LAW FOR ALL

Saturday, April 14, 2012

Consumer Protection Act, 1986 - ss.2(1)(d),(g) & (o) and 12 - Consumer - Deficiency in service - Claim for damages - Truck purchased in auction sale - Respondents authorities delayed delivery of the truck to appellant- auction purchaser and also, despite efforts made by him, did not hand over necessary papers of the truck to him for long number of years - Appellant could not ply the truck for such long number of years - Petition by appellant u/s.12 claiming damages - Held: Buyers of goods/commodities for "self consumption" in economic activities in which they are engaged would be consumers as defined in the Act - Appellant was 'consumer' within meaning of s.2(1)(d) as he purchased the truck for earning his livelihood by means of self-employment - Conduct, behaviour and attitude of respondents was highly reprehensible - There was deficiency in services on their part - Rs.1 lakh with 6% interest p.a. directed to be paid by respondents jointly or severally to the appellant. A truck was put in auction sale, on account of default in payment of instalments by its previous owner towards the loan taken by him from bank. Bid of the appellant was the highest. In 1999, the auction was confirmed and treated to be a final sale in favour of the appellant. Appellant deposited the requisite money consideration, however, the respondents authorities handed over the truck in question to the appellant only after six months from the date of auction. Even after getting delivery of the truck, the appellant could not start plying the same as he was not delivered the relevant papers thereof for long number of years despite efforts made by him. The relevant papers of the truck were handed over to the appellant six years after the date of auction. Meanwhile, the appellant filed petition Section 12 of the Consumer Protection Act, 1986 claiming damages. The appellant claimed damages @ Rs.500/- per day and interest at 5% on the amount of Rs.70,000/- deposited by him for the price of the truck and in addition, further claimed damages for mental and social injuries to the tune of Rs.50,000/- plus litigation expenses. The questions which arise for consideration in the present appeals were (i) whether the appellant was a 'consumer' within the definition of Section 2(1)(d) of the Act; and (ii) whether there was deficiency in services committed by respondents as contemplated under Section 2(1)(g) of the Act. Disposing of the appeals, the Court HELD:1. Appellant would be deemed to be a consumer within the definition as contained in Section 2(1)(d) of the Consumer Protection Act, 1986. A plain reading of Section 2(1) (d) of the Act makes it abundantly clear that appellant would fall in the category of a 'consumer' as he had bought the truck for a consideration which was paid by him. It was bought to be used exclusively for the purpose of earning his livelihood by means of self- employment. A further reading of the aforesaid definition of 'consumer' makes it clear that Parliament wanted to exclude from the scope of the definition the persons, who obtain goods for resale and also those who purchase goods with a view to use such goods for carrying on any activity for earning. The immediate purpose as distinct from the ultimate purpose of purchase, sale in the same form or after conversion and a direct nexus with profit or loss would be the determinants of the character of a transaction- whether it is for a "commercial purpose" or not. Thus, buyers of goods or commodities for "self consumption" in economic activities in which they are engaged would be consumers as defined in the Act. The purchase of the truck by the appellant would also be covered under explanation to Section 2(1)(d) of the Act. The appellant had mentioned categorically that he had bought the said truck to be used exclusively by him for the purpose of earning his livelihood, by means of self-employment. Even if he was to employ a driver for running the truck aforesaid, it would not have changed the matter in any case, as even then appellant would have continued to earn his livelihood from it and of course, by means of self-employment. Furthermore, there is nothing on record to show that he wanted to use the truck for any commercial purpose. [Paras 23, 24, 25 and 26] [1195-H; 1196-H; 1196-A-G] 2. There is nothing on record to show that any stay was granted in favour of any party, restraining the respondents not to deliver the papers of the truck to the appellant. It would go to show that respondents were unlawfully holding back the papers with them, for which, otherwise they were not entitled to do so. The truck in question was actually handed over to the appellant almost after six months from the date of auction in his favour. Even after getting delivery of the truck he could not have started plying the same unless he was delivered the relevant papers thereof. There is no dispute, which even otherwise stands proved from the voluminous material available on record that despite best efforts made by the appellant, the relevant papers of the truck were handed over to him only after six years from the date of the auction. No plausible or convincing reasons have been assigned by the respondents for not doing so. From the narration of the aforesaid facts, it is clearly made out that respondents were at fault in performance of the services which was otherwise required to be performed by them. What more could be the deficiency in service cannot be described. The respondents were certainly imperfect and the same would amount to shortcoming in quality in providing the service to the appellant. Thus, all the ingredients, to enable the appellant to claim damages under the Act were made out. This has in fact been found by the National Commission also, that is why it proceeded to award compensation of Rs. 25,000/- to the appellant. [Paras 21, 28, 29 and 30] [1194-H; 1195-A; 1197-F-H; 1198-A-C] 3.1. The appellant suffered loss of earning firstly due to non-delivery of vehicle and then due to highly belated supply of requisite documents. Moreover, the value of the truck also depreciated resulting in further loss to him. Thus, the amount awarded by National Commission is too meagre and deserves to be enhanced. [Para 32] [1198-E-F] 3.2. The conduct, behaviour and attitude of the respondents, throughout, has been highly reprehensible. When the bank had issued a Fard Nilami and respondents were entrusted with the job of auction then the said auction should have been implemented fully in letter and spirit. Once the highest bid of the appellant was knocked down in his favour, pursuant thereto, he had deposited the requisite amounts, then as a necessary consequence thereof he should have been delivered the truck immediately along with the necessary documents. For the reasons best known to the respondents they had not only delayed delivery of the truck but had also, despite the efforts made by the appellant, not handed over the papers of the truck to him for long number of years. Any explanation offered during the course of the arguments is not acceptable, which certainly shows their malafide intentions. [Para 34] [1199-B-D] 3.3. Even assuming for a moment that bank had not delivered the papers of the truck to the respondents then it was the duty of the respondents to have insisted the bank for delivery of the papers which they had failed to do. Thus, in any case, there cannot be any escape of the respondents from shaking off the liability fastened on them by the National Commission. [Para 35] [1199-E] 3.4. Taking the totality of the situation as it exists, a total amount of Rs. 1,00,000/- payable by respondents jointly or severally to the appellant would subserve the justice. [Para 36] [1199-F] 4. Even though the Act specifically does not authorise to grant interest but in appropriate cases, grant of interest on the facts and circumstances of the case is permissible. In this case also, keeping the circumstances under which appellant was made to run from pillar to post, to get the documents of the truck from the respondents, ends of justice would be met if interest at the rate of 6% p.a. from the date of the original application till actual payment of the aforesaid enhanced awarded amount is made by the respondents. [Paras 37 and 38] [1199-G-H; 1200-A-B] CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 5165 of 2009. From the Judgment & Order dated 18.5.2005 of the National Consumer Disputes Redressal Commission, New Delhi in Revision Petition No. 929 of 2003. WITH C.A. No. 5166 of 2009. R.K. Kapoor, Gunjan Sinha, H. Pant, Anis Ahmed Khan for the Appellants. R.K. Gupta, Manoj Dwivedi, Gunnam Venkateswara Rao for the Respondents.

REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5165 OF 2009
[Arising out of S.L.P.(C)No.20515 of 2005]

Madan Kumar Singh (D) Thr. LR. ....Appellant

Versus

Distt. Magistrate, Sultanpur & Ors. ...Respondents

WITH

CIVIL APPEAL NO. 5166 OF 2009
[Arising out of S.L.P.(C)No.11210 of 2006]

J U D G M E N T

Deepak Verma, J.

1.Leave granted.

2.For the sake of convenience, facts have been

taken from the appeal arising out of

S.L.P.(C)No.20515 of 2005.

3.Appellant was an auction purchaser of a truck

bearing registration No. UP I-4775, put to an

auction sale, on account of default in payment of

instalments committed by its previous owner Iqbal,

having taken loan from Union Bank of India under

"Self Employment Scheme". Recovery Certificate was

issued to the Collector, Sultanpur (U.P.) by the

said bank. The auction was held in the Tehsil
Compound, Sultanpur, on 19.8.1999. The appellant's

bid for a sum of Rs. 70,000/- being the highest,

was knocked down in his favour and accepted by

respondent No. 1.

4.As per the terms and conditions of the auction,

appellant deposited a sum of Rs. 20,000/-, as soon

as the bid was knocked down in his favour. Since no

objection was received against the said auction

sale, the appellant deposited balance amount of

Rs. 50,000/- on 20.8.1999.

5.On 19.9.1999, the said auction was confirmed,

since no objections were received much less, from

the previous owner Iqbal. Thus, it was treated to

be a final sale in favour of the appellant.

6.Obviously, after the sale having been confirmed

in favour of the appellant, he was entitled to

receive possession of the truck, which was not

delivered to him by the respondents. Thus he made

a representation on 30.11.1999 for delivery

thereof. He continued to make several

representations with the respondents for delivery

of the truck purchased in the auction and also to

hand over to him the documents so that the vehicle

could be transferred in the name of the appellant

so as to enable him to ply the same. It appears
that truck was delivered to the appellant after

about six months from the date of auction sale, for

which no plausible reasons were assigned by the

respondents.

7.Despite handing over possession of the truck at a

belated stage, respondents did not deliver

necessary documents of the truck to the appellant

so as to enable him to get the vehicle transferred

in his name, thereby depriving him of its

commercial use, the purpose for which he had

purchased.

8.He was therefore, constrained to file a petition

under Section 12 of the Consumer Protection Act,

1986 (for brevity, 'the Act') claiming damages.

9.Appellant was ultimately delivered the possession

of the truck on 14.3.2000, during the pendency of

the complaint before the District Forum. The

relevant papers thereof were not handed over to

him for a long time but on persistent requests, the

same were handed over to him some time in the month

of January, 2005. Thus after a lapse of more than

five years from the date, the auction was confirmed

in favour of the appellant.

10.The District Consumer Forum dismissed the

complaint of the appellant holding therein that
appellant is not a "consumer" within the definition

of the Act.

11.Feeling aggrieved, appellant filed an appeal

before the State Consumer Disputes Redressal

Commission, Uttar Pradesh, Lucknow which was

registered as Appeal No. 2327 of 2000. The State

Commission dismissed the appeal with certain

observations reproduced herein below:

"The District Consumer Forum Sultanpur
has dismissed the complaint on the finding
that such matters are not cognizable by it
under COPRA. No error at all can be found
in the aforesaid finding. It is open to
the appellant to file copy of this order
before District Magistrate Sultanpur with
such prayer relating to the documents of
the vehicle as advised. The District
Magistrate will deal with such
representation in accordance with law and
pass necessary orders within two months."

12.Pursuant thereto, appellant submitted

representation to the District Magistrate on

17.2.2003 and continued to remind them that they

have to deliver the necessary documents to the

appellant so as to enable him to get the vehicle

transferred in his name, which would further enable

him to use the same for commercial purposes.

13.Against the order of the State Commission,

appellant filed Revision Petition No. 929 of 2003
before the National Consumer Disputes Redressal

Commission, New Delhi. The same came to be

disposed of vide impugned order on 18.5.2005 and

the complaint filed by appellant has partly been

allowed with the following directions:

"In view of the long delay, we are inclined
to grant damages to the extent of Rs.
25,000/- along with cost of Rs.5000/-
payable by the respondents to the Petitioner
jointly and severally. In view of the facts
and circumstances of the case, we direct the
District Magistrate, Sultanpur, U.P. to
conduct an inquiry into the matter and fix
the responsibility including the recovery of
this awarded amount from the officers who
are found guilty of deficiency/negligence in
this case."

14. Feeling aggrieved thereby the auction

purchaser Madan Kumar Singh (since dead) preferred

a Special Leave Petition whereas respondents have

also preferred Special Leave Petition against

Madan Kumar Singh (since dead).

15. The original appellant having died during the

pendency of the appeal, his legal representative

was brought on record.

16. We have, accordingly, heard the learned

counsel for the appellant Mr. R.K. Kapoor and

learned counsel for the respondents Mr. R.K. Gupta

at length. Perused the record.

17. The questions which arise for consideration in

the aforesaid appeals are (i) whether the appellant
can be said to be 'consumer' within the definition

of Section 2(1)(d) of the Act; and (ii) whether it

can be said that there has been deficiency in the

services committed by respondents as contemplated

under Section 2(1)(g) of the Act.

18. It is pertinent to mention here that even

though respondents were parties before the District

Consumer Forum, State Commission, as also before

the National Commission but they neither preferred

to file any objections nor participated in the

proceedings. Thus were proceeded ex-parte

throughout.

19. Even though there has been long and chequered

history of various litigations in the High Court of

Allahabad and a civil suit which were either at the

instance of previous owner of the truck Iqbal Ahmed

or by Maqsood Ahmed, apparently set up by Iqbal

Ahmed but we are not concerned with the same, in

the aforesaid appeal. Needless to say that in

none of the proceedings either initiated by Iqbal

Ahmed or his stooge Maqsood Ahmed there was any

order of stay granted by any court that appellant

herein should not be delivered the relevant

documents of the truck, so as to enable him to

start plying the same.
20. It is trite to say that mere filing of a

Petition, Appeal or Suit, would by itself not

operate as stay until specific prayer in this

regard is made and orders thereon are passed.

21. There is nothing on record to show that any

stay was granted in favour of any party,

restraining the respondents not to deliver the

papers of the truck to the appellant. It would go

to show that respondents were unlawfully holding

back the papers with them, for which, otherwise

they were not entitled to do so.

22. To deal with the question projected

hereinabove in the aforesaid appeal, it is

necessary to go through the definition of

'Consumer' as contained in Section 2(1)(d) of the

Act.

"2(d) "Consumer" means any person who -

(i) Buys any goods for a consideration
which has been paid or promised or partly
paid and partly promised, or under any
system of deferred payment and includes any
user of such goods other than the
person who buys such goods for consideration
paid or promised or partly paid or partly
promised, or under any system of deferred
payment when such use is made with the
approval of such person, but does not
include a person who obtains such goods for
resale or for any commercial purpose;
or

(ii) [hires or avails of] any services for
a consideration which has been paid or
promised or partly paid and partly promised,
or under any system of deferred payment and
includes any beneficiary of such services
other than the person [hires or avails of]
the services for consideration paid or
promised, or partly paid and partly
promised, or under any system of deferred
payment, when such services are availed of
with the approval of the first mentioned
person.

[Explanation- For the purposes of sub-
clause (i), "commercial purpose" does not
include use by a consumer of goods bought
and used by him exclusively for the purpose
of earning his livelihood, by means of self-
employment;]".

23. Plain reading of the same makes it abundantly

clear that appellant herein would fall in the

category of a 'consumer' as he had bought the

truck for a consideration which was paid by him.

It was bought to be used exclusively for the

purpose of earning his livelihood by means of self-

employment. The said pleading by way of amendment

was incorporated by the appellant in his

application filed under Section 12 of the Act,

before the District Consumer Forum but proper

cognizance thereof has not been taken.

24. A further reading of the aforesaid definition

of 'consumer' makes it clear that Parliament wanted

to exclude from the scope of the definition the

persons, who obtain goods for resale and also those

who purchase goods with a view to use such goods
for carrying on any activity for earning. The

immediate purpose as distinct from the ultimate

purpose of purchase, sale in the same form or

after conversion and a direct nexus with profit or

loss would be the determinants of the character of

a transaction-whether it is for a "commercial

purpose" or not. Thus, buyers of goods or

commodities for "self consumption" in economic

activities in which they are engaged would be

consumers as defined in the Act.

25. Apart from the above, it may also be seen that

the purchase of the truck by the appellant would

also be covered under explanation to

Section 2(1)(d) of the Act. The appellant had

mentioned categorically that he had bought the said

truck to be used exclusively by him for the purpose

of earning his livelihood, by means of self-

employment. Even if he was to employ a driver for

running the truck aforesaid, it would not have

changed the matter in any case, as even then

appellant would have continued to earn his

livelihood from it and of course, by means of self-

employment. Furthermore, there is nothing on

record to show that he wanted to use the truck for

any commercial purpose.
26. Thus, the question No.1 is answered in favour

of the appellant that he would be deemed to be a

consumer within the definition as contained in

Section 2(1)(d) of the Act.

27. Coming to question No.2 whether there has been

a deficiency in the services committed by

respondents as contained in Section 2(1)(g) and (o)

of the Act or not, "deficiency" and "services" have

been defined as under:

"2(1)(g) "deficiency" means any
fault, imperfection, shortcoming or
inadequacy in the quality, nature and
manner of performance which is required
to be maintained by or under any law for
the time being in force or has been
undertaken to be performed by a person in
pursuance of a contract or otherwise in
relation to any service.

2(1)(o) "service" means service of any
description which is made available to
potential users and includes provision of
facilities in connection with banking,
financing, insurance, transport, processing,
supply of electrical or other energy, board
or lodging or both, [housing construction],
entertainment, amusement or the purveying of
news or other information, but does not
include the rendering of any service free of
charge or under a contract of personal
service."

28. The facts mentioned hereinabove would go to

show that appellant having been declared as highest

bidder had deposited the initial money and next day

deposited the balance of the consideration. The
truck in question was actually handed over to him

almost after six months from the date of auction in

his favour. Even after getting delivery of the

truck he could not have started plying the same

unless he was delivered the relevant papers

thereof. There is no dispute, which even otherwise

stands proved from the voluminous material

available on record that despite best efforts made

by the appellant, the relevant papers of the truck

were handed over to him only after six years from

the date of the auction. No plausible or

convincing reasons have been assigned by the

respondents for not doing so.

29. From the narration of the aforesaid facts, it

is clearly made out that respondents were at fault

in performance of the services which was otherwise

required to be performed by them. What more could

be the deficiency in service cannot be described.

According to us, respondents were certainly

imperfect and the same would amount to shortcoming

in quality in providing the service to the

appellant.

30. Thus, in our considered opinion, all the

ingredients, to enable the appellant to claim

damages under the Act were made out. This has in
fact been found by the National Commission also,

that is why it proceeded to award compensation of

Rs. 25,000/- to the appellant.

31. Now, the question that arises for

consideration before us is whether the amount of

compensation awarded to the appellant is just and

proper or deserves to be enhanced.

32. Even though the appellant claimed damages @

Rs.500/- per day and interest at 5% on the amount

of Rs.70,000/- deposited by him for the price of

the truck in addition, he further claimed damages

for mental and social injuries to the tune of

Rs.50,000/- + litigation expenses but in absence of

any cogent and valid evidence available on record,

it is not proper to consider the reliefs as claimed

by the appellant. However, there is no doubt that

the appellant suffered loss of earning firstly due

to non-delivery of vehicle and then due to highly

belated supply of requisite documents. Moreover,

the value of the truck also depreciated resulting

in further loss to him. Thus, in our opinion, the

amount awarded by National Commission is too meagre

and deserves to be enhanced.

33. During the course of arguments, Sh. R.K.

Gupta, learned counsel for the respondents also
made submissions that since the documents

pertaining to the truck were received late from the

bank, therefore, the same could not be delivered to

the appellant herein. However, this plea had not

been taken by the respondents nor it is reflected

from any of the documents filed by respondents in

their own appeal. It is, therefore, clearly an

afterthought and has been taken so as to shield the

unwarranted action of the respondents.

34. The conduct, behaviour and attitude of the

respondents, throughout, has been highly

reprehensible. When the bank had issued a Fard

Nilami and respondents were entrusted with the job

of auction then the said auction should have been

implemented fully in letter and spirit. Once the

highest bid of the appellant was knocked down in

his favour, pursuant thereto, he had deposited the

requisite amounts, then as a necessary consequence

thereof he should have been delivered the truck

immediately along with the necessary documents.

For the reasons best known to the respondents they

had not only delayed delivery of the truck but had

also, despite the efforts made by the appellant,

not handed over the papers of the truck to him for

long number of years. Any explanation offered
during the course of the arguments is not

acceptable to us, which certainly shows their

malafide intentions.

35. Even assuming for a moment that bank had not

delivered the papers of the truck to the

respondents then it was the duty of the respondents

to have insisted the bank for delivery of the

papers which they had failed to do. Thus, in any

case, there cannot be any escape of the respondents

from shaking off the liability fastened on them by

the National Commission.

36. Taking the totality of the situation as it

exists, we are of the opinion that a total amount

of Rs. 1,00,000/- payable by respondents jointly or

severally to the appellant would subserve the

justice.

37. Even though the Act specifically does not

authorise to grant interest but in appropriate

cases, grant of interest on the facts and

circumstances of the case is permissible. The same

has been done by this Court in long catena of

cases.

38. In this case also, keeping the circumstances

under which appellant was made to run from pillar

to post, to get the documents of the truck from the
respondents, we are of the opinion that ends of

justice would be met if interest at the rate of 6%

p.a. from the date of the original application till

actual payment of the aforesaid enhanced awarded

amount is made by the respondents. We accordingly

do so. The appeal arising out of SLP(C) No.20515

of 2005 is allowed with costs and Appeal arising

out of SLP (C) No.11210 of 2006 is dismissed with

costs. Counsel fee assessed at Rs.10,000/- each.

.....................
...J.
[S.B. SINHA]

.......................J.
[DEEPAK VERMA]
New Delhi.
August 07, 2009.

Contract: Auction sale - Forfeiture of earnest money - Highest bidder depositing earnest money for auctioned industrial plot of defaulting unit - Later it transpired that the premises did not have an independent passage - Issue of independent passage having not been resolved bidder did not pay the further amount - Earnest money forfeited by State Financial Corporation - HELD: The bidder has not failed to comply with conditions of sale - It is the Corporation which, though being the instrumentality of State, acted unfairly - It was incumbent upon the Corporation to disclose to the buyer about non-existence of independent passage to the premises - Corporation acted in breach of ss.55(1)(a) and (b) of the Transfer of Property Act - Buyer being an auction purchaser, s.29 of State Financial Corporation Act has no application to the case - High Court rightly concluded that action of Corporation in forfeiting the earnest money of the buyer was wholly arbitrary and unfair - Forfeited amount would be refunded to buyer with 12% interest - Transfer of Property Act, 1882 - ss. 55(1)(a) and (b) - State Financial Corporation Act, 1951 - s.29 - Constitution of India, 1950 - Article 12. The respondent, pursuant to an advertisement issued by the appellant- Haryana Financial Corporation, for sale of land of a defaulting company, made an offer and he being the highest bidder deposited Rs. 2.5 lakhs by way of earnest money. After a visit having been made by the respondent to the factory premises, he wrote to the appellant-Corporation that the land in question did not have an independent passage and requested for supply of copy of the approved building plan of the premises, but his request remained unanswered. In spite of this, the Corporation issued a letter dated 18.5.1998 to the respondent asking him to deposit balance amount of 25 per cent of the bid amount within fifteen days, failing which the earnest money deposited by him would be forfeited. Since the issue of independent passage was not resolved, the respondent did not pay the balance amount and the Corporation by its order dated 30.9.1998 forfeited the earnest money deposited by him. The respondent approached the High Court, which quashed the order dated 30.9.1998 and directed the Corporation to refund the amount along with 12 % interest. Aggrieved, the Corporation filed the appeal. Dismissing the appeal, the Court HELD: 1. Factually the appellants have accepted that on 28.1.1998 the respondent had in no uncertain terms informed the appellants/Corporation about the non-existence of the independent passage. There is a categorical assertion that premises do not have an independent appropriate passage from the road. The appellants were merely relying on the documents submitted by the defaulting unit. No independent inquiries were made by the appellants to verify the authenticity of the statements made by the management of the defaulting unit which had availed of the loan, by mortgaging the assets of the unit. The entire issue seems to be concluded against the appellants/Corproation by letter dated 30.4.1998 whereby its Branch Manager has informed the head office in unequivocal language that the independent passage shown in the sale deed is not connected directly with the defaulting unit. [Para 14 and 16] 1.2. Taking into consideration the facts, the Division Bench of the High Court rightly concluded that the action of the Corporation in forfeiting the amount deposited by the respondent was wholly arbitrary and unfair. The High Court was justified in further concluding that in law the Corporation undoubtedly has the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of State, which would act fairly. He deposited the sum of Rs.2.5 lakhs on the clear understanding that there would be an independent approach road to the Unit. Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a manufacturing unit. [Para 16 and 17] 1.3. Clause 5 of the advertisement, undoubtedly, permits the forfeiture of the earnest money deposited. But this can only be, if the auction purchaser fails to comply with the conditions of sale. The respondent has not failed to comply with the conditions of sale. Rather, it is the Corporation which has acted unfairly. The appellants, cannot be given the benefit of Clause 5 of the advertisement, and cannot be permitted to take advantage of their own wrong. [Para 18] 1.4. In terms of ss.55(1)(a) and (b) of the Transfer of Property Act, 1882 it was incumbent upon the appellants/Corporation to disclose to the respondent about the non-existence of the independent passage to the Unit, and that the passage mentioned in the revenue record was not fit for movement of vehicles. The appellants failed to disclose to the respondent the material defect about the non-existence of the independent 3 `Karam' passage to the property. The appellant also failed to produce to the buyer the entire documentation as required by s.55(1)(b) of the Transfer of Property Act. Therefore, the appellants clearly acted in breach of ss.55(1) (a) and (b) of the Transfer of Property Act. In any event, the facts of the instant case clearly indicate that the respondent had made all necessary inquiries. It was the Corporation that failed to perform its obligations in giving a fair description of the property offered for sale. [Para 19-20 and 23] U.T. Chandigarh Administration and Anr. Vs. Amarjeet Singh and Ors. 2009 (4) SCR541=(2009) 4 SCC 660, held inapplicable. 1.5. Section 29 of the State Financial Corporations Act, 1951 is not applicable in the instant case, as the said section pertains to action which the Corporation can take against the defaulting Unit. The respondent is an auction purchaser and therefore cannot be confused with the defaulting unit. [para 21] United Bank of India vs. Official Liquidator and Ors. 1993 (3) Suppl. SCR 1= (1994) 1 SCC 575, held inapplicable. 1.6. The forfeited amount be refunded to the respondent with 12 per cent interest w.e.f. 1.2.1998 till payment. In the event the amount is not paid within the stipulated period, the respondent shall be entitled to interest at the rate of 18 per cent per annum till payment. [Para 24] Case Law Reference 1993 (3) Suppl. SCR 1 held inapplicable para 21 2009 (4) SCR541 held inapplicable para 23 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 829 of 2003. From the Judgment & Order dated 26.11.2001 of the High Court of Punjab & Haryana in Civil Writ Petition No. 5752 of 2001. Amit Dayal for the Appellant. Vimal Chandra S. Dave for the Respondent.

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 829 OF 2003

HARYANA FINANCIAL CORPORATION
& ANR. ....APPELLANT(S)

VERSUS

RAJESH GUPTA ...RESPONDENT(S)

JUDGMENT

SURINDER SINGH NIJJAR, J.

1. This appeal is directed against the Judgment and Order

dated 26.11.2001 in C.W.P.5725/2001 of the High Court of

Punjab and Haryana at Chandigarh.

2. The respondent had approached the High Court with a

prayer that the order dated September 30, 1998 by which the

Haryana Financial Corporation (hereinafter referred to as the

appellants/Corporation), had forfeited, amount of Rs.2.5

lakhs, deposited by the respondent by way of earnest money,

be quashed. The respondent had also prayed that the
2

appellants /Corporation be directed to refund the amount

illegally forfeited along with interest.

3. Shorn of unnecessary details, we may notice here only

the relevant facts.

4. On 8.1.1998, the appellants/Corporation issued an

advertisement for sale of various units, including the

land of M/s. Unique Oxygen Private Limited(hereinafter

referred to as the defaulting unit), Old Hansi Road, Jind.

On 28.1.1998 respondent initially made an offer of

Rs.25,00,000/-, which was subsequently during

negotiations enhanced to Rs.50,00,000/-. On that very

day the respondent deposited an amount of Rs.2.5 lakhs

by way of earnest money. On 29.1.1998 the respondent

wrote a letter to the Managing Director of the

appellants/Corporation as follows:

"RAJESH GUPTA 578, AUTO MOBILE
MARKET HISAR
Phone: 28221 - 3 Lines
Fax No.01662 - 31084

January 29, 1998

The Managing Director
Haryana Financial Corporation
17, 18, 19 Sector 17-A
Chandigarh 160017
3

Kind Attention: Sh.Raj Kumar Ji, M.D.

Sub: Offer to purchase assets of Unique Oxygen Private
Limited Jind.

Dear Sir,

With reference to your advertisement in
`ECONOMIC TIMES' dated 08.01.98, we are
inclined to submit our bid for purchase of assets
of the above mentioned company. With this
purpose we visited the factory premises on
21.01.1998. On our visit, it was noticed that the
premises do not have an independent appropriate
passage from the road. On further inquiry from
the concerned Branch office, the copy of site
plan/ building plans were not available and we
were told that the same are available at Head
office only. Therefore you are requested to kindly
apprise us in this matter so that we do not face
any problems, if we acquire the unit as per your
offer.

We hope to hear soon in this regard.

Thanking you,

Yours faithfully
Sd/-
Rajesh Gupta"

No response was given by the appellants/Corporation to the

respondent. However by letter dated 19.2.1998 the

appellants/Corporation called the respondent for negotiations.

These negotiations resulted in enhancement of the bid from

Rs.25 lakhs to Rs.50 lakhs. Again in the letter dated

7.3.1998, the respondent stated as follows:
4

"FAX NO.1072-70266 578, AUTO MOBILE
MARKET HISAR
Phone: 28221 (3 Lines)

Fax No.01662 - 31084

07-03-1998

The Managing Director
Haryana Financial Corporation
Chandigarh.

Sub: Offer to purchase unit of Unique Oxygen Private
Limited Jind

Dear Sir,

With reference to the negotiation held on 6.3.98
at your Head Office for the sale of assets of said
concern. We are the highest bidder and understand
that our bid will be accepted. However, the matter
regarding approved/authorised passage for smooth
functioning of the factory was discussed in the
meeting and the unit holder, who was also present in
the meeting confirmed that such passage exist, at the
factory.

In this regard, it is submitted that we have come
to know that there is no approved/authorised passage
to factory sufficient to pass a truck through it. The
gate/passage presently being used is unauthorized.

In the light of above you are requested to kindly
apprise us in this matter and supply us the copy of
approved building plan, site plan for the building
mortgaged by H.F.C. so that we may not face any
problem in future in running the unit.

Kindly treat it as most urgent.

Thanking you,

Yours faithfully
Sd/- Rajesh Gupta"
5

5. It would appear that by letter dated 3.4.1998, the Branch

manager brought the objection of the respondent to the notice

of the head office of the appellants/Corporation. In response

to this communication the Branch Manager was informed by

the head office of the appellants/Corporation, by letter dated

7.4.1998 that clear cut passage/rasta has been provided to

the unit as per documents submitted by the defaulting unit at

the time of availing loan. Reference in this letter was also

made to the Sale Deed, dated 8.9.1994, Mutation No.5172,

Mutation No.9896, Search Report and sale deed, Rasta,

wherein it is mentioned that there is an approach road to the

factory site. The Branch Manager was directed to satisfy the

respondent with the aforesaid documents. On 13.4.1998, the

Branch Manager addressed a letter to the head office of the

appellants/Corporation clearly informing as follows:

"However, the actual Rasta which is
of 3 Karams and appeared in the papers
particularly shown in the sale deed is not
connected directly with the unit and to
connect the Rasta with the Rasta of the
revenue record party purchased some
land where the movement of the vehicles
is not possible at all."
6

6. In fact the letter further pointed out as follows:

"It is further stated that the area
mentioned in the map approved by the
M.C. is 1130 sq. yd. whereas the total
area in the sale deed and is mortgaged to
the Corporation is 1210 sq. yd. It is also
not out of place to mention that the land
on which the office building is
constructed is also not mortgaged to the
Corporation and if that area is excluded
the main gate of the factory will go behind
from the existing place and then the unit
will be stripped of independent Rasta."

7. In spite of the aforesaid factual position, the appellants/

Corporation issued the letter dated 18.5.1998 to the

respondent advising him to deposit balance amount of 25 per

cent of the bid amount within 15 days from the date of issue of

the letter failing which the amount of the earnest money

deposited would be forfeited without further notice. The

respondent, however, again raised the issue regarding the

passage at the open house held by the appellants/Corporation

at Hissar on 12.6.1998. According to the appellants/

Corporation, as per the revenue record and the demarcation

report of the revenue officials dated 27.6.1998, therein 16.5 ft.

rasta is provided in the west of the Unit. However, not
7

satisfied, the respondent did not pay the balance amount.

Therefore the appellants/Corporation invited fresh tenders for

sale of land. On 30.9.1998 the appellants/Corporation

forfeited the sum of Rs.2.5 lakhs which had been deposited by

the respondent as earnest money.

8. It was this action of the appellants/Corporation that was

challenged by the respondent by way of a Writ Petition in the

Punjab and Haryana High Court.

9. The aforesaid writ petition has been allowed by the

Division Bench. The order dated 30.9.1998 by which the

earnest money had been forfeited has been quashed and set

aside. A further direction has been issued to the

appellants/Corporation to refund the amount along with

interest at the rate of 12 per cent per annum w.e.f. 1.2.1998 to

the date of payment. The High Court also imposed costs on

the appellants/Corporation assessed as Rs.5,000/-. Further

directions were issued to release the amount to the respondent

within two months from the receipt of a copy of the order of

the High Court. It is this order which is challenged in the

present appeal.
8

10. We have heard the learned counsel for the parties at

length.

11. Mr. Amit Dayal, learned counsel for the appellants

/Corporation submits that the respondent accepted the plots

on "as is where is basis". Therefore, the appellants/

Corporation cannot now permit the respondent to wriggle out

of a confirmed bid, on the ground that there is no independent

approach road to the Unit. Learned Counsel further

submitted that it was for the respondent to make necessary

enquiry with regard to the existence of the 3 Karams rasta,

with the Revenue and other authorities. According to the

learned counsel the entire documentation which had been

provided at the time when the loan was sanctioned clearly

indicated that there is a 3 Karams rasta leading from the road

to the Unit. Learned counsel further pointed out that the

respondent had visited the site on 21.1.1998. Therefore he

would have known the exact situation of the "rasta". The

respondent was aware of the exact nature of the land being

purchased by him. In support of his submission learned

counsel relies on Section 55 of The Transfer of Property Act,
9

1882. Learned counsel further submitted that the appellants

/Corporation are entitled to forfeit the security amount in view

of Clause 5 of the terms and conditions for the sale of property

as contained in the advertisement dated 8.1.1998. Learned

counsel also sought to justify the action of the

appellants/Corporation by placing reliance on Section 29 of

The State Financial Corporation Act, 1951.

12. On the other hand, Mr. Vimal Chandra S. Dave, learned

counsel for the respondent, submits that the judgment of the

High Court is self-speaking and is not open to challenge on

any of the grounds pleaded by the appellants. He submitted

that the appellants cannot be permitted to take advantage of

their own wrong. They have misled the respondent into

making a huge deposit for a plot of land which was not

suitable. Without an independent passage the land could not

have been used as a manufacturing unit. The appellants

/Corporation ignored all the objections raised by the

respondent with regard to the non-existence of the

independent approach road.
10

13. We have considered the submissions made by the

learned counsel. We have also perused the judgment of the

Division Bench of the High Court.

14. Factually the appellants have accepted that on 28.1.1998

the respondent had in no uncertain terms informed the

appellants/Corporation about the non-existence of the

independent passage. No denial could possibly be made in the

face of the letter dated 29.1.1998 which makes a reference to

the visit of the respondent to the factory premises on

21.1.1998. There is a categorical assertion that premises do

not have an independent appropriate passage from the road.

When enquiries were made from the branch office, the

respondent, was simply informed that copy of the site plan

and building plan were not available, and would be available

at the Head Office only. Thereafter, there is a studious silence

from the appellants/Corporation with regard to the aforesaid

grievance made by the respondent. Again, on 7.3.1998 the

respondent informed the appellants/Corporation as follows:

"In this regard, it is submitted that
we have come to know that there is no
approved/authorised passage to factory
sufficient to pass a truck through it. The
11

gate/passage presently being used is
unauthorized.

In the light of above you are
requested to kindly apprise us in this
matter and supply us the copy of
approved building plan, site plan for the
building mortgaged by H.F.C. so that we
may not face any problem in future in
running the unit."

15. It appears that the aforesaid request of the respondent

was also never specifically answered by the appellants/

Corporation. In view of the protests of the respondent, the

issue was raised by the Branch Manager of the appellants

/Corporation through letter dated 3.4.1998 addressed to the

Head Office. The Branch Manager was informed by the Head

Office, through letter dated 7.4.1998 that as per the

documents submitted by the defaulting unit at the time of

availing loan, clear cut passage/rasta has been provided to the

concerned Unit. The letter dated 7.4.1998 reads as follows:

"Please refer to your letter No.
HFC\BO\JD\98\7 dated 3.4.98 on the
subject cited above.

In this connection, you are advised
that clear cut Passage / Rasta has been
provided to the concern as per
documents submitted by the concern at
the time of availing loan.
12

Enclosed herewith please find
photocopy of the Sale Deed No.1494
dated 8.9.94 and photocopy of the
Mutation No.5172, another Mutation
No.9896 and Search Report and Sale
Deed, Rasta, wherein it is clear cut
mentioned that there is an approach road
the factory site. So, you may please
satisfy the Auction Purchaser with these
documents and inform us the latest
position of the case. It is also added here
that you may make clear to the auction
purchaser that the unit has been sold by
the Corporation as and where basis."

16. A perusal of the aforesaid letter makes it apparent that

the appellants/Corporation were merely relying on the

documents submitted by M/s. Unique Oxygen Private Limited,

Old Hansi Road, Jind i.e., the defaulting unit. The

appellants/Corporation had been informed by the

management of the defaulting unit at the time of availing of

the loan facility that the Unit had the necessary independent

approach road. The letter however does not indicate, that any

independent inquiries were made by the appellants/

Corporation to verify the authenticity of the statements made

by the management of the defaulting unit which had availed of

the loan, by mortgaging the assets of the unit. The entire
13

issue seems to be concluded against the appellants/

Corporation by letter dated 30.4.1998, the relevant parts of

which have already been reproduced in the earlier part of this

judgment. A perusal of the extracts, reproduced earlier, would

clearly show that the Branch Manager has informed the head

office in unequivocal language that the independent passage

shown in the sale deed is not connected directly with the

defaulting unit. It also indicates that the defaulting unit had

merely purchased some land to connect the rasta with the

revenue record on which movement of the vehicle is not

possible at all. This land was not even mortgaged with the

appellants/Corporation. The letter also clearly states that by

exclusion of the aforesaid land the size of the plot would be

reduced from 1210 sq. yards to 1130 sq. yards. That would

mean that the main gate of the factory would be out side the

land offered for sale. Taking into consideration the aforesaid

facts the Division Bench concluded as follows:

"Taking the totality of circumstances
into consideration, we are satisfied that
the petitioner was not at fault. He was
entitled to withhold the money as the
respondents had failed to provide a
proper passage. Still further, the factual
14

position having been admitted in the
letter dated April 30, 1998, a copy of
which is at Annexure P6, and nothing to
the contrary having been produced on the
file, we find that the action of the
respondent/Corporation in forfeiting the
amount deposited by the petitioner was
wholly arbitrary and unfair."

17. We see no reason to take any different view. We are also

of the opinion that the Division Bench was justified in further

concluding that in law the appellants/Corporation

undoubtedly has the power to forfeit the earnest money

provided there was a failure on the part of the respondent to

make the deposit. The Division Bench, however, observed that

the respondent was dealing with an instrumentality of state.

He was entitled to legitimately proceed on the assumption that

the appellants, a Statutory Corporation, an instrumentality of

the State, shall act fairly. The respondent could not have

suspected that he would be called upon to pay the amount of

Rs.50 lakhs without being given even a proper passage to the

Unit that he was buying. We are of considered opinion that

the respondent had deposited the sum of Rs.2.5 lakhs on the

clear understanding that there would be an independent
15

approach road to the Unit. This is understandable. Without

any independent passage the plot of land would be not more

than an agricultural plot, not suitable for development as a

manufacturing unit. We therefore don't find any substance in

the submission made by the learned counsel for the

appellants/Corporation.

18. In our opinion, the appellants cannot be given the

benefit of Clause 5 of the advertisement. The appellants

/Corporation cannot be permitted to take advantage of their

own wrong. Clause 5 undoubtedly permits the forfeiture of the

earnest money deposited. But this can only be, if the auction

purchaser fails to comply with the conditions of sale. In our

opinion the respondent has not failed to comply with the

conditions of sale. Rather, it is the appellants/Corporation

which has acted unfairly, and is trying to take advantage of its

own wrong.

19. In view of the aforesaid, we are of the considered opinion

that the appellants/Corporation cannot be permitted to rely

upon Section 55 of The Transfer of Property Act, 1882. The

appellants/Corporation failed to disclose to the respondent the
16

material defect about the non-existence of the independent

3 `Karam' passage to the property. Therefore, the appellants/

Corporation clearly acted in breach of Section 55 (1) (a) and (b)

of The Transfer of Property Act, 1882. The aforesaid Section

provides as under:

(1) The seller is bound-
(a) to disclose to the buyer any material
defect in the property [or in the
seller's title thereto] of which the
seller is, and the buyer is not, aware,
and which the buyer could not with
ordinary care discover;

(b) to produce to the buyer on his request
for examination all documents of title
relating to the property which are in
the seller's possession or power;

20. A mere perusal of the aforesaid provision will show that it

was incumbent upon the appellants/Corporation to disclose to

the respondent about the non-existence of the independent

passage to the Unit. It was also the duty of the

appellants/Corporation to inform the respondent that the

passage mentioned in the revenue record was not fit for

movement of vehicles. The appellant also failed to produce to

the buyer the entire documentation as required by Section 51
17

(1) (b) of the aforesaid Section. We are therefore satisfied that

the appellants/Corporation cannot seek to rely on the

aforesaid provision of The Transfer of Property Act, 1882.

21. In our opinion, the reliance on Section 29 of the State

Financial Corporations Act, 1951 is wholly misplaced. The

aforesaid Section pertains to action which the Corporation can

take against the Unit which had defaulted in payment of loan.

In such circumstances the Corporation has the power to sell

the property that has been hypothecated or mortgaged with

the Corporation. Respondent herein is an auction purchaser

and therefore cannot be confused with the defaulting unit. We

are also of the considered opinion that the reliance placed on

the judgment of this Court by the counsel for the appellants in

the case of Union Bank of India vs. Official Liquidator and

Ors. (1994) 1 SCC 575 is wholly misconceived. The aforesaid

judgment relates to sale of the property and assets of a

company in liquidation by the official liquidator under the

orders of the Court. Therefore it is observed that the official

liquidator cannot and does not hold any guarantee or

warranty in respect of the property sold. That is because the
18

official liquidator proceeds on the basis of what the records of

the company in liquidation show. Therefore it is for the

intending purchaser to satisfy himself in all respects as to the

title and encumbrances and so forth of the immovable

property that he proposes to purchase. In those

circumstances it is held that the purchaser cannot after

having purchased the property on such terms then claim

diminution in the price on the ground of defect in the title or

description of the property. The judgment clearly goes on to

further hold as follows:

"The case of the Official Liquidator
selling the property of a company in
liquidation under the orders of the Court
is altogether different from the case of an
individual selling immovable property
belonging to himself."

22. The aforesaid observation would be clearly applicable to

the Corporation as it is exercising the rights of an owner in

selling the property. The appellants/Corporation is not selling

the property as an official liquidator.

23. In any event, the facts of this case as narrated above

would clearly indicate that the respondent had made all
19

necessary inquiries. It was the appellants/Corporation that

failed to perform its obligations in giving a fair description of

the property offered for sale. Learned counsel had also relied

on another judgment in the case of U.T. Chandigarh

Administration and Anr. vs. Amarjeet Singh and Ors.

(2009) 4 SCC 660. In our opinion, the aforesaid judgment is

wholly inapplicable to the facts and circumstances of this case

as it relates to the duties of a developer who carries on

activities of development of land and invites application for

allotment of sites in a developed layout. In our opinion the

aforesaid judgment is not applicable to the facts of this case.

We see no merit in any of the submissions, or the grounds of

appeal. The appeal is accordingly dismissed.

24. It appears that the judgment of the High Court had been

stayed by this Court on 2.9.2002. In view of the dismissal of

the appeal, we direct that the forfeited amount be refunded to

the respondent with 12 per cent interest w.e.f. 1.2.1998 till

payment. The amount be paid to the respondent within a

period of two months of producing the certificate copy of this

order. We also direct that in the event the aforesaid amount is
20

not paid within the stipulated period the respondent shall be

entitled to interest at the rate of 18 per cent per annum till

payment. We also direct the respondent shall be entitled to

costs which are assessed as Rs.50,000/-.

........................................J
(J.M. PANCHAL)

......................................
...J
(SURINDER SINGH NIJJAR)

NEW DELHI
DECEMBER 15, 2009

Electricity: Non-payment of electricity bill by previous owner/occupier of the premises in regard to the supply of electricity to the premises - Liability of subsequent purchaser of the premises to pay such arrears - Held: Electricity arrears do not constitute a charge over the property - Therefore, a transferee of a premises cannot be made liable for the dues of the previous owner/occupier - However, the electricity supplier can demand arrears from subsequent purchaser if the statutory rules or the terms and conditions of supply which are statutory in character, authorize it to make such demand. Res judicata: First suit filed for permanent injunction for restraining the electricity Board from enforcing the demand notice, dismissed - Second suit filed for declaration that the demand and the disconnection were invalid - Held: The second suit was not barred by the principle of res judicata since the matter that was directly and substantially in issue in the second suit was completely different from the matter that was directly and substantially in issue in the first suit and the reliefs claimed were also different - Doctrine/Principle. The first respondent purchased a rice mill in an auction. When the mill was purchased, the electricity supplied to it was already disconnected due to non-payment of electricity bill. After taking the possession of the mill, the first respondent applied for and obtained the electricity connection in its own name in the year 1991. Four years later, the appellant-Electricity Board served upon the first respondent a demand notice dated 16.1.1995 towards electricity arrears due from the previous owner. The first respondent filed a suit for permanent injunction for restraining the appellant-Board from enforcing the demand notice. The suit was dismissed. The appellate court upheld the order of dismissal. Thereafter, the appellant served a notice dated 2.3.1998 informing the first respondent that the electricity supply would be disconnected if the arrears due from the previous owner were not paid. Thereafter the electricity supplied was disconnected on 9.3.1998. The first respondent filed a suit challenging the demand and disconnection of electricity supplied. The said suit was dismissed by the trial court holding that the claim of the appellant was barred by limitation. Both the first respondent and the appellant filed appeals. The first appellate court while dismissing the appeal filed by the appellant and allowing the appeal filed by the first respondent held that the first respondent could not be made liable for the dues of the previous owner, as there was no provision in the terms and conditions of sale that the electricity dues of the previous owner should be paid by the first respondent as auction purchaser. The appellant filed an appeal before the High Court. The High Court dismissed the appeal holding that in view of the decision in Isha Marbles case, the liability of a consumer to pay charges for consumption of electricity cannot be fastened on a subsequent auction purchaser of the property. In appeal to this Court, appellant contended that the dismissal of the first suit filed by the first respondent for permanent injunction having attained finality, the second suit filed by the first respondent for a declaration that demand and disconnection were invalid, was barred by the principles of res judicata, and that the decision in *Isha Marbles relied on by the High Court was inapplicable to the facts of the case. Dismissing the appeal, the Court HELD: 1. The first suit by the first respondent was for a permanent injunction to restrain the appellant Board from enforcing the demand notice dated 16.1.1995 in respect of the electricity consumption charges incurred by the previous owner. By the second suit, the first respondent sought a declaration that the notice dated 9.3.1998 threatening disconnection of electricity supply for non-payment of the arrears of the previous owner and the consequential disconnection dated 2.3.1998, were invalid and for consequential relief. The matter that was directly and substantially in issue in the second suit was completely different from the matter that was directly and substantially in issue in the first suit. The reliefs claimed were also different, as the first suit was for a permanent injunction and the second suit was for a declaration and consequential relief. Therefore the second suit was not barred by res judicata. [Para 5] [223-A-D] 2. Electricity arrears do not constitute a charge over the property. Therefore, in general law, a transferee of a premises cannot be made liable for the dues of the previous owner/occupier. Where the statutory rules or the terms and conditions of supply which are statutory in character, authorize the supplier of electricity, to demand from the purchaser of a property claiming re-connection or fresh connection of electricity, the arrears due by the previous owner/occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser. The appellant did not plead in its defence that any statutory rule or terms and conditions of supply, authorized it to demand the dues of previous owner, from the first respondent. The decision in **Paramount Polymers shows that such an enabling term was introduced in the terms and conditions of electricity supply in Haryana, only in the year 2001. The appellant did not demand the alleged arrears, when the first respondent approached the appellant for electricity connection in its own name for the same premises and obtained it in the year 1991. More than three years thereafter, a demand was made by the appellant for the first time on 16.1.1995 alleging that there were electricity dues by the previous owner. In these circumstances, the claim relating to the previous owner could not be enforced against the first respondent. On facts, the decision of the High Court does not call for interference. [Paras 9 10, 11] [227-F-H; 228- A-E] Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS Steels & Alloys Pvt.Ltd. 2009 (1) SCC 210 - relied on. *Isha Marbles v. Bihar State Electricity Board (1995) 2 SCC 648; **Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd. (2006) 13 SCC 101; Dakshin Haryana Bijli Vitran Nigam Ltd. v. Excel Buildcon Pvt.Ltd. 2008 (10) SCC 720 - referred to. Case Law Reference: (1995) 2 SCC 648 referred to Para 3 (2006) 13 SCC 101 referred to Para 4 2008 (10) SCC 720 referred to Para 7 2009 (1) SCC 210 relied on Para 8 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6817 of 2010. From the Judgment & Order dated 08.08.2005 of the High Court of Punjab & Haryana at Chandigarh in R.S.A. No. 412 of 2004. Pardeep Dahiya, T.V. George for the Appellant. Amarjit Singh Bedi, Gurbir Singh R. for the Respondents.

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6817 OF 2010
[Arising out of SLP (C) No.16396/2006]

Haryana State Electricity Board ... Appellant

Vs.

M/s Hanuman Rice Mills & Ors. ... Respondents

JUDGMENT

R. V. RAVEENDRAN, J.

Leave granted. Heard.

2. The second respondent - Haryana Financial Corporation auctioned the

rice mill premises of one of its borrowers - Durga Rice Mills, to recover its

dues. The first respondent purchased the said premises at the auction on

14.12.1990 for a consideration of Rs. 15,25,000/- and paid the entire sale

consideration to the second respondent. When the first respondent purchased

the mill premises, electricity supply to the premises had been disconnected.

After taking possession of the premises, the first respondent applied for and

obtained electricity connection in its own name in the year 1991. Four years

later, the appellant served upon the first respondent, a notice dated 16.1.1995
2

demanding payment of Rs.2,39,251/- towards arrears of electricity charges

due by the previous owner Durga Rice Mills.

3. The first respondent filed a civil suit for permanent injunction and the

said suit ended in dismissal on 5.12.1996 which was affirmed by the appellate

court on 27.2.1998. Thereafter the appellant served a notice dated 2.3.1998

informing the first respondent that the electricity supply will be disconnected

if the said arrears due by Durga Rice Mills were not paid. This was followed

by disconnection of electricity supply on 9.3.1998. First respondent filed a suit

challenging the said demand and disconnection of electricity supply. The said

suit was dismissed by the trial court. While dismissing the suit, the trial court

held that the claim of the appellant was barred by limitation. Feeling

aggrieved by the dismissal, the first respondent filed an appeal; and feeling

aggrieved by the finding that appellant's claim was barred by limitation, the

appellant filed an appeal. The first appellate court decided the appeals by a

common judgment dated 30.10.2003. It dismissed the appeal filed by the

appellant and allowed the appeal filed by the first respondent. It held that first

respondent could not be made liable for the dues of the previous owner, as

there was no provision in the terms and conditions of sale that the electricity

dues of the previous owner should be paid by the first respondent as auction
3

purchaser. The judgment of the first appellate court was challenged by the

appellant by filing a second appeal. The Punjab & Haryana High Court by its

judgment dated 8.8.2005 dismissed the said appeal holding that the liability of

a consumer to pay charges for consumption of electricity, cannot be fastened

on a subsequent auction purchaser of the property, in view of the decision of

this court in Isha Marbles vs. Bihar State Electricity Board - (1995) 2

SCC 648.

4. Feeling aggrieved the appellant filed this appeal raising two

contentions:

(i) The dismissal of the first suit filed by the first respondent for permanent
injunction having attained finality, the second suit filed by the first respondent
for a declaration that demand and disconnection were invalid, was barred by
the principles of res judicata.

(ii) The decision in Isha Marbles relied on by the High Court was inapplicable
to the facts of the case. The decision of this court in Dakshin Haryana Bijli
Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd. - (2006) 13 SCC 101,
entitles the appellant to claim and receive the electricity dues of the previous
owner from the new owner/auction purchaser.
4

Re: Point No. (i)

5. The first suit by the first respondent was for a permanent injunction to

restrain the appellant Board from enforcing the demand notice dated

16.1.1995 in respect of the electricity consumption charges incurred by the

previous owner. By the second suit, the first respondent sought a declaration

that the notice dated 9.3.1998 threatening disconnection of electricity supply

for non-payment of the arrears of the previous owner and the consequential

disconnection dated 9.3.1998, were invalid and for consequential relief. The

matter that was directly and substantially in issue in the second suit was

completely different from the matter that was directly and substantially in

issue in the first suit. The reliefs claimed were also different, as the first suit

was for a permanent injunction and the second suit was for a declaration and

consequential relief. Therefore the second suit was not barred by res judicata.

Re : Point No. (ii)

6. The High Court held that the demand was untenable in view of the

decision in Isha Marbles. In Isha Marbles this court held that in the absence

of a charge over the property in respect of the previous electricity dues, and in

the absence of any statutory rules authorizing a demand for the dues of the

previous occupant, an auction purchaser seeking supply of electrical energy
5

by way of a fresh connection, cannot be called upon to clear the pre-sale

arrears, as a condition precedent for granting fresh connection. This court

further held that an Electricity Board could not seek the enforcement of the

contractual liability of the previous owner/occupier against a purchaser, who

was a third party in so far as the contract between the Electricity Board and

the previous occupant and that an auction purchaser who purchases the

property after disconnection of the electricity supply, could not be considered

as a `consumer' within the meaning of the Electricity Act, 1910 or Electricity

(Supply) Act, 1948, even though he seeks reconnection in respect of the same

premises. This court observed:

"Electricity is public property. Law, in its majesty, benignly protects
public property and behoves everyone to respect public property. Hence,
the courts must be zealous in this regard. But, the law, as it stands, is
inadequate to enforce the liability of the previous contracting party
against the auction purchaser who is a third party and is in no way
connected with the previous owner/occupier. It may not be correct to state,
if we hold as we have done above, it would permit dishonest consumers
transferring their units from one hand to another, from time to time,
infinitum without the payment of the dues to the extent of lakhs and lakhs
of rupees and each one of them can easily say that he is not liable for the
liability of the predecessor in interest. No doubt, dishonest consumers
cannot be allowed to play truant with the public property but inadequacy
of the law can hardly be a substitute for overzealousness."

(emphasis supplied)

7. The appellant relies on the subsequent decision of this court in

Paramount Polymers (supra) to distinguish the decision in Isha Marbles. In

Paramount Polymers (supra), the terms and conditions of supply contained a
6

provision (clause 21A) providing that reconnection or new connection shall

not be given to any premises where there are arrears on any account, unless

the arrears are cleared. In view of the said express provision, this Court

distinguished Isha Marbles on the following reasoning:

"This Court in Hyderabad Vanaspati Ltd. v. A.P. SEB [1998] 2 SCR 620
has held that the Terms and Conditions for Supply of Electricity notified
by the Electricity Board under Section 49 of the Electricity (Supply) Act
are statutory and the fact that an individual agreement is entered into by
the Board with each consumer does not make the terms and conditions for
supply contractual. This Court has also held that though the Electricity
Board is not a commercial entity, it is entitled to regulate its tariff in such
a way that a reasonable profit is left with it so as to enable it to undertake
the activities necessary. If in that process in respect of recovery of dues in
respect of a premises to which supply had been made, a condition is
inserted for its recovery from a transferee of the undertaking, it cannot ex
facie be said to be unauthorized or unreasonable. Of course, still a court
may be able to strike it down as being violative of the fundamental rights
enshrined in the Constitution of India. But that is a different matter. In this
case, the High Court has not undertaken that exercise.

The position obtaining in Isha Marbles (supra) was akin to the position
that was available in the case on hand in view of the Haryana Government
Electrical Undertakings (Dues Recovery) Act, 1970. There was no
insertion of a clause like Clause 21A as in the present case, in the Terms
and Conditions of Supply involved in that case. The decision proceeded on
the basis that the contract for supply was only with the previous consumer
and the obligation or liability was enforceable only against that consumer
and since there was no contractual relationship with the subsequent
purchaser and he was not a consumer within the meaning of the Electricity
Act, the dues of the previous consumer could not be recovered from the
purchaser. This Court had no occasion to consider the effect of clause like
Clause 21A in the Terms and Conditions of Supply. We are therefore of
the view that the decision in Isha Marbles (supra) cannot be applied to
strike down the condition imposed and the first respondent has to make
out a case independent on the ratio of Isha Marbles (supra), though it can
rely on its ratio if it is helpful, for attacking the insertion of such a
condition for supply of electrical energy. This Court was essentially
dealing with the construction of Section 24 of the Electricity Act in
arriving at its conclusion. The question of correctness or otherwise of the
decision in Isha Marbles (supra) therefore does not arise in this case
especially in view of the fact that the High Court has not considered the
7

question whether Clause 21A of the terms and conditions incorporated is
invalid for any reason."

The decision in Paramount Polymers was followed in Dakshin Haryana Bijli

Vitran Nigam Ltd. v. Excel Buildcon Pvt.Ltd. [2008 (10) SCC 720].

8. In Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS Steels & Alloys

Pvt.Ltd. [2009 (1) SCC 210] this court held, while reiterating the principle that

the electricity dues did not constitute a charge on the premises, that where the

applicable rules requires such payment, the same will be binding on the

purchaser. This court held:

"A transferee of the premises or a subsequent occupant of a premises with
whom the supplier has no privity of contract cannot obviously be asked to
pay the dues of his predecessor in title or possession, as the amount
payable towards supply of electricity does not constitute a `charge' on the
premises. A purchaser of a premises, cannot be foisted with the electricity
dues of any previous occupant, merely because he happens to be the
current owner of the premises.

When the purchaser of a premises approaches the distributor seeking a
fresh electricity connection to its premises for supply of electricity, the
distributor can stipulate the terms subject to which it would supply
electricity. It can stipulate as one of the conditions for supply, that the
arrears due in regard to the supply of electricity made to the premises
when it was in the occupation of the previous owner/occupant, should be
cleared before the electricity supply is restored to the premises or a fresh
connection is provided to the premises. If any statutory rules govern the
conditions relating to sanction of a connection or supply of electricity, the
distributor can insist upon fulfillment of the requirements of such rules
and regulations. If the rules are silent, it can stipulate such terms and
conditions as it deems fit and proper, to regulate its transactions and
dealings. So long as such rules and regulations or the terms and conditions
are not arbitrary and unreasonable, courts will not interfere with them.
8

A stipulation by the distributor that the dues in regard to the electricity
supplied to the premises should be cleared before electricity supply is
restored or a new connection is given to a premises, cannot be termed as
unreasonable or arbitrary. In the absence of such a stipulation, an
unscrupulous consumer may commit defaults with impunity, and when the
electricity supply is disconnected for non-payment, may sell away the
property and move on to another property, thereby making it difficult, if
not impossible for the distributor to recover the dues. Provisions similar to
Clause 4.3(g) and (h) of Electricity Supply Code are necessary to
safeguard the interests of the distributor."

9. The position therefore can may be summarized thus :

(i) Electricity arrears do not constitute a charge over the property.
Therefore in general law, a transferee of a premises cannot be made liable for
the dues of the previous owner/occupier.

(ii) Where the statutory rules or terms and conditions of supply which are
statutory in character, authorize the supplier of electricity, to demand from the
purchaser of a property claiming re-connection or fresh connection of
electricity, the arrears due by the previous owner/occupier in regard to supply
of electricity to such premises, the supplier can recover the arrears from a
purchaser.

Position in this case

10. The appellant did not plead in its defence that any statutory rule or

terms and conditions of supply, authorized it to demand the dues of previous

owner, from the first respondent. Though the appellant contended in the

written statement that the dues of Durga Rice Mills were transferred to the

account of the first respondent, the appellant did not specify the statutory
9

provision which enabled it to make such a claim. The decision in Paramount

Polymers shows that such an enabling term was introduced in the terms and

conditions of electricity supply in Haryana, only in the year 2001. The

appellant did not demand the alleged arrears, when first respondent

approached the appellant for electricity connection in its own name for the

same premises and obtained it in the year 1991. More than three years

thereafter, a demand was made by the appellant for the first time on 16.1.1995

alleging that there were electricity dues by the previous owner. In these

circumstances the claim relating to the previous owner could not be enforced

against the first respondent.

11. On facts, it has to be held that the decision of the High Court does not

call for interference. The appeal is therefore dismissed. Parties to bear their

respective costs.

..............................J.
(R V Raveendran)

.............................J.
(H L Gokhale)
New Delhi;
August 20, 2010

Hindu Adoption and Maintenance Act, 1956 - ss. 10(iv) and 16 - Adoption - Adopted child more than 15 years of age on the date of adoption - Validity of- held: Exception to s. 10(iv) provides that if custom or usage permits the adoption beyond the age of 15 years, such adoption is valid - On facts, customs in `Kamma' Community of Andhra Pradesh permits adoption beyond 15 years of age- Such custom having been repeatedly recognized by courts, it has blended into law of the land and proof thereof not necessary u/s. 57 of Evidence Act - In view of s. 16 also, the deed of adoption being a registered deed, court has to presume that the adoption was in compliance with the provisions of the Act as the deed has not been disproved- Evidence Act, 1872- s. 57 - Judicial notice. In a suit filed by the respondent-plaintiff against the appellant- defendant, it was stated by the plaintiff that he was the adopted son of the auction purchaser and, thus, was entitled to claim for recovery of possession of the suit property. The appellant-defendant denied that the plaintiff was the adopted son. Courts below had decreed the suit. In an appeal to the Supreme Court, the issue for consideration was whether the plaintiff was the adopted son of the auction-purchaser, as he was adopted when he was more than 15 years of age and whether the adoption was barred by s. 10(iv) of Hindu Adoption and Maintenance Act, 1956. Dismissing the appeal, the Court HELD: 1.1. The adoption of the respondent by his adoptive father is legal and valid. Clause (iv) of Section 10 of Hindu Adoption and Maintenance Act, 1956 provides that a person to be adopted should not have completed the age of 15 years. But there is also an exception that if there is a custom or usage applicable to the parties permitting persons who have completed the age of 15 years being taken in adoption, such a person could also be validly adopted. On the other hand, the effect and the implication of Section 16 of the Act is that if there is any document purporting to record an adoption made and is signed by the person giving as well the person taking the child in adoption is registered under any law for the time being in force and if it is produced in any court, the court would presume that the adoption has been made in compliance of the provisions of the Act unless and until it is disproved. [Paras 12] [345-H; 346-A-C] 1.2. In the instant case the respondent was more than 15 years of age at the time of his adoption. But the respondent has proved by leading cogent and reliable evidence like Ext. A-8 (the deed of adoption) that there is a custom in the "Kamma" community of Andhra Pradesh for adoption of a boy even above the age of 15 years. Therefore, the exception to s. 10(iv) of the Act which is engrafted in the same part of the provision of Section 10 of the Act was satisfied. Since the aforesaid custom and aforesaid adoption was also recorded in a registered deed of adoption, the court has to presume that the adoption has been made in compliance with the provisions of the Act, since the respondent has utterly failed to challenge the said evidence and also to disprove the aforesaid adoption. [Para 13] [346-D-F] 2. The ordinary rule is that all customs general or otherwise have to be proved, but u/s. 57 of the Evidence Act, 1872 nothing need to be proved of which the court can take judicial notice. When a custom has been repeatedly recognized by courts, it is blended into the law of land and proof of the same would become unnecessary under Section 57 of Evidence Act. The Andhra Pradesh High Court has recognized such a custom among the "Kamma" community of Andhra Pradesh of taking in adoption of a person even above the age of 15 years of age and has held the same to be legal and valid.[Paras 15 and 16] [347-A-C] Ujagar Singh vs. Mst. Jeo AIR 1959 SC 1041 - relied on. Nara Hanumantha Rao vs. Nara Hanumayya and Anr. 1964 Andhra Weekly Reporter 156 - referred to. Case Law Reference: 1964 Andhra Weekly Referred to. Para 14 Reporter 156 AIR 1959 SC 1041 Referred to. Para 15 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9714 of 2010. From the Judgment & Order dated 10.6.2008 of the High Cour of Andhra Pradesh at Hyderabad in Appeal Suit No. 2185 of 1989. M.V. Durga Prasad, G. Ramakrishna Prasad, B, Suyodhan, Bharat J. Joshi for the Appellants. G.V.R. Choudhary, K. Shivraj, Choudhuri, A. Chandra Sekhar for the Respondent.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9714 OF 2010
[Arising out of SLP (C) No. 28504 of 2008]

ATLURI BRAHMANANDAM (d) THR. LRS. ....Appellant

Versus

ANNE SAI BAPUJI ...Respondents

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. Leave granted.

2. The present appeal filed by the appellant herein arises

out of an order passed by the High Court of Andhra Pradesh at

Hyderabad in Appeal Suit No. 2185 of 1989 whereby the

1
High Court has dismissed the appeal filed by the

appellant herein and affirmed the judgment and decree passed

by the trial court in favour of the respondent.

3. The appellant herein was the defendant in the suit filed

by the respondent seeking for a decree for possession and

future mesne profits with interest at the rate of 6% per annum

and for payment of Rs.4,500/- with interest at the rate of 6%

per annum till realization. One of the contentions which was

raised in the suit was that the respondent/plaintiff was the

adopted son of Late Anne Seetharamaiah and if the findings

are in the affirmative, in that event, he would be entitled to

claim for recovery of possession of the scheduled land.

4. The case of the respondent-plaintiff in the suit was that

in 1965, one Myden Saheb of Atkuru Village in Gannavaram

Taluk of Krishna District filed a small cause suit being S.C.

No. 44 of 1965 against Atluri Brahmanandam of the same

village. The suit was decreed by the Court of District Munsif,

Nuzvid for an amount of Rs. 355/-. Consequent upon the

passing of the said decree, the decree-holder Myden Saheb

filed E.P. No. 29 of 1967 during the course of which the

2
judgment-debtor's agricultural wet land admeasuring Acs.

1.78 was sold in auction in which Anne Seetharamaih

purchased the same for Rs.5,900/-. The auction purchaser is

the adopted father of Anne Sai Bapuji, who filed the present

suit in the Court of Subordinate Judge, Vijaywada which was

later transferred to the Court of Subordinate Judge,

Gudivada.

5. The respondent-plaintiff had stated in the plaint that

after Seetharamaiah purchased the property in Court auction

on 26.4.1968, Brahmanandam filed various applications in

E.P. No. 29 of 1967 and prevented delivery of possession.

However, the Court delivered the possession to Seetharamaiah

on 10.7.1974. It was, however, contended that by taking

advantage of pendency of Miscellaneous Appeal in the High

Court, Brahmanandam trespassed into suit scheduled

property in January, 1975 and obtained wrongful possession.

It was also contended that Anne Sai Bapuji, the respondent

herein, is the adopted son of Late Anne Seetharamaiah who

died intestate on 7.8.1981, as a result of which all his

3
properties devolved on respondent and, therefore, he is

entitled to a decree for recovery of possession.

6. The appellant herein who was the defendant denied that

the respondent is the adopted son of Late Seetharamaiah. He

also denied delivery of possession on 10.7.1974 and contended

that the aforesaid auction sale is liable to be set aside. It may

be mentioned at this stage that the appellant herein did not

file any separate suit seeking to setting aside the auction sale

in which the adoptive father of the respondent purchased the

said property. Without filing such a suit against the sale by

which the appellant has been divested of the title to the

property, the appellant cannot claim to be the owner of the

suit property. But the present suit was filed by the

respondent seeking for decree delivery of possession which

was also contested by the appellant and, therefore, we are

required to examine the contention of the learned counsel

appearing for the parties and to decide the lis between them.

7. The main issue, therefore, in the present appeal on

which extensive argument was made is as to whether or not

the respondent was the adopted son of Late Anne

4
Seetharamaiah. In the plaint filed, the respondent claimed

himself to be the adopted son of Late Seetharamaiah. During

the trial of the suit, the appellant also relied upon and proved

Ex. A-8. Relying heavily on the said document, it was

contended by the respondent that in terms of the said

document, the respondent should be held to be the legally and

validly adopted son of Anne Seetharamaiah.

8. In view of the pleadings of the parties and the judgment

and decree passed by the High Court upholding the judgment

and decree passed by the trial court in favour of the

respondent, two contentions were mainly urged before us by

the learned counsel appearing for the appellant. According to

him, there was no adoption of the respondent by the adoptive

father as alleged and secondly, since the respondent was more

than 15 years of age on the date of the alleged adoption, he

could not have been validly adopted without proving any

customs in favour of such adoption. In support of the

aforesaid contentions, the counsel of the appellant referred to

and relied upon the provisions of Section 10 (iv) and Section

16 of the Hindu Adoption and Maintenance Act, 1956.

5
9. We have perused the records which are placed before us

including the deed of adoption which is placed on record by

the respondent and proved as Ex. A-8. The said Ex. A-8 is

dated 27th April, 1966 and incidentally, is a registered deed of

adoption. The recital in the said deed of adoption is that the

natural parents of the respondent had given the respondent

aged about 18 years and unmarried on the said date in the

presence of elders and in accordance with the provisions of the

Hindu Adoptions and Maintenance Act, 1956 to Anne

Seetharamaiah, who was issueless and, hence, the adoption.

It also recited that the aforesaid adoption is in accordance

with the customs prevailing in the "Kamma" community in

Andha Pradesh.

10. The aforesaid deed of adoption was produced in evidence

and the same was duly proved in the trial by the evidence led

by PW-1, the respondent. We have carefully scrutinized the

cross-examination of the said witness. In the entire cross-

examination, no challenge was made by the appellant herein

either to the legality of the said document or to the validity of

the same. Therefore, the said registered adoption deed went

6
unrebutted and unchallenged. We have already referred to the

recitals in the said documents which is a registered document

and according to the recitals therein, the respondent was

legally and validly adopted by the adoptive father Late Anne

Seetharamaiah and that such adoption even beyond the age of

15 years is permissible and recognized in the "Kamma"

community of Andhra Pradesh. All these factors also go

unrebutted and unchallenged.

11. Section 10 and Section 16 of the Hindu Adoptions and

Maintenance Act, 1956 of which reference was made during

the course of arguments read as follows:-

"10. No person shall be capable of being
taken in adoption unless the following
conditions are fulfilled, namely:-
(i) ...
(ii) . . .
(iii) . . .

(iv) he or she has not completed the
age of fifteen years, unless
there is a custom or usage
applicable to the parties which
permits persons who have
completed the age of fifteen
years being taken in adoption.

16. Whenever any document registered
under any law for the time being in

7
force is produced before any Court
purporting to record an adoption
made and is signed by the person
giving and the person taking the
child in adoption, the Court shall
presume that the adoption has been
made in compliance with the
provisions of this Act unless and
until it is disproved."

12. We are concerned for the purpose of this case with clause

(iv) of Section 10 which provides that a person to be adopted

should not have completed the age of 15 years. But there is

also an exception provided therein to the aforesaid required

qualification which provides that if there is a custom or usage

applicable to the parties permitting persons who have

completed the age of 15 years being taken in adoption, such a

person could also be validly adopted. On the other hand, the

effect and the implication of Section 16 of the Act is that if

there is any document purporting to record an adoption made

and is signed by the person giving as well the person taking

the child in adoption is registered under any law for the time

being in force and if it is produced in any Court, the Court

would presume that the adoption has been made in

8
compliance of the provisions of the Act unless and until it is

disproved.

13. There is no denial of the fact in the present case that the

respondent was more than 15 years of age at the time of his

adoption. But the respondent has relied upon the exception

provided in section 10 (iv) and has proved by leading cogent

and reliable evidence like Ex. A-8 that there is a custom in the

"Kamma" community of Andhra Pradesh for adoption of a boy

even above the age of 15 years. Therefore, the aforesaid

exception which is engrafted in the same part of the provision

of Section 10 of the Act was satisfied. Since the aforesaid

custom and aforesaid adoption was also recorded in a

registered deed of adoption, the Court has to presume that the

adoption has been made in compliance with the provisions of

the Act, since the respondent has utterly failed to challenge

the said evidence and also to disprove the aforesaid adoption.

14. Reference has also been made to a Division Bench

decision of the Andhra Pradesh High Court reported in 1964

Andhra Weekly Reporter p.156. In the said decision, the

Division Bench has recognized that there is a custom among

9
the members of the "Kamma" caste to adopt a boy of more

than 15 years old and that such custom is valid. The said

decision rendered by a Division Bench in 1964 has stood the

test of time and has remained binding till date.

15. In the case of Ujagar Singh v. Mst. Jeo reported in AIR

1959 SC 1041, this Court has held that the ordinary rule is

that all customs general or otherwise have to be proved, but

under Section 57 of the Evidence Act, 1872 nothing need to be

proved of which the Court can take judicial notice. It was also

held that when a custom has been repeatedly recognized by

Courts, it is blended into the law of land and proof of the same

would become unnecessary under Section 57 of Evidence Act,

1872.

16. The aforesaid decision is squarely applicable to the facts

and circumstances of the present case. The Andhra Pradesh

High Court has recognized such a custom among the

"Kamma" community of Andhra Pradesh of taking in adoption

of a person even above the age of 15 years of age and has held

the same to be legal and valid.

10
17. In view of the above discussion, we find no infirmity at all

in the findings of the trial court which were affirmed by the

High Court that the adoption of the respondent by Late Anne

Seetharamaiah is legal and valid. We, therefore, find no merit

in this appeal which is dismissed but we leave the parties to

bear their own costs.

............................................J
[Dr. Mukundakam Sharma ]

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

[ Anil R. Dave ]

New Delhi,
November 18, 2010.

11

LAW FOR ALL

LawforAll

advocatemmmohan

Just for legal information but not form as legal opinion

Saturday, April 14, 2012