service tax payable on wharfage charges. = no service is rendered by GMB to UCL under the agreement. = service tax is leviable under Section 65(105)(zn) which reads as follows:- “Taxable service” means any service provided or to be provided- “(zn) to any person, by a port or any person authorized by the port, in relation to port services, in any manner;”The revenue authorities initiated investigation against GMB for under- valuation and short payment of service tax. Ultimately, a show cause notice dated 6.3.2009 was issued to collect 80% of service tax payable on wharfage charges which was not paid by the assessee. This was for the period 1.10.2003 to 31.3.2006, the differential amount being a sum of Rs.1,67,45,620/-. A further amount of Rs.12,53,076/- was also demanded for the period 2003 October upto 2007-2008 on account of the provision of direct berthing facilities provided for captive cargo of a ship size of 10,000 DWT and above on account of lease rent for use of the waterfront. = The respondent - M/s Gujarat Maritime Board (hereinafter referred to as “GMB”) is a statutory body constituted under the Gujarat Maritime Board Act, 1981 (hereinafter referred to as “GMB Act”). This authority administers and operates minor ports in the State of Gujarat. GMB entered into an agreement dated 28.2.2000 with Larsen & Toubro which ultimately became M/s Ultratech Cement Limited (hereinafter referred to as “UCL”) whereby a licence was granted to UCL to construct and use a jetty for landing of goods and raw materials manufactured by UCL in their cement factory which was situate close to the said jetty at Pipavav port.There is no doubt on a reading of the agreement that it is the Board itself that charges or recovers wharfage charges from the licensee - UCL and does not authorize UCL to recover such charges from other persons. This being the position, it is clear that no service is rendered by a port or by any person authorized by such port and, therefore, the very first condition for levy of service tax is absent on the facts of the present case. So far as the direct berthing facilities provided for captive cargo is concerned, the lease rent charged for use of the waterfront also does not include any service in relation to a vessel or goods and cannot be described as “port service”. This being so, it is unnecessary to go into any of the other contentions raised by both parties. To the extent that the impugned judgment is in conformity with our judgment, it is upheld. The appeals of the revenue are, therefore, dismissed accordingly.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL NOS.3347-3348 OF 2014




           COMMISSIONER OF CENTRAL
           EXCISE, BHAVNAGAR                 …APPELLANT


                                   VERSUS


           M/S GUJARAT MARITIME BOARD,
           JAFRABAD                           ...RESPONDENT




                               J U D G M E N T

           R.F. Nariman, J.

           1.    The issue raised in the  present  civil  appeals  is  with
           regard  to  service  tax  payable  on  wharfage  charges.    The
           respondent - M/s Gujarat Maritime Board (hereinafter referred to
           as “GMB”) is a statutory  body  constituted  under  the  Gujarat
           Maritime Board Act, 1981 (hereinafter referred to as “GMB Act”).
            This authority administers and  operates  minor  ports  in  the
           State of Gujarat.  GMB entered into an agreement dated 28.2.2000
           with Larsen &  Toubro  which  ultimately  became  M/s  Ultratech
           Cement Limited (hereinafter referred  to  as  “UCL”)  whereby  a
           licence was granted to UCL to construct  and  use  a  jetty  for
           landing of goods and raw materials manufactured by UCL in  their
           cement factory which was situate close  to  the  said  jetty  at
           Pipavav port.  As the true construction of this agreement is the
           bone of contention between the parties, we will refer to it in a
           little detail hereafter.

           2.    It is alleged that service tax  was  payable  on  wharfage
           charges by GMB collected by them from their licensee  UCL  under
           the  taxable  category  of   “port   services”.    The   revenue
           authorities  initiated  investigation  against  GMB  for  under-
           valuation and short payment of service tax.  Ultimately, a  show
           cause notice dated 6.3.2009 was issued to collect 80% of service
           tax payable on wharfage  charges  which  was  not  paid  by  the
           assessee.  This was for the period 1.10.2003 to  31.3.2006,  the
           differential amount being a sum of Rs.1,67,45,620/-.  A  further
           amount of Rs.12,53,076/- was also demanded for the  period  2003
           October upto 2007-2008 on account of  the  provision  of  direct
           berthing facilities provided for captive cargo of a ship size of
           10,000 DWT and above on account of lease rent  for  use  of  the
           waterfront.  By the  order  in  original  dated  16.7.2009,  the
           Commissioner, Central Excise held that  it  is  clear  that  the
           nature of service  provided,  which  is  wharfage,  is  squarely
           covered under the head “port services” as defined in the Finance
           Act, 1994.  The amount of rebate/concession granted in  wharfage
           charges  amounting  to  80%  allowed  to  the  licensee  should,
           therefore, be included for purposes of  calculation  of  service
           tax.  Equally, the amount that was demanded on account of  lease
           rent for waterfront usage  was  also  confirmed,  together  with
           interest and penalty, which was imposed on the assessee.

           3.    In appeal from this order, CESTAT by  its  judgment  dated
           1.8.2013 reversed  the  Commissioner’s  order  holding  that  no
           service at all was rendered by the  Gujarat  Maritime  Board  in
           relation to any vessel and, therefore, no amount was payable  by
           way of service tax.  Equally, on an analysis  of  the  agreement
           between GMB and UCL, it was held that 20%  of  wharfage  charges
           which was payable under the  agreement  was  really  payable  as
           licence fee/rental and, therefore, the balance 80% being of  the
           nature of licence fee/rental and not  being  of  the  nature  of
           payment for services rendered would equally render  the  payment
           bad in law.

           4.    Shri Yashank Adhyaru, learned senior advocate appearing on
           behalf of the revenue has taken us through the Gujarat  Maritime
           Board Act and the Finance Act, 1994.  It is his contention  that
           on a conjoint reading of the two Acts and in particular  Section
           37 of the Gujarat Maritime Board Act and Section 65(82)  of  the
           Finance Act, 1994, it is clear  on  a  correct  reading  of  the
           agreement between GMB and UCL that service was rendered  by  GMB
           as owner of the jetty, the service  being  the  provision  of  a
           space for landing of goods from vessels  which  are  allowed  to
           berth there.  As an alternative argument, on a  correct  reading
           of the agreement, it was also argued that GMB had authorized UCL
           to render the service of wharfage and since what  was  collected
           was actual wharfage charges in accordance with the  schedule  of
           rates prescribed under the Gujarat Maritime Board Act, it was in
           relation to goods that were loaded or off-loaded from vessels on
           the said jetty.  It was further argued by learned  counsel  that
           the reason why only 20% of the wharfage  charges  was  collected
           and not the  entire  amount  was  a  pure  internal  arrangement
           between GMB and UCL with which revenue  is  not  concerned.   He
           further assailed the findings of the Tribunal stating  that  the
           finding that the ownership of the jetty vests in UCL is contrary
           to the agreement between the parties and that  20%  of  wharfage
           levied and collected cannot be said to be rental or licence  fee
           but is wharfage charges collected under  the  GMB  Act  for  the
           service of allowing goods  to  be  landed  at  the  said  jetty.
           According to learned counsel, the Gujarat Maritime Board was the
           owner and in control of the said jetty throughout  the  term  of
           the agreement and all findings to the contrary by  the  Tribunal
           were incorrect.

            5.    Shri P.P. Tripathi, learned senior advocate appearing  for
           the respondent  countered  all  the  aforesaid  submissions  and
           supported the Tribunal judgment.  According to learned  counsel,
           the very basis for service tax was absent in the present case as
           there is no service rendered of  any  kind  by  his  client  the
           respondent on the facts of the present case to UCL nor  has  UCL
           been authorized by  GMB  to  render  any  service  mentioned  in
           Section 37 of the Act and that, therefore, the authority to levy
           service tax was absent.  He also argued that the 20% of wharfage
           charges that was paid under the  agreement  was  really  only  a
           measure to calculate what is in fact payable as licence fee  and
           that, therefore, the agreement read as a whole would lead to the
           conclusion  that  no  service  was  in  fact  rendered  by   the
           respondent and, therefore, no service tax could be collected.

           6.    It is important first to advert to the Finance  Act,  1994
           under which the charge is laid for service tax.  Section  65(82)
           defines “port service” as under:-

                 “Port service” means any service  rendered  by  a  port  or
                 other port or any person authorized by such port  or  other
                 port, in any manner in relation to a vessel or goods;”




           7.    Such service tax is  leviable  under  Section  65(105)(zn)
           which reads as follows:-

                 “Taxable service” means any  service  provided  or  to  be
           provided-

                 “(zn) to any person, by a port or any person authorized  by
                 the port, in relation to port services, in any manner;”




           Further, under Section 67 of the said  Act,  the  value  of  any
           taxable service shall be the gross amount charged by the service
           provider for such service provided or to be provided by him.

           8.    The relevant provisions of the Gujarat Maritime Board  Act
           are as follows:-

                 “35.  Power to permit erection  of  private  wharves,  etc.
                 within a port subject to conditions:

                 (1)   No person shall make, erect or fix within the  limits
                 of a port or port approaches any wharf, dock, quay,  stage,
                 jetty, pier, place of anchorage,  erection  or  mooring  or
                 undertake any reclamation  of  foreshore  within  the  said
                 limits except with the previous permission  in  writing  of
                 the Board and subject to such conditions, if  any,  as  the
                 Board may specify.

                 (2)   If any person makes, erects or fixes and wharf, dock,
                 quay, stage jetty, pier place  of  anchorage,  erection  or
                 mooring  or  undertakes   reclamation   of   foreshore   in
                 contravention of sub-section (1) the Board may,  by  notice
                 require such person to remove it within such time as may be
                 specified in the notice and  if  the  person  fails  so  to
                 remove it the Board may cause  it  to  be  removed  at  the
                 expense of that person.

                 37.   Scales of rates for services performed  by  Board  or
                 other person:-

                 (1)   The Board shall from time to time frame  a  scale  of
                 rates at which and a  statement  of  the  conditions  under
                 which any of the services specified hereunder  (except  the
                 State charges) shall be performed by itself or  any  person
                 authorized under Section 32 at or in relation to  the  port
                 or port approaches-

                 (a)   transshipping of passengers or goods between  vessels
                 in the port or port  approaches;

                 (b)   stevedoring, landing and shipping  of  passengers  or
                 goods from or to such vessels, to or from any  wharf,  quay
                 jetty, pier, dock, berth mooring stage, or  erection,  land
                 or building in the possession or occupation of the Board or
                 at any  place  within  the  limits  of  the  port  or  port
                 approaches;

                 (c)   cranage or porterage of goods on any such place;

                 (d)   wharfage, storage or demurrage of goods on  any  such
                 place;

                   (e) any other service in respect of  vessels,  passengers
                 or goods excepting the services in respect of  vessels  for
                 which fees are chargeable under the Indian Port  Act,  1908
                 (15 of 1908).

                 (2)   Different scales  of  rates  and  conditions  may  be
                 framed for different classes of goods and vessels  and  for
                 different ports.

                 32.   Performance of services by Board or other person:-

                 1)    The Board shall have power to undertake the following
                 services:-

                 (a)    stevedoring,  landing,  shipping  or   transshipping
                 passengers and  goods  between  vessels  in  port  and  the
                 wharves, piers, quays, or docks  belonging  to  or  in  the
                 possession of the Board;

                 (b)   receiving, removing, shifting, transporting,  storing
                 or delivering goods brought within the Board’s premises;

                 (c)   carrying passengers within the  limits  of  the  port
                 approaches, by such means and subject to such  restrictions
                 and conditions as the State Government  may  think  fit  to
                 impose; and

                 (d)    piloting, hauling, mooring, re-mooring,  hooking  or
                 measuring of vessels or any other  service  in  respect  of
                 vessels.

                 (2)   The Board may, if so requested  by  the  owner,  take
                 charge of the goods  for  the  purpose  of  performing  the
                 service or services and shall give a receipt in  such  form
                 as the Board may specify.

                 (3)   Notwithstanding anything contained in  this  section,
                 the Board may authorize any person to perform  any  of  the
                 services mentioned in sub-section (1)  on  such  terms  and
                 conditions as may be agreed upon.

                 (4)   No person  authorized  under  sub-section  (3)  shall
                 charge or recover for such service any sum in excess of the
                 amount leviable according to the scale framed under Section
                 37, 38 or 40.

                 (5)   Any such person shall, if so required  by  the  owner
                 perform in respect of the goods any of the services and for
                 that purpose take charge of the goods and give a receipt in
                 such form as the Board may specify.

                 (6)   The responsibility of any such person for  the  loss,
                 destruction or deterioration of goods of which he has taken
                 charge shall, subject to the other provisions of this  Act,
                 be that of  a bailee under Section 151, 152 and 161 of  the
                 Indian Contract Act, 1872 (IX of 1872).

                 (7)   After any goods have  been  taken  charge  of  and  a
                 receipt given for them under this section, no liability for
                 any loss or damage which may occur to them shall attach  to
                 any person to whom a receipt  has  been  given  or  to  the
                 matter or owner of the vessel from  which  the  goods  have
                 been landed or transshipped.




           9.    Since a large part of the arguments on both sides revolved
           around the agreement dated 28.2.2000, between GMB  and  UCL,  it
           would be important to advert to the various  provisions  of  the
           agreement.  The agreement begins as follows:

                 “THE ARTICLES OF AGREEMENT made at Gandhinagar on this  day
                 28th February, two thousand between  the  GUJARAT  MARITIME
                 BOARD, a Board constituted under the Gujarat Maritime Board
                 Act, 1981 – (Gujarat Act No.XXX of 1981) having its  office
                 at Opp. Air force  station,  ‘Chh’  Road,  Sector  No.10-A,
                 Gandhinagar, hereinafter referred to as the “BOARD”  (which
                 expression shall unless it be repugnant to the  context  or
                 meaning  thereof  mean  and  include  its  successors   and
                 assigns) of the one part and Larsen & Toubro Limited having
                 its Registered Office at L&T House, Ballard Estate,  Mumbai
                 – 21, hereinafter referred  to  as  the  “LICENSEE’  (which
                 expression shall unless it be repugnant to the  context  or
                 meaning  thereof  mean  and  include  its  successors   and
                 assigns) of the other part;

                 WHEREAS the Licensee approached the  Board  for  permission
                 for construction and use of a Captive Jetty at Port Pipavav
                 in the State of Gujarat on a license basis for the  purpose
                 of handling, storage and  transportation  of  raw-materials
                 for  manufacturing   and   finished   products   that   are
                 manufactured by the Licensee and for  the  purpose  of  the
                 Board as well;

                 AND WHEREAS the Board and the Licensee have already entered
                 into License agreement which is modified and  this  license
                 Agreement in modification of previous Agreement is  entered
                 into by and between the Board and the Licensee as appearing
                 hereinafter;

                 AND WHEREAS in consideration of the Licensee constructing a
                 Captive jetty as aforesaid at  its  cost  initially  to  be
                 adjusted against the Rebate, that may  be  granted  by  the
                 Board, the Board as  empowered  under  Section  35  of  the
                 Gujarat Maritime Board Act, 1981 granted to the Licensee  a
                 license or permission for construction/use of  the  captive
                 Jetty on the said port at the  place  aligned,  demarcated,
                 provided and approved by  the  Board  upon  the  terms  and
                 conditions specified herein on Build, transfer, Operate and
                 Maintain basis;

                 NOW IT IS AGREED BY  AND  BETWEEN  THE  PARTIES  HERETO  AS
                 FOLLOWS:

                 (c)   ‘PORT CHARGES’ would mean port charges  specified  in
                 schedule of  port  charges,  notified  by  government/Board
                 under the Indian Ports  Act,  1908/Gujarat  Maritime  Board
                 Act, 1981 and allied legislations/regulations from time  to
                 time.

                 (e)   ‘CAPTIVE JETTY’ would mean a  Jetty  constructed  for
                 landing and shipping by a port based industry,  located  in
                 Gujarat for landing and shipping of their Captive  Industry
                 Raw Materials for manufacturing or their finished  products
                 that are manufactured by the Licensee, from the constructed
                 Jetty for that specific industry.

                 2. The Board has granted permission  to  the  licensee  for
                 continuing with construction and use of the  Captive  Jetty
                 at the site demarcated on the plan, a layout of  which  has
                 been annexed to this agreement.



                 3. The Licensee shall pay  and  continue  to  pay  for  the
                 license granted under  this  Agreement  a  license  fee  of
                 Rs.10,000/- (Rupees Ten Thousand only)  per  annum  to  the
                 Board regularly on or before the 30th day  of  April  every
                 year during the currency of this agreement.

                 12. The ownership of the structure so constructed vests  in
                 the Board and the Licensee  shall  have  no  right,  title,
                 interest or other proprietary  right  in  respect  of  such
                 structure or in respect of the land on which the  structure
                 is constructed, it being specifically understood that water-
                 front is the sovereign right of the Government.

                 13. The Licensee may however obtain a loan at its own  risk
                 and cost, on the basis of rights granted to him under  this
                 agreement and is entitled to create a charge or lien on its
                 rights or property only on the basis of investment made  by
                 it for construction i.e. to say taking  into  consideration
                 the extent of investment made by it in the construction;

                 PROVIDED that and it is agreed that the cost can be divided
                 for  the  purpose  of  obtaining  finance  for  the   Jetty
                 construction, it being, however,  clearly  understood  that
                 the water-front is a sovereign right of Government and  the
                 right of the Licensee is limited only for  the  purpose  of
                 mortgage or hypothecation to the extent of investment  made
                 by it and its right to concur in the event of  transfer  or
                 take over of the entire  project  to  which  the  Jetty  is
                 attached, subject, however, to the prior  approval  of  the
                 Board for transfer of license. The Licensee  shall  not  be
                 allowed to transfer the jetty separately  as  the  same  is
                 directly connected to the  project  to  which  the  Captive
                 Jetty is allowed to be constructed.

                 PROVIDED further that whatever  rebate  and  concession  is
                 granted by the Board against the cost of construction,  the
                 equivalent amount at the relevant time shall be utilized by
                 the Licensee in repayment of loan so that at the end of the
                 period of this agreement when the  Licensee  may  not  have
                 right of rebate under this agreement, then the construction
                 is free of any liability in respect of such loan.

                 PROVIDED further that the  Bank  or  financial  institution
                 granting loan to the licensee  shall  not  have  any  right
                 against the Board.

                 PROVIDED further that in the event of a declaration of  War
                 in the Country or any Emergency or on account  of  national
                 security or any other circumstances, the Board is  entitled
                 to exercise all rights  in  such  kinds  of  situation  and
                 emergency. The Bank or financial institutions shall not  be
                 entitled in such event to exercise  any  right  under  loan
                 documents  even  in  respect  of  such  construction.   The
                 Licensee shall obtain "No  Objection  Certificate"  of  the
                 Board for the loan and for  the  terms  and  conditions  on
                 which the loan is sanctioned, and shall  be  bound  to  see
                 that the relevant Clauses in pursuance  of  this  Agreement
                 are incorporated in loan documents.

                 15. The Board may, in order to decide  the  safety  of  the
                 structure or for any other purpose,  carry  out  inspection
                 every six months from the date of issue of  the  Completion
                 Certificate.  The Licensee shall carry out maintenance  and
                 repairs to the structure  at  its  own  cost,  whenever  so
                 directed by the Board upon  inspection.  No  alteration  or
                 extension  of  the  Jetty  shall  be  done  without   prior
                 permission of the  Board  in  writing  PROVIDED  that  this
                 clause shall not  preclude  the  Board  from  carrying  out
                 inspection at any time, instead of every six months.

                 16. The Licensee shall at its own cost repair and  maintain
                 the jetty in good order and condition to  the  satisfaction
                 of the Board during the tenure of this agreement and on the
                 failure of the Licensee  to  do  so,  the  Board  shall  be
                 entitled, but not bound, to do so at the cost of  licensee.
                 This condition however, does not entitle  the  Licensee  to
                 refrain from carrying out repair or maintain the  Jetty  in
                 good order and condition and it is further agreed that non-
                 performance by Licensee shall be considered as a breach  of
                 condition of this agreement.

                 17. In consideration of the Board permitting  the  Licensee
                 to construct the Captive Jetty at its own  cost  initially,
                 the Board hereby agree that the Jetty to be so  constructed
                 by the Licensee shall mainly and initially as per the terms
                 of this agreement, allowed  to  be  used  for  the  vessels
                 belonging to the Licensee or chartered by the Licensee,  on
                 preferential  basis,  without  any  ousting  priority   and
                 subject to Steamer  Working  (Priority)  Rules  as  may  be
                 amended from time to time and subject to  all  other  rules
                 and regulations and  the  legislations  prevailing  at  the
                 relevant time and subject also to the further conditions of
                 this agreement.

                 18. It is agreed that subject to the priority right of  the
                 Licensee for user of Jetty under the preceding  clause,  it
                 is further agreed that the Jetty shall when the same is not
                 in use by the Licensee, be open to use  by  the  Board  for
                 itself or for the traffic being regulated by the Board  for
                 the purpose  of  embarking  or  disembarking  their  ships,
                 boats, tugs, etc. and for loading  and  discharging  cargo.
                 The Licensee  or  its  Agents  shall  not  by  any  act  of
                 commission or omission, restrict the use of the  Jetty  and
                 back up area by the Board except when it is  actually  used
                 by the Licensee  for  the  purpose  provided  for  in  this
                 agreement.


                 PROVIDED that this clause shall not be  construed  to  mean
                 that Licensee has any ownership or  transferable  right  in
                 the property and the Licensee is not entitled to  levy  any
                 charges or compensation from the Board.

                 21. It is agreed that  subject  to  what  has  been  stated
                 herein, the Licensee shall be liable to pay  all  the  port
                 charges and all other dues payable by the Licensee  to  the
                 Board, and the Licensee shall not be eligible  to  get  any
                 other rebate or concession except that which  is  mentioned
                 in Clause 22 and 24.

                 22. It is agreed that  in  consideration  of  the  Licensee
                 constructing the Jetty at its own cost initially, the Board
                 has agreed to grant rebate, to be adjusted against the cost
                 of construction, as under:

                 A. The Licensee shall have  to  pay  landing/shipping  fees
                 (popularly known as wharfage charges) @ 20% of  the  actual
                 landing and shipping fees specified in the Schedule of Port
                 Charges prescribed  for  Captive  Jetty.  The  landing  and
                 shipping fees shall be calculated for this purpose  as  per
                 the schedule of  landing  and  shipping  fees,  as  may  be
                 revised or amended from time to time. This concession shall
                 be called 'REBATE' and it will  be  set  off  as  aforesaid
                 against the Capital Investment  (cost  of  construction  as
                 mentioned in Clause 24) made by the Captive  Jetty  holder,
                 and the same shall be calculated in  a  prescribed  format.
                 Once  the  Capital  Investment  is  recovered  through  the
                 Rebate,  the  Captive  Jetty  holder  shall  have  to   pay
                 thereafter, landing and shipping fees at the normal rate as
                 per the Schedule of Port Charges in force from time to time
                 prescribed for captive jetty.

                 B. The Licensee shall also be entitled, as  in  the  normal
                 case to a concession in payment  of  landing/shipping  fees
                 for coastal transportation of the cargo from one port under
                 the Board to another port under the Board @  25%  and  from
                 one port under the Board to another Indian  Port  or  vice-
                 versa @ 15% or at the rate as may be applicable  from  time
                 to time.

                 C. No Rebate will be given in respect of any other  charges
                 to be levied under  Indian  Ports  Act  and  under  Gujarat
                 Maritime Board Act. The parties shall have to pay  all  the
                 port charges at the rates specified  in  Schedule  of  Port
                 Charges in force from time to time.

                 ?25. In case the direct  berthing  facilities  provided  for
                 captive cargo (ship size calling at jetty of 10,000 DWT and
                 above) an amount of  Rs.25.00  Lakhs  (Rupees  Twenty  Five
                 Lakhs only) per annum will be charged  as  lease  rent  for
                 waterfront and way leave facility compensation.

                 28.   The Licensee shall provide all  the  services  at  or
                 around the  Jetty  including  dredging,  navigation,  water
                 supply, fire fighting equipments,  electricity,  telephone,
                 Very High Frequency (VHF) sets of HF sets  and  such  other
                 services and facilities which may be required at or  around
                 the Jetty and also such other services and facilities which
                 the Board may require the Licensee to keep available at  or
                 around the Jetty. If the Licensee does not provide  all  or
                 any of the aforesaid facilities, the Board may at  its  own
                 discretion provide such facilities at the cost and risk  of
                 the  Licensee  and  shall  recover  such  costs  from   the
                 Licensee. The decision of the Board regarding the amount of
                 cost incurred for such services shall be treated as final.

                 34. If the Licensee commits breach of any of the terms  and
                 conditions of this agreement or of any  Rules,  Regulations
                 or Notifications as may be in force from time to time,  the
                 Board shall be entitled to  give  notice  the  Licensee  to
                 remove such breach within a period of 15 days from the date
                 of notice and  Port  Authorities  can  temporarily  suspend
                 operation of captive port facility. If the said  notice  is
                 not complied with, the Board shall give another  Notice  to
                 terminate this agreement if the said breach is not complied
                 with within a period of further 15 days  and  that  on  the
                 expiry of such period  of  15  days,  the  agreement  shall
                 automatically be deemed to  have  been  terminated  without
                 further notice. Upon such termination of the agreement, the
                 Board shall  be  entitled  to  take  control  or  otherwise
                 dispose off all or any part of the Jetty that may have been
                 constructed, as well as the site thereof in such manner and
                 may give the same to such person or party as may be decided
                 by the Board and the Licensee shall not be entitled to  any
                 compensation,  nor shall the Licensee have then a right  in
                 respect of the superstructure or the land/sea on which  the
                 Jetty was constructed, provided that even if  the  cost  of
                 construction of the  Jetty  is  not  adjusted  against  the
                 aggregate of the  amount  of  rebate  availed  off  by  the
                 Licensee, the Licensee shall not be entitled to any refund.
                  In case of any dispute or difference by  and  between  the
                 Licensee and the Board, the same shall be referred  to  the
                 Arbitration of Secretary of the  Government  in  Ports  and
                 Fisheries Department and it shall  be  held  in  accordance
                 with  the  provisions  of  the   Indian   Arbitration   and
                 Reconciliation Act, 1996 or any statutory  modification  or
                 re-enactment thereof for the time being in force.

                 36.   The agreement shall remain in force for a  period  of
                 twenty five years or till such time  as  the  aggregate  of
                 ‘REBATE’ availed off by the party equals the amount of  the
                 construction of the Jetty whichever  is  earlier  from  the
                 date of commissioning of Jetty.

                 PROVIDED  further  that  even  after  aggregate  of  rebate
                 availed  of  by  the  Licensee   equals   the   amount   of
                 construction of Jetty, the Licensee will be allowed to  use
                 the Jetty for captive purpose subject to  full  payment  of
                 full wharfage  charges  so  long  as  the  project  of  the
                 Licensee for which the  permission  is  granted  exists  or
                 continues to exist, i.e., continues to function.

                 It is agreed and understood by the Licensee that out of the
                 terms ‘Jetty’ the terms applicable for the purpose of  this
                 Agreement may be  retained  in  this  Agreement  and  other
                 words/terms not applicable may be deleted.”




            10.   A reading of the agreement as a whole would  lead  to  the
           following conclusions:

              A. The agreement is a licence  agreement  entered  into  under
                 Section 35 of the Gujarat Maritime Board Act under which  a
                 licence or permission for construction and use of a captive
                 jetty in Pipavav Port is entered into on a Build, Transfer,
                 Operate and Maintain basis on certain conditions.

              B. A licence fee of Rs.10,000/- per annum is  payable  by  the
                 licensee to the Board for the  currency  of  the  agreement
                 unless terminated earlier.

              C. The ownership of what is constructed  vests  in  the  Board
                 together with the landing on which it  is  constructed  and
                 the waterfront.

              D. The jetty is constructed for the project  to  which  it  is
                 attached, namely, the cement factory of UCL.   The  licence
                 granted to UCL is, therefore, a non-transferable one.

              E. The Board is entitled to carry  out  inspection  every  six
                 months so that it can direct the licensee to  maintain  and
                 repair the structure at its own cost,  maintenance  of  the
                 said jetty in good order and condition being  that  of  the
                 licensee alone, a breach of which is considered as a breach
                 of the agreement.

              F. The jetty is to  be  used  mainly  for  the  goods  of  the
                 licensee and when not in use by the licensee can be used by
                 the Board itself.

              G. That in consideration  of  the  licensee  constructing  the
                 jetty at its own cost, the Board has agreed to grant rebate
                 to be adjusted against the  cost  of  construction  of  the
                 jetty by paying 20% of wharfage charges  specified  in  the
                 schedule of charges prescribed for  captive  jetties.  This
                 concession is to be called a  rebate  and  to  be  set  off
                 against the cost of construction of the said  jetty.   Once
                 the entire cost of construction is  recovered  through  the
                 rebate, the licensee will have to pay  thereafter  wharfage
                 charges at the full rate prescribed in the schedule of port
                 charges for captive jetties.

              H. For direct berthing facilities provided for  captive  cargo
                 in ships which call at the jetty of 10,000 DWT  and  above,
                 an amount of Rs.25,00,000/- will be charged as  lease  rent
                 for waterfront use.

              I. It is the licensee UCL that will provide all services at or
                 around the jetty including dredging, navigation,  etc.  and
                 if this is not done then the Board may on its  own  provide
                 such facilities at the risk and cost of the licensee UCL.

              J. The licence is  terminable  on  breach  of  the  terms  and
                 conditions of the agreement or of any  infraction  of  law.
                 Upon such termination, the Board shall be entitled to  take
                 control or otherwise dispose of all  or  any  part  of  the
                 jetty that may have been constructed.

              K. The period of the agreement is to be 25 years from the date
                 of commissioning of the jetty or such time  as  the  rebate
                 availed of by the party equals the construction cost of the
                 jetty whichever date is earlier. However,  even  after  the
                 rebate and the construction cost square off,  the  licensee
                 will be allowed to  use  the  jetty  for  captive  purposes
                 subject to full payment of wharfage charges so long as  the
                 project of the licensee – i.e.  the  cement  plant  of  the
                 licensee continues to function.




           11.   The question  which  arises  on  a  reading  of  the  said
           agreement is, therefore, whether any service is rendered by  GMB
           or by any person authorized by GMB in relation to  a  vessel  or
           goods.  The agreement makes it clear that it is the duty of  the
           licensee, i.e., UCL to maintain the  jetty  in  good  order  and
           condition during the tenure of the agreement. (See:  clauses  15
           and 16 set out above).  Further, it is UCL that  is  to  provide
           all  services  at  or  around  the  jetty  including   dredging,
           navigation, water supply etc. (See: clause 28 of the agreement).
            This makes it clear that during the currency of  the  agreement
           it is not the Board but the Licensee who keeps the said jetty in
           such condition that it is capable of enabling vessels  to  berth
           alongside it to load  and   unload   goods.     This  being  the
           position, we agree with Shri Tripathi, learned senior counsel on
           behalf of GMB that no service is rendered by GMB  to  UCL  under
           the agreement. The agreement  makes  it  clear  that  it  is  an
           agreement entered into under Section 35 of the GMB Act  allowing
           the licensee - UCL to construct a jetty and thereafter  maintain
           it at its own cost.  We may add  that  the  rebate  in  wharfage
           charges of 80% is a condition imposed statutorily under  Section
           35 of the said Act.  To say that it is in the  nature  of  lease
           rent or licence fee, would not be correct inasmuch as a separate
           licence fee is payable under the agreement.  (See: clause  3  of
           the agreement).  To that extent  we  agree  with  Shri  Adhyaru,
           learned senior advocate appearing on behalf of revenue that  the
           CESTAT does not seem to be correct in  this  behalf.   But  this
           would make no difference to the result of this case inasmuch  as
           the very first condition that must be met under  the  definition
           of “port service” is not met on the facts of the present case.

           12.   Shri Adhyaru argued relying upon the definition of “wharf”
           and “wharfage” in Black’s Law Dictionary, Seventh  Edition  that
           all that is necessary is that a wharf be provided by the  Board.
           The very provision of such wharf would entitle the Board to levy
           a fee which is nothing other  than  wharfage  charges  collected
           under  the  Schedule  of  rates   mentioned   hereinabove.    To
           appreciate this argument we set out the  definition  of  ‘wharf’
           and ‘wharfage’ from Black’s Law Dictionary as under:-

                       Wharf. A structure on the shores of navigable waters,
                 to which a vessel can be brought for loading or unloading.

                       Private wharf. One that can be used only by its owner
                 or lessee.

                       Public wharf. One that can be used by the public.




                       Wharfage 1. The fee paid  for  landing,  loading,  or
                 unloading goods  on  a  wharf.  2.  The  accommodation  for
                 loading or unloading goods on a wharf.



           We are afraid that we are unable to agree with Shri Adhyaru  for
           the reason that though GMB is the owner of the jetty  under  the
           said agreement, yet for providing  the  service  of  allowing  a
           vessel to berth at the said  jetty,  it  is  necessary  for  GMB
           itself to keep the said jetty in good order.   Wharfage  charges
           are collectible because they are  in  the  nature  of  fees  for
           services rendered.  The expenses that are defrayed by the  Board
           for the maintenance of the jetty is sought to  be  collected  as
           wharfage charges.  This amount  would  necessarily  include  all
           amounts that are spent  for  keeping  the  said  jetty  in  good
           condition including dredging so that vessels can berth alongside
           the jetty.  It is clear that so far as jetties operated  by  the
           Board are concerned, the Board itself defrays such expenses.  It
           is only in cases like the present where the jetty  is  primarily
           meant for loading and unloading goods belonging to a  particular
           private party that repair and maintenance  expenses  are  to  be
           borne by the private party and not by the Board.  It is in  this
           circumstance that we find that there is no  service,  therefore,
           rendered by GMB to UCL.

           13.   The other limb of Shri Adhyaru’s argument is that  in  any
           case UCL is a person authorized by GMB within the definition  of
           “port service” and that, therefore,  in  any  case  the  Section
           would be attracted as there is no doubt  that  wharfage  charges
           are a payment for services rendered in relation to a  vessel  or
           goods.

           14.   As can be seen from Section 32 sub-sections (3)  and  (4),
           the Board may  authorize  any  person  to  perform  any  of  the
           services mentioned in sub-section (1) of the said Section  which
           includes landing of goods at wharves.  We asked Shri Adhyaru  to
           show us where such authority is given and  his  reply  was  only
           that it was given under  the  self-same  agreement  referred  to
           hereinabove.  We are afraid that we are  unable  to  agree  with
           Shri Adhyaru.   The  authority  given  to  perform  any  of  the
           services must first and foremost be under terms  and  conditions
           as may be agreed upon by  the  Board  and  the  private  person.
           Further, under sub-Section (4) of Section 32, it is the  private
           person who is then authorized to charge or recover  any  sum  in
           respect of such service rendered.  This is conspicuously  absent
           in the aforesaid agreement.  There is no doubt on a  reading  of
           the agreement that it  is  the  Board  itself  that  charges  or
           recovers wharfage charges from the licensee - UCL and  does  not
           authorize UCL to recover such charges from other persons.   This
           being the position, it is clear that no service is rendered by a
           port or by any person authorized by such  port  and,  therefore,
           the very first condition for levy of service tax  is  absent  on
           the facts of the present case.  So far as  the  direct  berthing
           facilities provided for captive cargo is  concerned,  the  lease
           rent charged for use of the waterfront also does not include any
           service in relation to a vessel or goods and cannot be described
           as “port service”.   This being so, it is unnecessary to go into
           any of the other contentions raised by  both  parties.   To  the
           extent that the impugned judgment  is  in  conformity  with  our
           judgment, it  is  upheld.   The  appeals  of  the  revenue  are,
           therefore, dismissed accordingly.



                                            ……………………J.
                                            (A.K. Sikri)




                                            ……………………J.
                                            (R.F. Nariman)
           New Delhi;
           July 22, 2015

Quash - Complaint - absence of entrustment does not attract sec.406/409 of I.P.C. - mere sales and resolutions which were not declared by any court as void - Can not attract the ingredients of Sec.415/420 of I.P.C. - a third party who has no locus standi cannot maintain a complaint when earlier the same was rejected by police on the ground of Civil litigation - No complaint to vendetta personal grievance be considered - liable to be quashed - Lower courts failed to observe the same and as such their orders are set aside. what is apparent in the present case is that the complainant is not the member of Mukka Welfare Society. It is also not disputed that the sale deeds in question were executed way back in the year 1996 and the complainant, who is not even member of the Society, raises the issue that the sale deeds were executed for the benefit of the Directors of the Society, after a long gap of more than twelve years. Sale deeds in question are registered, and not declared null and void by any court of law. It is also relevant to mention here that admittedly earlier a complaint was made by the complainant to the Deputy Commissioner in the year 2009, which was got investigated by the police and the result of the investigation was that no offence was found committed by the appellants on the ground that the dispute is of civil in nature. even if the allegations made in the complaint are taken to be true, the ingredients of the offence punishable under Section 409 IPC for which appellants are summoned, are also not made out. Needless to say that to constitute an offence punishable under Section 406 IPC, the essential ingredient is the “entrustment” of the property. The complaint filed by the complainant nowhere discloses that the land in question purchased in the year 1978 was entrusted to the Society for the benefit of others. It is only after entrustment is shown, it can be said that there was criminal breach of trust. To constitute an offence punishable under Section 409 IPC, apart from entrustment, it is also essential requirement that it should be shown that the accused has acted in the capacity of a public servant, banker, merchant, factor, broker, attorney or agent. It is nowhere shown in the complaint that the appellants have acted in any of the above capacities. As far as offence of cheating is concerned, the same is defined in Section 415 IPC, for which the punishment is provided under Section 420 IPC. Section 415 reads as under:- “415. Cheating. – Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”. Explanation. – A dishonest concealment of facts is a deception within the meaning of this section. Illustrations ……………” From the above language of the Section, one of the essential ingredients for the offence of cheating is deception, but in the present case, from the contents of the complaint it nowhere reflects that the complainant was deceived or he or anyone else was induced to deliver the property by deception. What was done, was so reflected in the resolutions, and sale deeds. The court must ensure that criminal prosecution is not used as an instrument of harassment or for seeking private vendetta or with an ulterior motive to pressurise the accused. On analysis of the aforementioned cases, we are of the opinion that it is neither possible nor desirable to lay down an inflexible rule that would govern the exercise of inherent jurisdiction. Inherent jurisdiction of the High Courts under Section 482 CrPC though wide has to be exercised sparingly, carefully and with caution and only when it is justified by the tests specifically laid down in the statute itself and in the aforementioned cases. In view of the settled legal position, the impugned judgment cannot be sustained.” In view of the above facts, apparent on the record, we are of the view that the High Court and the courts below have committed grave error of law in ignoring the same. . Therefore, we allow the appeal and set aside the orders passed by the High Court and that of the courts below. Accordingly, the order passed by the Magistrate summoning the appellants in the criminal complaint filed by respondent No. 1, in respect of offences punishable under Sections 406, 409 and 420 IPC, also stands quashed.

  Quash - Complaint - absence of entrustment does not attract sec.406/409 of I.P.C. - mere sales and resolutions which were not declared by any court as void - Can not attract the ingredients of Sec.415/420 of I.P.C. - a third party who has no locus standi cannot maintain a complaint when earlier the same was rejected by police on the ground of Civil litigation - No complaint to  vendetta personal grievance be considered - liable to be quashed - Lower courts failed to observe the same and as such their orders are set aside.

what is apparent in the present  case  is  that  the
complainant is not the member of Mukka Welfare  Society.
 It  is  also  not
disputed that the sale deeds in question were executed way back in the  year
1996 and the complainant, who is not even member of the Society, raises  the
issue that the sale deeds were executed for the benefit of the Directors  of
the Society, after a long gap of more  than  twelve  years.
 Sale  deeds  in
question are registered, and not declared null and  void  by  any  court  of
law.
It is  also  relevant  to  mention  here  that  admittedly  earlier  a
complaint was made by the complainant to  the  Deputy  Commissioner  in  the
year 2009, which was got investigated by the police and the  result  of  the
investigation was that no offence was found committed by the  appellants  on
the ground that the dispute is of civil in nature.

even if the allegations made in the complaint are  taken  to  be  true,  the
ingredients of the offence  punishable  under  Section  409  IPC  for  which
appellants are summoned, are also not made out.

Needless  to  say  that  to  constitute  an   offence
punishable  under  Section  406  IPC,  the  essential  ingredient   is   the
“entrustment” of the property.
The  complaint  filed  by  the  complainant
nowhere discloses that the land in question purchased in the year  1978  was
entrusted to the Society for the  benefit  of  others.
 It  is  only  after
entrustment is shown, it can be said  that  there  was  criminal  breach  of
trust.  

 To  constitute  an  offence
punishable under Section  409  IPC,  apart  from  entrustment,  it  is  also
essential requirement that it should be shown that the accused has acted  in
the  capacity  of  a  public  servant,  banker,  merchant,  factor,  broker,
attorney  or  agent.   It  is  nowhere  shown  in  the  complaint  that  the
appellants have acted in any of the above capacities.

As far as offence of cheating is concerned, the same is defined  in  Section
415 IPC, for which  the  punishment  is  provided  under  Section  420  IPC.
Section 415 reads as under:-
“415. Cheating.  –  Whoever,   by  deceiving  any  person,  fraudulently  or
dishonestly induces the person so deceived to deliver any  property  to  any
person, or to  consent  that  any  person  shall  retain  any  property,  or
intentionally induces the person so deceived to do or omit  to  do  anything
which he would not do or omit if he were not so deceived, and which  act  or
omission causes or is likely to cause damage  or  harm  to  that  person  in
body, mind, reputation or property, is said to “cheat”.

      Explanation. – A dishonest concealment of facts is a deception  within
the meaning of this section.

Illustrations    ……………”

From the above language of the Section, one  of  the  essential  ingredients
for the offence of cheating is deception, but in the present case, from  the
contents of the complaint it  nowhere  reflects  that  the  complainant  was
deceived or he or anyone  else  was  induced  to  deliver  the  property  by
deception. What was done, was so reflected  in  the  resolutions,  and  sale
deeds.

 The court must ensure that  criminal  prosecution  is  not  used  as  an
instrument of  harassment  or  for  seeking  private  vendetta  or  with  an
ulterior  motive  to  pressurise   the   accused.  
On   analysis   of   the
aforementioned cases, we are of the opinion that it is neither possible  nor
desirable to lay down an inflexible rule that would govern the  exercise  of
inherent jurisdiction.
 Inherent  jurisdiction  of  the  High  Courts  under
Section 482 CrPC though wide has to be exercised  sparingly,  carefully  and
with caution and only when it is justified by the  tests  specifically  laid
down in the statute itself and in the aforementioned cases. In view  of  the
settled legal position, the impugned judgment cannot be sustained.”

In view of the above facts, apparent on the record, we are of the view  that
the High Court and the courts below have committed grave  error  of  law  in
ignoring  the  same.  

.
Therefore, we allow the appeal and set aside the orders passed by  the  High
Court and that of the courts below.  Accordingly, the order  passed  by  the
Magistrate summoning the appellants  in  the  criminal  complaint  filed  by
respondent No. 1, in respect of offences punishable under Sections 406,  409
and 420 IPC, also stands quashed.          



IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO.953 OF 2015
              (@ Special Leave Petition (Crl.) No. 330 of 2015)


Mr. Robert John D’Souza and others                 … Appellants

                                   Versus

Mr. Stephen V. Gomes and another             … Respondents







                               J U D G M E N T


Prafulla C. Pant, J.


This appeal is directed against order dated 9.10.2014, passed  by  the  High
Court of Karnataka at  Bangalore  in  Criminal  Petition  No.  658  of  2014
whereby said court has dismissed the petition, and  declined  to  quash  the
Criminal Complaint case No. 357 of 2012, filed by respondent No. 1,  against
the appellants.

 Brief facts of the case are that a Society named –  Mukka  Welfare  Society
was constituted  on  28.3.1970  for  charitable  work  and  social  service,
registered under Karnataka Societies Registration Act, 1970.  Appellant  No.
1, appellant No. 2  and  appellant  No.  3  were  President,  Secretary  and
Treasurer respectively, while appellant Nos. 4 to 7 were  Directors  of  the
Society.  Other appellants are their relatives.  A piece of land bearing  S.
No. 239/10 measuring 0.50 acres in Village Suratkal,  Taluk  Mangalore,  was
purchased by the Society vide registered sale deed dated 28.1.1978 from  one
Smt. Kaveri Hengsu.  It is alleged by the  complainant  (respondent  No.  1)
that appellant Nos. 1 to 7, being members of the Executive and Directors  of
Mukka Welfare  Society,  misusing  the  position,  held  Board  Meetings  on
22.9.1995 and 13.10.1995 facilitating the sale of the above  mentioned  land
in favour of their relatives (appellant Nos. 7 to 12).  The sale deeds  were
executed on 16.2.1996.  It is further stated that the purchasers  (appellant
Nos. 7 to 12), executed sale deeds  in  the  same  year  in  favour  of  the
Directors of the Society.  It is alleged by the complainant/respondent  No.1
that the appellants have fraudulently usurped the property through the  sale
deeds mentioned above, and thereby committed cheating.

The criminal complaint filed by respondent No. 1 was registered by  the  1st
Additional Senior Civil Judge and Chief Judicial Magistrate, Mangalore,  DK,
who, after recording the statement of the complainant under Section  200  of
the Code of Criminal  Procedure,  1973  (for  short  “CrPC”),  summoned  the
appellants vide order dated 13.4.2012  in  respect  of  offences  punishable
under Sections 406, 409, 420 read with  Section  34  of  Indian  Penal  Code
(IPC).  The appellants filed Criminal  Revision  Petition  No.  58  of  2012
before  the  Principal  Sessions  &  District  Judge  of  D.K.  District  at
Mangalore, which was dismissed vide order dated  6.2.2013.  Thereafter,  the
appellants filed a petition under Section 482 CrPC  before  the  High  Court
and the same was also dismissed.  Hence this appeal through special leave.

We have heard learned counsel for the parties  and  perused  the  papers  on
record.


The impugned orders passed by the  High  Court  and  the  other  authorities
below are challenged before us mainly on the following grounds: -
Respondent No. 1/complainant is not a member of the “Mukka Welfare  Society”
nor is he in any manner connected with the affairs of the Society,  as  such
he has no locus to file the criminal complaint.
The sale deeds in question were executed in the year 1996, and the  criminal
complaint is filed malafide by respondent No. 1 after a period  of  fourteen
years, in the year 2010, as such the courts below have erred in law  in  not
taking note of said fact.
The courts below have erred in law in not appreciating  that  the  complaint
in question was filed to get personal vendetta by respondent No.  1  against
the Directors of the Society.
The courts below  further  erred  in  not  considering  the  fact  that  the
complainant/respondent No. 1 had earlier filed a complaint,  with  same  set
of facts, before the Deputy Commissioner, Dakshin  Kannada,  Mangalore,  and
the same was sent to Police Station  Suratkal  for  investigation,  and  the
Circle Inspector, after investigation, did not  find  any  offence  to  have
been committed by the appellants, as the dispute  was  purely  of  civil  in
nature.
Ingredients of the offences punishable under Sections 406, 409 and  420  IPC
are not made out.
None of the transactions of sale in  question  is  against  any  bye-law  or
clause of Memorandum of Association of the Society.

In the counter affidavit filed on behalf of respondent  No.1,  it  has  been
stated that the complainant came to know of the transactions of  sale,  only
in the year 2009, whereafter he complained before the  Deputy  Commissioner,
D.K., as such the issue raised as  to  delay  in  filing  the  complaint  is
unfounded.  It is further stated that the  Mukka  Welfare  Society  receives
donations from various institutions and general public.  The  allegation  of
personal vendetta, pleaded in the appeal by the appellants, has been  denied
in the counter affidavit.   Lastly,  defending  the  orders  passed  by  the
courts below, it is stated that the courts below have committed no error  of
law.

Arguments were advanced by learned counsel for  the  parties  on  the  above
lines pleaded before us. Having considered the submissions  of  the  learned
counsel for the parties what is apparent in the present  case  is  that  the
complainant is not the member of Mukka Welfare  Society.   It  is  also  not
disputed that the sale deeds in question were executed way back in the  year
1996 and the complainant, who is not even member of the Society, raises  the
issue that the sale deeds were executed for the benefit of the Directors  of
the Society, after a long gap of more  than  twelve  years.  Sale  deeds  in
question are registered, and not declared null and  void  by  any  court  of
law.  It is  also  relevant  to  mention  here  that  admittedly  earlier  a
complaint was made by the complainant to  the  Deputy  Commissioner  in  the
year 2009, which was got investigated by the police and the  result  of  the
investigation was that no offence was found committed by the  appellants  on
the ground that the dispute is of civil in nature.


In view of the above facts, apparent on the record, we are of the view  that
the High Court and the courts below have committed grave  error  of  law  in
ignoring  the  same.   Needless  to  say  that  to  constitute  an   offence
punishable  under  Section  406  IPC,  the  essential  ingredient   is   the
“entrustment” of the property.   The  complaint  filed  by  the  complainant
nowhere discloses that the land in question purchased in the year  1978  was
entrusted to the Society for the  benefit  of  others.   It  is  only  after
entrustment is shown, it can be said  that  there  was  criminal  breach  of
trust.
In Ram Narayan Popli v. Central Bureau of Investigation[1], this Court,  per
majority, has explained “entrustment” in paragraph 363 as under: -
“The term “entrustment” is not necessarily a  term  of  law.   It  may  have
different  implications  in  different  contexts.   In  its   most   general
signification all it  imports  is  the  handing  over  possession  for  some
purpose which may not imply the  conferring  of  any  proprietary  right  at
all.”


In State of Gujarat v. Jaswantlal Nathalal[2], this  Court  in  paragraph  8
has  observed  that  a  mere  transaction  of  sale  cannot  amount  to   an
entrustment.

At this stage we also think it proper to observe that in the  present  case,
even if the allegations made in the complaint are  taken  to  be  true,  the
ingredients of the offence  punishable  under  Section  409  IPC  for  which
appellants are summoned, are also not made out.  To  constitute  an  offence
punishable under Section  409  IPC,  apart  from  entrustment,  it  is  also
essential requirement that it should be shown that the accused has acted  in
the  capacity  of  a  public  servant,  banker,  merchant,  factor,  broker,
attorney  or  agent.   It  is  nowhere  shown  in  the  complaint  that  the
appellants have acted in any of the above capacities.


As far as offence of cheating is concerned, the same is defined  in  Section
415 IPC, for which  the  punishment  is  provided  under  Section  420  IPC.
Section 415 reads as under:-
“415. Cheating.  –  Whoever,   by  deceiving  any  person,  fraudulently  or
dishonestly induces the person so deceived to deliver any  property  to  any
person, or to  consent  that  any  person  shall  retain  any  property,  or
intentionally induces the person so deceived to do or omit  to  do  anything
which he would not do or omit if he were not so deceived, and which  act  or
omission causes or is likely to cause damage  or  harm  to  that  person  in
body, mind, reputation or property, is said to “cheat”.

      Explanation. – A dishonest concealment of facts is a deception  within
the meaning of this section.

Illustrations    ……………”

From the above language of the Section, one  of  the  essential  ingredients
for the offence of cheating is deception, but in the present case, from  the
contents of the complaint it  nowhere  reflects  that  the  complainant  was
deceived or he or anyone  else  was  induced  to  deliver  the  property  by
deception. What was done, was so reflected  in  the  resolutions,  and  sale
deeds.

In Mathavrao Jiwajirao Scindia and others v. Sambhajirao Chandrojirao  Angre
and others[3], a three-Judge Bench of this Court has laid down  the  law  as
to quashment of proceedings under Section 482 CrPC as follows:-
“7.   The legal position is well settled that  when  a  prosecution  at  the
initial stage is asked to be quashed, the test to be applied  by  the  court
is as  to  whether  the  uncontroverted  allegations  as  made  prima  facie
establish the offence. It is also for the court to take  into  consideration
any special features which appear in a particular case to  consider  whether
it is expedient and in the interest of justice to permit  a  prosecution  to
continue. This is so on the basis that the court cannot be utilised for  any
oblique purpose and where  in  the  opinion  of  the  court  chances  of  an
ultimate conviction is bleak and, therefore, no useful purpose is likely  to
be served by allowing a criminal prosecution  to  continue,  the  court  may
while taking into consideration the special facts of a case also  quash  the
proceeding even though it may be at a preliminary stage.”

In  Suresh  v.  Mahadevappa  Shivappa  Danannava  and  another[4],  criminal
prosecution was  quashed  by  the  Court  in  respect  offence  of  cheating
noticing that the complaint was filed after a lapse of ten years.

    In  Inder  Mohan  Goswami  and  another  v.  State  of  Uttaranchal  and
others[5], this Court in paragraphs 25 and 46 has observed as under: -



“25. Reference to the following cases would  reveal  that  the  courts  have
consistently taken the view that they must use this extraordinary  power  to
prevent injustice and secure the ends of justice. The  English  courts  have
also used inherent power to achieve the  same  objective.  It  is  generally
agreed that the Crown Court has inherent power to protect its  process  from
abuse. In Connelly  v. DPP (1964 AC 1254)  Lord  Devlin  stated  that  where
particular criminal proceedings constitute an abuse of  process,  the  court
is empowered to refuse to allow the indictment to  proceed  to  trial.  Lord
Salmon in DPP v. Humphrys  (1977  AC  1)  stressed  the  importance  of  the
inherent power when he observed that it is only if the  prosecution  amounts
to an abuse of the process of the court  and  is  oppressive  and  vexatious
that the judge has the power to intervene. He  further  mentioned  that  the
court’s power to prevent such abuse is of  great  constitutional  importance
and should be jealously preserved.

            xxx              xxx             xxx

46. The court must ensure that  criminal  prosecution  is  not  used  as  an
instrument of  harassment  or  for  seeking  private  vendetta  or  with  an
ulterior  motive  to  pressurise   the   accused.   On   analysis   of   the
aforementioned cases, we are of the opinion that it is neither possible  nor
desirable to lay down an inflexible rule that would govern the  exercise  of
inherent jurisdiction.  Inherent  jurisdiction  of  the  High  Courts  under
Section 482 CrPC though wide has to be exercised  sparingly,  carefully  and
with caution and only when it is justified by the  tests  specifically  laid
down in the statute itself and in the aforementioned cases. In view  of  the
settled legal position, the impugned judgment cannot be sustained.”

In view of the above discussion and facts and circumstances of the case,  we
are of the view that none of the  offences  for  which  the  appellants  are
summoned, is made out  from  the  complaint  and  material  on  record.   We
further find that it is nothing but abuse of process of law on the  part  of
the complainant to implicate the appellants  in  a  criminal  case  after  a
period of twelve years of execution of registered sale  deeds  in  question,
who is neither party to  the  sale  deeds  nor  a  member  of  the  Society.
Therefore, we allow the appeal and set aside the orders passed by  the  High
Court and that of the courts below.  Accordingly, the order  passed  by  the
Magistrate summoning the appellants  in  the  criminal  complaint  filed  by
respondent No. 1, in respect of offences punishable under Sections 406,  409
and 420 IPC, also stands quashed.


                                                           ……………….....…………J.
                                                               [Dipak Misra]



                                                             .……………….……………J.
                                        [Prafulla C. Pant]
New Delhi;
July 21, 2015.
-----------------------
[1]    (2003) 3 SCC 641
[2]    AIR 1968 SC 700
[3]    (1988) 1 SCC 692
[4]    (2005) 3 SCC 670
[5]    (2007) 12 SCC 1

Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as ‘the Act’) =The appellant chose to accept the proposal for cancellation of allotment made by the respondent but it refunded the registration amount along with only 7% interest in terms of the offer document which had been accepted by the respondent and was thus the rate finalized by agreement between the parties. The respondent in his complaint before the Commission filed on 29.6.1997 raised two-fold grievances which have been noted by the Commission in paragraph 3 of the impugned judgment. The first grievance was against the levy of cancellation charges and penalty when the flat allotted to him was not in the 6 localities for which he had indicated his preference. The second grievance of the respondent was that the interest paid on the registration amount is at a rate lower than the rate at which the applicants are to be charged in case of delay/default.=In absence of relevant pleadings and evidence it cannot be presumed that the appellant has resorted to any unfair trade practice as defined under Section 36A or has increased its price unreasonably or made unreasonable earnings by investing the registration amount in accounts bearing higher interest. The relevant provision in the Brochure of the 1985 scheme by itself does not appear to be unreasonable in allowing interest @ 7% p.a. It is relevant to indicate here that nothing has been brought to our notice which may show that the registration amount is to remain locked for any fixed term or that the appellant can refuse an application for cancellation of registration at an early stage or even before draw of lots for allotment/allocation of flats. In such a situation it is not possible to infer that the registration deposits must reasonably be kept in long term fixed deposits with a view to earn higher interests. In any case such aspects had to be pleaded and proved by the respondent before the Commission but that has not been done leading to absence of requisite findings. Accordingly, we find the impugned order of the Commission awarding interest at the rate of 12% per annum on the registration amount and also award of Rs.5000/- towards litigation charges to be against law and unjustified. The impugned judgment and order is therefore set aside. The appeal stands allowed. However, in the facts of the case the appellant shall itself bear its cost of litigation.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                          CIVIL APPEAL NO.3 OF 2003

Delhi Development Authority                    …..Appellant

      Versus

P.R. Samanta                                              …..Respondent




                               J U D G M E N T



SHIVA KIRTI SINGH, J.

This statutory appeal under Section 55 of  the  Monopolies  and  Restrictive
Trade Practices  Act,  1969  (hereinafter  referred  to  as  ‘the  Act’)  is
directed  against  judgment  and  order  dated  20.08.2002  passed  by   the
Monopolies  and  Restrictive   Trade   Practices   Commission,   New   Delhi
(hereinafter referred to as ‘the Commission’)  in  Compensation  Application
No.367/97 preferred by the sole respondent.
In view of controversy arising for  determination  being  very  limited  and
confined to  reasonableness  of  rate  of  interest  payable  on  refund  of
registration amount, it is not necessary to delve  deeper  into  the  facts.
Suffice to  note  that  the  appellant  Delhi  Development  Authority  is  a
statutory body constituted under the Delhi Development  Act,  1957.   It  is
entrusted with the planned development of Delhi and claims to function on  a
No Profit No Loss basis in the matter of  providing  subsidized  housing  to
different income groups.  The appellant invited applications  from  eligible
members of the general public during the period May 1985 to August  1985  in
a scheme described as Sixth  Self  Financing  Housing  Registration  Scheme,
1985.  The respondent deposited the  requisite  sum  of  Rs.15000/-  and  by
filing application became a member  of  that  scheme.   In  due  course  the
appellant released a scheme for allocation of self financing society  flats.
 Pursuant to advertisements published by the appellant the  respondent  vide
his application dated 27.02.1991  opted  for  a  flat  at  either  of  three
locations, namely, (1) Sarita Vihar, (2) Kondli Gharoli and (3) Narela.   He
was allotted a flat at Narela but the offer was declined by  the  respondent
on 27.10.1991.
In the  year  1995  under  a  similar  fresh  scheme  the  persons  who  had
registered with the appellant were required to  indicate  their  preferences
for upto 14 localities mentioned in the Brochure Annexure ‘A’ and ‘B’.   The
advertised  terms  and  conditions  clarified  that  the   registrants   not
indicating their preferences for 14 localities  will  be  allocated/allotted
flats which would be  available  after  accommodating  the  preferences  and
choices of the registrants  applying  in  terms  of  advertisement  and  the
allotment  would  be  through  draw  of  lots.   The  respondent  gave   his
preference only for 6 localities.  He could not be accommodated against  any
of his 6 preferred localities but as per draw of  lots  he  was  allotted  a
flat in Dwarka.  On receipt of the allotment letter dated 14/22.03.1995  the
respondent through his letter dated 17.5.1995  declined  the  offer  on  the
ground that the allotment was not as per his preferences.  He  demanded  the
registration deposit of Rs.15000/- made in 1985 along  with  an  interest  @
15% p.a. in place of 7% p.a. indicated in the scheme  and  the  Brochure  on
the ground that the deposit would have earned a minimum of 15%  interest  if
it was deposited in a Class I company.
The appellant chose to accept the proposal  for  cancellation  of  allotment
made by the respondent but it refunded the registration  amount  along  with
only 7% interest in terms of the offer document which had been  accepted  by
the respondent and was thus the rate  finalized  by  agreement  between  the
parties.
The respondent in his complaint before the  Commission  filed  on  29.6.1997
raised two-fold grievances which  have  been  noted  by  the  Commission  in
paragraph 3 of the impugned judgment.  The first grievance was  against  the
levy of cancellation charges and penalty when the flat allotted to  him  was
not in the 6 localities for which he  had  indicated  his  preference.   The
second grievance of the  respondent  was  that  the  interest  paid  on  the
registration amount  is  at  a  rate  lower  than  the  rate  at  which  the
applicants are to be charged in case of delay/default.
After noticing the relevant provisions in the Brochure for 1985  scheme  the
Commission found no merit in the first grievance  of  the  respondent  since
clause 5.5 of the Brochure made it clear  that  allotment  of  flat  as  per
preference would depend on its availability and it was not the case  of  the
respondent  that  inspite  of  availability  of  flats  in  the   localities
preferred, the same was not allocated to the applicant.
The Commission thereafter considered the next grievance in respect  of  rate
of interest in the penultimate paragraph of  the  judgment  which  reads  as
follows :
“The applicant’s main grievance is against the payment of  the  interest  on
the registration amount, which  is  less  than  the  one  charged  from  the
applicants when in default.  I find substantial force in this plea   of  the
applicant and would award interest @  12%  per  annum  on  the  registration
amount as against the one paid by the Respondent  authority.   The  rate  of
interest at 12% per annum is considered to be reasonable and  equitable  and
has also been awarded in other cases  in  the  similar  circumstances.   The
applicant is also awarded a sum of  Rs.5,000/-  towards  litigation  charges
which the Respondent is directed to pay.”

Inspite of notice the respondent has not chosen to appear nor he  has  filed
any counter affidavit.  We have heard learned counsel for the appellant  and
perused the relevant materials on record including the order  under  appeal.
According to learned counsel for the appellant when the  main  grievance  of
the respondent in respect of levy of cancellation charges  and  penalty  was
not found acceptable  by  the  Commission  and  when  the  Commission  found
nothing wrong in the action of  the  appellant  in  the  light  of  declared
policy and contract governing  the  matter  at  hand,  it  should  not  have
enhanced the contract rate of 7% interest over registration  amount  on  the
singular ground that it was less than the one charged  from  the  applicants
when in default.   According  to  learned  counsel  for  the  appellant  the
Commission was wholly unjustified in interfering with the contractual  terms
and conditions and directing the appellant to pay a higher rate of  interest
at 12% p.a. on the specious plea that such rate in the consideration of  the
Commission was reasonable and equitable and had been awarded in  some  other
cases.  The award of litigation charges  of  Rs.5000/-  was  also  seriously
contested when the Commission had not found any action of the  appellant  to
be unfair, monopolistic or increasing the cost of production unreasonably.
The Act was enacted with the  object  of  preventing  the  concentration  of
economic power to the common detriment, for the control of  monopolies,  for
the prohibition of monopolistic and  restrictive  trade  practices  and  for
matters  connected  therewith  or  incidental  thereto.   It  has  now  been
replaced by the  Competition  Act,  2002.   The  terms  ‘monopolistic  trade
practice’ as well as ‘restrictive trade  practice’  have  been  defined  and
undoubtedly the Commission had the jurisdiction and power  to  inquire  into
any restrictive trade practice or any monopolistic trade  practice  in  view
of Section 10 of the Act and also into unfair trade practice  as  stipulated
in Section 36A.
Considering the submissions advanced on behalf of the appellant as  well  as
the discussion and reasonings in the impugned order in respect  of  rate  of
interest, we find sufficient merit in the submissions advanced on behalf  of
the appellant.  The Commission has clearly erred  in  interfering  with  the
contractual rate of interest in absence of any finding against  the  actions
and orders of the appellant.  Without returning a  finding  that  there  was
any unfair trade practice or  any  restrictive/monopolistic  trade  practice
pursuant to inquiry under the provisions of the Act, the Commission  clearly
erred in compensating the respondent with a higher rate of  interest.   Even
the basis for  grant  of  higher  interest  is  without  discussion  of  any
material.  The judgment and order under appeal  indicates  no  material  for
coming to the impugned finding that payment of interest on the  registration
amount should not be less than one charged from  the  applicants  when  they
commit a default.  A default clause is introduced  to  deter  any  delay  or
default and hence such penalty is by its very nature a deterrent one.   That
by itself offers a reasonable justification for the appellant  to  charge  a
higher rate of interest in the case of delay/default.  So  far  as  interest
on the registration amount is concerned it stands on  a  different  footing.
In absence of relevant pleadings and evidence it  cannot  be  presumed  that
the appellant has resorted to any unfair trade  practice  as  defined  under
Section 36A or has increased its price  unreasonably  or  made  unreasonable
earnings by investing the registration amount  in  accounts  bearing  higher
interest.  The relevant provision in the Brochure  of  the  1985  scheme  by
itself does not appear to be unreasonable in allowing  interest  @  7%  p.a.
It is relevant to indicate here that nothing has been brought to our  notice
which may show that the registration amount is  to  remain  locked  for  any
fixed term or that the appellant can refuse an application for  cancellation
of registration  at  an  early  stage  or  even  before  draw  of  lots  for
allotment/allocation of flats.  In such a situation it is  not  possible  to
infer that the registration deposits must reasonably be kept  in  long  term
fixed deposits with a view to earn  higher  interests.   In  any  case  such
aspects  had  to  be  pleaded  and  proved  by  the  respondent  before  the
Commission but that has not  been  done  leading  to  absence  of  requisite
findings.
Accordingly, we find the impugned order of the Commission awarding  interest
at the rate of 12% per annum on the registration amount and  also  award  of
Rs.5000/- towards litigation charges to  be  against  law  and  unjustified.
The impugned judgment and order is therefore set aside.  The  appeal  stands
allowed.  However, in the facts of the case the appellant shall itself  bear
its cost of litigation.


                       …………………………………….J.
                       [VIKRAMAJIT SEN]


                       ……………………………………..J.
                             [SHIVA KIRTI SINGH]
New Delhi.
July 21, 2015.
-----------------------
8