LAW FOR ALL

Sunday, July 15, 2018

No Arbitration with consent with out valid agreement = whether the petitioner had preferential right to match the lowest bid without pre-qualifying or participating in the bidding process. In that case, Article 14.1(c) of the concession agreement stipulated that the respondent No.1 could invite proposals 40 from eligible persons for capacity augmentation of the project which required the petitioner to give an option to submit its proposal. The Court after noticing the precedents on the relevant aspects, went on to observe that if the concessionaire chose not to submit its proposal, it did not have the right to match the preferred offer as would be the case of the respondent herein, in view of the express stipulation in the tender documents requiring the respondent to participate in the bidding process

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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3288 OF 2018
NATIONAL HIGHWAYS AUTHORITY OF INDIA …..Appellant(s)
:Versus:
GWALIOR JHANSI EXPRESSWAY LIMITED ....Respondent(s)
J U D G M E N T
A.M. Khanwilkar, J.
1. This appeal emanates from the decision of the High Court
of Delhi at New Delhi dated 21st August, 2017 in Appeal ARB.A
(Comm.) No.20 of 2017 whereby the appeal filed by the
appellant under Section 37(2)(b) of the Arbitration and
Conciliation Act, 1996 (for short, “the Act”) seeking to quash
the order dated 24th May, 2017 passed by the Arbitral Tribunal
under Section 17 of the Act came to be dismissed. The Arbitral
Tribunal vide order dated 24th May, 2017 allowed the
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application preferred by the respondent (claimant) under
Section 17 of the Act seeking a direction to the appellant to
allow the respondent to exercise an option to match the lowest
bid in terms of the order dated 23rd July, 2016 passed by the
Arbitral Tribunal and including to exercise Right of First
Refusal (“ROFR”) and for other consequential reliefs.
2. Shorn of unnecessary details, some of the relevant facts
are that the appellant (a body corporate, constituted under
the National Highways Authority of India Act, 1988) entered
into a Concession Agreement dated 17th December, 2006 with
the respondent (a consortium comprising of Apollo Enterprises
Limited and D.S. Construction Limited) for works of widening
the existing two-lane portion of Km 16.000 to Km 96.127 on
National Highway No.75 to four lanes in the States of Uttar
Pradesh and Madhya Pradesh on the terms and conditions
specified therein. The appellant asserts that the respondent
failed to undertake the project work at the requisite pace, inter
alia, due to inadequate deployment of machinery, plant,
material and manpower. The respondent had merely achieved
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62% progress and eventually abandoned the project site in
March, 2012. The appellant, therefore, had to issue a Cure
Period Notice dated 19th October, 2013 requiring the
respondent to cure the breaches within 30 days from receipt of
the notice, failing which the appellant may be forced to initiate
further action to terminate the contract in terms of the
Concession Agreement. The respondent denied the correctness
of the stated notice by a written reply. The appellant then
issued letters dated 27th February, 2014 and 7th March, 2014
expressing its intention to issue termination notice of the
Concession Agreement. The respondent immediately rushed to
the court by filing a petition under Section 9 of the Act seeking
stay of the Cure Period Notice dated 19th October, 2013 as well
as the notice expressing the intention to issue termination
notice. The High Court of Delhi passed an interim stay on 12th
March, 2014 restraining the appellant from taking any
coercive action. The petition under Section 9 of the Act was
finally disposed of on 22nd April, 2015 with a direction to the
Arbitral Tribunal, which was already constituted in the
meantime, that the interim order dated 12th March, 2014
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would continue during the pendency of the arbitral
proceedings with liberty to the parties to seek its modification
or revocation before the Arbitral Tribunal.
3. The appellant accordingly moved an application dated 8th
April, 2016 under Section 17 of the Act before the Arbitral
Tribunal seeking permission to complete the balance works of
the project as it was causing huge distress due to traffic
congestion, unsafe highway, increase in expenditures, higher
wear and tear of the vehicles and, in particular, national loss
to the public at large. The respondent also filed an application
under Section 17 of the Act on 17th May, 2016 seeking interim
directions against the appellant to pay Rs.400 crores to the
respondent at the risk and costs of the respondent for
completing the balance works of the project. The reliefs
claimed in the application filed by the respondent read thus:
“a) Allow the present application and as an interim
measure direct the Respondent to pay a sum of Rs.400
Crores to the Claimant at the risk and cost of the Claimant
so as to complete balance/remnant works of the project;
b) In the alternative and strictly without prejudice to
the prayer (a), as an interim measure permit the
Respondent to invite tender/bid for executing the
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balance work under the Concession Agreement on
Engineering Procurement and Construction basis subject
to Claimant being granted the right of First Refusal for
matching the lowest bid and in the event the Claimant
matches the said lowest bid permit the Claimant to
complete the said balance/remnant works on the terms
and conditions of the tender/bid invited on Engineering
Procurement and Construction basis except for the
provision, if any, for furnishing Bank Guarantees;
c) In alternative and strictly without prejudice to the
prayer (a) & (b), direct the Respondent to act in terms of their
letter dated 19.01.2016 and the Circular dated 09.06.2015
in the event prior to the award of contract of the balance
work on Engineering Procurement and Construction basis
the Project Lenders of the Claimant agree to provide first
charge to the Respondent;
d) Pass such further order and other relief(s) as this
Hon‟ble Tribunal may be deem fit, just, necessary and
appropriate in the facts and circumstances of the case.”
(emphasis supplied)
4. During the pendency of the aforementioned proceedings
before the Arbitral Tribunal, a meeting was held on 19th April,
2016 in the Chamber of Member (P) at NHAI – HQ to discuss
and conclude the issues of Gwalior-Jhansi project pursuant to
Ministers‟ meeting dated 15th March, 2016 in order to get the
work restarted without further delay. Another meeting was
convened on 27th April, 2016 before the said Authority, as a
result of which the hearing of the matter was deferred till 18th
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May, 2016. On the adjourned date, the advocate appearing
for the appellant placed reliance on the minutes of the
meetings held on 19th April, 2016 and 27th April, 2016. The
hearing of the applications was then deferred till 29th May,
2016, as the respondent submitted a construction-linked
financial plan for completing the balance work within a
maximum period of 24 months from the date of receipt of
advance payment from the appellant. The appellant filed its
response on 28th May, 2016 to the proposal submitted by the
respondent. The appellant asserted that the financial plan
submitted by the respondent was not in accord with the NHAI
Circular dated 19th June, 2015. In the meantime, on 25th
May, 2016, the respondent filed its reply to the application
filed by the appellant under Section 17 of the Act. The
appellant had stated that it was agreeable to infuse funds for
completion of the project as per the policy with condition of
first charge of NHAI, considering the larger public interest.
The respondent accepted the offer given by the appellant
including the conditions specified by the appellant.
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The conditions suggested by the appellant have been noted by
the Arbitral Tribunal as under:
“(i) As the Respondent is a public body, in the event of the
lowest bidder being denied the work, it will require to be
compensated. For this purpose Claimant/Concessionaire
shall pay to the authority a sum of Rs.2% of the bid amount,
out of which 75% shall be paid to the lowest bidder. This is
on the lines agreed by the parties and provided in the
Concession Agreement based on Model Concession
Agreement (MCA).
(ii) The Respondent shall not pay any „Mobilization
Advance‟ without Bank Guarantee being furnished for the
equivalent amount. The advance shall be at the interest at
the rate of 2% more than the prevailing bank interest.
(iii) The work shall be completed by the Claimant in a
period of 24 months from the date of LOA for the
Construction Contract.
(iv) The terms and conditions of the Construction
Agreement shall be in addition to and not in substitution of
any terms and condition of the Concession Agreement. In the
event of any disparity the terms of the Concession Contract
shall prevail.
(v) The specifications and quality of construction shall not
be lower than stipulated in the Concession Agreement.
(vi) The Respondent shall be free to bring forward
consequential additional claims for the expenses incurred
and damages suffered.”
The respondent, through counsel, informed the Arbitral
Tribunal that the respondent would accept the
aforementioned conditions except condition No.(ii).
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5. The arguments were heard by the Arbitral Tribunal
on 28th May, 2016. Before the application filed by the
parties under Section 17 of the Act could proceed further,
the appellant filed an application under Section 23 of the
Act for amendment of its reply dated 25th May, 2016 so
as to withdraw its acceptance of prayer (b) for
modification of procedure order No.9 dated 28th May,
2016, for the reasons mentioned therein. Finally, the
Arbitral Tribunal disposed of the applications by a
common order dated 23rd July, 2016. It accepted the
relief claimed by the respondent in terms of prayer clause
(b) of its application, reproduced in paragraph 3 above.
6. The Arbitral Tribunal rejected the plea of the
appellant to withdraw from its earlier offer noted in the
reply affidavit. The Arbitral Tribunal inter alia observed
thus:
“ . . . . .
NHAI had taken a specific stand before us that it would not
agree to prayer (a) made by the Claimant. Tribunal therefore
granted time to NHAI to examine and come out with concrete
proposals in respect of prayer (b) and on the unilateral
conditions suggested by NHAI itself, an order to that effect
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was passed by the Tribunal on May 18, 2016. Conditions
stipulated by NHAI, it is seen, are more stringent than what
were suggested by CCEA in its meeting held on May 13,
2015, particularly in the CCEA decision made on October
14, 2015, where in CCEA stated that after the constructions,
loans can be recovered bi-annually through execution of a
tripartite agreement between NHAI, lender and
concessionaire. Policy endorsed by CCEA takes note of the
comfort level of not only that of NHAI, citizens and travellers,
but also of the concessionaire. We have to take it, that it was
after taking into consideration all those aspects including
the policy decisions taken by CCEA and the Claimant‟s
eligibility for one time fund infusion in terms of the Circular
dated June 9, 2015, the NHAI suggested various conditions
and all those conditions were accepted by the Claimant
including the furnishing, of Bank Guarantee for the
mobilization advance to be made by NHAI. We are of the view
that by furnishing the unconditional Bank Guarantee, the
interest of NHAI is also protected.
We find that NHAI has no case that the Claimant has been
blacklisted or that it is incapable of completing the balance
work. In our view, it would not be in public interest if the
remaining work is allotted to a third party and in the facts
and circumstances, one cannot rule out the possibility of
passing the same order, even if NHAI is allowed to withdraw
the unilateral conditions suggested by it.
The Tribunal in its order dated May 25, 2016, also made it
clear that only if the Claimant would agree to all the
conditions stipulated by NHAI, the Claimant would be
granted permission to complete the balance work. The
Claimant has now filed an affidavit before the Tribunal that
all the conditions stipulated by NHAI are acceptable to it,
that being the factual position, we find no reason to
entertain the application preferred by NHAI under Section 23
of the Act seeking amendment in its reply dated May 25,
2016, to the Claimant‟s Sec 17 application, so as to
withdraw the conditions unilaterally suggested by it.
We are also of the view that the reasons stated for
modification of Procedural Order No.9 dated May 28, 2016,
cannot be sustained in the facts and circumstances of the
case and we find it difficult to accept the contention that the
specific conditions stipulated by NHAI to the alternative
prayer (b) made by the Claimant in Sec 17 Application have
been made without application of mind or that the so called
„higher management‟ was unaware of the pendency of this
arbitration proceedings as well as the pendency of the Sec 17
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applications filed by the parties and the various meetings
held in respect of this matter at HQ of NHAI and the
participation of Lead Bank, the Claimant and the officials of
NHAI and the meaning and content of the policy laid down
by CCEA. Sec 17 Application preferred by NHAI would
therefore stand dismissed and prayer (b) made by the
Claimant in its Sec 17 Application stands allowed subject to
the conditions stipulated by NHAI.
NHAI is directed to take up follow up action on the basis of
this order, within two weeks from today and submit a report
to that effect within a month. Claimant is directed to
scrupulously follow the conditions imposed by NHAI for
accepting prayer (b). Claimant is further directed to submit
quarterly reports before the Tribunal of the progress of the
balance work undertaken by it on the basis of the order of
this Tribunal. The Claimant is directed to furnish Bank
Guarantee from a nationalised bank on the mobilization
advance to be made by NHAI within the time stipulated. Both
sec 17 Applications and the Application made by NHAI under
Sec 23 of the Act are disposed of as above, reserving all the
contentions raised by the parties in the main matter.
This order as well as the observations and findings recorded
will have no bearing on the ultimate disposal of the main
matter.”
7. The appellant acquiesced to the aforementioned interim
order passed by the Arbitral Tribunal and allowed it to attain
finality. For, the subject project was on Build Operate and
Transfer (“BOT”) basis, any amount incurred by the Authority
with regard to the project or in relation to the completion of
the balance work was liable to be reimbursed by the
Concessionaire (respondent).
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8. The appellant accordingly issued a tender for the balance
work vide Notice dated 28th November, 2016 which fact was
brought to the notice of the Arbitral Tribunal during the
hearing on 10th December, 2016. The tender notice was placed
in the public domain, as is done in the case of other tender
process. Some of the pertinent clauses of the tender
documents may be appositely reproduced for considering the
matter in issue before us. In the bidding document, Volume I,
regarding Invitation for Bids (“IFB”), it was noted that sealed
bids were invited (technical and financial) from eligible bidders
for the construction and completion of the balance work
detailed in the table given in the said document. Clause (1)
postulated that eligibility of bidders would be assessed on post
qualification basis, amongst others. The financial bid in the
second part would be opened of only those bidders whose
technical bids were responsive to eligibility and qualification
requirements as per the Request for Proposal (“RFP”). Further,
clause (7) of the IFB reads thus:
“7. The Bidders may take notice of the following:
Notwithstanding anything to the contrary contained in this
RFP, as per the direction of Hon‟ble Arbitral Tribunal, if the
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BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.) of Four lane project (Gwalior-Jhansi
section of NH-75, is also a responsive bidder, the
Concessionaire shall have the option of matching the
lowest bid in terms of the selection criteria, subject to
payment of 2% (two per cent) of the bid amount to the
Authority and thereupon becomes the selected Bidder.
……………...”
(emphasis supplied)
In Section I of the bid document providing for procedure
for tender document of the Instructions to Bidders, the
eligibility of bidders has been specified in clause (3)
thereof which reads thus:
“3. Eligible Bidders
3.1 Eligibility of bidders is based on bidder meeting the
pass/fail criteria regarding their general and particular
experience, financial position, personnel and equipment
capabilities and other relevant information as demonstrated
by the applicant‟s responses on the forms attached.
3.2. This invitation for bids is open to bidders meeting the
following requirements:-
a) xxx xxx xxx
b) xxx xxx xxx
c) xxx xxx xxx
d) xxx xxx xxx
“(e) Notwithstanding anything to the contrary contained in
this REP, as per the direction of Hon‟ble Arbitral Tribunal, if
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.) of Four lane project (Gwalior-Jhansi
section of NH-75, is also a responsive bidder, the
Concessionaire shall have the option of matching the
lowest bid in terms of the selection criteria, subject to
payment of 2% (two per cent) of the bid amount to the
Authority and thereupon becomes the selected Bidder. Out
of the amount so received by the Authority (ILLEGIBLE) 5%
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of the amount shall be paid by the Authority to the lowest
bidder. For the avoidance of doubt, it is clarified that no
claim for compensation, damages, loss of profits etc. by the
lowest bidder for unbecoming selected bidder, shall be
admissible from the Authority.
(f) Notwithstanding anything to the contrary contained in
this RFP, for the purposes of eligibility and qualification of
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.), if it has participated in the bidding
process, it shall be deemed to fulfill all the requirements
of Clauses 3 to 6 of the RFP, being the existing
concessionaire of the Four lane project (Gwalior-Jhansi
section of NH-75.”
(emphasis supplied)
Again in clause 26, it is stated thus:
“26. Examination of Technical Bids and Determination of
Responsiveness of Technical Bids
x x x x x x x x x x x x
26.8 Notwithstanding anything to the contrary contained in
this RFP, as per the direction of Hon‟ble Arbitral Tribunal, if
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.) of Four Lane project (Gwalior-Jhansi
section of NH-75, is also a responsive bidder, the
Concessionaire shall have the option of matching the
lowest bid in terms of the selection criteria, subject to
payment of 2% (two per cent) of the bid amount to the
Authority and thereupon becomes the selected bidder, Out of
the amount so received by the Authority, 75% of the amount
shall be paid by the Authority to the lowest bidder. For the
avoidance of doubt, it is clarified that no claim for
compensation, damages, loss of profits etc. by the lowest
bidder for unbecoming selected bidder, shall be admissible
from the Authority.
26.9 Notwithstanding anything to the contrary contained in
this RFP, for the purposes of eligibility and qualification of
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.), if it has participated in the bidding
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process, it shall be deemed to fulfill all the requirements
of Clauses 3 to 6 of the RFP, being the existing
concessionaire of the Four lane project (Gwalior -Jhansi
section of NH-75).
27. Opening of Financial Bids.
xxx xxx xxx xxx
27.5 Notwithstanding anything to the contrary contained in
this RFP, as per the direction of Hon‟ble Arbitral Tribunal, if
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.) of Four lane project (Gwalior-Jhansi
section of NH-75, is also a responsive bidder, the
Concessionaire shall have the option of matching the
lowest bid in terms of the selection criteria, subject to
payment of 2% (two per cent) of the bid amount to the
Authority and thereupon becomes the selected Bidder. Out
of the amount so received by the Authority, 75% of the
amount shall be paid by the Authority to the lowest bidder.
For the avoidance of doubt, it is clarified that no claim for
compensation, damages, loss of profits etc. by the lowest
bidder for unbecoming selected bidder admissible from the
Authority.
27.6 Notwithstanding anything to the contrary contained in
this RFP, for the purposes of eligibility and qualification of
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.), if it has participated in the bidding
process, it shall be deemed to fulfill all the requirements of
Clauses 3 to 6 of the RFP, being the existing concessionaire
of the Four lane project (Gwalior-Jhansi section of NH-75).”
(emphasis supplied)
In clause 30, it is observed thus:
“30. Examination of Financial Bids and Determination of
Responsiveness of Financial Bids
xxx xxx xxx xxx
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30.4 Notwithstanding anything to the contrary contained in
this RFP, as per the direction of Hon‟ble Arbitral Tribunal, if
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.) of Four lane project (Gwalior Jhansi
section of NH-75, is also a responsive bidder, the
Concessionaire shall have the option of matching the lowest
bid in terms of the selection criteria, subject to payment of
2% (two per cent) of the bid amount to the Authority and
thereupon becomes the selected Bidder. Out of the amount
so received by the Authority, 75% of the amount shall be
paid by the Authority to the lowest bidder. For the avoidance
of doubt, it is clarified that no claim for compensation,
damages, loss of profits etc. by the lowest bidder for
unbecoming selected bidder, shall be admissible from the
Authority.
30.5 Notwithstanding anything to the contrary contained in
this RFP, for the purposes of eligibility and qualification of
the BOT-Annuity concessionaire (M/s Gwalior Jhansi
Expressway Ltd.), if it has participated in the bidding
process, it shall be deemed to fulfill all the requirements
of Clauses 3 to 6 of the RFP, being the existing
concessionaire of the Four lane project (Gwalior-Jhansi
section of NH-75).”
(emphasis supplied)
9. In consonance with the tender documents as uploaded
on E-Tender Portal 2016, technical bids were opened on 5th
January, 2017 and financial bids were opened on 29th March,
2017. It is only thereafter on 25th April, 2017, the respondent
moved an application before the Arbitral Tribunal under
Section 17 of the Act, seeking, inter alia, permission of the
Arbitral Tribunal to complete the balance work at its risk and
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cost. In the said application, it was asserted that the
respondent verily believed that it would get an opportunity to
exercise the option of ROFR and match the lowest bid, in
terms of the order dated 23rd July, 2016. However, to its utter
shock, surprise and dismay, it was reliably learnt on the
previous day (to the filing of the application) that the
appellant was proceeding to conclude the tender process by
issuing LOI/LOA in favour of the L-1 bid behind the back of
the respondent and in a highly surreptitious and opaque
manner. On the basis of the said assertions, the respondent
in its application filed under Section 17 of the Act prayed thus:
“a) Allow the present application and direct the
respondent to grant first right of refusal to the claimant for
matching the lowest bid, in terms of the order dated
23.07.2016 passed by this Hon‟ble Tribunal;
b) Pending hearing and disposal of the present
Application, pass an ex-parte ad-interim Order, directing the
Respondent to not issue LoI/LoA or award the works or take
any further steps, in any manner, directly or indirectly, in
favour of any party, pursuant to the Notice Inviting Tender
published by the Respondent on 28.11.2016;
c) Confirm prayer (b) upon issuance of notice;
d) Pass such further order and other relief(s) as this
Hon‟ble Tribunal may be deemed fit, just, necessary and
appropriate in the facts and circumstances of the case.”
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10. This application was resisted by the appellant by filing a
reply affidavit. The appellant asserted that the respondent
chose to remain silent during the entire period and only at the
belated stage when the tender process was nearing
completion, it has chosen to file the application with the
intention of stalling the entire process. This approach cannot
be countenanced. The appellant also asserted that it was
unfathomable that the respondent would get the right to
match the lowest bid without participating in the bidding
process. Further, an application such as this would delay the
progress of the main arbitration proceedings which was
required to be completed within one year. It was thus asserted
by the appellant that the ROFR could be invoked by the
respondent only if it had participated in the bidding process.
The appellant adverted to the terms and conditions of the
tender documents which unambiguously mandated the
respondent to participate in the tender process, coupled with
the fact that there was no express direction given by the
Arbitral Tribunal so as to give any right or cause of action to
the respondent to contend to the contrary. The appellant
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beseeched the Arbitral Tribunal to allow it to take the tender
process to its logical end.
11. Admittedly, no rejoinder was filed by the respondent to
the specific plea taken by the appellant in the reply affidavit
that despite having knowledge of the condition in the tender
documents requiring the respondent to participate in the
tender process, it failed to do so for reasons best known to the
respondent.
12. The Arbitral Tribunal vide order dated 24th May, 2017
allowed the application preferred by the respondent by inter
alia observing as follows:
“The Tribunal while examining both the 17 Applications
preferred by the parties specifically noticed that the
Claimant had completed more than 65% of the work though,
NHAI took the stand that the physical progress was only
62.13%. Claimant took the stand that it had completed more
than 73% work. Considering the fact that so much of money
and labour had been invested by the Claimant, and at the
same time safeguarding the interest of NHAI, the Tribunal
passed the order dated 23.7.2016 directing the Respondent
to grant the Claimant the right of first refusal for matching
the lowest bid. The Tribunal also felt that involvement of
third parties would also create more problems. The Tribunal,
therefore, ordered in the event Claimant matches the lowest
bid, Claimant be permitted to complete the balance work
that too by periodically submitting reports before the
Tribunal so that the Tribunal can examine whether the
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Claimant is successfully completing the balance work to the
satisfaction of NHAI. In our view, the stand taken by the
Respondent that the first right of refusal can be granted to
the Claimant only if it had participated in the bidding
process cannot be sustained. Accordingly, reliefs sought for
by the Claimant in the Application dated 25.4.2017 are
granted”.
13. Against this decision, the appellant filed an appeal under
Section 37(2)(b) of the Act before the High Court of Delhi at
New Delhi. The same was dismissed on 21st August, 2017. The
High Court upheld the view taken by the Arbitral Tribunal by
inter alia observing thus:
“12. It is quite clear from a perusal of the earlier order
dated 23.07.2016 that the respondent was granted right of
first refusal by matching the lowest bid, and if it matched the
bid the respondent was to be permitted to complete the
balance work as stated. There was no directions that the
respondent was obliged to participate in the bid. They had
been given the right to match the lowest bidder, subject to
terms and conditions and in that eventuality of their
matching the lowest bid, they were to be given the right to
carry out the balance work. The insistence of the appellant
that the respondent ought to have participated in the bid
floated pursuant to the order of the learned Arbitral Tribunal
dated 23.07.2017 is misplaced.
13. Learned counsel for the appellant was, several times
asked as to what prejudice is caused by the respondent by
not participating in the bid. The only reply made by the
learned counsel for the appellant was that in the absence of
participation in the bid by the respondent, the appellant is
unable to ascertain whether the respondent was eligible to
be a bidder or not. In my opinion in the light of the orders of
the Learned Arbitral Tribunal dated 23.07.2016 the
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appellant was not to participate in the bid. The apprehension
of the appellant are entirely misplaced.
14. No prejudice is caused to the appellant. It is manifest
that other than insistence on compliance by the respondent
of a procedural requirement, there is no prejudice caused to
the appellant by non participation of the respondent in the
bidding process. Further the impugned directions are passed
in accordance with the earlier orders of the Learned Arbitral
Tribunal dated 23.07.2016 which has not been challenged
and attained finality. There is no merit in the present appeal
and the same is dismissed.”
14. The appellant has assailed the decision of the Arbitral
Tribunal dated 24th May, 2017 and of the High Court dated
21st August, 2017 on the argument that the respondent
cannot be permitted to exercise ROFR sans participating in
the bidding process and in the teeth of the terms and
conditions of the tender documents. According to the
appellant, the Court cannot interfere with the tender process
and in particular with the modalities adopted for re-tendering
of the balance work of the project. The process of evaluation
of tender and awarding the contract are essentially commercial
functions for which reason the Courts should refrain from
exercising judicial review, especially when the decision taken
by the statutory authority is bona fide and taken in public
interest. Further, the order of the Arbitral Tribunal dated 23rd
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July, 2016 in no way, much less expressly, exempts the
respondent from participating in the bidding process nor has
any stipulation been placed on the appellant to refrain from
incorporating a condition requiring the respondent to
participate in the tender process along with others. In that
case, all concerned including the respondent, were bound by
the terms and conditions specified in the tender documents.
The fact that the respondent was deemed to possess technical
qualifications would not and does not do away with the
essentiality of participating in the subject bidding process, the
purpose whereof is to ensure a fair competition amongst the
participants and, more particularly, to get a fair offer and the
best value for money in a scientific and transparent manner,
encouraging competition between the participants and also to
give them equal opportunity. It is contended that the order of
the Arbitral Tribunal, be it dated 23rd July, 2016 or dated 24th
May, 2017, is in excess of jurisdiction as it transcends beyond
the purport of Section 17 of the Act. For, it was not open to
the Arbitral Tribunal to pass an interim order concerning a
separate contract albeit facilitating completion of the
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unfinished and incomplete works of the project. It is
contended that it is well settled position that the prerogative to
formulate the terms and conditions of the tender document is
that of the employer and the Court cannot sit in appeal over
such conditions. Nor can the same be re-written or modified
much less when it has not been challenged by the respondent.
It is contended that the fact that the respondent qualified the
technical bids in 2006, will not by itself qualify it for retendering
bid process in 2016. Having failed to participate in
the bid process in 2016, it was not possible to examine the
eligibility and qualification of the respondent in the context of
tender documents of 2016. Further, a person or entity who
stands out of the tender process or fails to comply with the
terms and conditions of the tender documents cannot acquire
any right or interest much less actionable claim in respect of
such tender process. According to the appellant, the
respondent must take the consequences of non-participation
in the subject tender process and cannot be allowed to
interdict the same in absence of an express exemption granted
by the competent forum/Authority to the respondent not to
23
participate in the tender process and yet exercise ROFR. To
buttress the aforesaid submission, reliance has been placed
on the decision of the Delhi High Court in VHCPL-ADCC
Pingalai Infrastructure Pvt. Ltd. & Anr. Vs. Union of India
& Ors.1 and on the decision of the Appellate Tribunal for
Electricity in M/s. Raj West Power Limited & Anr. Vs.
Rajasthan Electricity Regulatory Commission & Ors.2
15. The respondent on the other hand, would contend that
no interference in this appeal is warranted in view of the
concurrent view taken by the Arbitral Tribunal as well as the
High Court that it was not necessary for the respondent to
participate in the tender process to exercise ROFR. For, the
order dated 23rd July, 2016 does not prescribe such a precondition
nor does it prohibit the respondent from exercising
the ROFR without participation in the bidding process. It is
contended that the order dated 23rd July, 2016 is based on
consent of the parties and has never been challenged by the
appellant and as such, the appellant was obliged to comply

1
2010 SCC Online Del 2687
2
2013 SCC Online APTEL 46
24
with the same in its letter and spirit. According to the
respondent, having completed 78% work of the Project (which
according to the appellant, is only around 62%) and having
invested Rs.715 crores on the Project, by no stretch of
imagination can the respondent be termed as a non-serious
contender. According to the respondent, the appellant cannot
be heard to challenge the order dated 23rd July, 2016, which
confers ROFR, as it was based on consent of the parties and
also attained finality. Further, the purpose of participating in
the bidding process was only to ascertain as to whether the
offer given by the bidder was a responsive offer. The
respondent having already completed substantial work of the
Project, by no stretch of imagination, can be said to be
incapable of completing the balance work. This aspect had
commended to the Arbitral Tribunal, as can be discerned from
the order dated 23rd July, 2016. The Arbitral Tribunal in that
order also unambiguously recorded that it was not the case of
the appellant herein that the respondent had been black listed
or was incapable of completing the balance work. Not only
that, the Arbitral Tribunal went on to observe that it would not
25
be in the public interest to allow a third party to take over the
balance work of the project. On that basis, direction was given
to the appellant to allow the respondent to exercise ROFR,
subject to certain conditions. The order passed by the Arbitral
Tribunal, in essence, was on the basis of consent of the
respondent with unilateral conditions imposed by the
appellant, which the appellant should not be allowed to resile.
According to the respondent, it was impermissible for the
appellant to incorporate conditions such as clauses 3, 26, 27
and 30 in the tender documents, as the same are in the teeth
of order dated 23rd July, 2016 passed by the Arbitral Tribunal
and, more so, without seeking liberty from the Arbitral
Tribunal in that behalf. It is contended that the purpose of the
tender process is only to evoke responsive offers. There would
be no logic or rationale for participation of the respondent in
the backdrop of clause 3.2(f) which is a deeming provision
virtually declaring the respondent as eligible and qualified for
the work. The capability of the respondent to complete the
balance work was never in doubt as has been recorded by the
Arbitral Tribunal. In any case, in the absence of liberty given
26
by the Arbitral Tribunal, it was not open to the appellant to
incorporate such a pre-condition in the tender document. It is
contended that such pre-condition would require the
respondent to furnish bid security amount in which case it
would be a fait accompli situation for the respondent if it were
to refuse or fail to match the lowest bid. For, it would result in
forfeiture of its bid security and also entail in black listing. The
order dated 23rd July, 2016, is one of ROFR and not for right
to participate in the bidding process as such. Further, the
submission of financial bid by the respondent was not to find
out whether it is L-1. In that, all the bidders participating in
the subject tender process pursuant to tender notice, were
made fully aware in the bid document itself that the
respondent had ROFR and L-1 would be compensated by the
respondent as provided in the order dated 23rd July, 2016.
Therefore, the respondent was not expected to bid with itself
by submitting a financial bid and then matching the same.
The respondent would contend that the appellant has wrongly
asserted that the respondent was aware of the conditions
prescribed in the tender documents and yet did not choose to
27
participate in the bidding process. For, the bid documents
were neither furnished to the respondent nor placed on record
before the Arbitral Tribunal. Thus, the conditions on which
reliance has now been placed by the appellant were never
pointed out to the respondent or to the Arbitral Tribunal at
any point of time. In any case, the appellant had completely
failed to show as to what prejudice would be caused by
allowing the respondent to exercise ROFR without
participating in the tender process. The learned Single Judge
of the High Court repeatedly made queries in that behalf
which was not explained by the appellant, as is noted in the
impugned judgment. Resultantly, the High Court rejected the
plea of the appellant and held that it was not necessary for the
respondent to participate in the bidding process in terms of
order dated 23rd July, 2016, to exercise ROFR. The respondent
has distinguished the two decisions relied upon by the
appellant and would contend that the same do not lay down
any legal principle that participation in the bidding process is
a condition precedent for exercise of ROFR. It is contended, in
the present case, the ROFR, without condition of participation
28
in the bid, was granted by the Arbitral Tribunal on the basis of
consent of the parties. It is contended that in view of the
concurrent view taken by the Arbitral Tribunal as also the
High Court, this Court should be slow in entertaining this
appeal.
16. We have heard Mr. K.K. Venugopal, learned Attorney
General for India and Mr. Mukul Rohatgi, learned senior
counsel appearing for the respondent.
17. The issue involved in the present appeal ostensibly
concerns the justness of the order passed by the Arbitral
Tribunal and affirmed by the High Court on an application
moved by the respondent (claimant) under Section 17 of the
Act in the pending arbitral proceedings. However, in essence,
the subject matter of the application under consideration
relates to the rights and liabilities of the parties in respect of a
tender process for awarding of a contract in relation to the
unfinished and balance work of the Highway Project.
29
18. While considering the relief claimed by the respondent
(claimant), the same should have been tested on the
touchstone of the principle governing the tender process,
especially when the validity of the tender document has not
been put in issue or challenged before any competent forum.
Going by the terms and conditions in the tender documents,
as already alluded to in paragraph 8 above, there is no tittle of
doubt that the right of the claimant (respondent) to match the
bid of L-1 or to exercise ROFR would come into play only if the
respondent was to participate in the tender process pursuant
to the notice inviting tenders from the interested parties. The
objective of tender process is not only to adhere to a
transparent mechanism but to encourage competition and give
equal opportunity to all tenderers with the end result of
getting a fair offer or value for money. The plain wording of the
eligibility clause in the tender documents and the incidental
stipulations make it explicit that the respondent was required
to participate in the tender process by submitting its sealed
bid (technical and financial). The fact that a deeming clause
has been provided in the tender document that if the
30
respondent was to participate in the bidding process, it shall
be deemed to fulfill all the requirements of the tender clauses
3 to 6 of the RFP, being the existing concessionaire of the
Project, does not exempt the respondent from participating in
the tender process; rather the tenor of the terms of the
documents made it obligatory for the respondent to participate
in the tender process to be considered as a responsive bidder,
along with others. Having failed to participate in the tender
process and, more so, despite the express terms in the tender
documents, validity whereof has not been challenged, the
respondent cannot be heard to contend that it had acquired
any right whatsoever. Only the entities who participate in the
tender process pursuant to a tender notice can be allowed to
make grievances about the non-fulfillment or breach of any of
the terms and conditions of the concerned tender documents.
The respondent who chose to stay away from the tender
process, cannot be heard to whittle down, in any manner, the
rights of the eligible bidders who had participated in the
tender process on the basis of the written and express terms
and conditions. At the culmination of the tender process, if
31
the respondent had not participated, in law, the offer
submitted by the eligible bidders is required to be considered
on the basis of the stated terms and conditions. Thus, if the
claim of the respondent was to be strictly adjudged on the
basis of the terms and conditions specified in the subject
tender document, the respondent has no case whatsoever.
19. The gravamen of the plea taken by the respondent is on
the assumption that the interim order passed by the Arbitral
Tribunal on 23rd July, 2016 bestows unconditional right on
the respondent to exercise ROFR, in the event tender process
in respect of the balance work is resorted to. For that, we may
straightway advert to the order dated 23rd July, 2016. That is
an order granting prayer clause (b) in the application preferred
by the respondent under Section 17 of the Act. The same has
been reproduced in paragraph 3 above. Notably, there is
nothing in the entire application (filed by the respondent
under Section 17 of the Act) to even remotely suggest that the
respondent had prayed in clause (b) that it be exempted from
participating in the proposed tender process as such, and
32
could yet exercise ROFR before the letter of intent was to be
issued to the lowest bidder. The exemption in this regard
cannot be inferred. It has to be an express exemption sought
and so granted and disclosed in the tender documents. The
respondent may be right in contending that the interim order
passed by the Arbitral Tribunal dated 23rd July, 2016 neither
prescribes that the respondent must participate in the bidding
process as a condition precedent for exercise of ROFR nor does
it prohibit the respondent from exercising ROFR without
participation in the bidding process. The order is, indeed,
silent in that behalf. But, that will be of no avail to the
respondent. For, such exemption ought to have been prayed
and expressly granted by the Court. In absence of such
express exemption, the respondent was obliged to comply with
the terms and conditions of the tender documents publicly
notified by the appellant as per its understanding of the order
of the High Court. Having failed to participate in the bidding
process in consonance with such notified terms and
conditions, the respondent lost the opportunity granted under
the order dated 23rd July, 2016 to match the lowest bid or to
33
exercise ROFR. Any other view would fall foul of the
fundamental policy of the Indian law and cannot be
countenanced.
20. It is not the case of the respondent that an express
exemption has been granted to the respondent, from
participating in the bidding process. In the matter of tender
process, there can be no tacit or implied exemption from
participating. In the first place, whether such direction can be
issued by the Arbitral Tribunal under Section 17 of the Act
itself is debatable. However, since the order dated 23rd July,
2016 has remained unchallenged, we do not wish to dilate on
that aspect. Indeed, the appellant accepted the order with a
sanguine hope that a proper tender process can be resorted to,
wherein the respondent would also participate, for awarding
the contract of unfinished and balance works of the subject
Project. For effectuating that order, tender documents were
issued by the appellant on 28th November, 2016 which, as
aforesaid, explicitly stipulated that the respondent was
expected to submit its bid within the specified time.
34
Admittedly, the fact that tender notice was issued, came to be
disclosed before the Arbitral Tribunal on 10th December, 2016.
Surprisingly, the respondent neither took any clue nor
bothered to follow up the tender documents which were placed
in public domain (as is done in respect of any other tender
process). Further, the respondent waited till the opening of
technical bids on 5th January, 2017 and financial bids on 29th
March, 2017 and rushed to the Arbitral Tribunal by way of an
application under Section 17 of the Act, only on 25th April,
2017 stating that on the previous day, it had come to its
notice that the appellant was likely to issue letter of intent to
the lowest bidder, without giving opportunity to the
respondent to match the lowest bid or exercise ROFR. To
oppose the said application, the appellant in the reply affidavit
had asserted that the respondent was fully aware about the
terms and conditions of the tender documents and yet chose
not to participate in the bidding process. The respondent did
not think it necessary to counter the said assertion by filing
any rejoinder thereto. Notwithstanding that, the Arbitral
Tribunal was impressed by the plea taken by the respondent
35
and allowed the application of the respondent vide order dated
24th May, 2017. The relevant extract of the said order has been
reproduced in paragraph 12 above. The Arbitral Tribunal was
more impressed by the fact that the respondent had completed
substantial works of the Project and it would be just and
proper to allow the respondent to complete the balance work.
The Arbitral Tribunal made no effort to ascertain as to whether
the order dated 23rd July, 2016 was a blanket and
unconditional order entitling the respondent to straightaway
exercise ROFR without participating in the bidding process.
The Arbitral Tribunal merely adverted to the objection of the
appellant and rejected the same on the finding that
involvement of a third party in the Project would create serious
problems. It took the view that giving option to the respondent
to match the lowest bid and to complete the balance work,
with a condition to periodically submit the progress report to
the Arbitral Tribunal for monitoring whether the balance work
was successfully completed to the satisfaction of the NHAI,
would be a proper and equitable arrangement. This approach
36
is not in conformity with the fundamental policy of Indian
law.
21. The approach of the High Court in the appeal preferred
by the appellant was no different. The relevant extract of the
High Court decision has been reproduced in paragraph 13
above. The High Court did not find any error, much less
manifest error, in the view taken by the Arbitral Tribunal.
Further, it can be gleaned from the observations of the High
Court in the impugned judgment that the High Court was
more eager to know as to what prejudice would be caused to
the appellant if the respondent had not participated in the
bidding process. This query of the High Court is begging the
question. For, that cannot be the primary basis to answer the
relief claimed by the respondent in the application under
Section 17 of the Act. An entity who stays away from the
bidding process and fails to comply with the express terms
and conditions of the tender documents cannot claim any
right to match the lowest bid or exercise ROFR. Only a
responsive bidder could do so. The High Court has overlooked
37
the fact that the appellant is a body corporate under the 1988
Act. It has to act in a just and fair manner in the matter of
allocation of contract albeit the balance and unfinished work
of the Project. No express exemption has been granted to the
respondent vide order of the Arbitral Tribunal dated 23rd July,
2016 – to exercise ROFR or match the lowest bid without
participating in the bidding process. The respondent had the
option to participate in the bidding process which was not
availed of for reasons best known to the respondent. The High
Court also overlooked the fact that the tender process was not
an empty formality and with the initiation of the same, third
parties, who participated in the bidding process, were likely to
be prejudiced by allowing the respondent to match the lowest
bid or exercise ROFR, without participating in the bidding
process despite the express stipulation in that behalf in the
tender documents. Suffice it to observe that the High Court
committed the same error as committed by the Arbitral
Tribunal in not examining the core issues for grant or
non-grant of the relief to the respondent, in conformity with
the fundamental policy of Indian law.
38
22. The argument of the respondent that the order dated 23rd
July, 2016 passed by the Arbitral Tribunal was based on
consent of the parties and was never challenged by the
appellant, does not take the matter any further. The
respondent on the one hand, contends that the said order was
based on consent of the parties and also in the same breath
contends that the respondent consented to the unilateral
conditions stipulated by the appellant, which the appellant
should not be allowed to resile as prayed by it. Be that as it
may, on a fair reading of the order dated 23rd July, 2016, it is
noticed that the same is the outcome of a contest and not
founded on any concession. In any case, the order makes no
express mention about granting of exemption to the
respondent from participating in the proposed bidding
process. The fact that the respondent has already invested a
substantial amount in the subject Project and has also
completed substantial work can be no basis to overlook the
fundamental policy of Indian law regarding the subject of
tender process and the rights and obligations of the parties
39
involved. We are also not impressed by the argument of the
respondent that the respondent was not expected to refuse to
match its own bid or that if it had participated in the bidding
process and exercised ROFR, then it would have resulted in
consequence of black listing and forfeiture of bid security
amount. The fact that the respondent would exercise ROFR
would mean that the bid given by the respondent was not L-1.
If it was not L-1, exercising ROFR would obviously neither
entail in forfeiture of the bid security nor would visit the
consequence of black listing. This plea is obviously an
argument of desperation and belated one to justify the failure
to participate in the bidding process.
23. The appellant invited our attention to the dictum in
VHCPL-ADCC Pingalai Infrastructure Pvt. Ltd., (supra). In
that case, the Court considered the question whether the
petitioner had preferential right to match the lowest bid
without pre-qualifying or participating in the bidding process.
In that case, Article 14.1(c) of the concession agreement
stipulated that the respondent No.1 could invite proposals
40
from eligible persons for capacity augmentation of the project
which required the petitioner to give an option to submit its
proposal. The Court after noticing the precedents on the
relevant aspects, went on to observe that if the concessionaire
chose not to submit its proposal, it did not have the right to
match the preferred offer as would be the case of the
respondent herein, in view of the express stipulation in the
tender documents requiring the respondent to participate in
the bidding process. The appellant has also placed reliance on
the decision in M/s. Raj West Power Limited, (supra). We
agree with the respondent that this decision does not lay down
any principle which may have any bearing on the case in
hand.
24. In view of the above, we have no hesitation in concluding
that the decision of the Arbitral Tribunal as confirmed by the
High Court, falls foul of the fundamental policy of Indian law
and cannot be countenanced.
25. Accordingly, the order passed by the Arbitral Tribunal
dated 24th May, 2017 as also the order dated 21st August,
41
2017 passed by the learned Single Judge of the High Court,
deserve to be quashed and set aside and resultantly, the
application preferred by the respondent under Section 17 of
the Act dated 24th April, 2017 ought to be dismissed. We
order accordingly.
26. The appeal is allowed in the above terms with no order
as to costs.
.………………………….CJI.
(Dipak Misra)
…………………………..….J.
(A.M. Khanwilkar)
…………………………..….J.
(Dr. D.Y. Chandrachud)
New Delhi;
July 13, 2018.

Saturday, July 14, 2018

Ancestral Properties means = 12. It is settled that the property inherited by a male Hindu from his father, father’s father or father’s father’s father is an ancestral property. The essential feature of ancestral property, according to Mitakshara Law, is that the sons, grandsons, and great grandsons of the person who inherits it, acquire an interest and the rights attached to such property at the moment of their birth. The share which a coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. After partition, the property in the hands of the son will continue to be the ancestral property and the natural or adopted son of that son will take interest in it and is entitled to it by survivorship. Exchange Deed must be registered – Mandatory.= 18. It is clear from this provision that where either of the properties in exchange are immovable or one of them is immovable and the value of anyone is Rs.100/- or more, the provision of Section 54 of the TP Act relating to sale of immovable property would apply. The mode of transfer in case of exchange is the same as in the case of sale. It is thus clear that in the case of exchange of property of value of Rs. 100/- and above, it can be made only by a registered instrument. Sec.53 A of T. P. Act – when can be availed 23........application of Section 53A of the T.P Act. It is well settled that the defendant who intends to avail the benefit of this provision must plead that he has taken possession of the property in part performance of the contract. Oral evidence under sec.91 of Evidence Act- the contents of unregistered deed is not permissible 22. It is clear from the above judgment that the best evidence of the contents of the document is the document itself and as required under Section 91 of the Evidence Act the document itself has to be produced to prove its contentsBut having regard to Section 49 of the Registration Act, any document which is not registered as required under law, would be inadmissible in evidence and cannot, therefore, be produced and proved under Section 91 of the Evidence Act. Since Exhibit P2 is an unregistered document, it is inadmissible in evidence and as such it can neither be proved under Section 91 of the Evidence Act nor any oral evidence can be given to prove its contents. Therefore, the High Court has rightly discarded the exchange deed at Exhibit P2.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5415 OF 2011
SHYAM NARAYAN PRASAD … APPELLANT
VERSUS
KRISHNA PRASAD AND ORS. … RESPONDENTS
J U D G M E N T
S.ABDUL NAZEER, J.
1. Defendant No.1, Shyam Narayan Prasad is the appellant before us. In this
appeal he has questioned the legality and correctness of the judgment and decree
dated 15.5.2006 passed by the High Court of Sikkim in RSA No.1 of 2005.
2. One Gopalji Prasad is the common male ancestor of the parties. The
appellant and Laxmi Prasad, 5th respondent herein, are the sons of Gopalji Prasad.
Respondent Nos. 1 to 3 are the sons of Laxmi Prasad and respondent No.4 is the
son of the 1st respondent. Respondent Nos.1 to 4 are the plaintiffs in the suit, being
2
Civil Suit No.10 of 2001, and the appellant and respondent Nos.5 and 6 are the
defendants. No relief has been claimed against respondent No.6 (defendant No.3
in the suit). For the sake of convenience, parties are referred to by the ranking in
the trial court.
3. The plaintiffs filed the aforesaid suit against the defendants for a declaration
that the document dated 30.1.1990 (Exhibit P2) executed between defendant Nos.
1 and 2 is invalid and for certain other reliefs. According to them, the family
property was partitioned on 31.7.1987 between Gopalji and his five sons, namely,
Laxmi Prasad, Ayodhya Prasad, Shyam Narayan Prasad, Dr. Onkarnath Gupta and
Suresh Kumar. In the partition Gopalji has retained some of the properties for his
personal use till his death. Laxmi Prasad got his share of property along with half
portion of existing two-storey RCC building situated at Singtam Bazar, East
Sikkim, wherein presently a liquor shop is being run. Shyam Narayan Prasad was
allotted a shoe shop at Manihari which is run on a rented premises owned by Gouri
Shankar Prasad. He was also allotted other properties in the partition.
4. After the partition, the sons of Gopalji were put in possession of their share
of the properties. However, Laxmi Prasad (defendant No.2) in collusion with his
brother Shyam Narayan Prasad (defendant No.1) executed an agreement dated
30.1.1990 exchanging the liquor shop at Singtam Bazar, East Sikkim with the shoe
shop at Manihari. It is their contention that since the property is an ancestral
3
property, they also have a share in the property which had fallen to the share of
defendant No.2 and that he has no legal right to exchange the property with
defendant No.1. It was further contented that the deed of exchange dated 30.1.1990
entered into between defendant Nos.1 and 2 is in relation to an immovable
property. Since the said document has not been registered, it has no legal effect.
5. Defendant No.1 has filed the written statement stating that the suit properties
are not ancestral properties. He has denied the contention of the plaintiffs that the
document dated 30.1.1990 is not a valid document. It was further contended that
the said document has already been given effect from the date of its execution.
6. Defendant No. 2 has filed the written statement contending that for the
alleged exchange deed, defendant No. 1 had approached him for exchanging only
the business of liquor shop at Sikkim with that of shoe shop at Gangtok for
convenience and that he had signed the document in good faith believing that the
exchange deed was only for the two businesses, and further, admitted that
exchange deed was made and executed behind the back of the plaintiffs.
7. On the basis of the pleadings of the parties, the trial court has framed
relevant issues. Parties have led evidence in support of their respective
contentions. On appreciation of the materials on record, the trial court had come to
the conclusion that the property in question is an ancestral property and that the
plaintiffs being the sons and grandson of defendant No.2, they have also equal
4
share in the property allotted to him in the partition. The suit was accordingly
decreed.
8. The first defendant challenged the said judgment and decree by filing an
Appeal No.2 of 2003 before the District Judge, Sub-Division-II, Sikkim at
Gangtok. The District Judge by judgment and decree dated 19.11.2004 allowed the
appeal, set aside the judgment and decree of the trial court and dismissed the suit.
The plaintiffs filed a Second Appeal No.1 of 2005 challenging the judgment and
decree of the District Judge before the High Court. The High Court has set aside
the judgment and decree of the District Judge and restored the judgment and decree
of the trial court.
9. The contention of the learned counsel for the appellant/defendant No.1 is
that the entire property of Gopalji was the self acquired property and he has
divided the property amongst his five sons by a deed of partition dated 1.3.1988.
According to the deed of settlement dated 30.1.1990 between defendant Nos. 1 and
2, only the businesses were transferred and not the buildings. Therefore, the sons
and the grandson of defendant No.2 have no right to seek cancellation of the said
deed. There is no exchange of immovable property as contended by the plaintiffs.
Therefore, the settlement deed does not require registration. The parties have acted
upon the said agreement. In the circumstances, possession of the appellant is
5
protected under Section 53A of the Transfer of Property Act, 1882 (for short ‘the
T.P. Act’).
10. On the other hand, learned advocate appearing for the respondent Nos. 1 to
4/plaintiffs submits that the subject matter of the deed of settlement dated
30.1.1990 is a joint family property. The recitals of this document clearly show
that there is a transfer of immovable property. The plaintiffs, being the lineal
descendants of defendant No.2, are the members of the copercenary. They have a
right and interest over the property in question. The settlement deed dated
30.1.1990 has not been registered. Hence, it is inadmissible in evidence.
Defendant No.1 has not pleaded in his written statement that he has taken the
possession of the property in part performance of the contract. Therefore, it is not
open for him to claim the benefit of Section 53A of the T.P. Act. Learned counsel
prays for dismissal of the appeal.
11. Having regard to the contentions urged, the first question for consideration is
whether the property allotted to defendant No.2 in the partition dated 31.07.1987
retained the character of a coparcenary property. Admittedly, Gopalji Prasad and
his five sons partitioned the property by a deed of partition dated 31.07.1987. It is
clear from the materials on record that Gopalji Prasad retained certain properties in
the partition. Certain properties had fallen to the share of defendant No.2 who is
the father of plaintiff Nos. 1 to 3 and grandfather of plaintiff No. 4. Certain
6
properties had fallen to the share of the first defendant. The trial court has held
that the properties are ancestral properties. The High Court has confirmed the
finding of the trial court. We do not find any ground to disagree with this finding
of the courts below.
12. It is settled that the property inherited by a male Hindu from his father,
father’s father or father’s father’s father is an ancestral property. The essential
feature of ancestral property, according to Mitakshara Law, is that the sons,
grandsons, and great grandsons of the person who inherits it, acquire an interest
and the rights attached to such property at the moment of their birth. The share
which a coparcener obtains on partition of ancestral property is ancestral property
as regards his male issue. After partition, the property in the hands of the son will
continue to be the ancestral property and the natural or adopted son of that son will
take interest in it and is entitled to it by survivorship.
13. In C. Krishna Prasad v. C.I.T, Bangalore, 1975 (1) SCC 160, this Court
was considering a similar question. In the said case, C. Krishna Prasad, the
appellant along with his father Krishnaswami Naidu and brother C. Krishna Kumar
formed Hindu undivided family up to October 30, 1958, when there was a partition
between Krishnaswami Naidu and his two sons. A question arose as to whether an
unmarried male Hindu on partition of a joint Hindu family can be assessed in the
status of undivided family even though no other person besides him is a member of
7
the family. It was held that the share which a coparcener obtains on partition is
ancestral property as regards male issue. It was held as under:
“The share which a coparcener obtains on partition of
ancestral property is ancestral property as regards his
male issue. They take an interest in it by birth,
whether they are in existence at the time of partition
or are born subsequently. Such share, however, is
ancestral property only as regards his male issue. As
regards other relations, it is separate property, and if the
coparcener dies without leaving male issue, it passes to
his heirs by succession (see p. 272 of Mulla’s Principles
of Hindu Law, 14th Ed.). A person who for the time being
is the sole surviving coparcener is entitled to dispose of
the coparcenary property as if it were his separate
property. He may sell or mortgage the property without
legal necessity or he may make a gift of it. If a son is
subsequently born to him or adopted by him, the
alienation, whether it is by way of sale, mortgage or gift,
will nevertheless stand, for a son cannot object to
alienations made by his father before he was born or
begotten”.
(emphasis supplied)
14. In M. Yogendra and Ors. v. Leelamma N. and Ors. 2009 (15) SCC 184, it
was held as under:
“It is now well settled in view of several decisions of
this Court that the property in the hands of a sole
coparcener allotted to him in partition shall be his
separate property for the same shall revive only when
a son is born to him. It is one thing to say that the
property remains a coparcenary property but it is another
thing to say that it revives. The distinction between the
two is absolutely clear and unambiguous. In the case of
former any sale or alienation which has been done by the
8
sole survivor coparcener shall be valid whereas in the
case of a coparcener any alienation made by the karta
would be valid.”
(emphasis supplied)
15. In Rohit Chauhan v. Surinder Singh and Ors. 2013 (9) SCC 419, a
contention was raised by the defendant No. 1 that after partition of the joint Hindu
family property, the land allotted to the share of defendant No. 2 became his self
acquired property and he was competent to transfer the property in the manner he
desired. It was held that the property which defendant No. 2 got by virtue of
partition decree amongst his father and brothers was although separate property
qua other relations but it attained the characteristics of coparcenary property the
moment a son was born to defendant No. 2. It was held thus:
“A person, who for the time being is the sole surviving
coparcener as in the present case Gulab Singh was,
before the birth of the plaintiff, was entitled to dispose of
the coparcenary property as if it were his separate
property. Gulab Singh, till the birth of plaintiff Rohit
Chauhan, was competent to sell, mortgage and deal with
the property as his property in the manner he liked. Had
he done so before the birth of plaintiff, Rohit Chauhan,
he was not competent to object to the alienation made by
his father before he was born or begotten. But, in the
present case, it is an admitted position that the
property which Defendant 2 got on partition was an
ancestral property and till the birth of the plaintiff he
was the sole surviving coparcener but the moment
plaintiff was born, he got a share in the father’s
property and became a coparcener. As observed
earlier, in view of the settled legal position, the property
9
in the hands of Defendant 2 allotted to him in partition
was a separate property till the birth of the plaintiff and,
therefore, after his birth Defendant 2 could have alienated
the property only as karta for legal necessity. It is
nobody’s case that Defendant 2 executed the sale deeds
and release deed as karta for any legal necessity. Hence,
the sale deeds and the release deed executed by Gulab
Singh to the extent of entire coparcenary property are
illegal, null and void. However, in respect of the property
which would have fallen in the share of Gulab Singh at
the time of execution of sale deeds and release deed, the
parties can work out
their remedies in appropriate proceeding.”
(emphasis supplied)
16. Therefore, the properties acquired by defendant No.2 in the partition dated
31.07.1987 although are separate property qua other relations but it is a
coparcenary property insofar as his sons and grandsons are concerned. In the
instant case, there is a clear finding by the trial court that the properties are
ancestral properties which have been divided as per the deed of partition dated
31.07.1987. The property which had fallen to the share of defendant No.2 retained
the character of a coparcenary property and the plaintiffs being his sons and
grandson have a right in the said property. Hence, it cannot be said that the suit
filed by the plaintiffs was not maintainable.
17. This takes us to the next question as to whether the exchange deed at Exhibit
P2 is admissible in evidence or not. The transfer of ownership of their respective
properties by defendant Nos. 1 and 2 was done through Exhibit P2 deed of
10
exchange. It was contended by defendant No.1 that the exchange was only of the
businesses. However, a careful perusal of Exhibit P2 clearly shows that the RCC
building is also a subject matter of the deed of exchange. The value of RCC
building exceeds Rs. 100/- which is not in dispute. Section 118 of the TP Act
defines ‘exchange’ as under:
“118. “Exchange” defined.-When two persons mutually
transfer the ownership of one thing for the ownership of
another, neither thing or both things being money only,
the transaction is called an “exchange”.
A transfer of property in completion of an
exchange can be made only in manner provided for the
transfer of such property by sale”.
18. It is clear from this provision that where either of the properties in exchange
are immovable or one of them is immovable and the value of anyone is Rs.100/- or
more, the provision of Section 54 of the TP Act relating to sale of immovable
property would apply. The mode of transfer in case of exchange is the same as in
the case of sale. It is thus clear that in the case of exchange of property of value of
Rs. 100/- and above, it can be made only by a registered instrument. In the instant
case, the exchange deed at Exhibit P2 has not been registered.
19. Section 49 of the Registration Act, 1908 provides for the effect of nonregistration
of the document which is as under:
“49. Effect of non-registration of documents required
to be registered.-No document required by section 17
11
{or by any provision of the Transfer of Property Act,
1882 (4 of 1882)}, to be registered shall-
(a) affect any immovable property comprised
therein, or
(b) confer any power to adopt, or
(c) Be received as evidence of any transaction
affecting such property or conferring such
power,
Unless it has been registered:”
20. Section 17(i)(b) of the Registration Act mandates that any document which
has the effect of creating and taking away the rights in respect of an immovable
property must be registered and Section 49 of the Registration Act imposes bar on
the admissibility of an unregistered document and deals with the documents that
are required to be registered under Section 17 of the Registration Act. Since, the
deed of exchange has the effect of creating and taking away the rights in respect of
an immovable property, namely, RCC building, it requires registration under
Section 17. Since the deed of exchange has not been registered, it cannot be taken
into account to the extent of the transfer of an immovable property.
21. In Roshan Singh & Ors. v. Zile Singh & Ors. 1988 (2) SCR 1106, this
Court was considering the admissibility of an unregistered partition deed. It was
held thus:
“……Section 17(i)(b) lays down that a document for
which registration is compulsory should, by its own
force, operate or purport to operate to create or declare
some right in immovable property……Two propositions
must therefore flow:
12
(1) A partition may be affected orally; but if it is
subsequently reduced into a form of a document and that
document purports by itself to effect a division and
embodies all the terms of bargain, it will be necessary
to register it. If it be not registered, S.49 of the Act
will prevent its being admitted in evidence. Secondary
evidence of the factum of partition will not be admissible
by reason of S.91 of the Evidence Act, 1872.”
(emphasis supplied)
22. It is clear from the above judgment that the best evidence of the contents of
the document is the document itself and as required under Section 91 of the
Evidence Act the document itself has to be produced to prove its contents. But
having regard to Section 49 of the Registration Act, any document which is not
registered as required under law, would be inadmissible in evidence and cannot,
therefore, be produced and proved under Section 91 of the Evidence Act. Since
Exhibit P2 is an unregistered document, it is inadmissible in evidence and as such
it can neither be proved under Section 91 of the Evidence Act nor any oral
evidence can be given to prove its contents. Therefore, the High Court has rightly
discarded the exchange deed at Exhibit P2.
23. The last contention of the learned counsel for the appellant is in relation to
application of Section 53A of the T.P Act. It is well settled that the defendant who
intends to avail the benefit of this provision must plead that he has taken
possession of the property in part performance of the contract. Perusal of the
13
written statement of the first defendant shows that he has not raised such a plea.
Pleadings are meant to give to each side, intimation of the case of the other, so that,
it may be met to enable courts to determine what is really at issue between the
parties. No relief can be granted to a party without the pleadings. Therefore, it is
not open for the first defendant/appellant to claim the benefit available under
Section 53A of the T.P. Act.
24. In the result, this appeal fails and it is accordingly dismissed. There will be
no order as to costs.
…..……………………………...J.
(ABHAY MANOHAR SAPRE)
…….……………………………J.
(S. ABDUL NAZEER)
New Delhi;
July 02, 2018.

Ancestral Properties means = 12. It is settled that the property inherited by a male Hindu from his father, father’s father or father’s father’s father is an ancestral property. The essential feature of ancestral property, according to Mitakshara Law, is that the sons, grandsons, and great grandsons of the person who inherits it, acquire an interest and the rights attached to such property at the moment of their birth. The share which a coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. After partition, the property in the hands of the son will continue to be the ancestral property and the natural or adopted son of that son will take interest in it and is entitled to it by survivorship. Exchange Deed must be registered – Mandatory.= 18. It is clear from this provision that where either of the properties in exchange are immovable or one of them is immovable and the value of anyone is Rs.100/- or more, the provision of Section 54 of the TP Act relating to sale of immovable property would apply. The mode of transfer in case of exchange is the same as in the case of sale. It is thus clear that in the case of exchange of property of value of Rs. 100/- and above, it can be made only by a registered instrument. Sec.53 A of T. P. Act – when can be availed 23........application of Section 53A of the T.P Act. It is well settled that the defendant who intends to avail the benefit of this provision must plead that he has taken possession of the property in part performance of the contract. Oral evidence under sec.91 of Evidence Act- the contents of unregistered deed is not permissible 22. It is clear from the above judgment that the best evidence of the contents of the document is the document itself and as required under Section 91 of the Evidence Act the document itself has to be produced to prove its contentsBut having regard to Section 49 of the Registration Act, any document which is not registered as required under law, would be inadmissible in evidence and cannot, therefore, be produced and proved under Section 91 of the Evidence Act. Since Exhibit P2 is an unregistered document, it is inadmissible in evidence and as such it can neither be proved under Section 91 of the Evidence Act nor any oral evidence can be given to prove its contents. Therefore, the High Court has rightly discarded the exchange deed at Exhibit P2.

Tuesday, July 10, 2018

“8. While deciding an appeal against acquittal, the power of the appellate court is no less than the power exercised while hearing appeals against conviction. In both types of appeals, the power exists to review the entire evidence. However, one significant difference is that an order of acquittal will not be interfered with, by 15 an appellate court, where the judgment of the trial court is based on evidence and the view taken is reasonable and plausible. It will not reverse the decision of the trial court merely because a different view is possible. The appellate court will also bear in mind that there is a presumption of innocence in favour of the accused and the accused is entitled to get the benefit of any doubt. Further, if it decides to interfere, it should assign reasons for differing with the decision of the trial court.”

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1479 OF 2015
MOTIRAM PADU JOSHI AND OTHERS …Appellants
Versus
THE STATE OF MAHARASHTRA ...Respondent
J U D G M E N T
R. BANUMATHI, J.
This appeal arises out of the judgment dated 30.07.2015 passed
by the High Court of Judicature at Bombay in Criminal Appeal No.174
of 1994 in and by which the High Court reversed the judgment of the
acquittal of the appellants/accused Nos. 3, 5, 7 and 8 and convicted
them under Sections 147, 148, 302 read with 149 IPC and sentenced
them to undergo life imprisonment.
2. Briefly stated case of the prosecution is that PW-2-Anant Budhaji
Joshi is the brother of deceased Machindra Budhaji Joshi. Both Anant
and Machindra were doing the work of electric fitting. PW-3-
1
Kesarinath Bhagat and PW-4-Vasudeo Gaikar were also doing the
same work. Appellant Motiram Padu Joshi (A3), Ratan Maruti Vaskar
(A5), Devidas Maruti Vaskar (A7), Ramnath @ Ram Padu Joshi (A8),
deceased-Machindra and prosecution witnesses are residents of
village Owa-peth, Taluka Panvel, District Raigad. Appellants/accused
were belonging to congress party and the deceased and the
prosecution witnesses were from Shiv-sena party. In the election of
Zilla Parishad in 1992, both parties became inimical to each other.
3. On 26.04.1992, deceased Machindra had gone to village
Nandgaon for electric fitting work along with PWs 3 and 4 and they
returned at about 08.30 pm to the house of deceased. All three of
them had their dinner and were sitting on the cot in the courtyard. PW2
was thereafter taking his dinner inside the house. At about 09.30
pm, appellants along with other accused being armed with deadly
weapons like swords, knife, sticks and motor-cycle chain came to the
courtyard of the house of deceased Machindra. Appellant Motiram
(A3) was carrying sword in his hand and assaulted the deceased on
his head. Appellant Ratan (A5) attacked the deceased with the sword
on the legs of the deceased. Appellant Ramnath (A8) also attacked
the deceased with the sword on his head. Appellant Devidas (A7)
2
attacked the deceased with knife on his foot and legs. Other accused
against whom the appeal is abated assaulted the deceased with
motor-cycle chain and sticks. On seeing the accused armed with
deadly weapons, PWs 3 and 4 got frightened and went inside the
house and stood near the window of the house and witnessed the
occurrence. Due to the assault, the deceased fell down from the cot
having sustained grievous injuries and PW-2 took the deceased in the
truck of his brother PW-5-Eknath Joshi to Taloja police station.
Considering the serious conditions of the deceased, he was sent to the
Municipal Dispensary at Panvel along with police constable Mhatre.
PW-15-Atmaram, Head Constable recorded the statement of PW-2,
based on which, FIR in Crime No.44/92 was registered under Sections
147, 148, 149 and 307 IPC. On the same night at about 11.30 pm,
deceased Machindra succumbed to injuries and the FIR was altered
from Section 307 IPC to Section 302 IPC.
4. Sub-Inspector Mr. Laxman Shejal (PW-16) had taken up the
investigation and he visited the spot and prepared the rough sketch
(Ex.A42). From the spot, he collected blood-stained quilt (Article No.3)
and also blood-stained soil and sample mud. The body was sent to
autopsy and PW-14-Dr. Ramrao Kendre conducted the post-mortem
3
and noticed as many as twenty-six injuries in the nature of incised
wounds, contusions on the head, legs, right arm and all over the body
of the deceased. Dr. Ramrao Kendre opined that the cause of death
was “shock secondary to celebral contusion due to blood trauma over
occipital area”.
5. The accused were arrested on 27.04.1991. Based on the
disclosure statement of appellant Motiram, one sword (Article No.8)
was recovered on 09.05.1992. Swords (Article No.9) also came to be
recovered at the instance of appellants Ratan and Ramnath on
11.05.1992 and 10.05.1992. The motor-cycle chain and sticks also
came to be recovered from the other accused. The Chemical Analysis
Report disclosed that ‘A’ group blood was found on Article No.8 (sword
recovered at the instance of appellant Motiram) and Article No.12
(Motor-cycle chain). On completion of investigation, charge sheet was
filed against all the nine accused under Sections 147, 148, 302 read
with 149 IPC.
6. To prove the charges against the accused, the prosecution has
examined as many as sixteen witnesses and also produced material
objects and exhibited documents. The accused were questioned
under Section 313 Cr.P.C. about the incriminating evidence and
4
circumstances and the accused denied all of them and stated that they
have been falsely implicated. Upon consideration of evidence, the trial
court pointed out that PW-2 has a criminal record and that his
evidence is improbable. The trial court also held that the presence of
PWs 3 and 4 was doubtful and their evidence is untrustworthy and
cannot be relied upon to convict the accused. The trial court further
held that the prosecution has not proved the guilt of the accused
beyond reasonable doubt and acquitted all the accused.
7. On appeal by the State, the High Court held that the evidence of
PWs 2 to 4 as to the overt act of the accused is consistent and
corroborated by the medical evidence and recovery of weapons. The
High Court held that the trial court erred in disbelieving the evidence of
eye witnesses and the reasonings of the trial court suffers from
perversity. Observing that prompt registration of FIR lends credence
to the prosecution case which is also strengthened by medical
evidence and recovery of weapons, the High Court reversed the
judgment of the trial court and convicted the appellants as aforesaid in
para (1). The High Court maintained the acquittal of accused Baburao
(A2).
5
8. During the pendency of the appeal before the High Court,
accused Ragho Dharma Koli (A1), Rohidas Balram Joshi (A4),
Satyawan Balu Waskar (A6) and Dnyandeo Sakharam Joshi (A9) died
and the appeal against them stood abated.
9. We have heard Mr. Y.P. Adhyaru and Mr. Sidharth Luthra learned
senior counsel appearing on behalf of appellants and the learned
counsel appearing on behalf of State of Maharashtra. We have
perused the impugned judgment and carefully considered the rival
contentions and the evidence and materials placed on record.
10. There are three eye witnesses namely Anant, brother of
deceased (PW-2), Kesarinath (PW-3) and Vasudeo (PW-4). PWs 2 to
4 have consistently stated that on the date of incident, after having
dinner, deceased was lying on the cot in the courtyard and PWs 3 and
4 were sitting near him. PW-2 went inside and was taking meal. At
about 09.30 pm, the appellants and other accused armed with
weapons came there shouting and running. On seeing the accused
armed with deadly weapons, PWs 3 and 4 got frightened and went
inside the house. Appellant Motiram attacked the deceased with
sword on his head, appellant Ratan attacked the deceased with sword
on his legs, appellant Ramnath attacked the deceased with sword on
6
his head and appellant Devidas attacked the deceased with knife on
his foot and legs. On hearing the alarm raised by deceased
Machindra, PW-2 came out and raised shouts and on seeing the
neighbours, the accused ran away from the spot. PWs 2 to 4 have
consistently spoken about the overt act of the appellants as mentioned
above.
11. Evidence of PW-2 and his credibility is attacked by the
appellants contending that:- (i) PW-2 though present in the house did
not go to the rescue of his brother Machindra and remained mute
spectator; and (ii) PW-2 has a criminal record. Just prior to the
incident, PW-2 went inside the house and was taking meals. On
hearing the alarm raised by his brother Machindra, PW-2 came
outside. As the accused were many in numbers and armed with
deadly weapons like swords, knife, motor-cycle chain and sticks etc.,
PW-2 being unarmed would have naturally become frightened and
may not have dared to interfere. Evidence of a witness is not to be
disbelieved simply because he has not reacted in a particular manner.
12. Likewise, the relationship of PW-2 with the deceased cannot be
the reason for doubting the testimony of PW-2. It is fairly well-settled
that relationship is not a ground affecting the credibility of a witness. In
7
Mohabbat v. State of M.P., (2009) 13 SCC 630, this Court held as
under:-
“11. Learned counsel for the respondent State on the other hand
supported the judgment of the High Court.
“12. Merely because the eyewitnesses are family members their
evidence cannot per se be discarded. When there is allegation of
interestedness, the same has to be established. Mere statement
that being relatives of the deceased they are likely to falsely
implicate the accused cannot be a ground to discard the evidence
which is otherwise cogent and credible. We shall also deal with the
contention regarding interestedness of the witnesses for furthering
the prosecution version.
13. ‘5. … Relationship is not a factor to affect credibility of a
witness. It is more often than not that a relation would not conceal
actual culprit and make allegations against an innocent person.
Foundation has to be laid if plea of false implication is made. In
such cases, the court has to adopt a careful approach and analyse
evidence to find out whether it is cogent and credible.
………
To the same effect are the decisions in State of Punjab v. Jagir
Singh (1974) 3 SCC 277, Lehna v. State of Haryana (2002) 3 SCC
76 (SCC pp. 81-82, paras 5-9) and Gangadhar Behera v. State of
Orissa (2002) 8 SCC 381.”
The above position was also highlighted in Babulal Bhagwan
Khandare v. State of Maharashtra (2005) 10 SCC 404, Salim
Sahab v. State of M.P. (2007) 1 SCC 699 and Sonelal v. State of
M.P. (2008) 14 SCC 692 (SCC pp. 695-97, paras 12-13).”
As held in various decisions, judicial approach has to be cautious in
dealing with such evidence. It is unreasonable to contend that
evidence given by related witness should be discarded only on the
ground that such witness is related.
13. Evidence of PWs 3 and 4 is sought to be assailed on the ground
that their names were not mentioned in the First Information Report
8
(FIR) and that they are interested witnesses. Of course, names of
PWs 3 and 4 were not mentioned in the FIR. Deceased Machindra
was critically injured and when he was taken to the police station, on
seeing his serious condition, deceased was sent to the hospital along
with police constable Mhatre. PW-2 remained in the police station to
lodge the complaint and his statement was recorded. His brother
having been critically injured, PW-2 must have been in a disturbed
mind and must have been in a hurry to rush to the hospital to save his
brother. Non-mention of the names of eye witnesses (PWs 3 and 4) in
the FIR should be examined in the situation in which PW-2 was
placed.
14. Furthermore, as pointed out by the High Court, FIR is not an
encyclopedia which should contain all the details of the incident. FIR
is not an encyclopedia which is expected to contain all the details of
the prosecution case. It may be sufficient if the broad facts of the
prosecution case about the occurrence appear. Omission as to the
names of the assailants or the witnesses may not all the times be fatal
to the prosecution, if the FIR is lodged without delay. Unless there are
indications of fabrication, the court cannot reject the prosecution case
as given in the FIR merely because of omission. In the present case,
9
FIR was registered without delay and prompt registration of FIR itself
lends assurance to the prosecution case. The object of the FIR is to
set the law in motion. Omission to give the names of assailants or the
names of witnesses in the FIR is not fatal to the prosecution case.
The High Court was right in observing that non-mention of the names
of eye witnesses in the FIR can hardly be fatal to the prosecution case.
15. Evidence of PWs 3 and 4 is assailed on the ground that PWs 3
and 4 have not gone to the rescue of the deceased and it is quite
unbelievable that on seeing the accused who were armed with
weapons, both of them went inside the house. It is further submitted
that the trial court righty held that their evidence is not trustworthy and
the High Court was not right in intervening such finding and basing the
conviction on the evidence of PWs 3 and 4. In their evidence, PWs 3
and 4 have stated that on seeing number of accused armed with
deadly weapons got frightened and went inside the house and stood
near the window and saw the occurrence. Their evidence cannot be
doubted on the ground that they did not intervene in the attack nor
made attempts to save the deceased. On witnessing a crime, each
person reacts in his own way and their evidence cannot be doubted on
the ground that the witness has not acted in a particular manner. The
10
evidence of PWs 3 and 4 cannot be doubted merely because they
have not acted in a particular manner.
16. We may usefully refer to the case in Rana Partap v. State of
Haryana, (1983) 3 SCC 327 as under:-
“6. Yet another reason given by the learned Sessions Judge to
doubt the presence of the witnesses was that their conduct in not
going to the rescue of the deceased when he was in the clutches of
the assailants was unnatural. We must say that the comment is
most unreal. Every person who witnesses a murder reacts in his
own way. Some are stunned, become speechless and stand rooted
to the spot. Some become hysteric and start wailing. Some start
shouting for help. Others run away to keep themselves as far
removed from the spot as possible. Yet others rush to the rescue of
the victim, even going to the extent of counter-attacking the
assailants. Every one reacts in his own special way. There is no set
rule of natural reaction. To discard the evidence of a witness on the
ground that he did not react in any particular manner is to
appreciate evidence in a wholly unrealistic and unimaginative way.”
17. While appreciating the evidence of witness, approach must be
whether the evidence of witness read as a whole appears to have a
ring of truth and consistent with the prosecution case or to find out
whether it is against the general tenor of the case. Their evidence
cannot be doubted merely because they belong to opposite faction. All
that is required is that their evidence is to be scrutinized with care and
caution. On testing the evidence of PWs 2 to 4, the High Court found
that their evidence is consistent and credit worthy. We find no reason
to take a different view.
11
18. The evidence of PWs 2 to 4 is corroborated by medical
evidence. Further, PW-14 opined that nineteen to fourteen injuries
could have been caused by swords (Articles 8 and 9). Oral evidence
of PWs 2 to 4 is thus corroborated by the medical evidence. PW-14-
Dr. Ramrao who conducted the post-mortem has noticed that “half of
the stomach with rice is not digested”. PW-14 opined that the
deceased died within two hours of his last meal which again is
consistent with the evidence of PWs 2 to 4. Medical evidence of PW14
lends assurance to the evidence of PWs 2 to 4.
19. Prosecution case is further corroborated by recovery of weapons
from the accused. Based on the disclosure statement of appellant
Motiram, one sword (Article No.8) was recovered and another sword at
the instance of appellant Ratan (Article No.9) was recovered and
another sword was also recovered on the disclosure statement of
appellant Ramnath. Chemical Analysis Report (Ex. A32) showed that
the blood-stained found on the quilt seized from the scene of
occurrence was that of ‘A’ group. ‘A’ group blood was also detected on
swords which were recovered, based on the disclosure statement of
appellants Motiram (Article No.8) and Ratan (Article No.9). The
presence of ‘A’ group blood (Blood Group of deceased) on the
12
weapons recovered is yet another piece of evidence corroborating the
evidence of PWs 2 to 4 and strengthening the prosecution case.
20. PW-14-Dr. Ramrao noticed that the thighs and legs of the
deceased was smeared with mud. Learned senior counsel for the
appellants submitted that in view of the presence of mud on the body
of the deceased, serious doubts arise as to the time and place of
occurrence and that there is no possibility of the occurrence having
taken place in the courtyard of the house of deceased Machindra.
This submission does not merit acceptance for more than one reason.
Firstly, as pointed out earlier, PW-16-Laxman Shejal, Investigating
Officer had recovered blood-stained quilt (Article No.3) from the scene
of occurrence i.e. courtyard of house of the deceased and also bloodstained
mud and sample mud. Chemical Analysis Report (Ex. A32)
showed presence of ‘A’ group blood in the quilt. While narrating the
occurrence, eye witnesses have stated that after the attack, the
deceased had fallen down from the cot; in that course, thighs and legs
of the deceased might have been smeared with mud. The presence of
mud on the thighs and legs therefore does not raise doubts about the
prosecution case. This aspect of submission advanced by the
appellants has been elaborately considered by the High Court in para
13
(42) of its judgment. As rightly observed by the High Court, this is too
insignificant a fact to give importance so as to disbelieve and discard
the entire prosecution case as such.
21. Learned senior counsel for the appellants then contended that
only when there are compelling and substantial reasons, the High
Court can interfere with the order of acquittal and in the present case,
there were no such compelling circumstances or glaring mistakes in
the judgment of the trial court to reverse the order of acquittal.
22. It is fairly well-settled that in an appeal against the order of
acquittal, the appellate court would be slow to disturb the findings of
the trial court which had the opportunity of seeing and hearing the
witnesses. In an appeal against the order of acquittal, there is no
embargo for reappreciating the evidence and to take a different view;
but there must be strong circumstances to reverse the order of
acquittal. In the appeal against order of acquittal, the paramount
consideration of the appellate court should be to avoid miscarriage of
justice.
23. While considering the scope of power of the appellate court in an
appeal against the order of acquittal, after referring to various
14
judgments, in Chandrappa v. State of Karnataka, (2007) 4 SCC 415,
this Court summarised the principle as under:-
“42. From the above decisions, in our considered view, the
following general principles regarding powers of the appellate court
while dealing with an appeal against an order of acquittal emerge:
(1) An appellate court has full power to review, reappreciate and
reconsider the evidence upon which the order of acquittal is
founded.
(2) The Code of Criminal Procedure, 1973 puts no limitation,
restriction or condition on exercise of such power and an appellate
court on the evidence before it may reach its own conclusion, both
on questions of fact and of law.
(3) Various expressions, such as, “substantial and compelling
reasons”, “good and sufficient grounds”, “very strong
circumstances”, “distorted conclusions”, “glaring mistakes”, etc. are
not intended to curtail extensive powers of an appellate court in an
appeal against acquittal. Such phraseologies are more in the nature
of “flourishes of language” to emphasise the reluctance of an
appellate court to interfere with acquittal than to curtail the power of
the court to review the evidence and to come to its own conclusion.
(4) An appellate court, however, must bear in mind that in case
of acquittal, there is double presumption in favour of the accused.
Firstly, the presumption of innocence is available to him under the
fundamental principle of criminal jurisprudence that every person
shall be presumed to be innocent unless he is proved guilty by a
competent court of law. Secondly, the accused having secured his
acquittal, the presumption of his innocence is further reinforced,
reaffirmed and strengthened by the trial court.
(5) If two reasonable conclusions are possible on the basis of
the evidence on record, the appellate court should not disturb the
finding of acquittal recorded by the trial court.”
24. In Kallu alias Masih and others v. State of M.P., (2006) 10
SCC 313, this Court held as under:-
“8. While deciding an appeal against acquittal, the power of the
appellate court is no less than the power exercised while hearing
appeals against conviction. In both types of appeals, the power
exists to review the entire evidence. However, one significant
difference is that an order of acquittal will not be interfered with, by
15
an appellate court, where the judgment of the trial court is based on
evidence and the view taken is reasonable and plausible. It will not
reverse the decision of the trial court merely because a different view
is possible. The appellate court will also bear in mind that there is a
presumption of innocence in favour of the accused and the accused
is entitled to get the benefit of any doubt. Further, if it decides to
interfere, it should assign reasons for differing with the decision of
the trial court.”
25. In the present case, as held by the High Court, the trial court has
not properly appreciated the evidence and its findings are perverse.
When the approach of the trial court is perverse, in an appeal against
the order of acquittal, a duty is cast upon the High Court to
reappreciate the evidence. The deceased had sustained as many as
twenty-six injuries. PWs 1 to 3 have consistently spoken about the
incident and that the appellants were armed with deadly weapons and
the overt acts of the appellants which is corroborated by the medical
evidence and also by recovery of weapons from the
appellants/accused. As observed by the High Court, the trial court
gave importance to insignificant aspects like “smearing of the thighs
and legs of the body with mud” and the conduct of the witnesses as to
why they have not reacted in a particular manner and while doing so,
the trial court failed to appreciate the substratum of the prosecution
case. The High Court on being satisfied that the conclusion reached
by the trial court was erroneous reversed the order of acquittal
16
recorded by the trial court. We do not find any good ground to
interfere with the judgment of the High Court.
26. In the result, the conviction of the appellants under Section 302
IPC read with Section 149 IPC is confirmed and the sentence of life
imprisonment imposed upon each of them is confirmed and this appeal
is dismissed.
.…….…………...………J.
[RANJAN GOGOI]
…………….……………
J.
[R. BANUMATHI]
New Delhi;
July 10, 2018
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