As regard clause (6) of the Circular, prima facie we are of the definite opinion that increasing trade refuse charge by 10% every year from 2009 is highly arbitrary and without any guidelines. In our considered opinion, the automatic increase of trade refuse charges by 10% every year irrespective of the nature of business carried on by the Licencee violates principles of natural justice. We, therefore, hold that respondent shall not recover any increased trade refuse charges with effect from 2009 without giving reasonable opportunity of hearing to the licencee or persons liable to pay such increased charges.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION




                        CIVIL APPEAL NO.1431 OF 2015
                 (Arising out of SLP (C) No. 30485 of 2013)


Kandivali Cooperative Industrial Estate
and another                                  ...Appellant (s)

                                  versus

Municipal Corporation of Greater Mumbai
and others                                   ...Respondent(s)

                                    WITH

                        CIVIL APPEAL NO.1433 OF 2015
                  (Arising out of SLP(C)No. 33545 of 2013)

Bulwark Warehousing Company
and others                              ...Appellant (s)
                                  versus
Municipal Corporation of Greater Mumbai
and others                                   ...Respondent(s)

                        CIVIL APPEAL NO.1436  OF 2015
                  (Arising out of SLP(C)No. 35558 of 2013)

Wadi Bunder Cotton Press Co.            ...Appellant (s)
                                  versus
Brihan Mumbai Mahanagar Palika
and others                                   ...Respondent(s)





                        CIVIL APPEAL NO.1434 OF 2015
                  (Arising out of SLP(C)No. 35589 of 2013)

Tulsidas Khimji Warehousing Pvt. Ltd.
and others                              ...Appellant (s)
                                   versus

Brihan Mumbai Mahanagar Palika
and others                                   ...Respondent(s)


                        CIVIL APPEAL NO.1435  OF 2015
                  (Arising out of SLP(C) No. 35593 of 2013)

Narendra & Co. and another              ...Appellant (s)
                                   versus

Brihan Mumbai Mahanagar Palika
and others                                   ...Respondent(s)



                               J U D G M E N T


M.Y. Eqbal, J.:

      Leave granted.



These appeals are directed against  the  common  judgment  and  order  dated
30.7.2013 passed  by  the  High  Court  of  Bombay  in  the  writ  petitions
preferred by the appellants.



By the impugned judgment and  order,  the  High  Court  dismissed  the  writ
petitions preferred by the appellants challenging the  Circular  dated  12th
December, 2011 and the respective entries  made  in  the  schedule  appended
thereto issued by the Respondent-Municipal Corporation of Grater  Mumbai  as
also the respective  entries  in  the  schedule  appended  thereto,  thereby
questioning the levy of 'trade refuse charges' and the rates thereof.





The appellants are traders, carrying on  activities  of  warehouse  keepers,
godown keepers,  bank  mukadam,  carriers  of  stores,  material  and  goods
required to be stored and kept safe from insects, ants,  rodents,  moisture,
rain, heat, fire etc. For this purpose, the appellants  from  time  to  time
have been obtaining trade licences issued under Section 394  of  the  Mumbai
Municipal Corporation Act, 1888 (in short,  'MMC  Act').  According  to  the
appellants, the respondents  recover  'trade  refuse  charges'  (hereinafter
referred to as 'TRC'),  by  making  the  payment  thereof  a  condition  for
renewing the trade licences under the MMC Act on a yearly basis.



Respondent Corporation, vide circular dated 5.6.1999 fixed  the  pattern  of
Trade Refuse Charges (TRC) to be  collected  from  the  owners/occupiers  of
trade premises. On  receiving  various  representations  from  the  traders,
Municipal Commissioner took the decision of modifying  the  earlier  charges
levied on  the  trade  refuse.  Therefore,  the  TRC  were  revised  by  the
Respondent Commissioner vide a circular dated  14.1.2008  w.e.f.1.1.2008  by
almost 300% of the trade licence fees. It was further stated that  the  same
was required to be collected once in a year along with the Licence  fees  at
the time of renewal of licences issued  under  section  394  of  the  Mumbai
Municipal Corporation Act, 1888. The appellants and  several  other  parties
made representations and preferred writ petitions urging reconsideration  of
the rates, which were disposed of by the  Bombay  High  Court  by  an  order
dated 12.4.2010 upon the statement being made on behalf of  the  respondents
that they would reconsider the rates of TRC.





Respondent Corporation gave a hearing to the representations and  instructed
the department concerned to submit the detailed  report.  A  Core  Committee
was constituted which submitted its report in  2010.   On  consideration  of
Core Committee report, TRC were modified  by  the  impugned  Circular  dated
12.12.2011. The circular stipulated that the TRC  would  be  collected  with
retrospective effect from 1.1.2008 onwards.



Although there was very significant  reduction  in  rates  of  trade  refuse
charges to be collected, the appellants,  being  dissatisfied,  again  moved
the Bombay High Court by way of writ petitions, contending that they  merely
receive goods from the customers for  purposes  of  safe  custody  and  upon
receipt of the prescribed charges, return such goods  to  the  customers  in
the same  conditions.   For  this  purpose,  they  provide  adequate  space,
security and safeguards against fire, rain, water,  etc.   In  the  process,
neither any solid  waste,  nor  any  trade  refuse  is  generated.   In  the
circumstances, it is their case that levy of TRC  upon  them  and  that  too
with  retrospective  effect  i.e.  from  2008  is  illegal,  arbitrary   and
unconstitutional.
The appellants further contended that they do not generate any trade  refuse
and, therefore, question of payment of TRC does not arise.





The High Court by the impugned common order dismissed the writ petitions  of
the  appellants  holding  that  there   is   nothing   illegal,   arbitrary,
unreasonable or unconstitutional in the levy of TRC by the respondents.   It
was observed that the question as to whether the appellants generate  'trade
refuse' or not is a disputed question of fact, which cannot  be  adjudicated
in proceedings under Article 226 of the Constitution  of  India.   The  High
Court did not find any merit in the contention  that  the  levy  of  TRC  is
invalid, because according to the Appellants there is no  element  of  'quid
pro quo'.   The Appellants are certainly benefited, in as much as they  have
been called upon to pay TRC at reduced  rates  with  effect  from  the  year
2008. No retrospectivity is involved in the implementation of  the  Circular
dated  12th  December,  2011.  If  the  contention  is  upheld,  it  is  the
appellants who would suffer a higher TRC.  The High Court has  further  held
that provisions of Sections 368(5) and 394(5) read with Section 479  of  the
MMC Act entitle the respondents to impose  restrictions  and  conditions  at
the time of grant of licence. The same principle will be applicable even  at
the stage  of  renewal  of  licences.  At  this  juncture,  we  consider  it
appropriate to reproduce the reasoning of the High Court in this regard:

"The linkage which is challenged by the appellants in the  present  petition
is more concerned with the manner of recovery of TRC and not  competence  of
the respondents to recover TRC. In deciding the manner, we  are  once  again
of the opinion that this is a policy matter  and  sufficient  free  hand  is
required to be conceded to the respondents in formulation  of  such  policy.
The respondents are right in submitting that it is not possible  to  monitor
each and  every  establishment  for  purposes  of  determining  the  precise
quantity and quality of 'trade refuse' generated. So  also  the  respondents
are right  in  contending  that  there  is  nothing  illegal,  arbitrary  or
unconstitutional in respondents recovering TRC at the stage  of  renewal  of
licences. From the averments made by the appellants themselves,  it  appears
that this has always been the manner in  which  the  respondents  have  been
collecting TRC. In matters of policy, merely because some  other  system  of
collection may be better,  is  no  ground  to  exercise  power  of  judicial
review. As long as it is not demonstrated that the manner of  collection  is
ex-facie, absurd, unreasonable  or  disproportionately  oppressive,  we  are
unable to uphold the seventh challenge as to the linking.  We  find  nothing
absurd, unreasonable or disproportionately oppressive in the policy  adopted
by the respondents or the manner of collection of TRC."



Being aggrieved, the appellants call in  question  the  correctness  of  the
common judgment and order passed by the  High  Court  in  a  batch  of  Writ
Petitions dated 30.7.2013.





  Mr. Shyam Divan, learned senior counsel appearing  for  the  appellant  in
SLP No.30485 of 2013, assailed the impugned  Circular  dated  11.10.2011  as
being illegal, ultra vires and  unconstitutional.  Learned  counsel  submits
that the respondents cannot  demand,  levy  or  recover  any  tax,  cess  or
compulsory exaction without authority of law as mandate  under  Section  265
of the Constitution.  According  to  the  learned  counsel,  Section  368(5)
empowers the Commissioner  to  fix  the  charges  only  when  the  owner  or
occupier  of  trade  premises  seeks  permission  to  deposit  trade  refuse
temporarily upon any place appointed by the Commissioner in this behalf  and
upon such permission granted by the Commissioner.  It was  urged  that  none
of the members of  appellant  had  ever  sought  such  permission  from  the
Commissioner and, therefore, the question of levy of  trade  refuse  charges
under Section 368(5) of the Act does not arise.  According  to  the  learned
counsel any compulsory exaction whether it be a fee  or  tax  or  any  other
levy must be backed by law.  The Circular dated  12.12.2011  imposing  trade
refuse charges is irrational and arbitrary.

11.   Mr. Divan, learned senior counsel, submitted that  the levy of TRC  is
contrary  to  the  judgment  of   Bombay   High   Court   in  Doran  Bomanji
Ghadiali vs. Jamshed Kanga and others, AIR  1992 Bombay  page  13    whereby
 the   High   Court   has  held  that the only charge that can be levied  on
traders is to the limited extent provided under Section 368(5) of  the  Act.
The Court further held that the fee imposable by Section  479  of  the  said
Act must relate to licence or written permission for  any  purpose  required
under the Act and, therefore, the charge could only  be  for  permission  to
deposit the trade refuse temporarily at a particular  place  and  would  not
apply to traders not seeking such permission to dump  their  refuse  at  any
place.  Learned counsel drew our attention to various sections  of  the  Act
and submitted that the manner in which the imposition  or  levy  of  charges
contemplated under Section 368(5) of  the  Act,  is  ultra  vires.   Learned
counsel relied upon the decision in the case of Ahmedabad Urban  Development
Authority vs. Sharadkumar Jayantikumar Pasawalla, (1992) 3  SCC  285,  which
was subsequently followed in the case of Gupta Modern  Breweries  vs.  State
of J& K, (2007) 6  SCC  317  and   Leelabai  Gajanan  Pansare  vs.  Oriental
Insurance Co. Ltd., (2008) 9 SCC 720.
12.   Mr. Chander Uday Singh, learned senior counsel,  appearing  on  behalf
of appellants in SLP (C)  Nos.  35558,  35589  and  35593  of  2013,   after
referring  relevant  provisions  of  Municipal  Corporation  Act,  made  the
following submissions:-



(i). The appellants are engaged in the warehousing business and they do  not
generate any trade refuse, thus entitling the Respondents to levy  the  TRC.
Neither they are conducting any manufacturing activity due  to  which  solid
waste can be generated and, hence, the term TRC has been misinterpreted  and
equated to garbage. It was  asserted  that  the  Appellants  merely  receive
goods from the customers for the purpose of safe custody  and  upon  receipt
of the prescribed charges, return such goods to the customers  in  the  same
condition. Therefore, the Respondents are wrong in treating  every  kind  of
refuse as 'trade refuse' and on the  said  incorrect  premise  imposing  TRC
upon the appellants. 'Trade refuse' should mean and imply some  solid  waste
generated by an industry involved  in  manufacturing  process  and  in  this
regard reliance is placed upon sub-clauses (a) and (b) of  Section  367  and
sub-sections (1) and (5) of Section 368 of the MMC  Act  and  as  the  terms
"refuse" and  "trade  refuse"  have  been  dealt  with  separately  this  is
indicative that every kind of refuse cannot be qualified as "trade refuse".

(ii).  It was pointed  out  that  Respondents'  own  inspection  reports  of
warehouses show that those warehousers only  generated  dust,  tree  leaves,
etc. and in a quantity of only one and a half to two baskets.  This  cannot,
by any stretch of imagination, be treated as trade  refuse  since  the  dust
and tree leaves are blown into  the  warehouses  by  the  wind  and  not  on
account of any activity being carried  out  by  the  warehousers/appellants.
Further, under Section 370 of the MMC  Act  it  will  be  incumbent  on  the
occupier of any premises situate in any portion of the city  for  which  the
Commissioner has not given a public notice under  Section  142  (a)  and  in
which there is no water closet or privy connected to  municipal  drains,  to
cause all excrementitious and polluted to be collected and  to  be  conveyed
to the nearest receptacle /depot provided for  this  purpose  under  Section
367 (b) and not (a). Pertinently, 367 (a) deals  with  dust,  ashes,  refuse
and rubbish and 367 (b) deals with trade  refuse.  Thus  "trade  refuse"  is
obnoxious refuse and cannot and ought not be equated with  refuse  generated
in any trade /business  establishment.  It  is  submitted  that  this  vital
difference has been ignored and TRC is being unlawfully sought to be  levied
upon the appellants who generate no "trade refuse at all".

(iii). It was the contention of the learned  counsel  that  the  appellants,
who are engaged in the warehousing  business,  do  not  generate  any  trade
refuse and in the event TRC constitutes a 'tax' there is  no  taxable  event
for imposition of tax in the form of TRC. Alternatively, if  TRC  is  to  be
regarded a 'fee', then, on account of the circumstance that  the  appellants
generate no trade refuse at all, there is no element of 'quid pro  quo'  and
hence levy of fee in the form of TRC is illegal and invalid.



(iv). It was submitted that the linking of payment of TRC  with  renewal  of
trade licences under section 394 of the MMC Act, is  illegal,  invalid  and,
therefore, renewal of trade licences under section 394 of the MMC Act  ought
to be granted, irrespective of whether the appellants pay TRC  or  not.  The
TRC being levied in addition to the normal licence fees for issue  of  trade
licences under Section 394 of the MMC Act, there is double  charging,  which
is  wholly  arbitrary  and  unreasonable  and  without  authority  of   law,
particularly, qua the Appellants, who do not generate  any  'trade  refuse'.
It was, therefore sought to be submitted, that the levy  and  collection  of
TRC cannot be linked to the renewal of an annual trade  licence  granted  to
the  Appellants  for  conducting  warehousing  activity  when  there  is  no
statutory  provision  enabling  such  linkage;  and   in   the   facts   and
circumstances  and  absence  of   any   specific   authority   to   levy   a
retrospective charge or fee, Respondent No.1 could not levy TRC with  effect
from 1.1.2008 when a solemn assurance was made by  Respondent  No.1  to  the
Bombay High Court that there would be no linkage  between  TRC  and  licence
fees collected at the stage of renewal. Under Section 471 of  the  MMC  Act,
Respondent No.1 is entitled to impose penalty for contravention  of  Section
368 (1) to (4) and under Section 472 of the  Act,  the  Respondent  No.1  is
entitled to impose penalty for continuing offence in  contravention  of  any
provision of Section 368 (1) to (5). When penalty  provisions  are  provided
under the Act, payment of TRC has been without any  basis  or  justification
whatsoever sought to be linked with renewal of the Trade Licence,  which  is
impermissible and bad in law. Furthermore, only valid trade licence  holders
are being charged TRC.  It  becomes  pertinent  to  note  that  after  1976,
Respondent No.1 has stopped issuing  warehousing  licences  in  the  Greater
Mumbai Area. Therefore, the burden on TRC is only  being  applied  to  valid
licence holders and not to others who are carrying on the trade without  any
licence.



(v). It was again pointed out that the Respondents have  completely  ignored
their own Circular No.  ChE/280/SWM  dated  06.04.2010  which  categorically
states that for the year 2010, TRC will be levied on the  basis  of  licence
fees of the licence issued by the Shops & Establishment  Department  of  the
MMC and that the Respondents will delink TRC from  licence  fees  in  future
and new TRC levy pattern will be  introduced.  The  TRC  is  now  wrongfully
charged on the basis of sq. mtr. footage of area of premises and is in  fact
more than the licence fees which is wholly illogical, irrational,  arbitrary
and without any authority of law. The policy adopted by the Respondents  and
the manner of  collection  of  TRC  (whether  charged  based  on  number  of
employees   or   square   meter   area)   is   absurd,   unreasonable    and
disproportionately oppressive, without Application of mind  and  incompetent
and without the authority of law.



(vi). Lastly, it was contended that any compulsory execration  of  money  by
the Government for a tax or a cess has to be  strictly  in  accordance  with
law and there should be a specific provision for the same and  there  is  no
room for intendment and nothing is to be read or nothing is  to  be  implied
and one should look fairly to the language used. Our attention was drawn  to
the decision of this Court in Consumer Online Foundation vs. Union of  India
(2011) 5 SCC 360.  In this behalf it was sought  to  be  pointed  out,  that
Imposition of levy/charges by Respondent No.1 is in the nature of a tax  and
not a  fee  and  hence  such  imposition  without  backing  of  statutes  is
unreasonable and unfair. Learned counsel also  drew  our  attention  to  the
decisions of this Court in the cases of Gupta Modern Breweries vs. State  of
J&K & Ors. - (2007) 6 SCC 317 and B.C. Banerjee & Ors. vs. State of  M.P.  &
Ors. (1970) 2 SCC 467.



13.   Mr. L. Nageswar Rao, learned Additional  Solicitor  General  appearing
for the respondents, firstly contended that the constitutional  validity  of
Section 368(5) of the Act was never challenged by any of the  appellants  as
being ultra vires to the Constitution. The appellants have  only  prayed  in
the  writ  petitions  for  issuance  of  appropriate  writ   directing   the
respondents to cancel and/or withdraw  the  Circulars  dated  14.1.2008  and
11.10.2011 and also to withdraw the notice dated 9th  June,  2014.   Learned
counsel submitted that the appellants challenged  the  circular  by  arguing
that the manner of collection of trade refuse charges was contrary  to  law.
The competence of the  authority  to  demand  and  levy  TRC  has  not  been
challenged at any point of time. Distinguishing the  imposition  of  fee/TRC
and tax, learned counsel put heavy reliance on the  ratio  decided  by  this
Court in the case of  The Commissioner, Hindu  Religious  Endowment,  Madras
vs. Sri Lakshmindra Tirtha Swamiar of  Shirur  Mutt,  (1954)  1   SCR  1005.
Mr. Rao referred to  the  Core  Committee  Report  and  submitted  that  the
validity of guidelines provided therein cannot  be  tested  on  any  ground.
Learned counsel put reliance on a decision in the  case  of  Corporation  of
Calcutta & Anr. vs. Liberty  Cinema,  Assam,  (1965)  2  SCR  477.   Learned
counsel also made submission on the object and  purpose  of  collection  and
submitted that absolute equality is impossible for the purpose  of  levy  of
fee or charges. Learned counsel referred the decision of this Court  in  the
case of Gulabchand Bapalal Modi vs.  Municipal  Corpn.  of  Ahmedabad  City,
(1971) 1 SCC 82, Union of India vs.  Nitdip  Textile  Processors  (P)  Ltd.,
(2012) 1 SCC 226.

14.         Before appreciating the rival contentions made by  the  parties,
we  would  like  to  refer  the  relevant  provisions  of  Bombay  Municipal
Corporation Act, 1988.  Section 3 (yy) defines the word  'trade  refuse'  as
under:-
"3(yy)   "Trade  refuse"  means  and  includes  the  refuse  of  any  trade,
manufacture or business."



15.      Section  367  empowers  the  Commissioner  to  make  provision  for
providing receptacles, depots and places  for  temporary  deposit  or  final
disposal of waste articles including trade refuse.  Section  367  is  quoted
hereinbelow:-

"367. Provision and  appointment  of  receptacles,  depots  and  places  for
refuse, etc.,

The  Commissioner  shall  provide  or  appoint  in  proper  and   convenient
situations public receptacles, depots and places for the  temporary  deposit
or disposal of-
(a) dust, ashes, refuse and rubbish;
(b) trade refuse;"



16.     Section 368 lays down the provisions with  regard  to  the  duty  of
owners and occupiers for the purpose of collecting and depositing dust  etc.
 Sections 368, 394 and 479, which are under consideration in these  appeals,
read as under:-

"368. Duty of owners and occupiers to collect and deposit dust, etc. ,
(1) It shall be incumbent on the owners and occupiers  of  all  premises  to
cause all dust, ashes, refuse, rubbish and  trade  refuse  to  be  collected
from their respective premises and to be deposited  at  such  times  as  the
Commissioner, by public notice, from time to time prescribes in  the  public
receptacle, depot or place provided or appointed under  the  last  preceding
section or the temporary deposit or final disposal thereof

(2) ......
(3).........
(4)-.........

(5) Notwithstanding anything contained in this  section,  if  the  owner  or
occupier 'of any trade premises desires permission to deposit trade  refuse,
collected daily or periodically from  the  premises,  temporarily  upon  any
place appointed by the Commissioner in this behalf,  the  Commissioner  may,
on the application, and on payment of such charges as the  Commissioner  may
from time to time, fix, allow the applicant  to  deposit  the  trade  refuse
accordingly."


"394. Certain articles (or animals) not to  be  kept,  and  certain  trades,
processes and operations not to be carried on without a licence; and  things
liable to be seized destroyed, etc., to prevent danger or nuisance.-

 (1) Except under and in accordance with the terms  and  conditions  of  the
licence granted by the Commissioner, no person shall-

 (a) keep, or suffer or allow to be kept, in or upon any premises,

 (I) any article specified in Part I of Schedule M; or,

 (II) any article specified in Part II of  Schedule  M,  in  excess  of  the
quantity therein specified as the maximum quantity (or  where  such  article
is kept  along  with  any  other  article  or  articles  specified  in  that
Schedule,  such  other  maximum  quantity  as  may  be   notified   by   the
Commissioner) of such article which may at any one time be kept in  or  upon
the same premises without a licence;

(b) keep, or suffer or allow to be kept, in or upon any premises,  for  sale
or for other than domestic  use,  any  article  specified  in  Part  III  of
Schedule M;

(c) .................

(d).................

(e) carry on or allow or suffer to be carried on, in or upon any  premises.-


 (I) any of the trades specified in Part IV of Schedule M,  or  any  process
or operation connected with any such trade;

 (II) any trade,  process  or  operation,  which  in  the  opinion  of,  the
Commissioner, is dangerous to life, health or property, or likely to  create
a nuisance either from its nature or by reason of the manner  in  which,  or
the conditions under which, the, same is, or is proposed to be carried on;

(f) carry on within [Brihan Mumbai] or use or allow to be used any  premises
for, the trade or operation of a carrier.

(2).....................

(3)....................

(4)...................

(5) It shall be in the discretion of the Commissioner.-

 (a) to grant any licence referred to in sub-section (1),  subject  to  such
restrictions or conditions (if any,) as he shall think fit  to  specify,  or
(b) for the purposes  of  ensuring  public  safety,  to  withhold  any  such
licence:

Provided that, the Commissioner when  withholding  any  such  licence  shall
record his reasons in writing for such withholding and  furnish  the  person
concerned a copy of his order containing the reasons for such withholding:

Provided further that, any person aggrieved by an order of the  Commissioner
under this sub-section may, within sixty days of the  date  of  such  order,
appeal to the Chief Judge of the Small Cause Court, whose decision shall  be
final."



"479. Licences and written permission to specify  condition  etc,  on  which
they are granted:-

(1) Whether it is  provided  in  this  Act  that  a  licence  or  a  written
permission Licences and may be  given  for  any  purpose,  such  licence  or
written permission shall specify the  wntten.  period  for  which,  and  the
restrictions and conditions subject to  which,  the  same  is  granted,  and
shall be given under the signature of the Commissioner or of  a  munici  pal
officer empowered under section 68 to grant the same.

(2)..................

(3)....................

(4)..................."



17.   From a conjoint reading of the provisions quoted hereinbefore,  it  is
manifestly clear that the Commissioner may from  time  to  time  inter  alia
specify conditions and  restrictions  while  granting  trade  licence.   The
Commissioner may notify the charges including trade refuse charges  i.e.  to
be collected from the trade licencees.



18.     In exercise of power conferred upon the Commissioner under  the  MMC
Act, a Circular was issued on  14.1.2008  raising  the  TRC  by  almost  300
percent of the trade licence fees with the stipulation that  the  TRC  would
be collected at the time of renewal of the licence under Section 394 of  the
Act which were due to expire in December, 2009. As noticed  above  the  said
Circular dated 14.1.2008 was challenged before the Bombay High Court by  way
of writ petitions.   When the writ petitions  were  taken  up  for  hearing,
learned counsel appearing for the respondent-Corporation informed the  Court
that the rate of trade  refuse  charges  is  under  reconsideration  by  the
Authority.  On the  basis  of  submissions  made  by  the  counsel  for  the
Corporation, the writ petitions were disposed of as the  grievances  of  the
traders were satisfied.



19.   In December, 2011,  the  respondents  after  re-consideration  of  the
tariff fixed in the  earlier  circular  came  with  another  Circular  dated
11.10.2011 whereby the TRC rate was  revised  effective  from  1st  January,
2008.  Perusal of the revised rates appended thereto  would  show  that  the
rates have been significantly reduced  in  respect  of  different  types  of
business.  Instead of quoting the revised  rates  we  would  like  to  quote
hereinbelow the modified circular dated 11.10.2011. The English  translation
of the Circular reads as under:-

                   "MUNCIPAL CORPORATION OF GREATER MUMBAI
                     (Solid Waste Management Department)
                             No. Pra.A/11384/SWM
                              Dated 11.10.2011
                                  CIRCULAR
Subject:-: Revision/Modification in the trade refuse charge.

      For the purpose of recovering  Trade  refuse  charge  by  Solid  Waste
Management Department  in  Municipal  Corporation  of  Greater  Mumbai,  the
Mayor's Council  gave  approval  vide  Resolution  No.14  dated  15.4.99  to
recover the said charge in certain  multiplication  of  licence/registration
charge without making any category of  the  business.   According   to  that
procedure, the orders were  issued  vide  Circular  Pra.  A/17785/SWM  dated
14.1.2008,  regarding  entrusting  the  responsibility  on   (1)   Licencing
Department (2) Shops & Establishment Department (3)  health  department  and
(4) Market Department,  by  co-relating  the  expenses   incurred  then  for
disposal  of the waste  and  the  multiplication  of  licencing/registration
charges and also to recover 'Trade refuse charges' at the  time  of  renewal
of licence and deposit the same under the head  'Miscellaneous  Charges'  of
Income under Financial Budget Head of Solid Waste Management Department.

      However,  considering  the  complaints/  representations  as  well  as
certain other aspects regarding Trade  refuse  charge,  meetings  were  held
with the  officials  of  1)  Licencing  Department,  Shops  &  Establishment
Department (3)  health  department  and  (4)  Market  Department  and  after
detailed deliberations it was proposed to carry out  suitable  modifications
in Trade  refuse  charges  for  which  the  business  people  were  examined
regarding the Trade refuse charge.  The examination  reports  received  from
all the department levels were carefully studied and  the  aspects  such  as
the Trade refuse charge  being  levied  on  the  business,  the  expenditure
incurred for disposal of the waste generated  by  them  were  examined,  and
accordingly Hon'ble Municipal  Commissioner  has  given  approval  vide  No.
MGC/F/5874 dated 2.9.2011 to charge  Trade  refuse  charge  accordingly  and
following decision was taken.

As the Trade refuse  charge  being  levied  by  the  Shops  &  Establishment
Department in proportion with  the  waste  generation,  hence   it  will  be
continued as per the circular No. Pra.A/6123 dated 05.06.1999.

The businesses for which the complaints about the Trade refuse charge  being
more and in respect of whom changes in the Trade  refuse  charge  have  been
made in accordance with their waste generation  from  the  year  2008,  have
been indicated in 'schedule B-1".

Trade refuse charge for the halls used for marriages and  parties  is  being
introduced now.  The solid waste generated in  halls  of  schools,  colleges
and the functions in layout R.G. Plots of  the  housing  societies,  is  not
included in commercial tax.

In respect  of the business who do not agree with the revised  Trade  refuse
charge, applications may be accepted  from  them   in  enclosed  format  and
after examining the same, a report be sent to the concerned  Asst.  Engineer
(S.W.M.) for submitting  to Chief Engineer (S.W.M.).

In respect of the business where there  are  more  than  one  licences,  the
Trade refuse charge will be levied on the licence  of  which  the  fees  are
more than other licences.

Trade refuse charge will be increased by 10  percent  every  year  from  the
year 2009.

In respect of the businesses who  have  paid  the  Trade  refuse  charge  at
less/more rate than the  rate  mentioned  in  the  circular,  it  should  be
adjusted at the time of recovering,  Trade refuse tax  from  the  next  year
with effect from 2008.  In respect of the  business  whose  rates  of  Trade
refuse charge have not been increased/decreased or those business  who  have
so far not paid the Trade refuse charge, the same should be  recovered  from
them immediately at the rate indicated in the Circular of 2008.

     All the concerned department heads will take note of this circular  and
take further action.



                                                                        Sd/-

                                                     Chief Engineer (S.W.M.)

                                                                   11.10.11.

                                                  Licencing Superintendent."





20.   The Bombay High Court, while passing  the  impugned  order  dismissing
the writ petitions came to the conclusion that the  MMC  Act  confers  power
upon the authorities of the respondents to impose conditions at the time  of
grant of trade licence and also to recover trade refuse charges.   The  High
Court observed:-


"21. The provisions of sections 368(5) and 394(5) read with Section  479  of
the MMC Act, in our view, entitle the  respondents  to  impose  restrictions
and conditions at the time of grant of licence. The same principle  will  be
applicable even at the stage of renewal of licences. The  linkage  which  is
challenged by the appellants in the present petition is more concerned  with
the manner of recovery of TRC and  not  competence  of  the  respondents  to
recover TRC. In deciding the manner, we are once again of the  opinion  that
this is a policy matter and sufficient free hand is required to be  conceded
to the respondents in formulation of such policy. The respondents are  right
in  submitting  that  it  is  not  possible  to  monitor  each   and   every
establishment for purposes of determining the precise quantity  and  quality
of  'trade  refuse'  generated.  So  also  the  respondents  are  right   in
contending that there is nothing illegal, arbitrary or  unconstitutional  in
respondents recovering TRC at the stage of renewal  of  licences.  From  the
averments made by the  appellants  themselves,  it  appears  that  this  has
always been the manner in which the respondents have  been  collecting  TRC.
In matters of policy, merely because some other system of collection may  be
better, is no ground to exercise power of judicial review. As long as it  is
not  demonstrated  that  the  manner  of  collection  is  ex-facie,  absurd,
unreasonable or disproportionately oppressive, we are unable to  uphold  the
seventh challenge as to the linking. We find  nothing  absurd,  unreasonable
or disproportionately oppressive in the policy adopted  by  the  respondents
or the manner of collection of TRC.


22.  We  have  already  held  that  there  is  nothing  illegal,  arbitrary,
unreasonable or unconstitutional in the levy of TRC by the  respondents.  In
these circumstances, we are not inclined to exercise the jurisdiction  under
Article 226 of the Constitution of India in order to assist the  appellants,
who desire to either postpone or avoid payment of TRC and at the  same  time
enjoy the benefits of a renewed licence. Upon  grant  of  renewal,  the  MMC
shall have to initiate fresh proceedings in order to  recover  TRC,  thereby
giving the appellants opportunity to resist or delay in the payment  of  the
same. The extra-ordinary jurisdiction under Article 226 of the  Constitution
of India cannot be exercised for such purposes."



21.   As stated above, the constitutional validity of Section 368(5) of  the
Act has not been  challenged  in  the  writ  petitions.  The  power  of  the
Commissioner in fixing and demanding trade refuse charges  by  the  impugned
Circular have been questioned in all those  writ  petitions  which  are  the
subject matter of these appeals.  The only challenge is the  Circular  dated
11.10.2011 and the respective  entries  in  the  schedule  appended  thereto
issued by the respondents on the ground that the rate fixed in the  schedule
appended to the Circular is wholly irrational  and  full  of  arbitrariness.
The main contention made by the appellants are that  they  do  not  generate
any trade refuse  and,  therefore,  the  rate  fixed  for  levy  of  TRC  is
arbitrary, unreasonable and violative of Articles 14  and  19(1)(g)  of  the
Constitution of India.



22.    Since the constitutional validity of different  provisions  including
Section 368 of the Act was not challenged, we do not think it  necessary  to
go into the vires of the said provisions.  The only issue that needs  to  be
considered is as to whether the fees  or  charge  imposed  by  the  impugned
Circular dated 11.10.2011 is just and proper or suffers from  arbitrariness.






23.   There is no dispute with regard to the settled legal proposition  that
in almost all the  statute  dealing  with  legal  administration,  Municipal
Authorities have inevitably to be delegated the power of taxation.  The  aim
and object of the scheme have to be taken into consideration while  deciding
the question as to  the  excessive  exercise  of  power  in  the  matter  of
collection of fees and charges.




24.   However, it would be appropriate to refer the principles laid down  by
this Court in the case of   The  Commissioner,  Hindu  Religious  Endowment,
Madras vs. Sri Lakshmindra Tirtha Swamiar of  Shirur  Mutt,  (1954)  1   SCR
1005: AIR 1954 SC 282, which according to us will be the complete answer  to
the points raised by  Mr.  Divan  and  Mr.  Singh,  learned  senior  counsel
appearing for the appellants.  In para 44, this Court observed:

"44. Coming now to fees, a 'fee' is generally defined to be a charge  for  a
special service rendered to individuals by  some  governmental  agency.  The
amount of fee levied is supposed to be based on  the  expenses  incurred  by
the Government in rendering the service, though in many cases the costs  are
arbitrarily assessed. Ordinarily, the fees are uniform  and  no  account  is
taken of the varying abilities of different recipients to pay (Vide Lutz  on
"Public Finance" p.  215.).  These  are  undoubtedly  some  of  the  general
characteristics, but as there may be  various  kinds  of  fees,  it  is  not
possible to formulate a definition that would be applicable to all cases."



25.   A fee undoubtedly, is a payment primarily in public interest, but  for
some special services, rendered or some special work done  for  the  benefit
of those from whom payments are demanded.  In  other  words,  fees  must  be
levied in consideration of certain  services  which  the  individual  accept
willingly or unwillingly. It is also  necessary  that  fees  or  charges  so
demanded must be appropriated for that purpose and  must  not  be  used  for
other general public purposes.  Further, indisputably, the  legislature  can
delegate its power to statutory authority, to levy taxes  or  fees  and  fix
the rate in regard thereto.



26.  Elaborating the distinction between the tax and a fee,  this  Court  in
number of decisions held that the  element  of  compulsion  or  coercion  is
present in all impositions, though in different degrees and that it  is  not
totally absent in fees.  The compulsion lies in the  fact  that  payment  is
enforceable by law against a man in spite of his unwillingness  or  want  of
consent and this element is present in taxes as well as in fees.



27.   Since the provisions of  Section  368(5)  of  the  Act  is  not  under
challenge the decisions relied upon by Mr.  Divan  and  Mr.  Singh,  learned
senior counsel appearing for the appellants, will  have  no  application  in
the facts and circumstances of the present case.  Be that as it may,  it  is
well settled that  an  Act  delegating  power  to  the  local  body  without
providing a maximum rate does not by itself render the delegation  excessive
or invalid.



28.    Coming  back  to  the  impugned  Circular,  it  reveals  that   after
considering the complaints and representations  and  certain  other  aspects
regarding trade refuse charges, decisions have been taken by the  authority.
Clause (4) and (6) of the said circular are re-quoted hereinbelow:-

  In respect  of the business who  do  not  agree  with  the  revised  Trade
refuse charge, applications may be accepted from them   in  enclosed  format
and after examining the same, a  report  be  sent  to  the  concerned  Asst.
Engineer (S.W.M.) for submitting  to Chief Engineer (S.W.M.).



Trade refuse charge will be increased by 10  percent  every  year  from  the
year 2009."



29.   So far clause (4) is concerned, provision has  been  made  for  making
application by persons in respect of particular business  who do  not  agree
with the revised trade refuse charge may approach the  authority  by  making
necessary  application  and   on   such   application   or   representation,
appropriate  response  shall  be  given  to  those  persons,  who  have  any
grievance to that effect.  We, therefore,  direct  the  respondent-authority
to follow the procedure mentioned in clause (4) of the circular.



30.    As regard clause (6) of the Circular, prima  facie   we  are  of  the
definite opinion that increasing trade refuse charge by 10% every year  from
2009 is highly arbitrary and without  any  guidelines.   In  our  considered
opinion, the automatic increase of trade refuse charges by  10%  every  year
irrespective of the nature of business carried on by the  Licencee  violates
principles of natural justice. We, therefore,  hold  that  respondent  shall
not recover any  increased  trade  refuse  charges  with  effect  from  2009
without giving reasonable opportunity of hearing to the licencee or  persons
liable to pay such increased charges.





31.   After giving our anxious consideration in the matter, we do  not  find
any reason to differ with the view  taken  by  the  High  Court  in  passing
impugned order.   However, we modify the  impugned  order  only  by  holding
that clause (6) of the Circular increasing trade refuse  charge  by  10  per
cent every year from 2009 is highly arbitrary  and  without  any  guideline.
We, therefore, hold that the increase of trade refuse charge by 10 per  cent
every year irrespective of the  actual  escalation  or  reduction  in  costs
involved or the  nature  of  business  carried  on  by  the  Licencee   etc.
violates  principles  of  reasonableness  as  well   as   natural   justice.
Accordingly, we direct  that  the  respondent-authority  shall  not  recover
increased trade refuse charge at the rate of 10 per cent  with  effect  from
2009.  The actual increase can be ascertained and  realized  in  future  but
not without giving reasonable opportunity of hearing to the licencee or  the
persons liable to pay the said increased charges.

32.   With the aforesaid modification and directions,  these  appeals  stand
disposed of with no order as to costs.





                                        ..................................J.
                                                                (M.Y. Eqbal)


                                        ..................................J.
(Shiva Kirti Singh)
New Delhi
February 04, 2015

delay in executing the work resulted in loss for which the respondent was entitled to reasonable compensation. Evidence of precise amount of loss may not be possible but in absence of any evidence by the party committing breach that no loss was suffered by the party complaining of breach, the Court has to proceed on guess work as to the quantum of compensation to be allowed in the given circumstances. Since the respondent also could have led evidence to show the extent of higher amount paid for the work got done or produce any other specific material but it did not do so, we are of the view that it will be fair to award half of the amount claimed as reasonable compensation. 19. Accordingly, this appeal is partly allowed and the decree granted by the High Court is modified to the effect that the respondent-plaintiff is entitled to half of the amount claimed with rate of interest as awarded by the High Court. Out of the amount deposited in this Court, the respondent will be entitled to withdraw the said decretal amount and the appellant will be entitled to take back the remaining . 20. The appeals are disposed of accordingly.

                                 REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                    CIVIL APPEAL NOS...1440-1441 OF 2015
              (ARISING OUT OF SLP (C) NOS.35365-35366 OF 2012)


M/S. CONSTRUCTION & DESIGN SERVICES                          ...APPELLANT

VERSUS

DELHI DEVELOPMENT AUTHORITY                             ...RESPONDENT

                               J U D G M E N T

ADARSH KUMAR GOEL, J.
1.    Leave granted.
2.    These appeals have been preferred against final judgment
and order dated 10th February, 2012 in RFA(OS) No.35 of 2010 and  dated  1st
June, 2012 in R.P. No.369 of 2012  in RFA (OS) No.35 of 2010 passed  by  the
High Court of Delhi at New Delhi.
3.    The question raised for our consideration is when and to  what  extent
can the stipulated liquidated damages for breach of a contract  be  held  to
be in the nature of penalty in absence of evidence of  actual  loss  and  to
what extent the stipulation be taken to be the measure of  compensation  for
the loss suffered even in absence of specific  evidence.   Further  question
is whether burden of proving that  the  amount  stipulated  as  damages  for
breach of contract was penalty is on the person committing breach.
4.    The respondent - Delhi Development Authority awarded a  contract  vide
agreement dated 4th October,  1995  to  the  appellant  for  constructing  a
sewerage pumping station at CGHS area at Kondli Gharoli at Delhi.  Clause  2
in the agreement provided as follows:
"the contractor shall comply with the said time schedule.  In the  event  of
the contractor failing to comply with this condition, he shall be liable  to
pay as compensation an amount equal to one percent or  such  smaller  amount
as the Superintending Engineer Delhi Development Authority  (whose  decision
shall be final) may decide on the said estimated cost of the whole work  for
everyday that the due quantity of work remains incomplete;  provided  always
that the entire amount of compensation to be paid under  the  provisions  of
this clause shall not exceed ten percent of the estimated cost  of  work  as
shown in the tender."

Since the work proceeded at slow pace and the appellant-defendant failed  to
complete the same, the contract was  terminated  on  17th  September,  1999.
Under Clause  2  of  the  agreement,  the  Superintending  Engineer  of  the
respondent levied compensation of Rs.20,86,446/- for delay in  execution  of
the project by an order of penalty dated 21st July,  1999  and  called  upon
the appellant to deposit the same.   The said order reads thus :
"The work was being executed by you at extremely  slow  pace.   You  had  to
complete the job by 7.1.97.  You had failed to complete the work even  after
expiry of 2 years six months after stipulated date of  completion.   Despite
the clear direction from Hon'ble Supreme Court  to  expedite  the  work  and
complete the job by June-99, you have failed  to  comply  the  direction  of
Court and have rather abandoned the work since  6.4.99  and  you  failed  to
complete the work till date.

In exercise of the power conferred on me under clause-2  of  the  agreement,
I, R.C. Kinger, the SE/CC-10/DDA decide and determine that  you  are  liable
to pay Rs.20,86,446/- (Rs. Twenty lacs  eighty  six  thousand  four  hundred
forty six only) as and by way of compensation as stipulated in  clause-2  of
the agreement."

5.    On failure of the  appellant  to  respond  to  the  above  order,  the
respondent filed suit No.1311 of  2002  before  the  Delhi  High  Court  for
recovery of the said amount with interest.  The  appellant-defendant  failed
to contest the suit inspite of  service  but  made  an  application  raising
objection to the maintainability of the suit on the ground that  vide  order
dated 19th December, 2001, a former Judge  of  Delhi  High  Court  had  been
appointed arbitrator to decide the disputes arising  out  of  the  contract.
The said application was, however, dismissed on the ground that  the  matter
in the suit was not within  the  purview  of  the  arbitration.   The  Court
proceeded to decide the suit on merits.
6.    Learned single Judge dismissed the suit  holding  that  the  plaintiff
had not treated the time  fixed  for  performance  of  the  contract  as  of
essence and the compensation stipulated in Clause 2 of the agreement was  in
the nature of penalty.  The basis for levy  of  compensation  had  not  been
indicated  so  as  to  determine  whether  the  compensation   claimed   was
reasonable.  Reliance was placed on the  judgment  of  this  Court  in  M/s.
Arosan Enterprises Ltd. vs. Union of India and another[1] in support of  the
view that the time stipulated in the agreement was  not  treated  to  be  of
essence.  It was further observed that since the claim for compensation  was
based on sole discretion and not on the basis of  loss  suffered,  the  same
was in the nature of  penalty  and  thus,  the  said  Clause  could  not  be
enforced in view of Section 74 of the Contract Act as  laid  down  in  Fateh
Chand vs. Bal Kishan Das[2], Maula Bux vs. Union of India[3], M.L.  Devendra
Singh vs. Syed Khaja[4], P. D'Souza  vs.  Shondrilo  Naidu[5]  and  Oil  and
Natural Gas Corporation Ltd. vs.  Saw Pipes Ltd.[6].  Learned  single  Judge
concluded as follows:-
"20.    The Court is of opinion that the plaintiff having  not  treated  the
contract as of the essence, and having extended the time for performance  on
several occasions, cannot now  fall  back  on  a  presumptive  condition  to
impose the maximum compensation leviable; enforcement of such  action  would
be giving effect to  a  penalty  clause.   As  far  as  granting  reasonable
compensation is concerned, the plaintiff has not shown even  the  basis  for
levying the compensation that it did in this case.  As  said  earlier,  this
aspect assumes significance, because the plaintiff was aware what extent  of
the contract was performed, as well as what was the exact  extent  of  loss,
in monetary terms, either by way of payment to another  contractor,  or  the
amount spent for completing the work.  In the circumstances,  the  Court  is
of opinion that the relief sought cannot be granted."

7.    On appeal, the Division Bench reversed the view taken by  the  learned
single Judge.  It was held that delay in a contract  of  construction  of  a
public utility service could itself be a  ground  for  compensation  without
proving the actual loss.  Accordingly, the suit was decreed for  payment  of
Rs.20,86,446/- with pendente lite and future interest @ 9%  per  annum.   It
was observed:
"5.   The respondent had been proceeded against ex-parte at  the  trial  and
has chosen not to appear even before us.  The evidence led by the  appellant
has remained unrebutted.

6.    Suffice would it be to state that  the  observations  of  the  Supreme
Court in para 68 of the decision reported as AIR 203 SC  2629  ONGC  v.  Saw
Pipes Ltd. are squarely applicable in the instant case as per which  delayed
constructions such as completing construction  of  road  or  bridges  within
stipulated time would be difficult to be linked with actual  loses  suffered
by the State and in such cases the pre-estimated damages  envisaged  in  the
contract have to be paid.

7.    Now, a Sewage Pumping Station is  not  something  from  which  Revenue
would be generated by the State.  It is a public utility service and  has  a
role to play in maintaining or  preserving  clean  environment.   If  Sewage
Pumping Station are not set up, sewage would stagnate as cess pools  in  low
lying areas and would cause environmental degradation, both  air  and  soil.
That apart,  in  a  delayed  project,  interest  on  blocked  capital  would
obviously be a measure of damages.

8.    The learned Single Judge has ignored as aforesaid  and  held  that  in
the absence of proof of damages, compensation levied under  clause-2  cannot
be recovered.  The learned Single Judge is incorrect  in  view  of  the  law
declared by the Supreme Court and thus we allow the  appeal  and  set  aside
the impugned decree.  Suit filed by the  appellant  is  decreed  in  sum  of
Rs.20,86,446/- with pendente lite and future interest @ 9%  per  annum  from
date of suit till realization  and  the  suit  filed  by  the  appellant  is
disposed of accordingly with costs all throughout."

8.    The appellant filed a review petition which was dismissed.
9.    We have heard learned counsel for the parties.
10.   On 19th November, 2012 notice was  issued  subject  to  the  appellant
depositing the entire decretal amount in this  Court  and  by  a  subsequent
order, the amount was directed to be kept in term deposit for  a  period  of
one year to ensure for the benefit of the successful  party.    Accordingly,
the amount of Rs.20,86,500/- is said to have been deposited which  has  been
kept in FDR which is going to mature on 8th February, 2015.
11.   Learned counsel for the appellant submitted that  the  Division  Bench
erred in holding that the entire amount of stipulated  damages  was  genuine
measure of compensation when instead of any fixed amount, only  the  maximum
amount of compensation  was  stipulated.   The  contract  in  question  only
envisaged the upper  limit  of  damages  which  could  be  claimed.   It  is
submitted that the agreement quoted in earlier part  of  the  order  clearly
shows that what is stipulated is that the compensation shall not exceed  10%
of the estimated cost and the amount to be  recovered  as  compensation  was
required to be determined by the Superintending Engineer.   The  respondent-
plaintiff has failed to show the actual amount of loss suffered  in  getting
the work executed from any other contractor.   In  these  circumstances,  at
best a part of it could be  taken  to  be  compensation  and  the  remaining
penalty.  He submitted that the judgment of this Court  in  Saw  Pipes  Ltd.
(supra) relied upon by  the  High  Court  is  distinguishable  in  the  fact
situation of the present case.   Without  determining  that  the  stipulated
compensation was reasonable, the maximum  amount  stipulated  could  not  be
treated as compensation.
12.   Learned  counsel  for  the  respondent-plaintiff  on  the  other  hand
submitted that even  though  in  the  order  passed  by  the  Superintending
Engineer no specific basis has been shown, notice was  duly  issued  to  the
appellant  defendant   before   determining   the   reasonable   amount   of
compensation and claiming 10% of the project cost which  was  stipulated  to
be the maximum compensation,  on  account  of  delay  in  execution  of  the
project.  On failure of the appellant to  respond,  the  entire  amount  has
been rightly held to be the estimate of damages for the  loss.   Burden  was
on the defendant to show that no loss or lesser loss  was  suffered  by  the
plaintiff.
13.   We have given due consideration to the rival submissions.
14.   There is no dispute that the appellant failed to execute the  work  of
construction of sewerage pumping station within the stipulated  or  extended
time.  The said pumping station certainly was of public utility to  maintain
and  preserve  clean  environment,  absence  of  which   could   result   in
environmental degradation  by  stagnation  of  water  in  low  lying  areas.
Delay also resulted in loss  of  interest  on  blocked  capital  as  rightly
observed in para 7 of the impugned judgment of the  High  Court.   In  these
circumstances, loss could be assumed, even without proof and burden  was  on
the appellant who committed breach to show that no loss was caused by  delay
or that the amount stipulated as damages for breach of contract was  in  the
nature of penalty.  Even if technically the time  was  not  of  essence,  it
could not be presumed that delay was of no consequence.
15.   Thus, even if there is no specific evidence of loss suffered by
the respondent-plaintiff, the observations in  the  order  of  the  Division
Bench that the project being a public utility project, the delay
itself can be taken to have resulted in loss in the  form  of  environmental
degradation and loss of interest on the capital are not without
any basis.
16.   Once it is held  that  even  in  absence  of  specific  evidence,  the
respondent could be held to have suffered  loss  on  account  of  breach  of
contract, and  it  is  entitled  to  compensation  to  the  extent  of  loss
suffered, it is for the appellant to show that  stipulated  damages  are  by
way of penalty.  In a given case, when highest limit is  stipulated  instead
of a fixed sum, in absence of evidence of loss, part of it can  be  held  to
be reasonable, compensation and the remaining by way of penalty.  The  party
complaining of breach can certainly be allowed reasonable  compensation  out
of the said  amount  if  not  the  entire  amount.   If  the  entire  amount
stipulated is genuine pre-estimate of loss, the  actual  loss  need  not  be
proved.  Burden to prove that no loss was likely to be suffered is on  party
committing breach, as already observed.
17.   It is not necessary to refer to all the  judgments  on  the  point  in
view of categorical pronouncement  of  this  Court  in  Saw  Pipes  (supra),
laying down as follows:-
"64. It is apparent from the aforesaid reasoning recorded  by  the  Arbitral
Tribunal that it failed to  consider  Sections  73  and  74  of  the  Indian
Contract Act and the ratio laid down in Fateh  Chand  case   wherein  it  is
specifically held that jurisdiction of the court to  award  compensation  in
case of  breach  of  contract  is  unqualified  except  as  to  the  maximum
stipulated; and compensation has to be reasonable. Under Section 73, when  a
contract has been broken, the party who suffers by such breach  is  entitled
to receive compensation for any loss caused to him which  the  parties  knew
when they made the contract to be likely to result from the  breach  of  it.
This section is to be  read  with  Section  74,  which  deals  with  penalty
stipulated in the contract, inter  alia  (relevant  for  the  present  case)
provides that when a contract has been broken, if a  sum  is  named  in  the
contract as the amount to  be  paid  in  case  of  such  breach,  the  party
complaining of breach is entitled, whether or not actual loss is  proved  to
have been caused, thereby to receive from  the  party  who  has  broken  the
contract reasonable compensation not exceeding the amount so named.  Section
74 emphasizes that in case of breach of contract, the party  complaining  of
the breach is entitled to receive reasonable  compensation  whether  or  not
actual loss is proved to have been caused by  such  breach.  Therefore,  the
emphasis is on reasonable [pic]compensation. If the  compensation  named  in
the contract is by way of penalty, consideration would be different and  the
party is only entitled to reasonable compensation  for  the  loss  suffered.
But if the compensation named in the contract for  such  breach  is  genuine
pre-estimate of loss which the parties knew when they made the  contract  to
be likely to result from the breach of it, there is no question  of  proving
such loss or such party is not required to lead  evidence  to  prove  actual
loss suffered by him. Burden is on the other  party  to  lead  evidence  for
proving  that  no  loss  is  likely  to  occur  by  such  breach.  Take  for
illustration: if the parties have agreed to purchase cotton  bales  and  th
same were only to be kept as a stock-in-trade. Such bales are not  delivered
on  the  due  date  and  thereafter  the  bales  are  delivered  beyond  the
stipulated time, hence there is breach of the contract. The  question  which
would arise for consideration is - whether by  such  breach  the  party  has
suffered any loss. If the price  of  cotton  bales  fluctuated  during  that
time, loss or gain could easily be proved. But if cotton  bales  are  to  be
purchased    for    manufacturing    yarn,    consideration     would     be
different...........

67. Take for illustration construction of a road or a bridge.  If  there  is
delay  in  completing  the  construction  of  road  or  bridge  within   the
stipulated [pic]time, then it would be difficult to prove how much  loss  is
suffered by the society/State. Similarly, in the present  case,  delay  took
place in deployment of rigs and on that basis actual production of gas  from
platform B-121 had to be changed. It is undoubtedly true  that  the  witness
has  stated  that  redeployment  plan  was  made  keeping  in  mind  several
constraints including shortage  of  casing  pipes.  The  Arbitral  Tribunal,
therefore, took into consideration the aforesaid  statement  volunteered  by
the witness that shortage of casing  pipes  was  only  one  of  the  several
reasons and not the only reason which led to change in deploym7ent  of  plan
or redeployment of rigs Trident II platform B-121. In our view,  in  such  a
contract, it would be difficult to prove exact  loss  or  damage  which  the
parties suffer because of the breach thereof. In such a  situation,  if  the
parties have pre-estimated such loss after clear understanding, it would  be
totally unjustified to arrive at the  conclusion  that  the  party  who  has
committed breach of the contract is  not  liable  to  pay  compensation.  It
would be against the specific provisions  of  Sections  73  and  74  of  the
Indian  Contract  Act.  There  was  nothing  on  record  that   compensation
contemplated by the parties  was  in  any  way  unreasonable.  It  has  been
specifically mentioned  that  it  was  an  agreed  genuine  pre-estimate  of
damages duly  agreed  by  the  parties.  It  was  also  mentioned  that  the
liquidated damages are not by way of penalty. It was also  provided  in  the
contract that such damages are to be recovered by  the  purchaser  from  the
bills for payment of the cost of material submitted by  the  contractor.  No
evidence is led by the claimant to establish that the  stipulated  condition
was by way of penalty or the compensation  contemplated  was,  in  any  way,
unreasonable. There was no reason for the Tribunal  not  to  rely  upon  the
clear and unambiguous terms of agreement  stipulating  pre-estimate  damages
because of delay in supply of goods. Further, while extending the  time  for
delivery of the  goods,  the  respondent  was  informed  that  it  would  be
required to pay stipulated damages."

18.   Applying the above principle to the present case, it  could  certainly
be presumed that delay in executing the work resulted in loss for which  the
respondent was entitled to reasonable  compensation.   Evidence  of  precise
amount of loss may not be possible but in absence of  any  evidence  by  the
party committing breach that no loss was suffered by the  party  complaining
of breach, the Court has to proceed on guess  work  as  to  the  quantum  of
compensation  to  be  allowed  in  the  given  circumstances.    Since   the
respondent also could have led evidence to show the extent of higher  amount
paid for the work got done or produce any other  specific  material  but  it
did not do so, we are of the view that it will be fair to award half of  the
amount claimed as reasonable compensation.
19.   Accordingly, this appeal is partly allowed and the decree  granted  by
the High Court is modified to the effect that  the  respondent-plaintiff  is
entitled to half of the amount claimed with rate of interest as  awarded  by
the High Court.  Out of the amount deposited in this Court,  the  respondent
will be entitled to withdraw the said  decretal  amount  and  the  appellant
will be entitled to take back the remaining .
20.   The appeals are disposed of accordingly.


                       ...................................................J.
                                              (T.S. THAKUR)




                       ...................................................J.
                                              (ADARSH KUMAR GOEL)

NEW DELHI
FEBRUARY 4, 2015



-----------------------
[1]    (1999) 9 SCC 449
[2]    (1964) 1 SCR 515
[3]    (1969) 2 SCC 554
[4]    (1973) 2 SCC 515
[5]    (2004) 6 SCC 649
[6]    (2003) 5 SCC 705

Speedy trial is a right of the accused and is also in the interest of justice. We are thus, of the opinion that the prosecution and the trial Court must ensure speedy trial so that right of the accused is protected. This Court has already directed that the investigation be finally completed and final charge sheet filed on or before March 15, 2015. We have also been informed that a special prosecutor has been appointed and the matter is being tried before a Special Court. The High Court is monitoring the matter. We expect that in these circumstances, the trial will proceed day to day and its progress will be duly monitored. Material witnesses may be identified and examined at the earliest. Having regard to special features of this case, we request the High Court to take up the matter once in three months to take stock of the progress of trial and to issue such directions as may be necessary. We also direct that if the trial is not completed within one year from today for reasons not attributable to the appellant, the appellant will be entitled to apply for bail afresh to the High Court which may be considered in the light of the situation which may be then prevailing.

                                 REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO. 220 OF 2015
                 (ARISING OUT OF SLP (CRL.) NO.7506 OF 2014)

DR. VINOD BHANDARI
...APPELLANT


                 VERSUS


STATE OF M.P.
...RESPONDENT
J U D G M E N T

ADARSH KUMAR GOEL, J.
1.    Leave granted.
2.    This appeal has been preferred against final judgment and order  dated
11th August, 2014 passed by the High Court of Madhya Pradesh at Jabalpur  in
Misc. Criminal Case No.10371 of 2014 whereby a Division Bench  of  the  High
Court dismissed the bail application filed by
the appellant.
3.    M.P. Vyavsayik Pareeksha Mandal (M.P. Professional Examination  Board)
known as  Vyapam  conducts  various  tests  for  admission  to  professional
courses  and  streams.   It  is  a  statutory  body  constituted  under  the
provisions of M.P. Professional Examination Board Act,  2007.   As  per  FIR
No.12 of 2013 registered on 30th October, 2013 at  police  station,  S.T.F.,
Bhopal under Sections 420, 467, 468, 471, 120B  of  the  Indian  Penal  Code
("IPC") read with Section 3(d), 1, 2/4 of the Madhya Pradesh  Manyata  Prapt
Pariksha Adhiniyam, 1937 and under Sections 65 and 66 of the I.T. Act,  Shri
D.S.  Baghel,  DSP  (STF),  M.P.  Police  Headquarters,  Bhopal  during  the
investigation of another  case  found  that  copying  was  arranged  in  PMT
Examination, 2012 at the instance of concerned officers of  the  Vyapam  and
middlemen who for monetary consideration helped the undeserving students  to
pass the entrance examination to get admission  to  the  M.B.B.S  course  in
Government and Private Medical Colleges in the State of  M.P.   As  per  the
material collected during investigation, in  pursuance  of  conspiracy,  the
appellant Dr. Vinod Bhandari, who is the Managing Director of Shri  Aurbindo
Institute of Medical Sciences, Indore, received money  from  the  candidates
through co-accused Pradeep Raghuvanshi who was working in Bhandari  Hospital
& Research Centre, Indore as General Manager and who was also looking  after
the admissions and management work of Shri  Aurbindo  Institute  of  Medical
Sciences, Indore, for arranging the undeserving candidates to  pass  through
the MBBS Entrance Examination by unfair means.  He gave part  of  the  money
to Nitin Mohindra, Senior Systems Analyst in Vyapam, who was  the  custodian
of the model answer key,  along  with  Dr.  Pankaj  Trivedi,  Controller  of
Vyapam.  During investigation, disclosure  statement  was  made  by  Pradeep
Raghuvanshi  which  led  to  the  recovery  of  money  and  documents.   The
candidates, their guardians, some officers of the Vyapam and middlemen  were
found to be involved in the scam.  It appears that  there  are  in  all  516
accused out of which 329 persons have been arrested and 187 are  due  to  be
arrested.  Substantial investigation has been completed  and  charge  sheets
filed but certain aspects are still being investigated and as per  direction
of this Court in a  Petition  for  Special  Leave  to  Appeal  (C)  ....  CC
No.16456 of 2014 titled "Ajay Dubey versus State  of  M.P.  &  Ors.",  final
charge sheet is to be filed by the Special Task Force  on  or  before  March
15, 2015 against the remaining  accused.    Allegations  also  include  that
some high scorer candidates were arranged  in  the  examination  centre  who
could give correct answers and the candidates who paid money were  permitted
to do the copying.  Other modus  operandi  adopted  was  to  leave  the  OMR
sheets blank which blank sheets  were  later  filled  up  with  the  correct
answers by the corrupt officers of Vyapam. Further,  the  model  answer  key
was copied and made available to concerned candidates one night  before  the
examination.  Each candidate paid few lakhs of rupees to the  middlemen  and
the money was shared by the middlemen with the officers of the Vyapam.   The
appellant received few crores of rupees  in  the  process  from  undeserving
candidates to get admission to the M.B.B.S. and, as per  allegation  in  the
other  connected  matter,  i.e.,  FIR  No.14  of  2013  registered  on  20th
November, 2013 with the same police station, to the PG medical courses.
4.    In the present case, the appellant was arrested on 30th January,  2014
while in the other FIR he was granted anticipatory  bail  on  16th  January,
2014.  Second Bail application of the appellant  in  the  present  case  was
considered by the 9th Additional Sessions Judge, Bhopal and  dismissed  vide
Order dated 9.5.2014.  Earlier, first bail application  had  been  dismissed
on 5th February, 2014.  While declining prayer  for  bail,  it  was,  inter-
alia, observed :
"In the present  case,  it  is  alleged  against  the  accused  that  he  in
connivance  with  the  officers  of  coordinator  State  level   institution
(VYAPAM) in  lieu  of  huge  amount  got  the  candidates  selected  in  the
examination  after  getting  them  passed  in  the  Pre-Medical  Test  (PMT)
Examination, which is mandatory and important for admission in  the  medical
education institution.  According to  the  prosecution,  applicant  snatched
right  of  deserving  and  scholar  students,  he  got  selected  ineligible
candidates in the field  of  medical  education.   This  case  is  not  only
related  to  economic  offence,  rather  apart  from  depriving  rights   of
deserving and scholar  students,  it  is  related  to  the  human  life  and
health."

5.    The Division Bench of the High Court, in its Order,  referred  to  the
supplementary challan filed against  the  appellant  on  24th  April,  2014,
indicating the following material :
"Offence of the accused :

The  accused  Dr.  Vinod  Bhandari  has  been  the  Managing   Director   of
S.A.I.M.S., Indore and prior to  the  P.M.T.  Examination  2012  he  had  in
collusion with Nitin Mohindra, Senior System Analyst of Vyapam, for  getting
some of his candidates passed in the P.M.T. Examination,  2012  and  stating
to send list of his candidates and cash amount through his  General  Manager
Pradeep Raghuvanshi, subsequently he sent list of his 08 candidates  and  60
lakh rupees in cash through his General Manager and  07  candidates  out  of
aforesaid candidates  were  got  passed  by  using  unfair  means  with  the
connivance of Nitin Mohindra by way of  filling  up  the  circles  in  their
O.M.R. sheets and received  the  amount  in  illegally  manner  by  hatching
conspiracy which has been recovered/seized from his General Manager  Pradeep
Raghuvanshi.  In this manner, the accused has committed a serious  crime  in
well designed conspiracy by  hatching  conspiracy  and  committed  organized
crime.

Evidences available against the accused :-
The certified copy of the excel sheet of the data  retrieved from  the  hard
disc seized from the   office of the accused Nitin Mohindra;
The documents, note sheets and the activity  chart  of  P.M.T.  Examination,
2012 seized from       Vyapam;
The list of 150 candidates seized from Shri  Aurbindo Institute  of  Medical
Sciences College,      Indore in  respect  of  M.B.B.S.  admission  for  the
session 2012-13 at the instanced of the      accused Dr. Bhandari;
Memorandums of other accused persons;
The seizure memo of the amount seized from   Pradeep Raghuvanshi."

6.    While declining bail, the High Court observed :
"To put it differently after considering all aspects of the  matter  as  the
material already placed  along  with  the  first  charge-sheet  prima  facie
indicates complicity of the applicant in the commission of the crime and  is
not a case of no evidence against the applicant at  all;  coupled  with  the
fact that if the charge is proved against  the  applicant,  the  offence  is
punishable with life sentence; as the role of the applicant  is  being  part
of the conspiracy  and  is  the  kingpin;  further  that  the  applicant  is
allegedly  involved  in  huge  money  transaction  including  to  sponsor  8
candidates who were to  appear  in  the  VYAPAM  examination;  and  is  also
prosecuted for another offence of similar type of having sponsored  8  other
candidates; and has the potential of influencing  the  witnesses  and  other
evidence  and  more  importantly  the  investigation  of  the  large   scale
conspiracy is still incomplete; as also keeping in mind the past conduct  of
the applicant in going abroad soon  after  the  registration  of  the  Crime
No.12/2013 and returning back to India on  21.1.2014  only  after  grant  of
anticipatory bail on 16.1.2014, for all these reasons, for the  time  being,
the applicant cannot be admitted to the privilege of regular bail."
7.    We have heard learned counsel for the parties.
8.    Main contention advanced on  behalf  of  the  appellant  is  that  the
appellant has already been in custody for about one year  and  there  is  no
prospect of commencement of trial in the near  future.   Even  investigation
is not likely to be completed before March 15, 2015.  There  are  about  516
accused and large number of witnesses and documents.  Thus, the  trial  will
take long time.  In these circumstances, the appellant  cannot  be  kept  in
custody for indefinite period before his guilt is established by  acceptable
evidence.  Our attention has been invited  to  order  dated  27th  November,
2014 passed by the trial Court, recording the request of the Special  Public
Prosecutor for deferring the proceedings of  the  case  till  the  cases  of
other accused against whom  supplementary  charge  sheets  were  filed  were
committed to the Court of Session and till supplementary  charge  sheet  was
filed against several other accused persons.  In the said order,  the  Court
directed the Investigating Officer  to  indicate  as  to  against  how  many
accused persons investigation is pending  and  the  time  frame  for  filing
charge sheets/supplementary charge sheets.  In response to the  said  order,
the Investigating Officer, vide  letter  dated  25th  December,  2014  filed
before the trial Court, stated that 329 persons had  already  been  arrested
and 187 were yet to be arrested and efforts were  being  made  to  file  the
charge sheets by March 15, 2015 in compliance  of  the  directions  of  this
Court.  Thus, the submission on behalf of the appellant is that in  view  of
delay in trial, the appellant was entitled to bail.
9.    On the other hand, learned counsel for the State  opposed  the  prayer
for grant of bail by submitting that this Court ought not to interfere  with
the discretion exercised by the trial Court and the High Court in  declining
bail to the appellant.  He points out that the  trial  Court  and  the  High
Court have  dealt  with  the  matter  having  regard  to  all  the  relevant
considerations,  including  the  nature   of   allegations,   the   material
available, likelihood of misuse of bail and also the impact of the crime  in
question on the society.  He pointed out that the Courts  below  have  found
that there is a clear prima facie case showing complicity of the  appellant,
the offence was  punishable  with  life  sentence,  the  appellant  was  the
kingpin  in  the  conspiracy,  he  had  the  potential  of  influencing  the
witnesses, investigation was still pending and  the  appellant  had  earlier
gone abroad to avoid arrest.
10.    Referring to the counter affidavit filed on behalf of the  State,  he
points out that in the  excel  sheet  recovered  from  Nitin  Mohindra,  the
appellant has been named and in the  statement  under  Section  164  Cr.P.C.
Dr. Moolchand Hargunani disclosed that he had met the  appellant  who  asked
him to meet Pradeep Raghuvanshi for admission to PMT and  he  was  asked  to
pay Rs.20 lakhs.  He could not pay the said amount and  his  son  could  not
get the admission.  A sum of Rs.50 lakh for PMT Examination and  1.2  crores
for Pre PG Examination, 2012 was received from Pradeep Raghuvanshi  who  was
General  Manager of the appellant's hospital and in charge of  admission  to
the institute of
the appellant.
11.   We have given due consideration to the rival submissions  and  perused
the material on record.
12.   It is well settled that at pre-conviction stage, there is  presumption
of innocence.  The object of keeping a person in custody is  to  ensure  his
availability to face the trial and to  receive  the  sentence  that  may  be
passed.  The detention  is  not  supposed  to  be  punitive  or  preventive.
Seriousness of the allegation or the availability  of  material  in  support
thereof  are not the only  considerations  for  declining  bail.   Delay  in
commencement and conclusion of trial is a factor to be  taken  into  account
and the accused cannot be kept in custody for indefinite period if trial  is
not likely to be concluded within reasonable time.  Reference  may  be  made
to decisions of this Court in Kalyan Chandra Sarkar  vs.  Rajesh  Ranjan[1],
State of U.P. vs. Amarmani Tripathi[2], State of Kerala  vs.  Raneef[3]  and
Sanjay Chandra vs. CBI[4].
13.   In Kalyan Chandra Sarkar (supra), it was observed :
"8. It is trite law that personal liberty cannot be  taken  away  except  in
accordance with the procedure established by  law.  Personal  liberty  is  a
constitutional guarantee. However, Article 21  which  guarantees  the  above
right  also  contemplates  deprivation  of  personal  liberty  by  procedure
established by law. Under the  criminal  laws  of  this  country,  a  person
accused of offences which are non-bailable  is  liable  to  be  detained  in
custody during the pendency of trial  unless  he  is  enlarged  on  bail  in
accordance with law. Such detention cannot be questioned as being  violative
of Article 21 since the same is authorised by law. But even persons  accused
of non-bailable offences are entitled to bail if the court  concerned  comes
to the conclusion that the prosecution  has  failed  to  establish  a  prima
facie case against him and/or if the court is satisfied for  reasons  to  be
recorded that in spite of the existence of prima facie case there is a  need
to release such persons on bail where fact situations require it to  do  so.
In that process a person whose application for enlargement on bail  is  once
rejected is not precluded from filing a subsequent application for grant  of
bail if there is a change in the  fact  situation.  In  such  cases  if  the
circumstances then prevailing require  that  such  persons  be  released  on
bail, in spite of his earlier applications being rejected,  the  courts  can
do so."

14.   In Amarmani Tripathi (supra), it was observed :
18. It is well settled that the matters to be considered in  an  application
for bail are (i) whether there is any prima facie or  reasonable  ground  to
believe that the accused had committed the offence; (ii) nature and  gravity
of the charge; (iii) severity of the punishment in the event of  conviction;
(iv) danger of the accused absconding or fleeing, if released on  bail;  (v)
character, behaviour, means, position and  standing  of  the  accused;  (vi)
likelihood of the offence being repeated; (vii) reasonable  apprehension  of
the witnesses being tampered with; and (viii) danger, of course, of  justice
being  thwarted  by  grant  of  bail  [see  Prahlad  Singh  Bhati  v.   NCT,
Delhi[(2001) 4 SCC 280] and Gurcharan Singh v. State (Delhi  Admn.)  [(1978)
1 SCC 118]. While a vague allegation that the accused may  tamper  with  the
evidence or witnesses may not be a ground to refuse bail, if the accused  is
of such character that his mere  presence  at  large  would  intimidate  the
witnesses or if there is material to show that he will use  his  liberty  to
subvert justice or tamper with the evidence, then bail will be  refused.  We
may also refer to the following principles relating to grant or  refusal  of
bail stated in Kalyan Chandra Sarkar v. Rajesh Ranjan [(2004)  7  SCC  528]:
(SCC pp. 535-36, para 11)

"11. The law in regard to grant or refusal of bail  is  very  well  settled.
The court granting bail  should  exercise  its  discretion  in  a  judicious
manner and not as a matter of course. Though at the stage of  granting  bail
a detailed examination of evidence and elaborate documentation of the  merit
of the case need not be undertaken, there is a  need  to  indicate  in  such
orders reasons for  prima  facie  concluding  why  bail  was  being  granted
particularly where the accused is charged  of  having  committed  a  serious
offence. Any order devoid of such reasons would suffer from  non-application
of mind. It is also necessary for the court granting bail to consider  among
other circumstances, the following factors also before granting  bail;  they
are:

(a) The nature of accusation and the  severity  of  punishment  in  case  of
conviction and the nature of supporting evidence.
(b) Reasonable apprehension of tampering with the  witness  or  apprehension
of threat to the complainant.
(c) Prima facie satisfaction of the court in support  of  the  charge.  (See
Ram Govind Upadhyay v. Sudarshan Singh [(2002) 3  SCC  598]]  and  Puran  v.
Rambilas [(2001) 6 SCC 338.)"

22. While a detailed examination of the evidence  is  to  be  avoided  while
considering the question of bail, to ensure that there is no prejudging  and
no prejudice, a brief examination to be satisfied  about  the  existence  or
otherwise of a  prima  facie  case  is  necessary.  An  examination  of  the
material in this  case,  set  out  above,  keeping  in  view  the  aforesaid
principles, disclose prima facie, the existence of  a  conspiracy  to  which
Amarmani and Madhumani were parties.  The  contentions  of  the  respondents
that the confessional statement  of  Rohit  Chaturvedi  is  inadmissible  in
evidence and that that [pic]should be excluded from consideration,  for  the
purpose of bail is untenable. This Court had negatived  a  somewhat  similar
contention in Kalyan Chandra Sarkar thus: (SCC p. 538, para 19)

"19. The next argument of learned counsel for the respondent is  that  prima
facie the prosecution has failed to produce any material  to  implicate  the
respondent in the crime of conspiracy. In  this  regard  he  submitted  that
most of the witnesses have already turned hostile. The only  other  evidence
available to the prosecution to connect the respondent with the crime is  an
alleged confession of the co-accused which according to the learned  counsel
was inadmissible in evidence. Therefore, he contends  that  the  High  Court
was  justified  in  granting  bail  since  the  prosecution  has  failed  to
establish even a prima facie case against  the  respondent.  From  the  High
Court order we do not find this as a ground for granting bail.  Be  that  as
it may, we think that this argument is too premature for us to  accept.  The
admissibility or otherwise of the confessional statement and the  effect  of
the evidence already adduced  by  the  prosecution  and  the  merit  of  the
evidence that may be adduced hereinafter including  that  of  the  witnesses
sought to be recalled are all matters to be considered at the stage  of  the
trial."

15.   In Raneef (supra), it was observed :
"15.  In  deciding  bail  applications  an  important  factor  which  should
certainly be  taken  into  consideration  by  the  court  is  the  delay  in
concluding the trial. Often this takes several years, and if the accused  is
denied bail but is ultimately acquitted, who will restore so many  years  of
his life spent in custody? Is Article 21 of the Constitution, which  is  the
most basic of all the fundamental rights in our Constitution,  not  violated
in such a case? Of course this is not the only factor, but it  is  certainly
one of the important factors in deciding  whether  to  grant  bail.  In  the
present case the respondent has already spent 66 days in custody (as  stated
in Para 2 of his counter-affidavit), and we see no reason why he  should  be
denied bail. A doctor incarcerated for a long period may  end  up  like  Dr.
Manette in Charles Dicken's novel A Tale  of  Two  Cities,  who  forgot  his
profession and even his name in the Bastille."

16.   In Sanjay Chandra (supra), it was observed :
"21. In bail applications,  generally,  it  has  been  laid  down  from  the
earliest times that the object of bail is to secure the  appearance  of  the
accused person at his trial by reasonable amount  of  bail.  The  object  of
bail is neither punitive nor preventative. Deprivation of  liberty  must  be
considered a punishment, unless it is required to  ensure  that  an  accused
person will stand his trial when called  upon.  The  courts  owe  more  than
verbal respect to the principle that  punishment  begins  after  conviction,
and that every man is deemed to be innocent until duly tried and duly  found
guilty.

24. In the instant case, we have already noticed that the  "pointing  finger
of accusation" against the appellants is "the seriousness  of  the  charge".
The offences alleged are economic offences which have resulted  in  loss  to
the State exchequer. Though, they contend that there  is  a  possibility  of
the appellants tampering with  the  witnesses,  they  have  not  placed  any
material in support of the allegation.  In  our  view,  seriousness  of  the
charge is, no doubt, one of the relevant  considerations  while  considering
bail applications but that is not the only test or  the  factor:  the  other
factor that also requires to be taken note of is the punishment  that  could
be imposed after trial and conviction, both under the  Penal  Code  and  the
Prevention of Corruption Act. Otherwise, if the former is the only test,  we
would not be balancing the constitutional rights but  rather  "recalibrating
the scales of justice".


17.   In the light of above settled  principles  of  law  dealing  with  the
prayer for bail pending trial, we proceed  to  consider  the  present  case.
Undoubtedly, the offence alleged against the appellant has  serious  adverse
impact on the fabric of the society.   The  offence  is  of  high  magnitude
indicating illegal admission to large number of  undeserving  candidates  to
the medical courses by corrupt  means.   Apart  from  showing  depravity  of
character and generation of black money, the offence has  the  potential  of
undermining the trust of the people in the integrity of  medical  profession
itself.  If undeserving  candidates  are  admitted  to  medical  courses  by
corrupt means, not only the society will be  deprived  of  the  best  brains
treating the patients, the patients  will  be  faced  with  undeserving  and
corrupt persons treating them in whom they will find it difficult to  repose
faith.  In these  circumstances,  when  the  allegations  are  supported  by
material on record and  there  is  a  potential  of  trial  being  adversely
influenced  by  grant  of  bail,  seriously  jeopardising  the  interest  of
justice, we do not find any ground to interfere with the view taken  by  the
trial Court and the High Court in declining bail.
18.   It is certainly a matter of serious concern  that  the  appellant  has
been in custody for about one year and there is  no  prospect  of  immediate
trial.  When a person is kept in custody to facilitate a fair trial  and  in
the interest of the society, it is duty of the prosecution and the Court  to
take all possible steps to expedite the trial.  Speedy trial is a  right  of
the accused and is also in the interest of justice.  We  are  thus,  of  the
opinion that the prosecution and the trial Court must  ensure  speedy  trial
so that right of the accused is protected.  This Court has already  directed
that the investigation be finally completed and final charge sheet filed  on
or before March 15, 2015.   We  have  also  been  informed  that  a  special
prosecutor has been appointed  and  the  matter  is  being  tried  before  a
Special Court.  The High Court is monitoring the matter.  We expect that  in
these circumstances, the trial will proceed day  to  day  and  its  progress
will be duly monitored.  Material witnesses may be identified  and  examined
at the earliest.  Having  regard  to  special  features  of  this  case,  we
request the High Court to take up the matter once in three  months  to  take
stock of the progress of trial and  to  issue  such  directions  as  may  be
necessary.  We also direct that if the trial is  not  completed  within  one
year  from  today  for  reasons  not  attributable  to  the  appellant,  the
appellant will be entitled to apply for bail afresh to the High Court  which
may be  considered  in  the  light  of  the  situation  which  may  be  then
prevailing.

19.   The appeal is accordingly disposed of  with  the  above  observations.
We make it clear that  observations  in  our  above  judgment  will  not  be
treated as expression of any opinion on merits of the  case  and  the  trial
Court  may  decide  the  matter  without  being  influenced  by   any   such
observation.


                       ...................................................J.
                                       (T.S. THAKUR)




                       ...................................................J.
                                            (ADARSH KUMAR GOEL)

NEW DELHI
FEBRUARY 4,  2015
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[1]    (2005) 2 SCC 42
[2]    (2005) 8 SCC 21
[3]    (2011) 1 SCC 784
[4]    (2012) 1 SCC 40

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