tag:blogger.com,1999:blog-17274750898440540842024-03-19T13:15:54.925+05:30LAW FOR ALL
advocatemmmohan@gmail.com .
advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comBlogger6685125tag:blogger.com,1999:blog-1727475089844054084.post-60619934978494985512024-03-09T06:51:00.000+05:302024-03-09T06:51:00.000+05:30Elections – Electoral process – Electoral Bond Scheme, 2018 – Electoral Bond Scheme introduced anonymous financial contribution to political parties – Constitutional validity of:<p>* Authors</p><p> Ed. Note : Hon’ble Dr Dhananjaya Y Chandrachud, CJI, pronounced the judgement of the Bench comprising</p><p>his lordship, Hon’ble Mr. Justice B.R. Gavai, Hon’ble Mr. Justice J.B. Pardiwala, Hon’ble Mr. Justice Manoj</p><p>Misra, while Hon’ble Mr. Justice Sanjiv Khanna pronounced his separate judgement.</p><p>[2024] 2 S.C.R. 420 : 2024 INSC 113</p><p>Association for Democratic Reforms & Anr.</p><p>v.</p><p>Union of India & Ors.</p><p>(Writ Petition (C) No. 880 of 2017)</p><p>15 February 2024</p><p>[Dr Dhananjaya Y Chandrachud,* CJI, B R Gavai,</p><p>J B Pardiwala, Manoj Misra and Sanjiv Khanna,* JJ.]</p><p>Issue for Consideration</p><p>The matter pertains to the constitutional validity of the Electoral</p><p>Bond Scheme which introduced anonymous financial contributions</p><p>to political parties; as also the constitutional validity of the</p><p>provisions of the Finance Act 2017 which, among other things,</p><p>amended the provisions of the Reserve Bank of India Act 1934,</p><p>the Representation of the People Act 1951, the Income Tax Act</p><p>1961; as also whether unlimited corporate funding to political</p><p>parties, as envisaged by the amendment to s. 182(1) of the</p><p>Companies Act infringes the principle of free and fair elections</p><p>and violates Art. 14 of the Constitution; and whether the nondisclosure of information on voluntary contributions to political</p><p>parties under the Electoral Bond Scheme and the amendments</p><p>to s. 29C of the RPA, s. 182(3) of the CA and s. 13A(b) of the</p><p>IT Act are violative of the right to information of citizens u/Art.</p><p>19(1)(a) of the Constitution.</p><p>Headnotes</p><p>Elections – Electoral process – Electoral Bond Scheme, 2018</p><p>– Electoral Bond Scheme introduced anonymous financial</p><p>contribution to political parties – Constitutional validity of:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Electoral</p><p>Bond Scheme is unconstitutional – Directions to the issuing bank</p><p>to stop the issuance of Electoral Bonds – SBI to submit: details</p><p>of Electoral Bonds purchased since 12 April 2019 till date to the</p><p>ECI including the date of purchase of each Electoral Bond, the</p><p>name of the purchaser of the bond and the denomination of the</p><p>[2024] 2 S.C.R. 421</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Electoral Bond purchased; details of political parties which have</p><p>received contributions through Electoral Bonds since 12April 2019</p><p>till date to the ECI, and each Electoral Bond encashed by political</p><p>parties – SBI to submit the said information to the ECI within the</p><p>period stipulated – ECI to publish the information shared by the</p><p>SBI on its official website – Electoral Bonds within the validity</p><p>period of fifteen days but have not been encashed by the political</p><p>party yet, to be returned by the political party or the purchaser to</p><p>the issuing bank – Constitution of India. [Paras 216, 219] – Held:</p><p>(per Sanjiv Khanna, J.) (Concurring with Dr Dhananjaya Y</p><p>Chandrachud, CJI.) (Concurring with conclusions albeit with</p><p>different reasonings) Electoral Bond Scheme is unconstitutional</p><p>and is struck down – Directions to ECI to ascertain the details</p><p>from the political parties and the State Bank of India, which issued</p><p>the Bonds, and the bankers of the political parties and thereupon</p><p>disclose the details and names of the donor/purchaser of the Bonds</p><p>and the amounts donated to the political party – Henceforth, the</p><p>issuance of fresh Bonds is prohibited – Electoral Bonds within</p><p>the validity period of fifteen days but have not been encashed by</p><p>the political party yet, to be returned by the political party or the</p><p>purchaser to the issuing bank. [Para 79]</p><p>Elections – Electoral process – Electoral Bond Scheme –</p><p>Amendment to s. 182 of the Companies Act, 2013 Act, deleting</p><p>the first proviso thereunder (as amended by the s. 154 of the</p><p>Finance Act, 2017) thereby permitting unlimited corporate</p><p>funding to political parties – First proviso to s. 182 provided</p><p>the limit of contribution by the company upto seven and a half</p><p>per cent of its average net profits during the three immediately</p><p>preceding financial years – Validity of:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself and</p><p>for B R Gavai, J B Pardiwala and Manoj Misra, JJ): Is arbitrary</p><p>and violative of Art. 14 – It infringes the principle of free and fair</p><p>elections – Amendment to s. 182 is manifestly arbitrary for treating</p><p>political contributions by companies and individuals alike; permitting</p><p>the unregulated influence of companies in the governance and</p><p>political process violating the principle of free and fair elections;</p><p>and treating contributions made by profit-making and loss-making</p><p>companies to political parties alike [Paras 215, 216] – Held: (per</p><p>Sanjiv Khanna, J.) Amendment to s. 182 of the Companies Act,</p><p>deleting the first proviso thereunder, is unconstitutional, and is</p><p>422 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>struck down – Principle of proportionality applied which would</p><p>subsume the test of manifest arbitrariness – Furthermore, the claim</p><p>of privacy by a corporate or a company, especially a public limited</p><p>company would be on very limited grounds, restricted possibly to</p><p>protect the privacy of the individuals and persons responsible for</p><p>conducting the business and commerce of the company – It would</p><p>be rather difficult for a public (or even a private) limited company</p><p>to claim a violation of privacy as its affairs have to be open to the</p><p>shareholders and the public who are interacting with the body</p><p>corporate/company – Constitution of India – Art. 14 – Companies</p><p>Act, 2013 – s. 182. [Para 73]</p><p>Elections – Electoral process – Electoral Bond Scheme –</p><p>Non-disclosure of information on voluntary contributions to</p><p>political parties under the Electoral Bond Scheme and the</p><p>amendments to s. 29C of the Representation of the People</p><p>Act 1951, s. 182(3) of the Companies Act and s. 13A(b) of the</p><p>IT Act by the Finance Act, 2017 – If violative of Art. 19(1)(a):</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself and</p><p>for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Information</p><p>about funding to a political party is essential for a voter to exercise</p><p>their freedom to vote in an effective manner – Electoral Bond</p><p>Scheme and the impugned provisions-proviso to s. 29C(1) of the</p><p>RPA, s. 182(3) of the CA, and s. 13A(b) of the ITA to the extent</p><p>that they infringe upon the right to information of the voter by</p><p>anonymizing contributions through electoral bonds are violative of</p><p>Art 19(1)(a) and unconstitutional – Union of India was unable to</p><p>establish that the measure employed in Clause 7(4) of the Electoral</p><p>Bond Scheme is the least restrictive means to balance the rights</p><p>of informational privacy to political contributions and the right to</p><p>information of political contributions – Deletion of the mandate</p><p>of disclosing the particulars of contributions in s. 182(3) violates</p><p>the right to information of the voter since they would not possess</p><p>information about the political party to which the contribution was</p><p>made which, is necessary to identify corruption and quid pro quo</p><p>transactions in governance – Such information is also necessary for</p><p>exercising an informed vote – s. 29C exempts political parties from</p><p>disclosing information of contributions received through Electoral</p><p>Bonds whereas s. 182(3) applies to all modes of transfer – Both</p><p>must be read together – Only purpose of amending s. 182(3)</p><p>was to bring the provision in tune with the amendment under the</p><p>[2024] 2 S.C.R. 423</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>RPA exempting disclosure requirements for contributions through</p><p>electoral bonds – Amendment to s. 182(3) becomes otiose in</p><p>terms of the holding that the Electoral Bond Scheme and relevant</p><p>amendments to the RPA and the IT Act mandating non-disclosure</p><p>of particulars on political contributions through electoral bonds is</p><p>unconstitutional [Paras 104, 168, 169, 172-174, 216] – Held: (per</p><p>Sanjiv Khanna, J.) On application of the doctrine of proportionality,</p><p>proviso to s. 29C(1) of the RPA, s. 182(3) of the CA, 2013, and</p><p>s. 13A(b) of the ITA, as amended by the Finance Act, 2017,</p><p>unconstitutional, and are struck down – Representation of the</p><p>People Act, 1951 – s. 29C – Companies Act, 2013 – s. 182(3)</p><p>– Income Tax Act, 1961 – s. 13A(b) – Constitution of India – Art.</p><p>19(1)(a). [Para 74]</p><p>Elections – Electoral process – Electoral Bond Scheme –</p><p>s. 31(3) of the RBI Act added by the Finance Act, 2017 to</p><p>effectuate the issuance of the Bonds which, as envisaged, are</p><p>not to mention the name of the political party to whom they</p><p>are payable, and hence are in the nature of bearer demand</p><p>bill or note – Challenge to:</p><p>Held: Per Sanjiv Khanna, J. Sub-section (3) to s. 31 of the RBI</p><p>Act, 1934 and the Explanation thereto introduced by the Finance</p><p>Act, 2017 is unconstitutional, and are struck down as it permits</p><p>issuance of Bonds payable to a bearer on demand by such person</p><p>– Finance Act, 2017 – Reserve Bank of India Act, 1934 – s. 31(3).</p><p>[Para 79]</p><p>Elections – Electoral process – Electoral Bonds Scheme, 2018</p><p>– Challenge to the Electoral Bond Scheme and the statutory</p><p>amendments mandating non-disclosure of information on</p><p>electoral financing; and provisions permitting unlimited</p><p>corporate funding to political parties – Parameters to test:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI, (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ):</p><p>Courts must adopt a less stringent form of judicial review while</p><p>adjudicating challenges to legislation and executive action which</p><p>relate to economic policy as compared to laws relating to civil</p><p>rights such as the freedom of speech or the freedom of religion</p><p>– Amendments relate to the electoral process – Correspondence</p><p>between the Ministry of Finance and RBI that the Bonds were</p><p>introduced only to curb black money in the electoral process, and</p><p>424 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>protect informational privacy of financial contributors to political</p><p>parties – Union of India itself classified the amendments as an</p><p>“electoral reform” – It cannot be said that the amendments deal</p><p>with economic policy [Paras 40, 42] – Held: (per Sanjiv Khanna,</p><p>J.) Scheme cannot be tested on the parameters applicable to</p><p>economic policy – Matters of economic policy normally pertain to</p><p>trade, business and commerce, whereas contributions to political</p><p>parties relate to the democratic polity, citizens’ right to know and</p><p>accountability in the democracy – Primary objective of the Scheme,</p><p>and relevant amendments, is electoral reform and not economic</p><p>reform – To give the legislation the latitude of economic policy, it</p><p>would be diluting the principle of free and fair elections. [Para 15]</p><p>Elections – Electoral process – Presumption of constitutionality</p><p>– Application, to electoral laws:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI, (for himself and</p><p>for B R Gavai, J B Pardiwala and Manoj Misra, JJ): Presumption</p><p>of constitutionality is based on democratic accountability, that is,</p><p>the legislators are elected representatives who are aware of the</p><p>needs of the citizens and are best placed to frame policies to</p><p>resolve them; and that they are privy to information necessary</p><p>for policy making which the Courts as an adjudicating authority</p><p>are not – However, the policy underlying the legislation must</p><p>not violate the freedoms and rights entrenched in Part III of the</p><p>Constitution and other constitutional provisions – Presumption of</p><p>constitutionality is rebutted when a prima facie case of violation</p><p>of a fundamental right is established – Onus then shifts on the</p><p>State to prove that the violation of the fundamental right is justified</p><p>– It cannot be said that the presumption of constitutionality does</p><p>not apply to laws which deal with electoral process [Paras 44,</p><p>45] – Held: (per Sanjiv Khanna, J.): Doctrine of presumption of</p><p>constitutionality has its limitations when the test of proportionality</p><p>is applied – Structured proportionality places an obligation on</p><p>the State at a higher level, as it is a polycentric examination,</p><p>both empirical and normative – While the courts do not pass a</p><p>value judgment on contested questions of policy, and give weight</p><p>and deference to the government decision by acknowledging</p><p>the legislature’s expertise to determine complex factual issues,</p><p>the proportionality test is not based on preconceived notion or</p><p>presumption – Standard of proof is a civil standard or a balance</p><p>of probabilities; where scientific or social science evidence is</p><p>[2024] 2 S.C.R. 425</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>available, it is examined; and where evidence is inconclusive or</p><p>does not exist and cannot be developed, reason and logic may</p><p>suffice. [Para 18]</p><p>Elections – Electoral process – Electoral Bond Scheme, 2018</p><p>– Corporate donations to national parties through electoral</p><p>bonds – Annual audit reports of political parties from 2017-</p><p>18 to 2022-23 as available on website of ECI – Significance</p><p>– Doctrine of proportionality, application:</p><p>Held: (Per Sanjiv Khanna, J.) Data indicative of the quantum</p><p>of corporate funding through the anonymous Bonds – It clarifies</p><p>that majority of contribution through Bonds has gone to political</p><p>parties which are ruling parties in the Centre and the States –</p><p>More than 50% of the Electoral Bonds in number, and 94% of</p><p>the Electoral Bonds in value terms were for Rs.1 crore – This</p><p>supports the reasoning and conclusion on the application of the</p><p>doctrine of proportionality – Based on the analysis of the data</p><p>available, the Scheme fails to meet the balancing prong of the</p><p>proportionality test, however, the proportionality stricto sensu</p><p>not applied due to the limited availability of data and evidence.</p><p>[Paras 69, 74]</p><p>Elections – Electoral Process – Electoral Bond Scheme –</p><p>Infringement of the right to information of the voter, if satisfies</p><p>the proportionality standard vis-à-vis the purposes of curbing</p><p>black money; and protecting donor privacy:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ)</p><p>Purpose of curbing black money is not traceable to any of the</p><p>grounds in Art 19(2) – Electoral trusts are an effective alternative</p><p>through which the objective of curbing black money in electoral</p><p>financing can be achieved – Electoral Bond Scheme not being the</p><p>least restrictive means to achieve the purpose of curbing black</p><p>money in electoral process, there is no necessity of applying</p><p>the balancing prong of the proportionality standard – Electoral</p><p>Bond Scheme is not the only means for curbing black money in</p><p>Electoral Finance – There are other alternatives which substantially</p><p>fulfill the purpose and impact the right to information minimally</p><p>when compared to the impact of electoral bonds on the right to</p><p>information – Constitution of India – Art. 19(1) (a) and 19(2).</p><p>[Paras 116, 121, 124, 129, 130]</p><p>426 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Elections – Electoral process – Right to informational privacy,</p><p>if extends to financial contributions to a political party:</p><p>Held : (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) If the</p><p>right to informational privacy extends to financial contributions to</p><p>a political party, this Court needs to decide if the Electoral Bond</p><p>Scheme adequately balances the right to information and right to</p><p>informational privacy of political affiliation – Informational privacy</p><p>to political affiliation is necessary to protect the freedom of political</p><p>affiliation and exercise of electoral franchise – As regards, right</p><p>to informational privacy if can be extended to the contributions to</p><p>political parties, Electoral Bond Scheme has two manifestations</p><p>of privacy, informational privacy by prescribing confidentiality visà-vis the political party; and informational privacy by prescribing</p><p>non-disclosure of the information of political contributions to the</p><p>public – Financial contributions to political parties are usually</p><p>made because they may constitute an expression of support to</p><p>the political party and that the contribution may be based on a quid</p><p>pro quo – Law permits contributions to political parties by both</p><p>corporations and individuals – Huge political contributions made</p><p>by corporations and companies should not be allowed to conceal</p><p>the reason for financial contributions made by another section</p><p>of the population: a student, a daily wage worker, an artist, or a</p><p>teacher – When the law permits political contributions and such</p><p>contributions could be made as an expression of political support</p><p>which would indicate the political affiliation of a person, it is the</p><p>duty of the Constitution to protect them – Contributions made as</p><p>quid pro quo transactions are not an expression of political support</p><p>– However, to not grant the umbrella of informational privacy to</p><p>political contributions only because a portion of the contributions</p><p>is made for other reasons would be impermissible – Constitution</p><p>does not turn a blind eye merely because of the possibilities of</p><p>misuse. [Paras 131, 138, 139, 142]</p><p>Doctrines/Principles – Principle of proportionality –</p><p>Proportionality standard test – Four prongs –– Explanation of:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ)</p><p>Proportionality standard is laid down to determine if the violation</p><p>of the fundamental right is justified – Proportionality standard is-the</p><p>[2024] 2 S.C.R. 427</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>measure restricting a right must have a legitimate goal (legitimate</p><p>goal stage); the measure must be a suitable means for furthering</p><p>the goal (suitability or rational connection stage); the measure</p><p>must be least restrictive and equally effective (necessity stage);</p><p>and the measure must not have a disproportionate impact on</p><p>the right holder (balancing stage) – At the legitimate goal stage,</p><p>the Court is to analyze if the objective of introducing the law is a</p><p>legitimate purpose for the infringement of rights – Second prong</p><p>of the proportionality analysis requires the State to assess whether</p><p>the means used are rationally connected to the purpose – At</p><p>this stage, the court is required to assess whether the means,</p><p>if realised, would increase the likelihood of the purpose – It is</p><p>not necessary that the means chosen should be the only means</p><p>capable of realising the purpose – Next stage is the necessity</p><p>stage, wherein the Court is to determine if the means adopted</p><p>is the least restrictive means to give effect to the purpose – The</p><p>Court is to see, whether there are other possible means which</p><p>could have been adopted by the State; whether the alternative</p><p>means identified realise the objective in a ‘real and substantial</p><p>manner’; whether the alternative identified and the means used</p><p>by the State impact fundamental rights differently; and whether</p><p>on an overall comparison (and balancing) of the measure and</p><p>the alternative, the alternative is better suited considering the</p><p>degree of realizing the government objective and the impact on</p><p>fundamental rights – In the last stage, the Court undertakes a</p><p>balancing exercise to analyse if the cost of the interference with</p><p>the right is proportional to the extent of fulfilment of the purpose</p><p>– It is in this step that the Court undertakes an analysis of the</p><p>comparative importance of the considerations involved in the</p><p>case, the justifications for the infringement of the rights, and if</p><p>the effect of infringement of one right is proportional to achieve</p><p>the goal [Paras 105, 106, 117, 119, 156] – Held: (per Sanjiv</p><p>Khanna, J.) Four steps of test of proportionality are: first step is</p><p>to examine whether the act/measure restricting the fundamental</p><p>right has a legitimate aim, second step is to examine whether</p><p>the restriction has rational connection with the aim, third step</p><p>is to examine whether there should have been a less restrictive</p><p>alternate measure that is equally effective, and last stage is to</p><p>strike an appropriate balance between the fundamental right and</p><p>the pursued public purpose. [Para 25]</p><p>428 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Doctrines/Principles – Principle of proportionality – Test of</p><p>proportionality – Proportionality standard to balance two</p><p>conflicting fundamental rights – Foreign vis-à-vis Indian</p><p>jurisprudence:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI, (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ):</p><p>Foreign case *Campbell v MGM Limited judgment adopts a double</p><p>proportionality standard – It employed a three step approach to</p><p>balance fundamental rights, first step to analyse the comparative</p><p>importance of the actual rights claimed, second step to lay down</p><p>the justifications for the infringement of the rights, and third to apply</p><p>the proportionality standard to both the rights – Said approach must</p><p>be slightly tempered to suit Indian jurisprudence on proportionality</p><p>– Indian Courts adopt a four prong structured proportionality</p><p>standard to test the infringement of the fundamental rights – In</p><p>the last stage, the Court undertakes a balancing exercise, wherein</p><p>the Court undertakes an analysis of the comparative importance</p><p>of the considerations involved in the case, the justifications for</p><p>the infringement of the rights, and if the effect of infringement</p><p>of one right is proportional to achieve the goal – Thus, the first</p><p>two steps laid down in Campbell case are subsumed within the</p><p>balancing prong of the proportionality analysis. [Paras 154, 156]</p><p>– Held: (per Sanjiv Khanna, J.) Test of proportionality employed</p><p>by courts in various jurisdictions like Germany, Canada, South</p><p>Africa, Australia and the United Kingdom, however, no uniformity</p><p>on application of test of proportionality or the method of using the</p><p>last two prongs – In the third prong, courts examine whether the</p><p>restriction is necessary to achieve the desired end, wherein they</p><p>consider whether a less intrusive alternative is available to achieve</p><p>the same ends, aiming for minimal impairment – As regards, the</p><p>fourth prong, the balancing stage, some jurists believe that balancing</p><p>is ambiguous and value-based, which stems from the premise of</p><p>rule-based legal adjudication, where courts determine entitlements</p><p>rather than balancing interests – However, proportionality is a</p><p>standard-based review rather than a rule-based one – Balancing</p><p>stage enables judges to consider various factors by analysing them</p><p>against the standards proposed by the four prongs of proportionality</p><p>– This ensures that all aspects of a case are carefully weighed</p><p>in decision-making – While balancing is integral to the standard</p><p>of proportionality, such an exercise should be rooted in empirical</p><p>[2024] 2 S.C.R. 429</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>data and evidence as adopted by most of the countries – In</p><p>the absence of data and figures, there is a lack of standards by</p><p>which proportionality stricto sensu can be determined – However</p><p>many of the constitutional courts have employed the balancing</p><p>stage ‘normatively’ by examining the weight of the seriousness</p><p>of the right infringement against the urgency of the factors that</p><p>justify it – Findings of empirical legal studies provide a more solid</p><p>foundation for normative reasoning and enhance understanding</p><p>of the relationship between means and ends – Proportionality</p><p>analyses would be more accurate and would lead to better and</p><p>more democratic governance. [Paras 29, 31-33, 35]</p><p>Doctrines/Principles – Doctrine of proportionality –</p><p>Proportionality standard test to balance fundamental rightsright to information and the right to informational privacy:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself and</p><p>for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Proportionality</p><p>standard is an effective standard to test whether the infringement of</p><p>the fundamental right is justified – It would prove to be ineffective</p><p>when the State’s interest in question is also a reflection of a</p><p>fundamental right – Proportionality standard is by nature curated</p><p>to give prominence to the fundamental right and minimize the</p><p>restriction on it – If the single proportionality standard were employed</p><p>to the considerations in the instant case, at the suitability prong,</p><p>the Court would determine if non-disclosure is a suitable means for</p><p>furthering the right to privacy – At the necessity stage, the Court</p><p>would determine if non-disclosure is the least restrictive means</p><p>to give effect to the right to privacy – At the balancing stage, the</p><p>Court would determine if non-disclosure has a disproportionate</p><p>effect on the right holder – In this analysis, the necessity and the</p><p>suitability prongs would inevitably be satisfied because the purpose</p><p>is substantial: it is a fundamental right – Balancing stage will only</p><p>account for the disproportionate impact of the measure on the right</p><p>to information (the right) and not the right to privacy (the purpose)</p><p>since the Court is required to balance the impact on the right with</p><p>the fulfillment of the purpose through the selected means – Thus,</p><p>the Court while applying the proportionality standard to resolve</p><p>the conflict between two fundamental rights preferentially frames</p><p>the standard to give prominence to the fundamental right which</p><p>is alleged to be violated by the petitioners (in this case, the right</p><p>to information). [Paras 152-153]</p><p>430 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Doctrines/Principles – Double proportionality standard –</p><p>Application of, to both the rights-right to informational privacy</p><p>of the contributor and the right to information of the voter:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Double</p><p>proportionality standard is the proportionality standard to both the</p><p>rights (as purpose) to determine if the means used are suitable,</p><p>necessary and proportionate to the fundamental rights – First prong</p><p>of the analysis is whether the means has a rational connection</p><p>with both the purposes, that is, informational privacy of the political</p><p>contributions and disclosure of information to the voter – Further,</p><p>while applying the suitability prong to the purpose of privacy of</p><p>political contribution, the court must consider whether the nondisclosure of information to the voter and its disclosure only when</p><p>demanded by a competent court and upon the registration of</p><p>criminal case has a rational nexus with the purpose of achieving</p><p>privacy of political contribution – Undoubtedly, the measure by</p><p>prescribing non-disclosure of information about political funding</p><p>shares a nexus with the purpose – Non-disclosure of information</p><p>grants anonymity to the contributor, thereby protecting information</p><p>privacy – It is certainly one of the ways capable of realizing the</p><p>purpose of informational privacy of political affiliation – Suitability</p><p>prong must next be applied to the purpose of disclosure of</p><p>information about political contributions to voters – There is no</p><p>nexus between the balancing measure adopted with the purpose of</p><p>disclosure of information to the voter – According to Clause 7(4) of</p><p>the Electoral Bond Scheme and the amendments, the information</p><p>about contributions made through the Electoral Bond Scheme is</p><p>exempted from disclosure requirements – This information is never</p><p>disclosed to the voter – Purpose of securing information about</p><p>political funding can never be fulfilled by absolute non-disclosure</p><p>– Measure adopted does not satisfy the suitability prong vis-à-vis</p><p>the purpose of information of political funding – The next stage is</p><p>the necessity prong, wherein the Court determines if the measure</p><p>identified is the least restrictive and equally effective measure –</p><p>Court must determine if there are other possible means which</p><p>could have been adopted to fulfill the purpose, and whether such</p><p>alternative means realize the purpose in a real and substantial</p><p>manner; impact fundamental rights differently; and are better suited</p><p>on an overall comparison of the degree of realizing the purpose</p><p>[2024] 2 S.C.R. 431</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>and the impact on fundamental rights - On an overall comparison</p><p>of the measure and the alternative, the alternative is better suited</p><p>because it realizes the purposes to a considerable extent and</p><p>imposes a lesser restriction on the fundamental rights – Having</p><p>concluded that Clause 7(4) of the Scheme is not the least restrictive</p><p>means to balance the fundamental rights, there is no necessity</p><p>of applying the balancing prong of the proportionality standard.</p><p>[Paras 160-164, 168]</p><p>Doctrine/Principles – Doctrine of proportionality, when applied:</p><p>Held: (Per Sanjiv Khanna, J.) Proportionality principle is applied</p><p>by courts when they exercise their power of judicial review in</p><p>cases involving a restriction on fundamental rights – It is applied</p><p>to strike an appropriate balance between the fundamental right</p><p>and the pursued purpose and objective of the restriction. [Para 24]</p><p>Doctrine/Principles – Doctrine of proportionality – Application</p><p>of proportionality test to Electoral Bond Scheme, 2018 –</p><p>Legitimate purpose prong – Retribution, victimisation or</p><p>retaliation, if can be treated as a legitimate aim:</p><p>Held: (Per Sanjiv Khanna, J.) Retribution, victimisation or</p><p>retaliation cannot by any stretch be treated as a legitimate aim – This</p><p>would not satisfy the legitimate purpose prong of the proportionality</p><p>test – Neither the Scheme nor the amendments to the Finance</p><p>Act, 2017, rationally connected to the fulfilment of the purpose to</p><p>counter retribution, victimisation or retaliation in political donations</p><p>– It will also not satisfy the necessity stage of the proportionality</p><p>even if the balancing stage is ignored – Retribution, victimisation</p><p>or retaliation against any donor exercising their choice to donate</p><p>to a political party is an abuse of law and power – This has to be</p><p>checked and corrected – As it is a wrong, the wrong itself cannot</p><p>be a justification or a purpose – Cloak of secrecy, leads to severe</p><p>restriction and curtailment of the collective’s right to information</p><p>and the right to know – Transparency and not secrecy is the cure</p><p>and antidote. [Para 39]</p><p>Doctrine/Principles – Doctrine of proportionality – Application</p><p>of proportionality test to Electoral Bond Scheme, 2018 –</p><p>Rational nexus prong:</p><p>Held: (Per Sanjiv Khanna, J.) Donor may like to keep his identity</p><p>anonymous is a mere ipse dixit assumption – Plea of infringement</p><p>432 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>of the right to privacy has no application at all if the donor makes</p><p>the contribution, that too through a banking channel, to a political</p><p>party – Identity of the purchaser of the Bond can always be revealed</p><p>upon registration of a criminal case or by an order/direction of the</p><p>court – Thus, the fear of reprisal and vindictiveness does not end</p><p>– So-called protection exists only on paper but in practical terms</p><p>is not a good safeguard even if it is accepted that the purpose</p><p>is legitimate – Under the Scheme, political parties in power may</p><p>have asymmetric access to information with the authorised bank</p><p>– They also retain the ability to use their power and authority of</p><p>investigation to compel the revelation of Bond related information</p><p>– Thus, the entire objective of the Scheme is contradictory and</p><p>inconsistent – Rational connection test fails since the purpose of</p><p>curtailing black or unaccounted-for money in the electoral process</p><p>has no connection or relationship with the concealment of the</p><p>identity of the donor – Payment through banking channels is easy</p><p>and an existing antidote – On the other hand, obfuscation of the</p><p>details may lead to unaccounted and laundered money getting</p><p>legitimised. [Paras 41, 42, 44]</p><p>Doctrine/Principles – Doctrine of proportionality – Application</p><p>of proportionality test to Electoral Bond Scheme, 2018 –</p><p>Necessity prong:</p><p>Held: (Per Sanjiv Khanna, J.) As per the Electoral Trust Scheme,</p><p>contributions could be made by a person or body corporate to the</p><p>trust which would transfer the amount to the political party – Trust is</p><p>thus, treated as the contributor to the political party and guidelines</p><p>were issued by the ECI to ensure transparency and openness in</p><p>the electoral process – When the necessity test is applied, the</p><p>Trust Scheme achieves the objective of the Union of India in a</p><p>real and substantial manner and is also a less restrictive alternate</p><p>measure in view of the disclosure requirements, viz. the right to</p><p>know of voters – Trust Scheme is in force and is a result of the</p><p>legislative process – In a comparison of limited alternatives, it is</p><p>a measure that best realises the objective of the Union of India in</p><p>a real and substantial manner without significantly impacting the</p><p>fundamental right of the voter to know. [Paras 50-51]</p><p>Doctrine/Principles – Doctrine of proportionality – Application</p><p>of proportionality test to Electoral Bond Scheme, 2018 – Fourth</p><p>prong-the balancing prong of proportionality:</p><p>[2024] 2 S.C.R. 433</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Held: (Per Sanjiv Khanna, J.) On application of the balancing</p><p>prong of proportionality, the Electoral Bond Scheme falls foul and</p><p>negates and overwhelmingly disavows and annuls the voters right in</p><p>an electoral process as neither the right of privacy nor the purpose</p><p>of incentivising donations to political parties through banking</p><p>channels, justify the infringement of the right to voters – Voters</p><p>right to know and access to information is far too important in a</p><p>democratic set-up so as to curtail and deny ‘essential’ information</p><p>on the pretext of privacy and the desire to check the flow of</p><p>unaccounted money to the political parties – While secret ballots</p><p>are integral to fostering free and fair elections, transparency-not</p><p>secrecy-in funding of political parties is a prerequisite for free and</p><p>fair elections – Confidentiality of the voting booth does not extend</p><p>to the anonymity in contributions to political parties. [Para 57]</p><p>Constitution of India – Balancing of conflicting fundamental</p><p>rights-right to information and the right to informational</p><p>privacy – Standard to be followed:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) First</p><p>exercise that the Court must undertake while balancing two</p><p>fundamental rights is to determine if the Constitution creates a</p><p>hierarchy between the two rights in conflict, if yes, then the right</p><p>which has been granted a higher status would prevail over the</p><p>other right involved – And if not, the following standard must be</p><p>employed from the perspective of both the rights where rights A</p><p>and B are in conflict, whether the measure is a suitable means</p><p>for furthering right A and right B, whether the measure is least</p><p>restrictive and equally effective to realise right A and right B, and</p><p>whether the measure has a disproportionate impact on right A and</p><p>right B – Courts have used the collective interest or the public</p><p>interest standard, the single proportionality standard, and the</p><p>double proportionality standard to balance the competing interests</p><p>of fundamental rights – There is no constitutional hierarchy between</p><p>the right to information and the right to informational privacy of</p><p>political affiliation. [Paras 145-146, 157, 159]</p><p>Constitution of India – Fundamental right – Breach of – Burden</p><p>of proof:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI, (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ): Courts</p><p>434 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>cannot carve out an exception to the evidentiary principle which is</p><p>available to the legislature based on the democratic legitimacy which</p><p>it enjoys – In the challenge to electoral law, like all legislation, the</p><p>petitioners would have to prima facie prove that the law infringes</p><p>fundamental rights or constitutional provisions, upon which the</p><p>onus would shift to the State to justify the infringement [Para 45]</p><p>– Held: (per Sanjiv Khanna, J.) Once the petitioners are able to</p><p>prima facie establish a breach of a fundamental right, then the onus</p><p>is on the State to show that the right limiting measure pursues a</p><p>proper purpose, has rational nexus with that purpose, the means</p><p>adopted were necessary for achieving that purpose, and lastly</p><p>proper balance has been incorporated. [Para 17]</p><p>Constitution of India – Art. 14 – Doctrine of manifest</p><p>arbitrariness – Application of:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Doctrine</p><p>of manifest arbitrariness can be used to strike down a provision</p><p>where the legislature fails to make a classification by recognizing</p><p>the degrees of harm; and the purpose is not in consonance with</p><p>constitutional values – Legislative action can also be tested for</p><p>being manifestly arbitrary – There is, and ought to be, a distinction</p><p>between plenary legislation and subordinate legislation when they</p><p>are challenged for being manifestly arbitrary – Manifest arbitrariness</p><p>of a subordinate legislation has to be primarily tested vis-a-vis its</p><p>conformity with the parent statute – Doctrines/Principles. [Paras</p><p>198, 209]</p><p>Constitution of India – Art 19(1)(a) – Right to information,</p><p>scope of – Evolution of jurisprudence on right to information:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Right</p><p>to information can be divided into two phases – In the first phase,</p><p>the right to information is traced to the values of good governance,</p><p>transparency and accountability – In the second phase, the</p><p>importance of information to form views on social, cultural and</p><p>political issues, and participate in and contribute to discussions</p><p>is recognised – Crucial aspect of the expansion of the right to</p><p>information in the second phase is that right to information is not</p><p>restricted to information about state affairs, that is, public information</p><p>– It includes information which would be necessary to further</p><p>[2024] 2 S.C.R. 435</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>participatory democracy in other forms – Right to information has</p><p>an instrumental exegesis, which recognizes the value of the right</p><p>in facilitating the realization of democratic goals – Beyond that, it</p><p>has an intrinsic constitutional value; one that recognizes that it is</p><p>not just a means to an end but an end in itself. [Paras 60, 64, 65]</p><p>Constitution of India – Art. 19(1)(a) – Right to vote – Right to</p><p>know – Significance:</p><p>Held: (Per Sanjiv Khanna, J.) Right to vote is a constitutional</p><p>and statutory right, grounded in Art 19(1)(a), as the casting of a</p><p>vote amounts to expression of an opinion by the voter – Citizens’</p><p>right to know stems from this very right, as meaningfully exercising</p><p>choice by voting requires information – Representatives elected</p><p>as a result of the votes cast in their favour, enact new, and amend</p><p>existing laws, and when in power, take policy decisions – Access</p><p>to information which can materially shape the citizens’ choice is</p><p>necessary for them to have a say – Thus, the right to know is</p><p>paramount for free and fair elections and democracy – Denying</p><p>voters the right to know the details of funding of political parties</p><p>would lead to a dichotomous situation – Funding of political</p><p>parties cannot be treated differently from that of the candidates</p><p>who contest elections – Democratic legitimacy is drawn not only</p><p>from representative democracy but also through the maintenance</p><p>of an efficient participatory democracy – In the absence of fair</p><p>and effective participation of all stakeholders, the notion of</p><p>representation in a democracy would be rendered hollow. [Paras</p><p>19, 21, 22]</p><p>Constitution of India – Fundamental rights – Conflict of –</p><p>Voter’s right to know vis-à-vis right to privacy:</p><p>Held: (Per Sanjiv Khanna, J.) Fundamental rights are not</p><p>absolute, legislations/policies restricting the rights may be enacted</p><p>in accordance with the scheme of the Constitution – Thread of</p><p>reasonableness applies to all such restrictions – Furthermore, Art.</p><p>14 includes the facet of formal equality and substantive equality –</p><p>Thus, the principle ‘equal protection of law’ requires the legislature</p><p>and the executive to achieve factual equality – This principle can</p><p>be extended to any restriction on fundamental rights which must</p><p>be reasonable to the identified degree of harm – If the restriction</p><p>is unreasonable, unjust or arbitrary, then the law should be struck</p><p>down – Further, it is for the legislature to identify the degree of</p><p>436 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>harm – Voters right to know and access to information is far too</p><p>important in a democratic set-up so as to curtail and deny ‘essential’</p><p>information on the pretext of privacy and the desire to check the</p><p>flow of unaccounted money to the political parties. [Paras 56, 57]</p><p>Elections – Electoral Bond Scheme, 2018 – Clause 7(4), 2(a)</p><p>– Features of the Scheme:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Scheme</p><p>defines electoral bond “as a bond issued in the nature of promissory</p><p>note which shall be a bearer banking instrument and shall not carry</p><p>the name of the buyer or payee” – The Scheme also stipulates</p><p>that the information furnished by the buyer shall be treated as</p><p>confidential which shall not be disclosed by any authority except</p><p>when demanded by a competent court or by a law enforcement</p><p>agency upon the registration of criminal case – While it is true that</p><p>the law prescribes anonymity as a central characteristic of electoral</p><p>bonds, the de jure anonymity of the contributors does not translate</p><p>to de facto anonymity – The Scheme is not fool-proof – There are</p><p>sufficient gaps in the Scheme which enable political parties to know</p><p>the particulars of the contributions made to them – Electoral bonds</p><p>provide economically resourced contributors who already have a</p><p>seat at the table selective anonymity vis-à-vis the public and not</p><p>the political party. [Paras 102, 103]</p><p>Elections – Electoral process – Focal point of the electoral</p><p>process-candidate or political party:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Statutory</p><p>provisions relating to elections accord considerable importance to</p><p>political parties, signifying that political parties have been the focal</p><p>point of elections – ‘Political party’ is a relevant political unit in the</p><p>democratic electoral process in India – Voters associate voting</p><p>with political parties because of the centrality of symbols and its</p><p>election manifesto in the electoral process – Form of government</p><p>where the executive is chosen from the legislature based on the</p><p>political party or coalition of political parties which has secured the</p><p>majority – Prominence accorded to political parties by the Tenth</p><p>Schedule of the Constitution – Law recognises the inextricable link</p><p>between a political party and the candidate though vote is cast for</p><p>a candidate – Voters casts their votes based on two considerations:</p><p>[2024] 2 S.C.R. 437</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>the capability of the candidate as a representative and the ideology</p><p>of the political party. [Paras 80, 86, 89, 94]</p><p>Elections – Electoral democracy in India – Basis of:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ)</p><p>Electoral democracy in India is premised on the principle of political</p><p>equality, guaranteed by the Constitution in two ways – Firstly, by</p><p>guaranteeing the principle of “one person one vote” which assures</p><p>equal representation in voting, and secondly, the Constitution</p><p>ensures that socio-economic inequality does not perpetuate</p><p>political inequality by mandating reservation of seats for Scheduled</p><p>Castes and Scheduled Tribes in Parliament and State Assemblies</p><p>– Constitution guarantees political equality by focusing on the</p><p>‘elector’ and the ‘elected’ – However, political inequality continues</p><p>to persist in spite of the constitutional guarantees – Difference in</p><p>the ability of persons to influence political decisions because of</p><p>economic inequality is one of the factors – Economic inequality</p><p>leads to differing levels of political engagement because of the</p><p>deep association between money and politics – It is in light of the</p><p>nexus between economic inequality and political inequality, and the</p><p>legal regime in India regulating party financing that the essentiality</p><p>of the information on political financing for an informed voter must</p><p>be analyzed. [Paras 96-100]</p><p>Elections – Electoral process in India – Nexus between money</p><p>and electoral democracy:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Law</p><p>does not bar electoral financing by the public – Both corporates</p><p>and individuals are permitted to contribute to political parties which</p><p>is crucial for the sustenance and progression of electoral politics</p><p>– Primary way through which money directly influences politics is</p><p>through its impact on electoral outcomes – One way in which money</p><p>influences electoral outcomes is through vote buying –Another way</p><p>in which money influences electoral outcomes is through incurring</p><p>electoral expenditure for political campaigns – Enhanced campaign</p><p>expenditure proportionately increases campaign outreach which</p><p>influences the voting behavior of voters – Money also creates</p><p>entry-barriers to politics by limiting the kind of candidates and</p><p>political parties which enter the electoral fray – Challenge to the</p><p>438 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>statutory amendments-provisions dealing with electoral finance</p><p>and the Electoral Bond Scheme cannot be adjudicated in isolation</p><p>without a reference to the actual impact of money on electoral</p><p>politics. [Paras 46-51, 55]</p><p>Election Symbols (Reservation and Allotment) Order, 1968 –</p><p>Allotment of symbols to political parties – Significance:</p><p>Held: (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself and</p><p>for B R Gavai, J B Pardiwala and Manoj Misra, JJ) In terms of</p><p>the provisions of the Symbols Order, the ECI shall allot a symbol to</p><p>every candidate contesting the election – Symbols Order classifies</p><p>political parties into recognised political parties and unrecognised</p><p>political parties – Difference in the procedure under the Symbols</p><p>Order for allotting symbols to recognised political parties, registered</p><p>but unrecognised political parties and independent candidates</p><p>indicates both the relevance and significance of political parties in</p><p>elections in India – Purpose of allotting symbols to political parties</p><p>is to aid voters in identifying and remembering the political party –</p><p>Law recognises the inextricable link between a political party and</p><p>the candidate though the vote is cast for a candidate – Most of</p><p>the voters identified a political party only with its symbol and this</p><p>still continues to the day – Symbols also gain significance when</p><p>the names of political parties sound similar. [Paras 81, 84, 86, 87]</p><p>Words and Phrases – Privacy – Definition:</p><p>Held : (per Dr Dhananjaya Y Chandrachud, CJI.) (for himself</p><p>and for B R Gavai, J B Pardiwala and Manoj Misra, JJ) Privacy</p><p>is not limited to private actions and decisions – Privacy is defined</p><p>as essential protection for the exercise and development of other</p><p>freedoms protected by the Constitution, and from direct or indirect</p><p>influence by both State and non-State actors – Viewed in this</p><p>manner, privacy takes within its fold, decisions which also have a</p><p>‘public component’. [Para 133]</p><p>Case Law Cited</p><p>In the Judgment of Dr Dhananjaya Y Chandrachud, CJI</p><p>Roger Mathew v. South Bank of India, CA No. 8588/2019;</p><p>PUCL v. Union of India, [2003] 2 SCR 1136 : (2003) 4</p><p>SCC 399; ADR v. Union of India, [2002] 3 SCR 696 :</p><p>(2002) 5 SCC 294; Anjali Bhardwaj v. Union of India,</p><p>[2024] 2 S.C.R. 439</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>[2019] 2 SCR 199 :(2019) 18 SCC 246;Kanwar Lal Gupta</p><p>v. Amar Nath Chawla, [1975] 2 SCR 259 : 1975 SCC</p><p>(3) 646; Subash Chandra v. Delhi Subordinate Services</p><p>Selection Board, [2009] 12 SCR 978 : (2009) 15 SCC</p><p>458; Gujarat Mazdoor Sabha v. State of Gujarat, [2020]</p><p>13 SCR 886 : (2020) 10 SCC 459; Ramesh Chandra</p><p>Sharma v. State of Uttar Pradesh, [2023] 2 SCR 422 :</p><p>(2023) SCC OnLine SC 162; Shayara Bano v. Union</p><p>of India, [2017] 9 SCR 797 : (2017) 9 SCC 1; Rustom</p><p>Cavasjee Cooper v. Union of India, [1970] 3 SCR 530 :</p><p>(1970) 1 SCC 248; R.K Garg v. Union of India, [1982]</p><p>1 SCR 947 : (1981) 4 SCC 675; Premium Granites v.</p><p>State of Tamil Nadu, [1994] 1 SCR 579 : (1994) 2 SCC</p><p>691; Peerless General Finance and Investment Co v.</p><p>RBI, [1992] 1 SCR 406 : (1992) 2 SCC 343; BALCO</p><p>Employees Union v. Union of India, [2001] Suppl. 5 SCR</p><p>511 : (2002) 2 SCC 333; DG of Foreign Trade v. Kanak</p><p>Exports, [2015] 15 SCR 287 : (2016) 2 SCC 226; Swiss</p><p>Ribbons v. Union of India, [2019] 3 SCR 535 : (2019) 4</p><p>SCC 17; Pioneer Urban Land and Infrastructure Limited</p><p>v. Union of India, [2019] 10 SCR 381 : (2019) 8 SCC</p><p>416; State of Bombay v. FN Balsara, [1951] 1 SCR 682;</p><p>Dharam Dutt v. Union of India, [2003] Suppl. 6 SCR</p><p>151 : AIR 2004 SC 1295; Ramlila Maidan Incident, In</p><p>re, [2012] 4 SCR 971 : (2012) 5 SCC 1; Ameerunissa</p><p>Begum v. Mahboob Begum, [1953] 1 SCR 404 : (1952)</p><p>2 SCC 697; Vatal Nagaraj v. R Dayanand Sagar, [1975]</p><p>2 SCR 384 : (1975) 4 SCC 127; P Nalla Thampy Terah</p><p>v. Union of India, [1985] Supp. 1 SCR 622 : (1985) Supp</p><p>SCC 189; Common Cause (A Registered Society) v.</p><p>Union of India, [1996] 3 SCR 1208 : (1996) 2 SCC 752;</p><p>State of Punjab v. Sodhi Sukhdev Singh, [1961] 2 SCR</p><p>371; State of Uttar Pradesh v. Raj Narain, [1975] 3 SCR</p><p>333 : (1975) 4 SCC 428; SP Gupta v. Union of India,</p><p>(1981) Supp SCC 87; Dinesh Trivedi v. Union of India,</p><p>[1997] 3 SCR 93 : (1997) 4 SCC 306; Secy., Ministry</p><p>of Information & Broadcasting, Govt. of India v. Cricket</p><p>Assn. of Bengal, [1995] 1 SCR 1036 : (1995) 2 SCC 161;</p><p>Indian Express Newspapers v. Union of India, [1985] 2</p><p>SCR 287 : AIR 1986 SC 515; Romesh Thappar v. State</p><p>of Madras, [1950] 1 SCR 594 : AIR 1950 SC 124; DC</p><p>Saxena v. Hon’ble The Chief Justice of India, [1996] </p><p>440 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Suppl. 3 SCR 677 : (1996) 5 SCC 216; Supriyo v. Union</p><p>of India, 2023 INSC 920; Union of India v. Association</p><p>for Democratic Reforms, [2002] 3 SCR 696 : (2002) 5</p><p>SCC 294; Rameshwar Prasad v. Union of India, [2006] 1</p><p>SCR 562 : (2006) 2 SCC 1; Kihoto Hollohon v. Zachillhu,</p><p>[1992] 1 SCR 686 : (1992) Supp (2) SCC 651; Ravi S</p><p>Naik v. Union of India, [1994] 1 SCR 754 : AIR 1994 SC</p><p>1558; Subash Desai v. Principal Secretary, Governor of</p><p>Maharashtra, WP (C) No. 493 of 2022; Modern Dental</p><p>College & Research Centre v. State of Madhya Pradesh,</p><p>[2016] 3 SCR 575 : (2016) 4 SCC 346; Media One v.</p><p>Union of India, Civil Appeal No. 8129 of 2022; Sakal</p><p>Papers v. The Union of India, [1962] 3 SCR 842 : AIR</p><p>1962 SC 305; Express Newspapers v. Union of India,</p><p>[1959] 1 SCR 12 : AIR 1958 SC 578; Sodhi Shamsher</p><p>v. State of Pepsu, AIR 1954 SC 276; Kaushal Kishor v.</p><p>State of Uttar Pradesh, Writ Petition (Criminal) No. 113</p><p>of 2016; Superintendent, Central Prison, Fatehgarh v. Dr</p><p>Ram Manohar Lohia, [1960] 2 SCR 821 : AIR 1960 SC</p><p>633; Justice KS Puttaswamy v. Union of India, [2017] 10</p><p>SCR 569 : (2017) 10 SCC 1; In Re Noise Pollution, [2005]</p><p>Suppl. 1 SCR 624 : (2005) 5 SCC 733; Subramanian</p><p>Swamy v. Union of India, [2016] 3 SCR 865 : (2016) 7</p><p>SCC 221; Asha Ranjan v. State of Bihar, [2017] 1 SCR</p><p>945 : (2017) 4 SCC 397; Mazdoor Kisan Shakti Sangathan</p><p>v. Union of India, [2018] 11 SCR 586 : (2018) 17 SCC</p><p>324; Sahara India Real Estate Corporation Limited v.</p><p>Securities and Exchange Board of India, [2012] 12 SCR</p><p>256 : (2012) 10 SCC 603; Justice KS Puttaswamy v. Union</p><p>of India, [2018] 8 SCR 1 : (2019) 1 SCC 1; Central Public</p><p>Information Officer, Supreme Court of India v. Subash</p><p>Chandra Agarwal, [2010] 13 SCR 1120 : Civil Appeal No.</p><p>10044 of 2010; Aishat Shifa v. State of Karnataka, [2022]</p><p>5 SCR 426 : (2023) 2 SCC 1; Jayantilal Ranchhoddas</p><p>Koticha v. Tata Iron and Steel Co. Ltd., AIR 1958 Bom</p><p>155; Basheshar Nath v. CIT, [1959] Supp 1 SCR 528;</p><p>State of West Bengal v. Anwar Ali Sarkar, [1952] 1 SCR</p><p>284 : (1951) 1 SCC 1; Kathi Raning Rawat v. State of</p><p>Saurashtra, [1952] 1 SCR 435 : (1952) 1 SCC 215;</p><p>Budhan Chowdhury v. State of Bihar, [1955] 1 SCR 1045;</p><p>Ram Krishna Dalmia v. S R Tendolkar, [1959] SCR 279;</p><p>E P Royappa v. State of Tamil Nadu, [1974] 2 SCR 348 : </p><p>[2024] 2 S.C.R. 441</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>(1974) 4 SCC 3; Ajay Hasia v. Khalid Mujib Seheravardi,</p><p>[1981] 2 SCR 79 : (1981) 1 SCC 722; Sharma Transport</p><p>v. Government of Andhra Pradesh, [2001] Suppl. 5 SCR</p><p>390 : (2002) 2 SCC 188; State of Tamil Nadu v. Ananthi</p><p>Ammal, [1994] Suppl. 5 SCR 666 : (1995) 1 SCC 519;</p><p>Dr. K R Lakshmanan v. State of Tamil Nadu, [1996] 1</p><p>SCR 395 : (1996) 2 SCC 226; State of Andhra Pradesh</p><p>v. McDowell & Co., [1996] 3 SCR 721 : (1996) 3 SCC</p><p>709; Malpe Vishwanath Acharya v. State of Maharashtra,</p><p>[1997] Suppl. 6 SCR 717 : (1998) 2 SCC 1; Mardia</p><p>Chemicals Ltd. v. Union of India,[2004] 3 SCR 982 : (2004)</p><p>4 SCC 311; Natural Resources Allocation, In Re Special</p><p>Reference No. 1 of 2012, [2012] 9 SCR 311 : (2012) 10</p><p>SCC 1; Maneka Gandhi v. Union of India, [1978] 2 SCR</p><p>621 : (1978) 1 SCC 248; Navtej Singh Johar v. Union</p><p>of India, [2018] 7 SCR 379 : (2018) 10 SCC 1; Joseph</p><p>Shine v. Union of India, [2018] 11 SCR 765 : (2019) 3</p><p>SCC 39; Mohd. Hanif Quareshi v. State of Bihar, [1959]</p><p>SCR 629 : AIR 1958 SC 731; Binoy Viswam v. Union of</p><p>India, [2017] 7 SCR 1 : (2017) 7 SCC 59; Charanjit Lal</p><p>Chowdhuri v. Union of India, 1950 SCC 833; In Re Delhi</p><p>Laws Act 1912, 1951 SCC 568; Gwalior Rayon Silk Mfg.</p><p>(Wvg.) Co. Ltd. v. Assistant Commissioner of Sales Tax</p><p>and others, [1974] 2 SCR 879 : (1974) 4 SCC 98; Shri</p><p>Sitaram Sugar Co. Ltd. v. Union of India, [1990] 1 SCR</p><p>909 : (1990) 3 SCC 223; Khoday Distilleries Ltd. V. State</p><p>of Karnataka, [1995] Suppl. 6 SCR 759 : (1996) 10 SCC</p><p>304; State of Tamil Nadu v. P Krishnamurthy, [2006] 3</p><p>SCR 396 : (2006) 4 SCC 517; Kesavananda Bharati v.</p><p>State of Kerala, [1973] Suppl. 1 SCR 1 : (1973) 4 SCC</p><p>225; Indira Nehru Gandhi v. Raj Narain, [1978] 2 SCR</p><p>405 : (1975) Supp SCC 1; Digvijay Mote v. Union of India,</p><p>[1993] Suppl. 1 SCR 553 : (1993) 4 SCC 175; Kuldip</p><p>Nayar v. Union of India, [2006] Suppl. 5 SCR 1 : (2006)</p><p>7 SCC 1; People’s Union for Civil Liberties v. Union of</p><p>India, [2013] 12 SCR 283 : (2013) 10 SCC 1; Mohinder</p><p>Singh Gill v. Chief Election Commissioner, [1978] 2 SCR</p><p>272 : (1978) 1 SCC 405 – referred to.</p><p>FCC v. National Citizens Committee for Broadcasting,</p><p>436 US 775 (1978); *Campbell v. MGM Limited,</p><p>[2004] UKHL 22; Citizens United v. Federal Election</p><p>Commission, 558 U.S 310 – referred to.</p><p>442 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>In the Judgment of Sanjiv Khanna, J</p><p>Swiss Ribbons (P.) Ltd. and Another v. Union of India</p><p>and Others, [2019] 3 SCR 535 : (2019) 4 SCC 17;</p><p>Pioneer Urban Land and Infrastructure and Another v.</p><p>Union of India and Others, [2019] 10 SCR 381 : (2019)</p><p>8 SCC 416 – held inapplicable.</p><p>Rojer Matthew v. South Indian Bank Ltd. And Ors., [2019]</p><p>16 SCR 1 : Civil Appeal No. 8588 of 2019; R.K. Garg</p><p>v. Union of India and Others, [1982] 1 SCR 947 : (1981)</p><p>4 SCC 675; Bhavesh D. Parish and Others v. Union of</p><p>India and Others, [2000] Suppl. 1 SCR 291 : (2000)</p><p>5 SCC 471; Directorate General of Foreign Trade and</p><p>Others v. Kanak Exports and Another, [2015] 15 SCR</p><p>287 : (2016) 2 SCC 226; Union of India v. Association for</p><p>Democratic Reforms and Another, [2002] 3 SCR 696 :</p><p>(2002) 5 SCC 294; People’s Union of Civil Liberties</p><p>(PUCL) and Another v. Union of India and Another, [2003]</p><p>2 SCR 1136 : (2003) 4 SCC 399; Kanwar Lal Gupta v.</p><p>Amar Nath Chawla & Ors., [1975] 2 SCR 259 : (1975)</p><p>3 SCC 646; K. S. Puttaswamy and Anr. v. Union of</p><p>India and Ors. [2017] 10 SCR 569 : (2017) 10 SCC 1;</p><p>Modern Dental College & Research Centre and Others</p><p>v. State of Madhya Pradesh and Others, [2016] 3 SCR</p><p>579 : (2016) 7 SCC 353; K. S. Puttaswamy (Retired)</p><p>and Anr. v. Union of India and Anr., [2018] 8 SCR 1 :</p><p>(2019) 1 SCC 1; Gujarat Mazdoor Sabha and Another</p><p>v. State of Gujarat, [2020] 13 SCR 886 : (2020) 10 SCC</p><p>459; Ramesh Chandra Sharma and Others v. State of</p><p>U.P. and Others, 2023 SCC OnLine SC 162; Anuradha</p><p>Bhasin v. Union of India and Others, [2020] 1 SCR 812 :</p><p>(2020) 3 SCC 637; Rustom Cavasjee Cooper v. Union of</p><p>India, [1970] 3 SCR 530 : (1970) 1 SCC 248; Maneka</p><p>Gandhi v. Union of India and Another, [1978] 2 SCR 621</p><p>: (1978) 1 SCC 248; Anoop Baranwal v. Union of India,</p><p>[2023] 9 SCR 1 : (2023) 6 SCC 161; R.C.Poudyal v.</p><p>Union of India and Others, [1993] 1 SCR 891 : (1994)</p><p>Supp 1 SCC 324; Shayara Bano v. Union of India, [2017]</p><p>9 SCR 797 : (2017) 9 SCC 1 – referred to.</p><p>Libman v. Quebec (A. G.), [1997] 3 SCR 569; RJRMacDonald Inc. v. Canada (Attorney General), [1995] </p><p>[2024] 2 S.C.R. 443</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>3 SCR 199; Thomson Newspapers Co. v. Canada</p><p>(A.G.), [1998] 1 SCR 877; R. v. Sharpe, [2001] 1 SCR</p><p>45; Harper v. Canada (A.G.), [2004] 1 SCR 827; R. v.</p><p>Bryan, [2007] 1 SCR 527; Mounted Police Association</p><p>of Ontario v. Canada (Attorney General), [2015] 1 SCR</p><p>3; Brown v. Socialist Workers Comm., 459 U.S. 87</p><p>(1982); Campbell v. MGM Limited, [2004] 2 AC 457;</p><p>My Vote Counts NPC v. President of the Republic of</p><p>South Africa and Ors., (2017) ZAWCHC 105, para</p><p>67; Jeffery Raymond McCloy and Others v. State</p><p>of New South Wales and Another, (2015) HCA 34;</p><p>Bernstein and Ors. v. Bester NO and Others, (1996)</p><p>ZACC 2; Federal Election Commission v. National</p><p>Right to Work Committee, 459 U.S. 197 (1982);</p><p>Buckley v. R Valeo, 424 U.S. 1 (1976); Grosjean v.</p><p>American Press Co., 297 U.S. 233 (1936); Nixon,</p><p>Attorney General of Missouri, et al v. Shrink Missouri</p><p>Government PAC et al, 528 U.S. 377 (2000); In re.S,</p><p>[2005] 1 AC 593; In Re. W, [2005] EWHC 1564 (Fam);</p><p>R. v. Oakes, [1986] 1 SCR 103; Canada (Attorney</p><p>General) v. JTI-Macdonald Corp., [2007] 2 S.C.R.</p><p>610; Alberta v. Hutterian Brethren of Wilson Colony,</p><p>and [2009] 2 S.C.R. 567; Clubb v. Edwards, (2019)</p><p>93 ALJR 448; Associated Provincial Picture Houses</p><p>Ltd v. Wednesbury Corporation, (1948) 1 KB 223 –</p><p>referred to.</p><p>Books and Periodicals Cited</p><p>In the Judgment of Dr Dhananjaya Y Chandrachud, CJI</p><p>Gayatri Devi and Santha Rama Rau, A Princess</p><p>remembers: The Memoirs of the Maharani of Jaipur,</p><p>(Rupa Publications 1995) [301]; Michael A. Collins,</p><p>Navigating Fiscal Constraints in “Costs of Democracy:</p><p>Political Finance in India” (edited by Devesh Kapur and</p><p>Milan Vaishnav) OUP 2018; Neelanjan Sircar, Money</p><p>in Elections: the Role of Personal Wealth in Election</p><p>Outcomes in Costs of Democracy: Political Finance in</p><p>India (ed. By Devesh Kapur and Milan Vaishnav) OUP</p><p>2018; Aradhya Sethia, “Where’s the party?: towards a</p><p>constitutional biography of political parties, Indian Law</p><p>444 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Review, 3:1, 1-32 (2019); Law Commission of India,</p><p>170th Report on the Reform of the Electoral Laws</p><p>(1999); Lok Sabha Debates, Companies Bill (16 May</p><p>1985); Santhanam Committee Report on Prevention of</p><p>Corruption, 1964 – referred to.</p><p>John Hart Ely Democracy and Distrust: A Theory of</p><p>Judicial Review (Harvard University Press, 2002);</p><p>Conrad Foreman, Money in Politics: Campaign Finance</p><p>and its Influence over the Political Process and Public</p><p>Policy, 52 UIC J. Marshall L. Rev. 185 (2018); D</p><p>Sunshine Hillygus, Campaign Effects on Vote Choice</p><p>in “The Oxford Handbook of American Elections and</p><p>Political Behavior” (Ed. Jan E. Leighley 2010); David</p><p>P. Baron, Electoral Competition with informed and</p><p>uninformed voters, American Political Science Review,</p><p>Vol. 88, No. 1 March 1994; Dominik Hangartner,</p><p>NelsonA Ruiz, Janne Tukiainen, Open or Closed? How</p><p>List Type Affects Electoral Performance, Candidate</p><p>Selection, and Campaign Effort, VAT Institute for</p><p>Economic Research Working Papers 120 (2019); Ben</p><p>Ansell and Jean Gingrich J (2021). Political Inequality.</p><p>The IFS Deaton Review of Inequalities, London:</p><p>Institute for Fiscal Studies; Joshua L. Kalla and David</p><p>E. Broockman, “Campaign Contributions Facilitate</p><p>Access to Congressional Officials: A Randomized</p><p>Field Experiment” (2016 60(3)) American Journal of</p><p>Political Science; Philip N Howard and Daniel Kreiss,</p><p>Political Parties and Voter privacy: Australia, Canada,</p><p>the United Kingdom, and United States in Comparative</p><p>Perspective, First Monday 15(12) 2010; Colin</p><p>Bennet, The politics of privacy and privacy of politics:</p><p>Parties, elections, and voter surveillance in Western</p><p>Democracies. First Monday, 18(8) 2013; Hon’ble Mr</p><p>Justice Andrew Cheung PJ, Conflict of fundamental</p><p>rights and the double proportionality test, A lecture in</p><p>the Common Law Lecture Series 2019 delivered at</p><p>the University of Hong Kong (17 September 2019);</p><p>Report of the Committee on Prevention of Corruption,</p><p>1964 [11.5] – referred to.</p><p>[2024] 2 S.C.R. 445</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>In the Judgment of Sanjiv Khanna, J</p><p>Suchindran Bhaskar Narayan and Lalit Panda, Money</p><p>and Elections-Necessary Reforms in Electoral Finance,</p><p>Vidhi 2018 at p. 19; Law Commission of India, Electoral</p><p>Reforms, Report No. 255, March 2015 – referred to.</p><p>John Parkinson and Jane Mansbridge (eds),</p><p>Deliberative Systems (1st edn, Cambridge University</p><p>Press 2012) 11; James S Fishkin, When the</p><p>People Speak: Deliberative Democracy and Public</p><p>Consultation (Oxford University Press 2011) 33– 34;</p><p>Aharon Barak, “Proportionality – Constitutional Rights</p><p>and their Limitations”, Cambridge University Press,</p><p>2012; David Bilchitz, “Necessity and Proportionality:</p><p>Towards a Balance Approach?“, (Hart Publishing,</p><p>Oxford and Portland, Oregon 2016); Aparna Chandra,</p><p>“Proportionality: A Bridge to Nowhere?”, (Oxford</p><p>Human Rights Journal 2020); Jochen von Bernstroff,</p><p>Proportionality Without Balancing: Why Judicial</p><p>Ad Hoc Balancing is Unnecessary and Potentially</p><p>Detrimental to Realisation of Collective and Individual</p><p>Self Determination, Reasoning Rights-Comparative</p><p>Judicial Engagement, (Ed. Liaora Lazarus); Bernhard</p><p>Schlink, ‘Abwägung im Verfassungsrecht’, Duncker</p><p>& Humblot, 1976, and Francisco J. Urbina, ‘Is It</p><p>Really That Easy? A Critique of Proportionality and</p><p>Balancing as Reasoning’ Canadian Journal of Law</p><p>and Jurisprudence, 2014; Robert Alexy, A Theory of</p><p>Constitutional Rights (Julian Rivers, trans. Oxford</p><p>Univ. Press 2002); Cabinet Directive on Law-making</p><p>in Guide to Making Federal Acts and Regulations</p><p>(2nd edn, Government of Canada; Niels Petersen,</p><p>‘Proportionality and judicial Activism: Fundamental</p><p>Rights Adjudication in Canada, Germany and South</p><p>Africa, (CUP 2017); Yun-chien Chand & Peng-Hsiang</p><p>Wang, The Empirical Foundation of Normative</p><p>Arguments in Legal Reasoning (Univ. Chicago</p><p>Coase-Sandor Inst. For L. & Econ., Res. Paper No.</p><p>745, 2016); Lee Epstein & Andrew D. Martin, An</p><p>Introduction to Empirical Legal Research 6 (2014);</p><p>Joshua B. Fischman, Reuniting “Is” and “Ought” in</p><p>Empirical Legal Scholarship, 162 U. Pa. L. Rev. 117</p><p>446 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(2013); Marilyn Strathern, Improving Ratings: Audit in</p><p>the British University System, European review, Vol.</p><p>5 Issue 3, pp. 305-321 (1997); Lord Neill of Bladen,</p><p>QC, ‘Fifth Report of the Committee on Standards</p><p>in Public Life: The Funding of Political Parties in</p><p>the United Kingdom’, 1998 pp 61-62; Francisco J.</p><p>Urbina, A Critique of Proportionality, American Journal</p><p>of Jurisprudence, Vol 57, 2012; Ronald Dworkin,</p><p>Taking Rights Seriously (Bloomsbury 2013), pp 41-</p><p>42; Robert Alexy, A Theory of Constitutional Rights,</p><p>(translated by Julian Rivers, first published 2002,</p><p>OUP 2010), pp. 47-48; Robert Alexy, A Theory of</p><p>Constitutional Rights (Julian Rivers, trans. Oxford</p><p>Univ. Press 2002); David Bilchitz, Necessity and</p><p>Proportionality: Towards a Balance Approach?, (Hart</p><p>Publishing, Oxford and Portland, Oregon 2016);</p><p>Adrienne Stone, Proportionality and its Alternatives,</p><p>Melbourne Legal Studies Research Paper Series</p><p>No. 848; John Braithwaite, Rules and Principles:</p><p>a Theory of Legal Certainty, Australian Journal of</p><p>Legal Philosophy 47 (2002); Harrison Moore, The</p><p>Constitution of the Commonwealth of Australia;</p><p>Jennifer L. Greenblatt, Putting the Government to</p><p>the (Heightened, Intermediate, or Strict) Scrutiny</p><p>Test: Disparate Application Shows Not All Rights and</p><p>Powers Are Created Equal, (2009) 10 Fla Coastal L</p><p>Rev 421 – referred to.</p><p>Website</p><p>In the Judgment of Dr Dhananjaya Y Chandrachud, CJI</p><p>Election Commission of India, Instructions to political</p><p>parties on manifestos dated 24.04.2015, https://</p><p>www.eci.gov.in/election-manifestos/; Election</p><p>Commission of India, Letter dated 26 May 2017,</p><p>No. 56/PPEMS/Transparency/2017 – referred to.</p><p>In the Judgment of Sanjiv Khanna, J</p><p>Charterpedia, Department of Justice, Government</p><p>of Canada, available at: https://www.justice.</p><p>[2024] 2 S.C.R. 447</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/check/art1.htm</p><p>– referred to.</p><p>List of Acts</p><p>In the Judgment of Dr Dhananjaya Y Chandrachud, CJI</p><p>Constitution of India; Finance Act, 2017; Companies Act,</p><p>1956; Reserve Bank of India Act, 1934; Representation of</p><p>the People Act, 1951; Income Tax Act, 1961; Companies</p><p>Act, 2013; Companies (Amendment) Act, 1960; Companies</p><p>(Amendment)Act, 1969; Companies (Amendment)Act, 1985;</p><p>Taxation Laws (Amendment) Act, 1978; Evidence Act, 1872;</p><p>Election and Other Related Laws (Amendment) Act, 2003;</p><p>Election Symbols (Reservation and Allotment) Order, 1968;</p><p>Conduct of Election Rules, 1961.</p><p>In the Judgment of Sanjiv Khanna, J</p><p>Constitution of India; Companies Act, 1956; Companies Act</p><p>of 2013; Finance Act, 2017; Income Tax Act, 1961; Reserve</p><p>Bank of India Act, 1934; Representation of the People Act,</p><p>1951; Foreign Contribution RegulationAct, 2010; Prevention</p><p>of Money Laundering Act, 2002.</p><p>List of Keywords</p><p>In the Judgment of Dr Dhananjaya Y Chandrachud, CJI</p><p>Electoral bond scheme, 2018; Electoral bond; Corporate</p><p>contributions; Curbing black money; Transparency; Judicial</p><p>review; Close association of politics and money; Nondisclosure of information on electoral financing; Right to</p><p>information; Electoral process; Donor privacy; Informational</p><p>privacy of financial contributions to political parties; Privacy</p><p>vis-a-vis political party; Right to informational privacy; Judicial</p><p>approach; Balancing fundamental rights; Double proportionality</p><p>standard; Arbitrariness; Manifest arbitrariness; Indian</p><p>jurisprudence; Anonymous financial contributions to political</p><p>parties; Financial contributions to political parties; Financial</p><p>448 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>contributions; Election Commission of India; Transparency of</p><p>political finance; Quid pro quo arrangements; Free and fair</p><p>elections; Presumption of constitutionality; Corporate funding;</p><p>Electoral campaigns; Excessive delegation; Principle of ‘one</p><p>person-one vote’; Non-disclosure of funding by companies;</p><p>Public domain; Corporate donations; Anonymity of donations</p><p>to political parties; Judicial restraint; Symbols Order; Electoral</p><p>democracy; Proportionality standard; Electoral Trusts; Political</p><p>contribution; Electronic transfer other than electoral bonds;</p><p>Right to informational privacy of political affiliation; Privacy;</p><p>Political beliefs; Political affiliation; Privacy of political affiliation;</p><p>Electoral franchise; Corrupt practices; Single proportionality</p><p>standard; Plenary legislation; Subordinate legislation; Removal</p><p>of contribution restrictions; Loss-making companies; Profitmaking companies.</p><p>In the Judgment of Sanjiv Khanna, J</p><p>Electoral Bonds Scheme, 2018; Electoral bonds; Electoral</p><p>process; Doctrine of proportionality; Corporate funding;</p><p>Ban on contributions to political parties; Contributions</p><p>by companies; Electronic Clearing System; Economic</p><p>policy; Judicial review; Electoral democracy; Burden of</p><p>proof; Doctrine of presumption of constitutionality; Test of</p><p>proportionality; Structured proportionality; Right to vote;</p><p>Right to know; Symbol allotted to political parties; Funding of</p><p>political parties; Democratic legitimacy; Substantive balance;</p><p>Diversity; Conscientiousness; Equal consideration; Donors of</p><p>a political party; Informational privacy of donors; Black money</p><p>in electoral finance; Retribution; Victimisation; Retaliation;</p><p>Quid pro quo; Multiple donors; Double proportionality; Single</p><p>proportionality standard; Principle of reasonableness; Right</p><p>of privacy; Balancing prong of proportionality; Principle of lis</p><p>pendens; Necessity test; Rational connection test; Standard</p><p>based review; Rule based legal adjudication; Empirical</p><p>deference; Transparency; Secrecy; Identities of donor;</p><p>Money laundering; Alternative measures; Electoral Trust</p><p>[2024] 2 S.C.R. 449</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Scheme; Fundamental rights; Complementary rights; Law</p><p>Commission of India; Party wise donation; Test of manifest</p><p>arbitrariness.</p><p>Case Arising From</p><p>CIVIL ORIGINAL JURISDICTION : Writ Petition (Civil) No.880 of 2017</p><p>(Under Article 32 of the Constitution of India)</p><p>With</p><p>Writ Petition (Civil) Nos.59 of 2018, 975 And 1132 of 2022</p><p>Appearances for Parties</p><p>Kapil Sibal, Sr. Adv., Prashant Bhushan, Ms. Neha Rathi, Pranav</p><p>Sachdeva, Ms. Alice Raj, Ms. Shivani Kapoor, Kamal Kishore, Ms.</p><p>Kajal Giri, Varinder Kumar Sharma, Varun Thakur, Gautam Bhatia,</p><p>Pradanns. S, Ms. Rupali Samuel, Ms.Aprajits Jamuel, Rishabh Parikh,</p><p>Shsntanu Sharma, Ms. Deeksha Gaur, Y K Prasad, Shadan Farasat,</p><p>Ms. Hrishika Jain, Aman Naqvi, Ms. Natasha Maheshwari, Rizwan,</p><p>Ms. Sachi Chopra, Nizam Pasha, Javedur Rahman, Mudassir, Arif</p><p>Ali, Ms. Aayushi Mishra, Advs. for the Petitioners.</p><p>R Venkataramani, AG, Tushar Mehta, SG, R Balasubramanian, Sr.</p><p>Adv., Raj Bahadur Yadav, Ms. Seema Bengani, Shyam Gopal, Ms.</p><p>Chinmayee Chandra, Kanu Agrawal, Rajat Nair, Raman Yadav,</p><p>Chitvan Singhal, Mrs. Shraddha Deshmukh, Ms. Sonali Jain,Abhishek</p><p>Kumar Pandey, Kartikay Aggarwal, Rajan Kumar Chourasia, Ms.</p><p>Shraddha Deshmukh, Ankur Talwar, Arvind Kumar Sharma, Amit</p><p>Sharma, Dipesh Sinha, Ms. Pallavi Barua, Ms. Aparna Singh, Advs.</p><p>for the Respondents.</p><p>Vijay Hansaria, Sanjay R Hegde, Sr. Advs. Ms. Sneha Kalita,</p><p>Ms. Kavya Jhawar, K.S.bhati, Ms. Jessy Kurian, Ms. Sr. Leona,</p><p>Pawanshree Agarwala, Suren Uppal, Aviral Kashyap, Shahrukh Ali,</p><p>Sanjeev Menon, Ms. Stuti Srivastava, Ms. Vimal Sinha, Rajesh Kumar,</p><p>P.B. Suresh, Prasanna S., Ms. Disha Wadekar, Ms. Deeksha Dwivedi,</p><p>Ms. Swati Arya, Yuvraj Singh Rathore, Varun K Chopra, Mehul</p><p>Sharma, Abhishek Kandwal, M/S. Vkc Law Offices, Kaleeswaram</p><p>Raj, Ms. Thulasi K Raj, Ms. Aparna Menon, Mohammed Sadique</p><p>T.A., Advs. for the Intervenors.</p><p>450 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Dr Dhananjaya Y Chandrachud, CJI*</p><p>A. Background 4</p><p>i. Corporate Contributions ........................................... 5</p><p>ii. Curbing black money ................................................ 10</p><p>iii. Transparency .............................................................. 11</p><p>iv. Objections of RBI and ECI to the Electoral</p><p>Bond Scheme ............................................................. 13</p><p>v. Electoral Bond Scheme ............................................. 18</p><p>B. Issues ................................................................................. 23</p><p>C. Submissions ....................................................................... 24</p><p>i. Submissions of petitioners ....................................... 24</p><p>ii. Submissions of Union of India ................................. 36</p><p>D. The Scope of Judicial Review ......................................... 40</p><p>E. The close association of politics and money ................ 44</p><p>F. The challenge to non-disclosure of information</p><p>on electoral financing ...................................................... 50</p><p>i. Infringement of the right to information of the voter .. 51</p><p>a. The scope of Article 19(1)(a): tracing the right to</p><p>information ............................................................. 51</p><p>b. Right to information of a voter: exploring the</p><p>judgments in ADR and PUCL ............................... 55</p><p>c. The focal point of the electoral process:</p><p>candidate or political party .................................... 64</p><p>[2024] 2 S.C.R. 451</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>d. The essentiality of information about political</p><p>funding for the effective exercise of the choice of</p><p>voting ..................................................................... 73</p><p>ii. Whether the infringement of the right to</p><p>information of the voter is justified ......................... 78</p><p>a. Curbing Black money ............................................. 80</p><p>b. Donor Privacy ......................................................... 95</p><p>I. Informational privacy of financial contributions to</p><p>political parties .......................................................</p><p>96</p><p>II. Privacy vis-à-vis political party ............................... 103</p><p>III. Balancing the right to information and the right</p><p>to informational privacy ......................................... 103</p><p>a) Judicial Approach towards balancing</p><p>fundamental rights: establishing the double</p><p>proportionality standard .................................. 103</p><p>b) Validity of the Electoral Bond Scheme,</p><p>Section 11 of the Finance Act and Section</p><p>137 of the Finance Act .................................... 113</p><p>c. Validity of Section 154 of the Finance Act amending</p><p>Section 182(3) to the Companies Act ................... 120</p><p>G. Challenge to unlimited corporate funding ..................... 124</p><p>i. The application of the principle of non-arbitrariness 127</p><p>a. Arbitrariness as a facet of Article 14 ..................... 127</p><p>b. Beyond Shayara Bano: entrenching manifest</p><p>arbitrariness in Indian jurisprudence ..................... 131</p><p>ii. Validity of Section 154 of the Finance Act 2017</p><p>omitting the first proviso to Section 182 of the</p><p>Companies Act ........................................................... 140</p><p>H. Conclusion and Directions .............................................. 149</p><p>452 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>1. The petitioners have instituted proceedings under Article 32 of the</p><p>Constitution challenging the constitutional validity of the Electoral</p><p>Bond Scheme1 which introduced anonymous financial contributions to</p><p>political parties. The petitioners have also challenged the provisions</p><p>of the Finance Act 20172 which, among other things, amended the</p><p>provisions of the Reserve Bank of IndiaAct 19343</p><p>, the Representation</p><p>of the PeopleAct 19514</p><p>, the Income TaxAct 19615</p><p>, and the Companies</p><p>Act 20136</p><p>.</p><p>A. Background</p><p>2. Section 31 of the RBI Act stipulates that only the RBI or the Central</p><p>Government authorized by the RBI Act shall draw, accept, make, or</p><p>issue any bill of exchange or promissory note for payment of money</p><p>to the bearer of the note or bond. The Finance Act amended the RBI</p><p>Act by including Section 31(3) which permits the Central Government</p><p>to authorize any scheduled bank to issue electoral bonds.</p><p>3. To understand the context in which the legislative amendments</p><p>were introduced, it is necessary to juxtapose the amendments with</p><p>the regime on financial contributions to political parties. The law</p><p>relating to financial contributions to political parties focusses on (a)</p><p>contributions by corporate entities; (b) disclosure of information on</p><p>contributions; and (c) income tax exemptions for donations.</p><p>i. Corporate Contributions</p><p>4. The Companies Act 1956 and the provisions of the RPA, when they</p><p>were enacted did not regulate contributions to political parties by</p><p>companies and individuals. The Companies (Amendment) Act 1960</p><p>included Section 293A7 to regulate contributions by companies.</p><p>1 “Electoral Bond Scheme” or “Scheme”</p><p>2 “Finance Act”</p><p>3 Section 135 of the Finance Act 2017; “RBI Act”</p><p>4 Section 137 of the Finance Act 2017;“RPA”</p><p>5 Section 11 of the Finance Act 2017; “IT Act”</p><p>6 Section 154 of the Finance Act 2017; “Companies Act”</p><p>7 “293A. (1) Notwithstanding anything contained in section 293, neither a company in general meeting</p><p>nor its Board of directors shall, after the commencement of the Companies (Amendment) Act, 1960,</p><p>contribute-</p><p>(a) To any political party, or</p><p>(b) For any political purpose to any individual or body, any amount or amounts which or the aggregate</p><p>of which will, in any financial year, exceed twenty-five thousand rupees or five per cent of its</p><p>average net profits as determined in accordance with the provisions of sections 349 and 350 during</p><p>[2024] 2 S.C.R. 453</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>The provision stipulated that companies cannot contribute to (a)</p><p>any political party; and (b) to any individual or body for any political</p><p>purpose, amounts exceeding twenty-five thousand rupees in a</p><p>financial year or five percent of its average net profits during the three</p><p>financial years immediately preceding the contribution, whichever</p><p>is greater. Companies were also required to disclose the amount</p><p>contributed in a financial year in their profit and loss accounts and</p><p>furnish particulars of the total amount contributed and the name of</p><p>the party, individual or entity to which or to whom such amount was</p><p>contributed. Companies defaulting in complying with the disclosure</p><p>requirement were punishable with a fine which could extend to</p><p>rupees five thousand.</p><p>5. The Companies (Amendment) Act 1969 amended Section 293A8 so</p><p>as to ban contributions to political parties and for political purposes.</p><p>Companies acting in contravention of the prohibition were punishable</p><p>with a fine which could extend to five thousand rupees, and every</p><p>officer who defaulted was punishable with imprisonment which could</p><p>extend to three years, besides being liable to fine.</p><p>6. The Companies (Amendment) Act 1985 amended Section 293A9 to</p><p>the three financial years immediately preceding, whichever is greater.</p><p>Explanation- Where a portion of a financial year of the company falls before the commencement of the</p><p>Companies (Amendment) Act, 1960, and a portion falls after such commencement, the latter portion</p><p>shall be deemed to be a financial year within the meaning, and for the purposes, of this sub-section.</p><p>(2) Every company shall disclose in its profit and loss account any amount or amounts contributed by it</p><p>under sub-section (1) to any political party or for any political purpose to any individual or body during</p><p>the financial year to which the account relates, giving particulars of the total amount contributed and the</p><p>name of the party, individual or body to which or to whom such amount has been contributed.</p><p>(3) If a company makes a default in complying with the provisions of sub-section (2), the company, and</p><p>every officer of the company who is in default shall be punishable with fine which may extend to five</p><p>thousand rupees.”</p><p>8 “Section 293A. (1) Notwithstanding anything contained in any other provision of this Act, neither a</p><p>company in general meeting nor its Board of directors shall, after the commencement of the Companies</p><p>(Amendment) Act 1960 contribute any amount or amounts-</p><p>(a) To any political party or</p><p>(b) For any political purpose to an individual or body.</p><p>(2) If a company contravenes the provisions of sub-section (1) then-</p><p>(i) the company shall be punishable with fine which may extend to five thousand rupees; and</p><p>(ii) every officer of the company who is in default shall be punishable with imprisonment for a</p><p>term which may extend to three years and shall also be liable to fine”</p><p>9 “293A. (1) Notwithstanding anything contained in any other provision of this Act-</p><p>(a) No Government company; and</p><p>(b) No other company which has been in existence for less than three financial years,</p><p>shall contribute any amount or amounts, directly or indirectly, -</p><p>(i) To any political party; or</p><p>(ii) For any political purpose to any person.</p><p>(2) A company, not being a company referred to in clause (a) or clause (b) of sub-section (1), may</p><p>454 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>permit contributions to political parties and for political purposes once</p><p>again. The explanation of the phrase “political purpose” included</p><p>donations made to a person who in the knowledge of the donor is</p><p>carrying out any activity at the time of donation which can be regarded</p><p>as public support to a political party. Further, the direct or indirect</p><p>expenditure by companies on advertisements by or on behalf of</p><p>political parties or publications for the advantage of a political party</p><p>were also regarded as contributions for political purposes. Three other</p><p>restrictions, in addition to the earlier restriction prescribing a cap on</p><p>contributions and disclosure requirement were included. First, the</p><p>company (which is not a government company) should have been</p><p>in existence for more than three years; second, contributions could</p><p>only be made when a resolution authorizing the contributions had</p><p>been passed at a meeting of the Board of Directors; and third, the</p><p>penal consequences attached to the violations of the provision were</p><p>contribute any amount or amounts directly or indirectly-</p><p>(a) to any political party,-</p><p>(b) for any political purpose to any person:</p><p>Provided that the amount or, as the case may be, the aggregate of the amounts which may be so</p><p>contributed by a company in any financial year shall not exceed five percent of its average net profits</p><p>determined in accordance with the provisions of sections 349 and 350 during the three preceding</p><p>financial years.</p><p>Explanation.- Where a portion of a financial year of the company falls before the commencement of the</p><p>Companies (Amendment) Act, 1985, and a portion falls after such commencement, the latter portion</p><p>shall be deemed to be a financial year within the meaning, and for the purposes of this sub-section:</p><p>Provided further that no such contribution shall be made by a company unless a resolution authorizing</p><p>the making of such contribution is passed at a meeting of the Board of Directors and such resolution</p><p>shall, subject to the other provisions of this section, be deemed to be justification in law for the making</p><p>and the acceptance of the contribution authorized by it.</p><p>(3) Without prejudice to the generality of the provisions of sub-sections (1) and (2)-</p><p>(a) a donation or subscription or payment caused to be given by a company on its behalf or on its</p><p>account to a person who, to its knowledge, is carrying on any activity which, at the time at which</p><p>such donation or subscription or payment was given or made, can reasonably be regarded as likely</p><p>to effect public support for a political party shall also be deemed to be contribution of the amount of</p><p>such donation, subscription or payment to such person for a political purpose;</p><p>(b) the amount of expenditure incurred, directly or indirectly, by a company on advertisement in any</p><p>publication (being a publication in the nature of a souvenir brochure, tract, pamphlet or the like) by</p><p>or on behalf of a political party or for its advantage, shall also be deemed,-</p><p>(i) where such publication is by or on behalf of a political party, to be a contribution of such</p><p>amount to such political party, and</p><p>(ii) where such publication is not by or on behalf of but for the advantage of a political party, to</p><p>be a contribution for a political purpose to the publishing it.</p><p>(4) Every company shall disclose in its profit and loss account any amount or amounts contributed by</p><p>it to any political party or for any political purpose to any person during the financial year to which that</p><p>account relates, giving particulars of the total amount contributed and the name of the party or person to</p><p>which or to whom such amount has been contributed.</p><p>(5) If a company makes any contribution in contravention of the provisions of this section-</p><p>(a) the company shall be punishable with fine which may extend to three times the amount so</p><p>contributed; and</p><p>(b) every officer of the company who is in default shall be punishable with imprisonment for a term</p><p>which may extend to three years and shall also be liable to fine.</p><p>[2024] 2 S.C.R. 455</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>made more stringent. A fine extendable to three times the amount</p><p>contributed could be imposed, and every officer of the company who</p><p>was in default of the provision was punishable for a term which could</p><p>extend to three years and be liable for fine.</p><p>7. Section 182 of the Companies Act 2013 substantively incorporated</p><p>the provisions of Section 293-A of the 1956 Act, as amended in</p><p>1985. Section 182 enables a company to contribute any amount</p><p>directly or indirectly to any political party. The provision bars a</p><p>Government company and a company which has been in existence</p><p>for less than three financial years from contributing to a political</p><p>party. The provisos to the provision prescribe the following two</p><p>conditions:</p><p>a. The aggregate of the amount contributed by the company in</p><p>any financial year shall not exceed seven and a half per cent of</p><p>its average net profits during the three immediately preceding</p><p>financial years;10 and</p><p>b. A contribution can be made only if the Board of Directors</p><p>issues a resolution authorizing the contribution at a meeting.</p><p>Such a resolution shall, subject to the other provisions of the</p><p>Section, be deemed to be a justification in law for the making</p><p>and acceptance of the contribution authorized by the Board.11</p><p>8. Sub-section (3) of Section 182 mandates every company to disclose</p><p>in its profit and loss account any amount contributed by it to any</p><p>political party during the financial year with specific particulars of the</p><p>total amount contributed along with the name of the political party</p><p>to which the contribution was made.</p><p>9. Section 182 of the Companies Act 2013 made two modifications</p><p>from Section 293-A of the Companies Act 1956: (a) the cap on the</p><p>contributions which can be made by companies was increased from</p><p>5 % to 7.5% of their average net profits; and (b) more stringent</p><p>consequences for violation of were imposed. The fine was extendable</p><p>to five times (instead of three times prescribed in the earlier provision)</p><p>of the contribution.</p><p>10 Companies Act, First proviso to Section 182(1).</p><p>11 Companies Act, second proviso to Section 182(1)</p><p>456 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>10. The Finance Act 2017 made three changes to Section 182 of the</p><p>Companies Act:</p><p>a. The first proviso to Section 182(1) which prescribed a cap on</p><p>corporate funding was omitted;</p><p>b. Section 182(3) was amended to only require a disclosure of</p><p>the total amount contributed to political parties by a company</p><p>in a financial year and excluded the requirement to disclose</p><p>the particulars of the amount contributed to each political</p><p>party; and</p><p>c. Sub-section 3A was introduced, by which a company could</p><p>contribute to a political party only by a cheque, bank draft, or</p><p>electronic clearing system. The proviso to the sub-section states</p><p>that a company may also contribute through any instrument</p><p>issued pursuant to any scheme notified under any law for the</p><p>time being in force for contribution to political parties.</p><p>ii. Curbing black money</p><p>11. The Taxation Laws (Amendment) Act 1978 included Section 13A to</p><p>the IT Act exempting the income of political parties through financial</p><p>contributions and investments from income tax. The objects and</p><p>reasons of the Amending Act stipulated that tax exemption would</p><p>increase disposable funds from “legitimate sources”. However, to</p><p>secure the benefit of exemption, the following conditions prescribed</p><p>in the proviso were required to be fulfilled:</p><p>a. The political party was required to keep and maintain books of</p><p>account and other documents which would enable theAssessing</p><p>Officer to properly deduce its income;12</p><p>b. The political party had to maintain a record of voluntary</p><p>contributions in excess of twenty thousand rupees13, along</p><p>with the name and address of the person who made such</p><p>contributions;14 and</p><p>12 IT Act, Proviso (a) to Section 13A</p><p>13 It was ten thousand rupees when Section 13A was introduced. It was increased to twenty thousand</p><p>rupees by the Election and Other Related Laws (Amendment) Act 2003</p><p>14 IT Act, Proviso (b) to Section 13A</p><p>[2024] 2 S.C.R. 457</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>c. The accounts of the political party were required to be audited</p><p>by an accountant.15</p><p>12. By the Election and Other Related Laws (Amendment) Act 2003,</p><p>Sections 80GGB16 and 80GGC17 were inserted in the IT Act making</p><p>contributions made to political parties tax deductible. The speech of Mr</p><p>Arun Jaitley, the then Minister of Law and Justice while moving the Bill</p><p>indicates that contributions were made tax deductible to “incentivize</p><p>contributions” through cheque and other banking channels.</p><p>13. The Finance Act 2017 made the following amendments to Section</p><p>13A of the IT Act:</p><p>a. The political party was not required to maintain a record of</p><p>contributions if the contribution was received by electoral</p><p>bonds;18 and</p><p>b. The political party must receive a donation in excess of two</p><p>thousand rupees only by a cheque, bank draft, electronic clearing</p><p>system or through an electoral bond.19</p><p>iii. Transparency</p><p>14. The Election and Other Related Laws (Amendment) Act 2003</p><p>amended the provisions of the RPA. Section 29C of the RP Act was</p><p>introduced for requiring each political party to declare the details of the</p><p>contributions received. The treasurer of a political party or any other</p><p>person authorized by the political party must in each financial year</p><p>prepare a report in respect of the contributions in excess of twenty</p><p>thousand rupees received by the party from a person or company</p><p>15 IT Act, Proviso (c) to Section 13A</p><p>16 80GGB. “Deduction in respect of contributions made by companies to political parties-In computing the</p><p>total income of an assessee, being an Indian company, there shall be deducted any sum contributed by</p><p>it, in the previous year to any political party or an electoral trust:</p><p>Provided that no deduction shall be allowed under this section in respect of any sum contributed by way</p><p>of cash.”</p><p>17 80 GGC. “Deduction in respect of contributions made by any person to political parties- In computing the</p><p>total income of an assessee, being any person, except local authority and every artificial juridical person</p><p>wholly or partly funded by the Government, there shall be deducted any amount of contribution made by</p><p>him, in the previous year, to a political party [or an electoral trust] :</p><p>[Provided that no deduction shall be allowed under this section in respect of any sum contributed by</p><p>way of cash.]</p><p>Explanation.—For the purposes of sections 80GGB and 80GGC, “political party” means a political party</p><p>registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).”</p><p>18 IT Act, amendment to Proviso (b) to Section 13A</p><p>19 IT Act, Proviso (d) to Section 13A</p><p>458 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>other than Government companies in that financial year. The report</p><p>prepared must be submitted to the Election Commission before</p><p>the due date for furnishing a return of income of that financial year</p><p>under the IT Act.20 A political party which fails to submit the report</p><p>shall not be entitled to any tax relief as provided under the IT Act.21</p><p>15. The provision was amended by the Finance Act 2017 to include</p><p>a proviso by which the political party was not required to disclose</p><p>details of contributions received by electoral bonds.</p><p>Annexure I to this Judgment depicts in a tabular form the amendments</p><p>to the provisions of the RP Act, the IT Act, the Companies Act, and</p><p>the RBI Act by the Finance Act 2017.</p><p>16. The effect of the amendments introduced by the Finance Act to the</p><p>above legislations is that:</p><p>a. A new scheme for financial contribution to political parties is</p><p>introduced in the form of electoral bonds;</p><p>b. The political parties need not disclose the contributions received</p><p>through electoral bonds;</p><p>c. Companies are not required to disclose the details of</p><p>contributions made in any form; and</p><p>d. Unlimited corporate funding is permissible.</p><p>iv. Objections of RBI and ECI to the Electoral Bond Scheme</p><p>17. On 2 January 2017, the RBI wrote a letter to the Joint Secretary in</p><p>the Ministry of Finance on the proposal of the Government of India</p><p>to enable Scheduled Banks to issue electoral bearer bonds for the</p><p>purpose of donations to political parties before the Finance Act 2017</p><p>was enacted. The RBI objected to the proposal on the ground that:</p><p>a. The amendment would enable multiple non-sovereign entities to</p><p>issue bearer instruments. The proposal militated against RBI’s</p><p>sole authority for issuing bearer instruments which has the</p><p>potential of becoming currency. Electoral bonds can undermine</p><p>the faith in banknotes issued by the Central Bank if the bonds</p><p>are issued in sizable quantities;</p><p>20 RPA, Section 29C (3)</p><p>21 RPA, Section 29C (4)</p><p>[2024] 2 S.C.R. 459</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>b. Though the identity of the person or entity purchasing the bearer</p><p>bond will be known because of the Know Your Customer22</p><p>requirement, the identities of the intervening persons/entities</p><p>will not be known. This would impact the principles of the</p><p>Prevention of Money Laundering Act 2002; and</p><p>c. The intention of introducing electoral bonds can be accomplished</p><p>by cheque, demand draft, and electronic and digital payments.</p><p>There is no special need for introducing a new bearer bond in</p><p>the form of electoral bonds.</p><p>18. On 30 January 2017, the Finance Ministry responded to the</p><p>observations of RBI and stated that:</p><p>a. RBI has not understood the core purpose of electoral bonds</p><p>which is to keep the identity of the donor secret while at the</p><p>same time ensuring that the donation is only made from tax</p><p>paid money; and</p><p>b. The fear that electoral bonds might be used as currency is</p><p>unfounded because there is a time limit for redeeming the bonds.</p><p>19. By a letter dated 4 August 2017, the Deputy Governor of the RBI</p><p>stated that India can consider issuing the electoral bonds on a</p><p>transitional basis through the RBI under the existing provisions of</p><p>Section 31(1) of the RBIAct. The RBI recommended the incorporation</p><p>of the following safeguards to minimize the inherent scope of misuse</p><p>of the bonds for undesirable activities:</p><p>a. The electoral bonds may have a maximum tenure of fifteen days;</p><p>b. The electoral bonds can be purchased for any value in multiples</p><p>of a thousand, ten thousand, or a lakh of rupees;</p><p>c. The purchase of electoral bonds would be allowed from a KYC</p><p>compliant bank account of the purchaser;</p><p>d. The electoral bonds can be redeemed only upon being deposited</p><p>into the designated bank account of an eligible political party;</p><p>e. The sale of electoral bonds will be open only for a limited period,</p><p>may be twice a year for seven days each; and</p><p>f. The electoral bonds will be issued only at RBI, Mumbai.</p><p>22 “KYC”</p><p>460 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>20. The draft of the Electoral Bond Scheme was circulated to the RBI for its</p><p>comments. The draft conferred notified scheduled commercial banks,</p><p>apart from the RBI, with the power to issue electoral bonds. The RBI</p><p>objected to the draft Scheme by a letter dated 14 September 2017. The</p><p>RBI stated that permitting a commercial bank to issue bonds would “have</p><p>an adverse impact on public perception about the Scheme, as also the</p><p>credibility of India’s financial system in general and the central bank</p><p>in particular.” The RBI again flagged the possibility of shell companies</p><p>misusing bearer bonds for money laundering transactions. The RBI</p><p>recommended that electoral bonds may be issued in electronic form</p><p>because it would (a) reduce the risk of their being used for money</p><p>laundering; (b) reduce the cost; and (c) be more secure.</p><p>21. The Electoral Bond Scheme was placed for deliberation and guidance</p><p>by the RBI before the Committee of the Central Board. The Committee</p><p>conveyed serious reservations on the issuance of electoral bonds</p><p>in the physical form. The reservations were communicated by the</p><p>RBI to the Finance Minister by a letter dated 27 September 2017.</p><p>The reservations are catalogued below:</p><p>a. Issuance of currency is a ‘monopolistic function’ of a central</p><p>authority which is why Section 31 of the RBIAct bars any person</p><p>other than the RBI from issuing bearer bonds;</p><p>b. Issuance of electoral bonds in the scrips will run the risk of money</p><p>laundering since the consideration for transfer of scrips from</p><p>the original subscriber to a transferee will be paid in cash. This</p><p>will not leave any trail of transactions. While this would provide</p><p>anonymity to the contributor, it will also provide anonymity to</p><p>several others in the chain of transfer;</p><p>c. Issuance of electoral bonds in the scrip form could also expose</p><p>it to the risk of forgery and cross-border counterfeiting besides</p><p>offering a convenient vehicle for abuse by “aggregators”; and</p><p>d. The electoral bond may not only be seen as facilitating money</p><p>laundering but could also be projected (albeit wrongly) as</p><p>enabling it.</p><p>22. On 26 May 2017, the Election Commission of India23 wrote to the</p><p>Ministry of Law and Justice that the amendments to the IT Act,</p><p>23 “ECI”</p><p>[2024] 2 S.C.R. 461</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>RPA, and Companies Act introduced by the Finance Act 2017</p><p>will have a “serious impact on transparency of political finance/</p><p>funding of political parties.” The letter notes that the amendment</p><p>to the RPA by which donations through electoral bonds were not</p><p>required to be disclosed is a retrograde step towards transparency</p><p>of donations:</p><p>“2(ii) It is evident from the Amendment which has been</p><p>made, that any donation received by a political party</p><p>through electoral bond has been taken out of the ambit</p><p>of reporting under the Contribution Report as prescribed</p><p>under Section 29C of the Representation of the People</p><p>Act 1951 and therefore, this is a retrograde step as far as</p><p>transparency of donations is concerned and this proviso</p><p>needs to be withdrawn.</p><p>(iii) Moreover, in a situation where contributions received</p><p>through Electoral Bonds is not reported, on perusal of</p><p>the Contribution reports of the political parties, it cannot</p><p>be ascertained whether the political party has taken any</p><p>donation in violation of provisions under Section 29B of</p><p>the Representation of the People Act 1951 which prohibits</p><p>the political parties from donations from Government</p><p>Companies and Foreign sources.”</p><p>23. Referring to the deletion of the provision in the Companies Act</p><p>requiring companies to disclose particulars of the amount contributed</p><p>to specific political parties, the ECI recommended that companies</p><p>contributing to political parties must declare party-wise contributions</p><p>in the profit and loss account to maintain transparency in the financial</p><p>funding of political parties. Further, the ECI also expressed its</p><p>apprehension to the deletion of the first proviso to Section 182(1)</p><p>by which the cap on corporate donations was removed. The ECI</p><p>recommended that the earlier provision prescribing a cap on corporate</p><p>funding be reintroduced because:</p><p>a. Unlimited corporate funding would increase the use of black</p><p>money for political funding through shell companies; and</p><p>b. Capped corporate funding ensured that only profitable</p><p>companies with a proven track record could donate to political</p><p>parties.</p><p>462 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>v. Electoral Bond Scheme</p><p>24. On 2 January 2018, the Ministry of Finance in the Department of</p><p>EconomicAffairs notified the Electoral Bond Scheme 2018 in exercise</p><p>of the power under Section 31(3) of the RBI Act. The Electoral Bond</p><p>is a bond issued in the nature of promissory note which is a bearer</p><p>banking instrument and does not carry the name of the buyer.24 The</p><p>features of the Scheme are as follows:</p><p>a. The Bond may be purchased by a person who is (i) a citizen</p><p>of India; or (ii) incorporated or established in India.25 ‘Person’</p><p>includes (a) an individual; (b) a Hindu undivided family; (c) a</p><p>company; (c) a firm; (d) an association of persons or a body</p><p>of individuals, whether incorporated or not; (e) every artificial</p><p>juridical person, not falling within any of the above categories;</p><p>and (f) any agency, office, or branch owned or controlled by</p><p>such a person. An individual can buy bonds either singly or</p><p>jointly with other individuals;26</p><p>b. An Electoral Bond can only be encashed by an eligible political</p><p>party.27 A political party, to be eligible to receive an electoral</p><p>bond, has to be registered under Section 29A of the RP Act,</p><p>and ought to have secured not less than one per cent of the</p><p>votes polled in the last general election to the House of the</p><p>People or the Legislative Assembly of the State.28 An eligible</p><p>political party can encash a bond only through a bank account</p><p>with an authorised bank.29 The scheme has notified the State</p><p>Bank of India as the bank authorised to issue and encash</p><p>bonds;30</p><p>c. The instructions issued by the Reserve Bank of India regarding</p><p>KYC apply to buyers of the bond. The authorised bank may</p><p>call for additional KYC documents if necessary;31</p><p>24 Electoral Bond Scheme, Clause 2(a)</p><p>25 Electoral Bond Scheme, Clause 3(1)</p><p>26 Electoral Bond Scheme, clause 3(3)</p><p>27 Electoral Bond Scheme, Clause 12</p><p>28 Electoral Bond Scheme, Clause 3(3)</p><p>29 Electoral Bond Scheme, Clause 3(4)</p><p>30 Electoral Bond Scheme, Clause 2(b)</p><p>31 Electoral Bond Scheme, Clause 4(2)</p><p>[2024] 2 S.C.R. 463</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>d. Payments for the issuance of the bond are accepted in Indian</p><p>rupees, through demand draft, cheque, Electronic Clearing</p><p>System or direct debit to the buyer’s account. Where payment</p><p>is made by cheque or demand draft, it must be drawn in favour</p><p>of the issuing bank at the place of issue;32</p><p>e. The bonds are issued in denominations of Rs 1000, 10,000,</p><p>1,00,000, 10,00,000 and 1,00,00,000;33</p><p>f. The bond is valid for fifteen days from the date of issue. No</p><p>payment will be made to a political party if the bond is deposited</p><p>after the expiry of fifteen days34. If the bond is not encashed</p><p>within fifteen days, it will be deposited by the authorised bank</p><p>with the Prime Minister’s Relief Fund;35</p><p>g. A buyer who wishes to purchase electoral bond(s) can apply</p><p>in the format specified in Annexure II of the Scheme.36 The</p><p>issuing branch shall issue the bond if all the requirements are</p><p>fulfilled.37 The application shall be rejected if the application</p><p>is not KYC compliant or if the application does not meet the</p><p>requirements of the scheme;38</p><p>h. The bond issued is non-refundable;39</p><p>i. The information furnished by the buyer is to be treated as</p><p>confidential by the authorized bank. It shall be disclosed only</p><p>when demanded by a competent court or upon the registration</p><p>of criminal case by any law enforcement agency;40</p><p>j. The bond shall be available for purchase for a period of ten days</p><p>on a quarterly basis, in the months of January, April, July, and</p><p>October as specified by the Central Government.41 Bonds will</p><p>32 Electoral Bond Scheme, Clause 11</p><p>33 Electoral Bond Scheme, Clause 5</p><p>34 Electoral Bond Scheme, Clause 6</p><p>35 Electoral Bond Scheme, Clause 12(2)</p><p>36 Electoral Bond Scheme, Clause 7(1)</p><p>37 Electoral Bond Scheme, Clause 7(3)</p><p>38 Electoral Bond Scheme, Clause 7(4)</p><p>39 Electoral Bond Scheme, Clause 7(6)</p><p>40 Electoral Bond Scheme, Clause 7(4)</p><p>41 Electoral Bond Scheme, Clause 8(1)</p><p>464 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>be available for an additional period of thirty days as specified</p><p>by the Central Government in a year when General Elections</p><p>to the House of People are to be held;42</p><p>k. No interest is payable on the bond.43 No commission, brokerage,</p><p>or any other charges for issue of a bond shall be payable by</p><p>the buyer against purchase of the bond;44</p><p>l. The value of the bonds shall be considered as income by way</p><p>of voluntary contributions received by an eligible political party</p><p>for the purpose of exemption from Income Tax under Section</p><p>13A of the IT Act;45 and</p><p>m. The bonds are not eligible for trading.46</p><p>25. The petitioners instituted proceedings under Article 32 seeking a</p><p>declaration that Electoral Bond Scheme and the following provisions</p><p>be declared unconstitutional:</p><p>a. Section 135 of the Finance Act 2017 and the corresponding</p><p>amendment in Section 31 of the RBI Act;</p><p>b. Section 137 of the Finance Act 2017 and the corresponding</p><p>amendment in Section 29C of the RP Act;</p><p>c. Section 11 of the Finance Act 2017 and the corresponding</p><p>amendment in Section 13A of the IT Act; and</p><p>d. Section 154 of the Finance Act 2017 and the corresponding</p><p>amendment to Section 182 of the Companies Act.</p><p>26. In its order dated 13 April 2019, this Court observed that the</p><p>amendments which have been challenged give rise to weighty</p><p>issues which have a bearing on the sanctity of the electoral</p><p>process. This Court directed all political parties, in the interim to</p><p>submit details of contributions received through electoral bonds</p><p>(with particulars of the credit received against each bond, date of</p><p>credit, and particulars of the bank account to which the amount</p><p>42 Electoral Bond Scheme, Clause 8(2)</p><p>43 Electoral Bond Scheme, Clause 9</p><p>44 Electoral Bond Scheme, Clause 10</p><p>45 Electoral Bond Scheme, Clause 13</p><p>46 Electoral Bond Scheme, Clause 14</p><p>[2024] 2 S.C.R. 465</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>has been credited) to the ECI in a sealed cover. The prayer for</p><p>interim relief was rejected by observing that the operations under</p><p>the scheme are not placed behind “iron curtains incapable of</p><p>being pierced”:</p><p>“25. The financial statements of companies registered</p><p>under the Companies Act, 2013 which are filed with the</p><p>Registrar of Companies, are accessible online on the</p><p>website of the Ministry of Corporate Affairs for anyone.</p><p>They can also be obtained in physical form from the</p><p>Registrar of Companies upon payment of prescribed</p><p>fee. Since the Scheme mandates political parties to</p><p>file audited statement of accounts and also since the</p><p>CompaniesAct requires financial statements of registered</p><p>companies to be filed with the Registrar of Companies,</p><p>the purchase as well as encashment of the bonds,</p><p>happening only through banking channels, is always</p><p>reflected in documents that eventually come to the</p><p>public domain. All that is required is a little more effort</p><p>to cull out such information from both sides (purchaser</p><p>of bond and political party) and do some “match the</p><p>following”. Therefore, it is not as though the operations</p><p>under the Scheme are behind iron curtains incapable</p><p>of being pierced.”</p><p>27. The petitioners have also challenged the introduction of the Finance</p><p>Act as a Money Bill under Article 110 of the Constitution. The issue</p><p>of the scope of Article 110 has been referred to a seven-Judge</p><p>Bench and is pending adjudication.47 The petitioners submitted</p><p>that they would press the grounds of challenge to the Finance Act</p><p>independent of the issue on Money Bills in view of the upcoming</p><p>elections to Parliament.</p><p>28. By an order dated 31 October 2023, the batch of petitions was</p><p>directed to be listed before a Bench of at least five-Judges in view</p><p>of the provisions of Article 145(3) of the Constitution. It is in this</p><p>background that the challenge to the Electoral Bond Scheme and</p><p>the amendments is before the Constitution Bench.</p><p>47 Roger Mathew v. South Bank of India, CA No. 8588/2019</p><p>466 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>B. Issues</p><p>29. The present batch of petitions gives rise to the following issues:</p><p>a. Whether unlimited corporate funding to political parties,</p><p>as envisaged by the amendment to Section 182(1) of the</p><p>Companies Act infringes the principle of free and fair elections</p><p>and violates Article 14 of the Constitution; and</p><p>b. Whether the non-disclosure of information on voluntary</p><p>contributions to political parties under the Electoral Bond Scheme</p><p>and the amendments to Section 29C of the RPA, Section</p><p>182(3) of the Companies Act and Section 13A(b) of the IT Act</p><p>are violative of the right to information of citizens under Article</p><p>19(1)(a) of the Constitution.</p><p>C. Submissions</p><p>i. Submissions of petitioners</p><p>30. Mr Prashant Bhushan, learned counsel made the following</p><p>submissions:</p><p>a. There is no rational basis for the introduction of electoral bonds.</p><p>The main objective of introducing the Electoral Bond Scheme</p><p>as reflected in the article written by the then Finance Minister,</p><p>Mr. Arun Jaitley was that it would enhance transparency in</p><p>electoral funding since electoral bond transactions can only</p><p>be made through legitimate banking channels. However, cash</p><p>donations are still permitted even after the introduction of the</p><p>Electoral Bond Scheme;</p><p>b. The Central Government ignored the objections which were</p><p>raised by both the RBI and the ECI to the Electoral Bond Scheme;</p><p>c. The statutory amendments and the Electoral Bond Scheme</p><p>which mandates non-disclosure of information of electoral</p><p>funding are unconstitutional because:</p><p>i. They defeat the purpose of introducing provisions</p><p>mandating disclosure of information on political funding in</p><p>the RPA and the Companies Act which was to enhance</p><p>transparency in electoral funding;</p><p>ii. They violate Article 19(1)(a) which guarantees to the voter</p><p>the right to information concerning the affairs of the public</p><p>[2024] 2 S.C.R. 467</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>and the government.48 This includes the right to information</p><p>about financial contributions to political parties because the</p><p>Constitution through the Tenth Schedule recognizes that</p><p>political parties have a decisive control over the formation</p><p>of Government and voting by members of the Legislature</p><p>in the Legislative Assembly;</p><p>iii. They violate Article 21 because the non-disclosure of</p><p>information of political contributions promotes corruption49</p><p>and quid pro quo arrangements. The available data</p><p>indicates that more than ninety four percent of the total</p><p>electoral bonds are purchased in denominations of rupees</p><p>one crore. This indicates that bonds are purchased by</p><p>corporates and not individuals. The limited disclosure</p><p>clause in the Electoral Bond Scheme prevents investigating</p><p>agencies such as the Central Bureau of Investigation and</p><p>Enforcement Directorate from identifying corruption; and</p><p>d. They violate the rights of shareholders of Companies who are</p><p>donating money to political parties by preventing disclosure of</p><p>information to them; and</p><p>e. The statutory amendments and the Electoral Bond Scheme</p><p>subvert democracy and interfere with free and fair elections</p><p>because the huge difference in the funds received by ruling</p><p>parties in the States and Centre vitiates a level playing field</p><p>between different parties and between parties and independent</p><p>candidates.</p><p>31. Mr Kapil Sibal, learned senior counsel made the following submissions:</p><p>a. The amendments and the Electoral Bond Scheme skew free</p><p>and fair elections by permitting unlimited contributions to political</p><p>parties by corporate entities and removing the requirement of</p><p>disclosure of information about political funding;</p><p>b. Freedom of a voter in the negative connotation refers to the</p><p>freedom to cast their vote without interference and intimidation.</p><p>Freedom in the positive connotation includes the freedom to</p><p>48 Relied on PUCL v. Union of India, [2003] 2 SCR 1136 : (2003) 4 SCC 399; ADR v. Union of India, [2002]</p><p>3 SCR 696 : (2002) 5 SCC 294; Anjali Bhardwaj v. Union of India, [2019] 2 SCR 199 : (2019) 18 SCC 246</p><p>49 Relied on Kanwar Lal Gupta v. Amar Nath Chawla, [1975] 2 SCR 259 : 1975 SCC (3) 646</p><p>468 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>vote on the basis of complete and relevant information. This</p><p>includes information about financial contributions to political</p><p>parties;</p><p>c. The argument of the Union of India that Courts should show</p><p>judicial restraint is erroneous because the amendments in</p><p>question relate to the electoral process and do not pertain to</p><p>economic policy;</p><p>d. The presumption of constitutionality should not apply to</p><p>statutes which alter the ground rules of the electoral process.</p><p>The principle underlying the presumption of constitutionality is</p><p>that the legislature represents the will of the people and that</p><p>it is validly constituted through free and fair elections. It would</p><p>be paradoxical to accord a presumption of constitutionality to</p><p>the very laws or rules that set the conditions under which the</p><p>legislature comes into being50;</p><p>e. Corporate funding per se is violative of the Constitution because</p><p>corporate entities are not citizens and thus, are not entitled to</p><p>rights under Article 19(1)(a);</p><p>f. The funds contributed to the Electoral Bond Scheme can be</p><p>used in any manner and their use is not restricted to electoral</p><p>campaigns;</p><p>g. The Electoral Bond Scheme severs the link between elections</p><p>and representative democracy because those elected are</p><p>inclined to fulfill the wishes of the contributors and not the voters.</p><p>This could be through direct quid pro quo where an express</p><p>promise is made to enact a policy in favour of the donor and</p><p>indirect quid pro quo where there is an influence through access</p><p>to policy makers;</p><p>h. The Scheme promotes information asymmetry where the</p><p>information about political donations is not disclosed to voters</p><p>but the Central Government is privy to such information through</p><p>the State Bank of India which is the authorized bank under the</p><p>Scheme. The information asymmetry will ensure that a larger</p><p>portion of the donations would be made to the ruling party at the</p><p>50 Relied on Subash Chandra v. Delhi Subordinate Services Selection Board, [2009] 12 SCR 978 : (2009)</p><p>15 SCC 458</p><p>[2024] 2 S.C.R. 469</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Centre. According to the data, the political party at the center</p><p>has received fifty seven percent of the total contributions made</p><p>through electoral bonds;</p><p>i. The Electoral Bond Scheme skews the principle of one person,</p><p>one vote because it gives the corporates a greater opportunity</p><p>to influence political parties and electoral outcomes;</p><p>j. The amendment to Section 182(3) permits: (i) loss making</p><p>companies to contribute to political parties; (ii) unlimited</p><p>contributions to political parties enabling significant policy</p><p>influence; and (iii) non-disclosure of information on political</p><p>funding to shareholders;</p><p>k. The amendments permitting non-disclosure of information on</p><p>political funding are violative of the right to information under</p><p>Article 19(1)(a). The right to information on funding of political</p><p>parties is a natural consequence of the judgment of this Court</p><p>in ADR (supra) and PUCL (supra) because the underlying</p><p>principle in the judgments is that an informed voter is essential</p><p>for a functioning democracy. Information about funding to political</p><p>parties is necessary for an informed voter since the Symbols</p><p>Order 1968 and the provisions of the Tenth Schedule allow</p><p>political parties to influence legislative outcomes and policies;</p><p>l. The infringement of the right to information does not satisfy the</p><p>proportionality standard vis-à-vis the purpose of curbing black</p><p>money.Even if the argument that theElectoralBondScheme fulfills</p><p>the purpose is accepted, non-disclosure of information on political</p><p>funding is not the least restrictive means to achieve the purpose;</p><p>m. The infringement of the right to information does not satisfy the</p><p>proportionality standard vis-à-vis the purpose of guaranteeing</p><p>informational privacy because:</p><p>i. Protecting donor privacy is not a legitimate purpose.</p><p>There is no legitimate expectation of informational privacy</p><p>to political contributions. The argument that it lies at the</p><p>heart of privacy conflates speech with money. Secrecy of</p><p>voting cannot be equated to political donations because</p><p>while the former is an expression of political equality, the</p><p>latter is contrary to political equality because it depends</p><p>on the economic capacity of the contributor;</p><p>470 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>ii. Political funding is made to influence public policy. They</p><p>are public acts which are by their very nature subject to</p><p>public scrutiny; and</p><p>iii. Even if donor privacy is necessary, on a balance, the</p><p>public interest in free and fair elections trumps the private</p><p>interest in confidentiality. Further, this Court has to balance</p><p>between the possibility of victimization on the disclosure of</p><p>information and the infringement of the right to know; and</p><p>n. The amendment to Section 31 of the RBI Act is unconstitutional</p><p>because of excessive delegation since it does not set out the</p><p>contours of the Scheme.</p><p>32. Mr Shadan Farasat, learned counsel made the following submissions:</p><p>a. The Scheme does not effectively curb black money. Clause</p><p>14 of the Electoral Bond Scheme prohibits de jure trading of</p><p>the bonds. However, trading is de facto permissible. Nothing</p><p>prevents person A from purchasing the bond and trading it with</p><p>person B who pays through cash;</p><p>b. The right to information on political funding which is traceable to</p><p>Article 19(1)(a) can only be restricted on the grounds stipulated</p><p>in Article 19(2). The purposes of curbing black money and</p><p>recognizing donor privacy is not traceable to the grounds in</p><p>Article 19(2);</p><p>c. Even if the purposes are traceable toArticle 19(2), the Scheme is</p><p>unreasonable and disproportionate to the purpose of “increasing</p><p>political funding through banking channels and reducing political</p><p>funding through non-banking channels” because:</p><p>i. The purpose is not satisfied: The regime still permits cash</p><p>funding up to Rupees two thousand. The operation of the</p><p>Scheme increases anonymous funding through electoral</p><p>bonds at the cost of contributions through regular banking</p><p>channels;</p><p>ii. There is no rational nexus between the means and the</p><p>purpose;</p><p>iii. Other less restrictive means of contributing through banking</p><p>channels are available; and</p><p>[2024] 2 S.C.R. 471</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>iv. The fifth prong of the proportionality analysis as laid down</p><p>in Gujarat Mazdoor Sabha v. State of Gujarat51 and</p><p>Ramesh Chandra Sharma v. State of Uttar Pradesh52</p><p>that the legislation should have sufficient safeguard to</p><p>prevent abuse has also not been satisfied.</p><p>d. The statutory amendments and the Scheme are manifestly</p><p>arbitrary because (i) large scale corruption and quid pro quo</p><p>arrangements would go unidentified due to the non-disclosure</p><p>of information about political funding; (ii) they enable capture</p><p>of democracy by wealthy interests; and (iii) they infringe the</p><p>principle of ‘one person-one vote’ because a selected few</p><p>overpower the voice of the masses because of their economic</p><p>wealth;</p><p>e. The deletion of the limit on corporate contributions is</p><p>manifestly arbitrary53 because it (i) permits donations by loss</p><p>making companies; (ii) removes the control of shareholders</p><p>over the decisions of the Board; (iii) permits unlimited</p><p>contribution by corporates and thereby abrogates democratic</p><p>principles;</p><p>f. The provision permitting non-disclosure of funding by companies</p><p>is violative of the shareholders’ rights under:</p><p>i. Article 25 which includes the right of the shareholder to</p><p>know how the resources generated from their property are</p><p>utilized. Once a shareholder comes to know that a company</p><p>is financing a political party and their conscience does not</p><p>permit it, as an exercise of the right to conscience, the</p><p>shareholder should be entitled to sell those shares; and</p><p>ii. If the shareholder feels that the political contributions are</p><p>not a sound business decision, they must be entitled to</p><p>exit the business by selling the shares. The information</p><p>that would enable the shareholder to make such a decision</p><p>is not disclosed, thus, infringing upon their right under</p><p>Article 19(1)(g).</p><p>51 [2020] 13 SCR 886 : (2020) 10 SCC 459</p><p>52 [2023] 2 SCR 422 : 2023 SCC OnLine SC 162</p><p>53 Relied on Shayara Bano v. Union of India, [2017] 9 SCR 797 : (2017) 9 SCC 1</p><p>472 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>33. Mr Nizam Pasha, learned counsel made the following submissions:</p><p>a. The Electoral Bond Scheme and the amendments are arbitrary</p><p>as they permit Indian registered companies to purchase electoral</p><p>bonds without considering their ownership and control. This goes</p><p>against foreign investment laws in India, treating companies</p><p>owned or controlled by non-resident Indian citizens as ‘foreign</p><p>owned or controlled companies,’ without rational justification;</p><p>b. The Electoral Bond Scheme is arbitrary due to its discriminatory</p><p>and non-transparent nature. It contradicts existing laws requiring</p><p>transparency and verification of the beneficial ownership and</p><p>source of funds; and</p><p>c. The amendments to Section 29C of the RPA and Section 182</p><p>of the CompaniesAct serve no purpose other than perpetuating</p><p>illegal ends, as they exempt companies’ purchase of electoral</p><p>bonds from public disclosure. This fails to achieve the scheme’s</p><p>stated objective of curbing cash donations.</p><p>34. Mr Vijay Hansaria, learned senior counsel made the following</p><p>submissions:</p><p>a. The objects and reasons of the Election and Other Related</p><p>Laws (Amendment) Act 2003 which amended the Companies</p><p>Act 1956, IT Act 1961, and the RPA indicates that the</p><p>amendments were made to incentivize contributions through</p><p>banking channels. Thus, the amendments to Section 13A of</p><p>the Income Tax Act and Section 29C of the RPA are contrary</p><p>to the object of inserting Section 13A and Section 80GGB and</p><p>Section 80GGC of the Income Tax Act;</p><p>b. Since 1959, when companies were permitted to contribute to</p><p>political parties, all companies were required to mandatorily</p><p>disclose the total contributions made and the name of party</p><p>to which they have contributed. Further, ceiling limits for total</p><p>contribution by companies were prescribed. The Finance Act</p><p>2017 does away with these transparency requirements; and</p><p>c. International perspectives on political funding regulations,</p><p>including those from the United States, the United Kingdom,</p><p>Switzerland and Singapore, emphasize the importance of</p><p>transparency, disclosure, and reporting in political contributions.</p><p>[2024] 2 S.C.R. 473</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>These examples underscore the global consensus on</p><p>transparency in the political funding process.</p><p>35. Mr Sanjay R. Hegde, learned senior counsel made the following</p><p>submissions:</p><p>a. Public listed companies are subject to scrutiny since they raise</p><p>funds from the public. Information pertaining to the company is</p><p>essential to be brought to the public domain. This will enable</p><p>informed debates and discussions regarding the use of money</p><p>by such companies. Such information must particularly be made</p><p>available to shareholders to enable them to make an informed</p><p>choice with regard to trading of securities. Thus, the amendment</p><p>to the Companies Act which removes the requirement of</p><p>disclosure of information about political contributions is violative</p><p>of the right to information of shareholders which flows from</p><p>Article 19(1)(a);</p><p>b. Public listed companies should not be allowed to make</p><p>contributions without the consent of the majority of the</p><p>shareholders or the consent of three-fourths of shareholders;</p><p>c. Non-disclosure of information about political funding denies</p><p>shareholders the right to choice that flows from Article 21.</p><p>Shareholders are incapacitated from making a choice about</p><p>whether they wish to invest in shares of a company which has</p><p>contributed to a political party whose ideology that shareholder</p><p>does not agree with; and</p><p>d. The amendment to Section 182(3) perpetuates the pre-existing</p><p>inequality in power between shareholders and the Board/</p><p>Promoters/management and puts the shareholders in an even</p><p>weaker position violating the right to substantive equality under</p><p>Article 14.</p><p>36. Mr PB Suresh, learned counsel made the following submissions:</p><p>a. The Scheme and amendments violate Articles 14 and 15 by</p><p>disproportionately impacting regional political parties and political</p><p>parties which represent marginalised and backward sections</p><p>of the society. The representation of the backward classes is</p><p>low in the corporate sector. Thus, the Scheme has a disparate</p><p>impact on parties whose social base is derived from the SC/</p><p>STs and backward classes;</p><p>474 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>b. The presumption of constitutionality does not apply in full rigour</p><p>to electoral laws because the incumbent legislators have a</p><p>vested interest in shaping the laws that would make it easier</p><p>for them to be re-elected;</p><p>c. The removal of the cap on corporate donations has strengthened</p><p>the position of major political parties and created more barriers</p><p>for the entry of new political parties; and</p><p>d. Political parties have a right to know the funding sources of rival</p><p>political parties to enable them to critique it before the public.</p><p>ii. Submissions of Union of India</p><p>37. The learnedAttorney General forIndia made the following submissions:</p><p>a. Political parties are an integral product of a free and open society</p><p>and play an important role in the administration of the affairs</p><p>of the community. Accordingly, they are entitled to receive all</p><p>support, including financial contributions;</p><p>b. The Electoral Bond Scheme allows any person to transfer funds</p><p>to political parties of their choice through legitimate banking</p><p>channels instead of other unregulated ways such as direct</p><p>transfer through cash;</p><p>c. The Scheme ensures confidentiality of the contributions made</p><p>to political parties. The benefit of confidentiality to contributors</p><p>ensures and promotes contribution of clean money to political</p><p>parties;</p><p>d. Citizens do not have a general right to know regarding the</p><p>funding of political parties. Right to know is not a general right</p><p>available to citizens;</p><p>e. This Court has evolved the right to know for the specific</p><p>purpose of enabling and furthering the voter’s choice of electing</p><p>candidates free from blemish; and</p><p>f. The influence of contributions by companies to political parties</p><p>ought not to be examined by this Court. It is an issue of</p><p>democratic significance and should be best left to the legislature.</p><p>38. The learned Solicitor General of India made the following submissions:</p><p>a. The legal framework prior to the enactment of the Electoral Bond</p><p>Scheme was mostly cash-based which incentivized infusion of</p><p>[2024] 2 S.C.R. 475</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>black money into political parties, and consequently, into the</p><p>electoral process in India. The Electoral Bond Scheme is an</p><p>improvement on the prior legal framework;</p><p>b. Donors to a political party often apprehended retribution from</p><p>other political parties. Such apprehension incentivized donors</p><p>to contribute unaccounted money to political parties to avoid</p><p>identification and victimization by other political parties. The</p><p>Electoral Bond Scheme maintains the confidentiality of donors</p><p>and thereby incentivizes them to contribute clean money to</p><p>political parties;</p><p>c. In case the donor is a public company, they will have to declare</p><p>the amount contributed in their books of account without</p><p>disclosing the name of the political party. Similarly, the political</p><p>parties will also have to disclose the total amount received</p><p>through electoral bonds in their annual audited accounts filed</p><p>before the Election Commission of India. This framework ensures</p><p>a balance between clean money coming into the system as</p><p>against the right to information of citizens;</p><p>d. The state has a positive obligation to safeguard the privacy</p><p>of its citizens, which necessarily includes the citizens’ right to</p><p>political affiliation. The right of a buyer to purchase electoral</p><p>bonds without having to disclose their preference of political</p><p>party secures the buyer’s right to privacy;</p><p>e. The Electoral Bond Scheme has been enacted in pursuance</p><p>of a legitimate state interest - to shift from cash driven,</p><p>unregulated and unaccounted cash based political donations</p><p>to a regulated, digital and legal political donation framework.</p><p>The provisions of the Electoral Bond Scheme have a specific</p><p>object and purpose of curbing black money and protecting</p><p>donor privacy:</p><p>i. Clause 3(3) imposes a pre-condition that only a registered</p><p>political party which has secured at least 1 per cent of the</p><p>votes polled in the last general election would be eligible to</p><p>receive bonds. This provision ensures that ghost political</p><p>parties are barred from seeking and receiving political</p><p>funding;</p><p>476 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>ii. Clause 4 requires a buyer of electoral bonds to meet the</p><p>requisite KYC Norms. This ensures that only KYC compliant</p><p>persons are entitled to buy electoral bonds;</p><p>iii. The limited validity period of fifteen days ensures that the</p><p>bond is not used as a parallel currency;</p><p>iv. Clause 7(4) mandates the authorized bank to treat the</p><p>information furnished by a buyer as confidential which shall</p><p>not be disclosed to any authority, except when directed</p><p>by a competent court or upon registration of criminal case</p><p>by any law enforcement agency. This provision protects</p><p>the privacy and personal details of the buyer vis-à-vis the</p><p>state; and</p><p>v. Clause 11 mandates that all payments for the purchase</p><p>of electoral bonds shall be accepted through banking</p><p>channels. This provision curbs the circulation of black</p><p>money.</p><p>f. The right of a citizen to know how political parties are being</p><p>funded must be balanced against the right of a person to</p><p>maintain privacy of their political affiliations. Donating money to</p><p>one’s preferred party is a form political self-expression, which</p><p>lies at the heart of privacy;</p><p>g. Maintaining anonymity of donations to political parties is a part of</p><p>the concept of secret ballot because it enables a person to make</p><p>political choices without any fear of victimization or retaliation;</p><p>h. The right to information only operates against information in the</p><p>possession or in the knowledge of the state. It cannot operate</p><p>for seeking information not in the knowledge or possession of</p><p>the state;</p><p>i. The amendments to the RBI Act, RPA, and the IT Act are</p><p>intended to curb donations made by way of cash and other</p><p>means to political parties and secure the anonymity of donors;</p><p>j. The amendment to Section 182 of the Companies Act removes</p><p>the limitation of seven and a half percent of the net profits on</p><p>the amount contributed by political parties. The removal of the</p><p>contribution limit was intended to disincentivize creation of shell</p><p>companies;</p><p>[2024] 2 S.C.R. 477</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>k. This Court has recognized that the legislature has a wide</p><p>latitude in matters concerning economic policy. Further, the</p><p>mere possibility that the law might be abused cannot be a</p><p>ground for holding the provision procedurally or substantially</p><p>unreasonable; and</p><p>l. The fact that one party receives substantially more support</p><p>through donations than other parties cannot in itself be a legal</p><p>ground to challenge the validity of the Electoral Bond Scheme.</p><p>D. The Scope of Judicial Review</p><p>39. The Union of India submitted that this Court must exercise judicial</p><p>restraint while deciding the challenge to the Electoral Bond Scheme</p><p>and the statutory amendments because they relate to economic policy.</p><p>For this purpose, the Union of India relied on a series of decisions</p><p>where this Court has held that Courts must follow judicial restraint</p><p>in matters concerning economic and financial policy.54</p><p>40. It is a settled position of law that Courts must adopt a less stringent</p><p>form of judicial review while adjudicating challenges to legislation</p><p>and executive action which relate to economic policy as compared</p><p>to laws relating to civil rights such as the freedom of speech or the</p><p>freedom of religion.55 More recently, in Swiss Ribbons v. Union of</p><p>India56, this Court while deciding a challenge to the constitutional</p><p>validity of provisions of the Insolvency and Bankruptcy Code 2016</p><p>observed that the legislature must be given “free play” in the joints</p><p>to experiment with economic policy. This position was also followed</p><p>in Pioneer Urban Land and Infrastructure Limited v. Union of</p><p>India57, where amendments to the Insolvency and Bankruptcy Code</p><p>were challenged.</p><p>41. The question is whether the amendments under challenge relate</p><p>to economic policy. While deciding on a constitutional challenge,</p><p>the Court does not rely on the ipse dixit of the government, that a</p><p>54 Rustom Cavasjee Cooper v. Union of India, [1970] 3 SCR 530 : (1970) 1 SCC 248; R.K Garg v. Union</p><p>of India, [1982] 1 SCR 947 : (1981) 4 SCC 675; Premium Granites v. State of Tamil Nadu, [1994] 1 SCR</p><p>579 : (1994) 2 SCC 691; Peerless General Finance and Investment Co v. RBI, [1992] 1 SCR 406 : (1992)</p><p>2 SCC 343, BALCO Employees Union v. Union of India, [2001] Suppl. 5 SCR 511 : (2002) 2 SCC 333.</p><p>55 RK Garg v. Union of India, [1982] 1 SCR 947 : (1981) 4 SCC 675 [8]; See Balco Employees Union v.</p><p>Union of India, [2001] Suppl. 5 SCR 511 : (2002) 2 SCC 333; DG of Foreign Trade v. Kanak Exports,</p><p>(2016) 2 SCC 226</p><p>56 [2019] 3 SCR 535 : (2019) 4 SCC 17</p><p>57 [2019] 10 SCR 381 : (2019) 8 SCC 416</p><p>478 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>legislation is an economic legislation. Courts before classifying the</p><p>policy underlying a legislation as economic policy must undertake</p><p>an analysis of the true nature of the law. The amendment to Section</p><p>31 of the RBI Act can be classified as a financial provision to the</p><p>extent that it seeks to introduce a new form of a bearer banking</p><p>instrument. However, any resemblance to an economic policy ends</p><p>there. The amendments in question can be clubbed into two heads:</p><p>first, provisions mandating non-disclosure of information on electoral</p><p>financing; and second, provisions permitting unlimited corporate</p><p>funding to political parties. Both these amendments relate to the</p><p>electoral process.</p><p>42. In fact, it is evident from the correspondence between the Ministry</p><p>of Finance and RBI (which have been summarized above) on the</p><p>apprehensions of the Bonds being used as an alternative currency</p><p>that the Bonds were introduced only to curb black money in the</p><p>electoral process, and protect informational privacy of financial</p><p>contributors to political parties. The Union of India has itself classified</p><p>the amendments as an “electoral reform”. Thus, the submission of</p><p>the Union of India that the amendments deal with economic policy</p><p>cannot be accepted.</p><p>43. The second argument that this Court needs to address is to determine</p><p>the scope of judicial review to decide this batch of petitions. The</p><p>petitioners submitted that the presumption of constitutionality does</p><p>not apply since the Scheme deals with the electoral process. The</p><p>premise of the argument is that the presumption of constitutionality is</p><p>based on the principle that the elected body must be trusted to make</p><p>decisions and that principle should not be applied when the rules</p><p>changing the electoral process are themselves in challenge.58 It was</p><p>submitted that in such cases if a prima facie case of constitutional</p><p>violation is made out, the State bears a heavy burden of justifying</p><p>the law.</p><p>44. The presumption of constitutionality is based on two premises. First,</p><p>it is based on democratic accountability, that is, legislators are elected</p><p>representatives who are aware of the needs of the citizens and are</p><p>58 For this purpose, the petitioners referred to the representation-reinforcement model of judicial review</p><p>propounded by John Hart Ely in his book Democracy and Distrust: A Theory of Judicial Review (Harvard</p><p>University Press, 2002) and the judgment of this Court in Subash Chandra v. Delhi Subordinate Service</p><p>Selection Board, [2009] 12 SCR 978 : (2009) 15 SCC 458</p><p>[2024] 2 S.C.R. 479</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>best placed to frame policies to resolve them59. Second, legislators are</p><p>privy to information necessary for policy making which the Courts as</p><p>an adjudicating authority are not. However, the policy underlying the</p><p>legislation must not violate the freedoms and rights which are entrenched</p><p>in Part III of the Constitution and other constitutional provisions. It is</p><p>for this reason that previous judgments of this Court have held that the</p><p>presumption of constitutionality is rebutted when a prima facie case of</p><p>violation of a fundamental right is established. The onus then shifts on</p><p>the State to prove that the violation of the fundamental right is justified.</p><p>In Dharam Dutt v. Union of India60, a two-Judge Bench of this Court</p><p>elucidated the principle in the following terms:</p><p>“49. In spite of there being a general presumption in favour</p><p>of the constitutionality of the legislation, in a challenge</p><p>laid to the validity of any legislation allegedly violating any</p><p>right or freedom guaranteed by clause (1) of Article 19 of</p><p>the Constitution, on a prima facie case of such violation</p><p>having been made out, the onus would shift upon the</p><p>respondent State to show that the legislation comes within</p><p>the permissible limits of the most relevant out of clauses</p><p>(2) to (6) of Article 19 of the Constitution, and that the</p><p>restriction is reasonable. The Constitutional Court would</p><p>expect the State to place before it sufficient material</p><p>justifying the restriction and its reasonability. On the State</p><p>succeeding in bringing the restriction within the scope of</p><p>any of the permissible restrictions, such as, the sovereignty</p><p>and integrity of India or public order, decency or morality</p><p>etc. the onus of showing that restriction is unreasonable</p><p>would shift back to the petitioner. Where the restriction on</p><p>its face appears to be unreasonable, nothing more would</p><p>be required to substantiate the plea of unreasonability. Thus</p><p>the onus of proof in such like cases is an ongoing shifting</p><p>process to be consciously observed by the Court called</p><p>upon to decide the constitutional validity of a legislation</p><p>by reference to Article 19 of the Constitution.”</p><p>59 See State of Bombay v. FN Balsara, [1951] 1 SCR 682</p><p>60 [2003] Supp. 6 SCR 151 : AIR 2004 SC 1295; Also see Ramlila Maidan Incident, In re, [2012] 4 SCR</p><p>971 : (2012) 5 SCC 1; State of Bombay v. FN Balsara, [1951] 1 SCR 682; Ameerunissa Begum v.</p><p>Mahboob Begum, [1953] 1 SCR 404 : (1952) 2 SCC 697</p><p>480 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>45. The broad argument of the petitioners that the presumption of</p><p>constitutionality should not apply to a specific class of statutes, that</p><p>is, laws which deal with electoral processes cannot be accepted.</p><p>Courts cannot carve out an exception to the evidentiary principle which</p><p>is available to the legislature based on the democratic legitimacy</p><p>which it enjoys. In the challenge to electoral law, like all legislation,</p><p>the petitioners would have to prima facie prove that the law infringes</p><p>fundamental rights or constitutional provisions, upon which the onus</p><p>would shift to the State to justify the infringement.</p><p>E. The close association of politics and money</p><p>46. The law does not bar electoral financing by the public. Both corporates</p><p>and individuals are permitted to contribute to political parties. The</p><p>legal regime has not prescribed a cap on the financial contributions</p><p>which can be received by a political party or a candidate contesting</p><p>elections. However, Section 77 of the RPA read with Rule 90 of</p><p>the Conduct of Election Rules 196161 prescribes a cap on the total</p><p>expenditure which can be incurred by a candidate or their agent in</p><p>connection with Parliamentary and Assembly elections between the</p><p>date on which they are nominated and the date of the declaration of</p><p>the result. The maximum limit for the expenditure in a Parliamentary</p><p>constituency is between Rupees seventy five lakhs to ninety five</p><p>lakhs depending on the size of the State and the Union Territory.62</p><p>The maximum limit of election expenses in anAssembly constituency</p><p>varies between rupees twenty eight lakhs and forty lakhs depending</p><p>on the size of the State.63 However, the law does not prescribe any</p><p>limits for the expenditure by a political party. Explanation 1 to</p><p>Section 77 stipulates that the expenditure incurred by “leaders of a</p><p>political party” on account of travel for propagating the programme</p><p>61 Section 77 of the RPA read with Section 169 provides the Central Government in consultation with the</p><p>Election Commission, the power to prescribe the amount over which the total expenditure incurred by</p><p>the candidate or their agent in connection with Parliamentary election and Assembly election shall not</p><p>be exceeded. The total expenditure cap is prescribed in Rule 90 of the Conduct of Election Rules 1961</p><p>which is amended from time to time.</p><p>62 The expenditure limit is capped at seventy-five Lakhs for the states of Arunachal Pradesh, Goa, and</p><p>Sikkim, and the Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli</p><p>and Daman and Diu, Lakshadweep, Puducherry, and Ladakh. For the remaining States and Union</p><p>Territories, the expenditure limit is capped at ninety-five Lakhs.</p><p>63 For State Assembly elections, the expenditure is capped at twenty-eight lakhs for the States of Arunachal</p><p>Pradesh, Goa, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura. Amongst the Union</p><p>Territories, the expenditure is capped at twenty-eight Lakhs for Puducherry and forty Lakhs for Delhi and</p><p>Jammu and Kashmir.</p><p>[2024] 2 S.C.R. 481</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>of the political party shall not be deemed to be election expenditure.</p><p>Thus, there is an underlying dicohotomy in the legal regime. The</p><p>law does not regulate contributions to candidates. It only regulates</p><p>contributions to political parties. However, expenditure by the</p><p>candidates and not the political party is regulated. Be that as it may,</p><p>the underlying understanding of the legal regime regulating electoral</p><p>finance is that finance is crucial for the sustenance and progression</p><p>of electoral politics.</p><p>47. It is believed that money does not vote but people do. However,</p><p>studies have revealed the direct and indirect influence of money on</p><p>electoral politics.64 The primary way through which money directly</p><p>influences politics is through its impact on electoral outcomes.</p><p>48. One way in which money influences electoral outcomes is through</p><p>vote buying. Another way in which money influences electoral</p><p>outcomes is through incurring electoral expenditure for political</p><p>campaigns. Campaigns have a measurable influence on voting</p><p>behavior because of the impact of television advertisements,</p><p>campaign events, and personal canvassing.65 An informed voter</p><p>is one who is assumed to be aware of the policy positions of the</p><p>candidate or the party they represent and votes on a thorough</p><p>analysis of the pros and cons of electing a candidate. On the other</p><p>hand, an uninformed voter is assumed to not possess knowledge of</p><p>the policy positions of the candidates.66 Campaigns have an effect</p><p>on the voting behavior of both an informed and an uninformed voter.</p><p>The impact of campaigns on an informed voter is supplementary</p><p>because campaign activities enable an informed voter to be further</p><p>informed about the policies and ideology of the political party and the</p><p>candidate, and their views on specific issues. Electoral campaigns</p><p>reduce the uncertainty about candidates for an informed voter.</p><p>For an uninformed voter, electoral campaigns play a much more</p><p>persuasive role in influencing electoral behavior because campaigns</p><p>throw more light on candidates.</p><p>64 See Conrad Foreman, Money in Politics: Campaign Finance and its Influence over the Political Process</p><p>and Public Policy, 52 UIC J. Marshall L. Rev. 185 (2018)</p><p>65 See D Sunshine Hillygus, Campaign Effects on Vote Choice in “The Oxford Handbook of American</p><p>Elections and Political Behavior” (Ed. Jan E. Leighley 2010)</p><p>66 See David P. Baron, Electoral Competition with informed and uninformed voters, American Political</p><p>Science Review, Vol. 88, No. 1 March 1994</p><p>482 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>49. Political parties use innovative techniques of campaigning by going</p><p>beyond the traditional methods of advertisements, door-to-door</p><p>campaigning and processions to increase outreach. For example,</p><p>political parties sponsor religious festivals and community fairs,</p><p>organize sporting matches and literary competitions where cash</p><p>awards are given.67 These outreach techniques leave a lasting</p><p>impression on the minds of uninformed voters. Thus, enhanced</p><p>campaign expenditure proportionately increases campaign outreach</p><p>which influences the voting behavior of voters.</p><p>50. Money also creates entry-barriers to politics by limiting the kind of</p><p>candidates and political parties which enter the electoral fray. Studies</p><p>have shown that money influences the selection of candidates by</p><p>political parties because parties would prefer fielding candidates who</p><p>would be able to substantially self-finance their campaign without</p><p>relying on the party for finance.68 In this manner, candidates who</p><p>belong to socio-economically weaker sections face added barriers</p><p>because of the close association of money and politics.</p><p>51. Money also excludes parties which are new to the electoral fray, and in</p><p>particular, parties representing the cause of marginalized communities.</p><p>Political parties which do not have enough finance have had to form</p><p>electoral coalitions with other established political parties who would in</p><p>exchange shoulder a lion’s share of the campaign expenditure of the</p><p>newly established political party extending to costs related to coalition</p><p>propaganda, print and digital advertising, vehicle and equipment hire,</p><p>political rallies, food transportation, and daily expenditure for party</p><p>cadres69. The compromises which newly formed political parties have</p><p>to make lead to a dilution of the ideology of the party in exchange of</p><p>its political sustenance. In this manner, money creates an exclusionary</p><p>impact by reducing the democratic space for participation for both</p><p>candidates and newer and smaller political parties.</p><p>52. The judgments of this Court have recognized the influence of</p><p>money on politics. They take a critical view of the role played by</p><p>67 Michael A. Collins, Navigating Fiscal Constraints in “Costs of Democracy: Political Finance in India”</p><p>(edited by Devesh Kapur and Milan Vaishnav) OUP 2018</p><p>68 See Neelanjan Sircar, Money in Elections: the Role of Personal Wealth in Election Outcomes in Costs of</p><p>Democracy: Political Finance in India (ed. By Devesh Kapur and Milan Vaishnav) OUP 2018</p><p>69 Michael A. Collins, Navigating Fiscal Constraints in “Costs of Democracy: Political Finance in India”</p><p>(edited by Devesh Kapur and Milan Vaishnav) OUP 2018</p><p>[2024] 2 S.C.R. 483</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>big business and “big money” in the electoral process in India. The</p><p>decision in Kanwar Lal Gupta v. Amar Nath Chawla,70 notices that</p><p>money serves as an asset for advertising and other forms of political</p><p>solicitation that increases a candidate’s exposure to the public. The</p><p>court observed that the availability of large funds allows a candidate</p><p>or political party “significantly greater opportunity for the propagation</p><p>of its programme” in comparison to their political rivals. Such political</p><p>disparity, it was observed, results in “serious discrimination between</p><p>one political party or individual and another on the basis of money</p><p>power and that in turn would mean that “some voters are denied an</p><p>‘equal’ voice and some candidates are denied an ‘equal chance’”.</p><p>53. In Vatal Nagaraj v. R Dayanand Sagar,71 Justice V R Krishna Iyer</p><p>noted that candidates often evade the legal ceiling on expenditure</p><p>by using big money channelled by political parties. The court</p><p>acknowledged that large monetary inputs are “necessary evils of</p><p>modern elections”, which they hoped would be eradicated sooner</p><p>rather than later. In P Nalla Thampy Terah v. Union of India,72</p><p>a Constitution Bench of this Court was called upon to decide the</p><p>validity of Explanation 1 to Section 77 of the RPA which allowed</p><p>unlimited channelling of funds by political parties for the election of</p><p>their candidates. While upholding the constitutional validity of the</p><p>explanation, the Court noted that the petitioners were justified in</p><p>criticizing the statute for “diluting the principle of free and fair elections.”</p><p>54. In Common Cause (A Registered Society) v. Union of India,73</p><p>this Court dwelt on the ostentatious use of money by political parties</p><p>in elections to further the prospects of candidates set up by them.</p><p>Justice Kuldip Singh described the role of money in the electoral</p><p>process, which is relevant for contextualizing the issue:</p><p>“18. … [The General Elections] is an enormous exercise</p><p>and a mammoth venture in terms of money spent. Hundreds</p><p>and thousands of vehicles of various kinds are pressed</p><p>on to the roads in 543 parliamentary constituencies on</p><p>behalf of thousands of aspirants to power, many days</p><p>70 [1975] 2 SCR 259 : (1975) 3 SCC 646</p><p>71 [1975] 2 SCR 384 : (1975) 4 SCC 127</p><p>72 [1985] Supp. 1 SCR 622 : 1985 Supp SCC 189</p><p>73 [1996] 3 SCR 1208 : (1996) 2 SCC 752</p><p>484 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>before the general elections are actually held. Millions</p><p>of leaflets and many million posters are printed and</p><p>distributed or pasted all over the country. Banners by the</p><p>lakhs are hoisted. Flags go up, walls are painted, and</p><p>hundreds of thousands of loudspeakers play out the loud</p><p>exhortations and extravagant promises. VIPs and VVIPs</p><p>come and go, some of them in helicopters and air-taxis.</p><p>The political parties in their quest for power spend more</p><p>than one thousand crore of rupees on the General Election</p><p>(Parliament alone), yet nobody accounts for the bulk of</p><p>money so spent and there is no accountability anywhere.</p><p>Nobody discloses the source of the money. There are no</p><p>proper accounts and no audit. From where does the money</p><p>come from nobody knows. In a democracy where rule of</p><p>law prevails this naked display of black money, by violating</p><p>the mandatory provisions of law, cannot be permitted.”</p><p>55. The challenge to the statutory amendments and the Electoral Bond</p><p>Scheme cannot be adjudicated in isolation without a reference to</p><p>the actual impact of money on electoral politics. This Court has in</p><p>numerous judgments held that the effect and not the object of the</p><p>law on fundamental rights and other constitutional provisions must</p><p>be determined while adjudicating its constitutional validity. The effect</p><p>of provisions dealing with electoral finance cannot be determined</p><p>without recognizing the influence of money on politics. Therefore,</p><p>we must bear in mind the nexus between money and electoral</p><p>democracy while deciding on the issues which are before us in this</p><p>batch of petitions.</p><p>F. The challenge to non-disclosure of information on electoral</p><p>financing</p><p>56. Section 29C of the RPAas amended by the FinanceAct 2017 stipulates</p><p>that the political party need not disclose financial contributions</p><p>received through electoral bonds. Similarly, Section 13A of the IT Act</p><p>as amended does not require the political party to maintain a record</p><p>of contributions for contributions received through electoral bonds.</p><p>Section 182 of the Companies Act 2013 as amended by the Finance</p><p>Act 2017 by which the earlier requirement of disclosure of particulars</p><p>of the amount contributed by companies to political parties in their</p><p>profit and loss accounts was deleted. The company which has made</p><p>[2024] 2 S.C.R. 485</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>financial contributions is now only required to disclose the total amount</p><p>contributed to political parties without disclosing specific particulars</p><p>about the political party to which the contribution was made.</p><p>57. Maintaining the anonymity of the contributor is a crucial and primary</p><p>characteristic of the Electoral Bond Scheme. The electoral bond is</p><p>defined as a bearer banking instrument which does not carry the name</p><p>of the buyer.74 The law mandates the authorized bank to not disclose</p><p>the information furnished by the buyer except when demanded by a</p><p>competent court or upon the registration of a criminal case by law</p><p>enforcement agencies.75</p><p>58. The amendments introduced by the Finance Act 2017 and the</p><p>Electoral Bond Scheme are challenged on the ground that the nondisclosure of information about electoral contributions is violative of</p><p>the right to information of the voter which is traceable to Article 19(1)</p><p>(a) of the Constitution.</p><p>i. Infringement of the right to information of the voter</p><p>59. This segment of the judgment will discuss whether the amendments</p><p>and the Electoral Bond Scheme infringe the right to information of</p><p>the voter. For this purpose, we will discuss the scope of the right</p><p>to information, and whether the right extends to information on</p><p>contributions to political parties.</p><p>a. The scope of Article 19(1)(a): tracing the right to information</p><p>60. Article 19(1)(a) has been held to guarantee the right to information to</p><p>citizens. The judgments of this Court on the right to information can</p><p>be divided into two phases. In the first phase, this Court traced the</p><p>right to information to the values of good governance, transparency</p><p>and accountability. These judgments recognize that it is the role of</p><p>citizens to hold the State accountable for its actions and inactions</p><p>and they must possess information about State action for them to</p><p>accomplish this role effectively.</p><p>61. In the first phase, this Court delineated the scope of the right to</p><p>information in the context of deciding the disclosure of evidence</p><p>relating to affairs of the State. Provisions of the Indian Evidence Act</p><p>74 Electoral Bond Scheme, Clause 2(a)</p><p>75 Electoral Bond Scheme, Clause 7(4)</p><p>486 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>stipulate that evidence which is relevant and material to proceedings</p><p>need not be disclosed to the party if the disclosure would violate</p><p>public interest.76 In the 1960’s, this Court framed the issue of</p><p>disclosure of documents related to the affairs of the State in terms</p><p>of a conflict between public interest and private interest. This Court</p><p>observed that the underlying principle in the provisions of the Indian</p><p>Evidence Act bearing on the disclosure of evidence related to the</p><p>affairs of the State is that if such disclosure is denied, it would</p><p>violate the private interest of the party.77 So, when a party seeks</p><p>the disclosure of documents, and when such disclosure is denied</p><p>on the ground that it would violate public interest, there is a conflict</p><p>between private interest and public interest. In subsequent cases,</p><p>the courts cast the principle underlying the provisions of disclosure</p><p>in the Indian Evidence Act as a conflict between two conceptions</p><p>of public interest. This Court held that disclosure of information aids</p><p>the party to the proceedings. But beyond that, disclosure also serves</p><p>the public interest in the administration of justice.78</p><p>62. In State of Uttar Pradesh v. Raj Narain79, the respondent sought to</p><p>summon documents in an election petition. The State made a claim</p><p>of privilege from disclosure of documents. In his concurring opinion in</p><p>the Constitution Bench, Justice KK Mathew observed that there is a</p><p>public interest in the impartial administration of justice which can only</p><p>be secured by the disclosure of relevant and material documents.</p><p>The learned Judge reaffirmed this proposition by tracing the right to</p><p>information to Article 19(1)(a) of the Constitution:</p><p>“74. In a Government of responsibility like ours, where</p><p>all the agents of the public must be responsible for their</p><p>conduct, there can be but few secrets. The people of this</p><p>country have a right to know every public act, everything</p><p>that is done in a public way, by their public functionaries.</p><p>They are entitled to know the particulars of every public</p><p>transaction in all its bearing. The right to know, which is</p><p>derived from the concept of freedom of speech, though not</p><p>76 Indian Evidence Act 1872, Section 124</p><p>77 See State of Punjab v. Sodhi Sukhdev Singh, [1961] 2 SCR 371 : (1961) 2 SCR 371 [13]</p><p>78 See State of Punjab v. Sodhi Sukhdev Singh, [1961] 2 SCR 371 : (1961) 2 SCR 371 [Subba Rao J]</p><p>79 [1975] 3 SCR 333 : (1975) 4 SCC 428</p><p>[2024] 2 S.C.R. 487</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>absolute, is a factor which should make one wary, when</p><p>secrecy is claimed for transactions which can, at any rate,</p><p>have no repercussion on public security.[…]”</p><p>63. This principle was further elucidated in SP Gupta v. Union of</p><p>India80. The Union of India claimed immunity against the disclosure</p><p>of the correspondence between the Law Minister, the Chief Justice</p><p>of the High Court of Delhi, and the Chief Justice of India on the</p><p>reappointment of Additional Judges. Justice P N Bhagwati while</p><p>discussing the position of law on claims of non-disclosure, observed</p><p>that the Constitution guarantees the “right to know” which is necessary</p><p>to secure “true facts” about the administration of the country. The</p><p>opinion recognised accountability and transparency of governance</p><p>as important features of democratic governance. Democratic</p><p>governance, the learned Judge remarked, is not restricted to voting</p><p>once in every five years but is a continuous process by which the</p><p>citizens not merely choose the members to represent themselves but</p><p>also hold the government accountable for their actions and inactions</p><p>for which citizens need to possess information81.</p><p>64. Our discussion indicates that the first phase of the jurisprudence on</p><p>the right to information in India focussed on the close relationship</p><p>between the right and open governance. The judgments in this phase</p><p>were premised on the principle that the citizens have a duty to hold</p><p>the government of the day accountable for their actions and inactions,</p><p>and they can effectively fulfil this duty only if the government is open</p><p>and not clothed in secrecy.</p><p>65. In the second phase of the evolution of the jurisprudence on the right</p><p>to information, this Court recognised the importance of information to</p><p>form views on social, cultural and political issues, and participate in</p><p>and contribute to discussions.82 Courts recognised that the relevance</p><p>of information is to not only to hold the government accountable but</p><p>also to discover the truth in a marketplace of ideas which would</p><p>80 1981 Supp SCC 87</p><p>81 Also see Dinesh Trivedi v. Union of India, [1997] 3 SCR 93 : (1997) 4 SCC 306 where this Court observed</p><p>that sunlight is the best disinfectant.</p><p>82 Secy., Ministry of Information & Broadcasting, Govt. of India v. Cricket Assn. of Bengal, [1995] 1 SCR</p><p>1036 : (1995) 2 SCC 161; Indian Express Newspapers v. Union of India, [1985] 2 SCR 287 : AIR 1986</p><p>SC 515 ; Romesh Thappar v. State of Madras, [1950] 1 SCR 594 : AIR 1950 SC 124</p><p>488 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>ultimately secure the goal of self-development.83 This Court also</p><p>recognised that freedom of speech and expression includes the</p><p>right to acquire information which would enable people to debate</p><p>on social, moral and political issues. These debates would not only</p><p>foster the spirit of representative democracy but would also curb the</p><p>prevalence of misinformation and monopolies on information. Thus,</p><p>in the second phase, the Court went beyond viewing the purpose of</p><p>freedom of speech and expression through the lens of holding the</p><p>government accountable, by recognising the inherent value in effective</p><p>participation of the citizenry in democracy. This Court recognised</p><p>that effective participation in democratic governance is not just a</p><p>means to an end but is an end in itself. This interpretation of Article</p><p>19(1)(a) is in line with the now established position that fundamental</p><p>freedoms and the Constitution as a whole seek to secure conditions</p><p>for self-development at both an individual and group level.84 A crucial</p><p>aspect of the expansion of the right to information in the second</p><p>phase is that right to information is not restricted to information</p><p>about state affairs, that is, public information. It includes information</p><p>which would be necessary to further participatory democracy in other</p><p>forms and is not restricted to information about the functioning of</p><p>public officials. The right to information has an instrumental exegesis,</p><p>which recognizes the value of the right in facilitating the realization</p><p>of democratic goals. But beyond that, the right to information has an</p><p>intrinsic constitutional value; one that recognizes that it is not just a</p><p>means to an end but an end in itself.</p><p>b. Right to information of a voter: exploring the judgments in ADR</p><p>and PUCL</p><p>66. In Union of India v. Association for Democratic Reforms85</p><p>(“ADR”), this Court traced the right of voters to have information about</p><p>the antecedents, including the criminal past, of candidates contesting</p><p>elections, to Article 19(1)(a) of the Constitution. In ADR (supra),</p><p>proceedings under Article 226 of the Constitution were instituted</p><p>before the High Court of Delhi seeking a direction to implement the</p><p>Law Commission’s recommendations to (a) debar candidates from</p><p>83 DC Saxena v. Hon’ble The Chief Justice of India, [1996] Supp. 3 SCR 677 : (1996) 5 SCC 216 [29]</p><p>84 See Supriyo v. Union of India, 2023 INSC 920 [213, 214]</p><p>85 [2002] 3 SCR 696 : (2002) 5 SCC 294.</p><p>[2024] 2 S.C.R. 489</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>contesting elections if charges have been framed against them by a</p><p>Court in respect of certain offences; and (b) ensure that candidates</p><p>furnish details regarding criminal cases which are pending against</p><p>them. The High Court held that the Court cannot direct Parliament to</p><p>implement the recommendations of the Law Commission. However,</p><p>the High Court directed the ECI to secure information relating to (a)</p><p>the details of cases in which a candidate is accused of any offences</p><p>punishable with imprisonment;(b) assets possessed by a candidate,</p><p>their spouse and dependents; (c) facts bearing on the candidate’s</p><p>competence, capacity, and suitability for representing the people;</p><p>and (d) any other information which ECI considers necessary for</p><p>judging the capacity of the candidate fielded by the political party.</p><p>67. The Union of India appealed against the decision of the High Court</p><p>before this Court. This Court held that voters have a right to be</p><p>sufficiently informed about candidates so as to enable them to exercise</p><p>their democratic will through elections in an intelligent manner. Such</p><p>information was held to be necessary for elections to be conducted</p><p>in a “free and fair manner”:</p><p>“34. …the members of a democratic society should be</p><p>sufficiently informed so that they may influence intelligently</p><p>the decisions which may affect themselves and this would</p><p>include their decision of casting votes in favour of a</p><p>particular candidate. If there is a disclosure by a candidate</p><p>as sought for then it would strengthen the voters in taking</p><p>appropriate decision of casting their votes.</p><p>[…] we fail to understand why the right of a citizen/voter — a</p><p>little man — to know about the antecedents of his candidate</p><p>cannot be held to be a fundamental right underArticle 19(1)</p><p>(a). In our view, democracy cannot survive without free and</p><p>fair election, without free and fairly informed voters. Votes</p><p>cast by uninformed voters in favour of X or Y candidate</p><p>would be meaningless.As stated in the aforesaid passage,</p><p>one-sided information, disinformation, misinformation and</p><p>non-information, all equally create an uninformed citizenry</p><p>which makes democracy a farce. Therefore, casting of a</p><p>vote by a misinformed and non-informed voter or a voter</p><p>having one-sided information only is bound to affect the</p><p>democracy seriously. Freedom of speech and expression</p><p>490 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>includes right to impart and receive information which</p><p>includes freedom to hold opinions.”</p><p>68. This Court rejected the argument that information about a candidate</p><p>contesting elections cannot be compelled to be disclosed because</p><p>it is not “public information”. The three-Judge Bench held that</p><p>information that candidates are required to disclose is only limited to</p><p>aiding the voters in assessing whether they could cast their vote in a</p><p>candidate’s favour. The Court observed that the criminal background</p><p>of a candidate and assets of the candidate (through which it could</p><p>be assessed if the candidate has amassed wealth through corruption</p><p>when they were elected previously) would aid the voters to cast their</p><p>vote in an informed manner. This Court directed the ECI to call for</p><p>the following information on affidavit as a part of nomination:</p><p>a. Whether the candidate has been convicted, acquitted or</p><p>discharged of any criminal offence in the past and if convicted,</p><p>whether they are punished with imprisonment or fine;</p><p>b. In the six months prior to the filling of nomination papers,</p><p>whether the candidate was accused in any pending case for an</p><p>offence punishable with imprisonment for two years or more,</p><p>and in which a charge is framed or cognizance is taken by the</p><p>court of law;</p><p>c. The assets (immovable, movable, bank balances and others)</p><p>of a candidate and of his/her spouse and that of dependents;</p><p>d. Liabilities, if any, particularly whether there are any over dues</p><p>to any public financial institution or government dues; and</p><p>e. The educational qualifications of the candidate.</p><p>69. This Court observed that the ECI can ask candidates to disclose</p><p>information about the expenditure incurred by political parties to</p><p>maintain the purity of elections.86 However, the operative portion of</p><p>the judgment did not reflect this observation.</p><p>86 Paragraph 64(4): “To maintain the purity of elections and in particular to bring transparency in the process</p><p>of election, the Commission can ask the candidates about the expenditure incurred by the political</p><p>parties and this transparency in the process of election would include transparency of a candidate who</p><p>seeks election or re-election. In a democracy, the electoral process has a strategic role. The little man of</p><p>this country would have basic elementary right to know full particulars of a candidate who is to represent</p><p>him in Parliament where laws to bind his liberty and property may be enacted.”</p><p>[2024] 2 S.C.R. 491</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>70. Pursuant to the decision of this Court in ADR (supra), Parliament</p><p>amended the RPA to incorporate some of the directions issued</p><p>by this Court.87 Section 33-B of RPA stipulated that the candidate</p><p>need not disclose any other information (other than the information</p><p>required by law) notwithstanding any judgment. In PUCL v. Union</p><p>of India88, proceedings were initiated before this Court under Article</p><p>32 for challenging Section 33-B of the RPA. Justice M B Shah,</p><p>writing for the majority, noted that the decision of the three-Judge</p><p>Bench in ADR (supra) tracing the right to know the antecedents of</p><p>candidates contesting elections had attained finality and Section</p><p>33-B was unconstitutional because it had the effect of rendering</p><p>the judgment of this Court inoperative. The learned Judge on an</p><p>independent interpretation also held that the right to information of</p><p>a voter is a facet of Article 19(1)(a).89</p><p>71. Justice Venkatarama Reddi observed in his concurring opinion</p><p>that there are two postulates which govern the right to vote : first,</p><p>the formulation of an opinion about candidates, and second, the</p><p>expression of choice based on the opinion formulated by casting</p><p>votes in favour of a preferred candidate. A voter must possess</p><p>relevant and essential information that would enable them to evaluate</p><p>a candidate and form an opinion for the purpose of casting votes.90</p><p>The learned Judge observed that the Constitution recognises the</p><p>right of a voter to know the antecedents of a candidate though the</p><p>right to vote is a statutory right91 because the action of voting is a</p><p>form of expression protected by Article 19(1)(a):</p><p>“Though the initial right cannot be placed on the pedestal</p><p>of a fundamental right, but, at the stage when the voter</p><p>goes to the polling booth and casts his vote, his freedom</p><p>to express arises. The casting of vote in favour of one</p><p>87 Section 33-A of the RPA required the candidate to furnish the following information:</p><p>(a) He is accused of any offence punishable with imprisonment for two years or more in a pending</p><p>case in which a charge has been framed by the court of competent jurisdiction; and</p><p>(b) He has been convicted of an offence other than any offence referred to in sub-section (1) or subsection (2), or covered in sub-section (3), of Section 8 and sentenced to imprisonment for one</p><p>year or more.</p><p>88 [2003] 2 SCR 1136 : (2003) 4 SCC 399</p><p>89 [2003] 2 SCR 1136 : (2003) 4 SCC 399 [18, 27]</p><p>90 [2003] 2 SCR 1136 : (2003) 4 SCC 399 [96]</p><p>91 The right to vote is classified as a statutory vote because only citizens who fulfill certain conditions (such</p><p>as the age) laid down in a statute can vote.</p><p>492 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>or the other candidate tantamounts to expression of his</p><p>opinion and preference and that final stage in the exercise</p><p>of voting right marks the accomplishment of freedom of</p><p>expression of the voter. That is where Article 19(1)(a) is</p><p>attracted.”</p><p>72. In the context of the decision of this Court in ADR (supra), the</p><p>learned Judge observed that the Court issued specific directions for</p><p>the disclosure of certain information about candidates because of</p><p>a legislative vacuum, and that the directions issued to the ECI will</p><p>fill the vacuum until Parliament legislates on the subject. Thus, the</p><p>five directions which were issued by this Court in ADR (supra) were</p><p>not construed to be inflexible and immutable theorems. The learned</p><p>Judge observed that though the voters have a fundamental right to</p><p>know the antecedents of candidates, all the conceptions of this right</p><p>formulated by this Court in ADR (supra) cannot be elevated to the</p><p>realm of fundamental rights.</p><p>73. The majority was of the view that the voters have a fundamental</p><p>right to all the information which was directed to be declared by this</p><p>Court in ADR (supra). Justice Venkatarama Reddi disagreed. In the</p><p>opinion of the learned Judge, only certain information directed to be</p><p>disclosed in ADR (supra) is “crucial” and “essential” to the right to</p><p>information of the voter:</p><p>“109. In my view, the points of disclosure spelt out by this</p><p>Court in Assn. for Democratic Reforms case [Ed.: See full</p><p>text at 2003 Current Central Legislation, Pt. II, at p. 3]</p><p>should serve as broad indicators or parameters in enacting</p><p>the legislation for the purpose of securing the right to</p><p>information about the candidate. The paradigms set by the</p><p>Court, though pro tempore in nature as clarified supra, are</p><p>entitled to due weight. If the legislature in utter disregard of</p><p>the indicators enunciated by this Court proceeds to make</p><p>a legislation providing only for a semblance or pittance of</p><p>information or omits to provide for disclosure on certain</p><p>essential points, the law would then fail to pass the muster</p><p>of Article 19(1)(a). Though certain amount of deviation</p><p>from the aspects of disclosure spelt out by this Court</p><p>is not impermissible, a substantial departure cannot be</p><p>countenanced. The legislative provision should be such as</p><p>[2024] 2 S.C.R. 493</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>to promote the right to information to a reasonable extent, if</p><p>not to the fullest extent on details of concern to the voters</p><p>and citizens at large. While enacting the legislation, the</p><p>legislature has to ensure that the fundamental right to know</p><p>about the candidate is reasonably secured and information</p><p>which is crucial, by any objective standards, is not denied.</p><p>[…] The Court has to take a holistic view and adopt a</p><p>balanced approach, keeping in view the twin principles that</p><p>the citizens’right to information to know about the personal</p><p>details of a candidate is not an unlimited right and that at</p><p>any rate, it has no fixed concept and the legislature has</p><p>freedom to choose between two reasonable alternatives.</p><p>[…] But, I reiterate that the shape of the legislation need</p><p>not be solely controlled by the directives issued to the</p><p>Election Commission to meet an ad hoc situation. As I</p><p>said earlier, the right to information cannot be placed in</p><p>straitjacket formulae and the perceptions regarding the</p><p>extent and amplitude of this right are bound to vary.”</p><p>74. Justice Reddi held that Section 33-B was unconstitutional because:</p><p>a. Parliament cannot impose a blanket ban on the disclosure of</p><p>information other than the disclosure of information required by</p><p>the provisions of RPA. The scope of the fundamental right to</p><p>information may be expanded in the future to respond to future</p><p>exigencies and necessities. The provision had the effect of</p><p>emasculating the freedom of speech and expression of which</p><p>the right to information is a facet; and</p><p>b. The provision failed to give effect to an essential aspect of the</p><p>fundamental right, namely the disclosure of assets and liabilities</p><p>of the candidates.</p><p>75. Justice Reddi then proceeded to juxtapose the directions for disclosure</p><p>issued by this Court in ADR (supra) with the scope of the provisions</p><p>of the RPA mandating disclosure. The learned judge observed that</p><p>the extent of disclosure mandated in RPA is fairly adequate with</p><p>respect to past criminal records but not with regard to pending cases.92</p><p>92 ADR required disclosure related to information of whether the candidate has been convicted/acquitted or</p><p>discharged of any criminal offence in the past, and whether six months prior to the filing of the nomination</p><p>paper, whether the candidate has been accused in any pending case for an offence punishable with</p><p>494 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>With respect to assets and liabilities, the learned Judge observed</p><p>that the disclosure of assets and liabilities is essential to the right</p><p>to information of the voter because it would enable voters to form</p><p>an opinion about whether the candidate, upon being elected in the</p><p>past, had amassed wealth in their name or their family Additionally,</p><p>information about dues which are payable by the candidate to public</p><p>institutions would enable voters to know the candidate’s dealing with</p><p>public money in the past.</p><p>76. Justice Reddi observed that the requirement to disclose assets of</p><p>the candidate’s family was justified because of the prevalence of</p><p>Benami transactions. Though mandating the disclosure of assets</p><p>and liabilities would infringe the right to privacy of the candidate and</p><p>their family, the learned Judge observed that disclosure which is in</p><p>furtherance of the right to information would trump the former because</p><p>it serves the larger public interest. Justice Reddi then observed that</p><p>disclosure of the educational qualifications of a candidate is not an</p><p>essential component of the right to information because educational</p><p>qualifications do not serve any purpose for the voter to decide</p><p>which candidate to cast a vote for since the characteristics of duty</p><p>and concern of the people is not “monopolised by the educated”.</p><p>A conclusion to the contrary, in the learned Judge’s opinion, would</p><p>overlook the stark realities of the society.93</p><p>77. The following principles can be deduced from the decisions of this</p><p>Court in ADR (supra) and PUCL (supra):</p><p>a. The right to information of voters which is traced to Article</p><p>19(1)(a) is built upon the jurisprudence of both the first and</p><p>the second phases in the evolution of the doctrine, identified</p><p>above. The common thread of reasoning which runs through</p><p>both the first and the second phases is that information which</p><p>furthers democratic participation must be provided to citizens.</p><p>imprisonment for more than two years and in which charge has been framed or cognizance is taken by</p><p>the Court. With respect to the first direction, law created a distinction between serious and non-serious</p><p>offences and mandates disclosure only if a candidate has been convicted of a serious offence. With</p><p>respect to the second direction, the provision only mandated the disclosure of cases in which charge has</p><p>been framed and excluded the disclosure of cases in which cognizance has been taken. The learned</p><p>Judge held that while the non-disclosure of conviction in a serious offence is a reasonable balance which</p><p>does not infringe the right to information, the non-disclosure of cases in which cognizance has been</p><p>taken would seriously violate the right to information of the voter particularly because framing of charges</p><p>gets delayed in a lot of cases.</p><p>93 [2003] 2 SCR 1136 : (2003) 4 SCC 399 [122]</p><p>[2024] 2 S.C.R. 495</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Voters have a right to information which would enable them to</p><p>cast their votes rationally and intelligently because voting is one</p><p>of the foremost forms of democratic participation;</p><p>b. In ADR (supra), this Court observed that while the disclosure of</p><p>information may violate the right to privacy of candidates and their</p><p>families, such information must be disclosed because it furthers</p><p>public interest.94 The opinion of Justice Venkatarama Reddi in</p><p>PUCL (supra) also followed the same line of reasoning. Justice</p><p>M B Shah writing for himself and Justice D M Dharmadhikari</p><p>held that the right to privacy would not be infringed because</p><p>information about whether a candidate is involved in a criminal</p><p>case is a matter of public record. Similarly, the assets or income</p><p>are normally required to be disclosed under the provisions of</p><p>the Income Tax Act; and</p><p>c. The voters have a right to the disclosure of information which</p><p>is “essential” for choosing the candidate for whom a vote</p><p>should be cast. The learned Judges in PUCL (supra) differed</p><p>to the extent of what they considered “essential” information</p><p>for exercising the choice of voting.</p><p>78. While relying on the judgments of this Court in ADR (supra) and PUCL</p><p>(supra) the petitioners argue that non-disclosure of information on</p><p>the funding of political parties is violative of the right to information</p><p>under Article 19(1)(a). This Court needs to consider the following</p><p>two issues to answer the question:</p><p>a. Whether the requirements of disclosure of information about</p><p>“candidates” can be extended to “political parties”; and</p><p>b. If the answer to (a) above is in the affirmative, whether</p><p>information on the funding of political parties is “essential”</p><p>for exercising choice on voting.</p><p>c. The focal point of the electoral process: candidate or political</p><p>party</p><p>79. The decisions in ADR (supra) and PUCL (supra) recognise the right</p><p>to information of a voter about candidates, which enables them to</p><p>94 In ADR (supra), this Court notes that such information would enable voters to determine if the candidate</p><p>is corrupt and would further openness in democracy. [Paragraph 41].</p><p>496 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>cast their vote in an effective manner. The relief which was granted</p><p>by this Court in PUCL (supra) and ADR (supra) was restricted</p><p>to the disclosure of information about candidates contesting the</p><p>election because of the limited nature of the reliefs sought. The</p><p>ratio decidendi of the two judgments of this Court is that voters</p><p>have a right to receive information which is essential for them to</p><p>cast their votes. This Court has to first analyse if the ‘political party’</p><p>is a relevant ‘political unit’ in the electoral process to answer the</p><p>question whether funding details of political parties are essential</p><p>information for the voter to possess.</p><p>80. The Constitution of India did not make a reference to political parties</p><p>when it was adopted.Areference was made when the Tenth Schedule</p><p>was included in the Constitution by the Constitution (Fifty-Second)</p><p>Amendment Act 1985. However, even though the Constitution on</p><p>its adoption did not make a reference to political parties, statutory</p><p>provisions relating to elections accorded considerable importance to</p><p>political parties, signifying that political parties have been the focal</p><p>point of elections.</p><p>81. The ECI notified the Election Symbols (Reservation and Allotment)</p><p>Order 196895 in exercise of the powers conferred by Article 344 of</p><p>the Constitution read with Section 29A of the RPA and Rules 596</p><p>and 1097 of the Conduct of Election Rules 1961. In terms of the</p><p>provisions of the Symbols Order, the ECI shall allot a symbol to</p><p>every candidate contesting the election. The Symbols Order classifies</p><p>political parties into recognised political parties and unrecognised</p><p>political parties. The difference in the procedure under the Symbols</p><p>Order for allotting symbols to recognised political parties, registered</p><p>but unrecognised political parties and independent candidates</p><p>indicates both the relevance and significance of political parties in</p><p>elections in India.</p><p>95 “Symbols Order 1968”</p><p>96 Rule 5 provides the ECI the power to specify by notification, the symbols which may be chosen by</p><p>candidates at elections in parliamentary or assembly constituencies.</p><p>97 Rule 10 deals with the preparation of list of contesting candidates. Rule 10(5) states that the allotment</p><p>of the returning officer of any symbol to a candidate shall be final except where it is inconsistent with the</p><p>directions issued by the ECI, in which case the ECI may revise the allotment. Rule 10(6) states that every</p><p>candidate shall be informed of the symbol allotted to the candidate.</p><p>[2024] 2 S.C.R. 497</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>82. A party is classified a National98 or a State recognised party99</p><p>based on the total percentage of votes secured at the last general</p><p>elections and (or) the number of candidates who have been returned</p><p>to the Legislative Assembly. Symbols are reserved for allocation to</p><p>recognised political parties.100 All candidates who are being set up by</p><p>a national or a State recognised party are to be allotted the symbol</p><p>reserved for that party for the purpose of contesting elections.101</p><p>83. Symbols other than those reserved for recognised political parties shall</p><p>be available for allotment to independent candidates and candidates</p><p>set up by political parties which are not recognised political parties in</p><p>terms of the Symbols Order.102 Candidates set up by a registered but</p><p>unrecognised political party may also be allotted a common symbol</p><p>if they fulfil certain conditions laid down in the Symbols Order.103</p><p>84. Thus, the Symbols Order creates a demarcation between candidates</p><p>set up by political parties and candidates contesting individually.</p><p>Political parties are allotted a Symbol such that all candidates who</p><p>are set up by that political party are allotted the Symbol of their</p><p>political party while contesting elections. Even within candidates</p><p>who are set up by political parties, the Symbols Order creates a</p><p>distinction between unrecognised but registered political parties and</p><p>recognised political parties. Recognised political parties shall continue</p><p>to be allotted the same symbol for all General elections until the time</p><p>these political parties fulfil the conditions for recognition under the</p><p>Symbols Order.104 The effect of the provisions of the Symbols Order</p><p>is that the symbols of certain political parties, particularly those which</p><p>have enjoyed the status of a recognised political party for long are</p><p>entrenched in the minds of the voters that they associate the symbol</p><p>with the political party.</p><p>98 Symbols Order 1968, Rule 6B</p><p>99 Symbols Order 1968, Rule 6A</p><p>100 Symbols Order 1968, Rule 5</p><p>101 Symbols Order 1968, Rule 8(1)</p><p>102 Ibid.</p><p>103 Symbols Order 1968, Rule 10B. The party is required to set up candidates in at least five percent of the</p><p>assembly constituencies.</p><p>104 A recognised National or a State Party shall continue to be treated as a recognised party even if the</p><p>political party does not fulfil the conditions at the next election to the General Assembly stipulated for</p><p>recognition as a recognised political party. However, it shall continue to be treated as a recognised</p><p>political party at the subsequent general election only if the party fulfils the conditions laid down.</p><p>498 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>85. For unrecognised but registered political parties, though a common</p><p>symbol is allotted for all candidates being set up by the political</p><p>parties, the symbol is not “reserved” for the Party. The ECI could allot</p><p>different symbols to that political party in each General election. The</p><p>candidates of a registered but unrecognised political party may be</p><p>represented by a common symbol but the people would not attach</p><p>a specific symbol to the political party because the symbol by which</p><p>it is represented may change with every election.</p><p>86. The purpose of allotting symbols to political parties is to aid voters in</p><p>identifying and remembering the political party. The law recognises the</p><p>inextricable link between a political party and the candidate though</p><p>the vote is cast for a candidate. The literacy rate in India was 18.33</p><p>percent when the first General Election was held in 1951. Most of</p><p>the voters identified a political party only with its symbol and this still</p><p>continues to the day. In a few cases, the voters would not possess</p><p>any knowledge of the candidate being set up by the political party.</p><p>They would vote solely based on the symbol which is allotted to</p><p>the political party; knowledge of which they have obtained through</p><p>campaigning activities or its sustained presence in the electoral fray.</p><p>Gayatri Devi, the third Maharani consort of Jaipur who was later set</p><p>up as a candidate by the Swatantra Party, recalls in herAutobiography</p><p>that her team spent hours trying to persuade the voters that they had</p><p>to vote for the Symbol Star (which was the symbol of the Swatantra</p><p>Party) and not a symbol showing a horse and a rider because she</p><p>also rode a horse:105</p><p>“Since most of India is illiterate, at the polls people vote</p><p>according to a visual symbol of their party. […] The</p><p>Swatantra Party had a star. Baby, all my other helpers</p><p>and I spent endless frustrating hours trying to instruct the</p><p>women about voting for the star. On the ballot sheet, we</p><p>said, over and over again, this is where the Maharani’s</p><p>name will appear and next to it will be a star. But it was</p><p>not as simple as that. They noticed a symbol showing a</p><p>horse and a rider, agree with each other that the Maharani</p><p>rides so that must be her symbol. Repeatedly we said,</p><p>105 Gayatri Devi and Santha Rama Rau, A Princess remembers: The Memoirs of the Maharani of Jaipur,</p><p>(Rupa Publications 1995) [301].</p><p>[2024] 2 S.C.R. 499</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>“No, no, that’s not the right one.” Then they caught sight</p><p>of the emblem of a flower. Ah, the flower of Jaipur – who</p><p>else could it mean but the Maharani? “No, no, no, not the</p><p>flower.” All right, the star. Yes, that seems appropriate for</p><p>the Maharani, but look, here is the sun. If the Maharani</p><p>is a star, then the sun must certainly mean the Maharaja.</p><p>We’ll vote for both. Immediately the vote would have been</p><p>invalidated. Even up to the final day, Baby and I were far</p><p>from sure that we had managed to get our point across.”</p><p>87. Symbols also gain significance when the names of political parties</p><p>sound similar. For example, political parties by the names of “Dravida</p><p>Munnetra Kazhagam”, “All IndianAnna Dravida Munnetra Kazhagam”,</p><p>“Dravida Kazhagam”, “Desiya Murpokku Dravida Kazhagam”, “Makkal</p><p>Desiya Murpokku Dravida Kazhagam”, “Kongu Desa Makkal Katchi”,</p><p>“Kongunadu Makkal Desia Katchi”, and “Kongunadu Makkal Katchi”</p><p>contest elections in Tamil Nadu. The names of all the political parties</p><p>bear similarities due to the usage of the same words with certain</p><p>additions or deletions. The allocation of Symbols to political parties</p><p>would help voters identify and distinguish between political parties</p><p>which have similar sounding names. It is precisely because of the</p><p>close association of the symbol with the political party by voters that</p><p>both factions of the party vie for the symbol that is allotted to the</p><p>Party when there is a split in a recognised political party.</p><p>88. India follows the open-list first past the post form of election in which</p><p>votes are cast for a candidate and the candidate who secures the</p><p>highest number of votes is chosen to represent the people of that</p><p>constituency. It could be argued that this system of elections gives</p><p>prominence to candidates and not political parties unlike the system of</p><p>closed list of elections where the voters do not have any knowledge</p><p>of the candidates that are set up by the Political Party.106</p><p>89. However, it cannot be concluded that the decision of voting is solely</p><p>based on the individual candidate’s capabilities and not the political</p><p>party merely because the voter has knowledge of the candidate who</p><p>has been set up by the political party. Such a conclusion cannot be</p><p>106 See Dominik Hangartner, Nelson A Ruiz, Janne Tukiainen, Open or Closed? How List Type Affects</p><p>Electoral Performance, Candidate Selection, and Campaign Effort, VAT Institute for Economic Research</p><p>Working Papers 120 (2019)</p><p>500 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>definitively drawn particularly in view of the design of the electoral</p><p>voting machine which has a list of the names of the candidates who</p><p>are contesting the election from the constituency along with the</p><p>symbol of the political party which is fielding the candidate. Voters</p><p>casts their votes based on two considerations: the capability of the</p><p>candidate as a representative and the ideology of the political party.</p><p>90. Political parties publish electoral manifestos containing the ideology</p><p>of the party, major policies of the political party, plans, programmes</p><p>and other considerations of governance which would be implemented</p><p>if they came to power.107 While political manifestos do not necessarily</p><p>always translate to policies when the party is elected to power,</p><p>they throw light upon the integral nature of political parties in the</p><p>electoral system. By publishing an election manifesto, a political party</p><p>communicates to the voters that they must accord preference to</p><p>the political party. Party manifestos prod voters to look away from a</p><p>candidate centric and towards a party centric perception of elections.</p><p>91. Lastly, the prominence of political parties as electoral units is further</p><p>heightened by the form of government in India. India follows a</p><p>Westminister system of government which confers prominence to</p><p>political parties without strictly separating between the legislature</p><p>and the executive. The time-honoured convention of the cabinet form</p><p>of government is that the leader of the political party with absolute</p><p>majority must be called to form the government.108 The Council of</p><p>Ministers is appointed by the President on the aid and advice of</p><p>the Prime Minister.109 Political parties are intrinsic to this form of</p><p>government because of the very process of government formation.</p><p>The recommendations of the Sarkaria Commission on the exercise of</p><p>discretion by the Governor when no single political party commands</p><p>an absolute majority, which has been given judicial recognition in</p><p>Rameshwar Prasad v. Union of India,110 also prioritises political</p><p>parties making them central to the governance structure.111</p><p>107 Election Commission of India, Instructions to political parties on manifestos dated 24.04.2015, https://</p><p>www.eci.gov.in/election-manifestos/</p><p>108 Constitution of India 1950, Article 75. See, Aradhya Sethia, “Where’s the party?: towards a constitutional</p><p>biography of political parties, Indian Law Review, 3:1, 1-32 (2019)</p><p>109 Ibid.</p><p>110 [2006] 1 SCR 562 : (2006) 2 SCC 1</p><p>111 65. “Para 4.11.04 of the Sarkaria Commission Report specifically deals with the situation where no</p><p>single party obtains absolute majority and provides the order of preference the Governor should follow in</p><p>[2024] 2 S.C.R. 501</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>92. The centrality of political parties in the electoral system is further</p><p>accentuated by the inclusion of the Tenth Schedule. The Tenth</p><p>Schedule deals with disqualification on the ground of defection from</p><p>the political party which set up the elected individual as its candidate.</p><p>Paragraph 2 provides the following grounds of defection:</p><p>a. Voluntarily giving up membership of the political party; and</p><p>b. Voting or abstaining from voting in the House contrary to direction</p><p>issued by the political party without obtaining prior permission</p><p>from the political party and when such voting has not been</p><p>condoned by the political party.</p><p>93. The underlying principle of anti-defection law which has been</p><p>recognised by a seven-Judge Bench of this Court in Kihoto</p><p>Hollohon v. Zachillhu,112 is that a candidate set up by a political</p><p>party is elected on the basis of the programme of that political</p><p>party. In the course of years, while deciding disputes related to the</p><p>Tenth Schedule, judgments of this Court have further strengthened</p><p>the centrality of political parties in the electoral system. In Ravi</p><p>S Naik v. Union of India113, this Court observed that voluntarily</p><p>giving up membership of a political party has a wider connotation</p><p>and includes not just resignation of the member from the party</p><p>and an inference can also be drawn from the conduct of the</p><p>member. In Subash Desai v. Principal Secretary, Governor of</p><p>Maharashtra,114 a Constitution Bench of this Court while interpreting</p><p>the provisions of the Tenth Schedule held that the political party</p><p>and not the legislature party (which consists of the members of</p><p>the House belonging to a particular political party) appoints the</p><p>Whip of a political party for the purposes of Paragraph 2(1)(b) of</p><p>the Tenth Schedule.115</p><p>selecting a Chief Minister. The order of preference suggested is:</p><p>a. An alliance of parties that was formed prior to the elections.;</p><p>b. The largest single party staking a claim to form the Government with the support of others,</p><p>including “independents”;</p><p>c. A post-electoral coalition of parties, with all the partners in the coalition joining the Government;</p><p>d. A post-electoral alliance of parties, with some of the parties in the alliance forming a Government</p><p>and the remaining parties, including “Independents” supporting the Government from outside.”</p><p>112 [1992] 1 SCR 686 : (1992) Supp (2) SCC 651 [4]</p><p>113 [1994] 1 SCR 754 : AIR 1994 SC 1558</p><p>114 WP (C) No. 493 of 2022</p><p>115 Subash Desai [113]</p><p>502 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>94. In summation, a ‘political party’ is a relevant political unit in the</p><p>democratic electoral process in India for the following three</p><p>reasons:</p><p>a. Voters associate voting with political parties because of</p><p>the centrality of symbols in the electoral process;</p><p>b. The form of government where the executive is chosen</p><p>from the legislature based on the political party or coalition</p><p>of political parties which has secured the majority; and</p><p>c. The prominence accorded to political parties by the Tenth</p><p>Schedule of the Constitution.</p><p>d. The essentiality of information about political funding for the</p><p>effective exercise of the choice of voting</p><p>95. In ADR (supra) and PUCL (supra), this Court held that a voter has</p><p>a right to information which is essential for them to exercise their</p><p>freedom to vote. In the previous section, we have concluded that</p><p>political parties are a relevant political unit. Thus, the observations</p><p>of this Court in PUCL (supra) and ADR (supra) on the right</p><p>to information about a candidate contesting elections is also</p><p>applicable to political parties. The issue whether information</p><p>about the funding received by political parties is essential for an</p><p>informed voter must be answered in the context of the core tenets</p><p>of electoral democracy. The Preamble to the Constitution resolves</p><p>to constitute a social, economic, and politically just society where</p><p>there is equality of status and opportunity. The discourse which</p><p>has emanated within and outside the Courts is often restricted</p><p>to the ideals of social and economic justice and rarely includes</p><p>political inequality.</p><p>96. Electoral democracy in India is premised on the principle of political</p><p>equality which the Constitution guarantees in two ways. First, by</p><p>guaranteeing the principle of “one person one vote” which assures</p><p>equal representation in voting. The Constitution prescribes two</p><p>conditions with respect to elections to seats in Parliament which</p><p>guarantee the principle of “one person one vote” with respect to</p><p>every voter and amongst every State:</p><p>a. Each State shall be divided into territorial constituencies in</p><p>such a manner that the ratio between the population of each</p><p>[2024] 2 S.C.R. 503</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>constituency and the number of seats allotted to it shall be the</p><p>same throughout the State;116 and</p><p>b. The total number of seats allotted to each State in Parliament</p><p>should be such that the ratio between the number of seats,</p><p>and the population of the State is the same for all States.117</p><p>97. Second, the Constitution ensures that socio-economic inequality</p><p>does not perpetuate political inequality by mandating reservation of</p><p>seats for Scheduled Castes and Scheduled Tribes in Parliament118</p><p>and State Assemblies.119</p><p>98. The Constitution guarantees political equality by focusing on the</p><p>‘elector’ and the ‘elected’. These two constitutional precepts foster</p><p>political equality in the following two ways. First, the Constitution</p><p>mandates that the value of each vote is equal. This guarantee ensures</p><p>formal political equality where every person’s vote is accorded equal</p><p>weightage. Second, the Constitution ensures that members of socially</p><p>marginalized groups are not excluded from the political process. This</p><p>guarantee ensures (a) equality in representation; and (b) equality in</p><p>influence over political decisions.</p><p>99. However, political inequality continues to persist in spite of the</p><p>constitutional guarantees. One of the factors which contributes to</p><p>the inequality is the difference in the ability of persons to influence</p><p>political decisions because of economic inequality. In a politically</p><p>equal society, the citizens must have an equal voice to influence</p><p>the political process.120 We have already in the preceding section</p><p>elucidated the close association of money and politics where we</p><p>explained the influence of money over electoral outcomes. However,</p><p>the influence of money over electoral politics is not limited to its</p><p>impact over electoral outcomes. It also spills over to governmental</p><p>116 Constitution of India 1950, Article 81 (2)(b). Also see Constitution of India, Article 170(2) where the</p><p>Constitution prescribes the same principle with respect to the composition of seats in Legislative</p><p>Assemblies of State</p><p>117 Constitution of India 1950, Article 81(2)(b)</p><p>118 Constitution of India 1950, Article 330 guarantees “as nearly as may be” proportional representation for</p><p>Scheduled Castes and Scheduled Tribes in Parliament.</p><p>119 Constitution of India 1950, Article 332 guarantees “as nearly as may be” proportional representation for</p><p>Scheduled Castes and Scheduled Tribes in Legislative Assemblies of the States.</p><p>120 See Ben Ansell and Jean Gingrich J (2021). Political Inequality. The IFS Deaton Review of Inequalities,</p><p>London: Institute for Fiscal Studies</p><p>504 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>decisions. It must be recalled here that the legal regime in India does</p><p>not distinguish between campaign funding and electoral funding. The</p><p>money which is donated to political parties is not used by the political</p><p>party only for the purposes of electoral campaign. Party donations are</p><p>also used, for instance, to build offices for the political party and pay</p><p>party workers. Similarly, the window for contributions is not open for</p><p>a limited period only prior to the elections. Money can be contributed</p><p>to political parties throughout the year and the contributed money</p><p>can be spent by the political party for reasons other than just election</p><p>campaigning. It is in light of the nexus between economic inequality</p><p>and political inequality, and the legal regime in India regulating party</p><p>financing that the essentiality of the information on political financing</p><p>for an informed voter must be analyzed.</p><p>100. Economic inequality leads to differing levels of political engagement</p><p>because of the deep association between money and politics. At</p><p>a primary level, political contributions give a “seat at the table”</p><p>to the contributor. That is, it enhances access to legislators.121</p><p>This access also translates into influence over policy-making. An</p><p>economically affluent person has a higher ability to make financial</p><p>contributions to political parties, and there is a legitimate possibility</p><p>that financial contribution to a political party would lead to quid pro</p><p>quo arrangements because of the close nexus between money and</p><p>politics. Quid pro quo arrangements could be in the form of introducing</p><p>a policy change, or granting a license to the contributor. The money</p><p>that is contributed could not only influence electoral outcomes but</p><p>also policies particularly because contributions are not merely limited</p><p>to the campaign or pre-campaign period. Financial contributions</p><p>could be made even after a political party or coalition of parties form</p><p>Government. The possibility of a quid pro quo arrangement in such</p><p>situations is even higher. Information about political funding would</p><p>enable a voter to assess if there is a correlation between policy</p><p>making and financial contributions.</p><p>121 See Joshua L.Kalla andDavidE.Broockman,“Campaign ContributionsFacilitateAccess toCongressional</p><p>Officials: A Randomized Field Experiment” (2016 60(3)) American Journal of Political Science. A political</p><p>organization conducted an experiment to determine if there is a link between political contributions and</p><p>access to the policy makers. The Organization scheduled meetings between 191 Congressional offices</p><p>and the organization’s members who were campaign donors. When the Congressional offices were</p><p>informed that prospective attendees were political donor, policymakers made themselves available for</p><p>the meeting three to four times more often.</p><p>[2024] 2 S.C.R. 505</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>101. For the information on donor contributions to be relevant and essential,</p><p>it is not necessary that voters have to take the initiative to peruse the</p><p>list of contributors to find relevant information which would enable</p><p>them to cast their vote effectively. Electronic and print media would</p><p>present the information on contributions received by political parties,</p><p>and the probable link between the contribution and the licenses which</p><p>were given to the company in an accessible format. The responses</p><p>to such information by the Government and political parties would</p><p>go a long way in informing the voter.</p><p>102. However, to establish the argument of quid pro quo arrangements</p><p>between the contributor and the political party, it is necessary that</p><p>the political party has knowledge of the particulars of funding to its</p><p>party. The political party to whom contributions are made cannot</p><p>enter into a quid pro quo arrangements if it is unaware of the donor.</p><p>The Scheme defines electoral bond “as a bond issued in the nature</p><p>of promissory note which shall be a bearer banking instrument and</p><p>shall not carry the name of the buyer or payee.”122 The Scheme also</p><p>stipulates that the information furnished by the buyer shall be treated</p><p>as confidential which shall not be disclosed by any authority except</p><p>when demanded by a competent court or by a law enforcement</p><p>agency upon the registration of criminal case.123</p><p>103. The submission of the Union of India is that the political party which</p><p>receives the contribution does not know of identity of the contributor</p><p>because neither the bond would have their name nor could the bank</p><p>discloses such details to the political party. We do not agree with this</p><p>submission. While it is true that the law prescribes anonymity as a</p><p>central characteristic of electoral bonds, the de jure anonymity of the</p><p>contributors does not translate to de facto anonymity. The Scheme</p><p>is not fool-proof. There are sufficient gaps in the Scheme which</p><p>enable political parties to know the particulars of the contributions</p><p>made to them. Clause 12 of the Scheme states that the bond</p><p>can be encashed only by the political party by depositing it in the</p><p>designated bank account. The contributor could physically hand over</p><p>the electoral bond to an office bearer of the political party or to the</p><p>legislator belonging to the political party, or it could have been sent</p><p>122 Electoral Bond Scheme; Clause 2(a)</p><p>123 Electoral Bond Scheme; Clause 7(4)</p><p>506 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>to the office of the political party with the name of the contributor, or</p><p>the contributor could after depositing the electoral bond disclose the</p><p>particulars of the contribution to a member of the political party for</p><p>them to cross-verify. Further, according to the data on contributions</p><p>made through electoral bonds, ninety four percent of the contributions</p><p>through electoral bonds have been made in the denomination of one</p><p>crore. Electoral bonds provide economically resourced contributors</p><p>who already have a seat at the table selective anonymity vis-à-vis</p><p>the public and not the political party.</p><p>104. In view of the above discussion, we are of the opinion that the</p><p>information about funding to a political party is essential for a voter to</p><p>exercise their freedom to vote in an effective manner. The Electoral</p><p>Bond Scheme and the impugned provisions to the extent that they</p><p>infringe upon the right to information of the voter by anonymizing</p><p>contributions through electoral bonds are violative of Article 19(1)(a).</p><p>ii. Whether the infringement of the right to information of the voter</p><p>is justified</p><p>105. The next issue which falls for analysis is whether the violation of</p><p>the right to information is justified. This Court has laid down the</p><p>proportionality standard to determine if the violation of the fundamental</p><p>right is justified.124 The proportionality standard is as follows:</p><p>a. The measure restricting a right must have a legitimate goal</p><p>(legitimate goal stage);</p><p>b. The measure must be a suitable means for furthering the goal</p><p>(suitability or rational connection stage);</p><p>c. The measure must be least restrictive and equally effective</p><p>(necessity stage); and</p><p>d. The measure must not have a disproportionate impact on the</p><p>right holder (balancing stage).</p><p>106. The legitimate goal stage requires this Court to analyze if the objective</p><p>of introducing the law is a legitimate purpose for the infringement of</p><p>rights. At this stage, the State is required to discharge two burdens.</p><p>First, the State must demonstrate that the objective is legitimate.</p><p>124 Modern Dental College & Research Centre v. State of Madhya Pradesh, [2016] 3 SCR 575 : (2016) 4</p><p>SCC 346</p><p>[2024] 2 S.C.R. 507</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Second, the State must establish that the law is indeed in furtherance</p><p>of the legitimate aim that is contended to be served.125</p><p>107. The then Finance Minister, Mr.Arun Jaitley encapsulated the objective</p><p>of introducing the Electoral Bond Scheme thus:</p><p>a. An attempt was made in the past to incentivize donations to</p><p>political party through banking channels. Both the donor and</p><p>the donee were granted exemption from payment of tax if</p><p>accounts of contributions were maintained and returns were</p><p>filed. However, the situation had only marginally improved.</p><p>Political parties continued to receive funds through anonymous</p><p>sources; and</p><p>b. Donors have been reluctant in donating through the banking</p><p>channel because the disclosure of donor identity would entail</p><p>adverse consequences.</p><p>108. In other words, Mr. Jaitley stated that the main purpose of the</p><p>Scheme is to curb black money in electoral financing and this purpose</p><p>could be achieved only if information about political donations is</p><p>kept confidential. That is, donor privacy is a means to incentivize</p><p>contributions through the banking channel. However, Mr. Tushar</p><p>Mehta argued that protecting donor privacy is an end in itself. We</p><p>will now proceed to determine if the infringement of the right to</p><p>information of the voters is justified vis-à-vis the purposes of (a)</p><p>curbing black money; and (b) protecting donor privacy.</p><p>a. Curbing Black money</p><p>109. The petitioners argue that the infringement of the right to information</p><p>which is traceable to Article 19(1)(a) can only be justified if the</p><p>purpose of the restriction is traceable to the grounds stipulated in</p><p>Article 19(2). They argue that the purpose of curbing of black money</p><p>cannot be traced to any of the grounds in Article 19(2), and thus, is</p><p>not a legitimate purpose for restricting the right to information.</p><p>110. Article 19(2) stipulates that the right to freedom of speech and</p><p>expression can only be restricted on the grounds of: (a) the</p><p>sovereignty and integrity of India; (b) the security of the State; (c)</p><p>friendly relations with foreign states, (d) public order; (e) decency</p><p>125 See Media One v. Union of India, Civil Appeal No. 8129 of 2022 [77-79]</p><p>508 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>or morality; (f) contempt of court; (g) defamation; and (h) incitement</p><p>to an offence. The purpose of curbing black money is traceable to</p><p>public interest. However, public interest is not one of the grounds</p><p>stipulated in Article 19(2). Of the rights recognized under Article 19,</p><p>only Article 19(1)(g) which guarantees the freedom to practice any</p><p>profession or to carry on any occupation, trade or business can be</p><p>restricted on the ground of public interest.126</p><p>111. In Sakal Papers v. The Union of India127, the constitutional validity of</p><p>the Newspaper (Price and Page) Act 1965 and the Daily Newspaper</p><p>(Price and Page) Order 1960 which regulated the number of pages</p><p>according to the price charged, prescribed the number of supplements</p><p>to be published and regulated the area for advertisements in the</p><p>newspapers was challenged on the ground that it violated the freedom</p><p>of press under Article 19(1)(a). The Union of India submitted that</p><p>the restriction on the freedom of press was justified because the</p><p>purpose of the law was to prevent unfair competition which was in</p><p>furtherance of public interest. It was argued that the restriction was</p><p>justified because the activities carried out by newspapers were also</p><p>traceable to the freedom to carry out a profession which could be</p><p>restricted on the ground of public interest under Article 19(6). Justice</p><p>JR Mudholkar writing for the Constitution Bench observed that the</p><p>impugned legislation “directly and immediately” curtails the freedom</p><p>of speech guaranteed underArticle 19(1)(a), and the freedom cannot</p><p>be restricted on any ground other than the grounds stipulated in</p><p>Article 19(2).128 In Express Newspapers v. Union of India,129 a</p><p>Constitution Bench while deciding the constitutional challenge to</p><p>the Working Journalists (Conditions of Service) and Miscellaneous</p><p>ProvisionsAct 1955 held that a law violatingArticle 19(1)(a) would be</p><p>unconstitutional unless the purpose of the law falls “squarely within</p><p>the provisions ofArticle 19(2)”.130 In Kaushal Kishor v. State of Uttar</p><p>126 Constitution of India 1950; Article 19(6)</p><p>127 [1962] 3 SCR 842 : AIR 1962 SC 305</p><p>128 Ibid; Paragraph 36:”If a law directly affecting it is challenged, it is no answer that the restriction enacted</p><p>by it are justifiable under clauses (3) to (6). For the scheme of Article 19 is to enumerate different</p><p>freedoms separately and then to specify the extent of restrictions to which they may be subjected and</p><p>the objects for securing which this could be done.”</p><p>129 [1959] 1 SCR 12 : AIR 1958 SC 578</p><p>130 Also see, Indian Express Newspapers (Bombay) Pvt Limited v. Union of India, AIR 1986 SC 515;Sodhi</p><p>Shamsher v. State of Pepsu, AIR 1954 SC 276; Romesh Thappar v. State of Madras, [1950] 1 SCR 594</p><p>[2024] 2 S.C.R. 509</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Pradesh,131 a Constitution Bench of this Court answered the issue</p><p>whether the grounds stipulated in Article 19(1)(a) are exhaustive</p><p>of the restrictions which can be placed on the right to free speech</p><p>under Article 19(1)(a) affirmatively.</p><p>112. However, in the specific context of the right to information, this Court</p><p>has observed that the right can be restricted on grounds not traceable</p><p>to Article 19(1)(a). In PUCL (supra), one of the submissions was that</p><p>dangerous consequences would follow if the right to information is</p><p>culled out from Article 19(1)(a) because the grounds on which the</p><p>right can be restricted as prescribed in Article 19(2) are very limited.</p><p>Justice Reddi in his concurring opinion in PUCL (supra) observed</p><p>that the right under Article 19(1)(a) can be restricted on grounds</p><p>which are not “strictly within the confines of Article 19(2)”.132 For</p><p>this purpose, Justice Reddi referred to the observations of Justice</p><p>Jeevan Reddy in The Secretary, Ministry of Information v. Cricket</p><p>Association of Bengal133:</p><p>“99. […] This raises the larger question whether apart</p><p>from the heads of restriction envisaged by sub-article (2)</p><p>of Article 19, certain inherent limitations should not be</p><p>read into the article, if it becomes necessary to do so in</p><p>national or societal interest. The discussion on this aspect</p><p>finds its echo in the separate opinion of Jeevan Reddy, J.</p><p>in Cricket Assn. case [(1975) 4 SCC 428] . The learned</p><p>Judge was of the view that the freedom of speech and</p><p>expression cannot be so exercised as to endanger the</p><p>interest of the nation or the interest of the society, even if</p><p>the expression “national interest” or “public interest” has</p><p>not been used in Article 19(2). It was pointed out that such</p><p>implied limitation has been read into the First Amendment</p><p>of the US Constitution which guarantees the freedom of</p><p>speech and expression in unqualified terms.”</p><p>113. In Cricket Association of Bengal (supra), one of the submissions</p><p>of the petitioner (Union of India) was that the right to broadcast can</p><p>be restricted on grounds other than those stipulated in Article 19(2).</p><p>131 Writ Petition (Criminal) No. 113 of 2016</p><p>132 PUCL (supra), [111]</p><p>133 [1995] 1 SCR 1036 : 1995 AIR 1236</p><p>510 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Justice P B Sawant writing for himself and Justice S Mohan observed</p><p>while summarizing the law on freedom of speech and expression that</p><p>Article 19(1)(a) can only be restricted on the grounds mentioned in</p><p>Article 19(2).134 The learned Judge specifically refuted the argument</p><p>that the right can be restricted on grounds other than those stipulated</p><p>in Article 19(2). Such an argument, the learned Judge states, is to</p><p>plead for unconstitutional measures. However, while observing so,</p><p>Justice P B Sawant states that the right to telecast can be restricted</p><p>on the grounds mentioned in Article 19(2) and the “dictates of public</p><p>interest”:</p><p>“78. […] If the right to freedom of speech and expression</p><p>includes the right to disseminate information to as wide a</p><p>section of the population as is possible, the access which</p><p>enables the right to be so exercised is also an integral</p><p>part of the said right. The wider range of circulation of</p><p>information or its greater impact cannot restrict the content</p><p>of the right nor can it justify its denial. The virtues of the</p><p>electronic media cannot become its enemies. It may</p><p>warrant a greater regulation over licensing and control</p><p>and vigilance on the content of the programme telecast.</p><p>However, this control can only be exercised within the</p><p>framework of Article 19(2) and the dictates of public</p><p>interest.”</p><p>(emphasis supplied)</p><p>114. Justice Jeevan Reddy in the concurring opinion segregated the</p><p>grounds stipulated in Article 19(2) into grounds in furtherance of</p><p>“national interest” and “societal interest”. The learned Judge observed</p><p>that the grounds of sovereignty and integrity of India, the security of</p><p>the State, friendly relations with foreign State and public order are</p><p>grounds referable to national interest, and the grounds of decency,</p><p>morality, contempt of court, defamation and incitement of offence</p><p>are referable to state interest. The learned Judge then referred to</p><p>the judgment of the Supreme Court of the United States in FCC v.</p><p>National Citizens Committee for Broadcasting135, where it was</p><p>held that a station license can be denied on the ground of public</p><p>134 Ibid; [45].</p><p>135 436 US 775 (1978)</p><p>[2024] 2 S.C.R. 511</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>interest. Justice Reddy observed that public interest is synonymous</p><p>to state interest which is one of the grounds underlying Article 19(2):</p><p>“189. Reference may also be made in this connection to</p><p>the decision of the United States Supreme Court in FCC</p><p>v. National Citizens Committee for Broadcasting [56 L Ed</p><p>2d 697 : 436 US 775 (1978)] referred to hereinbefore,</p><p>where it has been held that “to deny a station licence</p><p>because the public interest requires it is not a denial</p><p>of free speech”. It is significant that this was so said</p><p>with reference to First Amendment to the United States</p><p>Constitution which guarantees the freedom of speech and</p><p>expression in absolute terms. The reason is obvious. The</p><p>right cannot rise above the national interest and the</p><p>interest of society which is but another name for the</p><p>interest of general public. It is true that Article 19(2)</p><p>does not use the words “national interest”, “interest of</p><p>society” or “public interest” but as pointed hereinabove,</p><p>the several grounds mentioned in clause (2) are</p><p>ultimately referable to the interests of the nation and</p><p>of the society.”</p><p>(emphasis supplied)</p><p>115. The observations of Justice Sawant and the concurring opinion of</p><p>Justice Jeevan Reddy in Cricket Association of Bengal (supra)</p><p>that the right under Article 19(1)(a) can be restricted on the ground</p><p>of public interest even though it is not stipulated in Article 19(2)</p><p>must be understood in the specific context of that case. Cricket</p><p>Association of Bengal (supra), dealt with the access to and use</p><p>of a public good (that is, airwaves) for dissemination of information.</p><p>The Court distinguished airways from other means of dissemination</p><p>of information such as newsprint and held that since broadcasting</p><p>involves the use of a public good, it must be utilized to advance free</p><p>speech rights and plurality of opinion (that is, public interest).136 The</p><p>observations in Cricket Association of Bengal (supra) cannot be</p><p>interpreted to mean that other implied grounds of restrictions have</p><p>been read into Article 19(2).</p><p>136 Cricket Association of Bengal [201 (1)(a) and 201(1)(b)]</p><p>512 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>116. From the above discussion, it is clear that the right to information</p><p>under Article 19(1)(a) can only be restricted based on the grounds</p><p>stipulated inArticle 19(2). It could be argued that curbing black money</p><p>can be traced to the ground of “public order”. However, a Constitution</p><p>Bench of this Court has interpreted the ground “public order” to mean</p><p>“public safety and tranquility” and “disorder involving breaches of local</p><p>significance in contradistinction to national upheavals, such as civil</p><p>strife, war, affecting the security of the State.”137 Thus, the purpose</p><p>of curbing black money is not traceable to any of the grounds in</p><p>Article 19(2).</p><p>117. We proceed to apply the subsequent prongs of the proportionality</p><p>standard, even assuming that curbing black money is a legitimate</p><p>purpose for restricting the right to information. The second prong of</p><p>the proportionality analysis requires the State to assess whether the</p><p>means used are rationally connected to the purpose. At this stage,</p><p>the court is required to assess whether the means, if realised, would</p><p>increase the likelihood of curbing black money. It is not necessary</p><p>that the means chosen should be the only means capable of realising</p><p>the purpose. It is sufficient if the means used constitute one of the</p><p>many methods by which the purpose can be realised, even if it only</p><p>partially gives effect to the purpose.138</p><p>118. The respondents submit that before the introduction of the Electoral</p><p>Bond Scheme, a major portion of the total contributions received</p><p>by political parties was from “unknown sources”. For example,</p><p>immediately preceding the financial year (2016-17) in which the</p><p>Electoral Bond Scheme was introduced, eighty one percent of the</p><p>contributions (Rupees 580.52 Crores) were received by political</p><p>parties through voluntary contributions. Since the amount of voluntary</p><p>contributions is not regulated, it allowed the circulation of black money.</p><p>However, after the introduction of the Electoral Bond Scheme, fortyseven percent of the contributions were received through electoral</p><p>bonds which is regulated money. The Union of India submitted</p><p>that providing anonymity to the contributors incentivizes them to</p><p>contribute through the banking channel. Assuming, for the purpose</p><p>of hypothesis that the Union of India is right on this prong, what it</p><p>137 Superintendent, Central Prison, Fatehgarh v. Dr Ram Manohar Lohia, [1960] 2 SCR 821 : AIR 1960 SC</p><p>633 [18]</p><p>138 Media One (supra) [100]</p><p>[2024] 2 S.C.R. 513</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>urges is that non-disclosure of information about political expenditure</p><p>has a rational nexus with the goal, that is, curbing black money or</p><p>unregulated money.</p><p>119. The next stage of the proportionality standard is the least restrictive</p><p>means stage. At this stage, this Court is required to determine if</p><p>the means adopted (that is, anonymity of the contributor) is the</p><p>least restrictive means to give effect to the purpose based on the</p><p>following standard:139</p><p>a. Whether there are other possible means which could have been</p><p>adopted by the State;</p><p>b. Whether the alternative means identified realise the objective</p><p>in a ‘real and substantial manner’;</p><p>c. Whether the alternative identified and the means used by the</p><p>State impact fundamental rights differently; and</p><p>d. Whether on an overall comparison (and balancing) of the</p><p>measure and the alternative, the alternative is better suited</p><p>considering the degree of realizing the government objective</p><p>and the impact on fundamental rights.</p><p>120. Before we proceed to determine if the Electoral Bond Scheme is</p><p>the least restrictive means to curb black money in electoral funding,</p><p>it is important that we recall the regime on electoral funding. After</p><p>the amendments introduced by the Finance Act 2017, donations to</p><p>political parties exceeding rupees two thousand can only be made by</p><p>an account payee cheque drawn on a bank, an account payee bank</p><p>draft, the use of electronic clearing system through a bank account</p><p>or through an electoral bond.140 All contributions to political parties</p><p>through cash cannot be assumed to be black money. For example,</p><p>individuals who contribute to political parties in small donations</p><p>during party rallies usually contribute through cash. On the other</p><p>hand, contributions through the banking channel are certainly a form</p><p>of accounted transaction. Restricting the contributions to political</p><p>parties in cash to less than rupees two thousand and prescribing</p><p>that contributions above the threshold amount must only be made</p><p>139 See Justice KS Puttaswamy (5J) (supra) and Media One Broadcasting (supra) [103];</p><p>140 IT Act, Section 13A(d)</p><p>514 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>through banking channels is itself intended to curb black money.</p><p>Thus, the legal regime itself provides other alternatives to curb black</p><p>money: contributions through cheques, bank draft, or electronic</p><p>clearing system. The Union of India submits that though there</p><p>are other alternatives through which circulation of black money in</p><p>electoral financing can be curbed, these alternatives do not realize</p><p>the objective in a “substantial manner” because most contributors</p><p>resort to cash donations as they “fear consequences from political</p><p>opponents” to whom donations were not made.</p><p>121. In addition to the alternatives identified above, the existing legal</p><p>regime provides another alternative in the form of Electoral Trusts</p><p>through which the objective of curbing black money in electoral</p><p>financing can be achieved. Section 2(22AA) of the IT Act defines an</p><p>Electoral Trust as a trust approved by the Board in accordance with</p><p>the scheme made in this regard by the Central Government. Section</p><p>13B of the IT Act states that any voluntary contributions received</p><p>by an electoral trust shall not be included in the total income of the</p><p>previous year of such electoral trust if the it distributes ninety five</p><p>percent of the aggregate donations received during the previous</p><p>year. In terms of Rule 17CA of the IT Rules 1962, the features of</p><p>an electoral trust are as follows:</p><p>a. An Electoral Trust may receive voluntary contribution from (i)</p><p>an individual who is a citizen of India; (ii) a company registered</p><p>in India; (iii) a firm or Hindu undivided family or an Association</p><p>of persons or a body of individuals residing in India;</p><p>b. When a contribution is made to an electoral trust, a receipt</p><p>recording the following information shall, inter alia, be provided:</p><p>(i) Name and address of the contributor; (ii) Permanent account</p><p>number of the contributor or the passport number if the</p><p>contributor is not a resident of India; (iii) Amount contributed;</p><p>(iv) The mode of contribution including the name and branch</p><p>of the bank and the date of receipt of such contribution; and</p><p>(v) PAN of the electoral trust;</p><p>c. Contributions to the electoral trust can only be made through</p><p>cheque, bank draft and electronic transfer. Contributions made</p><p>in cash shall not be accepted by the Electoral Trust;</p><p>d. The Electoral Trust shall spend five percent of the total</p><p>contributions received in a year subject to a limit of Rupees five</p><p>[2024] 2 S.C.R. 515</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>hundred thousand in the first year of incorporation and Rupees</p><p>three hundred thousand in the second year.141 The remaining</p><p>money (that is, ninety five percent of the total contributions</p><p>received in that financial year along with any surplus from the</p><p>previous year) shall be distributed to political parties registered</p><p>under Section 29A of the RP Act;142</p><p>e. The political party to which the trust donated money shall</p><p>provide a receipt indicating the name of the political party, the</p><p>PAN and the amount of contribution received from the trust;143</p><p>f. The trust shall also maintain a list of persons from whom</p><p>contributions have been received and to whom they have been</p><p>distributed;144 and</p><p>g. The trust shall furnish a certified copy of the list of contributors</p><p>and list of political parties to whom contributions have been</p><p>made to the Commissioner of Income Tax along with the audit</p><p>report.145</p><p>122. In summary, an Electoral Trust is formed only for collecting political</p><p>contributions from donors. An electoral trust can contribute to more</p><p>than one party. To illustrate, if ten individuals and one company have</p><p>contributed to an Electoral Trust and the donations are contributed</p><p>to three political parties equally or unequally, the information about</p><p>which of the individuals contributed to which of the political parties</p><p>will not be disclosed. In this manner, the purpose of curbing black</p><p>money in electoral financing will be met. At the same time, there</p><p>would be no fear of consequences from political opponents because</p><p>the information as to which political party were made is not disclosed.</p><p>123. On 6 June 2014, the ECI circulated Guidelines for submission of</p><p>contribution reports of Electoral Trusts mandating in the interest of</p><p>transparency that all Electoral Trusts shall submit an Annual Report</p><p>containing details of contributions received and disbursed by them to</p><p>political parties. Pursuant to the Guidelines, Electoral Trusts submit</p><p>141 IT Rules 1962, Rule 17CA(8)(i)</p><p>142 IT Rules 1962, Rule 17CA(7) and Rules 17CA(8)(ii)</p><p>143 IT Rules 1962, Rule 17CA(9)</p><p>144 IT Rules 1962, Rule 17CA(11)(ii)</p><p>145 IT Rules 1962, Rule 17CA(14)</p><p>516 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Annual Reports to the ECI every year. For example, according to the</p><p>Annual Report of the Prudent Electoral Trust for the financial year 2021-</p><p>22, the Trust received contributions of a total of Rupees 4,64,83,00,116</p><p>from seventy contributors including individuals and companies. The</p><p>contributions were unequally distributed to the Aam Aadmi Party, All</p><p>India Congress Committee, Bharatiya Janata Party, Goa Congress</p><p>Committee, Goa Forward Party, Indian National Congress, Punjab Lok</p><p>Congress, Samajwadi Party, Shiromani Akali Dal, Telangana Rashtra</p><p>Samiti, and YSR Congress. From the report, it cannot be discerned</p><p>if contributor ‘A’ contributed to a particular political party. It can only</p><p>be concluded that contributor ‘A’ could have contributed to the Party.</p><p>124. Thus, even if the argument of the Union of India that the other</p><p>alternative means such as the other modes of electronic transfer</p><p>do not realize the objective of curbing black money substantially</p><p>because contributors would resort to cash donations due to the</p><p>fear of consequences is accepted, Electoral Trusts are an effective</p><p>alternative. There will be a lesser degree of “political consequences”</p><p>for contributions made to the Electoral Trust because the information</p><p>about which of the contributors contributed to which of the parties will</p><p>not be disclosed. It is only where the Electoral Trust contributes to one</p><p>political party, would there be a possibility of political consequences</p><p>and witch-hunting (assuming that there is a link between anonymity</p><p>and contributions). However, in that case, it is a choice expressly</p><p>made by the contributors. Additionally, the law mandates disclosure</p><p>only of contributions made above twenty thousand in a financial</p><p>year. So, for contributions less than twenty-five thousand, cheques</p><p>and other modes of electronic transfer are an effective alternative.</p><p>125. When these three methods of political contribution (electronic</p><p>transfer other than electoral bonds, contribution to Electoral Trust,</p><p>and Electoral Bonds) are placed on a continuum, transfer through</p><p>electronic means (other than electoral bonds) would be placed on</p><p>one end and Electoral Bonds would be placed on the other end. A</p><p>voter would receive complete information about contributions made</p><p>above twenty thousand to a political party in the case of electronic</p><p>transfer made directly to a political party other than through electoral</p><p>bonds.146</p><p>146 RPA; Section 29A</p><p>[2024] 2 S.C.R. 517</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>126. With respect to contributions through electoral bonds, the voter would</p><p>not receive any information about financial contributions in terms of</p><p>Section 29C of RPA as amended by the Finance Act. This Court in</p><p>the interim order dated 31 October 2023 in the specific context of</p><p>contributions made by companies through electoral bonds prima facie</p><p>observed the voter would be able to secure information about the</p><p>funding by matching the information of the aggregate sum contributed</p><p>by the Company (as required to be disclosed under Section 182(3)</p><p>of the Companies Act as amended by the Finance Act) with the</p><p>information disclosed by the political party. However, on a detailed</p><p>analysis of the Scheme and the amendments we are of the opinion</p><p>that such an exercise would not reveal the particulars of the donations</p><p>because the Company under the provisions of Section 182 and the</p><p>political party are only required to disclose the consolidated amount</p><p>contributed and received through Electoral Bonds respectively. The</p><p>particulars about the political party to which the contributions were</p><p>made which is crucial to the right to information of political funding</p><p>cannot be identified through the matching exercise.</p><p>127. With respect to contributions to an Electoral Trust, a voter receives</p><p>partial information. The voter would know the total amount contributed</p><p>by the donor and that the donor contributed to one of the political</p><p>parties (in case the Electoral Trust has made contributions to multiple</p><p>parties). But the donor would not be aware of the exact details of</p><p>the contribution.</p><p>128. Assuming that anonymity incentivizes contributions through banking</p><p>channels (which would lead to curbing black money in the electoral</p><p>process), electoral bonds would be the most effective means in</p><p>curbing black money, followed by Electoral Trust, and then other</p><p>means of electronic transfer. This conclusion is premised on the belief</p><p>that the Electoral Bond curbs black money. However, the Scheme</p><p>is not fool-proof. The Electoral Bond Scheme does not provide any</p><p>regulatory check to prevent the trading of bonds though Clause 14</p><p>of the Electoral Bond Scheme states that the bonds shall not be</p><p>eligible for trading.</p><p>129. On an overall balance of the impact of the alternative means on the</p><p>right to information and its ability to fulfill the purpose, for contributions</p><p>below twenty thousand rupees, contributions through other means</p><p>of electronic transfer is the least restrictive means. For contributions</p><p>518 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>above twenty thousand rupees, contributions through Electoral Trust is</p><p>the least restrictive means. Having concluded that the Electoral Bond</p><p>Scheme is not the least restrictive means to achieve the purpose of</p><p>curbing black money in electoral process, there is no necessity of</p><p>applying the balancing prong of the proportionality standard.</p><p>130. Based on the above discussion, we conclude that Electoral Bond</p><p>Scheme does not fulfill the least restrictive means test. The Electoral</p><p>Bond Scheme is not the only means for curbing black money in</p><p>Electoral Finance. There are other alternatives which substantially</p><p>fulfill the purpose and impact the right to information minimally when</p><p>compared to the impact of electoral bonds on the right to information.</p><p>b. Donor Privacy</p><p>131. The Union of India submitted that information about financial</p><p>contributions to political parties is not disclosed to protect the</p><p>contributor’s informational privacy to political affiliation. There are</p><p>two limbs to the argument of the Union of India with respect to the</p><p>purpose of donor privacy. First, that the State interest in introducing</p><p>the Electoral Bond Scheme which guarantees confidentiality (or</p><p>anonymity) to financial contributions is that it furthers donor privacy;</p><p>and second, this State interest facilitates a guaranteed fundamental</p><p>right. Thus, the submission of the State is that the right to information</p><p>can be restricted even if donor privacy is not traceable to the</p><p>grounds in Article 19(2) because privacy is a fundamental right in</p><p>itself. This Court needs to decide the following issues to determine</p><p>if the right to information of voters can be restricted on the ground</p><p>of donor privacy:</p><p>a. Whether the fundamental right to informational privacy</p><p>recognized by this Court in Justice KS Puttaswamy (9J) v.</p><p>Union of India147, includes information about a citizen’s political</p><p>affiliation; and</p><p>b. If (a) above is answered in the affirmative, whether financial</p><p>contribution to a political party is a facet of political affiliation.</p><p>If the right to informational privacy extends to financial contributions</p><p>to a political party, this Court needs to decide if the Electoral Bond</p><p>147 [2017] 10 SCR 569 : (2017) 10 SCC 1</p><p>[2024] 2 S.C.R. 519</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Scheme adequately balances the right to information and right to</p><p>informational privacy of political affiliation.</p><p>I. Informational privacy of financial contributions to political parties</p><p>132. In Justice KS Puttaswamy (9J) (supra), a nine-Judge Bench of</p><p>this Court held that the Constitution guarantees the right to privacy.</p><p>This Court traced the right to privacy to the constitutional ideals of</p><p>dignity, liberty, and the thread of non-arbitrariness that runs through</p><p>the provisions of Part III. The scope of the right to privacy discussed</p><p>in Justice KS Puttaswamy (9J) (supra) is summarized below:</p><p>a. The right to privacy includes “repose”, that is, the freedom from</p><p>unwanted stimuli, “sanctuary”, the protection against intrusive</p><p>observation into intimate decisions and autonomy with respect</p><p>to personal choices;</p><p>b. Privacy over intimate decisions includes decisions related to</p><p>the mind and body. Privacy extends to both the decision and</p><p>the process of arriving at the decision. A lack of privacy over</p><p>thought (which leads to decision-making) would suppress voices</p><p>and lead to homogeneity which is contrary to the values that</p><p>the Constitution espouses148;</p><p>c. Privacy over decisions and choices would enable the exercise</p><p>of fundamental freedoms such as the freedom of thought,</p><p>expression, and association freely without coercion;149</p><p>d. Privacy is attached to a person and not a space. The scope</p><p>of privacy cannot be restricted only to the “private” space; and</p><p>e. Privacy includes informational privacy. Information which may</p><p>seem inconsequential in silos can be used to influence decision</p><p>making behavior when aggregated.150</p><p>133. The content of privacy is not limited to “private” actions and decisions</p><p>such as the choice of a life partner, procreation and sexuality. Neither</p><p>is privacy merely defined from the point of direct State intrusion.</p><p>148 Justice Chandrachud (Paragraph 168), Justice Kaul (Paragraph 19)</p><p>149 Justice Chandrachud, Justice Chellameshwar, Justice Bobde (paragraph 25 and 29)</p><p>150 Justice Chandrachud (paragraph 170): “[…] Individually, these information silos may seem</p><p>inconsequential. In aggregation, they disclose the nature of the personality: food habits, language, health,</p><p>hobbies, sexual preferences, friendships, ways of dress and political affiliation. Justice Chelameshwar</p><p>(Paragraph 38), Justice Kaul (Paragaph 19)</p><p>520 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Privacy is defined as essential protection for the exercise and</p><p>development of other freedoms protected by the Constitution, and</p><p>from direct or indirect influence by both State and non-State actors.</p><p>Viewed in this manner, privacy takes within its fold, decisions which</p><p>also have a ‘public component’.</p><p>134. The expression of political beliefs is guaranteed under Article 19(1)</p><p>(a). Forming political beliefs and opinion is the first stage of political</p><p>expression. The freedom of political expression cannot be exercised</p><p>freely in the absence of privacy of political affiliation. Information</p><p>about a person’s political beliefs can be used by the State at a political</p><p>level, to suppress dissent, and at a personal level, to discriminate by</p><p>denying employment or subjecting them to trolls. The lack of privacy</p><p>of political affiliation would also disproportionately affect those whose</p><p>political views do not match the views of the mainstream.</p><p>135. In the specific context of exercising electoral franchise, the lack of</p><p>privacy of political affiliation would be catastrophic. It is crucial to</p><p>electoral democracy that the exercise of the freedom to vote is not</p><p>subject to undue influence. It is precisely for this reason that the law</p><p>recognizes certain ‘corrupt practices’ by candidates. These ‘corrupt</p><p>practices’ do not merely include ‘financial’ corrupt practices such as</p><p>bribery. They also include undue influence of the voters by an attempt</p><p>to interfere with the free exercise of electoral right151, publication of</p><p>false information about the personal character of any candidate152,</p><p>and providing vehicles for the free conveyance of electors153. The</p><p>law penalizes practices which have the effect of dis-franchising the</p><p>voter through illegitimate means.</p><p>136. Information about a person’s political affiliation can be used to disenfranchise voters through voter surveillance.154 Voter databases</p><p>which are developed through surveillance identify voting patterns of</p><p>the electors and attempt to interfere with their opinions based on the</p><p>information. For example, the data of online purchase histories such</p><p>as the books purchased (which would indicate the ideological leaning</p><p>151 RPA, Section 123(2). The provision includes the threatening with injury including social ostracism and</p><p>ex-communication from any caste or community.</p><p>152 RPA; Section 123(4)</p><p>153 RPA; Section 123(5)</p><p>154 See Philip N Howard and Daniel Kreiss, Political Parties and Voter privacy: Australia, Canada, the United</p><p>Kingdom, and United States in Comparative Perspective, First Monday 15(12) 2010</p><p>[2024] 2 S.C.R. 521</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>of the individual), clothing brands used (which would indicate the</p><p>social class to which the individual belongs) or the news consumed</p><p>or the newspapers subscribed (which would indicate the political</p><p>leanings or ideologies) can be used to draw on the relative political</p><p>affiliation of people. This information about the political affiliation of</p><p>individuals can then be used to influence their votes. Voter surveillance</p><p>gains particular significance when fewer people have attachments</p><p>to political parties.155</p><p>137. At a systemic level, information secured through voter surveillance</p><p>could be used to invalidate the foundation of the electoral system.</p><p>Information about political affiliation could be used to engage in</p><p>gerrymandering, the practice by which constituencies are delimited</p><p>based on the electoral preference of the voters.</p><p>138. Informational privacy to political affiliation is necessary to protect the</p><p>freedom of political affiliation and exercise of electoral franchise. Thus,</p><p>it follows from the judgment of this Court in Justice KS Puttaswamy</p><p>(9J) (supra) and the observations above that the Constitution</p><p>guarantees the right to informational privacy of political affiliation.</p><p>139. Having concluded that the Constitution guarantees a right to</p><p>informational privacy of political affiliation, it needs to be decided</p><p>if the right can be extended to the contributions to political parties.</p><p>The Electoral Bond Scheme has two manifestations of privacy:</p><p>first, informational privacy by prescribing confidentiality vis-à-vis the</p><p>political party; and second, informational privacy by prescribing nondisclosure of the information of political contributions to the public.</p><p>The Union of India submitted that contributions made to political</p><p>parties must be protected both from the political party itself and</p><p>the public because donor privacy is an extension of the principle of</p><p>secret ballot and is a facet of free and fair elections. The petitioners</p><p>argue that equating political contributions with expression of political</p><p>preference through voting is flawed because it conflates money with</p><p>speech. The petitioners also argue that informational privacy does</p><p>not extend to political contributions because they are by their very</p><p>nature public acts which influence public policy, and thus, must be</p><p>subject to public scrutiny.</p><p>155 Colin Bennet, The politics of privacy and privacy of politics: Parties, elections, and voter surveillance in</p><p>Western Democracies. First Monday, 18(8) 2013</p><p>522 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>140. The issue before this Court is not whether public funding of political</p><p>parties is permissible. Neither is the issue whether a restriction</p><p>can be placed on the contribution which can be made by a citizen</p><p>to a political party. If it was, then the question of whether financial</p><p>contribution to a political party is in furtherance of the right to freedom</p><p>of political speech and expression under Article 19(1)(a) or the right</p><p>to freedom to form associations under Article 19(1)(c) would arise.</p><p>However, that not being the case, this Court is not required to decide</p><p>whether financial contribution to a political party is protected by</p><p>Articles 19(1)(a) and 19(1)(c).</p><p>141. This Court in Justice KS Puttaswamy (9J) (supra) did not trace the</p><p>right to privacy to a particular provision of the Constitution such as</p><p>Article 21. Rather, this Court observed that privacy is crucial for the</p><p>fulfilment of the constitutional values of self-determination, autonomy</p><p>and liberty in addition to its essentiality for realizing the fundamental</p><p>freedoms such as the freedom of speech and expression. This Court</p><p>further held that the non-intrusion of the mind (the ability to preserve</p><p>beliefs, thoughts and ideologies) is as important as the non-intrusion</p><p>of the body. This Court (supra) did not hold that privacy is extendable</p><p>to the action of speech or the action of expression, both of which</p><p>are required to possess a communicative element to receive the</p><p>protection underArticle 19(1)(a).156 Rather, the proposition in Justice</p><p>KS Puttaswamy (9J) is that privacy (including informational privacy) is</p><p>extendable to thoughts, beliefs, and opinions formed for the exercise</p><p>of speech and action. Thus, informational privacy would extend to</p><p>financial contributions to political parties even if contributions are not</p><p>traceable to Article 19(1)(a) provided that the information on political</p><p>contributions indicates the political affiliation of the contributor.</p><p>142. Financial contributions to political parties are usually made for two</p><p>reasons. First, they may constitute an expression of support to</p><p>the political party and second, the contribution may be based on a</p><p>quid pro quo. The law as it currently stands permits contributions</p><p>to political parties by both corporations and individuals. The huge</p><p>political contributions made by corporations and companies should</p><p>not be allowed to conceal the reason for financial contributions made</p><p>by another section of the population: a student, a daily wage worker,</p><p>156 See Romesh Thappar v. State of Madras, [1950] 1 SCR 594 (602)</p><p>[2024] 2 S.C.R. 523</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>an artist, or a teacher. When the law permits political contributions</p><p>and such contributions could be made as an expression of political</p><p>support which would indicate the political affiliation of a person,</p><p>it is the duty of the Constitution to protect them. Not all political</p><p>contributions are made with the intent of attempting to alter public</p><p>policy. Contributions are also made to political parties which are not</p><p>substantially represented in the legislatures. Contributions to such</p><p>political parties are made purely with the intent of expressing support.</p><p>At this juncture, the close association of money and politics which</p><p>has been explained above needs to be recounted. Money is not</p><p>only essential for electoral outcomes and for influencing policies. It</p><p>is also necessary for true democratic participation. It is necessary for</p><p>enhancing the number of political parties and candidates contesting</p><p>the elections which would in-turn impact the demographics of</p><p>representatives in the Assembly. It is true that contributions made as</p><p>quid pro quo transactions are not an expression of political support.</p><p>However, to not grant the umbrella of informational privacy to political</p><p>contributions only because a portion of the contributions is made</p><p>for other reasons would be impermissible. The Constitution does</p><p>not turn a blind eye merely because of the possibilities of misuse.</p><p>II. Privacy vis-à-vis political party</p><p>143. The second issue is whether the right to privacy of political</p><p>contributions can be extended to include privacy vis-à-vis the political</p><p>party to which contributions are made since according to the Union</p><p>of India under the Electoral Bond Scheme, the political party to</p><p>which the contribution is made would not know the particulars of</p><p>the contributor. Hence, it is submitted that the scheme is akin to</p><p>the secret ballot.</p><p>144. We are unable to see how the disclosure of information about</p><p>contributors to the political party to which the contribution is made</p><p>would infringe political expression. The disclosure of the particulars</p><p>of the contributions may affect the freedom of individuals to the</p><p>limited extent that the political party with the information could coerce</p><p>those who have not contributed to them. However, we have already</p><p>held above that the scheme only grants de jure and not de facto</p><p>confidentiality vis-à-vis the political party. Under the current Scheme,</p><p>it is still open to the political party to coerce persons to contribute.</p><p>Thus, the argument of the Union of India that the Electoral Bond</p><p>524 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Scheme protects the confidentiality of the contributor akin to the</p><p>system of secret ballot is erroneous.</p><p>III. Balancing the right to information and the right to informational</p><p>privacy</p><p>a) Judicial Approach towards balancing fundamental rights:</p><p>establishing the double proportionality standard</p><p>145. At the core of governance is the conflict between different constitutional</p><p>values or different conceptions of the same constitutional value.</p><p>Countries with a written Constitution attempt to resolve these conflicts</p><p>by creating a hierarchy of rights within the constitutional order where</p><p>a few fundamental rights are subjected to others. For example,</p><p>Article 25 of the Indian Constitution which guarantees the freedom of</p><p>conscience, and the profession, practice and propagation of religion is</p><p>subject to public order, morality, health and other provisions of Part</p><p>III. The first exercise that the Court must undertake while balancing</p><p>two fundamental rights is to determine if the Constitution creates a</p><p>hierarchy between the two rights in conflict. If the Constitution does</p><p>not create a hierarchy between the conflicting rights, the Courts</p><p>must use judicial tools to balance the conflict between the two rights.</p><p>146. The judicial approach towards balancing fundamental rights has</p><p>evolved over the course of years. Courts have used the collective</p><p>interest or the public interest standard, the single proportionality</p><p>standard, and the double proportionality standard to balance the</p><p>competing interests of fundamental rights.</p><p>147. Before the proportionality standard was employed to test the validity</p><p>of the justification for the infringement of fundamental rights, Courts</p><p>balanced conflicting fundamental rights by according prominence</p><p>to one fundamental right over the other based on public interest.</p><p>This approach was undertaken through two modalities. In the</p><p>first modality, the Court while identifying the fundamental rights in</p><p>conflict circumscribed one of the fundamental rights in question</p><p>such that there was no real conflict between the rights. The Court</p><p>while circumscribing the right undertook an exercise of weighing the</p><p>relative constitutional values of the rights based on public interest. In</p><p>Re Noise Pollution157, writ petitions were filed seeking to curb noise</p><p>157 [2005] Suppl. 1 SCR 624 : (2005) 5 SCC 733</p><p>[2024] 2 S.C.R. 525</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>pollution. A two-Judge Bench of this Court observed that those who</p><p>make noise often justify their actions based on freedom of speech</p><p>and expression guaranteed under Article 19(1)(a). However, this</p><p>Court observed that the right to freedom of speech and expression</p><p>does not include the freedom to “engage in aural aggression”. In</p><p>this case, there was no necessity for this Court to “balance” two</p><p>fundamental rights because the right in question (freedom of speech</p><p>and expression) was circumscribed to not include the actions</p><p>challenged (noise pollution). In Subramanian Swamy v. Union of</p><p>India158, Sections 499 and 500 of the Indian Penal Code 1860 which</p><p>criminalized defamation were challenged. A two-Judge Bench of this</p><p>Court framed the issue as a conflict between the right to speech and</p><p>expression underArticle 19(1)(a) and the right to reputation traceable</p><p>to Article 21. In this case, the two Judge Bench held that the right</p><p>to speech and expression does not include the right to defame a</p><p>person. Justice Dipak Misra (as the learned Chief Justice then was)</p><p>observed that a contrary interpretation would completely abrogate</p><p>the right to reputation.159</p><p>148. In the second modality of the public interest approach, the Courts</p><p>undertook a comparison of the values which the rights (and the</p><p>conceptions of the rights) espouse and gave more weightage to the</p><p>right which was in furtherance of a higher degree of public or collective</p><p>interest. In Asha Ranjan v. State of Bihar160, this Court held that</p><p>when there is a conflict between two individuals with respect to their</p><p>right under Article 21, the facts and circumstances must be weighed</p><p>“on the scale of constitutional norms and sensibility and larger public</p><p>interest.” In PUCL (supra), one of the issues before this Court was</p><p>158 [2016] 3 SCR 865 : (2016) 7 SCC 221; Paragraph 11 “While one has a right to speech, others have a right</p><p>to listen or decline to listen. […] Nobody can indulge in aural aggression. If anyone increases his volume</p><p>of speech and that too with the assistance of artificial devices so as to compulsorily expose unwilling</p><p>persons to hear a noise raised to unpleasant or obnoxious levels, then the person speaking is violating</p><p>the right of others to a peaceful, comfortable and pollution-free life guaranteed by Article 21. Article 19(1)</p><p>(a) cannot be pressed into service for defeating the fundamental right guaranteed by Article 21.”</p><p>159 144: “[…] Reputation being an inherent component of Article 21, we do not think it should be allowed</p><p>to be sullied solely because another individual can have its freedom. It is not a restriction that has an</p><p>inevitable consequence which impairs circulation of thought and ideas. In fact, it is control regard being</p><p>had to another person’s right to go to court and state that he has been wronged and abused. He can</p><p>take recourse to a procedure recognised and accepted in law to retrieve and redeem his reputation.</p><p>Therefore, the balance between the two rights needs to be struck. “Reputation” of one cannot be allowed</p><p>to be crucified at the altar of the other’s right of free speech. The legislature in its wisdom has not thought</p><p>it appropriate to abolish criminality of defamation in the obtaining social climate.”</p><p>160 [2017] 1 SCR 945 : (2017) 4 SCC 397</p><p>526 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>whether the disclosure of the assets of the candidates contesting</p><p>the elections in furtherance of the right to information of the voters</p><p>violates the right to privacy of candidates.161 Justice Reddi authoring</p><p>the concurring opinion observed that the right to information of the</p><p>assets of candidates contesting elections trumps the right to privacy</p><p>because the former serves a larger public interest. In Mazdoor</p><p>Kisan Shakti Sangathan v. Union of India162, proceedings under</p><p>Article 32 were initiated challenging orders issued under Section</p><p>144 of the Code of Criminal Procedure prohibiting protests in certain</p><p>areas in Delhi. The issue before this Court was whether the total</p><p>ban of protests at the Jantar Mantar Road would violate the right</p><p>to protest which is traceable to Articles 19(1)(a) and 19(1)(b). One</p><p>of the inter-related issues was whether the right to hold peaceful</p><p>demonstrations violates the right of peaceful residence under Article</p><p>21, and if it does, how this Court should balance the conflicting</p><p>fundamental rights. This Court observed that the Court must while</p><p>balancing two fundamental rights examine where the larger public</p><p>interest lies.163 This Court framed the following issue in the specific</p><p>context of the case: whether disturbances caused to residents by</p><p>the protest is a larger public interest which outweighs the rights of</p><p>protestors. The two-Judge Bench held that “demonstrations as it has</p><p>been happening” are causing serious discomfort to the residents,</p><p>and that the right to protest could be balanced with the right to</p><p>peaceful residence if authorities had taken adequate safeguards</p><p>such as earmarking specific areas for protest, placing restrictions</p><p>on the use of loudspeakers and on parking of vehicles around</p><p>residential places.</p><p>149. The judgment of this Court in Mazdoor Kisan Shakti (supra),</p><p>represents the gradual shift from the pre-proportionality phase to</p><p>the proportionality stage which signifies a shift in the degree of</p><p>justification and the employment of a structured analysis for balancing</p><p>fundamental rights. In Mazdoor Kisan Shakti (supra), this Court</p><p>applied one of the prongs of the proportionality standard (the least</p><p>restrictive means prong) while balancing the right to protest and</p><p>the right to peaceful residence. The Court identified other means</p><p>161 Ibid, [121]</p><p>162 [2018] 11 SCR 586 : (2018) 17 SCC 324</p><p>163 (2018) 17 SCC 324 [58]</p><p>[2024] 2 S.C.R. 527</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>which would have infringed the right to a peaceful residence to a</p><p>lesser extent.</p><p>150. In 2012, a five-Judge Bench of this Court in Sahara India Real</p><p>Estate Corporation Limited v. Securities and Exchange Board</p><p>of India164, used a standard which resembled the structured</p><p>proportionality standard used in Justice KS Puttaswamy (5J) v.</p><p>Union of India165 to balance the conflict between two fundamental</p><p>rights. This judgment marked the first departure from the series of</p><p>cases in which this Court balanced two fundamental rights based on</p><p>doctrinal predominance. In Sahara (supra), the petitioner submitted</p><p>a proposal for the repayment of OFCDs (optionally fully convertible</p><p>bonds) to the investors. The details of the proposals were published</p><p>by a news channel. Interlocutory applications were filed in the Court</p><p>praying for the issuance of guidelines for reporting matters which are</p><p>sub-judice. This Court resolved the conflict between the freedom of</p><p>press protected under Article 19(1)(a) and the right to free trial under</p><p>Article 21 by evolving a neutralizing device. This Court held that it has</p><p>the power to evolve neutralizing devices such as the postponement</p><p>of trial, retrial, change of venue, and in appropriate cases, grant</p><p>acquittal in case of excessive media prejudicial publicity to neutralize</p><p>the conflicting rights. This Court followed the Canadian approach</p><p>in evolving a two prong standard to balance fundamental rights</p><p>through neutralizing devices which partly resembled the structured</p><p>proportionality standard. The two-pronged test was as follows:166</p><p>a. There is no other reasonable alternative measure available</p><p>(necessity test); and</p><p>b. The salutary effects of the measure must outweigh the</p><p>deleterious effects on the fundamental rights (proportionality</p><p>standard).</p><p>151. Finally, this Court in Justice KS Puttaswamy (5J) (supra) applied</p><p>the structured proportionality standard to balance two fundamental</p><p>rights. In this case, a Constitution Bench of this Court while testing the</p><p>validity of theAadharAct 2016 had to resolve the conflict between the</p><p>164 [2012] 12 SCR 256 : (2012) 10 SCC 603</p><p>165 [2018] 8 SCR 1 : (2019) 1 SCC 1</p><p>166 (2012) 10 SCC 603 [42, 22]</p><p>528 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>right to informational privacy and the right to food. Justice Sikri writing</p><p>for the majority held that the Aadhar Act fulfills all the four prongs of</p><p>the proportionality standard. In the final prong of the proportionality</p><p>stage, that is the balancing stage, this Court held that one of the</p><p>considerations was to balance the right to privacy and the right to</p><p>food. On balancing the fundamental rights, this Court held that the</p><p>provisions furthering the right to food satisfy a larger public interest</p><p>whereas the invasion of privacy rights was minimal.167</p><p>152. However, the single proportionality standard which is used to test</p><p>whether the fundamental right in question can be restricted for the</p><p>State interest (that is, the legitimate purpose) and if it can, whether</p><p>the measure used to restrict the right is proportional to the objective</p><p>is insufficient for balancing the conflict between two fundamental</p><p>rights. The proportionality standard is an effective standard to test</p><p>whether the infringement of the fundamental right is justified. It would</p><p>prove to be ineffective when the State interest in question is also a</p><p>reflection of a fundamental right.</p><p>153. The proportionality standard is by nature curated to give prominence</p><p>to the fundamental right and minimize the restriction on it. If this</p><p>Court were to employ the single proportionality standard to the</p><p>considerations in this case, at the suitability prong, this Court would</p><p>determine if non-disclosure is a suitable means for furthering the</p><p>right to privacy. At the necessity stage, the Court would determine</p><p>if non-disclosure is the least restrictive means to give effect to the</p><p>right to privacy. At the balancing stage, the Court would determine</p><p>if non-disclosure has a disproportionate effect on the right holder.</p><p>In this analysis, the necessity and the suitability prongs will</p><p>inevitably be satisfied because the purpose is substantial: it is a</p><p>fundamental right. The balancing stage will only account for the</p><p>disproportionate impact of the measure on the right to information</p><p>(the right) and not the right to privacy (the purpose) since the Court</p><p>is required to balance the impact on the right with the fulfillment</p><p>of the purpose through the selected means. Thus, the Court while</p><p>applying the proportionality standard to resolve the conflict between</p><p>two fundamental rights preferentially frames the standard to give</p><p>prominence to the fundamental right which is alleged to be violated</p><p>167 (2019) 1 SCC 1 [308]</p><p>[2024] 2 S.C.R. 529</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>by the petitioners (in this case, the right to information).168 This could</p><p>well be critiqued for its limitations.</p><p>154. In Campbell v. MGM Limited169, Baroness Hale adopted the double</p><p>proportionality standard to adequately balance two conflicting</p><p>fundamental rights. In this case, the claimant, a public figure,</p><p>instituted proceedings against a newspaper for publishing details of</p><p>her efforts to overcome drug addiction. Baroness Hale applied the</p><p>following standard to balance the right to privacy of the claimant and</p><p>the right to a free press:</p><p>“141. […] This involved looking first at the comparative</p><p>importance of the actual rights being claimed in the</p><p>individual case; then at the justifications for interfering</p><p>with or restricting each of those rights; and applying the</p><p>proportionality test to each”</p><p>155. In Central Public Information Officer, Supreme Court of India v.</p><p>Subash Chandra Agarwal170, one of us (Justice D Y Chandrachud)</p><p>while authoring the concurring opinion adopted the double</p><p>proportionality standard as formulated in Campbell (supra). Referring</p><p>to the double proportionality standard, the concurring opinion observes</p><p>that the Court while balancing between two fundamental rights must</p><p>identify the precise interests weighing in favour of both disclosure and</p><p>privacy and not merely undertake a doctrinal analysis to determine</p><p>if one of the fundamental rights takes precedence over the other:</p><p>“113. Take the example of where an information applicant</p><p>sought the disclosure of how many leaves were taken by a</p><p>public employee and the reasons for such leave. The need</p><p>to ensure accountability of public employees is of clear</p><p>public interest in favour of disclosure. The reasons for the</p><p>leave may also include medical information with respect</p><p>to the public employee, creating a clear privacy interest in</p><p>favour of non-disclosure. It is insufficient to state that the</p><p>privacy interest in medical records is extremely high and</p><p>168 Hon’ble Mr Justice Andrew Cheung PJ, Conflict of fundamental rights and the double proportionality</p><p>test, A lecture in the Common Law Lecture Series 2019 delivered at the University of Hong Kong (17</p><p>September 2019)</p><p>169 [2004] UKHL 22</p><p>170 Civil Appeal No. 10044 of 2010</p><p>530 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>therefore the outcome should be blanket non-disclosure.</p><p>The principle of proportionality may necessitate that the</p><p>number of and reasons for the leaves be disclosed and</p><p>the medical reasons for the leave be omitted. This would</p><p>ensure that the interest in accountability is only abridged</p><p>to the extent necessary to protect the legitimate aim of</p><p>the privacy of the public employee.”</p><p>156. Baroness Hale in Campbell (supra) employed a three step approach</p><p>to balance fundamental rights. The first step is to analyse the</p><p>comparative importance of the actual rights claimed. The second step</p><p>is to lay down the justifications for the infringement of the rights. The</p><p>third is to apply the proportionality standard to both the rights. The</p><p>approach adopted by Baroness Hale must be slightly tempered to</p><p>suit our jurisprudence on proportionality. The Indian Courts adopt a</p><p>four prong structured proportionality standard to test the infringement</p><p>of the fundamental rights. In the last stage of the analysis, the</p><p>Court undertakes a balancing exercise to analyse if the cost of the</p><p>interference with the right is proportional to the extent of fulfilment of</p><p>the purpose. It is in this step that the Court undertakes an analysis</p><p>of the comparative importance of the considerations involved in the</p><p>case, the justifications for the infringement of the rights, and if the</p><p>effect of infringement of one right is proportional to achieve the goal.</p><p>Thus, the first two steps laid down by Baroness Hale are subsumed</p><p>within the balancing prong of the proportionality analysis.</p><p>157. Based on the above discussion, the standard which must be followed</p><p>by Courts to balance the conflict between two fundamental rights</p><p>is as follows:</p><p>a. Does the Constitution create a hierarchy between the</p><p>rights in conflict? If yes, then the right which has been</p><p>granted a higher status will prevail over the other right</p><p>involved. If not, the following standard must be employed</p><p>from the perspective of both the rights where rights A and</p><p>B are in conflict;</p><p>b. Whether the measure is a suitable means for furthering</p><p>right A and right B;</p><p>c. Whether the measure is least restrictive and equally</p><p>effective to realise right A and right B; and</p><p>[2024] 2 S.C.R. 531</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>d. Whether the measure has a disproportionate impact on</p><p>right A and right B.</p><p>b) Validity of the Electoral Bond Scheme, Section 11 of the Finance</p><p>Act and Section 137 of the Finance Act</p><p>158. To recall, Section 13A of the ITAct before the amendment mandated</p><p>that the political party must maintain a record of contributions in</p><p>excess of rupees twenty thousand. Section 11 of the FinanceAct 2017</p><p>amended Section 13A creating an exception for contributions made</p><p>through Electoral Bonds. Upon the amendment, political parties are</p><p>not required to maintain a record of any contribution received through</p><p>electoral bonds. Section 29C of the RPA mandated the political party</p><p>to prepare a report with respect to contributions received in excess</p><p>of twenty thousand rupees from a person or company in a financial</p><p>year. Section 137 of the FinanceAct amended Section 29C of the RPA</p><p>by which a political party is now not required to include contributions</p><p>received by electoral bonds in its report. As explained earlier, the</p><p>feature of anonymity of the contributor vis-à-vis the public is intrinsic</p><p>to the Electoral Bond Scheme. Amendments had to be made to</p><p>Section 13A of the IT Act and Section 29C of the RPA to implement</p><p>the Electoral Bond Scheme because the EBS mandates anonymity</p><p>of the contributor. In this Section, we will answer the question of</p><p>whether the EBS adequately balances the right to informational</p><p>privacy of the contributor and the right to information of the voter.</p><p>159. In Justice KS Puttaswamy (9J) (supra), this Court did not trace</p><p>the right to privacy only to Article 21. This Court considered privacy</p><p>as an essential component for the effective fulfillment of the all</p><p>entrenched rights. Article 25 of the Constitution is the only provision</p><p>in Part III which subjects the right to other fundamental rights.</p><p>Article 25 guarantees the freedom of conscience which means the</p><p>freedom to judge the moral qualities of one’s conduct.171 Financial</p><p>contributions to a political party (as a form of expression of political</p><p>support and belief) can be traced to the exercise of the freedom of</p><p>conscience under Article 25.172 It can very well be argued that the</p><p>right to information of the voter prevails over the right to anonymity</p><p>of political contributions which may be traceable to the freedom of</p><p>171 See Supriyo (supra) [238 , 239]; Aishat Shifa v. State of Karnataka, [2022] 5 SCR 426 : (2023) 2 SCC 1;</p><p>172 See Justice KS Puttaswamy v. Union of India, [2017] 10 SCR 569 : (2017) 10 SCC 1 [372] (opinion of</p><p>Justice Chelameswar);</p><p>532 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>conscience recognized under Article 25 since it is subject to all other</p><p>fundamental rights, including Article 19(1)(a). However, the right</p><p>to privacy of financial contributions to political parties can also be</p><p>traced toArticle 19(1) because the informational privacy of a person’s</p><p>political affiliation is necessary to enjoy the right to political speech</p><p>under Article 19(1)(a), the right to political protests under Article</p><p>19(1)(b), the right to form a political association under Article 19(1)</p><p>(c), and the right to life and liberty under Article 21. The Constitution</p><p>does not create a hierarchy amongst these rights. Thus, there is no</p><p>constitutional hierarchy between the right to information and the right</p><p>to informational privacy of political affiliation.</p><p>160. This Court must now apply the double proportionality standard, that</p><p>is, the proportionality standard to both the rights (as purposes) to</p><p>determine if the means used are suitable, necessary and proportionate</p><p>to the fundamental rights. The Union of India submitted that Clause</p><p>7(4) of the Electoral Bond Scheme balances the right to information</p><p>of the voter and the right to informational privacy of the contributor.</p><p>Clause 7(4) stipulates that the information furnished by the buyer</p><p>shall be treated as confidential by the authorized bank. The bank</p><p>has to disclose the information when it is demanded by a competent</p><p>court or upon the registration of a criminal case by a law enforcement</p><p>agency. It needs to be analyzed if the measure employed (Clause</p><p>7(4)) balances the rights or tilts the balance towards one of the</p><p>fundamental rights.</p><p>161. The first prong of the analysis is whether the means has a rational</p><p>connection with both the purposes, that is, informational privacy of</p><p>the political contributions and disclosure of information to the voter.</p><p>It is not necessary that the means chosen should be the only means</p><p>capable of realising the purpose of the state action. This stage of the</p><p>analysis does not prescribe an efficiency standard. It is sufficient if</p><p>the means constitute one of the many methods by which the purpose</p><p>can be realised, even if it only partially gives effect to the purpose.173</p><p>162. This Court while applying the suitability prong to the purpose of</p><p>privacy of political contribution must consider whether the nondisclosure of information to the voter and its disclosure only when</p><p>demanded by a competent court and upon the registration of criminal</p><p>173 Media One Broadcasting (supra), [101]</p><p>[2024] 2 S.C.R. 533</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>case has a rational nexus with the purpose of achieving privacy of</p><p>political contribution. Undoubtedly, the measure by prescribing nondisclosure of information about political funding shares a nexus with</p><p>the purpose. The non-disclosure of information grants anonymity to</p><p>the contributor, thereby protecting information privacy. It is certainly</p><p>one of the ways capable of realizing the purpose of informational</p><p>privacy of political affiliation.</p><p>163. The suitability prong must next be applied to the purpose of disclosure</p><p>of information about political contributions to voters. There is no</p><p>nexus between the balancing measure adopted with the purpose of</p><p>disclosure of information to the voter. According to Clause 7(4) of</p><p>the Electoral Bond Scheme and the amendments, the information</p><p>about contributions made through the Electoral Bond Scheme is</p><p>exempted from disclosure requirements. This information is never</p><p>disclosed to the voter. The purpose of securing information about</p><p>political funding can never be fulfilled by absolute non-disclosure.</p><p>The measure adopted does not satisfy the suitability prong vis-àvis the purpose of information of political funding. However, let us</p><p>proceed to apply the subsequent prongs of the double proportionality</p><p>analysis assuming that the means adopted has a rational nexus with</p><p>the purpose of securing information about political funding to voters.</p><p>164. The next stage of the analysis is the necessity prong. At this stage,</p><p>the Court determines if the measure identified is the least restrictive</p><p>and equally effective measure. To recall, the Court must determine</p><p>if there are other possible means which could have been adopted</p><p>to fulfill the purpose, and whether such alternative means (a) realize</p><p>the purpose in a real and substantial manner; (b) impact fundamental</p><p>rights differently; and (c) are better suited on an overall comparison</p><p>of the degree of realizing the purpose and the impact on fundamental</p><p>rights.</p><p>165. The provisions of the RPA provide an alternative measure. Section</p><p>29C states that contributions in excess of rupees twenty thousand</p><p>received from a person or company for that financial year must be</p><p>disclosed by the political party through a report. The report must be</p><p>filled in the format prescribed in Form 24A of the Conduct of Election</p><p>Rules 1961. The form is annexed as Annexure II to this judgment.</p><p>A crucial component of this provision when juxtaposed with Section</p><p>13A of the IT Act must be noted. Section 13A of the IT Act requires</p><p>534 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>the political party to maintain a record of the contributions made in</p><p>excess of rupees twenty thousand. Section 29C of the RPA requires</p><p>the political party to disclose information about contributions in</p><p>excess of rupees twenty thousand made by a person or company</p><p>in a financial year. Section 13A mandates record keeping of every</p><p>contribution. On the other hand, Section 29C mandates disclosure</p><p>of information of contributions beyond rupees twenty thousand per</p><p>person or per company in one financial year.</p><p>166. Section 29C(1) is one of the means to achieve the purpose of</p><p>protecting the informational privacy of political affiliation of individuals.</p><p>Parliament in its wisdom has prescribed rupees twenty thousand as</p><p>the threshold where the considerations of disclosure of information</p><p>of political contribution outweigh the considerations of informational</p><p>privacy. It could very well be debated whether rupees twenty thousand</p><p>is on the lower or higher range of the spectrum. However, that is</p><p>not a question for this Court to answer in this batch of petitions.</p><p>The petitioners have not challenged the threshold of rupees twenty</p><p>thousand prescribed for the disclosure of information prescribed by</p><p>Section 29C. They have only raised a challenge to the disclosure</p><p>exception granted to contributions by Electoral Bonds. Thus, this Court</p><p>need not determine if the threshold tilts the balance in favour of one</p><p>of the interests. We are only required to determine if the disclosure</p><p>of information on financial contributions in a year beyond rupees</p><p>twenty thousand is an alternative means to achieve the purposes of</p><p>securing the information on financial contributions and informational</p><p>privacy regarding political affiliation.</p><p>167. It must be recalled that we have held above that the right to information</p><p>of the voter includes the right to information of financial contributions</p><p>to a political party because of the influence of money in electoral</p><p>politics (through electoral outcomes) and governmental decisions</p><p>(through a seat at the table and quid pro quo arrangements between</p><p>the contributor and the political party). The underlying rationale of</p><p>Section 29C(1) is that contributions below the threshold do not have</p><p>the ability to influence decisions, and the right to information of</p><p>financial contributions does not extend to contributions which do not</p><p>have the ability to influence decisions. Similarly, the right to privacy</p><p>of political affiliations does not extend to contributions which may</p><p>be made to influence policies. It only extends to contributions made</p><p>as a genuine form of political support that the disclosure of such</p><p>[2024] 2 S.C.R. 535</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>information would indicate their political affiliation and curb various</p><p>forms of political expression and association.</p><p>168. It is quite possible that contributions which are made beyond</p><p>the threshold could also be a form of political support and not</p><p>necessarily a quid pro quo arrangement, and contributions below</p><p>the threshold could influence electoral outcomes. However, the</p><p>restriction on the right to information and informational privacy of</p><p>such contributions is minimal when compared to a blanket nondisclosure of information on contributions to political parties. Thus,</p><p>this alternative realizes the objective of securing disclosure for</p><p>an informed voter and informational privacy to political affiliation</p><p>in a ‘real and substantial manner’. The measure in the Electoral</p><p>Bond Scheme completely tilts the balance in favor of the purpose</p><p>of informational privacy and abrogates informational interests.</p><p>On an overall comparison of the measure and the alternative,</p><p>the alternative is better suited because it realizes the purposes</p><p>to a considerable extent and imposes a lesser restriction on</p><p>the fundamental rights. Having concluded that Clause 7(4) of</p><p>the Scheme is not the least restrictive means to balance the</p><p>fundamental rights, there is no necessity of applying the balancing</p><p>prong of the proportionality standard.</p><p>169. The Union of India has been unable to establish that the measure</p><p>employed in Clause 7(4) of the Electoral Bond Scheme is the least</p><p>restrictive means to balance the rights of informational privacy</p><p>to political contributions and the right to information of political</p><p>contributions. Thus, the amendment to Section 13A(b) of the IT Act</p><p>introduced by the Finance Act 2017, and the amendment to Section</p><p>29C(1) of the RPA are unconstitutional. The question is whether this</p><p>Court should only strike down the non-disclosure provision in the</p><p>Electoral Bond Scheme, that is Clause 7(4). However, as explained</p><p>above, the anonymity of the contributor is intrinsic to the Electoral</p><p>Bond Scheme. The Electoral Bond is not distinguishable from other</p><p>modes of contributions through the banking channels such as cheque</p><p>transfer, transfer through the Electronic Clearing System or direct</p><p>debit if the anonymity component of the Scheme is struck down.</p><p>Thus, the Electoral Bond Scheme 2018 will also consequentially</p><p>have to be struck down as unconstitutional.</p><p>c. Validity of Section 154 of the Finance Act amending Section</p><p>182(3) to the Companies Act</p><p>536 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>170. Before the 2017 amendment, Section 182(3) of the Companies Act,</p><p>mandated companies to disclose the details of the amount contributed</p><p>to a political party along with the name of the political party to which</p><p>the amount was contributed in its profit and loss account. After the</p><p>amendment, Section 182(3) only requires the disclosure of the</p><p>total amount contributed to political parties in a financial year. For</p><p>example, under Section 182(3) as it existed before the amendment,</p><p>if a Company contributed rupees twenty thousand to a political party,</p><p>the company was required to disclose in its profit and loss account,</p><p>the details of the specific contributions made to that political party.</p><p>However, after the 2017 amendment, the Company is only required to</p><p>disclose that it contributed rupees twenty thousand to a political party</p><p>under the provision without disclosing the details of the contribution,</p><p>that is, the political party to which the contribution was made. The</p><p>profit and loss account of a company is included in the financial</p><p>statement which companies are mandated to prepare.174 A copy of</p><p>the financial statement adopted at the annual general meeting of the</p><p>company must be filed with the Registrar of Companies.175</p><p>171. As discussed in the earlier segment of this judgment, the Companies</p><p>Act 1956 was amended in 1960 to include Section 293A by which</p><p>contributions by companies to political parties and for political</p><p>purposes were regulated. Companies were permitted to contribute</p><p>within the cap prescribed. All such contributions were required to</p><p>be disclosed by the Company in its profit and loss account with</p><p>details. Companies which contravened the disclosure requirement</p><p>were subject to fine. It is crucial to note here that contributions to</p><p>political parties by companies were regulated long before the IT</p><p>Act was amended in 1978 to exempt the income of political parties</p><p>through voluntary contributions for tax purposes (ostensibly to curb</p><p>black money). It is clear as day light that the purpose of mandating</p><p>the disclosure of contributions made by companies was not merely</p><p>to curb black money in electoral financing but crucially to make</p><p>the financial transactions between companies and political parties</p><p>transparent. Contributions for “political purposes” was widely defined</p><p>in the 1985 amendment (which was later incorporated in Section 182</p><p>of the Companies Act 2013) to include expenditure (either directly or</p><p>174 The Companies Act 2013; Section 2(40)</p><p>175 The Companies At 2013; Section 137</p><p>[2024] 2 S.C.R. 537</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>indirectly) for advertisement on behalf of political parties and payment</p><p>to a person “who is carrying activity which can be regarded as likely</p><p>to affect public support to a political party”. This indicates that the</p><p>legislative intent of the provision mandating disclosure was to bring</p><p>transparency to political contributions by companies. Companies have</p><p>always been subject to a higher disclosure requirement because</p><p>of their huge financial presence and the higher possibility of quid</p><p>pro quo transactions between companies and political parties. The</p><p>disclosure requirements in Section 182(3) were included to ensure</p><p>that corporate interests do not have an undue influence in electoral</p><p>democracy, and if they do, the electorate must be made aware of it.</p><p>172. Section 182(3) as amended by the Finance Act 2017 mandates</p><p>the disclosure of total contributions made by political parties. This</p><p>requirement would ensure that the money which is contributed to</p><p>political parties is accounted for. However, the deletion of the mandate</p><p>of disclosing the particulars of contributions violates the right to</p><p>information of the voter since they would not possess information</p><p>about the political party to which the contribution was made which, as</p><p>we have held above, is necessary to identify corruption and quid pro</p><p>quo transactions in governance. Such information is also necessary</p><p>for exercising an informed vote.</p><p>173. Section 182(3) of the Companies Act and Section 29C of the RPA</p><p>as amended by the Finance Act must be read together. Section 29C</p><p>exempts political parties from disclosing information of contributions</p><p>received through Electoral Bonds. However, Section 182(3) not only</p><p>applies to contributions made through electoral bonds but through</p><p>all modes of transfer. In terms of the provisions of the RPA, if a</p><p>company made contributions to political parties through cheque or</p><p>ECS, the political party had to disclose the details in its report. Thus,</p><p>the information about contributions by the company would be in the</p><p>public domain. The only purpose of amending Section 182(3) was</p><p>to bring the provision in tune with the amendment under the RPA</p><p>exempting disclosure requirements for contributions through electoral</p><p>bonds. The amendment to Section 182(3) of the Companies Act</p><p>becomes otiose in terms of our holding in the preceding section that</p><p>the Electoral Bond Scheme and relevant amendments to the RPA</p><p>and the IT Act mandating non-disclosure of particulars on political</p><p>contributions through electoral bonds is unconstitutional.</p><p>538 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>174. In terms of Section 136 of the Companies Act, every shareholder in a</p><p>company has a right to a copy of the financial statement which also</p><p>contains the profit and loss account. The petitioners submitted that</p><p>the non-disclosure of the details of the political contributions made</p><p>by companies in the financial statement would infringe upon the</p><p>right of the shareholders to decide to sell the shares of a company</p><p>if a shareholder does not support the political ideology of the party</p><p>to which contributions were made. This it was contended, violates</p><p>Articles 19(1)(a), 19(1)(g), 21 and 25. We do not see the necessity</p><p>of viewing the non-disclosure requirement in Section 182(3) of the</p><p>Companies Act from the lens of a shareholder in this case when</p><p>we have identified the impact of non-disclosure of information on</p><p>political funding from the larger compass of a citizen and a voter. In</p><p>view of the above discussion, Section 182(3) as amended by the</p><p>Finance Act 2017 is unconstitutional.</p><p>G. Challenge to unlimited corporate funding</p><p>175. The Companies Act 1956,176 as originally enacted, did not contain any</p><p>provision relating to political contributions by companies. Regardless</p><p>of the same, many companies sought to make contributions to political</p><p>parties by amending their memorandum. In Jayantilal Ranchhoddas</p><p>Koticha v. Tata Iron and Steel Co. Ltd.,177 the decision of the</p><p>company to amend its memorandum enabling it to make contributions</p><p>to political parties was challenged before the High Court of Judicature</p><p>at Bombay. The High Court upheld the decision of the company to</p><p>amend its memorandum on the ground that there was no law prohibiting</p><p>companies from contributing to the funds of a party. Chief Justice M</p><p>C Chagla, cautioned against the influential role of “big business and</p><p>money bags” in throttling democracy. The learned Judge emphasized</p><p>that it is the duty of Courts to “prevent any influence being exercised</p><p>upon the voter which is an improper influence or which may be looked</p><p>at from any point of view as a corrupt influence.” Chief Justice Chagla</p><p>highlighted the grave danger inherent in permitting companies to</p><p>donate to political parties and hoped Parliament would “consider under</p><p>what circumstances and under what limitations companies should be</p><p>permitted to make these contributions”.</p><p>176 “1956 Act”</p><p>177 AIR 1958 Bom 155</p><p>[2024] 2 S.C.R. 539</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>176. Subsequently, Parliament enacted the Companies (Amendment) Act</p><p>1960 to incorporate Section 293A in the 1956 Act. The new provision</p><p>allowed a company to contribute to: (a) any political party; or (b) for</p><p>any political purpose to any individual or body. However, the amount</p><p>of contribution was restricted to either twenty-five thousand rupees</p><p>in a financial year or five percent of the average net profits during</p><p>the preceding three financial years, whichever was greater. The</p><p>provision also mandated every company to disclose in its profit and</p><p>loss account any amount contributed by it to any political party or for</p><p>any political purpose to any individual or body during the financial</p><p>year to which that account relates by giving particulars of the total</p><p>amount contributed and the name of the party, individual, or body</p><p>to which or to whom such amount has been contributed.</p><p>177. In 1963, the Report of the Santhanam Committee on Prevention of</p><p>Corruption highlighted the prevalence of corruption at high political</p><p>levels due to unregulated collection of funds and electioneering by</p><p>political parties.178 The Committee suggested “a total ban on all</p><p>donations by incorporated bodies to political parties.” Subsequently,</p><p>Section 293A of the 1956 Act was amended through the Companies</p><p>(Amendment)Act 1969 to prohibit companies from contributing funds to</p><p>any political party or to any individual or body for any political purpose.</p><p>178. In 1985, Parliament again amended Section 293A, in the process</p><p>reversing its previous ban on political contributions by companies.</p><p>It allowed a company, other than a government company and any</p><p>other company with less than three years of existence, to contribute</p><p>any amount or amounts to any political party or to any person for any</p><p>political purpose. It further provided that the aggregate of amounts</p><p>which may be contributed by a company in any financial year shall</p><p>not exceed five percent of its average net profits during the three</p><p>immediately preceding financial years. This provision was retained</p><p>under Section 182 of the Companies Act 2013. The only change was</p><p>that the aggregate amount donated by a company was increased to</p><p>seven and a half percent of its average net profits during the three</p><p>immediately preceding financial years. Section 154 of the Finance</p><p>Act 2017 amended Section 182 of the 2013 Act to delete this limit</p><p>contained in the first proviso of the provision.</p><p>178 Report of the Committee on Prevention of Corruption, 1964 [11.5].</p><p>540 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>179. At the outset, it is important to be mindful of the fact that the petitioners</p><p>are not challenging the vires of Section 182 of the 2013 Act. Neither</p><p>are the petitioners challenging the legality of contributions made by</p><p>companies to political parties. The challenge is restricted to Section</p><p>154 of the Finance Act 2017 which amended Section 182 of the</p><p>2013 Act.</p><p>i. The application of the principle of non-arbitrariness</p><p>180. The petitioners argue that Section 154 of the Finance Act 2017</p><p>violatesArticle 14 of the Constitution. The primary ground of challenge</p><p>is that the amendment to Section 182 of the 2013 Act is manifestly</p><p>arbitrary as it allows companies, including loss-making companies,</p><p>to contribute unlimited amounts to political parties. It has also been</p><p>argued that the law now facilitates the creation of shell companies</p><p>solely for the purposes of contributing funds to political parties. On</p><p>the other hand, the respondent has questioned the applicability of</p><p>the doctrine of manifest arbitrariness for invalidating legislation.</p><p>a. Arbitrariness as a facet of Article 14</p><p>181. At the outset, the relevant question that this Court has to answer is</p><p>whether a legislative enactment can be challenged on the sole ground</p><p>of manifest arbitrariness. Article 14 of the Constitution provides that</p><p>the State shall not deny to any person equality before the law or the</p><p>equal protection of laws within the territory of India. Article 14 is an</p><p>injunction to both the legislative as well the executive organs of the</p><p>State to secure to all persons within the territory of India equality</p><p>before law and equal protection of the laws.179 Traditionally,Article 14</p><p>was understood to only guarantee non-discrimination. In this context,</p><p>Courts held that Article 14 does not forbid all classifications but only</p><p>that which is discriminatory. In State of West Bengal v. Anwar Ali</p><p>Sarkar,180 Justice S R Das (as the learned Chief Justice then was)</p><p>laid down the following two conditions which a legislation must satisfy</p><p>to get over the inhibition of Article 14: first, the classification must</p><p>be founded on an intelligible differentia which distinguishes those</p><p>that are grouped together from others; and second, the differentia</p><p>must have a rational relation to the object sought to be achieved</p><p>179 Basheshar Nath v. CIT, [1959] Supp 1 SCR 528</p><p>180 [1952] 1 SCR 284 : (1951) 1 SCC 1; Also see State of Bombay v. FN Balsara, [1951] 1 SCR 682</p><p>[2024] 2 S.C.R. 541</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>by the legislation. In the ensuing years, this Court followed this</p><p>“traditional approach” to test the constitutionality of a legislation on</p><p>the touchstone of Article 14.181</p><p>182. In E P Royappa v. State of Tamil Nadu,</p><p>182 this Court expanded</p><p>the ambit of Article 14 by laying down non-arbitrariness as a limiting</p><p>principle in the context of executive actions. Justice P N Bhagwati</p><p>(as the learned Chief Justice then was), speaking for the Bench,</p><p>observed that equality is a dynamic concept with many aspects</p><p>and dimensions which cannot be confined within traditional and</p><p>doctrinaire limits. The opinion declared that equality is antithetic to</p><p>arbitrariness, further finding that equality belongs to the rule of law in</p><p>a republic, while arbitrariness belongs to the whim and caprice of an</p><p>absolute monarch. In Ajay Hasia v. Khalid Mujib Seheravardi,183 a</p><p>Constitution Bench of this Court considered it to be well settled that</p><p>any action that is arbitrary necessarily involves negation of equality.</p><p>Justice Bhagwati observed that the doctrine of non-arbitrariness can</p><p>also be extended to a legislative action. He observed that:</p><p>“[w]herever therefore there is arbitrariness in State action</p><p>whether it be of the legislature or of the executive or of an</p><p>“authority” under Article 12, Article 14 immediately springs</p><p>into action and strikes down such State action.”</p><p>183. Immediately after the judgment in Ajay Hasia (supra), Justice</p><p>E S Venkataramaiah (as the learned Chief Justice then was) in</p><p>Indian Express Newspapers (Bombay) (P) Ltd. v. Union of</p><p>India,184 laid down the test of manifest arbitrariness with respect</p><p>to subordinate legislation. It was held that a subordinate legislation</p><p>does not carry the same degree of immunity enjoyed by a statute</p><p>passed by a competent legislature. Therefore, this Court held that</p><p>a subordinate legislation “may also be questioned on the ground</p><p>that it is unreasonable, unreasonable not in the sense of not</p><p>being reasonable, but in the sense that it is manifestly arbitrary.”</p><p>181 Kathi Raning Rawat v. State of Saurashtra, [1952] 1 SCR 435 : (1952) 1 SCC 215; Budhan Chowdhury</p><p>v. State of Bihar, [1955] 1 SCR 1045; Ram Krishna Dalmia v. S R Tendolkar, [1959] SCR 279.</p><p>182 [1974] 2 SCR 348 : (1974) 4 SCC 3</p><p>183 [1981] 2 SCR 79 : (1981) 1 SCC 722</p><p>184 [1985] 2 SCR 287 : (1985) 1 SCC 641</p><p>542 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>In Sharma Transport v. Government of Andhra Pradesh,185 this</p><p>Court reiterated Indian Express Newspapers (supra) by observing</p><p>that the test of arbitrariness as applied to an executive action cannot</p><p>be applied to delegated legislation. It was held that to declare a</p><p>delegated legislation as arbitrary, “it must be shown that it was not</p><p>reasonable and manifestly arbitrary.” This Court further went on to</p><p>define “arbitrarily” to mean “in an unreasonable manner, as fixed</p><p>or done capriciously or at pleasure, without adequate determining</p><p>principle, not founded in the nature of things, non-rational, not done or</p><p>acting according to reason or judgment, depending on the will alone.”</p><p>184. While this Court accepted it as a settled proposition of law that a</p><p>subordinate legislation can be challenged on the ground of manifest</p><p>arbitrariness, there was still some divergence as to the doctrine’s</p><p>application with respect to plenary legislation. In State of Tamil</p><p>Nadu v. Ananthi Ammal,186 a three-Judge Bench of this Court held</p><p>that a statute can be declared invalid under Article 14 if it is found</p><p>to be arbitrary or unreasonable. Similarly, in Dr. K R Lakshmanan</p><p>v. State of Tamil Nadu,187 a three-Judge Bench of this Court</p><p>invalidated a legislation on the ground that it was arbitrary and in</p><p>violation of Article 14. However, in State of Andhra Pradesh v.</p><p>McDowell & Co.,188 another three-Judge Bench of this Court held</p><p>that a plenary legislation cannot be struck down on the ground that</p><p>it is arbitrary or unreasonable. In McDowell (supra), this Court held</p><p>that a legislation can be invalidated on only two grounds: first, the</p><p>lack of legislative competence; and second, on the violation of any</p><p>fundamental rights guaranteed in Part III of the Constitution or of</p><p>any other constitutional provision.</p><p>185. This divergence became more apparent when a three-Judge Bench of</p><p>this Court in Malpe Vishwanath Acharya v. State of Maharashtra,189</p><p>invalidated certain provisions of the Bombay Rents, Hotel and Lodging</p><p>House Rates ControlAct 1947 relating to the determination and fixation</p><p>of the standard rent. This Court declared the provisions in question</p><p>unreasonable, arbitrary, and violative ofArticle 14. However, the Court</p><p>185 [2001] Suppl. 5 SCR 390 : (2002) 2 SCC 188</p><p>186 [1994] Suppl. 5 SCR 666 : (1995) 1 SCC 519</p><p>187 [1996] 1 SCR 395 : (1996) 2 SCC 226</p><p>188 [1996] 3 SCR 721 : (1996) 3 SCC 709</p><p>189 [1997] Suppl. 6 SCR 717 : (1998) 2 SCC 1</p><p>[2024] 2 S.C.R. 543</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>did not strike down the provisions on the ground that the extended</p><p>period of the statute was to come to an end very soon, requiring</p><p>the government to reconsider the statutory provisions. Similarly, in</p><p>Mardia Chemicals Ltd. v. Union of India,190 another three-Judge</p><p>Bench of this Court invalidated Section 17(2) of the Securitization</p><p>and Reconstruction of Financial Assets and Enforcement of Security</p><p>Interest Act, 2002 for being unreasonable and arbitrary.</p><p>186. In Natural Resources Allocation, In Re Special Reference No. 1</p><p>of 2012,191 a Constitution Bench of this Court referred to McDowell</p><p>(supra) to observe that a law may not be struck down as arbitrary</p><p>without a constitutional infirmity. Thus, it was held that a mere finding</p><p>of arbitrariness was not sufficient to invalidate a legislation. The</p><p>Court has to enquire whether the legislation contravened any other</p><p>constitutional provision or principle.</p><p>b. Beyond Shayara Bano: entrenching manifest arbitrariness in</p><p>Indian jurisprudence</p><p>187. In Shayara Bano v. Union of India,192 a Constitution Bench of this</p><p>Court set aside the practice of Talaq-e-Bidaat (Triple Talaq). Section</p><p>2 of the Muslim Personal Law (Shariat) Act 1937 was also impugned</p><p>before this Court. The provision provides that the personal law of</p><p>the Muslims, that is Shariat, will be applicable in matters relating to</p><p>marriage, dissolution of marriage and talaq. Justice R F Nariman,</p><p>speaking for the majority, held that Triple Talaq is manifestly arbitrary</p><p>because it allows a Muslim man to capriciously and whimsically break</p><p>a marital tie without any attempt at reconciliation to save it. Thus,</p><p>Justice Nariman applied the principle of manifest arbitrariness for</p><p>the purpose of testing the constitutional validity of the legislation on</p><p>the touchstone of Article 14.</p><p>188. Justice Nariman traced the evolution of non-arbitrariness jurisprudence</p><p>in India to observe that McDowells (supra) failed to consider two</p><p>binding precedents, namely, Ajay Hasia (supra) and K R Lakshmanan</p><p>(supra). This Court further observed that McDowells (supra) did not</p><p>notice Maneka Gandhi v. Union of India,193 where this Court held</p><p>190 [2004] 3 SCR 982 : (2004) 4 SCC 311</p><p>191 [2012] 9 SCR 311 : (2012) 10 SCC 1</p><p>192 [2017] 9 SCR 797 : (2017) 9 SCC 1</p><p>193 [1978] 2 SCR 621 : (1978) 1 SCC 248</p><p>544 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>that substantive due process is a part of Article 21 which has to be</p><p>read along with Articles 14 and 19 of the Constitution. Therefore,</p><p>Justice Nariman held that arbitrariness of a legislation is a facet of</p><p>unreasonableness in Articles 19(2) to (6) and therefore arbitrariness</p><p>can also be used as a standard to strike down legislation underArticle</p><p>14. It held McDowells (supra) to be per incuriam and bad in law.</p><p>189. Shayara Bano (supra) clarified In Re Special Reference No. 1 of</p><p>2012 (supra) by holding that a finding of manifest arbitrariness is in</p><p>itself a constitutional infirmity and, therefore, a ground for invalidating</p><p>legislation for the violation of Article 14. Moreover, it was held that</p><p>there is no rational distinction between subordinate legislation and</p><p>plenary legislation for the purposes ofArticle 14.Accordingly, the test</p><p>of manifest arbitrariness laid down by this Court in Indian Express</p><p>Newspapers (supra) in the context of subordinate legislation was</p><p>also held to be applicable to plenary legislation. In conclusion, this</p><p>Court held that manifest arbitrariness “must be something done</p><p>by the legislature capriciously, irrationally and/or without adequate</p><p>determining principle.” It was further held that a legislation which is</p><p>excessive and disproportionate would also be manifestly arbitrary. The</p><p>doctrine of manifest arbitrariness has been subsequently reiterated</p><p>by this Court in numerous other judgments.</p><p>190. The standard of manifest arbitrariness was further cemented by the</p><p>Constitution Bench of this Court in Navtej Singh Johar v. Union of</p><p>India.194 In Navtej Singh Johar (supra), Section 377 of the Indian</p><p>Penal Code 1860 was challenged, inter alia, on the ground it is</p><p>manifestly arbitrary. Section 377 criminalized any person who has</p><p>had “voluntary carnal intercourse against the order of nature”. Chief</p><p>Justice Dipak Misra (writing for himself and Justice AM Khanwilkar)</p><p>held that Section 377 is manifestly arbitrary for failing to make a</p><p>distinction between consensual and non-consensual sexual acts</p><p>between consenting adults.195 Justice Nariman, in the concurring</p><p>opinion, observed that Section 377 is manifestly arbitrary for penalizing</p><p>“consensual gay sex”. Justice Nariman faulted the provision for (a)</p><p>not distinguishing between consensual and non-consensual sex for</p><p>the purpose of criminalization; and (b) criminalizing sexual activity</p><p>194 [2018] 7 SCR 379 : (2018) 10 SCC 1</p><p>195 WP (Criminal) 76 of 2016 [Chief Justice Misra, 239]</p><p>[2024] 2 S.C.R. 545</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>between two persons of the same gender.196 Justice DY Chandrachud</p><p>noted that Section 377 to the extent that it penalizes physical</p><p>manifestation of love by a section of the population (the LGBTQ+</p><p>community) is manifestly arbitrary.197 Similarly, Justice Indu Malhotra</p><p>observed that the provision is manifestly arbitrary because the basis</p><p>of criminalization is the sexual orientation of a person which is not</p><p>a “rationale principle”198.</p><p>191. In Joseph Shine v. Union of India,</p><p>199 a Constitution Bench of this</p><p>Court expressly concurred with the doctrine of manifest arbitrariness</p><p>as evolved in Shayara Bano (supra). In Joseph Shine (supra),</p><p>one of us (Justice D Y Chandrachud) observed that the doctrine</p><p>of manifest arbitrariness serves as a check against state action or</p><p>legislation “which has elements of caprice, irrationality or lacks an</p><p>adequate determining principle.” In Joseph Shine (supra), the validity</p><p>of Section 497 of the Indian Penal Code was challenged. Section</p><p>497 penalized a man who has sexual intercourse with a woman who</p><p>is and whom he knows or has a reason to believe to be the wife of</p><p>another man, without the “consent and connivance of that man” for</p><p>the offence of adultery. Justice Nariman observed that the provision</p><p>has paternalistic undertones because the provision does not penalize</p><p>a married man for having sexual intercourse with a married woman</p><p>if he obtains her husband’s consent. The learned Judge observed</p><p>that the provision treats a woman like a chattel:</p><p>“23. […] This can only be on the paternalistic notion of</p><p>a woman being likened to chattel, for if one is to use</p><p>the chattel or is licensed to use the chattel by the ―</p><p>licensor‖, namely, the husband, no offence is committed.</p><p>Consequently, the wife who has committed adultery is not</p><p>the subject matter of the offence, and cannot, for the reason</p><p>that she is regarded only as chattel, even be punished as</p><p>an abettor. This is also for the chauvinistic reason that the</p><p>third-party male has seduced her, she being his victim.</p><p>What is clear, therefore, is that this archaic law has long</p><p>196 Ibid,[Justice Nariman, 82]</p><p>197 Ibid, [Justice DY Chandrachud, 29]</p><p>198 Ibid, [Justice Malhotra, paragraph 14.9]</p><p>199 [2018] 11 SCR 765 : (2019) 3 SCC 39</p><p>546 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>outlived its purpose and does not square with today‘s</p><p>constitutional morality, in that the very object with which it</p><p>was made has since become manifestly arbitrary, having</p><p>lost its rationale long ago and having become in today‘s</p><p>day and age, utterly irrational. On this basis alone, the</p><p>law deserves to be struck down, for with the passage of</p><p>time, Article 14 springs into action and interdicts such law</p><p>as being manifestly arbitrary.”</p><p>192. The learned Judge further observed that the “ostensible object of</p><p>Section 497” as pleaded by the State which is to preserve the sanctity</p><p>of marriage is not in fact the object of the provision because: (a) the</p><p>sanctity of marriage can be destroyed even if a married man has</p><p>sexual intercourse with an unmarried woman or a widow; and (b)</p><p>the offence is not committed if the consent of the husband of the</p><p>woman is sought.</p><p>193. Justice DY Chandrachud in his opinion observed that a provision</p><p>is manifestly arbitrary if the determining principle of it is not in</p><p>consonance with constitutional values. The opinion noted that Section</p><p>497 makes an “ostensible” effort to protect the sanctity of marriage</p><p>but in essence is based on the notion of marital subordination of</p><p>women which is inconsistent with constitutional values.200 Chief Justice</p><p>Misra (writing for himself and Justice AM Khanwilkar) held that the</p><p>provision is manifestly arbitrary for lacking “logical consistency” since</p><p>it does not treat the wife of the adulterer as an aggrieved person</p><p>and confers a ‘license’ to the husband of the woman.</p><p>194. It is now a settled position of law that a statute can be challenged</p><p>on the ground it is manifestly arbitrary. The standard laid down by</p><p>Justice Nariman in Shayara Bano (supra), has been citied with</p><p>approval by the Constitution Benches in Navtej Singh Johar (supra)</p><p>and Joseph Shine (supra). Courts while testing the validity of a</p><p>law on the ground of manifest arbitrariness have to determine if the</p><p>statute is capricious, irrational and without adequate determining</p><p>principle, or something which is excessive and disproportionate.</p><p>This Court has applied the standard of “manifest arbitrariness” in</p><p>the following manner:</p><p>200 (2019) 3 SCC 39 [Paragraph 35]</p><p>[2024] 2 S.C.R. 547</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>a. A provision lacks an “adequate determining principle” if the</p><p>purpose is not in consonance with constitutional values. In</p><p>applying this standard, Courts must make a distinction between</p><p>the “ostensible purpose”, that is, the purpose which is claimed</p><p>by the State and the “real purpose”, the purpose identified by</p><p>Courts based on the available material such as a reading of</p><p>the provision201; and</p><p>b. A provision is manifestly arbitrary even if the provision does</p><p>not make a classification.202</p><p>195. This Court in previous judgments has discussed the first of the above</p><p>applications of the doctrine by distinguishing between the “ostensible</p><p>purpose” and the “real purpose” of a provision with sufficient clarity.</p><p>The application of the doctrine of manifest arbitrariness by Chief</p><p>Justice Misra and Justice Nariman in Navtej Singh Johar (supra) to</p><p>strike down a provision for not classifying between consensual and</p><p>non-consensual sex must be understood in the background of two</p><p>jurisprudential developments on the interpretation of Part III of the</p><p>Constitution. The first, is the shift from reading the provisions of Part</p><p>III of the Constitution as isolated silos to understanding the thread of</p><p>reasonableness which runs through all the provisions and elevating</p><p>unreasonable (and arbitrary) action to the realm of fundamental</p><p>rights. The second is the reading of Article 14 to include the facets</p><p>of formal equality and substantive equality. Article 14 consists of two</p><p>components. “Equality before the law” which means that the law must</p><p>treat everybody equally in the formal sense. “Equal protection of the</p><p>laws” signifies a guarantee to secure factual equality. The legislature</p><p>and the executive makes classifications to achieve factual equality.</p><p>The underlying premise of substantive equality is the recognition that</p><p>not everybody is equally placed and that the degree of harm suffered</p><p>by a group of persons (or an individual) varies because of unequal</p><p>situations. This Court has in numerous judgments recognized that</p><p>the legislature is free to recognize the degrees of harm and confine</p><p>its benefits or restrictions to those cases where the need is the</p><p>clearest.203 The corollary of the proposition that it is reasonable to</p><p>201 Justice Chandrachud, Justice Malhotra, and Justice Nariman in Navtej Singh Johar (supra); Justices</p><p>Chandrachud and Nariman in Joseph Shine (supra).</p><p>202 Chief Justice Misra in Navtej Singh Johar (supra)</p><p>203 Mohd. Hanif Quareshi v. State of Bihar, AIR 1958 SC 731; Binoy Viswam v. Union of India, [2017] 7 SCR</p><p>1 : (2017) 7 SCC 59; Charanjit Lal Chowdhuri v. Union of India, (1950) SCC 833</p><p>548 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>identify the degrees of harm, is that it is unreasonable, unjust, and</p><p>arbitrary if the Legislature does not identify the degrees of harm for</p><p>the purpose of law.</p><p>196. It is undoubtedly true that it is not the constitutional role of this Court</p><p>to second guess the intention of the legislature in enacting a particular</p><p>statute. The legislature represents the democratic will of the people,</p><p>and therefore, the courts will always presume that the legislature</p><p>is supposed to know and will be aware of the needs of the people.</p><p>Moreover, this Court must be mindful of falling into an error of equating</p><p>a plenary legislation with a subordinate legislation. In Re Delhi Laws</p><p>Act 1912,</p><p>204 Justice Fazl Ali summed up the extent and scope of</p><p>plenary legislation and delegated legislation, in the following terms:</p><p>“32. The conclusions at which I have arrived so far may</p><p>now be summed up:</p><p>(1) The legislature must normally discharge its primary</p><p>legislative function itself and not through others.</p><p>(2) Once it is established that it has sovereign powers</p><p>within a certain sphere, it must follow as a corollary</p><p>that it is free to legislate within that sphere in any</p><p>way which appears to it to be the best way to give</p><p>effect to its intention and policy in making a particular</p><p>law, and that it may utilise any outside agency to any</p><p>extent it finds necessary for doing things which it is</p><p>unable to do itself or finds it inconvenient to do. In</p><p>other words, it can do everything which is ancillary</p><p>to and necessary for the full and effective exercise</p><p>of its power of legislation.</p><p>(3) It cannot abdicate its legislative functions, and</p><p>therefore while entrusting power to an outside agency,</p><p>it must see that such agency acts as a subordinate</p><p>authority and does not become a parallel legislature.</p><p>(4) The doctrine of separation of powers and the judicial</p><p>interpretation it has received in America ever since</p><p>the American Constitution was framed, enables the</p><p>American courts to check undue and excessive</p><p>204 (1951) SCC 568</p><p>[2024] 2 S.C.R. 549</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>delegation but the courts of this country are not</p><p>committed to that doctrine and cannot apply it in</p><p>the same way as it has been applied in America.</p><p>Therefore, there are only two main checks in this</p><p>country on the power of the legislature to delegate,</p><p>these being its good sense and the principle that it</p><p>should not cross the line beyond which delegation</p><p>amounts to “abdication and self-effacement”.</p><p>197. InGwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. Assistant Commissioner</p><p>of Sales Tax and others,</p><p>205 a Constitution Bench of this Court held</p><p>that a subordinate legislation is ancillary to the statute. Therefore, the</p><p>delegate must enact the subordinate legislation “consistent with the</p><p>law under which it is made and cannot go beyond the limits of the</p><p>policy and standard laid down in the law.” Since the power delegated</p><p>by a statute is limited by its terms, the delegate is expected to “act in</p><p>good faith, reasonably, intra vires the power granted and on relevant</p><p>consideration of material facts.”206 This Court has to be cognizant of this</p><p>distinction. In fact, the doctrine of manifest arbitrariness, as developed</p><p>by this Court in Indian Express Newspapers (supra) in the context</p><p>of subordinate legislation, was applicable to the extent that “it is so</p><p>arbitrary that it could not be said to be in conformity with the statute</p><p>or that it offends Article 14 of the Constitution.”207</p><p>198. The above discussion shows that manifest arbitrariness of a</p><p>subordinate legislation has to be primarily tested vis-a-vis its</p><p>conformity with the parent statute. Therefore, in situations where</p><p>a subordinate legislation is challenged on the ground of manifest</p><p>arbitrariness, this Court will proceed to determine whether the</p><p>delegate has failed “to take into account very vital facts which either</p><p>expressly or by necessary implication are required to be taken into</p><p>consideration by the statute or, say, the Constitution.”208 In contrast,</p><p>205 [1974] 2 SCR 879 : (1974) 4 SCC 98</p><p>206 Shri Sitaram Sugar Co. Ltd. v. Union of India, (1990) 3 SCC 223</p><p>207 In Khoday Distilleries Ltd. V. State of Karnataka, (1996) 10 SCC 304, this Court reiterated Indian Express</p><p>Newspapers (supra) by holding that a delegated legislation is manifestly arbitrary if it “could not be</p><p>reasonably expected to emanate from an authority delegated with the law-making power.” Similarly, in</p><p>State of Tamil Nadu v. P Krishnamurthy, [2006] 3 SCR 396 : (2006) 4 SCC 517 this Court held that</p><p>subordinate legislation can be challenged on the ground of manifest arbitrariness to an extent “where the</p><p>court might well say that the legislature never intended to give authority to make such rules.”</p><p>208 Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India, [1985] 2 SCR 287 : (1985) 1 SCC 641</p><p>550 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>application of manifest arbitrariness to a plenary legislation passed by</p><p>a competent legislation requires the Court to adopt a different standard</p><p>because it carries greater immunity than a subordinate legislation.</p><p>We concur with Shayara Bano (supra) that a legislative action can</p><p>also be tested for being manifestly arbitrary. However, we wish to</p><p>clarify that there is, and ought to be, a distinction between plenary</p><p>legislation and subordinate legislation when they are challenged for</p><p>being manifestly arbitrary.</p><p>ii. Validity of Section 154 of the Finance Act 2017 omitting the</p><p>first proviso to Section 182 of the Companies Act</p><p>199. We now turn to examine the vires of Section 154 of the Finance</p><p>Act 2017. The result of the amendment is that: (a) a company, other</p><p>than a government company and a company which has been in</p><p>existence for less than three financial years, can contribute unlimited</p><p>amounts to any political party; and (b) companies, regardless of</p><p>the fact whether they are profit making or otherwise, can contribute</p><p>funds to political parties. The issue that arises for consideration is</p><p>whether the removal of contribution restrictions is manifestly arbitrary</p><p>and violates Article 14 of the Constitution.</p><p>200. As discussed in the earlier section, this Court has consistently</p><p>pointed out the pernicious effect of money on the integrity of the</p><p>electoral process in India. The Law Commission of India in its</p><p>170th Report also observed that “most business houses already</p><p>know where their interest lies and they make their contributions</p><p>accordingly to that political party which is likely to advance their</p><p>interest more.”209 This issue becomes particularly problematic</p><p>when we look at the avenues through which political parties</p><p>accumulate their capital. Section 182 of the 2013 Act is one such</p><p>legal provision allowing companies to contribute to political parties.</p><p>The question before us is not how political parties expend their</p><p>financial resources, but how they acquire their financial resources</p><p>in the first instance.</p><p>201. The Preamble to the Constitution describes India as a “democratic</p><p>republic”: a democracy in which citizens are guaranteed political</p><p>equality irrespective of caste and class and where the value of</p><p>209 Law Commission of India, 170th Report on the Reform of the Electoral Laws (1999)</p><p>[2024] 2 S.C.R. 551</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>every vote is equal. Democracy does not begin and end with</p><p>elections. Democracy sustains because the elected are responsive</p><p>to the electors who hold them accountable for their actions and</p><p>inactions. Would we remain a democracy if the elected do not</p><p>heed to the hue and cry of the needy? We have established the</p><p>close relationship between money and politics above where we</p><p>explained the importance of money for entry to politics, for winning</p><p>elections, and for remaining in power. That being the case, the</p><p>question that we ask ourselves is whether the elected would truly</p><p>be responsive to the electorate if companies which bring with them</p><p>huge finances and engage in quid pro quo arrangements with</p><p>parties are permitted to contribute unlimited amounts. The reason</p><p>for political contributions by companies is as open as day light.</p><p>Even the learned Solicitor General did not deny during the course</p><p>of the hearings that corporate donations are made to receive favors</p><p>through quid pro quo arrangements.</p><p>202. In Kesavananda Bharati v. State of Kerala,210 the majority of this</p><p>Court held that “republican and democratic form of government”</p><p>form the basic elements of the constitutional structure. Subsequently,</p><p>in Indira Nehru Gandhi v. Raj Narain,211 Justice H R Khanna</p><p>reiterated that the democratic set up of government is a part of the</p><p>basic features of the Constitution. Elections matter in democracy</p><p>because they are the most profound expression of the will of the</p><p>people. Our parliamentary democracy enables citizens to express</p><p>their will through their elected representatives. The integrity of the</p><p>electoral process is a necessary concomitant to the maintenance of</p><p>the democratic form of government.212</p><p>203. This Court has also consistently held that free and fair elections</p><p>form an important concomitant of democracy.213 In Kuldip Nayar</p><p>210 [1973] Suppl. 1 SCR 1 : (1973) 4 SCC 225</p><p>211 [1978] 2 SCR 405 : (1975) Supp SCC 1</p><p>212 In Indira Nehru Gandhi v. Raj Narain, [1978] 2 SCR 405 : (1975) Supp SCC 1, Justice Khanna observed</p><p>that periodical elections are a necessary postulate of a democratic setup as it allows citizens to elect their</p><p>representatives. He further observed that democracy can function “only upon the faith that elections are</p><p>free and fair and not rigged and manipulated, that they are effective instruments of ascertaining popular</p><p>will both in reality and form and are not mere rituals calculated to generate illusion of defence to mass</p><p>opinion.”</p><p>213 Digvijay Mote v. Union of India, (1993) 4 SCC 175; Union of India v. Association for Democratic Reforms,</p><p>(2002) 5 SCC 294.</p><p>552 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>v. Union of India,214 a Constitution Bench of this Court held that</p><p>a democratic form of government depends on a free and fair</p><p>election system. In People’s Union for Civil Liberties v. Union</p><p>of India,215 this Court held that free and fair elections denote equal</p><p>opportunity to all people. It was further observed that a free and</p><p>fair election is one which is not “rigged and manipulated and the</p><p>candidates and their agents are not able to resort to unfair means</p><p>and malpractices.”</p><p>204. The integrity of the election process is pivotal for sustaining the</p><p>democratic form of government. The Constitution also places the</p><p>conduct of free and fair elections in India on a high pedestal. To this</p><p>purpose, Article 324 puts the Election Commission in charge of the</p><p>entire electoral process commencing with the issue of the notification</p><p>by the President to the final declaration of the result.216 However,</p><p>it is not the sole duty of the Election Commission to secure the</p><p>purity and integrity of the electoral process. There is also a positive</p><p>constitutional duty on the other organs of the government, including</p><p>the legislature, executive and the judiciary, to secure the integrity of</p><p>the electoral process.</p><p>205. During the course of the arguments, the learned Solicitor General</p><p>submitted that the limit of seven and a half percent of the average</p><p>net profits in the preceding three financial years was perceived as</p><p>a restriction on companies who would want to donate in excess of</p><p>the statutory cap. The learned Solicitor General further submitted</p><p>that companies who wanted to donate in excess of the statutory cap</p><p>would create shell companies and route their contributions through</p><p>them. Therefore, it was suggested that the statutory cap was removed</p><p>to discourage the creation of shell companies.</p><p>206. The limit on restrictions to political parties was incorporated in</p><p>Section 293A of the 1956 Act through the Companies (Amendment)</p><p>Bill 1985. The original restriction on contribution was five per cent</p><p>of a company’s average net profits during the three immediately</p><p>preceding financial years. The Lok Sabha debates pertaining to the</p><p>Companies Bill furnish an insight into why contribution restrictions</p><p>214 [2006] Suppl. 5 SCR 1 : (2006) 7 SCC 1</p><p>215 [2013] 12 SCR 283 : (2013) 10 SCC 1</p><p>216 Mohinder Singh Gill v. Chief Election Commissioner, [1978] 2 SCR 272 : (1978) 1 SCC 405</p><p>[2024] 2 S.C.R. 553</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>were imposed in the first place. The then Minister of Chemicals and</p><p>Fertilizers and Industry and CompanyAffairs justified the contribution</p><p>restrictions, stating that:</p><p>“Since companies not having profits should not be</p><p>encouraged to make political contributions, monetary</p><p>ceiling as an alternative to a certain percentage of profits</p><p>for arriving at the permissible amount of political donation</p><p>has been done away with.”217</p><p>207. Thus, the object behind limiting contributions was to discourage</p><p>loss-making companies from contributing to political parties. In 1985,</p><p>Parliament prescribed the condition that only companies which</p><p>have been in existence for more than three years can contribute.</p><p>This condition was also included to prevent loss-making companies</p><p>and shell companies from making financial contributions to political</p><p>parties. If the ostensible object of the amendment, as contended</p><p>by the learned Solicitor General, was to discourage the creation of</p><p>shell companies, there is no justification for removing the cap on</p><p>contributions which was included for the very same purpose: to deter</p><p>shell companies from making political contributions. In fact, when</p><p>the proposal to amend Section 182 of the 2013 Act was mooted by</p><p>the Government in 2017, the Election Commission of India opposed</p><p>the amendment and suggested that the Government reconsider</p><p>its decision on the ground that it would open up the possibility of</p><p>creating shell companies. The relevant portion of the opinion of the</p><p>ECI is reproduced below:</p><p>“Certain amendments have been proposed in Section 182</p><p>of the Companies Act, where the first proviso has been</p><p>omitted and consequently the limit of seven and a half</p><p>percent (7.5 %) of the average net profits in the preceding</p><p>three financial years on contributions by companies has</p><p>been removed from the statute. This opens up the possibility</p><p>of shell companies being set up for the sole purpose of</p><p>making donations to political parties with no other business</p><p>of consequence having disbursable profits.”218</p><p>217 Lok Sabha Debates, Companies Bill (16 May 1985).</p><p>218 Election Commission of India, Letter dated 26 May 2017, No. 56/PPEMS/Transparency/2017</p><p>554 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>208. After the amendment, companies similar to individuals, can make</p><p>unlimited contributions and contributions can be made by both profitmaking and loss-making companies to political parties. Thus, in</p><p>essence, it could be argued that the amendment is merely removing</p><p>classification for the purpose of political contribution between</p><p>companies and individuals on the one hand and loss-making and</p><p>profit-making companies on the other.</p><p>209. The proposition on the principle of manifest arbitrariness culled out</p><p>above needs to be recalled. The doctrine of manifest arbitrariness</p><p>can be used to strike down a provision where: (a) the legislature</p><p>fails to make a classification by recognizing the degrees of harm;</p><p>and (b) the purpose is not in consonance with constitutional values.</p><p>210. One of the reasons for which companies may contribute to political</p><p>parties could be to secure income tax benefit.219 However, companies</p><p>have been contributing to political parties much before the Indian</p><p>legal regime in 2003 exempted contributions to political parties.</p><p>Contributions are made for reasons other than saving on the Income</p><p>Tax. The chief reason for corporate funding of political parties is</p><p>to influence the political process which may in turn improve the</p><p>company’s business performance.220 A company, whatever may</p><p>be its form or character, is principally incorporated to carry out the</p><p>objects contained in the memorandum. However, the amendment</p><p>now allows a company, through its Board of Directors, to contribute</p><p>unlimited amounts to political parties without any accountability</p><p>and scrutiny. Unlimited contribution by companies to political</p><p>parties is antithetical to free and fair elections because it allows</p><p>certain persons/companies to wield their clout and resources to</p><p>influence policy making. The purpose of Section 182 is to curb</p><p>corruption in electoral financing. For instance, the purpose of</p><p>banning a Government company from contributing is to prevent</p><p>such companies from entering into the political fray by making</p><p>contributions to political parties. The amendment to Section 182</p><p>by permitting unlimited corporate contributions (including by shell</p><p>companies) authorizes unrestrained influence of companies on</p><p>the electoral process. This is violative of the principle of free and</p><p>219 IT Act, Section 80 GGB</p><p>220 Jayantilal Ranchhoddas Koticha v. Tata Iron & Steel Co. Ltd (supra)</p><p>[2024] 2 S.C.R. 555</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>fair elections and political equality captured in the value of “one</p><p>person one vote”.</p><p>211. The amendment to Section 182 of the Companies Act must be read</p><p>along with other provisions on financial contributions to political parties</p><p>under the RPA and the IT Act. Neither the RPA nor the IT Act place</p><p>a cap on the contributions which can be made by an individual. The</p><p>amendment to the Companies Act when viewed along with other</p><p>provisions on electoral funding, seek to equalize an individual and</p><p>a company for the purposes of electoral funding.</p><p>212. The ability of a company to influence the electoral process through</p><p>political contributions is much higher when compared to that of an</p><p>individual. A company has a much graver influence on the political</p><p>process, both in terms of the quantum of money contributed to political</p><p>parties and the purpose of making such contributions. Contributions</p><p>made by individuals have a degree of support or affiliation to a political</p><p>association. However, contributions made by companies are purely</p><p>business transactions, made with the intent of securing benefits in</p><p>return. In Citizens United v. Federal Election Commission,</p><p>221</p><p>the issue before the Supreme Court of the United States was</p><p>whether a corporation can use the general treasury funds to pay</p><p>for electioneering communication. The majority held that limitations</p><p>on corporate funding bans political speech (through contributions)</p><p>based on the corporate identity of the contributor. Justice Steven</p><p>writing for the minority on the issue of corporate funding observed</p><p>that companies and natural persons cannot be treated alike for the</p><p>purposes of political funding:</p><p>“In the context of election to public office, the distinction</p><p>between corporate and human speakers is significant.</p><p>Although they make enormous contributions to our society,</p><p>corporations are not actually members of it. They cannot</p><p>vote or run for office. Because they may be managed and</p><p>controlled by non-residents, their interests may conflict in</p><p>fundamental respects with the interests of eligible voters.</p><p>The financial resources, legal structure, and instrumental</p><p>orientation of corporations raise legitimate concerns about</p><p>their role in the electoral process.”</p><p>221 558 U.S 310</p><p>556 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>213. In view of the above discussion, we are of the opinion that companies</p><p>and individuals cannot be equated for the purpose of political</p><p>contributions.</p><p>214. Further, Companies before the amendment to Section 182 could</p><p>only contribute a certain percentage of the net aggregate profits.</p><p>The provision classified between loss-making companies and profitmaking companies for the purpose of political contributions and for</p><p>good reason. The underlying principle of this distinction was that it is</p><p>more plausible that loss-making companies will contribute to political</p><p>parties with a quid pro quo and not for the purpose of income tax</p><p>benefits. The provision (as amended by the Finance Act 2017) does</p><p>not recognize that the harm of contributions by loss-making companies</p><p>in the form of quid pro quo is much higher. Thus, the amendment to</p><p>Section 182 is also manifestly arbitrary for not making a distinction</p><p>between profit-making and loss-making companies for the purposes</p><p>of political contributions.</p><p>215. Thus, the amendment to Section 182 is manifestly arbitrary for (a)</p><p>treating political contributions by companies and individuals alike; (b)</p><p>permitting the unregulated influence of companies in the governance</p><p>and political process violating the principle of free and fair elections;</p><p>and (c) treating contributions made by profit-making and loss-making</p><p>companies to political parties alike. The observations made above</p><p>must not be construed to mean that the Legislature cannot place</p><p>a cap on the contributions made by individuals. The exposition is</p><p>that the law must not treat companies and individual contributors</p><p>alike because of the variance in the degree of harm on free and</p><p>fair elections.</p><p>H. Conclusion and Directions</p><p>216. In view of the discussion above, the following are our conclusions:</p><p>a. The Electoral Bond Scheme, the proviso to Section 29C(1) of the</p><p>Representation of the PeopleAct 1951 (as amended by Section</p><p>137 of Finance Act 2017), Section 182(3) of the Companies</p><p>Act (as amended by Section 154 of the Finance Act 2017),</p><p>and Section 13A(b) (as amended by Section 11 of Finance Act</p><p>2017) are violative of Article 19(1)(a) and unconstitutional; and</p><p>b. The deletion of the proviso to Section 182(1) of the Companies</p><p>Act permitting unlimited corporate contributions to political parties</p><p>is arbitrary and violative of Article 14.</p><p>[2024] 2 S.C.R. 557</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>217. We direct the disclosure of information on contributions received</p><p>by political parties under the Electoral Bond Scheme to give</p><p>logical and complete effect to our ruling. On 12 April 2019, this</p><p>Court issued an interim order directing that the information of</p><p>donations received and donations which will be received must be</p><p>submitted by political parties to the ECI in a sealed cover. This</p><p>Court directed that political parties submit detailed particulars</p><p>of the donors as against each Bond, the amount of each bond</p><p>and the full particulars of the credit received against each bond,</p><p>namely, the particulars of the bank account to which the amount</p><p>has been credited and the date on which each such credit was</p><p>made. During the course of the hearing, Mr Amit Sharma, Counsel</p><p>for the ECI, stated that the ECI had only collected information on</p><p>contributions made in 2019 because a reading of Paragraph 14</p><p>of the interim order indicates that the direction was only limited</p><p>to contributions made in that year. Paragraphs 13 and 14 of the</p><p>interim order are extracted below:</p><p>“13. In the above perspective, according to us, the just</p><p>and proper interim direction would be to require all the</p><p>political parties who have received donations through</p><p>Electoral Bonds to submit to the Election Commission of</p><p>India in sealed cover, detailed particulars of the donors</p><p>as against each bond; the amount of each such bond</p><p>and the full particulars of the credit received against</p><p>each bond, namely, the particulars of the bank account</p><p>to which the amount has been credited and the date of</p><p>each such credit.</p><p>14. The above details will be furnished forthwith in respect</p><p>of Electoral Bonds received by a political party till date.</p><p>The details of such other bonds that may be received by</p><p>such a political party upto the date fixed for issuing such</p><p>bonds as per the Note of the Ministry of Finance dated</p><p>28.2.2019, i.e 15.5.2019 will be submitted on or before 30th</p><p>May, 2019. The sealed covers will remain in the custody</p><p>of the Election Commission of India and will abide by such</p><p>orders as may be passed by the Court.”</p><p>218. Paragraph 14 of the interim order does not limit the operation of</p><p>Paragraph 13. Paragraph 13 contains a direction in unequivocal</p><p>558 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>terms to political parties to submit particulars of contributions received</p><p>through Electoral Bonds to the ECI. Paragraph 14 only prescribes a</p><p>timeline for the submission of particulars on contributions when the</p><p>window for Electoral Bond contributions was open in 2019. In view</p><p>of the interim direction of this Court, the ECI must have collected</p><p>particulars of contributions made to political parties through Electoral</p><p>Bonds.</p><p>219. In view of our discussion above, the following directions are issued:</p><p>a. The issuing bank shall herewith stop the issuance of Electoral</p><p>Bonds;</p><p>b. SBI shall submit details of the Electoral Bonds purchased since</p><p>the interim order of this Court dated 12 April 2019 till date to</p><p>the ECI. The details shall include the date of purchase of each</p><p>Electoral Bond, the name of the purchaser of the bond and the</p><p>denomination of the Electoral Bond purchased;</p><p>c. SBI shall submit the details of political parties which have</p><p>received contributions through Electoral Bonds since the interim</p><p>order of this Court dated 12 April 2019 till date to the ECI. SBI</p><p>must disclose details of each Electoral Bond encashed by</p><p>political parties which shall include the date of encashment and</p><p>the denomination of the Electoral Bond;</p><p>d. SBI shall submit the above information to the ECI within three</p><p>weeks from the date of this judgment, that is, by 6 March 2024;</p><p>e. The ECI shall publish the information shared by the SBI on its</p><p>official website within one week of the receipt of the information,</p><p>that is, by 13 March 2024; and</p><p>f. Electoral Bonds which are within the validity period of fifteen</p><p>days but that which have not been encashed by the political</p><p>party yet shall be returned by the political party or the</p><p>purchaser depending on who is in possession of the bond</p><p>to the issuing bank. The issuing bank, upon the return of</p><p>the valid bond, shall refund the amount to the purchaser’s</p><p>account.</p><p>220. Writ petitions are disposed of in terms of the above judgment.</p><p>221. Pending applications(s), if any, stand disposed of.</p><p>[2024] 2 S.C.R. 559</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>ANNEXURE I</p><p>Section 29C, Representation of the People Act 1951</p><p>Prior to Amendment by the Finance</p><p>Act 2017</p><p>Upon Amendment by Section 137</p><p>of the Finance Act, 2017</p><p>29C. Declaration of donation</p><p>received by the political parties. -</p><p>(1) The treasurer of a political</p><p>party or any other person</p><p>authorized by the political</p><p>party in this behalf shall, in</p><p>each financial year, prepare</p><p>a report in respect of the</p><p>following, namely;</p><p>(a) the contribution in excess</p><p>of twenty thousand</p><p>rupees received by such</p><p>political party from any</p><p>person in that financial</p><p>year;</p><p>(b) the contribution in excess</p><p>of twenty thousand</p><p>rupees received b y</p><p>such political party from</p><p>companies other than</p><p>Government companies</p><p>in that financial year.</p><p>(2) The report under sub-section</p><p>(1) shall be in such form as</p><p>may be prescribed.</p><p>(3) The report for a financial</p><p>year under subsection (1)</p><p>shall be submitted by the</p><p>treasurer of a political party or</p><p>any other person authorized</p><p>by the political party in this</p><p>behalf before the due date for</p><p>furnishing a return of income</p><p>of that financial year under</p><p>section 139 of the Income-tax</p><p>Act, 1961 (43 of 1961), to the</p><p>Election Commission.</p><p>Section 29C. Declaration of donation</p><p>received by the political parties. –</p><p>(1) The treasurer of a political</p><p>party or any other person</p><p>authorized by the political</p><p>party in this behalf shall, in</p><p>each financial year, prepare</p><p>a report in respect of the</p><p>following, namely:</p><p>(a) the contribution in excess</p><p>of twenty thousand</p><p>rupees received by such</p><p>political party from any</p><p>person in that financial</p><p>year;</p><p>(b) the contribution in excess</p><p>of twenty thousand</p><p>rupees received b y</p><p>such political party from</p><p>companies other than</p><p>Government companies</p><p>in that financial year.</p><p>Provided that nothing contained</p><p>in this subsection shall apply</p><p>to the contributions received</p><p>by way of an electoral bond.</p><p>Explanation – For the purposes of</p><p>this subsection, “electoral bond”</p><p>means a bond referred to in the</p><p>Explanation to sub-section (3) of</p><p>section 31 of the Reserve Bank</p><p>of India Act, 1934.</p><p>(2) The report under sub-section</p><p>(1) shall be in such form as</p><p>may be prescribed.</p><p>560 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(4) Where the treasurer of any</p><p>political party or any other</p><p>person authorized by the</p><p>political party in this behalf</p><p>fails to submit a report</p><p>under sub-section (3) then,</p><p>notwithstanding anything</p><p>contained in the Income-tax</p><p>Act, 1961 (43 of 1961), such</p><p>political party shall not be</p><p>entitled to any tax relief under</p><p>that Act.</p><p>(3) The report for a financial</p><p>year under subsection</p><p>(1) shall be submitted by</p><p>the treasurer of a political</p><p>party or any other person</p><p>authorized by the political</p><p>party in this behalf before</p><p>the due date for furnishing</p><p>a return of income of that</p><p>financial year under section</p><p>139 of the Income-tax Act,</p><p>1961 (43 of 1961), to the</p><p>Election Commission.</p><p>(4) Where the treasurer of any</p><p>political party or any other</p><p>person authorized by the</p><p>political party in this behalf</p><p>fails to submit a report</p><p>under sub-section (3) then,</p><p>notwithstanding anything</p><p>contained in the Income-tax</p><p>Act, 1961 (43 of 1961), such</p><p>political party shall not be</p><p>entitled to any tax relief under</p><p>that Act.</p><p>Section 182, Companies Act 2013</p><p>Prior to Amendment by the Finance</p><p>Act, 2017</p><p>Upon Amendment by Section 154</p><p>of the Finance Act, 2017</p><p>182.Prohibitions and restrictions</p><p>regarding political contributions.</p><p>1) Notwithstanding anything</p><p>containedinanyotherprovision</p><p>of this Act, a company, other</p><p>than a Government company</p><p>and a company which has</p><p>been in existence for less</p><p>than three financial years,</p><p>may contribute any amount</p><p>directly or indirectly to any</p><p>political party:</p><p>182.Prohibitions and restrictions</p><p>regarding political contributions.</p><p>1) Notwithstanding anything</p><p>containedinanyotherprovision</p><p>of this Act, a company, other</p><p>than a Government company</p><p>and a company which has</p><p>been in existence for less</p><p>than three financial years,</p><p>may contribute any amount</p><p>directly or indirectly to any</p><p>political party:</p><p>[2024] 2 S.C.R. 561</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Provided that the amount referred</p><p>to in subsection (1) or, as the case</p><p>may be, the aggregate of the amount</p><p>which may be so contributed by the</p><p>company in any financial year shall</p><p>not exceed seven and a half per</p><p>cent of its average net profits during</p><p>the three immediately preceding</p><p>financial years:</p><p>Provided further that no such</p><p>contribution shall be made by</p><p>a company unless a resolution</p><p>authorising the making of such</p><p>contribution is passed at a meeting</p><p>of the Board of Directors and such</p><p>resolution shall, subject to the other</p><p>provisions of this section, be deemed</p><p>to be justification in law for the</p><p>making and the acceptance of the</p><p>contribution authorised by it.</p><p>(First proviso omitted)</p><p>Provided that no such contribution</p><p>shall be made by a company unless</p><p>a resolution authorising the making</p><p>of such contribution is passed at a</p><p>meeting of the Board of Directors</p><p>and such resolution shall, subject to</p><p>the other provisions of this section,</p><p>be deemed to be justification in law</p><p>for the making of the contribution</p><p>authorised by it.</p><p>Section 182 (3) Every company</p><p>shall disclose in its profit and loss</p><p>account any amount or amounts</p><p>contributed by it to any political</p><p>party during the financial year to</p><p>which that account relates, giving</p><p>particulars of the total amount</p><p>contributed and the name of the</p><p>party to which such amount has</p><p>been contributed.</p><p>Section 182 (3) Every company</p><p>shall disclose in its profit and</p><p>loss account the total amount</p><p>contributed b y it under this</p><p>section during the financial year</p><p>to which the account relates.</p><p>(3A) Notwithstanding anything</p><p>contained in subsection (1), the</p><p>contribution under this section shall</p><p>not be made except by an account</p><p>payee cheque drawn on a bank</p><p>or an account payee bank draft or</p><p>use of electronic clearing system</p><p>through a bank account:</p><p>Provided that a company may</p><p>make contribution through any</p><p>instruments, issued pursuant to</p><p>any scheme notified under any</p><p>law for the time being in force,</p><p>for contribution to the political</p><p>parties.</p><p>562 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Section 13A, Income Tax Act 1995</p><p>Prior to Amendment by the Finance</p><p>Act, 2017</p><p>Upon Amendment by Section 11 of</p><p>the Finance Act, 2017</p><p>13A. Special provision relating to</p><p>incomes of political parties</p><p>Any income of a political party</p><p>which is chargeable under the head</p><p>“Income from house property” or</p><p>“Income from other sources” or</p><p>any income by way of voluntary</p><p>contributions received by a political</p><p>party from any person shall not</p><p>be included in the total income of</p><p>the previous year of such political</p><p>party:</p><p>Provided that-</p><p>(a) such political party keeps</p><p>and maintains such books of</p><p>account and other documents</p><p>as would enable theAssessing</p><p>Officer to properly deduce its</p><p>income therefrom;</p><p>(b) in respect of each such</p><p>voluntary contribution in</p><p>excess of ten thousand</p><p>rupees, such political party</p><p>keeps and maintains a record</p><p>of such contribution and the</p><p>name and address of the</p><p>person who has made such</p><p>contribution; and</p><p>(c) the accounts of such political</p><p>party are audited by an</p><p>accountant as defined in the</p><p>Explanation below sub- section</p><p>(2) of section 288.</p><p>13A. Special provision relating to</p><p>incomes of political parties</p><p>Any income of a political party</p><p>which is chargeable under the</p><p>head “Income from house property”</p><p>or “Income from other sources” or</p><p>any income by way of voluntary</p><p>contributions received by a political</p><p>party from any person shall not</p><p>be included in the total income of</p><p>the previous year of such political</p><p>party:</p><p>Provided that-</p><p>(a) such political party keeps</p><p>and maintains such books of</p><p>account and other documents</p><p>as would enable theAssessing</p><p>Officer to properly deduce its</p><p>income therefrom;</p><p>(b) in respect of each such</p><p>voluntary contribution other</p><p>than contribution by way</p><p>of electoral bond in excess</p><p>of ten thousand rupees, such</p><p>political party keeps and</p><p>maintains a record of such</p><p>contribution and the name and</p><p>address of the person who</p><p>has made such contribution;</p><p>and</p><p>(c) the accounts of such political</p><p>party are audited b y an</p><p>accountant as defined in</p><p>the Explanation below subsection (2) of section 288;</p><p>and</p><p>[2024] 2 S.C.R. 563</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Explanation.- For the purposes of</p><p>this section, “political party” means</p><p>an association or body of individual</p><p>citizens of India registered with the</p><p>Election Commission of India as a</p><p>political party under paragraph 3 of</p><p>the Election Symbols (Reservation</p><p>and Allotment) Order, 1968, and</p><p>includes a political party deemed to</p><p>be registered with that Commission</p><p>under the proviso to subparagraph</p><p>(2) of that paragraph.</p><p>(d) no donation exceeding</p><p>two thousand rupees is</p><p>received by such political</p><p>party otherwise than by an</p><p>account payee cheque drawn</p><p>on a bank or an account</p><p>payee bank draft or use of</p><p>electronic clearing system</p><p>through a bank account or</p><p>through electoral bond.</p><p>Explanation.- For the purposes</p><p>of this proviso, “electoral bond”</p><p>means a bond referred to in the</p><p>Explanation to sub- section (3) of</p><p>section 31 of the Reserve Bank of</p><p>India Act, 1934;</p><p>Provided also that such political</p><p>party furnishes a return of income</p><p>for the previous year in accordance</p><p>with the provisions of sub-section</p><p>(4B) of section 139 on or before the</p><p>due date under that section.</p><p>Section 31, Reserve Bank of India Act 1931</p><p>Prior to Amendment by the Finance</p><p>Act, 2017</p><p>Upon Amendment by Section 11 of</p><p>the Finance Act, 2017</p><p>31. Issue of demand bills and</p><p>notes.</p><p>1) No person in India other than</p><p>the Bank or, as expressly</p><p>authorized by this Act, the</p><p>Central Government shall</p><p>draw, accept, make o r</p><p>issue any bill of exchange,</p><p>hundi, promissory note or</p><p>engagement for the payment</p><p>of money payable to bearer</p><p>on demand, or borrow, owe</p><p>or take up any sum or sums</p><p>of money on the bills, hundis</p><p>or notes payable to bearer on</p><p>demand of any such person:</p><p>31. Issue of demand bills and</p><p>notes.</p><p>1) No person in India other than</p><p>the Bank or, as expressly</p><p>authorized by this Act, the</p><p>Central Government shall</p><p>draw, accept, make o r</p><p>issue any bill of exchange,</p><p>hundi, promissory note or</p><p>engagement for the payment</p><p>of money payable to bearer</p><p>on demand, or borrow, owe</p><p>or take up any sum or sums</p><p>of money on the bills, hundis</p><p>or notes payable to bearer on</p><p>demand of any such person:</p><p>564 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Provided that cheques or drafts,</p><p>including hundis, payable to bearer</p><p>on demand or otherwise may be</p><p>drawn on a person’s account with</p><p>a banker, shroff or agent.</p><p>2) Notwithstanding anything</p><p>contained in the Negotiable</p><p>Instruments Act, 1881, no</p><p>person in India other than</p><p>the Bank or, as expressly</p><p>authorised by this Act, the</p><p>Central Government shall</p><p>make or issue any promissory</p><p>note expressed to be payable</p><p>to the bearer of the instrument.</p><p>Provided that cheques or drafts,</p><p>including hundis, payable to bearer</p><p>on demand or otherwise may be</p><p>drawn on a person’s account with</p><p>a banker, shroff or agent.</p><p>2) Notwithstanding anything</p><p>contained in the Negotiable</p><p>Instruments Act, 1881, no</p><p>person in India other than</p><p>the Bank or, as expressly</p><p>authorised by this Act, the</p><p>Central Government shall</p><p>make or issue any promissory</p><p>note expressed to be payable</p><p>to the bearer of the instrument.</p><p>3) Notwithstanding anything</p><p>contained in this section,</p><p>the Central Government may</p><p>authorise any scheduled</p><p>bank to issue electoral bond</p><p>Explanation.-For the purposes</p><p>of this subsection, ‘electoral</p><p>bond’ means a bond issued by</p><p>any scheduled bank under the</p><p>scheme as may be notified by the</p><p>Central Government.</p><p>[2024] 2 S.C.R. 565</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>ANNEXURE II</p><p>Conduct of Elections Rules, 1961</p><p>(Statutory Rules and Order)</p><p>222[FORM 24A</p><p>(See rule 85B)</p><p>[This form should be filed with the Election Commission before the</p><p>due date for furnishing a return of the Political Party’s income of the</p><p>concerned financial year under section 139 of the Income-tax Act,</p><p>1961 (43 of 1961) and a certificate to this effect should be attached</p><p>with the Income-tax return to claim exemption under the Income-tax</p><p>Act, 1961 (43 of 1961).]</p><p>1. Name of Political Party:</p><p>2. Status of the Political Party:</p><p>(recognised/unrecognised)</p><p>3. Address of the headquarters of the Political Party:</p><p>4. Date of registration of Political Party with Election</p><p>Commission:</p><p>5. Permanent Account Number (PAN) and Income-tax Ward/</p><p>Circle where return of the political party is filed:_______</p><p>6. Details of the contributions received, in excess of rupees</p><p>twenty thousand, during the Financial Year:20 – . –20 .</p><p>Serial</p><p>number</p><p>Name and</p><p>complete</p><p>address</p><p>of the</p><p>contributing</p><p>person/</p><p>company</p><p>PAN (if</p><p>any_ and</p><p>Income-Tax</p><p>Ward/Circle</p><p>Amount of</p><p>contribution</p><p>(Rs.)</p><p>Mode of</p><p>contribution</p><p>*(cheque/</p><p>demand</p><p>draft/cash)</p><p>Remarks</p><p>222 Ins. By Notifin. No. S.O. 1283(E), dated the 10th November, 2003.</p><p>566 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>*In case of payment by cheque/demand draft, indicate name of the</p><p>bank and branch of the bank on which the cheque/demand draft</p><p>has been drawn.</p><p>7. In case the contributor is a company, whether the conditions</p><p>laid down under section 293A of the Companies Act, 1956 (1</p><p>of 1956) have been complied with (A copy of the certificate</p><p>to this obtained from the company should be attached).</p><p>Verification</p><p>I,______________________________(full name in Block letters),</p><p>son/daughter of ___________________________solemnly declare</p><p>that to the best of my knowledge and belief, the information given</p><p>in this Form is correct, complete and truly stated.</p><p>I further declare that I am verifying this form in my capacity as</p><p>______________________on behalf of the Political Party above</p><p>named and I am also competent to do so.</p><p>(Signature and name of the Treasurer/Authorised person)]</p><p>Date:____________________</p><p>Place:____________________</p><p>[2024] 2 S.C.R. 567</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Sanjiv Khanna, J.</p><p>I have had the benefit of perusing the judgment authored by Dr. D.Y.</p><p>Chandrachud, the Hon’ble Chief Justice. I respectfully agree with the</p><p>findings and conclusions recorded therein. However, since my reasoning</p><p>is different to arrive at the same conclusion, including application of the</p><p>doctrine of proportionality, I am penning down my separate opinion.</p><p>2. To avoid prolixity, the contentions of the parties are not referred to</p><p>separately and the facts are narrated in brief.</p><p>3. Corporate funding of political parties has been a contentious issue</p><p>with the legislature’s approach varying from time to time. The</p><p>amendments to the Companies Act, 1956 reveal the spectrum of</p><p>views of the legislature. It began with regulations and restrictions in</p><p>19601 to a complete ban on contributions to political parties in 19692</p><p>.</p><p>The ban was partially lifted in 1985 with restrictions and stipulations.3</p><p>The aggregate amount contributed to a political party in a financial</p><p>year could not exceed 5% of the average net profit during the three</p><p>immediately preceding financial years.4 A new condition stipulated</p><p>that the board of directors5 in their meeting would pass a resolution</p><p>giving legitimacy and authorisation to contributions to a political party.6</p><p>4. The Companies Act of 2013 replaced the Companies Act of 1956.</p><p>Section 182(1) of the Companies Act, 20137 permitted contributions</p><p>by companies of any amount to any political party, if the said company</p><p>had been in existence for more than three immediately preceding</p><p>financial years and is not a government company. The requirement</p><p>of authorisation vide Board resolution is retained.8 The cap of 5%</p><p>is enhanced to 7.5% of the average net profits during the three</p><p>1 The Companies (Amendment) Act 1960, s 100 inserted into the Companies Act 1956, s 293A which</p><p>stipulates that contributions to political parties cannot exceed 5% of the average net profit of the company</p><p>during the three immediately preceding financial years.</p><p>2 The Companies (Amendment) Act 1969, s 3 substituted of the Companies Act 1956, s 293A introducing</p><p>a ban on contributions to political parties.</p><p>3 The Companies (Amendment) Act 1985, s 2 replaced of the Companies Act 1956, s 293A bringing back</p><p>the 5% cap on contributions to political parties.</p><p>4 The Companies Act 1956, s 293A.</p><p>5 For short, the “Board”.</p><p>6 Second proviso to Section 293A(2), Companies Act, 1956.</p><p>7 As originally enacted.</p><p>8 Unamended second proviso to Section 182(1) of the Companies Act, 2013. This condition continues to</p><p>remain.</p><p>568 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>immediately preceding financial years.9 It is also mandated that</p><p>the company must disclose the amount contributed by it to political</p><p>parties in the profit and loss account, including particulars of name</p><p>of political party and the amount contributed.10 In case of violation</p><p>of the terms, penalties stand prescribed.</p><p>5. The FinanceAct, 2017 made several amendments to the Companies</p><p>Act, 2013, Income Tax Act, 1961, Reserve Bank of India11 Act,</p><p>1934, the Representation of the People Act, 1951, and the Foreign</p><p>Contribution Regulation Act, 2010. These changes were brought</p><p>in to allow contributions/donations through Electoral Bonds12. The</p><p>changes made by the Finance Act, 2017 to these legislations were</p><p>provided in a tabular format by the petitioners. For clarity, I have</p><p>reproduced the table below. The specific changes are highlighted</p><p>in bold and italics for ease of reference:</p><p>Section 182 of the Companies Act, 2013</p><p>Prior to Amendment by the Finance</p><p>Act, 2017</p><p>Post Amendment by Section 154 of the</p><p>Finance Act, 2017</p><p>182. Prohibitions and restrictions</p><p>regarding political contributions-</p><p>(1) Notwithstanding anything contained</p><p>in any other provision of this Act, a</p><p>company, other than a Government</p><p>company and a company which has</p><p>been in existence for less than three</p><p>financial years, may contribute any</p><p>amount directly or indirectly to any</p><p>political party:</p><p>Provided that the amount referred</p><p>to in sub-section (1) or, as the case</p><p>may be, the aggregate of the amount</p><p>which may be so contributed by the</p><p>company in any financial year shall</p><p>not exceed seven and a half per</p><p>cent of its average net profits during</p><p>the three immediately preceding</p><p>financial years:</p><p>182. Prohibitions and restrictions</p><p>regarding political contributions-</p><p>(1) Notwithstanding anything contained</p><p>in any other provision of this Act, a</p><p>company, other than a Government</p><p>company and a company which has</p><p>been in existence for less than three</p><p>financial years, may contribute any</p><p>amount directly or indirectly to any</p><p>political party:</p><p>[First proviso omitted]</p><p>9 Unamended first proviso to Section 182(1) of the Companies Act, 2013.</p><p>10 Unamended Section 182(3) of the Companies Act, 2013.</p><p>11 For short, “RBI”.</p><p>12 For short, “Bonds”.</p><p>[2024] 2 S.C.R. 569</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Provided further that no such</p><p>contributionshallbemadebyacompany</p><p>unless a resolution authorising the</p><p>making of such contribution is passed</p><p>at a meeting of the Board of Directors</p><p>and such resolution shall, subject to</p><p>the other provisions of this section,</p><p>be deemed to be justification in law</p><p>for the making and the acceptance of</p><p>the contribution authorised by it.</p><p>Provided that no such contribution</p><p>shall be made by a company unless</p><p>a resolution authorising the making of</p><p>such contribution is passed at a meeting</p><p>of the Board of Directors and such</p><p>resolution shall, subject to the other</p><p>provisions of this section, be deemed</p><p>to be justification in law for the making</p><p>of the contribution authorised by it.</p><p>182 (3) Every company shall disclose</p><p>in its profit and loss account any</p><p>amount or amounts contributed</p><p>by it to any political party during the</p><p>financial year to which that account</p><p>relates, giving particulars of the</p><p>total amount contributed and the</p><p>name of the party to which such</p><p>amount has been contributed.</p><p>182 (3) Every company shall disclose</p><p>in its profit and loss account the total</p><p>amount contributed by it under this</p><p>section during the financial year to</p><p>which the account relates.</p><p>(3A) Notwithstanding anything</p><p>contained in sub-section (1), the</p><p>contribution under this section shall</p><p>not be made except by an account</p><p>payee cheque drawn on a bank or an</p><p>account payee bank draft or use of</p><p>electronic clearing system through</p><p>a bank account:</p><p>Provided that a company may make</p><p>contribution through any instrument,</p><p>issued pursuant to any scheme</p><p>notified under any law for the time</p><p>being in force, for contribution to the</p><p>political parties.</p><p>Section 13-A of the Income Tax Act, 1961</p><p>Prior to Amendment by the Finance</p><p>Act, 2017</p><p>Post Amendment by Section 11 of the</p><p>Finance Act, 2017</p><p>13-A. Special provision relating to</p><p>incomes of political parties.— Any</p><p>income of a political party which is</p><p>chargeable under the head “Income</p><p>from house property” or “Income</p><p>from other sources” or “capital gains</p><p>or” any income by way of voluntary</p><p>contributions received by a political</p><p>party from any person shall not be</p><p>included in the total income of the</p><p>previous year of such political party:</p><p>13-A. Special provision relating to</p><p>incomes of political parties.— Any</p><p>income of a political party which is</p><p>chargeable under the head “Income</p><p>from house property” or “Income</p><p>from other sources” or “capital gains</p><p>or” any income by way of voluntary</p><p>contributions received by a political</p><p>party from any person shall not be</p><p>included in the total income of the</p><p>previous year of such political party:</p><p>570 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Provided that—</p><p>(a) such political party keeps and</p><p>maintains such books of account and</p><p>other documents as would enable the</p><p>Assessing Officer to properly deduce</p><p>its income therefrom;</p><p>(b) in respect of each such voluntary</p><p>contribution in excess of twenty</p><p>thousand rupees, such political party</p><p>keeps and maintains a record of</p><p>such contribution and the name and</p><p>address of the person who has made</p><p>such contribution; and</p><p>(c) the accounts of such political</p><p>party are audited by an accountant</p><p>as defined in the Explanation below</p><p>sub-section (2) of Section 288:</p><p>Provided further that if the Treasurer of</p><p>such political party or any other person</p><p>authorised by that political party in this</p><p>behalf fails to submit a report under</p><p>sub-section (3) of Section 29-C of</p><p>the Representation of the People Act,</p><p>1951 (43 of 1951) for a financial year,</p><p>no exemption under this section shall</p><p>be available for that political party for</p><p>such financial year.</p><p>Explanation.—For the purposes of</p><p>this section, “political party” means a</p><p>political party registered under Section</p><p>29-A of the Representation of the</p><p>People Act, 1951 (43 of 1951).</p><p>Provided that—</p><p>(a) such political party keeps and</p><p>maintains such books of account and</p><p>other documents as would enable the</p><p>Assessing Officer to properly deduce</p><p>its income therefrom;</p><p>(b) in respect of each such voluntary</p><p>contribution other than contribution</p><p>by way of electoral bond in excess of</p><p>twenty thousand rupees, such political</p><p>party keeps and maintains a record of</p><p>such contribution and the name and</p><p>address of the person who has made</p><p>such contribution;</p><p>(c) the accounts of such political party</p><p>are audited by an accountant as defined</p><p>in the Explanation below sub-section</p><p>(2) of Section 288 and:</p><p>(d) no donation exceeding two</p><p>thousand rupees is received by such</p><p>political party otherwise than by an</p><p>account payee cheque drawn on a</p><p>bank or an account payee bank draft</p><p>or use of electronic clearing system</p><p>through a bank account or through</p><p>electoral bond.</p><p>Explanation.— For the purposes of this</p><p>proviso, “electoral bond” means a</p><p>bond referred to in the Explanation</p><p>to sub-section (3) of Section 31 of</p><p>the Reserve Bank of India Act, 1934</p><p>(2 of 1934).</p><p>Provided further that if the Treasurer of</p><p>such political party or any other person</p><p>authorised by that political party in this</p><p>behalf fails to submit a report under</p><p>sub-section (3) of Section 29-C of</p><p>the Representation of the People Act,</p><p>1951 (43 of 1951) for a financial year,</p><p>no exemption under this section shall</p><p>be available for that political party for</p><p>such financial year.</p><p>[2024] 2 S.C.R. 571</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Provided also that such political party</p><p>furnishes a return of income for the</p><p>previous year in accordance with</p><p>the provisions of sub-section (4B) of</p><p>Section 139 on or before the due date</p><p>under that section.</p><p>Explanation.—For the purposes of</p><p>this section, “political party” means a</p><p>political party registered under Section</p><p>29-A of the Representation of the</p><p>People Act, 1951 (43 of 1951).</p><p>Section 31 of the Reserve Bank of India Act, 1934</p><p>Prior to Amendment by the Finance</p><p>Act 2017</p><p>Post Amendment by Section 135 of</p><p>the Finance Act 2017</p><p>Section 31. Issue of demand bills</p><p>and notes.—</p><p>(1) No person in India other than the</p><p>Bank, or, as expressly authorized by</p><p>thisAct the Central Government shall</p><p>draw, accept, make or issue any bill</p><p>of exchange, hundi, promissory note</p><p>or engagement for the payment of</p><p>money payable to bearer on demand,</p><p>or borrow, owe or take up any sum or</p><p>sums of money on the bills, hundis or</p><p>notes payable to bearer on demand</p><p>of any such person:</p><p>Provided that cheques or drafts,</p><p>including hundis, payable to bearer on</p><p>demand or otherwise may be drawn</p><p>on a person’s account with a banker,</p><p>shroff or agent.</p><p>(2)Notwithstandinganythingcontained</p><p>in the Negotiable Instruments Act,</p><p>1881 (26 of 1881), no person in India</p><p>other than the Bank or, as expressly</p><p>authorised by this Act, the Central</p><p>Government shall make or issue</p><p>any promissory note expressed to</p><p>be payable to the bearer of the</p><p>instrument.</p><p>Section 31. Issue of demand bills and</p><p>notes.—</p><p>(1) No person in India other than the</p><p>Bank, or, as expressly authorized by</p><p>this Act the Central Government shall</p><p>draw, accept, make or issue any bill</p><p>of exchange, hundi, promissory note</p><p>or engagement for the payment of</p><p>money payable to bearer on demand,</p><p>or borrow, owe or take up any sum or</p><p>sums of money on the bills, hundis or</p><p>notes payable to bearer on demand of</p><p>any such person:</p><p>Provided that cheques or drafts,</p><p>including hundis, payable to bearer on</p><p>demand or otherwise may be drawn</p><p>on a person’s account with a banker,</p><p>shroff or agent.</p><p>2) Notwithstanding anything contained</p><p>in the Negotiable Instruments Act,</p><p>1881 (26 of 1881), no person in India</p><p>other than the Bank or, as expressly</p><p>authorised by this Act, the Central</p><p>Government shall make or issue</p><p>any promissory note expressed to</p><p>be payable to the bearer of the</p><p>instrument.</p><p>572 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(3) Notwithstanding anything</p><p>contained in this section, the Central</p><p>Government may authorise any</p><p>scheduled bank to issue electoral</p><p>bond.</p><p>Explanation.— For the purposes of</p><p>this sub-section, “electroal bond”</p><p>means a bond issued by any</p><p>scheduled bank under the scheme</p><p>as may be notified by the Central</p><p>Government.</p><p>Section 29-C of the Representation of the People Act 1951</p><p>Prior to Amendment by the Finance</p><p>Act 2017</p><p>Post Amendment by Section 137 of</p><p>the Finance Act 2017</p><p>29-C. Declaration of donation received</p><p>by the political parties.—</p><p>(1) The treasurer of the political party</p><p>or any other person authorised by the</p><p>political party in this behalf shall, in</p><p>each financial year, prepare a report</p><p>in respect of the following, namely:—</p><p>(a) the contribution in excess of twenty</p><p>thousand rupees received by such</p><p>political party from any person in that</p><p>financial year;</p><p>(b) the contribution in excess of twenty</p><p>thousand rupees received by such</p><p>political party from companies other</p><p>than Government companies in that</p><p>financial year.</p><p>(2) The report under sub-section</p><p>(1) shall be in such form as may be</p><p>prescribed.</p><p>(3) The report for a financial year under</p><p>sub-section (1) shall be submitted by</p><p>the treasurer of a political party or</p><p>any other person authorised by the</p><p>political party in this behalf before</p><p>the due date for furnishing a return</p><p>of its income of that financial year</p><p>under Section 139 of the Income</p><p>Tax, 1961 (43 of 1961) to the Election</p><p>Commission.</p><p>29-C. Declaration of donation received</p><p>by the political parties.—</p><p>(1) The treasurer of the political party</p><p>or any other person authorised by the</p><p>political party in this behalf shall, in</p><p>each financial year, prepare a report</p><p>in respect of the following, namely:—</p><p>(a) the contribution in excess of twenty</p><p>thousand rupees received by such</p><p>political party from any person in that</p><p>financial year;</p><p>(b) the contribution in excess of twenty</p><p>thousand rupees received by such</p><p>political party from companies other</p><p>than Government companies in that</p><p>financial year.</p><p>Provided that nothing contained in</p><p>this sub-section shall apply to the</p><p>contributions received by way of an</p><p>electoral bond.</p><p>Explanation.— For the purposes of</p><p>this sub-section, “electoral bond”</p><p>means a bond referred to in the</p><p>Explanation to sub-section (3) of</p><p>Section 31 of the Reserve Bank of</p><p>India Act, 1934 (2 of 1934).</p><p>(2) The report under sub-section (1) shall</p><p>be in such form as may be prescribed.</p><p>[2024] 2 S.C.R. 573</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>(4) Where the treasurer of any political</p><p>party or any other person authorised</p><p>by the political party in this behalf fails</p><p>to submit a report under sub-section</p><p>(3), then, notwithstanding anything</p><p>contained in the Income TaxAct, 1961</p><p>(43 of 1961), such political party shall</p><p>not be entitled to any tax relief under</p><p>that Act.</p><p>(3) The report for a financial year under</p><p>sub-section (1) shall be submitted by</p><p>the treasurer of a political party or</p><p>any other person authorised by the</p><p>political party in this behalf before</p><p>the due date for furnishing a return</p><p>of its income of that financial year</p><p>under Section 139 of the Income Tax,</p><p>1961 (43 of 1961) to the Election</p><p>Commission.</p><p>(4) Where the treasurer of any political</p><p>party or any other person authorised</p><p>by the political party in this behalf fails</p><p>to submit a report under sub-section</p><p>(3), then, notwithstanding anything</p><p>contained in the Income Tax Act, 1961</p><p>(43 of 1961), such political party shall</p><p>not be entitled to any tax relief under</p><p>that Act.</p><p>Section 2 of the Foreign Contribution Regulation Act, 2010</p><p>Prior to Amendment by the Finance</p><p>Act 2017</p><p>Post Amendment by Section 236 the</p><p>Finance Act 2017</p><p>Section 2 (1) (j)</p><p>(j) “foreign source” includes,—</p><p>(i) the Government of any foreign</p><p>country or territory and any agency</p><p>of such Government;</p><p>(ii) any international agency, not</p><p>being the United Nations or any of</p><p>its specialised agencies, the World</p><p>Bank, International Monetary Fund</p><p>or such other agency as the Central</p><p>Government may, by notification,</p><p>specify in this behalf;</p><p>(iii) a foreign company;</p><p>(iv) a corporation, not being a foreign</p><p>company, incorporated in a foreign</p><p>country or territory;</p><p>(v) a multi-national corporation referred</p><p>to in sub-clause (iv) of clause (g);</p><p>Section 2 (1) (j)</p><p>(j) “foreign source” includes,—</p><p>(i) the Government of any foreign</p><p>country or territory and any agency of</p><p>such Government;</p><p>(ii) any international agency, not</p><p>being the United Nations or any of</p><p>its specialised agencies, the World</p><p>Bank, International Monetary Fund</p><p>or such other agency as the Central</p><p>Government may, by notification,</p><p>specify in this behalf;</p><p>(iii) a foreign company;</p><p>(iv) a corporation, not being a foreign</p><p>company, incorporated in a foreign</p><p>country or territory;</p><p>(v) a multi-national corporation referred</p><p>to in sub-clause (iv) of clause (g);</p><p>574 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(vi) a company within the meaning of</p><p>the Companies Act, 1956 (1 of 1956),</p><p>and more than one-half of the nominal</p><p>value of its share capital is held, either</p><p>singly or in the aggregate, by one or</p><p>more of the following, namely—</p><p>(A) the Government of a foreign</p><p>country or territory;</p><p>(B) the citizens of a foreign country</p><p>or territory;</p><p>(C) corporations incorporated in a</p><p>foreign country or territory;</p><p>(D) trusts, societies o r other</p><p>associations of individuals (whether</p><p>incorporated or not), formed or</p><p>registered in a foreign country or</p><p>territory;</p><p>(E) foreign company;</p><p>(vi) a company within the meaning of</p><p>the Companies Act, 1956 (1 of 1956),</p><p>and more than one-half of the nominal</p><p>value of its share capital is held, either</p><p>singly or in the aggregate, by one or</p><p>more of the following, namely—</p><p>(A) the Government of a foreign country</p><p>or territory;</p><p>(B) the citizens of a foreign country or</p><p>territory;</p><p>(C) corporations incorporated in a</p><p>foreign country or territory;</p><p>(D)trusts, societies or other associations</p><p>of individuals (whether incorporated or</p><p>not), formed or registered in a foreign</p><p>country or territory;</p><p>(E) foreign company;</p><p>Provided that where the nominal</p><p>value of share capital is within the</p><p>limits specified for foreign investment</p><p>under the Foreign Exchange</p><p>Management Act, 1999 (42 of 1999),</p><p>or the rules or regulations made</p><p>thereunder, then, notwithstanding</p><p>the nominal value of share capital of</p><p>a company being more than one-half</p><p>of such value at the time of making</p><p>the contribution, such company shall</p><p>not be a foreign source.</p><p>6. The amended Companies Act, 2013 removes the cap on corporate</p><p>funding.13 The requirement that the contribution will require a resolution</p><p>passed at the meeting of the Board is retained. In the profit and loss</p><p>account, a company is now only required to disclose the total amount</p><p>contributed to political parties in a financial year.14 The requirement</p><p>to disclose the specific amounts contributed and the names of the</p><p>political parties is omitted. Section 182(3A), as introduced, stipulates</p><p>that the company could contribute to a political party only by way</p><p>13 First proviso to Section 182(1), Companies Act, 2013 has been omitted vide the Finance Act, 2017.</p><p>14 Section 182(3) of the Companies Act, 2013.</p><p>[2024] 2 S.C.R. 575</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>of a cheque, Electronic Clearing System15, or demand draft.16 The</p><p>proviso to Section 182(3A) permits a company to contribute through</p><p>any instrument issued pursuant to any scheme notified under the</p><p>law, for the time being in force, for contribution to political parties.</p><p>7. Section 13Aof the Income TaxAct, 1961,17 exempts income of political</p><p>parties, including financial contributions and investments, from income</p><p>tax. The object of providing a tax exemption is to increase the funds</p><p>of political parties from legitimate sources. However, conditions</p><p>imposed require political parties to maintain books of accounts and</p><p>other documents to enable the assessing officer to properly deduce</p><p>their income.18 Political parties are required to maintain records of the</p><p>name and addresses of persons who make voluntary contributions in</p><p>excess of Rs.20,000/-.19 Accounts of the political parties are required</p><p>to be audited.20</p><p>8. In 2003, Section 80GGB and 80GGC were inserted in the Income</p><p>Tax Act, 1961, permitting contributions to political parties. These</p><p>contributions are tax deductible, though they are not expenditure for</p><p>purposes of business, to incentivise contributions through banking</p><p>channels.21</p><p>9. By the Finance Act, 2017, Section 13A of the Income Tax Act, 1961,</p><p>was amended. Section 13A now stipulates that a political party is</p><p>not required to maintain a record of the contributions received by</p><p>Bonds.22 Further, donations over Rs.2,000/- are only permitted through</p><p>cheques, bank drafts, ECS or Bonds.23</p><p>10. Section 29C of the Representation of the People Act, 1951 was</p><p>introduced in 2003.24 The section requires each political party to</p><p>file a report for all contributions over Rs.20,000/- to the Election</p><p>15 For short, “ECS”.</p><p>16 Section 182(3A) of the Companies Act, 2013 was introduced vide Section 154 of the Finance Act, 2017.</p><p>17 As amended in 1978.</p><p>18 First proviso 1(a) to the unamended Section 13A of the Income Tax Act, 1961.</p><p>19 Second proviso to the unamended Section 13A of the Income Tax Act, 1961.</p><p>20 Third proviso to Section 13A Income Tax Act, 1961.</p><p>21 See Section 37 of the Income Tax Act, 1961.</p><p>22 Second proviso to Section 13A of the Income Tax Act, 1961.</p><p>23 Fourth proviso to Section 13A of the Income Tax Act, 1961.</p><p>24 Introduced vide Section 2, Election and Other Related Laws (Amendment) Act, 2003.</p><p>576 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Commission of India.25 The report is required to be filed before the</p><p>due date of filing income tax returns of the financial year under</p><p>the Income Tax Act, 1961. Failure to submit a report disentitles a</p><p>political party from any tax relief, as provided under the Income</p><p>Tax Act, 1961. Section 29C of the Finance Act, 2017, as amended,</p><p>stipulates that political parties are not required to disclose the details</p><p>of contributions received by Bonds.26</p><p>11. Section 31(3) of the RBI Act, 1934 was added by the Finance Act,</p><p>2017 to effectuate the issuance of the Bonds which, as envisaged,</p><p>are not to mention the name of the political party to whom they are</p><p>payable, and hence are in the nature of bearer demand bill or note.</p><p>12. On 02.01.2018, the Department ofEconomicAffairs, Ministry of Finance,</p><p>notified the Electoral Bonds Scheme, 201827 in terms of Section 31(3)</p><p>of the RBI Act, 1934.28 The salient features of this Scheme are:</p><p>⇒ Bonds are in the nature of a promissory note and bearer</p><p>instrument.29 They do not carry the name of the buyer or payee.30</p><p>⇒ Bonds can be purchased by any ‘person’31 who is a citizen of</p><p>India or who is a body corporate incorporated or established in</p><p>India.32 Any ‘person’ who is an individual can purchase Bonds</p><p>either singly or jointly with other individuals.33</p><p>⇒ Bonds are to be issued in denominations of Rs.1,000/-,</p><p>Rs.10,000/-, Rs.1,00,000/-, Rs.10,00,000/- and Rs.1,00,00,000/-.34</p><p>They are valid for a period of 15 days from the date of issue.35</p><p>The amount of Bonds not encashed within the validity period</p><p>25 For short, “ECI”.</p><p>26 Proviso to Section 29C(1) of the Representation of the People Act, 1951.</p><p>27 For short, “the Scheme”.</p><p>28 Finance Act, 2017 has also amended and added Section 31(3) to the RBI Act, 1934 as the Bonds in</p><p>question are bearer bonds like Indian currency. However, we do not think this amendment is required to</p><p>be separately adjudicated as it merely effectuates the Bonds scheme.</p><p>29 Paragraph 2(a) of the Scheme.</p><p>30 Ibid.</p><p>31 Paragraph 2(d) of the Scheme defines a ‘person’ to include an individual, Hindu undivided family,</p><p>company, firm, an association of persons or body of individuals, whether incorporated or not. It also</p><p>includes every artificial judicial person and any agency, office or branch owned by such ‘person’.</p><p>32 Paragraph 3(1) of the Scheme.</p><p>33 Paragraph 3(2) of the Scheme.</p><p>34 Paragraph 5 of the Scheme.</p><p>35 Paragraph 6 of the Scheme.</p><p>[2024] 2 S.C.R. 577</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>of 15 days, would be deposited by the authorised bank to the</p><p>Prime Minister Relief Fund.36</p><p>⇒ The Bond is non-refundable.37</p><p>⇒ A ‘person’ who wishes to purchase a Bond is required to apply</p><p>in the specified format.38 Non-compliant applications are to be</p><p>rejected.</p><p>⇒ To purchase Bonds, a buyer is required to apply to the authorised</p><p>bank.39 RBI’s Know Your Customer40 requirements apply and</p><p>the authorised bank could ask for additional KYC documents,</p><p>if necessary.41</p><p>⇒ The payments for the issuance of Bonds are required to be</p><p>made in Indian rupees through demand draft, cheque, ECS or</p><p>direct debit to the buyer’s account.42</p><p>⇒ The identity and information furnished by the buyer for the</p><p>issuance of Bonds is to be treated as confidential by the</p><p>authorised issuing bank.43 The details, including identity, can</p><p>be disclosed only when demanded by a competent court or on</p><p>registration of any criminal case by any law enforcement agency.44</p><p>⇒ Only eligible political parties, meaning a party that is registered</p><p>under Section 29Aof the Representation of the PeopleAct, 1951,</p><p>and has secured not less than 1% of the votes polled in the</p><p>last general election to the House of People or the Legislative</p><p>Assembly, can receive a Bond.45</p><p>⇒ The eligible political party can encash the Bond through their</p><p>bank account in the authorised bank.46</p><p>36 Paragraph 12(2) of the Scheme.</p><p>37 Paragraph 7(6) of the Scheme.</p><p>38 Paragraph 7 of the Scheme.</p><p>39 Paragraph 2(b) of the Scheme defines an authorized bank as the State Bank of India and its specified</p><p>branches.</p><p>40 For short, “KYC”.</p><p>41 Paragraph 4 of the Scheme.</p><p>42 Paragraph 11 of the Scheme.</p><p>43 Paragraph 7(4) of the Scheme.</p><p>44 Ibid.</p><p>45 Paragraph 3(3) of the Scheme.</p><p>46 Paragraph 3(4) of the Scheme.</p><p>578 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>⇒ The Bonds are made available for purchase for a period of 10</p><p>days every quarter, in the months of January, April, July and</p><p>October, as may be specified by the Central Government.47</p><p>They are also made available for an additional period of 30</p><p>days, as specified by the central government in a year where</p><p>general elections to the House of People are held.48</p><p>⇒ The Bonds are not eligible for trading,49 and commission,</p><p>brokerage or other charges are not chargeable/payable for</p><p>issuance of a Bond.50</p><p>⇒ The value of the Bond is considered as income by way of</p><p>voluntary contributions to eligible political parties for the</p><p>purposes of tax exemption under Section 13A of the Income</p><p>Tax Act, 1961.51</p><p>13. In the afore-mentioned writ petitions filed under Article 32 of the</p><p>Constitution of India,52 the petitioners are seeking a declaration that</p><p>the Scheme and the relevant amendments made by the Finance Act,</p><p>2017, are unconstitutional.</p><p>14. The question of the constitutional validity of the Scheme and the</p><p>amendments introduced by the FinanceAct, 2017 are being examined</p><p>by us. The question of introducing these amendments through a money</p><p>bill underArticle 110 of the Constitution is not being examined by us.53</p><p>The scope of Article 110 of the Constitution has been referred to a</p><p>seven-judge Bench and is sub-judice.</p><p>54 Further, a batch of petitions</p><p>challenging the amendments to the Foreign Contribution Regulation</p><p>Act, 2010 by the Finance Acts of 2016 and 2018 are pending. The</p><p>challenge to the said amendments is not being decided by us.</p><p>15. I fully agree with the Hon’ble Chief Justice, that the Scheme cannot</p><p>be tested on the parameters applicable to economic policy. Matters of</p><p>47 Paragraph 8(1) of the Scheme.</p><p>48 Paragraph 8(2) of the Scheme.</p><p>49 Paragraph 14 of the Scheme.</p><p>50 Paragraph 12 of the Scheme.</p><p>51 Paragraph 13 of the Scheme.</p><p>52 For short, “the Constitution”.</p><p>53 The Finance Act, 2017 was introduced and passed as a money bill by the Parliament under Article 110</p><p>of the Constitution.</p><p>54 Rojer Matthew v. South Indian Bank Ltd. and Ors., [2019] 16 SCR 1 : Civil Appeal No. 8588 of 2019.</p><p>[2024] 2 S.C.R. 579</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>economic policy normally pertain to trade, business and commerce,</p><p>whereas contributions to political parties relate to the democratic</p><p>polity, citizens’ right to know and accountability in our democracy.</p><p>The primary objective of the Scheme, and relevant amendments</p><p>introduced by the Finance Act, 2017, is electoral reform and not</p><p>economic reform. Thus, the dictum and the principles enunciated</p><p>by this Court in Swiss Ribbons (P.) Ltd. and Another v. Union of</p><p>India and Others,</p><p>55 and Pioneer Urban Land and Infrastructure</p><p>and Another v. Union of India and Others,</p><p>56 relating to judicial</p><p>review on economic policy matters have no application to the present</p><p>case. To give the legislation the latitude of economic policy, we will be</p><p>diluting the principle of free and fair elections. Clearly, the importance</p><p>of the issue and the nexus between money and electoral democracy</p><p>requires us to undertake an in-depth review, albeit under the settled</p><p>powers of judicial review.</p><p>16. Even otherwise, it is wrong to state as a principle that judicial review</p><p>cannot be exercised over every matter pertaining to economic policy.57</p><p>The law is that the legislature has to be given latitude in matters</p><p>of economic policy as they involve complex financial issues.58 The</p><p>degree of deference to be shown by the court while exercising the</p><p>power of judicial review cannot be put in a straitjacket.</p><p>17. On the question of burden of proof, I respectfully agree with the</p><p>observations made by the Hon’ble Chief Justice, that once the</p><p>petitioners are able to prima facie establish a breach of a fundamental</p><p>right, then the onus is on the State to show that the right limiting</p><p>measure pursues a proper purpose, has rational nexus with that</p><p>purpose, the means adopted were necessary for achieving that</p><p>purpose, and lastly proper balance has been incorporated.</p><p>18. The doctrine of presumption of constitutionality has its limitations</p><p>when we apply the test of proportionality. In a way the structured</p><p>proportionality places an obligation on the State at a higher level, as</p><p>it is a polycentric examination, both empirical and normative. While</p><p>55 [2019] 3 SCR 535 : (2019) 4 SCC 17.</p><p>56 [2019] 10 SCR 381 : (2019) 8 SCC 416.</p><p>57 R.K. Garg v. Union of India and Others, (1981) 4 SCC 675.</p><p>58 Ibid. See also Bhavesh D. Parish and Others v. Union of India and Others, (2000) 5 SCC 471, and</p><p>Directorate General of Foreign Trade and Others v. Kanak Exports and Another, [2015] 15 SCR 287 :</p><p>(2016) 2 SCC 226.</p><p>580 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>the courts do not pass a value judgment on contested questions of</p><p>policy, and give weight and deference to the government decision</p><p>by acknowledging the legislature’s expertise to determine complex</p><p>factual issues, the proportionality test is not based on preconceived</p><p>notion or presumption. The standard of proof is a civil standard or a</p><p>balance of probabilities;59 where scientific or social science evidence</p><p>is available, it is examined; and where such evidence is inconclusive</p><p>or does not exist and cannot be developed, reason and logic may</p><p>suffice.60</p><p>19. The right to vote is a constitutional and statutory right,61 grounded in</p><p>Article 19(1)(a) of the Constitution, as the casting of a vote amounts</p><p>to expression of an opinion by the voter.62 The citizens’ right to know</p><p>stems from this very right, as meaningfully exercising choice by</p><p>voting requires information. Representatives elected as a result of the</p><p>votes cast in their favour, enact new, and amend existing laws, and</p><p>when in power, take policy decisions. Access to information which</p><p>can materially shape the citizens’ choice is necessary for them to</p><p>have a say in how their lives are affected. Thus, the right to know</p><p>is paramount for free and fair elections and democracy.</p><p>20. The decisions in Association for Democratic Reforms (supra) and</p><p>People’s Union of Civil Liberties (PUCL) (supra) should not be</p><p>read as restricting the right to know the antecedents of a candidate</p><p>contesting the elections.63 The political parties select candidates who</p><p>contest elections on the symbol allotted to the respective political</p><p>parties64. Upon nomination, the candidates enjoy the patronage of</p><p>the political parties, and are financed by them. The voters elect a</p><p>candidate with the objective that the candidate’s political party will</p><p>come to power and fulfil the promises.</p><p>59 R. v. Oakes, [1986] 1 SCR 103.</p><p>60 See Libman v. Quebec (A.G.), [1997] 3 SCR 569; RJR-MacDonald Inc. v. Canada (Attorney</p><p>General), [1995] 3 SCR 199; Thomson Newspapers Co. v. Canada (A.G.), [1998] 1 S.C.R. 877; R.</p><p>v. Sharpe, [2001] 1 SCR 45; Harper v. Canada (A.G.), [2004] 1 SCR 827, at paragraph 77; R. v.</p><p>Bryan, [2007] 1 SCR 527, at paragraphs 16-19, 29; Mounted Police Association of Ontario v. Canada</p><p>(Attorney General), [2015] 1 SCR 3, at paragraphs 143-144.</p><p>61 Article 326, Constitution.</p><p>62 Union of India v. Association for Democratic Reforms and Another, [2002] 3 SCR 696 : (2002) 5 SCC</p><p>294, and People’s Union of Civil Liberties (PUCL) and Another v. Union of India and Another, [2003] 2</p><p>SCR 1136 : (2003) 4 SCC 399.</p><p>63 Ibid.</p><p>64 The Representation of the People Act, 1951 permits candidates not set up by a recognized political party,</p><p>that is independent candidates, to contest elections as well.</p><p>[2024] 2 S.C.R. 581</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>21. The Hon’ble Chief Justice has referred to the Tenth Schedule of</p><p>the Constitution. The Schedule incorporates a provision for the</p><p>disqualification of candidates on the ground of defection, which</p><p>reflects the importance of political parties in our democracy. Section</p><p>77 of the Representation of the People Act, 1951, requires monetary</p><p>limits to be prescribed for expenditures incurred by candidates.65 As</p><p>political parties are at the helm of the electoral process, including its</p><p>finances, the argument that the right of the voter does not extend to</p><p>knowing the funding of political parties and is restricted to antecedents</p><p>of candidates, will lead to an incongruity. I, respectfully, agree with</p><p>Hon’ble the Chief Justice, that denying voters the right to know the</p><p>details of funding of political parties would lead to a dichotomous</p><p>situation. The funding of political parties cannot be treated differently</p><p>from that of the candidates who contest elections.66</p><p>22. Democratic legitimacy is drawn not only from representative democracy</p><p>but also through the maintenance of an efficient participatory</p><p>democracy. In the absence of fair and effective participation of all</p><p>stakeholders, the notion of representation in a democracy would be</p><p>rendered hollow. In a democratic set-up, public participation is meant</p><p>to fulfil three functions; the epistemic function of ensuring reasonably</p><p>sound decisions,67 the ethical function of advancing mutual respect</p><p>among citizens, and the democratic function of promoting “an inclusive</p><p>process of collective choice”.68 James Fishkin lists five criteria which</p><p>define the quality of a deliberative process.69 These are:</p><p>¾ Information (the extent to which participants are given access</p><p>to accurate and reliable information);</p><p>65 Under Explanation 1 to Section 77 of the Representation of the People Act, 1951, the expenditure</p><p>incurred by ‘leaders of political parties’ on account of travel for propagating the programme of the political</p><p>party, is not deemed to be election expenditure.</p><p>66 See observations of this court in Kanwar Lal Gupta v. Amar Nath Chawla & Ors., [1975] 2 SCR 259 :</p><p>(1975) 3 SCC 646.</p><p>67 This function is elaborated as to “produce preferences, opinions, and decisions that are appropriately</p><p>informed by facts and logic and are the outcome of substantive and meaningful consideration of relevant</p><p>reasons(...). Because the topics of these deliberations are issues of common concern, epistemically</p><p>well-grounded preferences, opinions, and decisions must be informed by, and take into consideration,</p><p>the preferences and opinions of fellow citizens”, Jane Mansbridge and others, ‘A Systemic Approach to</p><p>Deliberative Democracy’ in John Parkinson and Jane Mansbridge (eds), Deliberative Systems (1st edn,</p><p>Cambridge University Press 2012) 11.</p><p>68 Ibid at 12.</p><p>69 James S Fishkin, When the People Speak: Deliberative Democracy and Public Consultation (Oxford</p><p>University Press 2011) 33– 34.</p><p>582 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>¾ Substantive balance (the extent to which arguments offered by</p><p>one side are answered by considerations offered by those who</p><p>hold other perspectives);</p><p>¾ Diversity (the extent to which major positions in the public are</p><p>represented by participants);</p><p>¾ Conscientiousness, (the degree to which participants sincerely</p><p>weigh the merits of the arguments); and</p><p>¾ Equal consideration (the extent to which arguments offered by</p><p>all participants are considered on its merits regardless of who</p><p>offered them).70</p><p>23. The State has contested the writ petitions primarily on three grounds:</p><p>(i) Donors of a political party often apprehend retribution from other</p><p>political parties or actors and thus their identities should remain</p><p>anonymous. The Bonds uphold the right to privacy of donors</p><p>by providing confidentiality. Further, donating money to one’s</p><p>preferred political party is a matter of self-expression by the</p><p>donor. Therefore, revealing the identity invades the informational</p><p>privacy of donors protected by the Constitution.71 The identity</p><p>of the donor can be revealed in exceptional cases, for instance</p><p>on directions of a competent court, or registration of a criminal</p><p>case by any law enforcement agency.72</p><p>(ii) The Scheme, by incentivising banking channels and providing</p><p>confidentiality, checks the use of black or unaccounted money</p><p>in political contributions.73</p><p>(iii) The Scheme is an improvement to the prior legal framework. It</p><p>has inbuilt safeguards such as compliance of donors with KYC</p><p>norms, bearer bonds having a limited validity of fifteen days</p><p>and recipients belonging to a recognised political party that</p><p>has secured more than 1% votes in the last general elections.</p><p>24. Hon’ble the Chief Justice has rejected the Union of India’s submissions</p><p>by applying the doctrine of proportionality. This is a principle applied</p><p>70 This is equally important from the perspective of the test of proportionality.</p><p>71 See K.S. Puttaswamy and Anr. v. Union of India and Ors. (9J) (Privacy), (2017) 10 SCC 1.</p><p>72 Paragraph 7(4) of the Scheme.</p><p>73 See Arun Jaitley, ‘Why Electoral Bonds Are Necessary’, Press Information Bureau, 2018.</p><p>[2024] 2 S.C.R. 583</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>by courts when they exercise their power of judicial review in cases</p><p>involving a restriction on fundamental rights. It is applied to strike an</p><p>appropriate balance between the fundamental right and the pursued</p><p>purpose and objective of the restriction.</p><p>25. The test of proportionality comprises four steps:74</p><p>(i) The first step is to examine whether the act/measure restricting</p><p>the fundamental right has a legitimate aim (legitimate aim/</p><p>purpose).</p><p>(ii) The second step is to examine whether the restriction has</p><p>rational connection with the aim (rational connection).</p><p>(iii) The third step is to examine whether there should have been</p><p>a less restrictive alternate measure that is equally effective</p><p>(minimal impairment/necessity test).</p><p>(iv) The last stage is to strike an appropriate balance between the</p><p>fundamental right and the pursued public purpose (balancing</p><p>act).</p><p>26. In Modern Dental College & Research Centre and Others v.</p><p>State of Madhya Pradesh and Others,</p><p>75 this Court had applied</p><p>proportionality in its four-part doctrinal form76 as a standard for</p><p>reviewing right limitations in India. This test was modified in K.S.</p><p>Puttaswamy (Retired) and Anr. (Aadhar) v. Union of India and</p><p>Anr. (5J),77 where this Court adopted a more tempered and nuanced</p><p>approach.78 The Court, inter alia, imposed a stricter test for the third</p><p>and fourth prongs, namely necessity and balancing stages of the</p><p>test of proportionality, as reproduced below.</p><p>“155. ...In order to preserve a meaningful but not unduly</p><p>strict role for the necessity stage, Bilchitz proposes the</p><p>74 See Aharon Barak, “Proportionality – Constitutional Rights and their Limitations”, Cambridge University</p><p>Press, 2012.</p><p>75 [2016] 3 SCR 579 : (2016) 7 SCC 353.</p><p>76 In Gujarat Mazdoor Sabha and Another v. State of Gujarat, (2020) 10 SCC 459, the Court added fifth</p><p>prong to proportionality test. It stipulated that the state should provide sufficient safeguards against the</p><p>abuse of such restriction. This was relied upon in Ramesh Chandra Sharma and Others v. State of U.P.</p><p>and Others, 2023 SCC OnLine SC 162.</p><p>77 [2018] 8 SCR 1 : (2019) 1 SCC 1.</p><p>78 See David Bilchitz, “Necessity and Proportionality: Towards a Balance Approach?“, (Hart Publishing,</p><p>Oxford and Portland, Oregon 2016). Also see Aparna Chandra, “Proportionality: A Bridge to Nowhere?”,</p><p>(Oxford Human Rights Journal 2020).</p><p>584 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>following inquiry. First, a range of possible alternatives</p><p>to the measure employed by the Government must be</p><p>identified. Secondly, the effectiveness of these measures</p><p>must be determined individually; the test here is not whether</p><p>each respective measure realises the governmental</p><p>objective to the same extent, but rather whether it realises</p><p>it in a “real and substantial manner”. Thirdly, the impact</p><p>of the respective measures on the right at stake must be</p><p>determined. Finally, an overall judgment must be made as</p><p>to whether in light of the findings of the previous steps, there</p><p>exists an alternative which is preferable; and this judgment</p><p>will go beyond the strict means-ends assessment favoured</p><p>by Grimm and the German version of the proportionality</p><p>test; it will also require a form of balancing to be carried</p><p>out at the necessity stage.</p><p>156. Insofar as second problem in German test is</p><p>concerned, it can be taken care of by avoiding “ad hoc</p><p>balancing” and instead proceeding on some “bright-line</p><p>rules” i.e. by doing the act of balancing on the basis of</p><p>some established rule or by creating a sound rule... </p><p>xx xx xx</p><p>158. ...This Court, in its earlier judgments, applied German</p><p>approach while applying proportionality test to the case at</p><p>hand. We would like to proceed on that very basis which,</p><p>however, is tempered with more nuanced approach as</p><p>suggested by Bilchitz. This, in fact, is the amalgam of</p><p>German and Canadian approach. We feel that the stages,</p><p>as mentioned in Modern Dental College & Research Centre</p><p>and recapitulated above, would be the safe method in</p><p>undertaking this exercise, with focus on the parameters as</p><p>suggested by Bilchitz, as this projects an ideal approach</p><p>that need to be adopted.”</p><p>27. The said test was also referred to in Anuradha Bhasin v. Union</p><p>of India and Others,</p><p>79 with the observation that the principle of</p><p>proportionality is inherently embedded in the Constitution under</p><p>79 [2020] 1 SCR 812 : (2020) 3 SCC 637.</p><p>[2024] 2 S.C.R. 585</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>the doctrine of reasonable restriction. This means that limitations</p><p>imposed on a right should not be arbitrary or of excessive nature</p><p>beyond what is required in the interest of public. This judgment</p><p>thereupon references works of scholars/jurists who have argued that</p><p>if the necessity prong of the proportionality test is applied strictly,</p><p>legislations and policies, no matter how well intended, would fail the</p><p>proportionality test even if any other slightly less drastic measure</p><p>exists.80 Thereupon, the Court accepted the suggestion in favour of</p><p>a moderate interpretation of the necessity test. Necessity involves a</p><p>process of reasoning designed to ensure that only measures with a</p><p>strong relationship to the objective they seek to achieve can justify</p><p>an invasion of fundamental rights. The process thus requires a court</p><p>to reason through the various stages of moderate interpretation of</p><p>necessity in the following manner:</p><p>“(MN1) All feasible alternatives need to be identified, with</p><p>courts being explicit as to criteria of feasibility;</p><p>(MN2) The relationship between the government measure</p><p>under consideration, the alternatives identified in MN1 and</p><p>the objective sought to be achieved must be determined.</p><p>An attempt must be made to retain only those alternatives</p><p>to the measure that realise the objective in a real and</p><p>substantial manner;</p><p>(MN3) The differing impact of the measure and the</p><p>alternatives (identified in MN2) upon fundamental rights</p><p>must be determined, with it being recognised that this</p><p>requires a recognition of approximate impact; and</p><p>(MN4) Given the findings in MN2 and MN3, an overall</p><p>comparison (and balancing exercise) must be undertaken</p><p>between the measure and the alternatives. A judgment</p><p>must be made whether the government measure is the</p><p>best of all feasible alternatives, considering both the</p><p>degree to which it realises the government objective</p><p>and the degree of impact upon fundamental rights (“the</p><p>comparative component”).</p><p>28. Dr. Justice D.Y. Chandrachud, as his Lordship then was, in K.S.</p><p>80 Anuradha Bhasin (supra) at paragraph 71.</p><p>586 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Puttaswamy (5J)(Aadhar) (supra), had observed that the objective</p><p>of the second prong of rational connection test is essential to the</p><p>test of proportionality.81 Sanjay Kishan Kaul, J. in his concurring</p><p>opinion in K.S. Puttaswamy (9J) (Privacy) (supra) had held that</p><p>actions not only should be sanctioned by law, but the proposed</p><p>actions must be necessary in a democratic society for a legitimate</p><p>aim. The extent of interference must be proportionate to the need for</p><p>such interference and there must be procedural guarantees against</p><p>abuse of such interference.</p><p>29. The test of proportionality is now widely recognised and employed</p><p>by courts in various jurisdictions like Germany, Canada, SouthAfrica,</p><p>Australia and the United Kingdom.82 However, there isn’t uniformity</p><p>in how the test is applied or the method of using the last two prongs</p><p>in these jurisdictions.</p><p>30. The first two prongs of proportionality resemble a means-ends review</p><p>of the traditional reasonableness analysis, and they are applied</p><p>relatively consistently across jurisdictions. Courts first determine if the</p><p>ends of the restriction serve a legitimate purpose, and then assess</p><p>whether the proposed restriction is a suitable means for furthering the</p><p>same ends, meaning it has a rational connection with the purpose.</p><p>31. In the third prong, courts examine whether the restriction is necessary</p><p>to achieve the desired end. When assessing the necessity of the</p><p>measure, the courts consider whether a less intrusive alternative is</p><p>available to achieve the same ends, aiming for minimal impairment.</p><p>As elaborated above, this Court Anuradha Bhasin (supra), relying</p><p>on suggestions given by some jurists,83 emphasised the need to</p><p>employ a moderate interpretation of the necessity prong. To conclude</p><p>its findings on the necessity prong, this Court is inter alia required</p><p>to undertake an overall comparison between the measure and its</p><p>feasible alternatives.84</p><p>81 Dr. Justice D.Y. Chandrachud was in minority in K.S. Puttaswamy (Aadhaar) (supra), albeit his</p><p>observations on the objective of the second prong of rational connection are good and in consonance</p><p>with the law on the subject.</p><p>82 We will be referring to certain facets of the proportionality enquiry employed by these countries in our</p><p>judgment. The test is also employed in various other jurisdictions like Israel, New Zealand, and the</p><p>European Union.</p><p>83 See David Bilchitz at supra note 76.</p><p>84 In Anuradha Bhasin (supra), the Court stipulated the following requirement for a conclusion of findings</p><p>on the necessity prong: “…A judgment must be made whether the government measure is the best of all</p><p>feasible alternatives, considering both the degree to which it realises the government objective and the</p><p>[2024] 2 S.C.R. 587</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>32. We will now delve into the fourth prong, the balancing stage, in some</p><p>detail. This stage has been a matter of debate amongst jurists and</p><p>courts. Some jurists believe that balancing is ambiguous and valuebased.85 This stems from the premise of rule-based legal adjudication,</p><p>where courts determine entitlements rather than balancing interests.</p><p>However, proportionality is a standard-based review rather than a rulebased one. Given the diversity of factual scenarios, the balancing stage</p><p>enables judges to consider various factors by analysing them against the</p><p>standards proposed by the four prongs of proportionality. This ensures</p><p>that all aspects of a case are carefully weighed in decision-making.</p><p>This perspective finds support in the work of jurists who believe that</p><p>constitutional rights and restrictions/measures are both principles, and</p><p>thus they should be optimised/balanced to their fullest extent.86</p><p>33. While balancing is integral to the standard of proportionality, such</p><p>an exercise should be rooted in empirical data and evidence. In</p><p>most countries that adopt the proportionality test, the State places</p><p>on record empirical data as evidence supporting the enactment</p><p>and justification for the encroachment of rights.87 This is essential</p><p>because the proportionality enquiry necessitates objective evaluation</p><p>of conflicting values rather than relying on perceptions and biases.</p><p>Empirical deference is given to the legislature owing to their</p><p>institutional competence and expertise to determine complex factual</p><p>legislation and policies. However, factors like lack of parliamentary</p><p>deliberation and a failure to make relevant enquiries weigh in on</p><p>the court’s decision. In the absence of data and figures, there is</p><p>a lack of standards by which proportionality stricto sensu can be</p><p>degree of impact upon fundamental rights…”</p><p>85 See Jochen von Bernstroff, Proportionality Without Balancing: Why Judicial Ad Hoc Balancing is</p><p>Unnecessary and Potentially Detrimental to Realisation of Collective and Individual Self Determination,</p><p>Reasoning Rights – Comparative Judicial Engagement, (Ed. Liaora Lazarus); Bernhard Schlink,</p><p>‘Abwägung im Verfassungsrecht’, Duncker & Humblot, 1976, and Francisco J. Urbina, ‘Is It Really</p><p>That Easy? A Critique of Proportionality and Balancing as Reasoning’ Canadian Journal of Law and</p><p>Jurisprudence, 2014.</p><p>86 According to Robert Alexy, the ‘Law of Balancing’ is as follows: “…the greater the degree of nonsatisfaction of, or detriment to, one principle, the greater must be the importance of satisfying the</p><p>other…” See Robert Alexy, A Theory of Constitutional Rights (Julian Rivers, trans. Oxford Univ. Press</p><p>2002).</p><p>87 For instance, in Canada, where the doctrine of proportionality is employed by courts, a cabinet directive</p><p>requires the standard to be incorporated into law-making. These guidelines stipulate that prior to</p><p>enactment of laws, the matter and its alternate solutions must be analysed, the relevant ministerial</p><p>department should engage in consultation with those who have an interest in the matter, and they should</p><p>analyse the impact of the proposed solution. See Cabinet Directive on Law-making in Guide to Making</p><p>Federal Acts and Regulations (2nd edn, Government of Canada).</p><p>588 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>determined. Nevertheless, many of the constitutional courts have</p><p>employed the balancing stage ‘normatively’88 by examining the</p><p>weight of the seriousness of the right infringement against the</p><p>urgency of the factors that justify it. Examination under the first three</p><p>stages requires the court to first examine scientific evidence, and</p><p>where such evidence is inconclusive or does not exist and cannot</p><p>be developed, reason and logic apply. We shall subsequently be</p><p>referring to the balancing prong during our application of the test</p><p>of proportionality.</p><p>34. In Germany, the courts enjoy a high judicial discretion. The parliament</p><p>and the judiciary in Germany have the same goal, that is, to realise the</p><p>values of the German Constitution.89 Canadian courts, some believe,</p><p>in practice give wider discretion to the legislature when a restriction</p><p>is backed by sufficient data and evidence.90 The constitutional court</p><p>in South Africa, as per some jurists, collectively applies the four</p><p>prongs of proportionality instead of a structured application.91 While</p><p>proportionality is the predominant doctrine in Australia, an alternate</p><p>calibrated scrutiny test is applied by a few judges.92 It is based on</p><p>the premise that a contextual, instead of broad standard of review,</p><p>is required to be adopted for constitutional adjudication.</p><p>35. Findings of empirical legal studies provide a more solid foundation for</p><p>normative reasoning93 and enhance understanding of the relationship</p><p>between means and ends.94 In our view, proportionality analyses</p><p>would be more accurate when empirical inquiries on causal relations</p><p>between a legislative measure under review and the ends of such a</p><p>measure are considered. It also leads to better and more democratic</p><p>governance. While one cannot jump from “is” to “ought”, to reach an</p><p>“ought” conclusion, one has to rely on accurate knowledge of “is”,</p><p>for “is” and “ought” to be united.95 While we emphasise the need</p><p>88 The first and second steps, legitimate aim and rational connection prong, and to some extent necessity</p><p>prong, are factual.</p><p>89 See Article 1 and 20, Basic Law for the Federal Republic of Germany.</p><p>90 Niels Petersen, ‘Proportionality and judicial Activism: Fundamental Rights Adjudication in Canada,</p><p>Germany and South Africa, (CUP 2017).</p><p>91 Ibid.</p><p>92 See Annexure A.</p><p>93 See Yun-chien Chand & Peng-Hsiang Wang, The Empirical Foundation of Normative Arguments in Legal</p><p>Reasoning (Univ. Chicago Coase-Sandor Inst. For L. & Econ., Res. Paper No. 745, 2016).</p><p>94 Lee Epstein & Andrew D. Martin, An Introduction to Empirical Legal Research 6 (2014).</p><p>95 See Joshua B. Fischman, Reuniting “Is” and “Ought” in Empirical Legal Scholarship, 162 U. Pa. L. Rev.</p><p>[2024] 2 S.C.R. 589</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>of addressing the quantitative/empirical deficit for a contextual and</p><p>holistic balancing analysis, the pitfalls of selective data sharing must</p><p>be kept in mind. After all, if a measure becomes a target, it ceases</p><p>to be a good measure.96</p><p>36. To avoid this judgment from becoming complex, I have enclosed as</p><p>an annexure a chart giving different viewpoints on the doctrine of</p><p>proportionality as a test for judicial review exercised by the courts to</p><p>test the validity of the legislation. The same is enclosed asAnnexure-A</p><p>to this judgment.97</p><p>37. When we turn to the reply or the defence of the Union of India in</p><p>the present case, which we have referred to above,98 the matter of</p><p>concern is the first submission made regarding the purpose and</p><p>rationale of the Scheme and amendments to the Finance Act of</p><p>2017. Lest remains any doubt, I would like to specifically quote from</p><p>the transcript of hearing dated 01.11.2023, where on behalf of the</p><p>Union of India it was submitted:</p><p>“..the bottom line is this. What was really found? That</p><p>what is the reason, why a person who contributes to a</p><p>political party chooses the mode of unclean money as</p><p>a payment mode and Your Lordships would immediately</p><p>agree with me if we go by the practicalities of life. What</p><p>happens is, suppose one state is going for an election.</p><p>There are two parties, there are multiple parties, but</p><p>by and large there are two parties which go neck to</p><p>neck. Suppose I am a contractor. I’m not a company or</p><p>anything. I am a contractor and I’m supposed to give</p><p>my political contribution to Party A and Party B or Party</p><p>A or Party B, as the case may be. But the fear was if</p><p>I give by way of accounted money or by clean money,</p><p>by way of cheque, it would be easily identifiable. If I</p><p>give to party A and Party B forms the Government, I</p><p>would be facing victimization and retribution and vice</p><p>117 (2013).</p><p>96 Marilyn Strathern, Improving Ratings: Audit in the British University System, European review, Vol. 5</p><p>Issue 3, pp. 305-321 (1997).</p><p>97 AnnexureAshould not be read as an opinion of this Court or even as obiter dicta expressed by this Court.</p><p>The Annexure is only for the purpose of pointing out different viewpoints on the test of proportionality.</p><p>98 See paragraph 23 of this judgment.</p><p>590 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>versa. If I give money to Party B and Party A continues</p><p>to be in Government, then I would be facing retribution</p><p>or victimization. Therefore, the safest course was to</p><p>pay by cash, so that none of the parties know what I</p><p>paid to which party, and both parties are happy that I</p><p>have paid something. So, that, the payment by cash</p><p>ensured confidentiality. Both parties would say that</p><p>one party would be given 100 crores, one party would</p><p>be given 40 crores, depending upon my assessment of</p><p>their winnability. But both would not know who is paid</p><p>what. My Lord, sometimes what used to happen is in</p><p>my business, I get only clean money or substantial</p><p>part of the clean money, but practicalities require that I</p><p>contribute to the political parties, and practicality again</p><p>requires that I contribute with a degree of confidentiality</p><p>so that I am not victimized in the future. And therefore</p><p>clean money used to be converted into unclean money.</p><p>White money is being converted into black money so</p><p>that it can be paid, according to them anonymously, and</p><p>according to me with confidentiality. And this is disastrous</p><p>for the economy when white money is converted into</p><p>black money.”</p><p>While introducing the Finance Act of 2017, the then Finance Minister</p><p>had elucidated that the main purpose of the Scheme was to curb the</p><p>flow of black money in electoral finance.99 This, it is stated, could be</p><p>achieved only if information about political donations and the donor</p><p>were kept confidential.100 It was believed that this would incentivise</p><p>donations to political parties through banking channels.</p><p>38. I am of the opinion that retribution, victimisation or retaliation cannot</p><p>by any stretch be treated as a legitimate aim. This will not satisfy the</p><p>legitimate purpose prong of the proportionality test. Neither is the</p><p>Scheme nor the amendments to the Finance Act, 2017, rationally</p><p>connected to the fulfilment of that purpose, namely, to counter</p><p>retribution, victimisation or retaliation in political donations. In our</p><p>opinion, it will also not satisfy the necessity stage of the proportionality</p><p>even if we have to ignore the balancing stage.</p><p>99 See Speech of Arun Jaitley, Minister of Finance, at paragraph 165, Budget 2017-18.</p><p>100 Ibid.</p><p>[2024] 2 S.C.R. 591</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>39. Retribution, victimisation or retaliation against any donor exercising</p><p>their choice to donate to a political party is an abuse of law and</p><p>power. This has to be checked and corrected. As it is a wrong, the</p><p>wrong itself cannot be a justification or a purpose. The argument,</p><p>therefore, suffers on the grounds of inconsistency and coherence</p><p>as it seeks to perpetuate and accept the wrong rather than deal</p><p>with the malady and correct it. The inconsistency is also apparent</p><p>as the change in law, by giving a cloak of secrecy, leads to severe</p><p>restriction and curtailment of the collective’s right to information and</p><p>the right to know, which is a check and counters cases of retribution,</p><p>victimisation and retaliation. Transparency and not secrecy is the</p><p>cure and antidote.</p><p>40. Similarly, the second argument that the donor may like to keep his</p><p>identity anonymous is a mere ipse dixit assumption. The plea of</p><p>infringement of the right to privacy has no application at all if the</p><p>donor makes the contribution, that too through a banking channel, to</p><p>a political party. It is the transaction between the donor and the third</p><p>person. The fact that donation has been made to a political party</p><p>has to be specified and is not left hidden and concealed.101 What</p><p>is not revealed is the quantum of the contribution and the political</p><p>party to whom the contribution is made. Further, when a donor goes</p><p>to purchase a Bond, he has to provide full particulars and fulfil the</p><p>KYC norms of the bank.102 His identity is then asymmetrically known</p><p>to the person and the officers of the bank from where the Bond is</p><p>purchased.103 Similarly, the officers in the branch of the authorised</p><p>bank104 where the political party has an account and encashes the</p><p>Bond are known to the officers in the said bank.105</p><p>41. The argument raised by the Union of India that details can be</p><p>revealed when an order is passed by a court or when it is required for</p><p>investigation pursuant to registration of a criminal case106 overlooks the</p><p>fact that it is their stand that the identities of the contributors/donors</p><p>101 Section 182(3) of the Companies Act, 2013 requires companies to mention the total political contributions</p><p>made.</p><p>102 Paragraph 4 of the Scheme.</p><p>103 In terms of paragraph 2(b) of the Scheme, only State Bank of India and its specified branches are</p><p>allowed to issue Bonds.</p><p>104 Ibid.</p><p>105 Paragraph 3(4) of the Scheme.</p><p>106 See paragraph 7(4) of the Scheme.</p><p>592 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>should be concealed because of fear of retaliation, victimisation and</p><p>reprisal. That fear would still exist as the identity of the purchaser</p><p>of the Bond can always be revealed upon registration of a criminal</p><p>case or by an order/direction of the court. Thus, the fear of reprisal</p><p>and vindictiveness does not evaporate. The so-called protection</p><p>exists only on paper but in practical terms is not a good safeguard</p><p>even if we accept that the purpose is legitimate. It fails the rational</p><p>nexus prong.</p><p>42. The fear of the identities of donors being revealed exists in another</p><p>manner. Under the Scheme, political parties in power may have</p><p>asymmetric access to information with the authorised bank. They</p><p>also retain the ability to use their power and authority of investigation</p><p>to compel the revelation of Bond related information.107 Thus, the</p><p>entire objective of the Scheme is contradictory and inconsistent.</p><p>43. Further, it is the case of the Union of India that parties in power at</p><p>the Centre and State are the recipients of the highest amounts of</p><p>donations through Bonds. If that is the case, the argument of retribution,</p><p>victimisation and retaliation is tempered and loses much of its force.108</p><p>44. The rational connection test fails since the purpose of curtailing</p><p>black or unaccounted-for money in the electoral process has no</p><p>connection or relationship with the concealment of the identity of the</p><p>donor. Payment through banking channels is easy and an existing</p><p>antidote. On the other hand, obfuscation of the details may lead to</p><p>unaccounted and laundered money getting legitimised.</p><p>45. The RBI had objected to the Scheme since the Bonds could change</p><p>hands after they have been issued. There is no check for the same</p><p>as the purchaser who has completed the KYC, whose identity is</p><p>thereupon completely concealed, may not be the actual contributor/</p><p>donor. In fact, the Scheme may enable the actual contributor/donor</p><p>to not leave any traceability or money trail.</p><p>107 Ibid.</p><p>108 In Brown v. Socialist Workers Comm., 459 U.S. 87 (1982), the Supreme Court of the United States of</p><p>America held that disclosure laws requiring the reporting of names and addresses of every campaign</p><p>contributor could be waived when “specific evidence of hostility, threats, harassment and reprisals”</p><p>existed, thus adopting a case-by-case approach. Marshall J., delivering the opinion of the court observed</p><p>that the Socialist Workers Party, a minor political party had historically been the object of harassment by</p><p>government officials and private parties. Therefore, the court held that the government was prohibited</p><p>from compelling disclosures from the said party, a minor political party, since there existed a reasonable</p><p>probability that the compelled disclosures would subject their donors, if identified, to threats, harassment</p><p>or reprisals.</p><p>[2024] 2 S.C.R. 593</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>46. Money laundering can be undertaken in diverse ways. Political</p><p>contributions for a quid pro quo may amount to money laundering,</p><p>as defined under the Prevention of Money Laundering Act, 2002109.</p><p>The Financial Action Task Force110 has observed that the signatory</p><p>States are required to check money laundering on account of</p><p>contributions made to political parties.111 Article 7(3) of the United</p><p>Nations Convention against Corruption, 2003 mandates the state</p><p>parties to enhance transparency in political funding of the candidates</p><p>and parties.112 The said convention is signed and ratified by India.</p><p>By ensuring anonymity, the policy ensures that the money laundered</p><p>on account of quid pro quo or illegal connection escapes eyeballs</p><p>of the public.</p><p>47. The economic policies of the government have an impact on</p><p>business and commerce. Political pressure groups promote different</p><p>agendas, including perspectives on economic policies. As long as</p><p>these pressure groups put forward their perspective with evidence</p><p>and data, there should not be any objection even if they interact with</p><p>elected representatives. The position would be different if monetary</p><p>contributions to political parties were made as a quid pro quo to</p><p>secure a favourable economic policy. This would be an offence</p><p>under the Prevention of Corruption Act, 1988 and also under the</p><p>PMLA. Such offences when committed by political parties in power</p><p>can never see the light of the day if secrecy and anonymity of the</p><p>donor is maintained.</p><p>48. In view of the aforesaid observations, the argument raised by the</p><p>petitioners that there is no rational connection between the measure</p><p>and the purpose, which is also illegitimate, has merit and should be</p><p>accepted.</p><p>49. On the question of alternative measures, that is the necessity prong</p><p>of the proportionality test, it is accepted that post the amendments</p><p>brought about by the Finance Act, 2017, political parties cannot</p><p>receive donations in cash for amounts above Rs.2,000/-. However,</p><p>political parties do not have to record the details and particulars of</p><p>109 For short, “PMLA”.</p><p>110 For short, “FATF”.</p><p>111 Paragraph 3, Section B, International Standards on Combating Money Laundering and the Financing of</p><p>Terrorism and Proliferation – The FATF Recommendations, 2012.</p><p>112 See also United Nations General Assembly Resolution A/RES/S-32/1, 02.06.2021, para 12.</p><p>594 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>donations received for amounts less than Rs.20,000/-.113 Therefore,</p><p>the reduction of the upper limit of cash donations from Rs.20,000/-</p><p>to Rs.2,000/- serves no purpose. It is open to the political parties to</p><p>bifurcate the law and camouflage larger donations in smaller stacks.</p><p>There is no way or method to verify the donor if the amount shown</p><p>in the books of the political party is less than Rs.2,000/-.</p><p>50. It is an accepted position that the Electoral Trust Scheme114 was</p><p>introduced in 2013 to ensure the secrecy of contributors. As per</p><p>the Trust Scheme, contributions could be made by a person or</p><p>body corporate to the trust. The trust would thereafter transfer the</p><p>amount to the political party. The trust is, therefore, treated as the</p><p>contributor to the political party. Interestingly, it is the ECI that had</p><p>issued guidelines dated 06.06.2014 whereby the trusts were required</p><p>to specify and give full particulars to the ECI of the depositors with</p><p>the trust and amounts which were subsequently transferred as a</p><p>contribution to the political party. The guidelines were issued by the</p><p>ECI to ensure transparency and openness in the electoral process.115</p><p>51. The trust can have multiple donors. Similarly, contributions are made</p><p>by the trust to multiple political parties. The disclosure requirements</p><p>provided in ECI’s guidelines dated 06.06.2014 only impose disclosure</p><p>requirements at the inflow and outflow points of the trust’s donations,</p><p>that is, the trust is required to provide particulars of its depositors</p><p>and the amounts donated to political parties, including the names of</p><p>the political parties. Thus, the Trust Scheme protects the anonymity</p><p>of the donors vis-à-vis their contributions to the political party. When</p><p>we apply the necessity test propounded in Anuradha Bhasin</p><p>(supra)116, the Trust Scheme achieves the objective of the Union of</p><p>113 This is inapplicable to Bonds under proviso (b) to Section 13A of the Income Tax Act, 1961.</p><p>114 For short, “Trust Scheme”.</p><p>115 Similarly, early campaign finance laws in the United Kingdom permitted trusts to donate to political</p><p>parties. It came to be disallowed since it was contrary to openness and accountability. See Suchindran</p><p>Bhaskar Narayan and Lalit Panda, Money and Elections – Necessary Reforms in Electoral Finance,</p><p>Vidhi 2018 at p. 19. See also Lord Neill of Bladen, QC, ‘Fifth Report of the Committee on Standards in</p><p>Public Life: The Funding of Political Parties in the United Kingdom’, 1998 pp 61-62.</p><p>116 As elaborated in paragraph 27] of this judgement, Anuradha Bhasin (supra) proposes a four sub-pronged</p><p>inquiry at the necessity stage of proportionality, that is (MN1) to (MN4). To arrive at the conclusion of</p><p>the necessity inquiry, this Court has proposed at (MN4) that: “…an overall comparison (and balancing</p><p>exercise) must be undertaken between the measure and the alternatives. A judgment must be made</p><p>whether the government measure is the best of all feasible alternatives, considering both the degree</p><p>to which it realises the government objective and the degree of impact upon fundamental rights (the</p><p>comparative component).”</p><p>[2024] 2 S.C.R. 595</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>India in a real and substantial manner and is also a less restrictive</p><p>alternate measure in view of the disclosure requirements, viz. the</p><p>right to know of voters. The Trust Scheme is in force and is a result</p><p>of the legislative process. In a comparison of limited alternatives, it</p><p>is a measure that best realises the objective of the Union of India</p><p>in a real and substantial manner without significantly impacting the</p><p>fundamental right of the voter to know. The ECI, if required, can</p><p>suitably modify the guidelines dated 06.06.2014.</p><p>52. I would now come to the fourth prong. I would begin by first referring</p><p>to the judgment cited by Hon’ble the Chief Justice in the case</p><p>of Campbell v. MGM Limited117. This judgment adopts double</p><p>proportionality standard to adequately balance two conflicting</p><p>fundamental rights. Double proportionality has been distinguished</p><p>from the single proportionality standard in paragraph 152 of the</p><p>judgment authored by Hon’ble the Chief Justice. Campbell (supra)</p><p>states that the single proportionality test and the principle of</p><p>reasonableness are applied to determine whether a private right claim</p><p>offers sufficient justification for the interference with the fundamental</p><p>rights. However, this test may not apply when two fundamental rights</p><p>are at conflict and one has to balance the application of one right</p><p>and restriction of the other.</p><p>53. In Campbell (supra), Baroness Hale has suggested a three-step</p><p>approach to balance conflicting fundamental rights, when two rights</p><p>are in play. The first step is to analyse the comparative importance</p><p>of the fundamental rights being claimed in the particular case. In the</p><p>second step, the court should consider the justification for interfering</p><p>with or restricting each of these rights. The third step requires the</p><p>application of a proportionality standard to both these rights.</p><p>54. In a subsequent decision, the House of Lords (Lord Steyn) in In</p><p>re.S118, distilled four principles to resolve the question of conflict of</p><p>rights as under:</p><p>“17. (...) First, neither article has as such precedence</p><p>over the other. Secondly, where the values under the two</p><p>articles are in conflict, an intense focus on the comparative</p><p>importance of the specific rights being claimed in the</p><p>117 [2004] 2 AC 457.</p><p>118 [2005] 1 AC 593.</p><p>596 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>individual case is necessary. Thirdly, the justifications for</p><p>interfering with or restricting each right must be taken into</p><p>account. Finally, the proportionality test must be applied to</p><p>each. For convenience I will call this the ultimate balancing</p><p>test. This is how I will approach the present case.”</p><p>55. The fourth principle, that is, the ultimate balancing test, was elaborated</p><p>upon by Sir Mark Potter in In Re. W119 in the following terms:</p><p>“53. (...) each Article propounds a fundamental right which</p><p>there is a pressing social need to protect. Equally, each</p><p>Article qualifies the right it propounds so far as it may be</p><p>lawful, necessary and proportionate to do so in order to</p><p>accommodate the other. The exercise to be performed</p><p>is one of parallel analysis in which the starting point is</p><p>presumptive parity, in that neither Article has precedence</p><p>over or “trumps” the other. The exercise of parallel analysis</p><p>requires the court to examine the justification for interfering</p><p>with each right and the issue of proportionality is to be</p><p>considered in respect of each. It is not a mechanical</p><p>exercise to be decided upon the basis of rival generalities.</p><p>An intense focus on the comparative importance of the</p><p>specific rights being claimed in the individual case is</p><p>necessary before the ultimate balancing test in terms of</p><p>proportionality is carried out.”</p><p>56. Fundamental rights are not absolute, legislations/policies restricting</p><p>the rights may be enacted in accordance with the scheme of the</p><p>Constitution. However, it is now well settled that the provisions of</p><p>fundamentalrights inPart III of the Constitution are not independent silos</p><p>and have to be read together as complementary rights.120 Therefore, the</p><p>thread of reasonableness applies to all such restrictions.121 Secondly,</p><p>Article 14, as observed by the Hon’ble Chief Justice in his judgment122</p><p>includes the facet of formal equality and substantive equality. Thus,</p><p>the principle ‘equal protection of law’ requires the legislature and the</p><p>executive to achieve factual equality. This principle can be extended</p><p>119 [2005] EWHC 1564 (Fam).</p><p>120 Rustom Cavasjee Cooper v. Union of India, (1970) 1 SCC 248; K.S. Puttaswamy (9J) (Privacy) (supra),</p><p>and Maneka Gandhi v. Union of India and Another, (1978) 1 SCC 248.</p><p>121 The test of single proportionality will apply.</p><p>122 See paragraphs 191 to 195 of the Hon’ble Chief Justice’s judgment.</p><p>[2024] 2 S.C.R. 597</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>to any restriction on fundamental rights which must be reasonable</p><p>to the identified degree of harm. If the restriction is unreasonable,</p><p>unjust or arbitrary, then the law should be struck down. Further, it is</p><p>for the legislature to identify the degree of harm. I have referred to the</p><p>said observation in the context that there appears to be a divergent</p><p>opinion in K.S. Puttaswamy (9-J) (Privacy) (supra) as to whether</p><p>right of privacy is an essential component for effective fulfilment of</p><p>all fundamental rights or can be held to be a part or a component of</p><p>Article 21 and Article 19(1)(a) of the Constitution.</p><p>57. When we apply the fourth prong, that is the balancing prong of</p><p>proportionality, I have no hesitation or doubt, given the findings</p><p>recorded above, that the Scheme falls foul and negates and</p><p>overwhelmingly disavows and annuls the voters right in an electoral</p><p>process as neither the right of privacy nor the purpose of incentivising</p><p>donations to political parties through banking channels, justify the</p><p>infringement of the right to voters. The voters right to know and</p><p>access to information is far too important in a democratic set-up so</p><p>as to curtail and deny ‘essential’ information on the pretext of privacy</p><p>and the desire to check the flow of unaccounted for money to the</p><p>political parties. While secret ballots are integral to fostering free</p><p>and fair elections, transparency—not secrecy—in funding of political</p><p>parties is a prerequisite for free and fair elections. The confidentiality</p><p>of the voting booth does not extend to the anonymity in contributions</p><p>to political parties.</p><p>58. In K.S. Puttasamy (9-J) (Privacy) (supra), all opinions accept that</p><p>the right to privacy has to be tested and is not absolute. The right</p><p>to privacy must yield in given circumstances when dissemination</p><p>of information is legitimate and required in state or public interest.</p><p>Therefore, the right to privacy is to be applied on balancing the</p><p>said right with social or public interest. The reasonableness of</p><p>the restriction should not outweigh the particular aspect of privacy</p><p>claimed.123 Sanjay Kishan Kaul, J., in his opinion in K.S. Puttasamy</p><p>(9-J) (Privacy) (supra), has said that restriction on right to privacy</p><p>may be justifiable and is subject to the principle of proportionality</p><p>when considering the right to privacy in relation to its function in</p><p>society.</p><p>123 While giving the aforesaid finding, we are applying the single proportionality test.</p><p>598 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>59. As observed above, the right to privacy operates in the personal</p><p>realm, but as the person moves into communal relations and activities</p><p>such as business and social interaction, the scope of personal space</p><p>shrinks contextually.124 In this context, the High Court of South Africa</p><p>in My Vote Counts NPC v. President of the Republic of South</p><p>Africa and Ors.125 observes that:</p><p>“(...) given the public nature of political parties and the</p><p>fact that the private funds they receive have a distinctly</p><p>public purpose, their rights to privacy can justifiably be</p><p>attenuated. The same principles must, as a necessary</p><p>corollary, apply to their donors. (...)”</p><p>(emphasis supplied)</p><p>60. The great underlying principle of the Constitution is that rights of</p><p>individuals in a democratic set-up is sufficiently secured by ensuring</p><p>each a share in political power.126 This right gets affected when a</p><p>few make large political donations to secure selective access to</p><p>those in power. We have already commented on pressure groups</p><p>that exert such persuasion, within the boundaries of law. However,</p><p>when money is exchanged as quid pro quo then the line between</p><p>persuasion and corruption gets blurred.</p><p>61. It is in this context that the High Court ofAustralia in Jeffery Raymond</p><p>McCloy and Others v. State of New South Wales and Another127,</p><p>observes that corruption can be of different kinds. When a wealthy</p><p>donor makes contribution to a political party in return of a benefit, it</p><p>is described as quid pro quo corruption. More subtle corruption arises</p><p>when those in power decide issues not on merits or the desires of</p><p>their constituencies, but according to the wishes and desires of those</p><p>who make large contributions. This kind of corruption is described as</p><p>‘clientelism’. This can arise from the dependence128 on the financial</p><p>support of a wealthy patron to a degree that it compromises the</p><p>124 See Bernstein and Ors. v. Bester NO and Others, (1996) ZACC 2, para 67.</p><p>125 My Vote Counts NPC v. President of the Republic of South Africa and Ors. (2017) ZAWCHC 105, para</p><p>67.</p><p>126 Harrison Moore, The Constitution of the Commonwealth of Australia, p.329 (1902).</p><p>127 (2015) HCA 34.</p><p>128 James Madison in the Federalist Paper No. 52 notes that a government must “depend on the people</p><p>alone”. This condition, according to Professor Lawrence Lessig, has two elements – first, it identifies a</p><p>proper dependency (“on the people”) and second, it describes that dependence as exclusive (“alone”).</p><p>[2024] 2 S.C.R. 599</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>expectation, fundamental to representative democracy, that public</p><p>power will be exercised in public interest. This affects the vitality as</p><p>well as integrity of the political branches of government. While quid</p><p>pro quo and clientelistic corruption erodes quality and integrity of</p><p>government decision making, the power of money may also pose</p><p>threat to the electoral process itself. This phenomenon is referred</p><p>to as ‘war-chest’ corruption.129</p><p>62. In Jefferey Raymond (supra), the High Court of Australia had</p><p>referred to the decision of the Supreme Court of Canada in Harper</p><p>v. Canada (Attorney General)130, which upheld the legislative</p><p>restriction on electoral advertising. In Harper (supra), the Supreme</p><p>Court of Canada has held that the State can provide a voice to</p><p>those who otherwise might not be heard and the State can also</p><p>restrict voices that dominate political discourse so that others can</p><p>be heard as well.</p><p>63. The Supreme Court of the United States in Buckley v. R Valeo131</p><p>has commented on the concern of quid pro quo arrangements and</p><p>its dangers to a fair and effective government. Improper influence</p><p>erodes and harms the confidence in the system of representative</p><p>government. Contrastingly, disclosure provides the electorate with</p><p>information as to where the political campaign money comes from</p><p>and how it is spent. This helps and aides the voter in evaluating</p><p>those contesting elections. It allows the voter to identify interests</p><p>which candidates are most likely to be responsive to, thereby</p><p>facilitating prediction of future performance in office. Secondly,</p><p>it checks actual corruption and helps avoid the appearance of</p><p>corruption by exposing large contributions and expenditures to</p><p>the light of publicity. Relying upon Grosjean v. American Press</p><p>Co.132, it holds that informed public opinion is the most potent of all</p><p>restraints upon misgovernment. Thirdly, record keeping, reporting</p><p>and disclosure are essential means of gathering data necessary to</p><p>detect violations of contribution limitations.</p><p>129 See Federal Election Commission v. National Right to Work Committee, 459 U.S. 197 (1982), where the</p><p>petitioners submitted: “...substantial aggregations of wealth amassed by the special advantages which</p><p>go with the corporate form of organization should not be converted into political “war chests” which could</p><p>be used to incur political debts from legislators who are aided by the contributions...”</p><p>130 [2004] 1 SCR 827.</p><p>131 424 U.S. 1 (1976).</p><p>132 297 U.S. 233 (1936).</p><p>600 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>64. In Nixon, Attorney General of Missouri, et al v. Shrink Missouri</p><p>Government PAC et al,</p><p>133 the Supreme Court of the United States</p><p>observes that large contributions given to secure a political quid pro</p><p>quo undermines the system of representative democracy. It stems</p><p>public awareness of the opportunities for abuse inherent in a regime</p><p>of large contributions. This effects the integrity of the electoral process</p><p>not only in the form of corruption or quid pro quo arrangements, but</p><p>also extending to the broader threat of the beneficiary being too</p><p>compliant with the wishes of large contributors.</p><p>65. Recently, a five judge Constitution Bench of this Court in Anoop</p><p>Baranwal v. Union of India134 has highlighted the importance of</p><p>purity of electoral process in the following words:</p><p>“215. …Without attaining power, men organised as political</p><p>parties cannot achieve their goals. Power becomes,</p><p>therefore, a means to an end. The goal can only be to govern</p><p>so that the lofty aims enshrined in the directive principles</p><p>are achieved while observing the fundamental rights as</p><p>also the mandate of all the laws. What is contemplated is</p><p>a lawful Government. So far so good. What, however, is</p><p>disturbing and forms as we understand the substratum of</p><p>the complaints of the petitioner is the pollution of the stream</p><p>or the sullying of the electoral process which precedes the</p><p>gaining of power. Can ends justify the means?</p><p>216. There can be no doubt that the strength of a</p><p>democracy and its credibility, and therefore, its enduring</p><p>nature must depend upon the means employed to gain</p><p>power being as fair as the conduct of the Government after</p><p>the assumption of power by it. The assumption of power</p><p>itself through the electoral process in the democracy cannot</p><p>and should not be perceived as an end. The end at any</p><p>rate cannot justify the means. The means to gain power</p><p>in a democracy must remain wholly pure and abide by</p><p>the Constitution and the laws. An unrelenting abuse of the</p><p>electoral process over a period of time is the surest way</p><p>to the grave of the democracy. Democracy can succeed</p><p>133 528 U.S. 377 (2000).</p><p>134 [2023] 9 SCR 1 : (2023) 6 SCC 161.</p><p>[2024] 2 S.C.R. 601</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>only insofar as all stakeholders uncompromisingly work at</p><p>it and the most important aspect of democracy is the very</p><p>process, the electoral process, the purity of which alone</p><p>will truly reflect the will of the people so that the fruits of</p><p>democracy are truly reaped.</p><p>217. The essential hallmark of a genuine democracy is</p><p>the transformation of the “Ruled” into a citizenry clothed</p><p>with rights which in the case of the Indian Constitution</p><p>also consist of fundamental rights, which are also being</p><p>freely exercised and the concomitant and radical change</p><p>of the ruler from an “Emperor” to a public servant. With</p><p>the accumulation of wealth and emergence of near</p><p>monopolies or duopolies and the rise of certain sections</p><p>in the Media, the propensity for the electoral process to</p><p>be afflicted with the vice of wholly unfair means being</p><p>overlooked by those who are the guardians of the rights</p><p>of the citizenry as declared by this Court would spell</p><p>disastrous consequences.”</p><p>66. The Law Commission of India in its 255th Report noted the concern</p><p>of financial superiority translating into electoral advantage.135 It was</p><p>observed that lobbying and capture give undue importance to big</p><p>donors and certain interest groups, at the expense of the ordinary</p><p>citizen, violating “the right of equal participation of each citizen in the</p><p>polity.”136 While noting the candidate-party dichotomy in the regulations</p><p>under Section 77 of the Representation of the People Act, 1951,</p><p>the Law Commission of India recommends to require candidates</p><p>to maintain an account of contributions received from their political</p><p>party (not in cash) or any other permissible donor.</p><p>67. At this stage, we would like to refer to the data as available on the</p><p>website of the ECI and the data submitted by the petitioners for a</p><p>limited purpose and objective to support our reasoning while applying</p><p>balancing. We have not stricto sensu applied proportionality as the</p><p>data is not sufficient for us. I also clarify that we have not opened</p><p>the sealed envelope given by the ECI pursuant to the directions of</p><p>this Court dated 02.11.2023.</p><p>135 Law Commission of India, Electoral Reforms, Report No. 255, March 2015.</p><p>136 R.C.Poudyal v. Union of India and Others, [1993] 1 SCR 891 : (1994) Supp 1 SCC 324.</p><p>602 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>68. An analysis of the annual audit reports of political parties from 2017-</p><p>18 to 2022-23 showcases party-wise donations received through the</p><p>Bonds as reproduced below:</p><p>PARTY-WISE DONATION THROUGH BONDS (IN RS. CR)</p><p>Party 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23</p><p>BJP 210.00 1,450.890 2,555.000 22.385 1,033.7000 1294.1499</p><p>INC 5.00 383.260 317.861 10.075 236.0995 171.0200</p><p>AITC 0.00 97.280 100.4646 42.000 528.1430 325.1000</p><p>NCP 0.00 29.250 20.500 0.000 14.0000 --</p><p>TRS 0.00 141.500 89.153 0.000 153.0000 --</p><p>TDP 0.00 27.500 81.600 0.000 3.5000 34.0000</p><p>YSR-C 0.00 99.840 74.350 96.250 60.0000 52.0000</p><p>BJD 0.00 213.500 50.500 67.000 291.0000 152.0000</p><p>DMK 0.00 0.000 45.500 80.000 306.0000 185.0000</p><p>SHS 0.00 60.400 40.980 0.000 -- --</p><p>AAP* 0.00 -- 17.765 5.950 25.1200 45.4500</p><p>JDU 0.00 0.000 13.000 1.400 10.0000 --</p><p>SP 0.00 0.000 10.840 0.000 3.2100 0.0000</p><p>JDS 6.03 35.250 7.500 0.000 0.0000 --</p><p>SAD 0.00 0.000 6.760 0.000 0.5000 0.0000</p><p>AIADMK 0.00 0.000 6.050 0.000 0.0000 0.0000</p><p>RJD 0.00 0.000 2.500 0.000 0.0000 --</p><p>JMM 0.00 0.000 1.000 0.000 0.0000 --</p><p>SDF 0.00 0.500 0.000 0.000 0.0000 0.0000</p><p>MGP 0.00 0.000 0.000 0.000 0.5500 --</p><p>TOTAL 221.03 2,539.170 3,441.324 325.060 2,664.8225 --</p><p>Asterisk (*) means that the AAP had declared their donations through Bonds/</p><p>Electoral Trust, but the party had not declared a separate amount for Bonds.</p><p>69. It is clear from the available data that majority of contribution through</p><p>Bonds has gone to political parties which are ruling parties in the</p><p>Centre and the States. There has also been a substantial increase</p><p>in contribution/donation through Bonds.</p><p>[2024] 2 S.C.R. 603</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>70. Petitioner no. 1 – Association for Democratic Reforms has submitted</p><p>the following table which showcases party-wise donation by corporate</p><p>houses to national parties:</p><p>PARTY-WISE CORPORATE DONATION</p><p>(NATIONAL PARTIES) (IN RS. Cr)</p><p>Party 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Total</p><p>BJP 515.500 400.200 698.140 720.407 416.794 548.808 3,299.8500</p><p>INC 36.060 19.298 127.602 133.040 35.890 54.567 406.4570</p><p>NCP 6.100 1.637 11.345 57.086 18.150 15.280 109.5980</p><p>CPI(M) 3.560 0.872 1.187 6.917 9.815 6.811 29.1615</p><p>AITC 2.030 0.000 42.986 4.500 0.000 0.250 49.7660</p><p>CPI 0.003 0.003 0.000 0.000 0.000 0.000 0.0055</p><p>BSP 0.000 0.000 0.000 0.000 0.000 0.000 0.0000</p><p>TOTAL 563.253 422.010 881.260 921.950 480.649 625.716 3,894.8380</p><p>As per the said table, the data shows that the party-wise donation</p><p>by the corporate houses has been more or less stagnant from the</p><p>years 2016-17 to 2021-22. We do not have the comments or official</p><p>details in this regard from the Union of India or the ECI. The figures</p><p>support our conclusion, but I would not, without certainty, base my</p><p>analysis on these figures. However, we do have data of denomination/</p><p>sale of Bonds, as submitted by the petitioners, during the 27 phases</p><p>from March 2018 to July 2023, which is as under:</p><p>DENOMINATION WISE SALE OF EB DURING 27 PHASES</p><p>(MARCH, 2018-JULY, 2023)</p><p>Denomination No. of Electoral</p><p>Bonds Sold</p><p>Amount</p><p>(In Rupees)</p><p>1 Crore 12,999</p><p>(54.13%)</p><p>12,999 Crore</p><p>(94.25%)</p><p>10 Lakhs 7,618</p><p>(31.72%)</p><p>761.80 Crore</p><p>(5.52%)</p><p>1 Lakh 3,088</p><p>(12.86%)</p><p>30.88 Crore</p><p>(0.22%)</p><p>10 Thousand 208</p><p>(0.86%)</p><p>20.80 Lakh</p><p>(0.001%)</p><p>1 Thousand 99</p><p>(0.41%) 99,000</p><p>Total 24,012 13791.8979 Cr.</p><p>604 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Analysis of this data shows that more than 50% of the Bonds in</p><p>number, and 94% of the Bonds in value terms were for Rs.1 crore.</p><p>This supports our reasoning and conclusion on the application of</p><p>the doctrine of proportionality. This is indicative of the quantum of</p><p>corporate funding through the anonymous Bonds.</p><p>71. The share of income from unknown sources for national parties</p><p>rose from 66% during the years 2014-15 to 2016-17 to 72% during</p><p>the years 2018-19 to 2021-22. Between the years 2019-20 to</p><p>2021-22 the Bond income has been 81% of the total unknown</p><p>income of national parties. The total unknown income, that is</p><p>donations made under Rs.20,000/-, sale of coupons etc. has not</p><p>shown ebbing and has substantially increased from Rs.2,550</p><p>crores during the years 2014-15 to 2016-17 to Rs.8,489 crores</p><p>during the years 2018-19 to 2021-22. To this we can add total</p><p>income of the national political parties without other known</p><p>sources, which has increased from Rs.3,864 crores during the</p><p>years 2014-15 to 2016-17 to Rs.11,829 crores during the years</p><p>2018-19 to 2021-22. The Bonds income between the years 2018-</p><p>19 to 2021-22 constitutes 58% of the total income of the national</p><p>political parties.137</p><p>72. Based on the analysis of the data currently available to us, along</p><p>with our previous observation asserting that voters’ right to know</p><p>supersedes anonymity in political party funding, I arrive at the</p><p>conclusion that the Scheme fails to meet the balancing prong of the</p><p>proportionality test. However, I would like to reiterate that I have not</p><p>applied proportionality stricto sensu due to the limited availability of</p><p>data and evidence.</p><p>73. I respectfully agree with the reasoning and the finding recorded by</p><p>Hon’ble the Chief Justice, holding that the amendment to Section</p><p>182 of the Companies Act, deleting the first proviso thereunder</p><p>should be struck down. While doing so, I would rather apply the</p><p>principle of proportionality which, in my opinion, would subsume</p><p>the test of manifest arbitrariness.138 In addition, the claim of privacy</p><p>137 “Parties’ unknown income rise despite electoral bonds”, The Hindu, 02.11.2023, pg.7.</p><p>138 The proportionality test, as adopted and applied by us, essentially checks, invalidates and does not</p><p>condone manifest arbitrariness. Proportionality analysis recognizes the thread of reasonableness which</p><p>[2024] 2 S.C.R. 605</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>by a corporate or a company, especially a public limited company</p><p>would be on very limited grounds, restricted possibly to protect the</p><p>privacy of the individuals and persons responsible for conducting the</p><p>business and commerce of the company. It will be rather difficult for</p><p>a public (or even a private) limited company to claim a violation of</p><p>privacy as its affairs have to be open to the shareholders and the</p><p>public who are interacting with the body corporate/company. This</p><p>principle would be equally, with some deference, apply to private</p><p>limited companies, partnerships and sole proprietorships.</p><p>74. In consonance with the above reasoning and on application of</p><p>the doctrine of proportionality, proviso to Section 29C(1) of the</p><p>Representation of the People Act 1951, Section 182(3) of the</p><p>Companies Act 2013 (as amended by the Finance Act 2017),</p><p>Section 13A(b) of the Income Tax Act 1961 (as amended by the</p><p>FinanceAct 2017), are held to be unconstitutional. Similarly, Section</p><p>31(3) of the RBI Act 1934, along with the Explanation enacted by</p><p>the Finance Act 2017, has to be struck down as unconstitutional,</p><p>as it permits issuance of Bonds payable to a bearer on demand</p><p>by such person.</p><p>75. The petitioners have not argued that corporate donations should</p><p>be prohibited. However, it was argued by some of the petitioners</p><p>that coercive threats are used to extract money from businesses</p><p>as contributions virtually as protection money. Major opposition</p><p>parties, which may come to power, are given smaller amounts to</p><p>keep them happy. It was also submitted that there should be a cap</p><p>on the quantum of donations and the law should stipulate funds to</p><p>be utilised for political purposes given that the income of the political</p><p>parties is exempt from income tax. Lastly, suggestions were made</p><p>that corporate funds should be accumulated and the corpus equitably</p><p>distributed amongst national and regional parties. I have not in-depth</p><p>examined these aspects to make a pronouncement. However, the</p><p>issues raised do require examination and study.</p><p>is the underlying principle behind the first three prongs, legitimate aim, rational connection and necessity</p><p>test. The balancing analysis of the permissible degree of harm for a constitutionally permissible purpose</p><p>effectuates the guarantee of reasonableness. Therefore, any legislative action which is manifestly</p><p>arbitrary, would be disproportionate and will fall foul when we apply the principle of proportionality. See</p><p>also Shayara Bano v. Union of India, (2017) 9 SCC 1, where the Court held at paragraph 95, that</p><p>rationality, logic and reasoning are the triple underpinnings of the test of manifest arbitrariness.</p><p>606 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>76. By an interim order dated 26.03.2021, this Court in the context of</p><p>contributions made by companies through Bonds had prima facie</p><p>observed that the voter would be able to secure information about</p><p>the funding by matching the information of aggregate sum contributed</p><p>by the company as required to be disclosed under Section 182(3) of</p><p>the Companies Act, as amended by the Finance Act 2017, with the</p><p>information disclosed by the political party. Dr. D.Y. Chandrachud,</p><p>Hon’ble the Chief Justice, rightly observes in his judgment that this</p><p>exercise would not reveal the particulars of donations, including the</p><p>name of the donor.</p><p>77. By the order dated 02.11.2023, this Court had asked for ECI’s</p><p>compliance with the interim order of this Court dated 12.04.2019.</p><p>Relevant portion whereof is reproduced below:</p><p>“In the above perspective, according to us, the just and</p><p>proper interim direction would be to require all the political</p><p>parties who have received donations through Electoral</p><p>Bonds to submit to the Election Commission of India in</p><p>sealed cover, detailed particulars of the donors as against</p><p>the each Bond; the amount of each such bond and the</p><p>full particulars of the credit received against each bond,</p><p>namely, the particulars of the bank account to which the</p><p>amount has been credited and the date of each such</p><p>credit.”</p><p>The intent of the order dated 12.04.2019 is that the ECI will continue</p><p>to maintain full particulars of the donors against each Bond; the</p><p>amount of each such Bond and the full particulars of the credit</p><p>received against each Bond, that is, the particulars of the bank</p><p>account to which the amount has been credited and the date of</p><p>each such credit. This is clear from paragraph 14 of the order</p><p>dated 12.04.2019 which had directed that the details mentioned</p><p>in paragraph 13 of the order dated 12.04.2019 will be furnished</p><p>forthwith in respect of the Bonds received by a political party till the</p><p>date of passing of the order.</p><p>78. In view of the findings recorded above, I would direct the ECI to</p><p>disclose the full particular details of the donor and the amount donated</p><p>to the particular political party through Bonds. I would restrict this</p><p>direction to any donations made on or after the interim order dated</p><p>[2024] 2 S.C.R. 607</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>12.04.2019. The donors/purchasers being unknown and not parties,</p><p>albeit the principle of lis pendens applies, and it is too obvious that</p><p>the donors/purchasers would be aware of the present litigation.</p><p>Hence, they cannot claim surprise.</p><p>79. I, therefore, respectfully agree and also conclude that:</p><p>(i) the Scheme is unconstitutional and is accordingly struck down;</p><p>(ii) proviso to Section 29C(1) of the Representation of the People</p><p>Act, Section 182(3) of the Companies Act, 2013, and Section</p><p>13A(b) of the Income TaxAct, 1961, as amended by the Finance</p><p>Act, 2017, are unconstitutional, and are struck down;</p><p>(iii) deletion of proviso to Section 182(1) to the Companies Act</p><p>of 2013, thereby permitting unlimited contributions to political</p><p>parties is unconstitutional, and is struck down;</p><p>(iv) sub-section (3) to Section 31 of the RBI Act, 1934 and the</p><p>Explanation thereto introduced by the Finance Act, 2017 are</p><p>unconstitutional, and are struck down;</p><p>(v) the ECI will ascertain the details from the political parties and</p><p>the State Bank of India, which has issued the Bonds, and the</p><p>bankers of the political parties and thereupon disclose the</p><p>details and names of the donor/purchaser of the Bonds and</p><p>the amounts donated to the political party. The said exercise</p><p>would be completed as per the timelines fixed by the Hon’ble</p><p>the Chief Justice;</p><p>(vi) Henceforth, as the Scheme has been declared unconstitutional,</p><p>the issuance of fresh Bonds is prohibited;</p><p>(vii) In case the Bonds issued (within the validity period) are with</p><p>the donor/purchaser, the donor/purchaser may return them</p><p>to the authorised bank for refund of the amount. In case the</p><p>Bonds (within the validity period) are with the donee/political</p><p>party, the donee/political party will return the Bonds to the</p><p>issuing bank, which will then refund the amount to the donor/</p><p>purchaser. On failure, the amount will be credited to the Prime</p><p>Ministers Relief Fund.</p><p>80. The writ petitions are allowed and disposed of in the above terms.</p><p>608 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Annexure - A</p><p>Standards of Review - Proportionality & Alternatives</p><p>Proportionality is a standard-based model. It allows factual and contextual</p><p>flexibility to judges who encounter diverse factual scenarios to analyse</p><p>and decide the outcome of factual clashes against the standards.</p><p>Proportionality, particularly its balancing prong, has been criticized by</p><p>jurists who contend that legal adjudication should be rule-based rather</p><p>than principle-based.139 They argue that this provides legal certainty by</p><p>virtue of rules being definitive in nature. In response, jurists in favour</p><p>of balancing contend that neither rules nor principles are definitive but</p><p>rather prima facie.</p><p>140 Therefore, both rights and legislations/policies are</p><p>required to be balanced and realized to the optimum possible extent.</p><p>This jurisprudential clash is visible in the various forms and structures</p><p>of adoptions of proportionality. Generally, two models can be</p><p>differentiated from works of jurists.</p><p>1) Model I – Firstly, the traditional two stages of the means–end</p><p>comparison is applied. After having ascertained the legitimate</p><p>purpose of the law, the judge asks whether the imposed</p><p>restriction is a suitable means of furthering this purpose (rational</p><p>connection). Additionally in this model, the judge ascertains</p><p>whether the restriction was necessary to achieve the desired end.</p><p>The reasoning focuses on whether a less intrusive means existed</p><p>to achieve the same ends (minimal impairment/necessity).</p><p>2) Model II – This model adds a fourth step to the first model,</p><p>namely the balancing stage, which weighs the seriousness</p><p>of the infringement against the importance and urgency of the</p><p>factors that justify it.</p><p>In the table provided below, we have summarised the different</p><p>models of proportionality and its alternatives, as propounded by jurists</p><p>and adopted by courts internationally. We have also summarized</p><p>other traditional standards of review like the means-ends test and</p><p>Wednesbury unreasonableness for contextual clarity. In the last</p><p>column we have captured the relevant criticisms, as propounded</p><p>by jurists, to each such model.</p><p>139 Francisco J. Urbina, A Critique of Proportionality, American Journal of Jurisprudence, Vol 57, 2012. Also</p><p>see Ronald Dworkin, Taking Rights Seriously (Bloomsbury 2013), pp 41-42.</p><p>140 Robert Alexy, A Theory of Constitutional Rights, (translated by Julian Rivers, first published 2002, OUP</p><p>2010), pp. 47-48.</p><p>[2024]</p><p>2 S.C.R. 609</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Test/Model Scope of Test/Model Jurisdictions Applied Criticism</p><p>Four-stage</p><p>Proportionality</p><p>In this model, all the four prongs of</p><p>proportionality test are employed, including</p><p>the final balancing stage.</p><p>According to Robert Alexy, values and</p><p>interests (rights of citizens and objects of</p><p>legislations/policies) are both principles and</p><p>principles are optimization requirements.141</p><p>They are norms and hence their threshold of</p><p>satisfaction is not strict, and can happen in</p><p>varying degrees. They must be satisfied to</p><p>the greatest extent possible in the legal and</p><p>factual scenarios, as they exist. All stages</p><p>of the proportionality test therefore seek to</p><p>optimize relative to what is legally and factually</p><p>possible.</p><p>⇒ The rational connection and necessity</p><p>prongs of the proportionality test are</p><p>applicable to factual possibilities.</p><p>⇒ The balancing stage optimizes each</p><p>principle within what is legally possible, by</p><p>weighing the relevant competing principles.</p><p>Germany</p><p>Balancing was adopted by the</p><p>German Constitutional Court in the</p><p>1950s as a new methodology for</p><p>intensive judicial review of rightsrestricting legislation. It stems</p><p>from the belief that the German</p><p>Constitution posits an original idea</p><p>of values, and the government and</p><p>courts, both have a duty to realise</p><p>these values.142</p><p>The main premise of the criticisms</p><p>of balancing is the wide discretion</p><p>available to judges.</p><p>To capture three contemporary</p><p>criticisms in brief: (i) it leads to a</p><p>comparison of incommensurable</p><p>values; 143 (ii) it fails to create</p><p>predictability in the legal system and</p><p>is potentially dangerous for human</p><p>rights;144 and (iii) conversely, it is</p><p>equally intrusive from the perspective</p><p>of separation of powers.145</p><p>141 See Robert Alexy, A Theory of Constitutional Rights (Julian Rivers, trans. Oxford Univ. Press 2002).</p><p>142 See Article 1 and 20, Basic Law for the Federal Republic of Germany.</p><p>143 See Francisco J. Urbina, ‘Is It Really That Easy? A Critique of Proportionality and Balancing as Reasoning’ Canadian Journal of Law and Jurisprudence, 2014; and</p><p>Bernhard Schlink, ‘Abwägung im Verfassungsrecht’, Duncker & Humblot, 1976.</p><p>144 Jochen von Bernstroff, Proportionality Without Balancing: Why Judicial Ad Hoc Balancing is Unnecessary and Potentially Detrimental to Realisation of Collective</p><p>and Individual Self Determination, Reasoning Rights – Comparative Judicial Engagement, (Ed. Liaora Lazarus);</p><p>145 Ibid.</p><p>610 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Alexy proposes the ‘weight formula’,</p><p>which quantifies competing values (rights</p><p>of individuals) and interests (objective of</p><p>legislation/policy) by reducing them to</p><p>numbers. It is a method of thinking about</p><p>conflicting values/interests.</p><p>W1.2 = (I1 . W1 . R1 ) / (I2 . W2 . R2 )</p><p>⇒</p><p>W1.2 represents the concrete weight of</p><p>principle P1 relative to the colliding principle</p><p>P2.</p><p>⇒ I</p><p>1 stand for intensity of interference with</p><p>P1</p><p>. I</p><p>2 stands for importance of satisfying</p><p>the colliding principle P2</p><p>.</p><p>⇒</p><p>W1 and</p><p>W2 stand for abstract weights of</p><p>colliding principles (P1 and P2).</p><p>⇒ When abstract weights are equal, as in</p><p>case of collision of constitutional rights (W1</p><p>and</p><p>W2</p><p>) – they cancel each other out.</p><p>⇒</p><p>R1 and</p><p>R2 stands for reliability of empirical</p><p>and normative assumptions with regard</p><p>to the question of how intensive the</p><p>interpretation is.</p><p>The weight formula is thereupon reduced to</p><p>numbers on an exponential scale of 2.</p><p>(i) The scale assigns following values to</p><p>intensity of interference (I) and abstract</p><p>weights (W)- light (l), moderate (m), and</p><p>serious (s) – in numbers these are – 20,</p><p>21, 22 – i.e., 1, 2 and 4 respectively.</p><p>(ii) To reliability (R), i.e., the epistemic side,</p><p>the values assigned are – reliable (r),</p><p>plausible (p) and not evidently false (e) –</p><p>in numbers these are - 20, 2-1, 2-2 – i.e., 1,</p><p>0.5 and 0.25</p><p>[2024]</p><p>2 S.C.R. 611</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors. Three-stage Proportionality This model proposes limiting the proportionality enquiry to its first three prongs, i.e., minus the balancing stage. Von Bernstorff argues against ad hoc balancing based on two principal reasons: (i) ad hoc balancing fails to erect stable and predictable standards of human rights protection, allowing even the most intensive infringements of civil liberties to be conveniently balanced out of existence when the stakes are high enough; and (ii) the lack of predictability leads to a situation where every act of parliament is threatened, however well intentioned, in the judicial balancing exercise and thus ad hoc balancing is potentially overly intrusive from a separation of powers perspective.146 He, however, defends the use of judicially established bright-line rules for specific cases where intensive interferences are at stake. The bright line rule brings clarity to a law or regulation that could be interpreted in multiple ways. Bright line rules constitute the ‘core’, ‘substance’ or ‘essence’ of a particular right, making human rights categorical instead of open-ended in nature. Canada Canada prefers to resolve cases in the first three prongs. Only in limited instances, does the Canadian Supreme Court decide that a measure survives the first three prongs but nevertheless fails at the final balancing stage.150 Despite this, past jurisprudence in Canada does affirm the significance of final balancing stage.151 (i) In absence of the balancing stage, the courts must be mindful of certain analytical weaknesses of the necessity stage that can be dealt with at the balancing stage.152 (ii) The core of the necessity test is whetheranalternatemeasureisas effective in achieving the purpose as the measure under challenge, while being less restrictive. But often, considerations of balancing may become disguised in the necessity prong, as the court must confront uncertainty in weighing the efficacy of the alternatives.153 (iii) Some jurists/courts have suggested a strict interpretation of necessity, where an alternate measure is only accepted as less restrictive when they prove to be as effective as the measure under challenge. 146 Jochen von Bernstroff, Proportionality Without Balancing: Why Judicial Ad Hoc Balancing is Unnecessary and Potentially Detrimental to Realisation of Collective and Individual Self Determination, Reasoning Rights – Comparative Judicial Engagement, (Ed. Liaora Lazarus); Also see Bernhard Schlink, ‘Abwägung im Verfassungsrecht’, Duncker & Humblot, 1976, pp. 192–219. 150 See Charterpedia, Department of Justice, Government of Canada, available at: https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/check/art1.html. Also see Niels Petersen (supra). 151 Ibid. Also see Canada (Attorney General) v. JTI-Macdonald Corp., [2007] 2 S.C.R. 610, at paragraph 46; Alberta v. Hutterian Brethren of Wilson Colony, and [2009] 2 S.C.R. 567, at paragraphs 72-78. 152 Niels Petersen, ‘Proportionality and judicial Activism: Fundamental Rights Adjudication in Canada, Germany and South Africa, (CUP 2017).</p><p>153 Ibid.</p><p>612 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>A stricter evaluation of evidence becomes</p><p>crucial at the necessity stage for an objective</p><p>standard of review, in contrast to ad hoc</p><p>balancing.</p><p>In Canada for instance, the onus of proof is on</p><p>the person seeking to justify the limit, which</p><p>is generally the government.147</p><p>⇒ The standard of proof is the civil standard</p><p>or balance of probabilities.148</p><p>⇒ Where scientific or social science evidence</p><p>is available, it will be required;</p><p>⇒ Howeve r, where such evidence is</p><p>inconclusive, or does not exist and cannot</p><p>not be developed, reason and logic may</p><p>suffice.149</p><p>David Bilchitz has also proposed that</p><p>other alternatives must have both</p><p>characteristics – equal realization</p><p>of the purpose and lesser invasion/</p><p>restriction on the right in question.154</p><p>David Blichitz’s approach was</p><p>followed in Aadhar (5J) (Privacy)</p><p>(supra) case.This test was referenced</p><p>in Anuradha Bhasin (supra), which</p><p>applied a moderate interpretation of</p><p>the necessity test. To conclude the</p><p>findings of the necessity stage this</p><p>Court in Anuradha Bhasin (supra)</p><p>suggests that an overall comparison</p><p>be undertaken between the measure</p><p>and its feasible alternatives.</p><p>Means-ends</p><p>Test</p><p>The doctrine is similar to a reasonableness</p><p>inquiry, albeit with some variation.</p><p>In Australia, for instance, courts enquire</p><p>whether a law is ‘reasonably appropriate and</p><p>adapted’ to achieving a legitimate end in a</p><p>manner compatible with the constitutionally</p><p>prescribed system of representative and</p><p>responsible government.</p><p>Australia</p><p>The test was followed in Australia</p><p>before the development o f</p><p>proportionality and is not frequently</p><p>used in contemporary times.</p><p>The test is simplistic and gives limited</p><p>judicial flexibility. It does not account</p><p>for diverse factual scenarios.</p><p>147</p><p>R. v. Oakes [1986] 1 S.C.R. 103.</p><p>148 Oakes (supra).</p><p>149 Libman v. Quebec (A.G.), [1997] 3 S.C.R. 569; RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199; Thomson Newspapers Co. v. Canada</p><p>(A.G.), [1998] 1 S.C.R. 877; R. v. Sharpe, [2001] 1 S.C.R. 45; Harper v. Canada (A.G.), [2004] 1 S.C.R. 827, at paragraph 77; R. v. Bryan, [2007] 1 S.C.R. 527,</p><p>at paragraphs 16-19, 29; Mounted Police Association of Ontario v. Canada (Attorney General), [2015] 1 S.C.R. 3, at paragraphs 143-144.</p><p>154 David Bilchitz, Necessity and Proportionality: Towards a Balance Approach?, (Hart Publishing, Oxford and Portland, Oregon 2016).</p><p>[2024]</p><p>2 S.C.R. 613</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Calibrated</p><p>Scrutiny</p><p>(evolved</p><p>means-ends</p><p>test)</p><p>The essential elements of the approach are</p><p>as follows:155</p><p>⇒ First, a judge determines the nature and</p><p>intensity of the burden on the right by the</p><p>challenged law;</p><p>⇒ Second, the judge calibrates ‘the</p><p>appropriate level of scrutiny to the risk</p><p>posed to maintenance of the constitutionally</p><p>prescribed system of representative and</p><p>responsible government;</p><p>⇒ Third, the judge isolates and assesses the</p><p>importance of constitutionally permissible</p><p>purpose of the prohibition; and</p><p>⇒ Finally the judge applies the appropriate</p><p>level of scrutiny so as to determine</p><p>whether the challenged law is justified</p><p>as reasonably appropriate and adapted</p><p>to achieve that purpose in a manner</p><p>compatible with the maintenance of the</p><p>constitutionally prescribed system of</p><p>government,</p><p>The test is similar to some prongs of the</p><p>proportionality test. However, it is more rule</p><p>oriented instead of being standard/principle</p><p>oriented.</p><p>Australia</p><p>While proportionality i s the</p><p>predominant doctrine in Australia,</p><p>this alternate test is applied by a</p><p>few judges. These judges raise</p><p>concerns about the application of a</p><p>test of structured proportionality and</p><p>suggest that it was best understood</p><p>as ‘a tool’ of analysis, or ‘a means</p><p>of setting out steps to a conclusion’,</p><p>‘not a constitutional doctrine’.</p><p>Critics of this approach have</p><p>emphasized that it takes away</p><p>from the flexibility that is required</p><p>while considering factually diverse</p><p>legal challenges. Therefore, the</p><p>test cannot substitute a contextually</p><p>guided judicial approach.156</p><p>155 Judgment by Gagler J. in Clubb v. Edwards, (2019) 93 ALJR 448; Also see Adrienne Stone, Proportionality and its Alternatives, Melbourne Legal Studies Research</p><p>Paper Series No. 848</p><p>156 See John Braithwaite, Rules and Principles: a Theory of Legal Certainty, Australian Journal of Legal Philosophy 47 (2002).</p><p>614 [2024]</p><p>2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Strict Scrutiny</p><p>Test</p><p>This is considered one of the heightened forms</p><p>of judicial review that can be used to evaluate</p><p>the constitutionality of laws, regulations,</p><p>or other governmental policies under legal</p><p>challenge.157</p><p>Strict scrutiny is employed in cases of violation</p><p>of the most fundamental liberties guaranteed</p><p>to citizens in the United States of America.</p><p>For instance, it is employed in cases of</p><p>infringements on free speech.</p><p>The test places the burden o n the</p><p>government to show a compelling, or</p><p>strong interest in the law, and that the law</p><p>is either very narrowly tailored or is the</p><p>least speech-restrictive means available to</p><p>the government.</p><p>The usual presumption of constitutionality</p><p>is removed, and the law must also pass</p><p>the threshold of both – necessity/end and</p><p>means.</p><p>United States of America</p><p>The courts in the United States use</p><p>a tiered approach of review with strict</p><p>scrutiny, intermediate scrutiny and</p><p>rational basis existing in decreasing</p><p>degree of intensity.</p><p>Only a limited number of laws survive</p><p>under the strict scrutiny test. Its</p><p>application is reserved for instances</p><p>where the most intensely protected</p><p>fundamental rights are affected.</p><p>157 See Jennifer L. Greenblatt, Putting the Government to the (Heightened, Intermediate, or Strict) Scrutiny Test: Disparate Application Shows Not All Rights and</p><p>Powers Are Created Equal, (2009) 10 Fla Coastal L Rev 421.</p><p>[2024]</p><p>2 S.C.R. 615</p><p>Association for Democratic Reforms & Anr. v. Union of India & Ors.</p><p>Unreasonableness</p><p>/ Wednesbury</p><p>Principles</p><p>Astandard of unreasonableness is used for the</p><p>judicial review of a public authority’s decision.</p><p>A reasoning or decision is unreasonable (or</p><p>irrational) when no person acting reasonably</p><p>could have arrived at it.</p><p>This test has two limbs:</p><p>(i) The court is entitled to investigate the</p><p>action to check whether the authority has</p><p>considered and decided on matters which</p><p>they ought not to have considered, or</p><p>conversely, have refused to consider or</p><p>neglected to consider matters which they</p><p>ought to have considered.</p><p>(ii) If the above query is answered in favour</p><p>of the local authority, it may be held that,</p><p>although the local authority has ruled</p><p>on matters which they ought to have</p><p>considered, the conclusion they have</p><p>arrived at is nonetheless so unreasonable</p><p>that no reasonable authority could ever</p><p>have arrived at it.</p><p>Associated Provincial Picture</p><p>Houses Ltd v. Wednesbury</p><p>Corporation158</p><p>The test i s simplistic and i s</p><p>traditionally only used for policies/</p><p>administrative decisions/delegated</p><p>legislation.</p><p>Please note that:-</p><p>(i) The above table briefly summarises the different standards of constitutional review and it does not</p><p>elaborate on the said tests in detail;</p><p>158 (1948) 1 KB 223.</p><p>616 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(ii) the theories propounded by the jurists are not followed in</p><p>toto across the jurisdictions and this has been pointed out</p><p>appropriately; and</p><p>(iii) the table does not provide an exhaustive account of the full</p><p>range of standards of review employed internationally and is</p><p>restricted to the tests identified therein.</p><p>Headnotes prepared by: Nidhi Jain Result of the case:</p><p>Writ Petitions disposed of.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-38027894376574978972024-03-09T06:45:00.003+05:302024-03-09T06:45:38.785+05:30Service Law – Recruitment – Allocation of marks for additional qualifications – An Institute issued an advertisement in March 2016 calling applications for appointment to the post of primary school teachers – For the allocation of marks, additional qualifications 10 marks had been prescribed – The appellant herein is aggrieved by the denial of 6 marks for the additional qualification of PG Degree that he held, on the ground that his PG Degree was not “in the relevant subject” – Propriety:<p>* Author</p><p>[2024] 2 S.C.R. 409 : 2024 INSC 126</p><p>Manoj Kumar</p><p>v.</p><p>Union of India & Ors.</p><p>(Civil Appeal No. 2679 of 2024)</p><p>20 February 2024</p><p>[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]</p><p>Issue for Consideration</p><p>The appellant sought appointment as a primary school teacher.</p><p>The issue arising for consideration in the present case relates the</p><p>allocation of marks for additional qualifications, for which 10 marks</p><p>had been prescribed.</p><p>Headnotes</p><p>Service Law – Recruitment – Allocation of marks for additional</p><p>qualifications – An Institute issued an advertisement in March</p><p>2016 calling applications for appointment to the post of primary</p><p>school teachers – For the allocation of marks, additional</p><p>qualifications 10 marks had been prescribed – The appellant</p><p>herein is aggrieved by the denial of 6 marks for the additional</p><p>qualification of PG Degree that he held, on the ground that</p><p>his PG Degree was not “in the relevant subject” – Propriety:</p><p>Held: It is evident from the record that a candidate possessing a</p><p>Post Graduate Diploma and a Post Graduate Degree would be</p><p>entitled to allocation of 5 and 6 marks respectively for their additional</p><p>qualification – However, a person possessing an MPhil degree or a</p><p>professional qualification in the field would be entitled to allocation of</p><p>7 marks for their additional qualification – The additional qualifications</p><p>provided under clauses ‘a’ to ‘d’ are under two categories – While</p><p>‘a’, ‘b’, and ‘d’ relating to PG Diploma, PG Degree, and PhD are</p><p>general qualifications providing for 5, 6, and 10 marks respectively,</p><p>the category under ‘c’ relates to Professional Qualification in the</p><p>field – This is where specialization is prescribed – If one adds the</p><p>requirement of specialization to category ‘b’, i.e., PG Degree, then</p><p>that category becomes redundant – The whole purpose of providing</p><p>PG Degree independently and allocating a lesser quantum of 6</p><p>marks will be completely lost if such an interpretation is adopted</p><p>– This can never be the purpose of prescribing distinct categories </p><p>410 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>– The Single Judge as well as the Division Bench of the High Court</p><p>did not really analyse the prescription of additional qualifications</p><p>and the distinct marks allocated to each of them, but confined their</p><p>decision to restraint in judicial review and dismissed the appellant’s</p><p>prayer – When a citizen alleges arbitrariness in executive action, the</p><p>High Court must examine the issue, of course, within the context of</p><p>judicial restraint in academic matters – While respecting flexibility</p><p>in executive functioning, courts must not let arbitrary action pass</p><p>through – For the reasons stated, this Court is of the opinion that</p><p>the decisions of the Single Judge and the Division Bench are not</p><p>sustainable. [Paras 12, 13]</p><p>Administration of Justice – Primary duty of constitutional</p><p>courts – Addressing injurious consequences arising from</p><p>arbitrary and illegal administrative actions:</p><p>Held: While the primary duty of constitutional courts remains</p><p>the control of power, including setting aside of administrative</p><p>actions that may be illegal or arbitrary, it must be acknowledged</p><p>that such measures may not singularly address repercussions of</p><p>abuse of power – It is equally incumbent upon the courts, as a</p><p>secondary measure, to address – The injurious consequences</p><p>arising from arbitrary and illegal actions – This concomitant duty to</p><p>take reasonable measures to restitute the injured is overarching</p><p>constitutional purpose – This is how one has to read constitutional</p><p>text – In public law proceedings, when it is realised that the</p><p>prayer in the writ petition is unattainable due to passage of time,</p><p>constitutional courts may not dismiss the writ proceedings on the</p><p>ground of their perceived futility – In the life of litigation, passage</p><p>of time can stand both as an ally and adversary – It is the duty</p><p>of the Court to transcend the constraints of time and perform the</p><p>primary duty of a constitutional court to control and regulate the</p><p>exercise of power or arbitrary action – By taking the first step,</p><p>the primary purpose and object of public law proceedings will be</p><p>subserved. [Paras 19, 20]</p><p>Administration of Justice – Restitution of the wrongful action</p><p>– discussed.</p><p>Administration of Justice – Alternative restitutory measure –</p><p>Monetary compensation:</p><p>Held: In the instant case, in exercise of primary duty, the action</p><p>of the respondents are set aside as being illegal and arbitrary – In</p><p>furtherance of duty to provide a reasonable measure for restitution, </p><p>[2024] 2 S.C.R. 411</p><p>Manoj Kumar v. Union of India & Ors.</p><p>the possibility was explored of directing the Institute to appoint the</p><p>appellant as a primary teacher in any other school run by them –</p><p>However, it seems that the only primary school run by the Institute</p><p>is the one for which they sought to fill vacancies and it is closed</p><p>since 2023 – In this situation, an alternative restitutory measure</p><p>in the form of monetary compensation is considered – Thus, the</p><p>Institute (respondent no. 2) is directed to pay an amount of Rs.</p><p>1,00,000/- as compensation. [Paras 25 and 26]</p><p>Case Law Cited</p><p>University Grants Commission v. Neha Anil Bobde,</p><p>[2013] 9 SCR 521 : (2013) 10 SCC 519; Tamil</p><p>Nadu Education Department Ministerial and General</p><p>Subordinate Services Association v. State of Tamil Nadu,</p><p>[1980] 1 SCR 1026 : (1980) 3 SCC 97; All India Council</p><p>for Technical Education v. Surinder Kumar Dhawan,</p><p>[2009] 3 SCR 859 : (2009) 11 SCC 726 – referred to.</p><p>Books and Periodicals Cited</p><p>Sir Clive Lewis, Judicial Remedies in Public Law (5th</p><p>edn, Sweet and Maxwell 2015); HWR Wade and CF</p><p>Forsyth, Administrative Law (11th edn, Oxford University</p><p>Press 2014) 596-597; Peter Cane, ‘Damages in Public</p><p>Law’ (1999) 9(3) Otago Law Review 489; Henry Woolf</p><p>and others, De Smith’s Judicial Review (8th edn, Sweet</p><p>and Maxwell 2018) 1026-1027.</p><p>List of Keywords</p><p>Service Law; Recruitment; Allocation of marks for additional</p><p>qualifications; Arbitrariness in executive action; Judicial review;</p><p>Academic matters; Judicial restraints; Administration of Justice;</p><p>Primary duty of constitutional courts; Transcending constraints</p><p>of time; Control and regulation of the arbitrary action; Restitution</p><p>of the wrongful action; Alternative restitutory measure; Monetary</p><p>compensation.</p><p>Case Arising From</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2679 of 2024</p><p>From the Judgment and Order dated 16.10.2018 of the High Court</p><p>of Delhi at New Delhi in LPA No. 158 of 2018</p><p>412 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Appearances for Parties</p><p>Ranjit Kumar Sharma, Adv. for the Appellant.</p><p>K. M. Nataraj, A.S.G., Amrish Kumar, Shailesh Madiyal, Navanjay</p><p>Mahapatra, Apoorv Kurup, T.A. Khan, T.S. Sabarish, Arun Kanwa,</p><p>Purnendu Bajpai, Advs. for the Respondents.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Pamidighantam Sri Narasimha, J.</p><p>1. Leave granted.</p><p>2. This appeal is by the appellant seeking appointment as a primary</p><p>school teacher. He is aggrieved by the judgment of the Division Bench</p><p>of the High Court of Delhi dismissing the writ appeal,1</p><p> which was filed</p><p>against the order of the Single Judge dismissing his writ petition.2</p><p>3. Pt. Deendayal Upadhyaya Institute for the Physically Handicapped,</p><p>hereinafter referred to as the ‘Institute’, issued an advertisement</p><p>in March 2016 calling applications for appointment to the post of</p><p>primary school teachers. The vacancy circular issued for this purpose</p><p>provided the qualifications and the procedure for selection. The</p><p>basic qualification was senior secondary with a two-year diploma</p><p>or certificate course in ETE/JBT or B.EI.Ed. The candidates were</p><p>required to have passed the secondary level with Hindi as a subject.</p><p>The final selection was to be made after conducting an interview</p><p>of qualified candidates. The Institute reserved its right to evaluate,</p><p>review the process of selection, and shortlist candidates at any stage,</p><p>and its decision would be final and binding. This discretionary power</p><p>is notified under Clauses 14 and 19 of the vacancy circular. The</p><p>relevant clauses relied on by the Institute are as follows:</p><p>“14. Decision of the institute in all matters regarding</p><p>eligibility of the candidate, the stages at which such</p><p>scrutiny of eligibility is to be undertaken, the documents</p><p>to be produced for the purpose of conduct of interview,</p><p>selection and any other matter relating to recruitment will</p><p>1 L.P.A. No. 158/2018 dated 16.10.2018.</p><p>2 W.P. (C) No. 5279/2017 and C.M. 22382/2017 dated 24.01.2018.</p><p>[2024] 2 S.C.R. 413</p><p>Manoj Kumar v. Union of India & Ors.</p><p>be final and binding on the candidate. Further, the institute</p><p>reserves the right to stall/ cancel the recruitment partially/</p><p>fully at any stage during the recruitment process at its</p><p>discretion, which will be final and binding on the candidate.</p><p>19. Fulfilment of conditions of minimum qualification</p><p>shall not necessarily entitle any applicant to be called for</p><p>further process of recruitment, in case of large number</p><p>of applications, Institute reserves the right to short-list</p><p>applications in any manner as may be considered appropriate</p><p>and no reason for rejection shall be communicated and no</p><p>claim for refund of fee shall be entertained in any case.”</p><p>4. On 27.04.2016, the Institute deviated from the procedure prescribed</p><p>in the original advertisement/vacancy circular and issued a notification</p><p>dispensing with the interview requirement, which was a part of the</p><p>selection process for Group ‘B’ and ‘C’ posts. Instead, it prescribed</p><p>allocation of additional marks for essential qualifications, additional</p><p>qualifications, essential experience, and the written test.</p><p>5. The issue arising for consideration in the present case relates the</p><p>allocation of marks for additional qualifications, for which 10 marks</p><p>had been prescribed. The break-up of the 10 allocable marks is as</p><p>under:</p><p>SL Particulars Marks</p><p>2. Marks for Additional Qualifications (Maximum) 10</p><p>a PG Diploma 5</p><p>b PG Degree 6</p><p>c MPhil/ Professional Qualification in the Field 7</p><p>d PhD 10</p><p>6. It is evident from the above that a candidate possessing a Post</p><p>Graduate Diploma and a Post Graduate Degree would be entitled</p><p>to allocation of 5 and 6 marks respectively for their additional</p><p>qualification. However, a person possessing an MPhil degree or a</p><p>professional qualification in the field would be entitled to allocation</p><p>of 7 marks for their additional qualification.</p><p>7. When the results were declared on 22.05.2017, the appellant got an</p><p>aggregate of 57.5 marks, and respondent no. 3 got 58.25 marks. On</p><p>enquiry, the appellant came to know that marks of respondent no. </p><p>414 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>3 are inclusive of the 7 marks that she was entitled to for holding</p><p>the professional qualification of Masters in Education (M.Ed.). The</p><p>appellant has no complaint against the allocation of 7 additional</p><p>qualification marks to respondent no. 3. He was however surprised</p><p>by the denial of 6 marks for the additional qualification of PG Degree</p><p>that he held, on the ground that his PG Degree was not “in the</p><p>relevant subject”.</p><p>8. The appellant’s simple case is that had he been allocated 6 marks</p><p>for the PG Degree that he possessed, he would be the highest in</p><p>the list by aggregating a total of 63.5 marks. Denial of 6 marks on</p><p>a new ground that the PG Degree held by him is not in the relevant</p><p>subject, he says, is illegal and arbitrary. He made a representation on</p><p>26.05.2017 for allocation of 6 marks. Due to inaction, he approached</p><p>the Delhi High Court by way of a writ of mandamus to the Union</p><p>and the Institute to remedy the injustice.</p><p>9. The learned Single Judge of the High Court refused to interfere by</p><p>following the principle laid down in the judgment of this Court in</p><p>University Grants Commission v. Neha Anil Bobde (Gadekar),</p><p>3 where</p><p>it was held that in academic matters, the qualifying criteria must be</p><p>left to the discretion of the concerned institution. The appellant then</p><p>preferred a Writ Appeal, and the Division Bench also followed the</p><p>principle in Neha Anil Bobde, as reiterated in other decisions,4</p><p> and</p><p>held that in academic matters, the interference of the Court should</p><p>be minimum.In para 13 of its judgment, the High Court also relied on</p><p>Clauses 14 and 19 of the vacancy circular to hold that the Institute in</p><p>any event reserves the right to shortlist applications as it considers</p><p>appropriate. Thus, the appellant approached this Court in 2019 itself.</p><p>10. At the outset, we note that the procedure for selection was provided</p><p>in the vacancy circular issued in March 2016. Instead of following</p><p>the said procedure, the Institute chose to adopt a new method by its</p><p>notification dated 27.04.2016, wherein it dispensed with the interview</p><p>and prescribed the allocation of marks for additional qualifications. We</p><p>make it clear at this very stage that the appellant has not challenged</p><p>the variation in the original selection process of an interview and its</p><p>3 (2013) 10 SCC 519.</p><p>4 Tamil Nadu Education Department Ministerial and General Subordinate Services Association v. State</p><p>of Tamil Nadu (1980) 3 SCC 97; All India Council for Technical Education v. Surinder Kumar Dhawan</p><p>(2009) 11 SCC 726.</p><p>[2024] 2 S.C.R. 415</p><p>Manoj Kumar v. Union of India & Ors.</p><p>replacement with allocation of marks for additional qualifications.</p><p>The only challenge is that the denial of 6 marks for the additional</p><p>qualification of a PG Degree that he possesses is illegal and arbitrary.</p><p>On the other hand, the respondents raised the standard defence by</p><p>invoking Clauses 14 and 19 to submit that they have reserved the</p><p>right of shortlisting candidates as is considered appropriate. They</p><p>also submit that the appellant cannot be given the benefit of 6 marks</p><p>for additional qualifications as he did not possess the PG Degree in</p><p>the “relevant subject”.</p><p>11. Analysis: The standard argument made consistently and successfully</p><p>before the Single Judge and Division Bench must fail before us.</p><p>Clauses 14 and 19 of the vacancy circular do nothing more than</p><p>reserving flexibility in the selection process. They cannot be read</p><p>to invest the Institute with unbridled discretion to pick and choose</p><p>candidates by supplying new criteria to the prescribed qualification.</p><p>This is a classic case of arbitrary action. The submission based on</p><p>Clauses 14 and 19 must fail here and now.</p><p>12. The other submission of the respondent about restricting a “PG</p><p>Degree” to a “PG Degree in Relevant Subject” must also be rejected.</p><p>The illegality in adopting and applying such an interpretation is</p><p>evident from a simple reading of the notification dated 27.04.2016</p><p>providing for additional qualifications. The additional qualifications</p><p>provided under clauses ‘a’ to ‘d’ are under two categories. While</p><p>‘a’, ‘b’, and ‘d’ relating to PG Diploma, PG Degree, and PhD are</p><p>general qualifications providing for 5, 6, and 10 marks respectively,</p><p>the category under ‘c’ relates to Professional Qualification in the field.</p><p>This is where specialization is prescribed. If we add the requirement</p><p>of specialization to category ‘b’, i.e., PG Degree, then that category</p><p>becomes redundant. The whole purpose of providing PG Degree</p><p>independently and allocating a lesser quantum of 6 marks will be</p><p>completely lost if such an interpretation is adopted. This can never</p><p>be the purpose of prescribing distinct categories. No further analysis</p><p>is necessary. We reject this submission also.</p><p>13. The Single Judge as well as the Division Bench did not really analyse</p><p>the prescription of additional qualifications and the distinct marks</p><p>allocated to each of them, but confined their decision to restraint</p><p>in judicial review and dismissed the appellant’s prayer. When a</p><p>citizen alleges arbitrariness in executive action, the High Court must </p><p>416 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>examine the issue, of course, within the context of judicial restraint in</p><p>academic matters. While respecting flexibility in executive functioning,</p><p>courts must not let arbitrary action pass through. For the reasons</p><p>stated above, we are of the opinion that the decisions of the Single</p><p>Judge and the Division Bench are not sustainable, and we hereby</p><p>set aside their judgments.</p><p>14. The story does not end here.</p><p>15. While reserving the judgment, we directed the respondents to file an</p><p>additional affidavit with respect to the availability of a vacant position.</p><p>Following the direction, respondents 1 and 2 have filed an affidavit.</p><p>Paragraph 3 and 4 of the affidavit read as under:</p><p>“3. I state that the applications were invited to fill up the</p><p>vacancy for Primary School Teacher at the Model Integrated</p><p>Primary School [hereinafter the ‘School’] which was run</p><p>by the Respondent No. 2 Institute. The Petitioner and the</p><p>Respondent had applied in the SC category for which there</p><p>was single post. The School has been closed on 01.04.2023</p><p>with the approval of the 128th Standing Committee held on</p><p>13.05.2022 and 49th General Council held on 26.05.2022.</p><p>I further state that the Respondent No. 3 who was select</p><p>in pursuance of aforementioned application had joined</p><p>the post of Primary Teacher on 02.04.2018 and has since</p><p>resigned on 24.10.2019.</p><p>4. I therefore state that on account of the closure of the</p><p>School, there is no vacancy in the post of Primary Teacher</p><p>to which the Petitioner and the Respondent No. 3 had</p><p>applied and which is the subject matter of the Special Leave</p><p>Petition. The letter dated 13/14.12.2023 of the Pt. Deendayal</p><p>Upadhyay National Institute for Persons with Physical</p><p>Disabilities (Divyangjan) to the Ministry of Law and Justice</p><p>is also annexed herewith for reference as Annexure A1.”</p><p>16. It is evident from the above that the school for which the advertisement</p><p>was issued was closed on 01.04.2023. In view of the closure of</p><p>the school, we cannot direct the respondent Institute to employ</p><p>the appellant as a primary school teacher. This is an unfortunate</p><p>situation where the Court finds that the action of the respondent</p><p>was arbitrary, but the consequential remedy cannot be given due to </p><p>[2024] 2 S.C.R. 417</p><p>Manoj Kumar v. Union of India & Ors.</p><p>subsequent developments. One stark reality of the situation is the</p><p>time that has passed between the order of 2018 impugned herein</p><p>and the judgment that we pronounce in 2024.</p><p>17. Judicial review of administrative action in public law is qualitatively</p><p>distinct from judicial remedies in civil law. In judicial review,</p><p>constitutional courts are concerned with the exercise of power by</p><p>the State and its instrumentalities.</p><p>18. Within the realm of judicial review in common law jurisdictions,</p><p>it is established that constitutional courts are entrusted with the</p><p>responsibility of ensuring the lawfulness of executive decisions, rather</p><p>than substituting their own judgment to decide the rights of the parties,</p><p>which they would exercise in civil jurisdiction.5</p><p> It has been held that</p><p>the primary purpose of quashing any action is to preserve order in</p><p>the legal system by preventing excess and abuse of power or to set</p><p>aside arbitrary actions. Wade on Administrative Law states that the</p><p>purpose of quashing is not the final determination of private rights,</p><p>for a private party must separately contest his own rights before the</p><p>administrative authority.6</p><p> Such private party is also not entitled to</p><p>compensation merely because the administrative action is illegal.7</p><p> A</p><p>further case of tort, misfeasance, negligence, or breach of statutory</p><p>duty must be established for such person to receive compensation.8</p><p>19. We are of the opinion that while the primary duty of constitutional courts</p><p>remains the control of power, including setting aside of administrative</p><p>actions that may be illegal or arbitrary, it must be acknowledged that</p><p>such measures may not singularly address repercussions of abuse</p><p>of power. It is equally incumbent upon the courts, as a secondary</p><p>measure, to address the injurious consequences arising from</p><p>arbitrary and illegal actions. This concomitant duty to take reasonable</p><p>measures to restitute the injured is our overarching constitutional</p><p>purpose. This is how we have read our constitutional text, and this</p><p>is how we have built our precedents on the basis of our preambular</p><p>objective to secure justice.9</p><p>5 Sir Clive Lewis, Judicial Remedies in Public Law (5th edn, Sweet and Maxwell 2015).</p><p>6 HWR Wade and CF Forsyth, Administrative Law (11th edn, Oxford University Press 2014) 596-597.</p><p>7 Peter Cane, ‘Damages in Public Law’ (1999) 9(3) Otago Law Review 489.</p><p>8 Henry Woolf and others, De Smith’s Judicial Review (8th edn, Sweet and Maxwell 2018) 1026-1027.</p><p>9 The Preambular goals are to secure Justice, Liberty, Equality, and Fraternity for all citizens. </p><p>418 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>20. In public law proceedings, when it is realised that the prayer in the</p><p>writ petition is unattainable due to passage of time, constitutional</p><p>courts may not dismiss the writ proceedings on the ground of their</p><p>perceived futility. In the life of litigation, passage of time can stand both</p><p>as an ally and adversary. Our duty is to transcend the constraints of</p><p>time and perform the primary duty of a constitutional court to control</p><p>and regulate the exercise of power or arbitrary action. By taking the</p><p>first step, the primary purpose and object of public law proceedings</p><p>will be subserved.</p><p>21. The second step relates to restitution. This operates in a different</p><p>dimension. Identification and application of appropriate remedial</p><p>measures poses a significant challenge to constitutional courts,</p><p>largely attributable to the dual variables of time and limited resources.</p><p>22. The temporal gap between the impugned illegal or arbitrary action and</p><p>their subsequent adjudication by the courts introduces complexities</p><p>in the provision of restitution. As time elapses, the status of persons,</p><p>possession, and promises undergoes transformation, directly</p><p>influencing the nature of relief that may be formulated and granted.</p><p>23. The inherent difficulty in bridging the time gap between the illegal</p><p>impugned action and restitution is certainly not rooted in deficiencies</p><p>within the law or legal jurisprudence but rather in systemic issues</p><p>inherent in the adversarial judicial process. The protracted timeline</p><p>spanning from the filing of a writ petition, service of notice, filing</p><p>of counter affidavits, final hearing, and then the eventual delivery</p><p>of judgment, coupled with subsequent appellate procedures,</p><p>exacerbates delays. Take for example this very case, the writ petition</p><p>was filed against the action of the respondent denying appointment</p><p>on 22.05.2017. The writ petition came to be decided by the Single</p><p>Judge on 24.01.2018, the Division Bench on 16.10.2018, and then</p><p>the case was carried to this Court in the year 2019 and we are</p><p>deciding it in 2024. The delay in this case is not unusual, we see</p><p>several such cases when our final hearing board moves. Appeals of</p><p>more than two decades are awaiting consideration. It is distressing</p><p>but certainly not beyond us. We must and we will find a solution to</p><p>this problem.</p><p>24. It is in this reality and prevailing circumstance that we must formulate</p><p>an appropriate system for preserving the rights of the parties till</p><p>the final determination takes place. In the alternative, we may also </p><p>[2024] 2 S.C.R. 419</p><p>Manoj Kumar v. Union of India & Ors.</p><p>formulate a reasonable equivalent for restitution of the wrongful action.</p><p>25. Returning to the facts of the present case, in exercise of our primary</p><p>duty, we have set aside the action of the respondents as being illegal</p><p>and arbitrary. In furtherance of our duty to provide a reasonable</p><p>measure for restitution, we have explored the possibility of directing</p><p>the Institute to appoint the appellant as a primary teacher in any other</p><p>school run by them. However, it seems that the only primary school</p><p>run by the Institute is the one for which they sought to fill vacancies</p><p>and it is closed since 2023. In this situation, we must consider an</p><p>alternative restitutory measure in the form of monetary compensation.</p><p>26. We appreciate the spirit of the appellant who has steadfastly contested</p><p>his case like the legendary Vikram,10 from the year 2017 when he</p><p>was illegally denied the appointment by the executive order dated</p><p>22.05.2017, which we have set aside as being illegal and arbitrary.</p><p>In these circumstances, we direct the Institute (respondent no. 2)</p><p>to pay an amount of Rs. 1,00,000/- as compensation. This amount</p><p>shall be paid to the appellant within a period of six weeks from the</p><p>date of passing of this order.</p><p>27. For the reasons stated above, we allow the appeal and set aside the</p><p>judgment of the High Court in W.P. (C) No. 5279 of 2017 and C.M.</p><p>No. 22382 of 2017 dated 24.01.2018 and in L.P.A. No. 158 of 2018</p><p>dated 16.10.2018 and direct the Institute (respondent no. 2) to pay</p><p>Rs. 1,00,000/- as a compensation with cost quantified at Rs. 25,000/-.</p><p>Headnotes prepared by: Ankit Gyan Result of the case:</p><p>Appeal allowed.</p><p>10 Against Betala, in the famous Vetalapancavimsati, the original being the Kathasaritsagara work of the</p><p>11th Century by Somadeva.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-70301303828963319092024-03-09T06:44:00.001+05:302024-03-09T06:44:13.124+05:30Evidence – Extra judicial confession – Evidentiary value – Case based on circumstantial evidence – Trial Court acquitted all the accused persons – Appeal against acquittal – High Court reversed the acquittal of the appellant and convicted him largely based on the extra judicial confession allegedly made by him before PW-1 – Correctness:<p>* Author</p><p>[2024] 2 S.C.R. 391 : 2024 INSC 124</p><p>Kalinga @ Kushal</p><p>v.</p><p>State of Karnataka By Police Inspector Hubli</p><p>(Criminal Appeal No. 622 of 2013)</p><p>20 February 2024</p><p>[Bela M. Trivedi and Satish Chandra Sharma,* JJ.]</p><p>Issue for Consideration</p><p>Whether the extra judicial confession of the appellant-accused</p><p>was admissible, credible and sufficient for his conviction thereon</p><p>for the murder of his brother-PW-1’s son; whether the testimony</p><p>of PW-1 could be termed as reliable and trustworthy and; whether</p><p>the chain of circumstantial evidence was complete and consistent</p><p>for arriving at the conclusion of guilt.</p><p>Headnotes</p><p>Evidence – Extra judicial confession – Evidentiary value –</p><p>Case based on circumstantial evidence – Trial Court acquitted</p><p>all the accused persons – Appeal against acquittal – High</p><p>Court reversed the acquittal of the appellant and convicted</p><p>him largely based on the extra judicial confession allegedly</p><p>made by him before PW-1 – Correctness:</p><p>Held: Extra judicial confession is a weak type of evidence and</p><p>is generally used as a corroborative link to lend credibility to the</p><p>other evidence on record – It must be accepted with great care</p><p>and caution – If it is not supported by other evidence on record,</p><p>it fails to inspire confidence and shall not be treated as a strong</p><p>piece of evidence for the purpose of arriving at the conclusion of</p><p>guilt – The extent of acceptability of an extra judicial confession</p><p>depends on the trustworthiness of the witness before whom it is</p><p>given and the circumstances in which it was given – Prosecution</p><p>must establish that a confession was indeed made by the accused,</p><p>it was voluntary in nature and the contents of the confession</p><p>were true – In the present case, the extra judicial confession</p><p>is essentially based on the deposition of PW-1, the father of</p><p>the deceased whose testimony is fatal to the prosecution case</p><p>on multiple parameters – The doubtful existence of the extra </p><p>392 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>judicial confession, unnatural prior and subsequent conduct of</p><p>PW-1, recovery of dead body in the presence of an unreliable</p><p>witness PW-2, contradictions regarding arrest, testimony of the</p><p>witnesses in support of the last seen theory etc. are some of the</p><p>inconsistencies which strike at the root of the prosecution case</p><p>– There exist serious doubts regarding the identity of the dead</p><p>body recovered from the well – Testimony of PW-1 not trustworthy</p><p>and reliable – Evidence on record fails the test laid down for the</p><p>acceptability of circumstantial evidence – Trial Court appreciated</p><p>the evidence in a comprehensive sense, High Court reversed</p><p>the view without arriving at any finding of perversity or illegality</p><p>therein – It took a cursory view of the matter and merely arrived at</p><p>a different conclusion on re-appreciation of evidence – Anomaly of</p><p>having two reasonably possible views in a matter is to be resolved</p><p>in favour of the accused – After acquittal, the presumption of</p><p>innocence in favour of the accused gets reinforced – High Court</p><p>erred in reversing the acquittal – Impugned judgment set aside –</p><p>Order of Trial Court restored, appellant acquitted. [Paras 14-16,</p><p>25-27 and 30]</p><p>Appeal against acquittal – Exercise of appellate powers by</p><p>High Court:</p><p>Held: High Court, in exercise of appellate powers, may re-appreciate</p><p>the entire evidence – However, reversal of an order of acquittal is</p><p>not to be based on mere existence of a different view or a mere</p><p>difference of opinion – To permit so would be in violation of the</p><p>two views theory – In order to reverse an order of acquittal in</p><p>appeal, it is essential to arrive at a finding that the order of the</p><p>Trial Court was perverse or illegal; or that the Trial Court did not</p><p>fully appreciate the evidence on record; or that the view of the</p><p>Trial Court was not a possible view. [Para 25]</p><p>Evidence – Extra judicial confession – Standard of proof:</p><p>Held: The standard required for proving an extra judicial confession</p><p>to the satisfaction of the Court is on the higher side and the</p><p>essential ingredients must be established beyond any reasonable</p><p>doubt – The standard becomes even higher when the entire case</p><p>of the prosecution necessarily rests on the extra judicial confession.</p><p>[Para 15]</p><p>Evidence – Circumstantial evidence – “Panchsheel” Principles:</p><p>[2024] 2 S.C.R. 393</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>Held: Essentially, circumstantial evidence comes into picture</p><p>when there is absence of direct evidence – For proving a case</p><p>on the basis of circumstantial evidence, it must be established</p><p>that the chain of circumstances is complete – It must also be</p><p>established that the chain of circumstances is consistent with the</p><p>only conclusion of guilt – The margin of error in a case based on</p><p>circumstantial evidence is minimal – For, the chain of circumstantial</p><p>evidence is essentially meant to enable the court in drawing an</p><p>inference – The task of fixing criminal liability upon a person on</p><p>the strength of an inference must be approached with abundant</p><p>caution. [Para 27]</p><p>Criminal Law – Minor inconsistencies vis-à-vis reasonable</p><p>doubt – Case based on circumstantial evidence – Plea of the</p><p>respondent-State that minor inconsistencies could not be</p><p>construed as reasonable doubts for ordering acquittal:</p><p>Held: No doubt, it is trite law that a reasonable doubt is essentially</p><p>a serious doubt in the case of the prosecution and minor</p><p>inconsistencies are not to be elevated to the status of a reasonable</p><p>doubt – A reasonable doubt is one which renders the possibility</p><p>of guilt as highly doubtful – Purpose of criminal trial is not only to</p><p>ensure that an innocent person is not punished, but it is also to</p><p>ensure that the guilty does not escape unpunished – In the present</p><p>case, the inconsistencies in the case of the prosecution are not</p><p>minor inconsistencies – Prosecution miserably failed to establish</p><p>a coherent chain of circumstances – The present case does not</p><p>fall in the category of a light-hearted acquittal, which is shunned</p><p>upon in law. [Para 29]</p><p>Case Law Cited</p><p>Chandrapal v. State of Chattisgarh [2022] 3 SCR 366 :</p><p>(2022) SCC On Line SC 705; Sanjeev v. State of H.P</p><p>(2022) 6 SCC 294 – relied on.</p><p>Sansar Chand v. State of Rajasthan [2010] 12 SCR</p><p>583 : (2010) 10 SCC 604; Piara Singh v. State of Punjab</p><p>[1978] 1 SCR 597 : (1977) 4 SCC 452; Mallikarjun v.</p><p>State of Karnataka [2019] 11 SCR 609 : (2019) 8 SCC</p><p>359; Hari Singh & Anr. v. State of Uttar Pradesh [2021]</p><p>10 SCR 1022 : Criminal Appeal No. 186 of 2018 (SC);</p><p>Sucha Singh v. State of Punjab [2003] Suppl. 2 SCR</p><p>35 : (2003) 7 SCC 643 – referred to.</p><p>394 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>List of Acts</p><p>Penal Code, 1860.</p><p>List of Keywords</p><p>Extra judicial confession; Weak type of evidence; Circumstantial</p><p>evidence; Chain of circumstantial evidence; Appeal against</p><p>acquittal; Acquittal reversed; Two possible views; Conclusion of guilt;</p><p>Perversity or illegality; Cursory view; Presumption of innocence in</p><p>favour of accused; Beyond reasonable doubt; Minor inconsistencies;</p><p>Reasonable doubt; Inconsistencies not minor; Appellate powers;</p><p>Re-appreciation of evidence; Absence of direct evidence; Criminal</p><p>trial purpose; Stock witness.</p><p>Case Arising From</p><p>CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 622</p><p>of 2013</p><p>From the Judgment and Order dated 28.03.2011 of the High Court</p><p>of Karnataka, Circuit Bench at Dharwad in Criminal Appeal No.130</p><p>of 2005</p><p>Appearances for Parties</p><p>Sharan Thakur, Mahesh Thakur, Siddharth Thakur, Shivamm</p><p>Sharrma, P.N. Singh, Mustafa Sajad, Ms. Keerti Jaya, Ranvijay Singh</p><p>Chandel, Dr. Sushil Balwada, Advs. for the Appellant.</p><p>Muhammed Ali Khan, A.A.G., V. N. Raghupathy, Omar Hoda, Ms.</p><p>Eesha Bakshi, Uday Bhatia, Kamran Khan, Manendra Pal Gupta,</p><p>Advs. for the Respondent.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Satish Chandra Sharma, J.</p><p>1. Master Hrithik, aged 2.5 years, lost his life on the fateful day of</p><p>03.11.2002 in Hubli, Karnataka. PW-1, his father and complainant in</p><p>this case, filed a complaint and the allegation was levelled against</p><p>the appellant/accused, who is the younger brother of PW-1. After a</p><p>full-fledged trial, Trial Court acquitted the appellant from the charges</p><p>levelled upon him. The High Court reversed the order of acquittal and </p><p>[2024] 2 S.C.R. 395</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>convicted the appellant. The mystery of Hrithik’s death continues as the</p><p>matter has landed before this Court in the form of the present appeal,</p><p>which assails the order dated 28.03.2011 passed by the High Court of</p><p>Karnataka (Circuit Bench at Dharwad) in Criminal Appeal No. 130/2005.</p><p>FACTUAL MATRIX</p><p>2. At the outset, we consider it apposite to note that there is considerable</p><p>divergence between the parties (as well as between the decisions</p><p>rendered by the Trial Court and the High Court) as regards the</p><p>sequence of events and timelines involved in this case. To avoid</p><p>any confusion or presumption, the facts delineated herein represent</p><p>the version of the prosecution for the purpose of understanding the</p><p>story. On 03.11.2002, at around 11 A.M., the son of PW-1 had gone</p><p>out for playing and went missing. PW-1 and other family members</p><p>of the child searched for him in and around the locality. Upon finding</p><p>no trace of the child till evening, a missing complaint was lodged at</p><p>around 10 P.M. by PW-1 at PS Vidyanagar, Hubli, Karnataka. The</p><p>complaint came to be registered as Crime No. 215/2002.</p><p>3. Fast forward to 14.11.2002, the appellant (also the brother of</p><p>PW-1) appeared at the house of PW-1 in a drunken state and</p><p>started blabbering about the missing incident of Hrithik and about</p><p>mishappening with the child. The encounter on 14.11.2002 happened</p><p>late at night and PW-1 did not pursue the same at that point of time.</p><p>On the morning of 15.11.2002, PW-1 went to his shop and returned</p><p>around 12:30 P.M. At this point, PW-1, his mother and wife enquired</p><p>about the child from the appellant and the appellant stated that he</p><p>had murdered Hrithik and thrown his body in the well. Thereafter,</p><p>PW-1 took the appellant to PS Vidyanagar for filing the complaint</p><p>which led to the registration of the First Information Report (FIR) in</p><p>this case.</p><p>4. It is the case of the prosecution that on reaching the police station,</p><p>the appellant confessed to the commission of crime as well as the</p><p>act of throwing the child in the well. The voluntary statement of the</p><p>accused, in the nature of extra judicial confession, was recorded</p><p>by PW-16 (Investigating Officer/IO of the case) as Ex.P.21. At the</p><p>instance of the appellant, PW-16 took PW-1, mother and wife of</p><p>PW-1 and panchas in a police jeep to a place near the back side </p><p>396 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>of Kamat Cafe. On reaching there, the appellant took PW-16, PW-1</p><p>and panchas near the well and told them that the dead body of the</p><p>deceased was thrown in the said well. When they looked into the</p><p>well, a dead body of a child was found floating there. The dead body</p><p>was taken out and inquest panchnama was conducted. Thereafter,</p><p>spot panchnama was prepared and the body was sent for post</p><p>mortem. Thereafter, accused no. 2 and 3 were arrested and upon</p><p>their disclosure and at their instance, jewelry articles exhibited as</p><p>M.O.s 5 and 6 were recovered from PW-17, which were allegedly</p><p>taken off from the body of the deceased child and were sold off to</p><p>PW-17.</p><p>5. In this factual backdrop, PW-16 investigated the case and filed the</p><p>chargesheet. Upon committal of the case to the Court of Sessions,</p><p>charges were framed upon the three accused persons under Sections</p><p>201, 302, 363, 364 read with 34 of Indian Penal Code, 18601. Upon the</p><p>culmination of trial, the Trial Court acquitted all the accused persons</p><p>vide order dated 30.04.2004 passed by Ld. ASJ-01, Dharwad (Hubli).</p><p>6. While ordering acquittal of the accused persons, the Trial Court gave</p><p>the following reasons:</p><p>i. There is no eye witness to support the case of the prosecution</p><p>and the case is entirely based on circumstantial evidence.</p><p>ii. The prosecution case is built upon the extrajudicial confession</p><p>of the appellant and factum of recovery of the dead body from</p><p>the well in consequence of the information disclosed by the</p><p>appellant.</p><p>iii. The credibility of an extra judicial confession depends upon</p><p>the veracity of the witnesses before whom it is given and</p><p>the circumstances in which it was given. The statements of</p><p>PW-1 in the Court and in the complaint Ex.P1 are different.</p><p>In the complaint, PW-1 had mentioned about the involved</p><p>of co-accused persons, whereas his testimony in the Court</p><p>was completely silent regarding the involved of other accused</p><p>persons.</p><p>1 Hereinafter referred as “IPC”</p><p>[2024] 2 S.C.R. 397</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>iv. PW-1 stated that his wife and mother were also present when</p><p>the confession was made by the appellant. However, neither</p><p>wife nor mother of PW- 1 was examined by the prosecution</p><p>as a witness.</p><p>v. PW-1 deposed that after the confession was made by the</p><p>appellant, he took the appellant to the police station where he</p><p>disclosed the involvement of accused no. 2 and 3. However,</p><p>in the complaint Ex.P1 which was given by him at the police</p><p>station, there is no mention of accused no. 3. The contradiction</p><p>in this regard is material as, if the appellant had disclosed the</p><p>involvement of accused no. 2 and 3 before going to the police</p><p>station, there was no reason for PW-1 to skip the name of</p><p>accused no. 3 from Ex.P1.</p><p>vi. The Trial Court noted the multiplicity of versions by PW-1 and</p><p>held that an extra judicial confession must be free from suspicion,</p><p>which is not the case in the testimony of PW-1.</p><p>vii. The Trial Court also noted the discrepancy regarding the arrest</p><p>of the accused. PW-1 deposed that he took the appellant to the</p><p>police station after his disclosure, whereas PW-16 deposed that</p><p>after registering the complaint, he had arrested the appellant</p><p>from his house.</p><p>viii. No mention of the incident of utterance of certain words by</p><p>the appellant on 14.11.2002 in the complaint given by PW-1</p><p>on the following day.</p><p>ix. PW-1 took no steps in furtherance of the information supplied</p><p>by PW-5 that he had seen the appellant taking away the child</p><p>on 03.11.2002 or in furtherance of the information supplied by</p><p>PW-7, who had informed PW-1 on 10.11.2002 that he had seen</p><p>three people throwing something into the well. The conduct of</p><p>PW-1 was not found to be natural.</p><p>x. PW-1 failed to explain the discrepancy in the clothes allegedly</p><p>worn by the deceased and the clothes found on the body of</p><p>the deceased. Moreover, PW-12 deposed that at the time of</p><p>filing the complaint, he had enquired from PW-1 regarding any</p><p>ornaments on the child. PW-1 had replied in negative.</p><p>398 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>xi. The theory of last seen was also rejected by the Trial Court and</p><p>PWs in that regard - PW-5, PW- 6, PW-7 and PW-18 - were</p><p>disbelieved.</p><p>7. The decision of the Trial Court was assailed before the High Court</p><p>by the State in appeal. The High Court analyzed the evidence on</p><p>record and partially allowed the appeal by holding the appellant guilty</p><p>for the commission of offences punishable under Sections 201, 302,</p><p>363, 364 of IPC. Notably, the High Court was in agreement with the</p><p>conclusion of acquittal regarding accused no. 2 and 3.</p><p>8. On a re-appreciation of evidence pitched against accused no.</p><p>2 and 3, the High Court agreed with the view of the Trial Court</p><p>that the evidence was not trustworthy. The theory of last seen,</p><p>as propounded to bring accused no. 2 and 3 within the ambit of</p><p>criminality, was rejected. Similarly, the allegation of recovery of</p><p>ornaments from PW-17 at the instance of the accused was also</p><p>rejected. Since, there is no divergence of opinion with respect to</p><p>accused no. 2 and 3, this Court is not required to delve further</p><p>into the same. The High Court set aside the view of the Trial Court</p><p>regarding the rejection of the voluntary extra judicial confession</p><p>of appellant and recovery of dead body of the deceased at his</p><p>instance. The High Court went on to convict the appellant on the</p><p>strength of the following reasons:</p><p>i. The extra judicial confession of the appellant was a voluntary</p><p>confession and there is no reason to doubt the same.</p><p>ii. Information disclosed by the appellant led to the discovery of</p><p>dead body of the deceased and minor discrepancies in the</p><p>version of PW-1 are not material.</p><p>iii. The Trial Court committed an error by not properly appreciating</p><p>the evidence of PW-1, especially the voluntary statement and</p><p>recovery of dead body.</p><p>SUBMISSIONS OF APPELLANT</p><p>9. Assailing the order of the High Court, the appellant submits that the</p><p>High Court did not appreciate the discrepancies in the evidence of</p><p>PW-1 and went on to accept the same. He further submits that the</p><p>High Court failed to take note of the improvements made by PW-1 at </p><p>[2024] 2 S.C.R. 399</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>every stage. He further submits that the Trial Court had elaborately</p><p>appreciated the entire evidence on record and it was not open for</p><p>the High Court to reappreciate the entire evidence and arrive at a</p><p>different conclusion of its own. Further, it is submitted that the High</p><p>Court did not notice the absence of mother and wife of PW-1 from</p><p>the list of witnesses of the prosecution.</p><p>10. The appellant further submits that the finding of the Trial Court regarding</p><p>the sequence of arrest of the appellant has not been discussed at</p><p>all in the impugned order. It is further submitted that the High Court</p><p>did not examine the extra judicial confession of the appellant in its</p><p>correct perspective, especially in light of the suspicion raised by the</p><p>Trial Court. It is urged that the High Court did not subject the extra</p><p>judicial confession to a stern test and went on to place undue reliance</p><p>on the same. It is further contended that the High Court overlooked</p><p>the discrepancy between the description of clothes found on the dead</p><p>body and that indicated by PW-1 in his complaint. Lastly, it is submitted</p><p>that if two views were possible on a reappreciation of evidence, the</p><p>High Court must have adopted the view in favour of the accused,</p><p>thereby providing benefit of doubt to the appellant.</p><p>11. Per contra, it is submitted on behalf of the State that there is no</p><p>infirmity in the impugned order as it is based on a correct appreciation</p><p>of evidence. It is further submitted that the voluntary extra judicial</p><p>confession of appellant constituted crucial evidence and the fact</p><p>that it led to the discovery of the dead body of the deceased, added</p><p>credibility to the same. Reliance has been placed upon the decisions</p><p>of this Court in Sansar Chand v. State of Rajasthan2 and Piara</p><p>Singh v. State of Punjab3</p><p>. It is further submitted that the Court</p><p>must not consider every doubt as a reasonable doubt and minor</p><p>discrepancies must not be allowed to demolish the entire testimony</p><p>of a witness. In this regard, reliance has been placed upon the</p><p>decisions of this Court in Mallikarjun v. State of Karnataka4</p><p> and</p><p>Hari Singh & Anr. v. State of Uttar Pradesh5</p><p>.</p><p>2 [2010] 12 SCR 583 : (2010) 10 SCC 604</p><p>3 [1978] 1 SCR 597 : (1977) 4 SCC 452</p><p>4 [2019] 11 SCR 609 : (2019) 8 SCC 359</p><p>5 [2021] 10 SCR 1022 : Criminal Appeal No. 186 of 2018 (SC)</p><p>400 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>12. We have heard Sh. Sharan Thakur, Advocate for the appellant and</p><p>Mr. Muhammed Ali Khan, AAG, for the respondent State.</p><p>DISCUSSION</p><p>13. We may now proceed to delineate the issues that arise for the</p><p>consideration of this Court, as follows:</p><p>i. Whether the extra judicial confession of the appellant/accused</p><p>was admissible, credible and sufficient for conviction of the</p><p>accused thereon?</p><p>ii. Whether the testimony of PW-1 could be termed as reliable</p><p>and trustworthy?</p><p>iii. Whether the chain of circumstantial evidence is complete and</p><p>consistent for arriving at the conclusion of guilt?</p><p>14. The conviction of the appellant is largely based on the extra judicial</p><p>confession allegedly made by him before PW-1. So far as an extra</p><p>judicial confession is concerned, it is considered as a weak type</p><p>of evidence and is generally used as a corroborative link to lend</p><p>credibility to the other evidence on record. In Chandrapal v. State</p><p>of Chattisgarh6, this Court reiterated the evidentiary value of an</p><p>extra judicial confession in the following words:</p><p>“11. At this juncture, it may be noted that as per Section</p><p>30 of the Evidence Act, when more persons than one are</p><p>being tried jointly for the same offence, and a confession</p><p>made by one of such persons affecting himself and some</p><p>other of such persons is proved, the court may take into</p><p>consideration such confession as against such other</p><p>person as well as against the person who makes such</p><p>confession. However, this court has consistently held that</p><p>an extra judicial confession is a weak kind of evidence</p><p>and unless it inspires confidence or is fully corroborated</p><p>by some other evidence of clinching nature, ordinarily</p><p>conviction for the offence of murder should not be made</p><p>only on the evidence of extra judicial confession. As held</p><p>in case of State of M.P. Through CBI v. Paltan Mallah, the</p><p>6 [2022] 3 SCR 366 : (2022) SCC On Line SC 705</p><p>[2024] 2 S.C.R. 401</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>extra judicial confession made by the co-accused could</p><p>be admitted in evidence only as a corroborative piece of</p><p>evidence. In absence of any substantive evidence against</p><p>the accused, the extra judicial confession allegedly made</p><p>by the co-accused loses its significance and there cannot</p><p>be any conviction based on such extra judicial confession</p><p>of the co-accused.”</p><p>15. It is no more res integra that an extra judicial confession must</p><p>be accepted with great care and caution. If it is not supported by</p><p>other evidence on record, it fails to inspire confidence and in such</p><p>a case, it shall not be treated as a strong piece of evidence for</p><p>the purpose of arriving at the conclusion of guilt. Furthermore, the</p><p>extent of acceptability of an extra judicial confession depends on</p><p>the trustworthiness of the witness before whom it is given and the</p><p>circumstances in which it was given. The prosecution must establish</p><p>that a confession was indeed made by the accused, that it was</p><p>voluntary in nature and that the contents of the confession were</p><p>true. The standard required for proving an extra judicial confession</p><p>to the satisfaction of the Court is on the higher side and these</p><p>essential ingredients must be established beyond any reasonable</p><p>doubt. The standard becomes even higher when the entire case of</p><p>the prosecution necessarily rests on the extra judicial confession.</p><p>16. In the present case, the extra judicial confession is essentially</p><p>based on the deposition of PW-1, the father of the deceased.</p><p>Without going into the aspect of PW-1 being an interested witness</p><p>at the threshold, his testimony is fatal to the prosecution case on</p><p>multiple parameters. PW-1 deposed that the appellant had arrived</p><p>at his residence on 14.11.2002 and mentioned about the deceased.</p><p>Despite so, the appellant was allowed to leave the residence and no</p><p>action whatsoever was taken by PW-1. The incident took place on</p><p>03.11.2002 and despite lapse of 11 days, PW-1 had no clue about</p><p>his deceased son. On the eleventh day, when the appellant arrives at</p><p>his residence and mentions adversely about his deceased son, PW-1</p><p>does nothing about it. In fact, on the next day as well, PW-1 started</p><p>off normally and went to his shop in a routine manner. Thereafter, he</p><p>came back home in the afternoon of 15.11.2002 and confronted the</p><p>appellant about the incident. There is no explanation as to how the </p><p>402 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>appellant arrived at his residence again on 15.11.2002. Nevertheless,</p><p>PW-1 deposed that when he, his mother and wife confronted the</p><p>appellant, he confessed to the murder of the deceased. Thereafter,</p><p>they took him to the police station.</p><p>17. Before we refer to the proceedings which took place at the police</p><p>station, it is of utmost relevance to note that the confession was</p><p>made before PW-1, his mother and wife. However, the mother and</p><p>wife of PW-1 were never examined as witnesses by the prosecution.</p><p>This glaring mistake raises a serious doubt on the very existence of</p><p>a confession, or even a statement, of this nature by the appellant.</p><p>18. Once the appellant was taken to the police station, as the examination</p><p>in chief of PW-1, the appellant confessed to the act of throwing the</p><p>deceased in the well along with accused no. 2 and 3. Notably, there</p><p>was no mention of the co-accused persons in the original statement</p><p>of the appellant, as per the examination in chief of PW-1. One finds a</p><p>third version of the same fact when the complaint Ex.P1 is perused.</p><p>The said complaint was given by PW-1 at the police station of</p><p>15.11.2002. As per this complaint, the appellant was queried by PW-1</p><p>and his mother (presence of wife not mentioned). Furthermore, as per</p><p>the complaint, the appellant confessed to the commission of offence</p><p>along with one other accused (accused no.2) only. The complaint</p><p>Ex.P1 is also silent on the episode that took place at the residence</p><p>of PW-1 on 14.11.2002, a day prior to the filing of complaint. There</p><p>is no explanation as to how and in what circumstances the incident</p><p>of 14.11.2002 was omitted from Ex.P1. The omission assumes great</p><p>importance in light of the fact that the incident of 14.11.2002 was</p><p>the precursor of the confrontation that followed the next day, which</p><p>culminated into the act of filing the complaint. The complaint Ex.P1</p><p>is also silent on the information received by PW-1 from PW-5 and</p><p>PW-6 that they had seen his child going with the appellant on the</p><p>date of incident. The introduction of these witnesses was an exercise</p><p>of improvement, as we shall see in the following discussion.</p><p>19. The confession was followed by two things – arrest of the appellant</p><p>and recovery of dead body of the deceased. The evidentiary aspects</p><p>concerning these facts are equally doubtful. As per the testimony of</p><p>PW-1, he had taken the appellant to the police station and he was</p><p>arrested there. Contrarily, PW-16/I.O. deposed that after recording </p><p>[2024] 2 S.C.R. 403</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>the complaint, he had arrested the appellant from his house. The</p><p>mode and manner of arrest, especially the place of arrest, is doubtful.</p><p>It also raises a question on the aspect of confession - whether the</p><p>confession was recorded when the appellant himself visited the police</p><p>station with PW-1 or when he was arrested from his house and was</p><p>taken to the police station by PW-16. The confessions, one made</p><p>after a voluntary visit to the police station and the other made after</p><p>arrest from the house, stand on materially different footings from</p><p>the point of view of voluntariness. The likelihood of the latter being</p><p>voluntary is fairly lesser in comparison to the former.</p><p>20. The next element which weighed upon the High Court in reversing</p><p>acquittal is the recovery of dead body of the deceased at the instance</p><p>of the appellant. Notably, the element of recovery is based on the</p><p>same statement/confession of the appellant which, as observed above,</p><p>fails to inspire the confidence of the Court. The Trial Court has rightly</p><p>analyzed the evidence regarding the recovery of dead body and the</p><p>High Court fell in an error in accepting the evidence on its face value,</p><p>without addressing the reasonable doubts raised by the Trial Court.</p><p>21. The recovery of dead body from the well is not in question. However,</p><p>the proof of such recovery to be at the instance of the appellant is</p><p>essentially based on the disclosure statement made by the appellant.</p><p>Again, the prime witness for proving the disclosure statement is</p><p>PW-1, whose testimony has failed to inspire the confidence of the</p><p>Court, in light of the contradictions, multiplicity of versions and</p><p>material improvements. The other witness to prove the recovery is</p><p>PW-2, the panch. Notably, PW- 2 was a waiter at a restaurant and</p><p>he deposed that he had visited the police station himself. It is difficult</p><p>to accept that PW-2 just happened to visit the police station on his</p><p>own and ended up becoming a witness of recovery of the dead</p><p>body. Firstly, his visit to the police station does not fit in the normal</p><p>chain of circumstances as it is completely unexplained. A police</p><p>station is not per se a public space where people happen to visit</p><p>in the ordinary course of business and therefore, an explanation is</p><p>warranted. Secondly, a normal person would generally be hesitant in</p><p>becoming a witness to the recovery of a dead body. There is nothing</p><p>on record to indicate that any notice to join investigation was given</p><p>to PW-2 by the I.O./PW-16. In such circumstances, it would not be </p><p>404 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>safe to rely upon the testimony of PW-2 as he could reasonably be</p><p>a stock witness of the I.O.</p><p>22. Furthermore, we deem it appropriate to note that the identity of the</p><p>dead body recovered from the well is also not beyond question. The</p><p>Trial Court had also noted the doubts regarding the identity of the</p><p>dead body, however, the identity of the deceased was held to be</p><p>established in light of the fact that the identification was done by PW1, father of the deceased. The Trial Court also relied upon the fact</p><p>that the identification was not challenged by either side. Be that as it</p><p>may, we consider it important to note that there exist serious doubts</p><p>regarding the identity of the dead body recovered from the well. The</p><p>description of the deceased given by PW-1 in his complaint Ex.P1</p><p>did not match with the description of the dead body. The clothes</p><p>found on the dead body were substantially different from the clothes</p><p>mentioned by PW-1 in his complaint. The presence of ornaments</p><p>was not mentioned in the complaint. Furthermore, identification of</p><p>the dead body by face was not possible as the body had started</p><p>decomposing due to lapse of time. Admittedly, the dead body was</p><p>recovered after 12 days of the incident from a well. Sensitive body</p><p>parts were found bitten by aquatic animals inside the well. The theory</p><p>of ornaments has already been held to be a figment of imagination</p><p>by the Trial Court and the High Court in an unequivocal manner.</p><p>Therefore, the prosecution case regarding the identity of the dead</p><p>body is not free from doubts.</p><p>23. Another circumstance which weighs against PW-1 in a material</p><p>sense is the deafening silence on his part when PW-5 and PW-6</p><p>informed him regarding the factum of the deceased being thrown</p><p>into the well. Notably, the said fact was brought to the knowledge of</p><p>PW-1 well before 15.11.2002. Despite so, PW-1 maintained silence</p><p>and did not even approach the police for investigation or information</p><p>on such a crucial aspect of investigation. An anxious father would</p><p>have rushed to the police station on receiving an information of this</p><p>nature. The subsequent conduct of PW-1, after the receipt of such</p><p>material information, is unnatural. Furthermore, PW-5 only saw the</p><p>appellant taking away the child, PW-6 also saw the appellant only</p><p>and PW-7 saw three persons throwing the child in the well. The</p><p>versions are manifold. In such circumstances, it cannot be held that</p><p>the testimony of PW-1 is trustworthy and reliable.</p><p>[2024] 2 S.C.R. 405</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>24. Notably, it is a peculiar case wherein the appellant has been convicted</p><p>for the commission of murder without ascertaining the cause of death</p><p>in a conclusive manner. The report prepared by PW-14 reveals</p><p>drowning as the cause of death. For attributing the act of throwing</p><p>the deceased into the well upon the appellant, the prosecution has</p><p>relied upon PW-7 and PW-18, the witnesses in support of the last</p><p>seen theory. The testimonies of these witnesses have been held to</p><p>be incredible by both Trial Court and the High Court. We suffice to</p><p>observe that we agree with the findings of the said Courts on this</p><p>point. Furthermore, the post mortem reveals the time of death within</p><p>a time frame of 3 to 12 days. Allegedly, the death took place on</p><p>03.11.2002. Such a wide time frame concerning the crucial question</p><p>of time of death raises a serious doubt on the reliability of the post</p><p>mortem report. When this fact is seen in light of the already existing</p><p>doubts on the identity of the deceased, one is constrained to take</p><p>the report with a pinch of salt. More so, this discrepancy again brings</p><p>into question the element of recovery of the dead body and identity</p><p>of the deceased.</p><p>25. This Court cannot lose sight of the fact that the Trial Court had</p><p>appreciated the entire evidence in a comprehensive sense and</p><p>the High Court reversed the view without arriving at any finding of</p><p>perversity or illegality in the order of the Trial Court. The High Court</p><p>took a cursory view of the matter and merely arrived at a different</p><p>conclusion on a re-appreciation of evidence. It is settled law that the</p><p>High Court, in exercise of appellate powers, may reappreciate the</p><p>entire evidence. However, reversal of an order of acquittal is not to</p><p>be based on mere existence of a different view or a mere difference</p><p>of opinion. To permit so would be in violation of the two views theory,</p><p>as reiterated by this Court from time to time in cases of this nature.</p><p>In order to reverse an order of acquittal in appeal, it is essential to</p><p>arrive at a finding that the order of the Trial Court was perverse or</p><p>illegal; or that the Trial Court did not fully appreciate the evidence on</p><p>record; or that the view of the Trial Court was not a possible view.</p><p>26. At the cost of repetition, it is reiterated that the anomaly of having</p><p>two reasonably possible views in a matter is to be resolved in favour</p><p>of the accused. For, after acquittal, the presumption of innocence in </p><p>406 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>favour of the accused gets reinforced. In Sanjeev v. State of H.P.7</p><p>,</p><p>this Court summarized the position in this regard and observed as</p><p>follows:</p><p>“7. It is well settled that:</p><p>7.1. While dealing with an appeal against acquittal, the</p><p>reasons which had weighed with the trial court in acquitting</p><p>the accused must be dealt with, in case the appellate court</p><p>is of the view that the acquittal rendered by the trial court</p><p>deserves to be upturned (see Vijay Mohan Singh v. State</p><p>of Karnataka8, Anwar Ali v. State of H.P.9)</p><p>7.2. With an order of acquittal by the trial court, the</p><p>normal presumption of innocence in a criminal matter gets</p><p>reinforced (see Atley v. State of U.P.10)</p><p>7.3. If two views are possible from the evidence on record,</p><p>the appellate court must be extremely slow in interfering</p><p>with the appeal against acquittal (see Sambasivan v.</p><p>State of Kerala11)”</p><p>27. It may be noted that the entire case of the prosecution is based on</p><p>circumstantial evidence. The principles concerning circumstantial</p><p>evidence are fairly settled and are generally referred as the</p><p>“Panchsheel” principles. Essentially, circumstantial evidence comes</p><p>into picture when there is absence of direct evidence. For proving a</p><p>case on the basis of circumstantial evidence, it must be established</p><p>that the chain of circumstances is complete. It must also be</p><p>established that the chain of circumstances is consistent with the</p><p>only conclusion of guilt. The margin of error in a case based on</p><p>circumstantial evidence is minimal. For, the chain of circumstantial</p><p>evidence is essentially meant to enable the court in drawing an</p><p>inference. The task of fixing criminal liability upon a person on the</p><p>strength of an inference must be approached with abundant caution.</p><p>7 (2022) 6 SCC 294</p><p>8 (2019) 5 SCC 436</p><p>9 (2020) 10 SCC 166)</p><p>10 AIR 1955 SC 807</p><p>11 [1998] 3 SCR 280 : (1998) 5 SCC 412</p><p>[2024] 2 S.C.R. 407</p><p>Kalinga @ Kushal v. State of Karnataka By Police Inspector Hubli</p><p>As discussed above, the circumstances sought to be proved by the</p><p>prosecution are inconsistent and the inconsistencies in the chain</p><p>of circumstances have not been explained by the prosecution. The</p><p>doubtful existence of the extra judicial confession, unnatural conduct</p><p>of PW-1, recovery of dead body in the presence of an unreliable</p><p>witness PW-2, contradictions regarding arrest, unnatural prior and</p><p>subsequent conduct of PW-1, incredible testimony of the witnesses in</p><p>support of the last seen theory etc. are some of the inconsistencies</p><p>which strike at the root of the prosecution case. To draw an inference</p><p>of guilt on the basis of such evidence would result into nothing but</p><p>failure of justice. The evidence on record completely fails the test</p><p>laid down for the acceptability of circumstantial evidence. Therefore,</p><p>in light of the consolidated discussion, all three issues are hereby</p><p>answered in negative.</p><p>28. Before parting, we consider it our duty to refer to the catena of</p><p>judgments relied upon by the respondent to contend that minor</p><p>inconsistencies could not be construed as reasonable doubts for</p><p>ordering acquittal. Reference has been made to Sucha Singh v.</p><p>State of Punjab12, Mallikarjun13 and Hari Singh v. State of Uttar</p><p>Pradesh14.</p><p>29. No doubt, it is trite law that a reasonable doubt is essentially a serious</p><p>doubt in the case of the prosecution and minor inconsistencies are</p><p>not to be elevated to the status of a reasonable doubt. A reasonable</p><p>doubt is one which renders the possibility of guilt as highly doubtful.</p><p>It is also noteworthy that the purpose of criminal trial is not only to</p><p>ensure that an innocent person is not punished, but it is also to ensure</p><p>that the guilty does not escape unpunished. A judge owes this duty</p><p>to the society and effective performance of this duty plays a crucial</p><p>role in securing the faith of the common public in rule of law. Every</p><p>case, wherein a guilty person goes unpunished due to any lacuna on</p><p>the part of the investigating agency, prosecution or otherwise, shakes</p><p>the conscience of the society at large and diminishes the value of</p><p>the rule of law. Having observed so, the observations in this regard</p><p>12 [2003] Suppl. 2 SCR 35 : (2003) 7 SCC 643</p><p>13 [2019] 11 SCR 609 : Supra</p><p>14 [2021] Suppl. 10 SCR 1022 : Supra</p><p>408 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>may not advance the case of the respondent in the present appeal.</p><p>It is so because the inconsistencies in the case of the prosecution</p><p>are not minor inconsistencies. As already discussed above, the</p><p>prosecution has miserably failed to establish a coherent chain of</p><p>circumstances. The present case does not fall in the category of a</p><p>light-hearted acquittal15, which is shunned upon in law.</p><p>30. In light of the foregoing discussion, we hereby conclude that the High</p><p>Court has erred in reversing the decision of acquittal. The evidence</p><p>of the prosecution, at best, makes out a case for suspicion, and not</p><p>for conviction. Accordingly, the impugned order and judgment are</p><p>set aside. We find no infirmity in the order of the Trial Court and</p><p>the same stands restored. Consequently, the appellant is acquitted</p><p>from all the charges levelled upon him. The appellant is directed to</p><p>be released forthwith, if lying in custody.</p><p>31. The captioned appeal stands disposed of in the aforesaid terms.</p><p>Interim applications, if any, shall also stand disposed of.</p><p>32. No order as to costs.</p><p>Headnotes prepared by: Divya Pandey Result of the case:</p><p>Appeal disposed of.</p><p>15 ‘Proof of Guilt’, Glanville Williams.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-83202179327922279902024-03-09T06:43:00.001+05:302024-03-09T06:43:05.631+05:30Chandigarh Housing Board (Allotment, Management and Sale of Tenements) Regulations, 1979 – Reservation – Allotment of houses – Exclusively for Schedule Castes and Schedule Tribes – The respondent herein had sought for allotment of HIG house reserved for Scheduled Tribes category in terms of the advertisement issued by the appellant-Chandigarh Housing Board; that being aggrieved by non-allotment of a house, a suit was filed by the respondent – The suit was decreed by the Trial Court and judgment and decree was affirmed by the First Appellate Court as well as in the second appeal by the High Court – Propriety:<p>[2024] 2 S.C.R. 371 : 2024 INSC 119</p><p>Chandigarh Housing Board</p><p>v.</p><p>Tarsem Lal</p><p>(Civil Appeal No. 1788 of 2024)</p><p>07 February 2024</p><p>[B.V. Nagarathna and Augustine George Masih, JJ.]</p><p>Issue for Consideration</p><p>Whether a notification issued by the appellant-Chandigarh Housing</p><p>Board calling for applications from both Schedule Castes and</p><p>Scheduled Tribes confer any benefit on the respondent (who</p><p>belonged to the Schedule Tribes community as recognised in the</p><p>State of Rajasthan and was living in Chandigarh for twenty years)</p><p>when there is no Presidential Order u/Art. 342 of the Constitution</p><p>of India issued with regard to Scheduled Tribes insofar as Union</p><p>Territory of Chandigarh is concerned.</p><p>Headnotes</p><p>Chandigarh Housing Board (Allotment, Management and Sale</p><p>of Tenements) Regulations, 1979 – Reservation – Allotment</p><p>of houses – Exclusively for Schedule Castes and Schedule</p><p>Tribes – The respondent herein had sought for allotment of</p><p>HIG house reserved for Scheduled Tribes category in terms of</p><p>the advertisement issued by the appellant-Chandigarh Housing</p><p>Board; that being aggrieved by non-allotment of a house, a</p><p>suit was filed by the respondent – The suit was decreed by</p><p>the Trial Court and judgment and decree was affirmed by the</p><p>First Appellate Court as well as in the second appeal by the</p><p>High Court – Propriety:</p><p>Held: The Presidential notification of a tribe or tribal community as</p><p>a Scheduled Tribe by the President of India u/Art. 342 is a sine qua</p><p>non for extending any benefits to the said community in any State</p><p>or U.T. – This implies that a person belonging to a group that is</p><p>recognized as a Scheduled Tribe in a State would be recognized a</p><p>Scheduled Tribe only within the said State and not in a U.T. where he</p><p>migrates if no such Presidential notification exists in the said U.T. – In</p><p>the instant case, merely because the appellant herein had issued a</p><p>Notification calling for applications from both Scheduled Castes and </p><p>372 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Scheduled Tribes did not confer any benefit by that Notification on</p><p>the respondent herein when there is no Presidential Order u/Art. 342</p><p>of the Constitution of India issued with regard to Scheduled Tribes</p><p>insofar as Union Territory of Chandigarh is concerned – The said</p><p>basic foundational fact goes against the respondent herein and the</p><p>invitation given by the appellant/Housing Board to Scheduled Tribes</p><p>was in fact contrary to the said basic tenets as well as the prevalent</p><p>law and by that reason, the respondent herein cannot also seek any</p><p>estoppel as against the appellant herein – The impugned judgment</p><p>of the High Court affirming the judgment of the First Appellate Court,</p><p>which in turn affirms the judgment of the Trial Court are all liable to</p><p>be set aside. [Paras 26, 31]</p><p>Case Law Cited</p><p>Bhaiya Lal v. Harikishan Singh, [1965] 2 SCR 877 : AIR</p><p>1965 SC 1557; State of Maharashtra v. Milind, [2000]</p><p>Suppl. 5 SCR 65 : (2001) 1 SCC 4; Action Committee</p><p>on Issue of Caste Certificate to Scheduled Castes and</p><p>Scheduled Tribes in the State of Maharashtra vs. Union</p><p>of India [1994] Suppl. 1 SCR 714 : (1994) 5 SCC 244</p><p>– followed.</p><p>Marri Chandra Shekhar Rao vs. Dean, Seth G. S.</p><p>Medical College, [1990] 2 SCR 843 : (1990) 3 SCC</p><p>130 – relied on.</p><p>Bir Singh vs. Delhi Jal Board, [2018] 10 SCR 513 :</p><p>(2018) 10 SCC 312; Director, Transport Department,</p><p>Union Territory Administration of Dadra and Nagar</p><p>Haveli, Silvassa vs. Abhinav Dipakbhai Patel, (2019) 6</p><p>SCC 434 – held inapplicable.</p><p>List of Acts</p><p>Constitution of India; Punjab Reorganization Act, 1966; Chandigarh</p><p>Housing Board (Allotment, Management and Sale of Tenements)</p><p>Regulations, 1979.</p><p>List of Keywords</p><p>Advertisement for dwelling units; Reservation; Allotment of</p><p>houses exclusively for Schedule Castes and Schedule Tribes;</p><p>Presidential Order u/Art. 342; Presidential notification of a tribe </p><p>[2024] 2 S.C.R. 373</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>or tribal community; Recognition of Scheduled Tribe in a State;</p><p>Migration of Schedule Tribe person to another State or Union</p><p>Territory; Claim of Schedule Tribe status in another State or</p><p>Union Territory.</p><p>Case Arising From</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No.1788 of 2024</p><p>From the Judgment and Order dated 10.08.2018 of the High Court of</p><p>Punjab & Haryana at Chandigarh in RSA No. 1570 of 1991</p><p>Appearances for Parties</p><p>Mrs. Rachana Joshi Issar, Svarit Uniyal Mishra, Ms. Nidhi Tewari,</p><p>Advs. for the Appellant.</p><p>Shivendra Singh, Bikram Dwivedi, Puneett Singhal, Sanjeev</p><p>Chaudhary, Advs. for the Respondent.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Leave granted.</p><p>2. Being aggrieved by judgment dated 10.08.2018 passed by the High</p><p>Court of Punjab and Haryana at Chandigarh, the appellant/Chandigarh</p><p>Housing Board has preferred this appeal.</p><p>3. Briefly stated, the facts pertinent to the adjudication of the present</p><p>appeal are that the appellant herein, vide advertisement dated</p><p>28.06.1983, had called for applications for allotment of houses</p><p>exclusively for Scheduled Castes and Scheduled Tribes and a total</p><p>of 35 houses in the HIG (Upper) and HIG (Lower) categories were</p><p>reserved for that purpose. This advertisement was issued pursuant</p><p>to Regulation 25 of the Chandigarh Housing Board (Allotment,</p><p>Management and Sale of Tenements) Regulations, 1979 which</p><p>makes a provision for reservation of 12.5 % of the total number of</p><p>dwelling units for Scheduled Castes and Scheduled Tribes. One of</p><p>the conditions stipulated for the applicants was that they should be</p><p>a domicile of Union Territory (U.T.) of Chandigarh or should have</p><p>been a bona fide resident of U.T. of Chandigarh for a period of at</p><p>least three years on the date of submission of the application. The </p><p>374 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>respondent submitted his application and the draw of lots was held</p><p>on 09.09.1983. The list of successful applicants was published on</p><p>12.09.1983 wherein thirty houses were allotted.</p><p>4. Due to administrative confusion about the separate reservation for</p><p>the Scheduled Tribes within the reserved dwelling units, four houses,</p><p>two each in HIG(Upper) and HIG(Lower) categories were kept in</p><p>abeyance out of 35 houses since there were only four applicants</p><p>from the Scheduled Tribes category. A clarification was sought from</p><p>the Chandigarh Administration by the appellant owing to the fact</p><p>there was no Scheduled Tribe community which had been notified</p><p>by the President of India with regard to U.T. of Chandigarh under</p><p>Article 342 even though a notification under Article 341 for the</p><p>Scheduled Castes in Chandigarh had been issued. Thus, it was</p><p>enquired as to whether the Scheduled Tribes category could be</p><p>entitled to a minimum reservation of 5%. In response to the request</p><p>of the Appellant, the clarification issued by the Research Officer</p><p>to the Finance Secretary of the Chandigarh Administration vide</p><p>letter dated 21.09.1983 referred to the Brochure on Reservation for</p><p>Scheduled Castes and Scheduled Tribes and noted that even if the</p><p>population of the Scheduled Tribe community was less than 5%, a</p><p>minimum reservation of 5% could be made even for the Scheduled</p><p>Tribes in respect of all built houses/dwelling units. Being aggrieved</p><p>by the non-allotment of a house, the respondent-plaintiff approached</p><p>the civil Court.</p><p>5. The respondent instituted Civil Suit No. 327/1984 in the Court</p><p>of Senior Sub Judge, Chandigarh seeking a declaration that the</p><p>appellant’s decision to not allot houses earmarked for Scheduled</p><p>Tribes was mala fide. It was stated that he belongs to the Scheduled</p><p>Tribes community as recognized in the State of Rajasthan and had</p><p>been permanently residing in Chandigarh for twenty years.</p><p>6. The suit was contested by the appellant herein by averring that</p><p>no right much less a legal right to allotment of four houses kept in</p><p>abeyance could accrue to the Scheduled Tribes in the absence of</p><p>the notification of any Scheduled Tribe by the President of India in</p><p>so far as Union Territory of Chandigarh was concerned.</p><p>7. By judgment and decree of the trial court dated 09.01.1986, the</p><p>suit was decreed by the trial Court on the basis of the letter of </p><p>[2024] 2 S.C.R. 375</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>clarification dated 21.09.1983 from which the trial court inferred that</p><p>the Appellant was obliged to reserve a minimum of 5% dwelling units</p><p>for Scheduled Tribes. The said letter was found to be ‘good for all</p><p>purpose’ and all the four applicants belonging to the Schedules Tribe</p><p>category were held to be entitled to the allotment. While noting that</p><p>Article 342 of the Constitution had not been ‘made applicable to the</p><p>U.T. Chandigarh’, the trial court concluded that it would not mean</p><p>that Scheduled Tribes cannot get any benefit from the Chandigarh</p><p>Administration. The trial court reasoned that the advertisement dated</p><p>28.06.1983 did not stipulate that only members of the Scheduled</p><p>Tribes of Chandigarh could apply. Therefore, the respondent was</p><p>decreed to be entitled to allotment of the house at the price fixed</p><p>on the date of draw of lots dated 09.09.1983.</p><p>8. Being aggrieved by the judgment and decree of the trial Court,</p><p>the appellant herein preferred Civil Appeal No. 295/1990 before</p><p>the First Appellate Authority (Additional District Judge), which was</p><p>also dismissed. Hence, the appellant herein preferred Regular</p><p>Second Appeal No. 1570/1991 (O&M) before the High Court. By</p><p>the impugned judgment, the Regular Second Appeal has also been</p><p>dismissed. The High Court placed reliance on the Chandigarh</p><p>Administration’s letter of clarification dated 21.09.1983 (Exhibit</p><p>D-3) and the Ministry of Home Affairs’ Letter No. BC.12017/9/85</p><p>SC & BCD I dated 21.05.1985 (Exhibit P-8) to conclude that</p><p>it leaves no manner of doubt that Chandigarh Administration</p><p>instructed the Chandigarh Housing Board to keep the reservation</p><p>for allotment of dwelling units as aforementioned. Thus, issuance</p><p>of notification under Article 342 of the Constitution of India, pales</p><p>into insignificance. That the appellant is also a Scheduled Tribe</p><p>and holder of such certificate, even though from another State</p><p>(Rajasthan) and was not debarred as per the contents of the letter.</p><p>Hence, this appeal.</p><p>9. We have heard Mrs. Rachana Joshi Issar, learned counsel appearing</p><p>for the appellant and Shri Shivendra Singh, learned counsel for</p><p>respondent and perused the impugned order as well as the material</p><p>on record.</p><p>10. During the course of submissions, learned counsel for the appellant</p><p>drew our attention to three Constitution Bench judgments of this Court</p><p>in the case of Marri Chandra Shekhar Rao vs. Dean, Seth G. S. </p><p>376 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Medical College (1990) 3 SCC 130 (Marri Chandra Shekhar Rao);</p><p>Action Committee on Issue of Caste Certificate to Scheduled</p><p>Castes and Scheduled Tribes in the State of Maharashtra vs.</p><p>Union of India (1994) 5 SCC 244 (Action Committee) and Bir</p><p>Singh vs. Delhi Jal Board (2018) 10 SCC 312 (Bir Singh) in</p><p>order to contend that insofar as the Union Territory of Chandigarh</p><p>is concerned, firstly, there is no specific Presidential Order issued</p><p>insofar as Scheduled Tribes are concerned and secondly, that it is only</p><p>by a Presidential Order issued under Article 342 of the Constitution</p><p>of India that Scheduled Tribes could be recognized in an Union</p><p>Territory or a State could be issued. Admittedly, no such Presidential</p><p>Order with regard to Scheduled Tribes has been issued vis-a-vis the</p><p>Union Territory of Chandigarh. In this regard, reliance was placed on</p><p>Exhibit D-3 communication. Therefore, the applications inviting for</p><p>the allotment of flats insofar as Scheduled Tribes were concerned,</p><p>were sought to be clarified. That in the absence of there being any</p><p>such Presidential Order insofar as Scheduled Tribes communities are</p><p>concerned, the advertisement inviting applicants from the Scheduled</p><p>Tribes was not at all correct.</p><p>Further, it was contended that the respondent herein claims to belong</p><p>to Scheduled Tribes category insofar as the State of Rajasthan is</p><p>concerned. He had migrated to Union Territory of Chandigarh for</p><p>his employment and, therefore, having regard to judgment of this</p><p>Court in the case of Marri Chandra Shekhar Rao followed by</p><p>other judgments, respondent is not entitled to place reliance on his</p><p>caste status insofar as the State of Rajasthan is concerned and</p><p>enforce the same in the Union Territory of Chandigarh. It was further</p><p>submitted that the High Court was not right in interpreting letters</p><p>dated 21.09.1983 and 21.05.1985 by ignoring the fact that the caste</p><p>status could be claimed insofar as the State or Union Territory of</p><p>a person’s origin only and not carried to a State or Union Territory</p><p>to which the person migrates. Therefore, the impugned judgments</p><p>may be set aside and the suit filed by the respondent herein may</p><p>be dismissed.</p><p>11. Per contra, learned counsel for the respondent with reference to</p><p>the counter affidavit strenuously contended that the impugned</p><p>judgments and decrees are just and proper, which would not call</p><p>for any interference at the hands of this Court. It was submitted that</p><p>although there may be no Presidential Order issued with regard </p><p>[2024] 2 S.C.R. 377</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>to Scheduled Tribes under Article 342 of the Constitution of India</p><p>insofar as Union Territory of Chandigarh is concerned, Annexure</p><p>P-9 (colly) letter dated 25.11.1985 issued by the Ministry of Welfare,</p><p>Government of India was relied upon. The said document would</p><p>clearly indicate that insofar as a migrant, such as the respondent</p><p>herein is concerned, he could derive the benefits having regard to</p><p>his status in the State of origin; that the reference in the said letter</p><p>is only to State and not to any Union Territory. Therefore, by that</p><p>logic it was contended that if a person migrates from a State to an</p><p>Union Territory, it would imply that even if there is no Presidential</p><p>Order issued in terms of Article 342 of the Constitution, the migrant</p><p>is entitled to place reliance on his status as Scheduled Tribe in</p><p>the State of his origin and, therefore, seek the benefit in the Union</p><p>Territory to which he migrates.</p><p>In support of his submissions, learned counsel for the respondent</p><p>placed reliance on judgment of this Court in Director, Transport</p><p>Department, Union Territory Administration of Dadra and Nagar</p><p>Haveli, Silvassa vs. Abhinav Dipakbhai Patel (2019) 6 SCC 434</p><p>(Abhinav Dipakbhai Patel). Further, this Court in paragraph 66 of</p><p>the judgment Bir Singh while dealing with the case which arose from</p><p>Delhi Jal Board, did not express any view with regard to question</p><p>as far as other Union Territories were concerned and confined</p><p>the decision only with regard to National Capital Territory of Delhi.</p><p>Therefore, there is no judgment of this Court which states that if a</p><p>person migrates from a State where he is recognised as a Scheduled</p><p>Tribe to an Union Territory in which there is no Presidential Order</p><p>recognising any Scheduled Tribe nevertheless placing reliance on</p><p>the Presidential Order vis-a-vis the State of origin of the migrant,</p><p>benefit must be given to such a person. He therefore, submitted that</p><p>there is no merit in this appeal.</p><p>12. We have considered the arguments advanced at the bar in relation</p><p>to the facts of the case and the judgments of this Court.</p><p>13. It is not in dispute that the respondent herein had sought for allotment</p><p>of HIG house reserved for Scheduled Tribes category in terms of the</p><p>advertisement issued by the appellant herein; that being aggrieved</p><p>by non-allotment of a house, the suit which was decreed by the Trial</p><p>Court and which judgment and decree was affirmed by the First</p><p>Appellate Court as well as in the second appeal by the High Court.</p><p>378 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>14. At the outset, we may refer to Articles 341 and 342 which read as</p><p>under:</p><p>“341. Scheduled Castes.-</p><p>(1) The President may with respect to any State or Union</p><p>territory, and where it is a State after consultation with</p><p>the Governor thereof, by public notification, specify</p><p>the castes, races or tribes or parts of or group within</p><p>castes, races or tribes which shall for the purposes</p><p>of this Constitution be deemed to be Scheduled</p><p>Castes in relation to that State or Union territory, as</p><p>the case may be.</p><p>(2) Parliament may by law include in or exclude from the</p><p>list of Scheduled Castes specified in a notification</p><p>issued under clause (1) any caste, race or tribe or</p><p>part of or group within any caste, race or tribe, but</p><p>save as aforesaid a notification issued under the</p><p>said clause shall not be varied by any subsequent</p><p>notification.</p><p>342. Scheduled Tribes. –</p><p>(1) The President may with respect to any State or Union</p><p>territory, and where it is a State after consultation with</p><p>the Governor thereof, by public notification, specify</p><p>the tribes or tribal communities or parts of or groups</p><p>within tribes or tribal communities which shall for</p><p>the purposes of this Constitution be deemed to be</p><p>Scheduled Tribes in relation to that State or Union</p><p>territory, as the case may be.</p><p>(2) Parliament may by law include in or exclude from</p><p>the list of Scheduled Tribes specified in a notification</p><p>issued under clause (1) any tribe or tribal community</p><p>or part of or group within any tribe or tribal community,</p><p>but save as aforesaid a notification issued under the</p><p>said clause shall not be varied by any subsequent</p><p>notification.”</p><p>15. Thus, the public notification of ‘tribes or tribal communities’ by the</p><p>President of India, upon consultation with the Governor, is a sine qua </p><p>[2024] 2 S.C.R. 379</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>non for deeming such tribes or tribal communities to be ‘Scheduled</p><p>Tribes’ in relation to that State or Union Territory for the purposes</p><p>of the Constitution.</p><p>16. With respect to the Union Territory of Chandigarh, we find that the</p><p>Parliament, vide the Punjab Reorganization Act, 1966 had created the</p><p>Union Territory of Chandigarh and made provision for amendment of</p><p>the Scheduled Castes and Schedules Tribes Orders. Section 27(2) of</p><p>the said Act provided for amendment of the Constitution (Scheduled</p><p>Castes) (Union Territories) Order, 1951, to include, with respect to</p><p>Chandigarh, 36 castes enlisted in Part V of the Ninth Schedule of</p><p>the said Act. A similar provision is also made for amendment of the</p><p>Constitution (Scheduled Tribes) (Union Territories) Order, 1951,</p><p>as directed in the Eleventh Schedule but the said Schedule does</p><p>not include any part or entry with respect the Union Territory of</p><p>Chandigarh.</p><p>In this context, it is apposite to refer to what the Constitution Bench</p><p>of this Court, speaking through Chief Justice Gajendragadkar, in</p><p>Bhaiya Lal v. Harikishan Singh, AIR 1965 SC 1557, held as it</p><p>expounded on the object of issuance of public notification under</p><p>Article 341 of the Constitution.</p><p>“10. … The object of Article 341(1) plainly is to provide</p><p>additional protection to the members of the Scheduled</p><p>Castes having regard to the economic and educational</p><p>backwardness from which they suffer. It is obvious that in</p><p>specifying castes, races or tribes, the President has been</p><p>expressly authorised to limit the notification to parts of or</p><p>groups within the castes, races or tribes, and that must</p><p>mean that after examining the educational and social</p><p>backwardness of a caste, race or tribe, the President</p><p>may well come to the conclusion that not the whole caste,</p><p>race or tribe but parts of or groups within them should</p><p>be specified. Similarly, the President can specify castes,</p><p>races or tribes or parts thereof in relation not only to the</p><p>entire State, but in relation to parts of the State where he is</p><p>satisfied that the examination of the social and educational</p><p>are backwardness of the race, caste or tribe justifies</p><p>such specification. In fact, it is well known that before a</p><p>notification is issued under Article 341(1), an elaborate </p><p>380 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>enquiry is made and it is as a result of this enquiry that</p><p>social justice is sought to be done to the castes, races or</p><p>tribes as may appear to be necessary, and in doing justice,</p><p>it would obviously be expedient not only to specify parts</p><p>or groups of castes, races or tribes, but to make the said</p><p>specification by reference to different areas in the State.</p><p>Educational and social backwardness in regard to these</p><p>castes, races or tribes may not be uniform or of the same</p><p>intensity in the whole of the State; it may vary in degree or</p><p>in kind in different areas and that may justify the division</p><p>of the State into convenient and suitable areas for the</p><p>purpose of issuing the public notification in question.”</p><p>17. The absolute necessity of a public notification in terms of Articles 341</p><p>and 342 was explicated by a Constitution Bench of this Court in State</p><p>of Maharashtra v. Milind, (2001) 1 SCC 4 (‘Milind’) which held that</p><p>de hors a specific mention in the entry concerned in the Constitution</p><p>(Scheduled Tribes) Order, 1950 (as amended by Parliament), it was</p><p>impermissible to hold an inquiry and declare that any tribe or tribal</p><p>community to be included in the list of Scheduled Tribes.</p><p>While holding that Article 341(2) did permit anyone to seek such</p><p>modification and that it is not open to any judicial body to modify</p><p>or vary the Constitution (Scheduled Tribes) Order, 1950, this</p><p>Court expounded on the salutary purpose of deferring to the</p><p>Presidential order, as amended by Parliament while considering</p><p>the grant of any benefit to members of the Scheduled Tribe</p><p>community:</p><p>“11. By virtue of powers vested under Articles 341 and 342</p><p>of the Constitution of India, the President is empowered</p><p>to issue public notification for the first time specifying</p><p>the castes, races or tribes or part of or groups within</p><p>castes, races, or tribes which shall, for the purposes of</p><p>the Constitution be deemed to be Scheduled Castes or</p><p>Scheduled Tribes in relation to a State or Union Territory,</p><p>as the case may be. The language and terms of Articles</p><p>341 and 342 are identical. What is said in relation to</p><p>Article 341 mutatis mutandis applies to Article 342. The</p><p>laudable object of the said articles is to provide additional</p><p>protection to the members of the Scheduled Castes and </p><p>[2024] 2 S.C.R. 381</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>Scheduled Tribes having regard to social and educational</p><p>backwardness from which they have been suffering since a</p><p>considerable length of time. The words “castes” or “tribes”</p><p>in the expression “Scheduled Castes” and “Scheduled</p><p>Tribes” are not used in the ordinary sense of the terms</p><p>but are used in the sense of the definitions contained in</p><p>Articles 366(24) and 366(25). In this view, a caste is a</p><p>Scheduled Caste or a tribe is a Scheduled Tribe only if</p><p>they are included in the President’s Orders issued under</p><p>Articles 341 and 342 for the purpose of the Constitution.</p><p>Exercising the powers vested in him, the President has</p><p>issued the Constitution (Scheduled Castes) Order, 1950</p><p>and the Constitution (Scheduled Tribes) Order, 1950.</p><p>Subsequently, some orders were issued under the said</p><p>articles in relation to Union Territories and other States</p><p>and there have been certain amendments in relation to</p><p>Orders issued, by amendment Acts passed by Parliament.</p><p>x x x</p><p>35. In order to protect and promote the less fortunate</p><p>or unfortunate people who have been suffering from</p><p>social handicap, educational backwardness besides</p><p>other disadvantages, certain provisions are made in</p><p>the Constitution with a view to see that they also have</p><p>the opportunity to be on par with the others in the</p><p>society. Certain privileges and benefits are conferred</p><p>on such people belonging to Scheduled Tribes by way</p><p>of reservations in admission to educational institutions</p><p>(professional colleges) and in appointments in services</p><p>of State. The object behind these provisions is noble</p><p>and laudable besides being vital in bringing a meaningful</p><p>social change. But, unfortunately, even some better-placed</p><p>persons by producing false certificates as belonging to</p><p>Scheduled Tribes have been capturing or cornering seats</p><p>or vacancies reserved for Scheduled Tribes defeating the</p><p>very purpose for which the provisions are made in the</p><p>Constitution. The Presidential Orders are issued under</p><p>Articles 341 and 342 of the Constitution recognising and</p><p>identifying the needy and deserving people belonging </p><p>382 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>to Scheduled Castes and Scheduled Tribes mentioned</p><p>therein for the constitutional purpose of availing benefits of</p><p>reservation in the matters of admissions and employment. If</p><p>these benefits are taken away by those for whom they are</p><p>not meant, the people for whom they are really meant or</p><p>intended will be deprived of the same and their sufferings</p><p>will continue. Allowing the candidates not belonging to</p><p>Scheduled Tribes to have the benefit or advantage of</p><p>reservation either in admissions or appointments leads</p><p>to making mockery of the very reservation against the</p><p>mandate and the scheme of the Constitution.”</p><p>(underlining by us)</p><p>18. Learned counsel for the appellant has drawn our attention to the</p><p>judgment of this Court in Marri Chandra Shekhar Rao by placing</p><p>reliance on the following paragraphs:-</p><p>“13. It is trite knowledge that the statutory and constitutional</p><p>provisions should be interpreted broadly and harmoniously.</p><p>It is trite saying that where there is conflict between two</p><p>provisions, these should be so interpreted as to give</p><p>effect to both. Nothing is surplus in a Constitution and no</p><p>part should be made nugatory. This is well settled. See</p><p>the observations of this Court in Venkataramana Devaru</p><p>v. State of Mysore [1958 SCR 895, 918 : AIR 1958 SC</p><p>255] , where Venkatarama Aiyer, J. reiterated that the rule</p><p>of construction is well settled and where there are in an</p><p>enactment two provisions which cannot be reconciled with</p><p>each other, these should be so interpreted that, if possible,</p><p>effect could be given to both. It, however, appears to us</p><p>that the expression ‘for the purposes of this Constitution’</p><p>in Article 341 as well as in Article 342 do imply that the</p><p>Scheduled Caste and the Scheduled Tribes so specified</p><p>would be entitled to enjoy all the constitutional rights that</p><p>are enjoyable by all the citizens as such. Constitutional</p><p>right, e.g., it has been argued that right to migration or</p><p>right to move from one part to another is a right given to</p><p>all — to Scheduled Castes or Tribes and to non-scheduled</p><p>castes or tribes. But when a Scheduled Caste or Tribe</p><p>migrates, there is no inhibition in migrating but when </p><p>[2024] 2 S.C.R. 383</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>he migrates, he does not and cannot carry any special</p><p>rights or privileges attributed to him or granted to him in</p><p>the original State specified for that State or area or part</p><p>thereof. If that right is not given in the migrated State it</p><p>does not interfere with his constitutional right of equality</p><p>or of migration or of carrying on his trade, business or</p><p>profession. Neither Article 14, 16, 19 nor Article 21 is</p><p>denuded by migration but he must enjoy those rights in</p><p>accordance with the law if they are otherwise followed in</p><p>the place where he migrates. There should be harmonious</p><p>construction, harmonious in the sense that both parts or</p><p>all parts of a constitutional provision should be so read</p><p>that one part does not become nugatory to the other or</p><p>denuded to the other but all parts must be read in the</p><p>context in which these are used. It was contended that the</p><p>only way in which the fundamental rights of the petitioner</p><p>under Articles 14, 19(1)(d), 19(1)(e) and 19(1)(f) could be</p><p>given effect to is by construing Article 342 in a manner by</p><p>which a member of a Scheduled Tribe gets the benefit of</p><p>that status for the purposes of the Constitution throughout</p><p>the territory of India. It was submitted that the words “for</p><p>the purposes of this Constitution” must be given full effect.</p><p>There is no dispute about that. The words “for the purposes</p><p>of this Constitution” must mean that a Scheduled Caste</p><p>so designated must have right under Articles 14, 19(1)(d),</p><p>19(1)(e) and 19(1)(f) inasmuch as these are applicable</p><p>to him in his area where he migrates or where he goes.</p><p>The expression “in relation to that State” would become</p><p>nugatory if in all States the special privileges or the</p><p>rights granted to Scheduled Castes or Scheduled Tribes</p><p>are carried forward. It will also be inconsistent with the</p><p>whole purpose of the scheme of reservation. In Andhra</p><p>Pradesh, a Scheduled Caste or a Scheduled Tribe may</p><p>require protection because a boy or a child who grows in</p><p>that area is inhibited or is at disadvantage. In Maharashtra</p><p>that caste or that tribe may not be so inhibited but other</p><p>castes or tribes might be. If a boy or a child goes to that</p><p>atmosphere of Maharashtra as a young boy or a child and</p><p>goes in a completely different atmosphere or Maharashtra</p><p>where this inhibition or this disadvantage is not there, </p><p>384 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>then he cannot be said to have that reservation which will</p><p>denude the children or the people of Maharashtra belonging</p><p>to any segment of that State who may still require that</p><p>protection. After all, it has to be borne in mind that the</p><p>protection is necessary for the disadvantaged castes or</p><p>tribes of Maharashtra as well as disadvantaged castes or</p><p>tribes of Andhra Pradesh. Thus, balancing must be done as</p><p>between those who need protection and those who need</p><p>no protection, i.e., who belong to advantaged castes or</p><p>tribes and who do not. Treating the determination under</p><p>Articles 341 and 342 of the Constitution to be valid for all</p><p>over the country would be in negation to the very purpose</p><p>and scheme and language of Article 341 read with Article</p><p>15(4) of the Constitution.”</p><p>19. The rationale for the aforesaid interpretation was further explained</p><p>by another Constitution Bench in Action Committee wherein this</p><p>Court relied upon the Constituent Assembly Debates to hold that</p><p>the list of Scheduled Castes, Scheduled Tribes and backward</p><p>classes in a given State would correspond to the disadvantages</p><p>and social hardships existing in the specific social context for a</p><p>particular caste, tribe or class in that State. Given the variance of</p><p>social context, the list of such castes, tribes or classes would be</p><p>totally non est in another State to which persons belonging thereto</p><p>may migrate. Thus, the learned judges wholly agreed with the</p><p>reasoning and conclusion in Marri Chandra Shekhar Rao and</p><p>observed as under:</p><p>“16. We may add that considerations for specifying a</p><p>particular caste or tribe or class for inclusion in the list of</p><p>Scheduled Castes/Schedule Tribes or backward classes</p><p>in a given State would depend on the nature and extent</p><p>of disadvantages and social hardships suffered by that</p><p>caste, tribe or class in that State which may be totally non</p><p>est in another State to which persons belonging thereto</p><p>may migrate. Coincidentally it may be that a caste or tribe</p><p>bearing the same nomenclature is specified in two States</p><p>but the considerations on the basis of which they have</p><p>been specified may be totally different. So also the degree</p><p>of disadvantages of various elements which constitute</p><p>the input for specification may also be totally different. </p><p>[2024] 2 S.C.R. 385</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>Therefore, merely because a given caste is specified</p><p>in State A as a Scheduled Caste does not necessarily</p><p>mean that if there be another caste bearing the same</p><p>nomenclature in another State the person belonging to</p><p>the former would be entitled to the rights, privileges and</p><p>benefits admissible to a member of the Scheduled Caste</p><p>of the latter State “for the purposes of this Constitution”.</p><p>This is an aspect which has to be kept in mind and which</p><p>was very much in the minds of the Constitution-makers</p><p>as is evident from the choice of language of Articles 341</p><p>and 342 of the Constitution.”</p><p>20. Thereafter, the Constitution Bench of this Court in Bir Singh, being</p><p>seized of the dispute pertaining to SC/ST reservation for persons</p><p>who had migrated to the National Capital Territory of Delhi, reiterated</p><p>the well-settled principles enunciated in Marri Chandra Shekhar Rao</p><p>and Action Committee in the following words:</p><p>“34. Unhesitatingly, therefore, it can be said that a person</p><p>belonging to a Scheduled Caste in one State cannot be</p><p>deemed to be a Scheduled Caste person in relation to</p><p>any other State to which he migrates for the purpose of</p><p>employment or education. The expressions “in relation</p><p>to that State or Union Territory” and “for the purpose</p><p>of this Constitution” used in Articles 341 and 342 of</p><p>the Constitution of India would mean that the benefits</p><p>of reservation provided for by the Constitution would</p><p>stand confined to the geographical territories of a State/</p><p>Union Territory in respect of which the lists of Scheduled</p><p>32 Castes/Scheduled Tribes have been notified by the</p><p>Presidential Orders issued from time to time. A person</p><p>notified as a Scheduled Caste in State ‘A’ cannot claim</p><p>the same status in another State on the basis that he is</p><p>declared as a Scheduled Caste in State ‘A’.</p><p>x x x</p><p>36. The upshot of the aforesaid discussion would lead</p><p>us to the conclusion that the Presidential Orders issued</p><p>under Article 341 in regard to Scheduled Castes and</p><p>under Article 342 in regard to Scheduled Tribes cannot be</p><p>varied or altered by any authority including the Court. It is </p><p>386 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Parliament alone which has been vested with the power</p><p>to so act, that too, by laws made. Scheduled Castes and</p><p>Scheduled Tribes thus specified in relation to a State or a</p><p>Union Territory does not carry the same status in another</p><p>State or Union Territory. Any expansion/deletion of the list of</p><p>Scheduled Castes/Scheduled Tribes by any authority except</p><p>Parliament would be against the constitutional mandate</p><p>under Articles 341 and 342 of the Constitution of India.”</p><p>21. Learned counsel for the respondent placed reliance on the Constitution</p><p>Bench judgment of this Court in Bir Singh concerning the services</p><p>in the NCT of Delhi. In the said judgment in paragraph 68, it has</p><p>been categorically recorded as under:–</p><p>“68. The Affidavit of the Union does not touch upon the</p><p>details of Subordinate Services in other Union Territories.</p><p>Neither the authorities of the other Union Territories have</p><p>laid before the Court any relevant material in this regard.</p><p>We, therefore, refrain from addressing the issue in question</p><p>as far as other Union Territories are concerned and have</p><p>confined our discussions and the consequential views only</p><p>to the National Capital Territory of Delhi.”</p><p>22. In view of the aforesaid observations, we do not think that the</p><p>respondent can draw any parity from what the position is, insofar</p><p>as NCT of Delhi is concerned with regard to availing of benefits</p><p>by Scheduled Tribes, even though, there is no Presidential Order</p><p>with regard to Scheduled Tribes issued insofar as NCT of Delhi is</p><p>concerned. Further, the observations made above are in the context</p><p>of services. In the circumstances, we find that the respondent cannot</p><p>rely upon the judgment of this Court in Bir Singh.</p><p>23. This court, in Abhinav Dipakbhai Patel sustained the High Court’s</p><p>direction to appoint a person who had migrated to the Union Territory</p><p>of Dadra and Nagar Haveli and was a member of the Scheduled</p><p>Tribe ‘Dhodia’ community as an Assistant Motor Vehicle Inspector.</p><p>This Court noted that the Presidential notification issued for the</p><p>Union Territory of Dadra and Nagar Haveli extended the benefit of</p><p>reservation to the Scheduled Tribes mentioned therein. Therefore,</p><p>the reservation for Scheduled Tribes in the Union Territory of Dadra</p><p>and Nagar Haveli was held to be available to migrant Scheduled</p><p>Tribes. The significant fact is that there was a Presidential notification </p><p>[2024] 2 S.C.R. 387</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>for Scheduled Tribes insofar as the aforesaid Union Territory was</p><p>concerned.</p><p>24. In view of the aforesaid observations, we do not think that the</p><p>respondent can rely upon Abhinav Dipakbhai Patel. This is for the</p><p>simple reason that there is no Presidential notification for Scheduled</p><p>Tribes in Chandigarh unlike in the case of Dadra & Nagar Haveli.</p><p>25. In view of the aforesaid, we find that the appellant had erroneously</p><p>issued the advertisement inviting applications for allotment of houses</p><p>from both Scheduled Castes as well as Scheduled Tribes persons</p><p>because no such reservation for Scheduled Tribes could have</p><p>been made without strict compliance with Article 342. The effect of</p><p>the finding that the advertisement was issued without necessary</p><p>jurisdiction and authority would lead to the setting aside of the</p><p>impugned judgment and decrees on that ground alone.</p><p>26. The upshot of the above discussion is that:</p><p>i. The Presidential notification of a tribe or tribal community as a</p><p>Scheduled Tribe by the President of India under Article 342 is a</p><p>sine qua non for extending any benefits to the said community</p><p>in any State or U.T.</p><p>ii. This implies that a person belonging to a group that is recognized</p><p>as a Scheduled Tribe in a State would be recognized a</p><p>Scheduled Tribe only within the said State and not in a U.T.</p><p>where he migrates if no such Presidential notification exists in</p><p>the said U.T.</p><p>27. As far as the Annexure R-9, produced by the respondent herein</p><p>is concerned, it is noted firstly, that the said document is dated</p><p>25.11.1985 and the same was issued prior to the judgment of this</p><p>Court in Marri Chandra Shekhar Rao which is contrary to the said</p><p>judgment and wherein the position of law has been clearly enunciated.</p><p>Secondly, the reading of the said document would clearly indicate</p><p>that what has been emphasized there is with regard to the Scheduled</p><p>Tribes and Scheduled Castes persons migrating from the State of</p><p>his origin to another State, to which he has migrated. There is no</p><p>reference whatsoever to a case where a person claiming to be a</p><p>Scheduled Caste or Scheduled Tribe migrating from a State to a Union</p><p>Territory as such. By that logic, it would not imply that a person who</p><p>is recognized as a Scheduled Tribe in a State has to be Scheduled </p><p>388 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Tribe in an U.T. also wherein he migrates and can rely on his status</p><p>in the State of his origin. The said letter is also contrary to Article</p><p>342 of the Constitution and the spirit of the dictum of this court in</p><p>the case of Marri Chandra Shekhar Rao and, therefore, the same</p><p>would hold no water. Merely because in the said letter there is no</p><p>reference to migration of a person claiming to belong to Scheduled</p><p>Tribe in a State to a Union Territory, it does not, by that logic mean</p><p>that such a person would be entitled to claim benefit on the basis</p><p>of his status as a Scheduled Tribe in the State of his origin. For</p><p>immediate reference, letter dated 25.11.1985 is extracted as under–</p><p>“No. BC-12017/9/85-SC&BCD.I</p><p>Government of India/Bharat Sarkar</p><p>Ministry of Welfare/Kalyan Mantralaya</p><p>New Delhi: 25th November, 1985.</p><p>To</p><p>The Chairman,</p><p>Chandigarh Housing Board,</p><p>8-Jan Marg, Sector–9, Chandigarh – 160009</p><p>Subject : Entitlement of Scheduled Tribe persons for</p><p>allotment of houses by the Chandigarh Housing</p><p>Board – Clarification of -</p><p>…</p><p>Sir,</p><p>I am directed to invite your attention to the Ministry of Home</p><p>Affair’s letter of even number dated 21st May 1985 on the</p><p>above subject and to say that the contents appearing at</p><p>the end of line 23 to 28 i.e. “It has ……………… migrated.”</p><p>may please be read as under:</p><p>“It has also been made clear in the latter that the migrated</p><p>person will be entitled to derive benefits admissible to the</p><p>Scheduled Castes/ Tribes from the State of his origin only</p><p>and not from the State to which he has migrated.”</p><p>2. A copy of the Ministry of Home Affairs letter No. BC16014-I/9/82-SC&BCD.I dated 22.2.85 containing the</p><p>instructions about issue of certificates to the migrants has </p><p>[2024] 2 S.C.R. 389</p><p>Chandigarh Housing Board v. Tarsem Lal</p><p>already been sent to you with our letter dated 21.5.85</p><p>referred to above.</p><p>Yours faithfully,</p><p>Sd/-</p><p>(Y.P. MARWAHA)</p><p>Assistant Director”</p><p>28. It is also unclear whether the aforesaid letter was at all marked in</p><p>evidence in the Suit.</p><p>29. In view of the judgments of this Court in the aforesaid cases, we</p><p>hold that insofar as a person claiming benefit having regard to his</p><p>status as a Scheduled Tribe in a State, when he migrates to a Union</p><p>Territory where a Presidential Order has not been issued at all</p><p>insofar Scheduled Tribe is concerned, or even if such a Notification</p><p>is issued, such an identical Scheduled Tribe does not find a place in</p><p>such a Notification, the person cannot claim his status on the basis</p><p>of his being noted as a Scheduled Tribe in the State of his origin.</p><p>30. Reliance placed on the judgment of this Court in Bir Singh by the</p><p>learned counsel for the respondent is also of no assistance since</p><p>the said case concerned granting of benefits to Scheduled castes</p><p>and Scheduled Tribes in the matter of employment and education</p><p>in a particular State and Union Territory and that a migrant to that</p><p>particular State or Union Territory cannot place reliance on his or</p><p>her status in the State of origin for the purpose of claiming similar</p><p>benefit in a State to which he or she has migrated. Reliance was</p><p>placed on paragraph 68 of the said judgment wherein this Court</p><p>noted that it had refrained from addressing the issue in question as</p><p>far as other Union Territories apart from the National Capital Territory</p><p>of Delhi are concerned, would not in any way further the case of</p><p>the respondent when the significant fact is that there has been no</p><p>notification issued by the President of India vis-à-vis Scheduled Tribe</p><p>in the Union Territory of Chandigarh is concerned.</p><p>31. In the instant case, merely because the appellant herein had issued</p><p>a Notification calling for applications from both Scheduled Castes and</p><p>Scheduled Tribes did not confer any benefit by that Notification on the</p><p>respondent herein when there is no Presidential Order at all under</p><p>Article 342 of the Constitution of India issued with regard to Scheduled</p><p>Tribes insofar as Union Territory of Chandigarh is concerned. The </p><p>390 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>said basic foundational fact goes against the respondent herein and</p><p>the invitation given by the appellant/Housing Board to Scheduled</p><p>Tribes was in fact contrary to the said basic tenets as well as the</p><p>prevalent law and by that reason, the respondent herein cannot also</p><p>seek any estoppel as against the appellant herein.</p><p>32. The High Court lost sight of the aforesaid facts and instead placed</p><p>reliance on Exhibit P-8 letter dated 21.09.1983 and Exhibit D-3</p><p>letter dated 21.05.1985 to hold that there was reservation made</p><p>for Scheduled Tribe applicants also for allotment of dwelling units</p><p>of flats. In fact, in the letter dated 21.09.1983 (Exhibit P-8) it has</p><p>been expressly noted that there are no Scheduled Tribes notified</p><p>for Union Territory of Chandigarh but there are general instructions</p><p>on reservation for Scheduled Tribes enunciated in Appendix-3</p><p>Note 2 on the Brochure on Reservation of Scheduled Castes and</p><p>Scheduled Tribes. The said Brochure cannot override Article 342 of</p><p>the Constitution of India which empowers the President of India to</p><p>notify the Scheduled Tribes either for a State or for an Union Territory.</p><p>33. In the circumstances, we find that the impugned judgment of the</p><p>High Court affirming the judgment of the First Appellate Court, which</p><p>in turn affirms the judgment of the Trial Court are all liable to be set</p><p>aside and are hence set aside.</p><p>The Appeal is allowed in the aforesaid terms. No costs.</p><p>Headnotes prepared by: Ankit Gyan Result of the case:</p><p>Appeal allowed.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-70275050210909658732024-03-09T06:41:00.003+05:302024-03-09T06:41:51.340+05:30Administration of Justice – Abuse of process of law– Parties made allegations against each other of taking money for providing a job and making false complaints – Police to exercise heightened caution:<p>* Author</p><p>[2024] 2 S.C.R. 364 : 2024 INSC 117</p><p>Deepak Kumar Shrivas & Anr.</p><p>v.</p><p>State of Chhattisgarh & Ors.</p><p>(Criminal Appeal No. 1007 of 2024)</p><p>19 February 2024</p><p>[Vikram Nath* and Satish Chandra Sharma, JJ.]</p><p>Issue for Consideration</p><p>Parties levelled counter-allegations against each other of having</p><p>extracted money for securing job for their relatives. High Court</p><p>whether justified in dismissing the writ petition of the appellant for</p><p>quashing the criminal proceedings against him.</p><p>Headnotes</p><p>Quashing – Parties made allegations against each other of</p><p>taking money for providing a job – Respondent no.6 filed FIR</p><p>against the appellant – High Court dismissed the writ petition</p><p>filed by the appellant for quashing the criminal proceedings</p><p>– Correctness:</p><p>Held: In the complaint made by the appellant in 2021 an enquiry</p><p>was made in which the fact that the respondent no.6 had stated</p><p>that she had paid Rs.4 lacs to the appellant for providing a job</p><p>to her daughter was recorded – Thus, respondent no.6 was well</p><p>aware of the complaint made by the appellant and thus cannot</p><p>raise a plea that she had no knowledge of the complaint made by</p><p>the appellant – Despite the same she did not lodge any complaint</p><p>against the appellant and his brother and waited for more than a</p><p>year to lodge the FIR in July, 2022 – According to the allegations</p><p>made in the FIR, the job was to be provided by the appellant</p><p>within three months of April, 2019 i.e. by July, 2019 – However,</p><p>the respondent no.6 did not take any action for a period of three</p><p>years till July, 2022 when the FIR in question was lodged – Thus,</p><p>the FIR suffers from a serious unexplained delay of three years –</p><p>Furthermore, there was totally an unlawful contract between the</p><p>parties where money was paid for securing job in the government</p><p>department/private sector – Apparently, a suit for recovery could</p><p>not have been filed for the said purpose and even if it could be </p><p>[2024] 2 S.C.R. 365</p><p>Deepak Kumar Shrivas & Anr. v. State of Chhattisgarh & Ors.</p><p>filed, it could be difficult to establish the same where the payment</p><p>was entirely in cash – Therefore, the respondent no.6 found out</p><p>a better medium to recover the said amount by building pressure</p><p>on the appellant and his brother by lodging the FIR – FIR lodged</p><p>not for criminal prosecution and for punishing the offender for the</p><p>offence committed but for recovery of money under coercion and</p><p>pressure – Impugned order set aside, proceeding arising out of</p><p>FIR in question quashed. [Paras 11-14, 16, 17]</p><p>Administration of Justice – Abuse of process of law– Parties</p><p>made allegations against each other of taking money for</p><p>providing a job and making false complaints – Police to</p><p>exercise heightened caution:</p><p>Held: Police should exercise heightened caution when drawn</p><p>into dispute pertaining to such unethical transactions between</p><p>private parties which appear to be prima facie contentious in light</p><p>of previous inquiries or investigations – The need for vigilance on</p><p>the part of the police is paramount. [Para 15]</p><p>List of Acts</p><p>Code of Criminal Procedure, 1973; Constitution of India.</p><p>List of Keywords</p><p>Quashing; Counter-allegations; Money extracted for securing</p><p>job; Police to exercise heightened caution; Resources of the law</p><p>enforcement agency; Abuse of process of law.</p><p>Case Arising From</p><p>CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.1007</p><p>of 2024</p><p>From the Judgment and Order dated 11.07.2023 of the High Court of</p><p>Chhattisgarh at Bilaspur in WPCR No. 703 of 2022</p><p>Appearances for Parties</p><p>Sameer Shrivastava, Dr. Sangeeta Verma, Shivendra Dixit, Advs.</p><p>for the Appellants.</p><p>Gautam Narayan, Ms. Asmita Singh, Harshit Goel, Sujay Jain,</p><p>Sachin Patil, Kailas Bajirao Autade, Sunil Kumar Sethi, Advs. for</p><p>the Respondents.</p><p>366 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Vikram Nath, J.</p><p>1. Leave granted.</p><p>2. As a law enforcement agency, the police force shoulders the vital</p><p>responsibility of preserving public order, guarding social harmony,</p><p>and upholding the foundations of justice. However, the current</p><p>case, full of counter-accusations of financial impropriety and broken</p><p>promises, highlights the complex matters that occasionally make</p><p>their way into the hands of the police force. Beyond the immediate</p><p>contours of the case, a broader question emerges regarding the</p><p>balancing of interests that ought to be done between addressing</p><p>unscrupulous private grievances and safeguarding public interests.</p><p>From the counter-allegations levelled against each other between the</p><p>parties in the present case, it becomes evident that the police finds</p><p>itself entangled in the irrelevant and trivial details of such unethical</p><p>private issues, diverting the resources away from the pursuit of more</p><p>consequential matters. The valuable time of the police is consumed in</p><p>investigating disputes that seem more suited for civil resolution. This</p><p>underscores the need for a judicious allocation of law enforcement</p><p>resources, emphasizing the importance of channelling their efforts</p><p>towards matters of greater societal consequence.</p><p>3. By means of this appeal, challenge is to the correctness of the</p><p>judgment and order dated 11.07.2023 passed by the Division Bench</p><p>of the High Court of Chhattisgarh in WPCR No.703 of 2022 dismissing</p><p>the writ petition of the appellant for quashing the criminal proceedings</p><p>arising out of FIR bearing Crime No.248 of 2022.</p><p>4. Relevant facts for deciding the present appeal are as follows:</p><p>a) The appellant made a complaint dated 06.04.2021 to the</p><p>Collector, District Janjgir-Champa (Chhattisgarh) alleging that the</p><p>respondent no.6 (Rajkumari Maravi) had allured the appellant</p><p>that she would secure a job for his brother -Raj Kumar Shivas</p><p>as she had good contacts with higher officers and demanded</p><p>substantial amount for doing this favour. The appellant got</p><p>allured and paid Rs.80,000/- cash at the first instance. Later</p><p>on an additional demand was made and, according to the </p><p>[2024] 2 S.C.R. 367</p><p>Deepak Kumar Shrivas & Anr. v. State of Chhattisgarh & Ors.</p><p>complaint made by the appellant, he has thereafter deposited</p><p>about Rs.20,000/- and odd in different bank accounts, details</p><p>of which were provided by respondent no.6. When nothing</p><p>happened and no job was provided to his brother, he approached</p><p>the respondent no.6 for returning the money paid by him upon</p><p>which she threatened him of false implication and later on she</p><p>stopped responding to his calls and started avoiding him.</p><p>b) The Collector apparently referred the said complaint dated</p><p>06.04.2021 to the Superintendent of Police of the District JanjgirChampa for enquiry. The enquiry is alleged to be entrusted</p><p>by the Superintendent of Police to the Station House Officer,</p><p>Police Station Shakti, District Janjgir-Champa. The Station</p><p>House Officer made detailed enquiries and also recorded</p><p>the statements of the appellant, respondent no.6 and other</p><p>persons who were sought to be referred to as witnesses and</p><p>ultimately submitted the report to the Superintendent of Police</p><p>on 25.07.2021.</p><p>c) The report mentioned interesting facts, according to which, both</p><p>the parties i.e. appellant and respondent no.6 were accusing</p><p>each other of having extracted money for securing job for their</p><p>relatives. As already stated, the appellant was trying to secure</p><p>a job for his brother whereas, according to respondent no.6, the</p><p>appellant had taken about Rs.4 lacs from her for securing a job</p><p>for her daughter. In the enquiry it was also found that when no</p><p>job was provided by the appellant to her daughter, the appellant</p><p>returned some amount by depositing it in her bank account.</p><p>Both the parties had alleged that false complaints were being</p><p>made against each other. Interestingly when in the enquiry the</p><p>Station House Officer required the appellant and respondent</p><p>no.6 to produce the relevant documents and also the details</p><p>of the call records and recorded conversations, they failed to</p><p>provide any such material. Accordingly, it was recommended</p><p>that the complaint deserves to be closed.</p><p>5. It appears that thereafter the respondent no.6 was successful in</p><p>lodging an FIR against the appellant on 27.07.2022, a copy of</p><p>which is filed as Annexure P-3. According to the contents of the</p><p>FIR, an amount of Rs.4 lacs has been taken by the appellant and</p><p>his brother, the other co-accused, for providing a job to the daughter </p><p>368 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>of respondent no.6. The said amount was paid in April, 2019. The</p><p>transaction is said to be purely in cash and there are no bank</p><p>transactions. Before registering the FIR in this case also an enquiry</p><p>was made and a report was submitted to the Sub-Divisional Officer,</p><p>who directed for registration of an FIR. In this enquiry it was found</p><p>that both parties have made allegations against each other of taking</p><p>money for providing a job.</p><p>6. The appellant filed a petition under Article 226 of the Constitution</p><p>before the High Court of Chhattisgarh for quashing the FIR and the</p><p>proceedings arising therefrom. The said petition has since been</p><p>dismissed by the impugned order giving rise to filing of the present</p><p>appeal.</p><p>7. We have heard learned counsel for the parties.</p><p>8. Learned counsel for the appellant submitted that on the earlier</p><p>occasion upon a complaint submitted by the appellant to the Collector</p><p>of the district, an enquiry was conducted in which similar allegations</p><p>against each other were made by both the sides which were not</p><p>found to be substantiated and, therefore, lodging of the impugned FIR</p><p>after about one year of the said enquiry, is mala fide and an abuse</p><p>of the process of law. It was further submitted that the impugned FIR</p><p>is a counterblast and has been maliciously lodged only to resist the</p><p>appellant from recovering the amount paid by him to the respondent</p><p>no.6. It is also submitted that the alleged transaction according to</p><p>the FIR is of April, 2019 whereas the FIR has been lodged in July,</p><p>2022 after more than three years and, therefore, on the ground of</p><p>delay, the alleged FIR deserves to be quashed.</p><p>9. On the other hand, learned counsel for the State of Chhattisgarh</p><p>as also learned counsel for the respondents have submitted that a</p><p>cognizable offence was disclosed in the FIR and as such the High</p><p>Court has rightly dismissed the petition; the investigation must be</p><p>allowed to continue and if ultimately the police report is submitted</p><p>under section 173(2) Criminal Procedure Code, 1973 finding the</p><p>appellant prima facie guilty of the charge on the basis of the evidence</p><p>collected during the investigation, the appellant would have adequate</p><p>remedy of assailing the charge sheet and also claiming discharge at</p><p>the stage of framing of charges. There is no justification for scuttling</p><p>the investigation which may ultimately not only deprive the respondent</p><p>no.6 of her hard-earned money but also the offence committed by </p><p>[2024] 2 S.C.R. 369</p><p>Deepak Kumar Shrivas & Anr. v. State of Chhattisgarh & Ors.</p><p>the appellant would go unpunished. It was also submitted that it was</p><p>a clear case of cheating as the appellant had deceitfully induced</p><p>the respondent no.6 to provide a job to her daughter by taking</p><p>huge amount of money and thereafter neither providing the job nor</p><p>returning the money.</p><p>10. Having heard learned counsel for the parties, we proceed to analyse</p><p>the material on record and submissions advanced by the parties.</p><p>11. In the complaint made by the appellant in 2021 to the Collector an</p><p>enquiry has been made by the Station House Officer of the Police</p><p>Station concerned in which the fact that the respondent no.6 had</p><p>stated that she had paid Rs.4 lacs to the appellant for providing a job</p><p>to her daughter was recorded. This clearly means that respondent</p><p>no.6 was well aware of the complaint made by the appellant and in</p><p>the enquiry her statement had been actually recorded. The respondent</p><p>no.6 therefore cannot raise a plea that she had no knowledge of</p><p>the complaint made by the appellant. Despite the same she did not</p><p>lodge any complaint against the appellant and his brother and waited</p><p>for more than a year to lodge the FIR in July, 2022.</p><p>12. According to the allegations made in the FIR, the job was to be</p><p>provided by the appellant within three months of April, 2019 i.e. by</p><p>July, 2019. However, the respondent no.6 did not take any action for</p><p>a period of three years till July, 2022 when the FIR in question was</p><p>lodged. Thus, the FIR suffers from a serious delay of three years</p><p>which is totally unexplained.</p><p>13. A reading of the entire material on record clearly reflects that it was</p><p>totally an unlawful contract between the parties where money was</p><p>being paid for securing a job in the government department(s) or</p><p>private sector. Apparently, a suit for recovery could not have been</p><p>filed for the said purpose and even if it could be filed, it could be</p><p>difficult to establish the same where the payment was entirely in</p><p>cash. Therefore, the respondent no.6 found out a better medium</p><p>to recover the said amount by building pressure on the appellant</p><p>and his brother by lodging the FIR. Under the threat of criminal</p><p>prosecution, maybe the appellant would have tried to sort out and</p><p>settle the dispute by shelving out some money.</p><p>14. In conclusion, certain key observations from the factual matrix warrant</p><p>a closer reflection. Prima facie, the conduct exhibited by the parties</p><p>involved appears tainted with suspicion, casting a shadow over the </p><p>370 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>veracity of their claims. The report from the previous inquiry reflects</p><p>a convoluted landscape and unveils a trail of unethical, maybe even</p><p>criminal, behaviour from both parties. The unexplained inordinate</p><p>delay in bringing these allegations to the police’s attention despite</p><p>knowledge of previous inquiry, raises even more doubts and adds a</p><p>layer of scepticism to the authenticity of the claims. The facts stated,</p><p>as well as the prior inquiry, reveal a shared culpability between</p><p>the parties, indicative of a complex web of deceit, and unethical</p><p>transactions where even civil remedies may not be sustainable. Thus,</p><p>the object of this dispute, manifestly rife with mala fide intentions of</p><p>only recovering the tainted money by coercion and threat of criminal</p><p>proceedings, cannot be allowed to proceed further and exploit the</p><p>time and resources of the law enforcement agency.</p><p>15. As parting suggestions, it becomes imperative to state that the</p><p>police should exercise heightened caution when drawn into dispute</p><p>pertaining to such unethical transactions between private parties which</p><p>appear to be prima facie contentious in light of previous inquiries</p><p>or investigations. The need for vigilance on the part of the police is</p><p>paramount, and a discerning eye should be cast upon cases where</p><p>unscrupulous conduct appears to eclipse the pursuit of justice. This</p><p>case exemplifies the need for a circumspect approach in discerning</p><p>the genuine from the spurious and thus ensuring that the resources</p><p>of the state are utilised for matters of true societal import.</p><p>16. For all the reasons recorded above, we are of the view that such</p><p>criminal prosecution should not be allowed to continue where</p><p>the object to lodge the FIR is not for criminal prosecution and for</p><p>punishing the offender for the offence committed but for recovery</p><p>of money under coercion and pressure and also for all the other</p><p>reasons stipulated above.</p><p>17. We, accordingly allow this appeal, and after setting aside the impugned</p><p>order passed by the High Court, quash the entire proceedings arising</p><p>out of FIR 248 of 2022.</p><p>Headnotes prepared by: Divya Pandey Result of the case:</p><p>Appeal allowed.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-34203045895775580602024-03-09T06:39:00.003+05:302024-03-09T06:39:30.645+05:30Narcotic Drugs and Psychotropic Substances Act, 1985 – s.37 – Code of Criminal Procedure, 1973 – s.438 – Quantity of narcotic substance seized multiple times the commercial quantity – Anticipatory bail granted by High Court, satisfaction in terms of the rider contained in s.37 not recorded – Challenge to:<p>* Author</p><p>[2024] 2 S.C.R. 357 : 2024 INSC 114</p><p>State by the Inspector of Police</p><p>v.</p><p>B. Ramu</p><p>(Criminal Appeal No. 801 of 2024)</p><p>12 February 2024</p><p>[B.R. Gavai and Sandeep Mehta,* JJ.]</p><p>Issue for Consideration</p><p>In a case involving recovery of huge quantity of narcotic substance</p><p>(232.5 kg of ganja), wherein the Respondent-accused was indicted</p><p>as being the conspirator for procurement/supply of the ganja so</p><p>recovered, High Court whether justified in granting anticipatory bail</p><p>in connection with the FIR registered for the offences punishable</p><p>u/ss.8(c), 20(b)(ii)(c) and 29(1), Narcotic Drugs and Psychotropic</p><p>Substances Act, 1985.</p><p>Headnotes</p><p>Narcotic Drugs and Psychotropic Substances Act, 1985 – s.37 –</p><p>Code of Criminal Procedure, 1973 – s.438 – Quantity of narcotic</p><p>substance seized multiple times the commercial quantity –</p><p>Anticipatory bail granted by High Court, satisfaction in terms</p><p>of the rider contained in s.37 not recorded – Challenge to:</p><p>Held: For entertaining a prayer for bail in a case involving recovery</p><p>of commercial quantity of narcotic drug or psychotropic substance,</p><p>the Court would have to mandatorily record the satisfaction in terms</p><p>of the rider contained in s.37, NDPS Act – In the event, the Public</p><p>Prosecutor opposes the prayer for bail either regular or anticipatory,</p><p>the Court would have to record a satisfaction that there are grounds</p><p>for believing that the accused is not guilty of the offence alleged</p><p>and that he is not likely to commit any offence while on bail – In</p><p>the present case, High Court not only omitted to record any such</p><p>satisfaction, but rather completely ignored the factum of recovery</p><p>of narcotic substance (ganja), multiple times the commercial</p><p>quantity – In case of recovery of such a huge quantity of narcotic</p><p>substance, the Courts should be slow in granting even regular</p><p>bail to the accused what to talk of anticipatory bail more so when</p><p>the accused is alleged to be having criminal antecedents – High </p><p>358 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Court failed to consider that the accused had criminal antecedents</p><p>and was already arraigned in two previous cases under the NDPS</p><p>Act – Impugned order being cryptic and perverse on the face of</p><p>the record is quashed and set aside. [Paras 9-12, 15]</p><p>List of Acts</p><p>Narcotic Drugs and Psychotropic Substances Act, 1985; Code of</p><p>Criminal Procedure, 1973.</p><p>List of Keywords</p><p>Huge quantity of narcotic substance; Ganja; Anticipatory bail; Bail;</p><p>Recovery of commercial quantity of narcotic drug or psychotropic</p><p>substance; Multiple times the commercial quantity; Criminal</p><p>antecedents.</p><p>Case Arising From</p><p>CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.801</p><p>of 2024</p><p>From the Judgment and Order dated 25.01.2022 of the High Court</p><p>of Judicature at Madras in CRLOP No. 1067 of 2022</p><p>Appearances for Parties</p><p>V. Krishnamurthy, Sr. A.A.G., D.Kumanan, Mrs. Deepa. S, Sheikh</p><p>F. Kalia, Veshal Tyagi, Advs. for the Appellant.</p><p>G.Sivabalamurugan, Selvaraj Mahendran, C.Adhikesavan, S.B.</p><p>Kamalanathan, Sumit Singh Rawat, P.V. Harikrishnan, Karuppaiah</p><p>Meyyappan, Raghunatha Sethupathy B, Ms. Kanika Kalaiyarasan,</p><p>Abhishek Kalaiyarasan, Advs. for the Respondent.</p><p>Judgment / Order of the Supreme Court</p><p>Order</p><p>Mehta, J.</p><p>1. Heard.</p><p>2. This appeal is directed against the order dated 25.01.2022 passed</p><p>by the learned Single Judge of the Madras High Court whereby,</p><p>the application under Section 438 of Code of Criminal Procedure,</p><p>1973 preferred by the respondent-accused in connection with Crime </p><p>[2024] 2 S.C.R. 359</p><p>State by the Inspector of Police v. B. Ramu</p><p>No. 235 of 2021 registered at P.S. Erode Taluk, District-Erode was</p><p>allowed and the respondent-accused was granted anticipatory bail</p><p>in connection with the aforesaid FIR registered for the offences</p><p>punishable under Sections 8(c), 20(b)(ii)(c) and 29(1) of the Narcotic</p><p>Drugs and Psychotropic Substances Act, 1985 (hereinafter being</p><p>referred to as ‘NDPS Act’).</p><p>3. On perusal of the case records, it becomes apparent that on search</p><p>of the house of Brinda/A1 and Kesavan/A2, both were found to be</p><p>in possession of 232.5 kg of ganja. The respondent-accused herein</p><p>was indicted as being the conspirator for procurement/supply of the</p><p>ganja so recovered.</p><p>4. As per the schedule to the NDPS Act, the commercial quantity</p><p>of ganja is 20kg. It is thus not in dispute that the quantity of the</p><p>narcotic substance seized in this case is well above commercial</p><p>quantity.</p><p>5. The learned Public Prosecutor appearing for the State in the</p><p>High Court opposed the prayer for grant of anticipatory bail to</p><p>the respondent-accused herein. The High Court considered the</p><p>application for grant of anticipatory bail and allowed the same in</p><p>the following manner:-</p><p>“3. The learned counsel appearing for the petitioner</p><p>submitted that the petitioner has not committed any</p><p>offence as alleged by the prosecution and he has been</p><p>falsely implicated in this case. He further submitted that</p><p>all the cases were put up cases by the police in order</p><p>to implicated him. Further he also submits that all the</p><p>accused were arrested and all were released in the</p><p>Trial Court in statutory bail. Hence, he prays for grant</p><p>of anticipatory bail.</p><p>4. The learned Additional Public Prosecutor appearing for</p><p>the respondent submitted that 3 previous cases pending</p><p>against the petitioner, investigation almost completed.</p><p>However, he vehemently opposed to grant anticipatory</p><p>bail to the petitioner.</p><p>5. Considering the facts and circumstances of the case, this</p><p>Court is inclined to grant anticipatory bail to the petitioner</p><p>with certain conditions.</p><p>360 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>6. Accordingly, the petitioner is directed to be released on</p><p>bail in the event of arrest or on his appearance, within a</p><p>period of fifteen (15) days after lifting of lockdown or the</p><p>commencement of the Court’s normal functioning whichever</p><p>is earlier, before the learned Judicial Magistrate - I, Erode,</p><p>on condition that the petitioner shall execute a bond for</p><p>a sum of Rs.10,000/- (Rupees Ten Thousand only) with</p><p>two sureties, each for a like sum to the satisfaction of the</p><p>respondent police or the police officer who intends to arrest</p><p>or to the satisfaction of the learned Magistrate concerned,</p><p>3/6 https://www.mhc.tn.gov.in/judis Crl.O.P.No.1067 of</p><p>2022 failing which, the petition for anticipatory bail shall</p><p>stand dismissed and on further condition that:</p><p>[a] the petitioner is directed to deposit a sum of Rs.30,000/-</p><p>(Rupees Thirty Thousand only) to the credit of the</p><p>Registered Tamil Nadu Advocate Clerk Association,</p><p>Chennai within a period of two weeks from the date of</p><p>receipt of a copy of this order and shall produce the said</p><p>receipt before the Court below.</p><p>[b] the petitioner and the sureties shall affix their photographs</p><p>and Left Thumb Impression in the surety bond and the</p><p>Magistrate may obtain a copy of their Aadhar card or Bank</p><p>pass Book to ensure their identity.</p><p>[c] the petitioner is directed to report before the respondent</p><p>police on every Tuesday and Saturday at 10.30 a.m., until</p><p>further orders;</p><p>[d] the petitioner shall not tamper with evidence or witness</p><p>either during investigation or trial.</p><p>[e] the petitioner shall not abscond either during investigation</p><p>or trial.</p><p>[f] On breach of any of the aforesaid conditions, the learned</p><p>Magistrate/Trial Court is entitled to take appropriate action</p><p>against the petitioner in accordance with law as if the</p><p>conditions have been imposed and the petitioner released</p><p>on anticipatory bail by the learned Magistrate/Trial Court</p><p>himself as laid down by the Hon’ble Supreme Court in</p><p>P.K.Shaji vs. State of Kerala [(2005)AIR SCW 5560].</p><p>[2024] 2 S.C.R. 361</p><p>State by the Inspector of Police v. B. Ramu</p><p>[g] If the accused thereafter absconds, a fresh FIR can be</p><p>registered under Section 229A IPC.”</p><p>6. From the order reproduced supra, it is apparent that the learned Single</p><p>Judge totally ignored the submission of the Public Prosecutor that</p><p>the respondent-accused was arraigned in three more previous cases</p><p>(two of which involve offence under the NDPS Act). Furthermore, the</p><p>learned Single Judge also totally ignored the fact that the recovered</p><p>ganja was well in excess of the commercial quantity as provided in</p><p>the schedule to the NDPS Act.</p><p>7. During the course of submissions, learned counsel for the respondent</p><p>vehemently and fervently contended that during the intervening</p><p>period, the matter has progressed much ahead inasmuch as the</p><p>investigation has been concluded and charge-sheet has been filed.</p><p>Now the matter is posted for framing of charges against the accused.</p><p>8. Section 37 of the NDPS Act deals with bail to the accused charged</p><p>in connection with offence involving commercial quantity of a</p><p>narcotic drug or psychotropic substance. The provision is reproduced</p><p>hereinbelow for the sake of ready reference:-</p><p>“[37. Offences to be cognizable and non-bailable.—(1)</p><p>Notwithstanding anything contained in the Code of Criminal</p><p>Procedure, 1973 (2 of 1974),—</p><p>(a) every offence punishable under this Act shall be</p><p>cognizable;</p><p>(b) no person accused of an offence punishable for</p><p>[offences under Section 19 or Section 24 or Section</p><p>27-A and also for offences involving commercial</p><p>quantity] shall be released on bail or on his own</p><p>bond unless—</p><p>(i) the Public Prosecutor has been given an</p><p>opportunity to oppose the application for such</p><p>release, and</p><p>(ii) where the Public Prosecutor opposes the</p><p>application, the court is satisfied that there are</p><p>reasonable grounds for believing that he is not</p><p>guilty of such offence and that he is not likely</p><p>to commit any offence while on bail.</p><p>362 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(2) The limitations on granting of bail specified in clause (b)</p><p>of sub-section (1) are in addition to the limitations under</p><p>the Code of Criminal Procedure, 1973 (2 of 1974), or any</p><p>other law for the time being in force on granting of bail]”</p><p>9. A plain reading of statutory provision makes it abundantly clear that</p><p>in the event, the Public Prosecutor opposes the prayer for bail either</p><p>regular or anticipatory, as the case may be, the Court would have</p><p>to record a satisfaction that there are grounds for believing that the</p><p>accused is not guilty of the offence alleged and that he is not likely</p><p>to commit any offence while on bail.</p><p>10. It is apposite to note that the High Court not only omitted to record</p><p>any such satisfaction, but has rather completely ignored the factum of</p><p>recovery of narcotic substance (ganja), multiple times the commercial</p><p>quantity. The High Court also failed to consider the fact that the</p><p>accused has criminal antecedents and was already arraigned in two</p><p>previous cases under the NDPS Act.</p><p>11. In case of recovery of such a huge quantity of narcotic substance, the</p><p>Courts should be slow in granting even regular bail to the accused</p><p>what to talk of anticipatory bail more so when the accused is alleged</p><p>to be having criminal antecedents.</p><p>12. For entertaining a prayer for bail in a case involving recovery of</p><p>commercial quantity of narcotic drug or psychotropic substance, the</p><p>Court would have to mandatorily record the satisfaction in terms of</p><p>the rider contained in Section 37 of the NDPS Act.</p><p>13. Manifestly, a very strange approach has been adopted by the learned</p><p>Single Judge in the impugned order whereby the anticipatory bail</p><p>was granted to the respondent on the condition that the appellant</p><p>would deposit a sum of Rs. 30,000/- to the credit of the registered</p><p>Tamil Nadu Advocate Clerk Association, Chennai along with various</p><p>other conditions. The condition no. [a] (supra) so imposed by the High</p><p>Court is totally alien to the principles governing bail jurisprudence</p><p>and is nothing short of perversity.</p><p>14. The fact that after investigation, the charge-sheet has been filed</p><p>against the respondent-accused along with other accused persons,</p><p>fortifies the plea of the State counsel that the Court could not have</p><p>recorded a satisfaction that the accused was prima facie not guilty</p><p>of the offences alleged.</p><p>[2024] 2 S.C.R. 363</p><p>State by the Inspector of Police v. B. Ramu</p><p>15. As a consequence, the impugned order is cryptic and perverse on</p><p>the face of the record and cannot be sustained. Thus, the same is</p><p>quashed and set aside.</p><p>16. The appeal is allowed in these terms.</p><p>17. The respondent-accused shall surrender before the learned trial</p><p>court within a period of 10 days from today.</p><p>18. Pending application(s), if any, shall stand disposed of.</p><p>Headnotes prepared by: Divya Pandey Result of the case:</p><p>Appeal allowed.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-91418786274858106562024-03-09T06:38:00.001+05:302024-03-09T06:38:15.581+05:30Inquiry Officer found that the charges levelled against the appellant were duly established. Inquiry report was accepted and the appellant was dismissed from service. Whether the dismissal of the appellant was justified and was the High Court justified in upholding the same<p>* Author</p><p>[2024] 2 S.C.R. 348 : 2024 INSC 115</p><p>Chatrapal</p><p>v.</p><p>The State of Uttar Pradesh & Anr.</p><p>(Civil Appeal No. 2461 of 2024)</p><p>15 February 2024</p><p>[B.R. Gavai and Prashant Kumar Mishra,* JJ.]</p><p>Issue for Consideration</p><p>Inquiry Officer found that the charges levelled against the appellant</p><p>were duly established. Inquiry report was accepted and the</p><p>appellant was dismissed from service. Whether the dismissal of</p><p>the appellant was justified and was the High Court justified in</p><p>upholding the same.</p><p>Headnotes</p><p>Service Law – Findings recorded by Inquiry Officer – Interference</p><p>– Scope – Appellant appointed as Ardly (a class IV Post) in the</p><p>Bareilly Judgeship was later transferred and posted as Process</p><p>Server however, was being paid the salary of Ardly – Aggrieved,</p><p>appellant made representations – Appellant was subjected to</p><p>departmental inquiry on charges of misconduct, insubordination</p><p>alleging that he used inappropriate, derogatory and objectional</p><p>language and made false allegations against various higher</p><p>officials; and had sent the representations directly to the High</p><p>Court and Chief Minister/Minister without routing the same</p><p>through proper channel – Inquiry Officer found that the charges</p><p>levelled against the appellant were established – Appellant</p><p>dismissed – Dismissal upheld by High Court – Correctness:</p><p>Held: Finding of making false statement and allegation in his</p><p>representation not borne out from the record – Since, this finding</p><p>is the fulcrum of the reasoning to hold that charge no.1 is proved,</p><p>this finding in the inquiry report is perverse – Ordinarily the</p><p>findings recorded by the Inquiry Officer should not be interfered</p><p>by the appellate authority or by the writ court – However, when</p><p>the finding of guilt recorded by the Inquiry Officer is based on</p><p>perverse finding the same can always be interfered – Further, </p><p>[2024] 2 S.C.R. 349</p><p>Chatrapal v. The State of Uttar Pradesh & Anr.</p><p>Class-IV employee, when in financial hardship, may represent</p><p>directly to the superior but that by itself cannot amount to major</p><p>misconduct for which punishment of termination from service should</p><p>be imposed – Impugned judgment of the High Court as well as the</p><p>order terminating the appellant from service, set aside – Appellant</p><p>reinstated with all consequential benefits. [Paras 9, 11-13]</p><p>Case Law Cited</p><p>Union of India v. P. Gunasekaran, [2014] 13 SCR 1312 :</p><p>(2015) 2 SCC 610; State of Haryana v. Rattan Singh,</p><p>(1977) 2 SCC 491; Chennai Metropolitan Water Supply</p><p>and Sewerage Board v. T.T. Murali Babu, [2014] 1 SCR</p><p>987 : (2014) 4 SCC 108 – relied on.</p><p>Sawai Singh v. State of Rajasthan, [1986] 2 SCR 957 :</p><p>AIR 1986 SC 995; Santosh Bakshi vs. State of Punjab,</p><p>[2014] 6 SCR 138 : AIR 2014 SC 2966 – referred to.</p><p>List of Acts</p><p>U.P. Government Servant Conduct Rules.</p><p>List of Keywords</p><p>Class-IV employee; Departmental inquiry; Inquiry Officer; Dismissal;</p><p>Misconduct; Insubordination; Finding of guilt; Perverse findings;</p><p>Financial hardship; Termination from service; Reinstatement;</p><p>Consequential benefits.</p><p>Case Arising From</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No.2461 of 2024</p><p>From the Judgment and Order dated 08.01.2019 of the High Court</p><p>of Judicature at Allahabad in WPC No. 297 of 2008</p><p>Appearances for Parties</p><p>P. K. Dey, Sr. Adv., Ms. Shilpi Dey Auditya, Ms. Shehla Chaudhary,</p><p>Md. Anas Chaudhary, Sumit Kumar Sharma, Subart, Ansar Ahmad</p><p>Chaudhary, Advs. for the Appellant.</p><p>Tanmaya Agarwal, Wrick Chatterjee, Ms. Aditi Agarwal, Vinayak</p><p>Mohan, Advs. for the Respondents..</p><p>350 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Prashant Kumar Mishra, J.</p><p>Leave granted.</p><p>2. The present appeal, by special leave, is directed against the judgment</p><p>and order dated 08.01.2019 passed by the High Court of Judicature</p><p>at Allahabad in Writ Petition (C) No. 297 of 2008, whereby the High</p><p>Court has dismissed the petition of the appellant being devoid of merit.</p><p>3. The facts, briefly stated, are that the appellant was appointed on</p><p>permanent basis on the post of Ardly (a class IV Post) in the Bareilly</p><p>Judgeship. The appellant was transferred and posted as Process</p><p>Server in the Nazarat of outlying court of Baheri, District Bareilly on</p><p>24.08.2001. In compliance of the transfer order, the appellant joined</p><p>the Nazarat Branch in Baheri, District Bareilly as Process Server on</p><p>31.08.2001 but he was being paid the remuneration of Ardly.</p><p>3.1 Being aggrieved, the appellant made a representation on</p><p>20.01.2003 to the District Judge to pay the salary due to the post</p><p>of Process Server. The said representation was duly considered</p><p>by the competent authority and a report from the Munsarim in</p><p>the office of Civil Judge, Baheri, Bareilly was called for. As per</p><p>the report of Munsarim dated 27.02.2003, the appellant joined</p><p>the post of Process Server in the Court of Civil Judge, Baheri,</p><p>Bareilly on 31.08.2001 and since then is working on the said</p><p>post. Allegedly, after submission of the said report, the Central</p><p>Nazir started harassing the appellant and demanded illegal</p><p>amount of gratification for settling his dues.</p><p>3.2 Since the grievance of the appellant was not being redressed,</p><p>he made a representation dated 05.06.2003 to the Janapad</p><p>Nyaayaadeesh inter alia stating that he is deprived of the</p><p>allowance that is admissible to the incumbents who are posted at</p><p>an outlying court as Process Server. It is further stated that when</p><p>the appellant went to meet the Central Nazir on 04.06.2003,</p><p>he demanded bribe to get his work done. The District Judge,</p><p>Bareilly sought an explanation from the Central Nazir, Bareilly</p><p>Judgeship who in turn admitted that by mistake the salary of</p><p>the appellant has been shown as against the post of Ardly, </p><p>[2024] 2 S.C.R. 351</p><p>Chatrapal v. The State of Uttar Pradesh & Anr.</p><p>however, he denied having demanded illegal gratification from</p><p>the appellant.</p><p>3.3 The District Judge placed the appellant under suspension vide</p><p>order dated 21.06.2003 and initiated a departmental inquiry.</p><p>The Inquiry Officer vide memorandum dated 22.08.2003</p><p>served the charge sheet on the appellant on the charges</p><p>firstly, the appellant vide communication dated 05.06.2003 had</p><p>used inappropriate, derogatory and objectionable language</p><p>and made false allegations against the officers including the</p><p>District Judge as well as against the Presiding Officer of Aonla</p><p>Court and secondly, the appellant communicated letters and</p><p>representations to the Registrar General of High Court and</p><p>other officials of the State Government including the then Chief</p><p>Minister without routing the same through proper channel. The</p><p>Inquiry Officer, upon completion of enquiry, recorded in his report</p><p>dated 21.04.2006 that the charges levelled against the appellant</p><p>are duly established. The District Judge, Bareilly accepted the</p><p>inquiry report dated 21.04.2006 and vide order dated 30.04.2007</p><p>dismissed the appellant which was challenged in appeal before</p><p>the High Court and the same was dismissed vide order dated</p><p>19.09.2007 being devoid of any substance while affirming the</p><p>order dated 30.04.2007 passed by the Disciplinary Authority</p><p>imposing punishment of dismissal.</p><p>3.4 Being aggrieved by the order dated 19.09.2007 passed by</p><p>the Administrative Judge of the High Court of Allahabad, the</p><p>appellant filed the Writ Petition (C) No. 297 of 2008 before the</p><p>High Court which attained the same fate as that of the appeal.</p><p>Hence, the present appeal.</p><p>4. Learned counsel for the appellant would submit that the first</p><p>charge, in particular, is vague as no finding has been recorded by</p><p>the Inquiry Officer with regard to the allegations made in the letter</p><p>dated 05.06.2003 against the officials. Learned counsel would further</p><p>submit that if it is presumed that the language used in the complaint</p><p>constitutes flagrant breach of Rule 3 of the U.P. Government Servant</p><p>Conduct Rules, the quantum of punishment imposed on the appellant</p><p>is not commensurate to the guilt. Learned counsel for the appellant</p><p>next submits that the appellant was not supplied copy of various</p><p>documents including proposed evidence and thus he was prejudiced. </p><p>352 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>It is lastly argued that the findings of guilt recorded by the enquiry</p><p>officer is perverse.</p><p>In support of his submissions, learned counsel for the appellant has</p><p>placed reliance on the decisions of this Court rendered in ‘Sawai</p><p>Singh vs. State of Rajasthan’1</p><p> and ‘Santosh Bakshi vs. State of</p><p>Punjab2</p><p>’</p><p>5. On the contrary, the learned counsel for the High Court would submit</p><p>that the appellant is habitual of making false allegations against the</p><p>senior officers including the District Judge and the charges framed</p><p>against him are specific and definite and not vague.</p><p>6. We have heard learned counsel for the parties at length and perused</p><p>the case papers.</p><p>7. The appellant was subjected to the departmental inquiry on two charges</p><p>of misconduct and insubordination. For the first charge, it was alleged</p><p>that he used inappropriate, derogatory and objectional language and</p><p>made false allegations against the Central Nazir and higher officials and</p><p>earlier also he had lodged a false report against the Presiding Officer of</p><p>Aonla Court. For the second charge, he allegedly sent a representation</p><p>dated 05.06.2003 to the Registrar General of the High Court and</p><p>Harijan Society Welfare Minister as also to the Chief Minister without</p><p>using the proper channel and without permission of the Head of the</p><p>Department.</p><p>8. The Inquiry Officer has found both the charges to be proved. In</p><p>the discussion with respect to the first charge, it is mentioned in</p><p>the inquiry report that the appellant’s statement in his letter dated</p><p>05.06.2003 that he met the Central Nazir, Bareilly number of times</p><p>between 24.08.2001 to 15.01.2003 is false because from the order</p><p>dated 21.06.2003 of the District Judge, Bareilly it is clear that the</p><p>Central Nazir took charge at Bareilly on 23.07.2002, therefore, he</p><p>could not have met the Central Nazir, Bareilly before 23.07.2002.</p><p>9. However, the finding of the Inquiry Officer that the appellant’s</p><p>statement in his application dated 05.06.2003 that he met the</p><p>Central Nazir number of times between 24.08.2001 to 15.01.2003</p><p>1 [1986] 2 SCR 957 : AIR 1986 SC 995</p><p>2 [2014] 6 SCR 138 : AIR 2014 SC 2966</p><p>[2024] 2 S.C.R. 353</p><p>Chatrapal v. The State of Uttar Pradesh & Anr.</p><p>is not reflected in appellant’s representation. In fact, the application</p><p>dated 05.06.2003 was addressed to the Janapad Nyaayaadeesh</p><p>and the relevant statement is that the applicant met the addressee</p><p>i.e. Janapad Nyaayaadeesh number of times between 24.08.2001 to</p><p>15.01.2003. There is no statement that he met the Central Nazir during</p><p>this period. In respect of meeting the Central Nazir, his statement</p><p>is that he met him on 04.06.2003. Thus, the finding of making false</p><p>statement and allegation in his representation dated 05.06.2003 is</p><p>not borne out from the record. Since, this finding is the fulcrum of</p><p>the reasoning to hold that charge no. 1 is proved, in our considered</p><p>view, this finding in the inquiry report is perverse.</p><p>10. Insofar as the allegation that the appellant made false allegations</p><p>of discrimination on caste basis, it is significant to notice that the</p><p>appellant himself has not made any such allegation in his letter</p><p>dated 05.06.2003. In the said letter, he has stated that it was the</p><p>Central Nazir who told him that the District Judge is saying that the</p><p>appellant is a Harijan employee, and he hates the people of such</p><p>community. Thus, it is clear that the appellant himself has not made</p><p>any such allegation against the District Judge but it was the Central</p><p>Nazir who made that statement. The Inquiry Officer had referred to</p><p>the report of the Central Nazir dated 20.06.2003 which is available</p><p>on record. Regarding the above statement, the Central Nazir has</p><p>not denied specifically. He has only stated that the charges levelled</p><p>by the appellant are false and baseless. The Central Nazir has</p><p>neither made any specific denial that he has not demanded illegal</p><p>gratification of Rs. 3,000/- from the appellant. Even though, in his</p><p>letter dated 05.06.2003, the appellant has made specific allegation</p><p>to this effect against the Central Nazir.</p><p>11. The charge no. 2 against the appellant concerns directly sending</p><p>the representations to the High Court and Hon’ble Chief Minister/</p><p>Minister without routing the same through proper channel. In this</p><p>regard, it is suffice to observe that Class-IV employee, when in</p><p>financial hardship, may represent directly to the superior but that</p><p>by itself cannot amount to major misconduct for which punishment</p><p>of termination from service should be imposed. Even otherwise, the</p><p>appellant has cited examples of other employees of the District Court,</p><p>Bareilly who have sent representations directly to the superiors, but</p><p>no action has been taken against them. </p><p>354 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>12. It is trite law that ordinarily the findings recorded by the Inquiry Officer</p><p>should not be interfered by the appellate authority or by the writ court.</p><p>However, when the finding of guilt recorded by the Inquiry Officer</p><p>is based on perverse finding the same can always be interfered as</p><p>held in Union of India vs. P. Gunasekaran3</p><p>, State of Haryana</p><p>vs. Rattan Singh4</p><p> and Chennai Metropolitan Water Supply and</p><p>Sewerage Board vs. T.T. Murali Babu5</p><p>. In P. Gunasekaran (supra),</p><p>the following has been held by this Court in para nos. 12, 13, 16 & 17:</p><p>“12. Despite the well-settled position, it is painfully disturbing</p><p>to note that the High Court has acted as an appellate</p><p>authority in the disciplinary proceedings, reappreciating</p><p>even the evidence before the enquiry officer. The finding</p><p>on Charge I was accepted by the disciplinary authority and</p><p>was also endorsed by the Central Administrative Tribunal. In</p><p>disciplinary proceedings, the High Court is not and cannot</p><p>act as a second court of first appeal. The High Court,</p><p>in exercise of its powers under Articles 226/227 of the</p><p>Constitution of India, shall not venture into reappreciation</p><p>of the evidence. The High Court can only see whether:</p><p>(a) the enquiry is held by a competent authority;</p><p>(b) the enquiry is held according to the procedure</p><p>prescribed in that behalf;</p><p>(c) there is violation of the principles of natural</p><p>justice in conducting the proceedings;</p><p>(d) the authorities have disabled themselves</p><p>from reaching a fair conclusion by some</p><p>considerations extraneous to the evidence and</p><p>merits of the case;</p><p>(e) the authorities have allowed themselves to</p><p>be influenced by irrelevant or extraneous</p><p>considerations;</p><p>(f) the conclusion, on the very face of it, is</p><p>3 [2014] 13 SCR 1312 : (2015) 2 SCC 610</p><p>4 (1977) 2 SCC 491</p><p>5 [2014] 1 SCR 987 : (2014) 4 SCC 108</p><p>[2024] 2 S.C.R. 355</p><p>Chatrapal v. The State of Uttar Pradesh & Anr.</p><p>so wholly arbitrary and capricious that no</p><p>reasonable person could ever have arrived at</p><p>such conclusion;</p><p>(g) the disciplinary authority had erroneously failed</p><p>to admit the admissible and material evidence;</p><p>(h) the disciplinary authority had erroneously</p><p>admitted inadmissible evidence which influenced</p><p>the finding;</p><p>(i) the finding of fact is based on no evidence.</p><p>13. Under Articles 226/227 of the Constitution of India,</p><p>the High Court shall not:</p><p>(i) reappreciate the evidence;</p><p>(ii) interfere with the conclusions in the enquiry,</p><p>in case the same has been conducted in</p><p>accordance with law;</p><p>(iii) go into the adequacy of the evidence;</p><p>(iv) go into the reliability of the evidence;</p><p>(v) interfere, if there be some legal evidence on</p><p>which findings can be based.</p><p>(vi) correct the error of fact however grave it may</p><p>appear to be;</p><p>(vii) go into the proportionality of punishment unless</p><p>it shocks its conscience.</p><p>16. These principles have been succinctly summed up</p><p>by the living legend and centenarian V.R. Krishna Iyer, J.</p><p>in State of Haryana v. Rattan Singh [(1977) 2 SCC 491 :</p><p>1977 SCC (L&S) 298] . To quote the unparalleled and</p><p>inimitable expressions: (SCC p. 493, para 4)</p><p>“4. … in a domestic enquiry the strict and sophisticated</p><p>rules of evidence under the Indian Evidence Act may</p><p>not apply. All materials which are logically probative for</p><p>a prudent mind are permissible. There is no allergy to</p><p>hearsay evidence provided it has reasonable nexus</p><p>and credibility. It is true that departmental authorities </p><p>356 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>and administrative tribunals must be careful in</p><p>evaluating such material and should not glibly swallow</p><p>what is strictly speaking not relevant under the Indian</p><p>Evidence Act. For this proposition it is not necessary</p><p>to cite decisions nor textbooks, although we have</p><p>been taken through case law and other authorities</p><p>by counsel on both sides. The essence of a judicial</p><p>approach is objectivity, exclusion of extraneous</p><p>materials or considerations and observance of rules</p><p>of natural justice. Of course, fair play is the basis</p><p>and if perversity or arbitrariness, bias or surrender</p><p>of independence of judgment vitiate the conclusions</p><p>reached, such finding, even though of a domestic</p><p>tribunal, cannot be held good.”</p><p>(emphasis supplied)</p><p>17. In all the subsequent decisions of this Court up to the</p><p>latest in Chennai Metropolitan Water Supply and Sewerage</p><p>Board v. T.T. Murali Babu (2014) 4 SCC 108: (2014) 1 SCC</p><p>(L&S) 38, these principles have been consistently followed</p><p>adding practically nothing more or altering anything.”</p><p>13. Having considered the entire material available on record and keeping</p><p>in view that the appellant is a Class-IV employee against whom</p><p>charge no. 1 was found proved on the basis of perverse finding</p><p>and charge no. 2 is only about sending the representation to the</p><p>High Court directly without availing the proper channel, we deem it</p><p>appropriate to set-aside the impugned judgment of the High Court</p><p>as well as the order dated 30.04.2007 whereby the appellant was</p><p>terminated from service. Consequently, the appellant is reinstated</p><p>in service with all consequential benefits. The appeal is allowed.</p><p>Headnotes prepared by: Divya Pandey Result of the case:</p><p>Appeal allowed.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-66098321575793927752024-03-09T06:30:00.000+05:302024-03-09T06:30:27.392+05:30The action that set in motion the instant dispute was in the year 1947, when a mother ‘T’ transferred property by executing First Settlement Deed in one form to her two sons and in another, to her daughter. Some forty-odd years later, the daughter’s husband ‘G’ filed a suit in respect of such property, in 1993. The issues arise for consideration are (i) Whether G’s suit for declaration based on the First Settlement Deed, eventually filed in the year 1993 barred by limitation; (ii) Whether the suit for declaration simpliciter was maintainable in view of s.34 of the SRA, 1963.<p>* Author</p><p>[2024] 2 S.C.R. 326 : 2024 INSC 109</p><p>Vasantha (Dead) Thr. Lr.</p><p>v.</p><p>Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>(Civil Appeal No. 3854 of 2014)</p><p>13 February 2024</p><p>[Hrishikesh Roy and Sanjay Karol*, JJ.]</p><p>Issue for Consideration</p><p>The action that set in motion the instant dispute was in the year</p><p>1947, when a mother ‘T’ transferred property by executing First</p><p>Settlement Deed in one form to her two sons and in another, to her</p><p>daughter. Some forty-odd years later, the daughter’s husband ‘G’</p><p>filed a suit in respect of such property, in 1993. The issues arise</p><p>for consideration are (i) Whether G’s suit for declaration based on</p><p>the First Settlement Deed, eventually filed in the year 1993 barred</p><p>by limitation; (ii) Whether the suit for declaration simpliciter was</p><p>maintainable in view of s.34 of the SRA, 1963.</p><p>Headnotes</p><p>Limitation Act, 1963 – s.27, Arts.58 and 65 – Specific Relief</p><p>Act, 1963 – s.34 – After First Settlement Deed, two sons</p><p>of T executed a second settlement deed dated 31.07.1952</p><p>reverting the interest in properties back to their mother-T</p><p>– Thereafter, T executed a third Settlement Deed dated</p><p>18.08.1952 bequeathing absolute interest in such properties</p><p>only in favour of two sons – G filed a suit praying for a</p><p>declaration as owner of the property as sole heir of T’s</p><p>daughter in terms of First Settlement Deed – Trial Court</p><p>held that G admitted execution of Second Settlement Deed</p><p>and possession was handed over to T – The suit filed was</p><p>barred by limitation – First Appellate Court confirmed the</p><p>trial Court judgment – However, the High Court held that G</p><p>was entitled to half share a property according to the First</p><p>Settlement Deed – Propriety:</p><p>Held: If the period of limitation is to run from the date of the Second</p><p>Settlement Deed, then the rights should be extinguished in 1964</p><p>– If the same were to run from either 1974 (when M, younger son </p><p>[2024] 2 S.C.R. 327</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>of T executed settlement deed in favour of his adopted daughter</p><p>V) or 1976 (when another deed was executed by M in favour of</p><p>his wife P), then after 1986 or 1988 respectively, G had no right</p><p>in the property on the plea of adverse possession – It is settled</p><p>that a reversioner ordinarily must file a suit for possession within</p><p>12 years from the death of the limited heir or widow – That metric</p><p>being applied to the instant facts, it is after the death of P, that the</p><p>reversioner, or in this case the heir of the reversioner G ought to</p><p>have filed the suit – The suit, the subject matter of appeal before</p><p>this Court is a suit for declaration simpliciter and not possession</p><p>– So, the possession still rests with heir of P – The 12 year period</p><p>expired in 2016 with death of P in the year 2004 – Therefore,</p><p>the suit filed in 1993 is barred by limitation – Also, Part III of the</p><p>Schedule to the Limitation Act details the time period within which the</p><p>declarations may be sought for – Art.58 of the Limitation Act governs</p><p>the present dispute – In the instant case, the suit for declaration</p><p>was filed in 1993 – This implies that the cause of action to seek</p><p>any other declaration i.e. a declaration of G in the property, should</p><p>have arisen only in the year 1990 – There is nothing on record</p><p>to show any cause of action having arisen at this point in time,</p><p>much less within the stipulated period of three years – As far as</p><p>the maintainability of suit for declaration simpliciter in view of s.34</p><p>of SRA is concerned, in view of the proviso to s.34, the suit of the</p><p>plaintiff-G could not have been decreed since the plaintiff sought</p><p>for mere declaration without the consequential relief of recovery</p><p>of possession – On a perusal of the plaint, it is evident that the</p><p>plaintiff was aware that the appellant-V herein was in possession</p><p>of the suit property and therefore it was incumbent upon him to</p><p>seek the relief which follows – It is also noted that after the death</p><p>of the life-estate holder-P in 2004, there was no attempt made</p><p>by the original plaintiff to amend the plaint to seek the relief of</p><p>recovery of possession – Thus, the impugned judgment fails on</p><p>both limitation and maintainability of suit – Judgment of the trial</p><p>Court and First Appellate Court restored. [Paras 16, 17, 23, 26, 33]</p><p>Adverse Possession – Claim of:</p><p>Held: Person who claims adverse possession should show : (a)</p><p>on what date he came into possession; (b) what was the nature of</p><p>his possession; (c) whether the factum of possession was known</p><p>to the other party; (d) how long his possession has continued; </p><p>328 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>and (e) his possession was open and undisturbed – A person</p><p>pleading adverse possession has no equities in his favour – Since</p><p>he is trying to defeat the rights of the true owner, it is for him to</p><p>clearly plead and establish all facts necessary to prove his adverse</p><p>possession. [Para 20]</p><p>Limitation – Adverse Possession – Dependence on limitation:</p><p>Held: Modern statutes of limitation operate, as a rule, not only to</p><p>cut off one’s right to bring an action for the recovery of property</p><p>that has been in the adverse possession of another for a specified</p><p>time but also to vest the possessor with title – The intention of such</p><p>statutes is not to punish one who neglects to assert rights but to</p><p>protect those who have maintained the possession of property for</p><p>the time specified by the statute under a claim of right or colour</p><p>of title. [Para 21]</p><p>Case Law Cited</p><p>Bharat Barrel and Drum Mfg. Co. Ltd. v. ESI Corpn.,</p><p>[1972] 1 SCR 867 : (1971) 2 SCC 860; Union of India</p><p>v. Ibrahim Uddin, [2012] 8 SCR 35 : (2012) 8 SCC</p><p>148 – relied on.</p><p>Sultan Khan v. State of MP, 1991 MP LJ 81 –</p><p>distinguished.</p><p>Yeswant Deorao Deshmukh v. Walchand Ramchand</p><p>Kothari, [1950] 1 SCR 852; National Textile Corporation</p><p>Ltd. v. Nareshkumar Badrikumar Jagad, [2011] 14 SCR</p><p>472 : (2011) 12 SCC 695; Fateh Bibi v. Charan Dass,</p><p>[1970] 3 SCR 953 : (1970) 1 SCC 658; M/s Ganesh</p><p>Trading Co. v. Moji Ram, [1978] 2 SCR 614 : (1978) 2</p><p>SCC 91; Ram Saran & Anr. v. Ganga Devi, (1973) 2 SCC</p><p>60; Vinay Krishna v. Keshav Chandra & Anr., (1993) Supp</p><p>3 SCC 129; UOI v. Ibrahim Uddin, [2012] 8 SCR 35 :</p><p>(2012) 8 SCC 148; Goplakrishna (Dead) Through LRs</p><p>v. Narayanagowda(Dead) Through Lrs., [2019] 6 SCR</p><p>382 : (2019) 4 SCC 592; Harmath Kaur v. Inder Bahadur</p><p>Singh, AIR 1922 PC 403; Mahadeo Prasad Singh, AIR</p><p>1931 PC 1989; Sreenivasa Pai v. Saraswathi Ammal,</p><p>[1985] Supp. 2 SCR 122 : (1985) 4 SCC 85; Tribhuvan</p><p>Shankar v. Amrutlal, [2013] 12 SCR 368 : (2014) 2 SCC </p><p>[2024] 2 S.C.R. 329</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>788; In Saroop Singh v. Banto, [2005] Suppl. 4 SCR</p><p>253 : (2005) 8 SCC 330; Karnataka Board of Wakf v.</p><p>Govt. of India, [2004] Suppl. 1 SCR 255 : (2004) 10</p><p>SCC 779; Hemaji Waghaji Jat v. Bhikhabhai Khengarbhai</p><p>Harijan, [2008] 13 SCR 818 : (2009) 16 SCC 517; P.T.</p><p>Munichikkanna Reddy v. Revamma, [2007] 5 SCR</p><p>491 : (2007) 6 SCC 59; Shakti Bhog Food Industries</p><p>Ltd. v. Central Bank of India, [2020] 6 SCR 538 : (2020)</p><p>17 SCC 260; Vinay Krishna v. Keshav Chandra, 1993</p><p>Supp (3) SCC 129; Venkataraja and Ors. v. Vidyane</p><p>Doureradjaperumal (Dead) thr. Lrs., [2013] 5 SCR 814 :</p><p>(2014) 14 SCC 502; Akkamma and Ors. v. Vemavathi</p><p>and Ors., 2021 SCC Online SC 1146; Executive Officer,</p><p>Arulmigu Chokkanatha Swamy Koil Trust, Virudhunagar</p><p>v. Chandran and Others, [2017] 5 SCR 473 : (2017) 3</p><p>SCC 702; Harcharan v. State of Haryana, (1982) 3 SCC</p><p>408; Rajender Prasad v. Kayastha Pathshala, (1981)</p><p>Supp 1 SCC 56 – referred to.</p><p>List of Acts</p><p>Limitation Act, 1963; Specific Relief Act, 1963.</p><p>List of Keywords</p><p>Limitation; Extinguishment of right to property; Adverse possession;</p><p>Title by adverse possession; Establishment of adverse possession;</p><p>Claim of adverse possession; Adverse possession dependency on</p><p>limitation; Modern statutes of limitation; Suit for declaration; Relief of</p><p>possession; Discretion of Court as to declaration of status or right;</p><p>Suit for mere declaration without consequential relief; Amendment</p><p>of plaint for recovery of possession.</p><p>Case Arising From</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No.3854 of 2014</p><p>From the Judgment and Order dated 27.09.2012 of the High Court</p><p>of Madras in SA No.1926 of 2004</p><p>Appearances for Parties</p><p>Dama Seshadri Naidu, Sr. Adv., G. Balaji, Advs. for the Appellant.</p><p>V. Ramasubramanian, Adv. for the Respondents.</p><p>330 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Sanjay Karol, J.</p><p>1. The action that set in motion the instant dispute was in the year</p><p>1947, when a mother transferred property inherited at the death</p><p>of her husband, in one form to her two sons and in another, to her</p><p>daughter. Some forty-odd years later, the daughter’s husband filed</p><p>a suit in respect of such property, in 1993. The Additional District</p><p>Munsiff1</p><p> decided the matter in 1999. The Additional District and</p><p>Session Judge2</p><p> returned a decision on the First Appeal in 2002.</p><p>The Second Appeal was decided by the High Court3</p><p> in 2012. It is</p><p>against this order and judgment in Second Appeal that the present</p><p>civil appeal has been preferred.</p><p>BACKGROUND FACTS</p><p>2. It would be necessary to advert to the facts underlying the present</p><p>dispute.</p><p>3. On 10th July 1947, one Thayammal executed a settlement deed4</p><p>granting rights in her property to her two sons namely Raghavulu</p><p>Naidu and Chinnakrishnan @ Munusamy Naidu5 for their lives</p><p>and thereafter to the former’s two daughters namely Saroja and</p><p>Rajalakshmi (present Respondent now represented through LRs).</p><p>Saroja pre-deceased Thayammal as also her father and uncle, in</p><p>1951.</p><p>3.1 Subsequently, Raghavulu and Munusamy executed a Settlement</p><p>Deed dated 31st July 19526</p><p> reverting the said interests in the</p><p>properties back to their mother.</p><p>3.2 Thayamma, soon thereafter, executed a further Settlement</p><p>Deed7</p><p> dated 18th August 1952, bequeathing absolute interest</p><p>1 “Trial Court”</p><p>2 “First Appellate Court”</p><p>3 “Impugned judgment”</p><p>4 “First Settlement Deed”</p><p>5 “Munusamy”</p><p>6 “Second Settlement Deed”</p><p>7 “Third Settlement Deed”</p><p>[2024] 2 S.C.R. 331</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>in such properties only in favour of her two sons namely</p><p>Raghavulu Naidu and Munusamy Naidu, with the consequence</p><p>of extinguishing the rights, if any, of Saroja and Gopalakrishnan.</p><p>3.3 Munusamy had no children. His wife Pavunammal enjoyed</p><p>life interest in the property bequeathed to her husband. They</p><p>had an adopted daughter, Vasantha (present Appellant, now</p><p>represented through LRs).</p><p>3.4 In 1993, during the lifetime of Pavunammal, Gopalakrishnan</p><p>(Husband of Saroja) filed a suit, subject matter of the present</p><p>lis, praying for a declaration as the owner of the properties since</p><p>he was the sole heir of Saroja in terms of the First Settlement</p><p>Deed.</p><p>4. It is in this brief background of facts that the dispute entered the</p><p>courts.</p><p>It would be useful to have a summary of family relations forming</p><p>the backdrop of, and parties to, the dispute by way of a chart, as</p><p>immediately hereunder:-</p><p>● Pounamma is also referred to as Pavanuammal at some places,</p><p>as was so done by the Courts below.</p><p>332 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>PROCEEDING BEFORE THE TRIAL COURT</p><p>A. PLAINT</p><p>5. Plaintiff (Gopalakrishnan) filed a suit for declaration and to establish</p><p>his vested rights and interest in the property.</p><p>5.1 It was urged that only the First Settlement Deed had legal</p><p>sanctity. Accordingly, the wife of Munusamy is only entitled to</p><p>possession and enjoyment till her lifetime. There is no right of</p><p>transfer in her favour.</p><p>5.2 The Second Settlement Deed is only for the lifetime of</p><p>Thayammal, and the same would not impact the vested</p><p>right created in favour of deceased Saroja, inherited by</p><p>Gopalakrishnan, as her husband and sole heir.</p><p>5.3 The adoption of Vasantha is illegal. Also, the vested right in favour</p><p>of Saroja was created prior to such adoption and, therefore,</p><p>would not affect the rights of Gopalakrishnan.</p><p>B. WRITTEN STATEMENT</p><p>6. The written statement is of denial of all claims made by Gopalakrishnan.</p><p>6.1 It is incorrect to state that the two sons Raghavulu and</p><p>Munasamy, were in possession of suit properties according to</p><p>the First Settlement Deed. No claim of any vested rights can</p><p>be accepted.</p><p>6.2 The claim that Gopalakrishnan is the sole legal heir of Saroja,</p><p>cannot be accepted as after her death in the year 1951, he</p><p>has remarried and relocated to Pondicherry.</p><p>6.3 Even if the First Settlement Deed is accepted as genuine, then</p><p>Pavanuammal alone would be the heir to such properties.</p><p>6.4 Munasamy had, during his lifetime, on 7th October, 1976</p><p>executed a settlement deed in favour of Pavanuammal without</p><p>any coercion. The patta of the said property was also transferred</p><p>in her name.</p><p>6.5 Since Munasamy and Pavanuammal did not have any children,</p><p>they adopted a child namely Vasantha. Pavanuammal of her</p><p>own volition executed a settlement deed in favour of Vasantha</p><p>on 19th July, 1993. Any denial of the same cannot be accepted.</p><p>[2024] 2 S.C.R. 333</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>6.6 On 18th August 1952, Thayammal had vide the Third Settlement</p><p>Deed given exclusively, the suit properties to her two sons</p><p>who have made separate and individual deeds in regards to</p><p>their shares and sold portions thereof to other parties. The suit</p><p>suffers from non-joinder of necessary parties.</p><p>C. FINDINGS</p><p>7. The Learned Additional District Munsif framed four following issues</p><p>to be considered:</p><p>a) Whether the settlement deed suggested by the</p><p>plaintiff is genuine?</p><p>b) Whether the plaintiff cannot claim any right in the</p><p>suit property?</p><p>c) Whether the plaintiff is entitled to get the relief prayed</p><p>in the plaint?</p><p>d) What are the relief for which plaintiff is entitled to?</p><p>7.1 Placing reliance upon the deposition of PW1 (Gopalakrishnan),</p><p>the first issue was decided in favour of the plaintiff and the First</p><p>Settlement Deed was upheld as genuine. Also, DW1 (Vasantha)</p><p>in her deposition had not completely denied the execution</p><p>and genuineness of First Settlement Deed. After considering</p><p>both, the First and the Second Settlement Deeds, it held that</p><p>Raghavulu Naidu and Munusamy Naidu must have executed</p><p>the Second Settlement Deed in favour of Thayammal as the</p><p>Second Settlement Deed could not be executed without the</p><p>first deed having been in existence.</p><p>7.2 In regard to the second issue, it was observed that plaintiff himself</p><p>has admitted the execution of Second Settlement Deed and that</p><p>possession was handed over to Thayammal. Plaintiff has not</p><p>taken any action in respect of the document executed in the year</p><p>1974 and filed the suit in the year 1993 and held that the suit is</p><p>barred by Limitation and the rights of the plaintiff were abated.</p><p>7.3 The third and fourth issues were decided against the plaintiff</p><p>since he cannot claim any rights in the suit property, therefore,</p><p>the declaration cannot be made in respect of one-half of the</p><p>defendant’s share in the suit property after her lifetime would</p><p>come to the plaintiff.</p><p>334 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>PROCEEDING BEFORE THE FIRST APPELLATE COURT</p><p>8. Two following questions were considered by the First Appellate Court:</p><p>a) Whether the plaintiff is the legal heir of Saroja Ammal?</p><p>b) Whether the plaintiff is entitled for the share in the</p><p>suit property?</p><p>8.1 It was held that the plaintiff has never taken any steps to revoke</p><p>various transactions that have taken place in regard to the suit</p><p>properties. He was also unaware about the real possession of</p><p>the properties in question. Further, it was observed that the</p><p>plaintiff failed to prove dispossession within a period of twelve</p><p>years, i.e. the time period within which the claim of adverse</p><p>possession has to be made.</p><p>8.2 In the above terms, the judgment and decree of the Trial Court</p><p>was confirmed and the appeal was dismissed.</p><p>PROCEEDING BEFORE THE HIGH COURT</p><p>9. The High Court under Second Appeal framed the following substantial</p><p>questions of law:</p><p>a) Whether in law the courts below are right in failing to</p><p>see that under Section 19 of the Transfer of Property</p><p>Act, a vested interest is not defeated by the death of</p><p>the transferee before the possession.</p><p>b) Whether in law the courts below are not wrong in</p><p>omitting to see that the matter in issue would be</p><p>squarely covered by the illustrations (i) and (iii) of</p><p>Section 119 of the Indian Succession Act?</p><p>c) Whether in law the courts below are right in failing to</p><p>see that a limited interest owner could not prescribe</p><p>title by adverse possession as held in AIR 1961</p><p>SCC 1442?</p><p>9.1 Having taken note of various decisions, the learned Single</p><p>Judge held that the interest vested in Saroja was full and not</p><p>life interest. Therefore, upon her death,, the interest does not</p><p>revert to the settlor. In other words, that Saroja died before her</p><p>interest stood fructified, is an incorrect statement. It is only the </p><p>[2024] 2 S.C.R. 335</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>right of enjoyment that stood postponed till the life interest of</p><p>Raghavulu Naidu and Munusamy Naidu.</p><p>9.2 On the question of limitation, it was observed that the documents</p><p>executed between Thayammal, her sons and subsequently,</p><p>Pavanummal and Vasantha, were only in respect of life interest</p><p>i.e. a limited right. The other two deeds of settlement executed</p><p>after the First Settlement Deed are against or beyond the</p><p>competency of the executants and therefore, not binding on the</p><p>plaintiff. That being the case the requirement of twelve years</p><p>within which to initiate a suit, does not arise. Further, it was held</p><p>that since, in the suit, the life estate holder has been impleaded</p><p>in the suit and Gopalakrishnan had the option of filing the suit</p><p>even after her lifetime, the same is not barred by limitation.</p><p>9.3 It was in such terms that it was held that according to the First</p><p>Settlement Deed the plaintiff will be entitled to half share of</p><p>the property after the lifetime of Vasantha, a life estate holder.</p><p>SUBMISSIONS</p><p>10. We have heard at length, Mr. Dama Seshadri Naidu, learned senior</p><p>counsel for the Appellants and Mr. V. Ramasubramanian, learned</p><p>counsel for the Respondents. The main contentions urged have</p><p>been recorded as under:-</p><p>A. APPELLANTS</p><p>(i) It is submitted that all questions raised in this Appeal are</p><p>pure questions of law and in accordance with Yeswant</p><p>Deorao Deshmukh v. Walchand Ramchand Kothari</p><p>(3-Judge Bench)8 and National Textile Corporation Ltd.</p><p>v. Nareshkumar Badrikumar Jagad (2-Judge Bench)9</p><p>, a</p><p>question of law can be raised at any stage.</p><p>(ii) It is urged that the original plaintiff (Gopalakrishnan) lacked</p><p>a cause of action. Since the suit was filed while Pounammal</p><p>was alive, even if his right is termed as ‘vested’, the same</p><p>does not become enforceable till her death. In other words, till</p><p>2004 no right stood accrued in favour of the plaintiff. Reference</p><p>8 [1950] 1 SCR 852</p><p>9 [2011] 14 SCR 472 : (2011) 12 SCC 695 </p><p>336 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>was made to Fateh Bibi v. Char̥an Dass (3-Judge Bench)10.</p><p>Further, upon such rights having accrued, no application</p><p>to amend the plaint was filed. Any which way, if he had by</p><p>amendment, sought the relief of possession, it would be as</p><p>if an entirely new cause of action is sought to be introduced</p><p>amounting to substitution, which ought not to be allowed.</p><p>Reference was made to M/s Ganesh Trading Co. v. Moji</p><p>Ram (2-Judge Bench)11.</p><p>(iii) As per Section 34 of the Specific Relief Act, 196312 the declaration</p><p>of a right or status is a matter of discretion. However, the proviso</p><p>restricts the application of such discretion in terms that it is not</p><p>to be exercised when the complainant seeks only a declaration</p><p>of title when he is able to seek further relief. Reference is made</p><p>to Ram Saran & Anr. v. Ganga Devi (3-Judge Bench)13, Vinay</p><p>Krishna v. Keshav Chandra & Anr. (3-Judge Bench)14 and</p><p>UOI v. Ibrahim Uddin (2-Judge Bench)15.</p><p>(iv) It is submitted that Article 65 Explanation (a) read with Section</p><p>27 of the Limitation Act, 1963 hits the right of Gopalkrishnan.</p><p>Succession to the estate only accrues on the death of the life</p><p>estate holder which was in 2004. Till date, no suit stands filed.</p><p>The learned senior counsel relied on Goplakrishna (Dead)</p><p>Through LRs v. Narayanagowda(Dead) Through LRs(2-</p><p>Judge Bench)16.</p><p>(v) It is argued that the right of Saroja created as per the First</p><p>Settlement Deed was in fact a contingent interest. It states that</p><p>if Munusamy has a male heir then one half will belong to him</p><p>and Saroja will get the other half after the life of Raghavulu</p><p>and Munusamy. Therefore, on her death in 1951, her interest</p><p>was spes successionis i.e. it did not achieve concrete form</p><p>and is only an expectation of succeeding. The contingency</p><p>10 [1970] 3 SCR 953 : (1970) 1 SCC 658</p><p>11 [1978] 2 SCR 614 : (1978) 2 SCC 91</p><p>12 “SRA, 1963”</p><p>13 (1973) 2 SCC 60</p><p>14 (1993) Supp 3 SCC 129</p><p>15 [2012] 8 SCR 35 : (2012) 8 SCC 148</p><p>16 [2019] 6 SCR 382 : (2019) 4 SCC 592</p><p>[2024] 2 S.C.R. 337</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>upon which Saroja’s interest rests is two-fold; Munusamy</p><p>either having or not having children. If he does, they would</p><p>get half share; if he doesn’t then two eventualities exist: half</p><p>of Munusamy’s share goes to Saroja upon his death, and the</p><p>other half after the life interest of Pavunammal is exhausted,</p><p>goes to Saroja, the remainder woman. Reliance is placed on</p><p>Harmath Kaur v. Inder Bahadur Singh17. Further, reliance is</p><p>placed on Mahadeo Prasad Singh18 to state that when there</p><p>is an expectation simpliciter of succession, neither a transfer</p><p>nor a contract to transfer is permissible.</p><p>B. RESPONDENTS</p><p>(i) The fact that the First Settlement Deed was acted upon i.e.</p><p>the rights given to two sons of Thayammal were returned to</p><p>her by a subsequent deed in 1952, shows that the first one</p><p>gave rights in presenti. Therefore, in Saroja rests a ‘vested’</p><p>right as per Section 19 of the Transfer of Property Act, 188219,</p><p>a vested right once accrued cannot be defeated by the death</p><p>of the transferee prior to possession. Reference is made to</p><p>Sreenivasa Pai v. Saraswathi Ammal (2-Judge Bench)20.</p><p>(ii) The Second Settlement Deed reverting the life interest awarded</p><p>to the two sons only gives Thayammal a life interest and</p><p>therefore subsequent settlement deeds were non est in law</p><p>and thus need not be challenged.</p><p>(iii) So far as the non-seeking of relief within twelve years is</p><p>concerned, it is submitted that the possession of the property was</p><p>only available to Gopalkrishnan upon the death of Pavunammal</p><p>(in 2004). Since a suit is pending, the limitation for seeking</p><p>possession is arrested. The plea of adverse possession will be</p><p>applicable only if the possession with the opposing party had</p><p>become adverse on the date of the plaint. The learned counsel</p><p>relies on Tribhuvan Shankar v. Amrutlal (2-Judge Bench) 21.</p><p>17 AIR 1922 PC 403</p><p>18 AIR 1931 PC 1989</p><p>19 “TPA”</p><p>20 [1985] Supp. 2 SCR 122 : (1985) 4 SCC 85</p><p>21 [2013] 12 SCR 368 : (2014) 2 SCC 788</p><p>338 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(iv) The enjoyment of the property bequeathed on Raghavulu</p><p>and Munusamy was in the nature of life interest. The Second</p><p>Settlement Deed, therefore, is hit by Section 6(d) of TPA. They</p><p>cannot convey a better title than they have received.</p><p>(v) None of the conditions mentioned in Section 126, TPA for</p><p>revocation/suspension of settlement are met in the present</p><p>case, meaning thereby that the settlement cannot be revoked.</p><p>(vi) Since the title to the properties stood vested in Saroja,</p><p>Gopalakrishnan had cause of action to file a suit for declaration.</p><p>The reason for filing of the suit in 1993 is a settlement deed</p><p>executed by Pavunammal in favour of Vasantha. Since the</p><p>former was alive the suit was filed without seeking the relief</p><p>of possession. It is submitted that the proviso uses the term</p><p>‘further relief’ which implies that such relief had to be available</p><p>on the date of filing the plaint which it was not as possession</p><p>rested with Pavunammal therefore, a suit only for declaration</p><p>was maintainable on the date of filing.</p><p>(vii) Reliance on Section 213 of the Indian Succession Act, 1925 is</p><p>misconceived as the same is only applicable to wills covered</p><p>by Section 57 (a) and (b) of the said Act i.e wills executed</p><p>within the local limits of the civil jurisdiction of the High Courts</p><p>of Bombay and Madras.</p><p>QUESTIONS FOR OUR CONSIDERATION</p><p>11. Various contentions have been canvassed by either party to the</p><p>dispute. However, if this Court is to decide those issues, two questions</p><p>must be considered at the threshold. They are:-</p><p>(i) Whether Gopalakrishnan’s suit for declaration based on the</p><p>First Settlement Deed, eventually filed in the year 1993 barred</p><p>by limitation?</p><p>(ii) Whether the suit for declaration simpliciter was maintainable</p><p>in view of Section 34 of the SRA, 1963?</p><p>To emphasise, we restate that if the answer to the aforementioned</p><p>questions is in the affirmative, we need not refer to the other</p><p>contentions raised across the bar.</p><p>[2024] 2 S.C.R. 339</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>ANALYSIS & CONSIDERATION</p><p>ISSUE 1</p><p>12. The provisions of the Limitation Act, 1963 relevant to the instant</p><p>dispute, i.e, Section 27 and Articles 58 and 65 of the First Schedule</p><p>to the Act, are reproduced hereinbelow for ready reference:-</p><p>“27. Extinguishment of right to property.—At the</p><p>determination of the period hereby limited to any person</p><p>for instituting a suit for possession of any property, his</p><p>right to such property shall be extinguished.</p><p>Art. Description</p><p>of suit</p><p>Period</p><p>of</p><p>limitation</p><p>Time from</p><p>which period</p><p>begins to run</p><p>58. To obtain any other</p><p>declaration.</p><p>Three</p><p>years</p><p>When the right</p><p>to sue first</p><p>accrues.</p><p>65. For possession of</p><p>immovable property</p><p>or any interest</p><p>therein based on</p><p>title.</p><p>Twelve</p><p>years</p><p>When the</p><p>possession of</p><p>the defendant</p><p>becomes</p><p>adverse to the</p><p>plaintiff.</p><p>Explanation.- For the purposes of this article--</p><p>(a) Where the suit is by a remainderman, a</p><p>reversioner (other than a landlord) or a</p><p>devisee, the possession of the defendant</p><p>shall be deemed to become adverse only</p><p>when the estate of the remainderman,</p><p>reversioner or devisee, as the case may be,</p><p>falls into possession;…”</p><p>13. We notice that before us, are different interpretations of when the</p><p>limitation period would expire thereby making the possession of the suit</p><p>property, hostile to the rights supposedly vesting in Gopalakrishnan,</p><p>as the heir of Saroja upon whom, the First Settlement Deed vested</p><p>a right in the property. The learned Trial Court observed that, given</p><p>the contention of the original plaintiff (Gopalakrishnan) that the </p><p>340 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Second Settlement Deed was invalid, he ought to have challenged</p><p>the transfer caused thereby within 12 years of such date. Further, it</p><p>was observed that another possibility of challenge arose in 1974 when</p><p>Munasamy executed a settlement deed in favour of Vasantha and</p><p>subsequently in 1976, when another deed was executed in favour of</p><p>his wife, Pavanuaamal, his daughter. On both these occasions, the</p><p>heir of the alleged vested interest of Saroja, was silent. Therefore, on</p><p>both counts the suit filed by Gopalakrishnan was barred by limitation.</p><p>The First Appellate Court agreed with this reasoning.</p><p>14. On the other hand, the learned senior counsel for the Appellants</p><p>has contended, if at all, Gopalakrishnan has a right in the disputed</p><p>property, then the period of limitation for establishing the adverse</p><p>possession of Vasantha began in the year 2004 upon the death of</p><p>the life estate holder i.e, Pavanuaamal, then by 2016 Vasantha had</p><p>perfected the title by adverse possession. Since no suit for recovery</p><p>of possession stands filed till date, Gopalakrishnan’s claim today is</p><p>barred by limitation.</p><p>15. The question before us is, from when will the period of limitation run,</p><p>for Gopalakrishnan to stake a claim on the properties?</p><p>16. If the period of limitation is to run from the date of the Second</p><p>Settlement Deed, then the rights should be extinguished in 1964. If</p><p>the same were to run from either 1974 or 1976, then after 1986 or</p><p>1988 respectively, Gopalakrishnan had no right in the property on</p><p>the plea of adverse possession.</p><p>17. We notice that this Court in Gopalakrishna (supra) had observed</p><p>that a reversioner ordinarily must file a suit for possession within 12</p><p>years from the death of the limited heir or widow. That metric being</p><p>applied to the instant facts, it is after the death of Pavunammal,</p><p>that the reversioner, or in this case the heir of the reversioner</p><p>(Gopalakrishnan) ought to have filed the suit. The suit, the subject</p><p>matter of appeal before us is a suit for declaration simpliciter and not</p><p>possession. So, the possession still rests with heir of Pavunammal.</p><p>The twelve-year period stood expired in 2016 (with the death of</p><p>Pavanummal in the year 2004) therefore, in our considered view,</p><p>the suit is barred by limitation, which was filed in 1993.</p><p>18. The learned counsel for the respondents contended that since the</p><p>suit stood filed in respect of the property, the clock for adverse </p><p>[2024] 2 S.C.R. 341</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>possession stopped ticking. He relied on Tribhuvanshankar (supra)</p><p>to buttress this claim.</p><p>19. A perusal of the said decision shows a reference has been made</p><p>to Sultan Khan v. State of MP22 to hold that if a suit for recovery of</p><p>possession has been filed then the time period for adverse possession</p><p>is arrested. The instant decision is distinguishable from the current</p><p>set of facts on two grounds: one, that the holding of the Madhya</p><p>Pradesh High Court was in respect of Section 248 of the MP Land</p><p>Revenue Code and had been referenced in an appeal arising from</p><p>the State of MP itself; two, in the present facts, Gopalakrishnan has</p><p>filed only a suit for declaration and not one for possession. The said</p><p>declaration suit was filed in the year 1993. It was after the death of</p><p>Pavunammal (in 2004) that the relief of possession became available</p><p>to him. However, no such relief has been claimed. This decision does</p><p>not in any way support the claim of the respondents.</p><p>20. In Saroop Singh v. Banto (2-Judge Bench)23, this Court observed</p><p>that Article 65 states that the starting point of limitation does not</p><p>commence from the date when the right of ownership arises to the</p><p>plaintiff but commences from the date the defendant’s possession</p><p>becomes adverse. Further relying on Karnataka Board of Wakf</p><p>v. Govt. of India (2-Judge Bench)24, it observed that the physical</p><p>fact of exclusive possession and the animus possidendi to hold</p><p>as owner in exclusion to the actual owner are the most important</p><p>factors that are to be accounted in cases related to adverse</p><p>possession. Plea of adverse possession is not a pure question of</p><p>law but a blend of fact and law. Therefore, a person who claims</p><p>adverse possession should show : (a) on what date he came into</p><p>possession; (b) what was the nature of his possession; (c) whether</p><p>the factum of possession was known to the other party; (d) how</p><p>long his possession has continued; and (e) his possession was</p><p>open and undisturbed. A person pleading adverse possession has</p><p>no equities in his favour. Since he is trying to defeat the rights of</p><p>the true owner, it is for him to clearly plead and establish all facts</p><p>necessary to prove his adverse possession.</p><p>22 1991 MP LJ 81</p><p>23 [2005] Supp. (4) SCR 253 : (2005) 8 SCC 330</p><p>24 [2004] Supp. (1) SCR 255 : (2004) 10 SCC 779</p><p>342 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>21. This Court in Hemaji Waghaji Jat v. Bhikhabhai Khengarbhai</p><p>Harijan (2-Judge Bench)25, reiterating the observations made in</p><p>P.T. Munichikkanna Reddy v. Revamma (2-Judge Bench)26 in</p><p>respect of the concept of adverse possession observed that efficacy</p><p>of adverse possession law in most jurisdictions depends on strong</p><p>limitation statutes by operation of which, right to access the court</p><p>expires through efflux of time. As against the rights of the paperowner, in the context of adverse possession, there evolves a set of</p><p>competing rights in favour of the adverse possessor who has, for</p><p>a long period of time, cared for the land, developed it, as against</p><p>the owner of the property who has ignored the property. Modern</p><p>statutes of limitation operate, as a rule, not only to cut off one’s</p><p>right to bring an action for the recovery of property that has been in</p><p>the adverse possession of another for a specified time but also to</p><p>vest the possessor with title. The intention of such statutes is not to</p><p>punish one who neglects to assert rights but to protect those who</p><p>have maintained the possession of property for the time specified</p><p>by the statute under a claim of right or colour of title.</p><p>22. In Bharat Barrel and Drum Mfg. Co. Ltd. v. ESI Corpn.27, (2-Judge</p><p>Bench) while discussing the object of Limitation Act, this Court</p><p>opined that:</p><p>“ ….The law of limitation appertains to remedies because</p><p>the rule is that claims in respect of rights cannot be</p><p>entertained if not commenced within the time prescribed</p><p>by the statute in respect of that right. Apart from Legislative</p><p>action prescribing the time, there is no period of limitation</p><p>recognised under the general law and therefore any time</p><p>fixed by the statute is necessarily to be arbitrary. A statute</p><p>prescribing limitation however does not confer a right of</p><p>action nor speaking generally does not confer on a person</p><p>a right to relief which has been barred by efflux of time</p><p>prescribed by the law. The necessity for enacting periods</p><p>of limitation is to ensure that actions are commenced</p><p>within a particular period, firstly to assure the availability</p><p>25 [2008] 13 SCR 818 : (2009) 16 SCC 517</p><p>26 [2007] 5 SCR 491 : (2007) 6 SCC 59</p><p>27 [1972] 1 SCR 867 : (1971) 2 SCC 860</p><p>[2024] 2 S.C.R. 343</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>of evidence documentary as well as oral to enable the</p><p>defendant to contest the claim against him; secondly to</p><p>give effect to the principle that law does not assist a person</p><p>who is inactive and sleeps over his rights by allowing</p><p>them when challenged or disputed to remain dormant</p><p>without asseting them in a court of law. The principle which</p><p>forms the basis of this rule is expressed in the maximum</p><p>vigilantibus, non dermientibus, jura subveniunt (the laws</p><p>give help to those who are watchful and not to those who</p><p>sleep). Therefore the object of the statutes of limitations</p><p>is to compel a person to exercise his right of action within</p><p>a reasonable time as also to discourage and suppress</p><p>stale, fake or fraudulent claims While this is so there are</p><p>two aspects of the statutes of limitation the one concerns</p><p>the extinguishment of the right if a claim or action is not</p><p>commenced with a particular time and the other merely bare</p><p>the claim without affecting the right which either remains</p><p>merely as a moral obligation or can be availed of to furnish</p><p>the consideration for a fresh enforceable obligation. Where</p><p>a statute, prescribing the limitation extinguishes the right,</p><p>it affects substantive rights while that which purely pertains</p><p>to the commencement of action without touching the right</p><p>is said to be procedural.…”</p><p>(Emphasis Supplied)</p><p>23. Part III of the Schedule to the Limitation Act details the time period</p><p>within which the declarations may be sought for: (a) declaration of</p><p>forgery of an instrument either issued or registered; (b) declaring</p><p>an adoption to be invalid or never having taken place; and (c) to</p><p>obtain any other declaration. Point (c) or in other words Article 58</p><p>governs the present dispute. This Court has in Shakti Bhog Food</p><p>Industries Ltd. v. Central Bank of India28, (3-Judge Bench)</p><p>taken note of Article 58 of the Limitation Act 1963 vis-a-vis Article</p><p>113(Any suit for which no period of limitation stands provided in</p><p>the Schedule) and observed that the right to sue accrues ‘from</p><p>the date on which the cause of action arose first’. In the present</p><p>case, the suit for declaration was filed in 1993. This implies that the</p><p>28 [2020] 6 SCR 538 : (2020) 17 SCC 260</p><p>344 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>cause of action to seek any other declaration i.e. a declaration of</p><p>Gopalakrishnan in the property, should have arisen only in the year</p><p>1990. There is nothing on record to show any cause of action having</p><p>arisen at this point in time. The possible causes of action would be</p><p>at the time of the Second Settlement Deed (1952) or Munusamy’s</p><p>deed of settlement in favour of Pavunammal(1976) or at the time of</p><p>Pavunammal’s vesting of the property in favour of Vasantha (1993)</p><p>or at the death of Pavunammal (2004) where apart from declaration,</p><p>he ought to have sought the relief of possession as well. It is clear</p><p>from the record that on no such possible occasion, a declaration</p><p>was sought, much less within the stipulated period of three years.</p><p>ISSUE II</p><p>24. We now proceed to examine whether the suit for declaration simpliciter</p><p>was maintainable in view of Section 34 of the SRA, 1963.</p><p>25. Section 34 reads as:</p><p>34. Discretion of Court as to declaration of status or</p><p>right.-</p><p>Any person entitled to any legal character, or to any right</p><p>as to any property, may institute a suit against any person</p><p>denying, or interested to deny, his title to such character</p><p>or right, and the Court may in its discretion make therein</p><p>a declaration that he is so entitled, and the plaintiff need</p><p>not in such suit ask for any further relief:</p><p>Provided that no Court shall make any such declaration</p><p>where the plaintiff, being able to seek further relief than</p><p>a mere declaration of title, omits to do so.</p><p>(Emphasis Supplied)</p><p>26. The learned senior counsel for the appellant has contended that it</p><p>has been settled by the Courts below that the appellant has been</p><p>in possession of the subject property since 1976. In view of the</p><p>proviso to Section 34, the suit of the plaintiff could not have been</p><p>decreed since the plaintiff sought for mere declaration without the</p><p>consequential relief of recovery of possession.</p><p>27. The learned counsel for the Respondent, in rebuttal, contended that</p><p>since at the time of filing of the suit, the life interest holder was alive,</p><p>she was entitled to be in possession of the property and therefore, </p><p>[2024] 2 S.C.R. 345</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>the Plaintiff not being entitled to possession at the time of institution</p><p>of the suit, recovery of possession could not have been sought.</p><p>28. We now proceed to examine the law on this issue. As submitted by</p><p>the learned senior counsel for the Appellant, in Vinay Krishna v.</p><p>Keshav Chandra (2-Judge Bench)29, this Court while considering</p><p>Section 42 of the erstwhile Specific Relief Act, 1877 to be pari materia</p><p>with Section 34 of SRA, 1963 observed that the plaintiff’s not being</p><p>in possession of the property in that case ought to have amended</p><p>the plaint for the relief of recovery of possession in view of the bar</p><p>included by the proviso.</p><p>29. This position has been followed by this Court in Union of India v.</p><p>Ibrahim Uddin (2-Judge Bench)30, elaborated the position of a suit</p><p>filed without the consequential relief. It was observed:</p><p>“55. The section provides that courts have discretion as</p><p>to declaration of status or right, however, it carves out an</p><p>exception that a court shall not make any such declaration</p><p>of status or right where the complainant, being able to seek</p><p>further relief than a mere declaration of title, omits to do so.</p><p>56. In Ram Saran v. Ganga Devi [(1973) 2 SCC 60] this</p><p>Court had categorically held that the suit seeking for</p><p>declaration of title of ownership but where possession</p><p>is not sought, is hit by the proviso of Section 34 of the</p><p>Specific Relief Act, 1963 and, thus, not maintainable. In</p><p>Vinay Krishna v. Keshav Chandra [1993 Supp (3) SCC</p><p>129] this Court dealt with a similar issue where the plaintiff</p><p>was not in exclusive possession of property and had filed</p><p>a suit seeking declaration of title of ownership. Similar</p><p>view has been reiterated observing that the suit was not</p><p>maintainable, if barred by the proviso to Section 34 of the</p><p>Specific Relief Act. (See also Gian Kaur v. Raghubir Singh</p><p>[(2011) 4 SCC 567)</p><p>57. In view of the above, the law becomes crystal clear</p><p>that it is not permissible to claim the relief of declaration</p><p>without seeking consequential relief.</p><p>29 1993 Supp (3) SCC 129</p><p>30 [2012] 8 SCR 35 : (2012) 8 SCC 148</p><p>346 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>58. In the instant case, the suit for declaration of title of</p><p>ownership had been filed, though Respondent 1-plaintiff</p><p>was admittedly not in possession of the suit property. Thus,</p><p>the suit was barred by the provisions of Section 34 of the</p><p>Specific Relief Act and, therefore, ought to have been</p><p>dismissed solely on this ground. The High Court though</p><p>framed a substantial question on this point but for unknown</p><p>reasons did not consider it proper to decide the same.”</p><p>30. In Venkataraja and Ors. v. Vidyane Doureradjaperumal (Dead)</p><p>thr. LRs (2-Judge Bench)31, the purpose behind Section 34 was</p><p>elucidated by this Court. It was observed that the purpose behind</p><p>the inclusion of the proviso is to prevent multiplicity of proceedings.</p><p>It was further expounded that a mere declaratory decree remains</p><p>non-executable in most cases. This Court noted that the suit was</p><p>never amended, even at a later stage to seek the consequential relief</p><p>and therefore, it was held to be not maintainable. This position of law</p><p>has been reiterated recently in Akkamma and Ors. v. Vemavathi</p><p>and Ors. (2-Judge Bench)32.</p><p>31. This Court in Executive Officer, Arulmigu Chokkanatha Swamy</p><p>Koil Trust, Virudhunagar v. Chandran and Others (2-Judge</p><p>Bench)33 while reversing the High Court decree, observed that</p><p>because of Section 34 of the SRA, 1963, the plaintiff not being in</p><p>possession and claiming only declaratory relief, ought to have claimed</p><p>the relief of recovery of possession. It was held that the Trial Court</p><p>rightly dismissed the suit on the basis that the plaintiff has filed a</p><p>suit for a mere declaration without relief for recovery, which is clearly</p><p>not maintainable.</p><p>32. That apart, it is now well settled that the lapse of limitation bars</p><p>only the remedy but does not extinguish the title. Reference may be</p><p>made to Section 27 of the Limitation Act. This aspect was overlooked</p><p>entirely by the High Court in reversing the findings of the Courts</p><p>below. It was not justified for it to have overlooked the aspect of</p><p>limitation, particularly when deciding a dispute purely civil in nature.</p><p>31 [2013] 5 SCR 814 : (2014) 14 SCC 502</p><p>32 [2021] 10 SCR 1187 : 2021 SCC Online SC 1146</p><p>33 [2017] 5 SCR 473 : (2017) 3 SCC 702</p><p>[2024] 2 S.C.R. 347</p><p>Vasantha (Dead) Thr. Lr. v. Rajalakshmi @ Rajam (Dead) Thr.Lrs.</p><p>33. Adverting to the facts of the present case, on a perusal of the plaint,</p><p>it is evident that the plaintiff was aware that the appellant herein was</p><p>in possession of the suit property and therefore it was incumbent</p><p>upon him to seek the relief which follows. Plaintiff himself has stated</p><p>that defendant no. 1 was in possession of the subject property and</p><p>had sought to transfer possession of the same to defendant no.2,</p><p>thereby establishing that he himself was not in possession of the</p><p>subject property. We are not inclined to accept the submission of</p><p>the learned counsel for the respondent on this issue. We note that</p><p>after the death of the life-estate holder in 2004, there was no attempt</p><p>made by the original plaintiff to amend the plaint to seek the relief of</p><p>recovery of possession. It is settled law that amendment of a plaint</p><p>can be made at any stage of a suit34, even at the second appellate</p><p>stage35.</p><p>34. In view of the above, the second issue is answered in the favour of</p><p>the Appellants herein and against the Respondent.</p><p>CONCLUSION</p><p>35. As evidenced from the discussion hereinabove, the judgment</p><p>impugned before us fails scrutiny at the threshold stage itself, i.e.</p><p>on limitation as also maintainability of the suit. This being the case,</p><p>the judgment of the Trial Court in O.S. No. 726 of 1993 as also the</p><p>First Appellate Court in S.C. Appeal Suit 47/99 FTC-II Appeal Suit</p><p>113/2002 which dismissed the suit of Gopalkrishnan on the grounds</p><p>of limitation cannot be faulted with.</p><p>36. The impugned judgment in Second Appeal No. 1926 of 2004 dated</p><p>27th September 2012 titled as Gopalakrishnan & Anr. v. Vasantha</p><p>& Ors. is set aside. The appeal is allowed in the above terms.</p><p>Pending application(s) if any, shall stand disposed of. The holding in</p><p>the judgments of the Learned Trial Court as also the First Appellate</p><p>Court are restored.</p><p>Headnotes prepared by: Ankit Gyan Result of the case:</p><p>Appeal allowed.</p><p>34 Harcharan v. State of Haryana, (1982) 3 SCC 408 (2-Judge Bench)</p><p>35 Rajender Prasad v. Kayastha Pathshala, (1981) Supp 1 SCC 56 (2-Judge Bench)</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-39507158975044644762024-03-09T06:28:00.000+05:302024-03-09T06:28:02.511+05:30Code of Criminal Procedure, 1973 – s. 482 – Powers of the High Court under – Banking financial institution sanctioned loan facilities to the borrowers, however, the borrowers defaulted – Banking institution auctioned the property and sold the shares of the borrowers for the recovery of its dues – Registration of FIR by the borrowers against the Banking institution and its officers, and investigation by the Enforcement Directorate – Writ petition before the High Court by the officers seeking quashing of FIR and as also consequential proceedings arising therefrom – Orders passed by the High Court staying the investigations of the FIRs and ECIR and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR – Propriety:Held: Inherent powers u/s. 482 do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice – Statutory power has to be exercised sparingly with circumspection and in the rarest of rare cases – Said order passed in utter disregard of the settled legal position – Without undermining the powers of the High Court u/s. 482 to quash the proceedings if the allegations made in the FIR or complaint prima facie do not constitute any offence against the accused, or if the criminal proceedings are found to be manifestly malafide or malicious, instituted with ulterior motive etc., the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR, particularly when the investigations were at a very nascent stage – In a way, by passing such orders of staying the investigations and restraining the investigating agencies from taking any coercive measure against the accused pending the petitions u/s. 482, the High Court granted blanket orders restraining the arrest without the accused applying for the anticipatory bail – Thus, the impugned orders passed by the High Court being not in consonance with the legal position, set aside – Impugned interim orders passed by the High Court qua the accused stands vacated. [Paras 20, 23-25] Judicial discipline – Principle of:Held: Judicial discipline and Judicial comity and demands that higher courts should follow the law – Extraordinary and inherent powers of the court do not confer any arbitrary jurisdiction on the court to act according to its whims and caprice. [Paras 24, 25] <div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">* Author</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 311 : 2024 INSC 106</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">v.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">(Criminal Appeal No. 843 of 2024)</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">13 February 2024</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[Bela M. Trivedi* And Prasanna B. Varale, JJ.]</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Issue for Consideration</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Interim orders passed by the High Court staying the investigations</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of the FIRs and the Enforcement Directorate, if justified.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Headnotes</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Code of Criminal Procedure, 1973 – s. 482 – Powers of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">High Court under – Banking financial institution sanctioned</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">loan facilities to the borrowers, however, the borrowers</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">defaulted – Banking institution auctioned the property</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and sold the shares of the borrowers for the recovery of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">its dues – Registration of FIR by the borrowers against</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the Banking institution and its officers, and investigation</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by the Enforcement Directorate – Writ petition before the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">High Court by the officers seeking quashing of FIR and as</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">also consequential proceedings arising therefrom – Orders</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">passed by the High Court staying the investigations of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">FIRs and ECIR and restrained the investigating agencies</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">from investigating into the cognizable offences as alleged</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the FIRs and the ECIR – Propriety:</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Held: Inherent powers u/s. 482 do not confer any arbitrary</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">jurisdiction on the High Court to act according to whims or caprice</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">– Statutory power has to be exercised sparingly with circumspection</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and in the rarest of rare cases – Said order passed in utter</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">disregard of the settled legal position – Without undermining the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">powers of the High Court u/s. 482 to quash the proceedings if</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the allegations made in the FIR or complaint prima facie do not</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">constitute any offence against the accused, or if the criminal</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">proceedings are found to be manifestly malafide or malicious,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">instituted with ulterior motive etc., the High Court could not have</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">stayed the investigations and restrained the investigating agencies </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">312 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">from investigating into the cognizable offences as alleged in the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">FIRs and the ECIR, particularly when the investigations were at a</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">very nascent stage – In a way, by passing such orders of staying</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the investigations and restraining the investigating agencies from</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">taking any coercive measure against the accused pending the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petitions u/s. 482, the High Court granted blanket orders restraining</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the arrest without the accused applying for the anticipatory bail</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">– Thus, the impugned orders passed by the High Court being</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">not in consonance with the legal position, set aside – Impugned</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">interim orders passed by the High Court qua the accused stands</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">vacated. [Paras 20, 23-25]</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Judicial discipline – Principle of:</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Held: Judicial discipline and Judicial comity and demands that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">higher courts should follow the law – Extraordinary and inherent</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">powers of the court do not confer any arbitrary jurisdiction on the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">court to act according to its whims and caprice. [Paras 24, 25]</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Case Law Cited</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Neeharika Infrastructure Pvt. Ltd. vs. State of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Maharashtra and Others, [2021] 4 SCR 1044 : (2021)</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">SCC Online SC 315 – relied on.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">K. Virupaksha and Another vs. State of Karnataka and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Another, [2020] 2 SCR 1020 : (2020) 4 SCC 440; A.P.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Mahesh Cooperative Urban Bank Shareholders Welfare</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Association vs. Ramesh Kumar Bung and Others, [2021]</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">6 SCR 850 : (2021) 9 SCC 152; State of Telangana</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">vs. Habib Abdullah Jeelani and Others, [2017] 1 SCR</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">141 : 2017 (2) SCC 779 – referred to.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">List of Acts</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Code of Criminal Procedure, 1973; Prevention of Money Laundering</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Act, 2002.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">List of Keywords</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Quashing of FIR; Staying the investigations; Powers of the High</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Court; Malafide or malicious criminal proceedings; Investigating</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">agencies; Enforcement Directorate; Inherent powers; Judicial</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">comity; Judicial discipline; Extraordinary powers; Money</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">laundering.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 313</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Case Arising From</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.843</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of 2024</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">From the Judgment and Order dated 13.07.2023 of the High Court of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Judicature at Allahabad in CRMWP No.10893 of 2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">With</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Criminal Appeal Nos. 844 And 845 of 2024</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Appearances for Parties</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">S.V. Raju, ASG, Siddhartha Dave, Sr. Adv., Udai Khanna, Rudra</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Pratap, Talha Abdul Rahman, M Shaz Khan, Tushar Randhawa,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Rahul Sharma, Nandini Singh, Adnan Yousuf, Mukesh Kumar Maroria,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Advs. for the Appellant.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"> Ardhendumauli Kumar Prasad, Sr. Adv./A.A.G, Ranjit Kumar, Dhruv</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Mehta, Sr. Advs., Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Mr.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Ankit Banati, Kajal Dalal, E. C. Agrawala, Ms. Fauzia Shakil, Rajat</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Singh, Ms. Rukhmini S. Bobde, Vivek Narayan Sharma, Sarthak</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Chandra, Akshay Kumar, Ms. Ananya Sahu, Deepesh Singh, Arun</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Pratap Singh Rajawat, Tishampati Sen, Ms. Riddhi Sancheti, Anurag</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Anand, Mukul Kulhari, Anubhav Ray, Advs. for the Respondents.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Judgment / Order of the Supreme Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Judgment</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Bela M. Trivedi, J.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">1. Leave granted.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">2. The appellants being aggrieved by the interim orders dated</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">13.07.2023, 08.08.2023 and 13.09.2023 passed by the High Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of Judicature at Allahabad in Criminal Misc. Writ Petition Nos.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">10893/2023, 11837/2023 and 14053/2023 respectively, have preferred</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the instant appeals. Vide the impugned orders, the High Court has</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">stayed the proceedings of the FIRs registered against the concerned</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">respondents-accused as also stayed the proceedings of ECIR No.-</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">ECIR/HIU-I/06/2023 registered by the Directorate of Enforcement</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">against the concerned respondents, and further directed not to take</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">any coercive action against the said respondents pending the said </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">314 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">writ petitions. All the appeals being interconnected with each other,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">they were heard together and it would be appropriate to decide them</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by this common judgment.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">3. The respondent India Bulls Housing Finance Limited (IHFL) is a nonbanking financial institution incorporated under the provisions of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Companies Act. IHFL deals with the public money. The major source</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of funds for the loans to be advanced by IHFL, is either the loans</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">from the other banks or from the public in the form of non-convertible</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">debentures. The respondents Niraj Tyagi is the President (Legal) and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Reena Bagga is the authorized officer of the IHFL.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">4. M/s Kadam Developers Pvt. Ltd. (hereinafter referred to as M/s</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Kadam) was one of the Shipra Group entities. M/s Kadam had</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">a sub-lease of a parcel of land admeasuring 73 acres in Sector</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">128, Noida, which was allotted to it by the predecessor of Yamuna</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Expressway Industrial Development Authority (hereinafter referred to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">as the YEIDA). The 100% equity shares of M/s Kadam were held by</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Shipra Estate Limited (98%); Mohit Singh (1%) and Bindu Singh (1%).</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">5. Between 2017-2020, IHFL had sanctioned 16 loan facilities to the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">tune of Rs. 2,801 crores to the Shipra Group/ Borrowers comprising</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of Shipra Hotels Ltd., Shipra Estate Ltd. and Shipra Leasing Pvt.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Ltd. for the purposes of the construction and/or development of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Housing/Residential Projects. Against the said sanctioned loan, a</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">sum of approximately 1995.37 crores was disbursed. The financial</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">assistance was secured by the Shipra Group by executing 22</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">pledge agreements whereby the shares of various companies were</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">pledged in favour of IHFL. A pledge agreement was also entered</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">into by Shipra Groups and M/s Kadam with IHFL pledging 100%</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">equity shares (dematerialized) of M/s Kadam to secure the loan. The</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">mortgaged properties also included 73 acres of land at Noida that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">had been sub-let to M/s Kadam by YEIDA, and the property called</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">‘Shipra Mall’ in Ghaziabad.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">6. There being defaults in the repayment of loan amount, IHFL had</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">issued notices recalling all the loans advanced to the Shipra Group</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">amounting to Rs. 1763 crores (approx.). The said notices came to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">be challenged by the Shipra Group before the Delhi High Court, by</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">filing FAO(OS) COMM 59/2021. The Delhi High Court vide order</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">dated 16.04.2021 recorded that IHFL could proceed further with the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">recovery proceedings, however the sale of shares should be done </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 315</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">at a fair market value and in a transparent manner. It appears that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">a series of litigations under the SARFAESI Act before the DRT and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">High Court had ensued between the parties.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">7. IHFL on 01.07.2021 ultimately sold the shares of M/s Kadam pledged</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">with it to one Final Step Developers P. Ltd., a subsidiary of M3M India</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">P. Ltd. for Rs. 750 crores. Since Final Step Developers (earlier known</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">as M/s Creative Soul Technology P. Ltd) had no source of funds of its</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">own, the funds to purchase the shares of M/s Kadam were provided</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to the Final Step Developers by the M3M India, which managed to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">take loan from the IHFL on the same day i.e. 03.07.2021. Thus, the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">purchase of shares of M/s Kadam by Final Step from the IHFL was</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">funded by the IHFL itself. The mortgaged properties-Shipra Mall at</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Ghaziabad and the parcel of law admeasuring 73 acres at Noida</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">also eventually came to be sold by the IHFL towards the recovery</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of its dues from the Shipra Group.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">8. On 09.04.2023, an FIR being No. 427 of 2023 came to be filed by</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">one Amit Walia, a Director of Shipra Hotels, against IHFL and its</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">officers for the offences under Sections 420, 467, 468, 471, 120-B</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">IPC, 323, 504 & 506 at Police Station Indirapuram, alleging inter alia</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">that IHFL had illegally showed the Shipra group to be the defaulters,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">so that they may misappropriate the properties owned by the Group</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">through illegal means. The FIR also alleged that IHFL had conspired</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">with M3M India, and by forging and fabricating the documents sold</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">73 acres of land of M/s Kadam to M3M India, for a sum of 300</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">crores when the market value of the same was about 4000 crores.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">IHFL had also undervalued the shares and securities on the basis</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of false and forged documents and had caused great loss to the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Shipra Estate Company and its Directors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">9. On 15.04.2023, another FIR being No. 197 of 2023 came to be filed</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by YEIDA against IHFL, M3M India, M/s Kadam and M/s Beacon</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Trusteeship Ltd. for the offences under Sections 420, 467, 468, 471</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and 120-B at Police Station Beta-2, Greater Noida alleging inter</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">alia that the first charge of YEIDA was preserved in the permission</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">issued on 09.01.2018 for pledging the shares to IHFL however, the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">IHFL neither informed nor sought any permission of YEIDA before</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">transferring the shares of M/s Kadam to M3M India. Thus, the terms</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and conditions contained in the permission letter, indemnity certificate</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and sub-lease document were violated by the financial institution and </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">316 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the sub-lessee, due to which the YEIDA had suffered a financial loss</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of about Rs. 200 crores.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">10. On 22.07.2023, yet another FIR being No. 611 of 2023 came to be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">filed by one Mohit Singh, authorized representative of Shipra Group,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">against Reena Bagga in her capacity as an authorized officer of IHFL</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and others for the offences under Section 420, 120B IPC and 82 of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Registration Act at Police Station Kavi Nagar, Ghaziabad, alleging</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">therein that “Shipra Mall”, which formed a part of the properties</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">mortgaged with IHFL, had been sold in pursuance of recovery</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">proceedings on the basis of false and fabricated documents, for a</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">sum of Rs. 551 Crore to Himri Estate Pvt. Ltd. although the actual</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">value of the land was over 2000 crore. It has been alleged that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">illegalities were committed by the said accused, by not showing the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">actual value of Shipra Mall and thereby had caused huge loss to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the Shipra Group.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">11. Since various FIRs came to be registered against the IHFL and its</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">officers, the same came to be challenged by them by filing the W.P.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">(Crl) being no. 166 of 2023 before this Court (Gagan Banga and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Anr. vs. State of West Bengal and Ors.).</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">12. Pending the said W.P. No.166/2023, the Directorate of Enforcement</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">(ED) on the basis of the said FIR nos. 197/2023 and 427/2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">registered an ECIR bearing no. ECIR/HIU-I/06/2023 in Delhi on</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">09.06.2023, to investigate into the offences of money laundering</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">under the Prevention of Money Laundering Act, 2002.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">13. According to the appellant-ED, this Court without giving the appellant</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">any opportunity of hearing, passed the following order on 04.07.2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">while disposing off the W.P. (Crl) No. 166/2023 and connected</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Contempt Petition.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">“1 to 3.……</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">4. Vide order dated 28.04.2023 passed in W.P. (Crl.)</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">No. 166/2023, criminal proceedings in three such FIRs</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">instituted by borrowers in different States, namely FIR No.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">646/2022 dated 26.10.2022 registered at P.S. Titagarh,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">FIR No. 427/2023 dated 09.04.2023 registered at P.S.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Indirapuram and FIR No. 25/2021 dated 27.01.2021</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">registered at P.S. EOW, Delhi were stayed.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 317</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">5. Further FIR No. 197/2023 dated 15.04.2023 was filed</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by YEIDA at PS Beta-2, Greater Noida, UP, which also</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">refers to the aforesaid FIR No. 427/2023 dated 09.04.2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">registered at P.S. Indirapuram with some overlapping facts.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">It is stated that on the basis of these two connected FIRs</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">namely FIR No. 427/2023 and 197/2023, now the ED</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">has registered ECIR bearing No. ECIR/HIU-I/06/2023 in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Delhi. The petitioners have now challenged the said FIRs</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and ECIR.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">6. In the circumstances, as it may also involve adjudication</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">on facts, we deem it appropriate to permit the petitioners</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to approach the respective jurisdictional High Courts to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">challenge all four FIRs and the ECIR within two weeks</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">from today, with a request to the respective High Courts</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to consider and decide the petitions expeditiously, not later</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">than six months of their presentation.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">7. We also direct DGPs of respective States to look into</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the matter, examine the contentions of the petitioners in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">respect of the contents of FIRs, and to take appropriate</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">measures in accordance with law within a period of one</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">month.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">8. Till final disposal of the respective petitions, interim order</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">dated 28.04.2023 passed in W.P.(Crl.) No. 166/2023 would</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">continue in the three FIRs mentioned therein.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">9. In so far as the further FIR No. 197/2023 dated</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">15.04.2023 filed by YEIDA and ECIR bearing No. ECIR/</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">HIU-I/06/2023 are concerned, no coercive steps would</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">be taken against the petitioner financial institution and its</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">officers, representatives and managers till final disposal of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">such petitions by the High Court, and it would be open for</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the petitioners to seek stay of proceedings which would be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">considered by the High Court on its own merits. It is clarified</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">that this interim protection would only be applicable to the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petitioner financial institution and its officers, representatives</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and managers, and not to any other person.”</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">14. The respondent-Niraj Tyagi and IHFL thereafter filed a writ petition</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the High Court being Criminal Misc. Writ Petition No. 10893/2023 </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">318 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">seeking issuance of appropriate writ, order and direction for declaring</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Section 420 of IPC as arbitrary and ultra vires to the Constitution</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of India and seeking quashing of the FIR No.197 of 2023 dated</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">15.04.2023 as also the consequential proceedings arising therefrom</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">as initiated by the ED in ECIR bearing No. ECIR/HIU-I/06/2023.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Similarly, the respondent Reena Bagga and IHFL filed another writ</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petition being Criminal Miscellaneous Writ Petition No. 11837/2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">seeking quashing of the FIR being No.611/2023 registered against</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">them as also all the consequential actions taken by any authority/</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">agency in pursuance to the said FIR. The respondent M3M India</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Pvt. Ltd. and Kadam Developers Pvt. Ltd. also filed a writ petition</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">being Criminal Misc. Writ Petition No.14053/2023 seeking the reliefs</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">similar to the reliefs prayed for in the Writ Petition No.10893/2023.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">15. The High Court passed the following impugned Order on 13.07.2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in Criminal Misc. Writ Petition No.10893 of 2023: -</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">“19. In view of the above, we are of the opinion that the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petitioners have made out a case for grant of the interim</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">as relief prayed for. Accordingly, in furtherance of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">protection granted by the Apex Court to the petitioners</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by the order dated 4th July, 2023, while disposing of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Contempt Petition (Civil) No. 774 of 2023, it is provided</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">that further proceedings, including summoning of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">officers, consequent to the F.I.R. No. 197 of 2023 dated</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">15.4.2023 under Sections 420, 467, 468, 471 and 120-B</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">- IPC, Police Station Beta-2, Greater Noida, Gautam Budh</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Nagar, registered by Respondent No.2 and consequent</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">ECIR No. ECIR/HIU-I/06/2023 registered by Respondent</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">No. 4, shall remain stayed so far as it confines to the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petitioners only and no coercive action shall be taken</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">against them.”</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">16. The High Court passed the other impugned orders on 08.08.2023 in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Criminal Miscellaneous Writ Petition No.11837/2023 and on 13.09.2023</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in Criminal Miscellaneous Writ Petition No.14053/2023, following the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">order dated 13.07.2023 passed in Writ Petition No.10893/2023.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Consequently, the proceedings of the FIR No.197/2023, FIR</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">No.611/23 as also the ECIR No. ECIR/HIU-I/06/2023 have been</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">stayed qua the concerned respondents herein pending the said three</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">writ petitions before the High Court, and the concerned respondents </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 319</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">who are the accused in the said FIRs have been protected from any</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">coercive action being taken against them. The present appeals stem</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">out of the aforesaid impugned orders passed by the High Court.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">17. The ASG, Mr. Raju appearing for the appellant ED in all the three</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">appeals vehemently submitted that this Court had passed the order</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">dated 04.07.2023 in Gagan Banga’s case staying the proceedings</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of ECIR and the FIRs registered against the concerned respondents</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">without hearing the ED, and therefore the ED has filed a Review</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Petition, which is pending before this Court. He further submitted</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">that the High Court also without assigning any cogent reasons in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the impugned orders stayed the said proceedings of ECIR and FIRs</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">under the guise of following the said order dated 04.07.2023 passed</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by this Court. Placing heavy reliance on the decision of the ThreeJudge Bench in Neeharika Infrastructure Pvt. Ltd. vs. State of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Maharashtra and Others1</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">, he submitted that this Court has strongly</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">deprecated the practice of the courts granting interim orders staying</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the investigation or directing the investigating agencies not to take</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">coercive actions against the accused. The impugned orders passed</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by the High Court therefore being in the teeth of the said settled legal</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">position, the same deserve to be quashed and set aside forthwith.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">18. However, the learned Senior counsels appearing for the respondents</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the respective appeals, taking the Court to the proceedings which</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">had taken place under the SARFAESI Act and before the High Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and this Court, submitted that the respondent-complainant Shipra</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Group having failed in all the said proceedings had taken recourse</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to the criminal proceedings to create a fear amongst the financial</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">institution and its officers. They further submitted that the High Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">taking into consideration the order passed by this Court in Gagan</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Banga’s case had rightly protected the financial institution and its</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">officers who had discharged their duties for the recovery of the dues</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">from the borrowers. Reliance is placed on the decision of this Court in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">K. Virupaksha and Another vs. State of Karnataka and Another2</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and in A.P. Mahesh Cooperative Urban Bank Shareholders Welfare</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Association vs. Ramesh Kumar Bung and Others3</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">, to submit that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">1 [2021] 4 SCR 1044 : (2021) SCC Online SC 315</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">2 [2020] 2 SCR 1020 : (2020) 4 SCC 440</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">3 [2021] 6 SCR 850 : (2021) 9 SCC 152</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">320 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">even in case of Neeharika Infrastructure (supra), the discretion</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">has been conferred on the High Court to pass the interim orders in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">exceptional cases for not taking coercive steps against the accused</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">pending the proceedings, particularly when the proceedings under</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the SARFAESI Act were initiated against the borrowers. According</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to them, bypassing the statutory remedies available to the borrowers</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">or having failed in such proceedings, the borrowers should not be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">permitted to prosecute the financial institution or its officers or the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">purchasers just to instill a fear in their mind, which otherwise would</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">have the potentiality to affect the marrows of economic health of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the nation.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">19. At the outset, it may be noted that the impugned interim orders have</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">been passed by the High Court under the umbrella of the order</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">dated 04.07.2023 passed by this Court in Gagan Banga’s case,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">creating an impression that the impugned orders were passed in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">furtherance of the said order, though this Court had passed the said</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">order leaving it open to the High Court to decide the writ petitions</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">on their own merits.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">20. In our opinion, it’s a matter of serious concern that despite the legal</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">position settled by this Court in catena of decisions, the High Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">has passed the impugned orders staying the investigations of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">FIRs and ECIR in question in utter disregard of the said settled legal</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">position. Without undermining the powers of the High Court under</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Section 482 of Cr.PC to quash the proceedings if the allegations made</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the FIR or complaint prima facie do not constitute any offence</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">against the accused, or if the criminal proceedings are found to be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">manifestly malafide or malicious, instituted with ulterior motive etc.,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">we are of the opinion that the High Court could not have stayed</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the investigations and restrained the investigating agencies from</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">investigating into the cognizable offences as alleged in the FIRs and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the ECIR, particularly when the investigations were at a very nascent</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">stage. It hardly needs to be reiterated that the inherent powers under</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Section 482 of Cr.PC do not confer any arbitrary jurisdiction on</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the High Court to act according to whims or caprice. The statutory</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">power has to be exercised sparingly with circumspection and in the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">rarest of rare cases. In a way, by passing such orders of staying the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">investigations and restraining the investigating agencies from taking</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">any coercive measure against the accused pending the petitions</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">under Section 482 Cr.PC, the High Court has granted blanket orders </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 321</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">restraining the arrest without the accused applying for the anticipatory</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">bail under Section 438 of Cr.PC.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">21. This Court in State of Telangana vs. Habib Abdullah Jeelani and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Others4</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">, while dealing with the contours of Section 482 and 438</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Cr.PC had emphasized that the direction not to arrest the accused</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">or not to take coercive action against the accused in the proceedings</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">under Section 482 Cr.PC, would amount to an order under Section</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">438 Cr.PC, albeit without satisfaction of the conditions of the said</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">provision, which is legally unacceptable.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">22. Recently, a Three-Judge Bench in Neeharika Infrastructure (supra)</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">while strongly deprecating the practice of the High Courts in staying</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the investigations or directing not to take coercive action against the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">accused pending petitions under Section 482 of Cr.PC, has issued</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the guidelines, which may be reproduced hereinbelow for ready</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">reference:-</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">“Conclusions</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33. In view of the above and for the reasons stated above,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">our final conclusions on the principal/core issue, whether</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the High Court would be justified in passing an interim</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">order of stay of investigation and/or “no coercive steps</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to be adopted”, during the pendency of the quashing</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petition under Section 482CrPC and/or under Article 226</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of the Constitution of India and in what circumstances and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">whether the High Court would be justified in passing the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">order of not to arrest the accused or “no coercive steps</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to be adopted” during the investigation or till the final</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">report/charge-sheet is filed under Section 173CrPC, while</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">dismissing/disposing of/not entertaining/not quashing the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">criminal proceedings/complaint/FIR in exercise of powers</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">under Section 482CrPC and/or under Article 226 of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Constitution of India, our final conclusions are as under:</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.1. Police has the statutory right and duty under the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">relevant provisions of the Code of Criminal Procedure</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">contained in Chapter XIV of the Code to investigate into</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">a cognizable offence.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">4 [2017] 1 SCR 141 : 2017 (2) SCC 779</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">322 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.2. Courts would not thwart any investigation into the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">cognizable offences.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.3. It is only in cases where no cognizable offence or</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">offence of any kind is disclosed in the first information report</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">that the Court will not permit an investigation to go on.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.4. The power of quashing should be exercised sparingly</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">with circumspection, as it has been observed, in the “rarest</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of rare cases” (not to be confused with the formation in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the context of death penalty).</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.5. While examining an FIR/complaint, quashing of which</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">is sought, the court cannot embark upon an enquiry as to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the reliability or genuineness or otherwise of the allegations</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">made in the FIR/complaint.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.6. Criminal proceedings ought not to be scuttled at the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">initial stage.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.7. Quashing of a complaint/FIR should be an exception</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">rather than an ordinary rule.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.8. Ordinarily, the courts are barred from usurping the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">jurisdiction of the police, since the two organs of the State</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">operate in two specific spheres of activities and one ought</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">not to tread over the other sphere.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.9. The functions of the judiciary and the police are</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">complementary, not overlapping.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.10. Save in exceptional cases where non-interference</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">would result in miscarriage of justice, the Court and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the judicial process should not interfere at the stage of</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">investigation of offences.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.11. Extraordinary and inherent powers of the Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">do not confer an arbitrary jurisdiction on the Court to act</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">according to its whims or caprice.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.12. The first information report is not an encyclopaedia</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">which must disclose all facts and details relating to the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">offence reported. Therefore, when the investigation by the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">police is in progress, the court should not go into the merits</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of the allegations in the FIR. Police must be permitted </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 323</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to complete the investigation. It would be premature to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">pronounce the conclusion based on hazy facts that the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">complaint/FIR does not deserve to be investigated or that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">it amounts to abuse of process of law. After investigation, if</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the investigating officer finds that there is no substance in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the application made by the complainant, the investigating</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">officer may file an appropriate report/summary before the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">learned Magistrate which may be considered by the learned</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Magistrate in accordance with the known procedure.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.13. The power under Section 482CrPC is very wide,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">but conferment of wide power requires the court to be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">more cautious. It casts an onerous and more diligent duty</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">on the court.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.14. However, at the same time, the court, if it thinks</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">fit, regard being had to the parameters of quashing and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the self-restraint imposed by law, more particularly the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">parameters laid down by this Court in R.P. Kapur [R.P.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Kapur v. State of Punjab, 1960 SCC OnLine SC 21 : AIR</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">1960 SC 866] and Bhajan Lal [State of Haryana v. Bhajan</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Lal, 1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] , has</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the jurisdiction to quash the FIR/complaint.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.15. When a prayer for quashing the FIR is made by the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">alleged accused and the court when it exercises the power</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">under Section 482CrPC, only has to consider whether the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">allegations in the FIR disclose commission of a cognizable</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">offence or not. The court is not required to consider on</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">merits whether or not the merits of the allegations make</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">out a cognizable offence and the court has to permit the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">investigating agency/police to investigate the allegations</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the FIR.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.16. The aforesaid parameters would be applicable and/</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">or the aforesaid aspects are required to be considered</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">by the High Court while passing an interim order in a</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">quashing petition in exercise of powers under Section 482</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">CrPC and/or under Article 226 of the Constitution of India.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">However, an interim order of stay of investigation during</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the pendency of the quashing petition can be passed with</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">circumspection. Such an interim order should not require </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">324 [2024] 2 S.C.R.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Digital Supreme Court Reports</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">to be passed routinely, casually and/or mechanically.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Normally, when the investigation is in progress and the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">facts are hazy and the entire evidence/material is not</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">before the High Court, the High Court should restrain</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">itself from passing the interim order of not to arrest or “no</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">coercive steps to be adopted” and the accused should</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">be relegated to apply for anticipatory bail under Section</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">438CrPC before the competent court. The High Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">shall not and as such is not justified in passing the order</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of not to arrest and/or “no coercive steps” either during</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the investigation or till the investigation is completed and/</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">or till the final report/charge-sheet is filed under Section</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">173 CrPC, while dismissing/disposing of the quashing</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petition under Section 482CrPC and/or under Article 226</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of the Constitution of India.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.17. Even in a case where the High Court is prima</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">facie of the opinion that an exceptional case is made</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">out for grant of interim stay of further investigation, after</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">considering the broad parameters while exercising the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">powers under Section 482CrPC and/or under Article 226</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of the Constitution of India referred to hereinabove, the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">High Court has to give brief reasons why such an interim</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">order is warranted and/or is required to be passed so that</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">it can demonstrate the application of mind by the Court</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and the higher forum can consider what was weighed</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">with the High Court while passing such an interim order.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">33.18. Whenever an interim order is passed by the High</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Court of “no coercive steps to be adopted” within the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">aforesaid parameters, the High Court must clarify what</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">does it mean by “no coercive steps to be adopted” as the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">term “no coercive steps to be adopted” can be said to be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">too vague and/or broad which can be misunderstood and/</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">or misapplied.”</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">23. The impugned orders passed by the High Court are in utter disregard</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and in the teeth of the said guidelines issued by the Three-Judge</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Bench of this Court. It was sought to be submitted by the Learned</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Counsels for the respondents-accused that the allegations made</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the FIRs are of civil nature, and have been given a colour of </div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">[2024] 2 S.C.R. 325</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Directorate of Enforcement v. Niraj Tyagi & Ors.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">criminal nature. According to them, as discernible from the record,</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">number of proceedings had ensued between the parties pursuant to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the actions taken by the IHFL against the complainant-borrower for</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the recovery of its dues under the SARFAESI Act, and the borrower</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">M/s Shipra after having failed in the said proceedings had filed the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">complaints with ulterior motives. We do not propose to examine</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the merits of the said submissions as the writ petitions filed by the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">concerned respondents-accused seeking quashing of the FIRs on</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">such grounds are pending for consideration before the High Court.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">It would be open for the High Court to examine the merits of the</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">petitions and decide the same in accordance with law.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">24. Without elaborating any further, suffice it to say that judicial comity</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">and judicial discipline demands that higher courts should follow</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">the law. The extraordinary and inherent powers of the court do not</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">confer any arbitrary jurisdiction on the court to act according to its</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">whims and caprice.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">25. The impugned orders passed by the High Court being not in</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">consonance with the settled legal position, the same deserve to be</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">set aside and are hereby set aside. The impugned interim orders</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">passed by the High Court qua the concerned respondents-accused</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">in the present appeals stand vacated forthwith.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">26. We may clarify that we have not expressed any opinion on the merits</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">of the Writ Petitions which are pending before the High Court, and</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">that it would be open for the concerned respondents-accused to</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">take all legal contentions or take recourse to the legal remedies as</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">may be available to them in accordance with law.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">27. The appeals stand allowed accordingly.</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Headnotes prepared by: Nidhi Jain Result of the case:</div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;">Appeals allowed.</div></div>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-58725097641939688062024-03-09T06:23:00.000+05:302024-03-09T06:23:19.692+05:30 913 * Author [2024] 1 S.C.R. 909 : 2024 INSC 23 Jaipur Vidyut Vitran Nigam Ltd. & Ors. v. MB Power (Madhya Pradesh) Limited & Ors. (Civil Appeal No. 6503 of 2022) 08 January 2024 [B. R. Gavai* and Prashant Kumar Mishra, JJ.] Issue for Consideration State Commission held that the tariffs offered by the L-4 and L-5 bidders were not aligned to the prevailing market prices. In appeal by L-5, APTEL held that the State Commission had to necessarily adopt the tariff and had no power to consider whether the tariff was aligned to market prices. Impugned judgment of the High Court relying on the said judgment of the APTEL and the earlier orders of this Court concluded that applying the test of “filling the bucket”, the procurers were bound to take supply from the respondent No.1 at the rates quoted by it and it had a right to supply power since there was a gap of 300 MW between the power procured by the procurers and the ceiling of 906 MW determined by this Court. High Court whether justified in issuing mandamus directing the appellants to take supply of 200 MW power from the respondent No.1 at the rates quoted by it. Power of the State Commission to go into the question as to whether the prices quoted are market aligned or not and to take into consideration the aspect of consumers’ interest.<div class="toolbar" style="cursor: default; left: 0px; margin: 0px; padding: 0px; position: relative; right: 0px; z-index: 9999;"><div id="toolbarContainer" style="border-bottom: var(--toolbar-border-bottom); box-shadow: var(--toolbar-box-shadow); height: 32px; margin: 0px; padding: 0px; position: relative; width: 1290.91px;"><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;"><br /></span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">913</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">* Author</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">[2024] 1 S.C.R. 909 : 2024 INSC 23</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Jaipur Vidyut Vitran Nigam Ltd. & Ors.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">v.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">MB Power (Madhya Pradesh) Limited & Ors.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">(Civil Appeal No. 6503 of 2022)</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">08 January 2024</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">[B. R. Gavai* and Prashant Kumar Mishra, JJ.]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Issue for Consideration</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">State Commission held that the tariffs offered by the L-4 and L-5</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">bidders were not aligned to the prevailing market prices. In appeal</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">by L-5, APTEL held that the State Commission had to necessarily</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">adopt the tariff and had no power to consider whether the tariff was</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">aligned to market prices. Impugned judgment of the High Court</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">relying on the said judgment of the APTEL and the earlier orders</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of this Court concluded that applying the test of “filling the bucket”,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the procurers were bound to take supply from the respondent No.1</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">at the rates quoted by it and it had a right to supply power since</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">there was a gap of 300 MW between the power procured by the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">procurers and the ceiling of 906 MW determined by this Court. High</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Court whether justified in issuing mandamus directing the appellants</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">to take supply of 200 MW power from the respondent No.1 at the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">rates quoted by it. Power of the State Commission to go into the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">question as to whether the prices quoted are market aligned or not</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">and to take into consideration the aspect of consumers’ interest.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Headnotes</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity Act, 2003 – ss.63, 86 – Rajasthan Rajya Vidyut</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Prasaran Nigam Limited (RVPN) filed Petition before the State</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commission seeking approval for procurement of 1000 MW</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of power by a competitive bidding process – RFP was issued</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– Eventually, in consonance with the LoI, PPAs were signed</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">with the L-1, L-2 and L-3 bidders – State Commission held that</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the quantum of only 500 MW power was liable to be approved</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">considering the demand in the State as recommended by the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">EAC and it approved the tariff quoted by the L-1 to L-3 bidders</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– Appeals filed by L-2 and L-3 bidders before APTEL, allowed</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– Challenged by the appellants – Subsequently, Civil Appeals</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">were filed by L-5 bidder also– Disposing of the appeals, State</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commission was directed to go into the issue of approval for</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">adoption of tariff with regard to L-4 and L-5 bidders– Further,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">910 [2024] 1 S.C.R.Digital Supreme Court Reports</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">vide order dtd.19.11.18, State Commission was directed to</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">go into the issue of adoption of tariff – State Commission</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">held that the tariffs offered by the L-4 and L-5 bidders were</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">not aligned to the prevailing market prices – Appeal filed by</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">L-5 bidder, allowed by APTEL – Writ petition was filed by the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">respondent No.1 – Allowed by impugned judgment:</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Held: Unlike s.62 r/w ss.61 and 64, under the provisions of s.63,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the appropriate Commission does not “determine” tariff but only</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">“adopts” tariff already determined u/s.63 – Such “adoption” is only</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">if such tariff has been determined through a transparent process</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of bidding, and this transparent process of bidding must be in</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">accordance with the guidelines issued by the Central Governments</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– s.86(1)(b) gives ample power to the State Commission to regulate</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">electricity purchase and procurement process of distribution</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">licensees – It also empowers the State Commission to regulate</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the matters including the price at which electricity shall be procured</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">from the generating companies, etc. – Further, orders relied upon</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">by the APTEL, specifically the order dtd. 19.11.2018, clarified</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">that the State Commission was to decide the tariff u/s.63 having</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">regard to the law laid down both statutorily and by this Court – As</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">such, the State Commission was bound to take into consideration</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the Bidding Guidelines notified by the Central Government, and</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">specifically clause 5.15 thereof – State Commission justified in</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">considering the Clause 5.15 of the Bidding Guidelines which</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">specifically permits to reject all price bids if the rates quoted are</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">not aligned to the prevailing market prices – APTEL grossly erred</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">in holding that the State Commission has no power to go into the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">question, as to whether the prices quoted are market aligned or not</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">and also not to take into consideration the aspect of consumers’</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">interest – It cannot be read from the orders of this Court that the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">State Commission was bound to accept the bids as quoted by</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the bidders till the bucket was filled – No such direction can be</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">issued by this Court de hors the provisions of ss.63 and 86(1)(b)</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">and the Bidding Guidelines – Since the decision-making process</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">adopted by the Bid Evaluation Committee approved by the State</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commission, was in accordance with the law laid down by this</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Court, the same ought not to have been interfered with by the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">APTEL – High Court could not have issued a mandamus to the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">instrumentalities of the State to enter into a contract harmful to the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">public interest inasmuch as, if the power was to be procured by</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the procurers at the rates quoted by the respondent No.1, which</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">was even higher than the rates quoted by the L-5 bidder, then the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">[2024] 1 S.C.R. 911Jaipur Vidyut Vitran Nigam L t d . & O r s . v.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">M</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">B</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">P</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">o</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">w</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">e</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">r</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">(Madhya P r a d e s h ) L i m i t e d & O r s .</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">State would have to bear financial burden in thousands of crore</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">rupees, which in turn would have passed on to the consumers</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– Impugned judgment quashed and set aside – Cost imposed.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">[Paras 67, 71, 73-75, 78, 83, 104, 105]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity – Competitive Bidding Guidelines notified by the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Government of India u/s.63 – Respondent No.1 contended</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">that the procurer is bound to accept all the bids emerged in</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">a competitive bidding process once the bidding process was</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">found to be transparent and in compliance with the Bidding</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Guidelines:</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Held: If the contention is to be accepted it will do complete violence</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">to clause 5.15 of the Bidding Guidelines itself – If that view is</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">accepted, the DISCOMS will be compelled to purchase electricity</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">at a much higher rate as compared with other suppliers – The</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">said higher rate will be passed on to the consumers – As such,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">accepting the contention of the respondent No.1 would result in</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">adversely affecting the interests of the consumers and, in turn,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">would be against the larger public interest. [Para 77]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity Act, 2003 – s.63 – General Clauses Act – s.13(2)</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– “all”, “any” – Principle of literal interpretation – Principle</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of purposive construction – “all” used in clause 5.15 of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the Bidding Guidelines r/ws.86(1)(b) – Competitive Bidding</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Guidelines notified by the Government of India u/s.63 – It was</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">contended that the power under clause 5.15 of the Bidding</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Guidelines can be exercised only when the bidding process</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">is found to be not in compliance with the Bidding Guidelines</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">and is not transparent in respect of all the bidders and not in</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">respect of some of the bidders is concerned:</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Held: The contention is without substance – Words “all” or “any” will</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">have to be construed in their context taking into consideration the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">scheme and purpose of the enactment – What is the meaning which</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the legislature intended to give to a particular statutory provision</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">has to be decided by the Court on a consideration of the context</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">in which the word(s) appear(s) and in particular, the scheme and</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">object of the legislation – The word “all” used in clause 5.15 of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the Bidding Guidelines, read with the legislative policy for which</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the Electricity Act was enacted and r/ws.86(1)(b), will have to be</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">construed to be the one including “any” – Applying the principle of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">literal interpretation, the evaluation committee/BEC would be entitled</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">to reject only such of the price bids if it finds that the rates quoted</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">912 [2024] 1 S.C.R.Digital Supreme Court Reports</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">by the bidders are not aligned to the prevailing market prices – It</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">does not stipulate rejection of all the bids in the bidding process</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– If the contention that clause 5.15 of the Bidding Guidelines will</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">come into play, which permits the Evaluation Committee to reject</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">“all” price bids and not “any” one of them is accepted, it will lead</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">to absurdity – The Court, while interpreting a particular provision,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">will have to apply the principles of purposive construction – Such</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">an interpretation would result in defeating one of the main objects</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of the enactment, i.e., protection of the consumer. [Paras 84, 87,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">88 and 91]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Interpretation of Statutes – Principle of purposive construction</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– Discussed.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity Act, 2003 – ss.62, 63, 79(1)(b):</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Held: The non-obstante clause advisedly restricts itself to s.62,</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">there is no reason to put s.79 out of the way altogether – Either</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">u/s.62, or 63, the general regulatory power of the Commission</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">u/s.79(1)(b) is the source of the power to regulate, which includes</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the power to determine or adopt tariff – ss.62 and 63 deal with</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">“determination” of tariff, which is part of “regulating” tariff – In a</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">situation where the guidelines issued by the Central Government</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">u/s.63 cover the situation, the Central Commission is bound by</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">those guidelines and must exercise its regulatory functions, albeit</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">u/s.79(1)(b), only in accordance with those guidelines. [Para 68]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Alternate remedy – Electricity Act, 2003 – Constitution of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">India – Article 226 – Judicial review – Scope:</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Held: The Electricity Act is an exhaustive code on all matters</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">concerning electricity – Under the Electricity Act, all issues dealing</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">with electricity have to be considered by the authorities constituted</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">under the said Act – The State Electricity Commission and the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">APTEL have ample powers to adjudicate in the matters with</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">regard to electricity – These Tribunals are tribunals consisting of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">experts having vast experience in the field of electricity – In the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">present case, the High Court erred in directly entertaining the writ</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">petition when the respondent No.1-the writ petitioner before the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">High Court had an adequate alternate remedy of approaching the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">State Electricity Commission – Although, availability of an alternate</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">remedy is not a complete bar in the exercise of the power of judicial</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">review by the High Courts but, recourse to such a remedy would</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">be permissible only if extraordinary and exceptional circumstances</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">are made out – While exercising its power of judicial review, the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">[2024] 1 S.C.R. 913Jaipur Vidyut Vitran Nigam L t d . & O r s . v.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">M</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">B</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">P</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">o</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">w</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">e</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">r</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">(Madhya P r a d e s h ) L i m i t e d & O r s .</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Court can step in where a case of manifest unreasonableness or</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">arbitrariness is made out – There was not even an allegation with</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">regard to that effect – In such circumstances, recourse to a petition</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">under Article 226 of the Constitution of India in the availability of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">efficacious alternate remedy under a statute which is a complete</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">code in itself was not justified. [Paras 93-95]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Contract – Award of contract, a commercial transaction –</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Judicial Scrutiny – Scope:</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Held: The award of a contract, whether by a private party or by</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">a public body or the State is essentially a commercial transaction</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">– In arriving at a commercial decision, considerations which are</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">paramount are commercial considerations – State can choose its</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">own method to arrive at a decision – It can fix its own terms of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">invitation to tender and that is not open to judicial scrutiny – State</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">can enter into negotiations before finally deciding to accept one of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the offers made to it – Price need not always be the sole criterion</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">for awarding a contract – State may not accept the offer even</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">though it happens to be the highest or the lowest – However, the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">State, its corporations, instrumentalities and agencies are bound</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">to adhere to the norms, standards and procedures laid down</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">by them and cannot depart from them arbitrarily – Though that</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">decision is not amenable to judicial review, the court can examine</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">the decision-making process and interfere if it is found vitiated by</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">mala fides, unreasonableness and arbitrariness – Only when the</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Court comes to a conclusion that overwhelming public interest</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">requires interference, the court should intervene. [Para 102]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Case Law Cited</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">PTC India Limited v. Central Electricity Regulatory</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commission, Through Secretary [2010] 3 SCR 609 :</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">(2010) 4 SCC 603; Vivek Narayan Sharma and others</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">v. Union of India and others [2023] 1 SCR 1 : (2023)</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">3 SCC 1 – followed.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Energy Watchdog v. Central Electricity Regulatory</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commission and others [2017] 3 SCR 153 : (2017)</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">14 SCC 80; GMR Warora Energy Limited v. Central</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity Regulatory Commission (CERC) & Ors. [2023]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">8 SCR 183 : 2023 SCC Online SC 464 – relied on.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">R.Viswanathan and others v. Rukn-ul-Mulk Syed Abdul</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Wajid since deceased and others [1963] 3 SCR 22 :</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">914 [2024] 1 S.C.R.Digital Supreme Court Reports</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">AIR 1963 SC 1; Deccan Paper Mills Company Limited</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">v. Regency Mahavir Properties & Ors. [2020] 13 SCR</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">427 : (2021) 4 SCC 786; Tata Power Company Limited</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Transmission v. Maharashtra Electricity Regulatory</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commission & Ors. [2022] 19 S.C.R. 620 : 2022 SCC</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Online 1615; Tata Cellular v. Union of India [1994]</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">2 Suppl. SCR 122 : (1994) 6 SCC 651; Rajasthan</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Housing Board and another v. G.S. Investments and</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">another [2006] 7 Suppl. SCR 868 : (2007) 1 SCC 477;</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Laxmikant and others v. Satyawan and others [1996] 3</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">SCR 532 : (1996) 4 SCC 208; Reliance Infrastructure</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Limited v. State of Maharashtra and others [2019] 1 SCR</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">886 : (2019) 3 SCC 352; Radha Krishan Industries v.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">State of Himachal Pradesh and others [2021] 3 SCR</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">406 : (2021) 6 SCC 771; South Indian Bank Ltd. and</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">others v. Naveen Mathew Philip and another [2023] 4</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">SCR 18 : 2023 SCC OnLine SC 435; Air India Ltd. v.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Cochin International Airport Ltd. and others [2000] 1</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">SCR 505 : (2000) 2 SCC 617 – referred to.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">List of Acts</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity Act; RERC (Power Purchase & Procurement Process</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of Distribution Licensee) Regulations 2004; Constitution of India;</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">General Clauses Act.</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">List Keywords</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Electricity; State Electricity Regulatory Commission; Appellate</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Tribunal for Electricity; Bid Evaluation Committee; Request for</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Proposal; Power Purchase Agreement; Reduction of quantum of</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">power; Test of filling the bucket; Tariffs not aligned to the prevailing</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">market prices; Consumers’ interest; Competitive Bidding Guidelines/</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Process; Approval for adoption of tariff; Determination of tariff</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">by bidding process; Functions of State Commission; Functions</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of Central Electricity Regulatory Commission; Bid Evaluation</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Committee; Mandamus; Contract harmful to the public interest;</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Interpretation of Statutes; Principle of literal interpretation; Principle</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">of purposive construction; Determination of tariff, Regulating</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">tariff; Alternate remedy; Judicial review; Unreasonableness</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">or arbitrariness; Award of contract; Commercial transaction;</span></div><div id="toolbarViewer" style="height: 32px; margin: 0px; padding: 0px;"><span style="font-family: Arial;">Commercial considerations; Judicial Scrutiny.</span></div><div><br /></div></div></div></div>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-4603790769250828162024-02-19T10:41:00.001+05:302024-02-19T10:41:21.170+05:30Partition suit-Proof of marriage-Insanity-Lucid interval-A person ad· judged insane whether continues to be so till proved to the contrary. The plaintiff who is son of defendant No. 3's mother's brother filed a suit for • partition of properties which belonged to the mother and father of defendant No. 3. Defendant Nos. 1 and 2 are the sons of brothers of defendant No. 3's mether. Defendant No. 4 is the son of defendant No. 3's father's brother. Defendant No. 3 died duri'ng the pendency of the suit. Thereafter, defendant No. 1 filed his additional written statement and claimed' half share in the property of defendant No. 3 on the ground that defendant No. 3 married defendant No. 1 after the suit was instituted. The Trial Court allotted different shares to various defendants in the properties left by defendants No. 3 's mother and father which are nd longer in dispute. The U"ial Court found that defendant No. 4 alone was entitled to the share of defendant No. 3 on the ground that the marriage of defendant No. 3 with defendant No. 1 was not proved. The trial Court also found that defenJdant No. 3 was mentally unsound to enter into any marriage. f' E F On appeal, the High Court held that defendant No. 1 was married to defendant No. 3 ancl defendant No. 3 was in a lucid interval at the time of marriage. On an appeal by certificate to this Court, the counsel for the appellant contended : (I) that the finding of the High Court both with regard to the fact of marriage and that the marriage took place during a !Ucid interval were erroneous; (2) that defendant No. 3 was not a sane person as is clear first from an order declaring defendant No. 3 to be a person of unsound mind, whereby defendant No, 4 was appointed guardian of the property of defendant No. 3 and defendant No. 1 was appointed guardian 9f the person of defendant No. 3. Secondly the application of defendant No. 3 to be declared herself as a person of sound mind was rejected by the District Judge. Thirdly, in the present suit defendant No. 3 was impleaded as a person of unsound mind; and (3) that once a person is adjudged insane it is presumed that state of unsoundness would continue until proved to the contrary. <p>85 8</p><p>A MAHAMMADUNNl'S SON KAPPATTA KATHOKANDATH</p><p>B</p><p>c</p><p>D</p><p>BAVA</p><p>, v.</p><p>KUNHOOSA'S SON AMPALATH VEETTIL KUNNATHODATH</p><p>MAHAMMADUNNI & ORS.</p><p>December 1, 1975</p><p>[A. N. RAY, C.J., M. FL BEG, R. S. SARKARIA AND P. N. SHINGHAL, JJ.J</p><p>Partition suit-Proof of marriage-Insanity-Lucid interval-A person ad·</p><p>judged insane whether continues to be so till proved to the contrary.</p><p>The plaintiff who is son of defendant No. 3's mother's brother filed a suit for • partition of properties which belonged to the mother and father of defendant</p><p>No. 3. Defendant Nos. 1 and 2 are the sons of brothers of defendant No. 3's</p><p>mether. Defendant No. 4 is the son of defendant No. 3's father's brother.</p><p>Defendant No. 3 died duri'ng the pendency of the suit. Thereafter, defendant</p><p>No. 1 filed his additional written statement and claimed' half share in the property of defendant No. 3 on the ground that defendant No. 3 married defendant</p><p>No. 1 after the suit was instituted.</p><p>The Trial Court allotted different shares to various defendants in the properties left by defendants No. 3 's mother and father which are nd longer in</p><p>dispute. The U"ial Court found that defendant No. 4 alone was entitled to the</p><p>share of defendant No. 3 on the ground that the marriage of defendant No. 3</p><p>with defendant No. 1 was not proved. The trial Court also found that defenJdant No. 3 was mentally unsound to enter into any marriage. f'</p><p>E</p><p>F</p><p>On appeal, the High Court held that defendant No. 1 was married to</p><p>defendant No. 3 ancl defendant No. 3 was in a lucid interval at the time of</p><p>marriage.</p><p>On an appeal by certificate to this Court, the counsel for the appellant</p><p>contended : (I) that the finding of the High Court both with regard to the</p><p>fact of marriage and that the marriage took place during a !Ucid interval were erroneous; (2) that defendant No. 3 was not a sane person as is clear first from an order declaring defendant No. 3 to be a person of unsound mind, whereby</p><p>defendant No, 4 was appointed guardian of the property of defendant No. 3</p><p>and defendant No. 1 was appointed guardian 9f the person of defendant No. 3.</p><p>Secondly the application of defendant No. 3 to be declared herself as a person</p><p>of sound mind was rejected by the District Judge. Thirdly, in the present</p><p>suit defendant No. 3 was impleaded as a person of unsound mind; and (3)</p><p>that once a person is adjudged insane it is presumed that state of unsoundness</p><p>would continue until proved to the contrary.</p><p>Dismissing the appeal,</p><p>HELD : ( 1) The documents relied op by the appellant do not rule out</p><p>G lucid interval at the time of marriage. The High Court relied on the evidence</p><p>of D.W. 4, a teacher, who attended the marriage. He deposed that defendant</p><p>No. 3 gave her consent to the marriage and was in her lucid interval at that</p><p>time. The High Court rightly found that defendant No. 3 gave her consent</p><p>to the marriage and was in her lucid interval. The conclusion of the Higlot</p><p>Court on both the questions, is based on evidence and is correct. [860E-H]</p><p>u</p><p>CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1268 of</p><p>1970.</p><p>From the Judgment and order dated 17th July 1969 of the Kerala</p><p>High Court in A.S. No. 217 of 1964.</p><p>jr1</p><p>MAHAMMADUNNI V. KUNHOOSA (Ray, C.J.) 859</p><p>T. S. Krishnanworthy Iyer, N. Sudhakaran and P. K. Pillai for the A</p><p>Appellant.</p><p>A. S. Narnbiyar for Respondent No. 2.</p><p>(Appeal set down ex-parte against respondents 1 and 5-21 Respondent 4 expired : Name of respondent 3 deleted).</p><p>The Judgment of the Court was delivered by</p><p>RAY, C.J. This is an appeal by certificate from the judgment dated</p><p>17 July 1969 of the High Court of Kerala.</p><p>B</p><p>The question in this appeal is whether defendants No. 1 and 4 are</p><p>each entitled to share in the property allotted to defendant No. 3 in a</p><p>partition decree. Defendant No. 4 is the appellant. C</p><p>This appeal arises out of a suit instituted on 19 November, 1957</p><p>for partition of properties. Properties mentioned in Schedule A and</p><p>B to the plaint belonged to the mother of defendant No. 3. Properties</p><p>mentioned in Schedule C to the plaint were joint properties of the father</p><p>and the mother of defendant No. 3.</p><p>The plaintiff and defendant No. 2 are the sons of one of the</p><p>brothers of the mother of defendant No. 3. Defendant No. 1 is the son</p><p>of another brother of the mother of defendant No. 3. Defendant No. 4</p><p>is the son of defendant No. 3's father's brother.</p><p>Defendant No. 3 died during the pendency of the suit. Thereafter</p><p>defendant No. 1 filed his additional written statement and claimed half</p><p>share in the property of defendant No. 3 on the ground that defendant</p><p>No. 1 had married defendant No. 3 -0n 30 August, 1959.</p><p>The Trial Court allotted to defendant No. 3 3/6th share in properties mentioned in Schedules A and B to the plaint. The plaintiff and</p><p>Defendant No. 1 and defendant No. 2 were each given 1/6th share in</p><p>properties in Schedules A and B to the plaint. With regard to Schedule</p><p>C properties the plaintiff and defendant No. 1 and defendant No. 2</p><p>were each given 9 /96th share and defendant No. 3 was given 51/96th</p><p>share and defendant No. 4 was given 18/96th share.</p><p>The Trial Court found that defendant No. 4 was alone entitled to</p><p>the share of defendant No. 3 on the ground that marriage of defendant</p><p>No. 3 with defendant No. 1 was not proved. The Trial Court also</p><p>found that defendant No. 3 was mentally unsound to enter into any</p><p>marriage.</p><p>Defendant No. 1 preferred an appeal. The High Court set aside</p><p>the judgment of the Trial Court and held that defendant No. 1 was</p><p>married to defendant No. 3 and defendant No. 3 was in a lucid interval</p><p>at the time of marriage. ,</p><p>Counsel for the appellant defendant No. 4 impeached the finding of</p><p>the High Court both with regard to the fact of marriage and the finding</p><p>that defendant No. 3 was married in a lucid interval.</p><p>D</p><p>E</p><p>F</p><p>G</p><p>H </p><p>A</p><p>B</p><p>860 SUPREME COURT REPORTS [1976] 2 S.C.R.</p><p>Defendant No. 4 relied on three documents in support of the submission that defendant No. 3 was not a sane person to enter into</p><p>marriage with defendant No. 1. The first document iS Exhibit B-34</p><p>which is an order dated 8 November, 1958 declaring defendant No. 3</p><p>to be a person of unsound mind. In that order defendant No. 4 was</p><p>appointed guardian of the property of defendant No. 3 and defendant</p><p>No. 1 was appointed guardian of the person of defendant No. 3. The</p><p>second document is Exhibit B-8 dated 7 September 1959. The appellant submitted that on 7 September 1959 defendant No. 3 wanted to</p><p>get herself declared as a person of sound mind. By an order dated</p><p>5 February 1960 being Exhibit B-31 the District Judge dismissed the</p><p>application of defendant No. 3. The third document on which the</p><p>appellant relied is the suit in this appeal where defendant No. 3 on 19</p><p>~ovember, 1957 was impleaded as a person of unsound mind.</p><p>The appellant contended that though Exhibit B-34. namely, order</p><p>dated 8 November 1958 declaring defendant No. 3 as a person of unsound mind was not a judgment in rem but it was a judgment interparties and it would, therefore, be admissible under sections 11 and</p><p>13 of the Evidence Act. The appellant also contended relying on the</p><p>decision in Amanchi Seshamma v. Amanchi Padmanabha Rao(1)</p><p>D that once a person is adjudged insane it is presumed that state of unsoundness will continue until proved to the contrary.</p><p>E</p><p>F</p><p>Counsel for the appellant therefore contended that the conclusion of</p><p>the High Court that defendant No. 3 was in a lucid interval at the time</p><p>of marriage was against the overwhelming documentary evidence.</p><p>The documents relied on by the appellant do not rule out lucid interval at the time of marriage on 30 August 1959. The High Court</p><p>relied on the evidence of D.W. 4 who attended the marriage. D.W. 4</p><p>was a teacher. His evidence was that defendant No. 3 at the time of</p><p>marriage talked with Musaliar. His further evidence was that Musaliar</p><p>called defendant No. 3 and she went near him and told him that he was</p><p>being authorised by her to give her in marriage to defendant No. 1.</p><p>The High Court rightly found that defendant No. 3 gave her consent</p><p>to the marriage and was in her lucid interval.</p><p>The High Court reversed the finding of the Trial Court and held</p><p>that the marriage took -place. The High Court relied on the oral</p><p>evidence and found that marriage in fact was held. The conclusion of</p><p>the High Court on both the questions is correct. The appeal is therefore dismissed. No order as to costs.</p><p>P.H.P. Appeal dismissed.</p><p>(I) I.LR. 40 Mad. 660.</p><p>ir </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-19011094849480976282024-02-19T10:38:00.002+05:302024-02-19T10:38:49.300+05:30limitation Act, 1963-Article 136-Partition suit-Decree-Execution of-limitation period of twelve years-Commencement of-Whether the time _ taken for furnishing stamp paper could be excluded for reckoning the period of limitation-Held, period of limitation begins to run from the date when the final decree becomes enforceable and not from the date when it becomes executable-Furnishing of stamp paper was an act entirely within the domain and control of the decree holder and any delay therein cannot put a stop on the period of limitation to run-Stamp Act, 1899, Section 35 and 2(15)- . Interpretation of Statutes. D Maxims: 'Vigilantibus non dormientibus jura subveniunt'-Applicability of In a partition suit a preliminary decree for partition was passed on 8.6.1969 and a final decree thereon was passed on 20.11.1970. The decree holder did not furnish any stamp paper and so the decree was not drafted or finalised. Subsequently, the original decree holder died and his legal representatives were impleaded as parties. The legal representatives of the decree holder filed an execution application on 21.5.1984 with engrossed· stamp paper dated 26.3.1984. Trial court dis!Dissed the execution petition holding that since the same was filed beyond twelve years period, the same was barred by limitation. On revision, High Court directed the trial court to consider the question of limitation afresh. On remand, trial court held the execution petition was not barred by limitation. Aggrieved, legal representatives of the defendant filed a revision petition before the High G Court which was allowed and ·the execution petition was dismissed. Hence the present appeal by legal representatives of decree holder. <p>-</p><p>HAMEED JOHARAN (D) AND ORS.</p><p>v.</p><p>ABDUL SALAM (D) BY LRS. AND ORS.</p><p>AUGUST 13, 2001</p><p>[A.P. MISRA AND UMESH C. BANERJEE, JJ.]</p><p>A</p><p>B</p><p>limitation Act, 1963-Article 136-Partition suit-Decree-Execution</p><p>of-limitation period of twelve years-Commencement of-Whether the time _</p><p>taken for furnishing stamp paper could be excluded for reckoning the period</p><p>of limitation-Held, period of limitation begins to run from the date when the C</p><p>final decree becomes enforceable and not from the date when it becomes</p><p>executable-Furnishing of stamp paper was an act entirely within the domain</p><p>and control of the decree holder and any delay therein cannot put a stop</p><p>on the period of limitation to run-Stamp Act, 1899, Section 35 and 2(15)-</p><p>. Interpretation of Statutes. D</p><p>Maxims:</p><p>'Vigilantibus non dormientibus jura subveniunt'-Applicability of</p><p>In a partition suit a preliminary decree for partition was passed on E</p><p>8.6.1969 and a final decree thereon was passed on 20.11.1970. The decree</p><p>holder did not furnish any stamp paper and so the decree was not drafted or</p><p>finalised. Subsequently, the original decree holder died and his legal</p><p>representatives were impleaded as parties. The legal representatives of the</p><p>decree holder filed an execution application on 21.5.1984 with engrossed·</p><p>stamp paper dated 26.3.1984. Trial court dis!Dissed the execution petition F</p><p>holding that since the same was filed beyond twelve years period, the same</p><p>was barred by limitation. On revision, High Court directed the trial court</p><p>to consider the question of limitation afresh. On remand, trial court held the</p><p>execution petition was not barred by limitation. Aggrieved, legal</p><p>representatives of the defendant filed a revision petition before the High G</p><p>Court which was allowed and ·the execution petition was dismissed. Hence the</p><p>present appeal by legal representatives of decree holder.</p><p>On behalf of appellant it was contended that the period of limitation</p><p>in respect of partition decree could not begin to run till it was engrossed on</p><p>requisite stamp paper because under Sections 35 and 2(15) of the Stamp Act, H</p><p>469 </p><p>470 SUPREME COURT REPORTS [2001) SUPP. I S.C.R.</p><p>A 1899 such a decree was not enforceable in evidence unless duly stamped.</p><p>Dismissing the appeals, the Court</p><p>HELD: I.I. The limitation period ofl2 years prescribed under Article</p><p>136 of the Limitation Act, 1963 for execution of a partition decree began to</p><p>B run from the date when the final decree or order becomes enforceable and</p><p>not from the date when the decree becomes executable. (476-D; 478-Dl</p><p>1.2. Article 136 of the Limitation Act prescribes a period of 12 years</p><p>for execution of a decree other than a decree granting a mandatory injunction</p><p>or order of any Civil Court. The language used by the legislature in Article</p><p>C 136 if read in its proper pe_rspective to wit: 'when decree or order becomes</p><p>enforceable' must have been to clear up any confusion that ought Have arisen</p><p>by reason of the user of the expression the date of the decree or order which</p><p>was used in the earlier Act. The intention of the legislature stands clearly</p><p>exposed by the language used therein viz., to permit 12 years period from</p><p>the date of the decree or order. What is relevant for Article 136 is as to when</p><p>D the decree became enforceable and not when the decree became executable.</p><p>The requirement of the limitation Act in the matter of enforcement of a</p><p>decree is the date on which the decree becomes enforceable or capable of·</p><p>being enforced-what is required is to assess the legislative intent and· if the</p><p>intent appears to be otherwise clear and unambiguous, question of attributing</p><p>E a different meaning other than the literal meaning of the words used would</p><p>not arise. In the instant case, the final decree was passed on 20.11.1970 and</p><p>the execution petition was filed on 21.5.1984'with engrossed stamp paper</p><p>·dated 26.3.1984 which was clearly beyond the period of limitation.</p><p>F</p><p>(474-8; 476-H; 477-A, C; 478-D, F, BJ</p><p>Biswapati Dey v. Kennisington Stores and Ors., AIR (1972) Calcutta</p><p>172 and Subhash.Ganpairao Buty v. Maroti Krishnaji Dor/ikar, AIR (1975)</p><p>Dom 244, approved.</p><p>2. Furnishing of stamp paper was an act entirely within the domain and</p><p>control of the appellant and any delay in the matter offurnishing ~fthe same</p><p>G cannot possibly be said to be putting a stop to the period oflimitation being</p><p>run-no one can take advantage of his own wrong. The legislature cannot be</p><p>sub-servient to any personal whim or caprice. In any event, furnishing of</p><p>engrossed stamp paper for the drawing up of the decree cannot but be</p><p>ascr!bed to be a ministerial act, which cannot possibly put under suspension</p><p>H a legislative mandate. Suspension of the period of limitation can be had when</p><p>-</p><p>... </p><p>HAMEEDJOHARANv.ABDULSALAM 471</p><p>the decree is a conditional one in the sense that some extraneous events have A</p><p>to happen on the fulfilment of which ah;me the decree c~uld be executed. In</p><p>the instant case, since no conditions are attached to the decree and the same</p><p>has been passed declaring the shares of the parties finaliy, the question of</p><p>suspension of the period of limitation does not arise. (478-E, F, G; 488-F-G)</p><p>' Yeswant Deora(j·Deshmukh v. Walchand Ramchand Kothari, (1950( B</p><p>SCR 852, relied on.</p><p>3.1. Prescription of a twelve years period.cannot possibly be obliterated</p><p>by an enactment wholly unconnected therewith. Legislative mandate as</p><p>sanctioned under Article 136 cannot be kept in abeyance unless the ·self C</p><p>same legislation makes a provision therefore. It may also b.e noticed that by</p><p>the passing of a final decree, the rights stand crystallized and it is only</p><p>thereafter its enforceability can be had though not otherwise. Section 35 of</p><p>the Stamp Act 1899 lays down a bar in the matter of unstamped or insufficient</p><p>· stamp being admitted in evidence or being acted upon-but that does not</p><p>mean that the prescribed period shall remain suspended until the stamp D</p><p>paper is furnished and the partition decree is drawn thereon and subsequently</p><p>signed by the judge. The intent oT the legislature in engrafting the Limitation</p><p>Act shall have to be given its proper weightage. Absurdity cannot be .the</p><p>outcome of interpretation by a court order and wherever there is even a</p><p>possibility of such absurdity, it would be a plain exercise of judicial power E</p><p>to repel the same rather than encouraging it. The whole purport of the Indian</p><p>Stamp Act is to make available certain dues and to collect revenue but it. does</p><p>not mean and imply, overriding the effect over another statute operating on</p><p>a completely different sphere. (490-8, C, F, G; 491-A, Bl</p><p>W.B. Essential Commodities Supply Corporation v. Swadesh Agro F</p><p>·. Farming & Storage Pvt. Ltd. and An;.. (19991 8 SCC 315, relied on.</p><p>Shanka~ Ba/want Lokhande (dead) by Lrs. v. Chandrakant Shankar</p><p>Lokhande and Anr.; (19951 3 SCC 413, distinguished.</p><p>Kisbori Mahal Pal v. Provash Chandra Monda/ and-Ors. AIR (1924) G</p><p>Calcutta 351, approved.</p><p>Municipal Committee, Amritsar v. Hazara Singh, 1197511 SCC 794;</p><p>Mis. Amarnath Om Parkash and Ors. v. State of Punjab and Ors., (198511</p><p>SCC 345; Munidpal Corporation of Delhi v. Gurnam Kaur, 119891 1 SCC</p><p>101 and Dr. Vijay Laxmi Sadho v. Jagdish, 120011-2 sec 247, referred to. H </p><p>472 SUPREME COURT REPORTS [2001] SUPP. 1 S.C.R.</p><p>A Manby v. Bwicke 3K. & J. 342 at 352 and Rakhit v. Carty, L.R., (1990)</p><p>2 Q.B. 315, referred to.</p><p>3.2 The legislature while engrafting it is Limitation Act, 1963, it is</p><p>presumed and there being a golden canon of interpretation of statutes, had</p><p>B in its mind the existing Indian Stamp Act before engrafting the provisions</p><p>under Article 136. A latter statute obviously will have the effect of nullifying</p><p>an earlier statute in the event of there being any conflict provided however</p><p>and in the event there is otherwise legislative competency in regard thereto.</p><p>Enforceability of the decree cannot be the subject matter of S.35 neither the</p><p>limitation can be said to be under suspension. The heading of the Section</p><p>C viz., "Instrument not duly stamped inadmissible in evidence etc." itself</p><p>denotes its sphere of applicability : it has no relation with the commencement</p><p>·of period of limitation. 'Executability' and 'enforceability' are two different</p><p>concepts having two specific connotations in legal parlance. They cannot be</p><p>termed as synonymous; nor they an be attributed one and the same meaning.</p><p>Significantly, the final partition decree, whenever it is drawn bears the date</p><p>D of the decree when the same was pronounced by the court and not when it</p><p>stands engrossed on a stamp paper and signed by the judge. The decree may</p><p>not be received in evidence nor it can be acted upon but the period of</p><p>limitation cannot be said to remain under suspension at the volition and</p><p>mercy of the litigant. Limitation starts by reason of the statutory provisions</p><p>E as prescribed in the Statute. Time does not stop running at the instance of</p><p>any individual unless, of course the same has a statutory sanction being</p><p>conditional. Thus, it cannot be accepted that Section 35 read with Section</p><p>2(15) of the Stamp Act would over-run the Limitation Act 1491-D-H; 492-AI</p><p>Bholanath Karmakar and Ors. v. Madanmohan Karmakar, AIR (1988)</p><p>F Calcutta I, overruled.</p><p>CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9876 of</p><p>1995.</p><p>From the Judgment and Order dated 25.11.1994 of the Madras High</p><p>G Court in C.R.P. No. 1897 of 1989.</p><p>K.K. Mani, K.V. Vishwanathan, K.V. Venkataraman, Atul Kr. Sinha, Kunwar</p><p>Ajit Mohan, Ms. Vijayalakshmi Menon and S. Muralidhar for the appearing</p><p>parties.</p><p>H The Judgment of the Court was delivered by </p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.) 473</p><p>BANERJEE. J. Availability of the plea of limitation in the matter of A</p><p>execution of decree has been the key issue in this appeal. The word 'execution'</p><p>stands derived from the Latin "ex sequi," meaning, to follow out, follow to</p><p>the end, or perform, and eq\livalent to the French executor", so that, when</p><p>used in their proper sense, all three convey the meaning of carrying out some</p><p>act or course of conduct to its completion (vide vol. 33-Corpus Juris Scundum). B</p><p>Lord Denning in Re Overseas Aviation Engineering (G.B) Ltd. : (L.R.</p><p>1963 : Ch. 24) has attributed a meaning to the word 'execution' as the process</p><p>for enforcing or giving effect to the judgment of the court and stated :</p><p>"The word "execution" is not defined in the Act. It is, of course, a</p><p>word familiar to lawyers. "Execution" means, quite simply, the process C</p><p>for enforcing or giving effect to the judgment of the court : and it is</p><p>"completed" when the judgment creditor gets the money or other</p><p>thing awarded to him by the judgment. That this is the meaning is</p><p>seen by reference to that valuable old book Rastill Termes de la Ley,</p><p>where it is stated : "Execution is, "where Judgment is given in any D</p><p>Action, that the plaintiff shall "recover the land, debt, or damages, as</p><p>the case is; and when any "Writ is awarded to put him in Possession,</p><p>or to do any other "thing whereby the plaintiff should the better be</p><p>satisfied his debt "or damages, that is called a writ of execution; and</p><p>when he hath "the possession of the land, or is paid the debt or</p><p>damages, or "hath the body of defendant awarded to prison, then he E</p><p>hath "execution." And the same meaning is to be found in Blackman</p><p>v. Fysh, [(1892) 3 Ch. 209, 217, C.A], when Kekewich. J. said that</p><p>execution means the "process of law for the enforcement of a judgment</p><p>creditor's right "and in order to give effect to that right." In cases</p><p>when execution was had by means of a common law writ, such as fieri</p><p>facias or elegit, it was legal execution : when it was had by means of F</p><p>an equitable remedy, such as the appointment of a receiver, then it</p><p>was equitable execution. But in either case it was "execution" because</p><p>it was the process for enforcing or giving effect to the judg111ent of</p><p>the court."</p><p>Before adverting to factual aspect of the matter, a brief re-capitulation</p><p>of the various periods of limitation as prescribed under the Limitation Act as</p><p>engrafted in the Statute Book from time to time would be convenient. Law of</p><p>Limitation in India, as a matter of fact, was introduced for the first time in 1859</p><p>being revised in 1871, 1877 and it is only thereafter, the Limitation Act of 1908</p><p>G</p><p>was enacted and was in force for more than half a century till replaced by the H </p><p>474 SUPREME COURT REPORTS [2001) SUPP. I S.C.R.</p><p>A present Act of 1963 (see in this context B.B. Mitra : the Limitation Act 20th</p><p>Ed).</p><p>Presently, Article 136 of the Limitation Act 1963, prescribes a period of</p><p>twelve years for the execution of a decree other than a decree granting a</p><p>mandatory injunction or order of any civil court. As regards the time from</p><p>B which the period of twelve years ought to commence, the statute has been</p><p>rather specific in recording that the period would commence from the date of</p><p>the decree or order when the same becomes enforceable. We need not go into</p><p>the other situations as envisaged in the statute for the present purpose, save</p><p>what is noticed above. To put it shortly, it therefore, appears that a twelve</p><p>year period certain has been the legislative choice in the matter of execution</p><p>C of a decree. Be it noted that corresponding provisions in the Act of 1908 were</p><p>in Articles 182 and 183 and as regards the statute of 1871 and 1877, the</p><p>corresponding provisions were contained in Articles 167, 168, 169, and 179,</p><p>180 respectively. Significantly, Article 182 of the Limitation Act of 1908 provided</p><p>a period of three years for the execution of decree. Be it clarified that since</p><p>.D the reference to the 1908 Act would be merely academic, we refrain ourselves</p><p>from_ recording the details pertaining to Article 182 save what is noted</p><p>hereinbefore. It is in this context, however, the Report of the Law Commission</p><p>on the Act of 1963 assumes some importance, as regards the question of</p><p>limitation and true purport of Article 136. Before elaborating any further, it</p><p>would be convenient to note the Report of the Law Commission which reads</p><p>E as below:</p><p>F</p><p>G</p><p>H</p><p>"170. Article 182 has been a very fruitful source of litigation and is</p><p>a weapon in the hands of both the dishonest decree-holder and the</p><p>dishonest judgment debtor. It has given rise to innumerable decisions.</p><p>The commentary in Rustomji's Limitation Act (5th Edn.) on this article</p><p>itself covers nearly 200 pages. In our opinion the maximum period of</p><p>limitation for the execution of a· decree or order of any civil court</p><p>should be 12 years from the date when the decree or· order became</p><p>.enforceable (which is usually the date of decree) or where the decree</p><p>or subsequent order directs any payment of money or the delivery of</p><p>any property to be made at a certain date or at recurring periods, the</p><p>date of the default.iilmaking the payment or delivery in respect of</p><p>which the applicant seeks to execute the dearee. There is, therefore,</p><p>no need for a provision compelling the decree-holder to keep the</p><p>· decree alive by making an. application every three years. There exists</p><p>a provision already in section 48 of the Civil Procedure Code that a,</p><p>decree ceases to be enforceable after a period of 12 years. In England </p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.] 475</p><p>also, the time fixed for enforcing a judgment is 12 years. Either the A</p><p>decree-holder succeeds in realising his decree within this period or he</p><p>fails and there should be no provision enabling the execution of a</p><p>decree after that period. To this provision an exception will have to</p><p>be made to the effect that the court may order the execution of a</p><p>decree upon an application presented after the expiration of the period B</p><p>of 12 years, where the judgment-debtor has, by fraud or force,</p><p>prevented the execution of the decree at some time within the twelve</p><p>years immediately preceding the date of the application. Section 48 of .. the Civil Procedure Code may be deleted and its provisions may be</p><p>incorporated in this Act. Article 183 should be deleted .... "</p><p>In pursuance of the aforesaid recommendation, the present article</p><p>has enacted in place of articles 182 and 183 of the 1908 Act. Section</p><p>48, Code of Civil Procedure 1908 has bc;en repealed".</p><p>The material facts pertaining to the issue however may be delved into</p><p>c</p><p>at this juncture. D</p><p>The factual score records that a prelim.inary decree for partition was</p><p>passed on 8.6.1-969 and a final decree thereon was passed on 20.11.1970. Th.e</p><p>suit being a suit for partition, the parties were under an obligation to furnish</p><p>the stamp paper for drafting of the final decre~ and ·it is on 28.2.1972, the</p><p>District Court. Nagapattinam_ in~ th:e erstwhile State of Madras (presently E</p><p>Chennai issued notice to the parties to furnish stamp papers and granting</p><p>time till 17.3.1972. The records depict th.at the decree-holder, in fact, did not</p><p>furnish any stamp paper by reason where for, no decree was draf!ed or</p><p>finalised. The factual score further records that the original decree-holder died</p><p>on 17.l.ln7 and it is on 26:7.1983 that an application was filed by the legal· F</p><p>-representatives of the decree-holder to implead themselves as additional</p><p>plaintiffs and on 23'.i_. 1984, the same was ordered and the legal representatives</p><p>of the original plaintiff were imp leaded on 8.3.1984 and after incorporation of</p><p>the names of the legal heirs in the suit register, an execution application w.as</p><p>presented before the District Court on 21.5.1984.</p><p>To have the factual score complete on this couRt, be it noted that in</p><p>the meanwhile a Civil Revision Petition was filed before the High Cou,rt (C.R.P.</p><p>No.2374 of 1984) against the order of impleadment but the sa~e however, was ·</p><p>dismissed on 8.10.1984.</p><p>G</p><p>The records depict that on I Ith December, 1984, the execution petition H. </p><p>476 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.</p><p>A was dismissed with a finding that since the same was filed beyond twelve</p><p>years, the execution petition was barred by limitation. Subsequently, a Revision</p><p>Petition was filed against said order (C.R.P. No. 2000 of 1985) and on 10.3.1989,</p><p>the High Court however did set aside the order of the executing court and</p><p>directed ~hat the question of limitation should be considered afresh, The</p><p>records further depict that on 13th July, 1989, the District Court held that the</p><p>B Execution Petition is not barred by limitation. As against the order of the</p><p>District Court dated 13th July, 1989, a Revision Petition was filed before the</p><p>High Court. by the legal heirs of the first defendant challenging the said</p><p>finding and the learned Single Judge of the High Court in a very detailed and</p><p>elaborate judgment allowed the Civil Revision Petition and set aside the order</p><p>C of the district court. Consequently, the execution petition also stood dismissed</p><p>and hence the Special Leave Petition before this Court and the subsequent</p><p>grant of leave by this Court.</p><p>As noticed earlier in this judgment, Article 136 of the Limitation Act</p><p>1963 being the governing statutory provision, prescribes a period of twelve</p><p>D years when the decree or order becomes enforceable. The word enforce in</p><p>common acceptation means and implies 'compel observance of (vide Concise</p><p>Oxford Dictionary) and the Black's Law Dictionary 'enforce' has been attributed</p><p>a meaning 'to give force or effect to; to compel obedience to' and 'enforcement</p><p>has been defined as 'the act or process of compelling compliance with a law,</p><p>E mandate or command'. In ordinary parlance 'enforce' means and implies 'compel</p><p>observance'. Corpus Juris Secundum attributes the following for the ·word</p><p>'enforce'.</p><p>"ENFORCE. In general, to cause to be executed or performed, to cause</p><p>to take effect, or to compel obedience to, as to enforce laws or rules; to</p><p>F control; to, execute with vigor; to put in execution; to put in force; also to</p><p>exact, or to obtain authoritatively. The word is used in a multiplicity of ways</p><p>and is given many shades of meaning and applicability, but it does not</p><p>riecessarily imply actual force or coercion. As applied to process, the term</p><p>implies execution and embraces all the legal means of collecting a judgment,</p><p>including proceedings supplemental to execution.</p><p>G</p><p>The past tense or past participle "enforced" has been said to have the</p><p>same primary meaning as "compelled".</p><p>The language used by the legislature in Article 136 if read in its proper</p><p>perspective to wit : when the decree or order becomes enforceable must have</p><p>H been to clear up any confusion that might have arisen by reason of the user </p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.) 477</p><p>of the expression 'the d~.te of the decree or order which was used in the earlier A</p><p>Act. The intention of the legislature stands clearly exposed by the language</p><p>used therein viz., to permit twelve year certain period from the date of the</p><p>decree or order. It is in this context that a decision of the Calcutta High Court</p><p>in the case of Biswapati Dev v. Kennsington Stores and Ors., AIR (1972)</p><p>Calcutta 172) wherein the learned Single Judge in no uncertain terms expressed</p><p>his opinion that there cannot be any ambiguity in the language used in the B</p><p>third column and the words used therein to wit : 'when the decree or order</p><p>becomes enforceable' should be read in their literal sense. 'We do feel it</p><p>expedient to lend our concurrence to such an observation of the learned</p><p>.Single Judge of the Calcutta High Court. The requirement of the Limitation</p><p>Act in the matter of enforcement of a decree is the date on which the decree ·C</p><p>becomes enforceable or capable of being enforced-what is required is to</p><p>assess the legislative intent and if the intent appears to be otherwise clear</p><p>and unambiguous, question of attributing a different meaning other than the</p><p>literal meaning of the words used would not arise. It is in this context, we also</p><p>do feel it inclined to record our concurrence to the observations of the full</p><p>Bench of the Bombay High Court in Subhash Ganpatrao Buty v. Maroti</p><p>Krishnaji Dorlikar, AIR (1975) Born. 244. The Full Bench in the decision</p><p>observed :</p><p>" ...... it is the duty of the Court to interpret the language actually</p><p>D</p><p>employed and to determine the intention of the legislature from such E</p><p>language and since there is no ambiguity about the language actually</p><p>employed, neither the recommendation of the Law Commission nor the</p><p>aims and object as set out in the Statement of Objects and reasons</p><p>can be brought in aid or can be allowed to influence the natural and</p><p>grammatical meaning of the Explanation as enacted by the Parliament".</p><p>Adverting however, to the merits of the matter at this juncture and for</p><p>consideration of the applicability of Article 136 in the way as stands interpreted</p><p>above, a short recapitulation of ce1tain relevant dates seems to be inevitable</p><p>and as such the same is set out herein below :</p><p>Date</p><p>8th June, 1969</p><p>20th November, 1970</p><p>Event</p><p>The preliminary decree passed in the</p><p>partition suit.</p><p>Final de.cree passed upon acceptance of ·</p><p>F</p><p>G</p><p>the report of the Commission. H </p><p>478 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.</p><p>A 28th February, 1972 Notice to furnish stamp paper on or</p><p>before 17.3 .1972 (be it nqted that no</p><p>stamp paper, in fact, was furnished).</p><p>17th January, 1977</p><p>B 8th March, 1'984</p><p>21st May, 1984</p><p>Original decree-holder died.</p><p>Legal representatives were impleaded.</p><p>Execution petition filed with the</p><p>engrossed stamp paper furnished on</p><p>16.3.1984.</p><p>C Probably one could avoid reference to a list of dates in the judgment,</p><p>but the same has been incorporated by reason of the peculiar fact-situation</p><p>of the appeal under consideration.</p><p>Article 136 of the Act of 1963 prescribes as noticed above, a twelve</p><p>years period certain and what is relevant for Article 136 is, as to when the</p><p>D decree became enforceable and not when the decree became executable. The</p><p>decision of the Calcutta High Court in Biswapati's case (supra) has dealt with</p><p>the issue very succinctly and laid down that the word 'enforceabie• should</p><p>be read in its literal sense. In the contextual facts, the final decree upon</p><p>acceptance of the report of the Commissioner was passed on 20.11.1970, while</p><p>E it is true that notice to furnish stamp pa:per was issued on 28.2.1972 and the</p><p>time granted was up to 17.3.1972 but that by itself will not take it out of the</p><p>purview of Article 136 as regards the enforceability of the decree. Furnishing</p><p>of stamped paper was an act entirely within the domain and control of the</p><p>appellant and any delay in the matter of furnishing of the same cannot</p><p>possibly be said to be putting a stop to the period of limitation being runF no one can take advantage of his own wrong : As a matter of fact, in the</p><p>contextual facts no stamp paper was filed until 26.3.1984-Does that mean</p><p>and imply that the period of limitation as prescribed under Article 136 stands</p><p>extended for a period of twelve years from 26th March, 1984? The answer if</p><p>it be stated to be in the affirmative, would lead to an utter absurdity and a</p><p>G mockery of the provisions of the statute. Suspension of the period of limitation</p><p>by reason of one's own failure cannot but be said to be a fallacious argument:</p><p>though however suspension can be had when the decree is a conditional one</p><p>in the sense that some extraneous events have to happen on the fulfillment</p><p>of which alone it could be enforced-furnishing of stamped paper was entirely</p><p>in the domain and power of the decree-holder and there was nothing to</p><p>H prevent him from acting in terms therewith and thus it cannot but be said that </p><p>' J</p><p>_,.</p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.] 479</p><p>the dercee was capable of being enforced on and from 20th November, J-970 A</p><p>and the twelve years period ought to be counted therefrom. It is more or less</p><p>in identical situation, this Court even five-decades ago· in the case of Yeswant</p><p>Deorao Deshmu~h v. Walchmd Ramchand Kothari, [1950] SCR 852 has</p><p>stated :</p><p>"The decree was not a· conditional one in the sense that some B</p><p>extaneous event was to happen on the fulfilment of which alone it</p><p>could be executed. The payment of court fees on the amount found</p><p>due was entirely in the power of the decree-holder and there was</p><p>nothing to prevent him from paying it then and there; it w~s a decree</p><p>capable of execution from the very date it was passed. C</p><p>Needless to record that engrossment of stamped paper would</p><p>undoubtedly render the decree executable but that does not mean and imply</p><p>however, that the enforceability of the decree would remain suspended until</p><p>furnishing of the stamped paper-this is opposed to the fundamental principle</p><p>of which the statutes of limitation are founded. It cannot, but be the general D</p><p>policy of our law to use the legal diligence and this has been the consistent</p><p>legal theory from the ancient times. Even the doctrine. of prescription in</p><p>Roman Law prescribes such a concept of legal diligence and since its</p><p>incorporation therein, the docfrine has always been favoured rather than</p><p>claiming dis-favour. Law courts never tolerate an indolent litigant since delay</p><p>defeats equity. The Latin maxim 'vigilantibus non dormientibus jure subventiunt' E</p><p>(law assists those who are vigilant and not those who are indolent). As a</p><p>matter of fact, lapse of time is a species for forfeiture of right. Wood, V.C. in</p><p>Manby v. Bewicke, (3 K. & J. 342 at 352) stated :</p><p>" ... the legislature has in this, as in every civilized country that has</p><p>ever existed, thought fit to prescribe certain limitations of time, after F</p><p>which persons may suppose themselves to be in peaceful possession</p><p>of their property and capable of transmitting the estates of which they</p><p>are in possession, without any apprehension of the title being</p><p>impugned by litigation in respect of transactions which occurred at a</p><p>distant period, when evidence in support. of their own title may be G</p><p>most difficult to obtain."</p><p>Recently this Court in WB. Essential Commodities Supply Corporation</p><p>v. Swadesh Agro Farming and Storage Pvt. ltd. and Anr., [1999) 8 SCC 315</p><p>had the occasion to consider the question of limitation under Article 136 of</p><p>'the Limitation Act of 1963 and upon consideration of the decision in the case H </p><p>480 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.</p><p>A of Yeshwant Deorao, (supra) held that under the scheme of the Limitation</p><p>Act, execution applications like plaints have to be presented in court within</p><p>the time prescribed by the Limitation Act. A decree-holder, this court went</p><p>on to record does not have the benefit of exclusion of the time taken for</p><p>obtaining even the certified copy of the decree like the appellant who prefers</p><p>B an appeal, much less can he claim to deduct time taken by the court in</p><p>drawing up and signing the decree. In fine, this Court observed that if the</p><p>time is reckoned not from the date of the decree but from the date when it</p><p>c</p><p>is prepared, it would amount to doing violence to the provisions of the</p><p>Limitation Act as well as of Order 20 and Order 2 I Rule I I C.P.C. which is</p><p>clearly impermissible.</p><p>The observations thus in W.B. Essential Commodities Supply Corpn.</p><p>(supra) lends concurrence to the view expressed above pertaining to the</p><p>question of enforceability of the decree as laid down in Article I 36 of the</p><p>Limitation Act.</p><p>D Incidentally, in paragraph I2 of the judgment in W.B. Essential</p><p>Commodities Supply Corpn. (supra), this Court listed out three several</p><p>situations in which a decree may not be enforceable on the date it is passed</p><p>and in last of the situations, this Court observed :</p><p>E</p><p>F</p><p>"Thirdly, in a suit for partition of immovable properties after passing</p><p>of preliminary decree when, in final decree proceedings, an order is</p><p>passed by the court declaring the rights of the parties in the suit</p><p>properties, it is not executable till final decree is engrossed on nonjudicial stamp paper supplied by the parties within the time specified</p><p>by the court and the same is signed by the Judge and sealed. It is</p><p>in this context that the observations of this Court in Shankar Ba/want</p><p>lokhande (dead) by Lrs. v. Chandrakant Shankar Lokhande and</p><p>Anr., [I 995] 3 SCC 413 have to be understood. These observations do</p><p>not apply to a money decree and, therefore, the appellant can derive</p><p>no b~nefit from them".</p><p>The third situation, as referred above, has been taken note of, by reason</p><p>G of the decision of this Court in the case of Shankar Ba/want Lokhande</p><p>(dead) by LRs. v. Chandrakant Shankar Lokhande and Anr., [I995] 3 SCC</p><p>4 I3 wherein Ramaswamy, J. speaking for the Bench came to a conclusion that:</p><p>H</p><p>" ..... After final decree is passed and a direction is issued to pay</p><p>stamped papers for engrossing final decree thereon and the same is</p><p>duly engrossed on stamped paper(s), it becomes executable or becomes </p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.) 481</p><p>an instrument duly stamped. Thus, condition precedent is to draw up A</p><p>a final decree and then to engross it on stamped paper(s) of required</p><p>value. There two acts together constitute final decree crystallizing the</p><p>rights of the parties in terms of the preliminary decree. Till then, there</p><p>is no executable decree as envisaged in Order 20, rule 18 (2), attracting</p><p>residuary Article 182 of the old Limitation Act."</p><p>Be it noticed that lokhande's d.ecision (supra) was decided against the</p><p>judgment of the High Court recording a finding that limitation for executing</p><p>a final decree in a suit for partition starts on the date on which the final decree</p><p>B</p><p>is passed and not from any subsequent date on which the parties supply the</p><p>non-judicial stamp for engrossing the final decree and when the court C</p><p>engrosses the final decree on the stamp paper and signs it - this view of the</p><p>High Court was negatived and this Court came to a contra conclusion as</p><p>noticed hereinbefore .</p><p>. The W.B. Essential Commodities Supply Corpn. 's decision (supra) has</p><p>been rather cautious in recording certain situations in which a decree may not D</p><p>be enforceable on the date it is passed (emphasis supplied). It is thus not a</p><p>pronouncement of law as such but an exception recorded in certain situations,</p><p>the words 'may not be' as emphasised are rather significant. The word 'May'</p><p>in common acceptation mean and imply-'a possibility' depicting thereby</p><p>availability of some fluidity and thus not conclusive. This aspect of the matter E</p><p>is required to be clarified by reason of the observations as laid down in the</p><p>third situation (noticed above}--Needless to record that the third situation</p><p>spoken of by this Court in the decision last noted obviously by reason of</p><p>the judgment of this Court in lokhande's case (supra). The factual situation</p><p>of Shankar B. lokhande's case (supra) however is completely different since</p><p>there was no final decree at all but only a preliminary decree. Paragraph I 0 F</p><p>of the report at page 419 makes the situation amply clear. Paragraph I 0 reads</p><p>as below:</p><p>"I 0. As found earlier, no executable final decree has been drawn</p><p>working out the rights of the parties dividing the properties in terms G</p><p>of the shares declared in the preliminary decree. The preliminary· ·</p><p>decree had only declared the shares of the parties and properties were</p><p>liable to be partitioned in accordance with those shares by a</p><p>Commissioner to be appointed in this behalf. Admittedly, no</p><p>Commissioner was appointed and no final decree had been passed</p><p>relating to all." H </p><p>482 SUPREME COURT REPORTS [2001] SUPP. 1 S.C.R.</p><p>A Another significant feature which would render the decision inapplicable</p><p>in the contextual facts is the consideration of the matter in the perspective</p><p>of the 1908 Act (the old Act) and not the Limitation Act of 1963. The language</p><p>of Article 136 is clear, categorical and unambiguous and it is the difficulty</p><p>experienced in the matter of interpretation of Article 182 "which has been a</p><p>B very fruitful source oflitigation", promoted incorporation of Article 136 in the</p><p>Statute Book. The recommendation of the Law Commission in the matter of</p><p>incorporation of Article 136 thus assumes a positive and a definite role.</p><p>Twelve year period certain has been the express opinion of the Commission</p><p>and by reason therefore Section 48 of the Code stands deleted from the main</p><p>body of the sections, which incidentlly provided for a twelve year period</p><p>C certain for execution proceedings.</p><p>D</p><p>E</p><p>F</p><p>In this context, a further reference can be had from Mulla's Civil</p><p>Procedure Code. As regards Section 48 the following is said in Mulla's C.P.</p><p>Code:</p><p>"This Section has been repealed by Section 28 of the Limitation Act,</p><p>36of1963. In its place a new provision, Article 136, has been introduced</p><p>which prescribes "for the execution of any decree (other than a decree</p><p>granting a mandatory injunction) or order of any civil court" a period</p><p>of twelve years "where the decree or order becomes enforceable or</p><p>where the decree or any subsequent order directs any payment of</p><p>money or the delivery of any property to be made at a certain date</p><p>or at recurrent periods, when default in making the payment or delivery</p><p>in respect of which execution takes place :</p><p>Provided that an application for the enforcement or execution of a</p><p>decree granting a perpetual injunction shall not be subject to any</p><p>period of limitation."</p><p>The period of twelve years prescribed by Section 48 is retained under</p><p>Article 136 and is now the only period of limitation. It is therefore no</p><p>longer necessary to keep the execution alive by successive applicants</p><p>within three years for complying with the original Article 182."</p><p>G Significantly, the contextual facts itself in lokhande's case (supra) has</p><p>prompted this Court to pass the order as it has (noticed above) and as would</p><p>appear from the recording in the order, to wit : "Therefore, executing court</p><p>cannot receive the preliminary decree unless final decree is passed as envisaged</p><p>under Order 20 Rule 18 (2)."</p><p>H In that view of the matter, reliance on the decision of lokhande's case</p><p>. i </p><p>'</p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.] 483</p><p>(supra) by Mr. Mani appearing for the appellants herein cannot thus but be A</p><p>said to be totally misplaced, more so by reason of the fact that the issue</p><p>pertaining to furnishing of stamp paper and subsequent engrossment of the</p><p>final decree thereon did not fall for consideration neither the observations</p><p>contained in the judgment could be said to be germane to the issue involved</p><p>therein. The factual score as noticed in paragraph I 0 of the Report, [1995] 3 B</p><p>SCC 413 makes the situation clear enough to indicate that the Court was not</p><p>called upon to adjudicate the issue as raised presently. The observations thus</p><p>cannot, with due deference to the learned Judge, but be termed to be an obiter</p><p>dictum.</p><p>It is in this context that we rather feel it inclined to record the observation C</p><p>of Russel l.J. in Rakhit v. Carty, (L.R. 1990 2 Q.B. 315) wherein at page 326/</p><p>327 of the report it has been observed :</p><p>"Miss Foggin has now submitted to this court that the decision in</p><p>Kent's case was indeed per incuriam if! that she submits that the</p><p>judgment ofOrmrod L.J. with which Dunn L.J. and and Sir Sebag Shaw O</p><p>agreed, made no reference to section 67 (3), that, if the Court of</p><p>Appeal had been referred to that subsection and had had regard to</p><p>its terms, the decision would plainly have been different and that</p><p>consequently this court should not follow Kent's case. I have already</p><p>expressed my own views as to the proper constitution of section 44( I)</p><p>and the impact of section 67 (3). E</p><p>In Rickards v. Rickards, (1990] Fam. 194, 203 Lord Donaldson of</p><p>Lymington M.R. said :</p><p>"The importance of the rule c;if state decisis in relation to the Court</p><p>of Appeal's own decisions can hardly be overstated. We now F</p><p>sometimes sit in eight divisions and, in the absence of such a rule,</p><p>the law would quickly become wholly uncertain. However the rule is</p><p>not without exceptions, albeit very limited. These exceptions were</p><p>considered in Young v. Bristol Aeroplane Co. ltd., [1944] K.B. 718:</p><p>Morelle ltd v. Wakeling, (1955] 2 Q.B. 379 and more recently, in· G</p><p>Williams v. Fawett, (1986] Q.B. 604, relevant extracts from the two</p><p>earlier decisions being set out at pp. 615-616 of the report. These</p><p>decisions show that this court is justified in refusing to follow one of</p><p>its own previous decisions to not only where that decision is given</p><p>in ignorance or forgetfulness of some authority binding upon it, but</p><p>also, in rare and exceptional cases, if it is satisfied that the decision H </p><p>A</p><p>B</p><p>.C</p><p>D</p><p>484 SUPREME COURT REPORTS [2001) SUPP. I S.C.R.</p><p>involved a manifest slip or error. In previous cases the judges of this</p><p>court have always refrained from defining this exceptional category</p><p>and I have no intention of departing from that approach save to echo</p><p>the words of Lord Greene M.R. in Young's case, p.729, and Sir</p><p>Raymond Evershed M.R. in Morelle's case, p. 406, and to say they</p><p>will be of the rarest occurrence.</p><p>In- my jadgment, the effect of allowing this appeal will produce no</p><p>injustice to the plaintiff, for the Rent Act 1977 provided him and his</p><p>advisers with ample opportunity to protect his interests by the simple</p><p>process of inspecting the public register of rents before letting the flat</p><p>to the defendant. A fresh application for registration or a fair rent</p><p>could then have been made enabling that fair rent to be recoverable</p><p>from the commencement of the defandant's tenancy.</p><p>For my part, I am satisfied that this court erred in Kent v. Mil/mead</p><p>Properties Ltd, 44 p & C.R. 353 and that, following the observations</p><p>of Lord Donaldson of Lymington M.R. in Rickards' case, this court •</p><p>is justified in declining to follow Kent's case.</p><p>As a matter of fact, a three Judge Bench of this Court in the case of</p><p>Municipal Committee, Amritsar v. Hazara Singh, [1975] I SCC 794 has been</p><p>E pleased to record that on facts, no two cases could be similar and the decision</p><p>of the court which was essentially on question of facts could not be relied</p><p>upon as precedent, for decision of the other cases. Presently the fact situation</p><p>in the decision of Lokhande (supra) and the matter under consideration are</p><p>completely different, as such the decision in lokhande cannot by any stretch</p><p>be termed to be a binding precedent. Jn Mis. Amarnath Om Prakas_h and Ors.</p><p>F v. State of Punjab & Ors., [1985] I SCC 345, a three Judges bench of this</p><p>Court in no uncertain terms stated :</p><p>G</p><p>H</p><p>" ... We consider it proper to say, as we have already said in other</p><p>cases, that judgments of courts are not to be construed as statutes.</p><p>To interpret words, phrases and provisions of a statute, it may become</p><p>necessary for Judges to embark into lengthy discussions but the</p><p>discussion is meant to explain and not to define. Judges interpret</p><p>statutes, they do not interpret judgments. They interpret words of</p><p>statutes their words are not to be interpreted as statutes. In London</p><p>Graving Dock Co. ltd v. Horton, ( 1951 AC 737-761 ), lord MacDermott</p><p>observed : </p><p>'</p><p>HAMEED JOI-IARAN v. ABDUL SALAM [BANERJEE, J.] 485</p><p>The matter cannot, of course, be settled merely by treating the ipsissima A</p><p>verba of Wills. J., as though they were part of an Act of Parliament</p><p>and applying the rules of interpretation appropriate thereto. This is</p><p>not to detract from the great weight to be given to the language</p><p>actually used by that most distinguished Judge, ....</p><p>In Home Office v. Dorset Yacht Co. Ltd, (1970) 2 All ER 294 Lord Reid B</p><p>said :</p><p>Lord Atkin's speech (Donoghue v. Stevension; 1932 All ER Rep l,</p><p>11 ) .... is not to be treated as if it was a statutory definition. It will</p><p>require qualification in new circumstances.</p><p>Megarry, J. in (1971) !WLR 1062 observed:</p><p>One must not, of course, construe even a reserved judgment of even</p><p>Russell, L.J. as if it were an Act of Parliament.</p><p>c</p><p>And, in Herrington v. British Railways Board [(1972) 2 WLR 537], D</p><p>Lord Morris said :</p><p>There is always peril in treating the words of a speech or a judgment</p><p>as though they were words in a le.gislative enae;tment and it is to be</p><p>remembered that judicial utterances are made in the setting of the</p><p>facts of a particular case." E</p><p>Further in Municipal Corporation of Delhi v. Gurnam Kaur, [1989] I</p><p>SCC 10 I, this Court in Paragraph 11 of the report observed,</p><p>"I I. Pronouncements oflaw, which are not part of the ratio decidendi</p><p>are classed as obiter dicta and are not authoritative. With all respect F</p><p>to learned Judge who passed the order in Jamna Das case (Writ .</p><p>Petition Nos. 981-82 of 1984) and to the learned Judge who agreed</p><p>with him, we cannot concede that this Court is bound to follow it. It</p><p>was delivered without argument, )¥ithout reference to the relevant</p><p>provisions of the Act conferring express power on the Municipal G</p><p>Corporation to direct removal of encroachments from any public place</p><p>like payments or public streets, and without any citation of authority.</p><p>Accordingly, we do no.t propose to uphold the decision of the High</p><p>Court because, it seems to us that it is wrong in principle and cannot</p><p>be justified by the terms of the relevant provisions. A decision should</p><p>be treated as given per incuriam when it is given in ignorance of the H </p><p>A</p><p>B</p><p>c</p><p>D</p><p>486 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.</p><p>terms of a statute or of a rule having the force of a statute. So far as</p><p>the order shows, no argument was addressed to the court on the</p><p>question whether or not any direction could properly be made</p><p>compelling the Municipal Corporation to construct a stall at a pitching</p><p>site of a payment squatter. Professor P.J. Fitzgerald, editor of the</p><p>Salmond on Jurisprudence, 12th Edn. Explains the concept of sub</p><p>si/entio at p. 153 in these words :</p><p>A decision passes sub silentio, in the technical sense that has</p><p>come to be attached to that phrase. When the particular point of law</p><p>involved in the decision is not perceived by the court or present to</p><p>its mind. The court may consciously decide in favour of one party</p><p>because of point A, which it considers and pronounces upon. It may</p><p>be shown, however, that logically the court should not have decided</p><p>in favour of the particular party unless it also decided point B in his</p><p>favour : but point B was not argued or considered by the court. In</p><p>such circumstances, although the case had a specific outcome, the</p><p>decision is not an authority on point B. Point B is said to pass sub</p><p>silentio."</p><p>In one of its latest judgment however this Court in Dr. Vijay laxmi</p><p>Sadho v. Jagdish, [2001] 2 SCC 247, though apparently sounded a contra note</p><p>but the safeguards introduced therein, does not however create any problem</p><p>E for a decision in the matter under consideration. Anand, C.J. while deprecating</p><p>the characterisation of earlier judgment as 'per incuriam' on ground of dissent</p><p>observed :</p><p>F</p><p>"that a Bench of coordinate jurisdiction ought not to record its</p><p>disagreement with another Bench on a question of law and it would</p><p>be rather appropriate to refer the matter to a larger Bench for resolution</p><p>of the issue."</p><p>Anand, C.J. however, has been extremely careful and cautious enough to</p><p>record "it is appropriate that the matter be referred to a larger Bench for</p><p>G resolution of the issue rather than to leave two conflicting judgments to</p><p>operate creating confusion" (emphasis supplied).</p><p>Jn the contextual facts, the question of there being a conflictingjudgment</p><p>as indicated hereinbefore or creation of any confusion does not and cannot</p><p>arise by reason of the fact that the observations in lokhande (supra) were</p><p>H the peculiar set of facts under the Limitation Act of 1908 - no Commissioner's </p><p>.. HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.] 487</p><p>report was available, neither any final decree passed, as such the issue before A</p><p>the court was completely different having regard to the factual state of the</p><p>matter.</p><p>The decision has thus no manner of application in the contextual facts</p><p>neither the decision of this Court in W.B.Essential Commodities supply Corpn.,</p><p>(supra) be of any assistance since there was no expression of law but a mere B</p><p>expression of a possibility only, as such at best be termed to be an expression</p><p>of opinion incidently. The latter decision thus also does not render any</p><p>assistance to the submission of Mr. Mani rather lends credence to the</p><p>observations of this Court as noticed hereinbefore.</p><p>Incidentlly, the Calcutta High Court in one of its very old decision in C</p><p>the case of Kishori Mohan Pal v. Provash Chandra Monda/ and Ors., AIR</p><p>(1924) Calcutta 351 while interpreting Article 182 under the Limitation Act of</p><p>1908 has been rather categorical in recording that the date of the decree under</p><p>the Article is the day on which the judgment is pronounced and limitation</p><p>begins to run from that day although no formal decree can be drawn up in D</p><p>a partition suit until paper bearing a proper stamp under Article 45 of the</p><p>Stamp Act is supplied to the Court. Richardson, J. with his usual felicity of</p><p>expression stated as below :</p><p>"In this Court the learned Vakil for the respondents has said all that</p><p>could be said for his clients. He has in particular called our attention E</p><p>to the fact that, although the decree is dated the 25th March 1914, it</p><p>is expressed to be "passed in terms of Commissioner's report dated</p><p>the 27th June 1914 which and the map filed along with it do form parts</p><p>of the decree." The 25th March 1914 is, nevertheless, the correct date</p><p>of the decree because that is the day on which the judgment was</p><p>pronounced (order 20, rule 7, Civ. Pro. Code). The report of the F</p><p>Commissioner appointed to make the partition had already been</p><p>received, the report was adopted by the judgment subject to certain</p><p>variations and, in connection with those variations, certain direc!,jons</p><p>of a ministerial character were given to the Commissioner which the</p><p>Commissioner had merely to obey. The order sheet shows that the G</p><p>Commissioner submitted a report on the 27th June 1914. That report</p><p>has not been placed before us. But 1 have no doubt that it did no more</p><p>than state that the Commissioner had done what he was directed to</p><p>do by the judgment of the 25th March 1914. That judgment was the</p><p>final judgment in -the suit and it was so regarded by the Subordinate</p><p>Judge who delivered it. The decree is in accordance therewith. The H </p><p>488</p><p>A</p><p>B</p><p>c</p><p>D</p><p>SUPREME COURT REPORTS (2001] SUPP. I S.C.R.</p><p>directions in the judgment were sufficient to indicate how the decree</p><p>should be framed, and there was no need of any further judgment.</p><p>The delay in signing the decree was due not to any fault of the</p><p>Court or to any cause beyond the control of the parties but solely to</p><p>the delay of the parties in supplying the requisite stamped paper. Any</p><p>party desiring to have the decree executed might have furnished the</p><p>stamped paper at any time leaving the expense of providing it to be</p><p>adjusted by the Court in connection with the costs of the execution.</p><p>The circumstances disclose no ground for saying that limitation</p><p>did not run from the date of the decree as provided by article 182 of</p><p>the Limitation Act, and if authority be needed, reference may be made</p><p>to Go/am Gaffar Manda/ v. Go/ijan Bibi, (1898) 25 Cal. 109 and</p><p>Bhajan Behari Shaha v. Girish Chandra Shaha, (1913) 17 C.W.N. 959.</p><p>I may add that much time and labour would be saved if the court</p><p>would resist such attempts as the present to go behind the plain</p><p>words of a positive enactment."</p><p>Though several other old and very old decisions were cited but in view</p><p>of the pronouncement lately by th is Court and as discussed herein before,</p><p>we are not inclined to deal with the same in extenso, save however recording</p><p>that contra view recorded earlier by different High Courts cannot be termed</p><p>E to be good law any longer.</p><p>The decision in Lokhande's case (supra) cannot but be said to be on</p><p>the special facts situation and is thus in any event clearly distinguishable.</p><p>Be it noted that the legislature cannot be sub-servant to any personal</p><p>F whim or caprice. In any event, furnishing of engrossed stamp paper for the</p><p>drawing up of the decree cannot but· be ascribed to be a minist~rial act, which</p><p>cannot possibly put under suspension a legislative mandate. Since no</p><p>conditions are attached to the decree and the same has been passed declaring</p><p>the shares of the parties finally, the Court is not required to deal with the</p><p>matter any further - what has to be done - has been done. The test thus</p><p>G should be - Has the court left out something for being adjudicated at a later</p><p>point of time or is the decree contingent upon the happening of an event .-</p><p>i.e. to say the Court by its own order postpones the enforceability of the order</p><p>- In the event of there being no postponement by a specific order of Court,</p><p>there being a suspension of the decree being µnenforceable would not arise.</p><p>H As a matter of fact, the very definition of decree in Section 2(2) ofC.P. Code</p><p>l (l</p><p>• I</p><p>.. </p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.) 489</p><p>lends credence to the observations as above since the term is meant to be A</p><p>'conclusive determination of the rights of the parties.'</p><p>On the next count Mr. Mani in support of the appeal very strongly</p><p>contended that question as to when a decree for partition becomes enforceable</p><p>cannot be decided in any .event without reference to relevant provisions of</p><p>Stamp Act, since a decree for partition is also an instrument of partition in B</p><p>terms of Section 2 (15) of the Indian Stamp Act 1899. For convenience sake,</p><p>Section 2 (15) reads as below :</p><p>"2 Definitions-in this Act, unless there is something repugnant in</p><p>the subject or context-</p><p>/</p><p>15. "Instrument of partition" means any instrument whereby co-owners</p><p>of any property divide or agree to divide such property in severalty,</p><p>and includes also a final order for effecting a partition passed by any</p><p>revenue-authority or any Civil Court and an award by an arbitrator</p><p>directing a partition."</p><p>At the first blush, the submissions seem to be very attractive having</p><p>substantial force but on a closer scrutiny of the Act read with the Limitation</p><p>Act, the same however pales into insignificance. Before detailing out the</p><p>submissions of Mr. Mani on the second count pertaining to the Stamp Act</p><p>c</p><p>D</p><p>we ought to note Section 35 of the Stamp Act at this juncture. Section 35 E</p><p>records that "no instrument chargeable with duty shall be admitted in evidence</p><p>for any purpose by any person having by law or consent of parties authority</p><p>to receive evidence, or shall be acted upon, registered or authenticated by</p><p>any such person or by any public officer, unless such instrument is duly</p><p>stamped". Mr. Mani in continuation of his submission, however contended</p><p>that a plain reading of the Section 35 would depict that the same creates a . F</p><p>three-fold bar in respect of unstamped or insufficiently stamped document viz.</p><p>I. That it shall not be received in evidence.</p><p>II. That it shall not be acted upon;</p><p>G</p><p>III. That it shall not be registered or authenticated</p><p>• And it is on this score, it has been contended that the partition decree thus</p><p>even though already passed cannot be acted upon, neither becomes</p><p>enforceable unless d~awn up and engrossed on stamp papers. The period of</p><p>limitation, it has been contended in respect of the partition decree cannot H </p><p>490 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.</p><p>A begin to run till it is engrossed on requisite stamp paper. There is thus, it has</p><p>been contended a legislative bar under Section 35 of the Indian Stamp Act</p><p>for enforceability of partition decree. Mr. Mani contended that enforcement</p><p>includes the whole process of getting an award as well as execution since</p><p>execution otherwise means due performance of all formalities necessary to</p><p>give validity to a document. We are however unable to record our concurrence</p><p>B therewith. Prescription of a twelve year certain period cannot possibly be</p><p>obliterated by an enactment wholly unconnected therewith. Legislative mandate</p><p>as sanctioned under Article 136 cannot be kept in abeyance unless the self</p><p>same legislation makes a provision therefor. It may also be noticed that by , the passing of a final decree, the rights stand crystalised and it is only</p><p>C thereafter its enforceability can be had though not otherwise.</p><p>As noticed above the submission of Mr. Manu apparently seemed to</p><p>be very attractive specially in view of the decision in Lokhande's case (supra).</p><p>In Lokhande's case as noted above, this Court was not called upon to decide</p><p>the true perspective of Article 136 of the Act of 1963 rather decided the issue</p><p>D in the peculiar fact situation of the matter on the basis of the Limitation Act</p><p>of 1908 and in particular, Article 182. This Court was rather specific on that</p><p>score and it is on that score only that the Andhra Pradesh High Court's</p><p>Judgment in Smt. Kotipal/i Mahalakshmamma v. Kotipal/i Ganeswara Rao</p><p>& Ors., AIR (1960) A.P. 54 was said to be the correct exposition of law. Article</p><p>E 136 however has a special significance and a very wide ramification as noted</p><p>above and as such we need not dilate therefore any further.</p><p>Turning attention on to Section 2 (15) read with Section 35 of the Indian</p><p>Stamp Act, be it noted that the Indian Stamp Act, 1899 (Act 2 of 1899) has</p><p>been engrafted in the Statute Book to consolidate and amend the law relating</p><p>F to stamps. Its applicability thus stands restricted to the scheme of the Act.</p><p>It is a true fiscal statute in nature, as such strict construction is required to</p><p>be effected and no liberal interpretation. Undoubtedly, Section 2 (15) includes</p><p>a decree of partition and Section 35 of the Act of 1899 lays down a bar in</p><p>the matter of unstamped or insufficient stamp being admitted in evidence or</p><p>G being acted upon-but does that mean that the prescribed period shall remain</p><p>suspended until the stamp paper is furnished and the partition decree is</p><p>drawn thereon and subsequently signed by the Judge? The result would</p><p>however be an utter absurdity; As a matter of fact ff somebody does not wish</p><p>to furnish the stamp paper within the time specified therein and as required</p><p>by the Ci vi I Court to draw up the partition decree or if someone does not at</p><p>H all furnish the stamp paper, does that mean and imply, no period of limitation </p><p>HAMEED JOHARAN v. ABDUL SALAM [BANERJEE, J.] 491</p><p>can said to be attracted for execution or a limitless period of limitation is A</p><p>available. The intent of the legislature in engrafting the Limitation Act shall</p><p>have to be given its proper weightage. Absurdity cannot be the outcome of</p><p>interpretation by a court order and wherever there is even possibility of such</p><p>absurdity, it would be a plain exercise of judicial power to repel the same</p><p>rather than encouraging it. The whole purport of the Indian Stamp Act is to B</p><p>make available certain dues and to collect revenue but it does not mean and</p><p>imply, overriding the effect over another statute operating on a completely</p><p>different sphere.</p><p>Let us examine the matter from another perspective. Limitation Act has</p><p>been engrafted in the Statute Book in the year 1963 and the Indian Stamp Act C</p><p>has been bought into existence by the British Parliament in 1899 though,</p><p>however, the Government of India Adaptation of Indian Laws Order 1937, the</p><p>Indian Independence Adoptation of Central Acts and Ordinance Order 1948</p><p>and the Adoptation of Laws Order 1950 allowed this fiscal statute to remain</p><p>on the statute book. The legislature while engrafting 1963 Act, it is presumed</p><p>and there being a golden canon of interpretation of statutes, that it had in D</p><p>its mind the existing Indian Stamp Act before engrafting the provisions _under</p><p>Article 136. A latter statute obviously will have the effect of nullifying ail</p><p>earlier statute in the event of there being any conflict provided however and</p><p>in the event there is otherwise legislative competency in regard thereto. As</p><p>regards the legislative competency, there cannot be any doubt which can E</p><p>stand focussed neither there is any difficulty in correlating the two statutes</p><p>being operative in two different and specified spheres. Enforceability of the</p><p>decree cannot be the subject matter of Section 35 neither the limitation can</p><p>be said to be under suspension. The heading of the Section viz., "Instrument</p><p>not duly stamped inadmissible in evidence etc". (emphasis supplied) itself</p><p>denotes its sphere of applicability : it has no relation with the commencement F</p><p>of period of limitation. As noticed above 'executability' and 'enforceability' are</p><p>two different concepts having two specific connotation in legal parlance.</p><p>They cannot be termed as synonymous, as contended by Mr. Mani nor they</p><p>can be attributed one and the same meaning. Significantly, the final partition</p><p>decree, whenever it is drawn bears the date of the decree when the same was G</p><p>pronounced by Court and not when it stands engrossed on a stamp paper</p><p>and signed by the judge and this simple illustration takes out the main thrust</p><p>of Mr. Mani's submission as regards the applicability of the Stamp Act visa-vis the enforceability of the decree. The decree may not be received in</p><p>evidence nor it can be acted upon but the period of limitation cannot be said</p><p>to remain under suspension at the violation and mercy of the litigant. H </p><p>492 SUPREME COURT REPORTS (2001] SUPP. I S.C.R.</p><p>A Limitations starts by reason of the statutory provisions as prescribed in th!'</p><p>statute. Time does not stop running at the instance of any individual unless,</p><p>of course, the same has a statutory sanction being conditional, as more fully</p><p>noticed hereinbefore; the Special Bench decision of the Calcutta High Court</p><p>in the case of Bholanath Karmakar and Ors. v. Madanmohan Karmakar,</p><p>B (AIR 1988 Calcutta I), in our view has completely misread and misapplied the</p><p>law for the reasons noted above and thus cannot but be said to be not</p><p>correctly decided and thus stands overruled. Undoubtedly, the judgment of</p><p>the Calcutta High Court has been a very learned judgment but appreciation</p><p>of the legislative intent has not been effected in a manner apposite to the</p><p>intent rather had a quick shift therefrom by reason wherefor, the Special</p><p>C Bench came to a manifest error in recording that the period of limitation for</p><p>execution of a partition decree shall not begin to run until the decree is</p><p>engrossed on requisite stamp paper.</p><p>On the wake of the aforesaid we are unable to record an affirmative</p><p>support to Mr. Mani's submission that Section 35 read with Section 2(15) of</p><p>D the Indian Stamp Act 1899 would over-run the Limitation Act of 1963 and thus</p><p>give a complete go-bye to the legislative intent in the matter of incorporation</p><p>of Article 136.</p><p>The appeal, therefore, fails and is dismissed. No order as to costs.</p><p>E S.V.K. Appeal dismissed. </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-26469481748278032592024-02-19T10:35:00.000+05:302024-02-19T10:35:29.084+05:30Limitation Act, 1963-Artic/e 136-Decree passed in a partition suitPeriod of limitation for execution of such decree commences from the date of the decree and not from the date of engrossment of the decree on the stamp · paper-Engrossment of the decree on stamp paper would relate back to the date of the decree-Indian Stamp Act, I 899--Section 35. In a suit for partition filed against the predecessor-in-interest of the appellants, final decree. was passed on 7th August, 1981 in favour of the predecessor-in-interest of the respondents. There was no order of the Court directing the parties to furnish stamp papers for the purposes of engrossing the decree. The stamp papers required for engrossing the decree were furnished by respondents on 25th May, 1982 and the decree was engrossed thereafte~. The execution application was filed on 21st March, 1994 in the High Court. The appellant raised objection that the execution application was barred by limitation in view of Article 136 of the Act, but the execution court rejected the objection. That order was upheld by the Division Bench in appeal, which held that unless and until the decree is engrossed on the stamp paper it is merely a judgment of the Court and there is no decree available for execution and therefore, the starting point of limitation in case of execution of a decre~ in partition suit is the date when the decree is engrossed on the requisite stamp papers as that would be the date when decree becomes enforceable. Hence the present appeal. <p>DR. CHIRANJI LAL (D) BY LRS.</p><p>v.</p><p>HARI DAS (D) BY LRS.</p><p>MAY 13, 2005</p><p>[R.C. LAHOTI, CJ., Y.K. SABHARWAL AND G.P. MATHUR, JJ.]</p><p>Limitation Act, 1963-Artic/e 136-Decree passed in a partition suitPeriod of limitation for execution of such decree commences from the date of</p><p>A</p><p>B</p><p>the decree and not from the date of engrossment of the decree on the stamp · C</p><p>paper-Engrossment of the decree on stamp paper would relate back to the</p><p>date of the decree-Indian Stamp Act, I 899--Section 35.</p><p>In a suit for partition filed against the predecessor-in-interest of the</p><p>appellants, final decree. was passed on 7th August, 1981 in favour of the</p><p>predecessor-in-interest of the respondents. There was no order of the Court D</p><p>directing the parties to furnish stamp papers for the purposes of engrossing</p><p>the decree. The stamp papers required for engrossing the decree were</p><p>furnished by respondents on 25th May, 1982 and the decree was engrossed</p><p>thereafte~. The execution application was filed on 21st March, 1994 in the</p><p>High Court. The appellant raised objection that the execution application E was barred by limitation in view of Article 136 of the Act, but the execution</p><p>court rejected the objection. That order was upheld by the Division Bench</p><p>in appeal, which held that unless and until the decree is engrossed on the</p><p>stamp paper it is merely a judgment of the Court and there is no decree</p><p>available for execution and therefore, the starting point of limitation in</p><p>case of execution of a decre~ in partition suit is the date when the decree F</p><p>is engrossed on the requisite stamp papers as that would be the date when</p><p>decree becomes enforceable. Hence the present appeal.</p><p>Allowing the appeal, the Court</p><p>HELD: I.I. The In~ian Stamp Act, 1899 is a fiscal measure enacted G</p><p>with. an object to secure revenue for the State on certain classes of</p><p>instruments. Since a decree in a suit for partition creates rights ~nd</p><p>liabilities of the parties with respect to the immovable properties, it is</p><p>, considered as an instrument liable for the payment of stamp duty under</p><p>the Indian Stamp Act.·</p><p>~59 H </p><p>360 SUPREME COURT REPORTS [2005) SUPP. I S.C.R.</p><p>1.2. The Indian Stamp Act is not enacted to arm a litigant with a</p><p>weapon of technicality to meet the case of his opponent. The stringent</p><p>provisions of the Act are conceived in the interest of the revenue. Once</p><p>that object is secured according to law, the party staking his claim on the</p><p>instrument will not be defeated on the ground of initial defect in the</p><p>B instrument. [368-E-FJ</p><p>c</p><p>·n</p><p>Hameed Joharan and Ors. v. Abdul Salam and Ors., [2001) 7 SCC 573;</p><p>Renu Devi v. Mahendra Singh and Ors., AIR (2003) SC 1608 and Hindustan</p><p>Steel Limitedv. Messrs Dilip Construction Company, [1969) 1SCC597, relied</p><p>on.</p><p>Shankar Ba/want Lokhande v. Chandrakant Shankar Lokhande and Anr.,</p><p>[1995] 3 SCC 413 and WB. Essential Commodities Supply Corporation v.</p><p>Swadesh Agro Farming & Storage Pvt. Ltd. and Anr., [1999] 8 SCC 315,</p><p>referred to.</p><p>2. The engrossment of the final decree in a suit for partition would</p><p>relate back to the date of the decree. The beginning of the period of</p><p>limitation for executing such a decree cannot be made to depend upon date</p><p>of the engrossment of such a decree on the stamp paper. The date of</p><p>furnishing of stamp paper is an uncertain act, within the domain,,.purview</p><p>E and control of a party. No date or period is fixed for furnishing stamp</p><p>papers. No rule has been shown requiring the court to call upon or give</p><p>any time for furnishing of stamp paper. A party by his own act of not</p><p>furnishing stamp paper cannot stop the running of period of limitation.</p><p>None can take advantage of his own wrong. Ttie' proposition that period</p><p>of limitation would remain suspended till stamp paper is furnished and</p><p>F · decree engrossed thereupon and only thereafter the period of twelve years</p><p>will b'egin to run would lead to absurdity. [369-E, GJ</p><p>Yeshwant Deorao Deshmukh v. Walchand Ramchand Kothari, [1950)</p><p>SCR 852, relied on.</p><p>G 3. Rules of limitation are meant to see that parties do not resort to</p><p>dilatory tactics, but seek their remedy promptly. There is no statutory</p><p>provision prescribing a time Jim it for furnishing of the stamp paper for</p><p>engrossing the decree or time limit for engrossment of the decree on stamp</p><p>paper and there is no statutory obligation on the Court passing the decree</p><p>H to direct the parties to furnish the stamp paper for engrossing the decree. </p><p>~</p><p>(</p><p>-----'· _,..</p><p>CHIRANJILAL(D)BYLRS. v.HARIDAS(D)BYLRS.[SABHARWAL, J.] 36]</p><p>In the present case the Court has not passed an order directing the parties A</p><p>to furnish the stamp papers for the purpose of engrossing the decree.</p><p>Merely because there is no direction by the Court to furnish the stamp</p><p>papers for engrossing of the decree or there is no time limit fixed by law,</p><p>does not mean that the party can furnish stamp papers at its sweet will</p><p>and claim that the period of limitation provided under Article 136 of the B</p><p>Act would start only thereafter as and when the decree is engrossed</p><p>thereupon. The starting of period of limitation for execution of a decree</p><p>cannot be made contingent upon the engrossment of the decree on stamp</p><p>paper. The engrossment of the decree on stamp paper would relate back</p><p>to the date of the decree, namely, 7th August, 1981, il1 the present case.</p><p>In this view, the execution application filed on 21st March, 1994 was time C</p><p>barred having been filed beyond the period of twelve years prescribed</p><p>under Article 136 of the Act. The High Court committed illegality in</p><p>coming to the conclusion that it was not barred by limitation. [370-B-EJ</p><p>CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3745 of2002. D</p><p>From the Judgment and Order dated 23.11.2000 of the Delhi High</p><p>Court in Execution First Appeal (O.S.) No. l of 2000.</p><p>K.N. Bhat, R.N. Verma, M.K.Verma and R.S. Rana with him for the</p><p>Appellant.</p><p>Jaspal Singh, Ms. Jayashree Wad, Ashish Wad, Neeraj Kumar and Ms.</p><p>Surabhi Madan with him for the Respondent.</p><p>The Judgment of the Court was delivered by</p><p>E</p><p>Y. K. SABHARW AL, J. Article 136 of the Limitation Act, 1963 (for F</p><p>short 'the Act') prescribes a period of twelve years for the execution of any</p><p>decree (other than a decree granting a mandatory injunction) or order of any</p><p>civil court. It provides that the period would commence when the decree or</p><p>order becomes enforceable.</p><p>The question that arises for determination in this matter is when would</p><p>the period of limitation for execution of a decree passed in a suit for partition</p><p>commence. In other words, question is when such a decree becomes</p><p>enforceable - from the date when the decree is made or when the decree is</p><p>engrossed on the stamp paper. Which, out of these two, would be the starting</p><p>G</p><p>point of limitation? H </p><p>A</p><p>362 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.</p><p>The facts are brief and undisputed. In a suit for partition filed against</p><p>the predecessor-in-interest of the appellants, final decree was passed on 7th</p><p>August, 1981 in favour of the predecessor-in-interest of the respondents. The</p><p>stamp papers required for engrossing the decree were furnished by respondents</p><p>on 25th May, 1982 and the decree was engrossed thereafter. There was no</p><p>B order of the Court directing the parties to furnish stamp papers for the purposes</p><p>of engrossing the decree. The execution application was filed on 21st March,</p><p>1994 in the High Court. The appellant raised objection that the execution</p><p>application was barred by limitation in view of Article 136 of the Act. The</p><p>execution court rejected the objection. The order was also upheld by the</p><p>Division Bench in the appeal. The Division Bench by the impugned judgment</p><p>C held that unless and until the decree is engrossed on the stamp paper it is</p><p>merely a judgment of the Court and there is no decree available for execution.</p><p>Therefore, it held that the starting point of limitation in case of execution of</p><p>a decree in partition suit is the date when the decree is engrossed on the</p><p>requisite stamp papers as that would be the date when decree becomes</p><p>D enforcea:6le.</p><p>A two-Judge Bench of this Court found that there was obvious conflict</p><p>among the three two-Judge Bench decisions i.e. (i) Shankar Ba/want Lokhande</p><p>v.Chandrakant Shankar Lokhande and Anr., [1995] 3 SCC 413 (ii)</p><p>W.B.Essential Commodities Supply Corporation v. Swadesh Agro Farming &</p><p>E Storage Pvt. Ltd. and Anr., [1999] 8 SCC 315 and (iii) Hameed Joharan and</p><p>Ors. v. Abdul Salam and Ors., [200 I] 7 SCC 573 and was of the view that</p><p>it would be appropriate that the case be placed before a three-Judge Bench</p><p>to resolve the conflict in these decisions.</p><p>The contention urged on behalf of the appellants is that the date of</p><p>F engrossment of decree on stamp paper cannot be the starting point oflimitation</p><p>for the purposes of Article 136 of the Act.</p><p>Learned counsel for the appellants contends that there is no conflict in</p><p>the decisions. The submission is that the case of W.B. Essential Commodities</p><p>G Supply Corporation was that of a money decree and, therefore, any discussion</p><p>therein on the issue of enforcement of decree on stamp paper and starting</p><p>point of limitation on that basis would be merely obiter dicta. Likewise, the</p><p>point in issue, in fact, did arise in Lokhande 's case and only passing</p><p>observations have been made therein which are purely obiter. The said</p><p>observations were not necessary to decide the issue which was germane to</p><p>H the matter. Placing strong reliance on the decision in Hameed Joharan 's case </p><p>Cl-IIRANJI LAL (D) BY LRS. v.1-IARI DAS (D) BY LRS. [SABHARWAL, J.] 3 63</p><p>(supra), it is contended by learned counsel that the legal propositions correctly A</p><p>laid down therein squarely cover the issue arising in the present matter.</p><p>On the other hand, the learned counsel appearing' for the respondents</p><p>supporting the impugned judgment strongly relies on th.e decisions inLokhande</p><p>and W.B. Essential Commodities Supply Corporation cases in support of the</p><p>contention that a final decree of partition becomes enforceable only when it B</p><p>is engrossed on the stamp paper.</p><p>In Lokhande 's case, a preliminary decree was passed on 2nd August,</p><p>1955 in a suit for partition declaring the share of each of the parties to the</p><p>suit. The Court by its order dated 19th April 1958 directed preparation of C</p><p>final decree on the supply of the stamp papers. On 19th December, 1960 one</p><p>among the several parties to the suit whose shares had been declared in the</p><p>preliminary decree, supplied the stamp paper for engrossing the final decree</p><p>to the extent of his share declared in the preliminary decree and accordingly</p><p>on 11th January, 1961 a final decree was engrossed on the stamp paper to the</p><p>exte_nt of his share. Other parties to the suit whose shares were declared in D</p><p>the preliminary decree did not supply the stamp papers, hence no final decree</p><p>was made qua them. However, they filed application for execution of the</p><p>preliminary decree, which was dismissed as barred by limitation. The High</p><p>Court while dismissing the appeal held that in view of the fact that no final</p><p>decree was drawn on stamp paper there was no decree in existence for its E</p><p>execution. In this background it was found that no executable final decree</p><p>has been drawn working out the rights of the parties dividing the properties</p><p>in terms of the shares declared in the preliminary decree. Since the final</p><p>decree had not been drawn, the observatiOns regarding furnishing of stamp</p><p>paper and engrossment of the final decree thereupon were not germane to the</p><p>issue involyed in the said ca:;e. Thus, the-said observations are clearly obiter F</p><p>dicta.</p><p>Therefore, Lokhande 's case cannot be said to have laid down the</p><p>proposition that the period of limitation would commence only on engrossment</p><p>of final decree of partition on stamp paper. G</p><p>In W.B. Essential Commodities Supply Corporation's case, the High</p><p>Court decreed the suit filed for recovery of money on 8th March, 1982.</p><p>However, the decree was actually drawn up and signed by the judge on 9th</p><p>August, 1983. Application for execution of decree was filed by the decree</p><p>holder on 5th June, 1995. The executing court ordered execution of the H</p><p>decree. But, on appeal, the Division Bench of the High Court set aside the </p><p>364 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.</p><p>A order and held that the execution petition was barred by limitation under</p><p>Article 136 of the Act. The question before this Court was whether the period</p><p>of limitation begins to run from the date the suit is decreed or from the date</p><p>when the decree is actually drawn up and signed by the judge.</p><p>The Court held that a decree is said to be enforceable when it is</p><p>B executable. For a decree to be executable, it must be in existence. A decree</p><p>would be deemed to come into existence immediately on the pronouncement</p><p>of the judgment and the decree becomes enforceable the moment thejudgment</p><p>is delivered and merely because there will be delay in drawing up of the</p><p>decree, it cannot be said that the decree is not enforceable till it is prepared</p><p>C because an enforceable decree in one form or the other is available to a</p><p>decree holder from the date of the judgment till the expiry of the period of</p><p>limitation under Article 136 of the Act.</p><p>In arriving at the abovenoted conclusion, the Court placed reliance on</p><p>Order 20 Rule 6A of Civil Procedure Code which provided that the last</p><p>D paragraph of the judgment should state in precise terms the relief which has .i</p><p>been granted by such judgment. It fixed the outer time limit of 15 days from</p><p>the date of the pronouncement of the judgment within which the decree must</p><p>be drawn up. In the event of the decree not so drawn up, clause (a) of subrule (2) of Rule 6-A enabled a party to make an appeal under Rule 1 of Order</p><p>E 41 CPC without filing a copy of the decree appealed against and for that</p><p>purpose the last paragraph of the juqgment shall be treated as a decree. For</p><p>the purpose of execution also, provision is made in clause (b) of the said subrule which says that so long as the decree is not drawn up, the last paragraph</p><p>of the judgment shall be deemed to be a decree. Clause {b) has thus enabled</p><p>the party interested in executing the decree before it is drawn up to apply for</p><p>F a copy of the last paragraph only, without being required to apply for a copy</p><p>of the whole of the judgment.</p><p>After holding that decree becomes enforceable the moment the judgment</p><p>is delivered, which ultimately decided the question that arose for consideration</p><p>G in the case, the Court went further and observed that there may, however, be</p><p>situations in which a decree may not be enforceable on the date it is passed.</p><p>The Court gave three situations by way of illustrations to demonstrate when</p><p>a decree may not be enforceable on the date it is passed. The third illustration</p><p>is more pertinent to the present discussion, which is as follows:</p><p>H "Thirdly, in a suit for partition of immovable properties after passing </p><p>CHIRANJI LAL (D) BY LRS. v. HARi DAS (D) BY LRS. [SABHARW AL, J.] 3 65</p><p>of preliminary decree when, in final decree proceedings, an order is A</p><p>passed by the court declaring the rights of the parties in the suit</p><p>properties, it is not executable till final decree is engrossed on nonjudicial stamp p~per supplied by the parties within the time specified</p><p>by the court and the same is signed by the Judge and sealed. It is in</p><p>this context that the observations of this Gourt in Shan/car Ba/want</p><p>Lokhande v. Chandrakant Shan/car Lokhande, [1995] 3 sec 413 B</p><p>have to be understood. These observations do not apply to a money</p><p>decree and, therefore, the appellant can derive no benefit from them."</p><p>This illustration according to the Court was necessitated because of the</p><p>observations in Lokhande 's case. Since these observations have already been C</p><p>held to be obiter, this illustration is not of much significance in deciding the</p><p>present matter and it cannot be said to be exposition of Jaw. In addition to</p><p>this, the decree involved in the case was a decree passed in a suit for recovery</p><p>of money and not a decree passed in a suit for partition, hence the question</p><p>of engrossing of the decree on stamp paper does not arise.</p><p>In Hameed Joharan 's case, a preliminary decree for partrtion was passed</p><p>on 8th June, 1969 and a final decree was passed on 20th November, 1970.</p><p>On 28th February, 1972, the Court issued notice to the parties to furnish</p><p>stamp papers and granted time till 17th March, 1972 for the same. The decree</p><p>D</p><p>· holder did not furnish any stamp paper, hence no decree was finalized. An</p><p>execution application was presented on 21st May, 1984. The execution petition E</p><p>was dismissed as barred by limitation as the same was filed beyond twelve</p><p>years stipulated in Article. 136 of the Act. Subsequently, a revision petition</p><p>was filed against the said order and the High Court set aside the order and</p><p>directed the executing court to consider the question of limitation afresh. The</p><p>executing court after fresh consideration of the matt~r held that the execution F</p><p>petition is not barred by limitation. As against this, a revision petition was</p><p>filed before the High Court and the Learned Single Judge of the High Court</p><p>allowed the revision petition and set aside the order of the executing court.</p><p>Consequently, the execution petition also stood dismissed. The question before</p><p>the Court was whether the limitation period begins to run from the date when</p><p>the decree is made or from the date on which the stamp paper for engrossing G</p><p>the decree is to be furnished as per the direction of the court and the decree</p><p>is engrossed on such stamp papers.</p><p>This Court in its detailed and elaborate judgment held that the direction</p><p>given by the Court for furnishing of stamp papers within a specified date by H </p><p>366 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.</p><p>A itself will not take the decree out of the purview of Article 136 of the Act</p><p>as regards the enforceability of the decree. It was held that furnishing of</p><p>stamp paper was an act entirely within the domain and control of the party</p><p>required to furnish and any delay in the matter of furnishing of the same</p><p>cannot possibly be said to be putting a stop to the period of limitation being</p><p>B run. The Court observed "that:-</p><p>"Needless to record that engrossment of ·stamped paper would</p><p>undoubtedly render the decree executable but that does not mean and</p><p>imply, however, that the enforceability of the decree would remain</p><p>suspended until furnishing of the stamped paper - this is opposed to</p><p>C the fundamental principle on which the statutes of limitation are</p><p>founded".</p><p>D</p><p>E</p><p>F</p><p>. The Court has further observed that:-</p><p>"Be it noted that the legislature cannot be subservient to any personal</p><p>whim or caprice. In any event, furnishing of engrossed stamp paper</p><p>for the drawing up of the decree cannot but· be ascribed to be a</p><p>ministerial act, which cannot possibly put under suspension a</p><p>legislative mandate. Since no conditions are attached to the decree</p><p>and the same has been passed declaring the shares of the parties</p><p>finally, the Court is not required to deal with the matter any further</p><p>- what has to be done - has been done. The test thus should be - has</p><p>the Court left out something for bei!"lg adjudicated at a later point of</p><p>time or is the decree contingent upon the happening of an event - i.e.</p><p>to say the Court by its- own order postpon~.s the enforceability of the</p><p>order - in the event of there being no postponement by a specific</p><p>order of the Court, there being a suspension of the decree being</p><p>unenforceable would not arise".</p><p>Thus, even if there is direction by the Court, for furnishing of stamp</p><p>papers by a particular date for the purposes of engrossing of the decree, the</p><p>period of limitation begins to run from the date when the decree is passed</p><p>G and not from the date when the decree is engrossed on the stamy papers</p><p>supplied by the parties. '</p><p>The Court also held that the period of limitation prescribed in Article</p><p>136 of the Act cannot be obliterated by an enactment wholly unconnected</p><p>therewith, like the Indian Stamp Act. Legislative mandate as sanctioned under</p><p>H Article 136 of the Act cannot be kept in abeyance unless the selfsame</p><p>• </p><p>CHIRANJJ LAL (D) BY LRS. v. HARI DAS (D) BY LRS. [SABHARWAL, J.] 367</p><p>legislation makes a provision therefor. The Indian Stamp Act, 1899 has been A·</p><p>engrafted in the statute book to consolidate and amend the law relating to</p><p>stamps. Its applicability thus stands restricted to the scheme of the Indian</p><p>Stamp Act.</p><p>As regards the bar under Section 35 of the Indian Stamp Act, it was</p><p>held in Hameed Joharan 'a case that the prescribed period shall not be allowed B</p><p>to remain suspended until the stamp paper is furnished and the partition</p><p>decree is drawn thereon and subsequently signed by the judge. Enforceability</p><p>of the decree cannot be the subject-matter of Section 35, neither can the</p><p>limitation be said to be under suspension. The Court differentiated between</p><p>"executability" ·and "enforceability" of the decree. The phrase 'execution' C</p><p>was held to mean the process for enforcing or giving effect to the judgment</p><p>of the court and it is completed when the decree holder gets the money or</p><p>other thing awarded to him by the judgment. It was held that though the</p><p>decree may not be received in evidence or be acted upon but the period of</p><p>limitation cannot be said to remain under suspension at the volition and D</p><p>mercy of the litigant. The period of limitation starts by reason of the statutory</p><p>provisions as prescribed in the statute. Time does not stop running at the</p><p>instance of any individual unless, of course, the same has a statutory sanction</p><p>being conditional.</p><p>The reference order mentions that the decision of a two Judge Bench E</p><p>of this Court in Renu Devi v. Mahendra Singh and Ors., AIR (2003) SC 1608</p><p>would have some bearing. In that case in a suit for partition a compromise</p><p>decree was made on 13th February, 1978 declaring the share of the parties</p><p>in the suit property. The final decree was engrossed on the stamp paper on</p><p>24th May, 1979. Two parties to the decree gifted the property that fell into F</p><p>their share by a gift deed. Title to these gifted properties was challenged in</p><p>the title suit. The Trial Court dismissed the suit. On appeal, the First Appellate</p><p>Court allowed the appeal. On further appeal, the High Court while allowing</p><p>the appeal held that donors acquired their separate title in the joint property</p><p>only after the final decree was engrossed on the stamp paper i.e. on 24th</p><p>May, 1979 and, therefore, they were legally incompetent to gift their property G</p><p>so as to transfer the title to the donees inasmuch as before the decree was</p><p>engrossed on the stamp paper they did not have any title in the property . . ,</p><p>.·\'<</p><p>--· This Court while allowing the appeal against the decision of the High</p><p>Court held that the compromise decree dated 13th February, 1978 being a H </p><p>368 SUPREME COURT REPORTS [2005] SUPP. l S.C.R.</p><p>A decree effecting partition by metes and bounds ought to have been engrossed</p><p>on requisite stamp papers. The deficiency stood supplied by the same beir.g</p><p>engrossed on stamp papers on 24th May, 1978. The engrossing of the decree</p><p>on stamp paper validated the compromise decree dated 13th February, 1978</p><p>and it became effective and binding w,ith effect from 13th February, 1978</p><p>B itself. Thus, the Court has categorically held that even ifthe decree is engrossed</p><p>on the stamp paper on a subsequent date, the decree would be legally effective</p><p>from the date when the decree is actually passed.</p><p>Learned counsel for the respondents contends that Section 35 of the</p><p>Indian Stamp Act, 1899 provides that an instrument not duly stamped cannot</p><p>C be 'acted upon'. Therefore, a decree passed in a suit for partition cannot be</p><p>acted upon which means it cannot be enforced until engrossed on stamp</p><p>paper. It is further contended that Article 136 of the Act presupposes two</p><p>conditions for the execution of the decree. Firstly, the judgment has to be</p><p>converted into a decree and secondly, the decree should be enforceable. It is</p><p>D further submitted that a decree becomes enforceable only when the decree is</p><p>engrossed on the stamp paper. Therefore, the period of limitation begins to</p><p>run from the date when the decree becomes enforceable i.e. when the decree</p><p>is engrossed on the stamp paper.</p><p>Such an interpretation i~ not permissible having regard to the object</p><p>E and scheme of the Indian Stamp Act, 1899. The Stamp Act is a fiscal measure</p><p>enacted with an object to secure revenue for the State on certain classes of</p><p>instruments. It is not enacted to arm a litigant with a weapon of technicality</p><p>to meet the case of his opponent. The stringent provisions of the Act are</p><p>conceived in the interest of the revenue. Once that object is secured according</p><p>F to law, the party staking his claim on the instrument will not be defeated on</p><p>the ground of initial defect. in the instrument {Hindustan Steel Limited v.</p><p>Messrs. Dilip Construction Company, [1969] 1 SCC 597}. Section 2(14) of</p><p>the Indian Stamp Act defines an 'instrument' as including every document by</p><p>which any right or liability is, or purported to be created, transferred, limited,</p><p>extended, extinguished or recorded. Section 2( 15) defines 'instrument of</p><p>G partition' as any instrument whereby co-owners of any property divide or</p><p>agree to divide such property in severalty, and includes also a final order for</p><p>effecting a partition passed by any revenue authority or any Civil Court and</p><p>an award by an arbitrator directin,g partition. Section 3 provides a list of</p><p>instruments which shall be chargeable with duty of the amount indicated in</p><p>H Schedule I of the Indian Stamp Act. Article 45 of Schedule I prescribes the</p><p>J</p><p>I</p><p>) </p><p>~ .</p><p>'·</p><p>CHIRANJI LAL (D) BY LRS. v. HARIDAS (D) BY LRS. [SABHARWAL, J] 3 69</p><p>proper stamp duty payable in case of an instrument of partition. Section 33 A</p><p>provides for the impounding of the instrument not duly stamped and for</p><p>examination of the instrument for ascertaining whether the instrument is duly</p><p>stamped or not. Section 35 provides that no instrument chargeable with duty</p><p>shall be admitted in evidence for any purpose by any person having by law</p><p>or consent of parties, authority to receive evidence, or shall be acted upon, B</p><p>registered or authenticated by any such person or by any p~blic officer,</p><p>unless such instrument is duly stamped. Section 40 (b) provide~ for payment</p><p>of the proper duty, ifthe instrument impou.nded is not duly stamped. Section</p><p>42 (I) provides for certifying that proper duty has been paid on the impounded</p><p>instrument. Sub-section (2) provides that after such certification the instrument</p><p>shall be admissible in evidence, and may be registered, acted upon and C</p><p>authenticated as if it had been duly stamped. .</p><p>A decree in a suit for partition declares the rights of the parties in the</p><p>immovable properties and divides the shares by metes and bounds. Since a</p><p>decree in a suit for partition creates rights and liabilities of the parties with</p><p>respect to the immovable properties, it is considered as an instrument liable . D</p><p>for the payment of stamp duty under the Indian Stamp Act. The object of the</p><p>Stamp Act being securing the revenue for the State, the scheme of the Stamp</p><p>Act provides that a decree of partition not duly stamped can be impounded</p><p>and once the requisite stamp duty along with penalty, if any, is paid the</p><p>decree can be acted upon. E</p><p>The engrossment of the final decree in a suit for partition would relate</p><p>back to the date of the decree. The beginning of the period of limitation for</p><p>executing such a decree cannot be made to depend upon date of the</p><p>engrossment of such a decree on the stamp paper. The date of furnishing of</p><p>stamp paper is an uncertain act, within the domain, purview and control of p</p><p>a party. No date or period is fixed for furnishing stamp papers. No rule has</p><p>been shown to us requiring the court to call upon or give any time for</p><p>furnishing of stamp paper. A party by his own act of not furnishing stamp</p><p>paper cannot stop the running of period of limitation. None can take advantage</p><p>of his own wrong. The proposition that period of limitation would remain</p><p>suspended till stamp paper is furnished and decree engrossed thereupon and G</p><p>only thereafter the period of twelve years will begin to run would lead to</p><p>absurdity. In YeshwantDeorao Deshmukh v. Walchand Ramchand Kothari,</p><p>(1950] SCR 852 it waf said that the .payment of court fee on the amount</p><p>found due was entirely in the power of the decree holder and there was</p><p>nothing to prevent him from paying it then and there; it was a decree capable H </p><p>'</p><p>370 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.</p><p>A of execution from the very date it was passed.</p><p>Rules of limitation are meant to see that parties do not resort to dilatory</p><p>tactics, but seek their remedy promptly. As above noted, there is no statutory</p><p>provision prescribing a time limit for furnishing of the stamp paper for</p><p>engrossing the decree or time limit for engrossment of the decree on stamp</p><p>B paper and there is no statutory obligation on the Court passing the decree to</p><p>direct the parties to furnish the stamp paper for engrossing the decree. In the</p><p>present case the Court has not passed an order directing the parties to furnish</p><p>the stamp papers for the purpose of engrossing the decree. Merely because</p><p>there is no direction by the Court to furnish the stamp papers for engrossing</p><p>C of the decree or there is no time limit fixed by law, does not mean that the</p><p>party can furnish stamp papers at its sweet will and claim that the period of</p><p>limitation provided under Article 136 of the Act would start only thereafter</p><p>as and when the decree is engrossed thereupon. The starting of period of</p><p>limitation for execution of a partition decree cannot be made contingent upon</p><p>the engrossment of the decree on the stamp paper. The engrossment of the</p><p>D decree on stamp paper would relate back to the date of the decree, namely,</p><p>7th August, 1981, in the present case. In this view the execution application</p><p>filed on 21st March, 1994 was ti[lle barred ~aving been filed beyond the</p><p>period of twelve years prescribed under Article 136 of the Act. The High</p><p>Court committed illegality in coming to the conclusion that it was not barred</p><p>E by. limitation.</p><p>In view of the above, the impugned judgment is set aside and the</p><p>appeal is allowed. Parties shall bear their own costs.</p><p>B.B.B. Appeal allowed.</p><p>.. ~</p><p>~-</p><p>jt </p><p>,,</p><p>SANJEEV BHATNAGAR A</p><p>v.</p><p>UNION OF INDIA AND ORS.</p><p>MAY 13, 2005</p><p>[R.C. LAHOTI, CJ. AND P.K. BALASUBRAMANY AN, J.] B</p><p>I</p><p>Constitution of India 1950-Artic/e 32-Public Interest LitigationSeeking deletion of word 'Sindh' from the Natiokal Anthem as 'Sindh' no I</p><p>longer part of India post partition-Held: NationaltAnthem is song expressing</p><p>patriotic feelings and not a chronicle defining te;riiory of nation which has C</p><p>adopted the anthem-'Sindh' is not just a geogrJphical region, it refers to</p><p>place and to its people spread throughout the country-Further, issue raised</p><p>neither constitutional nor there is enforcement of ahy fundamental right-A/so</p><p>petition not in public interest-Hence, petition rejected-Article ' 5/A. j ,!</p><p>The question which arose for consideration in this writ petition was D</p><p>whether the text of National Anthem could be rectified and the word</p><p>'Sindh' be deleted therefrom since the geographical region 'Sindh' does</p><p>not form part of India post partition. ;</p><p>I I</p><p>Dismissing the Writ Petition, the Court••. I</p><p>HELD: 1.1. A National Anthem is a hymn or song expressing</p><p>patriotic sentiments or feelings. It is not a ch1</p><p>ronicle which defines the</p><p>territory of the nation which has adopted the· anthem. A few things such</p><p>E</p><p>as - a National Flag, a National Song, a Natio~al Emblem and so on, are</p><p>symbolic of our national honour and heritage .. The National Anthem did</p><p>not, and do~s not, enlist the states or regional areas which were part of F</p><p>India at the point of time when it was written\ nor is it necessary that the</p><p>structure of the National Anthem should go o'ii changing as and when the</p><p>territories or the internal distribution of geographical regions and</p><p>provinces undergoes changes. Recently Uttaranchal, Chhattisgarh and</p><p>Jharkhand have been carved out by reorganizing certain states but that G</p><p>does not mean that the National Anthem should be enlarged, re-written</p><p>or modified to include the names of these new states. (377-C-D, D-E, E-F)</p><p>1.2. The National· Anthem is our patriotic salutation to our</p><p>motherland, nestling between the Himalyas and the oceans and the seas</p><p>371 H </p><p>372 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.</p><p>A surrounding her. The mention of a few names therein is symbolic of our</p><p>recollection of the glorious heritage of India. 'Sindh' is not just a</p><p>geographical region. It refers to the place and to its people. Sindhis are</p><p>spread throughout the country and they derive their such name as having</p><p>originated and migrated from Sindh. 'Sindh' also refers to the river</p><p>'Sindhu 'or 'Indus'. It also refers to a culture, one of the oldest in the world</p><p>B and even modern India feels proud of its having inherited the Indus Valley</p><p>Civilisation as an inalienable part of its heritage. River Indus (Sindhu) finds</p><p>numerous references in the Indian Classical Literature including Rig Veda.</p><p>[377-E-F-G)</p><p>C 1.3. The National Anthem is the poem written by Rabindranath</p><p>Tagore. He himself had said that the five stanzas in which the poem was</p><p>written is addressed to c'od. The poem is a reflection of the real India as</p><p>a country - a confluence of many religions, rates, communities and</p><p>geographical entities. It is a message of unity in diVersity. It is a patriotic</p><p>D</p><p>E</p><p>F</p><p>song. It has since the jldecades inspired niany by arousing their patriotic .. '</p><p>sentiments when sung).IJ. ~~ythm. It is. the,repres~ntativ~ of the ethos of</p><p>the country. Any classic, o·nce.created, becomes immortal and inalienable;</p><p>even its creator may not fed:l!ke making any change in it~ A~y t~mperi~g</p><p>with the script of the poem would be showing.disrespect to the great poetRabindranath Tagore. [377-G-H; 378-A-B) . ' . . .</p><p>I , ' .</p><p>. 1.4. The iss~e raised does not amount to raising ar_iy constitutional</p><p>issue o,r ca,nvassing a~y"fundarriental.right for, the enforcement of which . ' , ~' • • ~ "Ii',:-- • I ,.f ! ~</p><p>the jurisdiction of this Court under Article 32 of the Constitution can be • ~' ,,-· ' .. -;., F .' ' I</p><p>invoked. The petition is ·not in public interest but more of the publicity . . - -... .. -· -,, ,. . interest litigation. It is a"petition which should never have been filed. • • • I'.. '· f · '</p><p>.~ _.,,.; . . [378-B-C; 380-D-E)</p><p>'Indian National AYfthem' by Prab'odhchandrci Sen Vishvi:I Bharti,</p><p>Calcutta May 1945, refer~ed fo. · 1 ·</p><p>1 ··l :. . ' •. ' i.</p><p>2. The Preventipn.{1f Insults to National· Honour Act, 1971 enacted</p><p>G by the Parliament makes it an offence for whoever intentionally prevents</p><p>the singing'of the Indian, National-Anthem ·or· causes:disturbance to any</p><p>assembly engaged in sue~ singing.-Article SlA of the Constitution inserted</p><p>by Forty-second Amendrttent, provid~s for it being the fundam~ntal duty,</p><p>amongst others, of ever/citizen of India to abide1</p><p>by the Constitution and . ~ • • J • ; -</p><p>respect its ideals and i1fstitutions, the National Flag and tlie National</p><p>H Anthem. The Constitutio~ of India, its ideals and institutions, the National </p><p>~</p><p>-</p><p>'·</p><p>SANJEEV BHATNAGAR v. U.O.I. [LAHOTI, CJ.] 3 73</p><p>. Flag and the National Anthem have been treated almost on par. From the ·A_</p><p>language of clause (a) of Article SIA, it is clear that the National Anthem</p><p>is an ideal and an institution for the Indian citizens. [375-F-G-H) ,.</p><p>Re: Kera/a Education Bill, (1959] SCR 995, referred to .</p><p>. .</p><p>CIVIL ORIGINAL JURISDICTION: Writ Petition (C) No. 16 of2005. B</p><p>(Under Article 32 of the Constitution of India.)</p><p>P_etitioner-in-person.</p><p>Milon K. Banerji, Attorney General for India, A. Sharan, Additional c Solicitor General, M.R. Calla, Ram Jethmalani; Amit Anand Tiwari, Samir</p><p>Ali Khan, Amit Kumar, Navin Prakash, Gaurav Aggarwal, Dewashish Bharuka,</p><p>Mrs .. Sushma Suri, Ms. Ranjeeta Rohatgi.' Ms. Lata Krishnamurthy, R.L.</p><p>Panjwani, Ms. P.R. Mala, Mushtaq Ahmad, Vijay Panjwani, Dr. Natis A.</p><p>Siddiqui, R.N. Keshwani and Ms. Priya Hingorani with them for the apP,earing</p><p>parties. D</p><p>The Judgment of the Court was delivered by</p><p>R.C. LAHOTI, CJ. On 24th January 1950, the Constituent Assembly</p><p>of India finally met to sign the Constitution. The question of having a National</p><p>Anthem for India as a free country and a nation was under consideration. The E</p><p>Constituent Assembly had appointed a Committee to make recommendations</p><p>about the final selection of a National Anthem.</p><p>After deliberations it was considered desirable to leave it with the</p><p>President to make a declaration in the Assembly on the question of adopting F a National Anthem for India. In the Constitution Hall, on 24th January 1950,</p><p>where the Constituent Assembly of India finally met to sign the Constitution,</p><p>President Dr. Rajendra Prasad declared his decision on the matter relating to</p><p>National Anthem in his opening statement in the following words:-</p><p>"There is one matter which has been pending for discussion, G namely the question of the National Anthem. At one time it was</p><p>thought that the matter might be brought up before the House and a</p><p>decision taken by the House by way of a resolution. But it has been</p><p>felt that, instead of taking a formal decision by means of a resolution,</p><p>it was better ifl make a statement with regard to the National Anthem.</p><p>H</p><p>'J'",. </p><p>374</p><p>A</p><p>SUPREME COURT REPORTS [2005) SUPP. I S.C.R.</p><p>Accordingly I make this statement.</p><p>The composition consisting of the words and music known as</p><p>Jana Gana Mana is the National Anthem of India, subject to such</p><p>alterations in the words as the Government may authorise as occasion</p><p>arises; and the song Vande Mataram, which has played a historic part ,., B in the struggle for Indian freedom, shall be honoured equally with</p><p>Jana Gana Mana and shall have equal status with it. I hope this will</p><p>satisfy the Members.''</p><p>c</p><p>D</p><p>E</p><p>F</p><p>G</p><p>-Constituent Assembly Debates, XII.</p><p>(24th January, 1950)</p><p>After the Constitution had been signed by all the members of the</p><p>Assembly, the President; on the request ofShri M. Ananthasayanam Ayyangar</p><p>permitted all members of the House to sing Jana Gana Mana in chorus. Then</p><p>led by Shrimati Pumima Banerji all of them sang it in chorus for the first</p><p>time after its formal adoption as our National Anthem.</p><p>The following is the transliteration i.e. the text of the National Anthem</p><p>in Hindi: l</p><p>"Jana-gana-mana-adhinayaka, jaya he</p><p>Bharata-bhagya-vidhata.</p><p>PJnjab-Sindh-Gujarat-Maratha</p><p>Dravida-Utkala-Banga</p><p>Vindhya-Himachala-Yamuna-Ganga</p><p>Uchchala-Jaladhi-taranga.</p><p>Tova shubha name jage,</p><p>; Tova shubha asisa mange,</p><p>Gahe lava jaya gatha,</p><p>Jana-gana-mangala-dayaka jaya he</p><p>. Bharata-bhagya-vidhata.</p><p>Jaya he,jaya he,jaya he</p><p>Jaya jaya jaya, jaya he!"</p><p>H (Source-India 2004, A Reference Annual, published by Publications Division, </p><p>SANJEEV BHATNAGAR v. U.0.1. [LAHOTI, CJ.] 375</p><p>Ministry of Information and Broadcasting, Government of India, p.22) A</p><p>The great poet Rabindranath Tagore had himself rendered the English</p><p>translation of his poem which reads as under:-</p><p>"Thou art the ruler of the minds of all people, dispenser of India's</p><p>~~~- B</p><p>Thy name rouses the hearts of Punjab, Sind, Gujarat and Maratha,</p><p>Of the Dravida and Orissa and Bengal;</p><p>It echoes in the hills of the Vindhyas and Himalayas, mingles in the</p><p>music of Jamuna and Ganges and is chanted by the waves of the C</p><p>Indian Sea.</p><p>They pray for thy blessings and sing thy praise.</p><p>The saving of all people waits in thy hand, thou dispenser of India's</p><p>destiny. D</p><p>Victory, victory, victory to thee."</p><p>(Source, India 2004, ibid, p.22)</p><p>The song was first sung on December 27, 1911 at the Calcutta session</p><p>of the Indian National Congress. Ever since the date of its being adopted by E</p><p>the Constituent Assembly of India, the National Anthem has been sung</p><p>throughout the length and breadth of India, by every patriot, every citizen</p><p>and all people of this country. It has been sung even in places beyond India.</p><p>The Prevention oflnsults to National Honour Act, 1971 (Act No. 69 of F</p><p>1971) enacted by the Parliament makes it an offence for whoever intentionally</p><p>prevents the singing of the Indian National Anthem or causes disturbance to</p><p>any assembly engaged in such singing. Article 51 A of the Constitution of</p><p>India, inserted by Forty-second Amendment, provides for it being the</p><p>fundamental duty, amongst others, of every citizen of India to abide by the</p><p>Constitution and respect its ideals and institutions, the National Flag and the G</p><p>National Anthem. The Constitution of India, its ideals and institutions, the</p><p>National Flag and the National Anthem have been treated almost on par.</p><p>From the language of Clause (a) of Article 5 lA, it is clear that the National</p><p>-Anthem is an ideal and an institution for the Indian citizens. In Re: Kera/a</p><p>Education Bill, (1959] SCR 99~ .• S.R. Das, Chief Justice, quoted a stanza H</p><p>from the National Anthem as India sending out its message of goodwill to the </p><p>376 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.</p><p>A world and thus the genius of India finding unity in diversity by assimilating</p><p>the best of all creeds and cultures.</p><p>The petitioner is an advocate. He has filed this petition, claiming to be</p><p>in. public interest, invoking the extradrdinary jurisdiction of this Court under</p><p>Article 32 of the Constitution of India seeking a direction to the Union of</p><p>B India to rectify the text of National Anthem and delete the word 'Sindh'</p><p>therefrom. Earlier too, he had filed a similar petition, registered as W.P.(C)</p><p>No.506/2004. When the matter came up for hearing on 20.9.2004, the Court</p><p>was not inclined to entertain the petition. However, the petitioner insisted</p><p>that the Government of India had the authority to alter the text of National</p><p>C Anthem and therefore, a direction by the Court in that regard was called for.</p><p>The petition was dismissed though the petitioner was allowed liberty of inviting</p><p>the attention of the Central Government to the facts stated in the writ petition</p><p>and such other material as may be with the petitioner. The petitioner did</p><p>make a representation on 24.9.2004. On 3.12.2004, he once again filed this</p><p>writ petition seeking the very same and the only relief as was sought for</p><p>D earlier. The Court directed a notice to be issued to the respondent-Union of</p><p>India for having its response.</p><p>While the Union of India has filed its response opposing the prayer</p><p>made by the petitioner, there are a number of applicants seeking intervention</p><p>E in the hearing so as to oppose the writ petition. Some of the intervenors are</p><p>All India Sindhu Culture Society headed by a former Judge of the High</p><p>Court, Rashtriya Sindhu Parishad headed by an Advocate, Sindhi Council of</p><p>India A Registere9 Society, International Sindhi Forum; Sindhi Jagriti Sabha,</p><p>Delhi Pradesh Sindhi Samaj and a few other similar institutions and</p><p>representative bodies. A few individu.als belonging to Sindhi or non-Sindhi</p><p>F community have also sought for intervention. In suq~tance, all the.intervenors</p><p>have offered their ve~ement opposition to the petition submitting that their</p><p>feelings, first as an Indian and then as members of Sindhi community who</p><p>love Sindhi as a language and also as a culture, ha~e been hurt by the move</p><p>of the petitioner. They have sought for the petition being dismissed.</p><p>G The stand taken by the Union of India is that the National Anthem is</p><p>a highly emotive issue; any alteration/substitution in the National Arith.em</p><p>will distort the National Anthem and may give rise to several unnecessary</p><p>controversies, while no· fruitful object will be served. The National Anthem</p><p>is not open to mutilation. The song is a literary creation which cannot be</p><p>H changed. The National Anthem reflects our culture spread throughout the </p><p>SANJEEV BHATNAGAR v. U.0.1. [LAHOTI, CJ.] 377</p><p>length and breadth of India whether it is North, South, East or West. A</p><p>Having heard the petitioner appearing in-person, the learned Attorney</p><p>General for the Union of India and the several counsel for intervenors led by</p><p>Mr. Ram Jethmalani, Senior Advocate, and a few intervenors appearing inperson, we are satisfied that the petition is wholly devoid of any merit and</p><p>is liable to be dismissed. The main plank of the petitioner's case is that the B</p><p>geographical region known as 'Sindh', was a part of India pre-partition (i.e.</p><p>before 15th August, 194 7) and ever since then it is not a part of India, and</p><p>. therefore, the use of the word 'Sindh' in the National Anthem is misplaced</p><p>and deserves to be deleted for which an appropriate direction needs to be</p><p>issued to the Union of India. In our opinion, the submission is misconceived C</p><p>for very many reasons which we proceed to summarize herein below.</p><p>A National Anthem is a hymn or song expressing patriotic sentiments</p><p>or feelings. It is not a chronicle which defines the territory of the nation</p><p>which has adopted the anthem. A few things such as-a National Flag, a</p><p>National Song, a National Emblem and so on, are symbolic of our national D</p><p>honour and heritage. The National Anthem did not, and does not, enlist the</p><p>states or regional areas which were part of India at the point of time when</p><p>it was written. Nor is it necessary that the structure of the National Anthem</p><p>should go on changing as and when the territories or the internal distribution</p><p>of geographical regions and provinces undergoes changes. Very recently</p><p>Uttaranchal, Chhattisgarh and Jharkhand have been carved out by reorganizing E</p><p>certain states. Does it mean that the National Anthem should be enlarged, rewritten or modified to include the names of these new states? The obvious</p><p>answer is - no. The National Anthem is our patriotic salutation to our</p><p>motherland, nestling between the Himalyas and the oceans and the seas</p><p>surrounding her. The mention of a few names therein is symbolic of our F</p><p>recollection of the gloriousheritage oflndia. 'Sindh' is not just a geographical</p><p>region. It refers to the p_lace and to its people, Sindhis are spread throughout</p><p>the country and they derive their such name as having originated and migrated</p><p>from Sindh. 'Sindh' also refers to the river 'Sindhu' or 'Indus'. It also refers</p><p>to a culture, one of the oldest in the world and even modern India feels proud</p><p>of its having inherited the Indus Valley Civilisation as an inalienable part of G</p><p>· its heritage. River Indus (Sindhu) finds numerous references in the Indian</p><p>Classical Literature including Rig Veda.</p><p>The National Anthem is the poem as it was written by Rabindranath</p><p>Tagore. He himself had said that the five stanzas in which the poem was H </p><p>378 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.</p><p>A written is addressed to God. The poem is a reflection of the real India as a</p><p>country-a confluence of many religions, races, communities and geographical</p><p>entities. It is a message of unity in diversity. It is a patriotic song. It has since</p><p>the decades inspired many by arousing their patriotic sentiments when sung</p><p>in rhythm. It is the representative of the ethos of the country. Any classic,</p><p>once created, becomes immortal and inalienable; even its creator may not</p><p>B feel like making any change in it. Any tampering with the script of the poem</p><p>would be showing disrespect to the great poet-Rabindranath Tagore.</p><p>The hue and cry raised by the petitioner in his petition and also during</p><p>the hearing at the Bar does not amount to raising any constitutional issue or</p><p>C canvassing any fundamental right for the enforcement of which the jurisdiction</p><p>of this Court under Article 32 of the Constitution can be invoked. The issue</p><p>is puerile. Shri Milon Banerjee, the learned Attorney General for India,</p><p>submitted that the Union of India, a democratically elected popular</p><p>Government is not in favour of making any alteration in or any tampering</p><p>with a finely structured poem or song, which is the National Anthem. Every</p><p>D word placed therein is carefully in position in the whole composition. A</p><p>suggestion seeking a substitution of words in the National Anthem would be</p><p>"a bid to rob Tagore of his greatness". He further submitted that in any</p><p>poetry the structure has some purpose other than to clarify the content. Poetry</p><p>is more structured than prose. It is the structure which forces the author to</p><p>E be more creative; to find ways of saying things which do not disrupt the flow.</p><p>The choice of words and the structure often provide a path for the reader to</p><p>follow outside the flow of the theme and a good poet achieves interesting</p><p>things by playing the flow through the content and off the content. The fabric</p><p>of words is the creation of the author. A poem once popular, more so if</p><p>adopted as a National Anthem, becomes symbolic of the feelings, ideas and</p><p>F images that have come to be associated in our minds with the words used by</p><p>the author in structuring the poem and then the meaning of a word or a group</p><p>of words reaches far beyond its dictionary definition. The learned Attorney</p><p>General invited our attention to the book. "India's National Anthem" by</p><p>Prabodhchandra Sen, published by Vishva Bharti, Calcutta in May 1949,</p><p>G wherein Mahatma Gandhi, the Father of the Nation, has been quoted as</p><p>having said in a prayer discourse on 8th May, 1946 on the occasion of</p><p>Rabindranath Tagore's Birth Anniversary about Jana Gana Mana-"lt is not</p><p>only a song but is also like a devotional hymn". The National Anthem has</p><p>been given a tune. Its singing or playing takes 52 seconds.</p><p>H The learned Attorney General read out the following passage from </p><p>SANJEEV BHATNAGAR v. U.0.1. [LAHOTI, CJ.) 379</p><p>. "India's National Anthem" (ibid) which we feel i_nclined to quote verbatim A</p><p>for its value:</p><p>"THE MORNING SONG OF INDIA"</p><p>In the year 1919, during his tour of South India, Rabindranath</p><p>spent five days at the Theosophical College; Madanapalle, at the B</p><p>' invitation of Principal James H. Cousins. There-ire ·sang the song</p><p>'Janaganamana' at some function. The audience was very much moved</p><p>by the tune and at their request he made an English translation of the</p><p>song and called it 'The Morning Song of India'. The college</p><p>authorities, greatly impressed by the tune and the lofty ideals of the</p><p>song, selected it as their prayer song to be sung every morning before C</p><p>the day's work commenced. In a letter (23.7.34) Principal Cousins</p><p>writes:</p><p>Every working morning Janaganamana is sung by hundreds of</p><p>young people in our big hall. We want to extend its purifying influence</p><p>by sending copies of it to other schools and colleges in India and by</p><p>making it known abroad.</p><p>Later, in the year 1936, the translation mentioned above was</p><p>printed in the Poet's own handwriting in the College Commemoration</p><p>Volume and distributed widely, with a note that this 'would become</p><p>one of .the world's most precious documents ..... From Madanapalle</p><p>Janagana has spread all over India, and is admired in Europe and</p><p>America.'</p><p>D/</p><p>E</p><p>In the next year ( 193 7), when a bitter controversy was raging</p><p>throughout the whole country over the selection of India's National F</p><p>Anthem, Principal Cousins issued a statement to the Press (3.11.37)</p><p>in which he stated:</p><p>My suggestion is that Dr. Rabindranath's own intensely patriotic,</p><p>ideally stimulating, and at the same time world-embracing Morning</p><p>Song of India (Janaganamana) should be confirmed officially, as what G</p><p>it has for almost twenty years been unofficially, namely, the true</p><p>National Anthem of India."</p><p>Mr. Ram Jethmalani, the learned senior counsel leading the intervenors,</p><p>severely criticized the conduct of the petitioner who has mentioned in th~</p><p>writ petition that the continued use of the word 'Sindh' in the National H </p><p>380 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.</p><p>A Anthem offends patriotic sentiments of the citizens of India and is offensive</p><p>of sovereignty of the neighbouring country. He goes on to allege that the</p><p>sentiments of 100 crore Indians can be soothened by correcting and updating</p><p>the "National Anthem". The learned senior counsel posed the questionsWhose cause the petitioner is pleadingof the citizens of India or of a</p><p>B neighbouring country? Wherefrom does the petitioner gather an impression</p><p>and plead that he is espousing the cause of more than one billion people of</p><p>India? The learned senior counsel was at pains to point out that ever since</p><p>this petition was filed in the Court and notice was dire~ted to be issued the</p><p>Indian newspapers have been flooded with editorials and hundreds of 'letters</p><p>to the editor' highlighting the sentiments of the people of India, and in</p><p>C particular of Sindhis who have felt hurt by the move of the petitioner. There</p><p>are several oppositions filed in the Court. There is not even one who may</p><p>have spoken in support of the petitioner.</p><p>We find merit in the submissions made by the learned Attorney General</p><p>for India and Mr. Ram Jethmalani, the learned s~nior cdunsel appearing for</p><p>D the intervenors, and agree with the same.</p><p>We are satisfied that the petitioner is not entitled to the rdief prayed</p><p>for. The petition is wholly devoid of any merit. The petition is not in public</p><p>interest. It is a petition which should never have been filed. It is more of the</p><p>publicity interest litigation wherein the.petitioner seems to have achieved his</p><p>E purpose, To discourage the filing of such. like petitions which result only in</p><p>wasting the valuable time of this Court, we directthe petition to be dismissed</p><p>with costs quantified at Rs. I 0,000.</p><p>N.J. Writ Petition dismissed. </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-13089306446822728052024-02-19T10:32:00.001+05:302024-02-19T10:32:22.718+05:30Partition-Joint family property-Appel/ant and Respondents co-owners entered into a family settlement-Appellant was to pay a stipulated sum in consideration of which Respondents were to relinquish their share in the property-Amount not paid by Appellant-Suit for partition subsequently filed by Respondents-Held: ls liable to be decreed as the family settlement was not given effect. Code of Civil Procedure 1908-0rder VIII, rr. 3 & 5-Partition suitAverments made by plaintiff-Not denied by defendant in written statementHeld: Averments made by plaintiff would be deemed to be admitted-Fact admitted need not be proved-Evidence Act, 1872-s.58. 'D Appellants and Respondents were co-owners of joint family property. They entered into a family settlement in terms of which Appellant had to pay a stipulated sum in consideration of which the Respondents were to relinquish their share in the joint property. Appellant did not make payment of the stipulated amount. The question which arose for consideration in the present appeal is whether the suit for partition subsequently filed by the Respondents was liable to be decreed as the family settlement was not given effect. <p>1</p><p>M. VENKA TARAMANA HEBBAR (D) BY L.RS. A</p><p>v.</p><p>M. RAJ AGO PAL HEBBAR AND ORS</p><p>APRIL 5, 2007</p><p>B</p><p>[S.B. SINHA AND MARKANDEY KA TJU, JJ.]</p><p>Partition-Joint family property-Appel/ant and Respondents co-owners</p><p>entered into a family settlement-Appellant was to pay a stipulated sum in</p><p>consideration of which Respondents were to relinquish their share in the C</p><p>property-Amount not paid by Appellant-Suit for partition subsequently</p><p>filed by Respondents-Held: ls liable to be decreed as the family settlement</p><p>was not given effect.</p><p>Code of Civil Procedure 1908-0rder VIII, rr. 3 & 5-Partition suitAverments made by plaintiff-Not denied by defendant in written statementHeld: Averments made by plaintiff would be deemed to be admitted-Fact</p><p>admitted need not be proved-Evidence Act, 1872-s.58.</p><p>'D</p><p>Appellants and Respondents were co-owners of joint family property. They</p><p>entered into a family settlement in terms of which Appellant had to pay a</p><p>stipulated sum in consideration of which the Respondents were to relinquish E</p><p>their share in the joint property. Appellant did not make payment of the</p><p>stipulated amount.</p><p>The question which arose for consideration in the present appeal is</p><p>whether the suit for partition subsequently filed by the Respondents was liable . p</p><p>to be decreed as the family settlement was not given effect.</p><p>Dismissing the appeal, the Court</p><p>HELD: 1.1. The execution of the deed of family settlement is not in</p><p>question. It is furthermore not in dispute that all the co-shareholders are not G</p><p>parties thereto. Any co-owner can cause a severance in the status of joint</p><p>family by expressing his unequivocal intention to separate. Such intention</p><p>can be expressed even by filing a suit for partition. But, despite such</p><p>separation in the joint status, parties may continue to possess the lands jointly</p><p>941 </p><p>942 SUPREME COURT REPORTS {2007] 4 S.C.R.</p><p>A unless a partition of the joint family property takes place by metes and bounds. . . . . ~ .. .</p><p>(Para 9) f 946-EJ</p><p>1.2. For the purpose of this case, this Court will proceed on the</p><p>assumption that the said deed of family settlement was not required to be</p><p>compulsorily registered, in terms of Section 17 of the Registration Act as by</p><p>B reason thereof; the relinquishment of the property was to make effect in future.</p><p>But there cannot be any doubt whatsoever that before the Court rejects a claim</p><p>of partition of joint family property, at the instance of all the co-owners, it</p><p>must be established that there had been a partition by metes and bounds. By</p><p>reason of the family settlement, a complete partition of the joint family</p><p>C property by metes and bounds purported to have taken place. One of the cosharer, however, did not join in the said purported family settlement.</p><p>(Para 10)(946-F-G]</p><p>1.3. The contract between the parties, moreover was a contingent</p><p>coQtract It was to have its effect only on payment of the said sum ofRs.15,000/</p><p>D - by the plaintiff and other respondents by the defendant Nos. I to 3. No such</p><p>payment had been made. Even there had been no denial of the assertions made</p><p>by the appellant in their written statement in that behalf. The said averments</p><p>would, therefore, be deemed to be admitted. (Para 111 (946-H; 947-AI</p><p>1.4. If a plea which was relevant for the purpose of maintaining a suit</p><p>E had not been Si>t:Cifically traversed, the Court was entitl~ to draw an.inference ·</p><p>that the ~ame had been ad~itted. A fact-admitted in terms of-Section 58 ofthe .</p><p>Evidence Act need not be proved. (Para 12) [947-G)</p><p>2. Even otherwise, the Court had framed an issue and arrived at a positive</p><p>F finding that the appellant did not pay the said sum of~ 15;~0/- in favour of</p><p>plaintiff Nos. 1 to 3. The High Court has also affirmed the said finding. The</p><p>High Court, therefore, cannot be said to have committed any error' whatsoever</p><p>in arriving at the finding that by reason of the said purported de_ed of family</p><p>settlement, the co-owners had not partitioned thejoint family property by</p><p>metes and bounds. The plaintiffs/respondents were thus, yet to relinquish their</p><p>G rights in the joint family properties by receiving the said amount of Rs.</p><p>15,000/-. Deed of family settlement had not been given its full effect to. The</p><p>High Court was right in holding that even on that count, the plai,ntiff's suit</p><p>should ·have been decreed. (Paras 13, 14 and lSJ.(947-ff; 948.-A-C)</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No. 706 I of 2000.</p><p>H </p><p>(</p><p>M. VENKATARAMANA HEBBAR (D) BY L.RS. v. M. RAJAGOPAL HEBBAR [S.B. SINHA, l.) 943</p><p>From the Final Judgment and Order dated 11.03.1999 of the High Court A</p><p>of Kamataka at Bangalore in R.F ,A. No. 513 of 1992.</p><p>S.N. Bhat, N.S. Panwar and D.P. Chaturvedi for the Appellants.</p><p>Sunita Harish, Lalit Mohini Bhat, Naveen R. Nath, K.K. Mani and Shiv</p><p>Kumar Suri for the Respondent. B</p><p>The Judgment of the Court was delivered by</p><p>S.B. SINHA, J. 1. Defendant No. 1 in the suit is the appellant herein.</p><p>The parties hereto were admittedly co-owners of the suit property. The</p><p>relationship between the parties shall appear from the following genealogical C</p><p>table:-</p><p>M. VenkatramAnd Hebbar</p><p>(D-1)</p><p>I</p><p>I</p><p>I</p><p>I</p><p>M. Ramakrishna Hebbar</p><p>= Smt. Sundari Amma (D-9)</p><p>M. Rajgopala M. Mohana</p><p>Hebbar Hebbar</p><p>(P-1) (D-5)</p><p>I I</p><p>I I</p><p>11</p><p>I</p><p>I</p><p>I</p><p>I</p><p>I</p><p>Srirarna Srikrishna . Srivittala</p><p>(P-2) (P-3) (P-4)</p><p>I</p><p>M. Gopal</p><p>Krishna</p><p>Heb bar</p><p>(D-2)</p><p>M. Harisha</p><p>Hebbar</p><p>(D-3)</p><p>Prasanna</p><p>(D-7)</p><p>M. Janardhana</p><p>•</p><p>M. Anantha</p><p>Heb bar</p><p>(D-6)</p><p>I</p><p>I</p><p>Prashantha I</p><p>(D-8)</p><p>2. A suit for partition was filed by the plaintiff'> claiming one-fourth</p><p>share in the suit property. It is not in dispute that on or about 30.3.1973, a</p><p>purported family settlement was arrived at by the parties. One of the</p><p>defendants, however, was not a signatory thereto. In the said purported</p><p>family settlement, it was stated:-</p><p>D</p><p>E</p><p>F</p><p>G</p><p>H </p><p>A</p><p>B</p><p>c</p><p>D</p><p>E</p><p>F</p><p>G</p><p>H</p><p>944 SUPREME COURT REPORTS -, [2007) 4 S.C.R.</p><p>"We each of us are entitled to l/4 share in the family property. As that</p><p>property is a small areca garden and•as there are no sites near by to</p><p>construct a separate houses, that property cannot be divided. Hence</p><p>as owelty No. I of us is liable to pay to No. 2 and 4 of us Rs. 15,000/</p><p>- each. That amount js to be paid in 15 yearl"y instalments of Rs. l 000/</p><p>- each. On payment of last instalment 2 and 4 of us release their rights</p><p>in favour of No. I of us at his costs. We No. l, 2 and 4 of us have</p><p>agreed for this. The Ist instalment is to begi,n with the ~nd of March</p><p>1973 and end with the period of 15 years at the end of March 1987.</p><p>The marriage of Nos. 2 and 4 of us is to be performed by No. 1 of</p><p>us in the family House: If the instalments cannot be paid due to the</p><p>marriage in that year 112 the amount is to be paid in that year and the</p><p>balance is to be paid in the subsequent year. Accordingly if the entire</p><p>amount is not paid as stipulated the same is to be paid by the end</p><p>of March 1990 by number I of us and get a release deed executed from</p><p>No. 2 and 4 of us at the costs of No. I of us. -</p><p>No. 2 and 4 of us have. to construct separate houses by the end of</p><p>May 1976 and reside there.</p><p>As there are no sufficient movable and gold jewels in the family house</p><p>No. 2 and 4 have no separate share in it. No. I of us is liable to pay</p><p>the family dues if any and bear the expenses of the viniyogas of Gods</p><p>and devils.</p><p>Towards the maintenance of our mother each of us is liable to pay 2</p><p>muras of rice and Rs. 25/- every year and obtain receipts and her</p><p>obsequies is to be performed by No. I, 2, 3 and 4 of us in equal</p><p>shares. No. 2 and 4 are not liable for the family debts. The share of</p><p>No. 3 of us is retained by No. l of us he is liable to deliver the same</p><p>when he demands, we Nos. l, 2 and 4 of us agreed for the terms in</p><p>the presence of the grahastas with our full consent and executed this</p><p>agreement we are liable to abide by all the conditions of this agreement.</p><p>If any of us incurs loss etc. by non performing as per the agreement, ·</p><p>the person who had not performed his part is liable to pay the loss</p><p>etc. and that person is entitled to recover the aniounts. Ac~ordingly</p><p>we have entered into this agreement."</p><p>3. Allegedly, the said family settlement had not been acted upon in so</p><p>far as the appellant herein did not pay a sum of Rs; 15;000/- to the respondents</p><p>--1--</p><p>M. VENKATARAMANA HEBBAR (D) BY L.RS. v. M. RAJAGOPAL HEBBAR [S.B. SINHA, l.] 945</p><p>"r herein. In their complaint, the appellant stated:- A</p><p>"VI. The plaintiffs further submit that the alleged agreement dt.</p><p>30.03.1973 has never come into force and it has never been acted</p><p>upon. The 1st plaintiff has never been paid any amount under the said</p><p>agreement, the averments made in the notice dated 05.05.1988 and the</p><p>reply dated 12.05.1988 in this regard are palpably false, defendants \ B</p><p>to 4 cannot take shelter under the said agreement and deny the</p><p>plaintiffs their lawful share in the plaint properties. Further, the said</p><p>document is also not valid since the 6th and the 9th defendants are</p><p>not parties to it."</p><p>4. The averments made in the plaint to that effect had not been denied c</p><p>or disputed. Appellant, however, raised a contention that by reason thereof</p><p>as the parties have arrived at a family settlement and a part of it have been</p><p>acted upon; the plaintiffs/respondents were estopped from filing the suit.</p><p>Learned trial Judge having regard to the rival contentions raised by the</p><p>parties, inter-alia framed the following issue:- D / "3. Whether defendants l to 3 prove that plaintiff-I and defendant6 were paid money in respect of their share as per agreement dated</p><p>30.3.1973?"</p><p>5. The first part of the said issue, namely whether the appellant herein E had paid the said sum of Rs. 5,000/- in favour of plaintiff No. 1, was answered</p><p>in the negative. Despite the said finding, in view of the said purported family</p><p>settlement dated 30.3.1973, the learned Trial Judge decreed the suit. On an</p><p>appeal having been preferred by the said decree by the respondent herein,</p><p>the High Court by reason of the impugned judgment reversed the same intera/~a holding:- F</p><p>(i) The said deed offamily settlement dated 30.3.1973 not being registered,</p><p>was inadmissible in law.</p><p>(2) The family settlement could not have been acted upon as all the</p><p>parties are not signatories thereto. G</p><p>It was opined:-</p><p>...,-</p><p>"11. The view of the court below that there was a partition and the</p><p>-plaintiff is governed by the same and severance of status cannot be</p><p>accepted at all. Even if there be severance of status, there is no H </p><p>946 SUPREME COURT REPORTS [2007} 4 S.C.R.</p><p>A partition in the eye of law. Therefore, a preliminary decree has to be</p><p>passed declaring that the plaintiff is entitled to one fourth share.</p><p>12. It is open to the plaintiff to move to (sic) final decree for division</p><p>and separate possession. It is open to the 1st Defendant-Respondent</p><p>to put forward all his claim regarding his spending' moneys on the</p><p>B family in the minutes of the enquiry to be conducted by the enquiry</p><p>authority who shall consider all his objections."</p><p>6. Mr. S.N. Bhat, learned counsel appearing on behalf of the appellant</p><p>in support of the appeal submitted that the High Court committed a manifest</p><p>error in arriving at the aforementioned finding inasmuch as a deed of family</p><p>C settlement is not required to be compulsorily registered under Section I 7 of</p><p>the Registration Act.</p><p>D</p><p>7. Learned counsel contended that the said deed of family settlement</p><p>has wrongly been held to be ineffective only because all parties did not sign</p><p>thereto.</p><p>8. The learned counsel appearing on behalf of the respondent, on the</p><p>other hand, supported the impugned judgment. ·</p><p>9. The execution of the said document is not, in question. It is furthermore</p><p>E not in dispute that all the co-shareholders are not parties thereto. Any coowner can cause a severance in the status of joint family by expressing his</p><p>unequivocal intention to separate. Such intention can be expressed even by</p><p>filing a suit for partition. But, despite such separation in the joint status,</p><p>parties may continue to possess the lands jointly unless a partition of the</p><p>joint family property takes place by metes and bounds.</p><p>F</p><p>10. For the purpose of this case, we will proceed on the assumption that</p><p>the said deed of family settlement was not required to be compulsorily</p><p>registered>in terms of Section I 7 of the Registration. Act as by reason thereof,</p><p>the relinquishment of the property was to take effect in future. But there</p><p>cannot be any doubt whatsoever that before the Court rejects a claim of</p><p>G partition of joint family property, at the instance of all the co-owners, it must</p><p>H</p><p>. be established that there had been a partition by metes and bounds. By</p><p>reason of the family settlement, a complete partition of the joint family property _ . ·</p><p>by metes and bounds purported to have taken place. One of the co-sharer,</p><p>however, did not join in the said purported family settlement.</p><p>11. The contract between the parties, moreover was a contingent contract.</p><p>-</p><p>....</p><p>M. VENKATARAMANA HEBBAR (D) BY L.RS. v. M. RAIAGOPAL HEBBAR [S.B. SINHA. J.) 94 7</p><p>It was to have its effect only on payment of the said sum of Rs. 15,000/- by~ A</p><p>the plaintiff and other respondents by the defendant Nos. I to 3. It has been</p><p>noticed hereinbefore by us that as of fact, it was found that no such payment</p><p>had been made. Even there had been no denial of the assertions made by the 1</p><p>appellant in their written statement in that behalf. The said averments would,</p><p>therefore, be deemed to be admitted. Order VIII Rule 3 and Order VIII Rule, · B</p><p>5 of the Civil Procedure Code read thus:-</p><p>"3. Denial to be specific.-It shall not be sufficient for a defendant in.</p><p>his written statement to deny generally the grounds alleged by the</p><p>plaintiff, but the defendant must deal specifically with each allegation .</p><p>of fact of which he does not admit the truth, except damages. C</p><p>5. Specific denial.-[(l)] Every allegation of fact in the plaint, if not,</p><p>denied specifically or by necessary implication, or stated to be not ·</p><p>admitted in the pleading of the defendant, shall be taken to be admitted</p><p>except as against person under disability.</p><p>Provided that the Court may in its discretion require any fact so D</p><p>admitted to be proved otherwise than by such admission.</p><p>[(2) Where the defendant has not filed a pleading, it shall be lawful</p><p>for the Court to pronounce judgment on the basis of the facts '</p><p>contained in the plaint, except as against a person under a disability,</p><p>but the Court may, in its discretion, require any such fact to be 1</p><p>E</p><p>proved.</p><p>(3) In exercising its discretion under the proviso to sub-rule (I) or 1</p><p>under sub-rule (2), the Court shall have due regard to the fact whether</p><p>the defendant could have, or has, engaged a pleader.</p><p>( 4) Whenever a judgment is pronounced under this rule, a decree shall</p><p>be drawn up in accordance with such judgment and such decree shall</p><p>bear the date on which the judgment was pronounced.]"</p><p>12. Thus, if a plea which was relevant for the purpose of maintaining</p><p>a suit had not been specifically traversed, the Court was entitled to draw an 1</p><p>G</p><p>inference that the same had been admitted. A fact admitted in terms of Section</p><p>_ 58 of the Evidence Act need not be proved .</p><p>13. Even otherwise, the Court had framed an issue and arrived at a</p><p>positive finding that the appellant herein did not pay the said sum of H </p><p>948 SUPREME COURT REPORTS [2007) 4 S.C.R.</p><p>A Rs. 15,000/- in favour of the plaintiff Nos. l to 3. The High Court has also</p><p>affinned the said finding.</p><p>14. The High Court, therefore, cannot be said to have committed any</p><p>error whatsoever in arriving at the finding that by reason of the said purported</p><p>deed of family settlement, the co-owners had not partitioned the joint family</p><p>B property by meets and bounds. The plaintiffs/respondents were thus, yet to</p><p>relinquish their rights in the joint family properties by receiving the said</p><p>amount of Rs. 15,000/-. Deed of family settlement had not been given its full</p><p>effect to.</p><p>15. We agree with the High Court that even on that count, the plaintiffs</p><p>C suit should have been decreed. We, therefore, do not find any merit in this</p><p>appeal which is dismissed accordingly. However, in the facts and circumstances</p><p>of the case, the parties shall bear their own costs.</p><p>B.B.B. · Appeal dismissed. </p><p>-;</p><p>,,..</p><p>SECRETARY,AKOLATALUKAEDUCATIONSOCIETY ANDANR A</p><p>v.</p><p>SHIV An AND ORS.</p><p>APRIL 5, 2007</p><p>{S. B. SINHA AND MARKANDEY KA TJU, JJ.] B</p><p>Maharashtra employees of Private Schools (Conditions of Service)</p><p>Rules, 1981-Rule 26(2)(ii)-Termination without notice-Employees not</p><p>given three months notice-Order of termination bad in /aw-Labour law- C</p><p>Maharashtra Employees of Private Schools (Conditions of Service) Regulation</p><p>Act, 1977.</p><p>Labour laws-Back wages-Termination of employees-Tribunal found</p><p>order of termination malafide and allowed full back wages-Challenge</p><p>against-Held: Tribunal ought not to have granted full back wages-Tribunal 'D</p><p>failed to take into account the financial condition of employer-Jn peculiar</p><p>facts and circumstances, interest of justice would be met if grant of back</p><p>wages is confined to 25% from date of termination till their reinstatement.</p><p>Appeal-Fresh plea-Plea that institute in question was not recognized E one and Tribunal did not have jurisdiction to entertain the case, raised for</p><p>the first time before this Court-Held, not entertainable.</p><p>Appellant No. 1 has been imparting vocational training to the students</p><p>admitted in their training institute, in different disciplines like Draftsman</p><p>Civil, Electrician, Wireman, Welder and Fitter etc. The strength of the F</p><p>students in the aforementioned disciplines allegedly began to go down from</p><p>year to year. The services of respondents-Employees/teachers were terminated</p><p>on the plea that school had to be closed down. The respondents filed appeal</p><p>before the School Tribunal. The jurisdiction of the Tribunal to entertain the</p><p>said appeals was questioned on the ground that the institute in question was G</p><p>not a school within the meaning of the provisions of the Maharashtra</p><p>Employees of Private Schools (Conditions of Service) Regulation Act, 1977.</p><p>The Tribunal held that the institute was school within the meaning of the</p><p>provisions of the said Act and that the plea of the appellant that the institute</p><p>had to be closed down being incorrect, the orders of termination were ma/a</p><p>fide. Appellant unsuccessfully filed writ petition before High Court. Hence H</p><p>949 </p><p>950 SUPREME COURT REPORTS [2007) 4 S.C.R.</p><p>A the present appeal.</p><p>Appellant contended that the Institute is not covered by the definition of</p><p>the 'private school' within the meaning of the provisions of the said Act, as it</p><p>was not recognized by the authorities under. the said Act; the Tribunal merely</p><p>proceeded on the basis that the school, in fact, was not closed down, but having</p><p>B failed to take into consideration the charts filed before it, from which, it would</p><p>appear that the number of students had gone down in different disciplines;</p><p>and that the Tribunal wrongly allowed full back wages to the teachers without</p><p>taking into consideration the financial conditions of the appellant</p><p>C Partly allowing the appeal, the Court</p><p>D</p><p>HELD 1.1. The question as to whether the provisions of the said Act</p><p>were applicable in the case of Appellant school although raised a question of</p><p>jurisdiction, it was necessary for the appellant to plead the jurisdictional fact</p><p>in relation thereto. [Para 15) (956-G]</p><p>1.2. It is true that in the light of the interpretation clause contained in·</p><p>the Maharashtra Employees of Private Schools (Conditions of Service)</p><p>Regulation Act, 1977, a 'private school' was-required to be recognized by the</p><p>authorities specified therein. The Tribunal had found that it was recognized</p><p>E by the Ceritral Government. The State also in its counter affidavit contended</p><p>that it is recognized by the State. Appellant did not raise a contention before</p><p>the Tribunal that the institute in question was not recognized by the.</p><p>authorities specified under sub-section (21) of s~2 of the Act. The said</p><p>content.ion was required to be specifically raised so as to enable the</p><p>respondents to meet the same. As the jurisdictional fact required for</p><p>F determining the jurisdiction of the Tribunal had not been stated by the</p><p>appellant, such a contention cannot be allowed to be raised now for the first</p><p>time. {Para.16] {956-H; 957-A-B)</p><p>2.1. There cannot be any doubt whatsoever that ifthe 'institute' comes·</p><p>within the description of 'school' in terms of the provisions of the said Act, G . . before terminating the services of the respondents, it was obligatory on their</p><p>part to satisfy the conditions precedent therefor. [Para 17] [957-C]</p><p>2.2. Rule 26 of the Maharashtra employees of Private Schools</p><p>(Conditions of Service) Rules, 1981 provides that a permanent employee riiay</p><p>H be retrenched by the management after giving him three months' notice on</p><p>one or more ground specified therein. Stoppage of imparting coaching in</p><p>·-</p><p>SECRETARY, A KOLA TALUKA EDUCATION SOCIETY v. SHIVAJI 95 J</p><p>respect of some courses of studies was one of them. Admittedly, the A</p><p>respondents had not been given three months notice. The order of termination</p><p>was, therefore, bad in law. (Para 18) (957-D)</p><p>. 3.1. In view of the provisions contained in sub-clause (ii) of clause (2) ~f</p><p>Rule 26, it was not necessary to obtain prior approval of the Education Officer,</p><p>as a technical or a vocational school does not come within the purview thereof. B</p><p>· The contention raised by the appellants before the Tribunal that the institute</p><p>was required to be closed down was found to be factually incorrect and on that</p><p>ground the decision of the Tribunal to the effect that the termination of services</p><p>of the respondents were bad in law cannot be said to be suffering from any</p><p>error of law apparent on the face of the record. (Para 19) (957-F) C ·</p><p>3.2 It is now well-settled that back wages should not granted'</p><p>automatically. The Tribunal however, ought not to have granted full back</p><p>wages. Full back wages should not be granted only because it would be lawful ·</p><p>to do so. Before such an order is passed, a judicial or quasi-judicial authority' D</p><p>must consider all aspects of the matter. Appellant has produced facts to show·</p><p>decline in strength of the students in different disciplines. The same has not ·</p><p>been disputed. In some disciplines the strength of the students has considerably '</p><p>gone down. The school is an unaided one. It, therefore, must meet its financial</p><p>need from the fees realiud from the students. It was a relevant consideration. 1</p><p>The Tribunal failed to take the said fact into consideration. The financial· · E</p><p>condition of the school has not been denied or disputed. In the peculiar facts</p><p>and circumstances of this case, interest of justice shall be met if grant of</p><p>back wages is confined to 25% only from the date of termination of the</p><p>respondents till their reinstatement.</p><p>(Paras 21 and 23) (957-G-H; 958-B; G, H) F</p><p>U.P. State Brassware Corporation Ltd. and Anr. v. Uday Narain Pandey,</p><p>(2006) 1 SCC 479; A. P. SRTC and Anr. v. B. S. David Paul, (2006) 2 SCC</p><p>282; Banshi Dhar v. State of Rajasthan and Anr., (2006) 11SCAL~199 and</p><p>U.P. SRTC v. Mutthu Singh, (2006) 7 SCC 180, relied on.</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1816of2007.</p><p>From the Final Judgment and Order dated 23.01.2006 of the High Court</p><p>of Judicature of Bombay, Bench at Aurangabad in Writ Petitions Nos. 1143</p><p>to 1149, 1269, 1270 and 1336 of2005.</p><p>H </p><p>--+' \</p><p>952 SUPREME COURT REPORTS (2007) 4 S.C.R.</p><p>A Shekhar Naphade Sr. Adv., Uday B. Dube and Kuldip Singh for the -- Appellants. ,._</p><p>Vinayak Dixit Sr. Adv., Shivaji M. Jadhav, Himanshu Gupta, Brij Kishor</p><p>Sah, Rahul Joshi and S.S. Shinde (for V.N. Raghupathy) for the Respondents.</p><p>B The Judgment of the Court was delivered by . .</p><p>S.B. SINHA, J. I. Leave granted.</p><p>2: The State of Maharashtra enacted 'The Maharashtra Employees of</p><p>c</p><p>Private Schools (Conditions of Service) Regulation Act, 1977 (for short, 'the</p><p>Act') to regulate recruitment and conditions of service of employees in certain</p><p>private schools. It came into force with effect from 20.03.1978. 'Private School'</p><p>has been defined in Section 2(20) of the Act to mean :</p><p>"Private School", means a recognized school established or</p><p>D administered by a Management other than the Government or a local</p><p>authority."</p><p>3. The terms 'recognized' and 'school' have been defined in Section ,,_</p><p>2(21) and 2(24) respectively in the following terms :</p><p>E "2(21 ).- "Recognized" means recognized by the Director, the Divisional</p><p>Board or the State Board, or by any officer author~zed by him or by</p><p>any of such Boards;"</p><p>"2(24).- "School", means a primary school, secondary school, higher</p><p>secondary school, junior college of education or any other institution</p><p>F by whatever name called including technical, vocational or art</p><p>institution or part of any such school, college or institution, which</p><p>imparts general, technical, vocational, art or, as the case may be, ...</p><p>special education or training in any faculty or discipline or subject</p><p>below the degree level;"</p><p>G 4. Appellant No. I herein runs a training institute. It imparts vocational</p><p>training to the students admitted therein in different disciplines e.g. Draftsman</p><p>Civil, Electrician, Wireman, Welder and Fitter etc. The strength of the students</p><p>in the aforementioned disciplines allegedly began to go down from year to _;</p><p>-\ ,</p><p>H </p><p>SECRETARY, AKOLA TALUKA EDUCATION SOCIETY v. SHIVAJI [S.B. SINHA, J .] 953</p><p>year. So much so, no student took admission in the courses of 'Draftsman A</p><p>Civil' or 'Welder'. The relevant portion of the chart showing details of</p><p>admissions in the aforementioned disciplines reads as under :</p><p>"Sr. Academic Draftsman Civil Electrician Wireman Welder Fitter</p><p>No. Year I</p><p>Sanctio. Actual Sanctio- Actual Sanctio Actual Sanctio Actual Sanctio-- Actual '</p><p>ned admi- ned addmi- ned admi .. ned admi .. ned ad mistrength ssion strength ssion strength ssion strength ssion strength ssion</p><p>14 August 16 08 16 18 16 18 16 18 24 29</p><p>1998 ...</p><p>15 August 16 09 16 18 16 09 16 18 2A 19</p><p>1999</p><p>16 August 16 07 16 17 16 07 16 12 24 14</p><p>2000</p><p>17 August 16 00 16 09 16 06 16 05 2A 11</p><p>2001</p><p>18 August 16 00 16 01 16 05 16 00 24 02</p><p>2002</p><p>5. Similarly, in the certificate courses of six months and one year also,</p><p>there had been a steady decline, as would appear from the following charts:</p><p>"Details of Admission for Certificate Courses of six months</p><p>Sr. Academic Electric Motor & Armetcher Electronic Assembly &</p><p>No. Year Winding Trouble shooting</p><p>Sanctioned Actual Sanctioned Actual</p><p>Strength Admission Strength Admission</p><p>1. Jan. 1999 20 13 25 10</p><p>2. Jul. 1999 20 16 25 05</p><p>3. Jan. 2000 20 05 25 06</p><p>4. Jul. 2000 20 15 25 07</p><p>5. Jan. 2001 20 08 25 -</p><p>6. Jul. 2001 20 06 25 -</p><p>7. Jan. 2002 20 - 25 -</p><p>8. Jul. 2002 20 - 25 -</p><p>B</p><p>c</p><p>I</p><p>D</p><p>E</p><p>F</p><p>G</p><p>H </p><p>954 SUPREME COURT REPORTS [2007) 4 S.C.R.</p><p>A Details of Admission for Certificate Courses of one year</p><p>Sr. Academic Tailoring & Cutting Lathe Machine Computer Operation</p><p>No. Year Operator (Part-time)</p><p>Sanctioned Actual Sanctioned Actual Sanctioned Actual</p><p>.. Strength Admission Strength Admission Strength Admission</p><p>B l. Jul. 1998 40 34 25 17 20</p><p>2. Jul. 1999 40 24 25 09 20 - 3. Jul. 2000 40 26 25 05 20 -.-</p><p>4. Jul. 2001 40 32 25 06 20 -</p><p>c 5. Jul.-2002 40 - 25 - 20</p><p>6. Respondent No. I herein was appointed on a temporary basis. The</p><p>services of the private respondents were purported to have been temporanly</p><p>terminated as allegedly a decision had been taken to close down the institute</p><p>.with effect from 12.08.2002, contending that the said purported orders of</p><p>D termination were violative of the Act and the Rules framed thereunder.</p><p>7. Appeats·thereagainst were filed by the aggrieved employees/teachers</p><p>before the School Tribunal, Pllne Region. The jurisdiction of the tribunal to</p><p>entertain the said appeals was questioned on the ground that the institute in</p><p>question was not a school within the meaning of the provisions of the said</p><p>E Act. The Tribunal, however, in its judgment held : (i) As the appellan:t was</p><p>duly recognized by the Central Government permanently without grant-in-aid,</p><p>it was a school within the meaning of the provisions of the said Act; (ii) Inter</p><p>a/ia, on ·the premise that the services of all the staff and teachers were not</p><p>terminated, the plea of the appellant that the institute had to be closed down</p><p>F .being incorrect, the orders of termination were ma/a fide;</p><p>8. The Tribunal furthermore took note of the fact that during pendency</p><p>of the said appeals, some new teachers had been appointed.</p><p>9. The writ petition preferred by the appellant thereagainst has been</p><p>G dismissed by reason of the impugned judgment.</p><p>IO. Mr. Shekhar Naphade, the learned Senior Counsel appearing on</p><p>behalf of the appellants, would urge :</p><p>(i) The institute is not covered by the definition of the 'private school'</p><p>within the meaning of the provisions of the said Act, as it was not recognized</p><p>H by the authorities under the said Act.</p><p>,..</p><p>-</p><p>+</p><p>SECRETARY, A KOLA TALUKA EDUCATION SOCIETY v. SHIVAJI [S.B. SINHA, J.] 955</p><p>(iI) The Tribunal in its judgment merely proceeded on the basis that the A .. school, in fact, was not closed down, but having failed to take into</p><p>consideration the charts filed before it; from which, it would appear that the</p><p>number of students had gone down in different disciplines, and thus, the</p><p>impugned judgment cannot be sustained.</p><p>(iii) The Tribunal wrongly allowed full back wages to the teachers B</p><p>without taking into consideration the financial condition of the appellant.</p><p>11. Our attention, in this behalf, has also been drawn to the following</p><p>statements made in the Rejoinder to the Counter Affidavit of Respondent</p><p>Nos. 1 to 3 before this Court:</p><p>"I say that the details of the number of students currently studying C</p><p>in the Institute and the fees collected from them are as follows :</p><p>Students studying in 2nd 47 x Rs.6,000 (Fees collected Rs.2,82,000/-</p><p>year of ITI from every student)</p><p>Students studying in lst 72 x Rs.8,000/- (Fees Rs. 5, 76,000/-</p><p>year of ITI collected from every</p><p>student)</p><p>Students studying in 7 x 2,000 (Fees collected Rs.14,000/-</p><p>certificate course from every student)</p><p>Total Rs.8, 72,000/-</p><p>I say that the details regarding the expenses incurred by the</p><p>Petitioner on the salary and other miscellaneous expenses are as</p><p>follows:</p><p>1. Towards salary of Rs. 65,200/- per month x Rs.7,80,400/-</p><p>staff at current rate 12 months per annum</p><p>of consolidated pay</p><p>2 Expenses for raw Rs.2,400 x 126 (No. of Rs.3,02,400/-</p><p>material per student students)</p><p>per year Rs. 2400</p><p>3. Misc. Expenses Rs.2,00,000/-</p><p>(Telephone bill,</p><p>electricity bill,</p><p>stationery, travel</p><p>expenses, repairs, etc.</p><p>Total Rs.l 2.82.800/-</p><p>D</p><p>E</p><p>F</p><p>G</p><p>H </p><p>956</p><p>A</p><p>B</p><p>SUPREME COURT REPORTS [2007] 4 S.C.R.</p><p>Considering the above mentioned two tables, it becomes clear</p><p>that the Petitioner is facing a deficit of Rs.4,10,800/- in the current</p><p>academic year .. The Petitioner if is directed to pay 100% back wages</p><p>to the Respondents employees, it would create a burden of more than</p><p>Rs. 40 lacs. The Petitioner is not in a position to pay back wages and</p><p>the said direction would affect the poor students, who are studying</p><p>in the Institute and the efforts of the Management to re-establish the</p><p>Institute would be thwarted. It is respectfully submitted that the</p><p>institute is being run by reducing the tuition fees so as to attract the</p><p>higher number of students. As stated earlier the fees charged from the</p><p>students have dwindled from Rs.20,000/- per annum in the year 1998</p><p>C to Rs.6,000/- to 8,000/- at present."</p><p>12. It was furthermore submitted that the institute having been set up</p><p>in a tribal area, it is unlikely that many students would take admission in the</p><p>said institute in future.</p><p>D 13. Mr. Vinayak Dixit, the learned Senior Counsel appearing on behalf</p><p>of the respondents; on the other hand, supported the impugned judgment</p><p>contending that the plea taken by the appellant that the school was required</p><p>to be closed down was an act of ma/a fide on the part of the appellants. The</p><p>learned counsel would contend that in terms of Rule 26 of the Maharashtra</p><p>E Employees of Private Schools (Conditions of Service) Rules, 1981, as the</p><p>appellant was bound to give three months' notice and was furthermore required</p><p>to obtain prior approval of the competent authority specified therein; and as</p><p>the mandatory conditions for retrenching th~ services of the respondents had</p><p>not been complied with, the orders of termination were void ab initio.</p><p>F 14. It was submitted that the appellant had not paid any salary to the</p><p>teachers for the last 23 months, although they had been reinstated in terms</p><p>of this Court's order dated 19.08.2006. It was also submitted that even after</p><p>their reinstatement, they are being paid salary only on a consolidated basis.</p><p>G 15. The question as to whether the provisions of the said Act were</p><p>H</p><p>applicable in the case of Appellant school although raised a question of</p><p>jurisdiction, in our opinion, it was necessary for the appellant to plead the</p><p>jurisdictional fact in relation thereto.</p><p>16. It is true that in the light of the interpretation clause contained in </p><p>SECRETARY. AKO LA TALUKA EDUCATION SOCIETY~- SHIV All [S.B. SINHA. l.] 957</p><p>the said Act, a 'private school' was required to be recognized by the authorities A</p><p>specified therein. The Tribunal had found that it was recognized by the</p><p>Central Government. The State also in its counter affidavit contended that it</p><p>is recognized by the State. Appellant herein did not raise a contention before</p><p>the Tribunal that the i~stitute in question was not recognized by the authorities</p><p>specified under sub-section (21) of Section 2 of the Act. The said contention B</p><p>was required to be specifically raised so as to enable the respondents herein</p><p>to meet the same. As the jurisdictional fact required for determining the</p><p>jurisdiction of the Tribunal had not been stated by the appellants, we are of</p><p>the opinion that such a contention cannot be allowed to be raised before us</p><p>for the first time.</p><p>17. There cannot be any doubt whatsoever that ifthe 'institute' comes</p><p>c</p><p>within the description of 'school' in terms of the provisions of the said Act,</p><p>before terminating the services of the respondents, it was obligatory on their</p><p>part to satisfy the conditions p_recedent therefor,</p><p>18. R~le 26 of the Rules provides that a permanent employee may be D</p><p>_retrenched by the management after giving him three months' notice on one</p><p>~ or more grounds specified therein. Stoppage of impart1. coaching in respect</p><p>of some courses of studies was one of them. Admitted I , the respondents had</p><p>not been given three months' notice. The order of termination was, therefore,</p><p>bad in law.</p><p>E</p><p>19. We may, however, state that in view oftheprovisions contained in</p><p>sub-clause (ii) of clause (2) of Rule 26, it was not necessary to obtain prior</p><p>approval of the Education Officer, as a technical or a vocational school does</p><p>• not come within the purview thereof. There cannot furthermore be any doubt</p><p>whatsoever that the contention raised by the appellants before the Tribunal F</p><p>that the institute was required to be closed down was found to be factually</p><p>-; incorrect and on that ground the decision of the Tribunal to the effect that</p><p>the termination of services of the respondents were bad in law cannot be said</p><p>to be suffering from any e.rror of law apparent on the face of the records.</p><p>20. The Tribunal, however, in our opinion ought not to have granted full G</p><p>back wages. Full back wages, as is well-known, should not be directed to be</p><p>granted only because it would be lawful to do so. Before such an order is</p><p>passed, a judicial or a quasi-judicial authority" must consider all aspects of the </p><p>matter. Appellant herein has produced facts tci show decline in strength of</p><p>the students· in different disciplines. The same has not been disputed. We</p><p>-- H</p><p>/~ </p><p>958 SUPREME COURT REPORTS (2007) 4 S.C.R.</p><p>A have noticed hereinbefore that in some disciplines the strength of the students</p><p>has considerably gone down. The school is an unaided one. It, therefore,</p><p>must meet its financial need from the fees realized from the students. It was</p><p>a relevant consideration. The Tribunal, in our opinion, failed to take the said</p><p>fact into consideration. The financial condition of the school, as noticed</p><p>B supra, has also not been. denied or disputed.</p><p>c</p><p>D</p><p>E</p><p>F</p><p>G</p><p>H</p><p>21. It is now well-settled by a larg~ number of decisions of this Court</p><p>that back wages should not granted automatically. Jn U.P. State Brassware</p><p>Corporation Ltd. and Anr. v. Uday Narain Pandey, [2006] I SCC 479, this</p><p>Court observed :</p><p>"22. No precise formula can be laid down as to under what</p><p>circumstances payment of entire back wages should be allowed.</p><p>Indisputably, it depends upon the facts and circumstances of each</p><p>case. It ·would, however, not be correct to contend that it is automatic.</p><p>It should not be granted mechanically only because on. technical</p><p>grounds or otherwise an order of termination is found to be in</p><p>contravention of the provisions of Section 6-N of the U.P. Industrial</p><p>Disputes Act."</p><p>[See also Banshi Dhar v. State of Rajasthan & Anr., (2006) 11 SCALE</p><p>199 Para 11]</p><p>22. Jn U.P. SRTCv. MutthuSingh, [2006] 7 SCC 180], this Court opined:</p><p>" ... But we are fully satisfied that in the facts and circumstances of the</p><p>case, back wages should not have been awarded to the respondentworkman. In several cases, this Court has held t.iat payment of back</p><p>wages is a discretionary power which has to be exercised by a court/</p><p>tribunal keeping in view the facts in their entirety and neither straight</p><p>jacket formula can be evolved nor a rule of universal application can</p><p>be laid down in such cases."</p><p>[See also A.P. SRTC ar.d Anr. v. E.S. David Paul - [2006] 2 SCC 282]</p><p>23. We, therefore, are of the opinion that in the peculiar facts and</p><p>circumstances of this case, interest of ju•tice shall be met if grant of back</p><p>wages is confined to 25% only from the date of termination of the respondents·</p><p>till their reinstatement. It is, however, made clear that the respondents shall</p><p>be entitled to recei-:e entire salary for the period they had wo!1<ed prior to their </p><p>-</p><p>...</p><p>SECRETARY, AKOLA TALUKA EDUCATION SOCIETY v. SHIVAJI [S.B. SINHA, J ] 959</p><p>termination as also post reinstatement.</p><p>24. The appeal is allowed to the aforementioned extent with the</p><p>aforementioned directions. However, in the facts and circumstances of the</p><p>case, there shall be no order as to costs.</p><p>A</p><p>D.G. Appeal partly allowed. B </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-75808396549116681432024-02-19T10:29:00.002+05:302024-02-19T10:29:38.851+05:30Code of Civil Procedure, 1908 - ss. 2(2) and 97 - Partition suit =.. ·Inclusion of property in, after passing of preliminary decree - Permissibility - Held: Ordinarily a suit . for partial partition may not be entertained - But to do complete justice, subsequent events after passing of preliminary decree can be taken into account - On facts, since the addition of property was sought prior to passing of the decree in Written Statement, failure to pass decree in respect of that property was a mistake of the court .... s. 97 is not a bar to amend a decree to rectify the mistake of the court. Words and Phrases - Decree - Meaning of. Predecessor of respondent filed a suit for _partition, claiming share in the propertx. Appellants-defendants in their Written Statement contended that the plaintiff had only 1/3rd share in the suit property. They also mentioned, about. partition .of cycle business. In an application seeking amendment of Written Statement .also they mentioned about the partition of business of cycle. However, issues were not framed on this point. Trial Court passed a decree d·eclaring 1/3td share in favour of plaintiff. Appellants thereafter filed application under Order 20 Rule 18 rlw s.152 CPC with regard to share of· the parties in the business of cycle. Application was allowed. High Cou-rt set aside the order holding that in terms of s.97 · CPC.1 after the. preliminary ·decree attained finality, additional properties cannot be added for partition<p>A</p><p>B</p><p>[2008] 16 S.C.R. 904</p><p>S. SATNAM SINGH & ORS.</p><p>II.</p><p>SURENDER KAUR & ANR.</p><p>(Civil Appeal No. 7008 of 2008)</p><p>·DECEMBER 02, 2008</p><p>[S.B. SINHA AND CYRIAC JOSEPH, JJ.]</p><p>.Code of Ciltil Procedure, 1908 - ss. 2(2) and 97 -</p><p>Partition suit =.. ·Inclusion of property in, after passing of</p><p>C preliminary decree - Permissibility - Held: Ordinarily a suit</p><p>. for partial partition may not be entertained - But to do</p><p>complete justice, subsequent events after passing of</p><p>preliminary decree can be taken into account - On facts,</p><p>since the addition of property was sought prior to passing of</p><p>D the decree in Written Statement, failure to pass decree in</p><p>respect of that property was a mistake of the court .... s. 97 is</p><p>not a bar to amend a decree to rectify the mistake of the court.</p><p>Words and Phrases - Decree - Meaning of.</p><p>E Predecessor of respondent filed a suit for _partition,</p><p>claiming % share in the propertx. Appellants-defendants</p><p>in their Written Statement contended that the plaintiff had</p><p>only 1/3rd share in the suit property. They also mentioned,</p><p>about. partition .of cycle business. In an application</p><p>F seeking amendment of Written Statement .also they</p><p>mentioned about the partition of business of cycle.</p><p>However, issues were not framed on this point. Trial Court</p><p>passed a decree d·eclaring 1/3td share in favour 9f</p><p>plaintiff. Appellants thereafter filed application under</p><p>G Order 20 Rule 18 rlw s.152 CPC with regard to share of·</p><p>the parties in the business of cycle. Application was</p><p>allowed. High Cou-rt set aside the order holding that in</p><p>terms of s.97 · CPC.1 after the. preliminary ·decree attained</p><p>finality, additional properties cannot be added for partition</p><p>H . 904 </p><p>- S. SATNAM SINGH & ORS. v. SURENDER KAUR & 905</p><p>ANR.</p><p>in the preliminary decree. A</p><p>Allowing .. the. appeal, the Court</p><p>HELD: 1.1. A 'decree' as defined in Section 2(2) CPC</p><p>means the formal expression of an adjudication which,</p><p>so far as regards, the Court expressing it, conclusively B</p><p>determines the rights of the parties with regard to all or.</p><p>any of the matters in controversy in the suit. It may either</p><p>be preliminary or final. It may partly be preliminary and</p><p>partly be final. The court with a view to determine whether'</p><p>an order passed by it is a decree or not must take into , C</p><p>consideration the pleadings of the parties and the</p><p>proceedings leading upto the passing of an order. The .</p><p>·circumstances under which an order had been made</p><p>would also be relevant. [Para 14] [912-G-H; 913-A]</p><p>1.2. For determining the question as to whether an</p><p>·D</p><p>order passed by a court is a decree or not, it must satisfy</p><p>the tests viz.(i) ·there must be an adjudication; (ii) such</p><p>adjudication must have been given in a suit; (iii) it must</p><p>have determined the rights of the parties with regard to E</p><p>all or any ·of the matters in controversy in the suit; (iv)</p><p>such determination must be of a conclusive nature; and</p><p>(v) there must be a formal expression of such</p><p>adjudi~atic:>n. [Para 15] (913-8-0]</p><p>1.3: Ordinarily, a suit for partial partition may not be F</p><p>entertained. When the parties have brought on records</p><p>by way of pleadings and/or other material that apart from</p><p>the property mentioned by the plaintiff in his plaint, there</p><p>are other properties which could be a subject matter of</p><p>a partition, the court would be entitled to pass a decree G</p><p>even in relation thereto. In certain situations, for the</p><p>purpose of complete adjudication of the disputes</p><p>between the parties, an appellate Court may also take into</p><p>consideration subsequent events after passing of the</p><p>. preliminary decree. [Paras 16 and 17] [913-E-H] H </p><p>906 SUPREME COURT REPORTS [2008] 16 S.C.R.</p><p>A 1.4. Section 97 CPC provides for an appeal against</p><p>preliminary decree but the said provision, would not .be 'j...</p><p>a bar to file an application for amendment of a decree.</p><p>[Para 20] (916-D]</p><p>8 1.5. The court may ·not have a suo motu power to</p><p>amend a decree but the ·same would not mean that the</p><p>court cannot rectify a mistake. If a property was subject</p><p>matter of p</p><p>0</p><p>leadings and the court did not frame an issue</p><p>which it ought to have done, it can, at a later stage, when</p><p>pointed out, amend the decree. The power of</p><p>C amendment, in a case of this nature, would not only be</p><p>dependent upon the power of the court but also the</p><p>principle that a_ court shall always be ready and willing</p><p>to rectify .the mistake it has committed. [Paras 21 and 22]</p><p>D</p><p>[916-H; 917-A-B] . -</p><p>1.6. In the instant case, the issues were not correctly</p><p>framed. An additional written statement was permitted to</p><p>be filed. A replication thereto also was allowed. It was in</p><p>that situation, the question as to whether the -business</p><p>E transaction could be a subject matter of the suit for</p><p>partition or not was required to be determined on its own</p><p>merits. [Para 23] [917-C] ·</p><p>1.7. The Trial Court felt that it had committed a</p><p>mistake. In such a situation, the court, committed no</p><p>F infirmity in directing rectification of its mistake. [Para 24]</p><p>[917-D]</p><p>Phoolchand andAnr: v. Gopal Lal 1967 (3) SCR 153; Ct.</p><p>A. Ct. Nachiappa Chettiar and Ors. v. Ct. A. Ct. Subramaniam</p><p>G Chettiar {1960) 2 SCR 209 and Moo/, Chand & Ors .. v. Dy.</p><p>Director, Consolidation and Ors. AIR 1995 SC 2493, _Relied</p><p>on.</p><p>Syed /kramuddin v. Syed Mahamed Ali'AIR 1986 AP 267</p><p>and Venkata Reddy and Ors. v. Pethi Reddy AIR 1963 SC</p><p>H 992, Referred to </p><p>S. SATNAM SINGH & ORS. v. SURENDER KAUR & 907</p><p>ANR.</p><p>~ Case Law Reference: A</p><p>AIR 1986 AP 267 Referred to Para 12</p><p>(1960) 2 SCR 209 Relied on Para 17</p><p>(1967) 3 SCR 153 Referred to Para 18 B</p><p>.., AIR 1995 SC 2493 Relied on Para 18</p><p>I,</p><p>AIR 1963 SC 992 Referred to Para 19</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No.</p><p>7008 of 2008. c</p><p>From the Judgment and final Order dated 15.6.2007 of the</p><p>High Court of Judicature Andhra Pradesh at Hyderabad, in Civil</p><p>Revisipn Petition No. 2178 of 2006.</p><p>D I</p><p>P.S. Narsimha, Somiran Sharma and Aribam Guneshwar</p><p>·t Sharma for the Appellants.</p><p>i G.V.R. Choudhary and K. Shivraj Choudhury for the</p><p>Respondents.</p><p>E</p><p>The Judgment of the Court was delivered by</p><p>S.B. SINHA, J.1. Leave granted.</p><p>2. Whether a property can be added in the list of</p><p>properties after a preliminary decree is passed in a partition F t~ suit is the question involved herein.·</p><p>3. The parties hereto are successors of one late Surender</p><p>Singh and one late Harikishan Singh. They were brothers. First</p><p>respondent is the widow of late Harikishan Singh and the G</p><p>second- respondent is his son. The property which was the</p><p>subject matter of the partition suit was a house premises</p><p>bearing Municipal No.2-4-1099 situated at Nimbali Adds,</p><p>Hyderabad admeasuring 671 sq. yards.</p><p>4. The suit was filed by late Harikishan Singh against the H </p><p>908 SUPREME COURT REPORTS (2008] 16 S.C.R~ -</p><p>A first petitioner and his son Rajinder Singh. In the written ~ ..._</p><p>statement, the said fact was admitted. The question which.</p><p>arose for consideration of the court, however, was as regards</p><p>the share of the parties therein. Whereas according to the</p><p>petitione~, the plaintiff had only 1/3rd share in the suit property,</p><p>B according to the plaintiff he had 1/2nd share therein.</p><p>5. In the written statement, it was, inter alia, contended : --y</p><p>"There has never been any such attempt by the plaintiff for</p><p>partition of the property as alleged in the plaint. In fact, the</p><p>c plaintiff has failed to render true and proper account of the</p><p>business of M/s. Bombay Cycle Company though he was</p><p>specifically called upon to do so by the defendant - 2,</p><p>individually as well through his counsel. The plaintiff has</p><p>also never co-operated in managing the matters</p><p>D immediately after the death of Late Sunder Singh, the</p><p>father· of the plaintiff and defendant - 1. Having knocked</p><p>away some of t the securities and other amounts which</p><p>were in the hands of the plaintiff after death of late Sunder r</p><p>Singh singularly the plaintiff has chosen to file the present</p><p>E suit for partition claiming 50% share in the residential</p><p>house, which is mentioned as suit schedule property."</p><p>6. An application for amendment of the said written</p><p>statement was,.filed, inter alia, stating :</p><p>F "It is true that Sri Sunder Singh died on 26.4.1980 intestate</p><p>leaving behind his widow, the plaintiff and the defendant -</p><p>1 herein. It is also true that wido'tlf of late Sri Sunder Singh,</p><p>i.e., Smt. Karam Kaur also died on 14.9.1992. Howev~r.</p><p>the allegation that she died intestate is incorrect and false.</p><p>G The plaintiff is very well aware that Smt. Karam Kaur</p><p>executed a registered will on 1.9.1981 before the Sub- /f.. ..</p><p>registrar, Chikkadpally bequeathing her 1/3rd share in the</p><p>suit schedule property as well as her 50% rights as a</p><p>partner in the business of Mis. Bombay Cycle Company</p><p>H to the defendant No.2, herein. In the circumstances the </p><p>S. SATNAM SINGH & ORS. v. SURENDER KAUR & 909</p><p>ANR. [S.S. SINHA, J.]</p><p>..(' contrary allegations made in the plaint in this respect are A</p><p>denied as false and fabricated. It would, thus, be apparent</p><p>that by any stretch of imagination the plaintiff cannot deny</p><p>50% rights in respect of the suit schedule property as after</p><p>the death of Sunder Singh, widow of Sri Sunder Singh,</p><p>Karam Kaur, plaintiff I and the defendant 1 herein had B</p><p>become entitled to 1/3rd share each. Smt. Karam Kaur</p><p>'r having executed a registered will on 1.9.81, her 1/3rd share \</p><p>naturally goes to the defendant 2, herein. In the</p><p>circumstances the plaintiff would not be entitled to anything</p><p>more than 33.33% of the suit Schedule property if at all." c ----..</p><p>It was furthermore alleged :</p><p>"There has never been any such attempt by the plaintiff for</p><p>partition of the property as alleged in the plaint. In fact, the</p><p>plaintiff has failed to render true and proper account of the D</p><p>4 business of M/s. Bombay Cycle Company though he was</p><p>t spedfically called upon to do so by the defendant - 2, ~ individually as well as through his counsel. The plaintiff has</p><p>also never co-operated in managing the matters</p><p>immediately after the death of Late Sunder Singh, the E</p><p>father of the plaintiff and defendant - 1. Having knocked</p><p>away some of the securities and other amounts which</p><p>were in the hands of the plaintiff after death of late Sunder</p><p>. Singh singularly the plaintiff has chosen to file the present</p><p>~'</p><p>suit for partition claiming 50% share in the residential F</p><p>house, which is mentioned as suit schedule property. It</p><p>would thus be apparent that there is absolutely no merits</p><p>in the suit and the plaintiff would not be entitled for the</p><p>share as claimed. The suit, therefore being absolutely</p><p>devoid of merits deserves to be dismissed with costs." G</p><p>.~ A replication to the said written statement was also filed.</p><p>-</p><p>7. The learned Trial Judge framed issues which read as Iii</p><p>under:</p><p>H </p><p>910 SUPREME COURT REPORTS [2008) 16 S.C.R.</p><p>A "i. · Whether plaintiff is entitled for partition? If so, to ~</p><p>what share? ~</p><p>ii. To what relief?</p><p>B</p><p>On 21.1.02, basing on the pleadings of defendant</p><p>No.3, the following additional issues were settled:-</p><p>iii. Whether defendant No.3 is the legal heir of -1</p><p>defendant No.2?</p><p>f</p><p>c iv. Whether the Will deed claimed by defendant No.3</p><p>is true, valid and binding on the plaintiff?"</p><p>8. The suit was decreed declaring 1/3rd share in favour</p><p>of the plaintiff as also the first defendant, stating:</p><p>D II i. The plaintiff is entitled to partition and separate</p><p>possession of 1/3rd share only in the suit schedule</p><p>property. -rii. The first defendant is entitled to 1 /3rd share in the</p><p>to</p><p>E</p><p>suit schedule property.</p><p>iii. Defendant No.3 being the legal heir of defendant</p><p>No.2, who is not heard of since more than 7 years</p><p>and thereby presumed to be dead in the eye of law.</p><p>Defendant No.3 is entitled to his (D2) 1/3rd share</p><p>F in the suit schedule property."</p><p>-f</p><p>9. An interlocutory application was filed by the appellant</p><p>th~reafter purported to be in terms of Order XX Rule 18 of the</p><p>Code of Civil Procedure read with Section 152 of the Code of</p><p>G Civil Procedure with regard to the ~hare of the partie~ in the</p><p>said Bombay Cycle Company. The respondents o jected</p><p>thereto. By reason of an order dated 14th March, 2006, the said /\_</p><p>application was allowed, directing :</p><p>"Admittedly the petitioners have raised a plea in respect</p><p>H of Bombay Cycle Company in their written statement but</p><p>,,,_</p><p>S. SATNAM SINGH & ORS. v. SURENDER KAUR & 911</p><p>ANR. [S.S. SINHA, J.]</p><p>-t. there was no specific issue framed in the regard. The A</p><p>learned counsel appearing for the petitioners submit that</p><p>in order to shorten the litigation instead of driving the</p><p>parti_es to a separate action, the present dispute can be</p><p>decided in the present dispute itself. The petitioners in</p><p>support of their contention relied on the decision of our B</p><p>Hon'ble High Court in Syed lkramuddin v. Syed Mahamed</p><p>~- Ali reported in AIR 1986 AP 267. Further there is a dispute ..,</p><p>with regard to the Bombay Cycle Co. business. Whether</p><p>it is a joint family business and whether the petitioners are</p><p>having any share in the property cannot be decided without c</p><p>making any enquiry in that direction.</p><p>Therefore, I feel that the parties should be directed</p><p>to adduce oral or documentary evidence in respect of their</p><p>respective contentions so as to enable this Court to decide</p><p>D the point of controversy. It is also not out of place of mention</p><p>here that the Hon'ble High Court also directed to dispose</p><p>f of the matter at the earliest possible time.</p><p>+</p><p>Accordingly the parties are directed to lead oral and</p><p>documentary evidence in support of their contentions. The E</p><p>respondent No.4 herein is not a party to the suit. No relief</p><p>is passed against the respondent No.4 herein is not a</p><p>party to the suit. No relief is passed against the respondent</p><p>No.4 in this petition. Call on 16.3.2006."</p><p>10. A civil revi~ion application filed thereagainst by the F</p><p>t-· respondents has been allowed by reason of the impugned</p><p>judgment. The High Court referred to the decision of this Court . \</p><p>m Phoolchand v. Gopal Lal [AIR 1967 SC 1470] to conclude:</p><p>"The Supreme Court was dealing with a case where the G</p><p>A,_</p><p>shares had to be reallocated on account of death of party</p><p>and therefore the Court said such facts can be taken into</p><p>consideration and appropriate orders could be passed</p><p>which could be a fresh preliminary decree. But here we</p><p>have a case where it is contended by the defendants that H </p><p>912 SUPREME COURT. REPORTS [2008] 16 S.C.R.</p><p>'~</p><p>they had mentioned in their.written statement the property ;·</p><p>A</p><p>which they now sought to include in the preliminary decree. \-</p><p>Whole trial went on decree was passed in 2003, and this</p><p>. part!cular property was not mentioned in the decme as</p><p>joint family property and after three years an application</p><p>B . came fo be filed that it should be added in the· decree</p><p>which, ·in our view, is not permissibl'e. Therefore, we hold --(- .that the judgment of this Court in Syed lkramuddiri v: Syed f</p><p>Mahamed Ali does not lay down a good law and the</p><p>question is answered that additional properties cann_ot be</p><p>c added for partition in the preliminary decree after the</p><p>preliminary decree attained finality in terms of Se_ction 97</p><p>· of the Code .. " .. . '</p><p>11-. Mr. P.S. Narasimha, learned counsel appearing on</p><p>D</p><p>behalf of the appellant, would submit that ,as in this case the</p><p>only dispute between the parties was with regard· to the s,hare</p><p>in the suit property and, thus, it was obligatory on the part of ~</p><p>the court to pronounce its decision on all the issues. ~</p><p>. 12. It was urged. that a very well .considered decision of</p><p>E the.Andhra Pradesh High Court in Syed lkramuddin. it .. Syed</p><p>Mahamed Ali [AIR 1986 AP 267] has wrongly been overr~led</p><p>by reason of the impugned judgment.</p><p>13. Mr. G.V.R. Choudhary, learned counsel appearing on</p><p>F</p><p>behalf of the respondent, on the other hand, would support the</p><p>judgment contending that the courts even do not have any suo ·+ ' . motu power to amend the decree as a preliminary decree once</p><p>passed is final.</p><p>14. A.'decree' is denned in Section 2(2) of the Code of</p><p>G · Cfvil Procedure to. mean the. formal expr~ssion of an</p><p>adjudication which, so far as regards, the Court expressing it,</p><p>conclusiveiy determines the rights of the parties with regard to</p><p>all or any of the matters in controversy in the suit. It may either</p><p>be preliminary or final. It may partly be preliminary ~nd partly</p><p>H be final. The court with a view to determine whether an order</p><p>'</p><p>J=I </p><p>S. SATNAM SINGH & ORS. v. SURENDER KAUR & 913</p><p>ANR. [S.S. SINHA, J.]</p><p>passed by it is a decree or not must take into consideration A</p><p>the pleadings of the parties and the proceedings leading upto</p><p>the passing of an order. The circumstances under which an</p><p>order had been made would also be relevant.</p><p>15. For determining the question as to whether an order B</p><p>passed by a court is a decree or not, it must satisfy the</p><p>\.- following tests : ~</p><p>"(i) There must be an adjudication;</p><p>(ii) Sucti adjudication must have been given in a suit;. c</p><p>(iii) It must have determined the rights of the parties</p><p>with regard to all or any of the matters in controversy</p><p>in the suit;</p><p>(iv) Such determination must be of a conclusive nature; D</p><p>and</p><p>1</p><p>~ (v) There must be a formal expression of such</p><p>adjudication."</p><p>16. Before adverting to the nval contentions of the parties, E</p><p>it must be kept in mind the principle that ordinarily a party should</p><p>not be prejudiced by an act of court. It must also furthermore</p><p>be borne in mind that in a partition suit where both the parties</p><p>want partition, a defendant may also be held to b~ a plaintiff.</p><p>Ordinarily, a suit F for partial partition may not be entertained.</p><p>When the parties have brought on records by way of pleadings</p><p>and/or other material that apart from the property mentioned by</p><p>the plaintiff in his plaint, there are other properties which could</p><p>b~ a subject matter of a partition, the court would be entitled to</p><p>pass a decree even in relation thereto. G</p><p>17. In certain situations, for the purpose of complete</p><p>adjudication of the disputes between the parties an appellate</p><p>Court may also take into cq~sideration subsequent events after</p><p>passing of the preliminary decree. H </p><p>914 SUPREME COURT REPORTS [2008] 16 S.C.R.</p><p>A In Ct. A. Ct. Nachiappa Chettiar & Ors. V. Ct. A. Ct. '\.</p><p>Subramaniam Chettiar[(1960) 2 SCR 209], it was held :</p><p>"It would thus be seen that the r~spondent's share in the</p><p>family properties was not in dispute nor was his share in</p><p>B the prbperties in Burma seriously challenged. The only plea</p><p>raised in respect of the latter claim was that the court had</p><p>no jurisdiction to deal with it. This state of the pleadings in --+</p><p>a sense truly reflected the nature of the dispute between {</p><p>the parties. It is common ground that the family is a trading</p><p>c family and there could be no doubt that the assets of the</p><p>family were partible between the members of the family. It</p><p>was on these pleadings that the trial judge framed fifteen</p><p>issues and set down the case for hearing."</p><p>18. While dealing with the application under Section 21 of</p><p>D the Arbitration Act, 1940 where one of the questions was as</p><p>to whether an immoveable property situated in Burma could be</p><p>a subject matter of reference, in Phoo/chand & Anr. v. Gopal )--</p><p>Lal [(1967) 3 SCR 153], it was held : ~</p><p>E "7. We are of opinion that there is nothing in the Code of</p><p>Civil Procedure which prohibits the passing of more than</p><p>one preliminary decree if circumstances justify the same</p><p>and that it may be necessary to do so particularly in partition</p><p>suits when after the' preliminary decree some parties die</p><p>F .. and shares of other parties are thereby augmented. We</p><p>have already said that it is not disputed that in partition ~-</p><p>suits the court can do so even after the preliminary decree</p><p>is passed. It would in our opinion be convenient to the court</p><p>and advantageous to the parties, specially in partition suits,</p><p>G</p><p>to have disputed rights finally settled and specification of</p><p>shares in the preliminary decree varied before a final</p><p>decree is prepared. If this is done, there is a clear .</p><p>determination of the rights of parties to the suit on the</p><p>question in dispute and we see no difficulty in holding that</p><p>in such cases there is a decree deciding these disputed</p><p>H </p><p>S. SATNAM SINGH & ORS. v. SURENDER l"-AUR & 915</p><p>ANR. [S.S. SINHA, J.]</p><p>rights; if so, there is no reason why a second preliminary A</p><p>r decree correcting the shares in a partition suit cannot be</p><p>passed by the court. So far therefore as partition suits are</p><p>concerned we have no doubt that if an event transpires</p><p>after the preliminary decree which necessitates a change</p><p>in shares, the court can and should do so; and if there is a</p><p>a dispute in that behalf, the order of the court deciding that</p><p>dispute and making variation in shares specified in the</p><p>-\.- preliminary decree already passed is a decree in itself ., which would be liable to appeal. We should however like</p><p>to point out that what we are saying must be confined to c</p><p>partition suits, for we are not concerned in the present</p><p>appeal with other kinds of suits in which also preliminary</p><p>and final decrees are passed. There is no prohibition in</p><p>the Code of Civil Procedure against passing a second</p><p>preliminary decree in such circumstances and we do not D</p><p>see why we should rule out a second preliminary decree</p><p>in such circumstances only on the ground thatthe Code</p><p>1 of Civil Procedure does not contemplate such a</p><p>~ possibility."</p><p>The said principle was reiterated in Moo/ Chand & Ors. E</p><p>v. Dy. Director, Consolidation & Ors. [AIR 1995 SC 2493),</p><p>stating :</p><p>"The definition of 'decree' contained in Section 2(2) read</p><p>with the provisions contained in Order 20, Rule 18(2) as F</p><p>also Order 26, Rule 14 of the Code indicate that a</p><p>preliminary decree has first to be passed in a partition suit</p><p>and thereafter a final decree is passed for actual</p><p>separation of shares in accordance with the proceedings</p><p>held under Order 26. There are, thus, two stages in a suit G for partition. The first stage is reached when the preliminary</p><p>decree is passed under which the rights of the parties in</p><p>,., the property in question are determined and declared. The</p><p>second stage is the stage when a final decree is passed</p><p>which concludes the proceedings before the Court and the</p><p>H </p><p><br /></p><p>S. SATNAM SINGH & ORS. v. SURENDER KAUR & 917</p><p>ANR. [S.B. SINHA, J.]</p><p>rectify a mistake. If a property was subject matter of pleadings A</p><p>_.. and the court did not frame· an issue which it ought to have</p><p>done, it can, at a later stage, when pointed out, amend the</p><p>decree. · · · ·</p><p>22. The power of amendment, in a case of this natur~. as 8</p><p>noticed hereinbefore, would not only be dependent upon the</p><p>power of t~e court but also the principle that a court shall always</p><p>t</p><p>be ready and willing to rectify the mistake it has committed.,</p><p>\ 23. The issues were not correctly framed. An addition~!</p><p>written statement was permitted to be filed. A replication c</p><p>thereto also was allowed. It was in that situation, the questioh</p><p>as to whether the business transaction of Bombay Cycl~</p><p>Company could be a subject matter of the suit for partition or</p><p>not was required to be determined on its own merits.</p><p>D</p><p>24. The Trial Court felt that it had committed a mistake. In</p><p>such a situation, the court, in our opinion, committed no infirmity</p><p>in directing' rectification of its mistake.</p><p>i</p><p>25. For the reasons aforementioned, the impugned E judgment cannot be sustained. It is set aside accordingly. The</p><p>appeal is allowed. No costs.</p><p>K.K.T. Appeal allowed. </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-51393719897488078422024-02-19T10:24:00.001+05:302024-02-19T10:24:29.778+05:30Partition - Suit for, in respect of joint family property - Jurisdiction of Court to adjust shares at the final decree stage - Preliminary decree passed whereby the parties as well as their father found entitled to 1!4th share each - While partition suit was pending for passing of preliminary decree, father of the parties executed a registered Will bequeathing his share in favour of the respondent and died thereafter - Concurrent ~-findings of fact by Courts below that the Will was genuine - Such finding of fact not challenged - Entitlement of respondent to plead for grant of probate of the Will in the partition suit and consequent re-adjustment of shares vide final decree - Held: Suit for partition stands disposed of only with passing of the final decree - Respondent was entitled to plead for grant of probate of the Will in the partition suit itself and was not required to file a separate suit therefor - However, in ). facts and circumstances of the case, respondent was precluded from claiming more shares on basis of the Will or leading evidence to prove the Will before passing of the preliminary decree - Courts below were thus justified in passing final decree by dividing the joint family property into four equal shares and allotting two shares in favour of respondent on basis of the Will executed by deceased father of the parties.<p>[2009] 8 S.C.R. 912</p><p>•</p><p>A MADDINENI KOTESWARA RAO _.</p><p>V.</p><p>MADDINENI BHASKARA RAO AND ANR.</p><p>(Civil Appeal No. 3233 of 2009)</p><p>B</p><p>MAY 05, 2009</p><p>[TARUN CHATIERJEE AND HARJIT SINGH BEDI, JJ.]</p><p>; ••</p><p>Partition - Suit for, in respect of joint family property -</p><p>Jurisdiction of Court to adjust shares at the final decree stage</p><p>c - Preliminary decree passed whereby the parties as well as</p><p>their father found entitled to 1!4th share each - While partition</p><p>suit was pending for passing of preliminary decree, father of</p><p>the parties executed a registered Will bequeathing his share</p><p>in favour of the respondent and died thereafter - Concurrent ~- D findings of fact by Courts below that the Will was genuine -</p><p>Such finding of fact not challenged - Entitlement of</p><p>respondent to plead for grant of probate of the Will in the</p><p>partition suit and consequent re-adjustment of shares vide final</p><p>decree - Held: Suit for partition stands disposed of only with</p><p>E passing of the final decree - Respondent was entitled to plead</p><p>for grant of probate of the Will in the partition suit itself and</p><p>was not required to file a separate suit therefor - However, in ).</p><p>facts and circumstances of the case, respondent was</p><p>precluded from claiming more shares on basis of the Will or</p><p>F leading evidence to prove the Will before passing of the</p><p>preliminary decree - Courts below were thus justified in</p><p>passing final decree by dividing the joint family property into</p><p>four equal shares and allotting two shares in favour of</p><p>respondent on basis of the Will executed by deceased father</p><p>G</p><p>of the parties.</p><p>Dispute arose over a partition deed allegedly ·~-- executed in 1966 in respect of joint family property.</p><p>Respondent filed suit for partition and also for a</p><p>declaration that the alleged partition deed of 1966 was</p><p>H 912 </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 913</p><p>BHASKARA RAO l</p><p>.\. sham, void and inoperative. Meanwhile, the father of the A</p><p>parties executed a registered Will bequeathing his share</p><p>in the property in favour of the respondent and died</p><p>shortly thereafter. The suit was decreed and a preliminary</p><p>decree was passed whereby the parties as well as their</p><p>deceased father were found entitled to 1/4th share each B</p><p>and the alleged partition deed of 1966 was declared</p><p>I inoperative, void and sham. Respondent, placing reliance</p><p>upon the said Will, filed application for drawing up the</p><p>final decree with prayer to divide the joint family property</p><p>into four equal shares and to allot two shares to him. The c</p><p>trial court found the Will to be genuine and on</p><p>'--.. consideration of the same, passed final decree allotting</p><p>two shares to the respondent.</p><p>The High Court declined to interfere with the order</p><p>D of the trial court and dismissed the civil revision petition</p><p>filed by the appellant.</p><p>In appeal to this Court, the question which arose for</p><p>consideration was whether the Courts below erred in</p><p>allotting two shares in favour of the respondent on basis E</p><p>of the Will executed by the deceased father of the parties</p><p>-..\ and whether the genuineness of the Will could be decided</p><p>' by the Court in a suit for partition or had to be</p><p>adjudicated in a separate suit.</p><p>Dismissing the appeal, the Court F</p><p>HELD: 1.1. A suit for partition stands disposed of</p><p>only with the passing of the final decree. In a partition suit,</p><p>the court has the jurisdiction to amend the shares</p><p>suitably, even if the preliminary decree has been passed, G</p><p>---1 if some member of the family to whom an allotment was</p><p>made in the preliminary decree dies thereafter. The share</p><p>of the deceased would devolve upon other parties to a</p><p>suit or even a third party, depending upon the nature of .,. the succession or transfer, as the case may be. The H </p><p>914 SUPREME COURT REPORTS [2009] 8 S.C.R.</p><p>A validity of such succession, whether testate or intestate, }.</p><p>or transfer, can certainly be considered at the stage of</p><p>final decree proceedings. [Para 1 OJ [920-B-D]</p><p>1.2. The contention raised that the deceased father</p><p>8 of the parties had executed the Will and died before</p><p>passing of the preliminary decree, and accordingly the</p><p>Courts below were not justified in taking into</p><p>consideration the question regarding the genuineness of</p><p>the Will of the deceased father of the parties and allot two</p><p>shares to respondent in the final decree, is of no</p><p>C substance. In a suit for partition, a party who is claimih~</p><p>share in the plaint scheduled property, is entitled to plead</p><p>for grant of probate of the Will executed by the deceased</p><p>father of the parties and for which no separate suit</p><p>needed to be filed. In the present case, while re-allotting</p><p>D the shares of the parties, the trial court had framed issues</p><p>on genuineness of the Will of the deceased father of the</p><p>parties and decided that the Will was genuine after</p><p>considering the evidence on record including examining</p><p>the evidence of the scribe and attestor in respect of the</p><p>E Will in question. This finding of fact regarding the</p><p>genuineness of the Will was affirmed by the High Court</p><p>which was not agitated in this appeal. That being the f..</p><p>position, and considering the concurrent findings of fact</p><p>it was not open for this Court to interfere with the same</p><p>F if it was not found to be perverse or arbitrary. As regards</p><p>the contention that even if entitlement of share on basis</p><p>of the Will was available at the stage of preliminary</p><p>decree, the respondent could not have any adjudication</p><p>thereof at the final decree stage as it gave a go-by to such</p><p>G entitlement, though it is true that a Will was executed by</p><p>the deceased father of the parties when the suit was t- _</p><p>pending for passing a preliminary decree in respect of the</p><p>plaint scheduled property of the parties and also for</p><p>declaration that the alleged partition deed executed was</p><p>H sham, void and inoperative in law, but until and unless </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 915</p><p>BHASKARA RAO</p><p>)</p><p>• the alleged partition deed was declared inoperative, it was A</p><p>,. not open to any one to claim more shares on the basis</p><p>of a Will in respect of the plaint scheduled property. It</p><p>was also not open to the respondent to lead any evidence</p><p>to prove the Will before passing the preliminary decree,</p><p>since the suit itself was for a declaration that the partition • B</p><p>deed was void, inoperative and a sham transaction and</p><p>1 that being the factual position, there was no point in</p><p>proving the Will before the said declaration was granted</p><p>by the court. If ultimately, the court came to the</p><p>conclusion that there was a partition as evidenced by the c</p><p>partition deed of 1966, the evidence in respect of the Will</p><p>would have become totally irrelevant It was only under</p><p>those circumstances, the proof of the Will was withheld.</p><p>[Paras 11, 12, 13 and 14] [921-C-E; 922-C-H; 923-A, D-H]</p><p>' _A</p><p>1.3. So far as the contention raised regarding D</p><p>! applicability of s.97 CPC, a plain reading of the provision</p><p>I would make it clear that if a party aggrieved by a , preliminary decree passed after the commencement of '</p><p>the CPC does not appeal from such decree, he shall be</p><p>precluded from disputing its correctness in any appeal E</p><p>which may be preferred from the final decree. This is not</p><p>... the position in this case. [Para 15] [924-C-D] ,</p><p>Venkata Reddy & Ors. v. Pethi Reddy AIR 1963 SC 992</p><p>and Kaushalya Devi & Ors. v. Baijnath Saya/ (deceased) & F</p><p>Ors. AIR 1961 SC 790, held inapplicable.</p><p>Phoolchand v Gopal Lal AIR 1967 SC 1470, relied on.</p><p>Case Law Reference:</p><p>~ -~ AIR 1967 SC 1470 relied on Para 10 G</p><p>AIR 1963 SC 992 held inapplicable Para 14</p><p>AIR 1961 SC 790 held inapplicable Para 16</p><p>H </p><p>916 SUPREME COURT REPORTS [2009] 8 S.C.R.</p><p>'</p><p>A CIVIL APPELLATE JURISDICTION : Civil Appeal No. ~</p><p>3233 of 2009. ·~</p><p>From the Judgment & Order dated 2610.2006 of the High</p><p>Court of Andhra Pradesh at Hyderabad in C.R.P. No. 986 of</p><p>B 2006.</p><p>R. Sundaravaradan, K. Subba Rao, Aniruddha P. Mayee</p><p>for the Appellants.</p><p>;</p><p>Pramjit Singh Patwalia, Jaideep Gupta, T.V. Ratnam D.</p><p>c Bharat Kumar, M. lndrani, Abhijit Sengupta for the</p><p>Respondents.</p><p>The Judgment of the Court was delivered by</p><p>TARUN CHATTERJEE, J.1. Leave granted. ~</p><p>D</p><p>2. This appeal by special leave is directed against the</p><p>judgment and order dated 26th of October, 2006 of the High</p><p>Court of Andhra Pradesh at Hyderabad, wherein the High Court</p><p>had dismissed the Civil Revision Case being CRP No. 986 of</p><p>E 2006 filed before it by the appellant.</p><p>3. The relevant facts leading to the present appeal are as</p><p>follows: •</p><p>One M.Veera Raghavaiah, the father of the appellant</p><p>F (since deceased) and the respondents, had three sons and a</p><p>daughter. M.Veera Raghavaiah, the deceased father of the</p><p>appellant, was acting as a manager and karta of the joint family</p><p>till 1966. Thereafter, he fell sick and became incapable of</p><p>managing the joint family property and joint family debts. The</p><p>G appellant herein came forward and agreed to take up the</p><p>responsibility. Accordingly, all the parties agreed to execute a ~- . power of attorney in favour of the appellant. But, the appellant</p><p>insisted on executing a separate deed instead of a power of</p><p>attorney saying that a power of attorney may not be effective</p><p>H and it can be terminated at any point of time. The respondents </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 917</p><p>BHASKARA RAO [TARUN CHATIERJEE, J.]</p><p>s herein and the deceased father out of confidence signed on A</p><p>the said deed which was registered on 17th of May, 1966,</p><p>without knowing its contents. However, they later came to know</p><p>that the said deed was styled as. a partition deed between the</p><p>parties. On 21st of April, 1978, M. Bhaskara Rao, one of the</p><p>sons of the deceased father and the respondent no.1 herein B</p><p>(hereinafter referred to as the respondent), filed a suit for</p><p>partition of the plaint scheduled property claiming 1 /4th share</p><p>in the same and also for a declaration that the alleged deed of</p><p>partition dated 17th of May, 1966 was sham, void and</p><p>inoperative and for other incidental reliefs in the Court of c</p><p>Principal Subordinate Judge, Vijayawada. The suit was</p><p>decreed by the Principal Subordinate Judge, Vijayawada and</p><p>a preliminary decree dated 1st of October, 1986, was passed</p><p>whereby all the parties including the deceased father of the</p><p>,I parties were found to be entitled to 1/4th share each in respect D</p><p>of the plaint scheduled property. It was further declared by the</p><p>trial court that the partition deed dated 17th of May, 1966 was</p><p>inoperative, ineffective, void and a sham transaction.</p><p>4. When the aforesaid suit was pending, M.Veera</p><p>Raghavaiah (since deceased) being the father of the parties,· E</p><p>executed a registered Will on 21st of March, 1984 bequeathing</p><p>••</p><p>his 1/4th share in respect of the plaint scheduled property in</p><p>, favour of the respondent and also a sum of Rs.10,000/- was</p><p>allotted to his daughter/ respondent No.2 herein. M. Veera</p><p>Raghavaiah died on 17th of January, 1985. While the suit was F</p><p>pending, more precisely on 25th of February, 1985, the</p><p>respondent filed a photostat copy of the V\(ill in the trial court</p><p>praying that the probate of the will bequeathing his 1/4th share</p><p>in respect of the plaint scheduled property to the respondent</p><p>and Rs. 10,000/- to his daughter be granted. When the G</p><p>--1 photostat copy of the Will was filed by the respondent for grant</p><p>of probate, it was made clear by all the parties that the parties</p><p>on record were sufficient and there was no need of impleading</p><p>any other legal representatives. An endorsement to this effect</p><p>was also made by the counsel for the appellant stating that "no H </p><p>918 SUPREME COURT REPORTS [2009] 8 S.C.R.</p><p>A L.Rs. need be added". In view of such stand taken by the l</p><p>parties before the trial Court and no objection having been</p><p>raised upto this Court, we refrain from going into the question</p><p>whether probate can be granted to the Will in question in the</p><p>absence of any other heirs and legal representatives of the</p><p>B deceased, if there be any.</p><p>5. On 4th of November, 1986, the appellant went in appeal</p><p>before the High Court of Andhra Pradesh at Hyderabad against</p><p>the preliminary decree declaring 1/4th share each to the parties</p><p>c including the share in favour of the deceased father of the</p><p>appellant before the High Court which came to be registered</p><p>as AS.No. 2879 of 1986 which was also dismissed by a</p><p>learned Judge of the High Court that had confirmed the</p><p>judgment and decree of the trial cou!Q Feeling aggrieved, the</p><p>D appellant also filed a Letters Patent Appeal which came to be</p><p>registered as LPA No.154 of 1997 before the Division Bench</p><p>of the High Court. It would be evident from the record that while</p><p>the LPA was pending, the respondent on 11th of February,</p><p>1988 filed an application for drawing up the final decree in</p><p>respect of the plaint scheduled property in which he applied for</p><p>E appointment of a Commissioner to divide the plaint scheduled</p><p>property into four equal shares and to allot two shares to the</p><p>respondent as his father M.Veera Raghavaiah had executed ~</p><p>a registered Will dated 21st of March, 1984. The appellant</p><p>resisted the said application on numerous grounds.</p><p>F</p><p>6. After the LPA was dismissed by the Division Bench of</p><p>the High Court, the trial court before whom the application for</p><p>drawing up the final decree was pending, allowed the same</p><p>filed by the respondent and passed a final decree allotting two</p><p>G shares in respect of the plaint scheduled property to the</p><p>respondent after considering the Will executed by the deceased</p><p>father of the parties. It may be kept on record that the trial court t.</p><p>went into the question of the genuineness of the Will executed</p><p>by the deceased father of the parties and after considering the</p><p>H</p><p>evidence on record including examining the scribe and attester </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 919</p><p>BHASKARA RAO [TARUN CHATIERJEE, J.]</p><p>)</p><p>~ of the Will found the Will to be genuine and granted probate of A</p><p>the Will. The trial court also recorded the findings to the effect</p><p>that the Will was duly proved as required in law.</p><p>7. On 18th of February, 2006, the appellant approached</p><p>the High Court by filing a Civil Revision Case being CRP No. B</p><p>986 of 2006 contending that the Trial Court erred in allotting</p><p>"</p><p>tWo shares to the respondent relying on the Will of the deceased</p><p>father of the parties which amounted to alteration of the</p><p>preliminary decree passed by the trial court. The High Court</p><p>declined to accept this contention of the appellant. The High c Court further observed that in a suit for partition more than one</p><p>preliminary decree can be passed. The High Court also</p><p>observed that a suit for partition stands disposed of, only with</p><p>the passing of the final decree. It is competent for the court to</p><p>,,,,.</p><p>examine the validity of the transfers, testate or intestate</p><p>D successions in the final decree proceedings, of which</p><p>examination had not been done before the passing of the</p><p>preliminary decree, to take into consideration the changes</p><p>occurring on account of death of a party or transfer made by</p><p>him. Therefore, the High Court and the trial court were justified</p><p>in taking into account the Will of the deceased father while E</p><p>passing the final decree in the partition suit. The High Court</p><p>~ placed reliance on a·decision of this Court in Phoolchand v.</p><p>,/ Gopa/ Lal (AIR 1967 SC 1470). The High Court further held</p><p>that alteration of the preliminary decree would occur only if the</p><p>extent of shares allotted to each parties or the items identified F</p><p>for partition, wert: altered. No such alteration had taken place</p><p>in the present case. A mere adjustment of the shares of the</p><p>parties does not bring about any alteration in the preliminary</p><p>decree. Accordingly, the High Court had refused to interfere</p><p>with the order of the trial court in revision. G</p><p>-1 8. Feeling aggrieved, the appellant filed a special leave</p><p>petition, which on grant of leave, was heard in the presence of</p><p>the learned counsel for the parties.</p><p>9. The only question that needs to be decided in this H </p><p>920 SUPREME COURT REPORTS [2009] 8 S.C.R.</p><p>A appeal is whether the High Court as well as the trial court were ' • justified in allotting two shares in favour of the respondent on</p><p>the basis of the Will executed by the deceased father of the</p><p>parties and whether the genuineness of the Will could be</p><p>decided by the Court in a suit for partition or not or by a</p><p>B separate suit.</p><p>10. It is well settled that a suit for partition stands disposed</p><p>of only with the passing of the final decree. It is equally settled</p><p>that in a partition suit, the court has the jurisdiction to amend</p><p>c</p><p>the shares suitably, even if the preliminary decree has been</p><p>passed, if some member of the family to whom an allotment</p><p>was made in the preliminary decree dies thereafter. The share</p><p>of the deceased would devolve upon other parties to a suit or</p><p>even a third party, depending upon the nature of the succession</p><p>D</p><p>or transfer, as the case may be. The validity of such succession,</p><p>whether testate or intestate, or transfer, can certainly be</p><p>considered at the stage of final decree proceedings. An</p><p>inference to this effect can suitably be drawn from the decision</p><p>of this Court in the case of Phoo/chand v. Gopal Lal (AIR 1967</p><p>SC 1470). In that decision, it was observed as follows:</p><p>E</p><p>"There is nothing in the Code of Civil Procedure which</p><p>prohibits the passing of more than one preliminary decree</p><p>,.\. if the circumstances justify the same and that it may be</p><p>necessary to do so particularly in partition suits when after '</p><p>F the preliminary decree some parties die and shares of</p><p>other parties are thereby augmented ... it would in our</p><p>opinion be convenient to the court and advantageous to</p><p>the parties, specially in partition suits, to have disputed</p><p>rights finally settled and specifications of shares in the</p><p>G preliminary decree varied before a final decree is</p><p>prepared. If this is done there is a clear determination of</p><p>the rights of the parties to the suit on the question in dispute ·-</p><p>and we see no difficulty on holding that in such cases there</p><p>is a decree deciding these disputed rights, if so, there is</p><p>H</p><p>no reason why a second preliminary decree correcting the </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 921</p><p>BHASKARA RAO [TARUN CHATIERJEE, J.]</p><p>)</p><p>J shares in a partition suit cannot be passed by the court." A</p><p>11. Therefore, relying on the decision of this Court and</p><p>following the principles as aforesaid, both the courts below</p><p>granted two shares to the respondent in respect of which we</p><p>do not find any reason to differ. The courts below were also B</p><p>justified to hold that the two shares granted at the final stage</p><p>could be treated as two preliminary decrees which are</p><p>permissible in law. However, the learned counsel for the</p><p>appellant pointed out that in Phoo/chand's Case (supra), the</p><p>death of two parties had taken place after the preliminary c decree was passed. A new circumstance had emerged after</p><p>the passing of the preliminary decree, that is why the court had</p><p>passed a second preliminary decree modifying the shares of</p><p>the other parties, accordingly, based on the Will executed by</p><p>,-l the deceased. But, in the present case their father had executed</p><p>D the Will and died before the passing of the preliminary decree.</p><p>Therefore, no new circumstance has arisen after the passing</p><p>of the preliminary decree. Accordingly, the appellant contended</p><p>that the High Court as well as the trial court were not justified</p><p>in taking into consideration the question regarding the</p><p>genuineness of the Will of the .deceased father of the parties E</p><p>and allot two shares to respondent in the final decree.</p><p>~ 12. So far as the first question, as noted herein earlier, is</p><p>/</p><p>concerned, we are of the view that such a contention of the</p><p>learned counsel for the appellant was of no substance. F</p><p>According to the learned counsel for the appellant. as noted</p><p>herein earlier, the genuineness of the Will of the deceased</p><p>father of the parties not having been proved in a separate suit,</p><p>the High Court as well as the trial Court had specifically</p><p>considered this point before passing the final decree. As noted G</p><p>herein earlier, in Phoo/chand vs. Gopal Lal (supra), this</p><p>' -~ question has been squarely answered. In the said decision, the</p><p>appellant also filed a suit for partition of the joint property in</p><p>, which a preliminary decree was passed before passing a final</p><p>decree. The father and the mother of the appellant died and H </p><p>922 SUPREME COURT REPORTS [2009] 8 S.C.R.</p><p>A the brother of the appellant claimed that he was entitled to the ...</p><p>share of the father as the same was declared by way of a Will</p><p>executed by the father and the appellant claimed his right in the</p><p>share of the mother as the same was sold to him by the mother.</p><p>This question relates to the preliminary shares of the parties</p><p>B which were redistributed, however, the trial court did not prepare</p><p>another formal preliminary decree on the basis of this redistribution of shares. The appeal was taken to the High Court</p><p>by the brother of the appellant against distribution which finally</p><p>came to this Court and this Court held that Will executed by the</p><p>c father in favour of the brother of the appellant was genuine and,</p><p>therefore, the appellant was not entitled to take advantage of</p><p>the share of the mother and the same must be distributed</p><p>equally. In view of the aforesaid decision of this Court, it ls clear</p><p>that in a suit for partition, a party who is claiming share in the</p><p>D plaint scheduled property, is entitled to plead for grant of -/...</p><p>probate of the Will executed by the deceased father of the</p><p>parties and for which no separate suit needed to be filed.</p><p>13. While re-allotting the shares of the parties, the trial court</p><p>had framed the issues on the genuineness of the Will of the</p><p>E deceased father of the appellant and decided that the Will was</p><p>.genuine after considering the evidence on record including</p><p>examining the evidence of the scribe and attestor in respect ~</p><p>of the Will in question. This finding of fact regarding the ' genuineness of the Will of the father affirmed by the High Court</p><p>F was also not agitated before us in this appeal. That being the</p><p>position, and considering the concurrent findings of fact it was</p><p>also not open for us to interfere with the same if it is found not</p><p>to be perverse or arbitrary. In view of our discussions made</p><p>hereinabove and applying the principles laid down in the</p><p>G aforesaid decision of this Court, namely, Phoo/chand vs. Gopal</p><p>Lal (supra), we do not find any substance in the arguments of t- '</p><p>the learned counsel for the appellant.</p><p>14. A further contention was advanced by the learned</p><p>counsel for the appellant that if certain entitlement of share even</p><p>H on the basis of the Will was available to the parties at the stage </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 923</p><p>BHASKARA RAO [TARUN CHATIERJEE, J.]</p><p>~ of preliminary decree, but such entitlement was given a go-by A</p><p>by one of the parties, the parties who have already given a goby of such entitlement cannot have any adjudication at the final</p><p>decree stage. In support of this contention, the learned counsel</p><p>appearing on behalf of the appellant had drawn our attention</p><p>to Section 97 of the CPC and also on a decision of this Court B</p><p>in the case of Venkata Reddy & Ors. vs. Pethi Reddy [AIR</p><p>1963 SC 992]. In our view, so far as the decision of this Court</p><p>in Venkata Reddy's case is concerned, there is no applicability</p><p>of the principles laid down in that decision in the present case.</p><p>In that decision, the sale made by the Official Receiver during c</p><p>the insolvency of the father of the appellant was the subject</p><p>matter of a final decision by a competent court inasmuch as</p><p>the court had decided that the sale was of no avail to the</p><p>purchaser as the Official Receiver had no power to that sale.</p><p>Nothing more was required to be established by the appellants D before being entitled to the protection of the first proviso to</p><p>Section 28-A of the Provincial Insolvency Act. As noted herein</p><p>earlier, we are unable to find any applicability of this decision</p><p>in the facts of this case. It is true that a Will was executed by</p><p>the deceased father when the suit was pending for passing a E preliminary decree in respect of the plaint scheduled property</p><p>of the parties and also for declaration that the alleged partition</p><p>4 deed executed was sham, void and inoperative in law. Until and</p><p>, unless the partition deed is declared in operative, it is not open</p><p>to one who claimed more shares on the basis of a Will in</p><p>respect of the plaint scheduled property. In our view, it was also F</p><p>not open to the respondent to lead any evidence to prove the</p><p>Will before passing the preliminary decree, since the suit itself</p><p>was for a declaration that the partition deed was void,</p><p>inoperative and a sham transaction and that being the factual</p><p>position, there was no point in proving the Will before the said G ....... · ... declaration was granted by the court. If ultimately, the court</p><p>comes to the conclusion that there was a partition as evidenced</p><p>by the partition deed dated 17th of May, 1986, the evidence in</p><p>respect of the Will would totally become irrelevant. It was only</p><p>under those circumstances, the proof of the Will was withheld. H </p><p>924 SUPREME COURT REPORTS [2009] 8 S.C.R. .</p><p>A That being the position, this decision is distinguishable on facts +'</p><p>and also on law. So far as Section 97 of the CPC is concerned</p><p>again, we do not find that the said provision is at all applicable</p><p>to the present case. To understand the problem, it would be</p><p>appropriate for us to produce Section 97 of the CPC which runs</p><p>B as under:-</p><p>"Appeal from final decree where no appeal from</p><p>preliminary decree - Where any party aggrieved by a</p><p>preliminary decree passed after the commencement of this</p><p>c</p><p>Code does not appeal from such decree, he shall be</p><p>precluded from disputing its correctness in any appeal</p><p>which may be preferred from the final decree."</p><p>f15. A plain reading of this provision would make it clear</p><p>that a party aggrieved by a preliminary decree passed after the</p><p>D commencement of the CPC does not appeal from such decree,</p><p>he shall be precluded from disputing its correctness in any</p><p>appeal which may be preferred from the final decree. This is</p><p>not the position in this case. Here admittedly, a preliminary</p><p>decree was passed declaring the share of the parties including</p><p>E the share in favour of the deceased father of the parties. That</p><p>preliminary decree is final, but on the death of the father of the</p><p>parties, the shares allotted to the deceased father of the parties j. would fall either to the parties in equal shares or if by Will or by</p><p>any form of transfer, such share has been given to one of the</p><p>F parties. Therefore, in that situation, the respondents could not</p><p>have filed any appeal against the preliminary decree because</p><p>(1) at this stage, the father was very much alive and only on the</p><p>death of the father, the question of getting one more share that</p><p>is the share of the father would come into play and (2) the</p><p>G declaration made in the preliminary decree by the Court was</p><p>also accepted by the parties at that stage. Therefore, Section ~ 97 of the CPC could not be an aid to the appellant and</p><p>therefore, the submission of the learned counsel for the " appellant in this Court cannot be accepted and therefore it is</p><p>H rejected. </p><p>MADDINENI KOTESWARA RAO v. MADDINENI 925</p><p>BHASKARA RAO [TARUN CHATTERJEE, J.]</p><p>) 16. Before parting with this judgment, we may refer to a A</p><p>- decision of this Court in the case of Kaushalya Devi & Ors.</p><p>vs. Baijnath Saya/ (deceased) & Ors. [AIR 1961 SC 790] on</p><p>which reliance was also placed by the learned counsel for the</p><p>appellant. The learned counsel for the appellant also had drawn</p><p>our attention to paragraph 9 of the said decision. At this stage, B</p><p>it would be appropriate if we reproduce Para 9 on which strong</p><p>• reliance was placed by the learned counsel for the appellant.</p><p>Para 9 of the said decision runs as under:-</p><p>"If the preliminary decree passed in the present c proceedings without complying with the provisions of Order</p><p>.32 Rule 7(1) is not a nullity but is only voidable at the</p><p>• instance of the appellants, the question is ;can they seek .</p><p>to avoid it by preferring an appeal against the final decree</p><p>;- ? It is in dealing with this point that the bar of Section 97</p><p>D of the Code is urged against the appellants. Section 97</p><p>which has been aaded in the Code of Civil Procedure,</p><p>1908 for the first time provides that where any party</p><p>aggrieved by a preliminary decree passed after the</p><p>commencement of the Code does not appeal from such</p><p>decree he shall be precluded from disputing its correctness E</p><p>in any appeal which may be preferred from the final</p><p>-i decree."</p><p>I</p><p>17. We have already explained in this judgment that</p><p>Section 97 of the CPC is not applicable to the facts and F</p><p>circumstances of the present case and, therefore, we do not</p><p>find any applicability of Paragraph 9 of the decision thereof in</p><p>this decision of this Court in the facts and circumstances of the</p><p>present case.</p><p>18. No other point was raised by the learned counsel for G</p><p>_.... ,._ the parties before us. Accordingly we do not find any merit in</p><p>this appeal. The appeal is thus dismissed. There will be no</p><p>order as to costs.</p><p>B.B.B. Appeal dismissed. H </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-52752604121005079102024-02-19T10:21:00.001+05:302024-02-19T10:21:23.442+05:30Contract - Partition suit -:- Settlement between parties - Execution of MOU - Plaintiff agreeing to sell his share to defendant - Date specified for payment of consideration amount - Date was extendable on the consent of both the parties - Failure to pay consideration amount within stipulated period - Defendant's plea that he was ready and willing to perform his part of contract - Enforceability of MOU - Held: Since Defendant defaulted the terms and conditions of MOU, _ it cannot be given effect to - Defendant's conduct does not show that he was ready and willing to perform his part of contract - Mere showing of readiness and willingness would not discharge the obligation resting on one of the parties, unless it is shown to be real and genuine<p>~</p><p>[2009] 12 S.C.R. 479</p><p>NARINDE.R KUMAR MALIK</p><p>v.</p><p>SURINDER KUMAR MALIK</p><p>(Civil Appeal Nos. 5087-5088 of 2009)</p><p>AUGUST 4, 2009.</p><p>[S.B. SINHA AND DEEPAK VERMA, JJ.]</p><p>Contract - Partition suit -:- Settlement between parties -</p><p>Execution of MOU - Plaintiff agreeing to sell his share to</p><p>A</p><p>B</p><p>defendant - Date specified for payment of consideration C</p><p>amount - Date was extendable on the consent of both the</p><p>parties - Failure to pay consideration amount within stipulated</p><p>period - Defendant's plea that he was ready and willing to</p><p>perform his part of contract - Enforceability of MOU - Held:</p><p>Since Defendant defaulted the terms and conditions of MOU, D</p><p>j,_ it cannot be given effect to - Defendant's conduct does not</p><p>show that he was ready and willing to perform his part of</p><p>contract - Mere showing of readiness and willingness would</p><p>not discharge the obligation resting on one of the parties,</p><p>unless it is shown to be real and genuine. E</p><p>Appellant filed a suit claiming 1h share in a piece of</p><p>land, allotted to a partnership firm of which appellant and</p><p>his brother (defendant-respondent) were the partners.</p><p>Trial Court passed preliminary decree of partition.</p><p>Respondent filed appeal before High Court. During</p><p>pendency of the appeal, they arrived at a settlement and</p><p>a 'Memorandum of Understanding' (MOU) was executed.</p><p>As per the MOU, appellant had agreed to sell his % share</p><p>F</p><p>to the respondent at the consideration of Rs.3.50 crores. ·</p><p>'t' An advance of Rs. 25 lakhs had been received by the G</p><p>appellant. The balance amount was to be paid within a</p><p>maximum period of 150 days i.e. upto 9.7.2005. This</p><p>period was extendable by another 10 to 20 days with the</p><p>479 H </p><p>480 SUPREME COURT REPORTS [2009] 12 S.C.R.</p><p>A consent of both the parties. However, the matter did not ~</p><p>settle and respondent sent a notice to the appellant</p><p>stating that he was ready with the balance payment and</p><p>despite approaching the appellant, he had not been</p><p>honouring that Appellant replied to the notice denying the</p><p>B allegation. He also stated that in case of default in</p><p>payment of the balance amount by the date stipulated in</p><p>the MOU, the same would stand cancelled. As the</p><p>negotiations failed, High Court directed that the</p><p>consideration amount received as advance to be returned</p><p>c to the respondent. Despite the order, respondent filed</p><p>application seeking direction to the appellant to execute</p><p>transfer documents in terms of the MOU. Even after that,</p><p>attempts of settlement failed. High Court allowed the</p><p>appeal, directing the appellant to deposit the</p><p>0 consideration amount within two weeks. Hence the</p><p>present appeals.</p><p>Allowing the appeals, the Court</p><p>HELD: 1.1. From the facts of the instant case it is as</p><p>E clear that respondent has committed default of the terms</p><p>and conditions of the MOU and had neither been ready</p><p>and willing nor has been so throughout the relevant</p><p>period. Thus, MOU entered into between the parties</p><p>cannot be given effect to. [Para 34] [493-C]</p><p>F 1.2. The MOU categorically mentions that the</p><p>respondent shall make the payment of the balance</p><p>amount of Rs. 3.25 Crores within a maximum period of</p><p>150 days from the date of execution of the MOU, i.e., upto</p><p>or before 9th July 2005. However, this period of 150 days</p><p>G was extendable by another 10 to 20 days, if need be with</p><p>the consent of both the parties but not more. High Court</p><p>fell into error in construing the said provision in right</p><p>perspective and erred in coming to the conclusion that</p><p>since time was extendable, the time could not have been</p><p>H</p><p>f </p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 481</p><p>MALIK</p><p>+ made the essence of the contract. Admittedly, the A</p><p>respondent has not honoured his commitment, within the</p><p>extendable period given to him, even though he had no</p><p>right to claim the benefit as of right for the extendable</p><p>period. [Paras 27, 28 and 29] [490-D-E; 490-E; 490-G-H]</p><p>1.3. The respondent sent the photocopies of three</p><p>pay orders two of which were for a sum of Rs. 1 Crore</p><p>each and the third one for a sum of Rs. 1.25 Crore. It was</p><p>B</p><p>-"' neither here nor there, as the originals were never</p><p>tendered to the appellant and only photocopies were sent C</p><p>to make a semblance that respondent has been ready</p><p>and willing to perform his part of the contract. When MOU</p><p>had already been arrived at between the parties, then</p><p>mere show of readiness and willingness would not</p><p>' discharge the obligation resting on one of the parties</p><p>unless it is shown to be real and genuine. From the D</p><p>+. conduct, behaviour and attitude of the respondent it is</p><p>clearly made out that he had not been ready and willing</p><p>to perform his part of the contract as mentioned in the</p><p>MOU. [Paras 30 and 31] [491-A-B; 491-C]</p><p>"'</p><p>Star Construction and Transport Co. and Ors. v. India</p><p>Cements Ltd. (2001) 3 SCC 351, referred to.</p><p>United Bank of India v. Ramdas Mahadeo Prashad and</p><p>Ors. (2004) 1 SCC 252, referred to.</p><p>2. Moreover, the amount as directed to be deposited</p><p>by the High Court, was not deposited by the respondent</p><p>within the stipulated time as given in the impugned order.</p><p>Instead, the same was done much after the last/stipulated</p><p>date. [Para 26] [490-D]</p><p>Case Law Reference:</p><p>(2001) 3 sec 351 Referred to Para 32</p><p>E</p><p>F</p><p>G </p><p>A</p><p>482 SUPREME COURT REPORTS [2009] 12 S.C.R.</p><p>(2004) 1 sec 2s2 Referred to Para 33</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No.</p><p>5087-5088 of 2009.</p><p>From the Judgment & Order dated 08.09.2008 of the High</p><p>B Court of Delhi at New Delhi in C.M. No. 12796 of 2005 & RFA</p><p>No. 649 of 2004.</p><p>c</p><p>lndu Malhotra, Nupur Kanungo, Kunal Tandon, Anuj Sehgal,</p><p>Kush Chaturvedi, Vikas Mehta, for the Appellants.</p><p>Raju Ramachandran, Rajneesh Chopra, Dhruv Kapur,</p><p>Priyanka Kalra, Subramonium Prasad, for the Respondents.</p><p>The Judgment of the Court was delivered by</p><p>D DEEPAK VERMA, J. 1. Leave granted.</p><p>2. Parties to the litigation are real brothers having spent</p><p>their childhood with cheer and joy in the courtyard, are here,</p><p>now fighting tooth and nail for their respective shares in a piece</p><p>of plot admeasuring 3149.75 sq. yds. allotted to the partnership</p><p>E firm, viz., M/s. Narinder Kumar Malik & Surinder Kumar Malik</p><p>at D-2, Udyog Nagar, Rohtak Road, New Delhi.</p><p>3. Even though the partnership business could never</p><p>commence but the plot in question continued to be owned by</p><p>F both of them as partners of the firm to the extent of 50% each.</p><p>On account of differences having arisen between the parties,</p><p>the present appellant-Narinder Kumar Malik was constrained</p><p>to file a suit bearing No. 779 of 1997 before the High Court of</p><p>Delhi, later transferred to the Court of Additional District Judge,</p><p>G Tis Hazari, Delhi and was numbered as 289 of 2004, claiming</p><p>1 /2 share in the aforesaid piece of land allotted to the</p><p>partnership firm.</p><p>4. The respondent filed a written statement and took an</p><p>objection that the property was owned by a partnership firm and</p><p>H </p><p>...</p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 483</p><p>MALIK [DEEPAK VERMA, J.]</p><p>-t thus the suit for partition was not maintainable and rather a suit A</p><p>for dissolution of partnership firm ought to have been filed.</p><p>,..,</p><p>-J.,</p><p>"'</p><p>5. During the pendency of the proceedings of the suit. the</p><p>defendant (respondent herein) filed an application under O.Vll</p><p>R. 11 of the Code of Civil Procedure (for short, 'CPC') for B</p><p>dismissing the suit on the ground that it did not disclose any</p><p>cause of action as the property was owned by a partnership</p><p>firm, whereas the appellant herein filed an application under</p><p>O.Xll R.6, CPC praying therein that on account of c:1dmission</p><p>having been made by the respondent, judgment and decree on C</p><p>the said admission be passed.</p><p>6. Both the applications came to be considered by the</p><p>learned trial Judge on 04th November 2004. By the said order,</p><p>the application filed by the respondent under O.Vll R. 11, CPC</p><p>came to be dismissed. However, the application filed by the D</p><p>appellant herein under O.Xll R.6, CPC came to be allowed and</p><p>a preliminary decree of partition was passed in the following</p><p>terms:-</p><p>"12. In view of my above discussion, the application of the E defendant under order 7 rule 11 CPC is hereby dismissed</p><p>and application under order 12 rule 6 CPC is l1ereby</p><p>allowed. A preliminary decree of partition is passe1d with</p><p>the direction to the parties to decide the means of</p><p>partitioning the plot in question and in case they failed to</p><p>F partition the plot by themselves, a Local Commissioner</p><p>may be appointed by the court for suggesting the means.</p><p>13. The case is now adjourned for 8.12.2004 for further</p><p>proceedings."</p><p>7. Feeling aggrieved and dissatisfied with the said order</p><p>G</p><p>respondent herein, viz., Surinder Kumar Malik was constrained</p><p>to file appeal in the High Court of Delhi at New Delhi regist~\red</p><p>as R.F.A. No. 649 of 2004 reiterating the grounds taken in the</p><p>written statement and in the application filed by him under O.Vll H </p><p>484 SUPREME COURT REPORTS [2009] 12 S.C.R.</p><p>A Rule 11 of CPC.</p><p>;,.</p><p>8. It appears, during the pendency of the said appeal in</p><p>the High Court, good sense prevailed upon the two brothers</p><p>and they arri\ed at a settlement and pursuant thereto</p><p>B "Memorandum of Understanding" (hereinafter referred to as</p><p>'MOU') came to be executed between themselves on 09th</p><p>February 2005 at Delhi.</p><p>9. It is pertinent to mention here that this MOU was arrived</p><p>at also on account of the strong belief of the Division Bench of</p><p>c the High Co~rt that the parties being real brothers should settle</p><p>the matter among themselves through mediation. Accordingly,</p><p>on-17th December 2004 an order was passed, with the</p><p>consent of the parties, that both the brothers would appear</p><p>before Mr. M.L. Mehta, Addi. District Judge, Delhi who was</p><p>D requested to be a mediator. On 17th March 2005 it was noted</p><p>by the High Court that parties have entered into a settlement</p><p>as MOU was already entered into between the parties on 09th</p><p>February 2005. However, despite settling the matter outside the</p><p>Court on their own terms atJd conditions, it appears that the</p><p>E dispute beiween them did not come to an end.</p><p>10. Some of the relevant and salient terms and conditions</p><p>of the MOU are reproduced hereinbelow:</p><p>"(i) that Party No.1 has agreed to sell his share i.e. 50%</p><p>F area of the said Industrial plot to party No.2 at the settled</p><p>and agreed consideration of Rupees three crores fifty lacs</p><p>only and party1</p><p>No.2 has agreed to purchase the said share</p><p>at the said consideration.</p><p>G (ii) that the second party has paid a sum of Rs.</p><p>10,00,000.00 (Rupees ten lacs) in cash and Rs. ..., 15,00,000.00 vide Payee's Ale Cheque No. 131112</p><p>dated 05.02.2005 drawn on UCO Bank, Punjabi Bagh in</p><p>favour of the first party as a token money and first party</p><p>H has accepted the same. </p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 485</p><p>MALIK [DEEPAK VERMA, J.]</p><p>-t (iii) that as agreed the second party shall make the balance</p><p>payment of Rs. 3.25 crores within a maximum period of</p><p>A</p><p>150 days from the date of execution of this, MOU i.e. upto</p><p>or before 9th day of July, 2005. However, this period of</p><p>150 days is extend able by another 10 to 20 days, if need</p><p>be, with the consent of both the parties but not more. B</p><p>(iv) that on receiving the full consideration of Rupees three</p><p>crores, fifty lacs the first party shall execute the necessary</p><p>documents like GPA, Release Deed, Sale Deed etc., as</p><p>advised in favour of the second party or his nominee and c hand over the physical, peaceful and vacant possession</p><p>of his share to the second party or his nominee as the</p><p>case may be.</p><p>(v) that the First Party i.e. Shri Narinder Kumar Malik is</p><p>presently out of India, but his counsel/advocate Shri J.R. D</p><p>·!..</p><p>.,. Bajaj along with Shri Rohit Malik son of the first party and</p><p>Shri Ashok Kumar Marwaha, Advocate, have been</p><p>authorized to sign this MOU for and on his behalf .</p><p>.. (vi) that both the parties shall be jointly responsible for E</p><p>payment of ground rent/lease money and all other statutory</p><p>taxes etc., in respect of the Industrial Plot upto the date of</p><p>..... execution of this MOU, but thereafter only party No.2 and/</p><p>or his nominee shall be liable to pay the same.</p><p>(vii) that all the expenses like stamp duty, registration F</p><p>charges etc., for the registration of necessary documents</p><p>shall be borne by party No.2 or his nominee in whose</p><p>favour the documents of ownership are to be executed.</p><p>11. On 12th May 2005 despite having arrived at a G</p><p>"" settlement, High Court directed them to approach the learned</p><p>mediator for resolving their points of differences, if any, but,</p><p>instead of resolving the same, their differences continued to</p><p>rise.</p><p>H </p><p>486 SUPREME COURT REPORTS [2009] 12 S.C.R.</p><p>A 12. A registered notice dated 22nd June 2005 was not</p><p>sent to the appellant by respondent's advocate Mr. Harish</p><p>Malhotra mentioning therein that his client, viz., the respondent</p><p>herein is ready with the balance payment as mentioned in the</p><p>said MOU and despite approaching the appellant, he has not</p><p>B been honouring the same. Appellant replied to the said notice</p><p>through his advocate Shri Anuj Sehgal on 30th June 2005</p><p>denying the averments made in the notice and calling upon the</p><p>respondent to pay thei balance sum of Rs. 3.25 crores to him</p><p>on 07th July 2005 at 10.00 a.m. at 885, East Park Road, Karol</p><p>c Bagh, New Delhi. On payment of the aforesaid amount, it was</p><p>categorically mentioned by the appellant that necessary transfer</p><p>documents for transfer of his share of the property in the name</p><p>of the respondent or his nominee would be executed.</p><p>D</p><p>13. It was further mentioned in the said reply to the notice</p><p>that in case there is any default committed by the respondent .-- to pay the balance amount on the said date or latest by 09th .. July 2005 as contemplated in the MOU then in that eventuality</p><p>MOU would stand cancelled and the appellant would no longer</p><p>be bound by the said MOU dated 09th July 2005. •</p><p>E</p><p>14. It appears from the record that despite giving a fixed</p><p>time to the respondent for compliance of the terms and</p><p>conditions of the MOU, respondent did not honour the •</p><p>commitment and instead continued to send notices through his</p><p>F advocate, which were replied to by the appellant.</p><p>15. During all this period, the appeal filed by the</p><p>respondent in the High Court remained pending and it came</p><p>up for hearing before the Division Bench on 19th July 2005. On</p><p>G</p><p>the said date, learned counsel appearing for the parties</p><p>informed that negotiations have failed as both of them were</p><p>making allegations against each other. On the said date, it was</p><p>'I</p><p>further informed that respondent is still ready and willing to pay</p><p>the balance sum of Rs. 3.25 crores in terms of the MOU, but,</p><p>counsel for the appellant said that since no payment was</p><p>H </p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 487</p><p>MALIK [DEEPAK VERMA, J.]</p><p>-f received by the last date, i.e. 09th July 2005 .as mentioned in A</p><p>~ the MOU, the time cannot be extended. In the said order, it was</p><p>further directed that the amount of Rs.25 lac, which was</p><p>received by the appellant during the pendency of the appeal,</p><p>be returned to the respondent within a week.</p><p>16. In spite of the aforesaid order, the respondent filed an</p><p>B</p><p>application being C.M. No.12796 of 2005 before the High</p><p>Court seeking a direction to the appellant to execute necessary</p><p>-+ transfer documents in terms of the MOU.</p><p>17. On 04th April 2006, a statement was made by the c</p><p>parties that no settlement is possible between them and the</p><p>appeal was directed to be listed for hearing on 14th July 2006.</p><p>18. However, on 11th October 2006, yet another statement</p><p>.., was made by the learned counsel appearing for the parties that D</p><p>"'! they are making another attempt to find an amicable solution</p><p>and thus prayed fot time. Consequently, appeal kept on being</p><p>adjourned from time. to time. But it came up for hearing again</p><p>-!' on 18th July 2007. On the said date, the Division Bench passed</p><p>an order, the relevant portion whereof is reproduced E hereinbelow :</p><p>-,(</p><p>While counsel for the appellant claims that the _, appellant was ready and willing to implement the settlement F</p><p>and had raised the funds ther:efore, counsel for the</p><p>respondent disputes the same. Counsel for both the</p><p>• parties are conscious of the fact that as a result of passage</p><p>of time, there have been change in the values of the assets</p><p>etc. Both of them, however, are desirous of making yet G</p><p>"" another attempt of an amicable settlement, since appellant</p><p>and the respondent happen to be the brothers.</p><p>In these circumstances, we consider it appropriate</p><p>to refer the matter to Delhi High Court Mediation &</p><p>H </p><p>488 SUPREME COURT REPORTS [2009] 12 S.C.R.</p><p>A Conciliation Center for mediation. -1--</p><p>Mr. A.S. Chandhiok, Sr. Advocate is appointed as</p><p>the mediator along with Ms. Swati Singh as the comediator. Both the parties will deposit Rs.2500/- each with</p><p>B Delhi High Court Mediation & Conciliation Center and shall</p><p>appear before it on 23.7.2007 at 4.30 P.M.</p><p>List this matter before the court on 21.8.2007"</p><p>19. The aforesaid order would show that parties were</p><p>c once again given an opportunity to iron out the differences</p><p>between them. But despite the best efforts made by the learned</p><p>Judges of the High Court, the Mediator and the senior advocate</p><p>appointed in this behalf they were not able to convince the</p><p>parties that it is a fit case where an amicable settlement must</p><p>D be arrived at. Thus, on 24th January 2008 a statement was</p><p>made that mediation talks have failed. The matter, then came }"</p><p>up for hearing again before another Division Bench of the High</p><p>Court on 24th July 2008, but learned counsel appearing for the</p><p>parties thought that there is still light at the end of the tunnel and - E prayed for two weeks' time for arriving at a lasting settlement</p><p>between the parties. Since nothing worked on that, the matter</p><p>was, finally taken up by the High Court on 08th September 2008</p><p>and appeal of the respondent was allowed in terms of the .. directions contained in para 39 of the impugned judgment which ·-</p><p>F</p><p>are reproduced hereinbelow : l·</p><p>"We thus dispose of the application and along therewith</p><p>the appeal by passing the following directions :-</p><p>(A) The appellant shall deposit Rs. 3.5 crores with the</p><p>G learned Trial Judge within a period of 2 weeks from today.</p><p>(The appellant is being directed to deposit Rs. 3.5 crores ~</p><p>because the appellant has received back Rs.25 lacs</p><p>pursuant to interim orders passed in the appeal).</p><p>(B) Along with the deposit, the appellant shall file a draft</p><p>H </p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 489</p><p>MALIK [DEEPAK VERMA, J.]</p><p>-t of the document which the appellant desires to be execute A</p><p>by the respondent to convey respondent's 50% share in</p><p>the subject property.</p><p>(C) The learned Trial Judge would thereupon finalize the</p><p>document to be executed and the respondent would</p><p>thereafter execute the document drawn up and on</p><p>B</p><p>execution of the same would be entitled ta receive Rs. 3.5</p><p>crores from the learned Trial Judge."</p><p>~</p><p>20. Appellant, feeling aggrieved and dissatisfied with the</p><p>aforesaid direction contained herein, has preferred this appeal. c</p><p>21. Ms. lndu Malhotra, learned senior counsel appearing</p><p>on behalf of the appellant contended that in the MOU a specific</p><p>date was fixed for payment of balance consideration by or</p><p>before 09th July 2005 and respondent having failed to honour D</p><p>'¥ his commitment by the said date and time being the essence</p><p>of the contract, MOU could not have been directed to be</p><p>implemented by the High Court.</p><p>-· 22. It was also contended that it being a contingent contract</p><p>E dependent on execution of the terms and conditions mentioned</p><p>in the M.O.U. and respondent having failed to honour his own</p><p>commitment, the same cannot be given effect to.</p><p>23. Mr. Raju Ramchandran, learned senior counsel</p><p>appearing for the respondent contended that at all material F</p><p>times,· the respondent had been ready and willing to perform</p><p>his part of the contract but for some reason or the other and</p><p>also keeping in mind that the price of the disputed plot has</p><p>substantially shot up, the appellant is making excuses not to</p><p>..</p><p>comply with the direction as contained in the said order. G</p><p>24. It was also contended by him that the appellant would</p><p>be required to pay unearned increase of the plot to the Delhi</p><p>Development Authority and, therefore, he has taken somersault</p><p>from complying with the directions.</p><p>H </p><p>490 SUPREME COURT REPORTS [2009] 12 S.C.R.</p><p>A 25. In the light of the aforesaid contentions, we have heard</p><p>learned counsel for the parties and perused the record.</p><p>26. It is peirtinent to mention here that the amount was</p><p>deposited by the respondent only on 04th October 2008</p><p>B whereas in the fmpugned order passed by the High Court two</p><p>weeks' time wa~> granted to him to deposit the sum of Rs.3.5</p><p>crores. From the aforesaid date it would be clear that the ,.</p><p>amount, as directed to be deposited by the impugned order,</p><p>was not deposited by the respondent within the stipulated time. .+</p><p>c Instead, the sa1me was done much after the lasUstipulate date.</p><p>27. To ascertain if the time was the essence of the contract,</p><p>we have to go through Condition No. (iii) of the MOU which</p><p>categorically mentions that the second party, viz., the</p><p>respondent herein shall make the payment of the balance</p><p>D amount of Rs. 3.25 crores within a maximum period of 150</p><p>days from the date of execution of the MOU, i.e., upto or before t</p><p>09th July 2005. However, this period of 150 days was</p><p>extendable by another 10 to 20 days, if need be with the</p><p>consent of both the parties but not more. - E 28. High Court certainly fell into error in construing the said</p><p>provision in right perspective and erred in coming to the</p><p>conclusion that since time was extendable, the time could not</p><p>have been made the essence of the contract.</p><p>F 29. A bare perusal of the aforesaid provision makes it clear</p><p>that ultimately the time was fixed only upto 09th July 2005.</p><p>However, with an intention to given further leverage to the</p><p>respondent herein, the time was made extend able by 10 to 20</p><p>days and not more and that too only with the consent of the</p><p>G parties. Even if it is said that 09th July 2005 could not have</p><p>" been the last date, at least after 20 days the said last date</p><p>expired. Admittedly, the respondent has not honoured his</p><p>commitment, within the extendable period given to him, even</p><p>though he had no right to claim the benefit as of right for the</p><p>H extendable period. </p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 491</p><p>MALIK [DEEPAK VERMA, J.]</p><p>~ 30. The respondent sent the photocopies of three pay A</p><p>orders two of which were for a sum of Rs.1 crore each and the</p><p>third one for a sum of Rs.1.25 crore. It was neither here nor</p><p>there as the originals were never tendered to the appellant and</p><p>only photocopies were sent to make a semblance that</p><p>respondent has been ready and willing to perform his part of B</p><p>the contract. When MOU had already been arrived at between</p><p>the parties then mere show of readiness and willingness would</p><p>not discharge the obligation resting on one of the parties unless</p><p>+ it is shown to be real and genuine.</p><p>31. From the conduct, behaviour and attitude of the c</p><p>respondent it is clearly made out that he had not been ready</p><p>and willing to perform his part of the contract as mentioned in</p><p>the MOU.</p><p>32. Ms. lndu Malhotra, learned senior counsel for the D</p><p>t appellant has placed reliance on a judgment of this Court in the</p><p>case of Star Construction and Transport Co. & Ors. vs. India</p><p>Cements Ltd. (2001) 3 sec 351 and laid emphasis on</p><p>paragraph 7 thereof which reads thus :</p><p>"7. In this case, applications are filed under Order 23 Rule E</p><p>3 CPC. This Rule is a provision for making a decree on</p><p>--.. any lawful agreement or compromise between the parties</p><p>during the pendency of the suit by which claim is satisfied</p><p>or adjusted. The agreement, compromise or satisfaction F may relate to the whole of the suit or part of the suit or it</p><p>may also includ~ matters beyond the subject-matter of the</p><p>suit. But Rule 3 clearly envisages a decree being passed</p><p>in respect of part of subject-matter on a compromise.</p><p>Whether in fact there has been compromise or adjustment G of the suit claim or any part thereof is itself put in dispute ., in this case. Unless it is clearly established that such</p><p>accord or compromise has been entered into between the</p><p>parties, the powers under order 23 Rule 3 CPC could not</p><p>be exercised. The respondent's case is that the claim</p><p>made in the suit were never before the arbitrators in any H </p><p>492 SUPREME COURT REPORTS [2009) 12 S.C.R.</p><p>A form and even the figures mentioned in the reconciliation</p><p>statement also do not pertain to the suit claim and the</p><p>scope of reference to the arbitrators does not enable them</p><p>to make an award on that aspect of the matter. Those</p><p>objections have to be dealt with appropriately on full trial.</p><p>B That is the course now adopted by the Division Bench of</p><p>the High Court."</p><p>33. She has further placed reliance on yet another</p><p>judgment of this Court in the case of United Bank of India vs.</p><p>+</p><p>c</p><p>Ramdas Mahadeo Prashad & Ors. (2004) 1 SCC 252</p><p>particularly paragraphs 7 and 9 thereof which are reproduced</p><p>hereinbelow :</p><p>"7. Undisputedly, the respondents did not withdraw the suit</p><p>filed by them against United Bank of India, which is the</p><p>D condition precedent stipulated in clause (1) of the MOU.</p><p>The respondents also did not pay the guarantee liability j</p><p>of Rs.2.33 lakhs. No compromise petition was filed before</p><p>an appropriate court. Therefore, by no stretch of</p><p>imagination can it be said that the terms and conditions</p><p>E stipulated in the MOU had been complied with and acted</p><p>upon by the parties. Apart from what has been said,</p><p>subsequent to the MOU there was also a lot of</p><p>correspondence between the parties by exchanging letters</p><p>giving offers and counter-offers, as would be revealed in</p><p>F the letters dated 16.6.1994, 23.12.1994, 12.6.1995,</p><p>15.6.1995 and 19.6.1995. All these correspondences</p><p>would go to show that the parties failed to arrive at a</p><p>consensus even on what were the terms of the MOU. Thus,</p><p>it is clear that there was no concluded contract nor was</p><p>G there any novation.</p><p>9. Mr. Ranjit Kumar, learned Senior Advocate contended</p><p>that in view of the MOU signed by the parties the original</p><p>contract stood substituted by the MOU and it is a fit case</p><p>where Section 62 of the Indian Contract Act can be</p><p>H invoked. We have already said that there was no </p><p>NARINDER KUMAR MALIK v. SURINDER KUMAR 493</p><p>MALIK [DEEPAK VERMA, J.]</p><p>concluded settlement or novation. Even otherwise, there A</p><p>has been non-compliance with the terms and conditions</p><p>of the MOU by the respondents and a party in breach can</p><p>hardly seek to enforce a contract. Therefore, the MOU</p><p>does not amount to novation of contract as envisaged</p><p>under Section 62 of the Indian Contract Act. The contention B</p><p>of Mr. Ranjit Kumar is, therefore, legally untenable."</p><p>34. However, even without referring to the aforesaid judgments,</p><p>from the facts as have been mentioned hereinabove, it is as</p><p>clear as day light that respondent has committed default of the C</p><p>terms and conditions of the MOU and had neither been ready</p><p>and willing nor has been so throughout the relevant period.</p><p>Thus, MOU entered into between the parties cannot be given</p><p>effect to. We accordingly hold so.</p><p>35. Thus, judgment and decree passed by the impugned D</p><p>order are hereby set aside and quashed, but, with no order as</p><p>to costs.</p><p>36. The appeals are allowed accordingly.</p><p>K.K.T. Appeals allowed. E </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-7604844598440640542024-02-19T10:18:00.004+05:302024-02-19T10:18:58.944+05:30ss.2(20) and 54, 0. 20 r. 18, 0. 26 r. 13 - Partition suit - Preliminary decree passed - Application for final decree - ..... Resisted on the ground of limitation - HELD: Where an application does not invoke the jurisdiction of court to grant .... ;.-- . any fresh relief based on a new cause of action, but merely ... reminds or requests the· court to do its duty by completing the remaining part of the pending suit, there is no question of any limitation - Such an application is not one to which Limitation Act would apply - As declaration of rights or shares is only E the first stage in a suit for partition, a preliminary decree does not have the effect of disposing of the suit - Suit continues to be pending until partition, that is, division by metes and )' bounds, takes place by passing a final decree - An application requesting the court to take necessary steps to draw up a final decree effecting a division in terms of the preliminary decree is neither an application for execution (falling under Article 136 of Limitation Act) nor an application seeking a fresh relief (falling under Article 137 of Limitation Act) - Code does not contemplate filing of an application for final decree - Therefore, when a preliminary decree is passed in a partition suit, the proceedings should be continued by fixing·dates for further proceedings till a final decree is passed 'if- -It is the duty and function of the court which in the normal course has to be performed by the court itself as a continuation of the preliminary decree - Performance of such function does not require a reminder or nudge from the litigant - The mindset should be to expedite the process of dispute resolution - The application filed by plaintiff for drawing up of a final decree was rightly held to be not subject to any period of limitation - Court concerned would expedite the final decree proceedings - Limitation. <p>[2009] 14 (ADDL.) S.C.R. 40</p><p>A SHUB KARAN BUBNA @ SHUB KARAN PRASAD -1</p><p>BUB NA</p><p>v.</p><p>SITA SARAN BUBNA & ORS.</p><p>(Special Leave Petition (C) No.17932 of 2009)</p><p>B AUGUST 21, 2009</p><p>[R.V. RAVEENDRAN AND B. SUDERSHAN REDDY, JJ.]</p><p>CODE OF CIVIL PROCEDURE, 1908:.</p><p>c</p><p>ss.2(20) and 54, 0. 20 r. 18, 0. 26 r. 13 - Partition suit -</p><p>Preliminary decree passed - Application for final decree - .....</p><p>Resisted on the ground of limitation - HELD: Where an</p><p>application does not invoke the jurisdiction of court to grant ....</p><p>;.--</p><p>.D any fresh relief based on a new cause of action, but merely ... reminds or requests the· court to do its duty by completing the</p><p>remaining part of the pending suit, there is no question of any</p><p>limitation - Such an application is not one to which Limitation</p><p>Act would apply - As declaration of rights or shares is only</p><p>E the first stage in a suit for partition, a preliminary decree does</p><p>not have the effect of disposing of the suit - Suit continues to</p><p>be pending until partition, that is, division by metes and )'</p><p>bounds, takes place by passing a final decree - An</p><p>application requesting the court to take necessary steps to</p><p>F</p><p>draw up a final decree effecting a division in terms of the</p><p>preliminary decree is neither an application for execution</p><p>(falling under Article 136 of Limitation Act) nor an application</p><p>seeking a fresh relief (falling under Article 137 of Limitation</p><p>Act) - Code does not contemplate filing of an application for</p><p>final decree - Therefore, when a preliminary decree is passed</p><p>G in a partition suit, the proceedings should be continued by</p><p>fixing·dates for further proceedings till a final decree is passed 'f-</p><p>-It is the duty and function of the court which in the normal</p><p>course has to be performed by the court itself as a</p><p>continuation of the preliminary decree - Performance of such</p><p>H 40 </p><p>SHUB KARAN BUBNA @ SHUB KARAN PRASAD BUBNA 41</p><p>v. SITA SARAN BUBNA</p><p>function does not require a reminder or nudge from the litigant A</p><p>- The mindset should be to expedite the process of dispute</p><p>resolution - The application filed by plaintiff for drawing up of</p><p>a final decree was rightly held to be not subject to any period</p><p>of limitation - Court concerned would expedite the final</p><p>decree proceedings - Limitation. 8</p><p>La/ta Prasad v. Brahma Din AIR 1929 Oudh 456;</p><p>Ramabai Govind v. Anant Daji AIR 1945 Born. 338; Abdul</p><p>Kareem Sab v. Gowlivada S. Silar Saheb AIR 1957 AP 40;</p><p>A. Manjundappa v. Sonnappa & Ors. AIR 1965 Kar. 73; c Sudarsan Panda & Ors. v. Laxmidhar Panda & Ors. AIR 1983</p><p>Orissa 121; Laxmi v. A.Sankappa Alwa AIR 1989 Ker. 289;</p><p>--', Phoolchand vs. Gopal Lal AIR 1967 SC 1470; Hasham -:::r Abbas Sawad v. Usman Abbas Sayyad & Ors. 2007 (2) SCC -( 355; and Bikoba Deora Gaikwad v. Hirabai Marutirao .... Ghorgare 2008 (8) sec 198, relied on D</p><p>DECREE - Preliminary decree and final decree -</p><p>Concept of, in the context of partition suits and mortgage suits</p><p>- HELD: There is a fundamental difference between mortgage</p><p>suits and partition suits - In a preliminary decree in a E</p><p>mortgage suit (whether a decree for foreclosure under r.2 or</p><p>-\ a·decree for sale under r.4 of 0 34 CPC), the amount due is·</p><p>.. determined and declared and the time within which the amount</p><p>has to be paid is also fixed and the consequence of nonpayment within the time stipulated is also specified - A F</p><p>preliminary decree in a mortgage suit decides all the issues</p><p>and what is left out is only the action to be taken in the event</p><p>of non-payment of the amount- When the amount is not paid,</p><p>plaintiff gets a right to seek a final decree for foreclosure or</p><p>for sale - On the other hand, in a partition suit the preliminary G decree only decides a part of the suit and, therefore, an</p><p>application for passing a final decree is only an application</p><p>in a pending suit, seeking further progress - In partition suits,</p><p>- there can be a preliminary decree followed by a final decree,</p><p>. or there can be a decree which is a combination of</p><p>H </p><p>42 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.</p><p>A preliminary decree and final decree or there can be merely a</p><p>single decree with certain further steps to be taken by the court</p><p>- In fact several applications for final decree are permissible</p><p>in a partition suit - The application for final decree as and</p><p>when made is considered to be an application in a pending</p><p>B suit for granting the relief of division by metes and bounds -</p><p>Therefore, the concept of final decree in a partition suit is</p><p>different from the concept of final decree in a mortgage suit -</p><p>Consequently, an application for a final decree in a mortgage</p><p>suit is different from an application for final decree in a</p><p>c partition suit.</p><p>SUIT:</p><p>Suit for partition - Partition - Concept of - HELD:</p><p>'Partition' is a re-distribution or adjustment of pre-existing )-</p><p>D rights, among co-owners/coparceners, resulting in a division</p><p>of lands or other properties jointly 'held by them, into different</p><p>lots or portions and delivery thereof to the respective allottees</p><p>- The effect of such division is that the joint ownership is</p><p>terminated and the respective shares vest in them in severalty</p><p>E - A partition of a property can be only among those having a</p><p>share or interest in it - A person who does not have a share</p><p>>- in such property cannot obviously be a party to partition - ' /</p><p>'Separation of share' is a species of 'partition' - When all co- '</p><p>owners get separated, it is a partition - Separation of share/s</p><p>F refers to a division where only one or only a few among several</p><p>co-ownerslcoparceners get separated, and others continue to</p><p>be joint or continue to hold the remaining property jointly</p><p>without division by metes and bounds - In a suit for partition</p><p>or separation of a share, the prayer is not only for declaration</p><p>G</p><p>of plaintiff's share in the suit properties, but also division of</p><p>his share by metes and bounds - This involv(!]s three issues + , (i) whether the person seeking division has a share or interest</p><p>in the suit property/properties; (ii) whether he is entitled to the</p><p>relief of division and separate possession; and (iii) how and</p><p>H</p><p>in what manner the property/properties should be divided by</p><p>metes and bounds. </p><p>.. '-..'</p><p>7</p><p>~</p><p>~</p><p>..</p><p>-tSHUB KARAN BUBNA @ SHUB KARAN PRASAD</p><p>BUBNA v. SITA SARAN BUBNA</p><p>LEGISLATION:</p><p>43</p><p>Suit - Filing of suit and securing relief to litigant -</p><p>Proceedings in between - Need for legislation to avoid</p><p>multiplicity of proceedings - HELD: Cases have been found</p><p>where a suit is decreed or a preliminary decree is granted</p><p>within a year or two and the final decree proceeding and</p><p>execution takes decades for completion - This is an area</p><p>which contributes to considerable delay and consequential</p><p>loss of credibility of the civil justice system - Courts and</p><p>lawyers should give as much_ importance to final decree:</p><p>proceedings and executions, as they give to the main suits -</p><p>A conceptual change regarding civil litigation, is required so</p><p>that the emphasis is not only on disposal of suits, but also</p><p>on securing relief to the litigant - It is hoped that the Law</p><p>Commission and Parliament will bestow their attention on this</p><p>issue and make appropriate recommendations/amendments</p><p>so that the suit will be a continuous process from the stage of</p><p>its initiation to the stage of securing actual relief- The present</p><p>system involving a proceeding for declaration of the right, a</p><p>separate proceeding for quantification or ascertainment of</p><p>relief, and another separate proceeding for enforcement of the</p><p>decree to secure the relief, is outmoded and unsuited for</p><p>present requirements - The Code of Civil Procedure should</p><p>provide for a continuous and seamless process from the stage</p><p>of filing of suit to the stage of getting relief - In so far final</p><p>decree proceedings are concerned, there is no reason for</p><p>even legislative intervention - As the provisions of the Code</p><p>stand as on date, initiation of final decree proceedings does</p><p>not depend upon an application for final decree for initiation</p><p>(unless the local amendments require the same) - Practice</p><p>and Procedure.</p><p>Case Law Reference:</p><p>AIR 1929 Oudh 456 relied on para 8</p><p>AIR 1945 Born. 338 relied on pa~a 8</p><p>A</p><p>B</p><p>c</p><p>D</p><p>E</p><p>F</p><p>'</p><p>G</p><p>H </p><p>-44 SUPREME COURT REPORTS (2009] 14 (ADDL.) S.C.R.</p><p>A AIR 1957 AP 40 relied on para 8</p><p>AIR 1965 Kar. 73 relied on para 8</p><p>AIR 1983 Orissa 121 relied on para 8</p><p>B AIR 1989 Ker. 289 relied on para 8</p><p>AIR 1967 SC 1470 relied on para 8</p><p>2001 (2) sec 355 relied on para 8</p><p>2008 (8) sec 198 relied on para 8</p><p>c</p><p>CIVIL APPELLATE JURISDICTION : SLP (Civil) No.</p><p>17932/2009.</p><p>From the Judgment and Order dated 15.1.2009 of the High ... Court of Judicature.at Patna in C.R. No. 2216/2008 .. 'r</p><p>D</p><p>S.B. Sanyal and Subhro Sanyal for the Petitioner.</p><p>The Order of the Court was delivered by</p><p>-</p><p>E</p><p>R.V. RAVEENDRAN, J. The first respondent and his</p><p>mother filed a suit for p~rt!t:on against _getitioner and two others</p><p>in the year 1960 in the court of the First Additional Judge, fMuzaffarnagar, for partition and separate possession of their</p><p>r</p><p>one-third share in the plaint schedule properties and for ..rendition of accounts. The suit was in respect of three nonF agricultural plots and some movables. After contest the suit was</p><p>decreed on 25.2.1964 directing a preliminary decree for .....</p><p>partition be drawn in regard to the one-third share of the</p><p>plaintiffs in the said plots and a final decree be drawn up</p><p>through appointment of a Commissioner for actual division of</p><p>G the plots by metes and bounds.</p><p>-r</p><p>2. Feeling aggrieved the petitioner (and others) filed an</p><p>appeal before the Patna High Court which was dismissed on</p><p>29.3.197 4. The first respondent filed an application on 1.5.1987</p><p>H for drawing up a final decree. The petitioner filed an application </p><p>SHUB KARAN BUBNA @ SHUB KARAN PRASAD BUBNA 45</p><p>v. SITA SARAN BUBNA [R.V. RAVEENDRAN, J.]</p><p>~·</p><p>on 15.4.1991 to drop the final decree proceedings as it was A</p><p>barred by limitation. The said application was dismissed by the</p><p>trial court holding that once the rights/shares of the plaintiff had</p><p>been finally determined by a preliminary decree, there is no</p><p>limitation for an application for affecting the actual partition/</p><p>division in accordance with the preliminary decree, as it should B</p><p>be considered to be an application made in a pending suit. The</p><p>said order was challenged by the petitioner in a revision petition</p><p>which was dismissed by the High Court order dated 15.1.2009.</p><p>The petitioner has filed this special leave petition seeking leave</p><p>to appeal against the said decision of the High Court. c</p><p>3. The appellant contends that when a preliminary decree</p><p>..... is passed in a partition suit, a right enures to the plaintiff to</p><p>~ apply for a final decree for division of the suit property by metes</p><p>' and bounds; that whenever an application is made to enforce</p><p>D /</p><p>a right or seeking any relief, such application is governed by</p><p>the law of limitation; that an application for drawing up a final</p><p>decree would be governed by the residuary Article 137 of</p><p>Limitation Act, 1963 ('Act' for short) which provides a period</p><p>of limitation of three years; that as such right to apply accrues</p><p>on the date of the preliminary decree, any application filed E</p><p>-\, beyond three years from the date of preliminary decree (that</p><p>111111( is 12.3.1964) or at all events beyond three years from the date</p><p>when the High Court dismissed the defendant's appeal (that</p><p>is 29.3.1974) would be barred by limitation. Reliance was</p><p>placed by the petitioner on the decision of this Court in Sita/ F</p><p>Parshad v. Kishori Lal [AIR 1967 SC 1236], the decision of</p><p>the Privy Council in Saiyid Jawad Hussain v. Gendan Singh</p><p>[AIR 1926 PC 93) and a decision of the Patna High Court in</p><p>Thakur Pandey v. Bundi Ojha [AIR 1981 Patna 27) in support</p><p>of his contention. G i'</p><p>The issue:</p><p>4. 'Partition' is a re-distribution or adjustment of preexistin!J rights, among co-owners/coparceners, resulting in a</p><p>division of lands or other properties jointly held by them, into H </p><p>46 SUPREME COURT REPORTS [2009] 14 (ADDL:) ·s.C.R.</p><p>A different lots or portions and delivery thereof to the respective --!</p><p>allottees. The effect of such division is that the joint ownership</p><p>is terminated and the respective shares vest in them in</p><p>severalty. A partition of a property can be only among those</p><p>having a share or interest in it. A person who does not have a</p><p>B share in such property cannot obviously be a party to a partition.</p><p>'Separation of share' is a species of 'partition'. When all coowners get separated, it is a partition. Separation of share/s</p><p>refers to a division where only one or only a few among several</p><p>co-owners/coparceners get separated, and others continue to</p><p>c be joint_ or continue to hold the remaining property jointly without</p><p>division by metes and bounds. For example, where four brothers</p><p>owning a property divide it among themselves by metes and</p><p>bounds, it is a partition. But if only one brother wants to get his</p><p>share separated and other three brothers continue to remain )r</p><p>D joint, there is only a separation of the share of one brother. In a</p><p>suit for partition or separation of a share, the prayer is not only</p><p>/</p><p>'</p><p>for declaration of plaintiffs share in the suit properties, but also</p><p>division of his share by metes and bounds. This involves three</p><p>issues: (i) whether the person seeking division has a share or</p><p>E interest in the suit property/properties; (ii) whether he is entitled</p><p>to the relief of division and separate possession; and (iii) how</p><p>and in what manner, the property/properties should be divided !-</p><p>by metes and bounds? r</p><p>'</p><p>5. In a suit is for partition or separation of a share, the court</p><p>F at the first stage decides whether the plaintiff has a share in</p><p>the suit property and whether he is entitled to division and</p><p>separate possession. The decision on these two issues is</p><p>exercise of a judicial function and results in first stage decision</p><p>termed as 'decree' under Order 20 Rule 18(1) and termed as</p><p>G 'preliminary decree' under Order 20 Rule 18(2) of the Code.</p><p>The consequential division by metes and bounds, considered -rto be a ministerial or administrative act requiring the physical</p><p>inspection, measurements, calculations and considering</p><p>various permutations/ combinations/alternatives of division is</p><p>H referred to the Collector under Rule 18( 1) and is the subject </p><p>SHUB KARAN BUBNA @ SHUB KARAN PRASAD BUBNA 4 7</p><p> v. SITA SARAN BUBNA [RV. RAVEENDRAN, J.]</p><p>' ,._ matter of the final decree under Rule 18(2). The question is A</p><p>whether the provisions of Limitation Act are inapplicable to an</p><p>application for drawing up a final decree.</p><p>6. Rule 18 of Order 20 of the Code of Civil Procedure</p><p>('Code' for short) deals with decrees in suits for partition or 8</p><p>separate possession of a share therein which is extracted</p><p>below:</p><p>'f "18. Decree in suit for partition of property or separate</p><p>possession of a share therein.- Where the Court passes</p><p>a decree for the partition of property or for the separate c</p><p>possession of a share therein, then, -</p><p>(1) if and in so far as the decree relates to an estate</p><p>'f'</p><p>assessed to the payment of revenue to the Government,</p><p>' the decree shall declare the rights of the several parties D :-> interested in the property, but shall direct such partition or '</p><p>I separation to be made by the Collector, or any gazetted</p><p>subordinate of the Collector deputed by him in this behalf,</p><p>in accordance with such declaration and with the provisions</p><p>of section 54; E</p><p>"""'</p><p>(2) if and in so far as such decree relates to any other</p><p>immovable property or to movable property, the Court</p><p>may, if the partition or separation cannot be conveniently</p><p>made without further inquiry, pass a preliminary decree</p><p>declaring the rights of the several parties, interested in the F</p><p>.. property and giving such further directions as may be</p><p>required."</p><p>The terms 'preliminary decree' and 'final decree' used in</p><p>the said rule are defined in Explanation to section 2(2) of the</p><p>Code and reads thus :</p><p>G</p><p>"A decree is preliminary when further proceedings have to</p><p>be taken before the suit can be completely disposed of. It</p><p>is final when such adjudication completely disposes of the</p><p>H </p><p>48 SUPREME COURT.REPORTS [2009] 14 (ADDL.) S.C.R.</p><p>-'</p><p>A suit. It may be partly preliminary and partly final." 1 '</p><p>r~Section 54 of the Code dealing with partition of estate or</p><p>separation of share, relevant for purposes of Rule 18(1) reads</p><p>thus:</p><p>B "Where the decree is for the partition of an undivided</p><p>estate assessed to the payment of revenue of the f"</p><p>government, or for the separate possession of a share of</p><p>such an estate, the partition of the estate or the sepa'ration</p><p>)-</p><p>of the share shall be made by the Collector or any gazetted</p><p>c sub-ordinate of the Collector deputed by him in this behalf,</p><p>in accordance with the law (if any) for the time being in I></p><p>force relating to the partition, or the separate possession</p><p>of shares, of such estates." ,</p><p>\</p><p>y</p><p>D Rule 13 of Order 26 of the Code dealing with ~Commissions to make partition of immovable property, relevant '.</p><p>for purposes of Rule 18(2) reads thus:</p><p>"Where a preliminary decree for partition has been</p><p>E</p><p>passed, the Court may, in any case not provided for by</p><p>section 54, issue a commission to such person as it thinks</p><p>fit to make the partition or separation according to the r</p><p>rights as declared in such decree."</p><p>7 .. We may now turn to the provisions of the Limitation Act,</p><p>F 1963. Section 3 of the Act provides that subject to sections 4 }</p><p>to 24, every suit instituted, appeal preferred and application ...</p><p>~</p><p>made after the prescribed period shall be dismissed. The term t</p><p>'period of limitation' is defined as the period of limitation t prescribed for any suit, appeal or application by the Schedule</p><p>G to the Act (vide clause (j) of section 2 of the Act). The term</p><p>"prescribed period" is defined as the period of limitation ' ,.. ~</p><p>computed in accordance with the provisions of the said Act.</p><p>The Third Division of the Schedule to the said Act prescribes</p><p>the periods of limitatio'n for Applications. The Schedule does</p><p>H not contain any Article prescribing the limitation for an</p><p>-. </p><p>v</p><p>~</p><p>.</p><p>.. ..,,</p><p>.. '(</p><p>...;</p><p>......</p><p>SHUB KARAN BUBNA @ SHUB KARAN PRASAD BUBNA 49</p><p>v. SITA SARAN BUBNA [R.V. RAVEENDRAN, J.]</p><p>application for drawing up of a final decree. Article 136 A</p><p>prescribes the limitation for execution of any decree or order</p><p>of civil court as 12 years when the decree or order becomes</p><p>enforceable. Article 137 provides that for any other application</p><p>for which no period of limitation is provided elsewhere in that</p><p>division, the period of limitation is three years which would begin 8</p><p>to run from the time when the right to. apply accrues. It is thus</p><p>clear that every application which seeks to enforce a right or</p><p>seeks a remedy or relief on the basis of any cause of action in</p><p>a civil court, unless otherwise provided, will be subject to the</p><p>law of limitation. But where an application does not invoke the c</p><p>jurisdiction of the court to grant any fresh relief based on a new</p><p>cause of action, but merely reminds or requests the court to do</p><p>its duty by completing the remaining part of the pending suit,</p><p>there is no question of any limitation. Such an application in a</p><p>suit which is already pending, which contains no fresh or new</p><p>prayer for relief is not one to which Limitation Act, 1963 would D</p><p>apply. These principles are evident from the provisions of the</p><p>Code and the Limitation Act and also settled by a series of</p><p>judgments of different High Court over the decades (See : for</p><p>example, La/ta Prasad vs. Brahma Din [AIR 1929 Oudh 456], E Ramabai Govind v. Anant Daji [AIR 1945 Born. 338], Abdul</p><p>Kareem Sab vs. Gow/ivada S. Sitar Saheb [AIR 1957 AP 40],</p><p>A. Manjundappa v. Sonnappa & Ors. [AIR 1965 Kar. 73],</p><p>Sudarsan Panda & Ors. v. Laxmidhar Panda & Ors. [AIR 1983</p><p>Orissa 121], Laxmi v. A.Sankappa Alwa [AIR 1989 Ker. 289].</p><p>We may F also draw support from the judgments of this Court in</p><p>. Phoolchand vs. Gopal Lal [AIR 1967 SC 1470], Hasham</p><p>Abbas Sayyad v. Usman Abbas Sayyad & Ors. [2007 (2)</p><p>SCC 355] and Bikoba Deora Gaikwad v. Hirabai Marutirao</p><p>Ghorgare [2008 (8) SCC 198].</p><p>G</p><p>8. Once a court passes a preliminary decree, it is the duty</p><p>of the court to ensure that the matter is referred to the Collector</p><p>or a Commissioner for division unless the parties themselves</p><p>agree as to the manner of division. This duty in the normal</p><p>course has to be performed by the court itself as a continuation H </p><p>50 SUPREME COl}RT REPORTS (2009) 14 (ADDL.) S.C.R.</p><p>'<>·</p><p>i</p><p>A of the preliminary decree. Sometimes either on account of the -1</p><p>pendency of an appeal or other circumstances, the court</p><p>passes the decree under Rule 18(1) or a prelim.inary decree</p><p>under Rule 18(2) and the matter goes into storage to be.revived ></p><p>only when an application is made by any of the parties, drawing \</p><p>B its attention to the pending issue and the need for referring the</p><p>matter either to the Collector or a Commissioner for actual</p><p>division of the property. Be that as it may.·</p><p>9. The following principles emerge from the above """</p><p>c</p><p>discussion regarding partition suits :</p><p>(9.1.) In regard to estates assessed to payment of revenue '~to the government (agricultural land), the court is required to</p><p>pass only one decree declaring the rights of several parties</p><p>interested in the suit property with a direction to the Collector y</p><p>D (or his subordinate) to effect actual partition or separation in</p><p>accordance with the declaration made by the court in regard</p><p>to the shares of various parties and deliver the respective</p><p>portions to them, in accordance with section 54 of Code. Such</p><p>entrustment to the Collector under law was for two reason$. First</p><p>E is that Revenue Authorities are more conversant with matters</p><p>relating to agricultural lands. Second is to safeguard the ' interests of government in regard to revenue. (The second ~ \.</p><p>,.</p><p>reason, which was very important in the 19th century and early . .,</p><p>20th century when the Code was made, has now virtually lost</p><p>F its relevance, as revenue from agricultural lands is negligible).</p><p>Where the Collector acts in terms of the decree, the matter</p><p>does not come back to the court at all. The court will not interfere l</p><p>with the partitions by the Collector, except to the extent of any ccomplaint of a third party affected thereby.</p><p>G (9.2.) In regard to immovable properties (other than</p><p>agricultural lands paying land revenue), that is buildings, plots -i,- .__>-etc. or movable properties:</p><p>(i) where the court can conveniently and without further renquiry make the division without the assistance of any .,.._H ' </p><p>""""</p><p>_.</p><p>.. ,</p><p>...</p><p>I</p><p>1</p><p>SHUB KARAN BUBNA@ SHUB KARAN PRASAD BUBNA 51</p><p>v. SITA SARAN BUBNA [RV. RAVEENDRAN, J.]</p><p>Commissioner, or where parties agree upon the manner</p><p>of division, the court will pass a single decree comprising</p><p>the preliminary decree declaring the rights of several</p><p>parties and also a final decree dividing the suit properties</p><p>by metes and bounds.</p><p>(ii) where the division by metes and bounds cannot be</p><p>made without further inquiry, the court will pass a</p><p>preliminary decree declaring the rights of the parties</p><p>interested in the property and give further directions as</p><p>may be required to effect the division. In such cases,</p><p>normally a Commissioner is appointed (usually an</p><p>Engineer, Draughtsman, Architect, or Lawyer) to physically</p><p>examine the property to be divided and suggest the</p><p>manner of division. The court then hears the parties on the</p><p>report, and passes a final decree for division by metes and</p><p>bounds.</p><p>The function of making a partition or separation according to</p><p>the rights declared by the preliminary decree, (in regard to nonagricultural immovable properties and movables) is entrusted</p><p>to a Commissioner, as it involves inspection of the property and</p><p>examination of various alternatives with reference to practical</p><p>J-Utility and site conditions. When the Commissioner gives his</p><p>1!><J report as to the manner of division, the proposals contained in</p><p>C><i the report are considered by the court; and after hearing</p><p>~ objections to the report, if any, the court passes a final decree</p><p>~ whereby the relief sought in the suit is granted by separating</p><p>ci the property by metes and bounds. It is also possible that if the</p><p>property is incapable of proper division, the court may direct</p><p>sale thereof and distribution of the proceeds as per the shares</p><p>declared.</p><p>(9.3.) As the declaration of rights or shares is only the first</p><p>stage in a suit for partition, a preliminary decree does not have</p><p>the effect of disposing of the suit. The suit continues to be</p><p>pending until partition, that is division by metes and bounds,</p><p>A</p><p>e</p><p>c</p><p>0</p><p>E</p><p>F</p><p>G</p><p>H </p><p>52 SUPREME COURT REPORTS [2009) 14 (ADDL.) S.C.R.</p><p>A takes place by passing a final decree. An application 1</p><p>requesting the court to take necessary steps to draw up a final</p><p>I</p><p>decree effecting a division in terms of the preliminary decree, ....is neither an application for execution (falling under Article 136</p><p>of the Limitation Act) nor an application seeking a fresh relief</p><p>B (falling under Article 137 of Limitation Act). It is only a reminder</p><p>to the court to do its duty to appoint a Commissioner, get a .</p><p>report, and draw a final decree in the pending suit so that the</p><p>suit is taken to its logical conclusion. '"'</p><p>c</p><p>10. The three decisions relied on by the petitioner (refem~d</p><p>to in para 3 above) are not relevant for deciding the issue</p><p>arising in t~is case. They all relate to suits for mortgage and ......not partition. There is a fundamental difference between</p><p>mortgage suits and partition suits. In a preliminary decree in a</p><p>mortgage suit (whether a decree for foreclosure under Rule 2 y</p><p>D or a decree for.sale under Rule 4 of Order 34 of the Code), :'</p><p>the amount due is determined and declared and the time within</p><p>which the amount has to be. paid is also fixed and the</p><p>consequence of.non payment within the time stipulated is also</p><p>specified. A preliminary decr:.ee in a mortgage suit decides all</p><p>E the issues and what is left out is only the action to be taken in</p><p>the event of non payment of the amount. When the amount is</p><p>;· not paid the plaintiff gets a right to seek a final decree for " foreclosure or for sale. On the other hand, in a partition suit the ~preliminary decrees only decide a part of the suit and therefore</p><p>F an application for passing a final decree is only an application</p><p>in ~ pending suit, seeking further progress. In partition suits,</p><p>there can be a preliminary decree followed by a final decree,</p><p>or there can be a decree which is a combination of preliminary</p><p>decree and final decree or there can be merely a single decree</p><p>G with certain further steps to be taken by the court. In fact several</p><p>applications for final decree are permissible in a partition suit. ·~</p><p>A decree in a partition suit enures to the benefit of all the coowners and therefore, it is sometimes said that there is really</p><p>no judgment-debtor in a partition decree. A preliminary decree</p><p>H for partition only identifies the properties to be subjected to</p><p>~</p><p>I </p><p>SHUB KARAN BUBNA @ S!::iUB KARAN PRASAD BUBNA 53</p><p>v. SITA SARAN BUBNA [RV. RAVEENDRAN, J.]</p><p>~</p><p>partition, defines and declares the shares/rights of the parties: A</p><p>That part of the prayer relating to actual division by metes and</p><p>bounds and· allotment is left for being completed under the final</p><p>decree proceedings. Thus the application for final decree as</p><p>and when made is considered to be an application in a pending</p><p>suit for granting the relief of division by metes and bounds. B</p><p>Therefore, the concept of final decree in a partition suit is</p><p>different from the concept of final decree in a mortgage suit.</p><p>Consequently an application for a final decree in a mortgage</p><p>suit is different from an application for final decree in partition</p><p>suits. c .,..., A suggestion for debate and legislative action</p><p>.._.. 11. The century old civil procedure contemplates</p><p>judgments, decrees, preliminary decrees and final decrees and</p><p>execution of decrees. They provide for a 'pause' between a D</p><p>decree and execution. A 'pause' has also developed by</p><p>practice between a preliminary decree and a final decree. The</p><p>'pause' is to enable the defendant to voluntarily comply with the</p><p>decree or declaration contained in the preliminary decree. The</p><p>ground reality is that defendants normally do not comply with E</p><p>°l\ decrees without the pursuance of an execution. In very few</p><p>cases, the defendants in a partition suit, voluntarily divide the</p><p>property on the passing of a preliminary decree. In very few</p><p>cases, defendants in money suits, pay the decretal amount as</p><p>per the decrees. Consequently, it is necessary to go to the F</p><p>second stage that is levy of execution, or applications for final</p><p>decree followed by levy of execution in almost all cases.</p><p>12. A litigant coming to court seeking relief is not interested</p><p>in receiving a paper decree, when he succeeds in establishing</p><p>G ..,. his case. What he wants is relief. If it is a suit for money, he</p><p>wants the money. If it is a suit for property, he wants the.</p><p>property. He naturally wonders why when he files a suit for</p><p>recovery of money, he should first engage a lawyer and obtain</p><p>a decree and then again engage a lawyer and execute the</p><p>decree. Similarly, when he files a suit for partition, he wonders H </p><p>54 SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R.</p><p>A why he has to first secure a preliminary decree, then file an -+ '</p><p>application and obtain a final decree and then file an execution</p><p>to get the actual relief. The common-sensical query is: why not</p><p>a continuous process? The litigant is perp_lexed as to why when</p><p>a money decree is passed, the court does not fix the date for</p><p>B payment and if it is not paid, proceed with the execution; when</p><p>a preliminary decree is passed.in a partition suit, why the court</p><p>does not forthwith fix a date for appointment of a Commissioner</p><p>for division and make a final decree and deliver actual 'r· !</p><p>possession of his separated share. Why is it necessary for him</p><p>c to remind the court and approach the court at different stages?</p><p>13. Because of the artificial division of suits into preliminary ........</p><p>decree proceedings, final decree proceedings and execution</p><p>proceedings, many Trial judges tend to believe that adjudication</p><p>of the right being the judicial function, they should concentrate T</p><p>D on that part. Consequently, adequate importance is not given</p><p>to the final decree proceedings and execution proceedings</p><p>which are considered to be ministerial functions. The focus is</p><p>on disposing of cases, rather than ensuring that the litigant gets</p><p>the relief. But the focus should not only be on early disposal of</p><p>E cases, but also on early and easy securement of relief for</p><p>which the party approaches the court. Even among lawyers, I</p><p>importance is given only to securing of a decree, not securing</p><p>of relief. Many lawyers handle suits only till preliminary decree</p><p>is made, then hand it over to their juniors to c~nduct the final</p><p>F decree proceedings and then give it to their clerks for</p><p>conducting the execution proceedings. Many a time, a party</p><p>exhausts his finances and energy by the time he secures the</p><p>preliminary decree and has neither the capacity nor the energy</p><p>to pursue the matter to get the final relief. As a consequence,</p><p>G we have found cases where a suit is decreed or a preliminary</p><p>decree is granted within a year or two, the final decree f'</p><p>proceeding and execution takes decades for completion. This</p><p>is an area which contributes to considerable delay and</p><p>consequential loss of credibility of the civil justice system. Courts</p><p>H and Lawyers should give as much importance to final decree </p><p>I</p><p>.</p><p>SHUB KARAN BUBNA @SHUB KARAN PRASAD BUBNA 55</p><p>v. SITA SARAN BUBNA [R.V. RAVEENDRAN, J.)</p><p>t- proceedings and executions, as they give to the main suits. A</p><p>14. In the present system, when preliminary decree for</p><p>partition is passed, there is no guarantee that the plaintiff will</p><p>see the fruits of the decree. The proverbial observation by the</p><p>Privy Council is that the difficulties of a litigant begin when he B</p><p>obtains a decree. It is necessary to remember that success in</p><p>a suit means nothing to a party unless he gets the relief.</p><p>-f Therefore to be really meaningful and efficient, the scheme of</p><p>the Code should enable a party not only to get a decree quickly,</p><p>but also to get the relief quickly. This requires a conceptual c change regarding civil litigation, so that the emphasis is not only</p><p>on disposal of suits, but also on securing relief to the litigant.</p><p>We hope that the Law Commission and Parliament will bestow</p><p>1</p><p>their attention on this issue and make appropriate</p><p>recommendations/amendments so that the suit will be a</p><p>continuous process from the stage of its initiation to the stage D</p><p>of securing actual relief. The present system involving a</p><p>proceeding for declaration of the right, a separate proceeding</p><p>for quantification or ascertainment of relief, and another separate</p><p>proceeding for enforcement of the decree to secure the relief,</p><p>is outmoded and unsuited for present requirements. If there is E</p><p>·:.. a practice of assigning separate numbers for final decree</p><p>proceedings that should be avoided. Issuing fresh notices to</p><p>the defendants at each stage should also be avoided. The</p><p>Code of Civil Procedure should provide for a c.ontinuous and</p><p>seamless process f,rom the stage of filing of suit to the stage F</p><p>of getting relief. In money suits and other suits requiring a single</p><p>decree, the process of suit should be a continuous process</p><p>consisting of the first stage relating to determination of liability</p><p>and then the second stage of execution and recovery, without</p><p>any pause or stop or need for the plaintiff to initiate a separate G</p><p>t proceedings for execution. In suits for partition and other suits</p><p>involving declaration of the right and ascertainment/</p><p>quantification of the relief, the process of the suit should be</p><p>continuous, consisting of the first stage of determination and</p><p>declaration of the right, second stage of ascertainment/division/ H </p><p>56 SUPREME COURT REPORTS [2009] 14 (ADDL) S.C.R. /</p><p>: '</p><p>,,</p><p>.)</p><p>A quantificati'on, and the third stage of execution Jo give actual i</p><p>relief.</p><p>..Conclusion</p><p>B</p><p>·15. In so far final decree proceedings are concerned, we</p><p>see no reason for even legislative intervention. As the</p><p>provisions of the -Code stand at present, initiation of final decree</p><p>proceedings does not depend upon an application for final \---</p><p>decree for initiation (unless the local amendments require the</p><p>same). As noticed above, the Code does not contemplate filing</p><p>c an application for ·final decree. Therefore, when a preliminary</p><p>decree is passed in a partition suit, the proceedings should be</p><p>continued by fixing dates for further proceedings till a final.</p><p>decree is passed. It is the duty and function of the court. r Performance of such function does not require a reminder or</p><p>D nudge from the litigant. The mindset should be to expedite the</p><p>process of dispute resolution.</p><p>16. In view of the foregoing, we are of the view that the</p><p>application filed by the plaintiff in this case for drawing up of a</p><p>E final decree, was rightly held to be not subject to. any period of</p><p>limitation. We therefore dismiss this special leave petition as</p><p>having no merit, with a request to expedite .the final decree f</p><p>proceedings. ·</p><p>R.P. Appeal dismissed.</p><p>'· "' </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-64229351561439328932024-02-19T10:15:00.000+05:302024-02-19T10:15:44.872+05:30Transfer of Property Act, 1882: s. 52 - Transfer of property by a defendant pending a partition suit - Partition suit found to be not collusive - Decree in partition suit - In terms of decree, the pendente lite transferor found to have only half share in the property and she was allotted only one fourth of the property purchased by the transferee - Suit by transferee for declaration of title and permanent injunction in regard to transferred property- Courts below dismissed the suit - Held: Suit ought not to have been dismissed in entirety even if the sale was hit by the Doctrine of /is pendens - Transferee's title will be saved in respect of that part of the transferred property allotted to the transferor in the partition suit - Transfer in regard to the remaining portion of the transferred property to which the transferor is found not entitled, will be invalid and the transferee will not get any right, title or interest in that portion. <p>A</p><p>B</p><p>[2010] 14 (ADDL.) S.C.R. 560</p><p>T.G. ASHOK KUMAR</p><p>v.</p><p>GOVINDAMMAL AND ANR.</p><p>(Civil Appeal No.10325 of 2010)</p><p>DECEMBER 8, 2010</p><p>[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]</p><p>Transfer of Property Act, 1882: s. 52 - Transfer of property</p><p>by a defendant pending a partition suit - Partition suit found</p><p>C to be not collusive - Decree in partition suit - In terms of</p><p>decree, the pendente lite transferor found to have only half</p><p>share in the property and she was allotted only one fourth of</p><p>the property purchased by the transferee - Suit by transferee</p><p>for declaration of title and permanent injunction in regard to</p><p>D transferred property- Courts below dismissed the suit - Held:</p><p>Suit ought not to have been dismissed in entirety even if the</p><p>sale was hit by the Doctrine of /is pendens - Transferee's title</p><p>will be saved in respect of that part of the transferred property</p><p>allotted to the transferor in the partition suit - Transfer in</p><p>E regard to the remaining portion of the transferred property to</p><p>which the transferor is found not entitled, will be invalid and</p><p>the transferee will not get any right, title or interest in that</p><p>portion.</p><p>Transfer of Property: Suggestion to Law makers -</p><p>F Absence of a mechanism for prospective purchasers to verify</p><p>whether a property is subject to any pending suit or a decree</p><p>or attachment cause lot of hardship, loss, anxiety and leads</p><p>to unnecessary litigation - All these inconveniences, risks</p><p>and misery could be avoided and the property litigations</p><p>G could be reduced to a considerable extent, if there is some</p><p>satisfactory anct reliable method by which a prospective</p><p>purchaser can ascertain whether any suit is pending (or</p><p>whether the property is subject to any decree or attachment)</p><p>H 560 </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 561</p><p>before he decides to purchase the property - Law A</p><p>Commission and the Parliament much consider such</p><p>amendment or other suitable amendment to cover the</p><p>existing void in title verification or due diligence procedures</p><p>- Also, registration of agreements of sale should be made</p><p>compulsory to reduce property litigation - Registration Act, B</p><p>1908 - Legislation.</p><p>Appeal: Appeal before Supreme Court - Concurrent</p><p>findings of facts by the three courts below that the partition suit</p><p>·was not collusive - Interference with - Held: Not called for - C</p><p>Constitution of India, 1950 - Article 136.</p><p>The appellant filed a suit for declaration of his right.</p><p>and title and permanent injunction in regard to the suit</p><p>property. The case of the appellant was that he</p><p>purchased the suit property from the second respondent D</p><p>under sale deed dated 11.4.1990 and he was a bona</p><p>fide purchaser and was unaware of the partition suit</p><p>between the second respondent and the first</p><p>respondent who was the step daughter of the second</p><p>respondent. On 17.3.1994, the said suit for partition was E</p><p>decreed by preliminary decree whereby the two</p><p>respondents were held entitled to half share each in</p><p>the properties including the suit property. In the final</p><p>decree proceedings, the Commissioner divided the suit</p><p>property in such a manner that nearly three-fourth F</p><p>portion of the suit property was allotted to the share of</p><p>the first respondent and only about a one-fourth portion</p><p>was allotted to the share of the second respondent.</p><p>The first respondent resisted the suit contending</p><p>that the appellant had purchased the suit property G</p><p>during the pendency of her suit for partition; and that</p><p>being a purchaser pendente lite, the sale in his favour</p><p>was hit by the doctrine of /is pendens and, therefore,</p><p>he could not claim any right in the suit property; and</p><p>she denied that there was any collusion between her H </p><p>562 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R.</p><p>A and the second respondent. The second respondent</p><p>did not contest the suit.</p><p>The trial court dismissed the suit on the ground</p><p>that the sale in favour of the appellant was hit by the</p><p>8 doctrine of /is pendens. The appeal filed by the appellant</p><p>was dismissed by the first appellate cot'.lrt. The High</p><p>Court dismissed the second appeal. Aggrieved, the</p><p>appellant filed the instant appeal.</p><p>c</p><p>Partly allowing the appeal, the Court</p><p>HELD: 1. The trial court, the first appellate court</p><p>and the High Court on appreciating the evidence have</p><p>held that the partition suit was not collusive and that</p><p>there was a valid reason for a larger portion of the suit</p><p>0 property being allotted to the first respondent, plaintiff</p><p>in the partition suit as the portion allotted to the second</p><p>respondent had a house therein and to equalize the</p><p>value, a larger portion (vacant plot) was allotted to the</p><p>first respondent. There is no reason to interfere on that</p><p>E score. [Para 8] [570-C-D]</p><p>Jayaram Mudaliar v. Ayyaswami AIR 1973 SC 569;</p><p>Hardev Singh v. Gurmail Singh (2007) 2 SCC 404. - relied</p><p>on.</p><p>F 2.1. The principle underlying Section 52 of the</p><p>Transfer of Property Act, 1882 is clear. During the</p><p>pendency in a court of competent jurisdiction of any</p><p>suit which is not collusive, in which any right of an</p><p>immovable property is directly and specifically in</p><p>G question, such property cannot be transferred by any</p><p>party to the suit so as to affect the rights of any other</p><p>party to the suit under any decree that may be made in</p><p>such suit. If ultimately the title of the pendente lite</p><p>transferor is upheld in regard to the transferred property,</p><p>the transferee's title will not be affected. On the other H </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 563</p><p>hand, if the title of the pendente lite transferor is A</p><p>recognized or acc~pted only in regard to a part of the</p><p>transferred property, then the transferee's title will be</p><p>s.aved only in regard to that extent and the transfer in</p><p>regard to the remaining p9rtion of the transferred</p><p>property to which the transferor is found not entitled, B</p><p>will be invalid and the transferee will not get any right,</p><p>title or interest in that portion. If the property transferred</p><p>pendente lite, is allotted in entirety to some other party</p><p>or parties or if the transferor is held to have no right or</p><p>title in that property, the transferee will not have any c</p><p>title to the property. Where a co-owner alienates a</p><p>property or a portion of a property representing to be</p><p>the absolute owner, equities can no doubt be adjusted</p><p>while making the division during the final decree</p><p>proceedings, if feasible and practical (that is without 0 causing loss or hardship or inconvenience to other</p><p>parties) by allotting the property or portion of the</p><p>property transferred pendente lite, to the share of the</p><p>transferor, so that the bonafide transferee's right and</p><p>title are saved fully or partially. [Para 10] [571-C-H; 572- E</p><p>A]</p><p>2.2. In the instant case, a suit for partition filed by</p><p>the first respondent against the second respondent in</p><p>the year 1985 which included the suit property, was</p><p>pending in a court of competent jurisdiction as on the F</p><p>date of sale (11.4.1990) by the second respondent in</p><p>favour of the appellant. The partition suit was not</p><p>collusive. Having regard to Section 52 of the Act, the</p><p>sale by the second respondent in favour of the</p><p>appellant did not in any way affect the right-of the first G</p><p>respondent (plaintiff in the partition suit) or the decree</p><p>made in her favour in the said partition suit. It is thus</p><p>evident that the sale by the second respondent in favour</p><p>of the appellant though not void, did not bind the first</p><p>respondent. On the other hand, the sale in favour· of H </p><p>564 SUPREME COURT REPORTS (2010) 14 (ADDL.) S.C.R.</p><p>A appellant was subject to the right declared or recognized</p><p>in favour of the first respondent-plaintiff under the</p><p>decree passed in the pending partition suit. The sale</p><p>pendente lite would, therefore, be subject to the decree</p><p>in the partition suit. In the final decree passed in the</p><p>B partition suit, the major portion of the suit property was</p><p>allotted to the share of the first respondent and to that</p><p>extent, the sale in favour of the appellant would be</p><p>ineffective. But in regard to the remaining portion of</p><p>the suit property which stood allotted to the share of</p><p>c the second respondent in the final decree in the partition</p><p>suit, the sale by the second respondent in favour of</p><p>the appellant would be effective, valid and binding on</p><p>the second respondent and to that extent, the appellant</p><p>is entitled to a declaration of title and consequential</p><p>0 injunction. The suit ought not to have been dismissed</p><p>in entirety even if the sale by the second respondent in</p><p>favour of appellant on 11.4.1990 was hit by the doctrine</p><p>of tis pendens. The second respondent cannot avoid</p><p>the sale made by her on the ground that she was held</p><p>E to be not the exclusive owner, in the pending partition</p><p>suit. Therefore, the courts below ought to have decreed</p><p>the appellant's suit in part, in regard to the portion of</p><p>the suit property that fell to the share of second</p><p>respondent instead of dismissing the suit. Therefore,</p><p>the declaration of title with consequential permanent·</p><p>F injunction as prayed is granted in regard to that portion</p><p>of the suit property that was allotted to the second</p><p>respondent in the partition suit. [Paras 11, 12, 16] [572-</p><p>B-H; 573-A-B; 576-B]</p><p>G A related suggestion to the Law makers</p><p>3.1. Absence of a mechanism for prospective</p><p>purchasers to verify whether a property is subject to</p><p>any pending suit or a decree or attachment cause lot</p><p>H of hardship, loss, anxiety and unnecessary litigation. At </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 565</p><p>present, a prospective purchaser can find out about A</p><p>any existing encumbrance over a property either by</p><p>inspection of the Registration Registers or by securing</p><p>a certificate relating to encumbrances (that is copies of</p><p>entries in the Registration Registers) from the</p><p>jurisdictional Sub-Registrar under Section 57 of the B</p><p>Registration Act, 1908. But a prospective purchaser has</p><p>no way to ascertain whether there is an.y suit or</p><p>proceeding pending in respect of the property, if the</p><p>person offering the property for sale does not disclose</p><p>it or deliberately suppresses the information. The C</p><p>inconveniences, risks, hardships and misery as a result</p><p>of such transfers could be avoided and the property</p><p>litigations could be reduced to a considerable extent, if</p><p>there is some satisfactory and reliable .method by which</p><p>a prospective purchaser can ascertain whether any suit</p><p>is pending (or whether the property is subject to any D</p><p>decree or attachment) before he decides to purchase</p><p>the property. A solution has been found to this problem</p><p>in the States of Maharashtra by an appropriate local</p><p>amendment to section 52 of the Act, by Bombay Act 4</p><p>of 1939. The Law Commission and the Parliament must E</p><p>consider such amendment or other suitable amendment</p><p>to cover the existing void in title verification or due</p><p>diligence procedures. Provision can also be made for</p><p>compulsory registration of such notices in respect of</p><p>decrees and in regard to attachments of immoveable F</p><p>properties. [Paras 13, 14] [573-C-H; 574-A-C; 575-C]</p><p>3.2. At present in most of the States, agreements to</p><p>sell are not compulsorily registrable as they do not</p><p>involve transfer of any right, title or interest in an G</p><p>immoveable property. Registration of agreements of sale</p><p>will reduce property litigation. It will go a long way to</p><p>discourage generation and circulation of black money</p><p>in real estate matters, as also undervalua.tion of</p><p>documents for purposes of stamp duty. It will also H </p><p>566 SUPREME COURT REPORTS (2010] 14 (ADDL.) S.C.R.</p><p>A discourage the growth of land mafia and muscleman</p><p>who dominate the real estate scene in various parts of</p><p>the country. [Para 15) [575-0-G)</p><p>B</p><p>. c</p><p>D</p><p>E</p><p>Case Law Reference:</p><p>AIR 1973 SC 569</p><p>c2001) 2 sec 404</p><p>relied on</p><p>relied on</p><p>Para 9</p><p>Para 9</p><p>CIVIL APPELLATE JURISDICTION Civil Appeal No.</p><p>10325 of 2010.</p><p>From the Judgment & Order dated 01.09.2009 of the</p><p>High Court of Judicature at Madras in S.A. No. 1141 of 2008.</p><p>R. Balasubramaniam, B. Karunakaran, V. Balachandran</p><p>for the Appellant.</p><p>N. Shobha, Sriram J. Thalapathy, Adhi Venkataraman,</p><p>S.P. Parthasarthy for the Respondents.</p><p>The Judgment of the Court was delivered by</p><p>R.V.RAVEENDRAN, J. 1. Notice to respondents was</p><p>issued limited to the question whether the High Court ought</p><p>to have decreed the appellant's suit for declaration and</p><p>consequential injunction at least in respect of the portion of</p><p>the suit property which was allotted to the share of second</p><p>F respondent in the earlier partition suit filed by the first</p><p>respondent. Leave is granted only in regard to that question.</p><p>2. The appellant was the plaintiff in a suit for declaration</p><p>of title and permanent injunction in regard to the suit property,</p><p>G that is, a plot measuring East to West : 49 feet and north</p><p>south 81 feet, total extent of 3969 sq.ft (forming part of Natham</p><p>Survey No. 178 (New No. 137-138) of a total extent of 4</p><p>acres 25 cents situated at Kakkalur Village, Tiruvallur Taluk</p><p>and District). The appellant filed the said suit in the year</p><p>H 2000 in the court of Subordinate Judge, Thiruvallur (OS </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 567</p><p>[R.V. RAVEENDRAN, J.]</p><p>No.68/2000) subsequently transferred and renumbered as OS A</p><p>No. 138 of 2004 on the file of the District Munsiff, Thiruvallur.</p><p>B</p><p>3. The case of appellant in brief is as under: that the suit</p><p>property was purchased by the second respondent under sale</p><p>deed dated 4.3.1957; that she was in possession and</p><p>enjoyment of the suit property as absolute owner and had</p><p>mortgaged it in favour of appellant's sister (T.N. Latha) on</p><p>30.6.1983; that second respondent sold the suit property in</p><p>favour of the appellant under sale deed dated 11.4.1990 and</p><p>delivered possession thereof to him in pursuance of the sale; C</p><p>that though the suit property was the self acquired property</p><p>of the second respondent, the first respondent who is her</p><p>step-daughter, filed a collusive suit against the second</p><p>respondent in OS No. 8/1985 on the file of the Sub-ordinate</p><p>Judge, Thiruvallur alleging that the suit property and several</p><p>0 other properties belonged to her father Ekambara Reddy and</p><p>that she and second respondent had each an half share in</p><p>those properties; that the appellant is a bona fide purchaser</p><p>of the suit property from second respondent and he was</p><p>unaware of the pendency of the said suit for partition in O.S.</p><p>No.8/1985; that subsequently the said suit for partition filed</p><p>by the first respondent was decreed vide preliminary decree</p><p>dated 17.3.1994 holding that the first respondent was entitled</p><p>to half share in the properties described as Items 1 to 6 in</p><p>the partition suit schedule (which included the· suit property</p><p>(as Item No.6); that in the final decree proceedings, a</p><p>Commissioner was appointed to divide the properties; that</p><p>on the basis of the Commissioner's report, a final decree</p><p>was passed on 7.4.2000 dividing the properties; that on</p><p>account of collusion between first and second respondents,</p><p>E -</p><p>F</p><p>the Commissioner's report divided the suit property in a G</p><p>manner that nearly three fourth portion of the suit property</p><p>was allotted to the share of the first respondent and only</p><p>about a one-fourth portion was allotted to the share of the</p><p>second respondent; and that adversely affected his right and</p><p>title to the suit property and therefore it became necessary H </p><p>568 SUPREME COURT REPORTS [2010) 14 (AODL.) S.C.R.</p><p>A for him to file a suit for declaration of his right and title to the</p><p>suit property with a consequential permanent injunction.</p><p>4. The first respondent resisted the suit contending that</p><p>the appellant had purchased the suit property during the</p><p>8 pendency of her suit for partition and that being a purchaser</p><p>pendente lite, the sale in his favour was hit by the doctrine</p><p>of /is pendens and therefore he could not claim any right in.</p><p>the suit property. She asserted that the suit property was not</p><p>the self-acquired prop.erty of the second respondent,. and that</p><p>C the suit property was purchased by her father in the name of</p><p>the second respondent. She denied that there was any</p><p>collusion between her and the second respondent. The</p><p>second respondent did not contest the suit.</p><p>5. The trial court by judgment dated 6.7.2005 dismissed</p><p>D the appellant's suit. It held that the suit property was not the</p><p>self acquired property of second respondent and that there</p><p>was no collusion between first and second respondents; and</p><p>that the appellant having purchased the suit property under</p><p>sale dated 11.4.1990 during the pendency of the suit for</p><p>E partition (OS No.8/1985) filed by the first respondent against</p><p>the second respondent, the sale in his favour was hit by the</p><p>doctrine of /is pendens and that therefore the appellant did</p><p>not get any title to the suit property and he was not entitled</p><p>to the relief of declaration and injunction sought by him. The</p><p>F appeal filed by the appellant was dismissed by the first</p><p>appellate court by judgment and decree dated 26.3.2008.</p><p>The second appeal filed by the appellant was dismissed by</p><p>the High Court by the impugned judgment dated 1.9.2009 by</p><p>holding that appellant was a pendente lite purchaser,</p><p>G attracting the doctrine of tis pendens under Section 52 of</p><p>Transfer of Property Act, 1882 ('Act' for short) and therefore</p><p>the courts below were justified in ignoring the purchase by</p><p>appellant. Feeling aggrieved the appellant filed the present</p><p>appeal.</p><p>H 6. The partition suit was decreed holding that the first </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 569</p><p>[R.V. RAVEENDRAN, J.]</p><p>respondent was entitled to half share in the six properties A</p><p>which were the subject matter of partition suit including the</p><p>suit property. In the final decree proceedings, an equitable</p><p>division was made accepting the report of the Commissioner</p><p>who had divided the suit property as per the sketch (Ex. C5) resJlting in approximately three-fourth of the suit property 8</p><p>(vacant site portion) being allotted to the first respondent and</p><p>only the remaining one-fourth of the suit property (site with</p><p>house thereon) being allotted to the second respondent. The</p><p>contention of the appellant that the partition suit by the first</p><p>respondent against the second respondent was collusive, and c</p><p>that the suit property was the self acquired property of the</p><p>second respondent and the first respondent did not have a</p><p>share therein, have been concurrently negatived. The</p><p>alternative contention of the appellant that even if the first</p><p>respondent had a half share therein, the division and allotment 0 of the properties in the partition suit ought to have been</p><p>made in a manner that the entire suit property was allotted</p><p>to the share of second respondent to work out equities, . was</p><p>also negatived by the courts below.</p><p>7. As per the Report of Commissioner, schedule Items E</p><p>1 to 5 in the partition suit were agricultural lands in all</p><p>measuring 44 cents (less than half an acre) and they were</p><p>divided equally by allotting 22 cents to first respondent and</p><p>22 cents to second respondent. Item No.6 was a house site</p><p>with a house in the north western portion. As per the F</p><p>Commissioner's sketch (Ex.C-5), it measured East to West,</p><p>48'3" on the northern side and 53'3" on the southern side</p><p>and North to South : 53'9" on the eastern side and 60'3" on</p><p>the western side. The entire plot was shown by the letters 'A,</p><p>8, C, D, E, F, G, H, A' and as per the final decree based G</p><p>on the Commissioner's report, the North Western portion</p><p>shown by the letters A, 8, I, H, A measuring East to West:</p><p>24' on the north and 24'9" on the south, and North to South</p><p>: 28'9" on the east and 29' on the west with the house thereon</p><p>(measuring 16' x 27'3") was allotted to the share of the H </p><p>570 SUP~EM!;. COURT REPORTS (2010] 14 (ADDL.) S.C.R.</p><p>A second respondent; and the entire remaining portion which</p><p>was of an inverted L shape shown by the letters B, C, D, E,</p><p>F, G, H, I, B was allotted to the share of the first respondent.</p><p>As Items 1 to 5 in the partition suit schedule were small</p><p>agricultural lands, they were equally divided and it was not</p><p>B possible to allot Item No.6 in entirety to the second</p><p>respondent. ·</p><p>8. The trial court, first appellate court and the High Court</p><p>on appreciating the evidence have held that the partition suit</p><p>. C was nofcollusive. There was a valid reason for a larger portion</p><p>of Item No.6 being allotted to first respondent, as the portion</p><p>allotted to the second respondent had a house therein and to</p><p>equalize the value, a larger portion (vacant plot) was allotted</p><p>to first respondent. Therefore this court found no reason to</p><p>interfere on that score and issued notice in the special leave</p><p>D petition restricted to the question whether the appellant should</p><p>have been granted a decree at least in regard to the onefourth portion in the suit property that was allotted to the</p><p>second respondent instead of non-suiting him in entirety. That</p><p>limited issue alone arises for our consideration.</p><p>E</p><p>F</p><p>G</p><p>H</p><p>9. Section 52 dealing with tis pendens is relevant and</p><p>it is extracted below :</p><p>"Transfer of property pending suit relating thereto.-</p><p>During the pendency in any Court having authority within</p><p>the limits of India excluding the State of Jammu and</p><p>Kashmir or established beyond such limits by the Central</p><p>Government of any suit or proceeding which is not</p><p>collusive and in which any right of immovable property is</p><p>directly and specifically in question, the property cannot</p><p>be transferred or otherwise dealt with by any party to the</p><p>suit or proceeding so as to affect the rights of any other</p><p>party thereto under any decree or order which may be</p><p>made therein, except under the authority of the court and</p><p>on such terms as it may impose." x x x x x x </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 571</p><p>[R.V. RAVEENDRAN, J.]</p><p>In Jayaram Mudaliar v. Ayyaswami (AIR 1973 SC 569) this A</p><p>court held that the purpose of Section 52 of the Act is not to</p><p>defeat any just and equitable claim, but only to subject them</p><p>to the authority of the court which is dealing with the property</p><p>to which claims are put forward. This court in Hardev Singh</p><p>v. Gurmail Singh (2007) 2 SCC 404 held that Section 52 of B</p><p>the Act does not declare a pendente lite transfer by a party</p><p>to the suit as void or illegal, but only makes the pendente lite</p><p>purchaser bound by the decision in the pending litigation.</p><p>10. The principle underlying Section· 52 is clear. If during C</p><p>the pendency of any suit in a court of competent jurisdiction</p><p>which is not collusive, in which any right of an immovable</p><p>property is directly and specifically in question, such property</p><p>cannot be transferred by any party to the suit so as to affect</p><p>the rights of any other party to the suit under any decree that</p><p>may be made in such suit. If ultimately the title of the pendente D</p><p>lite transferor is upheld in regard to the transferred property,</p><p>the transferee's title will not be affected. On the other hand,</p><p>if the title of the pendente lite transferor is recognized or</p><p>accepted only in regard to a part of the transferred property,</p><p>then the transferee's title will be saved only in regard to that E</p><p>extent and the transfer in regard to the remaining portion of</p><p>the transferred property to which the transferor is found not</p><p>entitled, will be invalid and the transferee will not get any</p><p>right, title or interest in that portion. If the property transferred</p><p>pendente lite, is allotted in entirely to some other party or F</p><p>parties or if the transferor is held to have no right or title in</p><p>that property, the transferee will not have any title to the</p><p>property. Where a co-owner alienates a property or a portion</p><p>of a property representing to be the absolute owner, equities</p><p>can no doubt be adjusted while making the division during G</p><p>the final decree proceedings, if feasible and practical (that is</p><p>without causing loss or hardship or inconvenience to other</p><p>parties) by allotting the property or portion of the property</p><p>transferred pendente lite, to the share of the transferor, so</p><p>H </p><p>572 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R. .</p><p>A that the bonafide transferee's right and title are saved fully or</p><p>partially.</p><p>11. In this case, a suit for partition filed by the first</p><p>respondent against the second respondent in the year 1985</p><p>8 which included the suit property, was pending in a court of</p><p>competent jurisdiction as on the date of sale (11.4.1990) by</p><p>the second respondent in favour of the appellant. The partition</p><p>suit was not collusive. Having regard to Section 52 of the</p><p>Act, the sale by the second respondent in favour of the</p><p>C appellant did not in any way affect the right of the first</p><p>respondent (plaintiff in the partition suit) or the decree made</p><p>in her favour in the said partition suit. It is thus evident that</p><p>the sale by second respondent in favour of the appellant</p><p>though not void, did not bind the first respondent who was</p><p>the plaintiff in the partition suit. On the other hand, the sale</p><p>D in favour of appellant was subject to the right declared or</p><p>recognized in favour of the first respondent-plaintiff under the</p><p>decree passed in the pending partition suit. The sale pendente</p><p>lite would therefore be subject to the decree in the partition</p><p>suit. In the final decree passed in the partition suit, the major</p><p>E portion of the suit property shown by the letters B, C, D, E,</p><p>F, G, H, I, B in the Commissioner's sketch (Ex.C-5) was</p><p>allotted to the share of the first respondent and to that extent,</p><p>the sale in favour of the appellant would be ineffective. But in</p><p>regard to the remaining portion of the suit property namely</p><p>F the portion shown by the letters A, B, I, H, A in the</p><p>Commissioner's sketch (Ex.C-5) which stood allotted to the</p><p>share of the second respondent in the final decree in the</p><p>partition suit, the sale by the second respondent in favour of</p><p>the appellant is effective, valid and binding on the second</p><p>G respondent and to that extent, ·the appellant is entitled to a</p><p>declaration of title and consequential injunction. . .</p><p>12. We are therefore of the view that the suit ought not</p><p>to have been dismissed in entirety even if the sale by the</p><p>H second respondent in favour of appellant on 11.4.1990 was </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 573</p><p>[R.V. RAVEENDRAN, J.]</p><p>hit by the doctrine of /is pendens. The second respondent A</p><p>cannot avoid the sale made by her on the ground that she</p><p>was held to be not the exclusive owner, in the pending partition</p><p>suit. Therefore the courts below ought to have decreed the</p><p>appellant's suit in part, in regard to the portion of the suit</p><p>property that fell to the share of second respondent instead B</p><p>of dismissing the suit.</p><p>A related suggestion to the Law makers</p><p>13. It is necessary to refer to the hardship, loss, anxiety</p><p>and unnecessary litigation caused on account of absence of C</p><p>_a mechanism for prospective purchasers to verify whether a</p><p>'property is subject to any pending suit or a decree or</p><p>attachment. At present, a prospective purchaser can easily</p><p>find out about any existing encumbrance over a property either</p><p>by inspection of the Registration Registers or by securing a D</p><p>certificate relating to encumbrances (that is copies of entries</p><p>in the Registration Registers) from the jurisdictional SubRegistrar under Section 57 of the Registration Act, 1908.</p><p>But a prospective purchaser has no way of ascertaining</p><p>whether there is any suit or proceeding pending in respect of E</p><p>the property, if the person offering the property for sale does</p><p>not disclose it or deliberately suppresses the information. As</p><p>a result, after parting with the consideration (which is many .</p><p>a time the life time savings), the purchaser gets a shock of</p><p>his life when he comes to know that the property purchased</p><p>by him is subject to litigation, and that it may drag on for</p><p>decades and ultimately deny him title to the property. The</p><p>pendente lite purchaser will have to wait for the litigation to</p><p>come to an end or he may have to take over the responsibility</p><p>F</p><p>of conducting the litigation if the transferor loses interest after G</p><p>the sale. The purchaser may also face objections to his being</p><p>impleaded as a party to the pending litigation on the ground</p><p>that being a /is pendens purchaser, he is not a necessary</p><p>party. All these inconveniences, risks, hardships· and misery</p><p>could be avoided and the property litigations could be reduced H </p><p>574 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R.</p><p>A to a considerable extent, if there is some satisfactory and</p><p>reliable method by which a prospective purchaser can</p><p>ascertain whether any suit is pending (or whether the property</p><p>is subject to any decree or attachment) before he decides to</p><p>purchase the property.</p><p>8 14. It is of some interest that a solution has been found</p><p>to this problem in the States of Maharashtra by an</p><p>appropriate local amendment to section 52 of the Act, by</p><p>Bombay Act 4 of 1939. Section 52, as applicable in the</p><p>Maharashtra ·and Gujarat, reads thus (the amendment is</p><p>C shown in italics):</p><p>D</p><p>E</p><p>F</p><p>"52. (1) During the pendency in any court having authority</p><p>within the limits of India excluding the State of Jammu</p><p>and Kashmir established beyond such limits by the</p><p>Central Government, of any suit or proceeding which is</p><p>not collusive and in which any right to immoveable</p><p>property is directly and specifically in question, if a notice</p><p>of the pendency of such suit or proceeding is registered</p><p>under section 18 of the Indian Registration Act, 1908,</p><p>the property after the notice is so registered cannot be</p><p>transferred or otherwise dealt with by any party to the</p><p>suit or proceeding so as to affect the rights of any other</p><p>party thereto under any decree or order which may be</p><p>made therein, except under the authority of the court</p><p>and on such terms as it may impose.</p><p>(2) Every notice of pendency of a suit or proceeding</p><p>referred to in sub-section (1) shall contain the following</p><p>particulars, namely:-</p><p>G (a) the name and address of the owner of immoveable</p><p>property or other person whose right to the immoveable</p><p>property in question;</p><p>(b) the description of the immoveable property the right</p><p>to which is in question; </p><p>T.G. ASHOK KUMAR v. GOVINDAMMAL AND ANR. 575</p><p>[R.V. RAVEENDRAN, J.]</p><p>(c) the court in which the suit or proceeding is pending; A</p><p>(d) the nature and title of the suit or proceeding; and</p><p>(e) the date on which the suit or proceeding was</p><p>instituted.</p><p>xxxxxxxxxxxx</p><p>B</p><p>We hope that the Law Commission and the Parliament</p><p>considers such amendment or other suitable amendment to</p><p>cover the existing void in title verification or due diligence C</p><p>procedures. Provision can also be made for compulsory</p><p>registration of such notices in respect of decrees and in</p><p>regard to attachments of immoveable properties.</p><p>15. We may also refer to another related area where</p><p>registration should be made compulsory to reduce property D</p><p>litigation. At present in most of the states, agreements to sell</p><p>are not compulsorily registrable as they do not involve transfer</p><p>of any right, title or interest in an immoveable property.</p><p>Unscrupulous property owners enter into agreements of sale</p><p>and take huge earnest money deposits/advances, and then E</p><p>sell the property to others thereby plunging the original</p><p>agreement holder and the subsequent purchaser into litigation.</p><p>Registration of agreements of sale will reduce such litigation.</p><p>It will also assist in putting an end to the prevalent practice</p><p>of entering into agreements of sale showing the real F</p><p>consideration and then registering the sale deed for only a</p><p>part of the real consideration. If all agreements of sale are</p><p>compulsorily registered, that will go a long way to discourage</p><p>generation and circulation of black money in real estate</p><p>matters, as also undervaluation of documents for purposes G</p><p>of stamp duty. It will also discourage the growth of land mafia</p><p>and muscleman who dominate the real estate scene in various</p><p>parts of the country. Prevention of a malaise, is always better</p><p>than allowing a malaise to develop and then trying to cure it.</p><p>Be that as it may. H </p><p>576 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R.</p><p>A Conclusion</p><p>16. We accordingly allow this appeal in part and set</p><p>aside that part of the judgment of the High Court holding that</p><p>the appellant-plaintiff is not entitled to any relief. Instead, the</p><p>8 suit is decreed in part and declaration of title with</p><p>consequential permanent injunction as prayed is granted in·</p><p>regard to that portion of the suit property that was allotted to</p><p>the second respondent in the partition suit, that is portion</p><p>shown as A, B, I, H, A in Ex.C-5 (Commissioner's sketch) in</p><p>O.S.No.8/1985. Parties to bear their respective costs.</p><p>c</p><p>D.G. Appeal partly allowed. </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-21708167916594489232024-02-19T10:11:00.000+05:302024-02-19T10:11:01.747+05:30Code of Civil Procedure, 1908 - Order XVI, Rules 1 and 2 r/w s.151 - Partition suit - Defendants filed application for permission to file a list of witnesses, which included the name of the plaintiff's Advocate - Trial Court granted the defendants the leave to file the list of witnesses but rejected their prayer for permission to cite the plaintiff's advocate as a witness on ground that no reason therefor was assigned in the application - Justification of- Held: Justified - If the parties to the litigation are allowed to file list of witnesses without indicating the purpose for summoning the particular person(s) as witness(es), the unscrupulous litigants may create a situation where the cases may be prolonged for years together- Such litigants may include the name of the advocate representing the other side as a witness and if the Court casually accepts the list of witnesses, the other side will be deprived of the services of the advocate - Therefore, it would be a prudent exercise of discretion by the Court to insist that the party filing the list of witnesses should briefly indicate the purpose of summoning the particular person as a witness - In the instant case, the concerned advocate was engaged by the plaintiffs almost 11 years prior to the filing of application by the defendants - During this long interregnum, the defendants never objected to the appearance of the plaintiff's advocate by pointing out that he was interested in the subject matter of the suit - The prayer made by the defendants for being allowed to cite the plaintiff's advocate as a witness was not only - SUPREME COURT REPORTS [2011] 4 S.C.R.417 H • A misconceived but also mischievous ex-facie with an oblique motive of boarding him out of the case.<p>•</p><p>[2011] 4 S.C.R. 417</p><p>KOKKANDA B. POONDACHA AND OTHERS A</p><p>v.</p><p>K.D. GANAPATHI AND ANR.</p><p>(Civil Appeal No. 2015 of 2011)</p><p>FEBRUARY 22, 2011</p><p>[G.5. SINGHVI AND ASOK KUMAR GANGULY, JJ.]</p><p>Code of Civil Procedure, 1908 - Order XVI, Rules 1 and</p><p>B</p><p>2 r/w s.151 - Partition suit - Defendants filed application for</p><p>permission to file a list of witnesses, which included the name C</p><p>of the plaintiff's Advocate - Tdal Court granted the defendants</p><p>the leave to file the list of witnesses but rejected their prayer</p><p>for permission to cite the plaintiff's advocate as a witness on</p><p>ground that no reason therefor was assigned in the application</p><p>- Justification of- Held: Justified - If the parties to the litigation D</p><p>are allowed to file list of witnesses without indicating the</p><p>purpose for summoning the particular person(s) as</p><p>witness(es), the unscrupulous litigants may create a situation</p><p>where the cases may be prolonged for years together- Such</p><p>litigants may include the name of the advocate representing E</p><p>the other side as a witness and if the Court casually accepts</p><p>the list of witnesses, the other side will be deprived of the</p><p>services of the advocate - Therefore, it would be a prudent</p><p>exercise of discretion by the Court to insist that the party filing</p><p>the list of witnesses should briefly indicate the purpose of F</p><p>summoning the particular person as a witness - In the instant</p><p>case, the concerned advocate was engaged by the plaintiffs</p><p>almost 11 years prior to the filing of application by the</p><p>defendants - During this long interregnum, the defendants</p><p>never objected to the appearance of the plaintiff's advocate G</p><p>by pointing out that he was interested in the subject matter of</p><p>the suit - The prayer made by the defendants for being</p><p>allowed to cite the plaintiff's advocate as a witness was not only</p><p>417 H </p><p>418 SUPREME COURT REPORTS [2011] 4 S.C.R. •</p><p>A misconceived but also mischievous ex-facie with an oblique</p><p>motive of boarding him out of the case.</p><p>Constitution of India, 1950...:. Articles 226 and 227 -</p><p>Interlocutory order passed by Subordinate Court - Challenge</p><p>8 to - Exercise of powers under Arts. 226 and 227 - Scope -</p><p>Held: In the instant case, the High Court totally ignored the</p><p>principles and parameters laid down by this Court for exercise</p><p>of power u/Articles 226 and 227 of the Constitution qua an</p><p>interlocutory order passed by the Subordinate Court and set</p><p>C aside the order of the trial Court without assigning any tangible</p><p>reason.</p><p>Advocates - Relationship between lawyer and his client</p><p>- Duty imposed upon an Advocate - Discusseq -c Held: An</p><p>Advocate cannot ordinarily withdraw from engagement without·</p><p>D sufficient cause aod without giving reasonable and sufficient</p><p>notice to the client- If an Advocate has reason to believe that</p><p>he will be a witness in the case, he should not accept a brief</p><p>or appear in the case - Principles of 'uberrima fides' - Bar</p><p>Council of India Rules, 1975 - Rules 12, 13, 14 and 15 of</p><p>E Section II, Chapter II of Part IV. -</p><p>Appellant Nos.1 to 3 and one other person filed suit</p><p>for partition and separate possession of 1/Gth share each</p><p>in the suit property and also for grant of a declaration that</p><p>sale deed dated 10.7.1997 executed by appellant Nos.4</p><p>F to 6 was not binding on them. Respondent Nos.1 and 2</p><p>filed written statement, and subsequently, also filed an</p><p>application under Order XVI Rule 1(1) and (2) read with</p><p>Section 151 C.P.C. supported by an affidavit of</p><p>respondent No.1 for permission to file the list of ~</p><p>~ witnesses, which Included the name of 'NRK', the</p><p>Advocate who had been representing the appellants in</p><p>the suit from the very beginning.</p><p>The trial Court partly allowed the application of </p><p>• KOKKANDA B. POONDACHA AND ORS. v. K.D. 419</p><p>GANAPATHI AND ANR.</p><p>respondent Nos.1 and 2 and granted them leave to file A</p><p>the list of witnesses but rejected their prayer for</p><p>permission to cite 'NRK' as a witness on ground that no</p><p>reason therefor was assigned in the application. The</p><p>respondents challenged the order of the trial Court by</p><p>filing a petition under Articles 226 and 227 of the B</p><p>Constitution insofar as their prayer for citing 'NRK' as a</p><p>witness was rejected. The High Court allowed the petition</p><p>and set aside the order of the trial Court holding that</p><p>reasons were not required to be assigned to justify the</p><p>summoning of a particular person as a witness. c</p><p>In the instant appeal, the questions arising for</p><p>consideration were: 1) whether the High Court committed</p><p>serious error by interfering with the order of the trial Court</p><p>without recording a finding that the said order was</p><p>vitiated due to want of jurisdiction or any patent legal D</p><p>infirmity in exercise of jurisdiction; and 2) whether a</p><p>litigant filing the list of witnesses is bound to indicate,</p><p>howsoever briefly, the relevance of the witness to the</p><p>subject matter of the suit etc., and, in any case, one party</p><p>to the proceedings cannot cite the advocate representing E</p><p>the other side as a witness and thereby deprive the latter</p><p>of the services of the advocate without disclosing as to</p><p>how his testimony is relevant to the issues arising in the</p><p>case.</p><p>Allowing the appeal, the Court</p><p>F</p><p>HELD:1. The High Court totally ignored the</p><p>principles and parameters laid down by this Court for</p><p>exercise of power under Articles 226 and 227 of the</p><p>Constitution qua an interlocutory order passed by the G</p><p>Subordinate Court and set aside the order of the trial</p><p>Court without assigning any tangible reason. [Para 10]</p><p>[427-H; 428-A-B]</p><p>Surya Dev Rai v. Ram Chander Rai and others (2003) H </p><p>420 SUPREME COURT REFl>ORTS</p><p>•</p><p>[2011] 4 S.C.R.</p><p>A 6 SCC 675 and Shalini Shyam :Sheffy v. Rajendra Shankar</p><p>Patil (2010) 8 SCC 329 - reliecf on.</p><p>2.1. The relationship between a lawyer and his client</p><p>is solely founded on trust and confidence. A lawyer</p><p>8 cannot pass on the confiden~ial information to anyone</p><p>else. This is so because he 's a fiduciary of his client,</p><p>who reposes trust and cqnfidence in the lawyer.</p><p>Therefore, he has a duty tQ fulfill all his obligations</p><p>towards his client with care ~nd act in good faith. Since</p><p>C the client entrusts the whole obligation of handling legal</p><p>proceedings to an advocate, he has to act according to</p><p>the principles of uberrima fide$, i.e., the utmost good faith,</p><p>integrity, fairness and loyaltyl [Para 12] [428-F-G]</p><p>2.2. The duties of an advQcate to the Court, the client,</p><p>D opponent and colleagues arei enumerated in Chapter II of</p><p>Part IV of the Bar Council ot:lndia Rules, 1975. Rules 12,</p><p>13, 14 and 15 of Section II, ,Chapter II of Part IV of the</p><p>Rules, regulate the duty of ~n advocate to the client. An</p><p>analysis of the above Rules show that one of the most</p><p>E important duty imposed upc>n an advocate is to uphold</p><p>the interest of the client, fearlessly by all fair and</p><p>honourable means. An advocate cannot ordinarily</p><p>withdraw from engagement :without sufficient cause and</p><p>without giving reasonable and sufficient notice to the</p><p>F client. If he has reason to believe that he will be a witness</p><p>in the case, the advocate $hould not accept a brief or</p><p>appear in the case. [Paras 1$, 14] [428-H; 429-A-B; H; 430-</p><p>A]</p><p>2.3. If the prayer made by the respondents for being</p><p>G allowed to cite 'NRK' as a witness is critically scrutinized</p><p>in the backdrop of the duti~s of an advocate towards his</p><p>client, it is clear that the same was not only misconceived</p><p>but was mischievous ex-facie. Neither in the written</p><p>statement nor the additiot;ial written statement filed by</p><p>H them before the trial Court, the respondents hadl </p><p>• KOKKANDA' B. POON DACHA AND ORS. v. K.D. 421</p><p>GANAPATHI AND ANR.</p><p>attributed any role to 'NRK' in relation to the subject A</p><p>matter of the suit. The concerned advocate was engager'.</p><p>by the plaintiffs-appellants in 1996 i.e. almost 11 years</p><p>prior to the filing of application by the respondents under</p><p>Order XVI Rule 1(1) and (2) read with Section 151 CPC.</p><p>During this long interregnum, the respondents never B</p><p>objected to the appearance of 'NRK' as an advocate of</p><p>the appellants by pointing out that he was interested in</p><p>the subject matter of the suit. Notwithstanding this, the</p><p>respondents cited him as a witness in the list filed along</p><p>with the application. The sole purpose of doing this was c</p><p>to create a situ~tion in which the advocate would have</p><p>been forced to withdraw from the case. Luckily for the</p><p>appellants, the trial Court could see the game plan of the</p><p>respondents and frustrated their design by partly</p><p>dismissing the application. The Single Judge of the High 0 Court ignored that the respondents had included the</p><p>name of 'NRK' in the list of witnesses proposed to be</p><p>summoned by them with an oblique motive of boarding</p><p>him out of the case and passed the impugned order by</p><p>recording one line observation that the respondents were E</p><p>not required to give reasons for summoning the</p><p>particular person as a witness. [Para 15] [430-G-H; 431-</p><p>A·D]</p><p>2.4. If the parties to the litigation are allowed to file</p><p>list of witnesses without indicating the purpose for F</p><p>summoning the particular person(s) as witness(es), the</p><p>unscrupulous litigants may create a situation where the</p><p>cases may be prolonged for years together. Such</p><p>litigants may include the name of the advocate</p><p>representing the other side as a witness and if the Court G</p><p>casually accepts the list of witnesses, the other side will</p><p>be deprived of the services of the advocate. Therefore, it</p><p>would be a prudent exercise of discretion by the Court</p><p>to insist that the party filing the list of witnesses should</p><p>briefly indicate the purpose of summoning the particular H </p><p>422 SUPREME COURT REPORTS • [2011] 4 S.C.R.</p><p>A person as a witness. The iml)ugned order of the High</p><p>Court is set aside and the one: passed by the trial Court</p><p>is restored. The respondents s~all pay cost of Rs.50,000/</p><p>• to the appellants. [Para 16) [431-E-H]</p><p>B Mange Ram v. Brij Mohan ~1983) 4 SCC 36 and V. C.</p><p>Rangadurai v. D. Gopa/an (1979,) 1 SCC 308 - relied on.</p><p>Case Law ,Reference:</p><p>(201 O) 8 sec 329 relied on Para 6, 9</p><p>c (1983) 4 sec 36 relied on Para 6, 11</p><p>(2003) 6 sec 675 relied on Para 7, 8</p><p>(1979) 1 sec 308 relied on Para 14</p><p>o CIVIL APPELLLATE JURl$DICTION : Civil Appeal No.</p><p>2015 of 2011.</p><p>From the Judgment & Ord~r dated 24.2.2010 of the High</p><p>Court of Karnataka at Bangalore !n W.P. No. 2610 of 2007 (GME CPC).</p><p>F</p><p>Krian Suri for the Appellants.</p><p>S.N. Bhat for the Respondents.</p><p>The following Judgment o~ the Court was delivered</p><p>JUDGMENT</p><p>Leave granted.</p><p>2. Whether the respondents (defendant Nos.5 and 6 in the</p><p>G suit filed by the appellants), could cite the advocate</p><p>representing the appellants asi a witness in the list filed under</p><p>Order XVI Rule 1 (1) and (2) read with Section 151 of the Code</p><p>of Civil Procedure (CPC) without giving an iota of indication</p><p>about the purpose of summoning him in future is the question</p><p>H </p><p>• KOKKANDA B. POONDACHA AND ORS. v. K.D. 423</p><p>GANAPATHI AND ANR.</p><p>which arises for consideration in this appeal filed against order A</p><p>dated 24.02.2010 passed by the learned Single Judge of the</p><p>Karnataka High Court whereby he set aside the order passed</p><p>by the trial Court partly dismissing the application of the</p><p>respondents.</p><p>3. Appellant Nos.1 to 3 and one Parvathy filed suit, which</p><p>came to be registered as O.S. No.75 of 1996, for partition and</p><p>separate possession of 1/6th share each in the suit property</p><p>and also for grant of a declaration that sale deed dated</p><p>B</p><p>10. 7 .1997 executed by defendant Nos.2 to 4, who were, later</p><p>on, transposed as plaintiff Nos.5 to 7 (appellant Nos.4 to 6 C</p><p>herein), was not binding on them. Defendant Nos.5 to 7</p><p>(including respondent Nos.1 and 2 herein) filed written</p><p>statement on 19.2.1998. Respondent Nos.1 and 2 filed</p><p>additional written statement on 9.8.2002. After two years and</p><p>seven months, they filed an application dated 11.3.2005 under D</p><p>Order XVI Rule 1 (1) and (2) read with Section 151 C.P.C.</p><p>supported by an affidavit of respondent No.1 for permission to</p><p>file the list of witnesses, which included the name of Shri N.</p><p>Ravindranath Karnath, Advocate, who was representing th.e</p><p>appellants in the suit from the very beginning.</p><p>4. The trial Court partly allowed the application of</p><p>respondent Nos.1 and 2 and granted leave to them to file the</p><p>E</p><p>list of witnesses but rejected their prayer for permission to cite</p><p>Shri N. Ravindranath Karnath as witness No.1. The reasons F</p><p>assigned by the trial Court for partially declining the prayer of</p><p>respondent Nos; 1 and 2 are extracted below:</p><p>" ...................... While citing advocate of the opposite party</p><p>as a witness, the defendants 3 and 4 ought to have given</p><p>reason for what purpose they are citing him as a witness G</p><p>and examining him in their favour. Once the advocate for</p><p>the opposite party is cited as a witness in the list, the</p><p>opposite party losses precious service of his advocate. In</p><p>that circumstances, the party will suffer. Under the</p><p>circumstances, so as to know for what purpose the H </p><p>A</p><p>B</p><p>c</p><p>D</p><p>E</p><p>F</p><p>424 SUPREME COURT REPORTS [2011] 4 S.C.R. •</p><p>defendant ,110.2 and 3 are citing and examining the N.R.</p><p>Karnath advocate for the plaintiff in their favour have to</p><p>assign reason. The Court has to very cautious and careful</p><p>while considering such an aspect of the matter of</p><p>examining and citing the advocate foF the opposite party</p><p>in their favour. The Court has to determine as to whether</p><p>the evidence of said advocate is material for the decision</p><p>of the case or not? Unless defendant no.2 and 3 assigned</p><p>reason in the application or in the affidavit as to why they</p><p>are citing the advocate for the opposite party and</p><p>examining in their favour, the application filed by defendant</p><p>no.2 and 3 is not maintainable and the said application is</p><p>not sustainable under law. In the above said Judgment, in</p><p>para 2, it is clearly held that, "but qppellants then filed a</p><p>petition seeking permission to cite the advocate of the</p><p>respondents as a witness". But herein this case, the</p><p>defendant no.2 and 3 are not seeking permission to cite</p><p>the advocate for the plaintiff as a withess. Defendant no.2</p><p>and 3 not only have to seek permissic:,m of this Court to cite</p><p>the advocate for the Plaintiff as a witness, but also he has</p><p>to give good reasons for what purpose he is citing him as</p><p>a witness and examining in his favour. Without assigning</p><p>any reasons and without seeking permission to cite the</p><p>advocate for the Plaintiff as a witne:;;s in the witness list,</p><p>application to that extent is not tenable and same is liable</p><p>to be dismissed to that extent."</p><p>5. The respondents challenged the o:rder of the trial Court</p><p>by filing a petition under Articles 226 and 227 of the</p><p>Constitution insofar as their prayer for citing Shri N.</p><p>Ravindranath Karnath as a witness was t~jected. The learned</p><p>G Single Judge allowed the petition and set aside the order of</p><p>the trial Court by simply observing that reasons are not required</p><p>to be assigned to justify the summoning ~fa particular person</p><p>as a witness.</p><p>H 6. Mrs. Kiran Suri, learned counsel fof the appellants relied</p><p>upon the judgment of this Court in Shallni Shyam Shetty vs. </p><p>• KOKKANDA B. POONDACHA AND ORS. v. K.D. 425</p><p>GANAPATHI AND ANR.</p><p>Rajendra Shankar Patil (2010) 8 SCC 329 and argued that A</p><p>the order under challenge is liable to be set aside because the</p><p>High Court committed serious error by interfering with the order</p><p>of the trial Court without recording a finding that the said orde.r</p><p>is vitiated due to want of jurisdiction or any patent legal infirmity</p><p>in the exercise of jurisdiction and that refusal of the trial Court B</p><p>to permit the respondents to cite Shri N. Ravindranath Karnath</p><p>as a witness had prejudiced their cause. She further argued</p><p>that the respondents are not entitled to cite and summon as a</p><p>witness the advocate representing the appellants because in</p><p>the application filed by them, no justification was offered for· c</p><p>doing so. In support of this argument, Mrs. Suri relied upon the</p><p>judgment of this Court in Maqge Ram vs. Brij Mohan (1983)</p><p>4 sec 36. ·</p><p>7. Shri S.N. Bhatt, learned counsel for the respondents</p><p>argued that even though his clients had filed application D</p><p>belatedly, the trial Court was not justified in declining their</p><p>prayer for citing Shri N. Ravindranath Karnath as a witness</p><p>merely because he was representing the appellants. Learned</p><p>counsel submitted that at the stage of filing the list of witnesses,</p><p>the plaintiffs or for that reason the defendants are not required E</p><p>to disclose the nature of the evidence to be given by the</p><p>particular witness or its relevance to the subject matter of the</p><p>suit etc. and the trial Court had grossly erred in not granting</p><p>leave to the respondents to cite Shri N. Ravindranath Karnath</p><p>as one of their witnesses. Shri Bhatt relied upon the judgment F</p><p>in Surya Dev Rai v. Ram Chander Rai and others (2003) 6</p><p>sec 675 and argued that even after amendment of Section</p><p>115, C.P.C., the High Court can, in exercise of supervisory</p><p>power under Article 227, correct the error of jurisdiction</p><p>committed by the Subordinate Court. G</p><p>8. We have considered the respective submissions. We.</p><p>shall first consider the question whether the High Coort could</p><p>interfere with the order of the trial Court without considering the</p><p>question whether the said order was vitiated due to wan".·of H </p><p>426 SUPREME COURT REPORTS [2011] 4 S.C.R.</p><p>A jurisdiction or the trial Court had exceeded its jurisdiction in</p><p>deciding the application of the respondents and the order</p><p>passed by :ithas resulted in fail.ire ofj.lsti;:e. Jh Surya Dev Rai's</p><p>case (supra), the two Judge Bench, after detailed analysis of</p><p>the various precedents on the scope of th~ High Court's powers</p><p>B under Articles 226 and 227 of the Constitution culled out nine</p><p>c</p><p>Q</p><p>E</p><p>F</p><p>G</p><p>H</p><p>propos(tions including the following:-</p><p>"(2) Interlocutory orders, passed by the courts subordinate</p><p>to the High Court, against which remedy of revision has</p><p>been excluded by CPC Amendment Act 46 of 1999 are</p><p>nevertheless open to challenge in,, and continue to be</p><p>subject to, certiorari and supervisory jurisdiction of the High</p><p>Court.</p><p>(3) Certiorari, under Article 226 of the Constitution, is</p><p>issued for correcting gross errors of jurisdiction i.e. when</p><p>a subordinate court is found to have acted (i) without</p><p>jurisdiction - by assuming jurisdictiorn where there exists</p><p>none, or (ii) in excess of its jurisdiction - by overstepping</p><p>or crossing the limits of jurisdiction, or (iii) acting in flagrant</p><p>disregard of law or the rules of proi;edure or acting in</p><p>violation of principles of natural justice where there is no</p><p>procedure specified, and thereby occasioning failure of</p><p>justice.</p><p>(4) Supervisory jurisdiction under Article 227 of the</p><p>Constitution is exercised for keeping the subordinate</p><p>courts within the bounds of their jurit;diction. When the</p><p>subordinate Court has assumed a juris~iction which it does</p><p>not have or has failed to exercise a jurisdiction which it</p><p>does have or the jurisdiction though available is being</p><p>exercised by the Court in a manner n(:>t permitted by law</p><p>and failure of justice or grave injusti¢e has occasioned</p><p>thereby, the High Court may step in to exercise its</p><p>supervisory jurisdiction.</p><p>(5) Be it a writ of certiorari or the exercise of supervisory </p><p>• KOKKANDA B. POONDACHA AND ORS. v. K.D. 427</p><p>GANAPATHI AND ANR.</p><p>jurisdiction, none is available to correct mere errors of fact A</p><p>or of law unless the following requirements are satisfied:</p><p>(I) the error is manifest and apparent on the face of the</p><p>proceedings such as when it is based on clear ignorance</p><p>or utter disregard of the provisions of law, and (ii) a grave</p><p>injustice or gross failure of justice has occasioned B</p><p>thereby."</p><p>9. In Shalini Shyam Shetty vs. Rajendra Shankar Patil</p><p>(supra), the Court again examined the scope of the High Court's</p><p>power under Article 227 of the Constitution and laid down the C</p><p>following proposition:</p><p>"Article 227 can be invoked by the High Court suo motu</p><p>as a custodian of justice. An improper and a frequent</p><p>exercise of this power will be counterproductive and will</p><p>divest this extraordinary power of its strength and vitality. D</p><p>The power is discretionary and has to be exercised very</p><p>sparingly on equitable principle. This reserve and</p><p>exceptional power of judicial intervention is not to be</p><p>exercised just for grant of relief in individual cases but</p><p>should be directed for promotion of public confidence in E</p><p>the administration in the larger public interest whereas</p><p>Article 226 is meant for protection of individual grievances.</p><p>Therefore, the power under Article 227 may be unfettered</p><p>but its exercise is subject to high degree of judicial</p><p>discipline. The object of superintendence under Article F</p><p>227, both administrative and judicial, is to maintain</p><p>efficiency, smooth and orderly functioning of the entire</p><p>machinery of justice in such a way as it does not bring it</p><p>into any disrepute. The power of interference under Article</p><p>227 is to be kept to the minimum to ensure that the wheel G</p><p>of justice does not come to a halt and the fountain of justice</p><p>remains pure and unpolluted in order to maintain public</p><p>confidence in the functioning of the tribunals and courts</p><p>subordinate to the High Court."</p><p>10. The learned Single Judge of the High Court totally H </p><p>428 SUPREME COURT REPORTS</p><p>e</p><p>[2011] 4 S.C.R.</p><p>A ignored the principles and parameters laid down by this Court</p><p>for exercise of power under Articles 226 and 227 of the</p><p>Constitution qua an interlocutory order passed by the</p><p>Subordinate Court and set aside the otder of the trial Court</p><p>without assigning any tangible reason.</p><p>B 11. The next question which needs consideration is</p><p>whether a litigant filing the list of witnesses is bound to indicate,</p><p>howsoever briefly, the relevance of the witness to the subject</p><p>matter of the suit etc., and, in any case, one party to the</p><p>proceedings cannot cite the advocate representing the other</p><p>C side as a witness and thereby deprive th~ latter of the services</p><p>of the advocate without disclosing as to how his testimony is</p><p>relevant to the issues arising in the case. In Mange Ram vs.</p><p>Brij Mohan (supra), this Court interpreted Order XVI Rule 1</p><p>(1),(2) and (3) CPC and observed:</p><p>D</p><p>"If the requirements of these provisions are conjointly read</p><p>and properly analysed, it clearly transpires that the</p><p>obligation to supply the list as we'I as the gist of the</p><p>evidence of each witness whose natne is entered in the</p><p>E list has to be carried out in respect of those witnesses for</p><p>procuring whose attendance th$ party needs the</p><p>assistance of the court."</p><p>12. At this stage, we may also advert to the nature of</p><p>relationship between a lawyer ang his client, which is solely</p><p>F founded on trust and confidence. A lawyet cannot pass on the</p><p>confidential information to anyone else. This is so because he</p><p>is a fiduc:iary of his client, who reposes trust and confidence in</p><p>the lawyer. Therefore, he has a duty to fulfill all his obligations</p><p>towards his client with care and act in g¢>od faith. Since the</p><p>G client entrusts the whole obligation of handling legal</p><p>proceedings to an advocate, he has to act according to the</p><p>principles of uberrima fides, i.e., the utmost good faith, integrity,</p><p>fairness and loyalty.</p><p>H 13. The duties of an advocate to the Court, the client, </p><p>• KOKKANDA B. POONDACHA AND ORS. v. K.D. 429</p><p>GANAPATHI AND ANR.</p><p>opponent and colleagues are enumerated in Chapter II of Part A</p><p>l,V of the ~'ar Council of India .Rules, 1975 (for short, "the</p><p>Rules"). Ruies 12, 13, 14 and 15 of Section II, Chapter II of Part</p><p>IV of the Rules, which regulate the duty of an advocate to the</p><p>client, read as under:</p><p>"12. An advocate shall not ordinarily withdraw from</p><p>engagements, once accepted, without sufficient cause</p><p>and unless reasonable and sufficient notice is given to the</p><p>client. Upon his withdrawal from a case, he shall refund</p><p>such part of the fee as has not been earned.</p><p>13. An advocate should not accept a brief or appear in a</p><p>case in which he has reason to believe that he will be a</p><p>witness, and if being engaged in a case, it becomes</p><p>apparent that he is a witness on a material question of fact,</p><p>B·</p><p>c</p><p>he should not continue to appear as an advocate if he can o</p><p>retire without jeopardising his client's interests.</p><p>14. An advocate shall, at the commencement of his</p><p>engagement and during the continuance thereof, make all</p><p>such full and frank disclosures to his client relating to his</p><p>connection with the parties and any interest in or about the E</p><p>controversy as are likely to affect his client's judgment in</p><p>either engaging him or continuing the engagement.</p><p>15. It shall be the duty of an advocate fearlessly to uphold</p><p>the interests of-his client by all fair and honourable means F</p><p>without regard to any unpleasant consequences to himself</p><p>or any other. He shall defend a person accused of a crime .</p><p>regardless of his personal opinion as to the guilt of the</p><p>accused, bearing in mind that his loyalty is to the law which</p><p>requires that no man should be convicted without adequate G</p><p>evidence."</p><p>14. An analysis of the above reproduced Rules show that</p><p>one of the most important duty imposed upon an advocate is</p><p>to uphold the interest of the client fearlessly by all fair and</p><p>honourable means. An advocate cannot ordinarily withdraw H </p><p>430 SUPREME COURT REPORTS [2011) 4 S.C.R.</p><p>A from enga!1ement witho.ut sufficient ca4se and without giving</p><p>reasonable ·and sufficient notice to the Cllient. If he has reason</p><p>to believe th'at he will be a witness in the case, the advocate</p><p>should not accept a brief or appear in the case. In V. C.</p><p>Rangadurai v. D. Gopahm (1979) 1 $CC 308, A.P.Sen, J.</p><p>B outlined the importance of the relationship of an advocate with</p><p>c</p><p>D</p><p>E</p><p>F</p><p>his client in the following words:</p><p>"Nothing should be done by any member of the legal</p><p>fraternity which might tend to les~en in any degree the</p><p>confidence of the public in the fidelity, honesty and integrity</p><p>of the profession. Lord Brougham, then aged eighty-six,</p><p>said in a speech, in 1864, that the first great quality of an</p><p>advocate was 'to reckon everything subordinate to the</p><p>interests of his client'. What he said in 1864 about 'the</p><p>paramountcy of the client's intere~t', is equally true today.</p><p>The relation between a lawyer and his client is highly</p><p>fiduciary in its nature and of a ver'), delicate, exacting, and</p><p>confidential character requiring a high degree of fidelity</p><p>and good faith. It is purely a perso~al relationship, involving</p><p>the highest personal trust and confidence which cannot be</p><p>delegated without consent. A lawyer when entrusted with</p><p>a brief, is expected to follow the norms of professional</p><p>ethics and try to protect the int$rests of his clients, in</p><p>relation to whom he occupies a position of trust. The</p><p>appellant completely betrayed the trust reposed in him by</p><p>the complainants."</p><p>15. If the prayer made by the respondents for being</p><p>allowed to cite Shri N. Ravindranath Karnath as a witness is</p><p>critically scrutinised in the backdr(>p of the above noted</p><p>statement on the duties of an advocate towards his client, we</p><p>G have no hesitation to hold that the same was not only</p><p>misconceived but was mischievous ex-facie. Neither in the</p><p>written statement nor the additional written statement filed by</p><p>them before the trial Court, the respondents had attributed any</p><p>role to Shri N. Ravindranath Karnath in relation to the subject</p><p>H matter of the suit. The concerned aqvocate was engaged by</p><p>• </p><p>• KOKKANDA B. POONDACHA AND ORS. v. K.D. 431</p><p>GANAPATHI AND ANR.</p><p>the plaintiffs-appellants in 1996 i.e. ·almost 11 years prior to the A</p><p>filing of application by the respondents under Order XVI Rule</p><p>1(1) and (2) read with Section 151 CPC. During this long</p><p>interregnum, the respondents never objected to the appearance</p><p>of Shri N. Ravindranath Karnath as an advocate of the</p><p>appellants by pointing out that he was interested in the subject B</p><p>matter of the suit. Notwithstanding this, the respondents cited</p><p>him as a witness in the list filed along with the application. The</p><p>sole purpose of doing this was to create a situation in which</p><p>the advocate would have been forced to withdraw from the</p><p>case. Luckily for the appellants, the trial Court could see the c</p><p>game plan of the respondents and frustrated their design by</p><p>partly dismissing the application. The learned Single Judge</p><p>ignored that the respondents had included the name of Shri N.</p><p>Ravindranath Karnath in the list of witnesses proposed to be</p><p>summoned by them with an oblique motive of boarding him out 0 of the case and passed the impugned order by recording one</p><p>line observation that the respondents were not required to give</p><p>reasons for summoning the particular person as a witness.</p><p>16. We may add that if the parties to the litigation are</p><p>allowed to file list of witnesses without indicating the purpose E</p><p>for summoning the particular person(s) as witness(es), the</p><p>unscrupulous litigants may create a situation where the cases</p><p>may be prolonged for years together. Such litigants may include</p><p>~he name of the advocate representing the other side as a</p><p>witness and if _the Court casually accepts the list of witnesses,</p><p>the ottier side will be deprived of the services of the advocate.</p><p>Therefore, it would Pe a prudent exercise of discretion by the</p><p>Court to insists.that the party filing the list of witnesses should</p><p>briefly indicate..the purpose of summoning the particular person</p><p>as a witness.</p><p>• •</p><p>17: in· the-·result. the appeal is allowed, the impugned order</p><p>• is oet aside and the ol're passed by the trial Court is restored.</p><p>The respondE!nts shall pay cost of Rs.5Q,OOO/- to the _appellants.</p><p>F</p><p>G</p><p>B.B.~. Appeal allowed. H </p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-85267404329754448292024-02-19T09:25:00.001+05:302024-02-19T09:25:32.008+05:30Penal Code, 1860 – ss. 302/34, s. 304 Part II – Murder with common intention – Culpable homicide not amounting to murder, when – Political animosity between two groups led to the murder of the deceased – Prosecution witnesses corroborating incident of accused A 1 stopping an auto, dragging the deceased to the house of A-4, and the other accused-A2, A4 joined A-1 and assaulted the deceased with various weapons, whereas, A-3 used a stone to assault the deceased – Conviction u/ss. 302/34 and sentence for life imposed by the courts below – Correctness: Held: As regards A1, A2 and A4, the decision of the trial court and the High Court is concurred with – Their analyses and conclusions are based on correct appreciation of evidence and law – However, as regards, the culpability of A-3 for murder, testimonies of four eye-witnesses state that the A-3 had used a stone to hit the deceased’s head, he never took axe in his hands – Perusal of the evidence would reveal that it is not the case of the prosecution that A-3 was along with the other accused while the deceased was dragged to the house – After the other accused assaulted the deceased with sword, A-3 came thereafter and assaulted the deceased with stone lying there – Evidence insufficient to deduce a conclusion that A-3 shared the common intention with the other accused to cause the murder of the deceased – In fact, both the courts mechanically drew an inference against A3 u/s. 34 merely 2 [2024] 2 S.C.R. Digital Supreme Court Reports based on his presence near the scene of offence and his familial relations with the other accused – Even though, A-3 might not have had the common intention to commit the murder, nevertheless, his participation in the assault and the wielding of the stone certainly makes him culpable for the offence that he has committed – A-3 should have had the knowledge that the use of a stone to hit the head of the deceased is likely to cause death – Thus, he is held guilty of the offence u/s. 304 Part II – Conviction and sentence of A-1, A-2 and A-4 u/s. 302/34 is upheld, however, the conviction of A-3 is modified to s. 304 Part II and sentenced to 10 years imprisonment. [Paras 17, 23, 28, 30, 31, 32]<p>* Author</p><p>[2024] 2 S.C.R. 1 : 2024 INSC 87</p><p>Velthepu Srinivas and Others</p><p>v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>(Criminal Appeal No. 2852 of 2023)</p><p>06 February 2024</p><p>[B.R. Gavai and Pamidighantam Sri Narasimha,* JJ.]</p><p>Issue for Consideration</p><p>The courts below, if justified in convicting the four accused u/ss.</p><p>302/34 IPC and imposing sentence for life for committing murder</p><p>of the victim.</p><p>Headnotes</p><p>Penal Code, 1860 – ss. 302/34, s. 304 Part II – Murder with</p><p>common intention – Culpable homicide not amounting to</p><p>murder, when – Political animosity between two groups</p><p>led to the murder of the deceased – Prosecution witnesses</p><p>corroborating incident of accused A 1 stopping an auto,</p><p>dragging the deceased to the house of A-4, and the other</p><p>accused-A2, A4 joined A-1 and assaulted the deceased with</p><p>various weapons, whereas, A-3 used a stone to assault the</p><p>deceased – Conviction u/ss. 302/34 and sentence for life</p><p>imposed by the courts below – Correctness:</p><p>Held: As regards A1, A2 and A4, the decision of the trial court and</p><p>the High Court is concurred with – Their analyses and conclusions</p><p>are based on correct appreciation of evidence and law – However,</p><p>as regards, the culpability of A-3 for murder, testimonies of four</p><p>eye-witnesses state that the A-3 had used a stone to hit the</p><p>deceased’s head, he never took axe in his hands – Perusal of the</p><p>evidence would reveal that it is not the case of the prosecution</p><p>that A-3 was along with the other accused while the deceased</p><p>was dragged to the house – After the other accused assaulted</p><p>the deceased with sword, A-3 came thereafter and assaulted the</p><p>deceased with stone lying there – Evidence insufficient to deduce</p><p>a conclusion that A-3 shared the common intention with the other</p><p>accused to cause the murder of the deceased – In fact, both the</p><p>courts mechanically drew an inference against A3 u/s. 34 merely </p><p>2 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>based on his presence near the scene of offence and his familial</p><p>relations with the other accused – Even though, A-3 might not have</p><p>had the common intention to commit the murder, nevertheless, his</p><p>participation in the assault and the wielding of the stone certainly</p><p>makes him culpable for the offence that he has committed – A-3</p><p>should have had the knowledge that the use of a stone to hit the</p><p>head of the deceased is likely to cause death – Thus, he is held</p><p>guilty of the offence u/s. 304 Part II – Conviction and sentence of</p><p>A-1, A-2 and A-4 u/s. 302/34 is upheld, however, the conviction</p><p>of A-3 is modified to s. 304 Part II and sentenced to 10 years</p><p>imprisonment. [Paras 17, 23, 28, 30, 31, 32]</p><p>Case Law Cited</p><p>Camilo Vaz v. State of Goa, [2000] 2 SCR 1088 : (2000)</p><p>9 SCC 1; Bawa Singh v. State of Punjab 1993 Supp</p><p>(2) SCC 754; Sarup Singh v. State of Haryana (2009)</p><p>16 SCC 479; Ghana Pradhan & Ors. v. State of Orissa</p><p>1991 Supp (2) SCC 451 – referred to.</p><p>List of Acts</p><p>Penal Code, 1860</p><p>List of Keywords</p><p>Murder; Common intention; Witnesses; Corroboration; Sentence for</p><p>life; Evidence; Eye-witnesses; Appreciation of evidence and law;</p><p>Testimonies; Oral and documentary evidence; Scene of offence;</p><p>Post-mortem report; Likely to cause death.</p><p>Case Arising From</p><p>CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.2852</p><p>of 2023</p><p>From the Judgment and Order dated 26.04.2022 of the High Court</p><p>for the State of Telangana at Hyderabad in CRLA No.308 of 2005</p><p>Appearances for Parties</p><p>Gaurav Agrawal, D. Abhinav Rao, Ms. Prerna Robin, Rahul Jajoo,</p><p>Devadipta Das, Advs. for the Appellants.</p><p>Sirajudeen, Sr. Adv., Krishna Kumar Singh, Sri Harsha Peechara,</p><p>Duvvuri Subrahmanya Bhanu, Ms. Pallavi, Ms. Kriti Sinha, Akshat </p><p>[2024] 2 S.C.R. 3</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>Kulshreshtha, Rajiv Kumar Choudhry, G.Seshagiri Rao, Gaichangpou</p><p>Gangmei, Rahul Aggarwal, Amit Pratap Singh, Ms. Lothungbeni T.</p><p>Lotha, Yimyanger Longkumer, Advs. for the Respondents.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Pamidighantam Sri Narasimha, J.</p><p>1. This criminal appeal by appellants (accused 1 to 4) is against the</p><p>concurrent conviction under Section 302 read with Section 34 and</p><p>sentence for life imposed by the Trial as well as the Telangana High</p><p>Court. For the reasons to follow, while we confirm the judgment and</p><p>sentence with respect to A-1, A-2 and A-4, the conviction and sentence</p><p>of A-3 is however modified to Section 304 Part II and sentenced to</p><p>10 years imprisonment. The details of the crime, trial, decisions of</p><p>the Courts, followed by our analyses and conclusions are as follows.</p><p>2. The case of the prosecution is that the accused 1 to 4 belonging to</p><p>the same family, and the deceased, come from the same village -</p><p>Janda Venkatpur, Asifabad, Telangana. It is alleged that the sister of</p><p>the deceased and the wife of A-4 were political aspirants and they</p><p>contested the Gram Panchayat elections. In the said elections, the</p><p>sister of the deceased succeeded and the wife of A-4 lost and that,</p><p>unfortunately, led to an animosity between the two groups, eventually</p><p>leading to the murder of the deceased which is described as follows.</p><p>3. On 15.11.2001, at about 8AM, the deceased was going to Luxettipet</p><p>on some work in an auto-rikshaw. In the same auto-rikshaw, one</p><p>Sanga Swamy @ Thruputhi (PW-6) and Smt. Chetimala Rajitha</p><p>(PW-9) were travelling as co-passengers. When the auto reached</p><p>the house of A-4, it is alleged that A-1 stopped the auto-rickshaw</p><p>and dragged the deceased out by pulling his legs. At the same time,</p><p>A-2 joined A-1 and both the accused dragged the deceased towards</p><p>the house of A-4. At that point, it is alleged that A-1 to A-4 attacked</p><p>the deceased with an axe, a sword, a stone and a knife, thereby</p><p>inflicting severe bleeding injuries leading to death of the deceased</p><p>on the spot.</p><p>4. The son of the deceased, Kona Kiran Kumar, later examined as</p><p>PW-1, being an eyewitness, proceeded to the police station and</p><p>reported the incident at about 9PM by way of a complaint (Exhibit </p><p>4 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>P-1).The Sub-Inspector of Police (PW-17), Luxettipet received the</p><p>complaint and registered an FIR (Exhibit P-32), and took up the</p><p>investigation. He then recorded the statement of PW-1.</p><p>5. In view of the gravity of the crime, the Circle Inspector of</p><p>Police (PW-18) took up further investigation and immediately</p><p>proceeded to the village to examine the scene of offence. He</p><p>found the body of the deceased in the front yard of A-4’s house.</p><p>He enabled PW-15 to take photographs of the dead body</p><p>(Exhibits P-21 to 30) and himself drew the sketch of the scene</p><p>of offence (Exhibit P-37). He also conducted an inquest over</p><p>the body of the deceased in the presence of PW-10 and</p><p>PW-12 (panch witnesses). The inquest report was marked as Exhibit</p><p>P-5. He also seized a stick (MO.4), control earth (MO.5), bloodstained earth (MO.6), cotton full shirt (MO.7) and a baniyan under</p><p>cover of a panchnama. PW-18 recorded the statements of PWs 4,</p><p>5, 6, 7, 8, 9, and 15. The prosecution maintained that PWs 1, 3, 4,</p><p>6, 7 and 8 are eyewitnesses to the incident.</p><p>6. The Judicial Magistrate First-Class (PW-16) also recorded the</p><p>statements of PWs 1 to 9 under Section 164 of the CrPC. The Postmortem over the dead body of the deceased was conducted by Dr</p><p>Victor Dinesh (PW-11) at 3PM on 15.11.2001 at the Government</p><p>Civil Hospital. PW-11, in his report, found 8 incised wounds, 3 partial</p><p>amputations and 1 deep lacerated wound. It was his opinion that the</p><p>cause of death was due to cardio-pulmonary arrest due to transaction</p><p>spinal cord at atlanto occipital joint.</p><p>7. The Sub-Inspector (PW-17) is said to have apprehended all the</p><p>accused on 23.11.2001 and produced them before PW-18 in his</p><p>office. PW-18 recorded the confessional statement of the accused in</p><p>the presence of PW-13 and PW-14 (panch witnesses). In pursuance</p><p>of the confession, all the accused led him and the panch witnesses</p><p>to the field of one Mr. Appani Gangaiah at Laximpur Shivar. There,</p><p>A-1 recovered and showed an axe, A-2 a sword and A-4 a knife</p><p>which were all hidden behind the bushes in the field. PW-18 seized</p><p>these objects in front of PW-11 to PW-13, later came to be marked</p><p>as Exhibits MOs 1 to 3. PW-18 also recovered a lungi belonging to</p><p>A-1 and one belonging to A-2 (Exhibit MO’s 9 and 10, respectively).</p><p>These material objects were sent to a Forensic Lab in Hyderabad,</p><p>the report of which is marked as Exhibit P-16.</p><p>[2024] 2 S.C.R. 5</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>8. After completion of the above referred investigation, a chargesheet was filed on 09.01.2002. The Judicial First-Class Magistrate,</p><p>Luxettipet took cognizance of the offence under Section 302 read</p><p>with Section 34 of IPC, against all the accused. On production of the</p><p>accused, the Magistrate furnished copies of the charge-sheet and</p><p>other connected documents and committed the case to the Court</p><p>of Sessions and the Learned Sessions Judge numbered the trial as</p><p>Sessions Case No. 523 of 2003. After the charges were framed, the</p><p>accused pleaded not guilty and sought trial.</p><p>9. At the trial, the prosecution examined 18 witnesses being PW-1 to</p><p>PW-18, and marked 37 documents and 10 Material Objects (MO’s).</p><p>After the closure of evidence, the accused were examined under</p><p>Section 313 CrPC with reference to the incriminating material found</p><p>against them in the evidence of the prosecution witnesses, and they</p><p>denied the same. There are no defence witnesses.</p><p>10. The Trial Court, by its elaborate judgment dated 24.02.2005, found</p><p>all four accused guilty for the murder of the deceased and convicted</p><p>them under Section 302 read with Section 34 of the IPC. Accordingly,</p><p>they were sentenced to undergo imprisonment for life and to pay a</p><p>fine of Rs. 500 each, in default, to undergo simple imprisonment of</p><p>one month. All the accused appealed to the High Court.</p><p>11. For the completeness of narration, we may indicate that the High Court</p><p>initially acquitted all the accused by its judgment dated 21.06.2007,</p><p>but in appeal to this Court, their conviction and sentences were</p><p>set-aside, and the criminal appeal was remanded back to the High</p><p>Court for fresh consideration. It is in this background that the order</p><p>impugned came to be passed by the High Court.</p><p>12. After remand, the High Court confirmed the judgment of the Trial</p><p>Court and dismissed the criminal appeals. The Special Leave Petition</p><p>filed by the accused was admitted on 01.08.2022 and this is how we</p><p>have heard Shri Gaurav Agrawal, learned counsel for the appellants</p><p>and Shri Krishan Kumar Singh learned counsel for the State and</p><p>Shri Sirajudeen, learned senior counsel for the respondent No. 2.</p><p>13. Findings of the Trial Court: The Trial Court had examined the</p><p>credibility of the Prosecution witness in great detail. According to</p><p>the Trial Court, PWs 1, 3, 4, 6, 7 and 8 were eyewitnesses to the</p><p>incident and their testimonies were consistent. Among them, PW-6’s </p><p>6 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>testimony was a clinching piece of evidence as he was privy to the</p><p>incident from the very beginning. He was subjected to intense crossexamination with respect to his residence and other details about</p><p>the incident. Except for minor variations, the Trial Court found his</p><p>testimony unshaken, being consistent and natural. The Trial Court</p><p>found the testimonies PW-1, PW-3, PW-4, PW-7, PW-8 corroborating</p><p>the incident of stopping an auto, dragging the deceased out, and</p><p>subsequently assaulting the deceased with various weapons.</p><p>14. Collectively, the witnesses reiterated that A-1 stopped the autorickshaw and pulled the deceased out and A-2 attacking the</p><p>deceased’s hands with a sword. As they reached A-4’s house, A-4</p><p>took the sword from A-2 and struck the deceased on his head. A-4</p><p>also inflicted injuries by a knife. The common account about A-3 is</p><p>that he hit the deceased on the head with a stone. Accused No. 1</p><p>continued the attack and hit the deceased with an axe. Largely, these</p><p>witnesses recounted a consistent narrative of the attack, identifying</p><p>the weapons used and the roles of each accused.</p><p>15. Judgment of the High Court: According to the High Court, the</p><p>accounts of PWs 1, 3, 4, 6, 7 and 8, who witnessed the incident,</p><p>converge and are consistent with the injuries, weapons and motive</p><p>for the murder of the deceased. The High Court correctly relied on</p><p>the evidence of PW-6 who was in an auto-rickshaw along with the</p><p>deceased on the day of the incident. PW6’s evidence that he boarded</p><p>the auto-rickshaw of PW-5, followed by the deceased and Rajitha</p><p>(PW-9) joining him, was believed by the High Court.</p><p>16. The account of PW6 being corroborated by the evidence of PWs</p><p>1, 3, 4, 7 and 8, the High Court held that the evidence conclusively</p><p>establishes the guilt of the accused beyond reasonable doubt. The</p><p>High Court also noted the submission relating to the contradictions</p><p>in the Complaint (Ex. P1) and the testimonies of PWs 1, 3, 4, 6, 7</p><p>and 8, specifically relating to the acts of assault, however, the High</p><p>Court came to the conclusion that they were minor in nature.</p><p>17. Though the High Court saw that the trial court extensively examined</p><p>the evidence and considered all the submissions, it has nevertheless</p><p>considered the evidence afresh and after a detailed examination,</p><p>arrived at the same conclusion. We have given our anxious</p><p>consideration and have scrutinised the evidence of all the eye-</p><p>[2024] 2 S.C.R. 7</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>witnesses in detail. We are in full agreement with the decision of the</p><p>Trial Court and the High Court. Their analyses and conclusions are</p><p>based on correct appreciation of evidence and law. However, there</p><p>is one aspect which stands out in the above-referred analyses of the</p><p>Trial Court and the High Court, and that pertains to the conclusion on</p><p>the culpability of A-3 for murder. We will now examine the evidence</p><p>as against A-3.</p><p>18. Evidence against Accused No.3: To commence with, the FIR states</p><p>that A-3 hit the deceased on the head, thereby causing death. The</p><p>Chargesheet states that A3 used a stone to do the same. However,</p><p>no further details have been provided. Further as we examine the</p><p>testimonies of all the eyewitnesses the following picture emerges.</p><p>PWs 1, 3, 4 and 6 state that the A-3 had used a stone to hit the</p><p>deceased’s head. PW-7 and PW-8 do not speak about his role.</p><p>19. PW-1, in his examination-in-chief and cross-examination, has</p><p>respectively stated as follows:</p><p>Chief - “When I was trying to go near the deceased, A-3</p><p>threatened me saying that if I go there he would kill me.</p><p>A-3 hit the deceased with a stone.”</p><p>Cross - “I read Ex. P-1 complaint and it does not show</p><p>that A-1 and A-3 threatened me and other eye witnesses</p><p>to kill if we tried to rescue the deceased”</p><p>20. PW-3, in his examination-in-chief and cross-examination, has</p><p>respectively stated as follows:</p><p>Chief - “After hearing the cries of the said Rajitha and</p><p>Swamy I, PW1, Kona Mallesh Akireeddy Ramesh, T.Odaiah</p><p>rushed to the spot. By the time we reached the spot the</p><p>deceased was lying on ground with injuries and on seeing</p><p>us A-3 took a stone and gave threats to us saying that he</p><p>would hit us if we go there.”</p><p>Cross - “It is not true to say that I did not state before the</p><p>police that when land other eye witnesses were going</p><p>near· the place of the incident A-3 armed with a stone</p><p>threatened to kill us. It is not true to say that for the first</p><p>time before this court I am deposing that A-3 armed with</p><p>a stone threatened me and other witnesses to kill”</p><p>8 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>21. P.W. 4, in his examination-in-chief, has stated as follows:</p><p>“A-3 took a stone and hit on the head of the deceased.”</p><p>22. P.W. 6, in his examination-in-chief, has stated as follows:</p><p>“A-3 took a stone and hit on the head of the deceased.”</p><p>23. A reading of the judgment and order passed by the Trial as well as</p><p>the High Court would indicate that neither the prosecution or defence,</p><p>nor the court, have focussed on the role of A-3 as evidenced by</p><p>the oral and documentary evidence. There is nothing to attribute</p><p>A-3 with the intent to murder the deceased. In fact, both the Courts</p><p>have mechanically drawn an inference against A-3 under Section 34</p><p>of the Act merely based on his presence near the scene of offence</p><p>and his familial relations with the other accused.</p><p>24. As per the post-mortem report, the cause of death is “cardio</p><p>pulmonary arrest due to transaction spinal cord at atlanto occipital</p><p>joint”. The atlanto occipital joint is at the back of the neck, which is</p><p>the exact place where A-1 assaulted the deceased with the help of</p><p>an axe. This axe was then taken by A-2 and thereafter, by A-4, who</p><p>also assaulted the deceased. All the eye-witnesses are clear in this</p><p>account. In other words, it was only A-3 who never took the axe in</p><p>his hand. He only used a stone to assault the deceased.</p><p>25. Considering the statements of the eye-witnesses, coupled with the</p><p>post-mortem report, it is not possible to contend that A-3 would have</p><p>had the intention to commit the murder of the deceased and as such,</p><p>he cannot be convicted under Section 302 IPC.</p><p>26. In fact, Victor Dinesh (PW-11), who gave the post-mortem report</p><p>had indicated the injuries as under:</p><p>“1. Incised wound extending from right ear to left cheek</p><p>19 cm long 6 cm deep 2 mm wide grievous sharp</p><p>weapon, Ante mortem.</p><p>2. Incised wound on the right eye brow (4cms) simple</p><p>sharp weapon Ante mortem.</p><p>3. Incised wound on the left side of fore head about</p><p>9 cms above left eye brow measuring 8 cms sharp</p><p>weapon Ante mortem.</p><p>[2024] 2 S.C.R. 9</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>4. Incised wound on left shoulder measuring 4 cm long</p><p>3mm wide. Sharp weapon ante mortem.</p><p>5. Incised wound on right should of 8 cm long 1 ½ cm</p><p>wide sharp weapon, ante mortem.</p><p>6. 5 cm x 6 Incised wound (slice) on the vertex. Sharp</p><p>weapon ante mortem.</p><p>7. 8 cms long incised wound backs of left wrist, sharp</p><p>weapon ante mortem.</p><p>8. 12 cms incised wound on the front of left hand, sharp</p><p>weapon, ante mortem.</p><p>9. Partial amputation of middle 3 fingers of left hand,</p><p>ante mortem.</p><p>10. Partial amputation of right thumb. Measuring 2 cms</p><p>sharp weapon ante mortem.</p><p>11. Partial amputation of right index finger measuring 3</p><p>cms sharp weapon, ante mortem.</p><p>12. Deep lacerated wound on the back of neck measuring</p><p>18 cms 7 cms with complete transaction of spinal</p><p>card and Atlanta occipital joint. Blunt weapon, ante</p><p>mortem.”</p><p>27. It is evident from the evidence of PW-11 that the deceased suffered</p><p>12 injuries, of which 10 are caused by sharp-edged weapons. The</p><p>11th injury is a partial amputation of the middle 3 fingers of left hand.</p><p>The final injury is a lacerated wound on the back of neck measuring</p><p>18 cms x 7 cms with complete transaction of spinal cord and atlanto</p><p>occipital joint. The Trial Court and the High Court have not analysed</p><p>the evidence as against A-3. They have proceeded to convict him</p><p>along with others under Section 302 with the aid of Section 34. The</p><p>cumulative circumstances in which A-3 was seen participating in</p><p>the crime would clearly indicate that he had no intention to commit</p><p>murder of the deceased for two clear reasons. Firstly, while every</p><p>other accused took the axe used by A1 initially and contributed to the</p><p>assault with this weapon, A-3 did not wield the axe at any point of</p><p>time. Secondly, A-3 only had a stone in his hand, and in fact, some</p><p>of the witnesses said that he merely threatened in case they seek </p><p>10 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>to intervene and prevent the assault. Under these circumstances,</p><p>we hold that A-3 did not share a common intention to commit the</p><p>murder of the deceased. Additionally, there is no evidence that A-3</p><p>came along with the other accused evidencing a common intention.</p><p>The description of the incident is that when the deceased came to</p><p>the scene of occurrence, A-1 dragged him to the house of A-4, and</p><p>the other accused joined A-1. In this context, A-3 picked up a stone</p><p>to assault the deceased.</p><p>28. Even though, A-3 might not have had the common intention to</p><p>commit the murder, nevertheless, his participation in the assault</p><p>and the wielding of the stone certainly makes him culpable for the</p><p>offence that he has committed. While we acquit A-3 of the offence</p><p>under Section 302 read with Section 34 of the IPC, he is liable for</p><p>the offence under 304 Part II IPC. The law on Section 304 Part II</p><p>has been succinctly laid down in Camilo Vaz v. State of Goa, (2000)</p><p>9 SCC 1, where it was held that:</p><p>14. This section is in two parts. If analysed, the section</p><p>provides for two kinds of punishment to two different</p><p>situations: (1) if the act by which death is caused is</p><p>done with the intention of causing death or causing such</p><p>bodily injury as is likely to cause death. Here the important</p><p>ingredient is the “intention”; (2) if the act is done with the</p><p>knowledge that it is likely to cause death but without any</p><p>intention to cause death or such bodily injury as is likely</p><p>to cause death. When a person hits another with a danda</p><p>on a vital part of the body with such force that the person</p><p>hit meets his death, knowledge has to be imputed to the</p><p>accused….</p><p>29. In the past, this Court has considered factors such as lack of medical</p><p>evidence to prove whether the act/injury was individually sufficient</p><p>to cause death1</p><p>, a single blow on head with a hammer2</p><p> and lack</p><p>of cogent evidence of the eye-witnesses that the accused shared a</p><p>common intention to commit murder3</p><p> as some factors to commute</p><p>a sentence from Section 302 to Section 304 Part II IPC.</p><p>1 Bawa Singh v. State of Punjab, 1993 Supp (2) SCC 754.</p><p>2 Sarup Singh v. State of Haryana, (2009) 16 SCC 479.</p><p>3 Ghana Pradhan & Ors. v. State of Orissa, 1991 Supp (2) SCC 451.</p><p>[2024] 2 S.C.R. 11</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>30. Returning back to the facts of the case, there is certainly no escape</p><p>from coming to the conclusion that A-3 should have had the knowledge</p><p>that the use of a stone to hit the head of the deceased is likely to cause</p><p>death. However, as demonstrated before, the evidence is insufficient</p><p>to deduce a conclusion that he shared a common intention with the</p><p>other accused to commit the murder of the deceased. Considering</p><p>the role that A-3 has played, we hold him guilty of the offence under</p><p>Section 304 Part II IPC.</p><p>31. The perusal of the evidence would reveal that it is not the case of</p><p>the prosecution that A-3 was along with the other accused while the</p><p>deceased was dragged to the house. The deposition would reveal</p><p>that after the other accused assaulted the deceased with sword, A-3</p><p>came thereafter and assaulted the deceased with stone lying there.</p><p>We, therefore, find that the prosecution has not been in a position</p><p>to establish that A-3 shared the common intention with the other</p><p>accused to cause the murder of the deceased.</p><p>32. For the reasons stated above, we uphold the conviction and sentence</p><p>of A-1, A-2 and A-4 under Section 302 read with Section 34 IPC and</p><p>dismiss their Criminal Appeal No. 2852 of 2023 against the judgment</p><p>of the High Court of Telangana in Criminal Appeal No. 308 of 2005</p><p>dated 26.04.2022. We acquit A-3 of the conviction and sentence</p><p>under Section 302 read with Section 34 and convict him under</p><p>Section 304 Part II and sentence him to undergo imprisonment for</p><p>10 years. To this extent, the appeal of A-3 is allowed by altering the</p><p>conviction under Section 302 to Section 304 Part II IPC.</p><p>33. Pending applications, if any, are disposed of.</p><p>Headnotes prepared by: Nidhi Jain Result of the case: Appeal disposed of.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-45877836557667341972024-02-18T07:00:00.002+05:302024-02-18T07:00:52.793+05:30Customs Act, 1962 – ss.75A, 27A – Central Excise Act, 1944 – Foreign Trade (Development and Regulation) Act, 1992 – Foreign Trade (Regulation) Rules, 1993 – Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 – Exim Policy of 1992-1997 – Duty Exemption Scheme – Duty Drawback Scheme – Supplies in civil construction work, eligibility for ‘deemed export’ benefit under the Exim Policy – Respondent, a class-I contractor specializing in the field of civil contract works especially funneling and hydro-electric power projects had completed the work awarded to it in 1996 in a project called Koyna Hydro Electric Power Project, Maharashtra funded by the International Bank for Reconstruction and Development, an arm of the World Bank – Respondent claimed duty drawback and interest for the delayed refund thereof – Entitlement:<p>* Author</p><p>[2024] 2 S.C.R. 91 : 2024 INSC 83</p><p>Union of India and Ors.</p><p>v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>(Civil Appeal Nos. 7238 of 2009)</p><p>05 February 2024</p><p>[Abhay S. Oka and Ujjal Bhuyan,* JJ.]</p><p>Issue for Consideration</p><p>Entitlement of the respondent to refund of duty drawback and</p><p>interest for delayed payment thereof.</p><p>Headnotes</p><p>Customs Act, 1962 – ss.75A, 27A – Central Excise Act, 1944</p><p>– Foreign Trade (Development and Regulation) Act, 1992 –</p><p>Foreign Trade (Regulation) Rules, 1993 – Customs, Central</p><p>Excise Duties and Service Tax Drawback Rules, 1995 – Exim</p><p>Policy of 1992-1997 – Duty Exemption Scheme – Duty Drawback</p><p>Scheme – Supplies in civil construction work, eligibility for</p><p>‘deemed export’ benefit under the Exim Policy – Respondent,</p><p>a class-I contractor specializing in the field of civil contract</p><p>works especially funneling and hydro-electric power projects</p><p>had completed the work awarded to it in 1996 in a project called</p><p>Koyna Hydro Electric Power Project, Maharashtra funded by</p><p>the International Bank for Reconstruction and Development, an</p><p>arm of the World Bank – Respondent claimed duty drawback</p><p>and interest for the delayed refund thereof – Entitlement:</p><p>Held: On a conjoint reading of the relevant provisions of the Exim</p><p>Policy, 1992-1997 in conjunction with the Central Excise Act and</p><p>the Customs Act, it is evident that supply of goods to the project</p><p>in question by the respondent was a case of ‘deemed export’ and</p><p>thus entitled to the benefit under the Duty Drawback Scheme – The</p><p>language employed in the policy made this very clear and there</p><p>was no ambiguity in respect of such entitlement – Even if there</p><p>was any doubt, the same was fully explained by the 1995 Rules –</p><p>It is not correct on the part of the appellants to contend that there</p><p>was no provision for payment of interest on delayed refund of</p><p>duty drawback – It is also untenable for the appellants to contend</p><p>that refund of duty drawback was granted to the respondent as a</p><p>concession, not to be treated as a precedent – Respondent entitled </p><p>92 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>to refund of duty drawback as a deemed export under the Duty</p><p>Drawback Scheme – Applications for refund were made in 1996</p><p>– Decision to grant refund of duty drawback was taken belatedly</p><p>on 07.10.2002 whereafter the payments were made by way of</p><p>cheques on 31.03.2003 and 20.05.2003 – Admittedly, there was</p><p>considerable delay in refund of duty drawback – Under s.75A(1)</p><p>of the Customs Act, where duty drawback is not paid within three</p><p>months from the date of filing of claim, the claimant would be entitled</p><p>to interest in addition to the amount of drawback – It provides that</p><p>the interest would be at the rate fixed u/s.27A from the date after</p><p>expiry of the said period of three months till the payment of such</p><p>drawback – The interest rate prescribed u/s.27A at the relevant</p><p>point of time was not below ten percent and not exceeding thirty</p><p>percent per annum – The Central Board of Excise and Customs vide</p><p>its notification bearing No.32/1995 (NT)- Customs dtd. 26.5.1995</p><p>had fixed the rate of interest at fifteen percent for the purpose of</p><p>s.27A – Since there was belated refund of the duty drawback to</p><p>the respondent, it was entitled to interest at the rate which was</p><p>fixed by the Central Government at the relevant point of time being</p><p>fifteen percent – Order of the Division Bench of the High Court</p><p>not interfered with. [Paras 33-39]</p><p>Case Law Cited</p><p>S. S. Grewal v. State of Punjab [1993] 3 SCR 593 : 1993</p><p>Suppl. 3 SCC 234; Rajagopal Reddy (dead) by Lrs. v.</p><p>Padmini Chandrasekharan (dead) by Lrs. [1995] 1 SCR</p><p>715 : (1995) 2 SCC 630; Zile Singh v. State of Haryana</p><p>[2004] 5 Suppl. SCR 272 : (2004) 8 SCC 1 – referred to.</p><p>List of Acts</p><p>Central Excise Act, 1944; Customs Act, 1962; Finance Act,</p><p>1994, Imports and Exports (Control) Act, 1947; Foreign Trade</p><p>(Development and Regulation) Act, 1992; Foreign Trade</p><p>(Regulation) Rules, 1993; Customs, Central Excise Duties and</p><p>Service Tax Drawback Rules, 1995.</p><p>List of Keywords</p><p>Drawback; Duty drawback; Duty Drawback Scheme; Exim Policy</p><p>of 1992-1997; Duty Exemption Scheme; Deemed export; Delayed</p><p>refund of duty drawback; Interest; Multilateral or bilateral agencies;</p><p>International Bank for Reconstruction and Development; World Bank;</p><p>Central Board of Excise and Customs; Imports of duty free material;</p><p>Notification declaratory/clarificatory; Retrospective operation.</p><p>[2024] 2 S.C.R. 93</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>Case Arising From</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal No.7238 of 2009</p><p>From the Judgment and Order dated 22.08.2008 of the High Court</p><p>of Karnataka at Bangalore in WA No.356 of 2006</p><p>Appearances for Parties</p><p>V C Bharathi, Raj Bahadur Yadav, Shashank Bajpai, Mrs. Sweta</p><p>Singh Verma, A. K. Kaul, Praneet Pranab, Advs. for the Appellants.</p><p>Basuva Prabhu Patil, Sr. Adv., Amit Sharma, Dipesh Sinha, Ms.</p><p>Pallavi Barua, Ms. Aparna Singh, Advs. for the Respondent.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Ujjal Bhuyan, J.</p><p>Appellants i.e., Union of India, Director General of Foreign Trade and</p><p>Joint Director General of Foreign Trade by means of this civil appeal</p><p>have taken exception to the judgment and order dated 22.08.2008</p><p>passed by a Division Bench of the High Court of Karnataka, Circuit</p><p>Bench at Dharwad in Writ Appeal No.356 of 2006 affirming the</p><p>judgment and order of the learned Single Judge dated 22.09.2005</p><p>allowing Writ Petition No.45525 of 2004 filed by the respondent.</p><p>2. Facts lie within a narrow compass. Nonetheless, for a determination</p><p>of the lis, it would be necessary to briefly narrate the relevant facts</p><p>as projected by the respondent in the related writ petition.</p><p>2.1. Respondent is a class-I contractor specializing in the field of</p><p>civil contract works especially funneling and hydro electric</p><p>power projects.</p><p>2.2. Central Government had approved funding of a project called</p><p>Koyna Hydro Electric Power Project, Maharashtra by the</p><p>International Bank for Reconstruction and Development, which</p><p>is an arm of the World Bank. In the said project, respondent</p><p>was awarded a sub-contract to execute civil works from Lake</p><p>Intake to the Emergency Valve Tunnel. Respondent has relied</p><p>upon a letter dated 08.08.1991 issued by the Chief Engineer</p><p>of the project. Relevant portion of the letter reads thus:-</p><p>94 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>4.2. Information regarding the benefits available</p><p>under the “Deemed Export” concept for this World</p><p>Bank Aided (Loan) Project may please be obtained</p><p>by the contractors from their own sources and the</p><p>information gained by them may be utilised, while</p><p>quoting the rates.</p><p>2.3. A deemed export scheme was announced under the Exim</p><p>Policy, 1992-1997 by the Ministry of Commerce, Government</p><p>of India and the Director General of Foreign Trade under the</p><p>Foreign Trade (Development and Regulation) Act, 1992. Certain</p><p>benefits under ‘deemed export’ were also included in the said</p><p>Exim Policy.</p><p>2.4. Respondent completed the construction work awarded to it in</p><p>the month of March, 1996 and thereafter filed applications dated</p><p>25.03.1996, 13.09.1996 and 20.12.1996 claiming duty drawback</p><p>for Rs.35,75,679.00, Rs.88,98,206.00 and Rs.85,05,853.00</p><p>respectively.</p><p>2.5. By endorsements dated 10.11.1996, 06.12.1996 and 31.12.1996,</p><p>Director General of Foreign Trade (for short ‘DGFT’ hereinafter)</p><p>rejected the applications of the respondent for duty drawback</p><p>on the ground that supplies in civil construction work were not</p><p>eligible for ‘deemed export’ benefit.</p><p>2.6. Notwithstanding such rejection, respondent made representations</p><p>for reconsideration of such decision and sought for duty drawback</p><p>under the Exim Policy, 1992-1997. One such representation is</p><p>dated 05.02.1997. However, the same was rejected by the DGFT</p><p>vide the order dated 10.08.1997 stating that civil construction</p><p>work did not qualify for drawback.</p><p>2.7. On 20.08.1998, DGFT issued a circular under the successor</p><p>Exim Policy, 1997-2002 clarifying that supply of goods under</p><p>paragraph 10(2)(d) of the 1997-2002 Exim Policy would be</p><p>entitled for ‘deemed export’ benefit. It may be mentioned that</p><p>the Exim Policy of 1992-1997 had expired with effect from</p><p>31.03.1997.</p><p>2.8. On 05.12.2000, DGFT issued a circular that drawback was to</p><p>be paid in respect of excise duty on supply of goods to projects</p><p>funded by multilateral agencies. </p><p>[2024] 2 S.C.R. 95</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>2.9. In the above scenario, respondent once again addressed</p><p>a letter dated 28.08.2001 to the DGFT to finalize the issue.</p><p>However, DGFT rejected the claim vide the communication</p><p>dated 21.06.2002.</p><p>2.10.Notwithstanding the same, a Policy Interpretation Committee</p><p>was constituted which examined the case of the respondent in</p><p>its meeting held on 07.10.2002. It was decided that the benefit</p><p>of duty drawback under the ‘deemed export’ scheme would be</p><p>extended to the respondent. Consequently, in supersession of</p><p>the earlier rejection order dated 21.06.2002 and in the light of the</p><p>decision of the Policy Interpretation Committee dated 07.10.2002,</p><p>DGFT vide the order dated 01.11.2002 permitted duty drawback</p><p>of Rs.2,05,79,740.00 to the respondent. Thereafter cheques</p><p>for Rs.25,00,000.00, Rs.63,23,575.00, Rs.81,05,583.00 and</p><p>Rs.56,50,312.00, totalling Rs.2,25,79,470.00 vide endorsements</p><p>dated 31.03.2003 and 20.05.2003 were issued. However, it was</p><p>clarified that duty drawback granted to the respondent would</p><p>not be treated as a precedent.</p><p>2.11.Respondent thereafter submitted representation addressed</p><p>to the appellants dated 06.06.2003, 14.06.2003, 17.07.2003,</p><p>29.10.2003 and 10.08.2004 seeking interest on the duty</p><p>drawback amount paid on the ground of delayed payment.</p><p>However, the request for interest made by the respondent was</p><p>rejected by the DGFT.</p><p>3. Aggrieved by rejection of the request for interest on the amount</p><p>of duty drawback paid, respondent preferred a writ petition before</p><p>the High Court which was registered as Writ Petition No.45525 of</p><p>2004. After hearing the parties, a learned Single Judge of the High</p><p>Court vide the judgment and order dated 22.09.2005 referred to the</p><p>notification dated 05.12.2000 and held that respondent was entitled</p><p>for duty drawback. After observing that there was delay in payment</p><p>of duty drawback, learned Single Judge held that respondent would</p><p>be entitled to interest for delayed payment of duty drawback. Since</p><p>Customs Act, 1962 provides that interest has to be paid in such a</p><p>case in the range of five percent to thirty percent, learned Single</p><p>Judge awarded interest at the rate of fifteen percent. Consequently,</p><p>directions were issued to the appellants to consider the claim of</p><p>the respondent for payment of interest on delayed refund from the</p><p>date of notification dated 05.12.2000 till the date of payment to the</p><p>respondent within a period of three months. </p><p>96 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>4. This judgment and order of the learned Single Judge came to be</p><p>assailed by the appellants before the Division Bench of the High Court</p><p>which was registered as Writ Appeal No.356 of 2006. Respondent</p><p>also filed Writ Appeal No.3699 of 2005 assailing the direction of</p><p>the learned Single Judge to pay interest only from 05.12.2000. The</p><p>Division Bench took note of the fact that since duty drawback was</p><p>refunded by the appellants to the respondent, the only question to</p><p>be considered was the entitlement of the respondent to interest for</p><p>the delayed refund. In this connection, the Division Bench examined</p><p>the notification dated 20.08.1998 and observed that this notification</p><p>had clarified that ‘deemed export’ would include goods and services</p><p>of civil construction projects. Thus, duty drawback under the Exim</p><p>Policy in force was extended even to civil construction. This position</p><p>was further clarified by the subsequent notification dated 05.12.2000.</p><p>Such notification was held by the Division Bench to be clarificatory</p><p>in nature, thus having retrospective effect. After referring to Sections</p><p>27A and 75A of the Customs Act, 1962, the Division Bench held that</p><p>respondent would be entitled to interest after expiry of three months</p><p>from the date of making the applications for refund of duty drawback.</p><p>Vide the judgment and order dated 22.08.2008, the Division Bench</p><p>opined that respondent would be entitled to interest from the date</p><p>of expiry of three months after submitting the applications for refund</p><p>of duty drawback in the year 1996 at the rate of fifteen percent</p><p>as awarded by the learned Single Judge. While the writ appeal of</p><p>the respondent was allowed, the writ appeal of the appellants was</p><p>dismissed.</p><p>5. Mr. V. C. Bharathi, learned counsel for the appellants submitted a short</p><p>list of dates and events. He pointed out therefrom that applications</p><p>filed by the respondent for duty drawback were repeatedly rejected</p><p>by the DGFT. Notwithstanding such rejection, respondent continued</p><p>to file one representation after the other claiming duty drawback.</p><p>It is in such circumstances that a Policy Interpretation Committee</p><p>was constituted by the DGFT which examined the case of the</p><p>respondent and vide its decision dated 07.10.2002 decided to extend</p><p>the benefit of duty drawback to the respondent as a special case. It</p><p>is in this backdrop that DGFT had passed order dated 01.11.2002</p><p>emphasizing that the duty drawback paid to the respondent would</p><p>not be treated as a precedent. He submitted that duty drawback was</p><p>extended to the respondent as a special case which was not available</p><p>to the respondent under the Exim Policy of 1992-1997. In such </p><p>[2024] 2 S.C.R. 97</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>circumstances, question of awarding any interest to the respondent</p><p>on the ground of alleged delay in payment of duty drawback did not</p><p>arise. There was no provision under the Exim Policy of 1992-1997</p><p>for payment of such interest. Therefore, learned Single Judge erred</p><p>in awarding interest to the respondent, that too, at the high rate of</p><p>fifteen percent.</p><p>5.1. He further argued that the Division Bench had fallen in error taking</p><p>the view that circulars dated 20.08.1998 and 05.12.2000 were</p><p>clarificatory in nature and therefore would have retrospective</p><p>effect covering the case of the respondent. According to him,</p><p>these circulars were issued under the successor Exim Policy,</p><p>1997-2002 and thus could not be applied to cases like that of</p><p>the respondent under the Exim Policy 1992-1997. He, therefore,</p><p>submitted that the present is a fit case for interfering with the</p><p>decision of the learned Single Judge as affirmed by the Division</p><p>Bench.</p><p>6. Per-contra, Mr. Basuva Prabhu Patil, learned senior counsel for the</p><p>respondent supported the orders of the learned Single Judge and</p><p>that of the Division Bench. He submitted that the appellants having</p><p>granted the benefit of duty drawback to the respondent though</p><p>belatedly, it is not open to them to now contend that respondent</p><p>was not entitled to such duty drawback which was only granted as a</p><p>concession. Admittedly, there was delay in refund of duty drawback.</p><p>Respondent is, therefore, entitled to interest on such delayed refund</p><p>which was rightly awarded by the High Court.</p><p>6.1. Referring to the provisions of Section 27A of the Customs Act,</p><p>1962 (referred to as the ‘Customs Act’ hereinafter), learned</p><p>senior counsel submitted that the High Court had taken a rather</p><p>conservative figure considering the legislative scheme while</p><p>awarding interest at the rate of fifteen percent to the respondent.</p><p>He, therefore, submitted that no interference would be called</p><p>for in the orders of the High Court and that the civil appeal filed</p><p>by the appellants should be dismissed.</p><p>7. Submissions made by learned counsel for the parties have received</p><p>the due consideration of the Court.</p><p>8. Before we examine the decisions of the High Court, it would be</p><p>apposite to briefly highlight the statutory framework and the concerned</p><p>Exim Policy. </p><p>98 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>9. Section 11A of the Central Excise Act, 1944 (briefly ‘Central Excise</p><p>Act’ hereinafter) deals with recovery of duties not levied or not paid</p><p>or short-levied or short paid or erroneously refunded. Relevant for</p><p>our purpose is sub-section (1) which says that where any duty of</p><p>excise has not been levied or not paid or has been short levied or</p><p>short paid or erroneously refunded, for any reason other than the</p><p>reason of fraud or collusion etc. with intent to evade payment of</p><p>duty, the Central Excise Officer shall serve notice on the person so</p><p>chargeable within two years from the relevant date requiring him</p><p>to show cause why he should not pay the amount specified in the</p><p>notice. The person chargeable with duty may either before service</p><p>of notice pay on the basis of his own ascertainment or the duty</p><p>ascertained by the Central Excise Officer, the amount of duty along</p><p>with interest payable thereon under Section 11AA. In the event of</p><p>fraud, collusion etc. the notice period gets extended to five years.</p><p>9.1. Duty is cast upon the person liable to pay duty either voluntarily</p><p>or after determination under Section 11A to pay interest in</p><p>addition to the duty under sub-section (1) of Section 11AA.</p><p>As per sub-section (2), such interest shall not be below ten</p><p>percent and shall not exceed thirty six percent per annum,</p><p>as the Central Government may by notification in the Official</p><p>Gazette fix. Such interest shall be calculated from the date on</p><p>which the duty becomes due up to the date of actual payment</p><p>of the amount due.</p><p>9.2. Section 11B of the Central Excise Act entitles any person</p><p>claiming refund of any duty of excise and interest to make an</p><p>application for refund of such duty and interest before the expiry</p><p>of one year from the relevant date (prior to 12.05.2000, it was</p><p>six months instead of one year).</p><p>9.3. Section 11BB provides for interest on delayed refund. It says</p><p>that if any duty ordered to be refunded under sub-section (2)</p><p>of Section 11B to any applicant is not refunded within three</p><p>months from the date of receipt of the application under subsection (1) of that section, there shall be paid to such applicant</p><p>interest at such rate not below five percent and not exceeding</p><p>thirty percent per annum as for the time being fixed by the</p><p>Central Government, by notification in the Official Gazette. Prior</p><p>to 11.05.2001, the rate of interest was not below ten percent. </p><p>[2024] 2 S.C.R. 99</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>The applicant would be entitled to interest after expiry of three</p><p>months from the date of receipt of such application till the date</p><p>of refund of such duty.</p><p>10. Section 27 of the Customs Act deals with claim for refund of duty.</p><p>As per sub-section (1), any person claiming refund of any duty or</p><p>interest paid by him or borne by him, may make an application in</p><p>the prescribed form and manner, for such refund addressed to the</p><p>designated authority before the expiry of one year from the date of</p><p>payment of such duty or interest. Explanation below sub-section (1)</p><p>clarifies that for the purpose of sub-section (1), the date of payment</p><p>of duty or interest in relation to a person, other than an importer,</p><p>shall be construed as the date of purchase of goods by such person.</p><p>10.1.Sub-section (2) says that if on the receipt of such application</p><p>the designated authority is satisfied that the whole or any part</p><p>of the duty and interest, if any, paid on such duty, paid by the</p><p>applicant is refundable, he may make an order accordingly and</p><p>the amount so determined shall be credited to the Consumer</p><p>Welfare Fund established under Section 12C of the Central</p><p>Excise Act. However, as per the proviso, the amount of duty and</p><p>interest so determined shall be paid to the applicant instead of</p><p>being credited to the Consumer Welfare Fund if such amount is</p><p>relatable, amongst others, to drawback of duty payable under</p><p>Sections 74 and 75 of the Customs Act.</p><p>11. Section 27A of the Customs Act provides for interest on delayed</p><p>refund. It says that, if any duty ordered to be refunded under subsection (2) of Section 27 to an applicant is not refunded within three</p><p>months from the date of receipt of the application, there shall be paid</p><p>to that applicant interest at such rate not below five percent and not</p><p>exceeding thirty percent per annum as is for the time being fixed</p><p>by the Central Government, by notification in the Official Gazette,</p><p>on such duty from the date immediately after the expiry of three</p><p>months from the date of receipt of such application till the date of</p><p>refund of such duty.</p><p>12. Chapter X of the Customs Act comprising of Sections 74 to 76 deals</p><p>with drawback. While Section 74 allows drawback on re-export of</p><p>duty-paid goods, Section 75 provides for drawback on imported</p><p>materials used in the manufacture of goods which are exported. On</p><p>the other hand, Section 75A deals with interest on drawback. Sub-</p><p>100 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>section (1) of Section 75A says that, where any drawback payable</p><p>to a claimant under Section 74 or Section 75 is not paid within a</p><p>period of one month (earlier it was two months and prior thereto</p><p>it was three months) from the date of filing a claim for payment of</p><p>such drawback, there shall be paid to that claimant in addition to</p><p>the amount of drawback, interest at the rate fixed under Section 27A</p><p>from the date after the expiry of the said period of one month till the</p><p>date of payment of such drawback.</p><p>13. In exercise of the powers conferred under Section 3 of the Imports</p><p>and Exports (Control) Act, 1947, the Central Government notified the</p><p>Export and Import (Exim) Policy for the period 1992-1997. It came</p><p>into effect from 01.04.1992 and remained in force for a period of</p><p>five years up to 31.03.1997.</p><p>14. After the enactment of The Foreign Trade (Development and</p><p>Regulation) Act, 1992, the Exim Policy, 1992-1997 was deemed to</p><p>have been made under the aforesaid Act. That being the position,</p><p>we will briefly refer to the said enactment.</p><p>15. The Foreign Trade (Development and Regulation) Act, 1992 (briefly</p><p>‘the 1992 Act’ hereinafter) is an act to provide for the development</p><p>and regulation of foreign trade by facilitating imports into and</p><p>augmenting exports from India and for matters connected therewith</p><p>or incidental thereto.</p><p>15.1.Section 4 declares that all orders made under the Imports and</p><p>Exports (Control) Act, 1947 and in force immediately before the</p><p>commencement of the 1992 Act shall so far as they are not</p><p>inconsistent with the provisions of the 1992 Act would continue</p><p>to be in force and shall be deemed to have been made under</p><p>the 1992 Act.</p><p>15.2.Thus, by virtue of Section 4 of the 1992 Act, the Exim Policy of</p><p>1992-1997 continued to be in force and was deemed to have</p><p>been made under the 1992 Act.</p><p>16. Section 5 of the 1992 Act, as it stood at the relevant point of time,</p><p>dealt with export and import policy. As per Section 5, the Central</p><p>Government may from time to time formulate and anounce by</p><p>notification in the Official Gazette, the export and import policy and</p><p>may also, in the like manner, amend that policy. </p><p>[2024] 2 S.C.R. 101</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>17. Rule 2(e) of the Foreign Trade (Regulation) Rules, 1993, framed</p><p>under the 1992 Act, defines the word ‘policy’ to mean export and</p><p>import policy formulated and announced by the Central Government</p><p>under Section 5.</p><p>18. Let us now revert back to the Exim Policy, 1992 – 1997. Section 7</p><p>of the said policy ascribes meaning to the words and expressions for</p><p>the purpose of the policy. As per Section 7(13), ‘drawback’ in relation</p><p>to any goods manufactured in India and exported means the rebate</p><p>of duty chargeable on any imported materials or excisable materials</p><p>used in the manufacture of such goods in India.</p><p>19. Chapter VII of the policy provides for ‘Duty Exemption Scheme’.</p><p>Section 47, which is the first section in Chapter VII, mentions</p><p>that under the Duty Exemption Scheme, imports of duty free raw</p><p>materials, components, intermediates, consumables, parts, spares</p><p>including mandatory spares and packing materials required for the</p><p>purpose of export production may be permitted by the competent</p><p>authority under the five categories of licences mentioned in the</p><p>said chapter, including special imprest licence. As per Section</p><p>56 (ii)(3), supplies made to projects financed by multilateral or</p><p>bilateral agencies like the International Bank for Reconstruction and</p><p>Development would be entitled to duty free import of raw materials,</p><p>components, intermediates, consumables, parts, spares including</p><p>mandatory spares and packing materials to main/sub-contractors for</p><p>the manufacture and supply of products to such projects.</p><p>20. Chapter X introduced the concept of ‘deemed exports’. Section 120</p><p>defines ‘deemed exports’ to mean those transactions in which the</p><p>goods supplied did not leave the country and the payment for the</p><p>goods was received by the supplier in Indian rupees but the supplies</p><p>earned or saved foreign exchange for the country.</p><p>21. Under Section 121 (f), supply of goods to projects financed by</p><p>multilateral or bilateral agencies, such as, the International Bank</p><p>for Reconstruction and Development under international competitive</p><p>bidding or under limited tender system would be regarded as ‘deemed</p><p>exports’ under the Exim Policy of 1992-1997.</p><p>22. Section 122 provides that ‘deemed exports’ shall be eligible for the</p><p>benefits in respect of manufacture and supply of goods qualifying</p><p>as ‘deemed exports’, including under the Duty Drawback Scheme.</p><p>102 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>23. In exercise of the powers conferred by Section 75 of the Customs</p><p>Act, Section 37 of the Central Excise Act and Section 93A read with</p><p>Section 94 of the Finance Act, 1994, the Central Government has</p><p>made a set of rules called the Customs, Central Excise Duties and</p><p>Service Tax Drawback Rules, 1995. Rule 2(a) defines ‘drawback’ in</p><p>relation to any goods manufactured in India and exported, to mean</p><p>the rebate of duty or tax as the case may be, chargeable on any</p><p>imported materials or excisable materials used or taxable services</p><p>used as input services in the manufacture of such goods. ‘Excisable</p><p>material’ has been defined under Rule 2(b) to mean any material</p><p>produced or manufactured in India subject to a duty of excise under</p><p>the Central Excise Act. Likewise, the expression ‘imported material’</p><p>has been defined under Rule 2(d) to mean any material imported</p><p>into India and on which duty is chargeable under the Customs Act.</p><p>23.1. Rule 3 provides for allowance of drawback. Sub-rule (1) says</p><p>that subject to the provisions of the Customs Act, Central</p><p>Excise Act, the Finance Act, 1994 and the rules made under</p><p>the aforesaid three enactments, a drawback may be allowed</p><p>on the export of goods at such amount or at such rates as may</p><p>be determined by the Central Government.</p><p>23.2. Rule 14 deals with payment of drawback and interest. Subrule (1) says that the drawback under the Customs, Central</p><p>Excise Duties and Service Tax Drawback Rules, 1995 (briefly</p><p>‘the 1995 Rules’ hereinafter) and interest, if any, shall be paid</p><p>by the proper officer of customs to the exporter or to the agent</p><p>specially authorized by the exporter to receive the said amount</p><p>of drawback and interest. Sub-rule (2) clarifies that the officer</p><p>of customs may combine one or more claims for the purpose of</p><p>payment of drawback and interest, if any, as well as adjustment</p><p>of any amount of drawback and interest already paid and may</p><p>issue a consolidated order for payment. As per sub-rule (3),</p><p>the date of payment of drawback and interest, if any, shall be</p><p>deemed to be, in the case of payment by cheque, the date of</p><p>issue of such cheque; or by credit in the exporter’s account</p><p>maintained with the Custom House, the date of such credit.</p><p>24. At this stage, we may mention that in exercise of the powers conferred</p><p>by Section 27A of the Customs Act, the Central Board of Excise and</p><p>Customs had issued notification bearing No.32/1995 (NT)-Customs </p><p>[2024] 2 S.C.R. 103</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>dated 26.05.1995 fixing the rate of interest at fifteen percent for the</p><p>purposes of Section 27A of the Customs Act. This was notified by</p><p>the Central Government in the Ministry of Finance, Department of</p><p>Revenue in the Official Gazette of India dated 26.05.1995.</p><p>25. Likewise, in exercise of the powers conferred by Section 11BB of the</p><p>Central Excise Act, the Central Board of Excise and Customs issued</p><p>notification No.22/95-Central Excises (NT) dated 29.05.1995 fixing</p><p>the rate of interest at fifteen percent per annum for the purposes of</p><p>the said section. This was also notified by the Central Government</p><p>in the Official Gazette of India on 29.05.1995.</p><p>26. Though it may not be necessary, still we may refer to the circulars</p><p>dated 20.08.1998 and 05.12.2000 issued by the DGFT. Circular</p><p>dated 20.08.1998 says that representations had been received from</p><p>individual exporters as well as clarifications sought for by different</p><p>regional licencing authorities with regard to availability of deemed</p><p>export benefit for supply of goods and services to civil construction</p><p>projects. Circular dated 20.08.1998 says that the issue as to whether</p><p>supply of goods and services to civil construction projects would be</p><p>entitled for deemed export benefit or not had been examined in detail,</p><p>whereafter it was clarified that supply of goods under paragraph 10(2)</p><p>(d) of the Exim Policy would be entitled to deemed export benefit.</p><p>Therefore, if within the scope of a work of turn-key civil construction</p><p>project, supply of goods is included then supply of such goods would</p><p>be entitled to deemed export benefit.</p><p>26.1. It appears that representations were continued to be received</p><p>by the DGFT regarding admissibility of duty drawback on</p><p>supplies made to turn-key projects, considered as deemed</p><p>export in terms of the Exim Policy. Circular dated 05.12.2000</p><p>mentions that the matter was deliberated upon by the Policy</p><p>Review Committee. It was noted that it was not possible for a</p><p>single contractor to manufacture himself all the items required</p><p>for execution of such projects. Hence certain items, either</p><p>imported or indigenous, had necessarily to be procured from</p><p>other sources. It was, therefore, clarified that all such directly</p><p>supplied items, whether imported or indigenous, and used in the</p><p>projects, the condition ‘manufactured in India’, a pre-requisite</p><p>for grant of deemed export benefit, was satisfied in view of</p><p>the fact that such activities being undertaken at the project </p><p>104 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>site constituted ‘manufacture’ as per the definition provided in</p><p>the Exim Policy. Accordingly, it was clarified that the duties,</p><p>customs and central excise, suffered on such goods should</p><p>be refunded through the duty drawback route. Referring to the</p><p>previous circular dated 20.08.1998, it was further clarified that</p><p>excise duty paid on supply of inputs, such as, cement, steel</p><p>etc., would be refunded through the duty drawback route in the</p><p>same manner as in any other case of excisable goods being</p><p>supplied to any other project qualifying for deemed export</p><p>benefit, subject to the project authority certifying the receipt</p><p>and use of such inputs in the project.</p><p>27. As already noted above, a Policy Interpretation Committee was</p><p>constituted. The said committee held a meeting on 07.10.2002,</p><p>chaired by the DGFT. One of the agenda items deliberated upon</p><p>in the said meeting was the claim of the respondent regarding</p><p>inclusion of excise duty component in the price quoted before the</p><p>project authority as a case of deemed export and refund of the</p><p>same through the duty drawback route. The Policy Interpretation</p><p>Committee discussed the case of the respondent and opined that in</p><p>case any such firms were still competitive and able to supply goods</p><p>at international prices despite including the component of excise duty</p><p>in the price quoted before the project authority, the deemed export</p><p>benefit could not be denied to such firms. Hence, the committee</p><p>decided to permit deemed export benefit even in cases where the</p><p>excise duty component was factored in the pricing quoted provided</p><p>other conditions of deemed export benefit were adhered to.</p><p>27.1. From a perusal of the minutes of the meeting of the Policy</p><p>Interpretation Committee held on 07.10.2002, it is evident</p><p>that the committee had opined to extend the deemed export</p><p>benefit to those firms which included excise duty component</p><p>in the tender pricing quoted before the project authority such</p><p>as the respondent. There is nothing in the minutes to indicate</p><p>that such benefit was being extended to the respondent as a</p><p>one off case or by way of concession.</p><p>28. Based on the minutes of the Policy Interpretation Committee meeting</p><p>held on 07.10.2002, DGFT issued letter dated 01.11.2002, a copy</p><p>of which was marked to the respondent, superseding the previous</p><p>rejection order dated 21.06.2002 and allowing duty drawback to be </p><p>[2024] 2 S.C.R. 105</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>paid to the respondent for materials/goods, such as, steel, cement</p><p>etc., used in the civil works of Koyna Hydro Electric Project. The</p><p>amount of drawback refundable to the respondent was quantified</p><p>at Rs.2,05,79,740.00. In the said letter, it was, however, mentioned</p><p>that grant of drawback should not be treated as a precedent. It was</p><p>thereafter that cheques were issued paying the aforesaid amount of</p><p>duty drawback to the respondent. At that stage, respondent submitted</p><p>representations contending that there was delay in the refund of</p><p>drawback and therefore, it was entitled to interest from the relevant</p><p>date at the rate of fifteen percent in terms of the notification No.22/95</p><p>dated 29.05.1995 (we may mention that the respondent had placed</p><p>reliance on the aforesaid notification which fixed interest at the rate</p><p>of fifteen percent for delayed refund of duty under Section 11BB of</p><p>the Central Excise Act). However, such representations were rejected</p><p>by the DGFT on 10.07.2003 and 06.08.2003 respectfully. In the</p><p>rejection letter dated 10.07.2003, respondent was informed by the</p><p>office of DGFT that there was no provision for payment of interest</p><p>on the deemed export duty drawback. Therefore, the request for</p><p>payment of interest could not be agreed upon.</p><p>29. Learned Single Judge referred to the circular dated 05.12.2000 and</p><p>observed that pursuant thereto appellants had paid the duty drawback</p><p>to the respondent. However, there was delay in payment of duty</p><p>drawback at least from the date of the clarificatory circular dated</p><p>05.12.2000. Therefore, respondent would be entitled to interest from</p><p>the date of the clarification till the date of payment. After observing</p><p>that the Customs Act provides for interest on delayed refund within</p><p>the range from five percent to thirty percent, learned Single Judge</p><p>directed the appellants to pay interest on the delayed refund from</p><p>the date of the clarificatory circular dated 05.12.2000 till the date of</p><p>payment within a period of three months.</p><p>30. Appellants filed Writ Appeal No.356 of 2006 assailing the aforesaid</p><p>decision of the learned Single Judge. On the other hand, respondent</p><p>also filed a writ appeal being Writ Appeal No.3699 of 2005 assailing</p><p>the directions of the learned Single Judge to pay interest only from</p><p>the date of the circular dated 05.12.2000.</p><p>30.1. Before the Division Bench, it was contended on behalf of the</p><p>appellants that it was only under the Foreign Trade Policy,</p><p>2004-2009 that for the first time payment of simple interest </p><p>106 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>at the rate of six percent per annum in the event of delay in</p><p>refund of duty drawback was provided. There was no provision</p><p>for payment of interest on delayed refund of duty drawback on</p><p>deemed export prior thereto. Therefore, respondent was not</p><p>entitled to interest even from 05.12.2000 as directed by the</p><p>learned Single Judge. It was canvassed before the Division</p><p>Bench on behalf of the appellants that only due to magnanimity</p><p>on the part of the Central Government refund of duty drawback</p><p>under deemed export was paid to the respondent. As such,</p><p>refund would not carry any interest.</p><p>30.2. The Division Bench repelled such contentions advanced on</p><p>behalf of the appellants and held that in view of the circular</p><p>dated 05.12.2000, it was clarified that even civil construction</p><p>works were entitled to the benefit of deemed export under the</p><p>Exim Policy. After saying so, the Division Bench noted that as</p><p>a matter of fact, an amount of Rs.2,05,79,740.00 was paid</p><p>to the respondent as duty drawback. Thereafter, the Division</p><p>Bench analysed the circular dated 05.12.2000 and upon such</p><p>analysis it was observed that the position vis-à-vis refund of</p><p>duty drawback in civil construction work treating it as deemed</p><p>export was clarified in an earlier circular dated 20.08.1998.</p><p>Thus, according to the Division Bench, by the year 1998 itself,</p><p>DGFT had clarified that civil construction work was entitled to</p><p>the benefit of duty drawback as deemed export. Having held</p><p>so, the Division Bench posed a question as to whether the</p><p>respondent would be entitled to interest after expiry of three</p><p>months from the date of the applications for refund of duty</p><p>drawback? Corollary to the above question was an ancillary</p><p>question as to whether a clarificatory or declaratory notification</p><p>or circular would have retrospective operation? After referring to</p><p>decisions of this Court reported in 1993 Supplementary (3) SCC</p><p>234 S. S. Grewal versus State of Punjab, (1995) 2 SCC 630</p><p>Rajagopal Reddy (dead) by Lrs. Vs. Padmini Chandrasekharan</p><p>(dead) by Lrs., and (2004) 8 SCC 1 Zile Singh versus State of</p><p>Haryana, the Division Bench opined that the minute the Exim</p><p>Policy came into force the benefit of duty drawback automatically</p><p>became available to the respondent and that the clarification </p><p>[2024] 2 S.C.R. 107</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>was only with regard to the doubts expressed in some quarters</p><p>as to whether civil construction works were also entitled to</p><p>such benefit. By virtue of the two circulars dated 20.08.1998</p><p>and 05.12.2000, no new right or benefit came to be created;</p><p>those two circulars were clarificatory in nature only clarifying</p><p>that the benefit under the Exim Policy 1992-1997 was available</p><p>to civil construction as well. Therefore, such benefit would</p><p>take effect from the date of the Exim Policy. It was thereafter</p><p>that the Division Bench posed the further question as to what</p><p>would be the rate of interest on the delayed refund. In this</p><p>connection, the Division Bench referred to Sections 27A and</p><p>75A of the Customs Act and came to the conclusion that the</p><p>date of payment of interest would have to be on expiry of the</p><p>period of three months from the date of making an application</p><p>for refund of duty drawback. The Division Bench held that the</p><p>respondent would be entitled to interest from the date of expiry</p><p>of three months after submission of applications for refund back</p><p>in the year 1996 till the time the payment was made at the rate</p><p>of fifteen percent as awarded by the learned Single Judge.</p><p>Consequently, the appeal of the appellants was dismissed</p><p>while the appeal of the respondent was allowed.</p><p>31. Reverting back to the Exim Policy of 1992-1997, we have already</p><p>noted about the Duty Exemption Scheme. We have noted that under</p><p>the Duty Exemption Scheme, import of duty free raw materials,</p><p>components, intermediates, consumables, parts, spares including</p><p>mandatory spares and packing materials required for the purpose of</p><p>export production could be permitted by the competent authority under</p><p>five categories of licences mentioned in Chapter VII including special</p><p>imprest licence. Section 56 provided that a special imprest licence</p><p>was granted for the duty free import of raw materials, components,</p><p>consumables, parts, spares including mandatory spares and packing</p><p>materials to main/sub-contractors for the manufacture or supply</p><p>of products when such supply were made to projects financed by</p><p>multilateral or bilateral agencies, such as, the International Bank for</p><p>Reconstruction and Development under international competitive</p><p>bidding or under limited tender system.</p><p>108 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>31.1. In Chapter X ‘deemed export’ has been defined. It is a transaction</p><p>in which the goods supplied do not leave the country and the</p><p>payment for the goods is received by the supplier in Indian</p><p>rupees, but the supplies earn or save foreign exchange for</p><p>the country. Section 121 declares that the categories of supply</p><p>of goods mentioned in the said section would be regarded as</p><p>‘deemed export’ under the Exim Policy provided the goods</p><p>were manufactured in India and the payment was received</p><p>in Indian rupees. This included supply of goods to projects</p><p>financed by multilateral or bilateral agencies or any other</p><p>agency that may be notified by the Central Government, such</p><p>as, the International Bank for Reconstruction and Development</p><p>under international competitive bidding or under limited tender</p><p>system in accordance with the procedures of those agencies.</p><p>31.2. Section 122 clarifies that deemed export would be eligible</p><p>for benefits under the Duty Drawback Scheme in respect of</p><p>manufacture and supply of goods by treating those as deemed</p><p>export.</p><p>32. That apart, as already mentioned in the earlier part of the judgement,</p><p>the Explanation below sub-section (1) of Section 27 of the Customs</p><p>Act clarifies that the expression ‘the date of payment of duty or interest’</p><p>in relation to a person other than an importer shall be construed as</p><p>‘the date of purchase of goods’ by such person.</p><p>33. Therefore, on a conjoint and careful reading of the relevant provisions</p><p>of the Exim Policy, 1992-1997 in conjunction with the Central Excise</p><p>Act and the Customs Act, it is evident that supply of goods to the</p><p>project in question by the respondent was a case of ‘deemed export’</p><p>and thus entitled to the benefit under the Duty Drawback Scheme.</p><p>The language employed in the policy made this very clear and there</p><p>was no ambiguity in respect of such entitlement.</p><p>34. Even if there was any doubt, the same was fully explained by the</p><p>1995 Rules. In fact, under the definition clause of the 1995 Rules,</p><p>duty drawback, in relation to any goods manufactured in India</p><p>and exported has been defined to mean the rebate of duty or tax</p><p>chargeable on any imported materials or excisable materials used </p><p>[2024] 2 S.C.R. 109</p><p>Union of India and Ors. v.</p><p>M/S. B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd.</p><p>or taxable services used in the manufacture of such goods. In the</p><p>preceding paragraphs, we have noted the meaning of the expressions</p><p>‘excisable materials’ and ‘manufacture’.</p><p>34.1. Rule 3 of the 1995 Rules makes it abundantly clear that a</p><p>drawback may be allowed on the export of goods at such</p><p>amount or at such rates as may be determined by the Central</p><p>Government. Further, Rule 14 provides for payment of drawback</p><p>and interest.</p><p>35. It was, therefore, not correct on the part of the appellants to contend</p><p>that there was no provision for payment of interest on delayed refund</p><p>of duty drawback. That apart, it is wholly untenable for the appellants</p><p>to contend that refund of duty drawback was granted to the respondent</p><p>as a concession, not to be treated as a precedent. As we have seen,</p><p>respondent is entitled to refund of duty drawback as a deemed export</p><p>under the Duty Drawback Scheme. The applications for refund were</p><p>made in 1996. Decision to grant refund of duty drawback was taken</p><p>belatedly on 07.10.2002 whereafter the payments were made by</p><p>way of cheques on 31.03.2003 and 20.05.2003. Admittedly, there</p><p>was considerable delay in refund of duty drawback.</p><p>36. As we have already examined, under sub-section (1) of Section 75A</p><p>of the Customs Act, where duty drawback is not paid within a period</p><p>of three months from the date of filing of claim, the claimant would be</p><p>entitled to interest in addition to the amount of drawback. This section</p><p>provides that the interest would be at the rate fixed under Section</p><p>27A from the date after expiry of the said period of three months</p><p>till the payment of such drawback. If we look at Section 27A, the</p><p>interest rate prescribed thereunder at the relevant point of time was</p><p>not below ten percent and not exceeding thirty percent per annum.</p><p>37. The Central Board of Excise and Customs vide its notification bearing</p><p>No.32/1995 (NT) – Customs dated 26.5.1995 had fixed the rate</p><p>of interest at fifteen percent for the purpose of Section 27A of the</p><p>Customs Act. The High Court while awarding interest at the rate of</p><p>fifteen percent per annum, however, did not refer to such notification;</p><p>rather, there was no discussion at all as to why the rate of interest</p><p>on the delayed refund should be fifteen percent. Therefore, at the</p><p>first glance, the rate of interest awarded by the High Court appeared</p><p>to be on the higher side and without any reason. </p><p>110 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>38. Be that as it may, having regard to our discussions made above,</p><p>we have no hesitation in holding that the respondent was entitled</p><p>to refund of duty drawback. Appellants had belatedly accepted the</p><p>said claim and made the refund. Since there was belated refund of</p><p>the duty drawback to the respondent, it was entitled to interest at</p><p>the rate which was fixed by the Central Government at the relevant</p><p>point of time being fifteen percent.</p><p>39. That being the position, we find no good reason to interfere with the</p><p>judgment and order of the Division Bench of the High Court dated</p><p>22.8.2008. There is no merit in the appeal, which is accordingly</p><p>dismissed. No costs.</p><p>Headnotes prepared by: Divya Pandey Result of the case: Appeal dismissed.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-23938863925005284042024-02-18T06:58:00.001+05:302024-02-18T06:58:41.405+05:30Jharkhand Superior Judicial Service (Recruitment, Appointment and Conditions of Service) Rules, 2001 – rr.14, 18, 21 – Jharkhand Superior Judicial Service (Recruitment, Appointment and Conditions of Service) Regulation, 2017 – Selection to the posts of District Judge Cadre in the State of Jharkhand – Alteration in selection criteria after the performance of individual candidates was assessed – Higher aggregate marks prescribed in deviation from the statutory rules – By way of Full Court Resolution, High Court introduced securing 50 per cent marks in aggregate (combination of marks obtained in main examination and viva-voce) as the qualifying criteria for being recommended to the posts of District Judge – Impermissibility:<p>[2024] 2 S.C.R. 217 : 2024 INSC 97</p><p>Sushil Kumar Pandey & Ors.</p><p>v.</p><p>The High Court of Jharkhand & Anr.</p><p> (Writ Petition (Civil) No. 753 of 2023)</p><p>01 February 2024</p><p>[Aniruddha Bose and Sanjay Kumar, JJ.]</p><p>Issue for Consideration</p><p>High Court whether justified in altering the selection criteria after the</p><p>performance of individual candidates was assessed for selection</p><p>to the posts of District Judge Cadre in the State of Jharkhand.</p><p>Headnotes</p><p>Jharkhand Superior Judicial Service (Recruitment,</p><p>Appointment and Conditions of Service) Rules, 2001 – rr.14,</p><p>18, 21 – Jharkhand Superior Judicial Service (Recruitment,</p><p>Appointment and Conditions of Service) Regulation, 2017 –</p><p>Selection to the posts of District Judge Cadre in the State</p><p>of Jharkhand – Alteration in selection criteria after the</p><p>performance of individual candidates was assessed – Higher</p><p>aggregate marks prescribed in deviation from the statutory</p><p>rules – By way of Full Court Resolution, High Court introduced</p><p>securing 50 per cent marks in aggregate (combination of</p><p>marks obtained in main examination and viva-voce) as the</p><p>qualifying criteria for being recommended to the posts of</p><p>District Judge – Impermissibility:</p><p>Held: Under r.18, the task of setting cut-off marks was vested</p><p>in the High Court but this was to be done before the start of the</p><p>examination – Stipulations contained in r.21 for making the select</p><p>list were breached by the High Court administration in adopting</p><p>the impugned resolution – Plea that applying a higher aggregate</p><p>mark was not barred under the Rules or Regulations, not accepted</p><p>– The very expression “aggregate” means combination of two or</p><p>more processes and in the event the procedure for arriving at the</p><p>aggregate has been laid down in the applicable Rules, a separate</p><p>criteria cannot be carved out to enable change in the manner</p><p>of making the aggregate marks – If the High Court is permitted</p><p>to alter the selection criteria after the performance of individual </p><p>218 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>candidates is assessed, that would constitute alteration of the laid</p><p>down Rules – Plea of the High Court administration that r.14 permits</p><p>them to alter the selection criteria after the selection process is</p><p>concluded and marks are declared is not proper exposition of the</p><p>said provision – r.14 empowers the High Court administration in</p><p>specific cases to reassess the suitability and eligibility of a candidate</p><p>in a special situation by calling for additional documents –High</p><p>Court administration cannot take aid of this Rule to take a blanket</p><p>decision for making departure from the selection criteria specified</p><p>in the 2001 Rules – High Court to make recommendation for</p><p>those candidates who were successful as per the merit or select</p><p>list, for filing up the subsisting notified vacancies without applying</p><p>the Full Court Resolution that requires each candidate to get 50</p><p>per cent aggregate marks – The part of the Full Court Resolution</p><p>of the Jharkhand High Court by which it was decided that only</p><p>those candidates who secured at least 50% marks in aggregate</p><p>shall be qualified for appointment to the post of District Judge is</p><p>quashed [Paras 20, 22-24]</p><p>Service jurisprudence – Change in the rule midway – Discussed.</p><p>Case Law Cited</p><p>Sivanandan C.T. & Ors. v. High Court of Kerala, [2023]</p><p>11 SCR 674 : (2023) INSC 709 – followed.</p><p>State of Haryana v. Subash Chander Marwaha & Ors.,</p><p>[1974] 1 SCR 165 : (1974) 3 SCC 220; Ram Sharan</p><p>Maurya and Ors. v. State of U.P. and Ors., [2020] 12</p><p>SCR 466 : (2021) 15 SCC 401 – distinguished.</p><p>K.Manjusree v. State of Andhra Pradesh and Anr., [2008]</p><p>2 SCR 1025 : (2008) 3 SCC 512; Hemani Malhotra</p><p>v. High Court of Delhi, [2008] 5 SCR 1066 : (2008) 7</p><p>SCC 11 – relied on.</p><p>Tej Prakash Pathak & Ors. v. Rajasthan High Court and</p><p>Others: (2013) 4 SCC 540 – referred to.</p><p>List of Acts</p><p>Jharkhand Superior Judicial Service (Recruitment, Appointment and</p><p>Conditions of Service) Rules, 2001; Jharkhand Superior Judicial</p><p>Service (Recruitment, Appointment and Conditions of Service)</p><p>Regulation, 2017; Constitution of India.</p><p>[2024] 2 S.C.R. 219</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>List of Keywords</p><p>District Judge Cadre; Altering the selection criteria; Higher</p><p>aggregate mark; Qualifying criteria; Cut-off marks; Departure from</p><p>selection criteria.</p><p>Case Arising From</p><p>CIVIL ORIGINAL JURISDICTION : Writ Petition (Civil) No.753 of 2023</p><p>(Under Article 32 of The Constitution of India)</p><p>With</p><p>Writ Petition (Civil) No.921 of 2023</p><p>Appearances for Parties</p><p>Arunabh Chowdhury, Sr. Adv./A.A.G., Vinay Navare, K</p><p>Karpagavinagagam, Dushyant Dave, Ms. Meenakshi Arora, Jayant</p><p>K. Sud, Jaideep Gupta, Sr. Advs., Mahesh Thakur, Ms. Neha Singh,</p><p>Mrs. Geetanjali Bedi, Ranvijay Singh Chandel, Shivamm Sharrma,</p><p>Ms. Shivani, Prithvi Pal, Sanjay Kumar Yadav, Manoj Jain, Ms.</p><p>Kiran Bhardwaj, C Aravind, K V Mathu Kumar, Ms. Geeta Verma,</p><p>Syed Imtiyaz, Usman Khan, Ms. Madhurima Sarangi, Naeem</p><p>Ilyas, Towseef Ahmad Dar, Danish Zubair Khan, Dr. Lokendra</p><p>Malik, Surya Nath Pandey, Durga Dutt, Rohit Priyadarshi, Upendra</p><p>Narayan Mishra, Satyendra Kumar Mishra, Ms. Rashi Verma,</p><p>Somesh Kumar Dubey, Kartik Jasra, Prannit Stefano, Shivam</p><p>Nagpal, Ms. Susmita Lal, Ms. Racheeta Chawla, Kamakhya</p><p>Srivastava, Rajiv Shanker Dvivedi, Ms. Tulika Mukherjee, Karma</p><p>Dorjee, Dechen W. Lachungpa, Beenu Sharma, Venkat Narayan,</p><p>Advs. for the appearing parties.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>In these two writ petitions, we are to address the legality of the</p><p>selection process of District Judge Cadre in the State of Jharkhand</p><p>initiated in the year 2022. An advertisement bearing No. 01/2022</p><p>was published on 24th March, 2022, inviting applications from the</p><p>eligible candidates for the said posts. The vacancies specified in</p><p>the advertisement itself were twenty-two. Appointment procedure to </p><p>220 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>the said posts is guided by the Jharkhand Superior Judicial Service</p><p>(Recruitment, Appointment and Conditions of Service) Rules, 2001</p><p>(‘the 2001 Rules’). In the year 2017, the Jharkhand Superior Judicial</p><p>Service (Recruitment, Appointment and Conditions of Service)</p><p>Regulation, 2017 (“the 2017 Regulation”) was framed in terms of</p><p>Rule 11 and Rule 30 of the 2001 Rules for this purpose.</p><p>2. On the basis of cut-off marks specified in the advertisement as also</p><p>in the 2001 Rules, select list of sixty-six persons was published,</p><p>applying the 1:3 ratio as there were twenty-two published vacancies.</p><p>3. The High Court on its administrative side, however, recommended</p><p>only thirteen candidates for appointment though the vacancies</p><p>declared were twenty-two. A resolution to that effect was taken in</p><p>a Full Court meeting held on 23.03.2023. We shall quote relevant</p><p>provisions from the 2001 Rules in subsequent paragraphs of this</p><p>judgment along with the relevant extracts from the advertisement.</p><p>In the advertisement, the relevant portions for adjudication of the</p><p>subject dispute were contained under the heading ‘Eligibility and</p><p>Conditions’. The following criteria for selection was specified therein:-</p><p>“Preliminary Entrance Test</p><p>(1) The Preliminary Entrance Test shall consist. Of:-</p><p>i. General English</p><p>ii. General Knowledge(including Current Affairs).</p><p>iii. C.P.C.</p><p>iv. Cr.P.C.</p><p>v. Evidence Act</p><p>vi. Law of Contract.</p><p>vii. IPC</p><p>(2) The Preliminary Entrance Test shall be of 100 in aggregate</p><p>(3) Duration of Preliminary Entrance Test shall be of two hours.</p><p>(4) There shall be negative marking of -1 mark (minus one)for</p><p>each wrong answer.</p><p>Main Examination</p><p>(1) The Main Examination shall consist of:-</p><p>[2024] 2 S.C.R. 221</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>Paper -I</p><p>Part- I Language (English) 50 Marks</p><p>(Essay, Precis, Preposition and Comprehension etc,)</p><p>Part- II</p><p>(i) Procedural Law (Cr.P.C. & C.P.C)</p><p>(ii) Law of Evidence</p><p>(iii) Law of Limitation 50 Marks</p><p>Paper- II</p><p>Substantive Law 100 Marks</p><p>(i) Constitution of India</p><p>(ii) Indian Penal Code</p><p>(iii) Law of Contract</p><p>(iv) Sale of Goods Act</p><p>(v) Transfer of Property Act</p><p>(vi) Negotiable Instrument Act</p><p>(vii) Law relating to Motor Vehicle Accident Claim</p><p>(viii) Jurisprudence.</p><p>(ix) Santhal Pargana Tenancy Act</p><p>(x) Chhotanagpur Tenancy Act</p><p>(xi) Protection of Children from Sexual Offences Act (pocso)</p><p>(xii) Prevention Of Corruption Act (xiii) SC & ST Act</p><p>(xiv) Electricity Act</p><p>(xv) Narcotic Drugs and Psychotropic Substances Act (NDPS</p><p>Act)</p><p>(2) Examination shall be held in two sittings of three hours duration</p><p>for each paper.</p><p>Viva-Voce Test</p><p>(1) There shall be Viva-Voce Test of 40 marks.</p><p>(2) The marks obtained in Viva-Voce Test shall be added to</p><p>the marks obtained in Main Examination and the merit list</p><p>shall be prepared accordingly.</p><p>222 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(3) No candidate irrespective of the marks obtained by him</p><p>in the Main Examination, shall be eligible for selection</p><p>for appointment, if he obtains less than 20 marks out of</p><p>aggregate of 40 in the Viva-Voce. Test.</p><p>Note:- Every differently abled candidate will be allowed</p><p>“compensatory time” of 20 minutes for each hour of written</p><p>examination.”</p><p>4. So far as the selection process involved in these proceedings is</p><p>concerned, no preliminary entrance test was held, but that question</p><p>is not in controversy before us. The main examination comprising</p><p>of Paper-I and Paper-II carried a total of 200 marks. As per the</p><p>advertisement, the marks allocated for viva-voce test was 40 as would</p><p>appear from the preceding paragraph. A candidate irrespective of</p><p>the marks obtained by him in the main examination was required to</p><p>get at least 20 marks out of the aggregate 40 in the viva-voce test.</p><p>5. As per the 2001 Rules, the provisions relevant are Rules 14, 18, 21</p><p>and 22. These Rules read:-</p><p>“14. Notwithstanding anything contained in the foregoing</p><p>Rule, it shall be open to the High Court to require the</p><p>candidate at any stage of the selection process or</p><p>thereafter, to furnish any such additional proof or to produce</p><p>any document with respect to any matter relating to his</p><p>suitability and/or eligibility as the High Court may deem</p><p>necessary.</p><p>18. Before the start of the examination, the High Court</p><p>may fix the minimum qualifying marks in the Preliminary</p><p>Written Entrance Test and thereafter minimum qualifying</p><p>marks in the main examination. Based on such minimum</p><p>qualifying marks, the High Court may decide to call for</p><p>viva-voce such number of candidates, in order of merit</p><p>in written examination, depending upon the number of</p><p>vacancies available as it may appropriately decide:</p><p>Provided that in the case of candidates belonging to</p><p>scheduled castes and scheduled tribes and candidates</p><p>belonging to other reserved categories, such minimum</p><p>qualifying marks may not be higher than 45% of the total</p><p>aggregate marks :</p><p>[2024] 2 S.C.R. 223</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>Provided also that in determining the suitability of a</p><p>particular candidate based on both the minimum qualifying</p><p>marks as well as in order of merit, the total marks obtained</p><p>in the examination as a whole and the marks obtained</p><p>in any individual paper, both shall also be taken into</p><p>consideration, depending upon any guidelines that the</p><p>High Court may issue in this behalf in the Regulations to</p><p>be framed for this purpose.</p><p>21. A candidate, irrespective of the marks obtained by him</p><p>in the Preliminary Written Entrance Examination and/or</p><p>the Main Written Examination shall not be qualified to be</p><p>appointed unless he obtains a minimum of 30% marks in</p><p>the viva-voce test. The marks obtained at the viva voce</p><p>test shall then be added to the marks obtained by the</p><p>candidate at the main written examination. The names of</p><p>the candidates will then be tabulated and arranged in order</p><p>of merit. If two or more candidates obtain equal marks in</p><p>the aggregate, the order shall be determined in accordance</p><p>with the marks secured at the main written examination.</p><p>If the marks secured at the main written examination of</p><p>the candidates also are found equal then the order shall</p><p>be decided in accordance with the marks obtained in the</p><p>Preliminary Written Entrance Test. From the list of candidates</p><p>so arranged in order of merit the High Court shall prepare a</p><p>select list and have it duly notified in a manner as prescribed</p><p>in the regulations. Such select list shall be valid for a period</p><p>of one year from the date of being notified.</p><p>22. From out of the aforesaid select list, depending upon the</p><p>number of vacancies available or those required to be filled</p><p>up, the High Court shall recommend to the Government</p><p>the names for appointment as Additional District Judge.”</p><p>6. There appears to be one inconsistency in relation to minimum marks</p><p>prescribed between the content of Rule 21 of the said Rules and</p><p>paragraph 12 of the 2017 Regulation. The said paragraph of the</p><p>Regulation stipulates:-</p><p>“(12) No candidate irrespective of the marks obtained by</p><p>him in the Main Examination, shall be eligible for selection</p><p>for appointment, if he obtains less than 20 marks out of</p><p>aggregate of 40 in the Viva-Voce Test.”</p><p>224 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>7. We have already quoted Rule 21 of the 2001 Rules where minimum of</p><p>30% marks in the viva-voce has been prescribed as the qualification</p><p>criteria. But that question also does not arise in the present two writ</p><p>petitions as none of the parties before us has raised this point. We</p><p>also find it to be a safer course to go by the provisions of paragraph</p><p>12 of the 2017 Regulation, as the advertisement also prescribed</p><p>minimum 20 marks out of aggregate of 40 in the Viva Voce test.</p><p>8. Admitted position is that the 9 candidates who have been left out</p><p>from being recommended for appointment, had found place in the</p><p>select list in terms of Rule 21 of the 2001 Rules.</p><p>9. In Writ Petition (Civil) No. 753 of 2023, altogether seven petitioners</p><p>have joined in questioning the exclusion of the 9 candidates by</p><p>the Full Court Resolution. The said resolution introduces securing</p><p>50 per cent marks in aggregate (combination of marks obtained in</p><p>main examination and viva-voce) as the qualifying criteria for being</p><p>recommended to the said posts. This resolution against Agenda</p><p>No. 1 of the Full Court Meeting held on 23rd March, 2023 records:-</p><p>SL.No. AGENDA RESOLUTIONS</p><p>1. To consider the matter</p><p>o v e r r e c r u i t m e n t</p><p>process of District</p><p>J u d g e [ U / r 4 ( a )</p><p>directly from Bar] with</p><p>regard to Final Result</p><p>against advertisement</p><p>no.01/2022/Apptt.</p><p>Considered.</p><p>The Full Court resolves to approve</p><p>the final result list of 63 Candidates</p><p>who have appeared for viva voce</p><p>(list enclosed with this resolution and</p><p>marked at Flag “X”)</p><p>Further, Full Court observes that</p><p>candidates at Sl.No.7 & 8 have</p><p>got the same total marks, but on</p><p>careful consideration it transpires that</p><p>candidate at Sl.No.8 has got higher</p><p>marks in written examination. Hence</p><p>in view of Rule 21 of Jharkhand</p><p>Superior Judicial (Recruitment,</p><p>Appointment and Conditions of</p><p>Service) Rules, 2001, candidate at</p><p>Sl.No.8 is placed at higher place/</p><p>rank.</p><p>[2024] 2 S.C.R. 225</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>Further after due deliberation,</p><p>keeping in view the responsibility that</p><p>will be vested upon the candidates</p><p>who qualify for appointment of</p><p>District Judges and to maintain the</p><p>high standard of Superior Judicial</p><p>Services, the Full Court resolves</p><p>that only those candidates who</p><p>have secured at least 50% marks</p><p>in aggregate, shall be qualified for</p><p>appointment to post of District Judge.</p><p>It is hereby resolved to recommend</p><p>the names of following 13 top</p><p>(merit wise) candidates to the</p><p>State Government for issuance of</p><p>necessary notification/s for their</p><p>appointment to the post of District</p><p>Judge after completing/undertaking</p><p>the investigation/enquiry relating to</p><p>the candidates credentials as per</p><p>Rule 23 & 24 of Jharkhand Superior</p><p>Judicial (Recruitment, Appointment</p><p>and Conditions of Service) Rules,</p><p>2001:</p><p>S.No. Roll No. Name</p><p>1 10369 NAMITA CHANDRA</p><p>2 10956 SHWETA DHINGRA</p><p>3 10343 PARAS KUMAR SINHA</p><p>4 10388 KUMAR SAKET</p><p>5 10519 SHIVNATH TRIPATHI</p><p>6 10218 BHUPESH KUMAR</p><p>7 11577 AISHA KHAN</p><p>8 10294 BHANU PRATAP SINGH</p><p>9 10592 NEETI KUMAR</p><p>10 10371 PRACHI MISHRA</p><p>11 10109 PAWAN KUMAR</p><p>226 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>12 11061 RAJESH KUMAR BAGGA</p><p>13 10587 NARANJAN SINGH</p><p>Registrar General is directed to upload the names of above mentioned</p><p>13 successful candidates to the official website of this Court.</p><p>10. This Resolution has been disclosed in the reply to the Rejoinder</p><p>affidavit filed on behalf of the High Court of Jharkhand, affirmed by</p><p>Registrar General of that Court.</p><p>11. There are two impleadment applications registered as I.A. No.</p><p>173928 of 2023 taken out by ‘Purnendu Sharan’ and I.A. No. 10383</p><p>of 2024 taken out by ‘Ashutosh Kumar Pandey’, both of them being</p><p>aggrieved by the procedure adopted by the Full Court.</p><p>12. Another set of candidates have filed the second writ petition registered</p><p>as Writ Petition (Civil) No. 921 of 2023. In this writ petition, altogether</p><p>five candidates have sought substantially the same relief asked for</p><p>in the Writ Petition (Civil) No. 753 of 2023.</p><p>13. The petitioners have been represented before us by Mr. Dushyant</p><p>Dave, Mr. Vinay Navare and Mr. Jayant K. Sud, learned senior</p><p>counsel whereas the High Court of Jharkhand has been represented</p><p>by Mr. Jaideep Gupta, learned senior counsel. Mr. Rajiv Shanker</p><p>Dvivedi, learned Standing Counsel for the State of Jharkhand has</p><p>appeared for the State. State has taken a non-committal stand before</p><p>us. Counter affidavit has been filed by the State in which also no</p><p>definitive stand has been taken on the legality of the Resolution</p><p>in the Full Court meeting of the High Court. It has however been</p><p>submitted by the State that certain amendments need to be carried</p><p>out in Rule 21 of the 2001 Rules. That plea does not come within</p><p>the scope of the present proceedings.</p><p>14. The petitioners’ main case rests on two planks. First one is that the</p><p>decision of the Full Court on the administrative side goes contrary</p><p>to the Recruitment Rules, Regulations and the Terms contained in</p><p>the advertisement. The second plank of the submissions advanced</p><p>by the petitioners is that in any event, after the performance of each</p><p>of the candidate is known and the marks obtained by them in the</p><p>two forms of the examination are disclosed, it was impermissible</p><p>for the High Court Administration to introduce fresh cut-off marks.</p><p>On this point, the authority relied upon by Mr. Dave is a judgment</p><p>of a Constitution Bench comprising of five Hon’ble Judges of this </p><p>[2024] 2 S.C.R. 227</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>Court in the case of Sivanandan C.T. & Ors. Vs. High Court of</p><p>Kerala [(2023) INSC 709)] decided on 12th July, 2023. This judgment</p><p>narrates the factual background of that case in paragraph ‘7’ thereof</p><p>and the ratio of this decision would emerge from paragraphs ‘52’ to</p><p>‘57’ of the said judgment. These passages from the judgment are</p><p>quoted below:-</p><p>“7. On 27 February 2017, after the viva-voce was</p><p>conducted, the Administrative Committee of the High</p><p>Court passed a resolution by which it decided to apply</p><p>the same minimum cut-off marks which were prescribed</p><p>for th e written examination as a qualifying criterion in the</p><p>viva-voce. In coming to this conclusion, the Administrative</p><p>Committee was of the view that since appointments</p><p>were being made to the Higher Judicial Service, it was</p><p>necessary to select candidates with a requisite personality</p><p>and knowledge which could be ensured by prescribing</p><p>a cut-off for the viva-voce in terms similar to the cut-off</p><p>which was prescribed for the written examination. On 6</p><p>March 2017, the Full Court of the High Court of Kerala</p><p>approved the resolution of the Administrative Committee.</p><p>The final merit list of the successful candidates was also</p><p>published on the same day.</p><p> x x x</p><p>52. The statutory rule coupled with the scheme of</p><p>examination and the 2015 examination notification would</p><p>have generated an expectation in the petitioners that</p><p>the merit list of selected candidates will be drawn on</p><p>the basis of the aggregate of total marks received in the</p><p>written examination and the viva voce. Moreover, the</p><p>petitioners would have expected no minimum cutoff for</p><p>the viva voce in view of the express stipulation in the</p><p>scheme of examination. Both the above expectations of</p><p>the petitioners are legitimate as they are based on the</p><p>sanction of statutory rules, scheme of examination, and</p><p>the 2015 examination notification issued by the High Court.</p><p>Thus, the High Court lawfully committed itself to preparing</p><p>a merit list of successful candidates on the basis of the</p><p>total marks obtained in the written examination and the</p><p>viva voce. </p><p>228 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>ii. Whether the High Court has acted unlawfully in relation</p><p>to its commitment?</p><p>53. The Administrative Committee of the High Court</p><p>apprehended that a candidate who performed well in the</p><p>written examination, even though they fared badly in the</p><p>viva voce, would get selected to the post of District and</p><p>Sessions Judge. The Administrative Committee observed</p><p>that recruitment of such candidates would be a disservice to</p><p>the public at large because they possessed only “bookish”</p><p>knowledge and lacked practical wisdom. To avoid such a</p><p>situation, the Administrative Committee of the High Court</p><p>decided to apply a minimum cut-off to the viva voce</p><p>examination. The decision of the Administrative Committee</p><p>was approved by the Full Bench of the High Court.</p><p>54. The Constitution vests the High Courts with the authority</p><p>to select judicial officers in their jurisdictions. The High</p><p>Court, being a constitutional and public authority, has</p><p>to bear in the mind the principles of good administration</p><p>while performing its administrative duties. The principles</p><p>of good administration require that the public authorities</p><p>should act in a fair, consistent, and predictable manner.</p><p>55. The High Court submitted that frustration of the</p><p>petitioner’s substantive legitimate expectation was in larger</p><p>public interest – selecting suitable candidates with practical</p><p>wisdom for the post of District Judges. Indeed, it is in the</p><p>public interest that we have suitable candidates serving</p><p>in the Indian judiciary. However, the criteria for selecting</p><p>suitable candidates are laid down in the statutory rules. As</p><p>noted above, the High Court did amend the 1961 Rules</p><p>in 2017 to introduce a minimum cut-off mark for the viva</p><p>voce. The amended Rule 2(c) is extracted below:</p><p>“2. Method of appointment – (1) Appointment to the service</p><p>shall be made as follows:</p><p>[…]</p><p>(c) Twenty five percent of the posts in the service shall</p><p>be filled up by direct recruitment from the members of the</p><p>Bar. The recruitment shall be on the basis of a competitive </p><p>[2024] 2 S.C.R. 229</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>examination consisting of a written examination and a viva</p><p>voce. […] Maximum marks for viva voce shall be 50. The</p><p>General and Other Backward Classes candidates shall</p><p>secure a minimum of 40% marks and Scheduled Caste/</p><p>Scheduled Tribe candidate shall secure a minimum of</p><p>35% marks for passing the viva voce. The merit list of the</p><p>selected candidates shall be prepared on the basis of the</p><p>aggregate marks secured by the candidate in the written</p><p>examination and viva voce.”</p><p>(emphasis supplied)</p><p>56. Under the unamended 1961 Rules, the High Court was</p><p>expected to draw up the merit list of selected candidates</p><p>based on the aggregate marks secured by the candidates</p><p>in the written examination and the viva voce, without any</p><p>requirement of a minimum cut-off for the viva voce. Thus,</p><p>the decision of the Administrative Committee to depart</p><p>from the expected course of preparing the merit list of the</p><p>selected candidates is contrary to the unamended 1961</p><p>Rules. It is also important to highlight that the requirement</p><p>of a minimum cutoff for the viva voce was introduced</p><p>after the viva voce was conducted. It is manifest that the</p><p>petitioners had no notice that such a requirement would</p><p>be introduced for the viva voce examination. We are of</p><p>the opinion that the decision of High Court is unfair to the</p><p>petitioners and amounts to an arbitrary exercise of power.</p><p>57. The High Court’s decision also fails to satisfy the test</p><p>of consistency and predictability as it contravenes the</p><p>established practice. The High Court did not impose the</p><p>requirement of a minimum cut-off for the viva voce for the</p><p>selections to the post of District and Sessions Judges for</p><p>2013 and 2014. Although the High Court’s justification,</p><p>when analyzed on its own terms, is compelling, it is not</p><p>grounded in legality. The High Court’s decision to apply a</p><p>minimum cut-off for the viva voce frustrated the substantive</p><p>legitimate expectation of the petitioners. Since the decision</p><p>of the High Court is legally untenable and fails on the</p><p>touchstone of fairness, consistency, and predictability, we</p><p>hold that such a course of action is arbitrary and violative</p><p>of Article 14.”</p><p>230 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>15. There is an earlier judgment of this Court comprising of three Hon’ble</p><p>Judges in the case of K. Manjusree -vs- State of Andhra Pradesh</p><p>and Anr. [(2008) 3 SCC 512] in which the change of recruitment</p><p>criteria mid-way through the selection process has been held to</p><p>be impermissible. We quote below paragraphs ‘27’ and ‘36’ of that</p><p>judgment from the said report:-</p><p>“27. But what could not have been done was the second</p><p>change, by introduction of the criterion of minimum marks</p><p>for the interview. The minimum marks for interview had</p><p>never been adopted by the Andhra Pradesh High Court</p><p>earlier for selection of District & Sessions Judges, (Grade</p><p>II). In regard to the present selection, the Administrative</p><p>Committee merely adopted the previous procedure in</p><p>vogue. The previous procedure as stated above was to</p><p>apply minimum marks only for written examination and not</p><p>for the oral examination. We have referred to the proper</p><p>interpretation of the earlier Resolutions dated 24.7.2001 and</p><p>21.2.2002 and held that what was adopted on 30.11.2004</p><p>was only minimum marks for written examination and not for</p><p>the interviews. Therefore, introduction of the requirement</p><p>of minimum marks for interview, after the entire selection</p><p>process (consisting of written examination and interview)</p><p>was completed, would amount to changing the rules of</p><p>the game after the game was played which is clearly</p><p>impermissible. We are fortified in this view by several</p><p>decisions of this Court. It is sufficient to refer to three of</p><p>them - P. K. Ramachandra Iyer v. Union of India1</p><p>, Umesh</p><p>Chandra Shukla v. Union of India2</p><p>, and Durgacharan Misra</p><p>v. State of Orissa3</p><p>.</p><p> x x x</p><p>36. The Full Court however, introduced a new requirement</p><p>as to minimum marks in the interview by an interpretative</p><p>process which is not warranted and which is at variance</p><p>with the interpretation adopted while implementing the</p><p>1 (1984) 2 SCC 141: 1984 SCC (L &S) 214</p><p>2 (1985) 3 SCC 721: 1985 SCC (L&S) 919</p><p>3 (1987) 4 SCC 646: 1988 SCC (L & S) 36: (1987) 5 ATC 148</p><p>[2024] 2 S.C.R. 231</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>current selection process and the earlier selections. As</p><p>the Full Court approved the Resolution dated 30.11.2004</p><p>of the Administrative Committee and also decided to</p><p>retain the entire process of selection consisting of written</p><p>examination and interviews it could not have introduced</p><p>a new requirement of minimum marks in interviews,</p><p>which had the effect of eliminating candidates, who would</p><p>otherwise be eligible and suitable for selection. Therefore,</p><p>we hold that the action of Full Court in revising the merit list</p><p>by adopting a minimum percentage of marks for interviews</p><p>was impermissible.”</p><p>16. The same view has later been taken by a Coordinate Bench of this</p><p>Court in the case of Hemani Malhotra -vs- High Court of Delhi</p><p>[(2008) 7 SCC 11]. In a later decision, Tej Prakash Pathak & Ors.</p><p>-vs- Rajasthan High Court and Others [(2013) 4 SCC 540], a three</p><p>Judge Bench of this Court expressed a view which is different from</p><p>that taken in the case of K. Manjusree (supra) and referred the</p><p>matter to the Hon’ble the Chief Justice of India for being considered</p><p>by a larger Bench. There is no decision yet from a larger Bench and</p><p>until the principle laid down in the case of K. Manjusree (supra) is</p><p>overruled by a larger Bench, we shall continue to be guided by the</p><p>same as “no change in the rule midway” dictum has become an</p><p>integral part of the service jurisprudence.</p><p>17. The next point urged by Mr. Gupta is that the ratio of the three</p><p>judgments on which reliance has been placed by Mr. Dave would</p><p>not apply in the facts of the present case. His argument is that in</p><p>those three authorities, the marking in viva-voce was the subject</p><p>of dispute whereas in the present writ petitions, it is on aggregate</p><p>marking that the High Court administration has raised the bar. One</p><p>of the authorities on which Mr. Gupta has relied on is State of</p><p>Haryana -vs- Subash Chander Marwaha & Ors. [(1974) 3 SCC</p><p>220]. In paragraphs 7 and 12 of the said report, it has been held and</p><p>observed by a Bench of two Hon’ble Judges of this Court:-</p><p>“7. In the present case it appears that about 40 candidates</p><p>had passed the examination with the minimum score of</p><p>45%. Their names were published in the Government</p><p>Gazette as required by Rule 10(1) already referred to. It</p><p>is not disputed that the mere entry in this list of the name </p><p>232 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>of candidate does not give him the right to be appointed</p><p>The advertisement that there are 15 vacancies to be</p><p>filled does not also give him a right to be appointed. It</p><p>may happen that the Government for financial or other</p><p>administrative reasons may not fill up any vacancies. In</p><p>such a case the candidates, even the first in the list, will</p><p>not have a right to be appointed. The list is merely to help</p><p>the State Government in making the appointments showing</p><p>which candidates have the minimum qualifications under</p><p>the Rules. The stage for selection for appointment comes</p><p>thereafter, and it is not disputed that under the Constitution</p><p>it is the State Government alone which can make the</p><p>appointments. The High Court does not come into the</p><p>picture for recommending any particular candidate. After</p><p>the State Government have taken a decision as to which</p><p>of the candidates in accordance with the list should be</p><p>appointed, the list of selected candidates for appointment</p><p>is forwarded to the High Court then will have to enter</p><p>such candidates on a Register maintained by it. When</p><p>vacancies are to be filled the High Court will send in the</p><p>names of the candidates in accordance with the select</p><p>list and in the order they have been placed in that list for</p><p>appointment in the vacancies. The High Court, therefore,</p><p>plays no part except to suggest to the Government who</p><p>in accordance with the select list is to be appointed and</p><p>in a particular vacancy. It appears that in the present case</p><p>the Public Service Commission had sent up the rolls of</p><p>the first 15 candidates because the Commission had been</p><p>informed that there are 15 vacancies. The High Court</p><p>also in its routine course had sent up the first 15 names</p><p>to the Government for appointment. Thereupon the Chief</p><p>Secretary to Government, Haryana wrote to the Registrar</p><p>of the High Court on May 4, 1971 as follows:</p><p>“I am directed to refer to Haryana Government endst</p><p>No. 1678-1 GS, II—71/3802, dated April 22, 1971, on</p><p>the subject noted above, and to say that after careful</p><p>consideration of the recommendations of the Punjab</p><p>and Haryana High Court for appointment of first fifteen</p><p>candidates to the Haryana Civil Service (Judicial Branch), </p><p>[2024] 2 S.C.R. 233</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>the State Government have taken the view that it would be</p><p>appropriate that only the first seven candidates should be</p><p>appointed to the Haryana Civil Service (Judicial Branch)</p><p>and a notification has been issued accordingly. The</p><p>reason is that in the opinion of the State Government,</p><p>only those candidates who obtained 55% or more marks</p><p>in the Haryana Civil Service (Judicial Branch) Examination,</p><p>should be appointed as that will serve to maintain a</p><p>minimum standard in the appointments to the Service. It</p><p>may be mentioned that the last candidate appointed against</p><p>un-reserved vacancies out of the merit list prepared on</p><p>the basis of the Haryana Civil Service (Judicial Branch)</p><p>Examination held in May 1969, secured 55.67% marks.</p><p>The State Government have also received information</p><p>that the Punjab and Haryana High Court themselves</p><p>recommended to the Punjab Government that in respect</p><p>of P.C.S. (Judicial Branch) Examination held in 1970,</p><p>candidates securing 55% marks or more should be</p><p>appointed against un-reserved vacancies. Thus, the</p><p>decision taken by Haryana Government is in line with</p><p>the recommendations which the High Court made to the</p><p>Punjab Government regarding recruitment to the P.C.S.</p><p>(Judicial Branch) on the basis of the Examination held</p><p>in 1970, and a similar policy in both the cases would be</p><p>desirable for obvious reasons.”</p><p>12. It was, however, contended by Dr Singhvi on behalf</p><p>of the respondents that since Rule 8 of Part C makes</p><p>candidates who obtained 45% or more in the competitive</p><p>examination eligible for appointment, the State Government</p><p>had no right to introduce a new rule by which they can</p><p>restrict the appointments to only those who have scored not</p><p>less than 55%. It is contended that the State Government</p><p>have acted arbitrarily in fixing 55% as the minimum</p><p>for selection and this is contrary to the rule referred to</p><p>above. The argument has no force. Rule 8 is a step in the</p><p>preparation of a list of eligible candidates with minimum</p><p>qualifications who may be considered for appointment.</p><p>The list is prepared in order of merit. The one higher in</p><p>rank is deemed to be more meritorious than the one who </p><p>234 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>is lower in rank. It could never be said that one who tops</p><p>the list is equal in merit to the one who is at the bottom of</p><p>the list. Except that they are all mentioned in one list, each</p><p>one of them stands on a separate level of competence</p><p>as compared with another. That is why Rule 10(ii), Part</p><p>C speaks of “selection for appointment”. Even as there is</p><p>no constraint on the State Government in respect of the</p><p>number of appointments to be made, there is no constraint</p><p>on the Government fixing a higher score of marks for the</p><p>purpose of selection. In a case where appointments are</p><p>made by selection from a number of eligible candidates</p><p>it is open to the Government with a view to maintain</p><p>high standards of competence to fix a score which is</p><p>much higher than the one required for more eligibility.</p><p>As shown in the letter of the Chief Secretary already</p><p>referred to, they fixed a minimum of 55% for selection as</p><p>they had done on a previous occasion. There is nothing</p><p>arbitrary in fixing the score of 55% for the purpose of</p><p>selection, because that was the view of the High Court</p><p>also previously intimated to the Punjab Government on</p><p>which the Haryana Government thought fit to act. That</p><p>the Punjab Government later on fixed a lower score is no</p><p>reason for the Haryana Government to change their mind.</p><p>This is essentially a matter of administrative policy and if</p><p>the Haryana State Government think that in the interest</p><p>of judicial competence persons securing less than 55%</p><p>of marks in the competitive examination should not be</p><p>selected for appointment, those who got less than 55%</p><p>have no right to claim that the selections be made of also</p><p>those candidates who obtained less than the minimum</p><p>fixed by the State Government. In our view the High Court</p><p>was in error in thinking that the State Government had</p><p>somehow contravened Rule 8 of Part C.”</p><p>18. Mr. Gupta has also cited the case of Ram Sharan Maurya and Ors.</p><p>Vs. State of U.P. and Ors. [(2021) 15 SCC 401]. It has been held</p><p>in this judgment:-</p><p>“72. In terms of Rule 2(1)(x) of the 1981 Rules, qualifying</p><p>marks of ATRE are such minimum marks as may be</p><p>determined “from time to time” by the Government. </p><p>[2024] 2 S.C.R. 235</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>Clause (c) of Rule 14 of the 1981 Rules lays down</p><p>that a candidate must have “passed Assistant Teacher</p><p>Recruitment Examination conducted by the Government”.</p><p>Thus, one of the basic requirements for being considered</p><p>to be appointed as an Assistant Teacher under the 1981</p><p>Rules is passing of ATRE with such minimum marks as</p><p>may be determined by the Government. Unlike para 7 of</p><p>the Guidelines for ATRE 2018 which had spelt out that a</p><p>candidate must secure minimum of 45% or 40% marks</p><p>(for “General” and “Reserved” categories respectively) for</p><p>passing ATRE 2018, no such stipulation was available in</p><p>G.O. dated 1-12-2018 notifying ATRE 2019. Though, the</p><p>minimum qualifying marks were set out in the Guidelines</p><p>for ATRE 2018, it is not the requirement of the 1981 Rules</p><p>that such stipulation must be part of the instrument notifying</p><p>ATRE. By very nature of entrustment, the Government</p><p>is empowered to lay down minimum marks “from time</p><p>to time”. If this power is taken to be conditioned with</p><p>the requirement that the stipulation must be part of the</p><p>instrument notifying the examination, then there was no</p><p>such stipulation for ATRE 2019. Such reading of the rules</p><p>will lead to somewhat illogical consequences. On one hand,</p><p>the relevant Rule requires passing of ATRE while, on the</p><p>other hand, there would be no minimum qualifying marks</p><p>prescribed. A reasonable construction on the relevant</p><p>rules would therefore imply that the Government must</p><p>be said to be having power to lay down such minimum</p><p>qualifying marks not exactly alongside instrument notifying</p><p>the examination but at such other reasonable time as well.</p><p>In that case, the further question would be at what stage</p><p>can such minimum qualifying marks be determined and</p><p>whether by necessity such minimum qualifying marks must</p><p>be declared well before the examination.</p><p>73.K. Manjusree [K. Manjusree v. State of A.P., (2008) 3</p><p>SCC 512 : (2008) 1 SCC (L&S) 841] and Hemani Malhotra</p><p>[Hemani Malhotra v. High Court of Delhi, (2008) 7 SCC 11</p><p>: (2008) 2 SCC (L&S) 203] were the cases which pertained</p><p>to selections undertaken to fill up posts in judicial service.</p><p>In these cases, no minimum qualifying marks in interview </p><p>236 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>were required and the merit list was to be determined going</p><p>by the aggregate of marks secured by a candidate in the</p><p>written examination and the oral examination. By virtue</p><p>of stipulation of minimum qualifying marks for interview,</p><p>certain candidates, who otherwise, going by their aggregate</p><p>would have been in zone of selection, found themselves</p><p>to be disqualified. The stipulation of minimum qualifying</p><p>marks having come for the first time and after the selection</p><p>process was underway or through, this Court found such</p><p>exercise to be impermissible.</p><p>74. These were cases where, to begin with, there was no</p><p>stipulation of any minimum qualifying marks for interview.</p><p>On the other hand, in the present case, the requirement</p><p>in terms of Rule 2(1)(x) read with Rule 14 is that the</p><p>minimum qualifying marks as stipulated by the Government</p><p>must be obtained by a candidate to be considered eligible</p><p>for selection as Assistant Teacher. It was thus always</p><p>contemplated that there would be some minimum qualifying</p><p>marks. What was done by the Government by virtue of its</p><p>orders dated 7-1-2019 was to fix the quantum or number</p><p>of such minimum qualifying marks. Therefore, unlike the</p><p>cases covered by the decision of this Court in K. Manjusree</p><p>[K. Manjusree v. State of A.P., (2008) 3 SCC 512 : (2008)</p><p>1 SCC (L&S) 841], where a candidate could reasonably</p><p>assume that there was no stipulation regarding minimum</p><p>qualifying marks for interview, and that the aggregate of</p><p>marks in written and oral examination must constitute</p><p>the basis on which merit would be determined, no such</p><p>situation was present in the instant case. The candidate</p><p>had to pass ATRE 2019 and he must be taken to have</p><p>known that there would be fixation of some minimum</p><p>qualifying marks for clearing ATRE 2019.</p><p>75. Therefore, there is fundamental distinction between</p><p>the principle laid down in K. Manjusree [K. Manjusree v.</p><p>State of A.P., (2008) 3 SCC 512 : (2008) 1 SCC (L&S)</p><p>841] and followed in Hemani Malhotra [Hemani Malhotra</p><p>v. High Court of Delhi, (2008) 7 SCC 11 : (2008) 2 SCC</p><p>(L&S) 203] on one hand and the situation in the present</p><p>case on the other.</p><p>[2024] 2 S.C.R. 237</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>76. We are then left with the question whether prescription</p><p>of such minimum qualifying marks by order dated 7-1-</p><p>2019 must be set aside merely because such prescription</p><p>was done after the examination was conducted. At this</p><p>juncture, it may be relevant to note that the basic prayer</p><p>made in the leading writ petition before the Single Judge</p><p>was to set aside the order dated 7-1-2019. What could</p><p>then entail as a consequence is that there would be no</p><p>minimum qualifying marks for ATRE 2019, which would run</p><p>counter to the mandate of Rule 2(1)(x) read with clause</p><p>(c) of Rule 14. It is precisely for this reason that what was</p><p>submitted was that the same norm as was available for</p><p>ATRE 2018 must be adopted for ATRE 2019. In order to</p><p>lend force to this submission, it was argued that Shiksha</p><p>Mitras who appeared in ATRE 2018 and ATRE 2019 formed</p><p>a homogeneous class and, therefore, the norm that was</p><p>available in ATRE 2018 must be applied. This argument,</p><p>on the basis of homogeneity, has already been dealt with</p><p>and rejected.</p><p>77. If the Government has the power to fix minimum</p><p>qualifying marks “from time to time”, there is nothing in</p><p>the Rules which can detract from the exercise of such</p><p>power even after the examination is over, provided the</p><p>exercise of such power is not actuated by any malice or</p><p>ill will and is in furtherance of the object of finding the</p><p>best available talent. In that respect, the instant matter</p><p>is fully covered by the decisions of this Court in MCD v.</p><p>Surender Singh [MCD v. Surender Singh, (2019) 8 SCC 67</p><p>: (2019) 2 SCC (L&S) 464] and Jharkhand Public Service</p><p>Commission v. Manoj Kumar Gupta [Jharkhand Public</p><p>Service Commission v. Manoj Kumar Gupta, (2019) 20</p><p>SCC 178] . In the first case, the power entrusted under</p><p>Clause 25 of the advertisement also provided similar</p><p>discretion to the Selection Board to fix minimum qualifying</p><p>marks for each category of vacancies. While construing</p><p>the exercise of such power, it was found by this Court</p><p>that it was done “to ensure the minimum standard of the</p><p>teachers that would be recruited”. Similarly, in Jharkhand</p><p>Public Service Commission [Jharkhand Public Service </p><p>238 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Commission v. Manoj Kumar Gupta, (2019) 20 SCC 178],</p><p>the exercise of power after the examination in Paper III</p><p>was over, was found to be correct and justified.</p><p>78. If the ultimate object is to select the best available</p><p>talent and there is a power to fix the minimum qualifying</p><p>marks, in keeping with the law laid down by this Court in</p><p>State of Haryana v. Subash Chander Marwaha [State of</p><p>Haryana v. Subash Chander Marwaha, (1974) 3 SCC 220</p><p>: 1973 SCC (L&S) 488], State of U.P. v. Rafiquddin [State</p><p>of U.P. v. Rafiquddin, 1987 Supp SCC 401 : 1988 SCC</p><p>(L&S) 183], MCD v. Surender Singh [MCD v. Surender</p><p>Singh, (2019) 8 SCC 67 : (2019) 2 SCC (L&S) 464] and</p><p>Jharkhand Public Service Commission v. Manoj Kumar</p><p>Gupta [Jharkhand Public Service Commission v. Manoj</p><p>Kumar Gupta, (2019) 20 SCC 178], we do not find any</p><p>illegality or impropriety in fixation of cut-off at 65-60% vide</p><p>order dated 7-1-2019. The facts on record indicate that</p><p>even with this cut-off the number of qualified candidates</p><p>is more than twice the number of vacancies available. It</p><p>must be accepted that after considering the nature and</p><p>difficulty level of examination, the number of candidates</p><p>who appeared, the authorities concerned have the requisite</p><p>power to select a criteria which may enable getting the</p><p>best available teachers. Such endeavour will certainly be</p><p>consistent with the objectives under the RTE Act.</p><p>79. In the circumstances, we affirm the view taken by the</p><p>Division Bench of the High Court and conclude that in</p><p>the present case, the fixation of cut-off at 65-60%, even</p><p>after the examination was over, cannot be said to be</p><p>impermissible. In our considered view, the Government</p><p>was well within its rights to fix such cut-off.”</p><p>19. In these two writ petitions, we are not, however, only concerned with</p><p>the “midway change of the Rule” Principle. But on that count also,</p><p>the ratio of the decisions cited by Mr. Gupta are distinguishable. The</p><p>three Judge Bench in Tej Prakash Pathak (supra) had referred to</p><p>the judgment in the case of Subhas Chandra Marwaha (supra) to</p><p>express doubt over correctness of the judgment in the case of K.</p><p>Manjusree (supra). As we have already observed, the ratio of K. </p><p>[2024] 2 S.C.R. 239</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>Manjusree (supra) still holds the field. In the case of Ram Sharan</p><p>Maurya (supra), the Rules guiding recruitment empowered the</p><p>Government to stipulate qualifying marks of the particular selection</p><p>process to be such minimum marks as may be determined from</p><p>time to time by the Government. In this decision, the judgment itself</p><p>takes note of the decisions of this Court in K. Manjusree (supra)</p><p>and Hemani Malhotra (supra) and finds that the course for selection</p><p>to the posts involved in that case was different from that which was</p><p>found to be impermissible in K. Manjusree (supra) and Hemani</p><p>Malhotra (supra).</p><p>20. We find from Rule 18 of the 2001 Rules, the task of setting cut-off</p><p>marks has been vested in the High Court but this has to be done</p><p>before the start of the examination. Thus, we are also dealing with</p><p>a situation in which the High Court administration is seeking to</p><p>deviate from the Rules guiding the selection process itself. We have</p><p>considered the High Court’s reasoning for such deviation, but such</p><p>departure from Statutory Rules is impermissible. We accept the</p><p>High Court administration’s argument that a candidate being on the</p><p>select list acquired no vested legal right for being appointed to the</p><p>post in question. But if precluding a candidate from appointment is</p><p>in violation of the recruitment rules without there being a finding on</p><p>such candidate’s unsuitability, such an action would fail the Article</p><p>14 test and shall be held to be arbitrary. The reason behind the Full</p><p>Court Resolution is that better candidates ought to be found. That</p><p>is different from a candidate excluded from the appointment process</p><p>being found to be unsuitable.</p><p>21. Stipulations contained in Rule 21 of the 2001 Rules for making the</p><p>select list were breached by the High Court administration in adopting</p><p>the impugned resolution. The ratio of the decision in the case of</p><p>Ram Sharan Maurya (supra) would not apply in the facts of this</p><p>case and we have already discussed why we hold so.</p><p>22. Mr. Gupta’s stand is that applying a higher aggregate mark is not</p><p>barred under the said Rules or Regulations. We are, however,</p><p>unable to accept this submission. The very expression “aggregate”</p><p>means combination of two or more processes and in the event the</p><p>procedure for arriving at the aggregate has been laid down in the</p><p>applicable Rules, a separate criteria cannot be carved out to enable</p><p>change in the manner of making the aggregate marks. </p><p>240 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>23. So far as the ratio of the decision in the case of K. Manjusree</p><p>(supra) is concerned, that authority deals with change of the Rules</p><p>mid-way. In the case before us, in our opinion, if the High Court</p><p>is permitted to alter the selection criteria after the performance of</p><p>individual candidates is assessed, that would constitute alteration</p><p>of the laid down Rules. We refer to paragraphs Nos. 14 and 15 of</p><p>the judgment of the Constitution Bench in the case of Sivanandan</p><p>C.T. (supra), which lays down the principle of law on this point. We</p><p>reproduce below the said passages from this authority:-</p><p>“14. The decision of the High Court to prescribe a cut-off for</p><p>the viva-voce examination was taken by the Administrative</p><p>Committee on 27 February 2017 after the viva-voce was</p><p>conducted between 16 and 24 January 2017. The process</p><p>which has been adopted by the High Court suffers from</p><p>several infirmities. Firstly, the decision of the High Court</p><p>was contrary to Rule 2(c)(iii) which stipulated that the</p><p>merit list would be drawn up on the basis of the marks</p><p>obtained in the aggregate in the written examination and</p><p>the viva-voce; secondly, the scheme which was notified</p><p>by the High Court on 13 December 2012 clearly specified</p><p>that there would be no cut off marks in respect of the vivavoce; thirdly, the notification of the High Court dated 30</p><p>September 2015 clarified that the process of short listing</p><p>which would be carried out would be only on the basis of</p><p>the length of practice of the members of the Bar, should</p><p>the number of candidates be unduly large; and fourthly,</p><p>the decision to prescribe cut off marks for the viva-voce</p><p>was taken much after the viva-voce tests were conducted</p><p>in the month of January 2017.</p><p>15. For the above reasons, we have come to the conclusion</p><p>that the broader constitutional issue which has been referred</p><p>in Tej Prakash Pathak (supra) would not merit decision on</p><p>the facts of the present case. Clearly, the decision which was</p><p>taken by the High Court was ultra vires Rule 2(c)(iii) as it</p><p>stands. As a matter of fact, during the course of the hearing</p><p>we have been apprised of the fact that the Rules have</p><p>been subsequently amended in 2017 so as to prescribe a</p><p>cut off of 35% marks in the viva-voce examination which</p><p>however was not the prevailing legal position when the</p><p>present process of selection was initiated on 30 September</p><p>2015. The Administrative Committee of the High Court </p><p>[2024] 2 S.C.R. 241</p><p>Sushil Kumar Pandey & Ors. v. The High Court of Jharkhand & Anr.</p><p>decided to impose a cut off for the viva-voce examination</p><p>actuated by the bona fide reason of ensuring that candidates</p><p>with requisite personality assume judicial office. However</p><p>laudable that approach of the Administrative Committee</p><p>may have been, such a change would be required to be</p><p>brought in by a substantive amendment to the Rules which</p><p>came in much later as noticed above. This is not a case</p><p>where the rules or the scheme of the High Court were</p><p>silent. Where the statutory rules are silent, they can be</p><p>supplemented in a manner consistent with the object and</p><p>spirit of the Rules by an administrative order.”</p><p>24. The ratio of this authority is squarely applicable in the facts of this</p><p>case. Submission on behalf of the High Court administration that</p><p>Rule 14 permits them to alter the selection criteria after the selection</p><p>process is concluded and marks are declared is not proper exposition</p><p>of the said provision. The said Rule, in our opinion, empowers the</p><p>High Court administration in specific cases to reassess the suitability</p><p>and eligibility of a candidate in a special situation by calling for</p><p>additional documents. The High Court administration cannot take aid</p><p>of this Rule to take a blanket decision for making departure from the</p><p>selection criteria specified in the 2001 Rules. The content of Rule</p><p>14 has the tenor of a verification process of an individual candidate</p><p>in assessing the suitability or eligibility.</p><p>25. We, accordingly, allow both the writ petitions by directing the High</p><p>Court to make recommendation for those candidates who have been</p><p>successful as per the merit or select list, for filing up the subsisting</p><p>notified vacancies without applying the Full Court Resolution that</p><p>requires each candidate to get 50 per cent aggregate marks. The</p><p>part of the Full Court Resolution of the Jharkhand High Court dated</p><p>23.03.2023 by which it was decided that only those candidates who</p><p>have secured at least 50% marks in aggregate shall be qualified for</p><p>appointment to the post of District Judge is quashed.</p><p>26. We expect the exercise of recommendation in terms of this judgment</p><p>to be completed as expeditiously as possible.</p><p>27. We do not find any reason to address the impleadment applications</p><p>as this judgment will cover the entire recommendation process.</p><p>Headnotes prepared by: Divya Pandey Result of the case:</p><p>Writ petitions allowed.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-10265541504526351812024-02-18T06:55:00.001+05:302024-02-18T06:55:42.277+05:30Whether, the underlying principle of Section(s) 73 & 74 respectively of the Contract Act, 1872 Act is applicable to forfeiture of earnestmoney deposit under Rule 9(5) of the SARFAESI Rules. In other words, whether the forfeiture of the earnest-money deposit under Rule 9(5) of the SARFAESI Rules can be only to the extent of loss or damages incurred by the Bank; (ii) Whether, the forfeiture of the entire amount towards the earnest-money deposit under Rule 9(5) of the Rules amounts to unjust enrichment. In other words, whether the quantum of forfeiture under the SARFAESI Rule is limited to the extent of debt owed; (iii) Whether a case of exceptionable circumstances could be said to have been made out by the respondent to set aside the order of forfeiture of the earnest money deposit.<p>* Author</p><p>[2024] 2 S.C.R. 12 : 2024 INSC 80</p><p>The Authorised Officer, Central Bank of India</p><p>v.</p><p>Shanmugavelu</p><p>(Civil Appeal No(s). 235-236 of 2024)</p><p>02 February 2024</p><p>[Dr Dhananjaya Y Chandrachud, CJI, J B Pardiwala,*</p><p>Manoj Misra, JJ.]</p><p>Issue for Consideration</p><p>(i)Whether, the underlying principle of Section(s) 73 & 74 respectively</p><p>of the Contract Act, 1872 Act is applicable to forfeiture of earnestmoney deposit under Rule 9(5) of the SARFAESI Rules. In other</p><p>words, whether the forfeiture of the earnest-money deposit under</p><p>Rule 9(5) of the SARFAESI Rules can be only to the extent of</p><p>loss or damages incurred by the Bank; (ii) Whether, the forfeiture</p><p>of the entire amount towards the earnest-money deposit under</p><p>Rule 9(5) of the Rules amounts to unjust enrichment. In other</p><p>words, whether the quantum of forfeiture under the SARFAESI</p><p>Rule is limited to the extent of debt owed; (iii) Whether a case of</p><p>exceptionable circumstances could be said to have been made</p><p>out by the respondent to set aside the order of forfeiture of the</p><p>earnest money deposit.</p><p>Headnotes</p><p>Securitization and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002 – Security Interest</p><p>(Enforcement) Rules, 2002 – Contract Act, 1872 – ss. 73 and</p><p>74 – Whether, the underlying principle of Section(s) 73 & 74</p><p>respectively of the Contract Act, 1872 Act is applicable to</p><p>forfeiture of earnest-money deposit under Rule 9(5) of the</p><p>SARFAESI Rules:</p><p>Held: The SARFAESI Act is a special legislation with an overriding</p><p>effect on the general law, and only those legislations which are either</p><p>specifically mentioned in Section 37 or deal with securitization will</p><p>apply in addition to the SARFAESI Act – Being so, the underlying</p><p>principle envisaged under Section(s) 73 & 74 of the 1872 Act which</p><p>is a general law will have no application, when it comes to the</p><p>SARFAESI Act more particularly the forfeiture of earnest-money</p><p>deposit which has been statutorily provided under Rule 9(5) of the </p><p>[2024] 2 S.C.R. 13</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>SARFAESI Rules as a consequence of the auction purchaser’s</p><p>failure to deposit the balance amount – The forfeiture can be justified</p><p>if the terms of the contract are clear and explicit – If it is found that</p><p>the earnest money was paid in accordance with the terms of the</p><p>tender for the due performance of the contract by the Promisee,</p><p>the same can be forfeited in case of non-performance by him or</p><p>her – Since, the forfeiture under Rule 9(5) of the SARFAESI Rules</p><p>is also taking place pursuant to the terms & conditions of a public</p><p>auction – Suffice to say, Section(s) 73 and 74 of the 1872 Act will</p><p>have no application whatsoever, when it comes to forfeiture of the</p><p>earnest-money deposit under Rule 9 sub-rule (5) of the SARFAESI</p><p>Rules. [Paras 68, 89, 91]</p><p>Securitization and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002 – Security Interest</p><p>(Enforcement) Rules, 2002 – Contract Act, 1872 – The High</p><p>Court held that forfeiture of the entire deposit u/r. 9 subrule (5) of the SARFAESI Rules by the appellant bank after</p><p>having recovered its dues from the subsequent sale amounts</p><p>to unjust enrichment – Whether, the forfeiture of the entire</p><p>amount towards the earnest-money deposit under Rule 9(5)</p><p>of the Rules amounts to unjust enrichment:</p><p>Held: The consequence of forfeiture of 25% of the deposit under</p><p>Rule 9(5) of the SARFAESI Rules is a legal consequence that has</p><p>been statutorily provided in the event of default in payment of the</p><p>balance amount – The consequence envisaged under Rule 9(5)</p><p>follows irrespective of whether a subsequent sale takes place at a</p><p>higher price or not, and this forfeiture is not subject to any recovery</p><p>already made or to the extent of the debt owed – In such cases,</p><p>no extent of equity can either substitute or dilute the statutory</p><p>consequence of forfeiture of 25% of deposit under Rule 9(5) of</p><p>the SARFAESI Rules – The High Court erred in law by holding</p><p>that forfeiture of the entire deposit under Rule 9 sub-rule (5) of</p><p>the SARFAESI Rules by the appellant bank after having already</p><p>recovered its dues from the subsequent sale amounts to unjust</p><p>enrichment. [Paras 111, 113]</p><p>Securitization and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002 – Security Interest</p><p>(Enforcement) Rules, 2002 – Contract Act, 1872 – Whether a</p><p>case of exceptionable circumstances could be said to have</p><p>been made out by the respondent to set aside the order of</p><p>forfeiture of the earnest money deposit:</p><p>14 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Held: Where extraneous conditions exist that might have led to the</p><p>inability of the successful auction purchaser despite best efforts</p><p>from depositing the balance amount to no fault of its own, in such</p><p>cases the earnest-money deposited by such innocent successful</p><p>auction purchaser could certainly be asked to be refunded – In the</p><p>instant case, it is the respondent’s case that he was unable to make</p><p>the balance payment owing to the advent of the demonetization –</p><p>The same led to a delay in raising the necessary finance – It has</p><p>been pleaded by the respondent that the appellant bank failed to</p><p>provide certain documents to him in time as a result of which he</p><p>was not able to secure a term loan – However, the aforesaid by no</p><p>stretch can be said to be an exceptional circumstance warranting</p><p>judicial interference – Because demonetization had occurred much</p><p>before the e-auction was conducted by the appellant bank – As</p><p>regards the requisition of documents, the sale was confirmed on</p><p>07.12.2016, and the respondent first requested for the documents</p><p>only on 20.12.2016, and the said documents were provided to</p><p>him by the appellant within a month’s time i.e., on 21.01.2017 – It</p><p>may also not be out of place to mention that the respondent was</p><p>granted an extension of 90-days’ time period to make the balance</p><p>payment, and was specifically reminded that no further extension</p><p>would be granted, in-spite of this the respondent failed to make the</p><p>balance payment – The e-auction notice inviting bids along with the</p><p>correspondence between the appellant bank and the respondent</p><p>are unambiguous and clearly spelt out the consequences of not</p><p>paying the balance amount within the specified period. [Paras</p><p>117, 118, 119, 120]</p><p>Doctrines/Principles – Principle of ‘Reading-Down’ a provision:</p><p>Held: The principle of “reading down” a provision refers to a legal</p><p>interpretation approach where a court, while examining the validity</p><p>of a statute, attempts to give a narrowed or restricted meaning to</p><p>a particular provision in order to uphold its constitutionality – This</p><p>principle is rooted in the idea that courts should make every effort</p><p>to preserve the validity of legislation and should only declare a law</p><p>invalid as a last resort – When a court encounters a provision that,</p><p>if interpreted according to its plain and literal meaning, might lead</p><p>to constitutional or legal issues, the court may opt to read down the</p><p>provision –Reading down involves construing the language of the</p><p>provision in a manner that limits its scope or application, making</p><p>it consistent with constitutional or legal principles – The rationale </p><p>[2024] 2 S.C.R. 15</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>behind the principle of reading down is to avoid striking down an</p><p>entire legislation – Courts generally prefer to preserve the intent</p><p>of the legislature and the overall validity of a law by adopting an</p><p>interpretation that addresses the specific constitutional concerns</p><p>without invalidating the entire statute. [Paras 93, 94, 95]</p><p>Security Interest (Enforcement) Rules, 2002 – Rule 9 sub-rule</p><p>(5) – Harshness of a provision is no reason to read down the</p><p>same:</p><p>Held: Harshness of a provision is no reason to read down the</p><p>same, if its plain meaning is unambiguous and perfectly valid – A</p><p>law/rule should be beneficial in the sense that it should suppress</p><p>the mischief and advance the remedy – The harsh consequence of</p><p>forfeiture of the entire earnest-money deposit has been consciously</p><p>incorporated by the legislature in Rule 9(5) of the SARFAESI</p><p>Rules so as to sub-serve the larger object of the SARFAESI Act</p><p>of timely resolving the bad debts of the country – The idea behind</p><p>prescribing such a harsh consequence is not illusory, it is to attach</p><p>a legal sanctity to an auction process once conducted under the</p><p>SARFAESI Act from ultimately getting concluded – Any dilution of</p><p>the forfeiture provided under Rule 9(5) of the SARFAESI Rules</p><p>would result in the entire auction process under the SARFAESI</p><p>Act being set at naught by mischievous auction purchaser(s)</p><p>through sham bids, thereby undermining the overall object of the</p><p>SARFAESI Act of promoting financial stability, reducing NPAs and</p><p>fostering a more efficient and streamlined mechanism for recovery</p><p>of bad debts. [Paras 101 and 102]</p><p>Securitization and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002 – Legislative History</p><p>and scheme – Discussed.</p><p>Case Law Cited</p><p>Fateh Chand v. Balkishan Dass, [1964] SCR 515 : AIR</p><p>1963 SC 1405 – followed.</p><p>Madras Petrochem Ltd. & Anr. v. Board for Industrial</p><p>and Financial Reconstruction & Ors., [2016] 11 SCR</p><p>419 : (2016) 4 SCC 1; Karsandas H. Thacker v. M/s.</p><p>The Saran Engineering Co. Ltd., AIR 1965 SC 1981;</p><p>K. P. Subbarama Sastri and others v. K. S. Raghavan</p><p>& Ors., [1987] 2 SCR 767 : (1987) 2 SCC 424; Rakesh </p><p>16 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Birani (Dead) through LRs v. Prem Narain Sehgal &</p><p>Anr., [2018] 3 SCR 750 : (2018) 5 SCC 543; Agarwal</p><p>Tracom Private Limited v. Punjab National Bank & Ors.,</p><p>[2017] 11 SCR 164 : (2018) 1 SCC 626; Celir LLP. v.</p><p>Bafna Motors (Mumbai) Pvt. Ltd. & Ors., 2023 SCC</p><p>OnLine SC 1209; R.S. Joshi, Sales Tax Officer, Gujarat</p><p>& Ors. v. Ajit Mills Limited & Anr., [1978] 1 SCR 338 :</p><p>(1977) 4 SCC 98; Maula Bux v. Union of India, [1970] 1</p><p>SCR 928 : 1969 (2) SCC 554; Kailash Nath Associates</p><p>v. Delhi Development Authority & Anr., [2015] 1 SCR</p><p>627 : (2015) 4 SCC 136; B.R. Enterprises v. State of</p><p>U.P. & Ors., [1999] 2 SCR 1111 : (1999) 9 SCC 700;</p><p>Calcutta Gujarati Education Society & Anr. v. Calcutta</p><p>Municipal Corpn. & Ors., [2003] 2 Suppl. SCR 915 :</p><p>(2003) 10 SCC 533; Sahakari Khand Udyog Mandal</p><p>Ltd. v. Commissioner of Central Excise & Customs,</p><p>[2005] 2 SCR 606 : (2005) 3 SCC 738; National Spot</p><p>Exchange Ltd. v. Anil Kohli, Resolution Professional for</p><p>Dunar Foods Ltd., [2021] 7 SCR 1024 : (2022) 11 SCC</p><p>761; Alisha Khan v. Indian Bank (Allahabad Bank) &</p><p>Ors, 2021 SCC OnLine SC 3340; Authorized Officer</p><p>State Bank of India v. C. Natarajan, [2023] 5 SCR 1067:</p><p>2023 SCC Online SC 510 – relied on.</p><p>Mardia Chemicals Ltd. & Ors. v. Union of India & Ors.,</p><p>[2004] 3 SCR 982 : (2004) 4 SCC 311; United Bank</p><p>of India v. Satyawati Tondon & Ors., [2010] 9 SCR 1 :</p><p>(2010) 8 SCC 110; Satish Batra v. Sudhir Rawal, [2012]</p><p>9 SCR 662 : (2013) 1 SCC 345; Videocon Properties</p><p>Ltd. v. Dr. Bhalchandra Laboratories & Ors., [2003] 6</p><p>Suppl. SCR 1197 : (2004) 3 SCC 711; Shree Hanuman</p><p>Cotton Mills & Ors. v. Tata Air Craft Limited, [1970]</p><p>3 SCR 127 : (1969) 3 SCC 522; Delhi Development</p><p>Authority v. Grihshapana Cooperative Group Housing</p><p>Society Ltd., [1995] 2 SCR 115 : 1995 Supp (1) SCC</p><p>751; V. Lakshmanan v. B.R. Mangalagiri & Ors., 1995</p><p>Supp (2) SCC 33; HUDA v. Kewal Krishnan Goel, [1996]</p><p>2 Suppl. SCR 587 : 1996 (4) SCC 249 – referred to.</p><p>Dinanath Damodar Kale v. Malvi Mody Ranchhoddas</p><p>and Co., AIR 1930 Bom 213 – referred to.</p><p>[2024] 2 S.C.R. 17</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>Hadley & Anr. v. Baxendale & Ors., (1843-60) ALL E.R.</p><p>Rep. 461; Victoria Laundry (Windsor) Ltd v. Newman</p><p>Industrial Ltd., [1949] 2 K.B. 528; Kunwar Chiranjit</p><p>Singh v. Har Swarup, (1926) 23 LW 172; Vide Howe</p><p>v. Smith, (1884) 27 Ch.D. 89; Stockloser v. Johnson,</p><p>(1954) 1 All. E.R. 630 – referred to.</p><p>Books and Periodicals Cited</p><p>Treatise on the Law of Sale of Personal Property by</p><p>Benjamin, 1950, 8th Edition at page 946; Halsbury’s</p><p>Laws of England, third edition, volume XXXIV, page</p><p>118; G. C. Cheshire and C.H.S. Fifoot on the Law of</p><p>Contracts (fifth edition) at pages 496- 497.</p><p>List of Acts</p><p>Securitization and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002; Security Interest</p><p>(Enforcement) Rules, 2002; Contract Act, 1872.</p><p>List of Keywords</p><p>Simple mortgage; Default in payment; e-auction notice; Secured</p><p>asset; Public auction; Auction purchaser; Failure in remitting balance</p><p>amount; Cancellation of sale; Forfeiture under the SARFAESI</p><p>Rules; Secured creditor; Earnest money; Law on forfeiture of</p><p>earnest money; Principle of ‘Reading-Down’; Unjust enrichment;</p><p>Compensation for loss or damage caused by breach of contract.</p><p>Case Arising From</p><p>CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.235-236 of</p><p>2024.</p><p>From the Judgment and Order dated 27.10.2021 of the High Court</p><p>of Judicature at Madras in CRP Nos.1892 and 2282 of 2021.</p><p>Appearances for Parties</p><p>Dhruv Mehta, Sr. Adv., Amit K. Nain, PBA Srinivasan, Keith Verghese,</p><p>V. Aravind, Ms. Srishti Bansal, Sumit Swami, Ms. Pooja Kumari,</p><p>Advs. for the Appellant.</p><p>Dr. S. Muralidhar, Sr. Adv., S. Sethuraman, M. A. Karthik, Ms. Aswathi</p><p>M. K., Advs. for the Respondents.</p><p>18 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>J.B. Pardiwala, J.</p><p>For the convenience of exposition, this judgment is divided in the</p><p>following parts:-</p><p>INDEX*</p><p>A. FACTUAL MATRIX.................................................................3</p><p>B. IMPUGNED ORDER ............................................................13</p><p>C. SUBMISSIONS OF THE APPELLANT................................17</p><p>D. SUBMISSIONS OF THE RESPONDENT ............................18</p><p>E. ANALYSIS (Points for Determination) ..............................19</p><p>i) Legislative History and Scheme of the</p><p>SARFAESI Act.............................................................20</p><p>ii) Applicability of Section(s) 73 & 74 of the 1872</p><p>Act to Forfeiture under the SARFAESI Rules. ........32</p><p>a. Forfeiture under the SARFAESI Rules ................44</p><p>b. Concept of Earnest-Money & Law on</p><p>Forfeiture of Earnest-Money Deposit...................49</p><p>c. Law on the principle of</p><p>‘Reading-Down’ a provision..................................66</p><p>iii) Whether, the forfeiture of the entire</p><p>earnest-money deposit amounts to Unjust</p><p>Enrichment?................................................................73</p><p>iv) Whether Exceptional Circumstances exist</p><p>to set aside the forfeiture of the earnest</p><p>money deposit?..........................................................77</p><p>F. CONCLUSION......................................................................81</p><p>* Ed. Note : Pagination is as per the original judgment.</p><p>[2024] 2 S.C.R. 19</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>1. Since the issues raised in both the captioned appeals are the same,</p><p>the parties are also the same and the challenge is also to the selfsame judgment and order passed by the High Court, those were</p><p>taken up for hearing analogously and are being disposed of by this</p><p>common judgment and order.</p><p>2. For the sake of convenience, the appellant shall hereinafter be referred</p><p>to as the Bank being the Secured Creditor, and the respondent shall</p><p>hereinafter be referred to as the original Auction-Purchaser.</p><p>3. These appeals are at the instance of a Nationalized Bank and are</p><p>directed against the common judgment and order dated 27.10.2021</p><p>passed by the High Court of judicature at Madras in C.R.P No(s).</p><p>1892 & 2282 respectively of 2021 (“Impugned Order”) by which the</p><p>High Court allowed the respondent’s writ petition and held that the</p><p>forfeiture of the earnest money deposit by the appellant bank could</p><p>only be to the extent of the loss suffered by it.</p><p>A. FACTUAL MATRIX</p><p>4. It appears from the materials on record that the appellant bank</p><p>herein had sanctioned credit facilities to one ‘Best and Crompton</p><p>Engineering Projects’ against a parcel of land admeasuring 10581</p><p>sq.ft. (approx.) with superstructures situated in Survey Nos. 60 and</p><p>65/2, Block 6, Alandur village, Mambalam-Guindy, Chennai (for short</p><p>the, “Secured Asset”) as security interest in the form of a simple</p><p>mortgage in lieu of the sanctioned credit. Sometime thereafter the</p><p>said borrowers defaulted and the said loan account was classified as</p><p>a non-performing asset (“NPA”) by the appellant bank on 28.05.2013.</p><p>5. In order to recover its dues, the appellant bank took measures</p><p>under the Securitization and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002 (for short, the “SARFAESI</p><p>Act”), more particularly under Section 13(4) by taking over the</p><p>possession of the Secured Asset and putting the same for sale by</p><p>way of public auction.</p><p>6. Accordingly, on 24.10.2016 an e-auction notice for the sale of the</p><p>Secured Asset at a reserve price of Rs. 9,62,00,000/- came to be</p><p>issued by the appellant bank, with the following terms and conditions: -</p><p>20 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>“TERMS & CONDITIONS</p><p>1. The e-Auction is being held on “AS IS WHERE IS” and “AS IS</p><p>WHAT IS” basis and “NO COMPLAINT” condition.</p><p>2. The auction sale will be Online E-Auction/Bidding through</p><p>website https://www.bankeauctions.com on 07-12-2016 from</p><p>11.00 a.m. to 12. Noon</p><p>3. Intending bidders shall hold a valid Digital Signature Certificate,</p><p>e-mail address and PAN number. For details with regard to</p><p>Digital Signature Certificate please contact M/s C1 India Pvt.</p><p>Ltd., E-Mail ID: support@bankeauctions.com or shankar.</p><p>ganesh@c1india.com</p><p>4. Bidders are required to go through the website https://www.</p><p>bankeauctions.com for detailed terms and conditions of auction</p><p>sale before submitting their bids and taking part in the e- Auction</p><p>sale proceedings.</p><p>5. To the best of knowledge and information of the Authorized</p><p>Officer, there is no encumbrance on property affecting the</p><p>security interest. However, the intending bidders should make</p><p>their own independent inquiries regarding the encumbrances,</p><p>title of property put on auction and claims / rights / dues</p><p>affecting the property, prior to submitting their bid. The e-Auction</p><p>advertisement does not constitute and will not be deemed to</p><p>constitute any commitment or any representation of the bank.</p><p>The property is being sold with all the existing and future</p><p>encumbrances whether known or unknown to the bank. The</p><p>Authorized Officer / Secured Creditor shall not be responsible</p><p>in any way for any third party claims / rights / dues.</p><p>6. It shall be the responsibility of the bidders to inspect and</p><p>satisfy themselves about the asset and specification before</p><p>submitting the bid. The inspection of property put on auction</p><p>will be permitted to interested bidders at site on 23-11-2016</p><p>from 10.00 a.m. to 5.00 p.m.</p><p>7. The above mentioned amount should be remitted towards EMD</p><p>through RTGS/NEFT to Account No. 3227870680 of Central</p><p>Bank of India, CFB, Chennai 600008 IFSC Code CBIN0283507.</p><p>Cheques or demand draft shall not be accepted as EMD amount.</p><p>[2024] 2 S.C.R. 21</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>8. Prospective bidders are advised to obtain user id and password</p><p>which are mandatory for bidding in the above e-auction from M/s</p><p>C1India Pvt. Ltd., helpline 01244302020/2021/2022/2023/2024</p><p>E - m a i l s u p p o r t @ b a n k e r a u c t i o n s . c o m o r K . N .</p><p>SHRINATH-9840446485. Passwords will be allotted only to</p><p>those bidders who fulfil all the terms and conditions of e-auction</p><p>and have deposited the requisite EMD. And for further property</p><p>related query you may contact Mr. G.S. Prasad, Chief Manager,</p><p>Central Bank of India, CFB, Chennai Tel. No. 044-42625259</p><p>Mobile 9962029300 e-mail ID: bmchen3507@centralbank.co.in</p><p>during officer hours i.e. 10 AM to 5 PM during the working days.</p><p>9. After Registration by the bidder in the Web-Portal, the intending</p><p>bidder / purchaser is required to get the copies of the following</p><p>documents uploaded in the Web Portal before last date of</p><p>submission of the bid viz. i) Copy of the NEFT/RTGS Challan;</p><p>ii) Copy of PAN Card; iii) Proof of Identification (KYC) viz. selfattested copy of Voter ID Card / Driving License / Passport etc.</p><p>iv) Copy of proof of address; without which the bid is liable to</p><p>be rejected.</p><p>10. The interested bidders, who have submitted their bid not below</p><p>the Reserve price through online mode before 4.00 p.m. on</p><p>05-12-2016 shall be eligible for participating in the e-bidding</p><p>process. The e-Auction of above properties would be conducted</p><p>exactly on the scheduled Date & Time as mentioned against</p><p>each property by way of inter-se bidding amongst the bidders.</p><p>The bidder shall improve their offer in multiple of the amount</p><p>mentioned under the column “Bid Increase Amount”. In case</p><p>bid is placed in the last 5 minutes of the closing time of the</p><p>e-Auction, the closing time will automatically get extended for</p><p>3 minutes (subject to maximum of unlimited extensions of 3</p><p>minutes each). The bidder who submits the highest bid amount</p><p>(not below the Reserve Price) on closure of e-Auction process</p><p>shall be declared as Successful Bidder and a communication</p><p>to that effect will be issued which shall be subject to approval</p><p>by the Authorized Officer/Secured Creditor.</p><p>11. The Earnest Money Deposit (EMD) of the successful bidder</p><p>shall be retained towards part sale consideration and the EMD</p><p>of unsuccessful bidders shall be refunded. The Earnest Money</p><p>Deposit shall not bear any interest. The successful bidder shall </p><p>22 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>have to deposit 25% of the auction price less the EMD already</p><p>paid, within 24 hours of the acceptance of bid price by the</p><p>Authorized Officer and the balance 75% of the sale price on</p><p>or before 15th day of sale or within such extended period as</p><p>agreed upon in writing by and solely at the discretion of the</p><p>Authorized Officer. If any such extension is allowed, the amount</p><p>deposited by the successful bidder shall not carry any interest.</p><p>In case of default in payment by the highest and successful</p><p>bidder, the amount already deposited by the bidder shall be</p><p>liable to be forfeited and property shall be put to re-auction</p><p>and the defaulting bidder shall have no claim / right in respect</p><p>of property/amount.</p><p>12. The authorized Officer is not bound to accept the highest offer</p><p>and the authorized officer has absolute right to accept or reject</p><p>any or all offer(s) or adjourn / postpone / cancel the e-auction</p><p>without assigning any reasons thereof. ...”</p><p>7. Pursuant to the same, the e-auction was conducted on 07.12.2016</p><p>and a total of four bids were received wherein the respondent also</p><p>participated and submitted its bid to the tune of Rs. 12,27,00,000/-.</p><p>The respondent’s bid was found to be the highest and was classified</p><p>as H1 and accordingly, the respondent was declared as the successful</p><p>auction purchaser.</p><p>8. Pursuant to the aforesaid, the respondent on the same day deposited</p><p>25% of the bid amount i.e., Rs. 3,06,75,000/- as the earnest money</p><p>deposit upon which, the appellant confirmed the sale of the Secured</p><p>Asset in favour of the respondent vide its letter dated 07.12.2016</p><p>which inter-alia stipulated that in the event of default in payment of</p><p>the balance amount, the sale shall be liable to be cancelled and the</p><p>earnest money would be forfeited. The said sale confirmation letter</p><p>is being reproduced below: -</p><p>“CFB/CHEN/2016-17/685 December 7, 2016</p><p>Mr. R Shanmugavelu</p><p>Managing Director</p><p>M/s Sunbright Designers Private Limited</p><p>Module No – 4, Readymade Garment Complex</p><p>SIDCO Industrial Estate, Guindy</p><p>Chennai-600032</p><p>[2024] 2 S.C.R. 23</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>Sir,</p><p>Reg: Recovery Proceedings under the provision of SARFAESI</p><p>Act 2002 in our borrowal account M/s Best & Crompton</p><p>Engineering Projects Limited – E Auction of property held on</p><p>07/12/2016.</p><p>We have to inform you that in the E auction held on 07/12/2016</p><p>pursuant to the E-auction sale notice dated 24/10/2016 issued by</p><p>the Authorized Officer. In respect of Schedule property covered</p><p>in the E auction sale notice i.e.,</p><p>Lot no. 1: Property belonging to M/s Futuretech Industries Ltd.</p><p>presently known as Candid Industries Ltd. All that piece and</p><p>parcel of the immovable property being industrial land together</p><p>with the superstructure/shed standing thereon admeasuring</p><p>10581 sq. ft. or thereabouts comprised in survey nos. 60 part</p><p>and 65/2, Block no. 6, Alandur village, Mambalam-Guindy Taluk,</p><p>sub-registration district Alandur, registration district Chennai</p><p>South presently situated at plot no. A-19, Thiru Vi Ka Industrial</p><p>Estate, South by: Plot no. A-18, Thiru Vi Ka Industrial Estate</p><p>East by: 80 feet Road, West by: Service Road.</p><p>You have been declared as successful bidder at the sale price</p><p>of Rs. 12,27,00,000/- (Rupees Twelve Crore Twenty Seven</p><p>Lac only). You are now required to remit as per E auction</p><p>Sale notice 25% of the sale price less Earnest Money Deposit</p><p>amount already remitted by you i.e., Rs. 3,06,75,000/- minus</p><p>EMD remitted Rs. 96,20,000/- = Rs. 2,10,55,000/- (Rupees</p><p>Two Crore Ten Lac Fifty Five Thousand only) by RTGS/NEFT</p><p>to the same account number to which you have remitted the</p><p>Earnest Money Deposit within 24 hours of acceptance of bid.</p><p>The balance amount amounting to Rs. 9,20,25,000/- (Rupees</p><p>Nine Crore Twenty Lac Twenty Five Thousand Only) is to be</p><p>remitted by you by RTGS to the same account number on or</p><p>before 15 days from today; failing which the sale is liable to be</p><p>cancelled and the EMD will be forfeited.</p><p>Please note that the E Auction sale has been conducted strictly</p><p>as per the terms and conditions spelt out in the E Auction notice</p><p>dated 24/10/2016.</p><p>24 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Thanking You</p><p>Yours sincerely,</p><p>Sd/-</p><p>AUTHORIZED OFFICER”</p><p>9. The respondent vide its email dated 19.12.2016, requested the</p><p>appellant bank for grant of extension of three-months’ time for the</p><p>payment of the balance amount on the ground that its term-loan</p><p>was still under-process.</p><p>10. The appellant bank vide its letter dated 20.12.2016, acceded to</p><p>the request of the respondent and granted a further extension of</p><p>three-months’ time i.e., till 07.03.2017 in terms of Rule 9(4) of the</p><p>Security Interest (Enforcement) Rules, 2002 (for short, the “SARFAESI</p><p>Rules”). The said letter also stated that no further extension of time</p><p>shall be granted and in the event the respondent fails to pay the</p><p>balance amount, the sale shall be cancelled and the amount already</p><p>paid shall be forfeited. The said letter is being reproduced below: -</p><p>“CFB/CHEN/2016-17/718 December 20, 2016</p><p>Mr. R Shanmugavelu</p><p>Managing Director</p><p>M/s Sunbright Designers Private Limited</p><p>Module No – 4, Readymade Garment Complex</p><p>SIDCO Industrial Estate, Guindy</p><p>Chennai-600032</p><p>Sir,</p><p>Reg: Recovery Proceedings under the provision of SARFAESI</p><p>Act 2002 in the account M/s Best & Crompton Engineering</p><p>Projects Limited – E Auction of property held on 07/12/2016.</p><p>We may once again inform you that in the E auction held</p><p>on 07/12/2016 pursuant to the E-auction sale notice dated</p><p>24/10/2016 issued by the Authorized Officer in respect of</p><p>Schedule property covered in the E auction sale notice i.e.,</p><p>Property belonging to M/s Futuretech Industries Ltd. presently</p><p>known as Candid Industries Ltd. Al that piece and parcel of</p><p>the immovable property being industrial land together with the</p><p>superstructure/shed standing thereon admeasuring 10581 sq. </p><p>[2024] 2 S.C.R. 25</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>ft. or thereabouts comprised in survey nos. 60 part and 65/2</p><p>part, Block no. 6, Alandur village, Mambalam-Guindy Taluk, subregistration district Alandur, registration district Chennai South</p><p>presently situated at plot no. A-19, Thiru Vi Ka Industrial Estate,</p><p>South by: Plot no. A-18, Thiru Vi Ka Industrial Estate East by:</p><p>80 feet Road, West by: Service Road, you have been declared</p><p>as successful bidder at the sale price of Rs. 12,27,00,000/-</p><p>(Rupees Twelve Crore Twenty Seven Lac only).</p><p>You had remitted Rs. 2,10,55,000/- (Rupees Two Crore Ten Lac</p><p>Fifty Five Thousand only) as per E auction Sale notice 25%</p><p>of the sale price less Earnest Money Deposit amount already</p><p>remitted by you (i.e., Rs. 3,06,75,000/- minus Rs.96,20,000/-)</p><p>on 08/12/2016 as per the bid terms.</p><p>The balance amount amounting to Rs. 9,20,25,000/- (Rupees</p><p>Nine Crore Twenty Lac Twenty Five Thousand Only) was to be</p><p>remitted by you before 15 days from the date of bid failing which</p><p>the sale is liable to be cancelled and the EMD will be forfeited.</p><p>However, you had vide your mail dated 19/12/2016 requested to</p><p>give you three (3) months time to pay the balance 75% payment</p><p>of the bid amount and also assured that you will honour the</p><p>offer in the time frame.</p><p>After carefully going through your request, the Authorized</p><p>officer hereby permit/ allow you to pay the balance amount of</p><p>Rs 9,20,25,000/- (Rupees Nine crore Twenty Lac Twenty Five</p><p>Thousand Only) within 90 days from the date of BID. Further</p><p>we may also inform you that no further extension of time will</p><p>be granted and if you fail to pay the balance sale amount the</p><p>sale will be cancelled and the amount already paid will be</p><p>forfeited by the Bank.</p><p>Thanking You</p><p>Yours sincerely,</p><p>Sd/-</p><p>AUTHORIZED OFFICER”</p><p>11. The respondent being unable to pay the balance amount within</p><p>the extended period sought an additional 15-days for making the</p><p>balance-payment vide its letter dated 06.03.2017. </p><p>26 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>12. However, the appellant vide its letter dated 27.03.2017 turned down</p><p>the said request for further extension and intimated the respondent that</p><p>due to its failure in remitting the balance amount within the stipulated</p><p>time, the sale is cancelled and the amount already deposited stands</p><p>forfeited. The said sale cancellation letter is being reproduced below: -</p><p>“CFB/CHEN/2016-17/919 March 27, 2017</p><p>Mr. R. Shanmugavelu</p><p>Managing Director</p><p>M/s Sunbright Designers Private Limited</p><p>Module No.-4, Readymade Garment Complex</p><p>SIDCO Industrial Estates, Guindy</p><p>Chennai-600032</p><p>Sir,</p><p>Reg: Recovery Proceedings under the provision of SARFAESI</p><p>Act 2002 in the account M/s Best & Crompton Engineering</p><p>Projects Limited</p><p>Ref: E Auction of property held on 07/12/2016</p><p>You were declared as successful bidder at the sale price of Rs.</p><p>12,27,00,000/- (Rupees Twelve Crore Twenty Seven Lac only)</p><p>in the E auction held on 07/12/2016 pursuant to the E auction</p><p>sale notice dated 24/10/2016 issued by the Authorised Officer</p><p>in respect of Schedule property covered in the E auction sale</p><p>notice i.e., mortgaged property belonging to M/s Futuretech</p><p>Industries Ltd presently known as Candid Industries Ltd.</p><p>Schedule</p><p>All that place and parcel of the immovable property being</p><p>industrial land together with the superstructure/shed standing</p><p>thereon admeasuring 10581 sq.ft. or thereabouts comprised in</p><p>survey nos. 60 part and 65/2 part. Block no. 6, Alandur village,</p><p>Mambalam-Guindy Taluk, sub-registration district Alandur,</p><p>registration district Chennai South presently situated at plot</p><p>no. A-19. Thiru Vi Ka Industrial Estate, South by: Plot no. A-18,</p><p>Thiru Vi Ka Industrial Estate, and East by: 80 feet Road, West</p><p>by: Service Road. </p><p>[2024] 2 S.C.R. 27</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>You had remitted a total of Rs. 3,06,75,000 towards 25% of the</p><p>sale price on (i.e. Rs. 96,20,000 on 7-12-2016 towards EMD</p><p>and Rs. 2,10,55,000 on 08/12/2016 as per the terms of the bid.</p><p>The balance sale price amount to Rs. 9,20,25,000/- (Rupees</p><p>Nine Crore Twenty Lac Twenty Five Thousand only) was to be</p><p>remitted by you before 15 days from the date of bid failing which</p><p>the sale was liable to be cancelled and the amount deposited</p><p>by you had to be forfeited. However, you had vide your mail</p><p>dated 19/12/2016 requested to give you three (3) months’ time</p><p>to pay the balance 75% payment of the bid amount and also</p><p>assured that you will honour the offer in the time frame.</p><p>After carefully going through your request, the Authorized</p><p>officer permitted/allowed you to pay the balance amount of</p><p>Rs.9,20,25,000/-( Rupees Nine crore Twenty Lac Twenty Five</p><p>Thousand Only) within 90 days from the date of BID vide our</p><p>letter No. CFB/CHEN/2016-17/718 dated 20/12/2016. Further</p><p>we also informed you that no further extension of time will be</p><p>granted and if you fail to pay the balance sale amount the sale</p><p>will be cancelled and the amount already paid was liable to be</p><p>forfeited by the Bank.</p><p>You had again requested for extension of time for another 15</p><p>days vide your letter dated 06/03/2017. After going through your</p><p>representation/request, we permitted you to remit the balance</p><p>of Rs. 9,20,25,000/- (Rupees Nine Crore Twenty Lac Twenty</p><p>Five Thousand Only) by 22/03/2017 thereby giving three months</p><p>time from the 15th day of confirmation of sale as per the Security</p><p>Interests (Enforcement) Rules, 2002.</p><p>We hereby inform you that as you have failed to remit the balance</p><p>amount of Rs. 9,20,25,000/- (Rupees Nine crore Twenty Lac</p><p>Twenty Five Thousand Only) by 22/03/2017, the amount of Rs.</p><p>3,06,75,000/- which was already paid by you stands forfeited.</p><p>This letter issued without prejudice to the bank’s rights to bring</p><p>the property for fresh auction sale.</p><p>Thanking you</p><p>Yours sincerely,</p><p>Sd/-</p><p>AUTHORISED OFFICER”</p><p>28 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>13. Despite the aforesaid letter, the respondent on 05.04.2017 addressed</p><p>one another letter to the appellant seeking further extension of 90</p><p>days for making the balance sale payment by enclosing a cheque</p><p>of Rs.50,00,000/- to show its bona fides. However, the appellant</p><p>returned the cheque and declined the said request vide its letter</p><p>dated 06.04.2017.</p><p>14. Aggrieved by the aforesaid, the respondent filed an application being</p><p>SA No. 143 of 2018 before the Debts Recovery Tribunal-II (“DRT”)</p><p>assailing the appellant’s sale cancellation and forfeiture letters dated</p><p>27.03.2017 and 06.04.2017 respectively.</p><p>15. During the pendency of the proceedings before the DRT as aforesaid</p><p>a fresh auction of the Secured Asset was conducted by the appellant</p><p>bank on 13.03.2019, and it appears that pursuant to the same the</p><p>sale was completed at an enhanced price of Rs. 14.76 crore i.e.,</p><p>more than the price fetched in the previous auction.</p><p>16. The DRT-II vide its order dated 06.05.2019 allowed the application</p><p>being SA No. 143 of 2018 and directed the appellant bank to refund</p><p>the earnest money deposited by the respondent after deducting a</p><p>sum of Rs. 5,00,000/- towards the expenditure incurred. The DRT-II</p><p>in its order observed that the respondent had requested the appellant</p><p>bank to provide certain documents required for the grant of term loan</p><p>which was not provided, as a result of which the term loan was not</p><p>granted and the respondent failed to remit the balance amount. It</p><p>further observed that as the Secured Asset had been sold for an</p><p>amount higher than the initial bid, no loss was caused to the appellant.</p><p>17. The aforesaid order was challenged by the appellant before the Debt</p><p>Recovery Appellate Tribunal, Chennai (“DRAT”) by way of RA(SA)</p><p>No. 119 of 2019. The DRAT vide its order dated 30.07.2021 observed</p><p>that the secured creditor was not entitled to forfeit the entire amount</p><p>deposited, but partly allowed the appeal and enhanced the forfeiture</p><p>from Rs. 5 Lac to Rs. 55 Lac.</p><p>B. IMPUGNED ORDER</p><p>18. Aggrieved with the aforesaid, both the appellant and the respondent</p><p>approached the High Court of judicature at Madras by way of</p><p>C.R.P. No(s). 1892 & 2282 of 2021 respectively, assailing the</p><p>order dated 30.07.2021 passed by the DRAT, Chennai, wherein </p><p>[2024] 2 S.C.R. 29</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>the High Court vide the impugned judgment and final order dated</p><p>27.10.2021 allowed the respondent’s civil revision petition. The</p><p>operative portion is reproduced below: -</p><p>“19. For the reasons aforesaid, the enhancement of</p><p>the quantum of forfeiture as permitted by the Appellate</p><p>Tribunal in the impugned order of July 30, 2021 cannot</p><p>be sustained and the same is set aside. The quantum</p><p>as awarded by the DRT-II, Chennai in its order of May</p><p>06, 2019 is restored and to such extent the order of the</p><p>appellate authority is set aside.”</p><p>19. The impugned judgment of the High Court is in two-parts. In other</p><p>words, the High Court allowed the respondent’s civil revision petition</p><p>setting aside the DRAT’s order on two grounds: -</p><p>(i) First, the High Court took the view that the forfeiture of an amount</p><p>or deposit by a secured creditor under the SARFAESI Rules</p><p>cannot be more than the loss or damage suffered by it. The</p><p>High Court held that Rule 9 sub-rule (5) of the SARFAESI Rules</p><p>which provides for forfeiture cannot override the underlying ethos</p><p>of Section 73 of the Indian Contract Act, 1872 (for short, “the</p><p>1872 Act”). The relevant observations are reproduced below: -</p><p>“10. Section 74 of the Contract Act, 1872 provides for</p><p>compensation for breach of contract where the penalty is</p><p>stipulated. Section 73 of the Contract Act is the general</p><p>rule that provides for compensation for loss or damage</p><p>caused by breach of contract and Section 74 is where</p><p>the quantum is specified. What Section 73 of the Contract</p><p>Act mandates is that a party who suffers as a result of</p><p>a breach committed by the other party to the contract</p><p>“is entitled to receive from the party who has broken the</p><p>contract, compensation for any loss or damage caused to</p><p>him thereby, which naturally arose in the usual course of</p><p>things from such breach, or which the parties knew, when</p><p>they made the contract, to be likely to result from the breach</p><p>of it.” Any detailed discussion on such provision would</p><p>be beyond the scope of the present lis and may require</p><p>many more sheets that may be conveniently expended in</p><p>the present exercise. Indeed, Section 73 of the Contract</p><p>Act is in the nature of a jurisprudential philosophy that is </p><p>30 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>accepted as a part of the law in this country. In short, it</p><p>implies that only such of the loss or damage suffered by</p><p>the party not in breach, may be recovered from the party</p><p>in breach, as a consequence of the breach. It is possible</p><p>that as a result of the breach, the party not in breach does</p><p>not suffer any adverse impact. It is also possible, as in the</p><p>present case, that as a consequence of the breach, the</p><p>party not in breach obtains a benefit, in such cases, where</p><p>no loss or damage has been occasioned to the party not</p><p>in breach, such party cannot extract any money merely</p><p>on account of such breach, as the entitlement in law to</p><p>compensation is not upon the commission of breach, but</p><p>only upon any loss or damage suffered as a consequence</p><p>thereof. That is elementary.</p><p>xxx xxx xxx</p><p>12. Rule 9(5) of the said Rules of 2002 has to be seen as</p><p>an enabling provision that permits forfeiture in principle.</p><p>However, such Rule cannot be conferred an exalted status</p><p>to override the underlying ethos of Section 73 of the</p><p>Contract Act. In other words, Rule 9(5) has to yield to the</p><p>principle recognised in Section 73 of the Contract Act or</p><p>it must be read down accordingly. Thus, notwithstanding</p><p>the wide words used in Rule 9(5) of the said Rules, a</p><p>secured creditor may not forfeit any more than the loss</p><p>or damage suffered by such creditor as a consequence of</p><p>the failure on the part of a bidder to make payment of the</p><p>consideration or the balance consideration in terms of the</p><p>bid. It is only if such principle as embodied in Section 73 of</p><p>the Contract Act, is read into Rule 9(5) of the said Rules,</p><p>would there be an appropriate answer to the conundrum</p><p>as to whether a colossal default of the entirety of the</p><p>consideration or the mere default of one rupee out of the</p><p>consideration would result in the identical consequence</p><p>of forfeiture as indicated in the provision.</p><p>13. In any event, notwithstanding the reference to Section</p><p>35 of the Act of 2002, the apparent overriding effect of</p><p>the provisions of the Act of 2002 has to be tempered in</p><p>the light of Section 37 of the Act. Though Section 37 of </p><p>[2024] 2 S.C.R. 31</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>the Act refers to several statutes by name, the residual</p><p>limb of such provision recognises “or any other law for the</p><p>time being in force”, which would embrace the Contract</p><p>Act within its fold. It is completely unacceptable that by</p><p>virtue of the delegated legislation as in the Rules of 2002,</p><p>the fundamental principle envisaged in the Contract Act</p><p>would get diluted or altogether disregarded.”</p><p>(Emphasis supplied)</p><p>(ii) Secondly, the High Court was of the view that the forfeiture of</p><p>the entire earnest money deposit by the appellant amounts to</p><p>unjust enrichment which is not permissible. It observed that</p><p>under the SARFAESI Act, a secured creditor is not entitled to</p><p>obtain any amount more than the debt due to it, and as such</p><p>any forfeiture under the SARFAESI Act ought to be assessed</p><p>by computing damages on the basis of evidence. The relevant</p><p>observations are reproduced below: -</p><p>“18. It was completely open to the appellate authority</p><p>to enhance the quantum as awarded by the DRT.</p><p>However, such exercise could have been undertaken by</p><p>inviting evidence in such regard. The appellate authority</p><p>purported to enhance the quantum from Rs 5 lakh to</p><p>Rs 55 lakh without indicating any or cogent grounds for</p><p>such enhancement. Though an element of guesstimation</p><p>is permitted while assessing damages, when an initial</p><p>authority has indicated a ballpark figure, any tinkering with</p><p>such figure at the appellate stage would require material in</p><p>support thereof, which is completely lacking in the judgment</p><p>and order impugned dated July 30, 2021 passed by the</p><p>appellate authority in the present case.</p><p> xxx xxx xxx</p><p>20. Before parting, there is another aspect that has to be</p><p>referred to for the completeness of the discussion. The</p><p>purpose of the Act of 2002 is to ensure speedy recovery</p><p>of the debt due to secured creditors covered by such</p><p>statute. Towards such end, the provisions of the said</p><p>Act and the Rules made thereunder give primacy to the</p><p>secured creditor in initially assessing the quantum of debt </p><p>32 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>due and in proceeding against the securities furnished for</p><p>realising such debt due. However, no secured creditor,</p><p>not even by embracing the provisions of the said Act of</p><p>2002, can unjustly enrich itself or obtain any more by way</p><p>of resorting to any of the measures contemplated under</p><p>Section 13(4) of the Act or otherwise than the debt that</p><p>is due to it and the costs that may have been incurred in</p><p>course of trying to recover the debt due. In a sense, if the</p><p>forfeiture provision in Rule 9(5) of the said Rules is ready</p><p>to imply what the secured creditor in this case seeks to, it</p><p>may result in a secured creditor unjustly enriching itself,</p><p>which is not permissible.”</p><p>(Emphasis supplied)</p><p>20. The plain reading of the aforesaid findings recorded by the High</p><p>Court lays down three propositions of law as follows:</p><p>(1) Rule 9(5) of the SARFAESI Rules is merely an enabling</p><p>provision that permits forfeiture in principle. It cannot override</p><p>the underlying ethos of Section 73 of the 1872 Act. It should</p><p>yield to the principle recognised in Section 73 of the 1872 Act</p><p>or must be read down accordingly.</p><p>(2) By virtue of the delegated legislation as in the SARFAESI Rules,</p><p>the fundamental principle envisaged in the 1872 Act should not</p><p>be permitted to be diluted or altogether disregarded.</p><p>(3) Rule 9(5) of the SARFAESI Rules if not read along with the</p><p>principle recognised in Section 73 of the 1872 Act, the same</p><p>may result in a secured creditor unjustly enriching itself which</p><p>is not permissible.</p><p>21. In view of the aforesaid, the Bank being aggrieved with the impugned</p><p>order passed by the High Court is here before this Court with the</p><p>present appeals.</p><p>C. SUBMISSIONS OF THE APPELLANT</p><p>22. Mr. Dhruv Mehta, the learned Senior Counsel appearing for the</p><p>appellants submitted that the issue framed by the High Court in its</p><p>Impugned Judgment is wholly alien to the sale conducted under the</p><p>SARFAESI Rules, more particularly Rule 9. </p><p>[2024] 2 S.C.R. 33</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>23. It was submitted that the High Court was not correct in reading down</p><p>Rule 9(5) and holding that the same must yield to the principles</p><p>recognized in Section 73 of the 1872 Act, notwithstanding the wide</p><p>words used in Rule 9(5) of SARFAESI Rules.</p><p>24. It was further submitted that the High Court failed to appreciate that</p><p>the auction sale under consideration was a statutory sale conducted</p><p>by the appellant in accordance with the SARFAESI Rules and as</p><p>Section 35 of the SARFAESI Act gives an overriding effect, this would</p><p>not be a case of breach of contract which would attract principles</p><p>underlying Section 73 of the 1872 Act.</p><p>25. Mr. Mehta placed strong reliance on a recent decision of this Court</p><p>in Authorized Officer State Bank of India v. C. Natarajan reported</p><p>in 2023 SCC Online SC 510, wherein whilst dealing with a similar</p><p>issue, it was held that Rule 9 which is part of a special enactment</p><p>will have precedence over Sections 73 and 74 respectively of the</p><p>1872 Act which is a general provision.</p><p>26. It was further submitted that Rule 9(5) of the SARFAESI Rules, ought</p><p>to be interpreted strictly because often the borrowers use subversive</p><p>methods to hinder the auction process which may lead to erosion</p><p>of the secured asset’s value in light of reauctions.</p><p>27. In the last, Mr. Mehta submitted that clause 11 of the e-auction notice</p><p>dated 24.10.2016 explicitly provided that the failure of the auction</p><p>purchaser in paying the balance amount would result in forfeiture</p><p>of the earnest-money deposit.</p><p>28. In such circumstances referred to above, the learned Senior Counsel</p><p>prayed that there being merit in his appeals, the same be allowed</p><p>and the impugned judgment and order of the High Court be set aside.</p><p>D. SUBMISSIONS OF THE RESPONDENT</p><p>29. Dr. S. Muralidhar, the learned Senior Counsel appearing for the</p><p>respondent on the other hand vehemently submitted that no error not</p><p>to speak of any error of law could be said to have been committed</p><p>by the High Court in passing the impugned judgment and order.</p><p>30. It was submitted that Section 35 of the SARFAESI Act only gives the</p><p>Act an overriding effect over other laws, and is not applicable to the</p><p>SARFAESI Rules made under it. Therefore Rule 9(5) of SARFASI</p><p>Rules is only an enabling provision and cannot override the statutory</p><p>provisions of the 1872 Act.</p><p>34 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>31. It was submitted that the High Court committed no error in holding</p><p>that the appellant bank could not have forfeited the amount deposited</p><p>by a third party being the auction purchaser without any real damage</p><p>or loss being caused to it.</p><p>32. It was further submitted that under the SARFAESI Rules, the</p><p>authorized officer is left with an unguided power of forfeiture. Such</p><p>unguided power conferred on a delegated authority like the authorized</p><p>officer in a bank is opposed to public policy and would result in unjust</p><p>enrichment. Therefore, the said Rule 9(5) is liable to be struck down</p><p>as unconstitutional being opposed to public policy and principles of</p><p>fair play and unreasonableness.</p><p>33. In such circumstances referred to above, it was prayed on behalf of</p><p>the respondent that there being no merit in the appeals, the same</p><p>may be dismissed.</p><p>E. ANALYSIS (Points for Determination)</p><p>34. Having heard the learned counsel appearing for the parties and</p><p>having gone through the materials on record, the following questions</p><p>fall for our consideration: -</p><p>I. Whether, the underlying principle of Section(s) 73 & 74</p><p>respectively of the 1872 Act is applicable to forfeiture of earnestmoney deposit under Rule 9(5) of the SARFAESI Rules? In</p><p>other words, whether the forfeiture of the earnest-money deposit</p><p>under Rule 9(5) of the SARFAESI Rules can be only to the</p><p>extent of loss or damages incurred by the Bank?</p><p>II. Whether, the forfeiture of the entire amount towards the earnestmoney deposit under Rule 9(5) of the Rules amounts to unjust</p><p>enrichment? In other words, whether the quantum of forfeiture</p><p>under the SARFAESI Rule is limited to the extent of debt owed?</p><p>III. Whether a case of exceptionable circumstances could be said</p><p>to have been made out by the respondent to set aside the order</p><p>of forfeiture of the earnest money deposit?</p><p>i) Legislative History and Scheme of the SARFAESI Act</p><p>35. Till early 1990s, the civil suits were being filed for recovery of the</p><p>dues of banks and financial institutions under the Act 1882 and the</p><p>Code of Civil Procedure, 1908 (“CPC”). Due to various difficulties the </p><p>[2024] 2 S.C.R. 35</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>banks and financial institutions had to face in recovering loans and</p><p>enforcement of securities, the Parliament enacted the Recovery of</p><p>Debts Due to Banks and Financial Institutions Act, 1993 (for short,</p><p>the “RDBFI Act”).</p><p>36. On account of lack of infrastructure and manpower, the regular</p><p>civil courts were not in a position to cope up with the speed in the</p><p>adjudication of recovery cases. In the light of recommendations of</p><p>the Tiwari Committee the special tribunals came to be set up under</p><p>the provisions of the RDBFI Act referred to above for the recovery</p><p>of huge accumulated NPA of the Bank loans.</p><p>37. On the continuing rise in number of Non-Performing Assets (NPA)</p><p>at banks and other financial institutions in India; a poor rate of loan</p><p>recovery and the failure of the existing legislation in redressing the</p><p>difficulties of recovery by banks; the Narasimham Committee I & II</p><p>and Andyarujina Committee were constituted by the Government</p><p>for examining and suggesting banking reforms in India. These</p><p>Committees in their reports observed that one out of every five</p><p>borrower was a defaulter, and that due to the long and tedious</p><p>process of existing frame work of law and the overburdening of</p><p>existing forums including the specialised tribunals under the 1993</p><p>Act, any attempt of recovery with the assistance of court/tribunal</p><p>often rendered the secured asset nearly worthless due to the long</p><p>delays. In this background the Committees thus, proposed new laws</p><p>for securitisation in order to permit banks and financial institutions</p><p>to hold securities and sell them in a timely manner without the</p><p>involvement of the courts.</p><p>38. On the recommendations of the Narasimham Committee and</p><p>Andyarujina Committee, the SARFAESI Act was enacted to empower</p><p>the banks and financial institutions to take possession of the securities</p><p>and to sell them without intervention of the court.</p><p>39. The statement of objects and reasons for which the Act has been</p><p>enacted reads as under: -</p><p>“STATEMENT OF OBJECTS AND REASONS</p><p>The financial sector has been one of the key drivers in India’s</p><p>efforts to achieve success in rapidly developing its economy.</p><p>While the banking industry in India is progressively complying</p><p>with the international prudential norms and accounting practices </p><p>36 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>there are certain areas in which the banking and financial</p><p>sector do not have a level playing field as compared to other</p><p>participants in the financial markets in the world. There is no</p><p>legal provision for facilitating securitisation of financial assets</p><p>of banks and financial institutions. Further, unlike international</p><p>banks, the banks and financial institutions in India do not have</p><p>power to take possession of securities and sell them. Our existing</p><p>legal framework relating to commercial transactions has not</p><p>kept pace with the changing commercial practices and financial</p><p>sector reforms. This has resulted in slow pace of recovery of</p><p>defaulting loans and mounting levels of non-performing assets</p><p>of banks and financial institutions. Narasimham Committee I</p><p>and II and Andhyarujina Committee constituted by the Central</p><p>Government for the purpose of examining banking sector reforms</p><p>have considered the need for changes in the legal system in</p><p>respect of these areas. These Committees, inter alia, have</p><p>suggested enactment of a new legislation for securitisation and</p><p>empowering banks and financial institutions to take possession</p><p>of the securities and to sell them without the intervention of</p><p>the court. Acting on these suggestions, the Securitisation and</p><p>Reconstruction of Financial Assets and Enforcement of Security</p><p>Interest Ordinance, 2002 was promulgated on the 21st June,</p><p>2002 to regulate securitisation and reconstruction of financial</p><p>assets and enforcement of security interest and for matters</p><p>connected therewith or incidental thereto. The provisions of the</p><p>Ordinance would enable banks and financial institutions to realise</p><p>long-term assets, manage problem of liquidity, asset liability</p><p>mismatches and improve recovery by exercising powers to take</p><p>possession of securities, sell them and reduce nonperforming</p><p>assets by adopting measures for recovery or reconstruction.”</p><p>40. This Court in Mardia Chemicals Ltd. & Ors. v. Union of India & Ors.</p><p>reported in (2004) 4 SCC 311, examined the history and legislative</p><p>backdrop that ultimately led to the enactment of the SARFAESI Act</p><p>as under: -</p><p>“34. Some facts which need to be taken note of are that the</p><p>banks and the financial institutions have heavily financed the</p><p>petitioners and other industries. It is also a fact that a large sum</p><p>of amount remains unrecovered. Normal process of recovery</p><p>of debts through courts is lengthy and time taken is not suited</p><p>for recovery of such dues. For financial assistance rendered </p><p>[2024] 2 S.C.R. 37</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>to the industries by the financial institutions, financial liquidity</p><p>is essential failing which there is a blockade of large sums of</p><p>amounts creating circumstances which retard the economic</p><p>progress followed by a large number of other consequential ill</p><p>effects. Considering all these circumstances, the Recovery of</p><p>Debts Due to Banks and Financial Institutions Act was enacted</p><p>in 1993 but as the figures show it also did not bring the desired</p><p>results. Though it is submitted on behalf of the petitioners that</p><p>it so happened due to inaction on the part of the Governments</p><p>in creating Debts Recovery Tribunals and appointing presiding</p><p>officers, for a long time. Even after leaving that margin, it is</p><p>to be noted that things in the spheres concerned are desired</p><p>to move faster. In the present-day global economy it may be</p><p>difficult to stick to old and conventional methods of financing</p><p>and recovery of dues. Hence, in our view, it cannot be said that</p><p>a step taken towards securitisation of the debts and to evolve</p><p>means for faster recovery of NPAs was not called for or that</p><p>it was superimposition of undesired law since one legislation</p><p>was already operating in the field, namely, the Recovery of</p><p>Debts Due to Banks and Financial Institutions Act. It is also</p><p>to be noted that the idea has not erupted abruptly to resort to</p><p>such a legislation. It appears that a thought was given to the</p><p>problems and the Narasimham Committee was constituted</p><p>which recommended for such a legislation keeping in view the</p><p>changing times and economic situation whereafter yet another</p><p>Expert Committee was constituted, then alone the impugned</p><p>law was enacted. Liquidity of finances and flow of money is</p><p>essential for any healthy and growth-oriented economy. But</p><p>certainly, what must be kept in mind is that the law should</p><p>not be in derogation of the rights which are guaranteed to the</p><p>people under the Constitution. The procedure should also be</p><p>fair, reasonable and valid, though it may vary looking to the</p><p>different situations needed to be tackled and object sought to</p><p>be achieved.</p><p> xxx xxx xxx</p><p>36. In its Second Report, the Narasimham Committee observed</p><p>that NPAs in 1992 were uncomfortably high for most of the</p><p>public sector banks. In Chapter VIII of the Second Report</p><p>the Narasimham Committee deals about legal and legislative</p><p>framework and observed:</p><p>38 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>“8.1. A legal framework that clearly defines the rights and</p><p>liabilities of parties to contracts and provides for speedy</p><p>resolution of disputes is a sine qua non for efficient trade</p><p>and commerce, especially for financial intermediation. In</p><p>our system, the evolution of the legal framework has not</p><p>kept pace with changing commercial practice and with</p><p>the financial sector reforms. As a result, the economy</p><p>has not been able to reap the full benefits of the reforms</p><p>process. As an illustration, we could look at the scheme of</p><p>mortgage in the Transfer of Property Act, which is critical</p><p>to the work of financial intermediaries….”</p><p>One of the measures recommended in the circumstances was to</p><p>vest the financial institutions through special statutes, the power</p><p>of sale of the assets without intervention of the court and for</p><p>reconstruction of assets. It is thus to be seen that the question</p><p>of non-recoverable or delayed recovery of debts advanced by</p><p>the banks or financial institutions has been attracting attention</p><p>and the matter was considered in depth by the Committees</p><p>specially constituted consisting of the experts in the field. In the</p><p>prevalent situation where the amounts of dues are huge and</p><p>hope of early recovery is less, it cannot be said that a more</p><p>effective legislation for the purpose was uncalled for or that it</p><p>could not be resorted to. It is again to be noted that after the</p><p>Report of the Narasimham Committee, yet another Committee</p><p>was constituted headed by Mr Andhyarujina for bringing about</p><p>the needed steps within the legal framework. We are therefore,</p><p>unable to find much substance in the submission made on</p><p>behalf of the petitioners that while the Recovery of Debts Due</p><p>to Banks and Financial Institutions Act was in operation it was</p><p>uncalled for to have yet another legislation for the recovery of</p><p>the mounting dues. Considering the totality of circumstances</p><p>and the financial climate world over, if it was thought as a</p><p>matter of policy to have yet speedier legal method to recover</p><p>the dues, such a policy decision cannot be faulted with nor is</p><p>it a matter to be gone into by the courts to test the legitimacy</p><p>of such a measure relating to financial policy.”</p><p>41. In this regard, reference may be made to the following observations</p><p>of this Court in the case of United Bank of India v. Satyawati</p><p>Tondon & Ors. reported in (2010) 8 SCC 110. The relevant paras</p><p>are being reproduced hereunder: </p><p>[2024] 2 S.C.R. 39</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>“1. … With a view to give impetus to the industrial</p><p>development of the country, the Central and State</p><p>Governments encouraged the banks and other financial</p><p>institutions to formulate liberal policies for grant of loans</p><p>and other financial facilities to those who wanted to set</p><p>up new industrial units or expand the existing units. Many</p><p>hundred thousand took advantage of easy financing by the</p><p>banks and other financial institutions but a large number</p><p>of them did not repay the amount of loan, etc. Not only</p><p>this, they instituted frivolous cases and succeeded in</p><p>persuading the civil courts to pass orders of injunction</p><p>against the steps taken by banks and financial institutions</p><p>to recover their dues. Due to lack of adequate infrastructure</p><p>and non-availability of manpower, the regular courts could</p><p>not accomplish the task of expeditiously adjudicating the</p><p>cases instituted by banks and other financial institutions for</p><p>recovery of their dues. As a result, several hundred crores</p><p>of public money got blocked in unproductive ventures.</p><p>2. In order to redeem the situation, the Government of India</p><p>constituted a committee under the Chairmanship of Shri T.</p><p>Tiwari to examine the legal and other difficulties faced by</p><p>banks and financial institutions in the recovery of their dues</p><p>and suggest remedial measures. The Tiwari Committee noted</p><p>that the existing procedure for recovery was very cumbersome</p><p>and suggested that special tribunals be set up for recovery</p><p>of the dues of banks and financial institutions by following a</p><p>summary procedure. The Tiwari Committee also prepared a</p><p>draft of the proposed legislation which contained a provision</p><p>for disposal of cases in three months and conferment of</p><p>power upon the Recovery Officer for expeditious execution</p><p>of orders made by adjudicating bodies.”</p><p>42. Section 13 of the SARFAESI Act contains the provisions relating to</p><p>the enforcement of the security interest and the manner in which the</p><p>same may be done by the secured creditor without the intervention</p><p>of the court or ribunal in accordance with its provisions.</p><p>43. Rules 8 and 9 respectively of the SARFAESI Rules prescribe the</p><p>procedure and formalities to be followed for the sale of immovable</p><p>secured asset as per Section 13 of the SARFAESI Act. In the present </p><p>40 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>lis, we are concerned with Rule 9 more particularly sub-rule (5) of</p><p>the SARFAESI Rules which provides for forfeiture of 25% of the</p><p>deposit made under sub-rule (3) in the event the successful auction</p><p>purchaser fails to pay the balance amount within the stipulated time</p><p>period under sub-rule (4). The said Rule reads as under: -</p><p>“9. Time of sale, issue of sale certificate and delivery</p><p>of possession, etc.–(1) No sale of immovable property</p><p>under these rules, in first instance shall take place before</p><p>the expiry of thirty days from the date on which the public</p><p>notice of sale is published in newspapers as referred to in</p><p>the proviso to sub-rule (6) of rule 8 or notice of sale has</p><p>been served to the borrower:</p><p>Provided further that if sale of immovable property by</p><p>any one of the methods specified by sub-rule (5) of rule</p><p>8 fails and sale is required to be conducted again, the</p><p>authorised officer shall serve, affix and publish notice of</p><p>sale of not less than fifteen days to the borrower, for any</p><p>subsequent sale.</p><p>(2) The sale shall be confirmed in favour of the purchaser</p><p>who has offered the highest sale price in his bid or tender</p><p>or quotation or offer to the authorised officer and shall be</p><p>subject to confirmation by the secured creditor:</p><p>Provided that no sale under this rule shall be confirmed, if</p><p>the amount offered by sale price is less than the reserve</p><p>price, specified under sub-rule (5) of rule 8:</p><p>Provided further that if the authorised officer fails to obtain</p><p>a price higher than the reserve price, he may, with the</p><p>consent of the borrower and the secured creditor effect</p><p>the sale at such price.</p><p>(3) On every sale of immovable property, the purchaser</p><p>shall immediately, i.e. on the same day or not later than</p><p>next working day, as the case may be, pay a deposit</p><p>of twenty five per cent. of the amount of the sale price,</p><p>which is inclusive of earnest money deposited, if any, to</p><p>the authorised officer conducting the sale and in default</p><p>of such deposit, the property shall be sold again;</p><p>[2024] 2 S.C.R. 41</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>(4) The balance amount of purchase price payable shall be</p><p>paid by the purchaser to the authorised officer on or before</p><p>the fifteenth day of confirmation of sale of the immovable</p><p>property or such extended period as may be agreed upon</p><p>in writing between the purchaser and the secured creditor,</p><p>in any case not exceeding three months.</p><p>(5) In default of payment within the period mentioned in</p><p>sub-rule (4), the deposit shall be forfeited to the secured</p><p>creditor and the property shall be resold and the defaulting</p><p>purchaser shall forfeit all claim to the property or to any</p><p>part of the sum for which it may be subsequently sold.</p><p>(6) On confirmation of sale by the secured creditor and</p><p>if the terms of payment have been complied with, the</p><p>authorised officer exercising the power of sale shall issue a</p><p>certificate of sale of the immovable property in favour of the</p><p>purchaser in the Form given in Appendix V to these rules.</p><p>(7) Where the immovable property sold is subject to any</p><p>encumbrances, the authorised officer may, if he thinks</p><p>fit, allow the purchaser to deposit with him the money</p><p>required to discharge the encumbrances and any interest</p><p>due thereon together with such additional amount that</p><p>may be sufficient to meet the contingencies or further</p><p>cost, expenses and interest as may be determined by him.</p><p>Provided that if after meeting the cost of removing</p><p>encumbrances and contingencies there is any surplus</p><p>available out of money deposited by the purchaser such</p><p>surplus shall be paid to the purchaser within fifteen days,</p><p>from date of finalisation of the sale.</p><p>(8) On such deposit of money for discharge of the</p><p>encumbrances, the authorised officer shall issue or cause</p><p>the purchaser to issue notices to the persons interested</p><p>in or entitled to the money deposited with him and take</p><p>steps to make, the payment accordingly.</p><p>(9) The authorised officer shall deliver the property to the</p><p>purchaser free from encumbrances known to the secured</p><p>creditor on deposit of money as specified in sub-rule (7)</p><p>above.</p><p>42 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>(10) The certificate of sale issued under sub-rule (6)</p><p>shall specifically mention that whether the purchaser has</p><p>purchased the immovable secured asset free from any</p><p>encumbrances known to the secured creditor or not.”</p><p>44. Section 35 of the SARFAESI Act contains the overriding clause and</p><p>provides that the Act shall override any other law which is inconsistent</p><p>with its provisions, and reads as under: -</p><p>“35. The provisions of this Act to override other laws.–</p><p>The provisions of this Act shall have effect, notwithstanding</p><p>anything inconsistent therewith contained in any other law</p><p>for the time being in force or any instrument having effect</p><p>by virtue of any such law.”</p><p>45. Section 37 of the SARFAESI Act provides that the provisions of the</p><p>SARFAESI Act shall be in addition to the Acts mentioned in or and</p><p>any other law for the time being in force and that the other laws</p><p>shall also be applicable alongside the SARFAESI Act, and reads</p><p>as under: -</p><p>“37. Application of other laws not barred.–The provisions</p><p>of this Act or the rules made thereunder shall be in addition</p><p>to, and not in derogation of, the Companies Act, 1956 (1</p><p>of 1956), the Securities Contracts (Regulation) Act, 1956</p><p>(42 of 1956), the Securities and Exchange Board of India</p><p>Act, 1992 (15 of 1992), the Recovery of Debts Due to</p><p>Banks and Financial Institutions Act, 1993 (51 of 1993)</p><p>or any other law for the time being in force.”</p><p>46. This Court in Madras Petrochem Ltd. & Anr. v. Board for Industrial</p><p>and Financial Reconstruction & Ors. reported in (2016) 4 SCC 1,</p><p>recapitulated the object behind the enactment of the SARFAESI Act</p><p>and in that context examined the purpose of Sections 13, 35 and 37</p><p>respectively of the SARFAESI Act with the following observations</p><p>given as under: -</p><p>“16. It is important at this stage to refer to the genesis of these</p><p>three legislations. Each of them deals with different aspects of</p><p>recovery of debts due to banks and financial institutions. Two</p><p>of them refer to creditors’ interests and how best to deal with</p><p>recovery of outstanding loans and advances made by them on</p><p>the one hand, whereas the Sick Industrial Companies (Special </p><p>[2024] 2 S.C.R. 43</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>Provisions) Act, 1985, on the other hand, deals with certain</p><p>debtors which are sick industrial companies [i.e. companies</p><p>running industries named in the Schedule to the Industries</p><p>(Development and Regulation) Act, 1951] and whether such</p><p>“debtors” having become “sick”, are to be rehabilitated. The</p><p>question, therefore, is whether the public interest in recovering</p><p>debts due to banks and financial institutions is to give way to</p><p>the public interest in rehabilitation of sick industrial companies,</p><p>regard being had to the present economic scenario in the</p><p>country, as reflected in parliamentary legislation.</p><p> xxx xxx xxx</p><p>19. While this Act had worked for a period of about 7 years,</p><p>the Recovery of Debts Due to Banks and Financial Institutions</p><p>Act, 1993 was brought into force, pursuant to various committee</p><p>reports. The Statement of Objects and Reasons for this Act</p><p>reads as follows:</p><p>Statement of Objects and Reasons of the Recovery of</p><p>Debts Due to Banks and Financial Institutions Act, 1993</p><p>“1. Banks and financial institutions at present experience</p><p>considerable difficulties in recovering loans and enforcement</p><p>of securities charged with them. The existing procedure</p><p>for recovery of debts due to the banks and financial</p><p>institutions has blocked a significant portion of their funds</p><p>in unproductive assets, the value of which deteriorates</p><p>with the passage of time. The Committee on the Financial</p><p>System headed by Shri M. Narasimham has considered the</p><p>setting up of the Special Tribunals with special powers for</p><p>adjudication of such matters and speedy recovery as critical</p><p>to the successful implementation of the financial sector</p><p>reforms. An urgent need was, therefore, felt to work out a</p><p>suitable mechanism through which the dues to the banks</p><p>and financial institutions could be realised without delay.</p><p>In 1981, a Committee under the Chairmanship of Shri T.</p><p>Tiwari had examined the legal and other difficulties faced</p><p>by banks and financial institutions and suggested remedial</p><p>measures including changes in law. The Tiwari Committee</p><p>had also suggested setting up of Special Tribunals for </p><p>44 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>recovery of dues of the banks and financial institutions by</p><p>following a summary procedure. The setting up of Special</p><p>Tribunals will not only fulfil a long-felt need, but also will</p><p>be an important step in the implementation of the Report</p><p>of Narasimham Committee. Whereas on 30-9-1990 more</p><p>than fifteen lakhs of cases filed by the public sector banks</p><p>and about 304 cases filed by the financial institutions were</p><p>pending in various courts, recovery of debts involved more</p><p>than Rs 5622 crores in dues of public sector banks and</p><p>about Rs 391 crores of dues of the financial institutions.</p><p>The locking up of such huge amount of public money in</p><p>litigation prevents proper utilisation and recycling of the</p><p>funds for the development of the country.</p><p>2. The Bill seeks to provide for the establishment of Tribunals</p><p>and Appellate Tribunals for expeditious adjudication and</p><p>recovery of debts due to banks and financial institutions.</p><p>Notes on clauses explain in detail the provisions of the Bill.”</p><p>20. The Recovery of Debts Due to Banks and Financial</p><p>Institutions Act, 1993 took away the jurisdiction of the courts</p><p>and vested this jurisdiction in tribunals established by the Act</p><p>so as to ensure speedy recovery of debts due to the banks</p><p>and financial institutions mentioned therein. This Act also</p><p>included one appeal to the Appellate Tribunal, and transfer</p><p>of all suits or other proceedings pending before any court</p><p>to tribunals set up under the Act. The Act contained a non</p><p>obstante clause in Section 34 stating that its provisions will</p><p>have effect notwithstanding anything inconsistent contained in</p><p>any other law for the time being in force or in any instrument</p><p>having effect by virtue of any other law. In the year 2000, this</p><p>Act was amended so as to incorporate a new sub-section (2) in</p><p>Section 34 together with a saving provision in sub-section (1).</p><p>It is of some interest to note that this Act was to be in addition</p><p>to and not in derogation of various Financial Corporation Acts</p><p>and the Sick Industrial Companies (Special Provisions) Act,</p><p>1985. Clearly, therefore, the object of the 2000 Amendment to</p><p>the Recovery of Debts Due to Banks and Financial Institutions</p><p>Act, 1993 was to make the Sick Industrial Companies (Special</p><p>Provisions) Act, 1985 prevail over it. </p><p>[2024] 2 S.C.R. 45</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>21. Regard being had to the poor working of the Recovery</p><p>of Debts Due to Banks and Financial Institutions Act, 1993,</p><p>the Securitisation and Reconstruction of Financial Assets and</p><p>Enforcement of Security Interest Act, 2002 was brought into</p><p>force in the year 2002. …</p><p>22. This 2002 Act was brought into force as a result of two</p><p>committee reports which opined that recovery of debts due to</p><p>banks and financial institutions was not moving as speedily as</p><p>expected, and that, therefore, certain other measures would</p><p>have to be put in place in order that these banks and financial</p><p>institutions would better be able to recover debts owing to them.</p><p> xxx xxx xxx</p><p>24. The “pivotal” provision, namely, Section 13 of the said</p><p>Act makes it clear that banks and financial institutions would</p><p>now no longer have to wait for a tribunal judgment under the</p><p>Recovery of Debts Due to Banks and Financial Institutions</p><p>Act, 1993 to be able to recover debts owing to them. They</p><p>could, by following the procedure laid down in Section 13,</p><p>take direct action against the debtors by taking possession of</p><p>secured assets and selling them; they could also take over the</p><p>management of the business of the borrower. They could also</p><p>appoint any person to manage the secured assets possession</p><p>of which has been taken over by them, and could require, at</p><p>any time by notice in writing to any person who has acquired</p><p>any of the secured assets from the borrower and from whom</p><p>any money is due or may become due from the borrower, to</p><p>pay the secured creditor so much of the money as is sufficient</p><p>to pay the secured debt.</p><p>25. In order to further the objects of the Securitisation and</p><p>Reconstruction of Financial Assets and Enforcement of Security</p><p>Interest Act, 2002, the Act contains a non obstante clause in</p><p>Section 35 and also contains various Acts in Section 37 which</p><p>are to be in addition to and not in derogation of the Securitisation</p><p>and Reconstruction of Financial Assets and Enforcement of</p><p>Security Interest Act, 2002. Three of these Acts, namely, the</p><p>Companies Act, 1956, the Securities Contracts (Regulation)</p><p>Act, 1956 and the Securities and Exchange Board of India Act, </p><p>46 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>1992, relate to securities generally, whereas the Recovery of</p><p>Debts Due to Banks and Financial Institutions Act, 1993 relates</p><p>to recovery of debts due to banks and financial institutions.</p><p>Significantly, under Section 41 of this Act, three Acts are, by</p><p>the Schedule to this Act, amended. We are concerned with</p><p>the third of such Acts, namely, the Sick Industrial Companies</p><p>(Special Provisions) Act, 1985, in Section 15(1) of which two</p><p>provisos have been added. It is the correct interpretation of the</p><p>second of these provisos on which the fate of these appeals</p><p>ultimately hangs.”</p><p>(Emphasis supplied)</p><p>ii) Applicability of Section(s) 73 & 74 of the 1872 Act to</p><p>Forfeiture under the SARFAESI Rules.</p><p>47. Before we proceed to answer the first question formulated by us in</p><p>para 34 of this judgment, we must look into the principles underlying</p><p>Section 73 of the 1872 Act.</p><p>48. Section 73 of the 1872 Act deals with the compensation for loss or</p><p>damage caused by breach of contract. The same is extracted below:</p><p>“73. Compensation for loss or damage caused by</p><p>breach of contract. — When a contract has been broken,</p><p>the party who suffers by such breach is entitled to receive,</p><p>from the party who has broken the contract, compensation</p><p>for any loss or damage caused to him thereby, which</p><p>naturally arose in the usual course of things from such</p><p>breach, or which the parties knew, when they made the</p><p>contract, to be likely to result from the breach of it.</p><p>Such compensation is not to be given for any remote and</p><p>indirect loss or damage sustained by reason of the breach.</p><p>Compensation for failure to discharge obligation</p><p>resembling those created by contract. — When an</p><p>obligation resembling those created by contract has been</p><p>incurred and has not been discharged, any person injured</p><p>by the failure to discharge it is entitled to receive the same</p><p>compensation from the party in default, as if such person</p><p>had contracted to discharge it and had broken his contract.</p><p>[2024] 2 S.C.R. 47</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>Explanation. In estimating the loss or damage arising from</p><p>a breach of contract, the means which existed of remedying</p><p>the inconvenience caused by the non-performance of the</p><p>contract must be taken into account.”</p><p>49. The principles underlying Section 73 of the 1872 Act are well settled.</p><p>The classic case dealing with remoteness of damages is Hadley &</p><p>Anr. v. Baxendale & Ors. reported in (1843-60) ALL E.R. Rep. 461,</p><p>wherein it was observed:</p><p>“Where two parties have made a contract which one of</p><p>them has broken, the damages which the other party ought</p><p>to receive in respect of such breach of contract should</p><p>be such as may fairly and reasonably be considered</p><p>as either arising naturally, i.e., according to the usual</p><p>course of things, from such breach of contract itself, or</p><p>such as may reasonably be supposed to have been in</p><p>the contemplation of both parties at the time they made</p><p>the contract as the probable result of the breach of it.</p><p>If special circumstances under which the contract was</p><p>actually made were communicated by the plaintiffs to the</p><p>defendants, and thus known to both parties, the damages</p><p>resulting from the breach of such a contract which they</p><p>would reasonably contemplate would be the amount</p><p>of injury which would ordinarily follow from a breach of</p><p>contract under these special circumstances so known and</p><p>communicated. But, on the other hand, if these special</p><p>circumstances were wholly unknown to the party breaking</p><p>the contract, he, at the most, could only be supposed to</p><p>have had in his contemplation the amount of injury which</p><p>would arise generally, and in the great multitude of cases</p><p>not affected by any special circumstances, from such a</p><p>breach of contract. For, had the circumstances been known,</p><p>the parties might have provided for the breach of contract</p><p>by special terms as to the damages in that case; and of</p><p>this advantage it would be very unjust to deprive them.”</p><p>50. The above principles were explained and clarified by the Court of</p><p>Appeal in Victoria Laundry (Windsor) Ltd v. Newman Industrial</p><p>Ltd., [1949] 2 K.B. 528 as under:</p><p>48 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>“(1.) It is well settled that the governing purpose of damages</p><p>is to put the party whose rights have been violated in the</p><p>same position, so far as money can do so, as if his rights</p><p>had been observed: …</p><p>(2.) In cases of breach of contract the aggrieved party</p><p>is only entitled to recover such part of the loss actually</p><p>resulting as was at the time of the contract reasonably</p><p>foreseeable as liable to result from the breach.</p><p>(3.) What was at that time reasonably so foreseeable</p><p>depends on the knowledge then possessed by the parties</p><p>or, at all events, by the party who later commits the breach.</p><p>(4.) For this purpose, knowledge “possessed” is of two</p><p>kinds; one imputed, the other actual. Everyone, as a</p><p>reasonable person, is taken to know the “ordinary course of</p><p>things” and consequently what loss is liable to result from</p><p>a breach of contract in that ordinary course. This is the</p><p>subject matter of the “first rule” in Hadley v. Baxendale 9</p><p>Exch. 341. But to this knowledge, which a contract-breaker</p><p>is assumed to possess whether he actually possesses</p><p>it or not, there may have to be added in a particular</p><p>case knowledge which he actually possesses, of special</p><p>circumstances outside the “ordinary course of things,” of</p><p>such a kind that a breach in those special circumstances</p><p>would be liable to cause more loss. Such a case attracts</p><p>the operation of the “second rule” so as to make additional</p><p>loss also recoverable.</p><p>(5.) In order to make the contract-breaker liable under</p><p>either rule it is not necessary that he should actually have</p><p>asked himself what loss is liable to result from a breach.</p><p>As has often been pointed out, parties at the time of</p><p>contracting contemplate not the breach of the contract, but</p><p>its performance. It suffices that, if he had considered the</p><p>question, he would as a reasonable man have concluded</p><p>that the loss in question was liable to result ….</p><p>(6.) Nor, finally, to make a particular loss recoverable,</p><p>need it be proved that upon a given state of knowledge</p><p>the defendant could, as a reasonable man, foresee that </p><p>[2024] 2 S.C.R. 49</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>a breach must necessarily result in that loss. It is enough</p><p>if he could foresee it was likely so to result. It is indeed</p><p>enough, to borrow from the language of Lord du Parcq in</p><p>the same case, at page 158, if the loss (or some factor</p><p>without which it would not have occurred) is a “serious</p><p>possibility” or a “real danger.” …”</p><p>51. The above principles apply to grant of compensation under Section</p><p>73 of the 1872 Act. This is clear from the decision of this Court in</p><p>Karsandas H. Thacker v. M/s. The Saran Engineering Co. Ltd.</p><p>reported in AIR 1965 SC 1981. The Court held that when a party</p><p>commits breach of contract, the other party is entitled to receive</p><p>compensation for any loss by the damage caused to him which</p><p>naturally arose in the usual course of business from such breach</p><p>or which the parties knew when they made the contract to be likely</p><p>to result from the breach of it. Remote and indirect loss or damage</p><p>sustained by reason of the breach will not entitle the party complaining</p><p>breach, to any compensation. Referring to the facts of the case and</p><p>Illustration (k) to Section 73 of the 1872 Act, the Court held:</p><p>“13. …On account of the non-delivery of scrap iron, he</p><p>could have purchased the scrap iron from the market at</p><p>the same controlled price and similar incidental charges.</p><p>This means that he did not stand to pay a higher price than</p><p>what he was to pay to the respondent and therefore he</p><p>could not have suffered any loss on account of the breach</p><p>of contract by the respondent. The actual loss, which,</p><p>according to the appellant, he suffered on account of the</p><p>breach of contract by the respondent was the result of his</p><p>contracting to sell 200 tons of scrap iron for export to the</p><p>Export Corporation. It may be assumed that, as stated,</p><p>the market price of scrap iron for export on January 30,</p><p>1953, was the price paid by the Export Corporation for</p><p>the purchase of scrap iron that day. As the parties did not</p><p>know and could not have known when the contract was</p><p>made in July 1952 that the scrap iron would be ultimately</p><p>sold by the appellant to the Export Corporation, the parties</p><p>could not have known of the likelihood of the loss actually</p><p>suffered by the appellant, according to him, on account of</p><p>the failure of the respondent to fulfil the contract.</p><p>50 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>14. Illustration (k) to S. 73 of the Contract Act is apt for</p><p>the purpose of this case. According to that illustration,</p><p>the person committing breach of contract has to pay to</p><p>the other party the difference between the contract price</p><p>of the articles agreed to be sold and the sum paid by the</p><p>other party for purchasing another article on account of</p><p>the default of the first party, but the first party has not to</p><p>pay the compensation which the second party had to pay</p><p>to third parties as he had not been told at the time of the</p><p>contract that the second party was making the purchase</p><p>of the article for delivery to such third parties.”</p><p>52. Damages can be awarded only for the loss directly suffered on account</p><p>of the breach and not for any remote or indirect loss sustained by</p><p>reason of the breach of contract. The general rule is that where</p><p>two parties enter into a contract and one of them commits breach,</p><p>the other party will be entitled to receive as damages in respect of</p><p>such breach of contract, such sum as may fairly and reasonably be</p><p>considered arising naturally, that is according to the usual course of</p><p>things, from such breach of contract itself or such as may reasonably</p><p>be supposed to have been in the contemplation of both parties</p><p>at the time they made the contract, as the probable result of the</p><p>breach of it. If any special circumstances about the dependency of</p><p>the performance of other contract(s) by the party complaining of the</p><p>breach, on the performance of the contract in dispute by the party</p><p>in breach, had been communicated to the party in breach, and thus</p><p>known to both parties at the time of entering into the contract, then</p><p>the damages for the breach of the contract in dispute, may include the</p><p>compensation for the loss suffered in regard to such other dependent</p><p>contracts. But, on the other hand, if the special circumstances were</p><p>not made known to the party breaking the contract, the party breaking</p><p>the contract, at the most, could only be supposed to have had in its</p><p>contemplation the amount of injury which would arise generally and</p><p>directly and not any remote or unknown loss or damage.</p><p>53. What would be a ‘penalty’ under Section 74 of the 1872 Act was</p><p>explained by this Court in K. P. Subbarama Sastri and others v.</p><p>K. S. Raghavan & Ors. reported in (1987) 2 SCC 424 as under:</p><p>“5. …The question whether a particular stipulation in a</p><p>contractual agreement is in the nature of a penalty has to be</p><p>determined by the court against the background of various </p><p>[2024] 2 S.C.R. 51</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>relevant factors, such as the character of the transaction</p><p>and its special nature, if any, the relative situation of the</p><p>parties, the rights and obligations accruing from such a</p><p>transaction under the general law and the intention of</p><p>the parties in incorporating in the contract the particular</p><p>stipulation which is contended to be penal in nature. If on</p><p>such a comprehensive consideration, the court finds that</p><p>the real purpose for which the stipulation was incorporated</p><p>in the contract was that by reason of its burdensome or</p><p>oppressive character it may operate in terrorem over the</p><p>promiser so as to drive him to fulfil the contract, then the</p><p>provision will be held to be one by way of penalty.”</p><p>54. The SARFAESI Rules, more particularly Rule 9 was first examined</p><p>by this Court in Rakesh Birani (Dead) through LRs v. Prem</p><p>Narain Sehgal & Anr. reported in (2018) 5 SCC 543, wherein the</p><p>entire auction process under Rule 9 was explained. The relevant</p><p>observations read as under: -</p><p>“8. In order to comprehend the rival submissions, it is</p><p>necessary to ponder as to intendment of Rule 9 of the</p><p>2002 Rules which deals with the time of sale, issues of sale</p><p>certificate and delivery of possession, etc. Public notice</p><p>of sale is to be published in the newspaper and only after</p><p>thirty days thereafter, the sale of immovable property can</p><p>take place. Under Rule 9(2) of the 2002 Rules, the sale is</p><p>required to be confirmed in favour of the purchaser who</p><p>has offered the highest sale price to the authorised officer</p><p>and shall be subject to confirmation by the secured creditor.</p><p>The proviso makes it clear that sale under the said Rule</p><p>would be confirmed if the amount offered and the whole</p><p>price is not less than the reserved price as specified in</p><p>Rule 9(5). It is apparent that Rule 9(1) does not deal with</p><p>the confirmation by the authorised officer. It only provides</p><p>confirmation by the secured creditor.</p><p>9. Rule 9(3) makes it clear that on every sale of immovable</p><p>property, the purchaser on the same day or not later than</p><p>next working day, has to make a deposit of twenty-five per</p><p>cent of the amount of the sale price, which is inclusive of</p><p>earnest money deposited if any. Rule 9(4) makes it clear </p><p>52 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>that balance amount of the purchase price payable shall be</p><p>paid by the purchaser to the authorised officer on or before</p><p>the fifteenth day of “confirmation of sale of the immovable</p><p>property” or such extended period as may be agreed upon</p><p>in writing between the purchaser and the secured creditor.</p><p>Thus, Rule 9(2) makes it clear that after confirmation by</p><p>the secured creditor the amount has to be deposited. Rule</p><p>9(3) also makes it clear that period of fifteen days has to</p><p>be computed from the date of confirmation.”</p><p>55. This Court in Rakesh Birani (supra) while interpreting Rule 9(5) of</p><p>the SARFAESI Rules made the following pertinent observations: -</p><p>a. That, the liability of a successful auction purchaser to deposit</p><p>the requisite amount begins from the date when the sale is</p><p>confirmed by the secured creditor and communicated to the</p><p>auction purchaser, wherein 25% of the amount has to be</p><p>deposited as earnest money no later than the next working day</p><p>from the date of confirmation and the balance amount within</p><p>15 days from the said date.</p><p>b. That for forfeiture of the 25% earnest money deposit of the</p><p>auction purchaser, twin conditions have to be satisfied being (i)</p><p>First, that the sale must have been confirmed by the secured</p><p>creditor and (ii) second, there is a default in payment of the</p><p>balance 75% of the amount.</p><p>c. Once the afore-stated conditions are satisfied i.e., the auction</p><p>purchaser after confirmation of sale fails to deposit the balance</p><p>amount within the stipulated time, the secured creditor is required</p><p>to forfeit the original auction purchaser’s earnest money deposit</p><p>and the secured assets have to be resold.</p><p>d. The relevant observations are being reproduced below: -</p><p>“10. In this case, confirmation has been made and</p><p>communicated on 27-2- 2013 and within fifteen days</p><p>thereof i.e. on 13-3-2018, the amount of twenty-five per</p><p>cent had been deposited. Thereafter, sale certificate</p><p>has been issued under Rule 9(6). Rule 9(5) also makes</p><p>it clear that in default of payment within the period</p><p>mentioned in Rule 9(4), the deposit shall be forfeited.</p><p>There cannot be any forfeiture of the amount of 25% </p><p>[2024] 2 S.C.R. 53</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>in deposit until and unless the sale is confirmed by the</p><p>secured creditor and there is a default of payment of</p><p>75% of the amount. The interpretation made by the</p><p>High Court thus cannot be accepted.</p><p>11. If we read the provisions otherwise then we find</p><p>even before the confirmation of sale within fifteen days,</p><p>the amount would be forfeited by the authorised officer</p><p>who may decide not to confirm the sale that would</p><p>be a result not contemplated in Rules 9(2), 9(4) and</p><p>9(5) which fortify our conclusion that it is only after the</p><p>confirmation is made under Rule 9(4) that amount has</p><p>to be deposited and on failure to deposit the amount,</p><p>twenty-five per cent amount has to be forfeited and</p><p>property has to be resold….”</p><p>(Emphasis supplied)</p><p>56. In Agarwal Tracom Private Limited v. Punjab National Bank &</p><p>Ors. reported in (2018) 1 SCC 626, this Court held that the act of</p><p>forfeiture of the earnest money deposit by the secured creditor is</p><p>a measure under Section 13(4) of the SARFAESI Act and thus,</p><p>challengeable before the DRT under Section 17 of the SARFAESI</p><p>Act. The relevant observations are reproduced below: -</p><p>“28. We also notice that Rule 9(5) confers express power</p><p>on the secured creditor to forfeit the deposit made by the</p><p>auction-purchaser in case the auction-purchaser commits</p><p>any default in paying instalment of sale money to the</p><p>secured creditor. Such action taken by the secured creditor</p><p>is, in our opinion, a part of the measures specified in</p><p>Section 13(4) and, therefore, it is regarded as a measure</p><p>taken Under Section 13(4) read with Rule 9(5)….”</p><p> (Emphasis supplied)</p><p>57. It appears that the High Court whilst passing the impugned order was</p><p>of the view that the legislature had provided for forfeiture under the</p><p>SARFAESI Rules as a relief to the secured creditor for the breach</p><p>of obligation by the auction purchaser. Thus, it was of the view that</p><p>Section 73 of the 1872 Act will be applicable to forfeiture under Rule</p><p>9(5) of the SARFAESI Rules and any forfeiture will only be allowed</p><p>to the extent of the loss or damage suffered by the secured creditor. </p><p>54 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>58. This Court in C. Natarajan (supra) whilst dealing with a similar issue</p><p>pertaining to the applicability of Section(s) 73 and 74 of the 1872 Act</p><p>on forfeiture under Rule 9(5) of the SARFAESI Rules, answered the</p><p>same in a negative. The said decision is in two parts: -</p><p>a) It held that as the SARFAESI Act is a special enactment with</p><p>overriding effect over other laws by virtue of Section(s) 35 and</p><p>37, the 1872 Act more particularly Section(s) 73 and 74 will not</p><p>be applicable to Rule 9(5) of the SARFAESI Rules especially</p><p>since the rules framed under a statute become part of the statute.</p><p>“20. In terms of the Indian Contract Act, 1872 (for brevity</p><p>“Contract Act”, hereafter), a person can withdraw his offer</p><p>before acceptance. However, once a party expresses</p><p>willingness to enter into a contractual relationship subject</p><p>to terms and conditions and makes an offer which is</p><p>accepted but thereafter commits a breach of contract, he</p><p>does so at his own risk and peril and naturally has to suffer</p><p>the consequences. We are not oblivious of the terms of</p><p>section 73 and section 74 of the Contract Act, being part</p><p>of Chapter VI thereof titled “Of the Consequence of Breach</p><p>of Contract”. These sections, providing for compensation</p><p>for breach of contract and for liquidated damages, have</p><p>remained on the statute book for generations and permit</p><p>the party suffering the breach to recover such quantum of</p><p>loss or damage from the party in breach. However, with</p><p>changing times, the minds of people are also changing.</p><p>The judiciary, keeping itself abreast of the changes that</p><p>are bound to occur in an evolving society, must interpret</p><p>new laws that are brought in operation to suit the situation</p><p>appropriately. In the current era of globalization, the entire</p><p>philosophy of society, mainly on the economic front is</p><p>making rapid strides towards changes. Unscrupulous</p><p>people have been inventing newer modes and mechanisms</p><p>for defrauding and looting the nation. It is in such a scenario</p><p>that provisions of enactments, particularly those provisions</p><p>which have a direct bearing on the economy of the nation,</p><p>must receive such interpretation so that it not only fosters</p><p>economic growth but is also in tune with the intention of the</p><p>law-makers in introducing a provision such as sub-rule (5)</p><p>of rule 9, which though harsh in its operation, is intended to </p><p>[2024] 2 S.C.R. 55</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>suppress the mischief and advance the remedy. If indeed</p><p>section 73 and section 74, which are part of the general</p><p>law of contract, were sufficient to cater to the remedy, the</p><p>need to make sub-rule (5) of rule 9 as part of the Rules</p><p>might not have arisen. Additionally, insertion of sub-rule</p><p>(5) with such specificity regarding forfeiture must not have</p><p>been thought of only for reiterating what is already there.</p><p>It was visualized by the law makers that there was a need</p><p>to arrest cases of deceptive manipulation of prices at the</p><p>instance of unscrupulous borrowers by thwarting sale</p><p>processes and this was the trigger for insertion of such</p><p>a provision with wide words conferring extensive powers</p><p>of forfeiture. The purpose of such insertion must have</p><p>also been aimed at instilling a sense of discipline in the</p><p>intending purchasers while they proceed to participate in</p><p>the auction-sale process. At the cost of repetition, it must</p><p>not be forgotten that the SARFAESI Act was enacted</p><p>because the general laws were not found to be workable</p><p>and efficient enough to ensure liquidity of finances and</p><p>flow of money essential for any healthy and growthoriented economy. The decision of this Court in Mardia</p><p>Chemicals v. Union of India [(2004) 4 SCC 311], while</p><p>outlawing only a part of the SARFAESI Act and upholding</p><p>the rest, has traced the history of this legislation and the</p><p>objects that Parliament had in mind in sufficient detail.</p><p>Apart from the law laid down in such decision, these are</p><p>the other relevant considerations which ought to be borne</p><p>in mind while examining a challenge to a forfeiture order.</p><p>21. There is one other aspect which is, more often than not,</p><p>glossed over. In terms of sub-rule (5) of rule 9, generally,</p><p>forfeiture would be followed by an exercise to resell the</p><p>immovable property. On the date an order of forfeiture is</p><p>in contemplation of the authorized officer of the secured</p><p>creditor for breach committed by the bidder, factually, the</p><p>position is quite uncertain for the former in that there is</p><p>neither any guarantee of his receiving bids pursuant to a</p><p>future sale, much to the satisfaction of the secured creditor,</p><p>nor is there any gauge to measure the likely loss to be</p><p>suffered by it (secured creditor) if no bidders were interested</p><p>to purchase the immovable property. Since the extent of </p><p>56 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>loss cannot be immediately foreseen or calculated, such</p><p>officers may not have any option but to order forfeiture of</p><p>the amount deposited by the defaulting bidder in an attempt</p><p>to recover as much money as possible so as to reduce the</p><p>secured debt. That the immovable property is later sold</p><p>at the same price or at a price higher than the one which</p><p>was offered by the party suffering the forfeiture is not an</p><p>eventuality that occurs in each and every case. Sections</p><p>73 and 74 of the Contract Act would not, therefore, be</p><p>sufficient to take care of the interest of the secured creditor</p><p>in such a case and that also seems to be another reason</p><p>for bringing in the provision for forfeiture in rule 9. Ordinarily,</p><p>therefore, validity of an order of forfeiture must be judged</p><p>considering the circumstances that were prevailing on the</p><p>date it was made and not based on supervening events.</p><p>22. Does sub-rule (5) of rule 9, which is part of a delegated</p><p>legislation, i.e., the Rules, have the effect of diluting</p><p>section 73 and section 74 of the Contract Act? We have</p><p>considered it necessary to advert to this question as it</p><p>is one of general importance and are of the considered</p><p>opinion that the answer must be in the negative. While</p><p>the Contract Act embodies the general law of contract,</p><p>the SARFAESI Act is a special enactment, inter alia,</p><p>for enforcement of security interest without intervention</p><p>of court. Rule 9(5) providing for forfeiture is part of the</p><p>Rules, which have validly been framed in exercise of</p><p>statutory power conferred by section 38 of the SARFAESI</p><p>Act. Law is well settled that rules, when validly framed,</p><p>become part of the statute. Apart from the presumption as</p><p>to constitutionality of a statute, the contesting respondent</p><p>did not mount any challenge to sub-rule (5) of rule 9 of</p><p>the Rules. The applicability and enforcement of sub-rule</p><p>(5) of rule 9 on its terms, therefore, has to be secured in</p><p>appropriate cases.”</p><p>(Emphasis supplied)</p><p>b) That if Rule 9(5) is interpreted in light of Section(s) 73 and 74</p><p>of the 1872 Act, then the very auction process could be set at</p><p>naught by a mischievous or devious borrower by ‘gaming’ the</p><p>auction through sham bids. </p><p>[2024] 2 S.C.R. 57</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>“18. Having regard to the terms of rule 9, the notice</p><p>for auction constitutes the ‘invitation to offer’; the bids</p><p>submitted by the bidders constitute the ‘offer’ and upon</p><p>confirmation of sale in favour of the highest bidder under</p><p>sub-rule (2) of rule 9, the contract comes into existence.</p><p>Once the contract comes into existence, the bidder is bound</p><p>to honour the terms of the statute under which the auction</p><p>is conducted and suffer consequences for breach, if any,</p><p>as stipulated. Rule 9(5) legislatively lays down a penal</p><p>consequence. ‘Forfeiture’ referred to in sub-rule (5) of rule</p><p>9, in the setting of the SARFAESI Act and the Rules, has</p><p>to be construed as denoting a penalty that the defaulting</p><p>bidder must suffer should he fail to make payment of the</p><p>entire sale price within the period allowed to him by the</p><p>authorized officer of a secured creditor.</p><p>19. Though it is true that the power conferred by subrule (5) of rule 9 of the Rules ought not to be exercised</p><p>indiscriminately without having due regard to all relevant</p><p>facts and circumstances, yet, the said sub-rule ought also</p><p>not be read in a manner so as to render its existence</p><p>only on paper. Drawing from our experience on the</p><p>Bench, it can safely be observed that in many a case</p><p>the borrowers themselves, seeking to frustrate auction</p><p>sales, use their own henchmen as intending purchasers to</p><p>participate in the auction but thereafter they do not choose</p><p>to carry forward the transactions citing issues which are</p><p>hardly tenable. This leads to auctions being aborted and</p><p>issuance of fresh notices. Repetition of such a process</p><p>of participation-withdrawal for a couple of times or more</p><p>has the undesirable effect of rigging of the valuation of the</p><p>immovable property. In such cases, the only perceivable</p><p>loss suffered by a secured creditor would seem to be</p><p>the extent of expenses incurred by it in putting up the</p><p>immovable property for sale. However, what does generally</p><p>escape notice in the process is that it is the mischievous</p><p>borrower who steals a march over the secured creditor by</p><p>managing to have a highly valuable property purchased by</p><p>one of its henchmen for a song, thus getting such property</p><p>freed from the clutches of mortgage and by diluting the </p><p>58 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>security cover which the secured creditor had for its loan</p><p>exposure. Bearing in mind such stark reality, sub-rule (5) of</p><p>rule 9 cannot but be interpreted pragmatically to serve twin</p><p>purposes — first, to facilitate due enforcement of security</p><p>interest by the secured creditor (one of the objects of the</p><p>SARFAESI Act); and second, to prohibit wrong doers from</p><p>being benefitted by a liberal construction thereof.”</p><p>(Emphasis supplied)</p><p>a. Forfeiture under the SARFAESI Rules:</p><p>59. We, first come to the aspect of applicability of Section 73 of the</p><p>1872 Act vis-à-vis the SARFAESI Act, more particularly Rule 9(5)</p><p>of the SARFAESI Rules. In Madras Petrochem (supra) this Court</p><p>made a pertinent observation that Sections 35 and 37 respectively</p><p>of the SARFAESI Act form a unique scheme of overriding provisions,</p><p>however the scope and ambit of Section 37 is restricted only to the</p><p>securities law. The relevant portion is reproduced as under: -</p><p>“39. This is what then brings us to the doctrine of</p><p>harmonious construction, which is one of the paramount</p><p>doctrines that is applied in interpreting all statutes. Since</p><p>neither Section 35 nor Section 37 of the Securitisation</p><p>and Reconstruction of Financial Assets and Enforcement</p><p>of Security Interest Act, 2002 is subject to the other, we</p><p>think it is necessary to interpret the expression “or any</p><p>other law for the time being in force” in Section 37. If a</p><p>literal meaning is given to the said expression, Section 35</p><p>will become completely otiose as all other laws will then</p><p>be in addition to and not in derogation of the Securitisation</p><p>and Reconstruction of Financial Assets and Enforcement</p><p>of Security Interest Act, 2002. Obviously this could not</p><p>have been the parliamentary intendment, after providing</p><p>in Section 35 that the Securitisation and Reconstruction of</p><p>Financial Assets and Enforcement of Security Interest Act,</p><p>2002 will prevail over all other laws that are inconsistent</p><p>therewith. A middle ground has, therefore, necessarily to</p><p>be taken. According to us, the two apparently conflicting</p><p>sections can best be harmonised by giving meaning to</p><p>both. This can only be done by limiting the scope of the</p><p>expression “or any other law for the time being in force” </p><p>[2024] 2 S.C.R. 59</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>contained in Section 37. This expression will, therefore,</p><p>have to be held to mean other laws having relation to</p><p>the securities market only, as the Recovery of Debts</p><p>Due to Banks and Financial Institutions Act, 1993 is the</p><p>only other special law, apart from the Securitisation and</p><p>Reconstruction of Financial Assets and Enforcement of</p><p>Security Interest Act, 2002, dealing with recovery of debts</p><p>due to banks and financial institutions. On this interpretation</p><p>also, the Sick Industrial Companies (Special Provisions)</p><p>Act, 1985 will not be included for the obvious reason</p><p>that its primary objective is to rehabilitate sick industrial</p><p>companies and not to deal with the securities market.”</p><p>(Emphasis supplied)</p><p>60. The aforesaid view came to be reaffirmed by this Court in another</p><p>decision in Celir LLP. v. Bafna Motors (Mumbai) Pvt. Ltd. & Ors.</p><p>reported in 2023 SCC OnLine SC 1209, wherein it was held that only</p><p>those laws which have been either enumerated in Section 37 of the</p><p>SARFAESI Act or which occupy and deal with the same field as the</p><p>SARFAESI Act will be applicable in addition to the SARFAESI Act.</p><p>The relevant observations are being reproduced below: -</p><p>“72. Thus, it appears from a combined reading of</p><p>the decisions rendered by this Court in Madras</p><p>Petrochem (supra) and M.D. Frozen Foods Exports (supra)</p><p>that this Court has consistently construed that only those</p><p>laws which have either been enumerated in Section 37</p><p>SARFAESI Act or similar to it would be applicable in</p><p>addition to the SARFAESI Act i.e., laws which deal with</p><p>securities or occupy the same field as the SARFAESI Act.</p><p>Thus, even on this aspect, we are of the view that the Act,</p><p>1882 would not be applicable in addition to the SARFAESI</p><p>Act. Suffice to say, that in view of the above discussion,</p><p>the statutory right of redemption under the Act, 1882 will</p><p>not be applicable to the SARFAESI Act at least in view of</p><p>the amended Section 13(8) and any right of redemption</p><p>of a borrower must be found within the SARFAESI Act in</p><p>terms of the amended Section 13(8).”</p><p>(Emphasis supplied)</p><p>60 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>61. The legislature through Rule 9(5) of the SARFAESI Rules, has made</p><p>a conscious departure from the general law by statutorily providing</p><p>for the forfeiture of earnest-money deposit of the successful auction</p><p>purchaser for its failure in depositing the balance consideration</p><p>within the statutory period. No doubt, the forfeiture is a result of a</p><p>breach of obligation, but the consequence of forfeiture in such case</p><p>is taking place not because of the breach but because of operation</p><p>of the statutory provision providing for forfeiture that is attracted as</p><p>a result of the breach.</p><p>62. If the consequence of forfeiture was purely a matter of breach of</p><p>contract, then there would have been no occasion for the legislature</p><p>to specifically provide for forfeiture through the statutory provisions,</p><p>and it would have simpliciter relegated the consequences of such</p><p>breach to already existing general law under Section(s) 73 and 74</p><p>of the 1872 Act. [See C. Natarajan (supra) at Para 20]</p><p>63. However, the legislature has consciously provided for only one</p><p>consequence in the event of failure of the successful auction purchaser</p><p>in depositing the balance amount i.e., forfeiture and has not provided</p><p>for imposition of any other stipulation by the secured creditor in the</p><p>event of a breach. This has been done, keeping in mind the larger</p><p>object of the SARFAESI Act, which is to facilitate recovery of debt in</p><p>a time-bound manner by giving teeth to the measures enumerated</p><p>within Section 13 of the SARFAESI Act, more particularly sale of</p><p>the secured asset in the event the borrower fails to repay the debt.</p><p>64. If Section(s) 73 and 74 respectively of the 1872 Act are interpreted so</p><p>as to be made applicable to a breach in payment of balance amount</p><p>by the successful auction purchaser, it would lead to a chilling effect</p><p>in the following ways: -</p><p>(i) First, it would be quite preposterous to suggest that in an auction</p><p>which is a process meant for recovery of debt due to default of</p><p>the borrower, the balance amount if not paid by the successful</p><p>auction purchaser, another recovery proceeding would have</p><p>to be initiated by the secured creditor in terms of Section(s)</p><p>73 and 74 of the 1872 Act to recoup the loss and expenditure</p><p>occasioned to it by the defaulting successful auction purchaser. </p><p>[2024] 2 S.C.R. 61</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>(ii) Secondly, such an interpretation would allow unscrupulous</p><p>borrowers being hands-in-glove with the auction purchasers to</p><p>use subversive methods to participate in an auction only to not</p><p>pay the balance amount at the very end and escape relatively</p><p>unscathed under the guise of Section(s) 73 and 74 of the 1872</p><p>Act, thereby gaming the entire auction process and leaving any</p><p>possibility of recoveries under the SARFAESI Act at naught.</p><p>[See; C. Natarajan (supra) at Para 19]</p><p>65. Thus, such an interpretation would completely defeat the very purpose</p><p>and object of the SARFAESI Act and would reduce the measures</p><p>provided under Section 13 of the SARFAESI Act to a farce and</p><p>thereby undermine the country’s economic interest.</p><p>66. At this stage, we may also answer the submission of the respondent</p><p>that the authorised officer under Rule 9(5) of the SARFAESI Rules</p><p>has been conferred with unguided and unfettered power of forfeiture</p><p>and as such the said rule is liable to be struck down. However,</p><p>we are not impressed with such submission. First, there was no</p><p>challenge to the constitutional validity of Rule 9 sub-rule (5) of the</p><p>SARFAESI Rules. Secondly, even as per Agarwal Tracom (supra)</p><p>it is always open for a person aggrieved by an order of forfeiture</p><p>under the SARFAESI Rules to challenge the same before the DRT</p><p>under Section 17 of the SARFAESI Act.</p><p>67. As regards the contention that the SARFAESI Rules being a delegated</p><p>legislation cannot override the substantive provisions of a statutory</p><p>enactment more particularly Section(s) 73 & 74 of the 1872 Act, the</p><p>same was negatived by this Court in C. Natarajan (supra) with the</p><p>following observations: -</p><p>“22. .... We have considered it necessary to advert to</p><p>this question as it is one of general importance and are</p><p>of the considered opinion that the answer must be in the</p><p>negative. While the Contract Act embodies the general</p><p>law of contract, the SARFAESI Act is a special enactment,</p><p>inter alia, for enforcement of security interest without</p><p>intervention of court. Rule 9(5) providing for forfeiture</p><p>is part of the Rules, which have validly been framed in</p><p>exercise of statutory power conferred by section 38 of the</p><p>SARFAESI Act. Law is well settled that rules, when validly</p><p>framed, become part of the statute. …”</p><p>62 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>68. What can be discerned from the above is that the SARFAESI Act</p><p>is a special legislation with an overriding effect on the general law,</p><p>and only those legislations which are either specifically mentioned</p><p>in Section 37 or deal with securitization will apply in addition to the</p><p>SARFAESI Act. Being so, the underlying principle envisaged under</p><p>Section(s) 73 & 74 of the 1872 Act which is a general law will have</p><p>no application, when it comes to the SARFAESI Act more particularly</p><p>the forfeiture of earnest-money deposit which has been statutorily</p><p>provided under Rule 9(5) of the SARFAESI Rules as a consequence</p><p>of the auction purchaser’s failure to deposit the balance amount.</p><p>b. Concept of Earnest-Money & Law on Forfeiture of EarnestMoney Deposit:</p><p>69. This aforesaid aspect may be looked at from another angle.</p><p>Section(s) 73 and 74 of the 1872 Act deal with the consequences</p><p>and compensation for a breach of contract. It enables a suffering</p><p>party to recover such quantum of loss or liquidated damages from</p><p>a party in breach so as to make good the loss incurred by it and be</p><p>put in the same position prior to its losses.</p><p>70. At this juncture, it would be apposite to refer to the meaning of</p><p>‘forfeiture’. The word forfeiture is derived from the French word</p><p>‘forfaiture’ which means the loss of property by violation of his own</p><p>duty. The Black’s Law Dictionary defines ‘forfeiture’ as follows [See:</p><p>Henry Campbell Black on “Black’s Law Dictionary”, 1968, 4th Edition]: -</p><p>“the loss of a right, privilege, or property because of a</p><p>crime, breach of obligation, or neglect of duty.”</p><p>“something (especially money or property) lost or</p><p>confiscated by this process; a penalty”</p><p>“a destruction or deprivation of some estate or right because</p><p>of the failure to perform some obligation or condition</p><p>contained in a contract”</p><p>71. This Court in R.S. Joshi, Sales Tax Officer, Gujarat & Ors. v. Ajit</p><p>Mills Limited & Anr. reported in (1977) 4 SCC 98, while explaining</p><p>the true purport and meaning of the term ‘forfeiture’ observed that</p><p>whether a forfeiture clause is penal in nature must be decided in</p><p>the specific setting of a statute. The relevant observations read as</p><p>under: -</p><p>[2024] 2 S.C.R. 63</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>“18. Coming to ‘forfeiture’, what is the true character of a</p><p>‘forfeiture’ ? Is it punitive in infliction, or merely another form</p><p>of exaction of money by one from another? If it is penal, it</p><p>falls within implied powers. If it is an act of mere transference</p><p>of money from the dealer to the State, then it falls outside the</p><p>legislative entry. Such is the essence of the decisions which</p><p>we will presently consider. There was a contention that the</p><p>expression ‘forfeiture’ did not denote a penalty. This, perhaps,</p><p>may have to be decided in the specific setting of a statute. But,</p><p>speaking generally and having in mind the object of Section 37</p><p>read with Section 46, we are inclined to the view that forfeiture</p><p>has a punitive impact. Black’s Legal Dictionary states that ‘to</p><p>forfeit’ is ‘to lose, or lose the right to, by some error, fault,</p><p>offence or crime’ ‘to incur a penalty.’ ‘Forfeiture’, as judicially</p><p>annotated, is ‘a punishment annexed by law to some illegal act</p><p>or negligence. . . .’; ‘something imposed as a punishment for an</p><p>offence or delinquency.’ The word, in this sense, is frequently</p><p>associated with the word ‘penalty’, According to Black’s Legal</p><p>Dictionary.</p><p>The terms ‘fine’, ‘forfeiture’ and ‘penalty’, are often used loosely</p><p>and even confusedly; but when a discrimination is made, the</p><p>word ‘penalty’ is found to be generic in its character, including</p><p>both fine and forfeiture. A ‘fine’ is a pecuniary penalty and is</p><p>commonly (perhaps always) to be collected by suit in some</p><p>form. A ‘forfeiture’ is a penalty by which one loses his rights</p><p>and interest in his property.</p><p>More explicitly, the U. S. Supreme Court has explained the</p><p>concept of ‘forfeiture’ in the context of statutory construction.</p><p>Chief Justice Taney, in the State of Maryland v. The Baltimore</p><p>& Ohio RR Co. 11 L ED. 714, 712 observed:</p><p>And a provision, as in this case, that the party shall forfeit a</p><p>particular sum, in case he does not perform an act required</p><p>by law, has always, in the construction of statutes, been</p><p>regarded not as a contract with the delinquent party, but</p><p>as the punishment for an offence. Undoubtedly, in the</p><p>case of individuals, the word forfeit is construed to be the</p><p>language of contract, because contract is the only mode </p><p>64 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>in which one person can become liable to pay a penalty</p><p>to another for breach of duty, or the failure to perform</p><p>an obligation. In legislative proceedings, however, the</p><p>construction is otherwise and a forfeiture is always to be</p><p>regarded as a punishment inflicted for a violation of some</p><p>duty enjoined upon the party by law; and such, very clearly,</p><p>is the meaning of the word in the act in question</p><p>19. The same connotation has been imparted by our Court</p><p>too. A Bench has held: Bankura Municipality v. Lalji Raja and</p><p>Sons, 1953 Cri LJ 1101:</p><p>According to the dictionary meaning of the word ‘forfeiture’</p><p>the loss or the deprivation of goods has got to be in</p><p>consequence of a crime, offence or breach of engagement</p><p>or has to be by way of penalty of the transgression or a</p><p>punishment for an offence. Unless the loss or deprivation</p><p>of the goods is by way of a penalty or punishment for a</p><p>crime, offence or breach of engagement it would not come</p><p>within the definition of forfeiture</p><p>This word ‘forfeiture’ must bear the same meaning of a penalty</p><p>for breach of a prohibitory direction. The fact that there is</p><p>arithmetical identity, assuming it to be so, between the figures</p><p>of the illegal collections made by the dealers and the amounts</p><p>forfeited to the State cannot create a conceptual confusion</p><p>that what is provided is not punishment but a transference of</p><p>funds. If this view be correct, and we hold so, the legislature, by</p><p>inflicting the forfeiture, does not go outside the crease when it</p><p>hits out against the dealer and deprives him, by the penalty of</p><p>the law, of the amount illegally gathered from the customers….”</p><p>(Emphasis supplied)</p><p>72. The privy council in Kunwar Chiranjit Singh v. Har Swarup reported</p><p>in (1926) 23 LW 172, while dealing with the concept of earnest</p><p>money, had observed as follows: -</p><p>“Earnest money is part of the purchase price when the</p><p>transaction goes forward: it is forfeited when the transaction</p><p>falls through, by reason of the fault or failure of the vendee.”</p><p>(Emphasis supplied)</p><p>[2024] 2 S.C.R. 65</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>73. The above referred decision of the Privy Council has been referred to</p><p>and relied upon by the High Court of Bombay in the case of Dinanath</p><p>Damodar Kale v. Malvi Mody Ranchhoddas and Co. reported in</p><p>AIR 1930 Bom 213. The Court observed as under: -</p><p>“Turning to the law in England we have a series of decisions</p><p>showing that a deposit by way of earnest in a contract for</p><p>the sale of land is distinguishable from a penalty for breach</p><p>of the contract. The cases cited to us by the appellant’s</p><p>counsel are all cases in which either an instalment of the</p><p>price or a part payment was by the terms of the contract to</p><p>be forfeited on breach by the purchaser. If any authority be</p><p>needed to show what the law in England is, it may be found</p><p>in the passage in Halsbury, Vol. 25, p. 398, para 681, which</p><p>was cited to us by respondents’ counsel. There it is clearly</p><p>laid down that there is a distinction between a deposit and</p><p>a penalty. This distinction was referred to by the majority of</p><p>the Bench in the case of Bishan Chand v. Radha Kishan</p><p>Das [(1897) 19 All. 489 = (1897) A.W.N. 123], where it was</p><p>stated that a deposit is a payment actually made or advanced</p><p>and therefore Ss. 73 and 74 of the Contract Act, have no</p><p>application in such a case and are not intended to apply to it.</p><p>These sections show what is the compensation to the seller,</p><p>who is not responsible for the breach. They contemplate a</p><p>case in which he is seeking to recover compensation for the</p><p>breach. They do not contemplate a case in which a sum of</p><p>money has been paid by way of earnest. Nor is the Contract</p><p>Act necessarily exhaustive: see P. R. & Co. v. Bhagwandas</p><p>[(1909) 34 Bom. 192, = 2 I.C. 475 = 11 Bom. L.R. 335].</p><p>Furthermore, it is to be noted that in this particular contract</p><p>there was a specific condition of the sale by auction that the</p><p>deposit was to be forfeited in case of default by the purchaser</p><p>and we think that such a clause is not unreasonable and</p><p>must be given effect to. Our own High Court rules regarding</p><p>the sale by the Sheriff’s office (R. 391) specifically allow a</p><p>deposit to be forfeited and the mere fact that the word “may”</p><p>is used in that Rule cannot be taken to mean that only such</p><p>sum out of the deposit can be forfeited as the Court may</p><p>think proper as damages following the failure of the buyer</p><p>to complete the sale.”</p><p>(Emphasis supplied)</p><p>66 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>74. Subsequently, a 5-Judge Bench of this Court in its decision in</p><p>Fateh Chand v. Balkishan Dass reported in AIR 1963 SC 1405,</p><p>held that a forfeiture clause in an ordinary contract would fall within</p><p>the meaning of the words “any other stipulation by way of penalty”</p><p>of Section 74 of the 1872 Act, and thus only a reasonable amount</p><p>can be forfeited. The relevant observations are reproduced below: -</p><p>“(10) Section 74 of the Indian Contract Act deals with the</p><p>measure of damages in two classes of cases (i) where the</p><p>contract names a sum to be paid in case of breach and (ii)</p><p>where the contract contains any other stipulation by way</p><p>of penalty. We are in the present case not concerned to</p><p>decide whether a covenant of forfeiture of deposit for due</p><p>performance of a contract falls within the first class. The</p><p>measure of damages in the case of breach of a stipulation</p><p>by way of penalty is by S. 74 reasonable compensation</p><p>not exceeding the penalty stipulated for. In assessing</p><p>damages the Court has, subject to the limit of the penalty</p><p>stipulated, jurisdiction to award such compensation as it</p><p>deems reasonable having regard to all the circumstances of</p><p>the case. Jurisdiction of the Court to award compensation</p><p>in case of breach of contract is unqualified except as to</p><p>the maximum stipulated; but compensation has to be</p><p>reasonable, and that imposes upon the Court duty to award</p><p>compensation according to settled principles. The section</p><p>undoubtedly says that the aggrieved party is entitled to</p><p>receive compensation from the party who has broken the</p><p>contract, whether or not actual damage or loss is proved</p><p>to have been caused by the breach. Thereby it merely</p><p>dispenses with proof of “actual loss or damages”; it does</p><p>not justify the award of compensation when in consequence</p><p>of the breach no legal injury at all has resulted, because</p><p>compensation for breach of contract can be awarded to</p><p>make good loss or damage which naturally arose in the</p><p>usual course of things, or which the parties knew when they</p><p>made the contract, to be likely to result from the breach.</p><p>(11) Before turning to the question about the compensation</p><p>which may be awarded to the plaintiff, it is necessary to</p><p>consider whether S. 74 applies to stipulations for forfeiture</p><p>of amounts deposited or paid under the contract. It was </p><p>[2024] 2 S.C.R. 67</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>urged that the section deals in terms with the right to</p><p>receive from the party who has broken the contract</p><p>reasonable compensation and not the right to forfeit what</p><p>has already been received by the party aggrieved. There</p><p>is however no warrant for the assumption made by some</p><p>of the High Courts in India, that S. 74 applies only to</p><p>cases where the aggrieved party is seeking to receive</p><p>some amount on breach of contract and not to cases</p><p>where upon breach of contract an amount received under</p><p>the contract is sought to be forfeited. In our judgment the</p><p>expression “the contract contains any other stipulation by</p><p>way of penalty” comprehensively applies to every covenant</p><p>involving a penalty whether it is for payment on breach</p><p>of contract of money or delivery of property in future, or</p><p>for forfeiture of right to money or other property already</p><p>delivered. Duty not to enforce the penalty clause but only</p><p>to award reasonable compensation is statutorily imposed</p><p>upon Courts by S. 74. In all cases, therefore, where there</p><p>is a stipulation in the nature of penalty for forfeiture of an</p><p>amount deposited pursuant to the terms of contract which</p><p>expressly provides for forfeiture, the court has jurisdiction</p><p>to award such sum only as it considers reasonable, but not</p><p>exceeding the amount specified in the contract as liable to</p><p>forfeiture. We may briefly refer to certain illustrative cases</p><p>decided by the High Courts in India which have expressed</p><p>a different view.</p><p> xxx xxx xxx</p><p>(14) … The words “to be paid” which appear in the first</p><p>condition do not qualify the second condition relating to</p><p>stipulation by way of penalty. The expression “if the contract</p><p>contains any other stipulation by way of penalty” widens</p><p>the operation of the section so as to make it applicable to</p><p>all stipulations by way of penalty, whether the stipulation</p><p>is to pay an amount of money, or is of another character,</p><p>as, for example, providing for forfeiture of money already</p><p>paid. There is nothing in the expression which implies that</p><p>the stipulation must be one for rendering something after</p><p>the contract is broken. There is no ground for holding that</p><p>the expression “contract contains any other stipulation </p><p>68 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>by way of penalty” is limited to cases of stipulation in the</p><p>nature of an agreement to pay money or deliver property on</p><p>breach and does not comprehend covenants under which</p><p>amounts paid or property delivered under the contract,</p><p>which by the terms of the contract expressly or by clear</p><p>implication are liable to be forfeited.</p><p>(15) Section 74 declares the law as to liability upon breach</p><p>of contract where compensation is by agreement of the</p><p>parties pre-determined, or where there is a stipulation by</p><p>way of penalty. But the application of the enactment is</p><p>not restricted to cases where the aggrieved party claims</p><p>relief as a plaintiff. The section does not confer a special</p><p>benefit upon any party; it merely declares the law that</p><p>notwithstanding any term in the contract pre-determining</p><p>damages or providing for forfeiture of any property by way</p><p>of penalty, the Court will award to the party aggrieved</p><p>only reasonable compensation not exceeding the amount</p><p>named or penalty stipulated. The jurisdiction of the Court is</p><p>not determined by the accidental circumstance of the party</p><p>in default being a plaintiff or a defendant in a suit. Use of</p><p>the expression “to receive from the party who has broken</p><p>the contract” does not predicate that the jurisdiction of the</p><p>Court to adjust amounts which have been paid by the party</p><p>in default cannot be exercised in dealing with the claim</p><p>of the party complaining of breach of contract. The court</p><p>has to adjudge in every case reasonable compensation</p><p>to which the plaintiff is entitled from the defendant on</p><p>breach of the contract. Such compensation has to be</p><p>ascertained having regard to the conditions existing on</p><p>the date of the breach.”</p><p>(Emphasis supplied)</p><p>75. It is apposite to mention that in Fateh Chand (supra) this Court had</p><p>clarified that so far as forfeiture of earnest-money is concerned,</p><p>Section 74 of the 1872 Act will not be applicable. The relevant</p><p>observations are reproduced below:</p><p>“(7) The Attorney-General appearing on behalf of the</p><p>defendant has not challenged the plaintiff’s right to forfeit</p><p>Rs. 1,000/- which were expressly named and paid as </p><p>[2024] 2 S.C.R. 69</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>earnest money. He has, however, contended that the</p><p>covenant which gave to the plaintiff the right to forfeit Rs.</p><p>24,000/- out of the amount paid by the defendant was</p><p>stipulation in the nature of penalty, and the plaintiff can</p><p>retain that amount or part thereof only if he establishes</p><p>that in consequence of the breach by the defendant, he</p><p>suffered loss, and in the view of the Court the amount</p><p>or part thereof is reasonable compensation for that loss.</p><p>We agree with the Attorney-General that the amount of</p><p>Rs. 24,000/- was not of the nature of earnest money. The</p><p>agreement expressly provided for payment of Rs. 1,000/- as</p><p>earnest money, and that amount was paid by the defendant.</p><p>The amount of Rs. 24,000/- was to be paid when vacant</p><p>possession of the land and building was delivered, and it</p><p>was expressly referred to as “out of the sale price.” If this</p><p>amount was also to be regarded as earnest money, there</p><p>was no reason why the parties would not have so named</p><p>it in the agreement of sale. We are unable to agree with</p><p>the High Court that this amount was paid as security for</p><p>due performance of the contract. No such case appears</p><p>to have been made out in the plaint and the finding of</p><p>the High Court on that point is based on no evidence. It</p><p>cannot be assumed that because there is a stipulation for</p><p>forfeiture the amount paid must bear the character of a</p><p>deposit for due performance of the contract.”</p><p>(Emphasis supplied)</p><p>76. In another decision of this Court in Maula Bux v. Union of India</p><p>reported in 1969 (2) SCC 554, a similar view was reiterated and it</p><p>was held that forfeiture of earnest money is not a penalty and that</p><p>Section 74 of the 1872 Act will only apply where the forfeiture is in</p><p>the nature of a penalty. The relevant observations read as under: -</p><p>“4. Under the terms of the agreements the amounts deposited</p><p>by the plaintiff as security for due performance of the contracts</p><p>were to stand forfeited in case the plaintiff neglected to perform</p><p>his part of the contract. The High Court observed that the</p><p>deposits so made may be regarded as earnest money. But</p><p>that view cannot be accepted. According to Earl Jowitt in “The</p><p>Dictionary of English Law” at p. 689; “Giving an earnest or </p><p>70 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>earnest-money is a mode of signifying assent to a contract of</p><p>sale or the like, by giving to the vendor a nominal sum (e.g.</p><p>a shilling) as a token that the parties are in earnest or have</p><p>made up their minds”. As observed by the Judicial Committee</p><p>in Kunwar Chiranjit Singh v. Har Swarup:</p><p>“Earnest money is part of the purchase price when the</p><p>transaction goes forward; it is forfeited when the transaction</p><p>falls through, by reason of the fault or failure of the vendee.”</p><p>In the present case the deposit was made not of a sum of money</p><p>by the purchaser to be applied towards part payment of the price</p><p>when the contract was completed and till then as evidencing</p><p>an intention on the part of the purchaser to buy property or</p><p>goods. Here the plaintiff had deposited the amounts claimed</p><p>as security for guaranteeing due performance of the contracts.</p><p>Such deposits cannot be regarded as earnest money. ...</p><p>5. Forfeiture of earnest money under a contract for sale</p><p>of property — Movable or immovable — If the amount is</p><p>reasonable, does not fall within Section 74. That has been</p><p>decided in several cases: Kunwar Chiranjit Singh v. Har Swarup</p><p>(supra); Roshan Lal v. Delhi Cloth and General Mills Company</p><p>Ltd. Delhi, ILR 33 All. 166.; Muhammad Habibullah v. Muhammad</p><p>Shafi, ILR 41 All. 324.; Bishan Chand v. Radhakishan Das, ILR</p><p>19 All. 490. These cases are easily explained, for forfeiture of</p><p>reasonable amount paid as earnest money does not amount to</p><p>imposing a penalty. But if forfeiture is of the nature of penalty,</p><p>Section 74 applies. Where under the terms of the contract the</p><p>party in breach has undertaken to pay a sum of money or to</p><p>forfeit a sum of money which he has already paid to the party</p><p>complaining of a breach of contract, the undertaking is of the</p><p>nature of a penalty.”</p><p>(Emphasis supplied)</p><p>77. In Satish Batra v. Sudhir Rawal reported in (2013) 1 SCC 345,</p><p>this Court after a review of the entire case law starting from Fateh</p><p>Chand (supra), Videocon Properties Ltd. v. Dr. Bhalchandra</p><p>Laboratories & Ors. reported in (2004) 3 SCC 711 and Shree</p><p>Hanuman Cotton Mills & Ors. v. Tata Air Craft Limited reported</p><p>in (1969) 3 SCC 522, laid down the principles regarding earnest</p><p>money, which read as under: -</p><p>[2024] 2 S.C.R. 71</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>“9. …</p><p>“21. From a review of the decisions cited above, the</p><p>following principles emerge regarding ‘earnest’:</p><p>‘(1) It must be given at the moment at which the contract</p><p>is concluded.</p><p>(2) It represents a guarantee that the contract will be fulfilled</p><p>or, in other words, “earnest” is given to bind the contract.</p><p>(3) It is part of the purchase price when the transaction</p><p>is carried out.</p><p>(4) It is forfeited when the transaction falls through by</p><p>reason of the default or failure of the purchaser.</p><p>(5) Unless there is anything to the contrary in the terms of</p><p>the contract, on default committed by the buyer, the seller</p><p>is entitled to forfeit the earnest.””</p><p>78. This Court in Satish Batra (supra) after taking note of the decisions</p><p>in Delhi Development Authority v. Grihshapana Cooperative</p><p>Group Housing Society Ltd. reported in 1995 Supp (1) SCC 751,</p><p>V. Lakshmanan v. B.R. Mangalagiri & Ors. reported in 1995 Supp</p><p>(2) SCC 33 and HUDA v. Kewal Krishnan Goel reported in 1996 (4)</p><p>SCC 249 concluded that only that deposit which has been given as</p><p>an earnest-money for the due performance of the obligation is liable</p><p>to be forfeited in the event of a breach. The relevant observations</p><p>read as under: -</p><p>“15. The law is, therefore, clear that to justify the forfeiture</p><p>of advance money being part of ‘earnest money’ the terms</p><p>of the contract should be clear and explicit. Earnest money</p><p>is paid or given at the time when the contract is entered</p><p>into and, as a pledge for its due performance by the</p><p>depositor to be forfeited in case of non-performance by</p><p>the depositor. There can be converse situation also that if</p><p>the seller fails to perform the contract the purchaser can</p><p>also get double the amount, if it is so stipulated. It is also</p><p>the law that part-payment of purchase price cannot be</p><p>forfeited unless it is a guarantee for the due performance</p><p>of the contract. In other words, if the payment is made only</p><p>towards part-payment of consideration and not intended</p><p>as earnest money then the forfeiture clause will not apply.”</p><p>72 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>79. Since Rule 9 sub-rule (5) provides for the forfeiture of only the earnestmoney deposit of the successful auction purchaser i.e. only 25% of</p><p>the total amount, by no stretch of imagination it can be regarded as</p><p>a penal clause by virtue of the afore-stated decisions of this Court in</p><p>Fateh Chand (supra), Maula Bux (supra) and Satish Batra and as</p><p>such Section(s) 73 and 74 of the 1872 Act will have no application.</p><p>80. Even otherwise, what is discernible from the above referred decisions</p><p>of Fateh Chand (supra), Maula Bux (supra) and Satish Batra (supra)</p><p>is that there lies a difference between forfeiture of any amount and</p><p>forfeiture of earnest money with the former being a penal clause and</p><p>the latter a general forfeiture clause. A clause providing for forfeiture</p><p>of an amount could fundamentally be in the nature of a penalty clause</p><p>or a forfeiture clause in the strict sense or even both, and the same</p><p>has to be determined in the facts of every case keeping in mind the</p><p>nature of contract and the nature of consequence envisaged by it.</p><p>81. Ordinarily, a forfeiture clause in the strict sense will not be a penal</p><p>clause, if its consequence is intended not as a sanction for breach</p><p>of obligation but rather as security for performance of the obligation.</p><p>This is why Fateh Chand (supra) Maula Bux (supra) and Satish</p><p>Batra (supra) held that forfeiture of earnest-money deposit is not a</p><p>penal clause, as the deposit of earnest money is intended to signify</p><p>assent of the purchaser to the contract, and its forfeiture is envisaged</p><p>as a deterrent to ensure performance of the obligation.</p><p>82. We are conscious of the fact that in Maula Bux (supra) this Court</p><p>observed that the deposit of a sum by the purchaser as security for</p><p>guaranteeing due performance was held as a penalty. However, a</p><p>close reading would reveal that the reason why this Court held the</p><p>said deposit as a penal clause was because the said amount was</p><p>paid over and above the earnest-money deposit already paid by the</p><p>purchaser in the said case and more importantly the said sum was</p><p>not liable to be adjusted against the total consideration. Hence, this</p><p>Court held the same to be a penalty rather than earnest money. The</p><p>relevant observation read as under: -</p><p>“4. ... In the present case the deposit was made not of a</p><p>sum of money by the purchaser to be applied towards part</p><p>payment of the price when the contract was completed</p><p>and till then as evidencing an intention on the part of the</p><p>purchaser to buy property or goods. Here the plaintiff had </p><p>[2024] 2 S.C.R. 73</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>deposited the amounts claimed as security for guaranteeing</p><p>due performance of the contracts. Such deposits cannot</p><p>be regarded as earnest money. …”</p><p>(Emphasis supplied)</p><p>83. The difference between an earnest or deposit and an advance part</p><p>payment of price is now well established in law. Earnest is something</p><p>given by the Promisee to the Promisor to mark the conclusiveness</p><p>of the contract. This is quite apart from the price. It may also avail</p><p>as a part payment if the contract goes through. But even so it</p><p>would not lose its character as earnest, if in fact and in truth it was</p><p>intended as mere evidence of the bargain. An advance is a part to</p><p>be adjusted at the time of the final payment. If the Promisee defaults</p><p>to carry out the contract, he loses the earnest but may recover the</p><p>part payment leaving untouched the Promisor’s right to recover</p><p>damages. Earnest need not be money but may be some gift or token</p><p>given. It denotes a thing of value usually a coin of the realm given</p><p>by the Promisor to indicate that the bargain is concluded between</p><p>them and as tangible proof that he means business. Vide Howe v.</p><p>Smith (1884) 27 Ch.D. 89.</p><p>84. The practice of giving earnest is current in the present day commercial</p><p>contracts. An advance is made and accepted by way of deposit or</p><p>guarantee for the due performance of the contract. The distinction</p><p>between a deposit and a part payment is thus described by Benjamin,</p><p>in his book “Treatise on the Law of Sale of Personal Property”, 1950,</p><p>8th Edition at page 946: -</p><p>“A deposit is not recoverable by the buyer, for a deposit</p><p>is a guarantee that the buyer shall perform his contract</p><p>and is forfeited on his failure to do so. As regards the</p><p>recovery of part payments, the question must depend</p><p>upon the terms of the particular contract. If the contract</p><p>distinguishes between the deposit and instalments of price</p><p>and the buyer is in default, the deposit is forfeited and that</p><p>is all. And in ordinary circumstances, unless the contract</p><p>otherwise provides, the seller, on rescission following the</p><p>buyer’s default, becomes liable to repay the part of the</p><p>part of the price paid.”</p><p>85. In Halsbury’s Laws of England, third edition, volume XXXIV, page</p><p>118 the distinction between the two is thus pointed out: -</p><p>74 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>“Part of the price may be payable as a deposit. A part</p><p>payment is to be distinguished from a deposit or earnest.</p><p>A deposit is paid primarily as security that the buyer will</p><p>duly accept and pay for the goods, but, subject thereto,</p><p>forms part of the price. Accordingly, if the buyer is unable</p><p>or unwilling to accept and pay for the goods, the seller</p><p>may repudiate the contract and retain the deposit. If the</p><p>seller is unable or unwilling to deliver the goods, or to</p><p>pass a good title thereto, or the contract is voidable by the</p><p>buyer for any reason, the buyer may repudiate the contract</p><p>and recover the deposit. The buyer may also recover it</p><p>where, without the default of either party, the contract is</p><p>rescinded by either party pursuant to an express power</p><p>in the contract in that behalf.”</p><p>86. In G. C. Cheshire and C.H.S. Fifoot on the Law of Contracts (fifth</p><p>edition) at pages 496- 497, the position is thus summed up: -</p><p>“Where, therefore, it has been agreed that a sum of money</p><p>shall be paid by the one to the other immediately or at</p><p>certain stated intervals, the question whether in the event</p><p>of rescission repayment will be compelled depends upon</p><p>the proper construction of the contract. The object that</p><p>the parties had in view in providing for the payment must</p><p>first be ascertained.</p><p>Where the intention was that the money should form a</p><p>part payment of the full amount due, then, as we have</p><p>seen, if the contract is rescinded for the payer’s default</p><p>the payee is required at law to restore the money, subject</p><p>to a cross-claim for damages. If, on the other hand, the</p><p>intention was that the money should be deposited as</p><p>earnest or as a guarantee for the due performance of the</p><p>payer’s obligation, the rule at common law is that if the</p><p>contract is rescinded by reason of his default the deposit</p><p>is forfeited to the payer and cannot be recovered.</p><p>In the latter case, however, and also where it has been</p><p>expressly agreed that a part payment shall be forfeited in</p><p>the event of the payer’s default, equity is prepared within</p><p>limits to grant relief against the forfeiture.”</p><p>[2024] 2 S.C.R. 75</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>87. The observations of Mellish, L.J., in Ex parte Barrell: [L.R.] In Re.</p><p>Parnell 10 Ch. App. 512 assume importance. The learned Judge</p><p>observed that even when there is no clause in the contract as to</p><p>the forfeiture of the deposit if the purchaser repudiates the contract,</p><p>he cannot have back the money if it was a deposit, as the contract</p><p>has gone off through his default. It is characteristic of a deposit to</p><p>entail forfeiture if the depositor commits breach of his obligation. On</p><p>the contrary it is inherent in a part payment of price in advance that</p><p>it should be returned to the buyer if the sale does not fructify. The</p><p>buyer is not disentitled to recover, even if he is the party in breach,</p><p>because breach of contract on the part of the buyer would only</p><p>entitle the seller to sue for damages but not to forfeit the advance.</p><p>A specific forfeiture clause might operate to defeat the buyer’s right</p><p>of recovery of even an advance payment. But equity might step in</p><p>to relieve the buyer from forfeiture. If the amount forfeited cannot</p><p>stand the test of a genuine pre-estimate of damages, it would be</p><p>unconscionable for the seller to retain it. The question whether the</p><p>amount is a deposit (earnest) or a part payment cannot be determined</p><p>by the presence or absence of a forfeiture clause. Whether the sum</p><p>in question is a deposit to ensure due performance of the contract or</p><p>not is not dependent on the phraseology adopted by the parties or</p><p>by the presence or otherwise of a forfeiture clause. The proportion</p><p>the amount bears to the total sale price, the need to take a deposit</p><p>intended to act in terrorem, the nature of the contract and other</p><p>circumstances which cannot be exhaustively listed have to be taken</p><p>into account in ascertaining the true nature of the amount. In essence</p><p>the question is one of proper interpretation of the terms of a contract.</p><p>88. We would like to refer to a decision of the Court of Appeal in England</p><p>in Stockloser v. Johnson reported in (1954) 1 All. E.R. 630 and</p><p>particularly to the observations of Denning, L.J., which, if we may</p><p>say so with respect, has set out the legal position succinctly and</p><p>with great clarity. The facts of that case need not be set out and</p><p>it would be sufficient to refer only to the principle of law laid down</p><p>by the Court of Appeal. At page 637 Denning L.J., observes thus:</p><p>“It seems to me that the cases show the law to be this. (i)</p><p>When there is no forfeiture clause, if money is handed over</p><p>in part payment of the purchase price, and then the buyer</p><p>makes default as to the balance, then, so long as the seller</p><p>keeps the contract open and available for performance, </p><p>76 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>the buyer cannot recover the money, but once the seller</p><p>rescinds the contract or treats it as at an end owing to</p><p>the buyer’s default, then the buyer is entitled to recover</p><p>his money by action at law, subject to a cross-claim by</p><p>the seller for damages: see Palmer v. Temple 112 E.R.</p><p>1304, Mayson v. Clouet (1924) A.C. 980, Dies v. British</p><p>and International Mining and Finance Corporation Ltd.</p><p>(1939) 1 .K.B. 724 and Williams on Vendor and Purchaser</p><p>4th ed., vol. 2, p. 1006. (ii) But when there is a forfeiture</p><p>clause or the money is expressly paid as a deposit (which</p><p>is equivalent to a forfeiture clause) then the buyer who</p><p>is in default cannot recover the money at law at all. He</p><p>may, however, have a remedy in equity, for, despite the</p><p>express stipulation in the contract, equity can relieve the</p><p>buyer from forfeiture of the money and order the seller to</p><p>repay it on such terms as the Court thinks fit.”</p><p>89. Therefore, it is clear that the forfeiture can be justified if the terms</p><p>of the contract are clear and explicit. If it is found that the earnest</p><p>money was paid in accordance with the terms of the tender for the</p><p>due performance of the contract by the Promisee, the same can be</p><p>forfeited in case of non-performance by him or her.</p><p>90. We are conscious of the decision of this Court in Kailash Nath</p><p>Associates v. Delhi Development Authority & Anr. reported in</p><p>(2015) 4 SCC 136 wherein it was held that Section 74 of the 1872</p><p>Act will be applicable to cases of forfeiture of earnest-money deposit,</p><p>however, where such forfeiture takes place under the terms and</p><p>conditions of a public auction, Section 74 will have no application.</p><p>The relevant observations are reproduced below: -</p><p>“43.1. Where a sum is named in a contract as a liquidated</p><p>amount payable by way of damages, the party complaining</p><p>of a breach can receive as reasonable compensation</p><p>such liquidated amount only if it is a genuine pre-estimate</p><p>of damages fixed by both parties and found to be such</p><p>by the court. In other cases, where a sum is named in</p><p>a contract as a liquidated amount payable by way of</p><p>damages, only reasonable compensation can be awarded</p><p>not exceeding the amount so stated. Similarly, in cases</p><p>where the amount fixed is in the nature of penalty, only </p><p>[2024] 2 S.C.R. 77</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>reasonable compensation can be awarded not exceeding</p><p>the penalty so stated. In both cases, the liquidated amount</p><p>or penalty is the upper limit beyond which the court cannot</p><p>grant reasonable compensation.</p><p>43.2. Reasonable compensation will be fixed on well-known</p><p>principles that are applicable to the law of contract, which</p><p>are to be found inter alia in Section 73 of the Contract Act.</p><p>43.3. Since Section 74 awards reasonable compensation</p><p>for damage or loss caused by a breach of contract, damage</p><p>or loss caused is a sine qua non for the applicability of</p><p>the Section.</p><p>43.4. The Section applies whether a person is a plaintiff</p><p>or a defendant in a suit.</p><p>43.5. The sum spoken of may already be paid or be</p><p>payable in future.</p><p>43.6. The expression “whether or not actual damage or loss</p><p>is proved to have been caused thereby” means that where</p><p>it is possible to prove actual damage or loss, such proof</p><p>is not dispensed with. It is only in cases where damage</p><p>or loss is difficult or impossible to prove that the liquidated</p><p>amount named in the contract, if a genuine pre-estimate</p><p>of damage or loss, can be awarded.</p><p>43.7. Section 74 will apply to cases of forfeiture of earnest</p><p>money under a contract. Where, however, forfeiture takes</p><p>place under the terms and conditions of a public auction</p><p>before agreement is reached, Section 74 would have no</p><p>application.”</p><p>(Emphasis supplied)</p><p>91. Since, the forfeiture under Rule 9(5) of the SARFAESI Rules is also</p><p>taking place pursuant to the terms & conditions of a public auction, we</p><p>need not dwell any further on the decision of Kailash Nath (supra)</p><p>and leave it at that. Suffice to say, in view of the above discussion,</p><p>Section(s) 73 and 74 of the 1872 Act will have no application</p><p>whatsoever, when it comes to forfeiture of the earnest-money deposit</p><p>under Rule 9 sub-rule (5) of the SARFAESI Rules. </p><p>78 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>c. Law on the principle of ‘Reading-Down’ a provision:</p><p>92. We must deal with yet one another aspect that weighed with the High</p><p>Court while passing the Impugned Order. In the Impugned Order,</p><p>the High Court also took the view that Rule 9(5) of the SARFAESI</p><p>Rules must be read down so as to yield to the underlying principle</p><p>recognized in Section(s) 73 & 74 of the 1872 Act. This reading down</p><p>of the relevant rules in the opinion of the High Court was necessary,</p><p>as otherwise irrespective of whether the default is of the entire</p><p>balance amount or only one rupee, the same harsh consequence of</p><p>forfeiture would ensue in both the cases. The relevant observations</p><p>are reproduced below: -</p><p>“12. Rule 9(5) of the said Rules of 2002 has to be seen</p><p>as an enabling provision that permits forfeiture in principle.</p><p>However, such Rule cannot be conferred an exalted status</p><p>to override the underlying ethos of Section 73 of the</p><p>Contract Act. In other words, Rule 9(5) has to yield to the</p><p>principle recognised in Section 73 of the Contract Act or</p><p>it must be read down accordingly. Thus, notwithstanding</p><p>the wide words used in Rule 9(5) of the said Rules, a</p><p>secured creditor may not forfeit any more than the loss</p><p>or damage suffered by such creditor as a consequence of</p><p>the failure on the part of a bidder to make payment of the</p><p>consideration or the balance consideration in terms of the</p><p>bid. It is only if such principle as embodied in Section 73 of</p><p>the Contract Act, is read into Rule 9 (5) of the said Rules,</p><p>would there be an appropriate answer to the conundrum</p><p>as to whether a colossal default of the entirety of the</p><p>consideration or the mere default of one rupee out of the</p><p>consideration would result in the identical consequence</p><p>of forfeiture as indicated in the provision.”</p><p>(Emphasis supplied)</p><p>93. The principle of “reading down” a provision refers to a legal</p><p>interpretation approach where a court, while examining the validity</p><p>of a statute, attempts to give a narrowed or restricted meaning to</p><p>a particular provision in order to uphold its constitutionality. This</p><p>principle is rooted in the idea that courts should make every effort</p><p>to preserve the validity of legislation and should only declare a law</p><p>invalid as a last resort.</p><p>[2024] 2 S.C.R. 79</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>94. When a court encounters a provision that, if interpreted according</p><p>to its plain and literal meaning, might lead to constitutional or legal</p><p>issues, the court may opt to read down the provision. Reading down</p><p>involves construing the language of the provision in a manner that</p><p>limits its scope or application, making it consistent with constitutional</p><p>or legal principles.</p><p>95. The rationale behind the principle of reading down is to avoid striking</p><p>down an entire legislation. Courts generally prefer to preserve the</p><p>intent of the legislature and the overall validity of a law by adopting</p><p>an interpretation that addresses the specific constitutional concerns</p><p>without invalidating the entire statute.</p><p>96. It is a judicial tool used to salvage the constitutionality of a statute</p><p>by giving a provision a narrowed or limited interpretation, thereby</p><p>mitigating potential conflicts with constitutional or legal principles.</p><p>97. In B.R. Enterprises v. State of U.P. & Ors. reported in (1999) 9</p><p>SCC 700, this Court observed that the principles such as “Reading</p><p>Down” emerge from the concern of the courts towards salvaging a</p><p>legislation to ensure that its intended objectives are achieved. The</p><p>relevant observations read as under: -</p><p>“81. … It is also well settled that first attempt should be</p><p>made by the courts to uphold the charged provision and</p><p>not to invalidate it merely because one of the possible</p><p>interpretations leads to such a result, howsoever attractive it</p><p>may be. Thus, where there are two possible interpretations,</p><p>one invalidating the law and the other upholding, the</p><p>latter should be adopted. For this, the courts have been</p><p>endeavouring, sometimes to give restrictive or expansive</p><p>meaning keeping in view the nature of legislation, maybe</p><p>beneficial, penal or fiscal etc. Cumulatively it is to subserve</p><p>the object of the legislation. Old golden rule is of respecting</p><p>the wisdom of legislature that they are aware of the law and</p><p>would never have intended for an invalid legislation. This</p><p>also keeps courts within their track and checks individual</p><p>zeal of going wayward. Yet in spite of this, if the impugned</p><p>legislation cannot be saved the courts shall not hesitate</p><p>to strike it down. Similarly, for upholding any provision, if</p><p>it could be saved by reading it down, it should be done,</p><p>unless plain words are so clear to be in defiance of the </p><p>80 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Constitution. These interpretations spring out because of</p><p>concern of the courts to salvage a legislation to achieve its</p><p>objective and not to let it fall merely because of a possible</p><p>ingenious interpretation. The words are not static but</p><p>dynamic. This infuses fertility in the field of interpretation.</p><p>This equally helps to save an Act but also the cause of</p><p>attack on the Act. Here the courts have to play a cautious</p><p>role of weeding out the wild from the crop, of course,</p><p>without infringing the Constitution. For doing this, the</p><p>courts have taken help from the Preamble, Objects, the</p><p>scheme of the Act, its historical background, the purpose</p><p>for enacting such a provision, the mischief, if any which</p><p>existed, which is sought to be eliminated. …”</p><p>(Emphasis supplied)</p><p>98. A similar view was reiterated by this Court in its decision in Calcutta</p><p>Gujarati Education Society & Anr. v. Calcutta Municipal Corpn.</p><p>& Ors. reported in (2003) 10 SCC 533, wherein this Court observed</p><p>that the rule of “Reading Down” is only for the limited purpose of</p><p>making a provision workable so as to fulfil the purpose and object</p><p>of the statute. The relevant observations read as under: -</p><p>“35. The rule of “reading down” a provision of law is now</p><p>well recognised. It is a rule of harmonious construction in</p><p>a different name. It is resorted to smoothen the crudities</p><p>or ironing out the creases found in a statute to make it</p><p>workable. In the garb of “reading down”, however, it is not</p><p>open to read words and expressions not found in it and</p><p>thus venture into a kind of judicial legislation. The rule</p><p>of reading down is to be used for the limited purpose of</p><p>making a particular provision workable and to bring it in</p><p>harmony with other provisions of the statute. It is to be</p><p>used keeping in view the scheme of the statute and to</p><p>fulfil its purposes. …”</p><p>(Emphasis supplied)</p><p>99. Thus, the principle of ‘Reading Down” a provision emanates from</p><p>a very well settled canon of law, that is, the courts while examining</p><p>the validity of a particular statute should always endeavour towards</p><p>upholding its validity, and striking down a legislation should always</p><p>be the last resort. “Reading Down” a provision is one of the many </p><p>[2024] 2 S.C.R. 81</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>methods, the court may turn to when it finds that a particular provision</p><p>if for its plain meaning cannot be saved from invalidation and so by</p><p>restricting or reading it down, the court makes it workable so as to</p><p>salvage and save the provision from invalidation. Rule of “Reading</p><p>Down” is only for the limited purpose of making a provision workable</p><p>and its objective achievable.</p><p>100. The High Court in its Impugned Order resorted to reading down Rule</p><p>9(5) of the SARFAESI Rules not because its plain meaning would</p><p>result in the provision being rendered invalid or unworkable or the</p><p>statute’s objective being defeated, but because it would result in the</p><p>same harsh consequence of forfeiture of the entire earnest-money</p><p>deposit irrespective of the extent of default in payment of balance</p><p>amount.</p><p>101. However, harshness of a provision is no reason to read down the</p><p>same, if its plain meaning is unambiguous and perfectly valid. A</p><p>law/rule should be beneficial in the sense that it should suppress</p><p>the mischief and advance the remedy. The harsh consequence of</p><p>forfeiture of the entire earnest-money deposit has been consciously</p><p>incorporated by the legislature in Rule 9(5) of the SARFAESI Rules</p><p>so as to sub-serve the larger object of the SARFAESI Act of timely</p><p>resolving the bad debts of the country. The idea behind prescribing</p><p>such a harsh consequence is not illusory, it is to attach a legal</p><p>sanctity to an auction process once conducted under the SARFAESI</p><p>Act from ultimately getting concluded.</p><p>102. Any dilution of the forfeiture provided under Rule 9(5) of the SARFAESI</p><p>Rules would result in the entire auction process under the SARFAESI</p><p>Act being set at naught by mischievous auction purchaser(s) through</p><p>sham bids, thereby undermining the overall object of the SARFAESI</p><p>Act of promoting financial stability, reducing NPAs and fostering a</p><p>more efficient and streamlined mechanism for recovery of bad debts.</p><p>103. This Court in Mardia Chemical (supra) observed that the provisions</p><p>of the SARFAESI Act & SARFAESI Rules must be interpreted keeping</p><p>in mind the economic object which is sought to be achieved by the</p><p>legislature, the relevant observations read as under: -</p><p>“34. Some facts which need to be taken note of are</p><p>that the banks and the financial institutions have heavily</p><p>financed the petitioners and other industries. It is also a</p><p>fact that a large sum of amount remains unrecovered. </p><p>82 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>Normal process of recovery of debts through courts is</p><p>lengthy and time taken is not suited for recovery of such</p><p>dues. For financial assistance rendered to the industries</p><p>by the financial institutions, financial liquidity is essential</p><p>failing which there is a blockade of large sums of amounts</p><p>creating circumstances which retard the economic progress</p><p>followed by a large number of other consequential ill effects.</p><p>Considering all these circumstances, the Recovery of Debts</p><p>Due to Banks and Financial Institutions Act was enacted</p><p>in 1993 but as the figures show it also did not bring the</p><p>desired results. Though it is submitted on behalf of the</p><p>petitioners that it so happened due to inaction on the part</p><p>of the Governments in creating Debts Recovery Tribunals</p><p>and appointing presiding officers, for a long time. Even</p><p>after leaving that margin, it is to be noted that things in</p><p>the spheres concerned are desired to move faster. In the</p><p>present day global economy it may be difficult to stick to</p><p>old and conventional methods of financing and recovery</p><p>of dues. Hence, in our view, it cannot be said that a step</p><p>taken towards securitisation of the debts and to evolve</p><p>means for faster recovery of NPAs was not called for or</p><p>that it was superimposition of undesired law since one</p><p>legislation was already operating in the field, namely, the</p><p>Recovery of Debts Due to Banks and Financial Institutions</p><p>Act. It is also to be noted that the idea has not erupted</p><p>abruptly to resort to such a legislation. It appears that a</p><p>thought was given to the problems and the Narasimham</p><p>Committee was constituted which recommended for</p><p>such a legislation keeping in view the changing times</p><p>and economic situation whereafter yet another Expert</p><p>Committee was constituted, then alone the impugned law</p><p>was enacted. Liquidity of finances and flow of money is</p><p>essential for any healthy and growth-oriented economy. But</p><p>certainly, what must be kept in mind is that the law should</p><p>not be in derogation of the rights which are guaranteed to</p><p>the people under the Constitution. The procedure should</p><p>also be fair, reasonable and valid, though it may vary</p><p>looking to the different situations needed to be tackled</p><p>and object sought to be achieved.”</p><p>(Emphasis supplied)</p><p>[2024] 2 S.C.R. 83</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>104. Thus, the High Court committed an egregious error by proceeding</p><p>to read down Rule 9(5) of the SARFAESI Rules in the absence of</p><p>the said provision being otherwise invalid or unworkable in terms</p><p>of its plain and ordinary meaning without appreciating the purpose</p><p>and object of the said provision.</p><p>iii) Whether, the forfeiture of the entire earnest-money deposit</p><p>amounts to Unjust Enrichment?</p><p>105. The High Court whilst passing the impugned order thought fit to</p><p>reduce the extent of amount forfeited in view of the subsequent sale</p><p>of the Secured Asset by the appellant bank at much higher price</p><p>than the previous auction. This in the High Court’s opinion meant</p><p>that no loss had been caused to the appellant bank, as it had duly</p><p>recovered more than its dues from the subsequent sale and as such</p><p>was not entitled to forfeit the entire amount of deposit as doing so</p><p>would amount to unjust enrichment, which is not permissible by the</p><p>SARFAESI Act.</p><p>106. However, we are not in agreement with the aforesaid observations</p><p>of the High Court. When an auction fails and a fresh auction is</p><p>required to be conducted in respect of the Secured Asset, there</p><p>looms a degree of uncertainty as to the extent of bids that may be</p><p>received in the future auction or whether the fresh auction would</p><p>even be successful or not. More often than not, with the efflux of</p><p>time, the value of the Secured Asset erodes. In such a case it would</p><p>be preposterous to tie or limit the forfeiture under Rule 9(5) of the</p><p>SARFAESI Rules on an eventuality or a contingency of a subsequent</p><p>sale of the secured asset if any.</p><p>107. As regards whether, the forfeiture of the entire amount of deposit even</p><p>after having recovered the entire debt amounts to unjust enrichment</p><p>or not? It would be apposite to understand what is meant by ‘unjust</p><p>enrichment’.</p><p>108. In Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central</p><p>Excise & Customs reported in (2005) 3 SCC 738, the Court observed</p><p>that the doctrine of unjust enrichment is based on equity and refers</p><p>to the inequitable retention of a benefit. The relevant observations</p><p>are reproduced below: -</p><p>84 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>“31. Stated simply, “unjust enrichment” means retention</p><p>of a benefit by a person that is unjust or inequitable.</p><p>“Unjust enrichment” occurs when a person retains money</p><p>or benefits which in justice, equity and good conscience,</p><p>belong to someone else.</p><p>32. The doctrine of “unjust enrichment”, therefore, is that</p><p>no person can be allowed to enrich inequitably at the</p><p>expense of another. A right of recovery under the doctrine</p><p>of “unjust enrichment” arises where retention of a benefit</p><p>is considered contrary to justice or against equity.</p><p> xxx xxx xxx</p><p>45. From the above discussion, it is clear that the doctrine</p><p>of “unjust enrichment” is based on equity and has been</p><p>accepted and applied in several cases. ...”</p><p>(Emphasis supplied)</p><p>109. Thus, from the aforesaid, it is clear that the concept of ‘Unjust</p><p>Enrichment’ is a by-product of the doctrine of equity and it is an</p><p>equally well settled cannon of law that equity always follows the law.</p><p>In other words, equity cannot supplant the law, equity has to follow</p><p>the law if the law is clear and unambiguous.</p><p>110. This Court in C. Natarajan (supra) had held that forfeiture of 25%</p><p>of the deposit does not constitute as an unjust enrichment with the</p><p>following relevant observations being reproduced below: -</p><p>“35. In the light of guidance provided by the above</p><p>decisions, what needs to be ascertained first is whether</p><p>the Bank received or derived any benefit or advantage</p><p>by forfeiture of 25% of the sale price. We do not think</p><p>that the Bank has been enriched, much less unjustly</p><p>enriched, by reason of the impugned forfeiture. Receipt</p><p>of 25% of the sale price by the Bank from the contesting</p><p>respondent was not the outcome of any private negotiation</p><p>or arrangement between them. It was pursuant to a public</p><p>auction, involving a process of offer and acceptance, and</p><p>it was in terms of statutory provisions contained in the</p><p>Rules, particularly rule 9(3), that money changed hands</p><p>for a definite purpose. Receipt of 25% of the sale price</p><p>does not constitute a benefit, a fortiori, retention thereof by </p><p>[2024] 2 S.C.R. 85</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>forfeiture cannot be termed unjust or inequitable, so as to</p><p>attract the doctrine of unjust enrichment. The Bank, as a</p><p>secured creditor, is entitled in law to enforce the security</p><p>interest and in the process to initiate all such steps and</p><p>take all such measures for protection of public interest</p><p>by recovering the public money, lent to a borrower and</p><p>who has squandered it, in a manner authorized by law.</p><p>The contesting respondent participated in the auction</p><p>well and truly aware of the risk of having 25% of the sale</p><p>price forfeited in case of any default or failure on his part</p><p>to make payment of the balance amount of the sale price.</p><p>Question of the Bank being enriched by a forfeiture, which</p><p>is in the nature of a statutory penalty, does not and cannot</p><p>therefore arise in the circumstances.”</p><p>(Emphasis supplied)</p><p>111. The consequence of forfeiture of 25% of the deposit under Rule 9(5) of</p><p>the SARFAESI Rules is a legal consequence that has been statutorily</p><p>provided in the event of default in payment of the balance amount.</p><p>The consequence envisaged under Rule 9(5) follows irrespective</p><p>of whether a subsequent sale takes place at a higher price or not,</p><p>and this forfeiture is not subject to any recovery already made or to</p><p>the extent of the debt owed. In such cases, no extent of equity can</p><p>either substitute or dilute the statutory consequence of forfeiture of</p><p>25% of deposit under Rule 9(5) of the SARFAESI Rules.</p><p>112. This Court in National Spot Exchange Ltd. v. Anil Kohli, Resolution</p><p>Professional for Dunar Foods Ltd. reported in (2022) 11 SCC 761</p><p>after referring to a catena of its other judgments, had held that where</p><p>the law is clear the consequence thereof must follow. The High Court</p><p>has no option but to implement the law. The relevant observations</p><p>made in it are being reproduced below: -</p><p>“15.1. In Mishri Lal [BSNL v. Mishri Lal, (2011) 14 SCC 739 :</p><p>(2014) 1 SCC (L&S) 387], it is observed that the law prevails</p><p>over equity if there is a conflict. It is observed further that equity</p><p>can only supplement the law and not supplant it.</p><p>15.2. In Raghunath Rai Bareja [Raghunath Rai Bareja v. Punjab</p><p>National Bank, (2007) 2 SCC 230], in paras 30 to 37, this Court</p><p>observed and held as under : (SCC pp. 242-43) </p><p>86 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>“30. Thus, in Madamanchi Ramappa v. Muthaluru Bojjappa</p><p>[AIR 1963 SC 1633] (vide para 12) this Court observed:</p><p>(AIR p. 1637)</p><p>‘12. … [W]hat is administered in Courts is justice</p><p>according to law, and considerations of fair play and</p><p>equity however important they may be, must yield to</p><p>clear and express provisions of the law.’</p><p>31. In Council for Indian School Certificate Examination</p><p>v. Isha Mittal [(2000) 7 SCC 521] (vide para 4) this Court</p><p>observed: (SCC p. 522)</p><p>‘4. … Considerations of equity cannot prevail and do</p><p>not permit a High Court to pass an order contrary</p><p>to the law.’</p><p>32. Similarly, in P.M. Latha v. State of Kerala [(2003) 3</p><p>SCC 541 : 2003 SCC (L&S) 339] (vide para 13) this Court</p><p>observed: (SCC p. 546)</p><p>‘13. Equity and law are twin brothers and law should</p><p>be applied and interpreted equitably but equity cannot</p><p>override written or settled law.’</p><p>33. In Laxminarayan R. Bhattad v. State of Maharashtra</p><p>[(2003) 5 SCC 413] (vide para 73) this Court observed:</p><p>(SCC p. 436)</p><p>‘73. It is now well settled that when there is a conflict</p><p>between law and equity the former shall prevail.’</p><p>34. Similarly, in Nasiruddin v. Sita Ram Agarwal [(2003) 2</p><p>SCC 577] (vide para 35) this Court observed: (SCC p. 588)</p><p>‘35. In a case where the statutory provision is plain</p><p>and unambiguous, the court shall not interpret the</p><p>same in a different manner, only because of harsh</p><p>consequences arising therefrom.’</p><p>35. Similarly, in E. Palanisamy v. Palanisamy [(2003) 1</p><p>SCC 123] (vide para 5) this Court observed: (SCC p. 127)</p><p>‘5. Equitable considerations have no place where the</p><p>statute contained express provisions.’</p><p>[2024] 2 S.C.R. 87</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>36. In India House v. Kishan N. Lalwani [(2003) 9 SCC</p><p>393] (vide para 7) this Court held that: (SCC p. 398)</p><p>‘7. … The period of limitation statutorily prescribed</p><p>has to be strictly adhered to and cannot be relaxed</p><p>or departed from for equitable considerations.’…”</p><p>113. Thus, the High Court erred in law by holding that forfeiture of the</p><p>entire deposit under Rule 9 sub-rule (5) of the SARFAESI Rules by</p><p>the appellant bank after having already recovered its dues from the</p><p>subsequent sale amounts to unjust enrichment.</p><p>iv) Whether Any Exceptional Circumstances exist to set aside</p><p>the forfeiture of the earnest money deposit?</p><p>114. The last aspect which remains to be determined is whether any</p><p>exceptional circumstances exist to set aside the forfeiture of the</p><p>respondent’s earnest money deposit?</p><p>115. This Court in its decision in Alisha Khan v. Indian Bank (Allahabad</p><p>Bank) & Ors. reported in 2021 SCC OnLine SC 3340 had directed</p><p>the refund of the earnest-money deposit after forfeiture to the</p><p>successful auction purchaser who was unable to pay the balance</p><p>amount on account of the Pandemic. The relevant observations are</p><p>being reproduced below:</p><p>“3. Having gone through the impugned judgment and</p><p>orders passed by the High Court, we are of the opinion</p><p>that the High Court ought to have allowed the refund</p><p>of the amount deposited being 25% of the auction sale</p><p>consideration. Considering the fact that though initially the</p><p>appellant deposited 25% of the auction sale consideration,</p><p>however, subsequently she could not deposit balance</p><p>75% due to COVID-19 pandemic. It is required to be</p><p>noted that subsequently the fresh auction has taken place</p><p>and the property has been sold. It is not the case of the</p><p>respondents that in the subsequent sale, lesser amount</p><p>is received. Thus, as such, there is no loss caused to the</p><p>respondents.</p><p>4. Considering the aforesaid facts and circumstances, we</p><p>allow these appeals and set aside the order of forfeiture</p><p>of 25% of the amount of auction sale consideration and</p><p>direct the respondent Bank to refund/return the amount </p><p>88 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>earlier deposited by the appellant, deposited as the part</p><p>auction sale consideration (minus 50,000/- towards the</p><p>expenditure which were required to be incurred by the</p><p>respondent Bank for conducting the fresh auction) within</p><p>a period of four weeks from today.”</p><p>116. In C. Natarajan (supra), this Court while affirming the decision of</p><p>Alisha Khan (supra) observed that after the earnest-money deposit</p><p>is forfeited, the courts should ordinarily refrain from interfering unless</p><p>the existence of very rare and exceptional circumstances are shown.</p><p>The relevant observations read as under: -</p><p>“13. ... If, however, circumstances are shown to exist where</p><p>a bidder is faced with such a grave disability that he has</p><p>no other option but to seek extension of time on genuine</p><p>grounds so as not to exceed the stipulated period of ninety</p><p>days and the prayer is rejected without due consideration</p><p>of all facts and circumstances, refusal of the prayer for</p><p>extension could afford a ground for a judicial review of the</p><p>decision-making process on valid ground(s). One such</p><p>exceptional circumstance led to the decision in Alisha</p><p>Khan v. Indian Bank (Allahabad Bank) [2021 SCC OnLine</p><p>SC 3340], where this Court intervened and granted relief</p><p>because, due to COVID complications, the appellant had</p><p>failed to pay the balance amount.</p><p> xxx xxx xxx</p><p>24. The up-shot of the aforesaid discussion is that whenever</p><p>a challenge is laid to an order of forfeiture made by an</p><p>authorized officer under sub-rule (5) of rule 9 of the Rules</p><p>by a bidder, who has failed to deposit the entire sale</p><p>price within ninety days, the tribunals/courts ought to be</p><p>extremely reluctant to interfere unless, of course, a very</p><p>exceptional case for interference is set up. What would</p><p>constitute a very exceptional case, however, must be</p><p>determined by the tribunals/courts on the facts of each</p><p>case and by recording cogent reasons for the conclusion</p><p>reached. Insofar as challenge to an order of forfeiture that</p><p>is made upon rejection of an application for extension of</p><p>time prior to expiry of ninety days and within the stipulated</p><p>period is concerned, the scrutiny could be a bit more</p><p>intrusive for ascertaining whether any patent arbitrariness </p><p>[2024] 2 S.C.R. 89</p><p>The Authorised Officer, Central Bank of India v. Shanmugavelu</p><p>or unreasonableness in the decision-making process</p><p>has had the effect of vitiating the order under challenge.</p><p>However, in course of such scrutiny, the tribunals/courts</p><p>must be careful and cautious and direct their attention</p><p>to examine each case in some depth to locate whether</p><p>there is likelihood of any hidden interest of the bidder to</p><p>stall the sale to benefit the defaulting borrower and must,</p><p>as of necessity, weed out claims of bidders who instead</p><p>of genuine interest to participate in the auctions do so</p><p>to rig prices with an agenda to withdraw from the fray</p><p>post conclusion of the bidding process. In course of such</p><p>determination, the tribunals/courts ought not to be swayed</p><p>only by supervening events like a subsequent sale at a</p><p>higher price or at the same price offered by the defaulting</p><p>bidder or that the secured creditor has not in the bargain</p><p>suffered any loss or by sentiments and should stay at a</p><p>distance since extending sympathy, grace or compassion</p><p>are outside the scope of the relevant legislation. In any</p><p>event, the underlying principle of least intervention by</p><p>tribunals/courts and the overarching objective of the</p><p>SARFAESI Act duly complimented by the Rules, which are</p><p>geared towards efficient and speedy recovery of debts,</p><p>together with the interpretation of the relevant laws by this</p><p>Court should not be lost sight of. Losing sight thereof may</p><p>not be in the larger interest of the nation and susceptible</p><p>to interference.”</p><p>(Emphasis supplied)</p><p>117. Thus, this Court held that where extraneous conditions exist that</p><p>might have led to the inability of the successful auction purchaser</p><p>despite best efforts from depositing the balance amount to no fault</p><p>of its own, in such cases the earnest-money deposited by such</p><p>innocent successful auction purchaser could certainly be asked to</p><p>be refunded.</p><p>118. In the case at hand, it is the respondent’s case that he was unable to</p><p>make the balance payment owing to the advent of the demonetisation.</p><p>The same led to a delay in raising the necessary finance. It has been</p><p>pleaded by the respondent that the appellant bank failed to provide</p><p>certain documents to him in time as a result of which he was not</p><p>able to secure a term loan. </p><p>90 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>119. However, the aforesaid by no stretch can be said to be an</p><p>exceptional circumstance warranting judicial interference. We say</p><p>so because demonetization had occurred much before the e-auction</p><p>was conducted by the appellant bank. As regards the requisition</p><p>of documents, the sale was confirmed on 07.12.2016, and the</p><p>respondent first requested for the documents only on 20.12.2016,</p><p>and the said documents were provided to him by the appellant within</p><p>a month’s time i.e., on 21.01.2017. It may also not be out of place to</p><p>mention that the respondent was granted an extension of 90-days’</p><p>time period to make the balance payment, and was specifically</p><p>reminded that no further extension would be granted, in-spite of this</p><p>the respondent failed to make the balance payment.</p><p>120. The e-auction notice inviting bids along with the correspondence</p><p>between the appellant bank and the respondent are unambiguous</p><p>and clearly spelt out the consequences of not paying the balance</p><p>amount within the specified period.</p><p>121. Thus, what could be said is that the respondent being aware of his</p><p>financial capacity, willingly participated in the e-auction and offered</p><p>his bid fully knowing the reserve price of the Secured Asset and the</p><p>consequences of its failure in depositing the balance amount.</p><p>F. CONCLUSION</p><p>122. For all the foregoing reasons, we have reached to the conclusion</p><p>that the High Court committed an egregious error in passing the</p><p>impugned judgment and order. We are left with no other option but</p><p>to set aside the impugned judgment and order passed by the High</p><p>Court.</p><p>123. In the result, the appeals filed by the bank succeed and are hereby</p><p>allowed. The impugned judgment and order passed by the High</p><p>Court dated 27.10.2021 is hereby set aside. As a result, the SA No.</p><p>143 of 2018 filed by the respondent before the DRT-II also stands</p><p>dismissed.</p><p>124. The parties shall bear their own costs.</p><p>125. Pending application(s), if any, also stand disposed of.</p><p>Headnotes prepared by: Ankit Gyan Result of the case:</p><p>Appeals disposed of.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.comtag:blogger.com,1999:blog-1727475089844054084.post-90697727870226610742024-02-18T06:52:00.001+05:302024-02-18T06:52:37.246+05:30The courts below, if justified in convicting the four accused u/ss. 302/34 IPC and imposing sentence for life for committing murder of the victim.<p>* Author</p><p>[2024] 2 S.C.R. 1 : 2024 INSC 87</p><p>Velthepu Srinivas and Others</p><p>v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>(Criminal Appeal No. 2852 of 2023)</p><p>06 February 2024</p><p>[B.R. Gavai and Pamidighantam Sri Narasimha,* JJ.]</p><p>Issue for Consideration</p><p>The courts below, if justified in convicting the four accused u/ss.</p><p>302/34 IPC and imposing sentence for life for committing murder</p><p>of the victim.</p><p>Headnotes</p><p>Penal Code, 1860 – ss. 302/34, s. 304 Part II – Murder with</p><p>common intention – Culpable homicide not amounting to</p><p>murder, when – Political animosity between two groups</p><p>led to the murder of the deceased – Prosecution witnesses</p><p>corroborating incident of accused A 1 stopping an auto,</p><p>dragging the deceased to the house of A-4, and the other</p><p>accused-A2, A4 joined A-1 and assaulted the deceased with</p><p>various weapons, whereas, A-3 used a stone to assault the</p><p>deceased – Conviction u/ss. 302/34 and sentence for life</p><p>imposed by the courts below – Correctness:</p><p>Held: As regards A1, A2 and A4, the decision of the trial court and</p><p>the High Court is concurred with – Their analyses and conclusions</p><p>are based on correct appreciation of evidence and law – However,</p><p>as regards, the culpability of A-3 for murder, testimonies of four</p><p>eye-witnesses state that the A-3 had used a stone to hit the</p><p>deceased’s head, he never took axe in his hands – Perusal of the</p><p>evidence would reveal that it is not the case of the prosecution</p><p>that A-3 was along with the other accused while the deceased</p><p>was dragged to the house – After the other accused assaulted</p><p>the deceased with sword, A-3 came thereafter and assaulted the</p><p>deceased with stone lying there – Evidence insufficient to deduce</p><p>a conclusion that A-3 shared the common intention with the other</p><p>accused to cause the murder of the deceased – In fact, both the</p><p>courts mechanically drew an inference against A3 u/s. 34 merely </p><p>2 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>based on his presence near the scene of offence and his familial</p><p>relations with the other accused – Even though, A-3 might not have</p><p>had the common intention to commit the murder, nevertheless, his</p><p>participation in the assault and the wielding of the stone certainly</p><p>makes him culpable for the offence that he has committed – A-3</p><p>should have had the knowledge that the use of a stone to hit the</p><p>head of the deceased is likely to cause death – Thus, he is held</p><p>guilty of the offence u/s. 304 Part II – Conviction and sentence of</p><p>A-1, A-2 and A-4 u/s. 302/34 is upheld, however, the conviction</p><p>of A-3 is modified to s. 304 Part II and sentenced to 10 years</p><p>imprisonment. [Paras 17, 23, 28, 30, 31, 32]</p><p>Case Law Cited</p><p>Camilo Vaz v. State of Goa, [2000] 2 SCR 1088 : (2000)</p><p>9 SCC 1; Bawa Singh v. State of Punjab 1993 Supp</p><p>(2) SCC 754; Sarup Singh v. State of Haryana (2009)</p><p>16 SCC 479; Ghana Pradhan & Ors. v. State of Orissa</p><p>1991 Supp (2) SCC 451 – referred to.</p><p>List of Acts</p><p>Penal Code, 1860</p><p>List of Keywords</p><p>Murder; Common intention; Witnesses; Corroboration; Sentence for</p><p>life; Evidence; Eye-witnesses; Appreciation of evidence and law;</p><p>Testimonies; Oral and documentary evidence; Scene of offence;</p><p>Post-mortem report; Likely to cause death.</p><p>Case Arising From</p><p>CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.2852</p><p>of 2023</p><p>From the Judgment and Order dated 26.04.2022 of the High Court</p><p>for the State of Telangana at Hyderabad in CRLA No.308 of 2005</p><p>Appearances for Parties</p><p>Gaurav Agrawal, D. Abhinav Rao, Ms. Prerna Robin, Rahul Jajoo,</p><p>Devadipta Das, Advs. for the Appellants.</p><p>Sirajudeen, Sr. Adv., Krishna Kumar Singh, Sri Harsha Peechara,</p><p>Duvvuri Subrahmanya Bhanu, Ms. Pallavi, Ms. Kriti Sinha, Akshat </p><p>[2024] 2 S.C.R. 3</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>Kulshreshtha, Rajiv Kumar Choudhry, G.Seshagiri Rao, Gaichangpou</p><p>Gangmei, Rahul Aggarwal, Amit Pratap Singh, Ms. Lothungbeni T.</p><p>Lotha, Yimyanger Longkumer, Advs. for the Respondents.</p><p>Judgment / Order of the Supreme Court</p><p>Judgment</p><p>Pamidighantam Sri Narasimha, J.</p><p>1. This criminal appeal by appellants (accused 1 to 4) is against the</p><p>concurrent conviction under Section 302 read with Section 34 and</p><p>sentence for life imposed by the Trial as well as the Telangana High</p><p>Court. For the reasons to follow, while we confirm the judgment and</p><p>sentence with respect to A-1, A-2 and A-4, the conviction and sentence</p><p>of A-3 is however modified to Section 304 Part II and sentenced to</p><p>10 years imprisonment. The details of the crime, trial, decisions of</p><p>the Courts, followed by our analyses and conclusions are as follows.</p><p>2. The case of the prosecution is that the accused 1 to 4 belonging to</p><p>the same family, and the deceased, come from the same village -</p><p>Janda Venkatpur, Asifabad, Telangana. It is alleged that the sister of</p><p>the deceased and the wife of A-4 were political aspirants and they</p><p>contested the Gram Panchayat elections. In the said elections, the</p><p>sister of the deceased succeeded and the wife of A-4 lost and that,</p><p>unfortunately, led to an animosity between the two groups, eventually</p><p>leading to the murder of the deceased which is described as follows.</p><p>3. On 15.11.2001, at about 8AM, the deceased was going to Luxettipet</p><p>on some work in an auto-rikshaw. In the same auto-rikshaw, one</p><p>Sanga Swamy @ Thruputhi (PW-6) and Smt. Chetimala Rajitha</p><p>(PW-9) were travelling as co-passengers. When the auto reached</p><p>the house of A-4, it is alleged that A-1 stopped the auto-rickshaw</p><p>and dragged the deceased out by pulling his legs. At the same time,</p><p>A-2 joined A-1 and both the accused dragged the deceased towards</p><p>the house of A-4. At that point, it is alleged that A-1 to A-4 attacked</p><p>the deceased with an axe, a sword, a stone and a knife, thereby</p><p>inflicting severe bleeding injuries leading to death of the deceased</p><p>on the spot.</p><p>4. The son of the deceased, Kona Kiran Kumar, later examined as</p><p>PW-1, being an eyewitness, proceeded to the police station and</p><p>reported the incident at about 9PM by way of a complaint (Exhibit </p><p>4 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>P-1).The Sub-Inspector of Police (PW-17), Luxettipet received the</p><p>complaint and registered an FIR (Exhibit P-32), and took up the</p><p>investigation. He then recorded the statement of PW-1.</p><p>5. In view of the gravity of the crime, the Circle Inspector of</p><p>Police (PW-18) took up further investigation and immediately</p><p>proceeded to the village to examine the scene of offence. He</p><p>found the body of the deceased in the front yard of A-4’s house.</p><p>He enabled PW-15 to take photographs of the dead body</p><p>(Exhibits P-21 to 30) and himself drew the sketch of the scene</p><p>of offence (Exhibit P-37). He also conducted an inquest over</p><p>the body of the deceased in the presence of PW-10 and</p><p>PW-12 (panch witnesses). The inquest report was marked as Exhibit</p><p>P-5. He also seized a stick (MO.4), control earth (MO.5), bloodstained earth (MO.6), cotton full shirt (MO.7) and a baniyan under</p><p>cover of a panchnama. PW-18 recorded the statements of PWs 4,</p><p>5, 6, 7, 8, 9, and 15. The prosecution maintained that PWs 1, 3, 4,</p><p>6, 7 and 8 are eyewitnesses to the incident.</p><p>6. The Judicial Magistrate First-Class (PW-16) also recorded the</p><p>statements of PWs 1 to 9 under Section 164 of the CrPC. The Postmortem over the dead body of the deceased was conducted by Dr</p><p>Victor Dinesh (PW-11) at 3PM on 15.11.2001 at the Government</p><p>Civil Hospital. PW-11, in his report, found 8 incised wounds, 3 partial</p><p>amputations and 1 deep lacerated wound. It was his opinion that the</p><p>cause of death was due to cardio-pulmonary arrest due to transaction</p><p>spinal cord at atlanto occipital joint.</p><p>7. The Sub-Inspector (PW-17) is said to have apprehended all the</p><p>accused on 23.11.2001 and produced them before PW-18 in his</p><p>office. PW-18 recorded the confessional statement of the accused in</p><p>the presence of PW-13 and PW-14 (panch witnesses). In pursuance</p><p>of the confession, all the accused led him and the panch witnesses</p><p>to the field of one Mr. Appani Gangaiah at Laximpur Shivar. There,</p><p>A-1 recovered and showed an axe, A-2 a sword and A-4 a knife</p><p>which were all hidden behind the bushes in the field. PW-18 seized</p><p>these objects in front of PW-11 to PW-13, later came to be marked</p><p>as Exhibits MOs 1 to 3. PW-18 also recovered a lungi belonging to</p><p>A-1 and one belonging to A-2 (Exhibit MO’s 9 and 10, respectively).</p><p>These material objects were sent to a Forensic Lab in Hyderabad,</p><p>the report of which is marked as Exhibit P-16.</p><p>[2024] 2 S.C.R. 5</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>8. After completion of the above referred investigation, a chargesheet was filed on 09.01.2002. The Judicial First-Class Magistrate,</p><p>Luxettipet took cognizance of the offence under Section 302 read</p><p>with Section 34 of IPC, against all the accused. On production of the</p><p>accused, the Magistrate furnished copies of the charge-sheet and</p><p>other connected documents and committed the case to the Court</p><p>of Sessions and the Learned Sessions Judge numbered the trial as</p><p>Sessions Case No. 523 of 2003. After the charges were framed, the</p><p>accused pleaded not guilty and sought trial.</p><p>9. At the trial, the prosecution examined 18 witnesses being PW-1 to</p><p>PW-18, and marked 37 documents and 10 Material Objects (MO’s).</p><p>After the closure of evidence, the accused were examined under</p><p>Section 313 CrPC with reference to the incriminating material found</p><p>against them in the evidence of the prosecution witnesses, and they</p><p>denied the same. There are no defence witnesses.</p><p>10. The Trial Court, by its elaborate judgment dated 24.02.2005, found</p><p>all four accused guilty for the murder of the deceased and convicted</p><p>them under Section 302 read with Section 34 of the IPC. Accordingly,</p><p>they were sentenced to undergo imprisonment for life and to pay a</p><p>fine of Rs. 500 each, in default, to undergo simple imprisonment of</p><p>one month. All the accused appealed to the High Court.</p><p>11. For the completeness of narration, we may indicate that the High Court</p><p>initially acquitted all the accused by its judgment dated 21.06.2007,</p><p>but in appeal to this Court, their conviction and sentences were</p><p>set-aside, and the criminal appeal was remanded back to the High</p><p>Court for fresh consideration. It is in this background that the order</p><p>impugned came to be passed by the High Court.</p><p>12. After remand, the High Court confirmed the judgment of the Trial</p><p>Court and dismissed the criminal appeals. The Special Leave Petition</p><p>filed by the accused was admitted on 01.08.2022 and this is how we</p><p>have heard Shri Gaurav Agrawal, learned counsel for the appellants</p><p>and Shri Krishan Kumar Singh learned counsel for the State and</p><p>Shri Sirajudeen, learned senior counsel for the respondent No. 2.</p><p>13. Findings of the Trial Court: The Trial Court had examined the</p><p>credibility of the Prosecution witness in great detail. According to</p><p>the Trial Court, PWs 1, 3, 4, 6, 7 and 8 were eyewitnesses to the</p><p>incident and their testimonies were consistent. Among them, PW-6’s </p><p>6 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>testimony was a clinching piece of evidence as he was privy to the</p><p>incident from the very beginning. He was subjected to intense crossexamination with respect to his residence and other details about</p><p>the incident. Except for minor variations, the Trial Court found his</p><p>testimony unshaken, being consistent and natural. The Trial Court</p><p>found the testimonies PW-1, PW-3, PW-4, PW-7, PW-8 corroborating</p><p>the incident of stopping an auto, dragging the deceased out, and</p><p>subsequently assaulting the deceased with various weapons.</p><p>14. Collectively, the witnesses reiterated that A-1 stopped the autorickshaw and pulled the deceased out and A-2 attacking the</p><p>deceased’s hands with a sword. As they reached A-4’s house, A-4</p><p>took the sword from A-2 and struck the deceased on his head. A-4</p><p>also inflicted injuries by a knife. The common account about A-3 is</p><p>that he hit the deceased on the head with a stone. Accused No. 1</p><p>continued the attack and hit the deceased with an axe. Largely, these</p><p>witnesses recounted a consistent narrative of the attack, identifying</p><p>the weapons used and the roles of each accused.</p><p>15. Judgment of the High Court: According to the High Court, the</p><p>accounts of PWs 1, 3, 4, 6, 7 and 8, who witnessed the incident,</p><p>converge and are consistent with the injuries, weapons and motive</p><p>for the murder of the deceased. The High Court correctly relied on</p><p>the evidence of PW-6 who was in an auto-rickshaw along with the</p><p>deceased on the day of the incident. PW6’s evidence that he boarded</p><p>the auto-rickshaw of PW-5, followed by the deceased and Rajitha</p><p>(PW-9) joining him, was believed by the High Court.</p><p>16. The account of PW6 being corroborated by the evidence of PWs</p><p>1, 3, 4, 7 and 8, the High Court held that the evidence conclusively</p><p>establishes the guilt of the accused beyond reasonable doubt. The</p><p>High Court also noted the submission relating to the contradictions</p><p>in the Complaint (Ex. P1) and the testimonies of PWs 1, 3, 4, 6, 7</p><p>and 8, specifically relating to the acts of assault, however, the High</p><p>Court came to the conclusion that they were minor in nature.</p><p>17. Though the High Court saw that the trial court extensively examined</p><p>the evidence and considered all the submissions, it has nevertheless</p><p>considered the evidence afresh and after a detailed examination,</p><p>arrived at the same conclusion. We have given our anxious</p><p>consideration and have scrutinised the evidence of all the eye-</p><p>[2024] 2 S.C.R. 7</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>witnesses in detail. We are in full agreement with the decision of the</p><p>Trial Court and the High Court. Their analyses and conclusions are</p><p>based on correct appreciation of evidence and law. However, there</p><p>is one aspect which stands out in the above-referred analyses of the</p><p>Trial Court and the High Court, and that pertains to the conclusion on</p><p>the culpability of A-3 for murder. We will now examine the evidence</p><p>as against A-3.</p><p>18. Evidence against Accused No.3: To commence with, the FIR states</p><p>that A-3 hit the deceased on the head, thereby causing death. The</p><p>Chargesheet states that A3 used a stone to do the same. However,</p><p>no further details have been provided. Further as we examine the</p><p>testimonies of all the eyewitnesses the following picture emerges.</p><p>PWs 1, 3, 4 and 6 state that the A-3 had used a stone to hit the</p><p>deceased’s head. PW-7 and PW-8 do not speak about his role.</p><p>19. PW-1, in his examination-in-chief and cross-examination, has</p><p>respectively stated as follows:</p><p>Chief - “When I was trying to go near the deceased, A-3</p><p>threatened me saying that if I go there he would kill me.</p><p>A-3 hit the deceased with a stone.”</p><p>Cross - “I read Ex. P-1 complaint and it does not show</p><p>that A-1 and A-3 threatened me and other eye witnesses</p><p>to kill if we tried to rescue the deceased”</p><p>20. PW-3, in his examination-in-chief and cross-examination, has</p><p>respectively stated as follows:</p><p>Chief - “After hearing the cries of the said Rajitha and</p><p>Swamy I, PW1, Kona Mallesh Akireeddy Ramesh, T.Odaiah</p><p>rushed to the spot. By the time we reached the spot the</p><p>deceased was lying on ground with injuries and on seeing</p><p>us A-3 took a stone and gave threats to us saying that he</p><p>would hit us if we go there.”</p><p>Cross - “It is not true to say that I did not state before the</p><p>police that when land other eye witnesses were going</p><p>near· the place of the incident A-3 armed with a stone</p><p>threatened to kill us. It is not true to say that for the first</p><p>time before this court I am deposing that A-3 armed with</p><p>a stone threatened me and other witnesses to kill”</p><p>8 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>21. P.W. 4, in his examination-in-chief, has stated as follows:</p><p>“A-3 took a stone and hit on the head of the deceased.”</p><p>22. P.W. 6, in his examination-in-chief, has stated as follows:</p><p>“A-3 took a stone and hit on the head of the deceased.”</p><p>23. A reading of the judgment and order passed by the Trial as well as</p><p>the High Court would indicate that neither the prosecution or defence,</p><p>nor the court, have focussed on the role of A-3 as evidenced by</p><p>the oral and documentary evidence. There is nothing to attribute</p><p>A-3 with the intent to murder the deceased. In fact, both the Courts</p><p>have mechanically drawn an inference against A-3 under Section 34</p><p>of the Act merely based on his presence near the scene of offence</p><p>and his familial relations with the other accused.</p><p>24. As per the post-mortem report, the cause of death is “cardio</p><p>pulmonary arrest due to transaction spinal cord at atlanto occipital</p><p>joint”. The atlanto occipital joint is at the back of the neck, which is</p><p>the exact place where A-1 assaulted the deceased with the help of</p><p>an axe. This axe was then taken by A-2 and thereafter, by A-4, who</p><p>also assaulted the deceased. All the eye-witnesses are clear in this</p><p>account. In other words, it was only A-3 who never took the axe in</p><p>his hand. He only used a stone to assault the deceased.</p><p>25. Considering the statements of the eye-witnesses, coupled with the</p><p>post-mortem report, it is not possible to contend that A-3 would have</p><p>had the intention to commit the murder of the deceased and as such,</p><p>he cannot be convicted under Section 302 IPC.</p><p>26. In fact, Victor Dinesh (PW-11), who gave the post-mortem report</p><p>had indicated the injuries as under:</p><p>“1. Incised wound extending from right ear to left cheek</p><p>19 cm long 6 cm deep 2 mm wide grievous sharp</p><p>weapon, Ante mortem.</p><p>2. Incised wound on the right eye brow (4cms) simple</p><p>sharp weapon Ante mortem.</p><p>3. Incised wound on the left side of fore head about</p><p>9 cms above left eye brow measuring 8 cms sharp</p><p>weapon Ante mortem.</p><p>[2024] 2 S.C.R. 9</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>4. Incised wound on left shoulder measuring 4 cm long</p><p>3mm wide. Sharp weapon ante mortem.</p><p>5. Incised wound on right should of 8 cm long 1 ½ cm</p><p>wide sharp weapon, ante mortem.</p><p>6. 5 cm x 6 Incised wound (slice) on the vertex. Sharp</p><p>weapon ante mortem.</p><p>7. 8 cms long incised wound backs of left wrist, sharp</p><p>weapon ante mortem.</p><p>8. 12 cms incised wound on the front of left hand, sharp</p><p>weapon, ante mortem.</p><p>9. Partial amputation of middle 3 fingers of left hand,</p><p>ante mortem.</p><p>10. Partial amputation of right thumb. Measuring 2 cms</p><p>sharp weapon ante mortem.</p><p>11. Partial amputation of right index finger measuring 3</p><p>cms sharp weapon, ante mortem.</p><p>12. Deep lacerated wound on the back of neck measuring</p><p>18 cms 7 cms with complete transaction of spinal</p><p>card and Atlanta occipital joint. Blunt weapon, ante</p><p>mortem.”</p><p>27. It is evident from the evidence of PW-11 that the deceased suffered</p><p>12 injuries, of which 10 are caused by sharp-edged weapons. The</p><p>11th injury is a partial amputation of the middle 3 fingers of left hand.</p><p>The final injury is a lacerated wound on the back of neck measuring</p><p>18 cms x 7 cms with complete transaction of spinal cord and atlanto</p><p>occipital joint. The Trial Court and the High Court have not analysed</p><p>the evidence as against A-3. They have proceeded to convict him</p><p>along with others under Section 302 with the aid of Section 34. The</p><p>cumulative circumstances in which A-3 was seen participating in</p><p>the crime would clearly indicate that he had no intention to commit</p><p>murder of the deceased for two clear reasons. Firstly, while every</p><p>other accused took the axe used by A1 initially and contributed to the</p><p>assault with this weapon, A-3 did not wield the axe at any point of</p><p>time. Secondly, A-3 only had a stone in his hand, and in fact, some</p><p>of the witnesses said that he merely threatened in case they seek </p><p>10 [2024] 2 S.C.R.</p><p>Digital Supreme Court Reports</p><p>to intervene and prevent the assault. Under these circumstances,</p><p>we hold that A-3 did not share a common intention to commit the</p><p>murder of the deceased. Additionally, there is no evidence that A-3</p><p>came along with the other accused evidencing a common intention.</p><p>The description of the incident is that when the deceased came to</p><p>the scene of occurrence, A-1 dragged him to the house of A-4, and</p><p>the other accused joined A-1. In this context, A-3 picked up a stone</p><p>to assault the deceased.</p><p>28. Even though, A-3 might not have had the common intention to</p><p>commit the murder, nevertheless, his participation in the assault</p><p>and the wielding of the stone certainly makes him culpable for the</p><p>offence that he has committed. While we acquit A-3 of the offence</p><p>under Section 302 read with Section 34 of the IPC, he is liable for</p><p>the offence under 304 Part II IPC. The law on Section 304 Part II</p><p>has been succinctly laid down in Camilo Vaz v. State of Goa, (2000)</p><p>9 SCC 1, where it was held that:</p><p>14. This section is in two parts. If analysed, the section</p><p>provides for two kinds of punishment to two different</p><p>situations: (1) if the act by which death is caused is</p><p>done with the intention of causing death or causing such</p><p>bodily injury as is likely to cause death. Here the important</p><p>ingredient is the “intention”; (2) if the act is done with the</p><p>knowledge that it is likely to cause death but without any</p><p>intention to cause death or such bodily injury as is likely</p><p>to cause death. When a person hits another with a danda</p><p>on a vital part of the body with such force that the person</p><p>hit meets his death, knowledge has to be imputed to the</p><p>accused….</p><p>29. In the past, this Court has considered factors such as lack of medical</p><p>evidence to prove whether the act/injury was individually sufficient</p><p>to cause death1</p><p>, a single blow on head with a hammer2</p><p> and lack</p><p>of cogent evidence of the eye-witnesses that the accused shared a</p><p>common intention to commit murder3</p><p> as some factors to commute</p><p>a sentence from Section 302 to Section 304 Part II IPC.</p><p>1 Bawa Singh v. State of Punjab, 1993 Supp (2) SCC 754.</p><p>2 Sarup Singh v. State of Haryana, (2009) 16 SCC 479.</p><p>3 Ghana Pradhan & Ors. v. State of Orissa, 1991 Supp (2) SCC 451.</p><p>[2024] 2 S.C.R. 11</p><p>Velthepu Srinivas and Others v.</p><p>State of Andhra Pradesh (Now State of Telangana) and Anr.</p><p>30. Returning back to the facts of the case, there is certainly no escape</p><p>from coming to the conclusion that A-3 should have had the knowledge</p><p>that the use of a stone to hit the head of the deceased is likely to cause</p><p>death. However, as demonstrated before, the evidence is insufficient</p><p>to deduce a conclusion that he shared a common intention with the</p><p>other accused to commit the murder of the deceased. Considering</p><p>the role that A-3 has played, we hold him guilty of the offence under</p><p>Section 304 Part II IPC.</p><p>31. The perusal of the evidence would reveal that it is not the case of</p><p>the prosecution that A-3 was along with the other accused while the</p><p>deceased was dragged to the house. The deposition would reveal</p><p>that after the other accused assaulted the deceased with sword, A-3</p><p>came thereafter and assaulted the deceased with stone lying there.</p><p>We, therefore, find that the prosecution has not been in a position</p><p>to establish that A-3 shared the common intention with the other</p><p>accused to cause the murder of the deceased.</p><p>32. For the reasons stated above, we uphold the conviction and sentence</p><p>of A-1, A-2 and A-4 under Section 302 read with Section 34 IPC and</p><p>dismiss their Criminal Appeal No. 2852 of 2023 against the judgment</p><p>of the High Court of Telangana in Criminal Appeal No. 308 of 2005</p><p>dated 26.04.2022. We acquit A-3 of the conviction and sentence</p><p>under Section 302 read with Section 34 and convict him under</p><p>Section 304 Part II and sentence him to undergo imprisonment for</p><p>10 years. To this extent, the appeal of A-3 is allowed by altering the</p><p>conviction under Section 302 to Section 304 Part II IPC.</p><p>33. Pending applications, if any, are disposed of.</p><p>Headnotes prepared by: Nidhi Jain Result of the case: Appeal disposed of.</p>advocatemmmohanhttp://www.blogger.com/profile/07338404357741706945noreply@blogger.com