subsidies = Section 28(iii)(b) specifically states that income from cash assistance, by whatever name called, received or receivable by any person against exports under any scheme of the Government of India, will be income chargeable to income tax under the head “profits and gains of business or profession”. If cash assistance received or receivable against exports schemes are included as being income under the head “profits and gains of business or profession”, it is obvious that subsidies which go to reimbursement of cost in the production of goods of a particular business would also have to be included under the head “profits and gains of business or profession”, and not under the head “income from other sources”.

                                  REPORTABLE



                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.7622 OF 2014


COMMISSIONER OF INCOME TAX          …APPELLANT

      VERSUS
M/S. MEGHALAYA STEELS LTD.               …RESPONDENT
                                    WITH
                        CIVIL APPEAL NO.8493 OF 2012
                        CIVIL APPEAL NO.8494 OF 2012
                        CIVIL APPEAL NO.8496 OF 2012
                        CIVIL APPEAL NO.2560 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.36578 OF 2013)
                        CIVIL APPEAL NO.2561 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.36579 OF 2013)
                        CIVIL APPEAL NO.2562 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.36581 OF 2013)
                        CIVIL APPEAL NO.2563 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.37831 OF 2013)
                        CIVIL APPEAL NO.2564 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.37833 OF 2013)
                        CIVIL APPEAL NO.2565 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.37834 OF 2013)
                        CIVIL APPEAL NO.2566 OF 2016
              (ARISING OUT OF SLP (CIVIL) NO.6867 (CC 224/2014)
                        CIVIL APPEAL NO.2567 OF 2016
             (ARISING OUT OF SLP (CIVIL) NO.6869 (CC 1543/2014)



                        CIVIL APPEAL NO.2568 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.11094 OF 2014)
                        CIVIL APPEAL NO.2569 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.11095 OF 2014)
                        CIVIL APPEAL NO.2570 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.12710 OF 2014)
                        CIVIL APPEAL NO.3624 OF 2015
                        CIVIL APPEAL NO.2571 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.24620 OF 2014)
                        CIVIL APPEAL NO.2572 OF 2016
                (ARISING OUT OF SLP (CIVIL) NO.11319 OF 2015)
                        CIVIL APPEAL NO.3623 OF 2015
                        CIVIL APPEAL NO.5238 OF 2015
                        CIVIL APPEAL NO.5239 OF 2015
                        CIVIL APPEAL NO.5236 OF 2015
                        CIVIL APPEAL NO.6040 OF 2015
                        CIVIL APPEAL NO.6039 OF 2015
                        CIVIL APPEAL NO.7623 OF 2014
                        CIVIL APPEAL NO.7624 OF 2014



                        J U D G M E N T



R.F. Nariman, J.



1.    Delay condoned in filing the special leave petitions.



2.    Leave granted in SLP  (C)  Nos.  36578/2013,  36579/2013,  36581/2013,
37831/2013, 37833/2013, 37834/2013,  SLP(C)  No.………CC  No.224/2014),  SLP(C)
No.………CC  No.1543/2014),  SLP(C)  Nos.11094/2014,  11095/2014,   12710/2014,
24620/2014, 11319/2015.



3.    This group of appeals arises from the State of Meghalaya and  concerns
deductions to be made under Sections 80-IB and 80-IC of the Income Tax  Act,
1961.  Civil Appeal No.7622 of 2014 has been treated as the lead  matter  in
which a judgment  of  the  Gauhati  High  Court  dated  29.5.2013  has  been
delivered, which has been followed in all the other appeals.

4.    Civil Appeal No.7622 of 2014  concerns  itself  with  two  income  tax
appeals filed by  the  Revenue  against  the  judgment  of  the  Income  Tax
Appellate Tribunal, ITA  No.7/2010  arising  out  of  the  applicability  of
Section 80-IB, and ITA  No.16/2011  arising  out  of  the  applicability  of
Section 80-IC.   For  the  purpose  of  these  matters,  the  facts  in  ITA
No.7/2010 are narrated hereinbelow.



5.    The respondent is engaged in the business of manufacture of Steel  and
Ferro Silicon. On 9.10.2014, the Respondent submitted its return  of  income
for the year 2004-2005 disclosing an income of Rs.2,06,970/- after  claiming
deduction under Section 80-IB of the Income  Tax  Act  on  the  profits  and
gains  of  business  of  the  respondent’s  industrial   undertaking.    The
respondent had received the following amounts on account of subsidies:-

Transport subsidy -          Rs.2,64,94,817.00

Interest subsidy -           Rs.2,14,569.00

Power subsidy -              Rs.7,00,000.00

Total -                      Rs.2,74,09,386.00

6.    The Assessing Officer, in the assessment order dated  7.12.2006,  held
that the  amounts  received  by  the  assessee  as  subsidies  were  revenue
receipts and did not qualify for deduction under  Section  80-IB(4)  of  the
Act and, accordingly, the respondent’s claim for deduction of an  amount  of
Rs.2,74,09,386/- on account of  the  three  subsidies  afore-mentioned  were
disallowed.   The  respondent-assessee  preferred  an  appeal   before   the
Commissioner of Income Tax (Appeals), Guwahati, who, vide  his  order  dated
8.3.2007,  dismissed  the  appeal  of  the  respondent.   Aggrieved  by  the
aforesaid order, the respondent preferred an appeal before the  ITAT  which,
by its order dated 19.3.2010, allowed the appeal  of  the  respondent.   The
Revenue carried the matter thereafter to the High Court, under Section  260A
of the Act, which resulted in the impugned judgment dated  29.5.2013,  which
decided the matter against the Revenue.  Revenue is therefore before  us  in
appeal against this judgment.



7.    Shri Radhakrishnan, learned senior advocate  appearing  on  behalf  of
the Revenue, argued before us that any amount received  by  way  of  subsidy
was an amount whose source was the Government and not the  business  of  the
assessee.  He further argued that there is a  world  of  difference  between
the expression profits and gains “derived from” any  business,  and  profits
“attributable to” any  business,  and  that  since  the  section  speaks  of
profits and gains “derived from” any business, such profits and  gains  must
have a close and direct nexus with the business of the  assessee.  Subsidies
that are allowed to the assessee have no close and  direct  nexus  with  the
business of the assessee but have a close and direct nexus with grants  from
the Government.  This being the case, according to him, the  respondent  did
not qualify for deductions under Sections 80-IB and 80-IC of  the  Act.   In
the course of his lengthy submissions, he made  reference  to  a  number  of
judgments including the judgment reported as Liberty India  v.  Commissioner
of Income Tax reported in 2009 (9) SCC 328, which has been followed  by  the
Himachal Pradesh High Court in Supriya Gill  v.  CIT (2010)  193  Taxman  12
(Himachal Pradesh).   He  submitted  that  the  aforesaid  judgment  of  the
Himachal Pradesh High Court has taken a diametrically opposite view  to  the
judgment of the Gauhati High Court, impugned in  the  present  appeals,  and
deserves to be followed, as  it,  in  turn,  has  followed  Liberty  India’s
judgment and another Supreme Court judgment  reported  as  CIT  v.  Sterling
Foods, 237 ITR 579 (1999).  He also relied upon Sections 80-A and  80-AB  in
order to demonstrate the scheme of deductions allowable under  Part-VI-A  of
the Income Tax Act.  He also referred us to Sections 56 and 57 (iii) of  the
Act to buttress his  submission  that  subsidies  being  in  the  nature  of
“income from other sources”  could  not  be  allowed  to  be  deducted  from
profits and gains of business, which fell under a different  sub-heading  in
Section 14 of the Act.  According to him, there is  one  interpretation  and
one interpretation alone of  Sections  80-IB  and  80-IC,  which  cannot  be
deviated from with reference to any so-called object of the said sections.



8. Countering these submissions, Shri P. Chidambaram Learned Senior  Counsel
appearing on behalf of the assessee, referred to the Budget  Speech  of  the
Minister of Finance for 1999-2000 to buttress his submission that  the  idea
of giving these subsidies was to give a 10 year tax  holiday  to  those  who
come from outside Meghalaya to set up industries in that State, which  is  a
backward area.  He referred to several  judgments,  including  the  judgment
reported in Jai Bhagwan Oil and Flour Mills v. Union  of  India  and  Others
(2009) 14 SCC 63 and Sahney Steel and Press Works Ltd.  v.  Commissioner  of
Income Tax,  A.P.  -  I,  Hyderabad,  (1997)  7  SCC  764  to  buttress  his
submission that subsidies were given only in order that  items  which  would
go into the cost of manufacture of  the  products  made  by  the  respondent
should be reduced, as these subsidies  were  reimbursement  for  either  the
entire or partial costs incurred by the respondent towards transporting  raw
materials to its factory and transporting its finished products to  dealers,
who then sell the  finished  products.   Further,  power  subsidy,  interest
subsidy and  insurance  subsidy  were  also  reimbursed,  either  wholly  or
partially, power being a necessary element of the  cost  of  manufacture  of
the respondent’s products, and insurance subsidy being necessary  to  defray
costs for  both  manufacture  and  sale  of  the  said  products.   Further,
interest subsidy  would  also  go  towards  reducing  the  interest  element
relatable  to  cost,  and  therefore  all  four  subsidies  being   directly
relatable to cost of manufacture and/or  sale  would  therefore  necessarily
fall  within  the  language  of  Sections  80-IB  and  80-IC,  as  they  are
components of cost of running a business from which profits  and  gains  are
derived.   He  sought  to  distinguish   the   judgments   cited   by   Shri
Radhakrishnan, in particular the judgment of this Court in   Liberty  India,
on the ground that the said judgment did not deal with a  subsidy  relatable
to cost of manufacture but dealt with a DEPB drawback scheme, which  related
to export of goods and not manufacture of goods, thereby rendering the  said
decision inapplicable to the facts of the present  case.   Shri  S.  Ganesh,
learned senior counsel appearing  on  behalf  of  some  of  the  respondent-
assessees, reiterated the submissions made by Shri P. Chidambaram and  added
that as all the subsidies went towards cost of manufacture or  sale  of  the
products of the respondent, such subsidies being amounts of cost which  were
actually incurred by the respondent and thereafter reimbursed by the  State,
the principle of netting off recognized in several decisions of  this  Court
ought to be applied, and on application of the said principle, it  is  clear
that the subsidy received by the respondent was  only  to  depress  cost  of
manufacture and/or sale and would therefore be “derived  from”  profits  and
gains made from the business  of  the  assessee.   He  also  relied  upon  a
judgment of the Calcutta High Court dated 15.1.2015,  in  C.I.T.  v.  Cement
Manufacturing Company Limited, which has followed the  Gauhati  High  Court,
and a judgment of the Delhi High Court in CIT v. Dharampal  Premchand  Ltd.,
317 ITR 353.



9.    We have heard learned counsel for the parties.  Before embarking on  a
discussion of the relevant case law, we think it is  necessary  to  set  out
Sections 80-IB and 80-IC insofar as they are relevant for the  determination
of the present case.

“80-IB Deduction in respect of profits and  gains  from  certain  industrial
undertakings other than infrastructure development undertakings

(1) Where the gross total income of an assessee  includes  any  profits  and
gains derived from any business referred to  in  sub-sections  (3)  to (11),
(11A) and  (11B)  (such  business  being  hereinafter  referred  to  as  the
eligible business), there shall, in  accordance  with  and  subject  to  the
provisions of this section, be allowed, in computing  the  total  income  of
the assessee, a deduction from such profits and gains of an amount equal  to
such percentage and for such number of  assessment  years  as  specified  in
this section.

(2) This section applies to any industrial  undertaking  which  fulfils  all
the following conditions, namely:-
(i) it is not formed by splitting up, or the reconstruction, of  a  business
already in existence:
Provided that this condition shall not apply in  respect  of  an  industrial
undertaking  which  is  formed  as  a  result   of   the   re-establishment,
reconstruction or revival by the  assessee  of  the  business  of  any  such
industrial  undertaking  as  is  referred  to  in  section   33B,   in   the
circumstances and within the period specified in that section;
(ii) it is not formed by the transfer to a  new  business  of  machinery  or
plant previously used for any purpose;
(iii) it manufactures or produces  any  article  or  thing,  not  being  any
article or thing  specified  in  the  list  in  the  Eleventh  Schedule,  or
operates one or more cold storage plant or plants, in any part of India:
Provided that the condition in this clause shall, in  relation  to  a  small
scale industrial undertaking or an industrial  undertaking  referred  to  in
sub-section (4) shall apply as if the words "not being any article or  thing
specified in the list in the Eleventh Schedule" had been omitted.
Explanation 1- For the purposes of  clause  (ii),  any  machinery  or  plant
which was used outside India by any person other  than  the  assessee  shall
not be regarded as machinery or plant previously used for  any  purpose,  if
the following conditions are fulfilled, namely:-
(a) such machinery or plant was not, at any time previous  to  the  date  of
the installation by the assessee, used in India;
(b) such machinery or plant is imported into India from any country  outside
India; and
(c) no deduction on account of depreciation in respect of such machinery  or
plant has been allowed or is allowable under the provisions of this  Act  in
computing the total income of any person for any period prior  to  the  date
of the installation of the machinery or plant by the assessee.
Explanation  2-  Where  in  the  case  of  an  industrial  undertaking,  any
machinery or plant or any part thereof previously used for  any  purpose  is
transferred to a new business and the total value of the machinery or  plant
or part so transferred does not exceed twenty per cent of  the  total  value
of the machinery or plant used in the business, then, for  the  purposes  of
clause (ii) of this sub-section, the condition specified  therein  shall  be
deemed to have been complied with;
(iv) in a case where the industrial  undertaking  manufactures  or  produces
articles or things, the  undertaking  employs  ten  or  more  workers  in  a
manufacturing process carried on with the aid of power,  or  employs  twenty
or more workers in a manufacturing process carried on  without  the  aid  of
power.

(4) The amount of deduction in the case of an industrial undertaking  in  an
industrially backward State  specified  in  the  Eighth  Schedule  shall  be
hundred per cent of the profits  and  gains  derived  from  such  industrial
undertaking for five assessment years beginning with the initial  assessment
year and thereafter twenty-five per cent  (or  thirty  per  cent  where  the
assessee  is  a  company)  of  the  profits  and  gains  derived  from  such
industrial undertaking:
Provided that the total period of deduction does not exceed ten  consecutive
assessment years (or twelve consecutive assessment years where the  assessee
is a co-operative society) subject to fulfillment of the condition  that  it
begins to manufacture or produce articles or things or to operate  its  cold
storage plant or plants during the  period  beginning  on  the  1st  day  of
April, 1993 and ending on the 31st day of March, 2004:
Provided further that in the case of such industries  in  the  North-Eastern
Region, as may  be  notified  by  the  Central  Government,  the  amount  of
deduction shall be hundred per cent of profits and gains  for  a  period  of
ten assessment years, and the total period of  deduction  shall  in  such  a
case not exceed ten assessment years.
 Provided also that no deduction under this  sub-section  shall  be  allowed
for the assessment year beginning on the 1st  day  of  April,  2004  or  any
subsequent year to any undertaking or enterprise referred to in  sub-section
(2) of section 80-IC.
Provided also that in the case of an industrial undertaking in the State  of
Jammu and Kashmir, the provisions of the first proviso shall have effect  as
if for the figures, letters and words 31st day of March, 2004, the  figures,
letters and words 31st day of March, 2012 had been substituted:
Provided also that no deduction under this sub-section shall be  allowed  to
an industrial undertaking in  the  State  of  Jammu  and  Kashmir  which  is
engaged in the manufacture or production of any article or  thing  specified
in Part C of the Thirteenth Schedule.”


1  “80-IC  Special  provisions  in  respect  of  certain   undertakings   or
enterprises in certain special category States


2

(1) Where the gross total income of an assessee  includes  any  profits  and
gains derived by an undertaking or an enterprise from any business  referred
to in sub-section (2), there shall, in accordance with and  subject  to  the
provisions of this section, be allowed, in computing  the  total  income  of
the assessee, a deduction from such profits and gains, as specified in  sub-
section (3).”


10.   There is no dispute between the parties that the  businesses  referred
to in Section 80-IB are businesses which are eligible businesses under  both
the aforesaid Sections.  The parties have only locked horns on  the  meaning
of the expression “any profits and gains derived from any business”.



11.   The aforesaid provisions were inserted by the Finance  Act  1999  with
effect from 1.4.2000. The Finance Minister in  his  budget  speech  for  the
year 1999-2000 spoke about  industrial  development  in  the  North  Eastern
Region as follows:-

“Mr. Speaker, Sir, I  am  conscious  of  the  fact  that,  despite  all  our
announcements, the industrial development in North Eastern  Region  has  not
come up to our expectations. To give  industrialisation  a  fillip  in  this
area of the country, I propose a 10 year tax holiday for all industries  set
up in Growth Centres, Industrial  Infrastructure  Development  Corporations,
and for other specified industries, in the North  Eastern  Region.  I  would
urge the industrial entrepreneurs from this part of  the  country  to  seize
the opportunity and set up modern, high value added manufacturing  units  in
the region.”


12.   The reference to the 10 year tax holiday for the industries set up  in
the North Eastern Region is an obvious reference to the  second  proviso  to
sub-section (4) of Section 80-IB set  out  hereinabove.   The  speech  of  a
Minister is relevant insofar it gives the background  for  the  introduction
of a particular provision in the Income Tax Act. It is not determinative  of
the construction of the said provision, but gives the reader an idea  as  to
what was in the Minister’s  mind  when  he  sought  to  introduce  the  said
provision.  As an external aid to construction,  this  Court  has,  in  K.P.
Varghese v. Income Tax Officer,  Ernakulam  and  Anr.,  (1982)  1  SCR  629,
referring to a Minister’s speech piloting a Finance Bill, stated as under:-

“Now it is true that the speeches made by the Members of the Legislature  on
the floor of the House when a Bill for enacting  a  statutory  provision  is
being  debated  are  inadmissible  for  the  purpose  of  interpreting   the
statutory provision but the speech made by the Mover of the Bill  explaining
the reason for the introduction of the Bill can  certainly  be  referred  to
for the purpose of ascertaining the mischief sought to be  remedied  by  the
legislation and  the  object  and  purpose  for  which  the  legislation  is
enacted. This is in accord with the recent trend  in  juristic  thought  not
only in Western countries  but  also  in  India  that  interpretation  of  a
statute being an exercise in the ascertainment of meaning, everything  which
is logically relevant should be admissible.  In  fact  there  are  at  least
three decisions of this Court, one in Loka Shikshana Trust  v.  Commissioner
of Income-Tax [1975]  101  ITR  234(SC)  the  other  in  Indian  Chamber  of
Commerce v. Commissioner of Income-tax [1975] 101 ITR 796(SC) and the  third
in  Additional  Commissioner  of  Income-tax  v.  Surat   Art   Silk   Cloth
Manufacturers Association [1980] 121 ITR 1(SC) where the speech made by  the
Finance Minister while introducing the  exclusionary  clause  in  Section  2
Clause (15) of the Act was relied upon by  the  Court  for  the  purpose  of
ascertaining what was the reason for introducing  that  clause.  The  speech
made by the Finance Minister while moving  the  amendment  introducing  Sub-
section (2) clearly states what were the circumstances in which  Sub-section
(2) came to be passed, what was the mischief for  which  Section  52  as  it
then stood did not provide and which  was  sought  to  be  remedied  by  the
enactment of Sub-section (2) and why the enactment of  Sub-section  (2)  was
found necessary. It is apparent from the  speech  of  the  Finance  Minister
that Sub-section(2) was enacted for the  purpose  of  reaching  those  cases
where there was under-statement of consideration in respect of the  transfer
or to  put  it  differently,  the  actual  consideration  received  for  the
transfer was  'considerably  more'  than  that  declared  or  shown  by  the
assessee, but  which  were  not  covered  by  Sub-section  (1)  because  the
transferee was not directly or indirectly connected with the  assessee.  The
object and purpose of Sub-section (2), as explicated from the speech of  the
Finance Minister, was not to strike  at  honest  and  bonafide  transactions
where the consideration for the transfer  was  correctly  disclosed  by  the
assessee but to bring within the net of taxation  those  transactions  where
the consideration in respect of the transfer was shown at  a  lesser  figure
than that actually received by the assessee, so that they do not escape  the
charge of tax on capital gains  by  under-statement  of  the  consideration.
This was real object and purpose of the enactment  of  Sub-section  (2)  and
the  interpretation  of  this  sub-section  must  fall  in  line  with   the
advancement of that object and purpose. We  must  therefore  accept  as  the
underlying assumption of Sub-section (2) that there  is  under-statement  of
consideration in respect of the transfer and Sub-section  (2)  applies  only
where the actual consideration received by the  assessee  is  not  disclosed
and the consideration declared in respect of the  transfer  is  shown  at  a
lesser figure than that actually received.”


13.   A  series  of  decisions  have  made  a  distinction  between  “profit
attributable to” and “profit derived from” a business. In one of  the  early
judgments, namely, Cambay Electric  Supply  Industrial  Company  Limited  v.
Commissioner of Income Tax, Gujarat II, (1978) 2 SCC 644, this Court had  to
construe Section 80-E of the Income Tax Act, which referred to  profits  and
gains  attributable  to  the  business  of  generation  or  distribution  of
electricity. This Court held:

“As regards the  aspect  emerging  from  the  expression  "attributable  to"
occurring in the phrase "profits and gains attributable to the business  of"
the specified industry (here generation and distribution of electricity)  on
which the learned Solicitor General relied, it will be pertinent to  observe
that the Legislature has deliberately used the expression "attributable  to"
and not the expression "derived  from".  It  cannot  be  disputed  that  the
expression  "attributable  to"  is  certainly  wider  in  import  than   the
expression "derived from". Had the expression "derived from"  been  used  it
could have with some force been contended that a  balancing  charge  arising
from the sale of old machinery and buildings cannot be regarded  as  profits
and gains derived from  the  conduct  of  the  business  of  generation  and
distribution of electricity. In this connection it may be pointed  out  that
whenever the Legislature wanted to give a restricted meaning in  the  manner
suggested by the learned  Solicitor  General  it  has  used  the  expression
"derived from", as for instance in s. 80J. In our view since the  expression
of wider import, namely, "attributable to” has been  used,  the  Legislature
intended to cover receipts from sources other than  the  actual  conduct  of
the business of generation and distribution of electricity.” (Para 8)


14.    In  Commissioner  Of  Income  Tax,  Karnataka  v.   Sterling   Foods,
Mangalore, (1999) 4 SCC 98, this Court had to decide whether income  derived
by the assessee by sale of import entitlements on  export  being  made,  was
profit and gain derived from the respondent’s industrial  undertaking  under
Section 80HH of the Indian Income  Tax  Act.  This  Court  referred  to  the
judgment in Cambay Electric Supply (supra)  and  emphasized  the  difference
between the wider expression “attributable to” as contrasted  with  “derived
from”.   In  the  course  of  the  judgment,  this  Court  stated  that  the
industrial undertaking itself had to be  the  source  of  the  profit.   The
business of the industrial undertaking had directly to  yield  that  profit.
Having said this, this Court finally held:-

“We do not think that the source of the import entitlements can be  said  to
be the industrial undertaking of the assessee.  The  source  of  the  import
entitlements can, in the circumstances,  only  be  said  to  be  the  Export
Promotion Scheme of the Central Govt.  whereunder  the  export  entitlements
become available. There must be for the application of  the  words  "derived
from", a direct nexus between the  profits  and  gains  and  the  industrial
undertaking.  In  the  instant  case  the  nexus  is  not  direct  but  only
incidental. The  industrial  undertaking  exports  processed  sea  food.  By
reason of such export, the Export Promotion Scheme applies. Thereunder,  the
assessee is entitled to import entitlements, which it  can  sell.  The  sale
consideration therefrom cannot, in our view, be held to constitute a  profit
and gain derived from the assessees' industrial undertaking.” (Para 13)


15.   Similarly, in Pandian Chemicals Limited v Commissioner of Income  Tax,
262 ITR 278, this Court dealt with the claim for a deduction  under  Section
80HH of the Act.  The question before the Court was as to  whether  interest
earned on a deposit made with  the  Electricity  Board  for  the  supply  of
electricity to the appellant’s industrial undertaking should be  treated  as
income derived from the industrial undertaking  under  Section  80HH.   This
Court held that although electricity may be required  for  the  purposes  of
the industrial undertaking, the deposit required for its supply  is  a  step
removed from the business of the industrial undertaking.  The derivation  of
profits on the deposit made with the Electricity Board could not be said  to
flow directly from the industrial undertaking itself.  On  this  basis,  the
appeal was decided in favour of Revenue.



16.   The sheet anchor of Shri Radhakrishnan’s submissions  is the  judgment
of this Court in Liberty India v. Commissioner of Income Tax, (2009)  9  SCC
328.  This was a case referring directly  to  Section  80-IB  in  which  the
question was whether DEPB credit or Duty drawback receipt could be  said  to
be in respect of profits and gains derived from an eligible business.   This
Court first made the distinction  between  “attributable  to”  and  “derived
from” stating that the latter  expression  is  narrower  in  connotation  as
compared to the former. This court further went on to state  that  by  using
the expression “derived from”  Parliament  intended  to  cover  sources  not
beyond the first degree.  This Court went on to hold:-

“34. On an analysis of Sections 80-IA and 80-IB it becomes  clear  that  any
industrial  undertaking,  which  becomes   eligible   on   satisfying   sub-
section(2), would be entitled to deduction under  sub-section  (1)  only  to
the extent  of  profits  derived  from  such  industrial  undertaking  after
specified date(s). Hence, apart from eligibility, sub-section  (1)  purports
to restrict the quantum of deduction to a specified percentage  of  profits.
This is the importance of the words "derived  from  industrial  undertaking"
as against "profits attributable to industrial undertaking".

35. DEPB is an  incentive.  It  is  given  under  Duty  Exemption  Remission
Scheme. Essentially, it is an export incentive. No doubt, the object  behind
DEPB is to neutralize the incidence of customs duty payment  on  the  import
content of export product. This neutralization is provided for by credit  to
customs duty against export product. Under DEPB, an exporter may  apply  for
credit as percentage of FOB value of  exports  made  in  freely  convertible
currency. Credit is available only against the export product and  at  rates
specified by DGFT for import of raw materials, components etc.. DEPB  credit
under the Scheme has to be calculated by  taking  into  account  the  deemed
import content of the export product as per basic customs duty  and  special
additional duty payable on such deemed imports.

36. Therefore, in our view, DEPB/Duty Drawback  are  incentives  which  flow
from the Schemes framed by Central Government or from S. 75  of  the Customs
Act, 1962, hence, incentives  profits  are  not  profits  derived  from  the
eligible business under Section  80-IB.  They  belong  to  the  category  of
ancillary profits of such Undertakings.” (Paras 34,35 and 36)


17.   An analysis of all the aforesaid decisions  cited  on  behalf  of  the
Revenue becomes necessary at this stage.  In the first decision, that is  in
Cambay Electric Supply Industrial Company Limited v Commissioner  of  Income
Tax, Gujarat II, this Court held that since an expression  of  wider  import
had been used, namely “attributable  to”  instead  of  “derived  from”,  the
legislature intended to cover receipts from sources other  than  the  actual
conduct of the business of generation and distribution of  electricity.   In
short, a step removed from the business of the industrial undertaking  would
also be subsumed within the meaning of  the  expression  “attributable  to”.
Since we are directly concerned with the  expression  “derived  from”,  this
judgment is relevant only insofar as it  makes  a  distinction  between  the
expression “derived from”, as being something directly from, as  opposed  to
“attributable to”, which can be said to include something which is  indirect
as well.

18.   The judgment in Sterling Foods lays down  a  very  important  test  in
order to determine whether profits and gains are derived  from  business  or
an industrial undertaking.  This Court has stated that  there  should  be  a
direct nexus between such profits and gains and the  industrial  undertaking
or business.  Such nexus cannot be only incidental. It therefore  found,  on
the facts before it, that by  reason  of  an  export  promotion  scheme,  an
assessee was entitled to  import  entitlements  which  it  could  thereafter
sell.  Obviously, the sale consideration therefrom could not be said  to  be
directly from profits and gains  by  the  industrial  undertaking  but  only
attributable  to  such  industrial  undertaking  inasmuch  as  such   import
entitlements did not relate to manufacture or sale of the  products  of  the
undertaking, but related  only  to  an  event  which  was  post  manufacture
namely, export. On an application of the aforesaid test to the facts of  the
present case, it can be said that as all the four subsidies in  the  present
case are revenue receipts which are reimbursed to the assessee for  elements
of cost relating to  manufacture  or  sale  of  their  products,  there  can
certainly be said to be a direct nexus between  profits  and  gains  of  the
industrial undertaking or business, and  reimbursement  of  such  subsidies.
However, Shri Radhakrishnan stressed the fact that the immediate  source  of
the subsidies  was  the  fact  that  the  Government  gave  them  and  that,
therefore,  the  immediate  source  not  being  from  the  business  of  the
assessee, the element of directness is missing.  We  are  afraid  we  cannot
agree.  What is to be seen for the applicability of Sections 80-IB  and  80-
IC is whether the profits and gains are derived from the business.  So  long
as profits and gains emanate directly from the  business  itself,  the  fact
that the immediate source of the subsidies is the Government would  make  no
difference, as it cannot be disputed that the said  subsidies  are  only  in
order to reimburse, wholly or partially,  costs  actually  incurred  by  the
assessee in the manufacturing and selling of its products. The “profits  and
gains” spoken of by Sections 80-IB and 80-IC have reference to  net  profit.
And net profit can only be calculated by deducting from the  sale  price  of
an article all elements of cost which go into manufacturing or  selling  it.
Thus understood, it is clear that profits and gains  are  derived  from  the
business  of  the  assessee,  namely  profits  arrived  at  after  deducting
manufacturing cost and selling costs  reimbursed  to  the  assessee  by  the
Government concerned.


19.   Similarly, the judgment in Pandian Chemicals  Limited  v  Commissioner
of Income Tax is also distinguishable, as interest on  a  deposit  made  for
supply of electricity is not an element of cost at all, and this  being  so,
is  therefore  a  step  removed  from  the  business   of   the   industrial
undertaking.  The derivation of profits on such  a  deposit  made  with  the
Electricity Board could not therefore be said  to  flow  directly  from  the
industrial undertaking itself, unlike the facts  of  the  present  case,  in
which, as has  been  held  above,  all  the  subsidies  aforementioned  went
towards reimbursement of  actual  costs  of  manufacture  and  sale  of  the
products of the business of the assessee.



20.   Liberty India being the fourth judgment in this  line  also  does  not
help Revenue.  What this Court was concerned with was an  export  incentive,
which is very far removed from reimbursement of an element of cost.  A  DEPB
drawback scheme is not related to the business of an industrial  undertaking
for manufacturing or selling its  products.  DEPB  entitlement  arises  only
when the undertaking goes on to export the said product, that  is  after  it
manufactures or produces the same. Pithily  put,  if  there  is  no  export,
there is no DEPB entitlement, and therefore its relation to  manufacture  of
a product and/or sale within India is not proximate or  direct  but  is  one
step removed.  Also, the object behind DEPB entitlement, as  has  been  held
by this Court, is to neutralize the incidence of  customs  duty  payment  on
the import content of the export product which is provided for by credit  to
customs duty against the export product. In such a scenario,  it  cannot  be
said that such duty exemption scheme is derived from profits and gains  made
by the industrial undertaking or business itself.

21.   The Calcutta High Court in Merino Ply & Chemicals  Ltd.  v.  CIT,  209
ITR 508 [1994], held that transport  subsidies  were  inseparably  connected
with the business carried on by the assessee.  In that  case,  the  Division
Bench held:-
“We do not find any perversity in the Tribunal’s finding that the scheme  of
transport subsidies is inseparably connected with the  business  carried  on
by the assessee.  It is a fact that  the  assessee  was  a  manufacturer  of
plywood, it is also a fact that the assessee has  its  unit  in  a  backward
area and is entitled to the benefit of the  scheme.   Further  is  the  fact
that transport expenditure is an incidental expenditure  of  the  assessee’s
business and it is that expenditure which the subsidy recoups and  that  the
purpose of the  recoupment  is  to  make  up  possible  profit  deficit  for
operating in a backward area.  Therefore, it is beyond all manner  of  doubt
that the subsidies were inseparably connected with  the  profitable  conduct
of the business and in  arriving  at  such  a  decision  on  the  facts  the
Tribunal committed no error.”

22.   However, in CIT  v.  Andaman  Timber  Industries  Ltd.,  242  ITR  204
[2000],  the  same  High  Court  arrived  at  an  opposite   conclusion   in
considering whether a deduction was allowable under Section 80HH of the  Act
in respect of transport  subsidy  without  noticing  the  aforesaid  earlier
judgment of a Division Bench of that very court.  A Division  Bench  of  the
Calcutta High Court in C.I.T. v. Cement Manufacturing Company Limited, by  a
judgment dated 15.1.2015, distinguished  the  judgment  in  CIT  v.  Andaman
Timber Industries Ltd. and followed the impugned  judgment  of  the  Gauhati
High Court in the present case. In a pithy discussion  of  the  law  on  the
subject, the Calcutta High Court held:
“Mr.  Bandhyopadhyay,  learned  Advocate  appearing   for   the   appellant,
submitted that the impugned judgment is  contrary  to  a  judgment  of  this
Court in the case of CIT v.  Andaman  Timber  Industries  Ltd.  reported  in
(2000) 242 ITR, 204 wherein this Court held that transport  subsidy  is  not
an immediate source and does not have direct nexus with the activity  of  an
industrial undertaking.  Therefore, the  amount  representing  such  subsidy
cannot be treated as profit derived from the  industrial  undertaking.   Mr.
Bandhypadhyay  submitted  that  it  is  not  a  profit  derived   from   the
undertaking.  The benefit under section 80IC could not therefore  have  been
granted.

He also relied on a judgment of the Supreme court in  the  case  of  Liberty
India v. Commissioner of Income Tax, reported in (2009)  317  ITR  218  (SC)
wherein it was held that subsidy by way of customs duty draw back could  not
be treated as a profit derived from the industrial undertaking.

We  have  not  been  impressed  by   the   submissions   advanced   by   Mr.
Bandhyopadhyay.  The judgment of the Apex  Court  in  the  case  of  Liberty
India (supra) was in relation to the subsidy arising  out  of  customs  draw
back and duty Entitlement Pass-book  Scheme  (DEPB).   Both  the  incentives
considered by the Apex Court in the case of Liberty India could  be  availed
after the manufacturing activity was over and exports were  made.   But,  we
are concerned in this case with the transport  and  interest  subsidy  which
has a direct  nexus  with  the  manufacturing  activity  inasmuch  as  these
subsidies go to reduce the cost of production.  Therefore, the  judgment  in
the case of Liberty India v. Commissioner of Income Tax  has  no  manner  of
application.  The Supreme Court in the case of Sahney Steel and Press  Works
Ltd. & Others versus Commissioner of Income Tax, reported in [1997] 228  ITR
at page 257 expressed the following views:-

“…. Similarly,  subsidy  on  power  was  confined  to  ‘power  consumed  for
production’.  In other words, if power is consumed  for  any  other  purpose
like setting up the plant and machinery, the incentives will not  be  given.
Refund of  sales  tax  will  also  be  in  respect  of  taxes  levied  after
commencement of production and up to a period of five years  from  the  date
of commencement of production. It is difficult to hold  these  subsidies  as
anything but operation subsidies.  These subsidies were given  to  encourage
setting up of industries in the  State  of  Andhra  Pradesh  by  making  the
business of production and sale of goods in the State more profitable.”

23.   We are of the view that the judgment in Merino Ply  &  Chemicals  Ltd.
and  the  recent  judgment  of  the  Calcutta  High  Court  have   correctly
appreciated the legal position.


24.   We do not find it necessary to refer in detail to  any  of  the  other
judgments that have been placed before us. The judgment in Jai Bhagwan  case
(supra) is helpful on the nature of a transport  subsidy  scheme,  which  is
described as under:

“The object of the Transport Subsidy Scheme is not augmentation of  revenue,
by levy and collection of tax or duty.  The  object  of  the  Scheme  is  to
improve trade and commerce between the remote  parts  of  the  country  with
other parts, so as to bring about economic development  of  remote  backward
regions. This was sought  to  be  achieved  by  the  Scheme,  by  making  it
feasible and  attractive  to  industrial  entrepreneurs  to  start  and  run
industries in remote parts, by giving them a level  playing  field  so  that
they could compete with their counterparts in central (non-remote) areas.
The  huge  transportation  cost  for  getting  the  raw  materials  to   the
industrial unit and finished  goods  to  the  existing  market  outside  the
state, was making it unviable for industries in remote parts of the  country
to compete with industries in central areas. Therefore, industrial units  in
remote areas were extended the benefit  of  subsidized  transportation.  For
industrial units in Assam and other north-eastern States,  the  benefit  was
given in the form of a subsidy in respect of a percentage  of  the  cost  of
transportation between a point in central area  (Siliguri  in  West  Bengal)
and the actual location of the industrial unit in the remote area,  so  that
the industry could become competitive and economically  viable.”  (Paras  14
and 15)


25.   The decision in Sahney Steel and Press Works Ltd. v.  Commissioner  of
Income Tax, A.P. - I,  Hyderabad  (1997)  7  SCC  764,  dealt  with  subsidy
received from the State Government in the form of refund of sales  tax  paid
on raw materials, machinery, and finished goods; subsidy on  power  consumed
by the industry; and exemption from water  rate.   It  was  held  that  such
subsidies were treated as assistance given for the purpose  of  carrying  on
the business of the assessee.



26.   We do not find it necessary to further  encumber  this  judgment  with
the judgments which Shri Ganesh cited on the netting principle.  We find  it
unnecessary to further substantiate the reasoning in our judgment  based  on
the said principle.



27.   A Delhi High Court judgment was also cited  before  us  being  CIT  v.
Dharampal Premchand Ltd., 317 ITR 353 from which an  SLP  preferred  in  the
Supreme Court was dismissed.   This  judgment  also  concerned  itself  with
Section 80-IB of the Act, in which it was held that refund  of  excise  duty
should not be excluded in arriving at the profit derived from  business  for
the purpose of claiming deduction under Section 80-IB of the Act.



28.    It  only  remains  to  consider  one   further   argument   by   Shri
Radhakrishnan.  He has argued that as the subsidies  that  are  received  by
the respondent, would be income from other sources referable to  Section  56
of the Income Tax Act, any deduction that is to be made, can  only  be  made
from income from other sources and not from profits and gains  of  business,
which is a separate and distinct head as recognised by  Section  14  of  the
Income Tax Act.  Shri Radhakrishnan is not correct in  his  submission  that
assistance by way of subsidies which are  reimbursed  on  the  incurring  of
costs relatable to a  business,  are  under  the  head  “income  from  other
sources”, which is a residuary head of income that can be  availed  only  if
income does not fall under any of the other four heads of  income.   Section
28(iii)(b)  specifically  states  that  income  from  cash  assistance,   by
whatever name called, received or receivable by any person  against  exports
under any scheme of the Government of India, will be  income  chargeable  to
income tax under the head “profits and gains  of  business  or  profession”.
If cash assistance  received  or  receivable  against  exports  schemes  are
included as being income under the head “profits and gains  of  business  or
profession”, it is obvious that subsidies which go to reimbursement of  cost
in the production of goods of a particular business would also  have  to  be
included under the head “profits and gains of business or  profession”,  and
not under the head “income from other sources”.

29.   For the reasons given by us, we are of  the  view  that  the  Gauhati,
Calcutta and Delhi High Courts have correctly construed Sections  80-IB  and
80-IC.  The Himachal Pradesh High  Court,  having  wrongly  interpreted  the
judgments in Sterling Foods and Liberty India  to  arrive  at  the  opposite
conclusion, is held to be wrongly  decided  for  the  reasons  given  by  us
hereinabove.



30.   All the aforesaid appeals are, therefore, dismissed with no  order  as
to costs.



                                  ……………………………J.
                                  (Kurian Joseph)



                                  ……………………………J.
                                  (R.F. Nariman)
New Delhi;
March 09, 2016.

to add a charge= As is evident, an application was filed by the informant to add a charge under Section 406 IPC as there were allegations against the husband about the criminal breach of trust as far as her stridhan is concerned. It was, in a way, bringing to the notice of the learned Magistrate about the defect in framing of the charge. The court could have done it suo motu. In such a situation, we do not find any fault on the part of learned Magistrate in entertaining the said application. It may be stated that the learned Magistrate has referred to the materials and recorded his prima facie satisfaction. There is no error in the said prima facie view.

Reportable



                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO.131 of 2016
           (@ Special Leave Petition (Criminal) No.  837 of 2016)


Anant Prakash Sinha @ Anant Sinha       …Appellant

                                   Versus

State of Haryana & Anr.                             …Respondents



                               J U D G M E N T


Dipak Misra, J.

      Despite completion of a decade from the date of solemnisation  of  the
marriage and in spite of two off springs in the wedlock,  neither  the  time
nor the expansion of family nor the concern for the  children  could  cement
the bond or weld the affinity between the appellant-husband  and  the  wife,
the 2nd respondent herein, as a consequence of which she  was  compelled  to
set the criminal law in motion by  lodging  FIR  No.  376  dated  23.11.2013
which was registered for the offences punishable under  Section  498A/323/34
of the Indian Penal Code (IPC) against the  husband  and  the  mother-in-law
alleging that the husband was insistent upon getting mutual divorce  and  on
her resistance, he had physically assaulted her and deprived  her  of  basic
facilities of life. All these allegations had the foundation  in  demand  of
dowry and non-meeting of the same by the family members of wife.  After  due
investigation, the prosecuting agency placed the  charge-sheet  against  the
husband alone for the offences punishable under Section  498A  and  323  IPC
before the learned Judicial Magistrate 1st  Class,  Gurgaon  who  eventually
vide  order  dated  04.04.2009  framed  charges  against  the  husband   for
commission of the said offences.
2.    When  the  matter  was  pending  before  the  learned  Magistrate,  an
application dated 31.07.2014 under Section 216   of  the  Code  of  Criminal
Procedure (CrPC) was filed by the informant-wife for framing  an  additional
charge under Section 406 IPC against the husband and  mother-in-law,  Renuka
Sinha. It was stated in the said  application  that  there  was  an  express
complaint with regard to misappropriation of the entire stridhan  and  other
articles and hence, the accused persons had committed breach of  trust,  but
no charge-sheet was filed in respect of the said offence. It  was  contended
that  in  her  statement  recorded  under  Section   161   CrPC,   she   had
categorically stated about misappropriation of the stridhan  by  the  family
members of her husband. The learned Magistrate took note of  the  materials,
namely, stridhan  list,  complaint  addressed  to  D.C.P.  (East),  Gurgaon,
statements recorded under Section 161 CrPC and letter dated 16.11.2013  from
Women Cell, D.C.P. (East), Gurgaon and came to  hold that  in  view  of  the
specific allegations regarding misappropriation of her  entire  stridhan  by
the husband and the other statements recorded during investigation, a  prima
facie case for criminal breach of  trust  was  made  out  and,  accordingly,
allowed the application under Section 216 CrPC against the husband  and  the
mother-in-law. Be it noted, a prayer had been made to  add  the  charge  for
the offence under Section 120B IPC also but the same  was  not  accepted  by
the learned Magistrate.
3.    The order passed by the learned Magistrate  came  to  be  assailed  in
Criminal Revision No. 5 of  2015  before  the  learned  Additional  Sessions
Judge, Gurgaon and it was contended in the revision that  the  mother-in-law
was not charge-sheeted by the police but the trial  court  had  directed  to
frame the  charge  against  her  and,  therefore,  the  whole  approach  was
erroneous.  It was also urged that there was  no  material  to  make  out  a
prima facie case under Section 406 IPC against the husband.  The  stand  put
forth by the revisionist was combatted by the prosecution as well as by  the
informant on the ground that the trial court has power to add or  alter  any
charge under Section 216 CrPC and, therefore, no exception  could  be  taken
to the order passed by the learned Magistrate.  The revisional  court  dwelt
upon the law pertaining to alteration and addition of charges  and  came  to
hold that the framing of the charge against mother-in-law was  unsustainable
but the framing of additional charge  under  Section  406  IPC  against  the
husband, the appellant herein, could not be faulted.  Being  of  this  view,
the revisional court partly allowed the revision petition by  setting  aside
the order of framing of charge against the mother-in-law.
4.    The defensibility of the aforesaid order was  called  in  question  by
the husband by preferring a petition under Section  482  CrPC  in  the  High
Court of Punjab and Haryana forming the subject matter of CRL.M.  No.  24510
of 2015. The soundness of the order was attacked by placing reliance on  the
principles as elucidated in CBI v. Karimullah  Osan  Khan[1]  and  Hasanbhai
Valibhai Qureshi v. State of Gujarat and others[2]. As is demonstrable  from
the impugned order, the learned single Judge appreciating the ratio  of  the
aforesaid decisions  has  opined  that  the  court  can  exercise  power  of
addition or modification of charge under Section 216 CrPC on  the  basis  of
material before the court. The High Court has also observed that  the  trial
court has spelt out the reasons that have necessitated for addition  of  the
charge and hence, the impugned order did not warrant  any  interference.  To
buttress the view, the High Court has drawn support from  the  authority  in
Jasvinder   Saini and others v. State (Government of NCT of Delhi)[3].
5.    We have heard Mr. Amarendra Sharan, learned senior  counsel  appearing
for the appellant and Mr.  Sanjay  Kumar  Visen,  learned  counsel  for  the
respondent-State.
6.    It is  submitted  by  Mr.  Sharan,  learned  senior  counsel  for  the
appellant that the High Court would have been well within the domain of  its
jurisdiction in exercise of power under Section 482 CrPC  in  setting  aside
the orders passed by the courts below,  for  the  Magistrate  has  no  power
under Section 216 CrPC to alter or modify the charge  on  the  basis  of  an
application filed by the informant. It is his further  submission  that  the
trial court could have altered the charge  if  some  evidence  had  come  on
record but not on the basis of the material  that  was  already  on  record.
Additionally, it is urged by Mr. Sharan that  materials  on  record  do  not
remotely attract any of the ingredients of the  offence  under  Section  406
CrPC and, therefore, addition of charge in respect of the  said  offence  is
wholly unsound and faulty. It has also been argued by Mr.  Sharan  that  the
charges could not have been added on the basis of an  application  filed  by
the informant, for such an application as required in law  is  to  be  filed
only by the Public Prosecutor.  In support of the aforesaid submissions,  he
has drawn inspiration from the authorities in Harihar Chakravarty  v.  State
of West Bengal[4], Hasanbhai Valibhai Qureshi (supra), Jasvinder  Saini  and
others (supra), Umesh Kumar v.  State  of  Andhra  Pradesh  and  another[5],
Karimullah Osan Khan (supra) and orders passed by the High Court  of  Punjab
and Haryana in Poonam and anr. V. State of  Punjab[6]  and  Anant  Sinha  v.
State of Haryana and ors.[7].
7.     Mr. Visen, learned counsel for the  respondent-State,  has  supported
the order  passed  by  the  High  Court  and  submitted  that  there  is  no
prohibition under Section 216 CrPC to alter or add a  charge  prior  to  the
recording of evidence if the court is moved for the said purpose and  it  is
satisfied that charge framed by it deserves to be altered or  an  additional
charge is required to be added.  According to him, the order passed  by  the
High Court being totally correct and impenetrable, there  is  no  reason  to
interfere with the same in exercise of jurisdiction  under  Article  136  of
the Constitution of India.  Learned counsel would further contend that  when
the Magistrate  has  jurisdiction  to  rectify  the  mistake  by  adding  or
altering the charge, he can hear the counsel for the parties and do  it  suo
motu and an application either filed by the  Public  Prosecutor  or  by  the
informant is only to bring the said facts to his notice  and  in  any  case,
that would not invalidate the order.
8.    The controversy as raised rests on two aspects. The first aspect  that
has emanated for consideration is whether without   evidence  being  adduced
another charge could be added.  In this context, we may  usefully  refer  to
Section 216 CrPC which reads as follows:-
“216. Court may alter charge.—
(1)   Any court may alter or add to any charge at any time  before  judgment
is pronounced.
(2)    Every such alteration or addition shall be read and explained to  the
accused.
(3)   If the alteration or addition to a  charge  is  such  that  proceeding
immediately with the trial is not likely, in the opinion of  the  court,  to
prejudice the accused in his defence or the prosecutor  in  the  conduct  of
the case, the court  may,  in  its  discretion,  after  such  alteration  or
addition has been made, proceed with the trial as if the  altered  or  added
charge had been the original charge.
(4)   If the alteration or addition  is  such  that  proceeding  immediately
with the trial is likely, in the opinion of  the  court,  to  prejudice  the
accused or the prosecutor as aforesaid, the court may either  direct  a  new
trial or adjourn the trial for such period as may be necessary.
(5)   If the offence stated in the altered or added charge is  one  for  the
prosecution of which previous sanction is necessary, the case shall  not  be
proceeded with until such sanction is obtained,  unless  sanction  has  been
already obtained for a prosecution on the same facts as those on  which  the
altered or added charge is founded.”

9.    The aforesaid provision has been  interpreted  in  Hasanbhai  Valibhai
Qureshi (supra) wherein the Court has observed:-
“Section 228 of the Code in Chapter XVII and  Section  240  in  Chapter  XIX
deal with framing of the charge during trial before a Court of  Session  and
trial of warrant cases by Magistrates respectively.  There  is  a  scope  of
alteration of the charge during trial on the basis of materials  brought  on
record.  Section  216  of  the  Code  appearing  in  Chapter  XVII   clearly
stipulates that any court may alter or add to any charge at any time  before
judgment is pronounced. Whenever such alteration or addition  is  made,  the
same is to be read out and informed to the accused.”


10.    In the said case, reference was made to Kantilal Chandulal  Mehta  v.
State of Maharashtra[8] wherein it has been  ruled  that  Code  gives  ample
power to the courts to alter or amend a charge  provided  that  the  accused
has not to face a charge for a new offence or is not  prejudiced  either  by
keeping him in the  dark  about  the  charge  or  in  not  giving  him  full
opportunity of meeting it and putting forward any defence  open  to  him  on
the charge finally preferred against him.   Placing  reliance  on  the  said
decision, it has been opined that if during  trial  the  trial  court  on  a
consideration of broad probabilities of the case based upon total effect  of
the evidence and documents  produced  is  satisfied  that  any  addition  or
alteration of the charge is necessary, it is free to do so,  and  there  can
be no legal bar to appropriately act as the exigencies of the  case  warrant
or necessitate.
11.   In Jasvinder Saini and others (supra), the  charge-  sheet  was  filed
before the jurisdictional Magistrate alleging commission of  offences  under
Sections 498-A, 304-B, 406 and 34 IPC against the  appellant  Nos.  1  to  4
therein.  A supplementary charge-sheet was  filed  in  which  the  appellant
Nos. 5 to 8 therein were implicated for the case to which  Section  302  IPC
was  also  added  by  the  investigating  officer.   After  the  matter  was
committed to the Court of Session, the trial court came  to  the  conclusion
that there was no evidence or material on record to  justify  framing  of  a
charge under Section 302 IPC, as a result of which charges were framed  only
under Sections 498-A, 304-B read with Section 34 IPC. When the  trial  court
was proceeding with the matter, this Court delivered the judgment in  Rajbir
alias Raju and anr. v. State of Haryana[9]  and directed that all the  trial
courts in India to ordinarily add Section 302 to the charge on Section  304-
B IPC so that death sentences could  be  imposed  in  heinous  and  barbaric
crimes against women.   The  trial  court  noted  the  direction  in  Rajbir
(supra) and being duty-bound, added the charge under Section 302 IPC to  the
one already framed against the appellant therein and further for  doing  so,
it placed reliance on Section 216 CrPC.  The said order was assailed  before
the High Court which opined that the appearance of   evidence at  the  trial
was not essential for framing of an additional charge or altering  a  charge
already framed, though it may be one of the grounds to do so.   That  apart,
the High Court referred to the autopsy surgeon which, according to the  High
Court, provided prima facie evidence for framing the  charge  under  Section
302 IPC.  Being of this  view, it  declined  to  interfere  with  the  order
impugned. This Court adverting to the facts held thus:-
“It is common ground that  a  charge  under  Section  304-B  IPC  is  not  a
substitute for a charge of murder punishable under Section 302.  As  in  the
case of murder in every case under Section  304-B  also  there  is  a  death
involved. The question whether it is murder  punishable  under  Section  302
IPC or a dowry death punishable under Section 304-B  IPC  depends  upon  the
fact situation and the evidence in the case. If there  is  evidence  whether
direct or circumstantial to prima facie support a charge under  Section  302
IPC the trial court can and  indeed  ought  to  frame  a  charge  of  murder
punishable under Section 302 IPC, which would then be the  main  charge  and
not an alternative charge as is erroneously assumed  in  some  quarters.  If
the main charge of murder is not proved against the accused  at  the  trial,
the court can look into the evidence to determine  whether  the  alternative
charge of dowry death punishable under Section  304-B  is  established.  The
ingredients constituting the two offences are different,  thereby  demanding
appreciation of evidence from the perspective relevant to such  ingredients.
The trial court in that view of the matter acted mechanically for it  framed
an additional  charge  under  Section  302  IPC  without  adverting  to  the
evidence adduced in the case and  simply  on  the  basis  of  the  direction
issued in Rajbir case. The High Court no doubt made a  half-hearted  attempt
to justify the framing of  the  charge  independent  of  the  directions  in
Rajbir case (supra), but it would have been more appropriate  to  remit  the
matter back to the trial court for fresh orders rather than lending  support
to it in the manner done by the High Court.”


12.   It is appropriate to note here, the Court further  observed  that  the
annulment of the order passed by the  court  would  not  prevent  the  trial
court from re-examining the question of framing a charge under  Section  302
IPC against the appellant therein and passing an appropriate order  if  upon
a prima facie appraisal of the evidence adduced before it, the  trial  court
comes to the conclusion that there  is  any  room  for  doing  so.  In  that
context, reference was made to Hasanbhai Valibhai Qureshi (supra).
13.   In Karimullah Osan Khan (supra), the  Court  was  concerned  with  the
legality of the order passed by the Designated  Court  under  the  Terrorist
and Disruptive Activities  (Prevention)  Act,  1987  for  Bomb  Blast  Case,
Greater Bombay rejecting the application filed  by  the  Central  Bureau  of
Investigation (for short “CBI”) under Section 216  CrPC for addition of  the
charges punishable under Section 302 and other charges  under  the  IPC  and
the Explosives Act read with Section 120-B IPC and also under  Section  3(2)
of the Terrorist and  Disruptive  Activities  (Prevention)  Act,  1987.  The
Designated Court framed charges in respect of certain offences and when  the
CBI filed an application for addition of the charge under  Section  302  IPC
and other offences, the Designated Court rejected  the  application  as  has
been indicated  earlier.  In  the  said  context,  the  Court  proceeded  to
interpret the  scope  of  Section  216  CrPC.  Reference  was  made  to  the
decisions in Jasvinder Saini (supra) and Thakur Shah  v.  King  Emperor[10].
Proceeding further, it has been ruled thus:-

“17. Section 216 CrPC gives considerable power to the trial court, that  is,
even after the completion of evidence,  arguments  heard  and  the  judgment
reserved, it can alter and add to any  charge,  subject  to  the  conditions
mentioned therein. The expressions “at any time” and  before  the  “judgment
is pronounced” would indicate that  the  power  is  very  wide  and  can  be
exercised, in appropriate cases, in the interest  of  justice,  but  at  the
same time, the courts should also see that its orders would  not  cause  any
prejudice to the accused.

18. Section 216 CrPC confers  jurisdiction  on  all  courts,  including  the
Designated Courts, to alter or add to any  charge  framed  earlier,  at  any
time  before  the  judgment  is  pronounced  and  sub-sections  (2)  to  (5)
prescribe the procedure which has to be  followed  after  that  addition  or
alteration. Needless to say, the courts can exercise the power  of  addition
or modification of charges under Section 216 CrPC, only  when  there  exists
some material before the court, which has some connection or link  with  the
charges sought to be amended, added or modified. In other words,  alteration
or addition of a charge must be for an offence  made  out  by  the  evidence
recorded  during  the  course  of  trial  before  the  court.  (See  Harihar
Chakravarty v. State of W.B. (supra) Merely because the charges are  altered
after conclusion of the trial, that itself will not lead to  the  conclusion
that it  has  resulted  in  prejudice  to  the  accused  because  sufficient
safeguards  have  been  built  in  Section  216  CrPC  and   other   related
provisions.”

14.    At  this  juncture,   we  have  to  appropriately  recapitulate   the
principles stated in Harihar Chakravarty  (supra).   In  the  said  case,  a
complaint was filed charging the appellant  and  another  for  the  offences
punishable  under  Sections  409,  406,  477  and  114  of  the  IPC.    The
complainant and his witnesses  were  examined  and  on  the  basis  of  said
evidence, the learned Magistrate had framed a charge under Section  409  IPC
against the appellant.  The appellant entered upon  his  defence  and  after
the trial, the Magistrate acquitted the  appellant  and  the  other  accused
under Section 409 IPC.  The complainant filed  a  criminal  revision  before
the High Court which set aside the  order  of  acquittal  and  remanded  the
matter to the Magistrate  for  decision  for  amendment  of  the  charge  by
examining appropriate evidence.  The said order was the  subject  matter  of
assail before this Court.  This Court, addressing to the merits of the  case
opined thus:-
“8. This was a private prosecution in which  the  complainant  came  forward
with a story that the never ordered the appellant to purchase  these  shares
and that therefore the shares did not belong to him, and he had no  interest
in them or title to them. In fact his case was that the  shares  were  never
purchased by the appellant under his instructions. All that was found to  be
false and it was found that he did order  them  to  be  purchased  and  that
therefore the shares were his. The order  which  was  made  by  the  learned
Judge in effect meant that  the  complainant  should  abandon  his  original
story to lay claim to the shares and prosecute  the  Appellant  for  another
and distinct offence which could only arise on  a  different  set  of  facts
coming into existence after the purchase of the shares. The appellant  might
or might not be guilty of this other offence, but he is  certainly  innocent
of the offence with which he was charged and for which he  was  fully  tried
and therefore he is entitled to an acquittal and the learned  Judge  had  no
power to set aside that order so long as he agreed,  as  he  did,  that  the
appellant was not guilty of the offence with which he was  charged.  Once  a
charge is framed and the accused is found  not  guilty  of  that  charge  an
acquittal must be recorded under Section 258(1) of  the  Criminal  Procedure
Code. There is no option in the matter and we are of the  opinion  therefore
that the order setting aside the acquittal was in any event bad.

9. Next as regards the direction to alter the charge so  as  to  include  an
offence for which the appellant was not originally charged, that could  only
be done if the trial court itself had taken action under Section 227 of  the
Criminal Procedure Code before it pronounced judgment. It  could  only  have
done so if there were materials before it either in the complaint or in  the
evidence to justify such action.

10. The complaint affords no material for any such case because it is  based
on the allegation that the shares did not  belong  to  the  complainant  and
that in fact they were never purchased. The learned Judge observed that  the
contention was  that  the  shares  belonged  to  the  complainant  and  were
dishonestly pledged by the appellant with the Nath  Bank.  We  do  not  find
even a word about this either in the complaint or in the examination of  the
complainant.”
                                                         [emphasis is added]

15.   After so stating, the Court opined  that  there  was  no  material  on
which the trial court could have amended the charge under Section  227  CrPC
and the learned Judge therefore had no power to direct an  amendment  and  a
continuation of the same trial as he  purported  to  do.    The  purpose  of
laying stress on the said authority is that the trial court  could  issue  a
direction for alteration of the charge if there were materials before it  in
the complaint or any evidence to justify such  action.    On  the  aforesaid
three-Judge Bench decision, it is quite vivid that if there are  allegations
in the complaint  petition  or  for  that  matter  in  FIR  or  accompanying
material, the court can alter the charge.  In Thakur Shah  v.  King  Emperor
(supra), what the Court has held is that alteration or addition of a  charge
must be for an offence made out by the evidence recorded during  the  course
of  trial  before  the  court.   It  does  not  necessarily  mean  that  the
alteration can be done only in a case where evidence  is  adduced.   We  may
hasten to clarify that there has been a reference to the  decision  rendered
in Harihar Chakravarty (supra) but the said reference has to  be  understood
in the context.  Section 216 CrPC, as is evincible, does not lay  down  that
the court cannot alter the charge solely because it has framed  the  charge.
In Hasanbhai Valibhai Qureshi (supra), it has been  stated  there  is  scope
for alteration of the charge during trial on the basis of  material  brought
on record.  In Jasvinder Saini and others (supra), it  has  been  held  that
circumstances in which addition or alteration of charge  can  be  made  have
been stipulated in Section 216 CrPC and sub-sections (2) to (5)  of  Section
216 CrPC deal with the procedure to be followed once the  court  decides  to
alter or add any charge.   It has been laid down therein that  the  question
of any such addition or alteration generally arise either because the  court
finds the charge already framed to be defective for any  reason  or  because
such addition is considered necessary after the commencement  of  the  trial
having regard to the evidence that may come before the court.  If  the  said
decision is appositely understood, it clear lays down  the  principle  which
is in consonance with Harihar Chakravarty (supra).
16.   From the aforesaid, it is graphic that the court can change  or  alter
the charge if there is defect or something is left out.   The  test  is,  it
must be founded on the material available on record. It can be on the  basis
of the complaint or the  FIR  or  accompanying  documents  or  the  material
brought on record during the course of trial. It can also  be  done  at  any
time before pronouncement of judgment.  It is not  necessary  to  advert  to
each and every circumstance.   Suffice it to  say,  if  the  court  has  not
framed a charge despite the material on record, it has the  jurisdiction  to
add a charge.  Similarly, it has the authority to  alter  the  charge.   The
principle that has to be kept in mind is that the charge so  framed  by  the
Magistrate is in accord  with  the  materials  produced  before  him  or  if
subsequent evidence comes on record. It is not to be understood that  unless
evidence has been let in, charges already  framed  cannot  be  altered,  for
that is not the purport of Section 216 CrPC.
17.   In addition to what we have stated hereinabove,  another  aspect  also
has to be kept in mind. It is obligatory on the part of  the  court  to  see
that no prejudice is caused to the accused and he is allowed to have a  fair
trial. There are in-built safeguards in Section 216 CrPC.  It  is  the  duty
of the trial court to bear in mind  that  no  prejudice  is  caused  to  the
accused as that has the potentiality to affect a fair trial.   It  has  been
held in Amar Singh  v. State of Haryana[11] that the accused must always  be
made aware of the case against them so as to enable him  to  understand  the
defence that he can lead. An accused can be convicted for an  offence  which
is minor than  the  one  he  has  been  charged  with,  unless  the  accused
satisfies the court that there has been a failure of  justice  by  the  non-
framing of a charge under a particular penal provision, and  some  prejudice
has been caused to the accused. While  so  stating,  we  may  reproduce  the
following two passages from Bhimanna v. State of Karnataka[12]:-
“25. Further, the defect must be so serious that it cannot be covered  under
Sections  464/465  CrPC,  which  provide  that,  an  order  of  sentence  or
conviction shall not be deemed to be invalid only  on  the  ground  that  no
charge was framed, or that  there  was  some  irregularity  or  omission  or
misjoinder of charges, unless the court comes to the conclusion  that  there
was also, as a consequence, a failure of  justice.  In  determining  whether
any error, omission or irregularity in framing the  charges  has  led  to  a
failure of justice, this Court must have  regard  to  whether  an  objection
could have been raised at an earlier stage during the  proceedings  or  not.
While judging the question of prejudice or guilt, the  court  must  bear  in
mind that every accused has a right to a fair trial, where he  is  aware  of
what he is being tried for and where the  facts  sought  to  be  established
against him, are explained to him fairly and clearly, and further, where  he
is given a  full  and  fair  chance  to  defend  himself  against  the  said
charge(s).

26. This Court in Sanichar Sahni v. State of  Bihar[13],  while  considering
the issue placed reliance upon various judgments of this Court  particularly
on Topandas v. State of Bombay[14], Willie  (William)  Slaney  v.  State  of
M.P.[15], Fakhruddin v. State of M.P.[16],  State  of  A.P.  v.  Thakkidiram
Reddy[17], Ramji Singh v. State of Bihar[18] and Gurpreet Singh v. State  of
Punjab[19] and came  to  the  following  conclusion:  (Sanichar  Sahni  case
(supra), SCC p. 204, para 27)

“27. Therefore … unless the convict is able  to  establish  that  defect  in
framing the charges has caused real prejudice to him and  that  he  was  not
informed as to what was the real case against him  and  that  he  could  not
defend   himself   properly,   no   interference   is   required   on   mere
technicalities. Conviction order in fact is to be tested on  the  touchstone
of prejudice theory.”

A similar view has been reiterated in Abdul Sayeed v. State of M.P.[20]”

18.   We have reproduced the aforesaid passages by abundant caution so  that
while adding or altering a charge under Section 216 CrPC,  the  trial  court
must keep both the aforestated principles in view.   The test of  prejudice,
as has been stated in the aforesaid judgment, has to be borne in mind.
19.   Presently to the second aspect. Submission of Mr. Sharan is  that  the
learned Magistrate could not have entertained the application  preferred  by
the informant, for such an application is incompetent because it has  to  be
filed by the public prosecutor. In this regard, he has laid  stress  on  the
decision in Shiv Kumar v. Hukam Chand and another[21].  In  the  said  case,
the grievance of the appellant was that  counsel  engaged  by  him  was  not
allowed by the High Court to conduct the prosecution in spite  of  obtaining
a consent from the concerned Public Prosecutor.  The trial court had  passed
an order to the extent that the advocate  engaged  by  the  informant  shall
conduct the case under the supervision, guidance and control of  the  Public
Prosecutor. He had further directed that the Public Prosecutor shall  retain
with  himself  the  control  over  the  proceedings.  The  said  order   was
challenged before the High Court and the learned single Judge  allowing  the
revision had directed that  the  lawyer  appointed  by  the  complainant  or
private person shall act under the directions  from  the  Public  Prosecutor
and may with the permission of the  court  submit  written  arguments  after
evidence is closed and the Public Prosecutor in-charge  of  the  case  shall
conduct the prosecution. This Court referred to Sections  301,  302(2),  225
CrPC and various other provisions and came to hold as follows:-

“13. From the scheme of the Code the  legislative  intention  is  manifestly
clear that prosecution in a Sessions Court cannot  be  conducted  by  anyone
other than the Public Prosecutor. The legislature  reminds  the  State  that
the policy must strictly conform to fairness in the trial of an  accused  in
a Sessions Court. A Public Prosecutor is not expected to show  a  thirst  to
reach the case in the  conviction  of  the  accused  somehow  or  the  other
irrespective of the true facts involved in the case. The  expected  attitude
of the Public Prosecutor while conducting prosecution  must  be  couched  in
fairness not only to the court and to the investigating agencies but to  the
accused as well. If an accused is entitled to any legitimate benefit  during
trial the Public Prosecutor should not scuttle/conceal it. On the  contrary,
it is the duty of the Public Prosecutor to winch it to the fore and make  it
available to the accused. Even if the defence  counsel  overlooked  it,  the
Public Prosecutor has the added responsibility to bring it to the notice  of
the court if it comes to his knowledge. A  private  counsel,  if  allowed  a
free hand to conduct  prosecution  would  focus  on  bringing  the  case  to
conviction even if it is not a fit case to be  so  convicted.  That  is  the
reason why Parliament applied  a  bridle  on  him  and  subjected  his  role
strictly to the instructions given by the Public Prosecutor.

14. It is not merely an overall supervision which the Public  Prosecutor  is
expected to perform in such  cases  when  a  privately  engaged  counsel  is
permitted to act on his behalf. The role which a private counsel in  such  a
situation can play is, perhaps, comparable with that of  a  junior  advocate
conducting the case of his senior in a court. The private counsel is to  act
on behalf of the Public Prosecutor albeit the fact that  he  is  engaged  in
the case by a private party.  If  the  role  of  the  Public  Prosecutor  is
allowed to shrink to a mere  supervisory  role  the  trial  would  become  a
combat between the private party and the  accused  which  would  render  the
legislative mandate in Section 225 of the Code a dead letter.”

20.   Being of this view, this Court upheld the order  passed  by  the  High
Court. The said decision is, in our opinion, is  distinguishable  on  facts.
The instant case does not pertain to trial or any area by  which  a  private
lawyer takes control of the proceedings.  As is evident, an application  was
filed by the informant to add a charge under Section 406 IPC as  there  were
allegations against the husband about the criminal breach of  trust  as  far
as her stridhan is concerned.   It was, in a way, bringing to the notice  of
the learned Magistrate about the defect in framing of the charge. The  court
could have done it suo motu.  In such a situation, we do not find any  fault
on the part of learned Magistrate in entertaining the said  application.  It
may be stated that the learned Magistrate has referred to the materials  and
recorded his prima facie satisfaction.  There is no error in the said  prima
facie  view.   We also do not perceive any error in the revisional order  by
which it  has  set  aside  the  charge  framed  against  the  mother-in-law.
Accordingly, we affirm the  order  of  the  High  Court  in  expressing  its
disinclination to interfere with the  order  passed  in  revision.   We  may
clarify that the entire scrutiny is only  for  the  purpose  of  framing  of
charge and nothing else. The learned Magistrate will proceed with the  trial
and decide the matter as per the evidence brought on record  and  shall  not
be influenced by any observations made as the same  have  to  be  restricted
for the purpose of testing the legal defensibility of the impugned order.
21.   Consequently, the appeal, being devoid of merit,  stands dismissed.

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



                                  .................................J.
                                        [Shiva Kirti Singh]
NEW DELHI
March, 4, 2016
-----------------------
[1]    (2014) 11 SCC 538
[2]    (2004) 5 SCC 347 : (2004) 2 RCR (Criminal) 463
[3]    (2013) 7  SCC 256
[4]    AIR 1954 SC 266
[5]    (2013) 10 SCC 591
[6]    CRR 657 of  2015 [High Court of Punjab and Haryana]
[7]    Criminal Misc. No. M-1044 of 2014 (O&M) Order dated 07.03.2014
[8]    (1969) 3 SCC 166
[9]    (2010) 15 SCC 116
[10]   (1942-43) 70 IA 196 : (1943) 56 LW 706 : AIR 1943 PC 192
[11]   (1974) 3 SCC 81
[12]   (2012) 9 SCC 650
[13]   (2009) 7 SCC 198
[14]   AIR 1956 SC 33
[15]   AIR 1956 SC 116
[16]   AIR 1967 SC 1326
[17]   (1998) 6 SCC 554
[18]   (2001) 9 SCC 528
[19]   (2005) 12 SCC 615
[20]   (2010) 10 SCC 259
[21]   (1999) 7 SCC 467

HILTRON.-Smart Card based driving licence and vehicle registration certificate. = “ The fact remains that it is not necessary for the State to invite tender in all cases. The fact remains that it is not necessary for the State to buy a product at the lowest price. The State has a choice to buy a better product at a higher price. But the law is settled that whatever the State is doing, the same must be transparent. Unless the intention to enter into such a contract is made public, there cannot be any transparency in the entering into that contract. The process of finalizing the contract being shrouded with thick blackness, the whole thing is bad.”

                                                              NON-REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO.2470 OF 2016
                   (Arising out of SLP (C) No. 36061/2013)



      SCORE INFORMATION TECHNOLOGIES LTD.         APPELLANT

                                VERSUS

      SRIYASH TECHNOLOGIES LTD. & ORS.            RESPONDENTS


                                  J U D G M E N T

      KURIAN, J.


1.    Leave granted.

2.    The  appellant  herein  was  the  respondent  No.4  in  Writ  Petition
No.1087/2007 on the file of the  High  Court  of  Uttarakhand  at  Nainital.
That writ petition was filed by  respondent  No.1  herein,  challenging  the
award  of  project  of  Smart  Card  based  driving  licence   and   vehicle
registration certificate.  Though it may not be necessary  to  go  into  the
facts in detail, still it is significant to note  that  respondent  No.3  in
the Writ Petition, namely, HILTRON is  a  Public  Sector  Undertaking,  with
whom the State of  Uttarakhand  had  entered  into  an  MOU  for  providing,
facilitating and  marketing  information  technology  solutions  within  the
State of  Uttarakhand.   HILTRON  was  also  nominated  as  the  Information
Technology and Communication service provider for various Departments, Semi-
Government  Departments  and  Institutions,
etc.  HILTRON and Transport Commissioner of Uttarakhand entered into an  MOU
with regard to the project of Smart Card based driving licence  and  vehicle
registration certificate. HILTRON in turn  nominated  the  appellant  herein
for execution of the project work.  That MOU with HILTRON was challenged  by
the respondent No.1 herein (petitioner before the  High  Court).   According
to  them,  the  award  of  the  project  to  HILTRON  on  the  basis  of  an
understanding between the Transport Commissioner  and  the  undertaking  was
impermissible  under  law,  being  violative  of  Article  14.    Therefore,
necessarily any arrangement made by the HILTRON with any other  party  would
also have to be set at naught.  The learned Single Judge dismissed the  Writ
Petition holding that there was no illegality on the part of the  State  and
the Transport Commissioner in getting the work of Smart Card  based  driving
licence and vehicle registration  certificate,  etc.  done  through  HILTRON
with the assistance of the appellant herein.  The above  conclusion  of  the
learned Single Judge was based on the  finding  that  the  writ  petitioners
were not competitors qualified for execution of the project  and  hence  the
intra court-before the Division Bench.
3.    Though, there are serious disputes on those aspects as to whether  the
writ petitioners were qualified or not,  ultimately what the Division  Bench
did  is  only  to  set  aside   the  arrangement   between   the   Transport
Commissioner and the

HILTRON.  In the impugned judgment  dated  24.07.2013,  the  Division  Bench
held as under:

 “ The fact remains that it is not necessary for the State to invite  tender
in all cases.  The fact remains that it is not necessary for  the  State  to
buy a product at the lowest price.  The State has a choice to buy  a  better
product at a higher price.  But the law is settled that whatever  the  State
is doing, the same must be transparent.  Unless the intention to enter  into
such a contract is made public, there cannot  be  any  transparency  in  the
entering into that contract.  The process of finalizing the  contract  being
shrouded with thick blackness, the whole thing is bad.”

4.    Accordingly, the appeal was allowed and the  writ  petition  was  also
allowed setting aside the arrangement made  by  the  Transport  Commissioner
with the HILTRON-Respondent No.3 in the High Court.
5.    HILTRON is not before this Court in  challenging  the  judgment.   The
judgment is challenged only by respondent No.4 in the writ petition who  had
entered into an MOU with HILTRON for execution of the  project work.
6.    Shri Shyam Divan, learned senior counsel appearing for  the  appellant
contends  that  the  learned  Single  Judge  having  found  that  the   writ
petitioners had no locus-standi and thus, dismissed the writ  petition,  the
Division Bench was not justified in addressing  the  issue  on  a  different
angle.  We find it difficult to appreciate  this  contention.   Whether  the
writ petitioners were qualified for the execution of the project work is  to
be seen only when the qualification is  to  be  addressed  by  the  quarters
concerned while awarding the work.
7. Be that as it may, the MOU was entered into between the  parties  in  the
year  2006 and since one decade has elapsed, we are of  the  view  that  the
whole issue must be addressed afresh  by  the  State,  in  case  it  is  not
already addressed.
8.    In public interest, we are also of the  view  that  the  State  should
take steps,  if  not  already  taken,  for  execution  of  the  project,  in
accordance with law expeditiously.
9.    With the above observations, this appeal is disposed of with no  order
as to costs.
10.   However, we make it clear that this order shall not stand in  the  way
of the appellant to work out his  grievances  with  HILTRON  in  appropriate
proceedings.


                                             .................J.
                                       [KURIAN JOSEPH]



                                                      ....................J.
                                                     [ROHINTON FALI NARIMAN]
 NEW DELHI;
  MARCH 03, 2016