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Thursday, May 2, 2024

Representation of the People Act, 1951 – ss. 100(1)(b), 100(1) (d)(i), 123 – Election – Filing of nomination – Submission of material particulars – Non-disclosure of three vehicles – High Court held non-disclosure of vehicles as corrupt practice – Correctness:

* Author

[2024] 4 S.C.R. 394 : 2024 INSC 289

Karikho Kri

v.

Nuney Tayang and Another

(Civil Appeal No. 4615 of 2023)

09 April 2024

[Aniruddha Bose and Sanjay Kumar,* JJ.]

Issue for Consideration

In the year 2019, appellant-KK an independent candidate emerged

victorious in Arunachal Pradesh Legislative Assembly from 44 Tezu

(ST) Assembly Constituency. The issue arising for consideration

is as to the validity of the High Court’s findings that grounds u/ss.

100(1)(b), 100(1)(d)(i) and 100(1)(d)(iv) of the Representation of

the People Act, 1951 were established, warranting invalidation of

the election of KK.

Headnotes

Representation of the People Act, 1951 – ss. 100(1)(b), 100(1)

(d)(i), 123 – Election – Filing of nomination – Submission of

material particulars – Non-disclosure of three vehicles – High

Court held non-disclosure of vehicles as corrupt practice –

Correctness:

Held: The High Court was of opinion that appellant’s failure

to disclose the three vehicles (two scooty and van), that stood

registered in the names of his dependent family members, amounted

to a corrupt practice – The High Court assumed that the nondisclosure of a vehicle registered in the name of a candidate or

his dependent family members was sufficient in itself to constitute

undue influence – One scooty was in name of wife of the appellant,

DW5 deposed that he had taken this vehicle as scrap and sold

it to DW6 – DW6 confirmed the same – In relation to other two

vehicles in question, there were actual documents of conveyance

and also proof of the requisite forms prescribed under the Motor

Vehicles Act, 1988 being duly filled in by wife and son of appellant

– Form No. 29, relating to notice of ownership transfer of a vehicle

by the registered owner, viz., the transferor, was issued in respect

of each of these vehicles but despite the same, the transferees

did not do the needful to get their own names registered as the

owners – Once it is accepted that the three vehicles in question 

[2024] 4 S.C.R. 395

Karikho Kri v. Nuney Tayang and Another

were either gifted or sold before the filing of the nomination by

KK, the said vehicles cannot be considered to be still owned by

KK’s wife and son for purposes other than those covered by the

Act of 1988 – However, the High Court did not take note of this

distinguishing factor in the case on hand – The vehicles were

not owned and possessed in praesenti by the dependent family

members of KK at the time of the filing of his nomination – Nondisclosure of three vehicles cannot be held against KK – Such

non-disclosure cannot be treated as an attempt on his part to

unduly influence the voters, thereby inviting the wrath of Section

123(2) of the Act of 1951. [Paras 20,21,22,25,27,28]

Representation of the People Act, 1951 – Election – Filing of

nomination – Non-disclosure of three vehicles – Vehicles sold/

gifted – The High Court was of the opinion that, notwithstanding

vehicles were sold/gifted, these vehicles continued to stand

in the names of the dependent wife and son of KK – In

consequence, upon considering the provisions of the Motor

Vehicles Act, 1988 and the decision of the Supreme Court in

Naveen Kumar v. Vijay Kumar and others [2018] 2 SCR 572,

it was held that vehicles were owned by the dependent wife

and son of KK but they were not disclosed in the Affidavit in

Form No. 26 filed by him – Correctness:

Held: The High Court overlooked the fact that the above judgment

(Naveen Kumar v. Vijay Kumar and others) was rendered in the

context of and for the purposes of the Act of 1988 and not for

general application – The judgment itself made it clear that despite

the sale/transfer of the vehicle in question, a claimant or claimants

should not be made to run from pillar to post to find out who was

the owner of the vehicle as on the date of the accident, if the

sale/transfer was not carried out in their books by the authorities

concerned by registering the name of the subsequent owner, be

it for whatever reason – Further, vehicles being goods, their sale

would be covered by the provisions of the Sale of Goods Act, 1930,

and the same make it clear that conveyance of ownership of the

vehicle would stand concluded upon execution of the document of

sale/transfer and registration of the new owner by the authorities

concerned would be a post-sale event – Mere failure to get

registered the name of the new owner of an already registered

vehicle does not mean that the sale/gift transaction would stand

invalidated and such a vehicle, despite being physically handed

over to the new owner, cannot, by any stretch of imagination, be 

396 [2024] 4 S.C.R.

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treated as still being in the possession and control of the former

owner.[Paras 23, 27]

Representation of the People Act, 1951 – ss. 100(1)(b), 100(d)

(i) – Election – Filing of nomination – Submission of material

particulars – Non-submission of the ‘No Dues Certificate’

in respect of the Government accommodation occupied by

appellant during his earlier tenure as an MLA was held against

him – High Court held that his nomination was defective and

in consequence, the acceptance by the Returning Officer was

improper – Correctness:

Held: In the case on hand, it is not in dispute that there were

no actual outstanding dues payable by KK in relation to the

government accommodation occupied by him earlier – His failure

in disclosing the fact that he had occupied such accommodation

and in filing the ‘No Dues Certificate’ in that regard, with his

nomination form, cannot be said to be a defect of any real import

– More so, as he did submit the relevant documents of 2014

after an objection was raised before the Returning Officer – His

explanation that he submitted such Certificates in the year 2014

when he stood for re-election as an MLA is logical and worthy

of acceptance – The most important aspect to be noted is that

there were no actual dues and the failure of KK to disclose that

he had been in occupation of government accommodation during

the years 2009 to 2014 cannot be treated as a defect that is of

substantial character so as to taint his nomination and render its

acceptance improper. [Para 42]

Representation of the People Act, 1951 – Election – Filing of

nomination – Non-disclosure of taxes due – The High Court

held that non-disclosure of the taxes due and payable by KK

and his wife was a defect of substantial character and the

same tainted his nomination:

Held: The failure on the part of KK to disclose the dues of municipal/

property taxes payable by him and his wife, the same cannot be

held to be a non-disclosure, inasmuch as he did disclose the

particulars of such dues in one part of his Affidavit but did not do

so in another part. [Para 49]

Representation of the People Act, 1951 – Election – Filing

of nomination – Whether every defect in the nomination can

straightaway termed to be of such character as to render its

acceptance improper:

[2024] 4 S.C.R. 397

Karikho Kri v. Nuney Tayang and Another

Held: Every defect in the nomination cannot straightaway be termed

to be of such character as to render its acceptance improper and

each case would have to turn on its own individual facts, insofar

as that aspect is concerned – This Court has always drawn a

distinction between non-disclosure of substantial issues as opposed

to insubstantial issues, which may not impact one’s candidature or

the result of an election – The very fact that Section 36(4) of the Act

of 1951 speaks of the Returning Officer not rejecting a nomination

unless he is of the opinion that the defect is of a substantial nature

demonstrates that this distinction must always be kept in mind and

there is no absolute mandate that every non-disclosure, irrespective

of its gravity and impact, would automatically amount to a defect

of substantial nature, thereby materially affecting the result of the

election or amounting to ‘undue influence’ so as to qualify as a

corrupt practice. [Para 40]

Representation of the People Act, 1951 – Voter’s right to know

– Absolute or not:

Held: A blanket proposition that a candidate is required to lay

his life out threadbare for examination by the electorate is not

accepted – His ‘right to privacy’ would still survive as regards

matters which are of no concern to the voter or are irrelevant to

his candidature for public office – In that respect, non-disclosure of

each and every asset owned by a candidate would not amount to

a defect, much less, a defect of a substantial character – It is not

necessary that a candidate declare every item of movable property

that he or his dependent family members owns, unless the same

is of such value as to constitute a sizeable asset in itself or reflect

upon his candidature, in terms of his lifestyle, and require to be

disclosed – Every case would have to turn on its own peculiarities

and there can be no hard and fast or straitjacketed rule as to when

the non-disclosure of a particular movable asset by a candidate

would amount to a defect of a substantial character. [Para 44]

Representation of the People Act, 1951 – s.100(1)(d)(iv) –

Election invalidation under:

Held: In the instant case, the High Court linked all the nondisclosures attributed to KK to s.100(1)(d)(i) of the Act of 1951 but

ultimately concluded that his election stood invalidated u/s. 100(1)

(d)(iv) thereof – There is no discussion whatsoever on what were

the violations which qualified as non-compliance with the provisions

of either the Constitution or the Act of 1951 or the rules and orders 

398 [2024] 4 S.C.R.

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framed thereunder, for the purposes of s.100(1)(d)(iv), and as to

how the same materially affected the result of the election – For

the election petitioner to succeed on such ground, viz., s.100 (1)(d)

(iv), he has not only to plead and prove the breach but also show

that the result of the election, insofar as it concerned the returned

candidate, has been materially affected thereby – Though there

are some general references to non-compliance with particular

provisions of the Act of 1951 and the rules made thereunder, there

are neither adequate pleadings nor proof to substantiate and satisfy

the requirements of s.100(1)(d)(iv) of the Act of 1951 – Therefore,

it is clear that NT (unsuccessful candidate) tied up the improper

acceptance of KK nomination, relatable to s.100(1)(d)(i) of the

Act of 1951, with the non-compliance relatable to s.100(1)(d)(iv)

thereof and he did not sufficiently plead or prove a specific breach

or how it materially affected the result of the election, in so far as

it concerned the returned candidate, KK – It was not open to NT

to link up separate issues and fail to plead in detail and adduce

sufficient evidence in relation to the non-compliance that would

attract s.100(1)(d)(iv) of the Act of 1951 – The finding of the High

Court in that regard is equally bereft of rhyme and reason and

cannot be sustained. [Paras 45, 46, 48]

Case Law Cited

Hari Vishnu Kamath v. Syed Ahmad Ishaque and others

[1955] 1 SCR 1104 : (1954) 2 SCC 881; Association for

Democratic Reforms and another v. Union of India and

others [2024] 3 SCR 417 : WP (C) No. 880 of 2017,

decided on 15.02.2024 – followed.

Naveen Kumar v. Vijay Kumar and others [2018] 2

SCR 572 : (2018) 3 SCC 1; Santosh Yadav v. Narender

Singh [2001] Supp. 4 SCR 545 : (2002) 1 SCC 160;

Harsh Kumar v. Bhagwan Sahai Rawat and others

(2003) 7 SCC 709; Commissioner of Commercial Taxes,

Thiruvananthapuram, Kerala v. K.T.C. Automobiles

[2016] 1 SCR 994 : (2016) 4 SCC 82; Surendra Kumar

Bhilawe v. New India Assurance Co. Ltd. [2020] 7 SCR

39 : (2020) 18 SCC 224; Kisan Shankar Kathore v. Arun

Dattatray Sawant and others [2014] 7 SCR 258 : (2014)

14 SCC 162; Vashist Narain Sharma v. Dev Chandra

and others [1955] 1 SCR 509 : (1954) 2 SCC 32; Kamta

Prasad Upadhyaya v. Sarjoo Prasad Tiwari and others 

[2024] 4 S.C.R. 399

Karikho Kri v. Nuney Tayang and Another

(1969) 3 SCC 622; Arjun Panditrao Khotkar v. Kailash

Kushanrao Gorantyal and others [2020] 7 SCR 180 :

(2020) 7 SCC 1; Madiraju Venkata Ramana Raju v.

Peddireddigari Ramachandra Reddy and others [2018]

9 SCR 164 : (2018) 14 SCC 1; Resurgence India v.

Election Commission of India and another [2013] 9 SCR

360 : (2014) 14 SCC 189; Union of India v. Association

for Democratic Reforms and another [2002] 3 SCR 696 :

(2002) 5 SCC 294; Lok Prahari through its General

Secretary S.N. Shukla v. Union of India and others [2018]

2 SCR 892 : (2018) 4 SCC 699; S. Rukmini Madegowda

v State Election Commission and others [2022] 12 SCR

1 : (2022) SCC OnLine SC 1218; Mairembam Prithviraj

alias Prithviraj Singh v. Pukhrem Sharatchandra Singh

[2016] 9 SCR 687 : (2017) 2 SCC 487; People’s Union

for Civil Liberties (PUCL) and another v. Union of India

and another [2003] 2 SCR 1136 : (2003) 4 SCC 399;

Sambhu Prasad Sharma v. Charandas Mahant [2012]

6 SCR 356 : (2012) 11 SCC 390; Mangani Lal Mandal

v. Bishnu Deo Bhandari [2012] 1 SCR 527 : (2012) 3

SCC 314; L.R. Shivaramagowda and others v. T.M.

Chandrashekar (Dead) by LRs and others [1998] Supp.

3 SCR 241 : (1999) 1 SCC 666 – referred to.

List of Acts

Representation of the People Act, 1951; Constitution of India.

List of Keywords

Election; Nomination; Disclosure of material particulars; Disclosure

of vehicles; Ownership transfer of vehicle; Corrupt practice; Undue

influence; Government accommodation; Non-due certificate;

Defective nomination; Dues of municipal/property taxes; Improper

acceptance; Election invalidation; Voter’s right to know.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4615 of 2023

From the Judgment and Order dated 17.07.2023 of the Gauhati High

Court at Itanagar Bench in Election Petition No. 01 (AP) of 2019

With

Civil Appeal No. 4716 of 2023

400 [2024] 4 S.C.R.

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Appearances for Parties

C.A. Sundaram, Arunabh Chowdhury, Sr. Advs., Simranjeet Singh,

Pulkit Gupta, Gautam Talukdar, Raushal Kumar, Ms. Apurbaa Dutta,

Lovenish Jagdhane, Zafar Inayat, Amol Chitale, Mrs. Pragya Baghel,

Mrs. Ranjeeta Rohatgi, Vishal Banshal, Karma Dorjee, Abhishek

Roy, Dechen W Lachungpa, Advs. for the Appellant.

Dr. Sushil Balwada, Mrs. Pragya Baghel, Ms. Tatini Basu, Boboy

Potsangbam, Gamso Billai, Kumar Shashank, Byrapaneni Suyodhan,

Advs. for the Respondents.

Judgment / Order of the Supreme Court

Judgment

Sanjay Kumar, J

1. In the year 2019, Karikho Kri, an independent candidate, Dr.

Mohesh Chai, candidate of the Bharatiya Janata Party, and Nuney

Tayang, candidate of the Indian National Congress, contested

the election to the Arunachal Pradesh Legislative Assembly from

44 Tezu (ST) Assembly Constituency. The election was held on

11.04.2019 and Karikho Kri emerged victorious with 7538 votes,

while Dr. Mohesh Chai secured 7383 votes and Nuney Tayang

secured 1088 votes.

2. Nuney Tayang filed Election Petition No. 01(AP) of 2019 before the

Itanagar Bench of the High Court of Assam, Nagaland, Mizoram

and Arunachal Pradesh, seeking a declaration that the election of

Karikho Kri was void on the grounds mentioned in Sections 100(1)

(b), 100(1)(d)(i) and 100(1)(d)(iv) of the Representation of the

People Act, 1951 (for brevity, ‘the Act of 1951’). He also sought a

consequential declaration that he stood duly elected from the said

constituency.

3. By judgment and order dated 17.07.2023, a learned Judge of the

Itanagar Bench of the High Court allowed the election petition in

part, declaring the election of Karikho Kri void under Sections 100(1)

(b), 100(1)(d)(i) and 100(1)(d)(iv) of the Act of 1951, but rejecting

the prayer of Nuney Tayang to declare him duly elected, as he

had not led any evidence to prove the allegations levelled by him

against Dr. Mohesh Chai, the candidate with the second highest

number of votes.

[2024] 4 S.C.R. 401

Karikho Kri v. Nuney Tayang and Another

4. Aggrieved thereby, Karikho Kri filed Civil Appeal No. 4615 of 2023

before this Court and Nuney Tayang filed Civil Appeal No. 4716 of

2023. These appeals were filed under Section 116A of the Act of 1951

5. While ordering notice in both the appeals on 31.07.2023, in exercise

of power under Section 116B(2) of the Act of 1951, this Court directed

that an election should not be held for the subject Constituency

which was represented by Karikho Kri and permitted him to enjoy

all the privileges as a Member of the House and of the constituted

committees but restrained him from casting his vote on the floor of

the House or in any of the committees wherein he participated as

an MLA.

6. Thereafter, during the course of the hearing of these appeals, Karikho

Kri filed I.A. No. 73161 of 2024, as a fresh schedule for election to

the Legislative Assembly of the State of Arunachal Pradesh was

notified on 16.03.2024 and he wished to contest in the election that

is proposed to be held on 19.04.2024. He sought leave to contest

as a candidate in the upcoming assembly election in the State of

Arunachal Pradesh during the pendency of this appeal. By order

dated 20.03.2024, this Court opined that a strong prima facie case

had been made out by him and, in the light of the said fact, stayed

the operation of the impugned judgment. This Court also made it

clear that any steps taken by Karikho Kri in view of the stay order

would be subject to the final decision that would be taken upon

conclusion of the hearing of these appeals.

7. In his election petition, Nuney Tayang claimed that the nomination

submitted by Karikho Kri was improperly accepted by the Returning

Officer, Tezu, as he did not disclose material particulars in his Affidavit

filed in Form No.26 appended to the Conduct of Elections Rules,

1961. The High Court framed nine issues for determination in the

election petition and ultimately held against Karikho Kri on Issue

Nos. 1 (in part), 4, 5, 6 (in part), 7 and 8. Issue No.9 pertained to the

relief claimed by Nuney Tayang. The relevant ‘Issues’ read as under:

‘1. Whether there has been a non-disclosure of

ownership of Hero Honda CD Dawn Motorcycle

owned by the returned candidate, Shri Karikho

Kri bearing registration No. AR-11-2446; Kinetic

Zing Scooty owned by the wife of the returned

candidate, Smti. Bagilu Kri bearing registration No. 

402 [2024] 4 S.C.R.

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AR-11-4474; Van, Maruti Omni Ambulance owned

by the wife of the returned candidate, Smti. Bagilu

Kri bearing registration No. AR-11A-3100 and TVS

Star City Motorcycle owned by Shri Goshinso Kri,

the son of the returned candidate Shri Karikho Kri

bearing registration No. AR- 11-6581, as is required

to be disclosed under Clause 7(vi) of the Conduct

of Election Rules, 1961, rendering the nomination of

the returned candidate invalid?

4. Whether there has been a non-submission of no

dues certificate with regard to Electricity Charges

required to be submitted under Clause 8(ii)(b) of

Form No. 26 of the Conduct of Election Rules, 1961,

as the respondent No. 1 was in occupation of MLA

Cottage No. 1 at ‘E’ Sector, Itanagar, from the year,

2009- 2014, while the respondent No. 1 was an MLA

of Tezu (ST) Assembly Constituency during the year,

2009-2014?

5. Whether the statements made by the respondent No.

1 about the liability of himself and his wife in respect

of Municipal Tax, Property Tax, due and grand total of

all govt. dues against Serial No. 6 & 8 of the table in

Para-8(A) of the affidavit in Form No. 26 appended

to the nomination paper of the respondent No. 1

has rendered the nomination of respondent No. 1,

defective?

6. Whether the non-disclosure of assets both movable

and immovable belonging to the respondent No. 1,

his wife, his mother and his two sons in the affidavit

in Form No. 26 appended to the nomination paper

amounted to commission of corrupt practice of undue

influence within the meaning of Section 123(2) of the

Representation of the People Act, 1951?

7. Whether the election of respondent No. 1 to the

44- Tezu(ST) Assembly Constituency is liable to

be declared void under Section 100(1)(d)(i) of the

Representation of the People Act, 1951?

[2024] 4 S.C.R. 403

Karikho Kri v. Nuney Tayang and Another

8. Whether the nature of non-disclosure alleged by the

Election petitioner is of a substantial nature effecting

the election of the returned candidate/respondent

No. 1?

9. What consequential relief the petitioner is entitled

to, if any?’

8. Nuney Tayang examined 7 witnesses, including himself as PW7.

Karikho Kri examined 39 witnesses, including himself as DW1A. Dr.

Mohesh Chai did not choose to contest the case before the High Court,

despite service of notice. Before us, however, he is duly represented

by learned counsel and also filed his replies in both the appeals.

9. The High Court held against Karikho Kri on Issue No 1, in relation to

three out of the four vehicles, viz., the Kinetic Zing Scooty bearing

No. AR-11/4474 and the Maruti Omni Van bearing No. AR-11A/3100,

both registered in the name of Bagilu Kri, his wife, and the TVS Star

City Motorcycle bearing No. AR-11/6851, registered in the name of

Goshinso Kri, his second son. The High Court was of the opinion that,

notwithstanding the sale of the Kinetic Zing Scooty bearing No. AR11/4474 in 2009 and the Maruti Omni Van bearing No. AR-11A/3100

in the year 2017 and the gifting of the TVS Star City Motorcycle

bearing No. AR-11/6851 in 2014, these vehicles continued to stand

in the names of Bagilu Kri and Goshinso Kri, the dependent wife

and son of Karikho Kri, on the relevant date. Upon considering the

provisions of the Motor Vehicles Act, 1988 (for brevity, ‘the Act of

1988’) and the decision of this Court in Naveen Kumar vs. Vijay

Kumar and others1

, the High Court concluded that the person in

whose name the motor vehicle stood registered should be treated as

the owner thereof. In consequence, it was held that, as on the date

of presentation of his nomination on 22.03.2019 and its scrutiny on

26.03.2019, the above three vehicles were owned by the dependent

wife and son of Karikho Kri but they were not disclosed in the Affidavit

in Form No. 26 filed by him.

10. On Issue No. 4 with regard to non-submission of a ‘No Dues

Certificate’ in the context of electricity and water charges, etc., that

was required to be submitted under Clause 8(ii)(B) of Form No. 26,

1 [2018] 2 SCR 572 : (2018) 3 SCC 1

404 [2024] 4 S.C.R.

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the High Court noted that Karikho Kri had occupied government

accommodation in MLA Cottage No.1 at ‘E’ Sector, Itanagar, from

2009 to 2014, as the MLA of Tezu (ST) Assembly Constituency during

those years. According to Karikho Kri, he lost the election in 2014

and vacated the said accommodation. He claimed that when he

filed his nomination for the Assembly Election in 2014, he obtained

a ‘No Dues Certificate’ after clearing the dues and submitted it. As

there were no outstanding dues thereafter and he did not occupy

government accommodation, he stated that he did not disclose the

same. As Karikho Kri admitted such non-disclosure in his Affidavit in

Form No. 26, the High Court held against him on this count.

11. As regards Issue No. 5, pertaining to the liability of Karikho Kri and

his wife in respect of their dues of municipal and property taxes,

the High Court found that Karikho Kri had disclosed the taxes due

and payable by him and his wife in one part of the Affidavit in Form

No.26 submitted by him, but failed to do so in another part thereof.

He disclosed the dues in Part A, Clause 8 (vi) and (viii), but failed to

disclose it in Clause 9 in Part B. Though the High Court held against

Karikho Kri even on this count, Mr. Arunabh Chowdhury, learned

senior counsel, appearing for Nuney Tayang, fairly stated that he

would not be pressing this ground as there was disclosure of the

dues at least in one part of the Affidavit in Form No. 26.

12. As regards Issue No. 6, i.e., whether non-disclosure of the three

vehicles, registered in the names of his dependent wife and second

son, by Karikho Kri in his Affidavit in Form No. 26 amounted to

commission of a corrupt practice as per Section 123(2) of the Act

of 1951, the High Court referred to case law and held that such

non-disclosure amounted to a corrupt practice within the meaning

of Section 123(2) of the Act of 1951.

13. The High Court then considered Issue No. 7, i.e., whether the election

of Karikho Kri was liable to be declared void under Section 100(1)

(d)(i) of the Act of 1951 and opined that when the nomination of the

returned candidate was shown to have been improperly accepted

by the Returning Officer, there is no necessity to further prove that

the election was ‘materially affected’. As the High Court was of the

opinion that the nomination of Karikho Kri had, in fact, been improperly

accepted by the Returning Officer, Tezu, his election was held liable

to be declared void under Section 100(1)(d)(i) of the Act of 1951.

[2024] 4 S.C.R. 405

Karikho Kri v. Nuney Tayang and Another

14. On Issue No. 8 - as to whether the non-disclosures by Karikho Kri were

of a substantial nature affecting his election, the High Court observed

that disclosure of information as per Form No. 26 of the Conduct of

Election Rules, 1961, was fundamental to the concept of free and fair

elections and, therefore, the solemnity thereof could not be ridiculed

by offering incomplete information or suppressing material information,

resulting in disinformation and misinformation to the voters.

15. Coming to Issue No. 9, i.e., as to what consequential relief Nuney

Tayang would be entitled to, if any, the High Court noted that Nuney

Tayang had secured the least number of votes out of the three

candidates and though he made allegations to the effect that Dr.

Mohesh Chai had failed to disclose the properties belonging to his

mother in his Affidavit in Form No. 26, the High Court found that Nuney

Tayang had failed to lead any evidence in proof of this statement

and, as such, there was no material to hold that Dr. Mohesh Chai’s

mother was even his dependent. On that basis, the High Court held

that no judgment could be pronounced against Dr. Mohesh Chai,

solely on the basis of the pleadings and allegations made by Nuney

Tayang in his election petition. In consequence, Nuney Tayang was

held disentitled to relief by way of a declaration that he had been

duly elected from 44 Tezu (ST) Assembly Constituency.

16. It is well-settled that the success of a winning candidate at an

election should not be lightly interfered with (See Santosh Yadav

vs. Narender Singh2 and Harsh Kumar vs. Bhagwan Sahai Rawat

and others3

). The issue before us presently is as to the validity of

the High Court’s findings that the grounds under Sections 100(1)(b),

100(1)(d)(i) and 100(1)(d)(iv) of the Act of 1951 were established,

warranting invalidation of the election of Karikho Kri. Further, the

finding of the High Court on Issue No. 6, that Karikho Kri committed

a ‘corrupt practice’ within the meaning of Section 123(2) of the Act

of 1951 also requires to be examined.

17. Section 33 of the Act of 1951 deals with ‘presentation of nomination

papers and the requirements for a valid nomination’. Scrutiny of such

nominations is undertaken by the Returning Officers under Section 36

of the Act of 1951. To the extent relevant, Section 36 reads as under:

2 [2001] Supp. 4 SCR 545 : (2002) 1 SCC 160

3 (2003) 7 SCC 709

406 [2024] 4 S.C.R.

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‘36. Scrutiny of nomination:-

‘1.  On the date fixed for the scrutiny of nominations under

section 30, the candidates, their election agents, one

proposer of each candidate, and one other person duly

authorised in writing by each candidate but no other person,

may attend at such time and place as the returning officer

may appoint; and the returning officer shall give them all

reasonable facilities for examining the nomination papers

of all candidates which have been delivered within the time

and in the manner laid down in section 33.

2.  The returning officer shall then examine the nomination

papers and shall decide all objections which may be made

to any nomination and may, either on such objection or

on his own motion, after such summary inquiry, if any, as

he thinks necessary, reject any nomination on any of the

following grounds:—

(a) ….. or

(b) ….. or

(c) …..

3  .…..

4.  The returning officer shall not reject any nomination

paper on the ground of any defect which is not of a

substantial character.

5. …..

6  The returning officer shall endorse on each nomination

paper his decision accepting or rejecting the same and, if

the nomination paper is rejected, shall record in writing a

brief statement of his reasons for such rejection.

7.  …..

8.  Immediately after all the nomination papers have been

scrutinized and decisions accepting or rejecting the same

have been recorded, the returning officer shall prepare a list

of validly nominated candidates, that is to say, candidates

whose nominations have been found valid, and affix it to

his notice board.

[2024] 4 S.C.R. 407

Karikho Kri v. Nuney Tayang and Another

18. In terms of Section 36(4) above, a Returning Officer is under a

mandate not to reject a nomination paper for a defect unless it is of

substantial character. Significantly, Nuney Tayang raised objections

to the candidature of Karikho Kri by way of his written representation

dated 26.03.2019. Therein, he raised the issue of non-submission of

a ‘No Dues Certificate’ in respect of the government accommodation

occupied by Karikho Kri during his tenure as an MLA from 2009 to

2014. He also raised the issue of non-disclosure of the vehicles,

mentioned in Issue No. 1. By his reply dated 26.03.2019, Karikho

Kri informed the Returning Officer, Tezu, that the vehicles, viz., the

Kinetic Zing Scooty and the Maruti Omni Van standing in the name

of his wife had already been disposed of as was the TVS Star City

Motorcycle standing in the name of his dependent second son, which

had been gifted away. As regards the non-submission of a ‘No Dues

Certificate’, Karikho Kri asserted that there were no outstanding

dues against any government accommodation in his name. Karikho

Kri submitted documents with his explanation, including those

pertaining to the transfer of the vehicles in question as well as the

‘No Dues Certificates’ of 2014. Thereafter, Karikho Kri filed before

the High Court, Certificates issued in 2019 by the Bharat Sanchar

Nigam Limited; the Department of Power, Government of Arunachal

Pradesh; and the Legislative Assembly Secretariat, Arunachal

Pradesh, confirming that there were no outstanding dues. In effect

and in fact, there were no dues payable by Karikho Kri in relation to

the Government accommodation occupied by him earlier.

19. In any event, it appears that the Returning Officer concerned, being

satisfied with the explanation and documents submitted by Karikho

Kri, accepted his nomination. No doubt, this preliminary exercise on

the part of the Returning Officer did not preclude the Election Tribunal,

viz., the High Court, from examining as to whether the acceptance

of Karikho Kri’s nomination was improper and, in consequence,

whether it would have an impact on his election under the relevant

provisions of the Act of 1951. Section 100(1) thereof enumerates

the grounds on which an election can be invalidated. To the extent

relevant, it reads as under:

‘100. Grounds for declaring election to be void:-

(1) Subject to the provisions of sub-section (2) if the High

Court is of opinion—

408 [2024] 4 S.C.R.

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(a) …..; or

(b) that any corrupt practice has been committed by a

returned candidate or his election agent or by any other

person with the consent of a returned candidate or his

election agent; or

(c)…..; or

(d) that the result of the election, in so far as it concerns

a returned candidate, has been materially affected—

(i) by the improper acceptance of any nomination,

or

(ii) by any corrupt practice committed in the interests

of the returned candidate by an agent other than

his election agent, or

(iii) by the improper reception, refusal or rejection

of any vote or the reception of any vote which

is void, or

(iv) by any non-compliance with the provisions of

the Constitution or of this Act or of any rules or

orders made under this Act, the High Court shall

declare the election of the returned candidate

to be void.’

20. The High Court held against Karikho Kri not only under Sections

100(1)(d)(i) and (iv) but also under Section 100(1)(b) of the Act of

1951, as it was of the opinion that his failure to disclose the three

vehicles, that still stood registered in the names of his dependent

family members, amounted to a corrupt practice. Insofar as Section

100(1)(b) of the Act of 1951 is concerned, the requirement thereof

for the purpose of invalidating the election of the returned candidate

is that the High Court must form an opinion that a ‘corrupt practice’

was committed by the returned candidate or his election agent or any

other person with the consent of the returned candidate or his election

agent. Section 123 of the Act of 1951 inclusively defines ‘corrupt

practices’, by stating that what have been enumerated thereunder

shall be deemed to be corrupt practices for the purposes of the Act

of 1951. Insofar as the present case is concerned, Section 123(2)

of the Act of 1951 is of relevance. This provision reads as under:

[2024] 4 S.C.R. 409

Karikho Kri v. Nuney Tayang and Another

‘123. Corrupt practices.—

The following shall be deemed to be corrupt practices for

the purposes of this Act:—

……

(2) Undue influence, that is to say, any direct or indirect

interference or attempt to interfere on the part of the

candidate or his agent, or of any other person with the

consent of the candidate or his election agent, with the

free exercise of any electoral right:

……’

21. The High Court opined that non-disclosure of the Kinetic Zing

Scooty and the Maruti Omni Van that had belonged to Bagilu Kri

and the TVS Star City Motorcycle that had belonged to Goshinso

Kri, the dependent wife and son of Krikho Kri, was sufficient in itself

to constitute ‘undue influence’, thereby attracting Section 123(2) of

the Act of 1951. However, what is of significance is that the High

Court did not doubt that these vehicles had been sold or gifted long

before the submission of the nomination by Karikho Kri in 2019.

This is clear from the observations in Para 13 (xiii) of the judgment,

wherein the High Court observed: ‘….at the time of presentation of

nomination paper of respondent No. 1, and on the date of scrutiny of

the nomination paper on 26.03.2019, notwithstanding the aforesaid

vehicles were gifted/sold to other persons by Smti. Bagilu Kri, wife of

respondent No. 1 as well as Shri. Goshinso Kri, son of respondent No.

1; it has now become imperative to decide as to who was the owner

of the aforesaid vehicles at the time presentation of the nomination

paper by the respondent No. 1, and on the date of scrutiny of the

nomination paper on 26.03.2019’. This finding of the High Court has

attained finality as Nuney Tayang did not choose to challenge the

same before this Court.

22. Though it appears that the three vehicles in question still remained

registered in the names of the wife and son of Karikho Kri, the question

that arises is as to whether non-disclosure of such vehicles justified

the attributing of a corrupt practice to Karikho Kri and the negating

of his election on that ground. The High Court assumed that the

non-disclosure of a vehicle registered in the name of a candidate or

his dependent family members was sufficient in itself to constitute 

410 [2024] 4 S.C.R.

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undue influence. In this context, the High Court placed reliance on

the provisions of the Act of 1988 and the decision of this Court in

Naveen Kumar (supra). Section 2(30) of the Act of 1988 defines

the owner of a vehicle as under:

‘ “owner” means a person in whose name a motor vehicle

stands registered, and where such person is a minor, the

guardian of such minor, and in relation to a motor vehicle

which is the subject of a hire-purchase, agreement, or an

agreement of lease or an agreement of hypothecation, the

person in possession of the vehicle under that agreement;’

In Naveen Kumar (supra), a 3-Judge Bench of this Court was

dealing with the issue as to who would be the owner of an offending

vehicle in the context of the Act of 1988 when a claim arises from

an accident involving the said vehicle. ‘Owner’, as defined under

Section 2(30) of the Act of 1988, was considered and it was opined

that the person in whose name a vehicle stands registered would

be the owner of the vehicle for the purposes of the Act. Reference

was made to Section 50 of the Act of 1988, which deals with transfer

of ownership, and to various earlier decisions in that regard and it

was observed thus:

‘13. The consistent thread of reasoning which emerges

from the above decisions is that in view of the definition

of the expression “owner” in Section 2(30), it is the person

in whose name the motor vehicle stands registered who,

for the purposes of the Act, would be treated as the

“owner”..……In a situation such as the present where the

registered owner has purported to transfer the vehicle but

continues to be reflected in the records of the Registering

Authority as the owner of the vehicle, he would not stand

absolved of liability. Parliament has consciously introduced

the definition of the expression “owner” in Section 2(30),

making a departure from the provisions of Section 2(19) in

the earlier 1939 Act. The principle underlying the provisions

of Section 2(30) is that the victim of a motor accident or, in

the case of a death, the legal heirs of the deceased victim

should not be left in a state of uncertainty. A claimant for

compensation ought not to be burdened with following

a trail of successive transfers, which are not registered 

[2024] 4 S.C.R. 411

Karikho Kri v. Nuney Tayang and Another

with the Registering Authority. To hold otherwise would

be to defeat the salutary object and purpose of the Act.

Hence, the interpretation to be placed must facilitate the

fulfilment of the object of the law. In the present case, the

first respondent was the “owner” of the vehicle involved

in the accident within the meaning of Section 2(30). The

liability to pay compensation stands fastened upon him.

Admittedly, the vehicle was uninsured.’

(emphasis is ours)

23. Notably, the High Court overlooked the fact that the above judgment

was rendered in the context of and for the purposes of the Act of

1988 and not for general application. The judgment itself made

it clear that despite the sale/transfer of the vehicle in question, a

claimant or claimants should not be made to run from pillar to post

to find out who was the owner of the vehicle as on the date of the

accident, if the sale/transfer was not carried out in their books by

the authorities concerned by registering the name of the subsequent

owner, be it for whatever reason. Further, vehicles being goods,

their sale would be covered by the provisions of the Sale of Goods

Act, 1930 (for brevity, ‘the Act of 1930’), and the same make it clear

that conveyance of ownership of the vehicle would stand concluded

upon execution of the document of sale/transfer and registration of

the new owner by the authorities concerned would be a post-sale

event. Section 2(7) of the Act of 1930 defines goods, inter alia, to

mean every kind of movable property, other than actionable claims

and money. Chapter III of the Act of 1930 is titled ‘Effects of the

Contract’ and ‘Transfer of property as between seller and buyer’.

Section 18 therein states that where there is a contract for the sale

of unascertained goods, no property in the goods is transferred to

the buyer unless and until the goods are ascertained. Section 19,

however, states that the property passes when intended to pass and

elaborates that, where there is a contract for the sale of specific or

ascertained goods, the property in them is transferred to the buyer

at such time as the parties to the contract intend it to be transferred.

24. In Commissioner of Commercial Taxes, Thiruvananthapuram,

Kerala vs. K.T.C. Automobiles4

, this Court observed that registration

4 [2016] 1 SCR 994 : (2016) 4 SCC 82

412 [2024] 4 S.C.R.

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of a motor vehicle is a post-sale event but the question would arise

as to when the property in the motor vehicle actually passed to the

buyer. That was a case involving the first sale of a motor vehicle by

the dealer to the first owner and is, therefore, distinguishable from

the subsequent sale of a vehicle, as in the case on hand. It was

observed therein that registration of a motor vehicle is a post-sale

event but only after obtaining valid registration under the Act of 1988,

a purchaser would get entitlement to use the vehicle in a public

place. It was observed that the purchaser, as an owner under the Act

of 1988, was obliged to obtain the certificate of registration, which

alone would entitle him to enjoy the possession of the vehicle by

using it in public places after meeting the other statutory obligations

of insurance, etc. This Court rejected the contention that motor

vehicles would be ‘unascertained goods’ till their engine number or

chassis number is entered in the Certificate of Registration, as the

sale invoice itself would disclose such particulars, so that the owner

of the vehicle may apply for registration of that specific vehicle in

his name. However, owing to the statutory provisions governing

motor vehicles, this Court held that an intending owner or buyer of

a motor vehicle cannot ascertain the particulars of the vehicle for

appropriating it to the contract of sale till its possession is handed

over to him after observing the requirements of the Act of 1988 and

the rules framed thereunder and such possession can be given

only at the registration office immediately preceding the registration.

Owing to the aforestated legal position, this Court held that, prior

to getting possession of the motor vehicle, the intending purchaser/

owner would not have a claim over any ‘ascertained motor vehicle’.

The observations in this judgment would, however, have to be

understood in the context of the first sale of a vehicle by the dealer,

i.e., where such vehicle has no registration whatsoever as opposed

to the subsequent sale of a registered vehicle.

25. Presently, insofar as the Scooty bearing No. AR-11/4474 is concerned,

it stood in the name of Bagilu Kri but Md. Nizammudin (DW5)

deposed that he had taken this vehicle as scrap and sold it as such

to Promod Prasad (DW6). In turn, Promod Prasad (DW6) confirmed

that he bought the Scooty as scrap from Md. Nizammudin (DW5).

During their cross-examination, nothing was elicited from these

witnesses to doubt their claims. However, letter dated 20.09.2019

addressed by the District Transport Officer, Lohit District, Tezu, 

[2024] 4 S.C.R. 413

Karikho Kri v. Nuney Tayang and Another

to Bagilu Kri, manifests that the registration of the Scooty in her

name stood cancelled only at that time. The taxes in respect of this

Scooty were paid till 26.03.2022, as borne out by Treasury Challan

No. 4806 dated 30.08.2019. Though much was argued about this

payment of taxes and the fact that the receipt was issued in the

name of Bagilu Kri, we are not inclined to give any weightage to

it. The payment was made after the filing of the election petition

and any person could have done so. The receipt therefor would

automatically be generated in the name of the registered owner. We

may also note that in relation to the other two vehicles in question,

there were actual documents of conveyance and also proof of the

requisite forms prescribed under the Act of 1988 being duly filled in

and issued by Bagilu Kri and Goshinso Kri. Form No. 29, relating

to notice of ownership transfer of a vehicle by the registered owner,

viz., the transferor, was issued in respect of each of these vehicles

but despite the same, the transferees did not do the needful to get

their own names registered as the owners.

26. In Surendra Kumar Bhilawe vs. New India Assurance Co. Ltd.5

,

the issue before this Court was as to whether an insurance company

would be liable to cover the claim arising out of an accident on the

ground that the vehicle was sold to another long before the date of

the accident but the insured continued to be the registered owner

of the vehicle. Referring to the judgment of this Court in Naveen

Kumar (supra), it was observed that the policy of insurance was a

comprehensive policy which covered third-party risks as well and,

therefore, the insurer could not repudiate one part of the policy with

regard to reimbursing the owner for losses when it could not evade

liability to third parties under the same contract of insurance. In view

of the definition of ‘owner’ in Section 2(30) of the Act of 1988, this

Court observed that the registered owner of the truck, on the date

of the accident, was the insured and, therefore, the insurer could not

avoid its liability for the losses suffered by the owner, on the ground

of transfer of ownership. This Court held that it is difficult to accept

that a person who transferred the ownership of a goods vehicle, on

receipt of consideration, would not report the transfer or apply for

transfer of registration and thereby continue to incur the risks and

liabilities of ownership of the said vehicle under the provisions of law,

5 [2020] 7 SCR 39 : (2020) 18 SCC 224

414 [2024] 4 S.C.R.

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including the Act of 1988. This Court further observed that it is equally

incredible that an owner of a vehicle who has paid consideration

to acquire it would not insist on transfer of the permit and thereby

expose himself to the penal consequences of operating a goods

vehicle without a valid permit. This Court, accordingly, held that

the registered owner continues to remain the owner and when the

vehicle is insured in the name of such registered owner, the insurer

would remain liable notwithstanding the transfer. This judgment is

clearly inapplicable to the case on hand as it dealt with the liability of

an insurer in the event of an accident involving the vehicle. Further,

as already noted, the vehicles in question were transferred and

the requisite forms, insofar as the transferor was concerned, were

filled up and issued but it was the transferees who failed to get the

vehicles transferred in their own names.

27. Mere failure to get registered the name of the new owner of an already

registered vehicle does not mean that the sale/gift transaction would

stand invalidated and such a vehicle, despite being physically handed

over to the new owner, cannot, by any stretch of imagination, be treated

as still being in the possession and control of the former owner. Once

it is accepted that the three vehicles in question were either gifted or

sold before the filing of the nomination by Karikho Kri, the said vehicles

cannot be considered to be still owned by Karikho Kri’s wife and son

for purposes other than those covered by the Act of 1988. However,

the High Court did not take note of this distinguishing factor in the case

on hand. In Kisan Shankar Kathore vs. Arun Dattatray Sawant and

others6

, the vehicle, details of which had been suppressed by the

returned candidate, was actually owned and possessed by his wife

and such suppression was, accordingly, held against him. Presently,

the High Court itself concluded that the three vehicles in question were

transferred, be it by way of sale or gift. The vehicles were, therefore, not

owned and possessed in praesenti by the dependent family members

of Karikho Kri at the time of the filing of his nomination. This point of

distinction was completely lost sight of by the High Court but, in our

considered opinion, it made all the difference.

28. Therefore, non-disclosure of the three vehicles in question could not

be held against Karikho Kri in the light of the aforestated analysis.

6 [2014] 7 SCR 258 : (2014) 14 SCC 162

[2024] 4 S.C.R. 415

Karikho Kri v. Nuney Tayang and Another

Such non-disclosure cannot, by any stretch of imagination, be treated

as an attempt on his part to unduly influence the voters, thereby

inviting the wrath of Section 123(2) of the Act of 1951. We may note

that Karikho Kri had declared the value of the movable assets of

his dependent family members and himself as ₹8,41,87,815/-. The

value of the three vehicles in question, by comparison, would be a

mere miniscule of this figure. In any event, suppression of the value

of these three vehicles would have no impact on the declaration of

wealth by Karikho Kri and such non-disclosure could not be said to

amount to ‘undue influence’.

29. Coming to the next ground, if the acceptance of a nomination is found

to be improper and it materially affects the result of the election in

so far as the returned candidate is concerned, Section 100(1)(d)(i)

of the Act of 1951 would come into play. It would be appropriate and

apposite at this stage for us to take note of precedential law on this

point. In Vashist Narain Sharma vs. Dev Chandra and others7

, a

3-Judge Bench of this Court noted that the burden of proving that

the improper acceptance of a nomination has materially affected the

result of an election would arise in one of three ways: (i) where the

candidate whose nomination was improperly accepted had secured

less votes than the difference between the returned candidate and

the candidate securing the next highest number of votes, (ii) where

the person referred to above secured more votes, or (iii) where

the person whose nomination has been improperly accepted is the

returned candidate himself. It was held that in the first case the

result of the election would not be materially affected because if all

the wasted votes were added to the votes of the candidate securing

the next highest votes, it would make no difference to the result and

the returned candidate would retain the seat. However, in the other

two cases, the result may be materially affected and insofar as the

third case is concerned, it may be readily conceded that such would

be the conclusion.

30. In Hari Vishnu Kamath vs. Syed Ahmad Ishaque and others8

,

a Constitution Bench of 7 Judges considered the scope of enquiry

under Section 100(1)(d) of the Act of 1951. It was observed that the

7 [1955] 1 SCR 509 : (1954) 2 SCC 32

8 [1955] 1 SCR 1104 (1954) 2 SCC 881

416 [2024] 4 S.C.R.

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said provision required, before an order setting aside an election

could be made, that two conditions be satisfied. It must, firstly, be

shown that there has been improper reception or refusal of a vote

or reception of any vote which is void, or non-compliance with the

provisions of the Constitution or the Act of 1951, or any rules or

orders made thereunder, relating to the election or any mistake in

the use of the prescribed form and it must further be shown that, as

a consequence thereof, the result of the election has been materially

affected. The Bench observed that the two conditions are cumulative

and must both be established. It was further observed that the burden

of establishing them is on the person who seeks to have the election

set aside. Reference was also made to Vashist Narain (supra).

31. In Kamta Prasad Upadhyaya vs. Sarjoo Prasad Tiwari and others9

,

another 3-Judge Bench of this Court affirmed the legal position settled

by Vashist Narain (supra). Again, in Arjun Panditrao Khotkar vs.

Kailash Kushanrao Gorantyal and others10, a 3-Judge Bench of

this Court affirmed the view taken in Vashist Narain (supra) that,

where a person whose nomination has been improperly accepted is

the returned candidate himself, it may be readily conceded that the

conclusion has to be that the result of the election was ‘materially

affected’ without their being any necessity to plead and prove the

same.

32. In Madiraju Venkata Ramana Raju vs. Peddireddigari Ramachandra

Reddy and others11, another 3-Judge Bench of this Court affirmed

that if there are more than two candidates and if the nomination of

one of the defeated candidates has been improperly accepted, a

question might arise as to whether the result of the election of the

returned candidate has been materially affected by such improper

reception but that would not be so in the case of challenge to the

election of the returned candidate himself on the ground of improper

acceptance of his nomination.

33. Ergo, if acceptance of the nomination of the returned candidate is

shown to be improper, it would automatically mean that the same

materially affected the result of the election and nothing more needs

9 (1969) 3 SCC 622

10 [2020] 7 SCR 180 : (2020) 7 SCC 1

11 [2018] 9 SCR 164 : (2018) 14 SCC 1

[2024] 4 S.C.R. 417

Karikho Kri v. Nuney Tayang and Another

to be pleaded or proved. However, whether acceptance of the

nomination of Karikho Kri was actually improper is the main issue

that requires to be addressed by us.

34. We may also take note of curial wisdom on the issue as to what

would be the defects that would taint a nomination to the extent of

rendering its acceptance improper. In Resurgence India vs. Election

Commission of India and another12, a 3-Judge Bench of this

Court observed that if the Election Commission accepts nomination

papers in spite of blank particulars therein, it would directly violate

the fundamental right of the citizen to know the criminal antecedents,

assets, liabilities and educational qualifications of the candidate. It was

observed that accepting an affidavit with such blanks would rescind the

verdict in Union of India vs. Association for Democratic Reforms

and another13. In effect, the Bench held that filing of an affidavit

with blank particulars would render the affidavit nugatory. In Kisan

Shankar Kathore (supra), the issue before this Court was whether

non-disclosure of certain government dues in the nomination would

amount to a material lapse impacting the election of the returned

candidate. On facts, this Court found that the non-disclosure of

electricity and municipal dues was not a serious lapse as there was

a dispute raised in the context thereof. Having said so, this Court

clarified that it would depend upon the facts and circumstances of

each case as to whether such non-disclosure would amount to a

material lapse or not. This Court, however, found that there were,

in fact, material lapses by the returned candidate, inasmuch as he

had failed to disclose the bungalow standing in the name of his

wife and also a vehicle owned by her. Further, he had also failed to

disclose his interest/share in a partnership firm which amounted to a

very serious and major lapse. The observations of this Court, in the

context of improper acceptance of his nomination, are of relevance:

‘43.When the information is given by a candidate in

the affidavit filed along with the nomination paper and

objections are raised thereto questioning the correctness

of the information or alleging that there is non-disclosure

of certain important information, it may not be possible

12 [2013] 9 SCR 360 : (2014) 14 SCC 189

13 [2002] 3 SCR 696 : (2002) 5 SCC 294

418 [2024] 4 S.C.R.

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for the Returning Officer at that time to conduct a detailed

examination. Summary enquiry may not suffice. The present

case is itself an example which loudly demonstrates this. At

the same time, it would not be possible for the Returning

Officer to reject the nomination for want of verification about

the allegations made by the objector. In such a case, when

ultimately it is proved that it was a case of non-disclosure

and either the affidavit was false or it did not contain

complete information leading to suppression, it can be held

at that stage that the nomination was improperly accepted.

Ms Meenakshi Arora, learned Senior Counsel appearing

for the Election Commission, rightly argued that such an

enquiry can be only at a later stage and the appropriate

stage would be in an election petition as in the instant

case, when the election is challenged. The grounds stated

in Section 36(2) are those which can be examined there

and then and on that basis the Returning Officer would be

in a position to reject the nomination. Likewise, where the

blanks are left in an affidavit, nomination can be rejected

there and then. In other cases where detailed enquiry is

needed, it would depend upon the outcome thereof, in an

election petition, as to whether the nomination was properly

accepted or it was a case of improper acceptance. Once it

is found that it was a case of improper acceptance, as there

was misinformation or suppression of material i`nformation,

one can state that question of rejection in such a case was

only deferred to a later date. When the Court gives such a

finding, which would have resulted in rejection, the effect

would be same, namely, such a candidate was not entitled

to contest and the election is void. Otherwise, it would be an

anomalous situation that even when criminal proceedings

under Section 125-A of the Act can be initiated and the

selected candidate is criminally prosecuted and convicted,

but the result of his election cannot be questioned. This

cannot be countenanced.’

35. In Lok Prahari through its General Secretary S.N. Shukla vs.

Union of India and others14, this Court observed that non-disclosure

14 [2018] 2 SCR 892 : (2018) 4 SCC 699

[2024] 4 S.C.R. 419

Karikho Kri v. Nuney Tayang and Another

of assets and sources of income of candidates and their associates

would constitute a corrupt practice falling under the heading ‘undue

influence’, as defined under Section 123 (2) of the Act of 1951. In

S. Rukmini Madegowda vs. State Election Commission and

others15, a 3-Judge Bench of this Court observed that a false

declaration with regard to the assets of a candidate, his/her spouse

or dependents, would constitute a corrupt practice irrespective of its

impact on the election of the candidate as it may be presumed that

a false declaration would impact the election.

36. In Mairembam Prithviraj alias Prithviraj Singh vs. Pukhrem

Sharatchandra Singh16, this Court noted that there is a difference

between improper acceptance of the nomination of a returned

candidate as opposed to improper acceptance of the nomination of

any other candidate. It was observed that a mere finding that there

has been an improper acceptance of a nomination would not be

sufficient for a declaration that the election is void under Section

100(1)(d)(i) and there has to be further pleading and proof that

the result of the election of the returned candidate was materially

affected, but there would be no necessity of any such proof in the

event of the nomination of the returned candidate being declared as

having been improperly accepted, especially in a case where there

are only two candidates in the fray.

37. In Association for Democratic Reforms and another vs. Union

of India and others17, a Constitution Bench affirmed that, in terms

of the earlier judgments in Association for Democratic Reforms

and another (supra) and People’s Union for Civil Liberties

(PUCL) and another vs. Union of India and another18, the right

of voters to information, which is traceable to Article 19(1)(a) of the

Constitution, is built upon the jurisprudence that information which

furthers democratic participation must be provided to citizens and

voters have a right to information which would enable them to cast

their votes rationally and intelligently because voting is one of the

foremost forms of democratic participation. It was further observed

15 [2022] 12 SCR 1 : (2022) SCC OnLine SC 1218

16 [2016] 9 SCR 687 : (2017) 2 SCC 487

17 [2024] 3 SCR 417 : W.P. (C) No. 880 of 2017, decided on 15.02.2024

18 [2003] 2 SCR 1136 : (2003) 4 SCC 399

420 [2024] 4 S.C.R.

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that voters have a right to the disclosure of information which is

‘essential’ for choosing the candidate for whom a vote should be cast.

38. In his Affidavit in Form No. 26, Karikho Kri was required to state as

to whether he had been in occupation of accommodation provided by

the Government at any time during the last 10 years before the date

of notification of the current election and, if so, he was to furnish a

declaration to the effect that there were no dues payable in respect

of the said accommodation in relation to rent, electricity charges,

water charges and telephone charges. Karikho Kri, however, failed

to disclose the fact that he had been in occupation of government

accommodation during his tenure as an MLA between 2009 and 2014.

He stated ‘Not applicable’. However, with regard to the declaration

as to there being no dues, he mentioned the date ‘22.03.2019’ and

stated that the dues in respect of rent, electricity charges, water

charges and telephone charges were ‘Nil’. After Nuney Tayang raised

an objection to his candidature on this ground, Karikho Kri filed the

requisite ‘No Due Certificates’ of 2014.

39. However, the High Court was of the opinion that the failure of

Karikho Kri to disclose the factum of his occupying government

accommodation from 2009 to 2014 and his failure to submit the ‘No

Dues Certificate’ in relation to such government accommodation was

sufficient, in itself, to infer that his nomination was defective and,

in consequence, the acceptance thereof by the Returning Officer,

Tezu, was improper.

40. Having considered the issue, we are of the firm view that every

defect in the nomination cannot straightaway be termed to be of

such character as to render its acceptance improper and each case

would have to turn on its own individual facts, insofar as that aspect

is concerned. The case law on the subject also manifests that this

Court has always drawn a distinction between non-disclosure of

substantial issues as opposed to insubstantial issues, which may

not impact one’s candidature or the result of an election. The very

fact that Section 36(4) of the Act of 1951 speaks of the Returning

Officer not rejecting a nomination unless he is of the opinion that the

defect is of a substantial nature demonstrates that this distinction

must always be kept in mind and there is no absolute mandate that

every non-disclosure, irrespective of its gravity and impact, would

automatically amount to a defect of substantial nature, thereby 

[2024] 4 S.C.R. 421

Karikho Kri v. Nuney Tayang and Another

materially affecting the result of the election or amounting to ‘undue

influence’ so as to qualify as a corrupt practice.

41. The decision of this Court in Kisan Shankar Kathore (supra), also

demonstrates this principle, as this Court undertook examination of

several individual defects in the nomination of the returned candidate

and found that some of them were actually insubstantial in character.

This Court noted that two facets required consideration – Whether

there is substantial compliance in disclosing requisite information

in the affidavits filed along with the nomination and whether nondisclosure of information on identified aspects materially affected

the result of the election. This Court observed, on facts, that nondisclosure of the electricity dues in that case was not a serious

lapse, despite the fact that there were dues outstanding, as there

was a bonafide dispute about the same. Similar was the observation

in relation to non-disclosure of municipal dues, where there was

a genuine dispute as to re-valuation and re-assessment for the

purpose of tax assessment. Earlier, in Sambhu Prasad Sharma

vs. Charandas Mahant19, this Court observed that the form of

the nomination paper is not considered sacrosanct and what is

to be seen is whether there is substantial compliance with the

requirement as to form and every departure from the prescribed

format cannot, therefore, be made a ground for the rejection of the

nomination paper.

42. In the case on hand, it is not in dispute that there were no actual

outstanding dues payable by Karikho Kri in relation to the government

accommodation occupied by him earlier. His failure in disclosing

the fact that he had occupied such accommodation and in filing

the ‘No Dues Certificate’ in that regard, with his nomination form,

cannot be said to be a defect of any real import. More so, as he did

submit the relevant documents of 2014 after Nuney Tayang raised

an objection before the Returning Officer. His explanation that he

submitted such Certificates in the year 2014 when he stood for reelection as an MLA is logical and worthy of acceptance. The most

important aspect to be noted is that there were no actual dues and

the failure of Karikho Kri to disclose that he had been in occupation

of government accommodation during the years 2009 to 2014 cannot

19 [2012] 6 SCR 356 : (2012) 11 SCC 390

422 [2024] 4 S.C.R.

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be treated as a defect that is of substantial character so as to taint

his nomination and render its acceptance improper.

43. The High Court opined that the nomination of Karikho Kri was

improperly accepted by the Returning Officer as he had failed

to disclose the three vehicles in question, which continued to be

registered in the name of his dependent family members. Nonsubmission of the ‘No Dues Certificate’ in respect of the government

accommodation occupied by him during his earlier tenure as an MLA

was also held to weigh against him. Lastly, the High Court held that

non-disclosure of the taxes due and payable by Karikho Kri and

his wife was a defect of substantial character and the same tainted

his nomination. In consequence, the High Court concluded that the

acceptance of Karikho Kri’s nomination by the Returning Officer was

improper and as he was the returned candidate, the question of

pleading and proving that such improper acceptance of his nomination

materially affected the result of the election did not arise.

44. Though it has been strenuously contended before us that the voter’s

‘right to know’ is absolute and a candidate contesting the election must

be forthright about all his particulars, we are not inclined to accept

the blanket proposition that a candidate is required to lay his life out

threadbare for examination by the electorate. His ‘right to privacy’

would still survive as regards matters which are of no concern to

the voter or are irrelevant to his candidature for public office. In that

respect, non-disclosure of each and every asset owned by a candidate

would not amount to a defect, much less, a defect of a substantial

character. It is not necessary that a candidate declare every item of

movable property that he or his dependent family members owns,

such as, clothing, shoes, crockery, stationery and furniture, etc., unless

the same is of such value as to constitute a sizeable asset in itself or

reflect upon his candidature, in terms of his lifestyle, and require to

be disclosed. Every case would have to turn on its own peculiarities

and there can be no hard and fast or straitjacketed rule as to when

the non-disclosure of a particular movable asset by a candidate

would amount to a defect of a substantial character. For example, a

candidate and his family who own several high-priced watches, which

would aggregate to a huge figure in terms of monetary value, would

obviously have to disclose the same as they constitute an asset of

high value and also reflect upon his lavish lifestyle. Suppression of

the same would constitute ‘undue influence’ upon the voter as that 

[2024] 4 S.C.R. 423

Karikho Kri v. Nuney Tayang and Another

relevant information about the candidate is being kept away from the

voter. However, if a candidate and his family members each own a

simple watch, which is not highly priced, suppression of the value of

such watches may not amount to a defect at all. Each case would,

therefore, have to be judged on its own facts.

45. So far as the ground under Section 100(1)(d)(iv) of the Act of 1951 is

concerned, the provision requires that the established non-compliance

with the provisions of the Constitution or the Act of 1951 or any rules

or orders made thereunder necessarily has to be shown to have

materially affected the result of the election insofar as it concerns

the returned candidate. Significantly, the High Court linked all the

non-disclosures attributed to Karikho Kri to Section 100(1)(d)(i) of

the Act of 1951 but ultimately concluded that his election stood

invalidated under Section 100(1)(d)(iv) thereof. Surprisingly, there is

no discussion whatsoever on what were the violations which qualified

as non-compliance with the provisions of either the Constitution or

the Act of 1951 or the rules and orders framed thereunder, for the

purposes of Section 100(1)(d)(iv), and as to how the same materially

affected the result of the election.

46. In Mangani Lal Mandal vs. Bishnu Deo Bhandari20, this Court held

that where a returned candidate is alleged to be guilty of non-compliance

with the provisions of the Constitution or the Act of 1951 or any rules

or orders made thereunder and his election is sought to be declared

void on that ground, it is essential for the election petitioner to aver,

by pleading material facts, that the result of the election insofar as

it concerned the returned candidate has been materially affected by

such breach or non-observance. It was further held that it is only on

the basis of such pleading and proof that the Court would be in a

position to form an opinion and record a finding that such breach or

non-compliance has materially affected the result of the election before

election of the returned candidate could be declared void. It was further

observed that mere non-compliance or breach of the Constitution or the

statutory provisions, as stated above, would not result in invalidating

the election of the returned candidate under Section 100 (1)(d)(iv) as

the sine qua non for declaring the election of a returned candidate to

be void on that ground under clause (iv) of Section 100 (1)(d) is further

20 [2012] 1 SCR 527 :(2012) 3 SCC 314

424 [2024] 4 S.C.R.

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proof of the fact that such breach or non-observance has resulted

in materially affecting the election of the returned candidate. For the

election petitioner to succeed on such ground, viz., Section 100 (1)

(d)(iv), he has not only to plead and prove the breach but also show

that the result of the election, insofar as it concerned the returned

candidate, has been materially affected thereby.

47. In L.R. Shivaramagowda and others vs. T.M. Chandrashekar

(Dead) by LRs and others21, a 3-Judge Bench of this Court pointed

out that in order to declare an election void under Section 100(1)

(d)(iv) of the Act of 1951, it is absolutely necessary for the election

petitioner to plead that the result of the election, insofar as it concerned

the returned candidate, has been materially affected by the alleged

non-compliance with the provisions of the Constitution or the Act of

1951 or the rules or orders made thereunder and the failure to plead

such material facts would be fatal to the election petition.

48. However, perusal of the election petition filed by Nuney Tayang

reflects that the only statement made by him in this regard is in

Paragraph 21 and it reads as follows:

‘……Hence, his nomination papers suffer from substantial

and material defects. As such, the result of the election,

insofar as the respondent No.1 is concerned, is materially

affected by the improper acceptance of his nomination

as well as by the non-compliance with the provisions of

the Representation of the People Act, 1951 and the rules

and orders made thereunder, including Section 33(1) of

the Representation of the People Act, 1951, Rule 4A of

the Conduct of Election Rules, 1961 and the orders made

thereunder…...’

Again, in his ‘Ground No. (ii)’, Nuney Tayang stated as under:

‘…….As such, the nomination papers of the respondent

Nos. 1 and 2 were improperly accepted by the Returning

Officer and the result of the election in question, insofar as

it concerns the respondent No.1 the return candidate, as

well as the respondent No.2, has been materially affected

by such improper acceptance of their nominations……’

21 [1998] Supp. 3 SCR 241 : (1999) 1 SCC 666

[2024] 4 S.C.R. 425

Karikho Kri v. Nuney Tayang and Another

Though there are some general references to non-compliance with

particular provisions of the Act of 1951 and the rules made thereunder,

we do not find adequate pleadings or proof to substantiate and satisfy

the requirements of Section 100(1)(d)(iv) of the Act of 1951. Therefore,

it is clear that Nuney Tayang tied up the improper acceptance of

Karikho Kri’s nomination, relatable to Section 100(1)(d)(i) of the Act

of 1951, with the non-compliance relatable to Section 100(1)(d)(iv)

thereof and he did not sufficiently plead or prove a specific breach

or how it materially affected the result of the election, in so far as it

concerned the returned candidate, Karikho Kri. It was not open to

Nuney Tayang to link up separate issues and fail to plead in detail

and adduce sufficient evidence in relation to the non-compliance that

would attract Section 100(1)(d)(iv) of the Act of 1951. The finding of

the High Court in that regard is equally bereft of rhyme and reason

and cannot be sustained.

49. As regards the failure on the part of Karikho Kri to disclose the dues

of municipal/property taxes payable by him and his wife, the same

cannot be held to be a non-disclosure at all, inasmuch as he did

disclose the particulars of such dues in one part of his Affidavit but did

not do so in another part. In any event, as Mr. Arunabh Chowdhury,

learned senior counsel, fairly stated that he would not be pressing

this ground, we need not labour further upon this point.

50. On the above analysis, we hold that the High Court was in error in

concluding that sufficient grounds were made out under Sections

100(1)(b), 100(1)(d)(i) and 100(1)(d)(iv) of the Act of 1951 to invalidate

the election of Karikho Kri and, further, in holding that non-disclosure

of the three vehicles, that still remained registered in the names of

his wife and son as on the date of filing of his nomination, amounted

to a ‘corrupt practice’ under Section 123(2) of the Act of 1951. In

consequence, we find no necessity to independently deal with Civil

Appeal No. 4716 of 2023 filed by Nuney Tayang, in the context of

denial of relief to him by the High Court, or the issues raised by Dr.

Mohesh Chai in the replies filed by him.

51. In the result, Civil Appeal No. 4615 of 2023 filed by Karikho Kri is

allowed, setting aside the Judgment and Order dated 17.07.2023

passed by the Itanagar Bench of the High Court of Assam, Nagaland,

Mizoram and Arunachal Pradesh in Election Petition No.01(AP) of

2019. In consequence, the election of Karikho Kri as the returned 

426 [2024] 4 S.C.R.

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candidate from 44 Tezu (ST) Assembly Constituency of the State of

Arunachal Pradesh is upheld.

As a corollary, Civil Appeal No. 4716 of 2023, filed by Nuney Tayang,

shall stand dismissed.

Pending applications in both the appeals, if any, shall also stand

disposed of.

This decision shall be intimated to the Election Commission of India

and to the Chairman of the Legislative Assembly of the State of

Arunachal Pradesh forthwith, as required by Section 116C(2) of the

Act of 1951.

An authenticated copy of this judgment shall be sent to the Election

Commission of India forthwith.

Parties shall bear their own costs.

Headnotes prepared by: Ankit Gyan Result of the case:

Appeals disposed of.

Lease – Perpetual lease deeds – Demand for unearned increase in the value of the plot at the time of sale, transfer, assignment, or parting with the possession – Perpetual lease deeds of four plots in favour of lessee (M/s. Jaiprakash Associates Pvt Ltd) – Scheme for amalgamation sanctioned by High Court, directing that the properties in the Schedule thereto which included the aforesaid plots shall stand vested in the transferee company (now known as the appellant ) – Demand by respondent-DDA for an unearned increase in the value from the appellant – Justification:

* Author

[2024] 4 S.C.R. 427 : 2024 INSC 273

M/s. Jaiprakash Industries Ltd.

(Presently known as M/s. Jaiprakash Associates Ltd.)

v.

Delhi Development Authority

(Civil Appeal No. 8336 of 2009)

05 April 2024

[Abhay S. Oka* and Pankaj Mithal, JJ.]

Issue for Consideration

High Court had sanctioned the scheme for amalgamation of

M/s. Jaiprakash Associates Pvt Ltd and M/s. Jaypee Rewa

Cement, directing that the properties in the Schedule thereto

which included four plots perpetually leased to M/s. Jaiprakash

Associates Pvt Ltd shall stand vested in M/s. Jaypee Rewa

Cement-transferee (now known as the appellant). Whether

amalgamation amounted to transferring the plots. RespondentDDA’s demand for an unearned increase in the value (i.e.

difference between the premium paid and the market value)

from the appellant, if justified.

Headnotes

Lease – Perpetual lease deeds – Demand for unearned increase

in the value of the plot at the time of sale, transfer, assignment,

or parting with the possession – Perpetual lease deeds of

four plots in favour of lessee (M/s. Jaiprakash Associates

Pvt Ltd) – Scheme for amalgamation sanctioned by High

Court, directing that the properties in the Schedule thereto

which included the aforesaid plots shall stand vested in the

transferee company (now known as the appellant ) – Demand

by respondent-DDA for an unearned increase in the value from

the appellant – Justification:

Held: Perpetual leases put an embargo on the lessee selling,

transferring, assigning or otherwise parting with the possession

of the whole or any part of the commercial plots except with the

previous consent of the lessor in writing – The second proviso

makes it clear that the respondent-DDA, which has stepped into

the shoes of the lessor, will be entitled to recover a portion of the

unearned increase in the value – Further, there was a specific

clause in the order of amalgamation passed by the High Court which 

428 [2024] 4 S.C.R.

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held that the plots stood transferred from the original permanent

lessee to the transferee M/s. Jaypee Rewa Cement Ltd, now

known as M/s. Jaiprakash Associates Ltd-appellant – Relevant

clause II(4)(a) covers all the categories of transfers as it provided

that the lessee shall not sell, transfer, assign or otherwise part with

the possession of the whole or any part of the commercial plots

without the written consent of the lessor – The said clause does not

exclude involuntary transfers – In the facts of the case, it cannot

be said that there was an involuntary transfer, as the transfer was

made based on a petition filed by the lessee and the transferee for

seeking amalgamation – In a sense, this is an act done by them

of their own volition – Nothing illegal in the impugned judgment

dismissing the appeal filed by the appellant against dismissal of

its writ petition. [Paras 6, 8 and 12]

Transfer of Property Act, 1882 – s.5 – “Transfer of property”

defined – High Court had sanctioned the scheme for

amalgamation of M/s. Jaiprakash Associates Pvt Ltd and

M/s. Jaypee Rewa Cement, directing that the properties in

the Schedule thereto which included four plots perpetually

leased to M/s. Jaiprakash Associates Pvt Ltd shall stand

vested in M/s. Jaypee Rewa Cement-transferee (now known

as the appellant) – Plea of the appellant that transfer in this

case was not covered by the transfer defined u/s.5:

Held: Clause II(4)(a) in the perpetual leases was very wide as it not

only covered transfers but also parting with possession – Therefore,

the transfer contemplated by the said clause is much wider than

what is defined u/s.5 – s.5 clarifies that nothing contained therein

shall affect any law for the time being in force in relation to the

transfer of property to or by companies – Therefore, s.5 will be of

no assistance to the appellant. [Para 11]

Case Law Cited

Delhi Development Authority v. Nalwa Sons Investment

Ltd. & Anr. [2019] 6 SCR 783 : (2020) 17 SCC 782 –

referred to.

Indian Shaving Products Limited v. Delhi Development

Authority & Anr. (2001) SCC Online Del 1123 :

2002 1 AD (Del) 175; Vijaya C. Gursahaney v. Delhi

Development Authority & Ors. 1994 SCC Online Del

306 : 1994 II AD (Delhi) 770 – referred to.

[2024] 4 S.C.R. 429

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

List of Acts

Transfer of Property Act, 1882.

List of Keywords

Lease; Perpetual lease deeds; Lessee; Lessor; Demand for an

unearned increase value; Permanent lessee; Amalgamation;

Scheme for amalgamation; Parting with the possession; Transfer

of plots; Involuntary transfers.

Case Arising From

CIVIL APPELLATE JURISDICTION: Civil Appeal No.8336 of 2009

From the Judgment and Order dated 16.08.2007 of the High Court

of Delhi at N. Delhi in LPA No. 252 of 2003

Appearances for Parties

Kavin Gulati, Sr. Adv., Ms. Sharmila Upadhyay, Pawan R Upadhyay,

Sarvjit Pratap Singh, Ms. Supriya R Pandey, Advs. for the Appellant.

Sanjiv Sen, Sr. Adv., Ms. Anjali Singh, Ms. Tanwangi Shukla, Ms.

Malvika Kapila, Advs. for the Respondent.

Judgment / Order of the Supreme Court

Judgment

Abhay S. Oka, J.

FACTUAL ASPECTS

1. The Hon’ble President of India executed four separate perpetual

lease deeds on 12th August 1983 in favour of M/s. Jaiprakash

Associates Pvt Ltd in respect of the plots more particularly described

in Schedule-I to the lease deeds (for short, ‘the said plots’). In July

1986, a joint application was made by M/s. Jaiprakash Associates

Pvt Ltd and M/s. Jaypee Rewa Cement Ltd before the High Court of

Judicature at Allahabad, praying for amalgamation of M/s. Jaiprakash

Associates Pvt Ltd with M/s. Jaypee Rewa Cement Ltd. By the

order dated 30th July 1986, the High Court sanctioned the scheme

of amalgamation. The said plots were included in the Schedule of

the properties to the scheme of amalgamation. While passing the

order dated 30th July 1986 approving amalgamation, the High Court

directed that the properties in Parts I, II and III of Schedule II to 

430 [2024] 4 S.C.R.

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the said order shall stand vested in the transferee company (M/s.

Jaypee Rewa Cement Ltd). After the amalgamation, in September

1986, the name of M/s. Jaypee Rewa Cement Ltd was changed to

M/s. Jaiprakash Industries Ltd. Subsequently, the name was changed

to M/s. Jaiprakash Associates Ltd, which is the present appellant.

Thus, in short, the appellant is a company created as a result of the

amalgamation of the erstwhile M/s. Jaiprakash Associates Pvt Ltd

and M/s. Jaypee Rewa Cement Ltd. In short, the present appellant

is the transferee company.

2. An application was made by the appellant to the respondent-Delhi

Development Authority (for short, ‘DDA’) for a grant of permission to

mortgage the said plots in favour of the Industrial Finance Corporation

of India. By the letter dated 14th March 1991, the respondent-DDA

demanded an unearned increase value of Rs.2,13,59,511.20. Being

aggrieved by the said demand, representations were made by the

appellant which were not favourably considered by the respondentDDA. Therefore, the appellant filed a writ petition before a learned

Single Judge of the High Court of Delhi. By the order dated 30th

January 2003, the learned Single Judge dismissed the said petition

filed by the appellant by relying upon a decision a Division Bench

of the same High Court in the case of Indian Shaving Products

Limited v. Delhi Development Authority & Anr.1 Being aggrieved

by the decision of the learned Single Judge, the appellant preferred

an appeal before a Division Bench of the High Court of Delhi. By

the impugned judgment, the said appeal had also been dismissed.

SUBMISSIONS

3. The learned senior counsel appearing for the appellant invited our

attention to clause II(4)(a) of the lease deed, which puts an embargo

on the lessee not to sell, transfer, assign or otherwise part with the

possession of the whole or any part of the said plots except with

the previous consent in writing from the lessor. The proviso to the

said clause entitled the lessor to impose a condition while granting

consent, of payment of a portion of the unearned increase in the

value (i.e. the difference between the premium paid and the market

value). He submitted that the amalgamation of the lessee with another

company under the orders of the Company Court will not amount

1 2001 SCC Online Del 1123: 2002 1 AD (Del) 175

[2024] 4 S.C.R. 431

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

to the sale, transfer or assignment of the said plots. His submission

is that in the case of Indian Shaving Products Limited1

, the High

Court had dealt with a completely different set of factual and legal

nuances. In the said case, the submission of the petitioner was that

Section 32 of the Sick Industrial Companies (Special Provisions) Act,

1985 (for short, ‘SICA’) would have an overriding effect over the terms

and conditions of the lease deed. He submitted that the merger or

amalgamation was taken up in the said case for rehabilitation of a sick

company and that it was a distressed company merger. Therefore,

the said decision will have no application to the facts of this case.

4. The learned senior counsel for the appellant further submitted that

the amalgamation or merger of the two companies does not involve

any transfer within the meaning of the Transfer of Property Act, 1882

(for short, ‘TPA’). He submitted that only in view of the operation of

Section 394 of the Companies Act, 1956, the assets and liabilities

of the lessee had merged and devolved on the appellant. He urged

that the order sanctioning the scheme of amalgamation is an order

in rem, which binds everyone. He pointed out that in the scheme

of amalgamation, there was no element of sale consideration or

consideration for transfer. The learned senior counsel submitted that

in the scheme subject matter of this appeal, the transferor personality

ceased to exist and merged with the transferee. The learned senior

counsel relied upon a decision of the High Court of Delhi in the case

of Delhi Development Authority v. Nalwa Sons Investment Ltd.

& Anr2

. He also relied upon a decision of the Division Bench of the

High Court of Delhi in the case of Vijaya C. Gursahaney v. Delhi

Development Authority & Ors3

.

5. The learned senior counsel appearing for the respondent-DDA invited

our attention to the order passed by the High Court of Judicature

at Allahabad on 30th July 1986. He submitted that clause (1) of the

order provides that the transferor company’s properties, rights and

powers in respect of the property described in the first, second and

third parts of schedule II shall be transferred without any further act

or deed to the transferee company. He would, therefore, submit that

the demand for unearned increase was lawful.

2 [2019] 6 SCR 783 : (2020) 17 SCC 782

3 1994 SCC Online Del 306 : 1994 II AD (Delhi) 770

432 [2024] 4 S.C.R.

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CONSIDERATION OF SUBMISSIONS

6. We have given careful consideration to the submissions. In the

perpetual leases, clause (II)(4)(a) was incorporated, which reads thus:

“II. The Lessee for himself, his heirs, executors,

administrators and assigns covenants with the Lessor in

the manner following that is to say:-

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

(4) (a) The lessee shall not sell, transfer, assign or

otherwise part with the possession of the whole or any

part of the commercial plot except with the previous

consent in writing of the lessor which he shall be

entitled to refuse in his absolute discretion.

Provided that such consent shall not be given for a period

of ten years from the commencement of this Lease unless

in the opinion of the Lessor, exceptional circumstances

exist for the grant of such consent.

Provided further that in the event of the consent

being given the Lessor may impose such terms and

conditions as he thinks fit and the Lessor shall be

entitled to claim and recover a portion of the unearned

increase in the value (i.e. the difference between the

premium paid and the market value) of the plot at the

time of sale, transfer, assignment, or parting with the

possession, the amount to be recovered being fifty

percent of the unearned increased and the decision

of the Lessor in respect of the market value shall be

final and binding.

Provided further that the Lessor shall have the pre-emptive

right to purchase the property after deducting fifty per cent

of the unearned increase as aforesaid.”

(emphasis added)

The same clause has been incorporated in all four perpetual leases

with which we are concerned. Therefore, the perpetual leases put an

embargo on the lessee selling, transferring, assigning or otherwise 

[2024] 4 S.C.R. 433

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

parting with the possession of the whole or any part of the commercial

plots except with the previous consent of the lessor in writing. The

second proviso makes it clear that the respondent-DDA, which has

stepped into the shoes of the lessor, will be entitled to recover a

portion of the unearned increase in the value.

7. Now, the question is whether amalgamation will amount to transferring

the said plots. We have carefully perused the order dated 30th July

1986 of the High Court of Judicature at Allahabad sanctioning the

scheme of amalgamation. In the said scheme, M/s. Jaiprakash

Associates Private Ltd (the erstwhile company) was shown as the

‘transferor company’ and M/s. Jaypee Rewa Cement Ltd was shown

as the ‘transferee company’. Clauses (1) and (2) of the operative

part of the order dated 30th July 1986 read thus:

“.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..

1. That all the properties, rights and powers of

the Transferor Company specified in the first,

second and third parts of the Schedule II hereto

and all other properties, rights and powers of

the Transferor Company be transferred without

further act or deed to the transferee company and

accordingly the same shall pursuant to section

394(2) of the Companies Act, 1956 be transferred

to and vest in the Transferee Company for all the

estate and interest of the Transferor Company

therein but subject, nevertheless to all charges

now affecting the same; and

2. That all the liabilities and duties of the Transferor

Company be transferred without further act or deed

to the Transferee company and accordingly the same

shall pursuant to section 394(2) of the Companies

Act, 1956 be transferred to and become the liabilities

and duties of the transferee company, and

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..”

(emphasis added)

8. The said plots are a part of the Schedule of the properties referred

to in clause (1). Thus, there is a specific clause in the order of

amalgamation which holds that the said plots stand transferred from 

434 [2024] 4 S.C.R.

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the original permanent lessee to the transferee M/s. Jaypee Rewa

Cement Ltd, which is now known as M/s. Jaiprakash Associates Ltd.

Clause II(4)(a) covers all the categories of transfers as it provides

that the lessee shall not sell, transfer, assign or otherwise part with

the possession of the whole or any part of the commercial plots

without the written consent of the lessor. The said clause does not

exclude involuntary transfers. In the facts of the case, it cannot be

said that there is an involuntary transfer, as the transfer is made

based on a petition filed by the lessee and the transferee for seeking

amalgamation. In a sense, this is an act done by them of their own

volition.

9. A similar issue arose for consideration before this Court in the case

of Nalwa Sons Investment Ltd2

. The Court was dealing with a

case where the Company Court passed an order of arrangement

and demerger. As a result, the plot given on lease to a company

was transferred to another company. In paragraph 5 of the decision,

this Court had set out the policy instructions regarding charging an

unearned increase. Paragraph 5 reads thus:

5. The instructions followed by the competent authority

in regard to charging of UEI have been articulated in

document Annexure P-1, which reads thus:

XXX XXX XXX

Sub. : Substitution/addition/deletion of names in lease/

sub-lease of industrial/commercial plots unearned increase

In supersession of previous instructions on the subject, the

Lt. Governor, Delhi is pleased to order that henceforth in

the matters of addition/deletion and substitution of names

in respect of industrial/commercial lease/sub-lease to be

executed or already executed, the following procedure

shall be followed:

1. No unearned increase to be charged:

(a) The auction-purchaser/allottee shall be permitted

free of charge, to add, delete or substitute the

names of family members which may, where

necessary, take the form of partnership firm or

private limited company.

[2024] 4 S.C.R. 435

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

(b) In case of conversion of partnership firm into

private limited company comprising original

partners as Directors/Subscribers/Shareholders.

(c) In case of addition, deletion or substitution of

partners in a firm or Directors and conversion of

sole proprietorship firm or partnership concern

into private limited company when change in

constitution is limited, for approval by the DDA,

within one year from the date of purchase of

plot in auction. This will to apply in case of plot

obtained by the party by way of allotment.

(d) Change from private limited company to

public limited company where a private limited

company becomes a public limited company

under Section 43-A of the Companies Act, 1956.

2. Where unearned increase is to be charged:

(a) Addition of outsiders not falling within the family

members shall be allowed through a conveyance

deed on payment of 50% unearned increase on

his proportionate shares. The unearned increase

shall be calculated at the market rate prevalent

on the date of receipt of the application in the

office of the DDA.

(b) Substitution of the original allottee/auctionpurchasers shall be allowed on payment of 50%

unearned increase of his shares in the value of

the plot which will be calculated at the market

rate. The market rate shall be the rate prevalent

on the date of receipt of the application. It is

irrespective of the fact whether the lease deed

has been executed or not.

(c) 50% unearned increase will be charged in

respect of proportionate shares of the plot parted

with by way of addition, deletion or substitution

of partner/partners in case of single ownership

or partnership firm and Director/Directors/

Shareholders/Subscribers in case of private 

436 [2024] 4 S.C.R.

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limited company. This is applicable where the

incoming persons do not fall within the definition

of family. Unearned increase would be charged

on the basis of market rate prevalent on the

date of intimation for each and every change

in the constitution. This would be applicable

in all cases where the lease deed has been

executed or not.

(d) In case where a private limited company/

public limited company separately floating

a new company although Directors may be

the same and the name of old company has

not changed and it still exists as it was,

50% unearned increase will be chargeable

in such cases.

3. Interest @ 18% p.a. on the unearned increase from

the date of receipt of the application intimating the

change till the payment by the company or individual

or firm shall be charged on the amount of the unearned

increase payable to the DDA.

4. The administrative conditions prescribed in the UO

No. F.1(23)/78/C(L) Part II dated 8-5-1979 will remain

unchanged.

XXX XXX XXX”

(emphasis added)

In paragraphs 14 to 18, this Court held thus:

14. For answering the seminal question, we must first

advert to the obligation of Respondent 1 springing from

the stipulation in the perpetual lease deed. Clause 6(a),

as extracted in para 2 above, envisages a bar to sell,

transfer, assign or otherwise part with the possession

of the whole or any part of the commercial plot, except

with the previous consent in writing of the lessor

(appellant), which the appellant would be entitled

to refuse in its absolute discretion. While granting

consent in terms of the proviso to Clause 6(a), it is open 

[2024] 4 S.C.R. 437

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

to the appellant to impose such terms and conditions

as may be deemed appropriate and claim and recover

a portion of the unearned increase in the value of the

commercial plot, being 50% of the unearned increase.

The decision of the appellant in this behalf is final and

binding upon the original lessee (Respondent 1). The

amount towards the unearned increase is computed on the

basis of the difference between the premium paid and the

market value of the commercial plot. In doing so, the fact

that the transfer under consideration did not involve any

consideration amount or the value paid by the transferee

is below the market value, would not inhibit recovery of

50% of the prescribed unearned increase amount on

actual or, in a given case, notional basis. This is the plain

meaning of the stipulation. This position is reinforced from

the contemporaneous instructions issued by the competent

authority of the appellant about the manner in which the

unearned increase should be charged and from whom

such charges should be recovered. That can be discerned

from the instructions dated 6-9-1988.

15. Indeed, the said instructions advert to the category

of persons from whom no unearned increase should be

charged, despite being a case of transfer of the property

as mentioned in Clause 1 thereof. The Division Bench of

the High Court has relied upon the category mentioned

in Clause 1(b). The same reads thus:

“1. No unearned increase to be charged:

(a)***

(b) In case of conversion of partnership firm into private

limited company comprising original partners as Directors/

Subscribers/Shareholders.”

From the plain language of this clause, we fail to fathom

how the said clause will be of any avail to the respondents.

For, we are not dealing with a case of conversion of a

partnership firm into a private limited company as such.

The fact that the instructions extricate the category of

transfers referred to in Clause 1 of the instructions from 

438 [2024] 4 S.C.R.

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the liability of paying an unearned increase despite being

a case of transfer, cannot be the basis to exclude the other

category of transfers/persons not specifically covered by

Clause 1, such as the case of present respondents. That

is a policy matter. The respondents were fully aware about

the existence of such a policy. That policy has not been

challenged in the writ petition. Concededly, the reliefs

claimed in the writ petition were limited to quashing of the

demand letter dated 5-8-2010 and notice dated 31-1-2011,

demanding unearned increase; and to direct the appellant

to convert the said property from leasehold to freehold in

favour of Respondent 2, without charging any unearned

increase. The reliefs are founded on the assertion that

the transfer was not to any outsider, much less for any

consideration.

16. In the first place, it is not open to the respondents

to contend that the arrangement and demerger scheme

does not result in transfer of the subject plot from

the original lessee (Respondent 1) to Respondent 2.

Inasmuch as, Clause (2) of the order passed by the

Company Judge approving the scheme of demerger,

as reproduced above, makes it amply clear that all

property, assets, rights and powers in respect of the

specified properties, including the subject plot, shall

stand transferred to and vest in Respondent 2. Once

it is a case of transfer, it must abide by the stipulation

in Clause 6(a) of the lease deed of taking previous

consent in writing of the lessor (appellant) and to

fulfil such terms and conditions as may be imposed,

including to pay any unearned increase amount. We

find force in the argument of the appellant that the fact

situation of the present case would, in fact, be governed

by Clause 2(d) of the instructions which reads thus:

“2. Where unearned increase is to be charged:

(a)***

(d) In case where a private limited company/public

limited company separately floating a new company

although Directors may be the same and the name 

[2024] 4 S.C.R. 439

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

of old company has not changed and it still exists as

it was, 50% unearned increase will be chargeable in

such cases.”

This clause plainly applies to the present case. The

demand of unearned increase from the respondents is

founded on that basis. The High Court misinterpreted the

said clause and erroneously opined that it is not applicable

to a case of demerger of a public limited company.

17. The principal clause is Clause 6(a) of the lease

deed. The clause referred to in the instructions is equally

significant. Indeed, the latter merely provides for the

mechanism to recover the unearned increase from the

original lessee. The fact that the same group of persons

or Directors/promoters/ shareholders would be and are

associated with the transferee company does not cease

to be a case of transfer or exempted from payment of UEI,

as envisaged in Clause 6(a) of the lease deed. Rather,

Clause 2(d) of the policy, noted above, makes it expressly

clear that unearned increase be charged irrespective of

the fact that the Directors in both companies are common

and the old (parent) company has not changed its name.

18. The fact that it was a case of transfer is reinforced

from the order of demerger passed by the Company

Judge and once it is a case of transfer, coupled with

the fact that the respondents are not covered within the

categories specified in Clauses 1(a) to 1(d) of the policy

of the appellant, reproduced in para 5 above, they would

be liable to pay unearned increase (“UEI”) in the manner

specified in Clause 6(a) of the lease deed. The obligation to

pay UEI does not flow only from the instructions issued by

the competent authority of the appellant but primarily from

the stipulation in the perpetual lease deed in the form of

Clause 6(a). Viewed thus, the Division Bench of the High

Court committed a manifest error in allowing the appeal

and setting aside the judgment of the learned Single Judge,

who had rightly dismissed the writ petition and upheld the

demand notice and the show-cause notice calling upon

the respondents to pay the unearned increase amount in 

440 [2024] 4 S.C.R.

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terms of Clause 6(a) of the perpetual lease deed. That

demand was final and binding on the respondents, so

long as the stipulation in the form of Clause 6(a) of the

perpetual lease was in force.”

(emphasis added)

This Court was dealing with an order of the Company Judge, which

provided that the property of a company shall stand transferred to the

respondent before this Court, and therefore, it was a case of transfer

to which clause 6(a) of the lease deed will be attracted. Clause 6(a)

in the lease subject matter of the said case was identical to clause

II(4)(a) of the perpetual lease in the present case. This Court also

held that clause 2(d) of the policy determining unearned income was

attracted in the case of transfer due to demerger. In our view, the

same principles will apply to a merger, and an unearned increase

will be payable. In the case of Indian Shaving Products Limited1

,

the High Court of Delhi dealt with the amalgamation of companies

under the SICA and not under the Companies Act. In any event,

this court confirmed the said decision by summarily dismissing the

petition. In the present case, the relevant clause II(4)(a) of the leases

covers involuntary transfers as well.

10. An argument is also sought to be canvassed that the transfer in this

case is not covered by the transfer defined under Section 5 of the

TPA. Section 5 of the TPA reads thus:

“5. “Transfer of property” defined.—

In the following sections “transfer of property” means an

act by which a living person conveys property, in present

or in future, to one or more other living persons, or to

himself, and one or more other living persons; and “to

transfer property” is to perform such act.

In this section “living person” includes a company or

association or body of individuals, whether incorporated

or not, but nothing herein contained shall affect any law

for the time being in force relating to transfer of property

to or by companies, associations or bodies of individuals.”

11. The relevant clause II(4)(a) in the perpetual leases subject matter

of this appeal is very wide. It not only covers transfers but also

parting with possession. Therefore, the transfer contemplated by 

[2024] 4 S.C.R. 441

M/s. Jaiprakash Industries Ltd. (Presently known as M/s. Jaiprakash

Associates Ltd.) v. Delhi Development Authority

the said clause is much wider than what is defined under Section 5.

Importantly, Section 5 clarifies that nothing contained therein shall

affect any law for the time being in force in relation to the transfer

of property to or by companies. Therefore, Section 5 of the TPA will

not be of any assistance to the appellant.

12. Therefore, we find nothing illegal about the impugned judgment.

Accordingly, we dismiss this appeal with no order as to costs.

13. By the order dated 3rd January 2008 of this Court, an interim stay

was granted to the impugned judgment subject to a condition

of the appellant depositing a sum of Rs.2,13,59,511.20 with this

Court. The office report shows that the amount and the interest

accrued thereon have been separately invested. Therefore, it will

be open for the respondent-DDA to withdraw the principal amount

of Rs.2,13,59,511.20 along with the interest.

Headnotes prepared by: Divya Pandey Result of the case:

Appeal dismissed.