2
[2010] 13 (ADDL.) S.C.R. 1
UTTAM CHAKRABORTY
v.
STATE OF ASSAM
(Criminal Appeal No. 869 of 2006 etc.)
APRIL 6, 2010
A
B
[HARJIT SINGH BEDI AND CHANDRAMAULI KR.
PRASAD, JJ.]
Penal Code, 1860:
C
s. 304 – An eight month pregnant woman died of burn
injuries – Post-mortem report revealing severe cut in
abdomen and foetus removed – Husband of deceased and
his friend convicted of murder – Husband sentenced to death
– Life imprisonment to co-accused – Sentences confirmed by D
High Court – HELD: The girl with whom the accused-husband
was stated to have had illicit relationship, though supported
the prosecution case in her statement u/s 164 CrPC, but
before the court she resiled therefrom – In the light of the fact
that a statement recorded u/s 164 Cr.P.C. is not substantive E
evidence, the court has to go to the other evidence produced
in court by the prosecution – Both the trial court and the High
Court have noticed that the only other evidence against the
accused-husband was the statement of PW-6, a 4-5 year old
child of the deceased and the accused –PW-6 did support the
F
prosecution and it is primarily his evidence that has led to the
conviction of the accused – The courts below have also found
corroboration for the motive in the statement of PW-5, the
mother of the deceased, and the very material circumstance
that the murder had been committed in the matrimonial house
of the couple – However, notwithstanding the fact that PW-6 G
is a witness whose credibility has not been doubted, it would
perhaps be imprudent to award a capital sentence on the
statement of a child witness – Therefore, though the conviction
1
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
of the accused-husband (appellant in Crl. A. No. 871/2006)
needs to be maintained, and his crime was truly horrendous,
the death sentence is commuted to life imprisonment –There
is absolutely no evidence to connect the co-accused
(appellant in Crl. A,. No. 869/2006) with the murder – PW-4
B did state that at about 10/10.30 p.m. on the night of the
occurrence, he had seen the two accused discussing
something with each other and while they were doing so, a girl
had come out shouting and told the accused that his wife had
died of burn injuries – This evidence cannot connect the coC accused with the murder – PW-5, the mother of the deceased,
has not said a word about his involvement in the incident
except that he was a neighbour of PW-1 – PW-6 did identify
the co-accused in court but he apparently mistook him for
PW-4, as is clear from his statement – In this view of the
matter, conviction of the co-accused cannot be sustained and
D
he is acquitted – Evidence – Sentence/Sentencing.
A
Evidence:
E
F
Child witness – Testimony of – HELD: In the instant case,
notwithstanding the fact that credibility of child witness has not
been doubted, it would be imprudent to award capital sentence
on his statement – Sentence/Sentencing.
Suresh vs. State of U.P. 1981 (3) SCR 259 = (1981) 2
SCC 569; and Raja Ram Yadav & Ors. vs. State of Bihar
1996 (1) Suppl. SCR 174 = (1996) 9 SCC 287 – relied on.
Case Law Reference:
G
1981 (3) SCR 259
relied on
para 5
1996 (1) Suppl. SCR 174 relied on
para 6
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
H
UTTAM CHAKRABORTY v. STATE OF ASSAM
3
No. 869 of 2006.
4
A
From the Judgment & Order dated 26.04.2006 of the
Gauhati High Court in Criminal Appeal No. 212 of 2005.
WITH
B
Crl. Appeal No. 871 of 2006.
S.B. Sanyal, Azim H. Laskar, Sachin Das, Rana
Mukherjee, Abhijit Sengutpa for the Appellant.
C
J.R. Luwang, Navneert (for Corporate Law Group) for the
Respondent.
The following order of the Court was delivered
ORDER
D
1. This judgment will dispose of Criminal Appeal Nos. 871
and 869 of 2006.
2. The facts are as under:
The appellants, Mission Suklabaidhya and Uttam
Chakraborty were friends. Mission Suklabaidhya, who was a
retired Army personnel, was married to Gita Das deceased.
The couple had a child Marjon PW-6 who was about 4 or 5
years old when the incident happened. The deceased was also
pregnant at that time and was carrying a foetus about 8 months
old. As the deceased was employed as a school teacher, the
couple had engaged one Panchami Suklabaidya PW-1, aged
16 years, as a domestic help, and she resided in the house of
the couple. As per the prosecution story, Mission Suklabaidhya
and PW-1 developed an illicit relationship and when this was
discovered by the deceased, there were frequent quarrels
between the couple. As per the prosecution story, on the night
intervening the 13th and 14th April 2004 at about 2.00 a.m.
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Radhu Paul PW-4, a resident of Lala Town, accompanied by
4 or 5 persons went to the house ˇof Nioti Das PW-1, the
mother of the deceased, situated at Abdullapur, and told her
that her daughter had fallen ill and asked her to accompany
them to the Police Station. On reaching the Police Station, PWB 1 found Mission Suklabaidhya and Panchami Suklabaidhya
present there and learnt from them that her daughter had died
of burn injuries. She thereupon lodged a FIR at about 2.30 a.m.
to the effect that she had learnt from her son-in-law and PW-1
that her daughter had died in a fire caused by kerosene oil but
C she further went on to say that she had been killed by her
husband. During the course of the investigation, it transpired
that accused Uttam Chakraborty had also present when the
deceased had been done to death. The statement of PW-1
was also recorded under Section 164 of the Cr.P.C. in which
she stated that both the accused had been responsible for the
D
murder as the deceased was objecting to her relationship with
Mission Suklabaidhya accused.
A
3. On the completion of the investigation the appellants
were brought to trial on a charge of murder. The prosecution
E relied primarily on the evidence of PW-6 Marjon Suklabaidhya,
who was projected as an eye witness to what had happened
on the fateful day, PW-1 Panchami Suklabaidya aforesaid, PW2 the Executive Magistrate Manash Das, who held an inquest
on the dead body and had noticed a huge cut injury on the
F person of the deceased, Radhu Paul PW-4 who stated that he
had seen both the accused involved in an animated discussion
in front of his shop and when he had gone close to them they
had changed the topic and had started discussing some
business matter and that after a ˇshort while a girl had come
G out and raised a hue and cry and told Mission Suklabaidhya
that his wife had died of burn injuries, Nioti Rani PW-6, the
mother of the deceased, who deposed to the illicit relationship
of her son-in-law and PW-1, and PW-7 the doctor, Khairuz
Zaman Choudhary, who had carried out the post-mortem
H examination and had found very severe cut injuries on the
UTTAM CHAKRABORTY v. STATE OF ASSAM
5
stomach which indicated that the foetus had been removed.
4. The trial court, on a consideration of the evidence,
convicted both the accused for the offence punishable under
Section 302 of the IPC and while Mission Suklabaidhya was
awarded the death penalty, Uttam Chakraborty was ordered to
undergo imprisonment for life. The matter was thereafter
referred to the High Court for the confirmation of the death
sentence in Criminal Death Reference No. 4/2005 whereas
Criminal Appeal No.212/2005 was filed by the accused. The
High Court, by the impugned judgment, confirmed the death
reference and dismissed the Criminal Appeal. While confirming
reference, the Division Bench considered the aggravating and
mitigating circumstances and held that the aggravating
circumstances far outweighed the mitigating ones. Two appeals
have been filed in this Court, Criminal Appeal No.871/2006 by
Mission Suklabaidhya and Criminal Appeal No. 869/2006 by
Uttam Chakraborty.
5. We have heard the learned counsel for the parties and
gone through the record very carefully. It is true that the primary
evidence would have been that of PW-1 Panchami
Suklabaidya, a girl 15 or 16 years of age, and admittedly a
domestic help of Mission Suklabaidhya and the deceased. In
her statement recorded under Section 164 of the Cr.P.C. she
supported the prosecution story but while giving evidence as
PW-1 she resiled therefrom and gave a complete go by to what
she had said earlier. In the light of the fact that a statement
recorded under Section 164 of the Cr.P.C. is not substantive
evidence we have to go to the other evidence produced in Court
by the prosecution. Both the trial court and the High Court have
noticed that the only other evidence against the appellants was
the statement of PW-6, a child 4 or 5 years of age. PW-6 did
support the prosecution and it is primarily his evidence that has
led to the conviction of the appellants. The courts below have
also found corroboration for the motive in the statement of PW5 Nioti Rani Das, the mother of the deceased, and the very
6
A
A
B
B
C
C
D
D
E
E
F
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
material circumstance that the murder had been committed in
the matrimonial house of the couple. We are, however, of the
opinion that notwithstanding the fact that PW-6 is a witness
whose credibility has not been doubted, it would perhaps be
imprudent to award a capital sentence on the statement of a
child witness as observed in Suresh vs. State of U.P. (1981)
2 SCC 569. While rendering its decision, this is what the Court
had to say:
"Children, in the first place, mix up what they see
with what they like to imagine to have seen and besides,
a little tutoring is inevitable in their case in order to lend
coherence and consistency to their disjointed thoughts
which tend to stray. The extreme sentence cannot seek
its main support from evidence of this kind which, even if
true, is not safe enough to act upon for putting out a life."
6. This judgment was followed later in Raja Ram Yadav
& Ors. vs. State of Bihar (1996) 9 SCC 287 wherein similar
observations have been made. We are, therefore, of the
opinion that though the conviction of Mission Suklabaidhya
needs to be maintained, and his crime was truly horrendous,
the death sentence awarded should be commuted to life
imprisonment. We make an order in the above terms. Criminal
Appeal No. 871 of 2006 is disposed of accordingly.
7. We now take up the case of the appellant Uttam
Chakraborty. We find absolutely no evidence to connect him
with the murder. PW-4 Radhu Paul did state that at about 10/
10.30 p.m. on the night of the occurrence, he had seen the two
accused discussing something with each other and while they
were doing so, a girl (that is PW-1) had come out shouting and
G
had told Mission Suklabaidhya that his wife had died of burn
injuries. We are unable to see how this evidence can connect
the appellant with the murder. PW-5, the mother of the
deceased, has not said a word about his involvement in the
incident except that he was a neighbour of PW-1. PW-6 did
H
UTTAM CHAKRABORTY v. STATE OF ASSAM
identify the appellant in Court but he apparently mistook him for
Radhu Paul PW-4, as is clear from his statement. In this view
of the matter, we find that the conviction of Uttam Chakraborty,
appellant cannot be sustained. We accordingly allow Criminal
Appeal No. 869 of 2006, set aside his conviction and sentence
and direct that he be set free forthwith, if not wanted in any other
case.
R.P.
[2010] 13 (ADDL.) S.C.R. 8
7
A
A
B
B
ABU SALEM ABDUL QAYOOM ANSARI
v.
STATE OF MAHARASHTRA & ANR.
(Criminal Appeal No. 990 of 2006)
SEPTEMBER 10, 2010
[P. SATHASIVAM AND ASOK KUMAR GANGULY, JJ.]
Appeal allowed.
C
D
E
F
G
H
Extradition Act, 1962 – ss. 21 and 19 – Absconded
accused charged under various provisions of IPC, TADA,
Arms Act and the Explosive Substances Act – The accused
detained in Portugal – No formal extradition treaty existed
between Portugal and India – Indian Government by a
Notification, making the Extradition Act applicable to Portugal
– India making request to Portugal for extradition of the
accused under International Convention on Suppression of
Terrorist Bombings – India also assuring that the accused, if
extradited, would not be visited by death penalty or
imprisonment beyond 25 years – Portuguese Government
extradited the accused for Section 120B r/w. s. 302 IPC and
s. 3(2) TADA among others, but denied extradition for s. 25
(1A) and (12B) of Arms Act and ss. 4 and 5 of Explosive
Substances Act – India also assured that accused would not
be tried for the offences other than those for which extradition
sought – After extradition, accused tried for all the offences –
Accused challenged before Supreme Court of India as well
as Portuguese courts, his trial for the offence for which
extradition was not granted – Portuguese Court adjourned the
matter till the disposal of the matter in the instant cases by
Supreme Court – Held: The extradition of the accused was
not only under the provisions of the convention, but also in
the light of the principle of reciprocity made applicable
through the application of the Act to the Portugal and also the
provisions of the Act applicable to Non-Treaty States – Trial
of the extradited accused is permissible u/s. 21 for ‘lesser
8
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA
9
offences’, even if the same are not covered by extradition
Decree – There has been no violation of Rule of Speciality –
Penal Code, 1860 – s. 120B r/w. ss. 324, 326, 427, 435, 121,
121A, 122, 307, 302 and 201 – Terrorist and Disruptive
Activities (Prevention) Act, 1987 – ss. 3, 4 and 5 – Arms Act,
1959 – ss. 3, 7(a), 25(1A), 25(1AA) 26, 29 and 35 – Explosive
Substances Act, 1908 – ss. 3, 4, 5 and 6 – Convention on
Suppression of Terrorist Bombing - Articles 2(1) and (3) and
1(3)(d) – Notification No. GSR-822 (E) dated 13.12.2002
issued by Government of India
International Law – The term ‘extradition’ – Explained.
Criminal Trial – Separation of trial – Absconded accused
charged under various provisions of IPC, TADA, Arms Act
and Explosive Substances Act alongwith 189 accused – On
the detention of the absconded accused, trial of the accused
separated from the trial of the other 123 accused whose trial
was nearing completion – Propriety of separation of the trial
– Held: On facts, separation of trial was correct – Code of
Criminal Procedure, 1973.
Doctrines:
10
A
B
C
D
E
Doctrine of ‘Speciality’ – Applicability of.
Doctrine of ‘Reciprocity’ – Applicability of.
Rule of non-inquiry – Applicability of.
F
Doctrine of ‘Double Criminality’ – Applicability of.
Doctrine of ‘Clean Slate’ – Applicability of.
Words and Phrases:
G
‘Extradition’ – Connotation of.
‘Lesser Offence’ and ‘Minor Offence’- Difference between
H
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
‘Lesser Offence’- Meaning of, in the context of s. 21 of
Extradition Act, 1962.
The Appellant-accused, and 189 other accused
persons, were charged with offences punishable u/s.
120B r/w. ss. 324, 326, 427, 435, 121, 121-A, 122, 307, 302
B
and 201 IPC r/w. ss. 3, 4 and 5 of TADA Act r/w. ss. 3, 7
(a), 25 (1A), 25 (1AA), 26, 29, 35 of Arms Act, 1959 r/w. ss.
3, 4, 5 and 6 of the Explosive Substances Act, 1908 in
connection with the serial bomb Blast cases of 1993 in
Bombay, The appellant was one of the 44 absconders.
C He was declared proclaimed offender. The Designated
Court issued non-bailable warrant against him and
INTERPOL also issued Red Corner Notice for his arrest.
Portuguese police detained the appellant on the
D basis of the Red Corner Notice. As no formal extradition
treaty existed between India and Portugal, Government
of India requested the Portuguese Government for
extradition of the appellant under the International
Convention on Suppression of Terrorist Bombings.
E Government of India also, by Notification dated
13.12.2002, made the Extradition Act applicable to the
Republic of Portugal. Indian Government gave assurance
to the Government of Portugal that the accused, if
extradited would not be visited by death penalty or
F imprisonment for a term beyond 25 years. In pursuance
to the above assurance, ministerial order was passed by
the Portuguese Government admitting extradition of the
accused amongst others for Section 120B r/w. s. 302 IPC,
s. 3(2) TADA. However, the order declined extradition for
Section 25(1A) and (12B) of the Arms Act and Sections 4
G
and 5 of Explosive Substances Act. The Ambassador of
India gave further assurance that the accused would not
be tried for offences other than those for which
extradition was sought for, and they would not be
extradited to any third country. Ultimately, the Supreme
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA
11
Court of Justice of Portugal permitted extradition in view
of the assurance of the Government of India. The order
was also confirmed by the Constitutional Court of
Portugal. The custody of the appellant was handed-over
to the Indian Authorities.
Thereafter, prosecution filed an application before
the Designated Court, seeking separation of the trial of
the appellant-accused from the main trial. The appellantaccused also filed an application seeking production of
relevant record of extradition and seeking joint trial
alongwith the 123 accused, whose trial was nearing
completion. The Designated Court allowed separation of
trial and held that the appellant could be tried for all the
offences because the assurances were given with
respect to sentences which could be imposed and not
with respect to the offences with which he could be tried.
The appellant-accused filed instant appeals against
the orders of the designated court framing charges
against him and allowing separation of his trial from the
main trial in the Bombay Blast case. He also filed a writ
petition under Article 32 of the Constitution of India. In
addition thereto, he also moved an application before the
Portuguese Court of Appeal complaining that he was
being tried in India in violation of Principles of Speciality
as contained in Article 16 of Law 144/991 wherein the
Court expressed its inability to enquire into the question
of surrender by the Indian State. In the appeal against the
order, the Supreme Court of Justice of Portugal remitted
the matter to the Court of Appeals to enquire whether
there was any violation of the conditions as alleged. The
Court of Appeals adjourned the matter till the final order
is passed by the Supreme Court of India in the instant
cases.
12
A
B
C
D
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A for which he has not been specifically extradited, is in
flagrant disobedience of the mandate of s. 21 of Indian
Extradition Act as well as the solemn sovereign
assurance of the Government of India, the ministerial
order of extradition passed by the Government of
B Portugal, the judgment of the Court of Appeals as well as
Supreme Court of Portugal; that he was being wrongfully
tried by the Designated Court in violation of the
extradition decree and breaching the ‘principle of
Speciality’. He also contended that because of the
C separation of his trial from the trial of the 123 accused,
he would forego the opportunity to cross-examine the
witnesses.
D
Dismissing the appeals and the writ petition, the
Court
HELD:
Per Sathasivam,J.
E
F
G
The appellant contended that his trial for the offences
H
1.1 The term ‘extradition’ denotes the process
E whereby under a concluded treaty one State surrenders
to any other State at its request, a person accused or
convicted of a criminal offence committed against the
laws of the requesting State, such requesting State being
competent to try the alleged offender. Though extradition
F is granted in implementation of the international
commitment of the State, the procedure to be followed by
the courts in deciding whether extradition should be
granted and on what terms, is determined by the
municipal law of the land. Extradition is founded on the
G broad principle that it is in the interest of civilised
communities that criminals should not go unpunished
and on that account it is recognised as a part of the
comity of nations that one State should ordinarily afford
to another State assistance towards bringing offenders
H to justice. [Para 11] [34-E-H; 35-A]
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA
13
14
1.2 The appellant has been charged within the
permissible scope of Section 21(b) of the Extradition Act,
1962 and the Designated Court has not committed any
illegality in passing the impugned orders. No bar has
been placed by the Portuguese Courts for the trial of
lesser offences in accordance with the provisions
contained under Section 21(b) of the Extradition Act,
although Portuguese Courts were aware of the said
provisions of Extradition Act. [Paras 32 and 35] [63-C-D;
64-D]
A
1.3 The Doctrine of Specialty is a universally
recognized principle of international law and partakes of
doctrines of both double criminality and reciprocity.
Indian Extradition Act, 1962 also recognizes the Doctrine
of Specialty in Section 21 of the Act. Unlike the law in
United Kingdom, United States and Portugal, the law in
India only permits the extradited person to be tried for
lesser offence disclosed by the facts proved for the
purpose of securing his surrender. Apart from the said
offence being made out from the facts proved by the
Indian authorities for the surrender of the fugitive, the
additional indictment, if any, has to be lesser than the
offences for which the extradition has been granted.
[Paras 25 and 26] [56-F-H; 57-A-B]
C
Suman Sood @ Kamaljeet Kaur vs. State of Rajasthan
(2007) 5 SCC 634 – relied on.
F
B
D
E
Daya Singh Lahoria vs. Union of India and Ors. (2001)
4 SCC 516 – referred to.
“The Law of Extradition and Mutual Assistance”. (Second
Editionby Clive Nicholls QC, Clare Montgomery QC, Julian B.
Knowles –Oxford Publication Halsbury’s laws of England, 4th
Ed., Vol. 18, Para246; American Jurisprudence, 2nd Ed.,
Vol. 31A – referred to.
G
H
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
1.4 The assumption of the appellant that since he had
been extradited under International Convention for the
Suppression of Terrorist Bombings, he can be tried only
for the offences which are related to the said Convention,
cannot be sustained. If the said claim is accepted, it
B would be contrary to the judgment of the Constitutional
Court of Portugal and it also shows the ignorance of the
appellant towards the Notification dated 13.12.2002,
issued by the Government of India making the Extradition
Act applicable to Government of Portugal except Chapter
C III. The Court has not granted extradition merely on the
basis of Extradition Treaty but also on the basis of
reciprocity. Pursuant to Section 3 of the Act, the order of
the Government of India GSR-822(E) dated 13.12.2002
was approved and published ensuring due regard for the
D principle of reciprocity. [Para 27] [59-G-H; 60-A-C]
1.5 It is true that there is no Extradition Treaty
between India and Portugal. However, the laws of both
the countries permit entertaining request for extradition
from Non-Treaty States also. The extradition request was
E made to the Government of Portugal by the Government
of India under the provisions of the Extradition Act
applicable to Non-Treaty States i.e. Section 19 of the Act.
Although the Convention was also relied upon for the
extradition, it was not the sole basis as is apparent from
F the Letter of Request. The primary consideration for the
request of extradition was the assurance of reciprocity.
The Notification dated 13.12.2002 by the Government of
India directing that the provisions contained in the
Extradition Act shall be applicable to the Republic of
G Portugal was issued keeping in view the said principle
of reciprocity. For the purpose of extradition
proceedings, the appellant was treated as a fugitive
criminal as defined under Section 2(f) of the Extradition
Act. The provisions of the Extradition Act are applicable
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA
15
16
in respect of the extradition of the appellant-accused. The
Court of Appeals of Lisbon has recognized this principle
of reciprocity and the applicability of the provisions of the
Extradition Act to the Republic of Portugal. The Supreme
Court of Justice and Constitutional Court of Portugal
have also approved it. None of these courts have
mentioned in their orders that the accused could not be
tried in India for the offences for which his trial could take
place as per the domestic laws of India. [Para 28] [60-DH; 61-A-B]
A
1.6 A bare reading of Section 21 of the Extradition Act
would indicate that the appellant-accused can be tried for
the offences for which he has been extradited. The
Supreme Court of Justice, Portugal has granted
extradition of the appellant for all the offences mentioned
in para-1 of the order dated 27.01.2005. In addition, he can
also be tried for lesser offence/offences in view of
Section 21 of the Extradition Act disclosed by the facts
proved for the purposes of securing his surrender.
‘Lesser offence’ means an offence which is made out
from the proved facts and provides lesser punishment,
as compared to the offences for which the fugitive has
been extradited. The offence has to be an extradition
offence, as defined under Section 2 (c) (ii) of the Act i.e.
an offence punishable with imprisonment for a term
which shall not be less than one year under the laws of
India or of a foreign State. The ‘lesser offence’ cannot be
equated with the term ‘minor offence’ as mentioned in
Section 222 Cr.P.C.. The Legislature has deliberately used
the word “lesser” in Section 21(b) of the Extradition Act
instead of the word “minor”. Thus, the punishment
provided for the offence is relevant and not the
ingredients for the purposes of interpretation of the term
“lesser offence”. [Para 29] [61-B-G]
C
1.7 The plea of the appellant that he can be tried only
for the offences covered under Article 2(1) of the
B
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A Convention is misconceived in view of the fact that he
was extradited not only under the Convention but also
in the light of the principle of reciprocity made applicable
through the application of the Extradition Act to the
Republic of Portugal. A complete reading of Article 2 of
B the Convention makes it clear that it deals not only with
those accused who commit the substantive offences as
defined in Article 2(1) but also includes all the
conspirators and those who have constructive liability for
commission of the substantive offences as per clause (3)
C of Article 2 of the Convention, which fact has also been
mentioned by the Supreme Court of Justice, Portugal in
its order. Further, sub-clause (d) of Article 1(3) of the
Convention makes it abundantly clear that the explosive
or lethal device means a weapon or device i.e. designed,
or has the capability to cause death, serious bodily injury
D
or substantial material damage through its release etc.
AK-56 rifles are the weapons/devices, which have the
capability to cause death and serious bodily injury
through the release of cartridges and are covered under
the said Article. The appellant has been charged for
E possession, transportation and distribution of AK-56
rifles, their ammunitions as well as hand-grenades, which
were illegally smuggled into the country in pursuance of
the criminal conspiracy. [Para 30] [61-G-H; 62-A-E]
1.8 There has been no violation of Rule of Speciality
and the Solemn Sovereign Assurance given by the
Government of India in the letter dated 25.05.2003 of the
Indian Ambassador to the Government of Portugal
regarding the trial of the appellant-accused. The said
G assurance of the Indian Ambassador was given to the
effect that the appellant will not be prosecuted for the
offences other than those for which his extradition has
been sought and that he will not be re-extradited to any
other third country. There has been no violation of Rule
of Speciality. As per the Government of India Gazette
H
F
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 17
MAHARASHTRA
Notification dated 13.12.2002, all the provisions contained
under the Extradition Act are made applicable in respect
of the extradition of the appellant except those contained
in Chapter III of the Act. The Court of Appeals in Lisbon,
has recognized this principle of reciprocity and the
applicability of the provisions of Extradition Act to
Portugal. The Supreme Court of Justice and
Constitutional Court of Portugal have also approved it.
In view of the fact that the provisions of the Extradition
Act, 1962 have been made applicable to Portugal,
provisions contained in Section 21 of the Act would come
into operation while conducting the trial of the appellant.
[Para 31] [82-E-H; 83-A-B]
1.9 In the light of the Notification of the Government
of India about the applicability of the Extradition Act the
additional charges that have been framed, fit well within
the Proviso to Section 21(b) of the Extradition Act. The
offences with which the appellant has been additionally
charged are lesser than the offences for which the
appellant has been extradited i.e., the offences with which
the appellant is charged are punishable with lesser
punishment than the offence for which he has been
extradited. The extradition granted in the instant case had
due regard to the facts placed which would cover the
offences with which the appellant has been charged. The
offences are disclosed by the same set of facts placed
before the Government of Portugal. [Para 33] [63-E-G]
2. There is no basis in the apprehension raised by
the appellant that because of the separation of the trial,
he would forego the opportunity to cross-examine the
witnesses. The order dated 24.08.2009 has granted the
appellant an opportunity to submit a list of witnesses
examined in the main trial for cross-examination. This
grievance has been dealt with in separate set of
proceedings. [Para 34] [64-B-C]
18
A
B
C
D
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A Per Asok Kumar Ganguly, J. (Concurring)
HELD: 1. In India, extradition has not been defined
under the Extradition Act 1962. But extradition is different
from deportation by which competent State authorities
B order a person to leave a country and prevent him from
returning to the same territory. Extradition is also
different from exclusion, by which an individual is
prohibited from staying in one part of a Sovereign State.
Both deportation and exclusion basically are nonC consensual exercise whereas extradition is based on a
consensual treaty obligation between the requesting
State and the requested State. Extradition, however, is
only to be resorted to in cases of serious offences.
Extradition treaties and legislation are designed to
D combine speed and justice . [Paras 6, 8 and 9] [65-C; 66B-E]
Gerhard Terlinden vs. John C. Ames, Re Evans – 1994
(3) All E.R. 449– referred to.
E
F
G
H
E
“International Extradition and World Public Order, 1974,
Oceana Publications” – referred to.
2. Doctrinally speaking, Extradition has five
substantive ingredients. They are: (a) reciprocity, (b)
double criminality, (c) extraditable offences, (d) specialty
F
and (e) non inquiry. In India, the Act suffered an
amendment in 1993, by Act 66 of 1993. As a result thereof
Section 21 has been completely recast and the doctrine
of Specialty has been introduced. The amendment
enables the requesting State to try the fugitive for a lesser
G offence without restoring him to the requested State. In
fact the doctrine of specialty is in fact a corollary to the
principle of double criminality, and is founded on policy
and expediency and on the basic principle of reciprocity.
It is thus a universally recognized principle of
H international law and partakes of doctrines of both double
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA
19
criminality and reciprocity. [Paras 25, 26, 27 and 28] [71E-F; 73-D-G]
3. A fair balance has to be struck between Human
Rights norms and the need to tackle transnational crime.
The extradition law has to be an amalgam of international
and national law. Normally, in extradition law the
requested State is to follow the rule of Non-Inquiry which
means that the requested State is not to normally make
inquiry about the nature of criminal justice system in the
requesting State. That is why in the instant case, on a
complaint being made by the appellant in the Court of the
requested country, the Courts of Portugal await the
decision of this Court. The actual conduct of trial of the
extradited accused is left to the criminal jurisprudence
followed in the requesting State. However, non-inquiry is
not an absolute principle. In a given situation, the
requested State may question the procedures in the
requesting State if they are prima facie contrary to
fundamental principles of justice and there is a high risk
of the fugitive being prejudiced by the process of
extradition. Obligations entered by many countries of the
world, including India, in the form of Covenant on Civil
and Political Rights, and The Convention Against Torture
and Other Cruel, Inhuman or Degrading Treatment or
Punishment (to which India is a Signatory), would
preclude a total and unconditional observance of the
principle of non-inquiry. Even though, non- inquiry is not
an absolute doctrine, but in the facts of the instant case,
it operates. [Paras 10, 11 and 16] [66-G; 67-D-F; 69-D-E]
Soering vs. United Kingdom 1989 (11) EHRR 439;
Canada vs.Schmidt (1987) 1 SCR 500 – referred to.
4. In the instant case, extradition has been allowed
by the requested State on the specific undertaking of the
Government of India that the extradited criminal will not
be subjected to death penalty or imprisonment beyond
20
A
B
C
D
E
F
G
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A 25 years. Therefore, the basic human rights
considerations have been taken into account and the
guidelines in Soering case have been adhered to. Thus,
primacy has been accorded to human rights norms in the
extradition process. [Para 24] [71-C-D]
B
Soering vs. United Kingdom 1989 (11) EHRR 439 –
referred to.
5. This position of extraditable offences, and the
obligations of the requesting State can further be
C understood, if one bears in mind the fact that the
doctrines of double criminality and specialty are both
safeguards of the individual rights of the extraditee who
should not be tried on unexpected counts, as well as the
rights of the requested State to have its laws and
D processes given adequate deference by the requesting
State. It is not only a means to protect the person from
unexpected prosecution, but also a preventive guard
against the abuse of the legal process of the requested
State. While the first takes care of the individual’s right,
E the second takes care of the rights of a sovereign State.
[Para 31] [74-F-H; 75-A]
6. Section 21 of Extradition Act is in keeping with the
rule of double criminality, which requires a mutually
acceptable position between the requesting as well as
F
the requested State on all the aspects of the criminal act
committed by the person who is to be extradited. This
understanding is not about an agreement as to the
specifics, but rather a consensus ad idem in the
contractual relationship between two sovereign States.
G [Para 30] [74-C-D]
Extradition in International Law (1971) at page 137 –
referred to.
H
H
7. In the instant case, the insistence of the Central
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 21
MAHARASHTRA
Government on trying the appellant for lesser offences
is permissible, both under the Extradition Act as well as
under the Convention for Suppressing Terrorist
Bombings. The Convention fills up a huge void in
international law by expanding the legal framework and
enabling several States to co-operate in the investigation,
prosecution and extradition of several persons who are
engaged in such international terrorism. It is of utmost
importance as it strengthens international law
enforcement in controlling international terrorism. This
Convention is structured on prior counter terrorism
conventions adopted by the United Nations. It calls upon
the member parties to declare certain specified conducts
to be criminal activities and to initiate prosecution for
them, and to extradite persons who have committed such
conduct in one country and are staying in another
country. But unlike its predecessors, this Convention
does not define terrorism. However, it points out
particular conducts, regardless of the motive, as
internationally condemnable. Thus, this convention is of
crucial importance in the field of international law
enforcement devices. [Paras 17, 19 and 20] [69-F; 70-AE]
The International Convention for the Suppression of
Terrorist Bombings by Samuel M. Witten; American Journal
of International Law, Vol.92, No.4 (October 1998) pp.774-781
– referred to.
8. There are two ways in which to describe a lesser
crime. Either every single element of a lesser crime
should be component of the greater crime on the basis
of their statutory definitions; or the allegations of the
larger crime in the indictment should include all the
factual details of the lesser crime. Section 21(b) of the Act
seems to embody the latter of these two principles. This
means that a crime which can be framed from out of the
22
A
B
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A factual averments themselves (i.e. evidence submitted)
before the requested State at the time of extradition, can
be the one upon which the fugitive can be tried. A lesser
crime can be a cognate crime, in that it shares its roots
with the primary crime, even though it may be
B independent of it. [Paras 21 and 22] [70-F-H; 71-A]
Submission of Lesser Crimes, Columbia Law
Review, Volume 56(6),1956 pp. 888-902 – referred to.
C
D
9. As long as the facts that have been submitted
C before the requested State prima facie show the guilt of
the extraditee in a foreseeable and logically consistent
way, the said person can be tried on all such counts that
can be conclusively proved against him or her. [Para 32]
[75-B]
D
Case Law Reference:
In the Judgement of P. Sathasivam, J:-
E
E
(2001) 4 SCC 516
referred to
Para 24
(2007) 5 SCC 634
relied on
Para 26
In the Judgment of Asok Kumar Ganguly, J:
F
G
F
1994 (3) All E.R. 449
referred to
Para 9
1989 (11) EHRR 439
referred to
Para 10
(1987) 1 SCR 500
referred to
Para 10
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
G No. 990 of 2006.
From the Judgment & Order dated 18.03.2006 &
13.06.2006 of the Designated Court, Arthur Road Jail, Mumbai
in Bombay Blast Case No. 1 of 1993.
H
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA
23
WITH
24
A
A
B
B
C
C
D
D
E
E
W.P. (Crl.) No. 171 of 2006, Crl. A. No. 1142-1143 of 2007.
Irshad Ahmed, Arvind Kumar Shukla, S. Pasbola, Prem
Malhotra, Mrinmayee Sahu, Rishi Malhotra for the Appellant.
Gopal Subramaniam, SG, H.P. Rawal, ASG, Ranjana
Narayan, Satyakam, Arvind Kumar Sharma, P. Parmeswaran,
Arun R. Pednekar, Sanjay Kharde, Asha G. Nair, Ravindra
Keshavrao Adsure, V.N. Raghupathy for the Respondents.
The Judgment of the Court was delivered by
P. SATHASIVAM, J. 1. The appeals and the writ petition
raised a common question, as such were heard together and
are being disposed of by this common judgment. The grievance
of the appellant-Abu Salem Abdul Qayoom Ansari in the
appeals and writ petition is that the criminal courts in the country
have no jurisdiction to try in respect of offences which do not
form part of the extradition judgment, by virtue of which he has
been brought to this country and he can be tried only for the
offences mentioned in the extradition decree.
2. Criminal Appeal No. 990 of 2006, filed under Section
19 of the Terrorist and Disruptive Activities (Prevention) Act,
1987 (hereinafter referred to as “the TADA Act”), arose out of
framing of charge on 18.03.2006 against the appellant by the
Designated Court at Arthur Road Jail, Mumbai in RC No.1(S/
93)/CBI/STF known as Bombay Bomb Blast Case No. 1 of
1993 and the order dated 13.06.2006 passed by the said Court
separating the trial of the accused/appellant from the main trial
in the Bombay Bomb Blast Case.
3. The appellant filed Criminal Appeal Nos. 1142-1143 of
2007 against the order dated 16.04.2007 by the same
Designated Court, framing charges against him under Sections
120B, 302, 307, 387, 382 IPC and under Sections 3(2)(i),
3(2)(ii), 3(3), 3(5) and 5 of the TADA Act.
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
4. In addition to filing of the abovesaid appeals, the
appellant has also filed Writ Petition (Crl.) No. 171 of 2006
under Article 32 of the Constitution of India seeking a) to issue
a writ of Certiorari to quash the charges framed against him in
Bombay Bomb Blast Case No. 1 of 1993 arising out of RC No.
1 (S/93)/CBI/STF by framing of charge on 18.03.2006; b) to
issue a writ of Certiorari to quash the order passed by the
Designated Court under TADA Act dated 13.06.2006 passed
in Misc. Application No. 144 of 2006; c) issue a writ of Certiorari
to declare that the charges framed on 18.03.2006, in Bombay
Bomb Blast Case No. 1 of 1993, as violative of the Rule of
Speciality and Section 21 of the Extradition Act, 1962; (d) issue
a writ of Mandamus to release and discharge the writ petitioner
by quashing all the proceedings against him; (e) issue a writ
of Prohibition prohibiting the respondents from prosecuting the
writ petitioner any further for the offences for which the petitioner
has not been extradited by the Court of Appeals at Lisbon as
affirmed by the order of the Supreme Court of Portugal; f) issue
a writ of Prohibition prohibiting the Designated Court at Arthur
Road Jail at Mumbai from separating the trial of the writ
petitioner from the other accused whose trial is stated to have
been completed.
5. Prosecution Case:
F
G
H
(a) On 12.03.1993, there were a series of bomb explosions
in
the
Mumbai City which resulted in death of 257 persons,
F
injuries of various types to 713 persons and destruction of
properties worth more than Rs. 27 crores (approximately).
These bomb explosions were caused at vital Government
installations, public places and crowded places in the city and
G its suburbs with an intention to overawe the Government
established by law, and to strike terror among the public at large
and also to adversely affect the peace and harmony among
different sections of the people. Twenty-seven criminal cases
were registered at respective Police Stations with regard to the
said bomb explosions and subsequent recovery of arms,
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
25
ammunitions and explosives, which were illegally smuggled into
the country with the intention to commit the said terrorist acts.
On completion of investigation, it was disclosed that various
acts committed by the accused persons were out of a single
conspiracy and, therefore, a single charge-sheet was filed in
the specially created Designated Court, Mumbai, against 189
accused persons including 44 absconders on 04.11.1993 for
offences punishable under Section 120B read with Sections
324, 326, 427, 435, 121, 121-A, 122, 307, 302 and 201 of the
Indian Penal Code read with Sections 3, 4 and 5 of the TADA
Act read with Sections 3, 7(a), 25(1A), 25(1AA), 26, 29, 35 of
the Arms Act, 1959 read with Sections 3, 4, 5 and 6 of the
Explosive Substances Act, 1908. The appellant-Abu Salem
was one of the absconders mentioned in the charge-sheet.
(b) The investigation disclosed that the appellant-Abu
Salem and other accused persons hatched a criminal
conspiracy during the period December, 1992 to April, 1993
with an object to create disturbances of serious nature by
committing terrorist acts by bomb explosions, murders and
causing destruction of properties throughout India. In pursuance
of the said criminal conspiracy, a large quantity of arms like
AK-56 rifles, pistols, hand-grenades, ammunitions and RDX
explosives were illegally smuggled into the country through sea
at Dighi Jetty and Shekhadi ports in Maharashtra State during
January and February, 1993. These illegal arms and
ammunitions were kept and stored at different places with
different persons with the object to commit terrorist acts.
(c) The appellant–Abu Salem was entrusted with the task
of transportation of illegally smuggled arms and ammunitions,
their storage and distribution to other co-accused persons.
Investigation has disclosed that a portion of arms and
explosives, which were smuggled and brought illegally into India
on 09.01.1993, were taken to the State of Gujarat and stored
at Village Sansrod, Dist. Bharuch. In the second week of
January, 1993, on the instructions of absconding accused,
26
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A
Anees Ibrahim Kaskar, appellant–Abu Salem brought AK-56
rifles, their ammunitions and hand-grenades from Village
Sansrod to Mumbai and distributed the same among coaccused persons.
B
B
C
C
D
D
(d) On 12.03.1993, RDX filled vehicles and suit-cases were
planted at strategic places like Bombay Stock Exchange, Air
India Building, Near Shiv Sena Bhawan, Plaza cinema and
thickly populated commercial places like Zaveri Bazar, Sheikh
Memon Street etc. The suit-case bombs were also planted in
the rooms of 3 five-star Hotels, namely, Hotel Sea Rock,
Bandra, Hotel Juhu Centaur and Airport Centaur, Mumbai.
Explosions were caused from the said vehicle-bombs and suitcase bombs in the afternoon of 12.03.1993 and within a period
of about two hours, large-scale deaths and destruction was
caused, as described earlier. Hand-grenades were also thrown
at two places i.e. Sahar International Airport, Mumbai and
Fishermen Colony, Mahim, Mumbai. The explosions caused by
hand-grenades also produced similar results.
E
E
F
F
G
G
H
H
(e) During the course of investigation, a large quantity of
arms, ammunitions and explosives were recovered from the
possession of accused persons. In India, AK-56 rifles,
ammunitions and hand-grenades cannot be possessed by
private individuals, as these types of sophisticated arms and
ammunitions can only be used by the armed forces and other
law enforcing agencies.
(f) Since the appellant–Abu Salem absconded and could
not be arrested during the course of investigation, he was shown
as an absconder in the charge-sheet. The Designated Court,
Mumbai, issued Proclamation No. 15777 of 1993 against him
on 15.09.1993. As the accused did not appear before the
Court despite issuance of Proclamation, he was declared as
a Proclaimed Offender on 15.10.1993. The Designated Court,
Mumbai issued Non-bailable Warrant against appellant–Abu
Salem and Interpol Secretariat General, Lyons, France also
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
27
issued a Red Corner Notice No. A-103/3-1995 for his arrest.
28
A
(g) During the course of trial, the Designated Court,
Mumbai, framed common charge of criminal conspiracy
punishable under Section 3(3) of the TADA Act and Section
120 B of the Indian Penal Code read with Sections 3(2)(i), (ii), B
3(3), 3(4), 5 and 6 of the TADA Act read with Sections 302,
307, 326, 324, 427, 435, 436, 201 and 212 of the Indian Penal
Code and offences under Sections 3 and 7 read with Sections
25 (1A), (1B), (a) of the Arms Act, 1959, Sections 9-B(1), (a),
(b), (c) of the Explosives Act, 1884, Sections 3, 4(a), (b), 5 and
C
6 of the Explosive Substances Act, 1908 and Section 4 of the
Prevention of Damage to Public Property Act, 1984 against all
the accused who were present before the Court, as also the
accused who are absconding including the appellant. The
Designated Court, Mumbai, on 19.06.1995, ordered that the
evidence of the witnesses may be recorded against D
absconding accused persons in their absence in accordance
with the provisions of Section 299 Cr.P.C.
(h) On 18.09.2002, the appellant–Abu Salem was detained
by the Portugese Police at Lisbon on the basis of the above E
mentioned Red Corner Notice. In December 2002, on receipt
of the intimation about his detention in Lisbon, the Government
of India submitted a request for his extradition in 9 criminal
cases (3 cases of CBI, 2 cases of Mumbai Police and 4 cases
of Delhi Police). The request was made relying on the F
International Convention for the Suppression of Terrorist
Bombings and on an assurance of reciprocity as applicable in
international law. Along with the requisition of extradition, the
relevant facts of the cases were enclosed in the form of duly
sworn affidavits of the concerned Police officers, together with
G
other supporting documents. The letter of requisition was issued
under the signature of the then Minister of State for External
Affairs and the affidavit-in-support was affirmed by Sr.
Superintendent of Police, CBI/STF.
H
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
(i) On 13.12.2002, the Government of India issued Gazette
Notification No. G.S.R.822(E) in exercise of the powers
conferred by Sub-section (1) of Section 3 of the Extradition Act,
1962, directing that the provisions of the Extradition Act, other
than Chapter-III, shall apply to the Portuguese Republic with
effect from 13.12.2002.
(j) The Government of India gave an undertaking under the
signatures of the then Dy. Prime Minister that on the basis of
provisions of the Constitution of India, Indian Extradition Act,
and the Code of Criminal Procedure, 1973 assured the
Government of Portugal that it will exercise its powers conferred
by the Indian Laws to ensure that if extradited by the Portugal
for trial in India, appellant–Abu Salem would not be visited by
death penalty or imprisonment for a term beyond 25 years. The
Ambassador of India in Lisbon, by letter dated 25.05.2003,
gave another assurance that in the event of extradition of the
appellant- Abu Salem, he will :
(i)
not be prosecuted for offences other than those for
which his extradition has been sought.
(ii)
not be re-extradited to any third country.
(k) The request for the extradition of the appellant–Abu
Salem was considered and examined by the authorities in
Government of Portugal and by the Court of Appeals, Lisbon,
Supreme Court of Justice, Portugal and Constitutional Court of
Portugal. The Authorities/Courts in Portugal granted extradition
of the appellant–Abu Salem in 8 criminal cases (3 cases of CBI,
2 cases of Mumbai Police and 3 cases of Delhi Police).
Extradition in one case of Delhi Police was not granted. The
Supreme Court of Justice, Portugal granted extradition of
appellant–Abu Salem for the following offences, included in the
request of Public Prosecution, as is clear from Para 13.1 of
the order dated 27.01.2005 of Supreme Court of Justice,
Portugal, which was also confirmed by the Constitutional Court
of Portugal. The maximum sentence prescribed under the
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 29
MAHARASHTRA [P. SATHASIVAM, J.]
30
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Indian Laws for these offences is mentioned here under:
A
A
S. Offence
No.
(i) The offence of criminal conspiracy
punishable u/s. 120B IPC
(ii) Murder punishable U/s. 302 IPC
(iii) Attempt to murder punishable u/s.
307 IPC
(iv) Mischief punishable u/s. 435 IPC
absconding accused in the said charge. On 18.03.2006, after
hearing the counsel for the appellant and the Prosecution, the
Court framed substantive charges against the appellant–Abu
Salem.
B
B
(n) The Designated Court has framed charges for the
following offences against the appellant–Abu Salem vide its
orders:
(v)
(vi)
(vii)
(viii)
(ix)
Mischief by fire or explosive
punishable u/s. 436 IPC
Offence punishable u/s. 3(2) of
TADA (P) Act.
3(3) of TADA (P) Act
Section 3 of Explosive
Substances Act, 1908
Offence punishable u/s. 4 of
Prevention of Damage to
Public Property Act
Maximum
Punishment
Death Penalty in the
case present
Death Penalty
Imprisonment for
Life
Imprisonment for 7
years
Imprisonment for
Life
Death Penalty in this
case
Life Imprisonment
Life Imprisonment
Imprisonment for 10
years
C
D
E
(l) Upon extradition, custody of the appellant–Abu Salem
was handed over by the Govt. of Portugal to Indian Authorities
on 10.11.2005 and he was brought to Mumbai on 11.11.2005.
He was produced in the Designated Court, Mumbai, in F
connection with the serial Bombay Bomb Blast Cases (CBI
Case RC No. 1 (S/93)/CBI/STF, Court case No. BBC 1 of 1993)
(m) On 01.03.2006, after completion of further investigation
against the appellant–Abu Salem, a Supplementary Report u/ G
s. 173(8) of Cr.P.C. was filed in the Designated Court, Mumbai.
Prior to that, on 09.12.2005, the Designated Court altered the
common charge of criminal conspiracy by adding the name of
the appellant–Abu Salem in the list of the accused persons
before the Court by deleting his name from the list of H
(i)
Offence of criminal conspiracy punishable u/s. 120B IPC r/w. offences punishable under IPC, TADA
(P) Act, Explosive Substances Act, Explosives Act,
Arms Act and Prevention of Damage to Public
Property Act.
(ii)
Offence punishable under Section 3 (3) of TADA
(P) Act, 1987.
(iii)
Offence punishable under Section 5 of TADA (P)
Act, 1987.
(iv)
Offence punishable under Section 6 of TADA (P)
Act, 1987.
(v)
Section 4(b) of the Explosive Substances Act,
1908.
(vi)
Section 5 of the Explosive Substances Act, 1908.
C
D
E
F
(vii) Section 25 (1-A)(1-B)(a) r/w Sections 3 and 7 of the
Arms Act, 1959.
G
(viii) Offence punishable u/s. 9-B of the Explosives Act,
1884.
(o) These charges have been framed by the Designated
Court keeping in view the provisions contained under Section
21 of the Extradition Act, 1962.
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
31
(p) The extradition order of the Supreme Court of Justice,
Portugal, did not include the following offences for which the
charges have been framed by the Designated Court, Mumbai.
The maximum punishment provided for these offences is given
here:S. Offence
No.
Maximum
Punishment
i)
Section 5 of TADA (P) Act, 1987. Imprisonment for
Life
ii)
Section 6 of TADA (P) Act, 1987. Imprisonment for
Life
iii)
Section 4-b of Explosive
Substances Act, 1908
Imprisonment for 20
years.
iv)
Section 5 of the Explosive
Substances Act, 1908
Imprisonment for 14
years.
v)
Section 25 (1-A) (1-B) (a) of
Arms Act, 1959.
Imprisonment for 10
years.
vi)
Section 9-B of Explosives Act,
1884
Imprisonment for 3
years.
32
A
A
B
B
C
C
D
D
E
E
(q) The request for extradition of the appellant-Abu Salem
has been made relying on the assurance of reciprocity as F
applicable in international law and the International Convention
for Suppression of Terrorist Bombings. The order dated
27.01.2005 of the Supreme Court of Justice, Portugal mentions
that Article9.3 of the said Convention applies to the case of
appellant-Abu Salem. As per Article 9.3, the State Parties,
G
which do not make extradition conditional on the existence of
a treaty, shall recognize the offences themselves subject to the
conditions provided by the law of the requested State. Article
2 of the Convention defines the extraditable offences. The
above mentioned offences for which the extradition has not been
H
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
specifically granted, also covered under the definition of
extraditable offence, as mentioned in Article 2 of the said
Convention.
(r) The punishment provided for the offences, not included
in the order of Supreme Court of Justice of Portugal, is lesser
than the punishment provided for the offences included in the
said order of Extradition. The said offences are disclosed by
the facts, which were considered/proved for the purposes of
extradition of appellant-Abu Salem from Portugal. It was further
stated that the said offences are extradition offences, as defined
under Section 2(c)(ii) of the Extradition Act, 1962 and, thus, the
trial of appellant-Abu Salem for these offences is permissible
under Section 21(b) of the Extradition Act, 1962.
(s) After framing of the charges on 18th March, 2006, the
Designated Court invited the views of the prosecution and the
defence about the further course of action for the trial of
appellant-Abu Salem. The prosecution, Vide M.A. No. 144 of
2006, submitted its views to the Designated Court, suggesting
therein that the trial of appellant-Abu Salem may be separated
in the same manner as was done by the Designated Court in
respect of absconding accused Mustafa Ahmed Dossa, upon
his arrest in March 2003, to avoid hardships to 123 accused
persons whose trial had already been completed. It was further
submitted by the prosecution that 33 accused persons were in
custody for the last about 12-13 years. The course of action as
suggested by the prosecution would not cause any prejudice
to any accused, including appellant-Abu Salem and would also
avoid further delay in pronouncement of the judgment in the
case. The Designated Court, Mumbai, after hearing both the
sides, by its order dated 13.06.2006 ordered that the trial of
appellant-Abu Salem, co-accused Riyaz Ahmed Siddique and
other absconding accused, mentioned in the common charge
of criminal conspiracy, and jointly in progress along with the
other co-accused mentioned in the said charge, stood
separated from the ongoing trial in progress. The Court further
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
33
ordered that the said separated trial from that day (13.06.2006)
to be continued under No. BBC-1-B of 1993, in continuity with
the earlier joint case.
6. These orders are under challenge in these appeals and
writ petition.
34
A
B
A
B
7. Stand of the appellant-Abu Salem
The appellant has been extradited from Portugal for being
tried in eight cases including the Bombay Bomb Blast Case
No. 1 of 1993 subject to certain conditions and the sovereign
assurance given by the Government of India to the Government
of Portugal. It was his stand that the charges under Sections
3(4), 5 and 6 of the TADA Act, Sections 4(b) and 5 of the
Explosive Substances Act, Section 25 of the Arms Act and
Section 9B of the Explosives Act (in R.C. No. 1(S/93)/CBI/STF
(Bomb Blast Case) and charges under Section 120B, 387 and
386 of the Indian Penal Code and under Section 5 of the TADA
(in C.R. No. 144 of 1995) are in flagrant disobedience of the
mandate of Section 21 of the Indian Extradition Act as well as
the solemn sovereign assurance of the Government of India,
the ministerial order of extradition of the appellant passed by
the Government of Portugal, the judgment of the Court of
Appeals as well as the Supreme Court of Portugal.
8. It is also his grievance that time and again the
authorities abused the process of criminal law by failing to file
the orders passed by Portugal Courts and by willfully and
deliberately violating the solemn sovereign assurance. It is his
categorical claim that the respondents are lowering the esteem
of the nation by their deceitful behaviour in the field of
international law, breaching the principle of speciality
established under the rule of international law and recognized
by Section 21 of the Extradition Act after securing the
extradition and gaining control of the appellant. The construction
made by the Designated Court is not acceptable and the
appellant is being wrongly tried by the Designated Court in
C
C
D
D
E
E
F
F
G
G
H
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
violation of the extradition decree and prayed for quashing of
the entire proceedings.
9. Heard Mr. S. Pasbola, learned counsel for the appellant
and Mr. Gopal Subramaniam, learned Solicitor General and
Mr. H.P. Rawal, learned Additional Solicitor General for the
respondents.
10. The contention of the appellant that he is being tried
for the offences for which he has not been specifically
extradited, has been rejected by way of the impugned order
on the ground that the extradition has been granted for the
offences of higher degree and the additional offences for which
he is being tried are subsumed/included in the said higher
degree of offences and the trial would be permissible by virtue
of clause (b) of Section 21 of the Extradition Act, 1962. As
pointed out earlier, apart from the appeals against the order
of the Designated Court, the appellant has also preferred a writ
petition seeking to invoke the extraordinary writ jurisdiction of
this Court on the ground that the trial for the offences for which
he has specifically not been extradited is violative of the
fundamental rights enshrined under Article 21 of the
Constitution of India which guarantees a fair trial with due
process of law.
11. The term ‘extradition’ denotes the process whereby
under a concluded treaty one State surrenders to any other
State at its request, a person accused or convicted of a criminal
offence committed against the laws of the requesting State,
such requesting State being competent to try the alleged
offender. Though extradition is granted in implementation of the
international commitment of the State, the procedure to be
followed by the courts in deciding, whether extradition should
be granted and on what terms, is determined by the municipal
law of the land. Extradition is founded on the broad principle
that it is in the interest of civilised communities that criminals
should not go unpunished and on that account it is recognised
as a part of the comity of nations that one State should
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
35
ordinarily afford to another State assistance towards bringing
offenders to justice.
12. With the tremendous increase in the facility of
international transport and communication, extradition has
assumed prominence since the advent of the present century.
Because of the negative attitude of the customary international
law on the subject, extradition is by and large dealt with by
bilateral treaties. These treaties, inasmuch as they affected, the
rights of private citizens, required in their turn alterations in the
laws and statutes of the States which had concluded them. The
established principle requires that without formal authority either
by treaty or by statute, fugitive criminals would not be
surrendered nor would their surrender be requested.
13. There is no general rule that all treaty rights and
obligations lapse upon external changes of sovereignty over
territory nor is there any generally accepted principle favouring
the continuity of treaty relations. Treaties may be affected when
one State succeeds wholly or in part to the legal personality and
territory of another. The conditions under which the treaties of
the latter survive depend on many factors including the precise
form and origin of the succession and the type of treaty
concerned. The emancipated territories on becoming
independent States may prefer to give general notice that they
were beginning with a “clean slate” so far as their future treaty
relations were concerned, or may give so-called “pick and
choose” notifications as to treaties as were formally applicable
to it before achieving independence. The “clean slate” doctrine
was ultimately adopted in the relevant provisions of the Vienna
Convention of 1978. The sound general working rule which
emerges is to look at the text of the relevant treaty and other
arrangements accompanying change of sovereignty and then
ascertain as to what was the intention of the State concerned
as to the continuance or passing of any rights or obligations
under the treaty concerned. The question whether a State is in
a position to perform its treaty obligations is essentially a
36
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A political question which has to be determined keeping in view
the circumstances prevailing and accompanying the change of
sovereignty.
B
B
C
C
D
D
E
E
F
F
G
G
H
H
14. We have already referred to the factual details. Hence
there is no need to repeat the same once again. However, it
is useful to advert the following information, namely, on
04.11.1993, a single charge-sheet was filed in the Designated
Court against 189 accused persons, of which, 44 accused
persons were shown absconding. The role attributed to Abu
Salem in RCI(S) relating to the Bombay Bomb Blast case of
1993 was that he was entrusted with the task of transportation
of illegally smuggled arms and ammunitions and their storage
and distribution to other co-accused. A portion of arms
smuggled on 09.01.1993 were taken to village Sansrod, Distt.
Bharuch, Gujarat on the instructions of absconding accused
Anees Ibrahim Kaskar. Subsequently, the appellant took AK56, ammunitions and hand grenades to Mumbai and distributed
amongst various co-accused. A Red Corner Notice bearing
No. A-103/3-1995 was issued through Interpol for the arrest of
the appellant. On 19.11.1993, further investigation was
transferred to C.B.I. The CBI registered case Crime No.
RC1(S)/93/STF/BB. Consequently, further investigation was
conducted by CBI and supplementary reports were filed under
Section 173(8) of Cr.P.C. before the Designated Court on
various dates. On 10.04.1995, the Designated Court, Mumbai,
after hearing the arguments of both sides, framed charges
against the accused persons. The Court framed a common
charge of criminal conspiracy against all the accused persons
present before it, absconding accused and other unknown
accused persons. The appellant has been named in the charge
as absconding accused. The charge included the offence of
conspiracy also for the offences with which he has been
substantively charged. By order dated 19.06.1995, before
commencing examination of witnesses, the Designated Court
directed that evidence to be adduced against the absconding
accused persons for the purpose of Section 299 of the Cr.P.C.
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 37
MAHARASHTRA [P. SATHASIVAM, J.]
38
On 18.09.2002, the appellant was detained by Portuguese A
Police, initially in a passport case and subsequently, in view of
the Red Corner Notice.
15. In December, 2002, Government of India submitted
request for extradition of the appellant in 9 criminal cases (three
B
cases of CBI, two cases of Mumbai Police and four cases of
Delhi Police).
16. Before going into the requisition made by the
Government of India and the orders passed by the Government
of Portugal as well as the Supreme Court of Justice, it is useful C
to refer certain provisions of the Extradition Act, 1962. In order
to codify the laws relating to the extradition to fugitive criminals,
the Parliament enacted the Extradition Act, 1962 which came
into force on 05.01.1963. It extends to the whole of India. The
following definitions are relevant:
D
A
B
C
D
(e) “foreign State” means any State outside India, and
includes every constituent part, colony or dependency of
such State;
(f) “fugitive criminal” means a person who is accused or
convicted of an extradition offence within the jurisdiction
of a foreign State and includes a person who, while in
India, conspires, attempts to commit or incites or
participates as an accomplice in the commission of an
extradition offence in a foreign State.
(g) …..
(i) ……
E
E
(b) …..
(c) extradition offence” means—
(i) in relation to a foreign State, being a treaty
State, an offence provided for in the extradition F
treaty with that State;
F
(ii) in relation to a foreign State other than a treaty
State an offence punishable with imprisonment for
a term which shall not be less than one year under G
the laws of India or of a foreign State and includes
a composite offence;
G
(d) “extradition treaty” means a treaty, agreement or
arrangement made by India with a foreign State relating
to the extradition of fugitive criminals, and includes any
treaty, agreement or arrangement relating to the
extradition of fugitive criminals made before the 15th day
of August, 1947, which extends to, and is binding on, India;
(h) …..
“2. Definitions.—In this Act, unless the context otherwise
requires,—
(a) .….
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
(j) “treaty State” means a foreign State with which an
extradition treaty is in operation.”
“3. Application of Act.—(1) The Central Government may,
by notified order, direct that the provisions of this Act other
than Chapter III shall apply to such foreign State or part
thereof as may be specified in the order.
(2) The Central Government may, by the same notified
order as is referred to in sub-section (1) or any subsequent
notified order, restrict such application to fugitive criminals
found, or suspected to be, in such part of India as may be
specified in the order.
(3) Where the notified order relates to a treaty State,(a) it shall set out in full the extradition treaty with that State;
H
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
39
(b) it shall not remain in force for any period longer than
that treaty; and
(c) the Central Government may, by the same or any
subsequent notified order, render the application of this
Act subject to such modifications, exceptions, conditions
and qualifications as may be deemed expedient for
implementing the treaty with that State.
(4) Where there is no extradition treaty made by India with
any foreign State, the Central Government may, by notified
order, treat any Convention to which India and a foreign
State are parties, as an extradition treaty made by India
with that foreign State providing for extradition in respect
of the offences specified in that Convention.”
“Section 21: Accused or convicted person
surrendered or returned by foreign State not to be
tried for certain offences – Whenever any person
accused or convicted of an offence, which, if committed
in India would be an extradition offence, is surrendered or
returned by a foreign State, such person shall not, until he
has been restored or has had an opportunity of returning
to that State, be tried in India for an offence other than—
40
A
B
A December, 1997. It is not in dispute that both India and Portugal
are signatories to the said Convention. In the absence of any
special treaty between India and Portugal, being the
signatories to the said Convention, the requisition for extradition
of the appellant-Abu Salem was signed by the then Minister of
B State of External Affairs. The said communication reads as
under:“Omar Abdullah
MINISTER OF STATE FOR EXTERNAL AFFAIRS
C
C
D
D
E
E
(a) the extradition offence in relation to which he has
surrendered or returned; or
F
F
G
G
H
H
(b) any lesser offence disclosed by the facts proved for the
purpose of securing his surrender or return other than an
offence in relation to which an order for his surrender or
return could not be lawfully made; or
(c) the offence in respect of which the foreign State has
given its consent.”
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
17. United Nations General Assembly adopted the
Convention for the Suppression of Terrorist Bombings on 15th
REQUISITION FOR EXTRADITION OF MR. ABU SALEM
ABDUL QAYOOM ANSARI FROM THE PORTUGUESE
REPUBLIC
I, Omar Abdullah, Minister of State for External Affairs,
Government of the Republic of India, relying on the
International Convention for the Suppression of Terrorist
Bombings and on an assurance of reciprocity as
applicable in international law, hereby request that Mr. Abu
Salem Abdul Qayoom Ansari, Indian national, who is
accused of having committed certain criminal offences in
India, and has been charged under the following Sections
of the Indian Penal Code:
201 (causing disappearance of evidence of
offence); 302 (Punishment for Murder); 307
(Attempt to murder); 324 (Voluntarily causing hurt
by dangerous weapons); 326 (voluntarily causing
grievous hurt by dangerous weapons); 427
(Mischief causing damage); 435 (Mischief by fire);
468 (Forgery for purpose of cheating); 471(Using
as genuine a forged document) of the Indian Penal
Code read with Sections 3, 4 and 5 of Terrorist and
Disruptive Activities (Prevention) Act, 1987 read
with Sections 3, 7(a), 25(1)(A), 25(1)(AA), 26, 29,
35 of Arms Act 1959 read with Sections 3, 4, 5 &
6 of Explosive Substances Act of 1998 read with
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 41
MAHARASHTRA [P. SATHASIVAM, J.]
Section 12(1)(b) of the Passport Act, 1967 and
120-B (Punishment for Criminal Conspiracy) of
Indian Penal Code.
In connection with Criminal Case Nos. CR.1(S)/93/
CBI/STF/Mumbai, RC 15(S)/97/CBI/STF/NE . Delhi
and RC 34(A)/2002-CBI/Hyderabad of the Central
Bureau of Investigation;
42
A
B
A
B
Sections 387 (Putting person in fear of death); 506
(Punishment for criminal intimidation); 507 (Criminal
Intimidation by an Anonymous Communication);
120-B (Punishment for Criminal Conspiracy); 201
(Causing Disappearance of Evidence of Offence)
of Indian Penal Code read with 3(ii), 3(iv) of
Maharashtra Control of Organized Crime Act, 1999
in connection with Criminal Case No. 88/2002
dated 04/04/2002 of Police Station Greater
Kailash, New Delhi
C
C
D
D
And
E
E
Sections 120-B (Punishment for Criminal
Conspiracy) read with Section 384 (Punishment for
Extortion) of Indian Penal Code, in connection with
Case FIR No. 850/98 of Police Station, Hauz Khas,
New Delhi
Section 302 (Punishment for Murder) of Indian
Penal code; read with Arms Act and Maharashtra
Control of Organized Crime Act, in connection with
Criminal Case No. CR No. 52/2001 of Crime
Branch –CID Mumbai.
And
Section 307 (Attempt to Murder); and 34 (Acts
done by several persons in furtherance of common
intention) of Indian Penal Code in connection with
CR No. 144/99 of Police Station D.N. Nagar,
Mumbai.
Be surrendered to the Republic of India to be dealt
with according to law.
F
F
G
G
And
Section 120-B (Punishment for Criminal
Conspiracy) of Indian Penal Code; read with 302
(Punishment for Murder) of Indian Penal Code in
connection with Case FIR No. 849/98 of Police
Station, Hauz Khas, New Delhi.
And
And
And
Sections 387 (Putting person in fear of death); 506
(Punishment for Criminal Intimidation); 120-B
(Punishment for Criminal Conspiracy) of Indian
Penal Code in connection with Case FIR No. 39/
02 dated 26/07/02 of Police Station Special Cell,
Lodhi Colony, New Delhi
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Particulars of the person whose extradition is being
requested, facts of the cases, relevant laws under which
he has been charged and the evidence to justify the issue
of warrant for his arrest have been given in the form of duly
sworn Affidavit together with other supporting documents
in the enclosed volumes.
I may further state that there are a number of other
criminal cases in which Mr. Abu Salem Abdul Qayoom
Ansari is involved. A formal extradition request in respect
of some of these criminal cases will be submitted shortly.
H
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 43
MAHARASHTRA [P. SATHASIVAM, J.]
I, hereby, certify that all documents enclosed herewith
have been authenticated, I have signed my name and
caused my seal to be affixed hereunto at New Delhi today,
the 13th December, 2002.
Sd/- illegible
(Omar Abdullah)
Minister of State for External Affairs
Government of the Republic of India”
44
A
A
B
B
The above communication was supported on facts with a
detailed affidavit dated 11.12.2002 duly sworn to by Mr. Om C
Prakash Chhatwal, Senior Superintendent of Police, Central
Bureau of Investigation, Special Task Force, New Delhi
C
18. On 13.12.2002, a Gazette Notification was issued
making the provisions of the Extradition Act, except Chapter
III, applicable to Portuguese Republic under sub-Section (1) of D
Section 3 of the said Act. (published in the Gazette of India,
Extraordinary, Pt. II, Section 3(i) Dated 13.12.2002).
D
19. In addition to the requisition by the then Minister of
State for External Affairs and the Gazette Notification, on
17.12.2002, an assurance was extended by the then Deputy
Prime Minister of India which reads as under:
E
E
F
F
“L.K. ADVANI
Deputy Prime Minister
No. I/11011/90/2000-IS-IV December 17, 2002
Excellency,
At the outset, I would like to express my deep
appreciation for your letter October 4, 2002 in response
G
to the letter of our External Affairs Minister of September
23, 2002 regarding the return of Abu Salem Abdul Qayoom
Ansari to India. In your letter, you had advised that a formal
extradition request be presented which would fulfill the
requirements of Portuguese law. Accordingly, the
H
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
concerned authorities in India have been in the process
of preparing the required formal extradition request for
presentation.
In this context, we have been informed that under
Portuguese law, an offender cannot be extradited to the
requesting country if the offence or offences committed
attract the visitation of either the death penalty or
imprisonment for an indefinite period beyond 25 years. As
the offences Abu Salem Abdul Qayoom Ansari is charged
with or accused of would attract the death penalty and life
imprisonment under Indian law, a solemn sovereign
assurance is required to enable his extradition from
Portugal to India.
The Government of India also desires that Abu
Salem Abdul Qayoom Ansari’s accomplice, Monica Bedi,
be extradited to India. One of the offences she is accused
of would carry the penalty of life imprisonment, Monica Bedi
was arrested in Portugal on September 18, 2002 along
with Abu Salem Abdul Qayoom Ansari.
The issue of the legal basis for the above assurance
to be given by the Government of India has been given due
attention. I may mention that Section 34(c) of the Indian
Extradition Act, 1962 states that “Notwithstanding anything
contained in any other law for the time being in force,
where a fugitive criminal, who has committed an
extradition offence punishable with death in India is
surrendered or returned by a foreign State on the request
of the Government and the laws of that foreign State do
not provide for the death penalty for such an offence, such
fugitive criminal shall be liable for punishment of
imprisonment for life only for that offence.”
Further Article 72 (1) of the Constitution of India
provides that “The President shall have the power to grant
pardons, reprieves, respites or remissions of punishment
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
45
or to suspend, remit or commute the sentence of any
person convicted of any offence.” In all cases where the
punishment or sentence is for any offence against any law
relating to a matter to which the executive power of the
Union extends including where the sentence is a sentence
of death. Further, it is a settled law that the power under
Article 72 of the Constitution of India is to be exercised
on the advice of the Government and not by the President
acting on his own and that the advice of the Government
is binding on the Head of the State. Also, the President’s
power under the said Article 72 is a constitutional power
and is beyond judicial review.
It is also pertinent to state that in addition to the
above provisions, Section 432 and 433 of the Code of
Criminal Procedure of India 1973 confer power on the
Government, to commute a sentence of life imprisonment
to a term not exceeding 14 years.
The Government of India, therefore, on the basis of
the provisions of the Constitution of India, the Indian
Extradition Act, 1962 and the Code of Criminal Procedure
of India, 1973 solemnly assures the Government of
Portugal that it will exercise its powers conferred by the
Indian laws to ensure that if extradited by Portugal for trial
in India, Abu Salem Abdul Qayoom Ansari and Monica
Bedi would not be visited by death penalty or
imprisonment for a term beyond 25 years.
46
A
A
B
B
C
C
D
E
F
Please accept, your Excellency, the assurance of my
highest consideration.
Sd/- illegible
(L.K. ADVANI)
G
H.E. MR. ANTONIO MARTINS DA CRUZ
MINISTER FOR FOREIGN AFFAIRS
PORTUGAL”
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
20. In pursuance of all the above assurances and
communications, on 28.03.2003, the Ministerial order came to
be passed admitting extradition amongst others for Section
120B read with Section 302 IPC, Section 3(2) of TADA.
However, the ministerial order declines extradition for Section
25(1A) and (1B) of the Arms Act and Sections 4 & 5 of
Explosive Substances Act. On 25.05.2003, the Ambassador
of India in Lisbon gave further assurance that they will not be
tried for offences other than those for which extradition was
sought for and they will not be extradited to a third country.
21. In pursuance of the Ministerial order dated 28.03.2003,
Her Excellency, the Minister of Justice, under the terms provided
in No. 2 of Article 48 of Law 144/99 submitted through the
Public Prosecution a request for extradition before the Court
of Appeals of Lisbon. The appellant–Abu Salem also preferred
D an appeal against the order of Extradition before the Court of
Appeals, Lisbon. By order dated 14.07.2004, the Court of
Appeals Lisbon agreed to authorize extradition for the offences
contained in the request of prosecution with an exception of
offences punishable with death or life imprisonment. Aggrieved
E by the same, the Public Prosecution challenged the order of
Court of Appeals before the Supreme Court of Justice by
lodging an appeal on 23.07.2004 and sought extradition also
for offences punishable with death and life imprisonment. On
29.07.2004, the appellant also filed an appeal against the said
F order of the Court of Appeals. On 27.01.2005, the Supreme
Court of Justice permitted the extradition for the offences in
view of the assurances given by the Government of India that
the person extradited would not be visited by death penalty or
imprisonment for a term beyond 25 years. In addition to the
G same, on 03.03.2005, the Supreme Court of Justice issued a
supplementary order maintaining the decision made on
27.01.2005. On 13.06.2005, the petition for appeal of the
appellant-Abu Salem was rejected by the Constitutional Court
by upholding the constitutional validity of the provisions of
H Article 9.3 of the said New York Convention which obliges the
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 47
MAHARASHTRA [P. SATHASIVAM, J.]
signatory State for extradition for offences covered under it
notwithstanding lack of mutual extradition treaty between the
parties. On 10.11.2005, the custody of the appellant was
handed over to the Indian Authorities and on 11.11.2005, the
appellant was brought to India and was produced before the
Designated Court, Mumbai in RC-1(S) of 1993 and by order
dated 18.03.2006, the substantive charges in addition to charge
of conspiracy were framed against the appellant and his plea
of not guilty and claim of trial was recorded. Thereafter, the
prosecution filed Miscellaneous Application bearing No. 144/
2006 seeking separation of the trial of the accused from the
main trail in the Bombay Bomb Blast case. In the meanwhile,
the appellant also filed Misc. Appeal No. 161 of 2006 seeking
production of relevant record of extradition and sought joint trial
along with other 123 accused whose trial was nearing
completion. By order dated 13.06.2006, the Designated Court
allowed the application of the Prosecution for separation of trial
and held that the trial would continue as BBC-1-B/1993 in
continuity with the earlier joint case. The Designated Court has
pointed out that the assurances were given with respect to
sentences which could be imposed and not with respect to the
offences with which he could be tried. It was further held that
the ‘lesser offence’ in Section 21 of the Extradition Act covers
wider matters than the phraseology “minor offence” in Section
222 of Criminal Procedure Code. It was also held by the
Designated Court that although the overt acts with which the
appellant has been charged may not be cognate with the
ingredients of offence with which he has been charged,
however, they are lesser offences for the purposes of Section
21 of the Extradition Act.
48
A
A
B
B
C
C
D
D
E
E
F
F
22. It is relevant to point out that apart from challenging the G
abovesaid order by way of an appeal under Section 19 of the
TADA Act and a writ petition under Article 32 of the
Constitution, the appellant has also moved an application
before the Court of Appeal in Lisbon that he is being tried in
India for violation of Principles of Speciality as contained in
H
G
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Article 16 of Law 144/99. It is brought to our notice that on
18.05.2007, the Court of Appeal expressed its inability to
enquire into the question of surrender by the Indian State on
the ground that the Indian State has violated certain conditions
on which extradition was granted. When the said order was
carried in appeal before the Supreme Court of Justice, which
by order dated 13.12.2007, remitted the matter to the Court of
Appeals to enquire whether there has been violation of any
condition as alleged by the appellant. The Court of Appeals,
by order dated 13.10.2008, has adjourned the matter till this
Court passes a final order in the present case.
23. The main grievance of the appellant is that inasmuch
as he being specifically extradited for trial of certain offences
only, the present action of the Designated Court and the
prosecution adding other offences without recourse to specific
order from the Government of Portugal cannot be sustained.
Before us, learned counsel for the appellant administered the
list of offences for which Government of Portugal agreed to and
adding certain other charges which are in flagrant disobedience
of the mandate of Section 21 of the Extradition Act as well as
the solemn sovereign assurance of the Government of India.
According to the appellant, the charges under Sections 3(4) ,
5 and 6 of the TADA Act, Sections 4(b) and 5 of the Explosive
Substances Act, Section 25 of the Arms Act, Section 9B of the
Explosives Act and charges under Section 120-B, 387 and 386
of IPC and under Section 5 of TADA are all impermissible,
contrary to the solemn sovereign assurance of the Government
of India, the ministerial order of extradition of the appellant
passed by the Government of Portugal, the judgment of the
Court of Appeals as well as the Supreme Court of Portugal.
24. The parties are in agreement over the application of
Section 21 of the Extradition Act, 1962 (which we have already
extracted in the earlier part of our judgment) to the case of
extradition of the appellant from Portugal to India on 11.11.2005.
We have already pointed out that in the absence of formal
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 49
MAHARASHTRA [P. SATHASIVAM, J.]
treaty between India and Portugal, the request for extradition
had been made under the International Convention on
Suppression of Terrorist Bombings. By virtue of Notification
dated 13.12.2002, the Government of India made the
provisions of the Extradition Act applicable for the purpose of
extradition of the appellant from Portugal to India. It is also
pointed out that in the ministerial order dated 28.03.2003, the
Government of Portugal rejected the request for extradition of
the appellant for the offences under Sections 201, 212, 324,
326, 427 of the Indian Penal Code, Sections 3(4), 5 and 6 of
the TADA Act, Sections 4 & 5 of the Explosive Substances
Act, Section 9B of the Explosives Act and Section 25(1A) and
(1B) of the Arms Act. Similarly, the Government of Portugal
rejected the request for extradition of the appellant for the
offences under Sections 120-B, 387 and 386 IPC and under
Section 5 of the TADA Act. The said Notification dated
11.04.2003 was published in the official gazette of the
Government of Portugal specifying the offences for which
consent for extradition was granted. Learned counsel for the
appellant has pointed out that the Court of Appeals and the
Supreme Court of Portugal confirmed the ministerial order and
the Notifications. The Supreme Court of Portugal specifically
referred to the “Principle of Speciality” and the assurances
given by the Government of India regarding the fulfillment of the
speciality rule. The pith and substance of the argument of the
counsel for the appellant is that once the appellant has been
brought to India on the basis of the extradition treaty, he can
only be tried for offences mentioned in the extradition decree
for which his extradition had been sought and not for other
offences. He also pointed out that the Designated Court has
no jurisdiction to try the appellant for such offences. He relied
on the judgment of this Court in Daya Singh Lahoria vs. Union
of India & Ors., (2001) 4 SCC 516. Learned counsel pressed
into service the following principles in respect of “Doctrine of
Speciality” as discussed in pages 521-522 of the judgment:
“The doctrine of speciality is yet another established
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rule of international law relating to extradition. Thus, when
a person is extradited for a particular crime, he can be tried
for only that crime. If the requesting State deems it desirable
to try the extradited fugitive for some other crime
committed before his extradition, the fugitive has to be
brought to the status quo ante, in the sense that he has to
be returned first to the State which granted the extradition
and a fresh extradition has to be requested for the latter
crime. The Indian Extradition Act makes a specific
provision to that effect. In view of Section 21 of the Indian
Extradition Act, 1962 an extradited fugitive cannot be tried
in India for any offence other than the one for which he has
been extradited unless he has been restored to or has had
an opportunity to return to the State which surrendered
him. The doctrine of speciality is in fact a corollary to the
principles of double criminality, and the aforesaid doctrine
is premised on the assumption that whenever a State uses
its formal process to surrender a person to another State
for a specific charge, the requesting State shall carry out
its intended purpose of prosecuting or punishing the
offender for the offence charged in its request for
extradition and none other. (See M. Cherif Bassiouni —
International Extradition and World Public Order.) In the
book International Law by D.P. O’Connell, the principle of
speciality has been described thus:
“According to this principle the State to which a
person has been extradited may not, without the consent
of the requisitioned State, try a person extradited save for
the offence for which he was extradited. Many extradition
treaties embody this rule, and the question arises whether
it is one of international law or not.”
The United States Supreme Court, while not placing
the rule on the plane of international law, did in fact arrive
at the same conclusion in the case of United States v.
Rauscher. The Supreme Court denied the jurisdiction of
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 51
MAHARASHTRA [P. SATHASIVAM, J.]
the trial court even though the Treaty did not stipulate that
there should be no trial and held: (US pp. 429-30:L Ed p.
432)
“[T]he weight of authority and of sound principle are
in favour of the proposition that a person who has been
brought within the jurisdiction of the court by virtue of
proceedings under an extradition treaty can only be tried
for one of the offences described in that treaty, and for the
offence with which he is charged in the proceedings for
his extradition, until a reasonable time and opportunity
have been given him, after his release or trial upon such
charge, to return to the country from whose asylum he had
been forcibly taken under those proceedings.”
In view of the aforesaid position in law, both on
international law as well as the relevant statute in this
country, we dispose of these cases with the conclusion that
a fugitive brought into this country under an extradition
decree can be tried only for the offences mentioned in the
extradition decree and for no other offence and the
criminal courts of this country will have no jurisdiction to
try such fugitive for any other offence. This writ petition and
special leave petitions are disposed of accordingly.”
If we apply the above principles in terms of the order of
the Government of Portugal, the Designated Court/
Prosecution cannot go beyond the various offences
mentioned in extradition decree. Mr. Gopal Subramaniam,
learned Solicitor General and Mr. H.P. Rawal, learned
Additional Solicitor General explained the “Rule of
Speciality”. Learned Solicitor General has highlighted his
arguments by way of an illustration, namely, a defendant
extradited to UK is entitled to the speciality protection
contained in Section 146 of Extradition Act, 2003 (C.41).
In other words, following his extradition, he may only be
tried in respect of the offences specified in that section.
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The offences specified in Section 146(3) are as follows:
(a)
the offence in respect of which the defendant is
extradited;
(b)
an offence disclosed by the information provided to
the category 1 territory in respect of that offence;
(c)
an extradition offence in respect of which consent
to the defendant being dealt with is given on behalf
of the territory in response to a request made by
the appropriate judge;
(d)
an offence which is not punishable with
imprisonment or another form of detention;
(e)
an offence in respect of which the person will not
be detained in connection with his trial, sentence
or appeal;
(f)
E
an offence in respect of which the person waives
the right that he would have (but for Section 146(6)(f)
not to be dealt with for the offence.
F
25. The “Rule of Speciality” has been succinctly explained
in the treatise “The Law of Extradition and Mutual Assistance”.
(Second Edition by Clive Nicholls QC, Clare Montgomery QC,
Julian B. Knowles – Oxford Publication) by way of the following
example:
B
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G
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“The operation of the speciality principle in this context can
be illustrated by an example, based on the facts of Kerr
and Smith (1976) 62 Cr App R 210 (a case under the EA
1870). Suppose that a Part 3 warrant is submitted to
Denmark for the return of D for an offence of robbery under
Section 8(1) of the Theft Act 1968. The Part 3 warrant only
specifies the offence of robbery, however, the factual
account of the offence provided by the UK to Denmark
refers to D as having carried a sawn-off shotgun in the
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
53
course of the robbery. This is an offence contrary to S. 18
of the Firearms Act, 1968. Extradition is granted.
D could be tried for robbery and for the S.18 offence
because it was disclosed in the information provided to
Denmark and S.146(6)(b) would therefore apply. If,
however, evidence came to light that prior to the robbery
D had assaulted his wife, then he could not be tried for
this offence until after he had been given an opportunity
to leave the UK after serving his sentence for the robbery,
unless Denmark consented or he waived his rights. This
is because the offence of assault did not form part of the
information supplied in support of the application for his
extradition.”
Similar principle is found in Halsbury’s laws of England, 4th
Ed., Vol. 18, Para 246:
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A does not violate the Rule of Speciality. Paragraph 155 of
American Jurisprudence, 2nd Ed., Vol. 31A, is pertinent in
this regard:
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“Extradition and Fugitive Offenders
246. Trial on other charges. Where a person accused or
convicted of an extradition crime is surrendered by a
foreign State, then, until he has been restored or had an
opportunity of returning to the foreign State, he is not
triable and may not be tried for any offence committed
prior to the surrender in any part of Her Majesty’s
dominions other than such of the extradition crimes as may
be proved by the facts on which the surrender is grounded.
It follows that a person extradited on a particular charge
is triable for any other crime provable by the facts upon
which is surrender is grounded. Where the defendant
alleges that he is being tried for an offence which is not
an extradition crime the onus of proving that he was
surrendered under extradition law is on him.”
Similarly, the American Jurisprudence also recognizes that
slight variation in the description of the offence in the extradition
proceedings and in the subsequent indictment or information
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“155. Effect of Variation in charges; related and included
charges
A slight variation in the description of the offence in the
extradition proceedings and in the subsequent indictment
or information does not violate the rule of speciality, it is
generally sufficient if the facts shown in the extradition
proceedings and those relied upon in the accusation and
at the trial are substantially the same, although the crime
itself may have a different name in the surrendering
country. And if extradition was based on several charges,
it is immaterial whether the trial is on all or any of them.
Although a returned fugitive may ordinarily be tried for any
offence included in the crime with which he has been
charged. But a person extradited as an accomplice may
be tried as a principal where the distinction between the
two has been abolished in the demanding state. Applying
similar reasoning, the fact that an extradited person could
not be convicted of conspiracy, because the foreign country
took the position that the conspiracy charge was not
included in the list of offences giving rise to a treaty
obligation to extradite, did not prevent the United States
from using evidence of a conspiracy to convict the
defendant on the substantive counts.”
The Rule of Speciality as contained in Article 16 of Law 144/
99 of Portugal recognizes that the speciality principle requires
that the extradited persons should be tried for the act or acts
G on the ground of which request for cooperation was made. It
is pointed out that the additional charges do not traverse
beyond the facts on which request for extradition of the
appellant was made by the Indian Government. The abovesaid
Portuguese Law on Speciality is reproduced hereunder:
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 55
MAHARASHTRA [P. SATHASIVAM, J.]
“Article 16—Rule of Speciality
1.
2.
3.
4.
56
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No person who, as a consequence of international
cooperation, appears in Portugal for the purpose
of participating in criminal proceedings, either as
a suspect an accused or a sentenced person, shall B
be proceeded against, sentenced or detained nor
shall he be in any way restricted in his personal
freedom, for any act committed prior to his
presence on the national territory, other than the act
or acts on the grounds of which the request for
C
cooperation was made by a Portuguese authority.
No person who, in the same terms as above,
appears before a foreign authority shall be
proceeded against, sentenced, detained, nor shall
he be in any way restricted in his personal freedom, D
for any act committed, or any sentence passed,
prior to his leaving the Portuguese territory, other
than those mentioned in the request for
cooperation.
E
The surrender of a person to the requesting State
as mentioned in the preceding praragraph shall not
be authorized unless that State provides the
necessary guarantees to the effect that the rule of
speciality shall be complied with.
F
The immunity that results from the provisions of this
Article shall cease to have effect:
(a)
where it became possible for the person
concerned to leave the Portuguese territory G
or the territory of another State, as
applicable, and that person does not avail
himself of that possibility within a period of
45 days, or that person voluntarily returns to
one of the said territories;
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B
(b)
5.
The provisions of paragraphs 1 and 2 above do not
preclude the possibility of extending the
cooperation previously sought, by way of a new
request, to facts other than those on the grounds of
which the original request was made; the new
request shall be prepared or examined, as
applicable, in accordance with the provisions of this
law.
6.
Any request made under the provisions of the
preceding paragraph shall be accompanied by a
document established by the competent authority,
containing the statements made by the person who
benefits from the rule of speciality.
7.
Where the request is submitted to a foreign State,
the document mentioned in the preceding
paragraph shall be established before the “Tribunal
da Relacao” “1” (Court of appeal) that has
jurisdiction over the ara where the person who
benefits from the rule of speciality resides or is
staying.”
C
D
E
F
where the State that authorized the transfer,
once the suspect, the accused or the
sentenced person have been heard,
consents to a derogation to the rule of
speciality.
In this regard, we may point out that Indian Extradition Act of
1962 also recognizes the Doctrine of Speciality in Section 21
of the Act which we have already extracted. The Doctrine of
G Speciality is a universally recognized principle of international
law and partakes of doctrines of both double criminality and
reciprocity.
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26. Unlike the law in United Kingdom, United States and
Portugal, the law in India only permits the extradited person to
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
57
be tried for lesser offence disclosed by the facts proved for the
purpose of securing his surrender. Apart from the said offence
being made out from the facts proved by the Indian authorities
for the surrender of the fugitive, the additional indictment, if any,
has to be lesser than the offences for which the extradition has
been granted. This Court while dealing with a similar issue
relating to Section 21(b) of the Extradition Act in Suman Sood
@ Kamaljeet Kaur vs. State of Rajasthan (2007) 5 SCC 634
observed as under:
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“28. On behalf of Suman Sood, one more argument
C
was advanced. It was contended that extradition order in
her case did not refer to Section 365 IPC but both the
courts convicted her for the said offence under Sections
365/120-B IPC which was illegal, unlawful and without
authority of law. Her conviction and imposition of sentence
for an offence punishable under Section 365 read with D
Section 120-B IPC, therefore, is liable to be set aside.
29. We find no substance in the said contention as
well. It is no doubt true that Section 365 IPC had not been
mentioned in the order of extradition. But as already seen E
earlier, Section 364-A IPC had been included in the
decree. Now, it is well settled that if the accused is charged
for a higher offence and on the evidence led by the
prosecution, the court finds that the accused has not
committed that offence but is equally satisfied that he has F
committed a lesser offence, then he can be convicted for
such lesser offence. Thus, if A is charged with an offence
of committing murder of B, and the court finds that A has
not committed murder as defined in Section 300 IPC but
is convinced that A has committed an offence of culpable
G
homicide not amounting to murder (as defined in Section
299 IPC), there is no bar on the court in convicting A for
the said offence and no grievance can be made by A
against such conviction.
30. The same principle applies to extradition cases.
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Section 21 of the Extradition Act, 1962 as originally
enacted reads thus:
“21. Accused or convicted person surrendered or
returned by foreign State or Commonwealth country not
to be tried for previous offence.—Whenever any person
accused or convicted of an offence, which, if committed
in India, would be an extradition offence, is surrendered
or returned by a foreign State or Commonwealth country,
that person shall not, until he has been restored or has had
an opportunity of returning to that State or country, be tried
in India for an offence committed prior to the surrender or
return, other than the extradition offence proved by the
facts on which the surrender or return is based.”
31. The section, however, was amended in 1993 by
the Extradition (Amendment) Act, 1993 (Act 66 of 1993).
The amended section now reads as under:
“21. Accused or convicted person surrendered or
returned by foreign State not to be tried for certain
offences.—Whenever any person accused or convicted of
an offence, which, if committed in India would be an
extradition offence, is surrendered or returned by a foreign
State, such person shall not, until he has been restored or
has had an opportunity of returning to that State, be tried
in India for an offence other than—
(a) the extradition offence in relation to which he was
surrendered or returned; or
G
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(b) any lesser offence disclosed by the facts proved
for the purposes of securing his surrender or return other
than an offence in relation to which an order for his
surrender or return could not be lawfully made; or
(c) the offence in respect of which the foreign State
has given its consent.”
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 59
MAHARASHTRA [P. SATHASIVAM, J.]
32. It is, therefore, clear that the general principle of
administration of criminal justice applicable and all
throughout applied to domestic or municipal law has also
been extended to international law or law of nations and
to cases covered by extradition treaties.
33. In Daya Singh this Court dealing with amended
Section 21 of the Extradition Act, stated: (SCC p. 519,
para 3)
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“The provision of the aforesaid section places restrictions
on the trial of the person extradited and it operates as a C
bar to the trial of the fugitive criminal for any other offence
until the condition of restoration or opportunity to return is
satisfied. Under the amended Act of 1993, therefore, a
fugitive could be tried for any lesser offence, disclosed
by the facts proved or even for the offence in respect of D
which the foreign State has given its consent. It thus
enables to try the fugitive for a lesser offence, without
restoring him to the State or for any other offence, if the
State concerned gives its consent.”
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34. Now, it cannot be disputed that an offence under
Section 365 IPC is a lesser offence than the offence
punishable under Section 364-A IPC. Since extradition
of Suman Sood was allowed for a crime punishable with
higher offence (Section 364-A IPC), her prosecution and
F
trial for a lesser offence (Section 365 IPC) cannot be held
to be without authority of law. The contention, therefore,
has no force and is hereby rejected.” (Emphasis supplied)
The ratio in the Suman Sosod (supra) is directly applicable to
G
the case on hand.
27. The main grievance of the appellant, as stated above,
is that he had been extradited under International Convention
for the Suppression of Terrorist Bombings and therefore, he can
be tried only for the offences which are related to the said
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Convention. The said assumption cannot be sustained. If the
said claim is accepted, it would be contrary to the judgment of
the Constitutional Court of Portugal and it also shows the
ignorance of the appellant towards the notification dated
13.12.2002, issued by the Government of India making the
Extradition Act, 1962 applicable to Government of Portugal
except Chapter III. As rightly pointed out by the respondents that
the Court has not granted extradition merely on the basis of
Extradition Treaty but also on the basis of reciprocity. Pursuant
to Section 3 of the Act, the order of the Government of India
GSR-822(E) dated 13.12.2002 had been approved and
published ensuring due regard for the principle of reciprocity.
In view of the same, the claim of the appellant is without any
substance.
28. As discussed earlier, it is true that there is no
Extradition Treaty between India and Portugal. However, the
laws of both the countries permit entertaining request for
extradition from Non Treaty States also. The extradition request
was made to the Government of Portugal by the Government
of India under the provisions of the Extradition Act applicable
to Non Treaty States i.e. Section 19 of the Act. Although the
Convention was also relied upon for the extradition, as rightly
pointed out by the respondent, it was not the sole basis as is
apparent from the Letter of Request. The primary consideration
for the request of extradition was the assurance of reciprocity.
The notification dated 13.12.2002 by the Government of India
directing that the provisions contained in the Extradition Act
shall be applicable to the Republic of Portugal was issued
keeping in view the said principle of reciprocity. For the
purpose of extradition proceedings, appellant–Abu Salem was
treated as a fugitive criminal as defined under Section 2(f) of
the Extradition Act, 1962. We have already adverted to the
Gazette Notification dated 13.12.2002 making it clear that the
provisions of Extradition Act shall apply to Portuguese Republic
in accordance with the principle of reciprocity. The provisions
of the Act are applicable in respect of the extradition of
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 61
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62
appellant-Abu Salem. The Court of Appeals of Lisbon has A
recognized this principle of reciprocity and the applicability of
the provisions of the Extradition Act, 1962 to the Republic of
Portugal. The Supreme Court of Justice and Constitutional
Court of Portugal have also approved it. None of these Courts
have mentioned in their orders that the accused could not be B
tried in India for the offences for which his trial could take place
as per the domestic laws of India.
29. We have already adverted to Section 21 of the
Extradition Act. A bare reading of the above section would
indicate that the appellant-Abu Salem can be tried for the
offences for which he has been extradited. The Supreme Court
of Justice, Portugal has granted extradition of appellant-Abu
Salem for all the offences mentioned in para-1 of the order
dated 27.01.2005. In addition, Abu Salem can also be tried for
lesser offence/offences in view of Section 21 of the Extradition
Act disclosed by the facts proved for the purposes of securing
his surrender. “Lesser offence” means an offence which is
made out from the proved facts and provides lesser punishment,
as compared to the offences for which the fugitive has been
extradited. The offence has to be an extradition offence, as
defined under Section 2 (c) (ii) of the Act i.e. an offence
punishable with imprisonment for a term which shall not be less
than one year under the laws of India or of a foreign State. The
lesser offence cannot be equated with the term “minor offence”
as mentioned in Section 222 of the Code of Criminal
Procedure. The Legislature has deliberately used the word
“lesser” in Section 21(b) of the Extradition Act instead of the
word “minor”. Thus, the punishment provided for the offence is
relevant and not the ingredients for the purposes of
interpretation of the term “lesser offence”.
30. The contention of the appellant that he can be tried only
for the offences covered under Article 2(1) of the said
Convention is misconceived in view of the fact that he was
extradited not only under the said Convention but also in the
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light of the principle of reciprocity made applicable through the
application of the Extradition Act to the Republic of Portugal.
A complete reading of Article 2 of the said Convention makes
it clear that it deals not only with those accused who commit
the substantive offences as defined in Article 2(1) but also
includes all the conspirators and those who have constructive
liability for commission of the substantive offences as per Subsection 3 of Article 2 of the Convention, which fact has also
been mentioned by the Supreme Court of Justice, Portugal in
para 9.4 of its order. Further sub-section (d) of Article 1(3) of
the Convention makes it abundantly clear that the explosive or
lethal device means a weapon or device i.e. designed, or has
the capability to cause death, serious bodily injury or substantial
material damage through its release etc. AK-56 rifles are the
weapons/devices, which have the capability to cause death
and serious bodily injury through the release of cartridges and
are covered under the said Article. The appellant has been
charged for possession, transportation and distribution of AK56 rifles, their ammunitions as well as hand-grenades, which
were illegally smuggled into the country in pursuance of the
criminal conspiracy.
31. We are also satisfied that there has been no violation
of Rule of Speciality and the Solemn Sovereign Assurance
given by the Government of India in the letter dated 25.05.2003
of the Indian Ambassador to the Government of Portugal
regarding the trial of the appellant-Abu Salem. The said
assurance of the Indian Ambassador was given to the effect
that the appellant will not be prosecuted for the offences other
than those for which his extradition has been sought and that
he will not be re-extradited to any other third country. As rightly
pointed out by the Solicitor General, there has been no violation
of Rule of Speciality. As per the Government of India Gazette
Notification dated 13.12.2002, all the provisions contained
under the Extradition Act are made applicable in respect of the
extradition of Abu Salem except those contained in Chapter III
of the Act. The Court of Appeals in Lisbon, has recognized this
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [P. SATHASIVAM, J.]
63
principle of reciprocity and the applicability of the provisions of
Extradition Act to Portugal. The Supreme Court of Justice and
Constitutional Court of Portugal have also approved it. In view
of the fact that the provisions of the Extradition Act, 1962 have
been made applicable to Portugal, provisions contained in
Section 21 of the Act would come into operation while
conducting the trial of appellant-Abu Salem.
64
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32. We are also satisfied that the Designated Judge has
correctly concluded that the appellant-Abu Salem can be tried
for ‘lesser offences’, even if, the same are not covered by the
Extradition Decree since the same is permitted under Section C
21(b) of the Extradition Act. No bar has been placed by the
Portuguese Courts for the trial of lesser offences in accordance
with the provisions contained under Section 21(b) of the
Extradition Act although Portuguese Courts were aware of the
D
said provisions of Extradition Act.
33. We have already highlighted how the Government of
India and the Government of Portugal entered into an
agreement at the higher level mentioning the relevant offences
and the appellant was extradited to India to face the trial. We E
have also noted the Notification of the Government of India
about the applicability of Extradition Act, 1962. In the light of
the said Notification, the additional charges that have been
framed fit well within the proviso to Section 21(b) of the
Extradition Act. The offences with which the appellant has been F
additionally charged are lesser than the offences for which the
appellant has been extradited. To put it clear, the offences with
which the appellant is charged are punishable with lesser
punishment than the offence for which he has been extradited.
The extradition granted in the present case had due regard to
G
the facts placed which would cover the offences with which the
appellant has been charged. As rightly pointed out by learned
Solicitor General, the offences are disclosed by the same set
of facts placed before the Government of Portugal. We agree
with the submission of the learned Solicitor General and the
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ultimate decision of the Designated Court.
34. Coming to the order of the Designated Court directing
separation of the trial of the appellant, it is the grievance of the
appellant that because of the separation, he would forego the
opportunity to cross-examine the witnesses. This grievance has
been dealt with in a separate set of proceeding which we have
adverted to in the earlier part of our judgment. The order dated
24.08.2009 has granted the appellant an opportunity to submit
a list of witnesses examined in the main trial for crossexamination. Hence, there is no basis in the apprehension
raised by the appellant.
35. In the light of the above discussion, we are of the view
that the appellant has been charged within the permissible
scope of Section 21(b) of the Extradition Act and the
Designated Court has not committed any illegality in passing
the impugned orders. Consequently, all the appeals as well as
the writ petition are liable to be dismissed, accordingly
dismissed. Since the trial is pending from the year 1983 and
connected matters have already been disposed of, we direct
the Designated Court to proceed with the trial expeditiously.
GANGULY, J. 1. I have gone through the judgment
prepared by Hon’ble Brother Justice P. Sathasivam and I agree
with the conclusions reached by His Lordship.
F
G
2. Having regard to the importance of the issues discussed
in the judgment, may I express my views on the same.
3. Conceptually extradition is a rather complex
jurisprudential zone as it has encompassed within itself various
trajectories of apparently conflicting ideas.
4. Generally, a State’s criminal jurisdiction extends over
offences committed within its geographical boundaries but it
is the common experience of all the countries that often a
criminal committing an offence in one country flees to another
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [ASOK KUMAR GANGULY, J.]
65
66
country and thus seeks to avoid conviction and the
consequential punishment. This poses a threat in all civilized
countries to a fair adjudication of crime and sustaining the
Constitutional norms of Rule of Law.
A
A
5. To remedy such anomalous and unjust situation,
Extradition has been evolved by way of International treaty
obligation which ensures a mode of formal surrender of an
accused by the one country to another based on reciprocal
arrangements.
B
B
6. In India, extradition has not been defined under the
Extradition Act 1962 (hereinafter, “the Act”). However, a
comprehensive definition of extradition has been given in
Gerhard Terlinden vs. John C. Ames in which Chief Justice
Fuller defined extradition as:-
C
“the surrender by one nation to another of an individual
accused or convicted of an offence outside of its own
territory, and within the territorial jurisdiction of the other,
which, being competent to try and to punish him, demands
the surrender.”
D
E
[184 U.S. 270 at p. 289]
7. In the above formulation, the learned Chief Justice
virtually echoed the principles of extradition laid down by
Professor M. Cherif Bassiouni in his treatise “International
Extradition and World Public Order, 1974, Oceana
Publications”. The learned Professor explained:
“In contemporary practice extradition means a formal
process through which a person is surrendered by one
state to another by virtue of a treaty, reciprocity or comity
as between the respective states. The participants in such
a process are, therefore, the two states and, depending
upon value-perspectives, the individual who is the objectsubject of the proceedings. To a large extent, the
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
processes and its participants have not changed much in
the course of time but the rationale and purposes of the
practice have changed, and as a consequence so have
the formal aspects of the proceedings.” (Page 2)
8. But extradition is different from deportation by which
competent State authorities order a person to leave a country
and prevent him from returning to the same territory. Extradition
is also different from exclusion, by which an individual is
prohibited from staying in one part of a Sovereign State. As a
result of such orders, sometimes deserters or absentees from
C
Armed Forces of a particular country are returned to the
custody of Armed Forces of the country to which they belong.
9. Both deportation and exclusion basically are nonconsensual exercise whereas extradition is based on a
D consensual treaty obligation between the requesting State and
the requested State. Extradition, however, is only to be resorted
to in cases of serious offences and Lord Templeman was right
in holding that extradition treaties and legislation are designed
to combine speed and justice [Re Evans – 1994 (3) All E.R.
E 449 at 450-451].
10. In the context of extradition law, which is based on
international treaty obligations, we must keep in mind the
emerging Human Rights movements in the post World War II
scenario and at the same time the need to curb transnational
F and international crime. The conflict between these two
divergent trends is sought to be resolved by expanding the
network of bilateral and multilateral treaties to outlaw
transnational crime on the basis of mutual treaty obligation. In
such a situation there is obviously a demand for inclusion of
G Human Rights concerns in the extradition process and at the
same time garnering more international support and awareness
for suppression of crime. A fair balance has to be struck
between Human Rights norms and the need to tackle
transnational crime. This is best summed up in the leading
H decision of European Court of Human Rights rendered in
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [ASOK KUMAR GANGULY, J.]
67
Soering vs. United Kingdom reported in 1989 (11) EHRR 439
and the relevant excerpt is quoted:
“…inherent in the whole of the Convention (European
Convention on Human Rights) is a search for a fair balance
between the demands of the general interest of the
community and the requirements of the protection of the
individual’s fundamental rights. As movement about the
world becomes easier and crime takes on a larger
international dimension, it is increasingly in the interests
of all nations that suspected offenders who flee abroad
should be brought to justice. Conversely, the establishment
of safe havens for fugitives would not only result in danger
for the State obliged to harbour the protected person but
also tend to undermine the foundations of extradition.
These considerations must also be included among the
factors to be taken into account in the interpretation and
application of the notions of inhuman and degrading
treatment or punishment in extradition cases.”
11. The extradition law, therefore, has to be an amalgam
of international and national law. Normally in extradition law the
requested State is to follow the rule of Non-Inquiry which means
that the requested State is not to normally make inquiry about
the nature of criminal justice system in the requesting State.
That is why in this case, on a complaint being made by Abu
Salem in the Court of the requested country, the Courts of
Portugal await the decision of this Court. The actual conduct
of trial of the extradited accused is left to the criminal
jurisprudence followed in the requesting State. This rule of NonInquiry is a well developed norm both in Canada and in
America [See the decision of Canadian Supreme Court in
Canada vs. Schmidt, (1987) 1 SCR 500.
68
A
A
B
B
country a person accused of having committed a crime
there for trial in the ordinary way in accordance with the
system for the administration of justice prevailing in that
country simply because that system is substantially
different from ours with different checks and balances. The
judicial process in a foreign country must not be subjected
to finicky evaluations against the rules governing the legal
process in this country.”
13. Whether or not the fugitive who has been extradited
would have a standing to complaint of the judicial process in
the requesting State after extradition has been done,
independent of the position taken by the requested State, is a
debatable issue. It is a part of the larger debate about the
position of an individual as a subject of international law, and
the obligation of States towards individuals. This is pertinent
here because one of the claims made by Abu Salem is with
respect to the erosion of his rights that exist by way of the
international commitments India has made through the doctrine
of specialty embodied in section 21 of the Extradition Act. His
complaint is that by trying him for some offences which are
designated as ‘lesser offences’ and calling them as completely
similar to the ones mentioned before the Portuguese
authorities, as well as by separating his trial from the other
accused, the Government of India has violated its commitments
in the extradition request, and therefore has violated the rights
with which Abu Salem had been extradited. The answer to this
complaint obviously lies in the principle of non-inquiry which
prohibits questioning the fairness of the judicial process in the
requesting State. That is why the Courts of Portugal await the
decision of this Court. However, non-inquiry is not an absolute
principle.
C
C
D
D
E
E
F
F
G
G
H
14. In a given situation, the requested State may question
the procedures in the requesting State if they are prima facie
contrary to fundamental principles of justice and there is a high
risk of the fugitive being prejudiced by the process of
H extradition.
12. Justice La Forest delivering the majority judgment in
Schmidt held:
“that I see nothing unjust in surrendering to a foreign
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [ASOK KUMAR GANGULY, J.]
69
15. There are cases where the requested State has
rejected the extradition request as the requesting State may
have procedures that are basically incompatible with the
practices of the requested State. The most remarkable
example is in Soering (supra) where the European Court of
Human Rights struck down an extradition request from the USA
on the ground of it being violative of Article 3 of the European
Convention on Human Rights which prohibits inhuman and
degrading treatment of humans. It said that the prolonged delay
in the form of death row, which is a natural outcome of the
criminal procedure existing in the USA, was certainly violative
of the human rights of the fugitive, for it was torturous for him
to wait in anticipation of a death that was almost certain for him
in the USA.
16. Furthermore obligations entered by many countries of
the world, including India, in the form of Covenant on Civil and
Political Rights, and The Convention Against Torture and Other
Cruel, Inhuman or Degrading Treatment or Punishment (to
which India is a Signatory), would preclude a total and
unconditional observance of the principle of non-inquiry. Even
though, non- inquiry is not an absolute doctrine, but in facts of
the present case, it operates.
17. In this case, the insistence of the Central Government
on trying Abu Salem for lesser offences is permissible, both
under the Extradition Act as well as under the Convention for
Suppressing Terrorist Bombings.
18. United Nations General Assembly adopted on 15th
December 1997, the International Convention for the
Suppression of Terrorist Bombings. India has been a party to
this Convention, ever since the Union Cabinet approved it on
5th of August, 1999 and India formally ratified it on 17th of
September 1999. This Convention creates a broad platform for
international cooperation to suppress and deal with unlawful and
international use of explosives and other lethal devices in
various public places with the intention to cause serious bodily
70
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A damage and extensive destruction.
B
19. The Convention thus fills up a huge void in international
law by expanding the legal framework and enabling several
States to cooperate in the investigation, prosecution and
extradition of several persons who are engaged in such
B
international terrorism. It is of utmost importance as it
strengthens international law enforcement in controlling
international terrorism.
C
D
E
20. This Convention is structured on prior counter terrorism
C conventions adopted by the United Nations. It calls upon the
member parties to declare certain specified conducts to be
criminal activities and to initiate prosecution for them, and to
extradite persons who have committed such conduct in one
country and are staying in another country. But unlike its
D predecessors, this Convention does not define terrorism.
However it points out particular conducts, regardless of the
motive, as internationally condemnable. Thus this convention is
of crucial importance in the field of international law
enforcement devices. [See Samuel M. Witten, The International
E Convention for the Suppression of Terrorist Bombings, The
American Journal of International Law, Vol.92, No.4 (October
1998) pp.774-781]
21. There are two ways in which to describe a lesser
crime. Either every single element of a lesser crime should be
component of the greater crime on the basis of their statutory
definitions; or the allegations of the larger crime in the
indictment should include all the factual details of the lesser
crime. (See Submission of Lesser Crimes, Columbia Law
Review, Volume 56(6), 1956 pp.888-902, at 888-890).
F
F
G
G
H
22. Section 21(b) of the Act seems to embody the latter
of these two principles. This means that a crime which can be
framed from out of the factual averments themselves (i.e.
evidence submitted) before the requested State at the time of
H extradition, can be the one upon which the fugitive can be tried.
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [ASOK KUMAR GANGULY, J.]
71
A lesser crime can be a cognate crime, in that it shares its roots
with the primary crime, even though it may be independent of
it.
23. The learned Solicitor General rightly placed reliance
on the following observation of the Designated Court in
Bombay Blast case where the learned Judge observed:
“Thus in true sense all such offences would always be lesser
offence of conspiracy of which pivotal charge of conspiracy
is framed at the trial subject to such offences being
punishable with lesser punishment than prescribed for main
offence of conspiracy.”
24. In the instant case the extradition has been allowed by
the requested State on the specific undertaking of the
Government of India that the extradited criminal will not be
subjected to death penalty or imprisonment beyond 25 years.
Therefore, the basic human rights considerations have been
taken into account and the guidelines in Soering (supra) have
been adhered to. Thus, primacy has been accorded to human
right norms in the extradition process.
72
A
A
B
B
C
C
D
D
E
E
25. Doctrinally speaking, Extradition has five substantive
ingredients. They are: (a) reciprocity, (b) double criminality, (c)
extraditable offences, (d) specialty and (e) non inquiry.
26. In India, the Act suffered an amendment in 1993, by
Act 66 of 1993 and in the instant case, the amended provisions
have come up for discussion. In order to appreciate the purport
of the amendment, the Statement of Objects and Reasons for
enacting the Act 66 of 1993 (hereinafter the Amending Act) are
set out:
“At present, the Law of Extradition in India is contained in
the Extradition Act, 1962 (Act 34 of 1962). The 1962-Act
made a distinction between Commonwealth countries and
foreign States and considered only foreign States as treaty
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
States. The extradition with Commonwealth countries was
separately governed by the second schedule of the Act
and the Central Government was given powers under
Chapter III to conclude special extradition arrangements
with respect to Commonwealth countries only. Such
distinction made in the Extradition Act, 1962 between
foreign States and Commonwealth countries does not hold
good in view of the change of time and rapid
developments in Extradition Law at international level.
Commonwealth countries are concluding extradition
treaties among themselves. India has in recent years
concluded separate extradition treaties with Canada and
UK. Moreover, the Civil Law countries have specific
requirements for purposes of extradition with them. In
addition, terrorism and drug trafficking as two most
heinous crimes affecting innocent lives, have thrown new
challenges necessitating changes in the existing
Extradition Law to effectively deal with these new crimes.
Many International Conventions dealing with these and
other crimes have laid down specific obligation on State
parties to extradite or prosecute a fugitive offender. India
is a State party to many of these International Conventions.
2. The purpose of the Bill is to amend the Extradition Act,
1962, to suitably incorporate in it the above noted changes
and to achieve, inter alia, the following objectives:
F
F
G
G
H
H
a.
to enable India to conclude extradition treaties with
foreign States including the Commonwealth
countries without treating them structurally different;
b.
to provide for extra-territorial jurisdiction over
foreigners for crimes committed by them outside
India;
c.
to incorporate composite offences in the definition
of extradition offence;
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF 73
MAHARASHTRA [ASOK KUMAR GANGULY, J.]
d.
to exclude political offence as a defence in cases
of offences of a serious nature;
e.
to cover extradition requests on the basis of
international Conventions within the scope of the
Act;
f.
to enable Central Government to make and receive
requests for provisional arrest of fugitives in urgent
cases pending the receipt of the formal extradition
request;
g.
to enable the Central Government to give
assurance pursuant to a treaty obligation to the
requested State for the non-execution of death
penalty.
3. The Bill seeks to achieve these objects.”
27. The above stated objects behind the Amending Act are
relevant in appreciating some of the problems in the instant
case. As a result of the amendment, Section 21 has been
completely recast and the doctrine of Specialty has been
introduced.
28. A perusal of the said Amendment Act would make it
clear that the amendment enables the requesting State to try
the fugitive for a lesser offence without restoring him to the
requested State. In fact the doctrine of specialty is in fact a
corollary to the principle of double criminality, and is founded
on policy and expediency and on the basic principle of
reciprocity. It is thus a universally recognized principle of
international law and partakes of doctrines of both double
criminality and reciprocity.
29. Section 21 of the Act bears close a resemblance to
Section 19 of the English Extradition Law. Both the provisions
are successors to Section 19 of the United Kingdom Extradition
Act, 1870. Section 19 of the English Extradition Law reads:
74
A
A
B
B
C
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
“Where in pursuance of any arrangement with a foreign
State, any person accused or convicted of any crime which,
if committed in England, would be one of the crimes
described in the first schedule to this Act is surrendered
by the foreign State, such person shall not, until he has
been restored or had an opportunity of returning to such
foreign State, be triable or tried for any offence committed
prior to the surrender in any part of her Majesty’s
dominions other than such of the said crimes as may be
proved by the fact on which the surrender is grounded.”
30. This is in keeping with the rule of double criminality,
which requires a mutually acceptable position between the
requesting as well as the requested State on all the aspects of
the criminal act committed by the person who is to be
extradited. This understanding is not about an agreement as
D to the specifics, but rather a consensus ad idem in the
contractual relationship between two sovereign States.
Explaining the rule of double criminality, Shearer says, “…This
rule requires that an act shall not be extraditable unless it
constitutes a crime according to the laws of both the requesting
E and requested States… The validity of the double criminality
rule has never seriously been contested, resting as it does, in
part on the basic principle of reciprocity, which underlies the
whole structure of extradition, and in part on the maxim nulla
poena sine lege” (no penalty without prior legal authority) (See
F Extradition in International Law (1971) at page 137).
31. This position of extraditable offences, and the
obligations of the requesting State can further be understood,
if one bears in mind the fact that the doctrines of double
criminality and specialty are both safeguards of the individual
G
rights of the extraditee who should not be tried on unexpected
counts, as well as the rights of the requested State to have its
laws and processes given adequate deference by the
requesting State. It is not only a means to protect the person
from unexpected prosecution, but also a preventive guard
H
ABU SALEM ABDUL QAYOOM ANSARI v. STATE OF
MAHARASHTRA [ASOK KUMAR GANGULY, J.]
75
against the abuse of the legal process of the requested State.
While the first takes care of the individual’s right, the second
takes care of the rights of a sovereign State.
32. Therefore it can be said that as long as the facts that
have been submitted before the requested State prima facie
show the guilt of the extraditee in a foreseeable and logically
consistent way, the said person can be tried on all such counts
that can be conclusively proved against him or her.
33. Therefore, I do not find any substance in the complaint
of Abu Salem.
34. Thus I concur with Brother Sathasivam and reach the
same conclusion as His Lordship does.
K.K.T.
Appeals & Writ petition dimissed.
[2010] 13 (ADDL.) S.C.R. 76
A
A
B
B
M/S. INDIAN RAILWAYS CATERING & TOURISM
CORPORATION LIMITED AND ANR.
v.
M/S. DOSHION VEOLIA WATER SOLUTIONS (P) LIMITED
AND ORS.
(Civil Appeal Nos. 8545-8546 of 2010)
OCTOBER 04, 2010
[ALTAMAS KABIR AND A.K. PATNAIK, JJ.]
C
C
Contract – Government Contract – Turnkey project –
Tender notice published by appellant-IRCTC – Two bidders,
‘I’ and ‘D’ – ‘D’ objected to the bid of ‘I’ on the ground that ‘I’
violated the Instructions to Bidders by offering 1% discount
on the quoted price and further violated the terms and
D conditions of the tender by not indicating the excise duty
amount in its bid – Objection negated by the appellant and
bid of ‘I’ accepted – Writ petition filed by ‘D’ dismissed by
Single Judge of High Court – Order set aside by the Division
Bench – Justification of – Held: Not justified – The offer of
E discount on the quoted price and non-mentioning of excise
duty amount in the bid of ‘I’ were not in breach of the essential
terms of the tender documents, therefore, it was for the
appellant to evaluate the valid offers of the two bidders on the
merits of the two offers – On the basis of recommendations
F of Tender Committee, the Accepting Authority of the
appellant-IRCTC found the offer of ‘I’ to be better than the offer
of ‘D’ and also that tax and duties including excise duty had
no adverse financial implications on the appellant-IRCTC and
accordingly accepted the offer of ‘I’ – By reversing this
decision of the Accepting Authority of the appellant-IRCTC,
G
the Division Bench of the High Court acted as an appellate
court and exceeded its power of judicial review in a matter
relating to award of contract – Judicial Review.
H
76
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION 77
VEOLIA WATER SOLUTIONS (P) LTD.
Appellant no.1- IRCTC published a tender notice for
a turnkey project in regard to a packaged drinking water
bottling plant. In response, two tenderers, Ion Exchange
and Doshion, submitted their technical and financial bids,
with Doshion quoting a total price of Rs.18.65 Crores,
and Ion Exchange quoting a price of Rs.18.66 Crores
alongwith a discount of 1% thereon (thereby the net price
worked out to Rs.18.47 Crores).
78
A
A
B
B
Doshion objected to the bid of Ion Exchange on the
ground that Ion Exchange violated the Instructions to
C
Bidders by offering 1% discount on the quoted price and
further violated the terms and conditions of the tender by
not indicating the excise duty amount in its bid. In this
regard, Doshion relied upon Clauses 1.10, 1.11 and 1.12
of the Instructions to Bidders and Clauses 2.1 and 9.0 of
the Special Terms and Conditions of the tender D
documents. The Tender Committee of IRCTC made
recommendation that taxes and duties (including the
excise duty) had no financial implication on IRCTC and
that the 1% discount offered in the bid of Ion Exchange
can be considered. The Accepting Authority of IRCTC E
accepted the said recommendation and issued a letter of
acceptance to Ion Exchange.
Doshion filed two writ petitions, one praying for a
writ of mandamus restraining IRCTC from taking any step
in furtherance of the tender; and another praying for
quashing the letter of acceptance issued in favour of Ion
Exchange. The Single Judge of the High Court dismissed
both the writ petitions.
C
D
E
F
F
In writ appeal, the Division Bench quashed the G
acceptance of the offer of Ion Exchange. However, it
declined to award the contract to Doshion (as prayed by
it) leaving it for IRCTC to take a decision in the matter.
G
In the instant cross-appeals, the questions which
H
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
arose for consideration were: 1) whether the offer of 1%
discount on the quoted price made by Ion Exchange was
in breach of any essential term of the tender notification
or the tender format as held by the High Court and 2)
whether the High Court was right in coming to the
conclusion that by not indicating the excise duty amount
in rupees in its offer, Ion Exchange committed breach of
an essential term or condition of the tender notification
or the tender format.
Allowing the appeals of IRCTC and Ion Exchange
and dismissing the appeal of Doshion, the Court
HELD: 1.1. Clause 1.10 of the Instructions to Bidders
states that rates are to be quoted in the Prescribed Price
Schedule format only and it shall be inclusive of all taxes,
levies and duties. This clause does not say that the
tenderer will not quote any discount on the price. Clause
1.11 of the Instructions to Bidders states that every page
of the tender document shall be signed and properly
stamped by the authorized person or persons submitting
the tender and no over-writing will be permitted. Clause
1.12 of the Instructions to Bidders states that failure to
comply with either of these conditions will render the
tender void. Since there is no condition either in Clause
1.10 or Clause 1.11 that the tenderer will not quote
discount on the price, in case a tenderer offers a discount
on his quoted price his tender will not be rendered void
under Clause 1.12 of the Instructions to Bidders. [Para
14] [92-D-F]
1.2. Clause 2.1 of the Special Terms and Conditions
states that the vendor shall quote for lump sum price
along with detailed break-up as per price schedule
enclosed with the bid document and the cost of plants
and equipments as quoted in the price schedule will
constitute contract price/contract value. This clause also
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v.
DOSHION VEOLIA WATER SOLUTIONS (P) LTD.
79
80
does not say that the vendor will not quote a discount A
on the lump sum price. Clause 9.0 of the Special Terms
and Conditions states that the vendor should clearly spell
out in his offer his acceptance of the terms and conditions
as indicated in the Special Terms and Conditions and in
case of deviation, his offer may be rejected. There is B
nothing in this clause also to show that the vendor
cannot quote a discount on the price. In the Prescribed
Price Schedule also there is no mention anywhere that
the tenderer will not offer any discount on his quoted
price. In the absence of any express stipulation in the C
Instructions to Bidders or the Special Terms and
Conditions or in the Prescribed Price Schedule
prohibiting the tenderer from quoting a discount on the
price offered by him, the High Court could not have come
to the conclusion that by offering a discount of 1% on D
the quoted price, Ion Exchange has committed a breach
of the essential terms of the tender notification or the
tender format. [Para 14] [92-F-H; 93-A-C]
1.3. Unless the offer of rebate or discount is in breach
of the clear stipulations in the notice inviting tenders, it
cannot be held that such offer is in breach of the essential
terms and conditions of the notice inviting tenders. [Para
15] [94-C-D]
A
B
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
explicit in the tender documents, is to give room to the
State or its agencies to arbitrarily reject tenders even
where the clear terms or conditions of the tender
documents are complied with. [Para 17] [95-G-H; 96-A-B]
Kanhaiya Lal Agrawal v. Union of India and Others (2002)
6 SCC 315 – relied on.
W.B. State Electricity Board v. Patel Engineering Co. Ltd.
and Others (2001) 2 SCC 451 and Dutta Associates Pvt. Ltd.
v. Indo Merchantiles Pvt. Ltd. (1997) 1 SCC 53 – referred to.
C
D
E
E
1.4. Since IRCTC did not clearly stipulate in the F
Instructions to Bidders or in the Special Terms and
Conditions or in the Prescribed Price Schedule or in any
other part of the tender documents that a tenderer will not
offer any discount on the prices quoted by him and if any
such discount is offered the tender will be rejected, the G
offer of discount on the price made by Ion Exchange
cannot be treated to be in breach of the essential terms
or conditions of the tender documents. To hold that the
State or its agencies can reject a tender for breach of a
term or condition in the tender document, which is not
H
F
G
H
2.1. The language of Clauses (i) and (ii) of the Note
appended to the Prescribed Price Schedule makes it
clear that the prices quoted are to be lump sum inclusive
of all duties and taxes etc. and the vendor should indicate
total excise duty amount included in the prices for plants
and equipments. The Note does not indicate the
consequences that will follow if the vendor does not
indicate the total excise duty amount included in the
prices for plants and equipments. The Note does not say
that if the vendor does not indicate the total excise duty
amount included in the prices for plants and equipments,
the offer of the vendor “shall” be rejected. In the absence
of any mention of the consequence of rejection of the
offer for not indicating the total excise duty amount in
rupees included in the price of plants and equipments in
the tender documents, the High Court could not have
held that Ion Exchange had committed breach of an
essential term or condition of the tender notification or
the tender format. [Para 18] [97-A-D]
2.2. If on the recommendation of the Tender
Committee, the Accepting Authority did not find the
deviation from Clause (ii) of the Note by Ion Exchange
very material and accepted the offer of Ion Exchange, the
Division Bench of the High Court could not have held
that Ion Exchange committed a breach of an essential
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD.
81
term by not mentioning the excise duty amount in rupees
in its offer. [Para 18] [97-G]
Kanhaiya Lal Agrawal v. Union of India and Others (2002)
6 SCC 315 and G.J. Fernandez v. State of Karnataka (1990)
2 SCC 488 – relied on.
3. As the offer of 1% discount on the quoted price
and the non-mentioning of excise duty amount in rupees
in the bid of Ion Exchange were not in breach of the
essential terms of the tender documents, it was for IRCTC
to evaluate the valid offers of Ion Exchange and Doshion
on the merits of the two offers. On the basis of
recommendations of the Tender Committee, the
Accepting Authority of IRCTC found the offer of Ion
Exchange at a net price of Rs.18,47,34,000/- to be better
than the offer of Doshion at the price of Rs.18,66,00,000/
- and that tax and duties including excise duty had no
adverse financial implications to IRCTC and accordingly
accepted the offer of Ion Exchange. By reversing this
decision of the Accepting Authority of the IRCTC, the
Division Bench of the High Court acted as an appellate
court and exceeded its power of judicial review in a
matter relating to award of contract. [Para 19] [97-H; 98A-D]
Tata Cellular v. Union of India, (1994) 6 SCC 651 – relied
on.
82
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relied on
Para 7
(1994) 6 SCC 651
relied on
Para 8
(2001) 2 SCC 451
referred to
Para 12
(1997) 1 SCC 53
referred to
Para 17
(1990) 2 SCC 488
relied on
Para 18
B
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
8545-8546 of 2010.
From the Judgment & Order dated 29.04.2010 of the High
Court of Madras in WA No. 726 of 2010 & WA No. 727 of
2010.
WITH
Civil Appeal No. 8547-48 of 2010.
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Civil Appeal No. 8549 of 2010.
Ghoolam Vahanvati, AGI, Gourab Banerji, ASGI, Dr.
Abhishek M. Singhvi, A. Mariarputham, Jaideep Gupta, Sourav
Agrawal, Rajiv Dubey, Harseb, Sahil, Dinish Girdhar,
Kamlendra Mishra, P. Parmeswaran, Jaiveer Shergill, Azim H.
D Laskar, Karthik Rajan, Sachin Das, Abhijit Sengupta and P.
Parmeswaran for the appearing parties.
The Judgment of the Court was delivered by
E
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A. K. PATNAIK, J. 1. Leave granted.
2. These Appeals are against the judgment and order
dated 29.04.2010 passed by the Division Bench of the Madras
High Court in Writ Appeal Nos. 726 and 727 of 2010.
F
Case Law Reference:
(2002) 6 SCC 315
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
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3. The relevant facts very briefly are that M/s Indian Railway
Catering and Tourism Corporation Limited (for short ‘IRCTC’)
planned to set up a packaged drinking water bottling plant at
Palure, near Chennai, to produce drinking water under the
brand name “Rail Neer” for railway passengers. In November
2008, the civil work for construction of the plant building was
G
started. In February 2009, IRCTC published a tender notice for
turnkey project for design, engineering, supply, installation,
commissioning, operation and maintenance of the packaged
drinking water bottling plant. Pursuant to the tender notice, three
tenderers, namely, M/s Thermax, M/s Ion Exchange (I) Ltd. and
H
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INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
83
M/s. Doshion Veolia Water Solutions (P) Limited submitted
their offers, but as the offers were conditional, it was not
possible to evaluate them and to decide the inter-se position
of the three tenderers in an objective manner and therefore the
Tender Committee of the IRCTC recommended for discharge
of the tender and to invite fresh tenders after incorporating all
the relevant revisions in the tender document to avoid
anomalies. On 04.08.2009, a fresh tender notice was
advertised by IRCTC and in response to this fresh tender notice
M/s Ion Exchange (I) Limited (for short ‘Ion Exchange’) and M/
s. Doshion Veolia Water Solutions (P) Limited (for short
‘Doshion’) submitted their technical and financial bids in
separate sealed covers. The technical bids were opened on
24.08.2009 and both Ion Exchange and Doshion were informed
on 26.08.2009 that their financial bids would be opened on
27.08.2009. When on 27.08.2009 the financial bids of Ion
Exchange and Doshion were opened, it was found that Doshion
had quoted a total price of Rs. 18.65 Crores, whereas Ion
Exchange had quoted a total price of Rs. 18.66 Crores and had
also quoted a discount of 1% on the quoted price. The result
was that the net price quoted by Ion Exchange after deducting
the discount of 1% worked out to Rs.18,47,34,000/- as against
the price of Rs.18,66,00,000/- quoted by Doshion.
4. On 28.08.2009, Doshion submitted a letter to IRCTC
saying that the offer of discount on the quoted price made by
Ion Exchange was in violation of Clause 1.10 of the Instructions
to Bidders. Again on 03.09.2009, Doshion submitted a letter
reiterating its objection to the offer of discount made by Ion
Exchange and also saying that the excise duty amount had not
been indicated in rupees by Ion Exchange in its financial bid
contrary to the terms and conditions of the tender. On
18.10.2009, the Tender Committee of IRCTC met and made
its first recommendation to the Accepting Authority of IRCTC.
In the recommendation, the two members of the Tender
Committee gave their opinion that the discount of 1% offered
by Ion Exchange was not valid and that the non-mentioning of
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A the excise duty amount in Rupees by Ion Exchange was a major
deviation. The third member gave his dissent in the
recommendation saying that the excise duty could be easily
ascertainable by applying the normal methodology of calculation
and so calculated the excise duty amount in the bid of Doshion
B was Rs.69,26,080/- and that of Ion Exchange was
Rs.55,12,050/-. The third member also gave his opinion that
the bid amount of Ion Exchange was Rs.17 Lacs lesser and if
the set off received in service tax for operation and maintenance
part of the contract is taken into account, then the additional
C benefit of MODVAT would get neutralized and therefore even
if excise duty amount was not quoted by Ion Exchange in its
financial bid, this was not a material deviation. On 13.10.2009,
the Accepting Authority of IRCTC directed the Tender
Committee to look into the financial implications of excise duty
on plant and equipment/ MODVAT credit. Regarding the
D
discount of 1%, the Accepting Authority directed the Tender
Committee to look into the prevalent practice being followed
by Government Departments and Public Sector Undertakings
regarding discount and thereafter make their recommendations.
On 02.11.2009, the Tender Committee made its second
E recommendation. In this recommendation, all the three
members of the Tender Committee were of the unanimous view
that excise duty should not be taken into account for tender
evaluation because if the offer of Ion Exchange in totality was
considered, there was no adverse financial implication to
F IRCTC. Regarding discount, the Tender Committee could not
find any instruction relating to the prevalent practice followed
by Government Departments and Public Sector Undertakings.
On 13.11.2009, the Accepting Authority considered the second
recommendation of the Tender Committee and asked the
G Tender Committee for further clarification on excise duty and
to make a review of the cases of Central Vigilance
Commission, Chief Technical Examiner’s Organization and
Stores Directorate Compendium, Railway Board on the
discount aspect. On 20.11.2009, the Tender Committee made
H its third recommendation. In the third recommendation, the
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
85
members of the Tender Committee were of the unanimous view
that taxes and duties (excise duty in particular) had no adverse
financial implication to IRCTC. Two of the three members of
the Tender Committee after taking into consideration the
guidelines/observations in the Railway Stores Directorate
Compendium, Central Vigilance Commission, Chief Technical
Examiner’s Organization, the bid documents of other Public
Sector Undertakings in respect of discounts and after
verification from Railways and Railway Public Sector
Undertakings, took the view that unconditional discount
available alongwith the offer should be considered. The third
member of the Tender Committee, however, did not agree with
this view and maintained his earlier view that unconditional
discount offers should not be considered when price bid does
not speak of discount as part of the bid conditions. The
Accepting Authority of the IRCTC accepted the unanimous
recommendation of the Tender Committee that taxes and duties
(including the excise duty) had no financial implication on
IRCTC. The Accepting Authority also accepted the majority
recommendation of the Tender Committee that the 1% discount
offered in the bid of Ion Exchange can be considered.
Accordingly, the Accepting Authority decided to accept the offer
of Ion Exchange and on 17.12.2009 letter of acceptance was
issued to Ion Exchange.
5. On 21.12.2009, Doshion filed Writ Petition No. 27074
of 2009 in the Madras High Court praying for a writ of
mandamus restraining IRCTC from taking any step in
furtherance of the tender. On 23.12.2009, learned Single Judge
of the Madras High Court issued an interim injunction till
15.01.2010 and posted the matter for 05.01.2010. On
05.01.2010, IRCTC filed its detailed counter affidavit in reply
to the writ petition. On 17.01.2010, Doshion filed Writ Petition
No. 1059 of 2010 praying for quashing the letter of acceptance
dated 17.12.2009 issued in favour of Ion Exchange. IRCTC and
Ion Exchange filed their respective counter affidavits in reply to
the Writ Petition and Doshion also filed its rejoinder affidavit.
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A After hearing, the learned Single Judge of the Madras High
Court dismissed the two Writ Petitions on 16.02.2010. On
08.04.2010, Doshion filed Writ Appeal Nos. 726-727 of 2010
before the Division Bench of the Madras High Court and on
12.04.2010 the Division Bench passed the order of status quo
B while admitting the appeals. After hearing the appeals, the
Division Bench passed the impugned judgment and order dated
29.04.2010 setting aside the order dated 16.02.2010 of the
learned Single Judge in Writ Petition Nos. 27074 of 2009 and
1059 of 2010 and allowed the Writ Petitions of the appellant
and quashed the acceptance of the offer of Ion Exchange. The
C
Division Bench, however, refused to grant the prayer in the Writ
Petition to award the contract to Doshion and instead observed
in the impugned judgment and order that it is for IRCTC to take
a decision in the light of the findings in the impugned judgment.
Aggrieved, the IRCTC and Ion Exchange have filed appeals
D against quashing of acceptance of the offer of Ion Exchange
by the Division Bench of the High Court and Doshion has filed
the appeal against the refusal of the Division Bench of the High
Court to grant the prayer in the writ petition to award the contract
to Doshion.
E
6. Mr. Goolam E. Vahanvati, learned Attorney General for
India appearing for IRCTC, submitted that the Division Bench
of the High Court quashed the acceptance of the offer of Ion
Exchange by IRCTC on the ground that the offer of discount of
F 1% over the quoted price and the non-mentioning of excise
duty amount in rupees in the offer of Ion Exchange were contrary
to the provisions of the tender notification and the tender format
and, therefore, the acceptance of the offer of Ion Exchange was
unfair and arbitrary and violative of Article 14 of the Constitution.
G
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7. He argued that the terms and conditions of the tender
documents did not contain any express provision prohibiting a
tenderer from quoting a discount on the price offered by him
and in the absence of an express provision in this regard, an
implied provision cannot be read into the terms and conditions
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
87
of the tender documents prohibiting a tenderer from quoting a
discount on the quoted price. He urged that in the facts of the
present case, the majority of the members of the Tender
Committee, after taking into consideration the guidelines/
observations in the Railway Stores Directorate Compendium,
Central Vigilance Commission, Chief Technical Examiner’s
Organization and the bid documents of other Public Sector
Undertakings in respect of discounts and after verification from
Railways and Railway Public Sector Undertakings, had given
the opinion in their third recommendation on 20.11.2009 that
unconditional discount along with the offer should be considered
and the Accepting Authority had accordingly considered the 1%
discount offered on the quoted price of Ion Exchange and
accepted the offer of Ion Exchange. He cited the decision of
this Court in Kanhaiya Lal Agrawal v. Union of India and Others
[(2002) 6 SCC 315] in which rebates offered by a tenderer as
an additional inducement to accept his offer was not treated
as breach of the terms and conditions of the invitation to
tender.
8. Regarding the non-mentioning of excise duty in rupees
in the offer of Ion Exchange, Mr. Vahanvati contended that the
members of the Tender Committee in their third
recommendation made on 20.11.2009 were unanimous in their
view that taxes and duties including excise duty had no adverse
financial implication on IRCTC and this recommendation of the
Tender Committee was accepted by the Accepting Authority.
He submitted that the Division Bench of the High Court has
acted as an appellate court over the Tender Committee and
the Accepting Authority by holding that the non-mentioning of
excise duty in rupees in the offer of Ion Exchange amounted
to breach of the essential terms and conditions of the tender
notification and tender format and has exceeded the power of
judicial review in matters relating to tenders and award of
contracts. He cited the decision of this Court in Tata Cellular
v. Union of India [(1994) 6 SCC 651] in which it has been held
that it is not the function of the Judge to act as Super Board
88
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
over the decisions of the administrator in matters relating to
tenders.
9. Dr. Abhishek Manu Singhvi, learned senior counsel
appearing for Ion Exchange, submitted that in the impugned
judgment and order, the Division Bench of the High Court has
referred to Clause 1.10 of the Instructions to Bidders which
provides that rates are to be quoted in the prescribed price
schedule format only and has also referred to Clause 1.12 of
the Instructions to Bidders which states that failure to comply
with either of the conditions will render the tender void. He
submitted that the Division Bench of the High Court appears
to have taken the view that Clause 1.12 is attracted in case of
failure of the tenderer to comply with Clause 1.10, but a careful
reading of Clause 1.12 would show that it will apply when the
tenderer fails to comply with either of the two conditions in
Clause 1.11 of the Instructions to Bidders and will not apply
when the tenderer does not comply with Clause 1.10 of the
Instructions to Bidders. He contended that excise duty rate is
8.24% on the value of the plants and equipments and therefore
the excise duty amount in rupees can always be calculated by
IRCTC and it made no difference whether the excise duty was
quoted in rate or in rupees. He submitted that for these reasons,
mentioning of excise duty in rupees for the plants and
equipments cannot constitute an essential term of the tender
notification or tender format as held by the Division Bench of
the High Court.
10. Dr. Singhvi argued that the fact remains that the price
offered by Ion Exchange with 1% discount is less than that of
Doshion and for this reason was accepted by IRCTC and hence
the Division Bench of the High Court should not have quashed
the acceptance of the offer of Ion Exchange. He cited Jagdish
Mandal v. State of Orissa and Others [(2007) 14 SCC 517] in
which this Court has held that so long as a decision relating to
award of contract is bona fide and is in the public interest,
courts will not interfere by exercising power of judicial review
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
89
even if a procedural aberration or error in assessment or
prejudice to a tenderer is made out.
11. Mr. Jaideep Gupta, learned senior counsel appearing
for Doshion, on the other hand, supported the impugned
judgment and order of the Division Bench of the High Court
quashing the acceptance of offer of Ion Exchange by IRCTC.
He submitted that when IRCTC published the first notice inviting
tenders in February, 2009, the bid of Doshion was the lowest
and yet IRCTC cancelled the tender process on the ground that
the offer made by the three tenderers were conditional and it
was not possible to evaluate them. He submitted that when the
fresh tender notice was advertised on 04.08.2009 for the very
same work, IRCTC revised the tender conditions and the tender
format and in Clause 1.10 of the Instructions to Bidders clearly
stipulated that rates are to be quoted in the Prescribed Price
Schedule only. He submitted that the IRCTC further stipulated
in Clause 1.12 of the Instructions to Bidders that failure to
comply with either of the conditions in Clauses 1.10 or 1.11 of
the Instructions to Bidders will render the tender void. He
contended that on a reading of these two tender conditions, it
will be clear that rates were to be quoted in the Prescribed
Price Schedule only and no tenderer could quote any discount
on the quoted price, and further any offer of discount on the
quoted price would be in breach of Clause 1.10 of the
Instructions to Bidders and the tender would be rendered void
under Clause 1.12 of the Instructions to Bidders. He submitted
that it would be also clear from Clause 2.1 of the Special Terms
and Conditions of the tender documents that the vendor was
required to quote a lump sum price along with detailed breakup as per price schedule enclosed with the bid documents and
Clause 9.0 of the Special Terms and Conditions stated that the
vendor should clearly spell out in his offer his acceptance of the
Special Terms and Conditions and in case of deviation, his offer
may be rejected. He also referred to the Prescribed Price
Schedule to show that there was no scope for a bidder to quote
any discount. Mr. Gupta next submitted that Note (ii) at the
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A bottom of the price schedule provides that the vendor should
indicate total excise duty amount included in the price for plants
and equipments, and yet Ion Exchange did not mention the total
excise duty amount in its offer. He argued that since Ion
Exchange quoted a discount on the price and did not indicate
B the excise duty amount in its offer, the Division Bench of the
High Court rightly held that the offer of Ion Exchange did not
comply with the essential terms and conditions of the tender
notification and tender format and was ought to have been
rejected by IRCTC.
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12. Mr. Gupta relied upon the observations of this Court
in W.B. State Electricity Board v. Patel Engineering Co. Ltd.
and Others [(2001) 2 SCC 451] that the very purpose of issuing
Rules/Instructions to bidders is to ensure their enforcement lest
the rule of law should be a casualty and relaxation or waiver of
a rule or condition, unless provided in the Instructions to
Bidders, by the State or its agencies in favour of one bidder
would create justifiable doubts in the minds of the other bidders
and would impair the rule of transparency and fairness and
provide room for manipulation to suit the whims of the State
agencies in picking and choosing a bidder for awarding
contracts. He also relied upon Kanhaiya Lal Agrawal v. Union
of India and Others (supra) for the proposition that if the
consequence of non-compliance of a condition in the notice
inviting tenders is rejection of the tender, then the condition is
an essential condition of the invitation to tender. Mr. Gupta
submitted that the Division Bench of the High Court therefore
was right in quashing the offer of Ion Exchange on the ground
that it was in breach of the essential terms and conditions of
the tender notification and the tender format. He submitted that
as the tender of Doshion was the only other valid tender, the
High Court should have directed IRCTC to award the contract
to Doshion. He urged that we should allow the appeal of
Doshion on this point and direct IRCTC to award the contract
to Doshion.
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
91
13. The first question that we have to decide in this case
is whether the offer of 1% discount on the quoted price made
by Ion Exchange was in breach of any essential term of the
tender notification or the tender format as held by the High
Court. Mr. Gupta, learned counsel for Doshion, has relied upon
Clauses 1.10, 1.11 and 1.12 of the Instructions to Bidders and
Clauses 2.1 and 9.0 of the Special Terms and Conditions of
the tender documents to support this finding of the High Court,
which are quoted hereinbelow:
“Instructions to Bidders:
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9.0
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1.11 Every page of the tender document shall be signed D
on the left hand side bottom corner and stamped
properly by the authorized person or persons
submitting the tender in token of his/their having
acquainted himself/themselves with the general
conditions of contract, technical specifications etc.
E
as laid down. Any tender is liable to be treated as
defective and is liable to be rejected if any of the
documents is not signed. The initials of the tenderer
must attest all erasures and alterations made while
filling the tender. Over-writing of figures is not
F
permitted.
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1.12 Failure to comply with either of these conditions will
render the tender void. No advice of any change in
rate after opening of the tender will be entertained.
2.1
equipments as quoted in the price schedule will
constitute contract price/contract value.
A
1.10 Rates are to be quoted in the prescribed price
schedule format only and it shall be inclusive of all
taxes, levies and duties.
Special Terms & Conditions:
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
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Vendor shall quote for lump sum price along with
detailed break-up as per price schedule enclosed
with this bid document. The cost of plants and
Deviation to Terms and Conditions:
The vendor should clearly spell out in his offer his
acceptance of the terms & conditions indicated
above. In case of deviation, his offer may be
rejected.
Deviations proposed, if any, should be raised in prebid meeting and decision taken there and conveyed
to all parties will be final and binding.”
14. Clause 1.10 of the Instructions to Bidders quoted
above states that rates are to be quoted in the Prescribed Price
Schedule format only and it shall be inclusive of all taxes, levies
and duties. This clause does not say that the tenderer will not
quote any discount on the price. Clause 1.11 of the Instructions
to Bidders states that every page of the tender document shall
be signed and properly stamped by the authorized person or
persons submitting the tender and no over-writing will be
permitted. Clause 1.12 of the Instructions to Bidders states that
failure to comply with either of these conditions will render the
tender void. Since there is no condition either in Clause 1.10
or Clause 1.11 that the tenderer will not quote discount on the
price, in case a tenderer offers a discount on his quoted price
his tender will not be rendered void under Clause 1.12 of the
Instructions to Bidders. Clause 2.1 of the Special Terms and
Conditions quoted above states that the vendor shall quote for
lump sum price along with detailed break-up as per price
schedule enclosed with the bid document and the cost of plants
and equipments as quoted in the price schedule will constitute
contract price/contract value. This clause also does not say that
the vendor will not quote a discount on the lump sum price.
Clause 9.0 of the Special Terms and Conditions states that the
vendor should clearly spell out in his offer his acceptance of the
terms and conditions as indicated in the Special Terms and
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
93
Conditions and in case of deviation, his offer may be rejected.
There is nothing in this clause also to show that the vendor
cannot quote a discount on the price. In the Prescribed Price
Schedule also there is no mention anywhere that the tenderer
will not offer any discount on his quoted price. In the absence
of any express stipulation in the Instructions to Bidders or the
Special Terms and Conditions or in the Prescribed Price
Schedule prohibiting the tenderer from quoting a discount on
the price offered by him, the High Court could not have come
to the conclusion that by offering a discount of 1% on the quoted
price Ion Exchange has committed a breach of the essential
terms of the tender notification or the tender format.
15. For this conclusion, we are supported by a direct
authority of this Court in Kanhaiya Lal Agrawal v. Union of India
and Others (supra) cited by Mr. Vahanvati. In this case, the
conditions in the tender notice required that the rates at which
the supply was to be made had to be stated in words as well
as in figures against each item of work as per Schedule
attached thereto and that the tenders submitted with any
omissions or alteration of the tender document were liable to
be rejected, but permissible corrections could be attached with
due signature of the tenderers. Kanhaiya Lal Agrawal submitted
along with his tender a covering letter that if his offer was
accepted within the stipulated time the following rebates would
be offered by him:
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(a)
5% reduction in rates if the contract is given to him
within 45 days,
(b)
3% reduction in rates if the contract is given within
60 days, and
(c)
G
2% reduction in rates if the contract is given within
75 days.”
The Union of India accepted the tender offered by Kanhaiya
Lal Agrawal on the rates subject to the rebate. Another tenderer,
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A whose rates would have been the lowest if the rebates offered
by Kanhaiya Lal Agrawal would not have been considered,
filed a writ petition in the Madhya Pradesh High Court
contending that the offer of Kanhaiya Lal Agrawal was
conditional and not valid and succeeded both before the
B learned Single Judge and before the Division Bench of the
High Court. Kanhaiya Lal Agrawal carried an appeal to this
Court and this Court held that the offer of rebates made by
Kanhaiya Lal Agrawal “did not militate against the terms and
conditions of inviting tender”. From the decision of this Court
C in Kanhaiya Lal Agrawal v. Union of India (supra), therefore,
it is clear that unless the offer of rebate or discount is in breach
of the clear stipulations in the notice inviting tenders it cannot
be held that such offer is in breach of the essential terms and
conditions of the notice inviting tenders.
D
16. The observations of this Court in W.B. State Electricity
Board v. Patel Engineering Co. Ltd. and Others (supra), on
which Mr. Gupta relied upon, is of no assistance to Doshion.
In that case the West Bengal State Electricity Board invited
bids for the Purulia Pumped Storage Project and the bids,
E which were submitted, were opened on 08.09.1999 and while
the details of the bids were under scrutiny, respondents 1 to 4
in the appeal before this Court informed the State Electricity
Board that there was a repetitive systematic computer
typographical transmission failure on account of which there
F were errors in their bid and requested that the errors be
corrected. On 17.12.1999, they sent another letter stating that
they had reason to believe that the State Electricity Board was
evaluating their price bid by an incorrect application of the
Instructions to Bidders and that their bid was the lowest. The
G State Electricity Board evaluated their bid and on 18.12.1999
sent a letter to them saying that during checking of their bid
documents a good number of arithmetical errors were
discovered. Respondents 1 to 4 challenged the validity of the
letter dated 18.12.1999 of the State Electricity Board in a writ
H petition filed in the High Court at Calcutta. Learned Single
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
95
Judge of the High Court directed the State Electricity Board to
consider the representation of Respondents 1 to 4 and to
communicate a reasoned order to them. Against the order of
the learned Single Judge, the State Electricity Board filed
appeals. Cross-objections were also filed by Respondents 1
to 4. The Division Bench of the High Court dismissed the
appeals and the cross-objections upholding the order of the
learned Single Judge and directed the State Electricity Board
to permit Respondents 1 to 4 to correct the errors in the bid
documents and then consider their bid along with the other bids
and take a decision objectively and rationally. On these facts,
this Court held that Respondents 1 to 4 in that appeal were
bound by the Instructions to Bidders which should be complied
with scrupulously and adherence to the instructions cannot be
given a go-by by branding it as a pedantic approach, otherwise
it will encourage and provide scope for discrimination,
arbitrariness and favouritism which are totally opposed to the
rule of law and constitutional values. This Court further observed
that the very purpose of issuing rules/instructions is to ensure
their enforcement lest the rule of law should be a casualty and
relaxation or waiver of a rule or condition, unless so provided
under the Instructions to Bidders, by the State or its agencies
in favour of one bidder would create justifiable doubts in the
minds of other bidders, would impair the rule of transparency
and fairness and provide room for manipulation to suit the
whims of the State agencies in picking and choosing a bidder
for awarding contracts.
17. These observations made by this Court in W.B. State
Electricity Board v. Patel Engineering Co. Ltd. and Others
(supra) rather come to the aid of Ion Exchange in this case.
Since IRCTC did not clearly stipulate in the Instructions to
Bidders or in the Special Terms and Conditions or in the
Prescribed Price Schedule or in any other part of the tender
documents that a tenderer will not offer any discount on the
prices quoted by him and if any such discount is offered the
tender will be rejected, the offer of discount on the price made
96
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A by Ion Exchange cannot be treated to be in breach of the
essential term or condition of the tender documents. To hold
that the State or its agencies can reject a tender for breach of
a term or condition in the tender document, which is not explicit
in the tender documents, is to give room to the State or its
B agencies to arbitrarily reject tenders even where the clear terms
or conditions of the tender documents are complied with. In
Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd.
[(1997) 1 SCC 53), this Court found that the offer of the lowest
tenderer for wholesale supply of rectified spirit (Grade 1) to the
C Excise Department of the Government of Assam was not
accepted on the ground that the price offered did not come
within the “viability range” and this Court held that the tender
process was vitiated for the reason that the tender notice did
not specify the “viability range” nor did it say that only the tenders
coming within the “viability range” will be considered. The Court
D
further observed that whatever procedure the Government
proposes to follow in accepting the tender must be clearly
stated in the tender notice and the consideration of tenders
received and the procedure to be followed in the matter of
acceptance of a tender should be transparent, fair and open.
E
18. The next question, which falls for consideration in this
case, is whether the High Court was right in coming to the
conclusion that by not indicating the excise duty amount in
rupees in its offer, Ion Exchange committed breach of an
F essential term or condition of the tender notification or the
tender format. Clauses (i) and (ii) of the Note appended to the
Prescribed Price Schedule, which relate to duties and taxes,
are quoted hereinbelow:
G
H
“Note:
(i)
The prices quoted are lump sum inclusive of all
duties and taxes etc.
(ii)
Vendor should indicate total Excise Duty amount
included in above prices (for Plants & Equipments)”
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION
VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
97
The language of Clauses (i) and (ii) of the Note quoted above
is clear that the prices quoted are to be lump sum inclusive of
all duties and taxes etc. and the vendor should indicate total
excise duty amount included in the prices for plants and
equipments. The Note does not indicate the consequences
that will follow if the vendor does not indicate the total excise
duty amount included in the prices for plants and equipments.
The Note does not say that if the vendor does not indicate the
total excise duty amount included in the prices for plants and
equipments, the offer of the vendor “shall” be rejected. In the
absence of any mention of the consequence of rejection of the
offer for not indicating the total excise duty amount in rupees
included in the price of plants and equipments in the tender
documents, the High Court could not have held that Ion
Exchange had committed breach of an essential term or
condition of the tender notification or the tender format. For
this conclusion, we are again supported by the decision in
Kanhaiya Lal Agrawal v. Union of India and Others (supra) in
which this Court relying on G.J. Fernandez v. State of Karnataka
[(1990) 2 SCC 488] held:
“Whether a condition is essential or collateral could be
ascertained by reference to the consequence of noncompliance thereto. If non-fulfillment of the requirement
results in rejection of the tender, then it would be an
essential part of the tender otherwise it is only a collateral
term.”
Hence, if on the recommendation of the Tender Committee,
the Accepting Authority did not find the deviation from Clause
(ii) of the Note by Ion Exchange very material and has accepted
the offer of Ion Exchange, the Division Bench of the High Court
could not have held that Ion Exchange committed a breach of
an essential term by not mentioning the excise duty amount in
rupees in its offer.
98
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B
C
D
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A the non-mentioning of excise duty amount in rupees in the bid
of Ion Exchange were not in breach of the essential terms of
the tender documents, it was for IRCTC to evaluate the valid
offers of Ion Exchange and Doshion on the merits of the two
offers. We find that on the basis of recommendations of the
B Tender Committee, the Accepting Authority of IRCTC found the
offer of Ion Exchange at a net price of Rs.18,47,34,000/- to be
better than the offer of Doshion at the price of Rs.18,66,00,000/
- and that tax and duties including excise duty had no adverse
financial implications to IRCTC and accordingly accepted the
C offer of Ion Exchange. By reversing this decision of the
Accepting Authority of the IRCTC, the Division Bench of the
High Court, in our considered opinion, acted as an Appellate
Court and exceeded its power of judicial review in a matter
relating to award of contract contrary to the law laid down by
this Court in the leading case of Tata Cellular (supra).
D
20. In the result, we set aside the impugned judgment and
order of the Division Bench of the High Court and allow the
appeals of IRCTC and Ion Exchange and dismiss the appeal
of Doshion. There shall be no order as to costs.
E
E
B.B.B.
F
G
19. As the offer of 1% discount on the quoted price and
H
Appeals disposed of.
100 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
[2010] 13 (ADDL.) S.C.R. 99
KANWAR NATWAR SINGH
v.
DIRECTORATE OF ENFORCEMENT & ANR
(Civil Appeal No. 8601 of 2010)
OCTOBER 5, 2010
A
B
[B. SUDERSHAN REDDY AND SURINDER SINGH
NIJJAR, JJ.]
Foreign Exchange Management (Adjudication
Proceedings and Appeal) Rules, 2000 – r.4(1) – Show cause
notice by adjudicating authority – For initiating proceedings
under Foreign Exchange Management Act – Noticee
demanding all the documents in the possession of
adjudicating authority – Only the relevant documents
furnished and not all – Entitlement of the noticee to demand
all the documents – Held: The provisions of Foreign
Exchange Management Act, the Rules or even the principles
of natural justice do not require supply of documents upon
which no reliance has been placed by the authority to set the
law into motion – The concept of fairness may require the
adjudicating authority to furnish copies of only those
documents upon which reliance has been placed to issue
show cause notice – No court can compel the authority to
deviate from the procedure laid down in a statute – On facts,
demand of the noticee for supply of all the documents is
based on vague, indefinite and irrelevant grounds – Foreign
Exchange Management Act, 1999 – s. 16 – Principles of
natural justice and concept of fairness – Doctrine of duty of
adequate disclosure.
Foreign Exchange Management Act, 1999:
C
D
E
A deemed to be judicial proceedings within the meaning of s.
193 and 228 IPC – Penal code, 1860 – ss. 193 and 228.
Powers of Adjudicating Authority under the Act – Held:
While holding inquiry into allegations of contravention, every
adjudicating authority shall have powers of civil court for the
B
purpose of ss. 345 and 346 Cr.P.C. – Code of Criminal
Procedure, 1973 – ss.345 and 346.
Principles of Natural Justice – Applicability of –
Discussed — Principles of natural justice do not supplant the
C law of the land, but supplement it.
Precedent – Observations in Judicial pronouncement –
Precedent value of – Held: Observations not to be read as
Euclid’s theorems nor as provisions of the statute, but to be
D read in the context it is made – A line or a word in a judgment
not to be read in isolation or as if interpreting statutory
provisions – Constitution of India, 1950 – Article 141.
Practice and Procedure – Practice in Supreme Court of
including list of judicial authorities in compilation, without the
E leave of the Court – Held: Not approved.
F
F
G
G
Proceedings under the Act – Nature of – Held: The
proceedings before the adjudicating authority shall be
99
The question for consideration in the instant appeal
was whether a noticee, served with show cause notice
u/r. 4(1) of the Foreign Exchange Management
(Adjudication Proceedings and Appeal) Rules, 2000, is
entitled to demand to furnish all the documents in
possession of the Adjudicating Authority including those
documents on which no reliance has been placed for
issuing the show cause notice.
Dismissing the appeals, the Court
HELD: 1.1 A reading of the relevant provisions of the
Foreign Exchange Management Act, 1999 and Foreign
Exchange Management (Adjudication Proceedings and
H
H
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT
101
Appeal) Rules, 2000 makes it abundantly clear that the A
manner, method and procedure of adjudication are
completely structured by the statute and the Rules. The
Authority is bound to follow the prescribed procedure
under the statute and the Rules and is not free and
entitled to devise its own procedure for making inquiry B
while adjudicating u/s.13 of the Act since it is under
legislative mandate to undertake adjudication and hold
inquiry in the prescribed manner after giving the person
alleged to have committed contravention against whom
a complaint has been made, a reasonable opportunity of C
being heard for the purpose of imposing any penalty.
The discretion of the Authority is so well structured by
the statute and the Rules. [Para 17] [119-B-C]
1.2 The Rules do not provide and empower the
Adjudicating Authority to straightaway make any inquiry D
into allegations of contravention against any person
against whom a complaint has been received by it. It is
clear from Rule 4 that show cause notice to be so issued
is not for the purposes of making any adjudication into
alleged contravention but only for the purpose of E
deciding whether an inquiry should be held against him
or not. That after taking the cause, if any, shown by such
person, the Adjudicating Authority is required to form an
opinion as to whether an inquiry is required to be held
into the allegations of contravention. It is only then the F
real and substantial inquiry into allegations of
contravention begins. [Para 18] [119-D-G]
1.3 While holding inquiry into allegations of
contravention, every Adjudicating Authority shall have
G
the powers of a Civil Court under CPC in respect of the
matters, namely, (a) summoning and enforcing the
attendance of any person and examining him on oath;
(b) requiring discovery and production of documents; (c)
receiving evidence on affidavits; (d) requisitioning any
H
102
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
public record, document or copy of such record or
document from any office; (e) issuing commissions for
examination of witnesses or documents etc. All
proceedings before the Adjudicating Authority shall be
deemed to be judicial proceedings within the meaning of
Sections 193 and 228 IPC; and the adjudicating authority
shall be deemed to be a civil court for the purposes of
Sections 345 and 346 Cr.P.C. [Para 18] [119-H; 120-A-C]
1.4 Rule 4 does not require the Adjudicating Authority
to supply copies of any documents along with the show
cause notice. The rule does not require the Adjudicating
Authority even to furnish any list of documents upon
which reliance has been placed by him to set the law in
motion. [Para 19] [120-D-E]
1.5 The extent of applicability of principles of natural
justice depends upon the nature of inquiry, the
consequences that may visit a person after such inquiry
from out of the decision pursuant to such inquiry. [Para
22] [122-A-B]
R vs. Gaming Board for Great Britain ex p. Benaim and
Khaida (1970) 2 QB 417; Lloyd vs. McMahon (1987) AC 625;
Wiseman vs. Boardman (1971) AC 297 – referred to.
1.6 The right to fair hearing is a guaranteed right.
Every person before an Authority exercising the
adjudicatory powers has a right to know the evidence to
be used against him. If relevant material is not disclosed
to a party, there is prima facie unfairness irrespective of
whether the material in question arose before, during or
after the hearing. If prejudicial allegations are to be made
against a person, he must be given particulars of that
before hearing so that he can prepare his defence.
However, disclosure not necessarily involves supply of
the material. A person may be allowed to inspect the file
and take notes. Whatever mode is used, the fundamental
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT
103
principle remains that nothing should be used against
the person which has not been brought to his notice.
However, there are various exceptions to this general rule
where disclosure of evidential material might inflict
serious harm on the person directly concerned or other
persons or where disclosure would be breach of
confidence or might be injurious to the public interest
because it would involve the revelation of official secrets,
inhibit frankness of comment and the detection of crime
might make it impossible to obtain certain clauses of
essential information at all in the future. [Para 23] [122C-F]
104 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
T. Dhakeswari Cotton Mills Ltd. vs. Commissioner of
Income TaxWest Bengal (1955) 1 SCR 941 – relied on.
R vs. Secretary of State for Home Department, ex. p. H
(1995) QB 43 – referred to.
1.7 The concept of fairness may require the
Adjudicating Authority to furnish copies of those
documents upon which reliance has been placed by him
to issue show cause notice requiring the noticee to
explain as to why an inquiry u/s.16 of the Act should not
be initiated. To this extent, the principles of natural justice
and concept of fairness are required to be read into Rule
4(1) of the Rules. Fair procedure and the principles of
natural justice are in built into the Rules. A noticee is
always entitled to satisfy the Adjudicating Authority that
those very documents upon which reliance has been
placed do not make out even a prima facie case requiring
any further inquiry. Thus, all such documents relied on
by the Authority are required to be furnished to the
noticee enabling him to show a proper cause as to why
an inquiry should not be held against him though the
Rules do not provide for the same. Such a fair reading
of the provision would not amount to supplanting the
procedure laid down and would in no manner frustrate
D
A the apparent purpose of the statute. [Para 24] [122-G; 123A-D]
1.8 The Adjudicating Authority is not required to
furnish copies of all the documents in his possession to
a noticee even for the purposes of forming an opinion as
B
to whether any inquiry at all is required at the preliminary
stage. In this regard, the doctrine of duty of adequate
disclosure and doctrine of fairness cannot be pressed
into service. A bare reading of the provisions of the Act
and the Rules do not support such requirement. Even the
C principles of natural justice do not require supply of
documents upon which no reliance has been placed by
the Authority to set the law into motion. Supply of relied
on documents based on which the law has been set into
motion would meet the requirements of principles of
D natural justice. No court can compel the Authority to
deviate from the statute and exercise the power in
altogether a different manner than the prescribed one.
[Para 25] [123-D-H]
E
E
F
F
State Inspector of Police, Vishakhapatnam vs. Surya
Sankaram Karri (2006) 7 SCC 172; Union of India vs. Ranu
Bhandari (2008) 17 SCC 348; Dwarka Prasad Agarwal (Dead)
by LRs. and Anr. vs. B.D. Agarwal and Ors. (2003) 6 SCC
230; Tribhuvandas Bhimji Zaveri and Anr. vs. Collector of
Central Excise (1997) 11 SCC 276; State of M.P. vs.
Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623 –
distinguished.
R v H / R v C (2004) UKHL 3; Kanda vs. Government of
Malaya (1962) AC 322 – referred to.
G
G
H
1.9 In the instant case, the inquiry against the noticee
is yet to commence. The evidence as may be available
upon which the Adjudicating Authority may place
reliance, undoubtedly, is required to be furnished to the
H person proceeded against at the second stage of inquiry
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT
105
into allegations of contravention. It is at that stage, the
Adjudicating Authority is not only required to give an
opportunity to such person to produce such documents
as evidence, as he may consider relevant to the inquiry,
but also enforce attendance of any person acquainted
with the facts of the case to give evidence or to produce
any document which in its opinion may be useful for or
relevant to the subject matter of the inquiry. Natural
justice often requires the disclosure of the reports and
evidence in the possession of the deciding Authority and
such reports and evidence relevant to the subject matter
of the inquiry may have to be furnished unless the
scheme of the Act specifically prohibits such disclosure.
[Para 26] [124-F-H; 125-A]
1.10 A fair reading of the statute and the Rules
suggests that there is no duty of disclosure of all the
documents in possession of the Adjudicating Authority
before forming an opinion that an inquiry is required to
be held into the alleged contraventions by a noticee.
Even the principles of natural justice and concept of
fairness do not require the statute and the Rules to be
so read. Any other interpretation may result in defeat of
the very object of the Act. Concept of fairness is not a one
way street. The principles of natural justice are not
intended to operate as roadblocks to obstruct statutory
inquiries. Duty of adequate disclosure is only an
additional procedural safeguard in order to ensure the
attainment of the fairness and it has its own limitations.
The extent of its applicability depends upon the statutory
framework. The principles of natural justice do not
supplant the law of the land but supplement it. [Para 36]
[130-G-H; 131-A-C]
A.K. Kraipak vs. Union of India (1969) 2 SCC 262;
Mohinder SinghGill vs. Chief Election Commissioner (1978)
1 SCC 405 – referred to.
106
A
B
C
D
E
F
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
1.11 It cannot be said that the appellants’ request to
the Adjudicating Authority to furnish the copies of the
documents could be treated as one made under sub-rule
(6) of Rule 4 which enables the Adjudicating Authority to
direct any person to produce any document which in his
B opinion may be useful for or relevant to the subject
matter of inquiry. A plain reading of sub-rule (6) of Rule 4
makes it abundantly clear that such a power to summon
and enforce attendance of any person acquainted with
the facts and circumstances of the case to give evidence
C or to produce any document which may be relevant to
the subject matter of inquiry is only available to the
Adjudicating Authority while holding an inquiry into
allegations of contravention, but not at the stage where
the Authority is merely required to form an opinion as to
whether an inquiry should be held into allegations of
D
contraventions. [Para 37] [131-E-G]
1.12 The appellant’s insistence for supply of all
documents in possession of the Authority is based on
vague, indefinite and irrelevant grounds. The appellants
E are not sure as to whether they are asking for the copies
of the documents in possession of the Adjudicating
Authority or in possession of authorized officer who
lodged the complaint. The only object in making such
demand is obviously to obstruct the proceedings and the
F appellants, to some extent, have been able to achieve
their object as is evident from the fact that the inquiry
initiated as early as in the year 2006 still did not even
commence. It is on account of continuous unreasonable
requests on the part of the appellants that the
G Adjudicating Authority could not deal with the complaint
expeditiously which is required to be disposed of within
one year from the date of receipt of the complaint. The
Adjudicating Authority is directed to deal with the
complaint as expeditiously as possible. [Paras 39 and 40]
H [133-B-E]
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT
108 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
107
2. Observations of the Courts made in the judgments
are not to be read as Euclid’s theorems nor as provisions
of the statute. The observations must be read in the
context in which they appear. A line or a word in a
judgment cannot be read in isolation or as if interpreting
a statutory provision to impute a different meaning to the
observations. [Para 32] [128-E-F]
A
B
A
B
Haryana Financial Corporation vs. Jagdamba Oil Mills
(2002) 3 SCC 496 – referred to.
3. The Court disapproves the practice and procedure
of including list of authorities in the compilation without
the leave of the Court. This Court is not required to
consider such decisions which are included in the
compilation which were not cited at the Bar. In the instant
case, number of judgments are included in the
compilation which were not cited at the Bar by any of the
counsel. The Court is not required to deal with the same.
[Para 38] [132-F-G]
Case Law Reference:
(1970) 2 QB 417
Referred to
Para 19
(1987) AC 625
Referred to
Para 20
(1971) AC 297
Referred to
Para 21
(1955) 1 SCR 941
Relied on
Para 23
(1995) QB 43
Referred to
Para 23
(1962) AC 322
Referred to
Para 25
(2006) 7 SCC 172
Distinguished
Para 27
(2008) 17 SCC 348
Distinguished
Para 28
(2003) 6 SCC 230
Distinguished
Para 29
(1997) 11 SCC 276
Distinguished
Para 30
AIR 1961 SC 1623
Distinguished
Para 31
(2002) 3 SCC 496
Referred to
Para 32
(2004) UKHL 3
Referred to
Para 33
(1969) 2 SCC 262
Referred to
Para 36
(1978) 1 SCC 405
Referred to
Para 36
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8601 of 2010.
C
C
From the Judgment & Order dated 28.03.2008 of the High
Court of Delhi at New Delhi in LPA No. 1072 of 2007.
Uday U. Lalit, Samrat Nigam, Gaurav Agrawal for the
Appellant.
D
D
Gopal Subramanium SG, H.P. Raval, ASG, Rajshekhar
Rao, Arijit Prasad, B.V. Balaram Das for the Respondents.
The Judgment of the Court was delivered by
E
E
F
F
G
G
H
H
B. SUDERSHAN REDDY, J. 1. The central question of
law arising on the appeal before this Court is whether a noticee
served with show cause notice under Rule 4(1) of the Foreign
Exchange Management (Adjudication Proceedings and
Appeal) Rules, 2000 (hereinafter referred to as ‘the Rules’) is
entitled to demand to furnish all the documents in possession
of the Adjudicating Authority including those documents upon
which no reliance has been placed to issue a notice requiring
him to show cause why an inquiry should not be held against
him?
The Adjudicating Authority’s refusal to supply all the
documents as demanded by the appellants led to filing of writ
petitions by the appellants in Delhi High Court which were heard
and dismissed.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
109
2. In order to consider and decide the issue that arises for
our consideration, it is just and necessary to briefly notice the
relevant facts:
110
A
PART I : BACKGROUND FACTS
A complaint in writing has been filed by an officer
authorized against the appellants under sub-section (3) of
Section 16 of the Foreign Exchange Management Act, 1999
(hereinafter referred to as ‘FEMA’ or ‘the Act’) in which certain
serious allegations have been levelled against the appellants
which we are not required to notice in detail. The gravamen of
the complaint is that the appellants along with others, jointly and
severally, without general or special permission of the Reserve
Bank of India dealt in and acquired Foreign Exchange totaling
US $ 8,98,027.79 in respect of two oil contracts with SOMO
of Iraq. Out of the said amount, the appellants and others jointly
and severally, without the required permission of the Reserve
Bank of India made payment and transferred Foreign Exchange
of US $ 7,48,550 to the credit of specified account with Jordan
National Bank, Jordan i.e., to persons resident outside India,
in fulfillment of precondition imposed by SOMO for allocation
of oil under aforesaid two contracts, in contravention of the
provisions of FEMA. It is further alleged that the appellants and
others, jointly and severally, without the required permission of
the Reserve Bank of India transferred Foreign Exchange of US
$ 1,46,247.23 being the commission amount in respect of two
oil contracts with SOMO to the account with the Barclays Bank,
London in contravention of the provisions of the Act. The
appellants together with others jointly and severally failed to take
all reasonable steps to repatriate the aforesaid Foreign
Exchange within the stipulated period and in the prescribed
manner, in contravention of the provisions of FEMA read with
Regulations, 2000. In addition to the above, some other
allegations also levelled against appellant No. 2. The
Adjudicating Authority having received the said complaint, set
the law in motion and accordingly issued a notice to the
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A appellants under the provisions of FEMA read with the Rules,
requiring them to show cause why an inquiry should not be held
against them.
3. The appellants having received the show cause notice,
instead of submitting their reply, required the Adjudicating
B
Authority to furnish “copies of all the documents in …
possession in respect of the instant case, including the 83000
documents allegedly procured by one Virender Dayal from USA
in connection with the instant case…” This seemingly innocuous
request ultimately turned out to be the origin of this avoidable
C
litigation. The fact remains that the copies of all such documents
as relied upon by the Adjudicating Authority were furnished. The
Authority, however, declined to furnish copies of other
documents and decided to hold an inquiry in accordance with
the provisions of FEMA and the Rules.
D
4. Aggrieved by the communications so sent by the
Authority, the appellant No.1 filed writ petition in Delhi High
Court which was disposed of with direction extending time to
file reply to the show cause notice. As regards the prayer for
E supply of copies of the documents, the Court gave liberty to
demand such copies but left the issue regarding the entitlement
of appellant No.1 to such documents open.
F
5. Thereafter, a preliminary/short reply to the show cause
notice was submitted by the appellants but once again insisting
with the demand that the copies of the documents not otherwise
relied upon by the Adjudicating Authority also be supplied
before taking any further steps in the matter.
6. The Adjudicating Authority, by the impugned
G proceedings, made it clear that the provisions of FEMA and
the Rules provide for supply of the grounds, nature of
contravention and copies of relied upon documents only in
order to enable the noticee to make effective representation
and the said requirement has been met. The Adjudicating
H Authority also made it clear that it is bound to conduct
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
111
proceedings in accordance with the statute and the Rules and
the noticees in any case are not entitled to ask the Authority
to deviate from the said procedure laid down in FEMA and the
Rules. The Authority clearly put the appellants on notice that it
shall proceed with the inquiry in accordance with the provisions
of the Act and the Rules.
7. The appellants promptly challenged the impugned
order of the Adjudicating Authority in petitions filed under Article
226 of the Constitution of India resulting in the impugned
judgment of the Delhi High Court. Hence these appeals.
112
A
A
B
B
C
C
8. Leave granted.
9. We have heard Shri U.U. Lalit, learned senior counsel
for the appellants and Shri Gopal Subramanium, learned
Solicitor General of India for the respondents.
11. The learned Solicitor General of India, on the other
hand, submitted that rule 4 of the Rules is a comprehensive
self contained code and that the Adjudicating Authority is to
follow and proceed step by step in accordance with the said
Rules. The learned Solicitor General submitted that it is a
normal rule of construction that when a statute vests certain
power in an Authority to be exercised in a particular manner,
then the said Authority has to exercise it only in the manner
provided in the statute itself. Hence the Adjudicating Authority
cannot deviate from the mandate of the statute and the Rules
to do something which is not provided for either in the statute
or in the Rules. The submission was that the Rules do not
provide for furnishing all the documents that may be in
possession of the Adjudicating Authority as prayed for by the
appellants. It was alternatively contended that principles of
natural justice are complied with in the instant case since copies
of relied on documents were supplied to the appellants.
PART III : RELEVANT STATUTE AND RULES
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PART II : LEGAL SUBMISSIONS
10. Learned senior counsel for the appellants strenuously
contended that there is a duty cast on the Adjudicating Authority
to disclose and supply copies of all the documents that may
be available with him enabling the noticee to effectively defend
and rebut the allegations mentioned in the show cause notice.
The submission was that the noticee is not only entitled to the
documents referred to and relied upon to set the law in motion
but all such other documents that may be in possession of the
Adjudicating Authority. The learned senior counsel submitted
that principles of natural justice and concept of fairness require
supply to the noticee all such documents whether relied on or
not by the Adjudicating Authority.
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
12. As part of the ongoing economic liberalization relating
to foreign investments and foreign trade, a review of the
Foreign Exchange Regulation Act, 1973 was made in the year
1993 and several amendments were enacted subsequently.
The Government of India felt that Foreign Exchange Regulation
Act, 1973 must be repealed and to be replaced by a
comprehensive legislation and for that purpose, a taskforce was
constituted to have overall look on the subject and suggest the
required changes. The taskforce submitted its report in 1994.
On the recommendations of the taskforce and keeping in view
the significant developments that had taken place since 1993,
the Foreign Exchange Management Bill was introduced in the
Parliament. The Statement of Objects & Reasons reveals that
the provisions of the Bill aim at consolidating and amending
the law relating to Foreign Exchange with the objective of
facilitating external trade and payments and for promoting the
orderly development and maintenance of Foreign Exchange
markets in India. The Foreign Exchange Management Bill
having been passed by both the Houses of Parliament,
received the assent of the President on 29th December, 1999
and it came into force on the first day of June, 2000 as the
Foreign Exchange Management Act, 1999 (42 of 1999).
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
113
13. Chapter II of FEMA deals with “Regulation and
Management of Foreign Exchange”. Chapter III thereof deals
with “Authorized Person”. Chapter IV deals with “Contravention
and Penalties”. Section 13 of FEMA which is relevant for our
present purposes reads as under:
13. Penalties (1) If any person contravenes any provision of this Act, or
contravenes any rule, regulation, notification, direction or
order issued in exercise of the powers under this Act, or
contravenes any condition subject to which an
authorisation is issued by the Reserve Bank, he shall, upon
adjudication, be liable to a penalty up to thrice the sum
involved in such contravention where such amount is
quantifiable, or up to two lakh rupees where the amount
is not quantifiable, and where such contravention is a
continuing one, further penalty which may extend to five
thousand rupees for every day after the first day during
which the contravention continues.
(2) Any Adjudicating Authority adjudging any contravention
under sub-section (1), may, if he thinks fit in addition to
any penalty which he may impose for such contravention
direct that any currency, security or any other money or
property in respect of which the contravention has taken
place shall be confiscated to the Central Government and
further direct that the Foreign exchange holdings, if any of
the persons committing the contraventions or any part
thereof, shall be brought back into India or shall be retained
outside India in accordance with the directions made in
this behalf.
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converted into such deposits;
(b) Indian currency, where the said property is converted
into that currency; and
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(c) Any other property which has resulted out of the
conversion of that property.
14. Chapter V deals with “Adjudication and Appeal”.
Section 16 is relevant which is reproduced hereinbelow:
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Explanation.- For the purposes of this sub-section,
“property” in respect of which contravention has taken
place, shall include ;(a) Deposits in a bank, where the said property is
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
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16. Appointment of Adjudicating Authority (1) For the purpose of adjudication under section 13, the
Central Government may, by an order published in the
Official Gazette, appoint as many officers of the Central
Government as it may think fit, as the Adjudicating
Authorities for holding an inquiry in the manner prescribed
after giving the person alleged to have committed
contravention under section 13, against whom a complaint
has been made under sub-section (2) (hereinafter in this
section referred to as the said person) a reasonable
opportunity of being heard for the purpose of imposing any
penalty:
Provided that where the Adjudicating Authority is of opinion
that the said person is likely to abscond or is likely to evade
in any manner, the payment of penalty, if levied, it may
direct the said person to furnish a bond or guarantee for
such amount and subject to such conditions as it may
deem fit.
(2) The Central Government shall, while appointing the
Adjudicating Authorities under sub-section (1), also
specify in the order published in the Official Gazette their
respective jurisdiction.
(3) No Adjudicating Authority shall hold an enquiry under
sub-section (1) except upon a complaint in writing made
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
115
by any officer authorised by a general or special order by
the Central Government.
(4) The said person may appear either in person or take
the assistance of a legal practitioner or a chartered
accountant of his choice for presenting his case before the
Adjudicating Authority.
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A inquiry which is material for our present purposes is as under:
4. Holding of inquiry.—
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(5) Every Adjudicating Authority shall have the same
powers of a civil court which are conferred on the Appellate
Tribunal under sub-section (2) of section 28 and;(a) All proceedings before it shall be deemed to be judicial
proceedings within the meaning of sections 193 and 228
of the Indian Penal Code, 1860 (45 of 1860);
(1) For the purpose of Adjudicating under section 13 of the
Act whether any person has committed any contravention
as specified in that section of the Act, the Adjudicating
Authority shall, issue a notice to such person requiring
him to show cause within such period as may be specified
in the notice (being not less than ten days from the date
of service thereof) why an inquiry should not be held against
him.
(2) Every notice under sub-rule (1) to any such person shall
indicate the nature of contravention alleged to have been
committed by him.
(b) Shall be deemed to be a civil court for the purposes of
sections 345 and 346 of the Code of Criminal Procedure,
1973 (2 of 1974).
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(6) Every Adjudicating Authority shall deal with the
compliant under sub-section (2) as expeditiously as
possible and endeavor shall be made to dispose off the
complaint finally within one year from the date of receipt
of the complaint:
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Provided that where the complaint cannot be disposed off
within the said period, the Adjudicating Authority shall
record periodically the reasons in writing for not disposing
off the complaint within the said period.
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(4) On the date fixed, the Adjudicating Authority shall
explain to the person proceeded against or his legal
practitioner or the chartered accountant, as the case may
be, the contravention, alleged to have been committed by
such person indicating the provisions of the Act or of
Rules, regulations, notifications, direction or orders or any
condition subject to which an authorisation is issued by the
Reserve Bank of India in respect of which contravention
is alleged to have taken place.
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(5) The Adjudicating Authority shall, then, given an
opportunity to such person to produce such documents or
evidence as he may consider relevant to the inquiry and if
necessary, the hearing may be adjourned to future date
and in taking such evidence the Adjudicating Authority shall
15. In exercise of the powers conferred by Section 4 read
with sub-section (1) of Section 16, sub-section (3) of Section
17 and sub-section (2) of Section 19 of the Act, the Central
Government made the Rules for holding inquiry for the purpose
of imposing penalty and appeals under Chapter V of the said
Act. The rules are called the Foreign Exchange Management
(Adjudication Proceedings and Appeal) Rules, 2000. Rule 4 of
the said Rules which prescribes the procedure for holding of
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(3) After considering the cause, if any, shown by such
person, the Adjudicating Authority is of the opinion that an
inquiry should be held, he shall issue a notice fixing a date
for the appearance of that person either personally or
through his legal practitioner or a chartered accountant duly
authorised by him.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
117
not be bound to observe the provisions of the Indian
Evidence Act, 1872 (1 of 1872).
(6) While holding an inquiry under this rule the Adjudicating
Authority shall have the power to summon and enforce
attendance of any person acquainted with the facts and
circumstances of the case to give evidence or to produce
any document which in the opinion of the Adjudicating
Authority may be useful for or relevant to the subject matter
of the inquiry.
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B Analysis of relevant provisions of FEMA and the Rules
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(10) Every order made under sub-rule (8) shall be dated
and signed by the Adjudicating Authority.
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(11) A copy of the order made under sub-rule (8) of the
rule 4 shall be supplied free of charge to the person
against whom the order is made and all other copies of
proceedings shall be supplied to him on payment of
copying fee @ Rs. 2 per page,
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(8) If, upon consideration of the evidence produced before
the Adjudicating Authority, the Adjudicating Authority is
satisfied that the person has committed the contravention,
he may, be order in writing, impose such penalty as he
thinks fit, in accordance with provisions of Sec. 13 of the
Act.
(9) Every order made under sub-rule (8) of the rule 4 shall
specify the provisions of the Act or of the rules, regulations,
notifications, direction or orders or any condition subject
to which an authorisation is issued by the Reserve Bank
of India in respect of which contravention has taken place
and shall contain reasons for such decisions.
(12) The copying fee referred to in sub-rule (11) shall be
paid in cash or in the form of demand draft in favour of the
Adjudicating Authority.
PART IV : DISCUSSION
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(7) If any person fails, neglects or refuses to appear as
required by sub-rule (3) before the Adjudicating Authority,
the Adjudicating Authority may proceed with the
adjudication proceedings in the absence of such person
after recording the reasons for doing so.
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
16. The issue that arises for our consideration is to be
resolved in the background of this statutory setting. The FEMA
is a self contained and special legislation dealing with the
Foreign Exchange management. It essentially deals with
regulation and management of the Foreign Exchange. The
provisions of the Act mandate that save as otherwise provided
in the Act, rules or regulations made thereunder or with the
general or special permission of the Reserve Bank, no person
shall deal in or transfer any Foreign Exchange or foreign
security to any person not being an authorised person; make
any payment to or for the credit of any person resident outside
India in any manner; receive otherwise through an authorised
person, any payment by order or on behalf of any person
resident outside India in any manner; enter into any financial
transaction in India as consideration for or in association with
acquisition or creation or transfer of a right to acquire, any asset
outside India in any manner. It is further provided that no person
resident in India shall acquire, hold, own, possess or transfer
any Foreign Exchange, foreign security or any immovable
property situated outside India. That if any person contravenes
any provision of the Act, or contravenes any rule, regulation,
notification, direction or order issued in exercise of the powers
under the Act, or contravenes any condition subject to which
an authorisation is issued, he shall, upon adjudication, be liable
to a penalty. For the purpose of adjudication, the Central
Government may, by an order, appoint officers of the Central
Government as the Adjudicating Authorities for holding inquiry
in the manner prescribed after giving the person alleged to have
committed contravention against whom a complaint has been
made, a reasonable opportunity of being heard for the purpose
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
119
of imposing any penalty.
17. That a bare reading of the relevant provisions of the
Act and the Rules makes it abundantly clear that the manner,
method and procedure of adjudication are completely structured
by the statute and the Rules. The Authority is bound to follow
the prescribed procedure under the statute and the Rules and
is not free and entitled to devise its own procedure for making
inquiry while adjudicating under Section 13 of the Act since it
is under legislative mandate to undertake adjudication and hold
inquiry in the prescribed manner after giving the person alleged
to have committed contravention against whom a complaint
has been made, a reasonable opportunity of being heard for
the purpose of imposing any penalty. The discretion of the
Authority is so well structured by the statute and the Rules.
18. The Rules do not provide and empower the
Adjudicating Authority to straightaway make any inquiry into
allegations of contravention against any person against whom
a complaint has been received by it. Rule 4 of the Rules
mandates that for the purpose of adjudication whether any
person has committed any contravention, the Adjudicating
Authority shall issue a notice to such person requiring him to
show cause as to why an inquiry should not be held against him.
It is clear from a bare reading of the rule that show cause notice
to be so issued is not for the purposes of making any
adjudication into alleged contravention but only for the purpose
of deciding whether an inquiry should be held against him or
not. Every such notice is required to indicate the nature of
contravention alleged to have been committed by the person
concerned. That after taking the cause, if any, shown by such
person, the Adjudicating Authority is required to form an
opinion as to whether an inquiry is required to be held into the
allegations of contravention. It is only then the real and
substantial inquiry into allegations of contravention begins.
While holding inquiry into allegations of contravention, every
Adjudicating Authority shall have the powers of a Civil Court
120 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
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A under the Code of Civil Procedure in respect of the matters,
namely, (a) summoning and enforcing the attendance of any
person and examining him on oath; (b) requiring discovery and
production of documents; (c) receiving evidence on affidavits;
(d) requisitioning any public record, document or copy of such
B record or document from any office; (e) issuing commissions
for examination of witnesses or documents etc. That all
proceedings before the Adjudicating Authority shall be deemed
to be judicial proceedings within the meaning of Sections 193
and 228 of the Indian Penal Code; shall be deemed to be a
C Civil Court for the purposes of Sections 345 and 346 of the
Code of Criminal Procedure, 1973.
Principles of natural justice : statutory requirement and
fair hearing
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19. It is true that rule 4 does not require the Adjudicating
Authority to supply copies of any documents along with the show
cause notice. The rule does not require the Adjudicating
Authority even to furnish any list of documents upon which
reliance has been placed by him to set the law in motion. Does
E it mean that the Adjudicating Authority is not required to furnish
the list of documents and copies thereof upon which reliance
has been placed by him to issue notice of show cause to a
person against whom a complaint has been made by the
authorized officer? Whether the principles of natural justice and
F doctrine of fairness require supply of documents upon which
reliance has been placed at the stage of show cause notice?
“It is not possible to lay down rigid rules as to when the
principles of natural justice are to apply; nor as to the scope of
extent. Everything depends on the subject matter” [see R Vs.
Gaming Board for Great Britain ex p. Benaim and Khaida1].
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Observed Lord Denning MR.: “Their application, resting as it
does upon statutory implication, must always be in conformity
with the scheme of the Act and with the subject matter of the
case”. Even in the application of the doctrine of fair play there
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(1970) 2 QB 417.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
121
must be real flexibility. There must also have been caused
some real prejudice to the complainant; there is no such thing
as a merely technical infringement of natural justice. The
requirements of natural justice must depend on the
circumstances of the case, the nature of the inquiry, the rules
under which the tribunal is acting, the subject matter to be dealt
with and so forth. Can the Courts supplement the statutory
procedures with requirements over and above those specified?
In order to ensure a fair hearing, Courts can insist and require
additional steps as long a such steps would not frustrate the
apparent purpose of the legislation.
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20. In Lloyd Vs. McMahon2, Lord Bridge observed:
“My Lords, the so-called rules of natural justice are not
engraved on tablets of stone. To use the phrase which
better expresses the underlying concept, what the
requirements of fairness demand when any body,
domestic, administrative or judicial, has to make a
decision which will affect the rights of individuals depends
on the character of the decision-making body, the kind of
decision it has to make and the statutory or other
framework in which it operates. In particular, it is wellestablished that when a statute has conferred on any body
the
power
to
make
decisions
affecting
individuals, the courts will not only require the procedure
prescribed by the statute to be followed, but will readily
imply so much and no more to be introduced by way of
additional procedural safeguards as will ensure the
attainment of fairness”.
21. As Lord Reid said in Wiseman Vs. Boardman3:
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[1987] AC 625.
3.
[1971] AC 297.
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this purpose…”
22. It is thus clear that the extent of applicability of principles
of natural justice depends upon the nature of inquiry, the
consequences that may visit a person after such inquiry from
out of the decision pursuant to such inquiry.
23. The right to fair hearing is a guaranteed right. Every
person before an Authority exercising the adjudicatory powers
has a right to know the evidence to be used against him. This
principle is firmly established and recognized by this Court in
C Dhakeswari Cotton Mills Ltd. Vs. Commissioner of Income
Tax, West Bengal 4. However, disclosure not necessarily
involves supply of the material. A person may be allowed to
inspect the file and take notes. Whatever mode is used, the
fundamental principle remains that nothing should be used
D against the person which has not brought to his notice. If relevant
material is not disclosed to a party, there is prima facie
unfairness irrespective of whether the material in question arose
before, during or after the hearing. The law is fairly well settled
if prejudicial allegations are to be made against a person, he
E must be given particulars of that before hearing so that he can
prepare his defence. However, there are various exceptions to
this general rule where disclosure of evidential material might
inflict serious harm on the person directly concerned or other
persons or where disclosure would be breach of confidence or
F might be injurious to the public interest because it would involve
the revelation of official secrets, inhibit frankness of comment
and the detection of crime, might make it impossible to obtain
certain clauses of essential information at all in the future [See
R Vs. Secretary of State for Home Department, ex. p. H]5.
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“For a long time the courts have, without objection from
Parliament, supplemented procedure laid down in
legislation where they have found that to be necessary for
2.
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
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24. The concept of fairness may require the Adjudicating
Authority to furnish copies of those documents upon which
reliance has been placed by him to issue show cause notice
4.
(1955) 1 SCR 941.
5.
[1995) QB 43.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
123
requiring the noticee to explain as to why an inquiry under
Section 16 of the Act should not be initiated. To this extent, the
principles of natural justice and concept of fairness are required
to be read into rule 4(1) of the Rules. Fair procedure and the
principles of natural justice are in built into the Rules. A noticee
is always entitled to satisfy the Adjudicating Authority that those
very documents upon which reliance has been placed do not
make out even a prima facie case requiring any further inquiry.
In such view of the matter, we hold that all such documents
relied on by the Authority are required to be furnished to the
noticee enabling him to show a proper cause as to why an
inquiry should not be held against him though the Rules do not
provide for the same. Such a fair reading of the provision would
not amount to supplanting the procedure laid down and would
in no manner frustrate the apparent purpose of the statute.
PART V : DUTY OF ADEQUATE DISCLOSURE
25. The real question that arises for consideration is
whether the Adjudicating Authority even at the preliminary stage
is required to furnish copies of all the documents in his
possession to a noticee even for the purposes of forming an
opinion as to whether any inquiry at all is required to be held.
In this regard, learned senior counsel for the appellant pressed
into service the doctrine of duty of adequate disclosure which
according to him is an essential part of the principles of natural
justice and doctrine of fairness. A bare reading of the provisions
of the Act and the Rules do not support the plea taken by the
appellants in this regard. Even the principles of natural justice
do not require supply of documents upon which no reliance has
been placed by the Authority to set the law into motion. Supply
of relied on documents based on which the law has been set
into motion would meet the requirements of principles of natural
justice. No Court can compel the Authority to deviate from the
statute and exercise the power in altogether a different manner
than the prescribed one. As noticed, a reasonable opportunity
of being heard is to be provided by the Adjudicating Authority
in the manner prescribed for the purpose of imposing any
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A penalty as provided for in the Act and not at the stage where
the Adjudicating Authority is required merely to decide as to
whether an inquiry at all be held into the matter. Imposing of
penalty after the adjudication is fraught with grave and serious
consequences and therefore, the requirement of providing a
B reasonable opportunity of being heard before imposition of any
such penalty is to be met. In contradistinction, the opinion
formed by the Adjudicating Authority whether an inquiry should
be held into the allegations made in the complaint are not
fraught with such grave consequences and therefore the
C minimum requirement of a show cause notice and
consideration of cause shown would meet the ends of justice.
A proper hearing always include, no doubt, a fair opportunity
to those who are parties in the controversy for correcting or
contradicting anything prejudicial to their view. Lord Denning
has added: “If the right to be heard is to be a real right which
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is worth anything, it must carry with it a right in the accused man
to know the case which is made against him. He must know
what evidence is given and what statements have been made
affecting him: and then he must be given a fair opportunity to
correct or contradict them” [see Kanda Vs. Government of
E Malaya]6.
26. In the present case, the inquiry against the noticee is
yet to commence. The evidence as may be available upon
which the Adjudicating Authority may place reliance,
F undoubtedly, is required to be furnished to the person
proceeded against at the second stage of inquiry into
allegations of contravention. It is at that stage, the Adjudicating
Authority is not only required to give an opportunity to such
person to produce such documents as evidence as he may
G consider relevant to the inquiry, but also enforce attendance of
any person acquainted with the facts of the case to give
evidence or to produce any document which in its opinion may
be useful for or relevant to the subject matter of the inquiry. It is
no doubt true that natural justice often requires the disclosure
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6.
[1962] AC 322.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
125
126
of the reports and evidence in the possession of the deciding
Authority and such reports and evidence relevant to the subject
matter of the inquiry may have to be furnished unless the
scheme of the Act specifically prohibits such disclosure.
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27. However, the learned senior counsel for the appellants
in support of his contention that there is a duty cast on the
Adjudicating Authority to disclose and supply copies of all the
documents that may be available with him to the noticee, placed
reliance on State Inspector of Police, Vishakhapatnam Vs.
Surya Sankaram Karri 7 which is not an authority for the
proposition canvassed. It was a case where the Court found
that investigation into an offence punishable under Section
13(1)(e) of the Prevention of Corruption Act was undertaken
without the required authorization of the Superintendent of
Police. In that context, this Court observed that the manner in
which “the investigation was conducted, is condemnable. The
least that a court of law would expect from the prosecution is
that the investigation would be a fair one. It would not only be
carried out from the stand of the prosecution, but also the
defence, particularly, in view of the fact that the onus of proof
may shift to the accused at a later stage”. Shri Lalit, strongly
relied upon the observations so made by this Court which in
our considered opinion, are not relevant for our purpose. One
cannot pick a sentence from here and there in the Judgment
and characterize it to be the ratio of the case. The observations
made in that case were in the context of criminal investigation
which was found to be unfair and illegal.
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28. In Union of India Vs. Ranu Bhandari8 this Court found
that some of the vital documents which have a direct bearing
on the detention order, had not been placed before the
detaining Authority and the detenu was entitled to question such
omission. It was the case of the detenu that if his representation
and the writ petition had been placed before the detaining
7.
(2006) 7 SCC 172.
8.
(2008) 17 SCC 348.
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A Authority which according to him contained his entire defence
to the allegations made against him, the same may have
weighed with the detaining Authority as to the necessity of
issuing the order of detention at all. It is under those
circumstances, this Court expressed its view that on account
B of non-supply of those documents, the detenu was prevented
from making an effective representation against his detention.
In fact, the said decision is an authority for the proposition that
“when a detention order is passed, copies of all the documents,
both against the detenu and in his favour, which had been relied
C upon by the detaining Authority for reaching the satisfaction that
in the interest of the State and its citizens the preventive
detention of the detenu is necessary, must be supplied to the
detenu to enable him to make an effective representation
against the detention order in compliance with Article 22(5) of
the Constitution, irrespective of whether he had knowledge of
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the same or not.
29. The learned senior counsel further relied upon the
following observations made by this Court in Dwarka Prasad
Agarwal (Dead) by LRs. & Anr. Vs. B.D. Agarwal & Ors.9:
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“The very basis upon which a judicial process can be
resorted to is reasonableness and fairness in a trial. Under
our Constitution as also the International Treaties and
Conventions, the right to get a fair trial is a basic
fundamental /human right. Any procedure which comes in
the way of a party in getting a fair trial would be violative
of Article 14 of the Constitution of India. Right to a fair trial
by an independent and impartial Tribunal is part of Article
6(1) of the European Convention for the Protection of
Human Rights and Fundamental Freedoms 1950.”
We fail to appreciate as to how the above observations are of
any relevance to resolve the issue that arises for our
consideration in the present case. It is not the case of the
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9.
(2003) 6 SCC 230.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
127
appellants that the procedure prescribed under Rule 4 of the
Rules comes in their way in getting a fair trail and therefore
the said provision is violative of Article 14 of the Constitution
of India. It is not the case that the Adjudicating Authority
constituted under the present Act is not an independent and
impartial tribunal.
30. In Tribhuvandas Bhimji Zaveri & Anr. Vs. Collector
of Central Excise10, Officers of the Income Tax Department
raided the business premises of the appellant and prepared
an inventory of the stock of gold and gold ornaments found in
the premises. This was followed by a show cause notice as to
why penal action should not be taken against the appellants.
The appellants by their letter had requested the authorities to
furnish a certified copy of the check list prepared at the time of
raid with a view to enabling them to check and verify the
particulars. In reply thereto, the Income Tax Officer expressed
his inability to provide the required documents on the ground
that they were not readily available with the Officer. It is under
those circumstances, this Court observed that the failure to
supply important piece of information to the appellants has
prejudiced the appellants and to this extent the principles of
natural justice would stand violated. From the facts in that case,
it is clear that particular documents containing important piece
of information which would have enabled the noticee therein to
offer a proper explanation were required to be made available.
The nature of the document, its relevancy being a document
prepared at the time of raid and its mention in the show cause
notice were taken into consideration. It was a basic document
based on which the law was set into motion against the
appellants therein. It is for that reason this Court was of the view
that such an important document could not have been withheld
from the appellants therein.
128 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
A State of M.P. Vs. Chintaman Sadashiva Vaishampayan11. In
that case, the charged police officer wanted the documents
which were relevant and would have been of invaluable
assistance to him in making his defence and cross-examining
the witness who gave evidence against him in the Departmental
B Enquiry. It is in that context this Court observed that “it is difficult
and inexpedient to lay down any general rules; whether or not
the officer in question has had a reasonable opportunity must
always depend on the facts in each case. The only general
statement that can be safely made in this connection is that the
C departmental enquiries should observe rules of natural justice,
and that if they are fairly and properly conducted the decisions
reached by the enquiry officers on the merits are not open to
be challenged on the ground that the procedure followed was
not exactly in accordance with that which is observed in Courts
of law”. There is no dispute with this proposition.
D
32. In our opinion, these decisions do not assist the
appellants’ case in any manner whatsoever because the
documents which the appellants wanted in the present case are
the documents upon which no reliance was placed by the
E Authority for setting the law into motion. Observations of the
Courts are not to be read as Euclid’s theorems nor as
provisions of the statute. The observations must be read in the
context in which they appear. A line or a word in a judgment
cannot be read in isolation or as if interpreting a statutory
F provision to impute a different meaning to the observations [see
Haryana Financial Corporation Vs. Jagdamba Oil Mills12].
33. One more decision upon which heavy reliance has
been placed by the learned senior counsel is RvH/RvC13. We
fail to appreciate as to how the said judgment would render any
G
assistance and support the case set up by the appellants in the
present proceedings. In that case, the defendants were charged
31. In support of his submissions the learned senior
counsel has also referred us to the decision of this Court in
10. (1997) 11 SCC 276
11. AIR 1961 SC 1623.
12. (2002) 3 SCC 496.
H
H
13. [2004] UKHL 3.
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
129
with criminal conspiracy to supply a class A drug. The
prosecution case was based on police surveillance evidence.
In pre-trial proceedings the defendants made far-reaching
requests for disclosure, including all material relating to any
covert human intelligence sources involved in the investigation.
At a preliminary hearing, it appeared that a public interest
immunity inquiry would be necessary as the prosecution wished
to withhold documents from disclosure to the defence on that
ground. The Judge ruled, without having looked in detail at the
documents provided by the prosecution, that unless
independent counsel were appointed, so as to introduce an
adversarial element into the public interest immunity inquiry,
there was a risk that the trial would be perceived to be unfair
and therefore violate Article 6(1) of the European Convention
for the Protection of Human Rights and Fundamental
Freedoms, 1950 (as set out in Schedule 1 to the Human Rights
Act 1998) (the convention), which provided for the right to a fair
trial. The Judge, therefore, ordered that special counsel should
be appointed. The Crown’s appeal against the Judge’s ruling
was successful. The defendants appealed to the House of
Lords contending inter alia that it was incompatible with Article
6 of the convention for a Judge to rule on a claim to public
interest immunity in the absence of adversarial argument on
behalf of the accused where the material which the prosecution
was seeking to withhold was or might be relevant to a disputed
issue of fact which the Judge had to decide in order to rule on
an application which would effectively determine the outcome
of the proceedings. The House of Lords held that there is a
golden rule that full disclosure of any material held by the
prosecution which weakened its case or strengthened that of
the defendants should be disclosed to the defence. In
circumstances where such material could not be disclosed to
the defence, fully or even at all, without the risk of serious
prejudice to an important public interest, some derogation from
the golden rule could be justified, but such derogation was
always to be the minimum necessary to protect the public
interest in question and had never to imperil the overall fairness
130
A
B
C
D
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A of the trial.
34. This decision was followed by Attorney General’s
guidelines and disclosure in which it is clearly explained that
disclosure is one of the most important aspects in the criminal
B justice system and the application of proper and fair disclosure
is a vital component of a fair criminal justice system. This
amounts to no more and no less than a proper application of
the Criminal Procedure and Investigations Act, 1996 (CPIA),
recently amended by the Criminal Justice Act, 2003. The
scheme set out in the Criminal Procedure and Investigations
C
Act, 1996 is held to be designed to ensure that there is fair
disclosure and material which may be relevant to an
investigation and which does not form part of the prosecution
case. The disclosure under the Act should assist the accused
in the timely preparation and presentation of their case and
D assist the case to focus on all the relevant issues in the trial.
G
35. It appears that those Acts recognize rights of accused
persons in a criminal case to a fair trial. It is clear that disclosure
of unused material in criminal proceedings in United Kingdom
E is regulated by the provisions of those Acts and applicable to
criminal trials where the accused are charged with criminal
offences. Duty of disclosure of unused material is not a definite
concept to be applied in any and every case in this country.
There is no such Act or law as in United Kingdom, nor any
F procedure prescribed for disclosure of unused material in
criminal proceedings. In the present case, the appellants are
not defendants in any criminal trial. The judgment has no
application as to the fact situation and the law applicable in
United Kingdom is not applicable to either the adjudicatory
G proceedings or even criminal trials in this country.
H
36. On a fair reading of the statute and the Rules suggests
that there is no duty of disclosure of all the documents in
possession of the Adjudicating Authority before forming an
opinion that an inquiry is required to be held into the alleged
H contraventions by a noticee. Even the principles of natural
E
F
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
131
justice and concept of fairness do not require the statute and
the Rules to be so read. Any other interpretation may result in
defeat of the very object of the Act. Concept of fairness is not
a one way street. The principles of natural justice are not
intended to operate as roadblocks to obstruct statutory
inquiries. Duty of adequate disclosure is only an additional
procedural safeguard in order to ensure the attainment of the
fairness and it has its own limitations. The extent of its
applicability depends upon the statutory framework. Hegde, J.
speaking for the Supreme Court propounded: “In other words,
they (principles of natural justice) do not supplant the law of the
land but supplement it” [see A.K. Kraipak Vs. Union of India14].
Its essence is good conscience in a given situation; nothing
more but nothing less [see Mohinder Singh Gill Vs. Chief
Election Commissioner15].
Alternate submission
37. Yet another submission made by the learned senior
counsel requiring our consideration relates to interpretation of
sub-rule (6) of Rule 4. The learned senior counsel contended
that the appellants’ request to the Adjudicating Authority to
furnish the copies of the documents could be treated as one
made under sub-rule (6) of rule 4 which enables the
Adjudicating Authority to direct any person to produce any
document which in his opinion may be useful for or relevant to
the subject matter of inquiry. We find no merit in the submission.
A plain reading of sub-rule (6) of rule 4 makes it abundantly
clear that such a power to summon and enforce attendance of
any person acquainted with the facts and circumstances of the
case to give evidence or to produce any document which may
be relevant to the subject matter of inquiry is only available to
the Adjudicating Authority while holding an inquiry into
allegations of contravention, but not at the stage where the
Authority is merely required to form an opinion as to whether
an inquiry should be held into allegations of contraventions. It
15. (1978) 2 SCC 262.
132 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
H
A is always open to a person facing an inquiry to invoke the
jurisdiction of the Adjudicating Authority requiring any person
to produce any document which may be useful for or relevant
to the subject matter of inquiry. Such request may have to be
considered upon its own merits. A fair reading of rule 4 which
B is a complete compendium for holding of inquiry suggests that
all the evidence and documents which the Adjudicating Authority
may consider relevant for the purpose of inquiry may have to
be furnished to a person facing the inquiry on the allegations
of contravention of the provisions of the Act etc., alleged to have
C been committed by him. In addition, the Authority may require
attendance of any person acquainted with the facts and
circumstances of the case to give evidence and to produce any
documents which in its opinion, may be useful for or relevant
to the subject matter of the inquiry. Only upon consideration of
the entire evidence produced, if the Adjudicating Authority is
D
satisfied that the person has committed the contravention, he
may by order in writing accordingly impose such penalty as he
thinks fit in accordance with the provisions of the Act which of
course is not final as it is subject to appeal.
E Practice of inclusion of list of judgments in compilations
not cited at the bar :
38. Before parting with the judgment, we are constrained
to observe with some reluctance about the recent practice and
F procedure of including list of authorities in the compilation
without the leave of the Court. In many a case, even the senior
counsel may not be aware of inclusion of such authorities in the
compilation. In our considered opinion, this Court is not required
to consider such decisions which are included in the
compilation which were not cited at the Bar. In the present
G
case, number of judgments are included in the compilation
which were not cited at the Bar by any of the counsel. We have
not dealt with them as we are not required to do so. At any rate,
all those judgments deal with the procedural aspects and
concern the interpretation for various provisions of the Code
H of Criminal Procedure applicable to a criminal trial and they are
KANWAR NATWAR SINGH v. DIRECTORATE OF
ENFORCEMENT [B. SUDERSHAN REDDY, J.]
133
totally irrelevant for the purposes of deciding the issue that had
arisen for our consideration in the present case.
[2010] 13 (ADDL.) S.C.R. 134
A
A
B
B
CONCLUSIONS:
39. The appellants insisted for supply of all documents in
possession of the Authority and such demand is based on
vague, indefinite and irrelevant grounds. The appellants are not
sure as to whether they are asking for the copies of the
documents in possession of the Adjudicating Authority or in
possession of authorized officer who lodged the complaint. The
only object in making such demand is obviously to obstruct the
proceedings and the appellants, to some extent, have been
able to achieve their object as is evident from the fact that the
inquiry initiated as early as in the year 2006 still did not even
commence.
40. We are constrained to take note of the fact that it is
on account of continuous unreasonable requests on the part of
the appellants, the Adjudicating Authority could not deal with the
complaint expeditiously which is required to be disposed of
within one year from the date of receipt of the complaint. We
accordingly direct the Adjudicating Authority to deal with the
complaint as expeditiously as possible and every endeavor
shall be made to dispose of the complaint finally at the earliest.
No unreasonable request for adjournment shall be entertained
by the Adjudicating Authority.
However, we make it clear that the Authority shall make
inquiry into the allegations made in the complaint strictly in
accordance with the law and uninfluenced by the observations
if any made in this order. We have not expressed any opinion
whatsoever on the merits of the case. The appellants are
entitled to all the defence that may be available to them in law.
Appeals dismissed.
OCTOBER 7, 2010.
[HARJIT SINGH BEDI R.M. LODHA, JJ.]
Penal Code, 1860:
C
D
E
F
ss. 498-A and 306 – ‘Cruelty’ – Abetment of suicide – A
woman drowned in river after one and a half years of marriage
– Prosecution case of harassment of the victim by her
husband and his sisters – Allegation of illicit relationship
between husband of deceased and another woman –
Conviction of husband – HELD: First and foremost, this is an
D
appeal under Article 136 of the Constitution by way of special
leave – Two courts, on a minute appreciation of the evidence,
have found against the accused – There is no reason to hold
otherwise – Nonetheless, on merits, it has come in the
evidence of PW.2, PW.3 and PW.4 that the accused and his
E sisters had been misbehaving with the victim – Harassment
meted out to the deceased has been clearly revealed and a
presumption u/s 113-A of the Evidence Act must, therefore,
be raised against the accused as admittedly the incident
happened about one and a half years after the marriage – On
F the facts and circumstances, it was a case of suicide on
account of harassment meted out to the deceased and not a
case of accident – Appeal dismissed – Constitution of India,
1950 – Article 136 – Evidence Act, 1972 – s.113-A.
C
G
G
s.498-A – ‘Cruelty’ – Evidence of illicit relationship
between husband of deceased and another woman – HELD:
An illicit relationship of a married man with another woman
would clearly amount to cruelty within the meaning of s. 498A – Even assuming that this did not amount to cruelty within
H
H
134
41. For all the aforesaid reasons, the appeals are
dismissed with costs.
K.K.T.
LAXMAN RAM MANE
v.
STATE OF MAHARASHTRA
(Criminal Appeal No. 19 of 2005)
LAXMAN RAM MANE v. STATE OF MAHARASHTRA 135
the meaning of s. 498-A, it could still be used as a piece of
evidence of harassment and misbehaviour of the accused
towards the deceased – Evidence.
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 19 of 2005.
136 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
From the Judgment & Order dated 21/22.09.2004 of the
High Court of Judicature at Bombay in Criminal Appeal No. 130
of 1995.
Vinay Navare, Keshav Ranjan, Naresh Kumar for the
Appellant.
C
Sushil Karanjakar, Sanjay Kharde, Asha Gopalan Nair for
the Respondent.
The following order of the Court was delivered
D
ORDER
This appeal by way of special leave arises out of the
following facts:
The deceased Vasudha @ Sangeeta was the daughter of
Chandrakant Kumbhar (PW.4) a resident of Tupgaon. Vasudha
had married to the appellant, Laxman Ram Mane, on 16th May,
1990, that is about one and a half years prior to the date of
incident, and after the marriage the couple resided in the
matrimonial home at Vitthalwadi, Pali in Raigad District. As per
the prosecution story Vasudha had gone to her parents’ home
about one month prior to the incident and had disclosed to her
father and brother of her husband’s dalliance with a girl Pragati
by name, and that he would often abuse and beat her.
Chandrakant told Vasudha that he would talk to her husband
on this issue after the harvesting season was over. A few days
after this visit Chandrakant received a message that his
daughter had drowned in the river. He along with his son (PW.3)
Vilas and Pandharinath and other relatives then rushed to Pali
and a complaint of a missing person was lodged at the Pali
E
F
G
H
A police station by Pandharinath. On the 9th August 1994 the
police informed PW.4 that a dead body had been found near
village Shiloshi about 6 k.m. away from the village of the
appellant and the deceased. API Ramesh Deshmukh who was
then attached to the Pali police station, recovered the dead
B body which was identified by Chandrakant and Vilas. After the
completion of the investigation, a charge-sheet was filed
against the appellant and his two sisters for offences punishable
under Section 498-A and Section 306 read with Section 34 of
the IPC. The accused pleaded not guilty and were brought to
C trial. In the cross examination the suggestion made by the
defence was that the deceased had gone out to answer the call
of nature near the river and had accidentally slipped in and had
been drowned.
The Trial Court examined the various pieces of evidence,
D they being (1) the evidence of the brother and the father of the
deceased PW.3 and PW.4 respectively; (2) the evidence of
Sunita Birwadkar (PW.2) a cousin of the deceased who
deposed about the cruelty and harassment by the accused and
(3) the evidence of photographer S.N. Dadholkar (PW.5) who
E deposed that he had taken the photograph of the appellant with
a young girl and that girl was identified as Pargati. In the light
of the aforesaid circumstances the Trial Court convicted the
appellant for offences under Section 306 and Section 498-A
of the IPC but acquitted his sisters. This judgment has been
F affirmed by the High Court in appeal.
Before us today, Mr. Vinay Navare, the learned counsel for
the appellant, has reiterated the arguments that had been raised
earlier. He has submitted that a perusal of the Panchnama and
the site plan revealed that the deceased could not have
G committed suicide but had in fact drowned in an accident when
she had fallen into the river while answering the call of nature.
He has finally argued that no offence under Section 498-A of
the IPC was made out and that a mere illicit relationship of a
husband with another woman did not amount to cruelty to the
H wife.
[2010] 13 (ADDL.) S.C.R. 138
LAXMAN RAM MANE v. STATE OF MAHARASHTRA 137
We have considered the arguments advanced very
carefully. First and foremost this is a matter under Article 136
of the Constitution by way of special leave. Two courts have
found against the appellant on a minute appreciation of the
evidence. We see no reason to hold otherwise. Nonetheless
we have gone into the evidence referred to us by the learned
counsel. The fact that the appellant had been misbehaving with
his wife is in the evidence of PW.2 and PW.3 and PW.4. It has
come in their statements that she was being harassed by the
appellant and his sisters for various reasons and that the
appellant would also side with his sisters. Be that as it may,
the sisters have already been given the benefit of doubt by the
Trial Court and we have nothing more to say on this aspect. It
is clearly revealed that harassment meted out to the deceased
and a presumption under Section 113-A of the Evidence Act
must therefore be raised against the appellant as admittedly
the accident happened about one and a half years after the
marriage.
We are of the opinion that an illicit relationship of a married
man with another woman would clearly amount to cruelty within
the meaning of Section 498-A. Even assuming for a moment
that this did not amount to cruelty within the meaning of Section
498-A it could still be used as a piece of evidence of
harassment and misbehaviour of the appellant towards the
deceased.
We have also perused the Panchnama and the site plan.
We find it difficult to believe that a woman who had been living
in the area would have gone to answer the call of nature at a
place where the water was 9 ft. deep and at a confluence of
two rivers. It appears to us, therefore, that this was a case of
suicide on account of harassment meted out to the deceased.
The appeal is accordingly dismissed.
R.P.
Appeal dismissed.
A
A
B
B
M/S SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD.
v.
UNITED INDIA INSURANCE CO. LTD. & ANR.
(Civil Appeal No. 1375 of 2003)
OCTOBER 8, 2010
[D.K. JAIN AND T.S. THAKUR, JJ.]
C
D
E
F
G
Insurance – Contract of insurance – In terms of the
contract, insured required to disclose each and every dispatch
C of consignment – Insured not disclosing dispatch of some of
the consignments – Dispatch of the consignment in question
disclosed – Damage to the consignment during its transit –
Insurance claim – Repudiated by insurance company on the
ground that the insured had violated terms and conditions of
D the contract by not disclosing all the dispatches – Entitlement
of the insured to insurance claim – Held: Insurance claim
must fail on the ground of the breach of contract – As per the
contract, the insured was required to declare each and every
dispatch and not those alone wherein it had insurable interest
E – Contract.
F
Deeds and Documents – Contract of insurance –
Interpretation of – Held: The terms of the contract of insurance
have to be strictly construed – It is not open to the court to
add, delete or substitute any words – Insurance contract.
The appellant, a company engaged in the business
of manufacture and sale of mustard oil, obtained an open
transit insurance policy from the respondents-insurance
company, covering all types of edible oils in tins
G transported by rail / road to anywhere in India. During the
relevant period, liability of the insurance company was
limited to Rs. 1 crore. The cover note of the insurance
policy contained a special condition i.e. each and every
H
138
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
UNITED INDIA INSURANCE CO. LTD.
139
consignment was to be declared immediately before
dispatch of the goods.
The insured dispatched certain tins of oils. The
railway wagon, carrying the goods met with an accident
resulting in damage to the consignment. The insured
informed about the accident to another branch of the
insurance company. A surveyor was appointed, who gave
his report assessing the loss. Thereafter another
surveyor was appointed by respondent No. 2 (the local
branch of the insurance company) who reported that till
the date the consignment in question was dispatched,
the insured had only disclosed dispatches worth Rs.
91,22,778/- while the total dispatches were worth Rs.
1,43,59,303/-.
The claim of the insured was repudiated by the
insurance company on the ground, amongst others, that
the insured violated the terms and conditions of the
contract in as much as it did not declare all the
dispatches. The insured filed a complaint, which was
allowed by the State Consumer Disputes Redressal
Commission. The National Consumer Disputes
Redressal Commission set aside the order of State
Commission and upheld the rejection of the claim of the
insured. Therefore, the instant appeal was filed.
Dismissing the appeal, the Court
HELD: 1. It is trite that in a contract of insurance, the
rights and obligations are governed by the terms of the
said contract. Therefore, the terms of a contract of
insurance have to be strictly construed, and no exception
can be made on the ground of equity. Thus, in construing
the terms of a contract of insurance, the words used
therein must be given paramount importance, and it is
not open for the court to add, delete or substitute any
words. It is also well settled that since upon issuance of
140 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
A an insurance policy, the insurer undertakes to indemnify
the loss suffered by the insured on account of risks
covered by the policy, its terms have to be strictly
construed to determine the extent of liability of the
insurer. Therefore, the endeavour of the court should
B always be to interpret the words in which the contract is
expressed by the parties. [Paras 22 and 24] [151-E; 152D-F]
C
General Assurance Society Ltd. v. Chandumull Jain and
Anr. (1966) 3 SCR 500 – followed.
United India Insurance Co. Ltd. v. Harchand Rai
Chandan Lal (2004) 8 SCC 644 – relied on.
D
E
F
G
H
Oriental Insurance Co. Ltd. v. Sony Cheriyan (1999) 6
D SCC 451; Vikram Greentech India Limited and Anr. v. New
India Assurance Company Limited (2009) 5 SCC 599; Sikka
Papers Limited v. National Insurance Company Limited and
Ors. (2009) 7 SCC 777; New India Assurance Company
Limited v. Zuari Industries Limited and Ors. (2009) 9 SCC 70;
Amravati District Central Cooperative Bank Limited v. United
E
India Fire and General Insurance Company Limited. (2010)
5 SCC 294 – referred to.
2. In the instant case, the claim of the appellant must
fail on the short ground that there was a breach of the
F special condition incorporated in the cover note of the
Contract. The special condition viz. “each and every
consignment” must be declared before dispatch of
goods is clear and admits of no ambiguity. The appellant
was obliged to declare “each and every consignment”
G before it left the appellant’s factory premises and there
is nothing in the policy to suggest that the insured had
the liberty to pick and choose the dispatches which they
wanted to declare to the insurer, not even at the instance
of the consignee, who otherwise is a stranger to the
H contract between the insurer and the insured. It is not
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
UNITED INDIA INSURANCE CO. LTD.
141
correct to say that the appellants were required to declare
only those dispatches in which they had an insurable
interest. Notwithstanding any request by the consignee,
the policy of insurance postulated declaration in respect
of each and every dispatch by the appellant. Therefore,
the fact that purchasers did not want an insurance cover
on certain dispatches had no bearing on the obligation
of the appellant to declare each and every dispatch
under the policy. It is a settled proposition of law that a
stranger cannot alter the legal obligations of parties to the
contract. [Para 25] [152-G; 153-A-E]
New India Assurance Co. Ltd. v. G.N. Sainani (1997) 6
SCC 383; New India Assurance Company Limited v. Hira Lal
Ramesh Chand and Ors. (2008) 10 SCC 626; United India
Insurance Co. Ltd. v. Great Eastern Shipping Co. Ltd. (2007)
7 SCC 101; Divisional Manager, LIC of India v. Shri
Bhavanam Srinivas Reddy, (1991) CPJ 189; Divisional
Manager, LIC India of India v. Smt. Uma Devi (1991) CPJ
516; M/s Raj Kamal and Co. v. M/s United Insurance
Company, (1992) CPJ 121; Dr. J.J. Merchant and Ors. v.
Shrinath Chaturvedi (2002) 6 SCC 635; CCI Chambers
Coop. Hsg. Society Ltd. v. Development Credit Bank Ltd.
(2003) 7 SCC 233 – referred to.
Barratt Bros. (Taxis), Ltd. v. Davies 1966 2 Lloyd’s
Rep.1; Dunlop Brothers and Company v. Townend. 1919
(2) 127 (KB); Kilroy Thompson, Ltd. v. Perkins and Homer,
Ltd. [1956] 2 Lloyd’s Rep. 49 – referred to
142
A
B
C
D
E
F
A
B
C
D
E
F
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
(1997) 6 SCC 383
Referred to
Para 17
(2008) 10 SCC 626
Referred to
Para 17
(1956) 2 Llyod’s Rep. 49
Referred to
Para 18
(2007) 7 SCC 101
Referred to
Para 18
(1991) CPJ 189
Referred to
Para 19
(1991) CPJ 516
Referred to
Para 19
(1992) CPJ 121
Referred to
Para 19
(2002) 6 SCC 635
Referred to
Para 19
(2003) 7 SCC 233
Referred to
Para 19
1919 (2) 127 (KB)
Referred to
Para 20
(2008) 14 SCC 598
Referred to
Para 21
(1999) 6 SCC 451
Referred to
Para 22
(1966) 3 SCR 500
Followed
Para 22
(2009) 5 SCC 599
Referred to
Para 22
(2009) 7 SCC 777
Referred to
Para 22
(2009) 9 SCC 70
Referred to
Para 22
(2010) 5 SCC 294
Referred to
Para 22
(2004) 8 SCC 644
Relied to
Para 23
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1375 of 2003.
Case Law Reference:
(1966) 2 Llod’s Rep. 1
Referred to
Para 16
(2005) 9 SCC 174
Referred to
Para 16
(1995) Supp (1) SCC 754
Referred to
Para 16
(1999) 3 SCC 465
Referred to
Para 16
G
G
H
A.K. Ganguli, Bamali Basak, Chanchal Kumar Ganguli,
Chitanya
Safaya, Debesh Panda for the Appellant.
H
From the Judgment & Order dated 12.07.2002 of the
National Consumer Disputes Redressal Commission, New
Delhi in F.A. No. 354 of 1996.
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
UNITED INDIA INSURANCE CO. LTD.
143
Vineet Malhotra, K. Singhal, Dr. Kailash Chand for the
Respondent.
144
A
A Sree Sree Kaibalia Bhandar, Agartala.
5. The railway wagon carrying the said goods met with an
accident on 28th September 1992, resulting in extensive
damage to the consignment.
The Judgment of the Court was delivered by
D.K. JAIN, J. 1. This appeal, by special leave, is directed
against the judgment and order dated 12th July 2002, delivered
by the National Consumer Disputes Redressal Commission (for
short “the National Commission”) in First Appeal No. 354 of
1996, whereby it set aside order dated 24th June, 1996 passed
by the Consumer Disputes Redressal Commission, Rajasthan
(for short “the State Commission”) and held that the respondents
– insurance company was justified in repudiating the insurance
claim of the appellant.
2. Both the respondents are the same insurance company,
the first being the registered and head office and the second
its local branch office.
B
C
D
3. Shorn of unnecessary details, the facts material for the
purpose of disposal of this appeal may be stated thus:
The appellant company is engaged in the business of
manufacture and sale of “Bhisham” brand mustard oil and
cakes. They had obtained an open transit insurance policy from
the respondents covering “all types of edible oils in tins…”
transported by rail/road (which had to be declared) from Jaipur
to anywhere in India. Initially, the liability of the respondents was
limited to `10 lakhs but during the relevant period, the limit was
enhanced to `1 crore. The insurance policy was subject to
certain conditions attached as schedule to the policy.
Additionally, the cover note also contained the following special
condition and warranty:
“Each & every consignment must be declared immediately
before dispatch of goods.”
4. On 14th August 1992, the appellant dispatched 1194
tins of oil valued at Rs. 5,84,790/- from Jaipur to Dharamnagar
by rail and from Dharamnagar to Agartala by road to one M/s
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
E
B
6. It is an admitted fact that the appellant did not inform
either of the two respondents herein about the said accident
till 30th September 1992 but claims to have informed their
Agartala office on 28th September 1992 itself, who had also
appointed a surveyor. The consignment, in damaged condition,
C was forwarded to Agartala by road on 29th September 1992.
The challans bearing Nos. 40336, 40337 and 40338 prepared
by the road carrier M/s Paul Brothers clearly mentioned the
damaged state of the goods. The said goods were received
by the consignee on the same day.
D
7. On 30th September 1992, the consignee informed the
Agartala branch office of respondent No. 1 about the damage
to the goods. The road carrier, M/s Paul Brothers also reported
the matter to the respondent No. 2, herein. Subsequently, on
3rd October 1992, the road carrier issued a shortage/damage
E certificate stating that 153 tins were handed over in fully empty
condition and in the remaining 1041 tins, there was shortage
of oil.
F
F
G
G
H
8. It appears from the report of the surveyor, one Mr. Tapan
Kumar Saha, that the Agartala branch of respondent No.1 had
issued instructions for survey on 28th November 1992. On 10th
November 1992, he submitted his report whereby he assessed
the total loss at Rs. 4,39,178/- payable by the respondents. The
said report was also communicated to respondent No. 2.
9. On 6th August 1993, another surveyor, Mr. S.K.
Bakliwal, was appointed by respondent No. 2, who reported that
during the period from 1st April 1992 to 14th August 1992, the
appellant had only declared dispatches worth Rs. 91,22,778/whereas the total dispatches by the appellant during that period
H were to the tune of Rs. 1,43,59,303/-.
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
145
UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
10. Respondent No. 2 thereafter requested Mr. Tapan
Kumar Saha to segregate the damage caused to the goods
at the place of accident, and the subsequent damage that
occurred during the transportation of the damaged consignment
to Agartala. In his report dated 22nd March 1994, the surveyor
observed that loss of oil due to the railway accident was 2,048
kgs. and from Dharamnagar to Agartala, it was 10,676 kgs.
11. On 23rd August 1993, the appellant requested the
respondents to honour their claim, followed by a reminder on
12th May 1994. On 1st August 1994, the respondents, vide
letter No. UIIC:DOII:JPR:1994-95, repudiated the claim of the
appellant on the following grounds:
“(i) As per the terms and conditions of the policy, you were
supposed to declare each and every dispatch. From 104-1992 to 14-8-1992, you have dispatches goods worth
Rs. 1,43,59,303/- while you have only declared as per your
record, goods worth Rs. 91,22,778/-. Out of these
declarations, a number of declarations have not reached
the company’s office. Even considering it to be correct as
the dispatched have exceeded rupees one crore long
back, the policy has not continued to cover the dispatch
in question, and thus your claim cannot be entertained.
146
A
A
B
B
C
C
D
E
(ii) You have further violated the terms and conditions of
the policy by removing goods from the rail accident site
without survey of the loss having been done by the
Insurance Company’s Surveyor immediately after the
accident, and without the permission of the Insurance
Company. You have not given any information or sought
any permission before removing the goods from the rail
accident site to Agartala.
G
(iii) You have aided in increasing the losses knowingly that
the goods dispatched from the rail accident site to Agartala
were not properly packed, and carrying of the oil in
damaged tins is clear violation of the terms and conditions
of the policy and the normal conduct of behaviour. From
H
F
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
the Surveyor’s Report, it is evident that the losses which
have been quantified on the basis of the certificates while
the rail authorities are to the tune of Rs. 71,130/- while the
rest of the damages have occurred during the
transshipment from the rail accident site to Agartala in
damaged tins by M/s Paul Brothers, the Road carriers. It
is also not disputed that during the carriage of the goods
by road from rail accident site to Agartala, there was no
accident and these losses are contributed to your own fault,
negligences and want of proper care to carry the oil only
after transferring the oil from tins damaged as a result of
the rail accident into new tins.”
12. Being aggrieved with the rejection of their claim, the
appellant filed a complaint before the State Commission,
preferring a claim of Rs. 5,50,798/- along with interest at the
D rate of 24% payable from 10th November 1992 till its payment
against the respondents.
13. The State Commission, vide its order dated 24th June
1996, allowed the complaint of the appellant and directed the
respondents to pay Rs. 4,39,178/- with interest at the rate of
E
12% per annum from 1st January 1993 till payment, and Rs.
2,000/- as costs. In relation to the grounds of repudiation
pressed into service by the respondents, the State
Commission, inter alia, observed that firstly, the effect of nondeclaration of the consignments could only be that they were
F not covered by the insurance policy, and the appellant company
having not crossed the limit of Rs. 1 crore in relation to
consignments which were desired to be covered by insurance,
the consignment in question would be covered by the insurance
policy as declaration was duly made in regard to it; secondly,
G the liability of the respondents would not be affected by the
reason that the assessment of loss was not done immediately
after the unloading of goods at Dharamnagar; and thirdly, it did
not matter that the loss or damage to the consignment was
remotely caused by the negligence of the insured unless the
H loss was due to the wilful act of the insured.
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
147
UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
14. Aggrieved by the said order of the State Commission,
the respondents preferred an appeal before the National
Commission. As aforestated, the National Commission
allowed the appeal of the respondents, observing thus:
148
A
“The insured’s failure to report the loss caused by Rail
B
accident and removal of consignment without giving
Surveyor a chance to assess the loss at first hand and on
the contrary aggravating the loss on account of improper
care while transporting it by Road after the initial damage
as well violating the terms of the policy by not reporting
each and every dispatch as per terms of the policy C
prejudices the interest of the appellant and in our view
repudiation by the appellant was in order.”
15. Being dissatisfied with the said order, the appellant is
before us in this appeal.
D
16. Mr. A.K. Ganguli, learned senior counsel appearing for
the appellant, strenuously urged that admittedly the respondents
were informed of the accident on 28th September 1992 by the
consignee through their Agartala office and this fact has been
overlooked by the National Commission while recording the E
finding that the surveyor was not given a chance to assess the
real loss. To buttress the contention that intimation of loss of
subject matter of insurance even by the consignee was
sufficient and appellant’s claim could not be rejected for want
of intimation about the accident by the insured themselves, F
learned counsel commended us to the decision of the Court of
Appeal in Barratt Bros. (Taxis), Ltd. Vs. Davies1, wherein it was
held that if the insurance company receives all material
knowledge from another source so that they are not prejudiced
at all by the failure of the insured himself to inform them, then G
they cannot rely on such a condition in the insurance contract
to defeat the claim. It was pleaded that in the present case the
surveyor had also surveyed the consignment as soon as the
goods reached their destination and had assessed the loss at
1.
[1966] 2 Lloyd’s Rep.1.
H
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Rs. 4,39,178/-. It was contended that since insurance contracts
are a different species of contract, their interpretation is
governed by different principles and in the event of any
ambiguity in any clause or where two interpretations are
possible, an interpretation which favours the policy holders
should be given. In support of the proposition, learned counsel
relied on the decisions of this Court in General Assurance
Society Ltd. Vs. Chandumull Jain & Anr.2, Polymat India (P)
Ltd. & Anr. Vs. National Insurance Co. Ltd. & Ors.3, Shashi
Gupta Vs. Life Insurance Corporation of India & Anr.4 and Life
Insurance Corporation of India Vs. Raj Kumar Rajgarhia &
Anr.5.
17. As regards the objection of the respondents about the
non-disclosure of dispatch of each and every consignment, as
pointed by the second surveyor, learned counsel submitted that
the said condition has to be understood in the context of the
fundamental condition that the insurance cover was intended
to secure only the “insurable interest” of the appellant in the
dispatches. It was urged that the appellant had declared only
those consignments in which they had an “insurable interest”
as in relation to dispatches which had not been declared, the
consignees had desired that their consignments should be
dispatched without an insurance cover. In all such cases, the
purchasers took the risk of loss to their goods, and hence the
appellant had no “insurable interest” in them, unlike in the
consignment in question for which due declaration was made.
Reference was made to the decisions of this Court in New India
Assurance Co. Ltd. Vs. G.N. Sainani 6 and New India
Assurance Company Limited Vs. Hira Lal Ramesh Chand &
Ors.7, wherein it was held that “insurable interest” over a
2.
(1966) 3 SCR 500.
3.
(2005) 9 SCC 174.
4.
1995 Supp (10) SCC 754.
5.
(1999) 3 SCC 465.
6.
(1997) 6 SCC 383.
7.
(2008) 10 SCC 626.
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
149
UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
property is “such interest as shall make the loss of the property
to cause pecuniary damage to the assured.”
18. It was then contended by learned counsel for the
appellant that in the instant case the insurance policy covered
all risks from the point of loading at Jaipur till the final delivery
and the appellant was only under a duty to ensure that goods
were in a properly packed condition when they were handed
over at Jaipur for transport by train. It was asserted that the
appellant had done everything possible to ensure that the goods
reached their destination in proper condition as the event that
had occurred at Dharamnagar station was beyond their control.
In order to buttress the contention that the goods were in transit
till they reached their destination, viz. Agartala, learned counsel
relied on Kilroy Thompson, Ltd. Vs. Perkins & Homer, Ltd.8
and United India Insurance Co. Ltd. Vs. Great Eastern
Shipping Co. Ltd.9 It was argued that in the instant case the
respondents have not led any evidence to prove negligence on
the part of the appellant.
19. Relying on the decisions rendered by the National
Commission in Divisional Manager, LIC of India Vs. Shri
Bhavanam Srinivas Reddy10, Divisional Manager, LIC India
of India Vs. Smt. Uma Devi11 and M/s Raj Kamal & Co. Vs.
M/s United Insurance Company12, learned counsel contended
that the jurisdiction of a consumer forum has to be construed
liberally and it covers unilateral repudiation of a claim arising
out of insurance. It was also submitted that apart from the fact
that the present case does not involve any complicated issues
of fact for which very detailed evidence would have to be led,
which the State or the National Commission would not be able
to do, mere complication either of facts or of law cannot be a
8.
[1956] 2 Lloyd’s Rep. 49.
9.
(2007) 7 SCC 101.
150
A
B
C
D
E
F
G
A ground for shutting the doors of those fora to the person
aggrieved. To buttress the submission, reliance was placed on
the decisions of this Court in Dr. J.J. Merchant & Ors. Vs.
Shrinath Chaturvedi13 and CCI Chambers Coop. Hsg. Society
Ltd. Vs. Development Credit Bank Ltd14.
B
20. Per contra, Mr. Vineet Malhotra, learned counsel
appearing for the res pondents, while supporting the judgment
of the National Commission, urged that the claim of the
appellant could not be considered as the appellant had violated
the special condition of the policy by not disclosing each and
C every consignment before it had left the factory premises. It was
asserted that the said condition was the basic condition of the
policy and on its breach the liability of the respondents stood
repudiated. It was also pleaded that the moment goods worth
Rs.1 crore had been dispatched from the factory of the
D appellant, the policy ceased to exist. It was argued that prior
to the dispatch of the goods in question, goods worth
Rs.1,43,59,303/- had already been dispatched, whereas the
appellant had declared dispatches of goods only worth Rs.
91,22,778/- and, therefore, liability of the respondents under the
E policy ceased to exist both on account of non-declaration of
material facts, as also due to the fact that the value of
dispatches had exceeded the policy limit. In support of his plea
that it was not open to the insured to pick and choose the
consignments for the purpose of declaration, learned counsel
F relied on the decision of the Kings Bench in Dunlop Brothers
& Company Vs. Townend15. Learned counsel contended that
appellant had also violated the terms of policy by not informing
the respondents immediately about the accident as well as not
taking adequate steps to minimise the losses, in as much as
G the goods dispatched from Dharamnagar to Agartala were not
properly packed. According to the learned counsel, the
insurance policy casts an obligation on the insured and its
10. (1991) CPJ 189.
13. (2002) 6 SCC 635.
11. (1991) CPJ 516.
12. (1992) CPJ 121.
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
14. (2003) 7 SCC 233.
H
H
15. 1919 (2) 127 (KB).
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
151
UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
agents to take steps for minimizing losses, and the fact that the
appellant permitted the carriage of oil in broken tins clearly
establishes that the appellant had violated the terms of the
policy and, therefore, the respondents cannot be made liable
for the losses.
21. Lastly, learned counsel urged that there must be strict
compliance with the terms and conditions of an insurance
policy, and the appellant having breached a fundamental
condition of the policy, the respondent is not liable to pay any
amount to them. In support of the contention that in a contract
of insurance, rights and obligations are strictly governed by the
terms of the policy and no exception or relaxation can be given
on the ground of equity, learned counsel relied on the judgments
of this Court in Deokar Exports Private Limited Vs. New India
Assurance Company Limited16, United India Insurance Co.
Ltd. Vs. Harchand Rai Chandan Lal17 and Vikram Greentech
India Limited & Anr. Vs. New India Assurance Company
Limited18.
22. Before embarking on an examination of the correctness
of the grounds of repudiation of the policy, it would be apposite
to examine the nature of a contract of insurance. It is trite that
in a contract of insurance, the rights and obligations are
governed by the terms of the said contract. Therefore, the terms
of a contract of insurance have to be strictly construed, and no
exception can be made on the ground of equity. In General
Assurance Society Ltd. (supra), a Constitution Bench of this
Court had observed that:
“In interpreting documents relating to a contract of
insurance, the duty of the court is to interpret the words in
which the contract is expressed by the parties, because it
is not for the court to make a new contract, however
reasonable, if the parties have not made it themselves.”
152 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A
B
B
(See also: Oriental Insurance Co. Ltd. Vs. Sony
Cheriyan 19; Vikram Greentech (supra); Sikka Papers
Limited Vs. National Insurance Company Limited &
Ors.20; New India Assurance Company Limited Vs. Zuari
Industries Limited & Ors. 21; Amravati District Central
Cooperative Bank Limited Vs. United India Fire and
General Insurance Company Limited.22)
23. Similarly, in Harchand Rai Chandan Lal’s case
(supra), this Court held that:
C
C
D
D
“The terms of the policy have to be construed as it is and
we cannot add or subtract something. Howsoever liberally
we may construe the policy but we cannot take liberalism
to the extent of substituting the words which are not
intended.”
F
24. Thus, it needs little emphasis that in construing the
terms of a contract of insurance, the words used therein must
be given paramount importance, and it is not open for the Court
to add, delete or substitute any words. It is also well settled that
since upon issuance of an insurance policy, the insurer
E
undertakes to indemnify the loss suffered by the insured on
account of risks covered by the policy, its terms have to be
strictly construed to determine the extent of liability of the insurer.
Therefore, the endeavour of the court should always be to
interpret the words in which the contract is expressed by the
F parties.
G
25. Having considered the instant case on the touchstone
of the aforenoted broad principles to be borne in mind while
examining the claim of an insured, we are of the opinion that
G the claim of the appellant must fail on the short ground that there
E
19. (1999) 6 SCC 451.
16. (2008) 14 SCC 598.
20. (2009) 7 SCC 777.
17. (2004) 8 SCC 644.
21. (2009) 9 SCC 70.
18. (2009) 5 SCC 599.
H
H
22. (2010) 5 SCC 294.
153
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.
UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
was a breach of the afore-extracted special condition
incorporated in the cover note. The special condition viz. “each
and every consignment” must be declared before dispatch of
goods is clear and admits of no ambiguity. The appellant was
obliged to declare “each and every consignment” before it left
the appellant’s factory premises and there is nothing in the
policy to suggest that the insured had the liberty to pick and
choose the dispatches which they wanted to declare to the
insurer, not even at the instance of the consignee, who
otherwise is a stranger to the contract between the insurer and
the insured. We have no hesitation in rejecting the plea of the
appellant that they were required to declare only those
dispatches in which they had an insurable interest. It bears
repetition that notwithstanding any request by the consignee,
the policy of insurance postulated declaration in respect of each
and every dispatch by the appellant. Therefore, the fact that
purchasers did not want an insurance cover on certain
dispatches had no bearing on the obligation of the appellant
to declare each and every dispatch under the policy. It is a
settled proposition of law that a stranger cannot alter the legal
obligations of parties to the contract.
[2010] 13 (ADDL.) S.C.R. 154
A
A
B
B
Land Acquisition Act, 1894:
C
D
E
F
27. Having come to the conclusion that the repudiation of
the claim preferred by the appellant on the aforestated ground
was valid, we deem it unnecessary to evaluate the correctness
of the other rival submissions made before us by the learned
counsel.
G
28. Resultantly, the appeal being devoid of any merit
deserves to be dismissed. It is dismissed accordingly, leaving
the parties to bear their own costs.
Appeal dismissed.
OCTOBER 8, 2010
[DR. MUKUNDAKAM SHARMA AND SWATANTER
KUMAR, JJ.]
26. We are in complete agreement with the National
Commission that there was a breach of the special condition
in the cover note for the insurance policy on the part of the
appellant and, therefore, the repudiation of the claim of the
appellant by the respondents was justified.
K.K.T.
RADHA MUDALIYAR
v.
SPL. TAHASILDAR (LAND ACQ.), T.N.H. BOARD
(Civil Appeal No. 5616 of 2004 etc.)
H
C
s.23 – Compensation – Basis for determination – Held:
Comparable sale instances are the best piece of evidence
for the purpose of determining the compensation – Even
transactions of the adjacent areas and closest sale instances
D to the date of the notification are best evidence – In case of
increasing trend in value of land, the claimants are entitled
to the benefit of increase for the intervening period – Annual
increase of 10% to 15% is normally allowed by the court where
the record reflects increasing trend in the sale price of the land
– In the instant case, 10% is allowed because of the short
E
intervening period between the execution of the sale deed and
issuance of notification u/s. 4.
s.23 – Deduction – Applicability of, while determining
compensation – Held: The deduction can be applied for
F different aspects – If the size of the plot of comparable sale
is very small and the same has to be taken into consideration
for non-availability of other evidence and the land acquired
is a large chunk of land, then some deduction on that score
is applicable – Deduction on account of expenses of
G development of the sites could vary from 20% to 70%
depending on the nature of the land, its situation, the purpose
and stage of development – In the instant case, agricultural
land was acquired to carry out the development scheme for
setting up export processing zone – The development
154
H
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD
156 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
155
purpose, being in public interest, is bound to result in
utilization of part of the land for the purposes of roads, by-links,
water and electricity lines and other infrastructural amenities
of the project– In the facts and circumstances of the case,
deduction of 30% is applied.
ss.23(I-A), 23(2) and 34, proviso – Consequential
benefits, solatium and interest – Held: The claimants are
entitled to solatium as well as the interest on the aggregate
amount including solatium, at the rate specified in proviso to
s.34 – Solatium is in consideration of compulsory nature of
acquisition – The compulsory nature of acquisition is to be
distinguished from voluntary sale or transfer – In the latter,
there is a willing buyer and seller – In the case of acquisition,
it is compulsory and deprives the owner of an opportunity to
negotiate and bargain the sale price of its land as it will entirely
depend on the Collector or the court to determine the amount
of compensation in accordance with the provisions of the Act.
On 23.1.1985, a Notification under Section 4 of the
Land Acquisition Act, 1894 was issued by the Industries
Department of the State of Tamil Nadu to acquire land in
furtherance of the scheme sanctioned by the State
Industries Promotion Corporation of Tamil Nadu
(SIPCOT) and a total of 261.42 acres of land was acquired
for setting up the Madras Export Processing Zone (MEPZ).
The land acquisition officer awarded compensation @ Rs.
145 per cent for an extent of 64 cents and Rs. 110 for 6.42
acres of another kind of land and also awarded
compensation at different rates for the superstructures
raised by the claimants-appellants on their respective
lands. The possession of the land was taken. The
appellants received the compensation under protest.
They filed applications for reference under Section 18 of
the Act. The reference court enhanced the compensation
payable to the claimants to Rs. 3,600/- per cent as
agricultural land by relying upon Exhibits A4 and A5. On
A
A appeal, the High Court reduced the compensation
payable holding that the market value of the acquired
lands would be Rs. 2,018/- per cent by adopting the value
as per Ex.A4, i.e. Rs. 3,363/-and making a deduction of
40% towards development charges.
B
B
C
In the instant appeals, it was contended for the
appellants that the High Court did not appreciate the
evidence on record in its correct perspective and applied
deduction of 40% which, in the facts and circumstances
of the case, was not called for; and the appellants were
C not awarded solatium and interest in accordance with
law.
Partly allowing the appeals, the Court
D
E
F
G
H
HELD: 1.1. It is a well settled principle of law that
comparable sale instances, subject to their satisfying the
basic ingredients of law, are the best piece of evidence
to be considered by the court for the purpose of
determining the compensation. Even awards and
transactions of the adjacent areas have been treated as
E best evidence. Of course, such instances must be
comparable and legally admissible in evidence. Three
sale instances were produced and proved by the
claimant. Of course, the area, stated in those sale
instances, was comparatively much smaller in size than
F the acquired land. The land, subject matter of Exhibit A4
admeasuring approximately 5.5 cents was sold for a sum
of Rs.18,500/- and the rate came to Rs. 3,363/- per cent.
Exhibits A1 and A5 again were the sale instances from
the same revenue estate and were quite close to the date
G of notification under Section 4. Exhibit A1 was dated
7.11.1984 while Exhibit A5 was dated 15.6.1984. None of
the parties to the proceedings had questioned the
genuineness, legality or otherwise of those documents
and, in fact, there was no objection regarding their
H
D
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD
157
158
A
admissibility. Exhibit A1 was not taken into consideration
by both the courts. The Exhibit A4 was dated 12.03.1984
while the notification under Section 4 was issued on
23.01.1985. There was a difference of nearly ten months
between these two dates. The claimants were entitled to
the benefit of increase for this intervening period. Annual
increase of 10% to 15% is normally allowed by the court
where the record reflects increasing trend in the sale
price of the land. This principle is often applied by this
Court while determining compensation. In the instant
case, the minimum increase possible is allowed because
of the short intervening period between the execution of
the sale deed and issuance of notification under Section
4. The consequence of the addition would be that the
value of the land in terms of Exhibit A4 as on the date of
the notification under Section 4 would be Rs. 3,699/- per
cent rounded off to Rs. 3,700/- per cent which, when
reasonable deduction is applied, would give more or less
the same rate of compensation as computed on the basis
of Exhibit A1. [Paras 10, 11, 12] [168-A-B, G; 169-C-D; 170A-B-D-H; 171-A]
C
Harcharan v. State of Haryana (1982) 3 SCC 408;
Kantaben Manibhai Amin v. Special Land Acquisition Officer,
Baroda (1989) 4 SCC 662; ONGC Ltd. v. Sendhabhai
Vastram Patel (2005) 6 SCC 454; Shaji Kuriakose v. Indian
Oil Corporation (2001) 7 SCC 650; Kanwar Singh v. Union
of India (1998) 8 SCC 136; ONGC Ltd. v. Rameshbhai
Jivanbhai Patel (2008) 14 SCC 745; Sardar Jogendra Singh
(dead) by LRs. v. State of Uttar Pradesh (2008) 17 SCC 133
– relied on.
F
1.2. While determining compensation, the deduction
can be applied for different aspects. If the size of the plot
is very small and the same has to be taken into
consideration for non-availability of other evidence and
the land acquired is a large chunk of land, then it would
B
D
E
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A be advisable to apply some deduction on that score. In
the instant case, the land was acquired, which apparently
was an agricultural land at the time of acquisition, to carry
out the development scheme for the MEPZ sanctioned by
the SIPCOT. The development purpose, being in public
B interest, is bound to result in utilization of part of the land
for the purposes of roads, by-links, water and electricity
lines and other infrastructural amenities of the project.
This Court, depending on the facts and circumstances of
the case, has taken the view that deduction on account
C of expenses of development of the sites could vary from
20% to 70% depending on the nature of the land, its
situation, the purpose and stage of development. The
courts would have to apply some guess work while
determining such a question inasmuch as it is not always
possible to determine the quantum of compensation with
D
exactitude or arithmetical accuracy. Of course, this
permissible guess work has to be used with great
caution and within the determinants of law declared by
this Court from time to time. Despite the fact that both the
reference court as well as the High Court relied upon
E Exhibit A4 or A5 or both of them, still they arrived at
drastically different rates of compensation payable to the
claimants. While the High Court took the value of Exhibit
A4 as Rs. 3,363/- per cent, without adding any element of
increase for the intervening period, it applied deduction
F at the rate of 40% and awarded compensation at the rate
of Rs. 2,018/- per cent. On the other hand, the reference
court took the total sale consideration of Exhibit A4 as
Rs. 25,000/- in place of Rs. 18,500/- and applied 40%
increase while awarding compensation to the claimants.
G Of course, the reference court also applied 40%
deduction on account of development charges and
taking the gross value at the rate of Rs. 6,000/- per cent
awarded compensation at the rate of 3,600/- per cent.
Both the reference court as well as the High Court have
H fell in error of law in computing the compensation
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD
160 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
159
payable to the claimants. The High Court ignored an
important aspect of the case in not awarding
enhancement in the value of the land as it had come in
evidence that there was increasing trend in the sale price
of the land in that area. The documentary evidence of
Exhibits A1 and A4 also showed the increasing trend. On
the other hand, the reference court fell in error in giving
40% increase for a short intervening period of ten
months. Both the High Court as well as the reference
court had applied the deduction at the rate of 40% but
still awarded compensation at antipodal rates. [Paras 13,
15, 16] [171-B-F; 172-H; 173-A-B; 174-E-H; 175-A-C]
Land Acquisition Officer v. Nookala Rajamallu (2003) 12
SCC 334; K.S. Shivadevamma v. Assistant Commissioner
and Land Acqusition Officer (1996) 2 SCC 62; Ram Piari v.
Land Acquisition Collector, Solan (1996) 8 SCC 338;
Chimanlal Hargovindas v. Special Land Acquisition Officer,
Poona (1988) 3 SCC 751; Hasanali Walimchand (Dead) by
Lrs v. State of Maharashtra (1998) 2 SCC 388; V.
Hanumantha Reddy (Deceased) by Lrs. v. Land Acquisition
Officer & Mandal R. Officer (2003) 12 SCC 642; Charan Dass
(Dead) by Lrs. v. H.P. Housing and Urban Development
Authority, 2009 (12) SCALE 293 – relied on.
1.3. Having examined the facts and circumstances of
the case and the evidence on record, rule of
approximately 1/3rd deduction can be fairly applied to the
instant case. The land certainly has potential and even
the sale instances show that the land from the revenue
estate of the same village was sold as plots and a number
of facilities, were available in the vicinity. Examining the
cumulative effect of the evidence on record in relation to
location, potential and similarity of land, the deduction of
more than 30% would be prejudicial to the interest of the
claimants whose lands have been acquired by the State
in exercise of its power of eminent domain. It is a
A
B
C
A compulsory acquisition and it is expected of the State to
be just and fair and award the compensation to the
claimants which satisfies mandate of law contained in the
provisions of Section 23 of the Act. Therefore, applying
30% deduction to the value indicated in Exhibit A1
B (deduction being made both on account of size of the
plot and development charges), the claimants would be
entitled to receive compensation at the rate of Rs. 2,800/
- per cent for the acquired land and consequential
benefits in terms of s. 23(I-A). [Para 16 and 19] [176-B-G;
178-D]
C
Kasturi & Ors. v. State of Haryana (2003) 1 SCC 354 –
referred to.
D
D
E
E
F
F
G
G
H
H
2. The claimants are entitled to solatium as well as
the interest on the awarded amount. The court has to
keep in mind that the compulsory nature of acquisition
is to be distinguished from voluntary sale or transfer. In
the latter, there is a willing buyer and seller. In the case
of acquisition, it is compulsory and deprives the owner
of an opportunity to negotiate and bargain the sale price
of its land as it will entirely depend on what the Collector
or the court determines as the amount of compensation
in accordance with the provisions of the Act. The solatium
envisaged in sub-section (2) of Section 23 is “in
consideration of the compulsory nature of acquisition”.
Thus, the solatium is not the same as damages on
account of the landowner’s disinclination to part with the
land acquired. If such compensation as determined in
terms of Section 23 of the Act is not paid within one year
from the date of taking possession of the land, then in
terms of proviso to Section 34 interest shall stand
escalated to 15% per annum from the date of the expiry
of the said period of one year on the amount of
compensation or part thereof which has not been paid
or deposited before the date of such expiry. The person
entitled to the compensation awarded is also entitled to
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD
161
get interest on the aggregate amount including solatium.
In any case, there can be no doubt in law that the
claimants are entitled to the solatium and the interest
thereupon at the rate specified in proviso to Section 34
of the Act for the relevant period. Even in this regard, the
judgment of the High Court, therefore, cannot be
sustained. [Paras 17, 18] [177-A-H; 178-A-C]
162
A
B
A
B
C
referred to
Para 17
(2001) 7 SCC 211
relied on
Para 17
(1999) 2 SCC 89
referred to
Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5616 of 2004.
C
WITH
Civil Appeal No. 5732 of 2004.
Case Law Reference:
Civil Appeal No. 5628 of 2004.
(1982) 3 SCC 408
relied on
Para 10
(1989) 4 SCC 662
relied on
Para 10
(2005) 6 SCC 454
relied on
Para 10
(2001) 7 SCC 650
relied on
Para 10
(2008) 14 SCC 745
relied on
Para 12
(2008) 17 SCC 133
relied on
Para 12
(2003) 12 SCC 334
relied on
Para 13
(1996) 2 SCC 62
relied on
Para 13
(1996) 8 SCC 338
relied on
Para 13
(1988) 3 SCC 751
relied on
Para 13
(1998) 2 SCC 388
relied on
Para 14
(2003) 12 SCC 642
relied on
Para 14
2009 (12) SCALE 293 relied on
Para 15
(2003) 1 SCC 354
Para 16
referred to
(1996) 2 SCC 71
From the Judgment & Order dated 06.11.2002 of the High
Court of Madras in AS No. 411 of 1991.
Sunder v. Union of India (2001) 7 SCC 211 – relied on.
Prem Nath Kapur v. National Fertilizers Corporation of
India Ltd. (1996) 2 SCC 71; Kapur Chand Jain v. State of
Himanchal Pradesh (1999) 2 SCC 89 – referred to.
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
D
D Civil Appeal No. 8818 of 2004.
A.T.M. Sampath, T.S. Shanthi, N. Karunanidhi, K.K. Mani
and Abhishek Krishna for the Appellant.
E
Harish Chander, R. Nedumaran, Vimal Dubey, Subhash,
E Padmalakshmi Nigam, A.K. Sharma, D.S. Mahra and V.K.
Verma for the Respondent.
The Judgment of the Court ws delivered by
F
SWATANTER KUMAR, J. 1. Leave granted in SLP (C)
No.9736 of 2004.
2. Application for impleadment in Civil Appeal No.5616 of
2004 is allowed.
G
H
3. By this judgment, we will dispose of the three Civil
Appeals being Civil Appeal Nos.5616, 5628 and 5732 of 2004
and a Civil Appeal arising out of Special Leave Petition (C)
No.9736 of 2004 as they arise from a common judgment with
somewhat similar facts.
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
163
FACTS
4. For the purposes of brevity and to avoid repetition, we
would be referring to the facts in Civil Appeal No.5616 of 2004.
A notification under Section 4(1) of the Land Acquisition Act,
1894 (for short, ‘the Act’) was issued by the Industries
Department of the State of Tamil Nadu on 23.01.1985 to
acquire land in the Revenue Estate of village Kadaperi, Hamlet
of Tambaram, Tambaram Taluk within the municipal limits of the
city including the land admeasuring 7.06 acres belonging to the
appellant. This notification came to be issued in furtherance of
the scheme, which was sanctioned by the State Industries
Promotion Corporation of Tamil Nadu (SIPCOT) on 03.04.1984
and a total of 261.42 acres of land was acquired for setting up
the Madras Export Processing Zone (MEPZ). The entire land,
including dry and wet lands, was sought to be acquired as a
compact block for the project in question. In response to the
publication of the notification, the interested persons filed
objections in terms of Section 5A of the Act which were
considered by the Land Acquisition Officer (for short, the ‘LAO’)
and declaration under Section 6 of the Act was issued on
23.04.1986. After notice to the interested persons/owners,
Award No. 3/86 was made and published by the LAO on
28.11.1986. The LAO awarded compensation at the rate of Rs.
145/- per cent for an extent of 64 cents and Rs. 110 for 6.42
acres of another kind of land and also awarded compensation
at different rates for the superstructures raised by the
appellants on their respective lands. The possession of the land
was taken on 03.02.1987. The compensation was received by
the appellants under protest on 04.07.1987 and they preferred
references under Section 18 of the Act.
According to the appellants, the market price of the land
in question was between Rs. 7,000/- and Rs. 8,000/- per cent
in the years 1983-84. In 1985-86 the land was sold at the rate
of Rs. 45,000/- to Rs. 50,000/- per ground. In this appeal, the
appellants had claimed compensation at that rate. They also
164 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
A stated that they had raised nearly 160 coconut trees and dug
a big well fitted with electric motor by incurring a cost of Rs.
1.5 lakh on the land in question. We may notice that various
appellants had raised different claims on these grounds. The
Collector, as already noticed, had awarded compensation
B uniformly at the rates mentioned supra while awarding
compensation separately for the well, trees, etc.
5. The parties led evidence before the Reference Court
and the Reference Court, vide its judgment dated 09.12.1988,
enhanced the compensation payable to the claimants to Rs.
C
3,600/- per cent as agricultural land by relying upon Exhibits A1,
A4 and A5. The Reference Court granted the following relief
to the claimants:
D
D
E
E
F
“(1)
The valuation fixed by the lands acquired at Rs.110/
- and Rs.145/- per cent, by the Land Acquisition
Officer has been raised and a fresh valuation at
Rs.3,600/- per cent is fixed for the entire area of the
acquired lands;
(2)
The valuation at Rs.2,675/- per coconut tree, fixed
by the Land Acquisition Tahsildar is held to be
correct and confirmed;
(3)
The valuation for the well and the pump-set made
by the Land Acquisition Tahsildar at Rs.44,487/- has
been enhanced to Rs.1,76,862/- and fixed
accordingly;
(4)
Further it is ordered that the claimant should be
paid 30% solatium for the above amounts and
interest at the rate of 12% from 23.1.1985 to
28.11.1986 and further 9% interest from 3.2.1987
to 2.2.1988. It is ordered that the sum of
Rs.1,88,887.85 fixed as compensation by the Land
Acquisition Tahsildar for the land, trees, well and
pump-set should be deducted from the above
F
G
G
H
H
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
165
amount. It is further ordered that the claimant is
entitled to the interest at the rate of 15% per annum
for the difference amount of compensation from
3.2.1988 till date of deposit of the compensation
into Court.”
6. Aggrieved by the said judgment of the Reference Court,
the Government, through the LAO, filed an appeal before the
High Court challenging the correctness of the same. The High
Court, vide its judgment dated 05.02.2001, declined to accept
the reasoning recorded by the Reference Court in its different
judgments under appeal and reduced the compensation
payable to the claimants at the rate of Rs. 2018/- per cent. Thus,
the High Court, while partially accepting the appeal of the State,
granted the following relief:
“Therefore, considering the fact the lands under acquisition
are not developed at all, whereas, under adjoining lands
are developed, deduction at the rate of 40% for prescribing
the correct value by the learned Judge cannot be held to
be erroneous. Therefore, we are of the considered view
that the market value of the acquired lands can be
determined by adopting the value as per Ex.A4, i.e.
Rs.3,363/-, and after a deduction of 40% towards
development charges, the market value will be Rs. 2,018/
- per cent. The claimant is entitled to compensation for the
7.06 acres of acquired lands at this rate, i.e., 14,24,708/.”
7. Before discussing the merits in these appeals, it needs
to be noticed that different sale instances were produced as
exhibits in different references. As far as the question of
enhancing the compensation awarded to the claimants on
account of trees, well and other improvements on the land in
question is concerned, we may notice that it is apparent from
the record of the case as well as the arguments addressed
before this Court that the correctness of the compensation
166
A
B
C
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A awarded by the Reference Court was hardly questioned before
the High Court and even before this Court. As there is no
serious challenge to the quantum of compensation awarded on
this account, we do not propose to discuss this issue any
further. Thus, only two issues have been raised before us,
B namely: (a) that the High Court has not appreciated the
evidence on record in its correct perspective. The High Court
has applied deduction of 40% which, in the facts and
circumstances of the case, is not called for. This has resulted
in serious prejudice to the interest of the claimants and they
C have not been awarded the fair market value of their acquired
lands; and (b) they have not been awarded solatium and interest
in accordance with law.
DISCUSSION ON MERITS
D
E
F
G
H
8. In Civil Appeal No.5616 of 2004, the claimant is the
owner of land admeasuring 7.06 acres in a compact square
shape falling in Survey Nos.16 and 24/1 in the Revenue Estate
of Kadaperi village. Exhibits A1, A4 and A5 are the sale
instances from the same village which had been produced by
E the claimant in support of her claim. Exhibits A2 and A3 are
the valuation reports in relation to the well and the pump on the
acquired land. Exhibit A6 is the photo copy of Kadaperi village
map. Exhibits A1, A4 and A5 are dated 7th November 1984,
12th March 1984 and 15th June 1984 respectively. The
F Reference Court appears to have firstly relied upon Exhibit A5
and while assuming that value of the land under this exhibit was
Rs. 6,000/- per cent then proceeded to apply 40% deduction
on account of road facilities and the fact that these were the
sale instances relating to plots and resultantly awarded Rs.
3,600/- per cent as the compensation payable to the claimants.
G
Reference was also made to Exhibit A4 where the land had
been sold at the rate of Rs. 4,545/- per cent. The Court noticed
that value of the land had been increasing in the area day-byday and various facilities such as school, college, hospital and
banks were available quite near the acquired land and even a
H
D
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
167
Railway Station was located within a distance of one kilometer.
While taking Exhibit A4 as the basis, the Reference Court erred
in adding 40% increase to the reflected value in the sale deed.
The error is due to the reasons that actual sale consideration
of Exhibit A4 was ‘ 3363 per cent and the intervening period
between the date of the sale deed and issuance of notification
under Section 4 was not two years as noticed by that Court.
Though the compensation was determined primarily on the
basis of Exhibit A4, the learned Reference Court noticed that
the land in Exhibit A5 had been sold at the rate of Rs.6,000/per cent under that document. This impression of the Reference
Court is not supported by any evidence on record as under
Exhibit A5 the land was, in fact, sold at the rate of Rs. 2,180/per cent on 15.06.1984. However, the learned Reference Court
computed somewhat similar compensation with reference to the
two Exhibits A4 and A5. It may be noticed that Exhibit A4 is
three months prior to the date of execution of Exhibit A5.
9. In Civil Appeal arising out of SLP (C) No. 9736 of 2004,
the Tahsildar vide Award No.5 of 1986 dated 29.11.1986 had
fixed the compensation at Rs.145.85 per cent on the basis of
Exhibits A2 and A3 respectively. These documents, as well as
Exhibit A4 were considered to be inadmissible by the
Reference Court in its order dated 18.11.1990 and rejected as
they were neither the original sale deeds nor copies of
registered documents. The rejection thereof is not questioned
in the present appeals. The Court had primarily relied upon
Exhibit A1 and awarded the compensation. The High Court,
while adopting the reasoning given in its judgment in Civil
Appeal No. 5616 of 2004, reduced the compensation relying
upon Exhibit A4 in that case and after making 40% deduction
awarded the compensation.
10. In the backdrop of the above factual matrix and the
judgments of the Courts under appeal, this Court imprimus has
168 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
G
A to examine as to what would be the just and fair market value
of the land on the basis of which the compensation payable to
the claimants should be determined in terms of Section 23 of
the Act. It is a well settled principle of law that comparable sale
instances, subject to their satisfying the basic ingredients of law,
B are the best piece of evidence to be considered by the Court
for the purpose of determining the compensation. Even awards
and transactions of the adjacent areas have been treated as
best evidence which will fall within the zone of consideration by
the Court. Of course, such instances must be comparable and
C legally admissible in evidence. In this aspect, we may refer to
the judgments of this Court in the case of Harcharan v. State
of Haryana, [(1982) 3 SCC 408]; Kantaben Manibhai Amin
vs. Special Land Acquisition Officer, Baroda, [(1989) 4 SCC
662] and ONGC Ltd. vs. Sendhabhai Vastram Patel, [(2005)
D
6 SCC 454]. Comparable sale instances are the safest
method for determining the market value of the acquired land
and as laid down in Shaji Kuriakose vs. Indian Oil Corporation,
[(2001) 7 SCC 650], it should satisfy the factors, inter alia, (1)
E the sale must be genuine transaction; (2) the sale deed must
have been executed at the time proximate to the date of
issuance of notification under Section 4 of the Act; (3) the land
covered by the sale must be in vicinity of the acquired land; (4)
the land covered by the sale must be similar to the acquired
F land; and (5) size of the plot of the land covered by the sale be
comparable to the acquired land. The sale instances should
preferably be closest to the date of the notification as then alone
it would satisfy the touchstone of the principles contemplated
under Section 23 of the Act, as held in Kanwar Singh vs. Union
G of India, [(1998) 8 SCC 136].
H
11. In Civil Appeal No.5616 of 2004, three sale instances
were produced and proved by the claimants on the record of
the Reference Court. These are Exhibit A1, A4 and A5 and their
H details are as follows :
B
C
D
E
F
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
Exhibit Date of
Sale
Deed
Area Sold
169
Total sale
Consideration
Value Per
Cent
A1
07.11.1984 5 Cents
Rs. 20,000
Rs. 4,000/-
A5
15.06.1984 4.13 Cents
Rs. 9,000
Rs. 2,180/-
A4
12.03.1984 5.5 Cents
Rs. 18,500
Rs. 3,363/-
It needs to be noticed that all these lands are located in
the Revenue Estate of the same village from where the land
has been acquired. The land, subject matter of Exhibit A4 is
located in Survey No.165 and, as apparent from the above
table, admeasuring approximately 5.5 cents was sold for a sum
of Rs. 18,500/- and the rate comes to Rs. 3,363/- per cent.
However, it is in evidence that when this document was
presented for registration, the concerned Registrar made an
endorsement raising an objection with regard to the sale
consideration declared in the sale deed. According to the
Registrar, Mark A5 was the endorsement vide which the parties
were directed to pay stamp duty taking the value of the land in
question to be Rs. 25,000/-. The total sale consideration being
Rs. 25,000/-, the rate of the land would come to Rs. 4,545/- per
cent. This document was registered as per endorsement on
record on 15.6.1984 while the date of the presentation and
execution of the sale deed was 12.3.1984. We would not like
to go into the question whether as per Exhibit A4 the sale
consideration should be Rs. 18,500/- or it should be Rs.
25,000/-. The question as to what is the effect of enhancement
of the sale consideration by the Registrar for the purpose of
payment of stamp duty, on the market value of the acquired land
while determining the compensation payable to the claimants,
need not be examined by us. In this case, the same is
specifically kept open. For the purposes of the present case,
we would take the value of the land at the rate of Rs. 3,363 per
cent.
170
A
B
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
Exhibits A1 and A5 again are the sale instances from the
same Revenue Estate and are quite close to the date of
notification under Section 4, Exhibit A1 is dated 7.11.1984
while Exhibit A5 is dated 15.6.1984. None of the parties to the
proceedings have questioned the genuineness, legality or
B otherwise of these documents and, in fact, as it appears from
the record before us there is hardly any objection regarding their
admissibility or being read in evidence.
C
C
D
D
E
E
F
F
G
G
H
H
12. Now, let us examine whether Exhibits A1, A4 and A5
satisfy the above stated tests. They were admitted in evidence
in accordance with law as they are genuine transactions and
are the closest sale instances to the date of the notification as
available on record and the land, subject matter of the
transaction, is quite similar to the acquired land and, in fact, it
is from the same village. Of course, the area, stated in these
sale instances, is comparatively much smaller in size than the
acquired land. The sale deed is dated 12.03.1984 while the
notification under Section 4 was issued on 23.01.1985. Thus,
there is a difference of nearly ten months between these two
dates. The claimants would be entitled to the benefit of increase
for this intervening period. Annual increase of 10% to 15% is
normally allowed by the court where the record reflects
increasing trend in the sale price of the land. This principle is
often applied by this Court while determining compensation.
Reference can be made to the judgments of this Court in ONGC
Ltd. vs. Rameshbhai Jivanbhai Patel [(2008) 14 SCC 745]
and Sardar Jogendra Singh (dead) by LRs. vs. State of Uttar
Pradesh [(2008) 17 SCC 133]. We have opted to apply the
minimum increase possible because of the short intervening
period between the execution of the sale deed and issuance
of notification under Section 4. Consequence of the above
addition would be that the value of the land in terms of Exhibit
A4 as on the date of the notification under Section 4 would be
Rs. 3,699/- per cent rounded off to Rs. 3,700/- per cent which,
when reasonable deduction is applied, would give more or less
the same rate of compensation as computed by us on the basis
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
171
of Exhibit A1.
13. Now, the next question that arises is whether the
claimants would be entitled to receive the compensation at this
rate or certain element of deduction needs to be applied in the
facts and circumstances of the case. The deduction can be
applied for different aspects while determining compensation.
If the size of the plot is very small and the same has to be taken
into consideration for non-availability of other evidence and
where the land acquired is a large chunk of land, then it would
be advisable to apply some deduction on that score. Reference
in this regard may be made to Land Acquisition Officer vs.
Nookala Rajamallu [(2003) 12 SCC 334]. In alternative or in
addition thereto, deduction can also be applied on account of
wastage of land and development charges. In the present case,
the land has been acquired, which apparently was an
agricultural land at the time of acquisition, to carry out the
development scheme for the MEPZ sanctioned by the SIPCOT.
The development purpose, being in public interest, is bound to
result in utilization of part of the land for the purposes of roads,
by-links, water & electricity lines and other infrastructural
amenities of the project. This Court, depending on the facts and
circumstances of the case, has taken the view that deduction
on account of expenses of development of the sites could vary
from 20% to 70% depending on the nature of the land, its
situation, the purpose and stage of development as held by this
Court in the case of K.S. Shivadevamma vs. Assistant
Commissioner and Land Acqusition Officer [(1996) 2 SCC
62], Ram Piari vs. Land Acquisition Collector, Solan [(1996)
8 SCC 338], Chimanlal Hargovindas vs. Special Land
Acquisition Officer, Poona [(1988) 3 SCC 751], Hasanali
Walimchand (Dead) by Lrs. vs. State of Maharashtra [(1998)
2 SCC 388]. In K.S. Shivadevamma (supra), this Court held
as under:
“10. It is then contended that 53% is not automatic but
depends upon the nature of the development and the
172 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A
B
B
C
C
D
D
E
E
stage of development. We are inclined to agree with the
learned counsel that the extent of deduction depends upon
development need in each case. Under the Building Rules
53% of land is required to be left out. This Court has laid
as a general rule that for laying the roads and other
amenities 33-1/3% is required to be deducted. Where the
development has already taken place, appropriate
deduction needs to be made. In this case, we do not find
any development had taken place as on that date. When
we are determining compensation under Section 23(1), as
on the date of notification under Section 4(1), we have to
consider the situation of the land development, if already
made, and other relevant facts as on that date. No doubt,
the land possessed potential value, but no development
had taken place as on the date, In view of the obligation
on the part of the owner to hand over the land to the City
Improvement Trust for roads and for other amenities and
his requirement to expend money for laying the roads,
water supply mains, electricity etc., the deduction of 53%
and further deduction towards development charges @ 331/3%, ordered by the High Court, was not illegal.”
The above view was reiterated in the case of Nookala
Rajamallu (supra).
F
G
H
14. On similar lines, this Court in the case of V.
F Hanumantha Reddy (Deceased) by Lrs. vs. Land Acquisition
Officer & Mandal R. Officer [(2003) 12 SCC 642], while
considering that the acquired land was adjacent to developed
land, held that neither its high potentiality nor its proximity to a
developed land can be a ground for not deducting the
G development charges and that normally 1/3rd deduction could
be allowed.
H
15. We may also notice that the Courts would have to apply
some guess work while determining such a question inasmuch
as it is not always possible to determine the quantum of
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
173
compensation with exactitude or arithmetical accuracy. Of
course, this permissible guess work has to be used with great
caution and within the determinants of law declared by this
Court from time to time. This Court in the case of Charan Dass
(Dead) by Lrs. vs. H.P. Housing and Urban Development
Authority, [2009 (12) SCALE 293] held as under:
“10. Section 15 of the Act mandates that in determining
the amount of compensation, the Collector shall be guided
by the provisions contained in Sections 23 and 24 of the
Act. Section 23 provides that in determining the amount
of compensation to be awarded for the land acquired
under the Act, the Court shall, inter alia, take into
consideration the market value of the land at the date of
the publication of the Notification under Section 4 of the
Act. The Section contains the list of positive factors and
Section 24 has a list of negatives, vis-a-vis the land under
acquisition, to be taken into consideration while
determining the amount of compensation. As already
noted, the first step being the determination of the market
value of the land on the date of publication of Notification
under Sub-section (1) of Section 4 of the Act. One of the
principles for determination of the market value of the
acquired land would be the price that a willing purchaser
would be willing to pay if it is sold in the open market at
the time of issue of Notification under Section 4 of the Act.
But finding direct evidence in this behalf is not an easy
task and, therefore, the Court has to take recourse to other
known methods for arriving at the market value of the land
acquired. One of the preferred and well accepted methods
adopted for ascertaining the market value of the land in
acquisition cases is the sale transactions on or about the
date of issue of Notification under Section 4 of the Act. But
here again finding a transaction of sale on or a few days
before the said Notification is not an easy exercise. In the
absence of such evidence contemporaneous transactions
in respect of the lands, which have similar advantages and
174
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B
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
disadvantages is considered as a good piece of evidence
for determining the market value of the acquired land. It
needs little emphasis that the contemporaneous
transactions or the comparable sales have to be in respect
of lands which are contiguous to the acquired land and are
similar in nature and potentiality. Again, in the absence of
sale deeds, the judgments and awards passed in respect
of acquisition of lands, made in the same village and/or
neighbouring villages can be accepted as valid piece of
evidence and provide a sound basis to work out the
market value of the land after suitable adjustments with
regard to positive and negative factors enumerated in
Sections 23 and 24 of the Act. Undoubtedly, an element
of some guess work is involved in the entire exercise, yet
the authority charged with the duty to award compensation
is bound to make an estimate judged by an objective
standard.”
(emphasis supplied)
E
F
G
16. Despite the fact that both the Reference Court as well
as
the
High Court have relied upon Exhibit A4 or A5 or both of
E
them, still they have arrived at drastically different rates of
compensation payable to the claimants. While the High Court
took the value of Exhibit A4 as Rs. 3,363/- per cent, without
adding any element of increase for the intervening period, it
F applied deduction at the rate of 40% and awarded
compensation at the rate of Rs. 2,018/- per cent. On the other
hand the Reference Court took the total sale consideration of
Exhibit A4 as Rs. 25,000/- in place of Rs. 18,500/- and applied
40% increase while awarding compensation to the claimants.
Of course, the Reference Court also applied 40% deduction
G
on account of development charges and taking the gross value
at the rate of Rs. 6,000/- per cent awarded compensation at
the rate of Rs. 3,600/- per cent.
In our considered view, both the Reference Court as well
H
H
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
175
as the High Court have fallen in error of law in computing the
compensation payable to the claimants. On the one hand, the
High Court ignored an important aspect of the case in not
awarding enhancement in the value of the land as it had come
in evidence that there was increasing trend in the sale price of
the land in that area. The documentary evidence of Exhibits A1
and A4 also shows the increasing trend. On the other hand, the
Reference Court fell in error in giving 40% increase for a short
intervening period of ten months. Both the High Court as well
as the Reference Court had applied the deduction at the rate
of 40% but still awarded compensation at antipodal rates.
Another reason which we must notice and, in fact, it is not
clear to us either from the judgment of the High Court or that of
the Reference Court as to why Exhibit A1 has not been taken
into consideration by both the Courts. In our view, Exhibit A1
is the sale instance from the Revenue Estate of the same
village and is located close to the developed area. The sale
deed was executed only three months prior to the date of
notification under Section 4 of the Act and also reflected a
reasonable value where the land was sold at the rate of Rs.
4,000/- per cent while as per Exhibit A4, the land was sold at
the rate of Rs. 3,363/- on 12.3.1984, thus, indicating increasing
trend in the value of the land. If appropriate increase is given
on the basis of Exhibit A4 for the intervening period and
deduction at a reasonable rate less than 40% is applied, it will
approximately give the same rate of compensation as would
be computed with reference to Exhibit A1.
Now, let us examine the exact compensation payable to
the claimants with reference to Exhibit A1. Genuineness of
Exhibit A1 has neither been questioned nor held to be a
transaction which was executed only to enhance the value of
the acquired land. Exhibit A1 is a comparable piece of
evidence which can safely be relied upon by the Court while
determining the compensation in regard to the acquired land.
Learned counsel for the claimants, while relying upon the
176 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
H
A judgment of this Court in Kasturi & Ors. vs. State of Haryana
[(2003) 1 SCC 354], contended that the acquired land has
great potential and is located adjacent to the developed land
and as such the deduction should not be more than 20% on
these counts. However, learned counsel appearing for the
B respondents relied upon the other judgments already referred
by us supra that the deduction should not be less than 40%.
Having examined the facts and circumstances of the case and
the evidence on record, we are of the considered view that rule
of approximately 1/3rd deduction can be fairly applied to the
C present case. The land certainly has potential and even the sale
instances show that the land from the Revenue Estate of the
same village was sold as plots and a number of facilities, as
indicated above, were available in the vicinity. Examining the
cumulative effect of the evidence on record in relation to
location, potential and similarity of land, we consider it
D
appropriate that deduction of more than 30% would be
prejudicial to the interest of the claimants whose lands have
been acquired by the State in exercise of its power of eminent
domain. It is a compulsory acquisition and it is expected of the
State to be just and fair and award the compensation to the
E claimants which satisfies mandate of law contained in the
provisions of Section 23 of the Act. Therefore, applying 30%
deduction to the value indicated in Exhibit A1 (deduction being
made both on account of size of the plot and development
charges), the claimants would be entitled to receive
F compensation at the rate of Rs. 2,800/- per cent for the
acquired land. As in the other appeals, the High Court had only
relied upon its judgment which is impugned in Civil Appeal
No.5616 of 2004, therefore, it is not necessary for us to discuss
the evidence in those cases in any further detail. The claimants
G in all these appeals would be entitled to the same rate of
compensation.
17. The argument of the appellants is that they have been
denied solatium and interest by the High Court while referring
H to the judgment of this Court in Prem Nath Kapur v. National
RADHA MUDALIYAR v. SPL. TAHASILDAR (LAND
ACQ.), T.N.H. BOARD [SWATANTER KUMAR, J.]
177
Fertilizers Corporation of India Ltd. [(1996) 2 SCC 71]. It is
contended that in view of the law clearly stated by this Court in
the case of Sunder v. Union of India [(2001) 7 SCC 211], which
has been consistently followed by different Benches of this
Court, the claimants are entitled to solatium as well as the
interest on the awarded amount. We find merit in this contention.
18. The Constitution Bench of this Court in the case of
Sunder (supra) had clearly stated that the Court has to keep
in mind that the compulsory nature of acquisition is to be
distinguished from voluntary sale or transfer. In the latter, there
is a willing buyer and seller. In the case of acquisition, it is
compulsory and deprives the owner of an opportunity to
negotiate and bargain the sale price of its land as it will entirely
depend on what the Collector or the court determines as the
amount of compensation in accordance with the provisions of
the Act. The solatium envisaged in sub-section (2) of Section
23 is “in consideration of the compulsory nature of acquisition”.
Thus, the solatium is not the same as damages on account of
the landowner’s disinclination to part with the land acquired. If
such compensation as determined in terms of Section 23 of
the Act is not paid within one year from the date of taking
possession of the land, then in terms of proviso to Section 34
interest shall stand escalated to 15% per annum from the date
of the expiry of the said period of one year on the amount of
compensation or part thereof which has not been paid or
deposited before the date of such expiry. The Court further held
that it is inconceivable that the solatium amount would attract
only the escalated rate of interest from the expiry of one year
and that there would be no interest on solatium during the
preceding period. Hence the person entitled to the
compensation awarded is also entitled to get interest on the
aggregate amount including solatium. It appears from the
impugned judgment that the High Court had relied upon the
judgment of this Court in the case of Prem Nath Kapur (supra)
and the judgment of this Court in the case of Sunder (supra)
came to be pronounced after the judgment of the High Court.
178
A
B
C
D
E
A While relying upon the law existing at that time, the High Court
had declined to grant the interest on solatium but made it
subject to the pronouncement in the case of Kapur Chand Jain
vs. State of Himanchal Pradesh [(1999) 2 SCC 89], wherein
this Court subsequently made a reference to a larger Bench
B and the judgment in Sunder (supra) came to be pronounced.
In any case there can be no doubt in law that the claimants are
entitled to the solatium and the interest thereupon at the rate
specified in proviso to Section 34 of the Act for the relevant
period. Even in this regard the judgment of the High Court,
C therefore, cannot be sustained.
19. For the reasons aforestated we partially allow the
appeals of the appellants that the claimants/appellants would
be entitled to receive compensation at the rate of Rs. 2,800/per cent for the acquired land and the consequential benefits
D of Section 23(1)A. The claimants would also be entitled to get
interest on solatium according to proviso to Section 34B of the
Act. As already noted, the claimants have not pressed for any
enhancement for the superstructures namely well, trees, etc.
which, in any case, is hereby rejected.
E
20. In the facts and circumstances of the cases parties are
left to bear their own costs.
D.G.
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Appeals allowed.
180 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
[2010] 13 (ADDL.) S.C.R. 179
A
A
B
B
ss. 163-A, 166, 168 and 169 – Non-fatal motor accident
– Partial permanent disability – Compensation towards loss
of future earnings – Principles enumerated – Illustrations
given – Securing of expert medical evidence – Guidelines
laid down – HELD: Instead of remanding the case after two
decades, on facts and circumstances of the case, in order to
do complete justice, permanent functional disability of the
claimant and loss of future earning capacity assessed –
Monthly income of claimant re-assessed – In calculating
compensation towards loss of future earnings due to disability,
there is no need to deduct one-third or any other percentage
from the assessed income towards the personal and living
expenses – Age of claimant being 25 years, multiplier of 18
applied – Compensation towards loss of future earning and
loss of earnings during the period of treatment enhanced
accordingly – Persons with Disabilities (Equal Opportunities,
Protection of Rights and Full Participation) Act, 1995 – s.2(1)
– Workmen’s Compensation Act, 1923 – Evidence – Expert
medical evidence – Securing of – Constitution of India, 1950
– Articles 136 and 142.
C
C
D
D
E
E
F
F
A roadside cheese vendor, aged about 25 years,
sustained fracture of both bones of left leg as also of left
radius, in a motor accident. The Motor Accident Claims
Tribunal, awarded compensation on various heads. As
regards compensation towards loss of future earnings,
179
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G
H
H
RAJ KUMAR
v.
AJAY KUMAR & ANR.
(Civil Appeal No. 8981 of 2010)
OCTOBER 18, 2010
[R.V. RAVEENDRAN AND H. L. GOKHALE, JJ.]
Motor Vehicles Act, 1988:
the Tribunal relying on the medical certificate indicating
45% disability held the loss of future earnings as 45%.
Though the claimant asserted that his monthly income
was Rs. 3000/-, the Tribunal, in the absence of any
documentary evidence in this regard, took the minimum
wage, viz. R.891/- as the monthly income of the claimant,
rounded it off to Rs. 900/-and deducted one-third
therefrom towards personal and living expenses. Taking
the loss of future earnings as 45% of Rs. 600/- to be Rs.
270/- or Rs. 3,240/- per annum, and applying a multiplier
of 17, the Tribunal awarded Rs. 55,080/- towards the loss
of future earnings. The appeal filed by the claimant for
enhancement of compensation was dismissed by the
High Court.
In the instant appeal, it was contended for the
appellant that (i) the assessment of monthly income at Rs.
900/- was very low and (ii) deduction of one-third of the
income towards personal and living expenses while
assessing the future loss of earning was not warranted.
Partly allowing the appeal, the Court
HELD:
1. The provision of the Motor Vehicles Act, 1988
makes it clear that the award must be just, which means
that compensation should, to the extent possible, fully
and adequately restore the claimant to the position prior
to the accident. The object of awarding damages is to
make good the loss suffered as a result of wrong done
as far as money can do so, in a fair, reasonable and
equitable manner. The court or tribunal shall have to
assess the damages objectively and exclude from
consideration any speculation or fancy, though some
conjecture with reference to the nature of disability and
its consequences, is inevitable. A person is not only to
be compensated for the physical injury, but also for the
RAJ KUMAR v. AJAY KUMAR & ANR.
181
loss which he suffered as a result of such injury. This
means that he is to be compensated for his inability to
lead a full life, his inability to enjoy those normal amenities
which he would have enjoyed but for the injuries, and his
inability to earn as much as he used to earn or could have
earned. [para 4] [188-F-H; 189-A]
C. K. Subramonia Iyer vs. T. Kunhikuttan Nair 1970 (2)
SCR 688 =AIR 1970 SC 376, R. D. Hattangadi vs. Pest
Control (India) Ltd. - 1995 (1) SCR 75 =1995 (1) SCC 551 –
relied on.
Baker vs. Willoughby – 1970 AC 467 – referred to.
182
A
B
C
Assessment of future loss of earnings due to permanent
disability:
2.1 Permanent disability can be either partial or total.
Partial permanent disability refers to a person’s inability
to perform all the duties and bodily functions that he
could perform before the accident, though he is able to
perform some of them and is still able to engage in some
gainful activity. Total permanent disability refers to a
person’s inability to perform any avocation or
employment related activities as a result of the accident.
[para 6] [191-A-B]
2.2 The permanent disabilities that may arise from
motor accidents injuries, are of a much wider range when
compared to the physical disabilities which are
enumerated in the Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation)
Act, 1995. But if any of the disabilities enumerated in
section 2(i) of the Disabilities Act are the result of injuries
sustained in a motor accident, they can be permanent
disabilities for the purpose of claiming compensation.
[para 6] [191-B-D]
2.3 Where the claimant suffers a permanent disability
as a result of injuries, the assessment of compensation
D
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A under the head of loss of future earnings, would depend
upon the effect and impact of such permanent disability
on his earning capacity. The Tribunal should not
mechanically apply the percentage of permanent
disability as the percentage of economic loss or loss of
B earning capacity. What requires to be assessed by the
Tribunal is the effect of the permanent disability on the
earning capacity of the injured; and after assessing the
loss of earning capacity in terms of a percentage of the
income, it has to be quantified in terms of money, to arrive
C at the future loss of earnings (by applying the standard
multiplier method used to determine loss of dependency).
[para 8] [191-H; 192-A-B, D-E]
Arvind Kumar Mishra v. New India Assurance Co.Ltd. 2010 (11) SCR 857 = 2010 (10) SCALE 298 and Yadava
D Kumar v. D.M., National Insurance Co. Ltd. - 2010 (10)
SCR 746 = 2010 (8) SCALE 567 – relied on.
2.4 The Tribunal should not be a silent spectator
when medical evidence is tendered in regard to the
injuries and their effect, in particular, the extent of
E permanent disability. Sections 168 and 169 of the Act
make it evident that the Tribunal does not function as a
neutral umpire as in a civil suit, but as an active explorer
and seeker of truth who is required to ‘hold an enquiry
into the claim’ for determining the ‘just compensation’.
F The Tribunal should, therefore, take an active role to
ascertain the true and correct position so that it can
assess the ‘just compensation’. While dealing with
personal injury cases, the Tribunal should preferably
equip itself with a Medical Dictionary and a Handbook for
G evaluation of permanent physical impairment. The
Tribunal may also keep in view the First Schedule to the
Workmen’s Compensation Act, 1923 which gives some
indication about the extent of permanent disability in
different types of injuries, in the case of workmen. [para
H 11] [194-F-H; 195-A-C]
RAJ KUMAR v. AJAY KUMAR & ANR.
183
Manual for Evaluation of Permanent Physical Impairment
for Orthopedic Surgeons, by American Academy of
Orthopedic Surgeons – referred to.
2.5 The Tribunal should also act with caution, if it
proposed to accept the expert evidence of doctors who
did not treat the injured but who give ‘ready to use’
disability certificates, without proper medical
assessment. The Tribunal may invariably make it a point
to require the evidence of the Doctor who treated the
injured or who assessed the permanent disability. If the
Tribunal is not satisfied with the medical evidence
produced by the claimant, it can constitute a Medical
Board (from a panel maintained by it in consultation with
reputed local Hospitals/Medical Colleges) and refer the
claimant to such Medical Board for assessment of the
disability. [para 12] [195-F-G-H; 196-A-B]
184 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A
B
B
C
C
D
2.6 The principles to be kept in view while making an
assessment of loss of future earnings are summarised as
below:
(i) All injuries (or permanent disabilities arising from
injuries), do not result in loss of earning capacity.
(ii) The percentage of permanent disability with
reference to the whole body of a person, cannot be
assumed to be the percentage of loss of earning
capacity. The percentage of loss of earning capacity
is not the same as the percentage of permanent
disability (except in a few cases, where the Tribunal
on the basis of evidence, concludes that percentage
of loss of earning capacity is the same as percentage
of permanent disability).
(iii) The doctor who treated an injured-claimant or
who examined him subsequently to assess the
extent of his permanent disability can give evidence
E
F
G
H
only in regard the extent of permanent disability. The
loss of earning capacity is something that will have
to be assessed by the Tribunal with reference to the
evidence in entirety.
(iv) The same permanent disability may result in
different percentages of loss of earning capacity in
different persons, depending upon the nature of
profession, occupation or job, age, education and
other factors. [para 13] [196-C-G]
2.7 The assessment of loss of future earnings may
be made keeping in view the illustrations A to C as given
in the judgment. [para 14] [196-H]
2.8 It may be noted that when compensation is
D awarded by treating the loss of future earning capacity
as 100% (or even anything more than 50%), the need to
award compensation separately under the head of loss
of amenities or loss of expectation of life may disappear
and as a result, only a token or nominal amount may have
to be awarded under the head of loss of amenities or loss
E
of expectation of life, as otherwise there may be a
duplication in the award of compensation. [para 10] [194D-F]
2.9 After the insertion of s. 163A in the Act (with effect
from 14.11.1994), if a claim for compensation is made
under that section by an injured alleging disability, and
if the quantum of loss of future earning claimed, falls
under the Second Schedule to the Act, the Tribunal may
have to apply the principles laid down in Note (5) of the
G Second Schedule to the Act to determine compensation.
[para 15] [198-G-H]
F
H
2.10 In the case of an injured claimant with a
disability, what is calculated is the future loss of earning
of the claimant, payable to claimant, (as contrasted from
RAJ KUMAR v. AJAY KUMAR & ANR.
185
loss of dependency calculated in a fatal accident, where
the dependent family members of the deceased are the
claimants). Therefore, there is no need to deduct onethird or any other percentage from the assessed income,
towards the personal and living expenses. [para 20] [202C]
2.11 The difficulties faced by claimants in securing
the presence of busy Surgeons or treating Doctors, who
treated them, for giving evidence are also to be
considered. The solution does not lie in coercing the
Doctors to attend the Tribunal to give evidence, but it lies
in recognizing the valuable time of Doctors and
accommodating them. Efforts should be made to record
the evidence of the treating Doctors on Commission, after
ascertaining their convenient timings. If the Doctors
attend the Tribunal for giving evidence, their evidence
may be recorded without delay, ensuring that they are not
required to wait. In cases where the certificates are not
contested by the respondents, they may be marked by
consent, thereby dispensing with the oral evidence. [para
16] [199-F; 200-B-F]
2.12 In the instant case, the Tribunal acted on the
disability certificate, and the High Court erred in rejecting
the same. Though the accident occurred in Delhi and the
injured claimant was treated in a Delhi Hospital after the
accident, as he hailed from the neighbouring District of
Ghaziabad in Uttar Pradesh, he might have continued the
treatment in the place where he resided. Besides, the
certificate has been issued by the Chief Medical Officer,
Ghaziabad, on the assessment made by the Medical
Board which also consisted of an Orthopaedic Surgeon.
[para 17] [200-G-H; 201-B]
186
A
B
C
D
E
F
G
Assessment of Compensation:
3.1 The Tribunal has proceeded on the basis that the
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A permanent disability of the injured-claimant was 45% and
the loss of his future earning capacity was also 45%. The
Tribunal overlooked the fact that the disability certificate
referred to 45% disability with reference to left lower limb
and not in regard to the entire body. The said extent of
B permanent disability of the limb could not be considered
to be the functional disability of the body nor could it be
assumed to result in a corresponding extent of loss of
earning capacity, as the disability would not have
prevented the claimant from carrying on his avocation as
C a cheese vendor, though it might impede in his smooth
functioning. Normally, the absence of clear and sufficient
evidence would have necessitated remand of the case for
further evidence on this aspect. However, instead of
remanding the matter for a finding on this issue, at this
distance of time after nearly two decades, on the facts
D
and circumstances, to do complete justice, the permanent
functional disability of the body is assessed as 25% and
the loss of future earning capacity as 20%. [para 18] [201C-F]
E
3.2 It would be very difficult to expect a roadside
vendor to have accounts or other documents regarding
income. As the accident occurred in the year 1991, the
Tribunal ought to have assumed the income as at least
Rs.1500/- per month (at the rate of Rs.50/- per day) or
F Rs.18,000/- per annum, even in the absence of specific
documentary evidence regarding income. Accordingly,
the loss of earning due to functional disability would be
20% of Rs.18000/ which is Rs.3600/- per annum. As the
age of appellant at the time of accident was 25, the
G multiplier applicable would be 18. Compensation towards
the loss of future earnings and the loss of earning during
the period of treatment enhanced accordingly. [para 19
and 21] [202-A-B-D-F]
H
Securing of expert medical evidence:
187
RAJ KUMAR v. AJAY KUMAR & ANR.
188 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
Case Law Reference:
1970 (2) SCR 688
relied on
para 4
1995 (1) SCR 75
relied on
para 4
1970 AC 467
referred to
para 4
2010 (11) SCR 857
relied on
para 8
2010 (10) SCR 746
relied on
para 8
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8981 of 2010.
B
C
D
3. The appellant puts forth two grievances: (i) the
assessment of monthly income at Rs.900/- was very low; and
(ii) deduction of one third of the income (towards personal and
living expenses) while assessing the future loss of earning was
D not warranted. The questions that therefore arise for our
consideration are whether the principles adopted for assessing
the compensation were erroneous and whether compensation
awarded requires to be increased.
E
E General principles relating to compensation in injury
cases
From the Judgment & Order dated 31.01.2007 of the High
Court of Delhi at New Delhi in FAO No. 601 of 2002.
Manu Shahlia, Manjeet Chawla for the Appellant.
Anurag Pandey for the Respondents.
The Order of the Court was delivered by
ORDER
R.V. RAVEENDRAN, J. 1. Leave granted. Heard.
2. The appellant was injured in a motor accident on
1.10.1991 and sustained fracture of both bones of left leg and
fracture of left radius. He was under treatment from 1.10.1991
to 16.6.1992. The Motor Accident Claims Tribunal, by award
dated 20.7.2002, awarded compensation of Rs.94,700/-, with
interest at 9% per annum from the date of petition till date of
realization. The amount awarded was made up of Rs.11,000/
- towards medical expenses, conveyance and special diet;
Rs.3600/- towards loss of earning during period of treatment;
Rs.25,000/- for pain and suffering; and Rs.55,080 towards loss
of future earnings. For calculating the loss of future earnings,
the Tribunal took the minimum wage as the monthly income of
the appellant, that is Rs.891/- rounded off to Rs.900/- and
deducted one-third therefrom towards the personal and living
A expenses; and by assuming the percentage of disability (45%)
shown in disability certificate to be the economic disability, the
Tribunal arrived at loss of future earnings as 45% of Rs.600/-,
that is Rs.270/- per month or Rs.3,240/- per annum. By applying
a multiplier of 17, it arrived at Rs.55,080/- as the loss of future
B earnings. The appellant filed an appeal seeking increase in
compensation. The High Court rejected the said appeal by the
impugned judgment dated 31.1.2007 on the ground that the
disability certificate produced by the appellant was not reliable.
The said judgment of the High Court is challenged in this appeal
C by special leave.
F
G
H
4. The provision of the Motor Vehicles Act, 1988 (‘Act’ for
short) makes it clear that the award must be just, which means
that compensation should, to the extent possible, fully and
F adequately restore the claimant to the position prior to the
accident. The object of awarding damages is to make good
the loss suffered as a result of wrong done as far as money
can do so, in a fair, reasonable and equitable manner. The court
or tribunal shall have to assess the damages objectively and
G exclude from consideration any speculation or fancy, though
some conjecture with reference to the nature of disability and
its consequences, is inevitable. A person is not only to be
compensated for the physical injury, but also for the loss which
he suffered as a result of such injury. This means that he is to
H be compensated for his inability to lead a full life, his inability
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
189
to enjoy those normal amenities which he would have enjoyed
but for the injuries, and his inability to earn as much as he used
to earn or could have earned. (See C. K. Subramonia Iyer vs.
T. Kunhikuttan Nair – AIR 1970 SC 376, R. D. Hattangadi vs.
Pest Control (India) Ltd. - 1995 (1) SCC 551 and Baker vs.
Willoughby – 1970 AC 467).
190
A
B
5. The heads under which compensation is awarded in
personal injury cases are the following :
Pecuniary damages (Special Damages)
C
(i)
Expenses relating to treatment, hospitalization,
medicines, transportation, nourishing food, and
miscellaneous expenditure.
(ii)
Loss of earnings (and other gains) which the injured
would have made had he not been injured,
comprising :
(iii)
(a)
Loss of earning during the period of
treatment;
(b)
Loss of future earnings on account of
permanent disability.
E
A only under heads (i), (ii)(a) and (iv). It is only in serious cases
of injury, where there is specific medical evidence
corroborating the evidence of the claimant, that compensation
will be granted under any of the heads (ii)(b), (iii), (v) and (vi)
relating to loss of future earnings on account of permanent
B disability, future medical expenses, loss of amenities (and/or
loss of prospects of marriage) and loss of expectation of life.
Assessment of pecuniary damages under item (i) and under
item (ii)(a) do not pose much difficulty as they involve
reimbursement of actuals and are easily ascertainable from
C the evidence. Award under the head of future medical expenses
– item (iii) — depends upon specific medical evidence
regarding need for further treatment and cost thereof.
Assessment of non-pecuniary damages – items (iv), (v) and
(vi) — involves determination of lump sum amounts with
D reference to circumstances such as age, nature of injury/
deprivation/disability suffered by the claimant and the effect
thereof on the future life of the claimant. Decision of this Court
and High Courts contain necessary guidelines for award under
these heads, if necessary. What usually poses some difficulty
is the assessment of the loss of future earnings on account of
E
permanent disability - item (ii)(a). We are concerned with that
assessment in this case.
Assessment of future loss of earnings due to permanent
disability
Future medical expenses.
Non-pecuniary damages (General Damages)
(iv)
Damages for pain, suffering and trauma as a
consequence of the injuries.
(v)
Loss of amenities (and/or loss of prospects of
marriage).
(vi)
D
F
G
Loss of expectation of life (shortening of normal
longevity).
In routine personal injury cases, compensation will be awarded
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
H
F
6. Disability refers to any restriction or lack of ability to
perform an activity in the manner considered normal for a
human-being. Permanent disability refers to the residuary
incapacity or loss of use of some part of the body, found existing
G at the end of the period of treatment and recuperation, after
achieving the maximum bodily improvement or recovery which
is likely to remain for the remainder life of the injured.
Temporary disability refers to the incapacity or loss of use of
some part of the body on account of the injury, which will cease
to exist at the end of the period of treatment and recuperation.
H
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
191
Permanent disability can be either partial or total. Partial
permanent disability refers to a person’s inability to perform all
the duties and bodily functions that he could perform before the
accident, though he is able to perform some of them and is still
able to engage in some gainful activity. Total permanent
disability refers to a person’s inability to perform any avocation
or employment related activities as a result of the accident. The
permanent disabilities that may arise from motor accidents
injuries, are of a much wider range when compared to the
physical disabilities which are enumerated in the Persons with
Disabilities (Equal Opportunities, Protection of Rights and Full
Participation) Act, 1995 (‘Disabilities Act’ for short). But if any
of the disabilities enumerated in section 2(i) of the Disabilities
Act are the result of injuries sustained in a motor accident, they
can be permanent disabilities for the purpose of claiming
compensation.
7. The percentage of permanent disability is expressed by
the Doctors with reference to the whole body, or more often than
not, with reference to a particular limb. When a disability
certificate states that the injured has suffered permanent
disability to an extent of 45% of the left lower limb, it is not the
same as 45% permanent disability with reference to the whole
body. The extent of disability of a limb (or part of the body)
expressed in terms of a percentage of the total functions of that
limb, obviously cannot be assumed to be the extent of disability
of the whole body. If there is 60% permanent disability of the
right hand and 80% permanent disability of left leg, it does not
mean that the extent of permanent disability with reference to
the whole body is 140% (that is 80% plus 60%). If different parts
of the body have suffered different percentages of disabilities,
the sum total thereof expressed in terms of the permanent
disability with reference to the whole body, cannot obviously
exceed 100%.
8. Where the claimant suffers a permanent disability as a
result of injuries, the assessment of compensation under the
192 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
G
A head of loss of future earnings, would depend upon the effect
and impact of such permanent disability on his earning capacity.
The Tribunal should not mechanically apply the percentage of
permanent disability as the percentage of economic loss or loss
of earning capacity. In most of the cases, the percentage of
B economic loss, that is, percentage of loss of earning capacity,
arising from a permanent disability will be different from the
percentage of permanent disability. Some Tribunals wrongly
assume that in all cases, a particular extent (percentage) of
permanent disability would result in a corresponding loss of
C earning capacity, and consequently, if the evidence produced
show 45% as the permanent disability, will hold that there is
45% loss of future earning capacity. In most of the cases,
equating the extent (percentage) of loss of earning capacity to
the extent (percentage) of permanent disability will result in
award of either too low or too high a compensation. What
D
requires to be assessed by the Tribunal is the effect of the
permanently disability on the earning capacity of the injured;
and after assessing the loss of earning capacity in terms of a
percentage of the income, it has to be quantified in terns of
money, to arrive at the future loss of earnings (by applying the
E standard multiplier method used to determine loss of
dependency). We may however note that in some cases, on
appreciation of evidence and assessment, the Tribunal may find
that percentage of loss of earning capacity as a result of the
permanent disability, is approximately the same as the
F percentage of permanent disability in which case, of course,
the Tribunal will adopt the said percentage for determination
of compensation (see for example, the decisions of this court
in Arvind Kumar Mishra v. New India Assurance Co.Ltd. –
2010(10) SCALE 298 and Yadava Kumar v. D.M., National
G Insurance Co. Ltd. – 2010 (8) SCALE 567).
H
9. Therefore, the Tribunal has to first decide whether there
is any permanent disability and if so the extent of such
permanent disability. This means that the tribunal should
H consider and decide with reference to the evidence: (i) whether
B
C
D
E
F
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
193
the disablement is permanent or temporary; (ii) if the
disablement is permanent, whether it is permanent total
disablement or permanent partial disablement, (iii) if the
disablement percentage is expressed with reference to any
specific limb, then the effect of such disablement of the limb
on the functioning of the entire body, that is the permanent
disability suffered by the person. If the Tribunal concludes that
there is no permanent disability then there is no question of
proceeding further and determining the loss of future earning
capacity. But if the Tribunal concludes that there is permanent
disability then it will proceed to ascertain its extent. After the
Tribunal ascertains the actual extent of permanent disability of
the claimant based on the medical evidence, it has to determine
whether such permanent disability has affected or will affect his
earning capacity.
10. Ascertainment of the effect of the permanent disability
on the actual earning capacity involves three steps. The Tribunal
has to first ascertain what activities the claimant could carry on
in spite of the permanent disability and what he could not do
as a result of the permanent ability (this is also relevant for
awarding compensation under the head of loss of amenities
of life). The second step is to ascertain his avocation,
profession and nature of work before the accident, as also his
age. The third step is to find out whether (i) the claimant is totally
disabled from earning any kind of livelihood, or (ii) whether in
spite of the permanent disability, the claimant could still
effectively carry on the activities and functions, which he was
earlier carrying on, or (iii) whether he was prevented or
restricted from discharging his previous activities and functions,
but could carry on some other or lesser scale of activities and
functions so that he continues to earn or can continue to earn
his livelihood. For example, if the left hand of a claimant is
amputated, the permanent physical or functional disablement
may be assessed around 60%. If the claimant was a driver or
a carpenter, the actual loss of earning capacity may virtually be
hundred percent, if he is neither able to drive or do carpentry.
194
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A On the other hand, if the claimant was a clerk in government
service, the loss of his left hand may not result in loss of
employment and he may still be continued as a clerk as he
could perform his clerical functions; and in that event the loss
of earning capacity will not be 100% as in the case of a driver
B or carpenter, nor 60% which is the actual physical disability, but
far less. In fact, there may not be any need to award any
compensation under the head of ‘loss of future earnings’, if the
claimant continues in government service, though he may be
awarded compensation under the head of loss of amenities as
C a consequence of losing his hand. Sometimes the injured
claimant may be continued in service, but may not found
suitable for discharging the duties attached to the post or job
which he was earlier holding, on account of his disability, and
may therefore be shifted to some other suitable but lesser post
with lesser emoluments, in which case there should be a limited
D
award under the head of loss of future earning capacity, taking
note of the reduced earning capacity. It may be noted that when
compensation is awarded by treating the loss of future earning
capacity as 100% (or even anything more than 50%), the need
to award compensation separately under the head of loss of
E amenities or loss of expectation of life may disappear and as
a result, only a token or nominal amount may have to be
awarded under the head of loss of amenities or loss of
expectation of life, as otherwise there may be a duplication in
the award of compensation. Be that as it may.
F
11. The Tribunal should not be a silent spectator when
medical evidence is tendered in regard to the injuries and their
effect, in particular the extent of permanent disability. Sections
168 and 169 of the Act make it evident that the Tribunal does
not
function as a neutral umpire as in a civil suit, but as an
G
active explorer and seeker of truth who is required to ‘hold an
enquiry into the claim’ for determining the ‘just compensation’.
The Tribunal should therefore take an active role to ascertain
the true and correct position so that it can assess the ‘just
H compensation’. While dealing with personal injury cases, the
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
195
Tribunal should preferably equip itself with a Medical Dictionary
and a Handbook for evaluation of permanent physical
impairment (for example the Manual for Evaluation of
Permanent Physical Impairment for Orthopedic Surgeons,
prepared by American Academy of Orthopedic Surgeons or
its Indian equivalent or other authorized texts) for understanding
the medical evidence and assessing the physical and functional
disability. The Tribunal may also keep in view the first schedule
to the Workmen’s Compensation Act, 1923 which gives some
indication about the extent of permanent disability in different
types of injuries, in the case of workmen. If a Doctor giving
evidence uses technical medical terms, the Tribunal should
instruct him to state in addition, in simple non-medical terms,
the nature and the effect of the injury. If a doctor gives evidence
about the percentage of permanent disability, the Tribunal has
to seek clarification as to whether such percentage of disability
is the functional disability with reference to the whole body or
whether it is only with reference to a limb. If the percentage of
permanent disability is stated with reference to a limb, the
Tribunal will have to seek the doctor’s opinion as to whether it
is possible to deduce the corresponding functional permanent
disability with reference to the whole body and if so the
percentage.
12. The Tribunal should also act with caution, if it proposed
to accept the expert evidence of doctors who did not treat the
injured but who give ‘ready to use’ disability certificates, without
proper medical assessment. There are several instances of
unscrupulous doctors who without treating the injured, readily
giving liberal disability certificates to help the claimants. But
where the disability certificates are given by duly constituted
Medical Boards, they may be accepted subject to evidence
regarding the genuineness of such certificates. The Tribunal
may invariably make it a point to require the evidence of the
Doctor who treated the injured or who assessed the permanent
disability. Mere production of a disability certificate or
Discharge Certificate will not be proof of the extent of disability
196 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
A stated therein unless the Doctor who treated the claimant or
who medically examined and assessed the extent of disability
of claimant, is tendered for cross-examination with reference
to the certificate. If the Tribunal is not satisfied with the medical
evidence produced by the claimant, it can constitute a Medical
B Board (from a panel maintained by it in consultation with
reputed local Hospitals/Medical Colleges) and refer the
claimant to such Medical Board for assessment of the disability.
C
13. We may now summarise the principles discussed
above :
(i) All injuries (or permanent disabilities arising from
injuries), do not result in loss of earning capacity.
D
E
(ii) The percentage of permanent disability with reference
D to the whole body of a person, cannot be assumed to be the
percentage of loss of earning capacity. To put it differently, the
percentage of loss of earning capacity is not the same as the
percentage of permanent disability (except in a few cases,
where the Tribunal on the basis of evidence, concludes that
percentage of loss of earning capacity is the same as
E
percentage of permanent disability).
(iii) The doctor who treated an injured-claimant or who
examined him subsequently to assess the extent of his
permanent disability can give evidence only in regard the extent
of permanent disability. The loss of earning capacity is
something that will have to be assessed by the Tribunal with
reference to the evidence in entirety.
F
F
G
(iv) The same permanent disability may result in different
G percentages of loss of earning capacity in different persons,
depending upon the nature of profession, occupation or job,
age, education and other factors.
H
14. The assessment of loss of future earnings is explained
below with reference to the following illustrations:
H
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
197
Illustration ‘A’: The injured, a workman, was aged 30 years
and earning Rs.3000/- per month at the time of accident. As
per Doctor’s evidence, the permanent disability of the limb as
a consequence of the injury was 60% and the consequential
permanent disability to the person was quantified at 30%. The
loss of earning capacity is however assessed by the Tribunal
as 15% on the basis of evidence, because the claimant is
continued in employment, but in a lower grade. Calculation of
compensation will be as follows:
(a)
Annual income before the accident :
198
A
B
Rs.36,000/-.
C
(b)
(c)
(d)
Loss of future earning per
annum (15% of the prior annual
income)
:
17
Loss of future earnings :
(5400 x 17)
Rs. 91,800/-
D
Illustration ‘B’: The injured was a driver aged 30 years,
earning Rs.3000/- per month. His hand is amputated and his
permanent disability is assessed at 60%. He was terminated
from his job as he could no longer drive. His chances of getting
any other employment was bleak and even if he got any job,
the salary was likely to be a pittance. The Tribunal therefore
assessed his loss of future earning capacity as 75%.
Calculation of compensation will be as follows:
(a)
Annual income prior to the accident : Rs.36,000/-.
(b)
Loss of future earning per annum
(75% of the prior annual income)
: Rs.27000/-.
Multiplier applicable with
reference to age
: 17
(c)
(d)
E
F
G
H
Loss of future earnings :
(27000 x 17)
: Rs. 4,59,000/-
Illustration ‘C’: The injured was 25 years and a final year
Engineering student. As a result of the accident, he was in
B coma for two months, his right hand was amputated and vision
was affected. The permanent disablement was assessed as
70%. As the injured was incapacitated to pursue his chosen
career and as he required the assistance of a servant
throughout his life, the loss of future earning capacity was also
assessed as 70%. The calculation of compensation will be as
C
follows:
(a)
Minimum annual income he would
have got if had been employed
as an Engineer
: Rs.60,000/-
(b)
Loss of future earning per annum
(70% of the expected annual
income)
: Rs.42000/-
(c)
Multiplier applicable (25 years)
: 18
(d)
Loss of future earnings :
(42000 x 18)
: Rs. 7,56,000/-
Rs. 5400/-.
Multiplier applicable with reference
to age
:
:
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
D
E
F
[Note : The figures adopted in illustrations (A) and (B) are
hypothetical. The figures in Illustration (C) however are
based on actuals taken from the decision in Arvind Kumar
Mishra (supra)].
15. After the insertion of section 163A in the Act (with effect
G from 14.11.1994), if a claim for compensation is made under
that section by an injured alleging disability, and if the quantum
of loss of future earning claimed, falls under the second
schedule to the Act, the Tribunal may have to apply the following
principles laid down in Note (5) of the Second Schedule to the
H Act to determine compensation :
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
199
“5. Disability in non-fatal accidents :
200 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
The following compensation shall be payable in case of
disability to the victim arising out of non-fatal accidents : Loss of income, if any, for actual period of disablement not
exceeding fifty two weeks.
B
PLUS either of the following :(a) In case of permanent total disablement the amount
payable shall be arrived at by multiplying the annual loss
of income by the Multiplier applicable to the age on the
date of determining the compensation, or
C
(b) In case of permanent partial disablement such
percentage of compensation which would have been
payable in the case of permanent total disablement as
specified under item (a) above.
D
Injuries deemed to result in Permanent Total Disablement/
Permanent Partial Disablement and percentage of loss of
earning capacity shall be as per Schedule I under
Workmen’s Compensation Act, 1923.”
16. We may in this context refer to the difficulties faced by
claimants in securing the presence of busy Surgeons or
treating Doctors who treated them, for giving evidence. Most
of them are reluctant to appear before Tribunals for obvious
reasons either because their entire day is likely to be wasted
in attending the Tribunal to give evidence in a single case or
because they are not shown any priority in recording evidence
or because the claim petition is filed at a place far away from
the place where the treatment was given. Many a time, the
claimants are reluctant to take coercive steps for summoning
the Doctors who treated them, out of respect and gratitude
towards them or for fear that if forced to come against their
wishes, they may give evidence which may not be very
E
F
A favorable. This forces the injured claimants to approach
‘professional’ certificate givers whose evidence most of the time
is found to be not satisfactory. Tribunals should realize that a
busy Surgeon may be able to save ten lives or perform twenty
surgeries in the time he spends to attend the Tribunal to give
B evidence in one accident case. Many busy Surgeons refuse to
treat medico-legal cases out of apprehension that their practice
and their current patients will suffer, if they have to spend their
days in Tribunals giving evidence about past patients. The
solution does not lie in coercing the Doctors to attend the
C Tribunal to give evidence. The solution lies in recognizing the
valuable time of Doctors and accommodating them. Firstly,
efforts should be made to record the evidence of the treating
Doctors on commission, after ascertaining their convenient
timings. Secondly, if the Doctors attend the Tribunal for giving
evidence, their evidence may be recorded without delay,
D
ensuring that they are not required to wait. Thirdly, the Doctors
may be given specific time for attending the Tribunal for giving
evidence instead of requiring them to come at 10.30 A.M. or
11.00 A.M. and wait in the Court Hall. Fourthly, in cases where
the certificates are not contested by the respondents, they may
E be marked by consent, thereby dispensing with the oral
evidence. These small measures as also any other suitable
steps taken to ensure the availability of expert evidence, will
ensure assessment of just compensation and will go a long
way in demonstrating that Courts/Tribunals show concern for
F litigants and witnesses.
Assessment of compensation
G
H
17. In this case, the Tribunal acted on the disability
certificate, but the High Court had reservations about its
G
acceptability as it found that the injured had been treated in the
Government Hospital in Delhi whereas the disability certificate
was issued by a District Hospital in the State of Uttar Pradesh.
The reason given by the High Court for rejection may not be
sound for two reasons. Firstly though the accident occurred in
H
RAJ KUMAR v. AJAY KUMAR & ANR.
[R.V. RAVEENDRAN, J.]
201
Delhi and the injured claimant was treated in a Delhi Hospital
after the accident, as he hailed from Chirori Mandi in the
neighbouring District of Ghaziabad in Uttar Pradesh, situated
on the outskirts of Delhi, he might have continued the treatment
in the place where he resided. Secondly the certificate has
been issued by the Chief Medical Officer, Ghaziabad, on the
assessment made by the Medical Board which also consisted
of an Orthopaedic Surgeon. We are therefore of the view that
the High Court ought not to have rejected the said disability
certificate.
18. The Tribunal has proceeded on the basis that the
permanent disability of the injured-claimant was 45% and the
loss of his future earning capacity was also 45%. The Tribunal
overlooked the fact that the disability certificate referred to 45%
disability with reference to left lower limb and not in regard to
the entire body. The said extent of permanent disability of the
limb could not be considered to be the functional disability of
the body nor could it be assumed to result in a corresponding
extent of loss of earning capacity, as the disability would not
have prevented him from carrying on his avocation as a cheese
vendor, though it might impede in his smooth functioning.
Normally, the absence of clear and sufficient evidence would
have necessitated remand of the case for further evidence on
this aspect. However, instead of remanding the matter for a
finding on this issue, at this distance of time after nearly two
decades, on the facts and circumstances, to do complete
justice, we propose to assess the permanent functional
disability of the body as 25% and the loss of future earning
capacity as 20%.
19. The evidence showed that at the time of the accident,
the appellant was aged around 25 years and was eking his
livelihood as a cheese vendor. He claimed that he was earning
a sum of Rs.3000/- per month. The Tribunal held that as there
was no acceptable evidence of income of the appellant, it
should be assessed at Rs.900/- per month as the minimum
202
A
B
C
D
E
F
G
A wage was Rs.891 per month. It would be very difficult to expect
a roadside vendor to have accounts or other documents
regarding income. As the accident occurred in the year 1991,
the Tribunal ought to have assumed the income as at least
Rs.1500/- per month (at the rate of Rs.50/- per day) or
B Rs.18,000/- per annum, even in the absence of specific
documentary evidence regarding income.
20. In the case of an injured claimant with a disability, what
is calculated is the future loss of earning of the claimant,
payable to claimant, (as contrasted from loss of dependency
C
calculated in a fatal accident, where the dependent family
members of the deceased are the claimants). Therefore there
is no need to deduct one-third or any other percentage from
out of the income, towards the personal and living expenses.
21. As the income of the appellant is assessed at
Rs.18000/- per annum, the loss of earning due to functional
disability would be 20% of Rs.18000/- which is Rs.3600/- per
annum. As the age of appellant at the time of accident was 25,
the multiplier applicable would be 18. Therefore, the loss of
E future earnings would be 3600 x 18 = Rs.64,800/- (as against
Rs.55,080/- determined by the Tribunal). We are also of the
view that the loss of earning during the period of treatment
(1.10.1991 to 16.6.1992) should be Rs.12750/- at the rate of
Rs.1500/- for eight and half months instead of Rs.3600/F determined by the Tribunal. The increase under the two heads
is rounded of to Rs.20,000/-.
D
22. In view of the above, we allow this appeal in part and
increase the compensation by Rs.20,000/- which shall carry
interest at the rate awarded by the Tribunal, from the date of
G petition to the date of payment.
R.P.
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Appeal partly allowed.
204 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
[2010] 13 (ADDL.) S.C.R. 203
SACHIDANAND THAKUR
v.
UNION OF INDIA & ORS.
(Criminal Appeal No. 970 of 2007)
OCTOBER 19, 2010.
A
B
A
B
[HARJIT SINGH BEDI AND CHANDRAMAULI
KR. PRASAD, JJ.]
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 970 of 2007.
From the Judgment & Order dated 23.12.2005 of the High
Court of Punjab & Haryana at Chandigarh in CRM 533 of 2005
in Criminal Writ Petition No. 877 of 2004.
D.K. Thakur, D. Jha, Debasis Misra for the Appellant.
P.P. Tripathi, ASG, N.S. Sweety Manchanda, Anil Katiyar,
Anuj Bhandari, D.S. Mahra for the Respondents.
Penal Code, 1860:
C
s.302 – Murder – An army personnel, in the night shot
three shots at the member of Quick Reaction Team, who ha
been summoned to locate the intruder – In Court Martial
proceedings it was held a deliberate act of murder and
accused convicted u/s 302 and sentenced to imprisonment
for life, besides other penalties imposed upon him under Army
Act – Conviction upheld by High Court – HELD: From the
order of the Court Martial, it is evident that the appellant had
fired three shots at the deceased, who was one of his
colleagues in the Army, and this incident had been witnessed
by several Army personnel who had been posted with the
accused at that time – The fact that the shots had been fired
from 8 to 10 ft. has also been borne out by the post-mortem
examination – It is also clear that the empty cartridge cases
lifted from the site of the incident also matched the weapon
issued to the accused – It is apparent from the evidence of
PW.14 that he had cautioned the accused that the person he
was chasing was in fact a member of the Quick Reaction Team
and that he should not fire at him, but despite this warning the
appellant fired three shots – Therefore, no error can be found
with the findings of fact recorded by the Court Martial and
upheld by the High Court – The Court would not, in these
circumstances, interfere with the same – Army Act, 1950.
203
C
The following order of the Court was delivered
ORDER
D
E
F
G
H
We have heard the learned counsel for the parties. The
facts
leading to this appeal are as under:
D
The appellant was enrolled in the Indian Army in the year
of 1978 and was deputed to an Artillery regiment. On the 6th
January, 2000 he along with two other Sentries, Naik Sajimon
and Lance Naik Shaiju, was on security duty as the Guard
E Commander in the Technical Battery Area of 501 AD GP (SP).
A 7.62 mm Self Loading Rifle bearing butt number 259 had
also been issued to him alongwith 20 cartridges. It appears that
there was an incident of stone throwing on the Guard Hut and
the matter was reported to the Security JCO, Naib Subedar
F Amrender Kumar. The JCO issued instructions that a Quick
Reaction Team be summoned. This Team reached the Guard
Hut at about 10.30 p.m. and the vehicle was challenged by the
Sentry on duty.
The Members of the Team came out of the vehicle and
moved to the right and left as ordered to locate the intruder who
had thrown the stones. At this stage the accused came running
towards Naik Jityu Yadav, one of the members of the Quick
Reaction Team, followed by Naik Sajimon KT who warned him
H that the person towards whom he, (the accused) was running
G
SACHIDANAND THAKUR v. UNION OF INDIA & ORS. 205
was one of the members of the Quick Reaction Team and not
to fire on him. Despite this information however the accused
fired three shots from a distance of 8 to 10 ft. killing Naik Jityu
Yadav at the spot. He was quickly apprehended by PW.14 and
the Security JCO PW.6 and when questioned as to what he had
done, he replied ‘MAINE JO KARNA THA KAR DIYA’.
Keeping in view the aforesaid facts, the Court Martial
before whom the appellant was tried, held that the shooting was
a deliberate attack of murder and the appellant was
accordingly guilty under Section 302 of the IPC. He was
accordingly sentenced to life imprisonment along with several
other penalties imposable under the Army Act 1950.
A writ petition was thereafter filed in the Punjab and
Haryana High Court under Art. 226 of the Constitution of India
and several issues of law and fact were raised before the
Division Bench. The High Court vide its judgment dated 23/12/
2005 repelled all the arguments and dismissed the writ petition
and confirmed the findings of the Court Martial. A recall
application was also moved before the High Court which too
was dismissed on 23rd November 2005. It is in this background
that the matter is before us in appeal.
Before us today Mr. D. Thakur, the learned counsel for the
appellant, has pointed out that from the facts of the case it was
apparent that the killing was an accident and arose from a
suspicion of a terrorist attack as Ambala, being close to the
Punjab State, also faced this threat. He accordingly prays that
a case under Section 302 was not made out.
Mr. P.P. Tripathi, the learned A.S.G. has however
submitted that the findings of fact recorded by the Court Martial
were very categoric and based on a correct appreciation of the
evidence and the High Court was justified in rejecting a
challenge to those findings as interference by Courts in such
matters was required to be minimal.
206
A
B
C
D
E
F
A
We have considered the arguments advanced by the
learned counsel for the parties and have gone through the
record very carefully with their assistance. As already pointed
out the only argument raised by Mr. Thakur pertains to the
finding of fact with regard to the murder. We see from the order
B of the Court Martial that the appellant had fired three shots at
the deceased, who was one of his colleagues in the Army, and
this incident had been witnessed by several Army personnel
who had been posted with the accused at that time. The fact
that the shots had been fired from 8 to 10 ft. has also been
C borne out by the observations of Dr. S. Sharma (PW.16) at the
time of the post-mortem examination. It is also clear that the
fired cartridge cases lifted from the site of the incident also
matched the weapon issued to the accused. If any doubt still
existed with regard to the culpability of the appellant for murder
it stands removed by the remark that he made when
D
apprehended, ‘MAINE JO KARNA THA KAR DIYA’.
It is also apparent from the evidence of PW.14 that he had
cautioned the appellant that the person he was chasing was in
fact a member of the Quick Reaction Team and that he should
E not fire on him but despite this warning the appellant fired three
shots. We are, therefore, of the opinion that no error can be
found with the findings of fact recorded by the Court Martial and
upheld by the High Court. This Court would not, in these
circumstances, interfere in the assessment.
F
We accordingly find no merit in this appeal. It is
accordingly dismissed.
R.P.
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Appeal dismissed.
208 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
[2010] 13 (ADDL.) S.C.R. 207
S.N. PRASAD
v.
MONNET FINANCE LTD. AND ORS.
(Civil Appeal No. 9224 of 2010 etc.)
OCTOBER 22, 2010
A
B
[R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]
agreement’ and denial thereof in the statement of defence –
Discussed.
Arbitration and Conciliation Act, 1996:
ss.7(4)(a), (b), 7(5) – Arbitration agreement – Parties to
– Appellant was not a party to the tri-partite agreements
containing arbitration clause executed between lender,
borrower and guarantor – Prior to loan agreements, a letter
was given by appellant to the lender indicating his willingness
to stand guarantee for loan – The said letter did not contain
a provision for arbitration nor did it refer to any document
containing an arbitration clause – Arbitration award directing
appellant also, to repay the loan amount and interest thereon
– Held: If there is a dispute between a party to an arbitration
agreement, with other parties to the arbitration agreement as
also non-parties to the arbitration agreement, reference to
arbitration or appointment of arbitrator can be only with
respect to the parties to the arbitration agreement and not the
non-parties – As there was no arbitration agreement between
the lender and the appellant as defined u/ss.7(4)(a) or (b) or
7(5), the claim against appellant could not be referred to
arbitration nor could any award be made against him – Awards
against appellant liable to be set aside u/s.34(2)(a)(ii).
s.7(4)(c) – When can an exchange of statements of
claims and defence be construed as an ‘arbitration
agreement’ – Meaning of the words ‘existence of the
agreement is alleged by one party and not denied by the
other party’ Application by lender company u/s.11 referring to
the loan agreement containing the arbitration clause, which
207
A was executed by borrower and guarantor in favour of lender
– The said application not alleging or referring to the existence
of any arbitration agreement between lender and appellant –
Held: In such a case, the question of the appellant accepting
such arbitration agreement by ‘non-denial’ would not arise.
B
Pleadings: ‘Allegation’ of existence of an ‘arbitration
C
D
E
F
G
H
Words and phrases: ‘allegation’ and ‘statement of claim
and
defence – Meaning of.
C
The second respondent company (borrower) sought
a loan of Rs.75 lakhs. The first respondent company
(lender) sanctioned the loan. The appellant by letter dated
27.10.1995 in his capacity as a director of the borrower
D company agreed to guarantee the loan of Rs.75 lakhs
sanctioned by the lender company. The third respondent
was also the director of the borrower company. On
28.10.1995, a tri-partite loan agreement was entered into
between the lender company, the borrower company and
E the third respondent as the guarantor, in regard to the
lending of a sum of Rs.50 lakhs. The agreement provided
for the arbitration clause. Similarly another tri-partite loan
agreement was entered in respect of a loan of Rs.25
lakhs on 6.11.1995 among the lender company, the
F borrower company and the third respondent followed by
a promissory note by the borrower company and a deed
of guarantee by the third respondent. The appellant was
not a party to the loan agreements nor did he execute any
separate deed of guarantee or other document in favour
G of the lender company. The loan agreements also did not
refer to the letter of guarantee by the appellant.
The lender company issued a notice demanding
payment and proposing to refer the claims against the
borrower company and its guarantors for arbitration. This
H was followed by two applications by the lender company
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 209
under Section 11 of the Arbitration and Conciliation Act,
1996 for appointment of an arbitrator. The borrower
company, its Director-cum-Guarantor, and the appellant
were impleaded as respondents in the said application.
The arbitrator was appointed who passed two
awards. The first award directed the borrower company,
the third respondent and the appellant to pay Rs.96.23
lakhs including interest in respect of the loan amount of
Rs.50 lakhs. The second award directed the borrower
company, the third respondent and the appellant to pay
Rs.46.49 lakhs including the interest in respect of loan of
Rs.25 lakhs. The awards were challenged by the
appellant, the borrower company and the third
respondent. The High Court upheld the awards. The
instant appeals were filed challenging the order of the
High Court.
It was contended for the appellant that he was not a
party to the tri-partite loan agreements containing the
arbitration clause and he merely gave a short letter dated
27.10.1995 standing guarantee for a loan of Rs.75 lakhs
sanctioned by the lender company. As there was no
arbitration agreement between the lender company and
the appellant, the claim against the appellant could not
be referred to arbitration, nor could any award be made
against him. The awards against the appellant were,
therefore, liable to be set aside under Section 34(2)(a)(ii)
of the Arbitration and Conciliation Act.
210
A
B
C
D
E
F
Allowing the appeals, the Court
HELD: 1.1. Section 2(b) of the Arbitration and
Conciliation Act, 1996 defines “arbitration agreement’ as
an agreement referred to in Section 7 of the Act. Section
7 of the Act defines an ‘arbitration agreement’. Subsection (1) of Section 7 defines an arbitration agreement
as an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which may
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A arise between them in respect of a defined legal
relationship, whether contractual or not. Sub-section (2)
provides that an arbitration agreement may be in the form
of an arbitration clause in a contract or in the form of a
separate agreement. Sub-section (3) requires an
B arbitration agreement to be in writing. Sub-section (4)
explains as to when an arbitration agreement could be
said to be in writing, that is : (a) a document signed by
the parties; (b) an exchange of letters, telex, telegrams or
other means of telecommunication which provide a
C record of the arbitration agreement; or (c) an exchange
of statements of claim and defence in which the
existence of the arbitration agreement is alleged by one
party and not denied by the other. Sub-section (5)
provides that the reference in a contract to a document
containing an arbitration clause constitutes an arbitration
D
agreement if the contract is in writing and the reference
is such as to make that arbitration clause a part of the
contract. Thus, there can be reference to arbitration only
if there is an arbitration agreement between the parties.
The Act makes it clear that an arbitrator can be appointed
E under the Act at the instance of a party to an arbitration
agreement only in respect of disputes with another party
to the arbitration agreement. If there is a dispute between
a party to an arbitration agreement, with other parties to
the arbitration agreement as also non-parties to the
F arbitration agreement, reference to arbitration or
appointment of arbitrator can be only with respect to the
parties to the arbitration agreement and not the nonparties. [Para 7] [217-F-G; 218-A-E]
G
G
H
H
1.2. There is no dispute that the loan agreements
among the lender company, the borrower company and
the third respondent (guarantor) contained a provision
for arbitration. But the appellant was not a party to the
same. In fact, the appellant’s letter of guarantee for Rs.75
lakhs was given on 27.10.1995, prior to the dates of the
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 211
two loan agreements. It was also not disputed that the
letter dated 27.10.1995 given by the appellant to the
lender company did not contain a provision for
arbitration; and that except the said letter dated
27.10.1995, the appellant did not execute any document
or issue any communication. An arbitration agreement
between the lender on the one hand and the borrower
and one of the guarantors on the other, cannot be
deemed or construed to be an arbitration agreement in
respect of another guarantor who was not a party to the
arbitration agreement. Therefore, there was no arbitration
agreement as defined under Section 7(4)(a) or (b) of the
Act, in so far as appellant was concerned, though there
was an arbitration agreement as defined under Section
7(4)(a) of the Act in regard to the borrower company and
third respondent. As the letter dated 27.10.1995 did not
refer to any document containing an arbitration clause,
there was also no arbitration agreement between lender
company and the appellant as contemplated under
Section 7(5) of the Act. [Para 8] [218-A-H; 219-A-D]
1.3. To constitute an arbitration agreement under
Section 7(4)(c) of the Act, what is required is a statement
of claim containing a specific allegation about the
existence of an arbitration agreement by the applicant
and ‘non-denial’ thereof by the other party. An ‘allegation’
is an assertion or declaration about a fact and also refers
to the narration of a transaction. The statement of claim
filed by the lender company before the arbitrator does not
contain an allegation or assertion of an arbitration
agreement with the appellant. Nor has the appellant
accepted the existence of any arbitration agreement by
not denying such arbitration agreement in the defence
filed before the arbitrator. On the other hand, the
appellant had specifically contended before the arbitrator
that there was no arbitration agreement between them
and, therefore, the arbitrator did not have jurisdiction. The
212 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
H
A words ‘statements of claim and defence’ occurring in
Section 7(4)(c) of the Act, are not restricted to the
statement of claim and defence filed before the arbitrator.
If there is an assertion of existence of an arbitration
agreement in any suit, petition or application filed before
B any court, and if there is no denial thereof in the defence/
counter/written statement thereto filed by the other party
to such suit, petition or application, then it can be said
that there is an “exchange of statements of claim and
defence” for the purposes of Section 7(4)(c) of the Act. It
follows that if in the application filed under Section 11 of
C
the Act, the applicant asserts the existence of an
arbitration agreement with each of the respondents and
if the respondents do not deny the said assertion, in their
statement of defence, the court can proceed on the basis
that there is an arbitration agreement in writing between
D the parties. In the instant case, the application filed by the
lender company under Section 11 of the Act referred to
the loan agreement containing the arbitration clause,
which was executed by the borrower company and the
third respondent as borrower and guarantor in favour of
E the lender company. The said application did not allege
or refer to the existence of any arbitration agreement
between the lender company and the appellant. There
was absolutely no reference to any agreement between
the lender company and the appellant or the existence
F of any arbitration agreement between them. If there was
no reference to the existence of any arbitration
agreement with appellant, the question of the appellant
accepting such arbitration agreement by ‘non-denial’ did
not arise. [Paras 10, 11, 13] [220-A-E; 223-B-C]
G
1.4. The Designate of the Chief Justice, in his order
dated 23.5.2000 appointing the arbitrator, had observed
that there was no dispute regarding the existence of the
arbitration agreement. The arbitrator had held that in view
of the positive finding of the Designate of the Chief
H
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 213
Justice about the existence of an arbitration agreement
notwithstanding the fact that the letter of guarantee did
not refer to the loan agreement which was executed
subsequently, it could not be said that there was no
arbitration agreement between the parties. The arbitrator
ought to have considered and decided the objections of
the appellant that he was not a party to the arbitration
agreement on merits, instead of referring to the order of
the Designate of the Chief Justice appointing the
arbitrator. During the relevant period, the law was that the
orders under Section 11 of the Act were administrative
orders and that the Designate of the Chief Justice
appointing an arbitrator was not adjudicating on any
disputed question of fact, including the existence of any
valid arbitration agreement; and that the arbitrator was
required to decide about the existence of arbitration
agreement and the arbitrability. [Para 15] [222-F-H; 223A-D]
214
A
B
C
D
SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618
– referred to.
2. When the appellant gave the guarantee letter dated
27.10.1995, he could not be imputed with the knowledge
that the loan agreements which were to be executed in
future (on 28.10.1995 and 6.11.1995) would contain an
arbitration clause. Further, the appellant did not state in
his letter dated 27.10.1995 that he would be bound by the
terms of loan agreement/s that may be executed by the
borrower. Therefore, the question of appellant impliedly
agreeing to the arbitration clause did not arise. The
apprehension of the lender company that an anomalous
situation may arise if there are two proceedings (one
arbitration proceedings against the borrower and one
guarantor and a suit against another guarantor), is not a
relevant consideration as any such anomalous situation,
if it arises, would be the own-making of the lender
company, as that is the consequence of its failure to
E
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A require the appellant to join in the execution of the loan
agreements. Having made only one of the guarantors to
execute the loan agreements and having failed to get the
appellant to execute the loan agreements, the lender
company cannot contend that the appellant who did not
B sign the loan agreements containing the arbitration
clause should also be deemed to be a party to the
arbitration and be bound by the awards. The issue is not
one of convenience and expediency. The issue is
whether there was an arbitration agreement with the
C appellant. As there was no arbitration agreement between
the parties (the lender company and the appellant), the
impleading of appellant as a respondent in the arbitration
proceedings and the award against the appellant in such
arbitration cannot be sustained. As a consequence, both
the arbitration awards, as against the appellant are liable
D
to be set aside. If the lender company wants to enforce
the alleged guarantee of the appellant, it is open to the
first respondent to do so in accordance with law. [Paras
17-19] [224-C-H; 225-A-B]
E
Case Law Reference:
(2005) 8 SCC 618
referred to
Para 15
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9224 of 2010.
F
F
From the Judgment & Order dated 22.05.2006 of the High
Court of Delhi at New Delhi in O.M.P. No. 319 of 2002.
WITH
G
G
Civil Appeal No. 9225 of 2010.
Dr. Rajeev Dhawan, Gaurav Kejriwal, Keshav Mohan for
the Appellant.
H
H
S.P. Kalra, Rajiv Kapoor, Sumit Kumar for the
Respondents.
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 215
The Judgment of the Court was delivered by
R.V.RAVEENDRAN, J. 1. Leave granted. These appeals
involve the question whether a guarantor for a loan, who is not
a party to the loan agreement containing the arbitration
agreement executed between the lender and borrower, can be
made a party to a reference to arbitration in regard to a dispute
relating to repayment of such loan and subjected to the
arbitration award.
2. The second respondent company is a borrower from the
first respondent. Third respondent is the Managing Director of
the second respondent. The appellant, father of the third
respondent, was a Director of the second respondent. The
second respondent (also referred to as ‘borrower’) after
repaying an earlier loan taken from the first respondent (also
referred to as the ‘lender’), sought a fresh loan of Rs.75 lakhs.
The first respondent sanctioned the loan. The appellant by letter
dated 27.10.1995 in his capacity as a Director of the second
respondent, stood guarantee for the loan of Rs.75 lakhs
sanctioned by the first respondent.
3. A loan agreement dated 28.10.1995 was entered
between the lender, the borrower, and the third respondent as
the guarantor, in regard to the lending of a sum of Rs.50 lakhs.
The agreement provided that the amount advanced had to be
repaid within three months with interest at 20% per annum and
if there was default, the borrower was liable to pay a compound
interest at the rate of 5% per month with quarterly rests. Clause
18 of the said loan agreement provided for settlement of
disputes by arbitration. In addition to the loan agreement, the
borrower executed an on demand promissory note for the
amount borrowed and the third respondent executed a Deed
of Guarantee guaranteeing repayment of the loan amount with
interest. Similarly, a tripartite loan agreement was entered in
respect of a loan of Rs.2500,000/- on 6.11.1995, among the
first respondent, second respondent and third respondent
followed by a promissory note by second respondent and deed
216 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
A of Guarantee by third respondent. The appellant was not a party
to the loan agreements nor did he execute any separate deeds
of guarantee or other document in favour of the first respondent.
The loan agreements did not refer to the letter of guarantee by
the appellant.
B
4. The lender issued a notice through counsel demanding
payment and proposing to refer the claims against the borrower
and its guarantors for arbitration. This was followed by two
applications by the lender under section 11 of the Arbitration
and Conciliation Act, 1996 (‘Act’ for short) for appointment of
C an Arbitrator. The borrower, its Managing Director-cumGuarantor, and the appellant were impleaded as respondents
in the said application.
5. The High Court of Delhi by two orders dated 23.5.2000
D appointed a retired Judge of the High Court as the sole
arbitrator. The arbitrations ended in two awards dated 1.5.2002.
The first award directed respondents 2 and 3 and appellant to
pay Rs.93,23,288/- (that is Rs.50 lakhs with interest at 20% up
to the date of the appointment of arbitrator) with interest at 18%
E per annum from 24.5.2000. Similarly the second award directed
respondents 2 and 3 and appellant to pay Rs.46,49,315/- (that
is Rs.25 lakhs with interest at 20% upto the date of appointment
of arbitrator) with interest at 18% per annum from 24.5.2000.
The two arbitration awards were challenged by the appellant
F by filing applications under section 34 of the Act (OMP No.319/
2002 and 322/2002). The second and third respondents also
challenged the awards in OMP No.320/2002 and 321/2002. A
learned single Judge of the Delhi High Court by a common
order dated 22.5.2006 dismissed the said applications. The
said common order dated 22.5.2006, insofar as it dismisses
G
OMP 319/2002 and 322/2002, is challenged by the appellant
in this appeals by special leave.
6. The following contentions are urged by the appellant :
H
H
(i) The appellant was not a party to the tripartite loan
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 217
[R.V. RAVEENDRAN, J.]
agreements executed among respondents 1, 2 and 3 (that
is the lender, the borrower and borrower’s Managing
Director-cum-Guarantor) containing the arbitration clause.
He had merely given a short letter dated 27.10.1995
standing guarantee for a loan of Rs.75 lakhs sanctioned
by the first respondent. As there was no arbitration
agreement between the first respondent and appellant, the
claim against the appellant could not be referred to
arbitration, nor could any award be made against him. The
awards against the appellant were therefore liable to be
set aside under section 34(2)(a)(ii) of the Act.
(ii) The appellant had merely given a letter dated
27.10.1995 indicating his willingness to stand guarantee,
but he did not execute the loan agreement or any deed of
guarantee, as it was decided that the third respondent
would be the guarantor instead of appellant. Consequently,
the third respondent executed the loan agreement as
guarantor as also a deed of Guarantee. Therefore, the
appellant was not a guarantor and is not liable.
(iii) Even assuming without conceding that there was an
arbitration agreement between the appellant and first
respondent, and that he was liable in respect of the loan
amount, there could be no award for interest against him
as he had not agreed to guarantee the payment of interest.
Re : Contention (i)
7. Section 2(b) defines “arbitration agreement’ as an
agreement referred to in section 7 of the Act. Section 2(h)
defines “party” as party to an arbitration agreement. Section 7
of the Act defines an ‘arbitration agreement’. Sub-section (1)
of Section 7 defines an arbitration agreement as an agreement
by the parties to submit to arbitration all or certain disputes
which have arisen or which may arise between them in respect
of a defined legal relationship, whether contractual or not. Subsection (2) provides that an arbitration agreement may be in
218
A
B
C
D
E
F
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A the form of an arbitration clause in a contract or in the form of
a separate agreement. Sub-section (3) requires an arbitration
agreement to be in writing. Sub-section (4) explains as to when
an arbitration agreement could be said to be in writing, that is
: (a) a document signed by the parties; (b) an exchange of
B letters, telex, telegrams or other means of telecommunication
which provide a record of the arbitration agreement; or (c) an
exchange of statements of claim and defence in which the
existence of the arbitration agreement is alleged by one party
and not denied by the other. Sub-section (5) provides that the
C reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement if the contract is in
writing and the reference is such as to make that arbitration
clause a part of the contract. Thus there can be reference to
arbitration only if there is an arbitration agreement between the
parties. The Act makes it clear that an Arbitrator can be
D
appointed under the Act at the instance of a party to an
arbitration agreement only in respect of disputes with another
party to the arbitration agreement. If there is a dispute between
a party to an arbitration agreement, with other parties to the
arbitration agreement as also non-parties to the arbitration
E agreement, reference to arbitration or appointment of arbitrator
can be only with respect to the parties to the arbitration
agreement and not the non-parties.
F
8. There is no dispute that the loan agreements among the
first respondent (lender), the second respondent (borrower) and
the third respondent (guarantor) contained a provision for
arbitration. The said provision for arbitration is extracted below:
“In the event of any dispute, question or difference arising
out of or in connection with this agreement and the
respective rights and obligations of the parties hereunder,
the same shall be referred to the arbitration in accordance
with the provisions of the Arbitration Act, 1940.”
G
G
H
But the appellant was not a party to the same. In fact appellant’s
H letter of guarantee for Rs.75 lakhs was given on 27.10.1995,
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 219
[R.V. RAVEENDRAN, J.]
prior to the dates of the two loan agreements. It is also not in
dispute that the letter dated 27.10.1995 given by appellant to
the first respondent did not contain a provision for arbitration;
and that except the said letter dated 27.10.1995, the appellant
did not execute any document or issue any communication.
An arbitration agreement between the lender on the one hand
and the borrower and one of the guarantors on the other, cannot
be deemed or construed to be an arbitration agreement in
respect of another guarantor who was not a party to the
arbitration agreement. Therefore, there was no arbitration
agreement as defined under section 7(4)(a) or (b) of the Act,
in so far as appellant was concerned, though there was an
arbitration agreement as defined under section 7(4)(a) of the
Act in regard to the second and third respondents. As the
letter dated 27.10.1995 does not refer to any document
containing an arbitration clause, there is also no arbitration
agreement between first respondent and appellant as
contemplated under section 7(5) of the Act.
9. What therefore remains to be considered is whether
there is an arbitration agreement as contemplated under section
7(4)(c) of the Act, which provides that an arbitration agreement
in writing can be said to exist, if it is contained in an exchange
of statements of claim and defence in which the existence of
the arbitration agreement is alleged by one party and not denied
by the other. The statement of claim filed by the first respondent
before the arbitrator does not contain an allegation or assertion
of an arbitration agreement between the first respondent and
appellant. Nor has the appellant accepted the existence of any
arbitration agreement by not denying such arbitration agreement
in the defence filed before the arbitrator. On the other hand, the
appellant specifically contended before the arbitrator that there
was no arbitration agreement between them (first respondent
and appellant) and therefore the arbitrator did not have
jurisdiction.
10. But the words, ‘statements of claim and defence’
220 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
H
A occurring in section 7(4)(c) of the Act, are not restricted to the
statement of claim and defence filed before the arbitrator. If
there is an assertion of existence of an arbitration agreement
in any suit, petition or application filed before any court, and if
there is no denial thereof in the defence/counter/written
B statement thereto filed by the other party to such suit, petition
or application, then it can be said that there is an “exchange of
statements of claim and defence” for the purposes of section
7(4)(c) of the Act. It follows that if in the application filed under
section 11 of the Act, the applicant asserts the existence of an
C arbitration agreement with each of the respondents and if the
respondents do not deny the said assertion, in their statement
of defence, the court can proceed on the basis that there is an
arbitration agreement in writing between the parties.
11. The question therefore is whether in this case, the
D application under section 11 of the Act had alleged the
existence of an arbitration agreement between first respondent
and appellant and such allegation was accepted by non-denial
thereof, by the appellant. The application filed by the first
respondent under section 11 of the Act referred to the loan
E agreement containing the arbitration clause, which was
executed by respondents 2 and 3 as borrower and guarantor
in favour of the first respondent. The application specifically
relied upon the provisions of clause 18 of the loan agreement
as the arbitration agreement under which appointment of an
F arbitrator was sought. Significantly, the application under
section 11 of the Act did not allege or refer to the existence of
any arbitration agreement between the first respondent and the
appellant. The only averment found in the entire application with
reference to the document executed by the appellant is
G extracted below:
H
“Respondent No.3 vide his letter dated 27.10.95
guaranteed the repayment of the total amount of loan i.e.
Rs.75,00,000 (Rupees Seventy Five Lakhs) sanctioned by
the Petitioner to Respondent No.1. Copy of the letter dated
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 221
[R.V. RAVEENDRAN, J.]
27.10.95 from Respondent No.3 guaranteeing repayment
of loans is annexed herewith and marked as
“ANNEXURE-C”.
(Note: The term ‘petitioner’ refers to the lender, respondent
No.1 refers to the borrower and respondent No.3 refers to
the appellant).
Except the aforesaid averment, there is absolutely no reference
to any agreement between the first respondent and the
appellant or the existence of any arbitration agreement between
them. Therefore the application filed by the first respondent
under section 11 of the Act referring to the loan agreement
with respondents 2 and 3 containing the arbitration agreement
cannot be considered or construed to be an allegation of
existence of an arbitration agreement between first respondent
and appellant. If there was no reference to the existence of
any arbitration agreement with appellant, the question of the
appellant accepting such arbitration agreement by ‘non-denial’
does not arise.
12. The first respondent contended that the application
under section 11 of the Act consisted of two parts, that is a
preamble containing three columns - column (1) relating to the
“provision under which the application was filed”, column (2)
relating to “Name of applicant with complete address” and
column (3) relating to “Name of the other parties to the
arbitration agreement with complete address”; and the second
part contained the running averments. It is submitted that the
name of first respondent is shown as the applicant in column
(2); and against column (3) relating to “Names of the other
parties to the arbitration agreement”, the names of Hitek
Industries (second respondent), Prem Prakash Verma (third
respondent) and S.N. Prasad (appellant) was shown and that
amounted to an allegation that the appellant was a party to the
arbitration agreement.
13. To constitute an arbitration agreement under section
222
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A 7(4)(c) of the Act, what is required is a statement of claim
containing a specific allegation about the existence of an
arbitration agreement by the applicant and ‘non-denial’ thereof
by the other party. An ‘allegation’ is an assertion or declaration
about a fact and also refers to the narration of a transaction.
B As noticed above, in the entire application under section 11 of
the Act, there was no allegation as to the existence of any
arbitration agreement between first respondent and the
appellant. Column (3) containing “Names of other parties to
arbitration agreement with addresses” cannot be considered
C to be an assertion or declaration about the existence of an
arbitration agreement between the first respondent and
appellant. Section 7(4)(c) of the Act cannot therefore be relied
upon to prove the existence of an Arbitration agreement.
14. It is of some relevance to note that in the year 1998
D when the applications under section 11 of the Act was filed and
in the year 2000 when the applications were allowed, an
application under section 11 of the Act was not considered to
be a judicial proceeding and the order appointing an arbitrator
was considered to be an administrative order. Therefore at the
E relevant time, the application under section 11 of the Act and
the counter if any thereto were not in the nature of ‘statements
of claim and defence’. Be that as it may.
15. Before the Arbitrator, the appellant specifically
F contended that by relying upon the section 2(1)(h) and section
7 of the Act that he was not a party to the arbitration agreement
and therefore there could be no arbitration in regard to the claim
against him. The said contention was rejected by the arbitrator
on the ground that the designate of the Chief Justice, in his
order dated 23.5.2000 appointing the arbitrator, had observed
G
that the existence of arbitration agreement was not denied and
there was no dispute regarding the existence of the arbitration
agreement. But what was not denied was the arbitration
agreement between first respondent and respondents 2 and 3.
The arbitrator held that in view of the positive finding of the
H
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 223
[R.V. RAVEENDRAN, J.]
designate of the Chief Justice about the existence of an
arbitrator agreement notwithstanding the fact that the letter of
guarantee does not refer to the loan agreement which was
executed subsequently, it could not be said that there was no
arbitration agreement between the parties. The arbitrator ought
to have considered and decided the objections of the appellant
that he was not a party to the arbitration agreement on merits,
instead of referring to the order of the designate of the Chief
Justice appointing the arbitrator. As noted above, when the said
application under section 11 of the Act was filed in 1998 and
decided in 2000 (long prior to the decision in SBP & Co. vs.
Patel Engineering Ltd. – (2005) 8 SCC 618,) the prevailing
view was that the orders under section 11 of the Act were
administrative orders and that the Designate of the Chief
Justice appointing an arbitrator was not adjudicating on any
disputed question of fact, including the existence of any valid
arbitration agreement; and that the Arbitrator was required to
decide about the existence of arbitration agreement and the
arbitrability.
16. The first respondent contended that the appellant
having agreed to be a guarantor for the repayment of the loan,
can not avoid arbitration by contending that he was not a
signatory to the loan agreement containing the arbitration
clause. It was submitted that the liability of the principal debtor
and guarantors was joint and several and therefore there could
be only one proceeding against all of them; and that if the
contention of the appellant was accepted, it would necessitate
two proceedings in regard to the same loan transaction and
same cause of action, that is an arbitration proceedings against
the borrower and one of its guarantors (respondents 2 and 3)
and a separate suit against the other guarantor (appellant). It
was further submitted that multiple proceedings may lead to
divergent findings and results, leading to an anomalous
situation. It was also submitted that the letter dated 27.10.1995
guaranteeing the loan of Rs.75 lakhs was written by the
appellant, as a Director of the borrower company; and that as
224 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
H
A the appellant had already given a guarantee letter dated
27.10.1995, he was not required to execute the tripartite loan
agreements containing the arbitration clause; that the appellant
was aware of the terms of the loan and was further aware that
loan agreements with arbitration clause had to be executed;
B and that therefore it should be deemed that the appellant had
agreed to abide by the terms contained in the loan agreements,
including the arbitration clause. We find no merit in these
contentions.
17. When the appellant gave the guarantee letter dated
C 27.10.1995, he could not be imputed with the knowledge that
the loan agreements which were to be executed in future (on
28.10.1995 and 6.11.1995) would contain an arbitration clause.
Further, the appellant did not state in his letter dated
27.10.1995 that he would be bound by the terms of loan
D agreement/s that may be executed by the borrower. Therefore
the question of appellant impliedly agreeing to the arbitration
clause does not arise.
18. The apprehension of the first respondent that an
anomalous
situation may arise if there are two proceedings
E
(one arbitration proceedings against the borrower and one
guarantor and a suit against another guarantor), is not a relevant
consideration as any such anomalous situation, if it arises,
would be the own-making of the first respondent, as that is the
F consequence of its failure to require the appellant to join in the
execution of the loan agreements. Having made only one of the
guarantors to execute the loan agreements and having failed
to get the appellant to execute the loan agreements, the first
respondent cannot contend that the appellant who did not sign
the loan agreements containing the arbitration clause should
G
also be deemed to be a party to the arbitration and be bound
by the awards. The issue is not one of convenience and
expediency. The issue is whether there was an arbitration
agreement with the appellant.
H
S.N. PRASAD v. MONNET FINANCE LTD. AND ORS. 225
[R.V. RAVEENDRAN, J.]
19. As there was no arbitration agreement between the
parties (the first respondent and appellant), the impleading of
appellant as a respondent in the arbitration proceedings and
the award against the appellant in such arbitration cannot be
sustained. As a consequence, both the arbitration awards, as
against the appellant are liable to be set aside. If the first
respondent wants to enforce the alleged guarantee of the
appellant, it is open to the first respondent to do so in
accordance with law.
20. The above discussion and findings would also apply
to the second loan covered by the loan agreement dated
6.11.1995, as the facts are the same.
226
A
A contention, it is not necessary to examine this contention. It is
open to appellant to urge this contention, if and when first
respondent initiates action against him in accordance with law.
Re : Contention (iii)
B
B
C
C
22. It is true that where the letter of Guarantee issued by a
guarantor, guarantees repayment of only the principal sum and
does not guarantee the payment of any interest, he could not
be made liable for the interest. But in view of our finding on the
first contention, this issue does not survive for consideration.
Conclusion
Re : Contention (ii)
21. The appellant contended that on 27.10.1995 he was
a Director of the borrower company and he had agreed to
guarantee the loan of Rs.75 lakhs; that subsequently, it was
decided as he would be resigning from his directorship on
account of his advanced age, his son would be the guarantor;
and that therefore, he did not become a guarantor by executing
a deed of guarantee and he did not also execute the loan
agreements. It was contended that the fact that ultimately the
loan agreements were executed only among the lender (first
respondent), the borrower company (2nd respondent) and the
3rd respondent (guarantor) and the further fact that third
respondent alone executed the Deed of Guarantee,
demonstrated that only third respondent was the guarantor and
he was not a guarantor. According to him on execution of the
loan agreements among respondents 1, 2 and 3, the letter
dated 27.10.1995 given by him agreeing to be a guarantor
ceased to be of any effect. We cannot examine these aspects
in an appeal arising from a proceeding under section 11 of the
Act. In a proceedings under section 11 of the Act, what is
relevant is existence of arbitration agreement and not the
defence on merits. Further, in view of our finding on the first
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
D
23. In view of the above, these appeals are allowed and
the impugned order of the High Court and awards of the
Arbitrator are set aside in part, in so far as the appellant is
D concerned.
D.G.
E
F
G
H
Appeals allowed.
228 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
[2010] 13 (ADDL.) S.C.R. 227
ANJANI CHAUDHARY
v.
STATE OF BIHAR
(Criminal Appeal No. 140 of 2004 etc.)
OCTOBER 26, 2010
A
A medical evidence; and further observing that there was
no delay in the lodging of the FIR, convicted all the three
accused under Section 302 IPC. The order of conviction
was affirmed by the High Court.
B
B
[HARJIT SINGH BEDI AND CHANDRAMAULI
KR. PRASAD, JJ.]
Penal Code, 1860 – s.302 – Parricide – Dispute over
landed property – A-1 was allegedly armed with a pistol and C
a ‘lathi’; A-2 with a ‘farsa’ and A-3 with a ‘bhala’ – Victim
assaulted and killed on the spot – Conviction by courts below
u/s.302 on the basis of evidence of eye-witnesses – Appeals
by A-1 and A-3 – Held: Since the instant matter involves
close relatives belonging to farming families with deep set D
animosities, some evidence beyond the ocular evidence is
also required to be looked at – Medical evidence corroborated
the presence of A-2 and A-3 as they were armed with a ‘farsa’
and a ‘bhala’ which could have caused the incised and
penetrating wounds found on the dead body – The medical E
evidence, however, did not support the presence of A-1 as
there was no injury with a pistol or a ‘lathi’ on the body of the
deceased – Appeal of A-3 dismissed while appeal of A-1
allowed.
Evidence – Chance witness – Reliability – Held: On
facts, reliable as he gave a very cogent explanation for his
presence at the time of the murder.
F
According to the prosecution, the three accused
assaulted PW-2’s brother with pistol, ‘lathi’, ‘farsa’ and G
‘bhala’ and killed him on the spot. The motive for the
murder was stated to be dispute between brothers (and
their family members) over landed property. The trial court
held that the ocular evidence was corroborated by the
227
H
A-1 and A-3 filed the instant appeals contending that
PWs. 4 and 5 had not supported the prosecution and that
the High Court had found that PW-14 (the wife of the
deceased) was not an eye-witness as claimed by her,
whereas PW-1 was a chance witness who belonged to a
village situated at a distance of about 8 miles from the
C place of the incident; the entire prosecution story rested
upon PW-2’s statement and as he admittedly had grave
animosity with the appellants on account of the land
dispute, his evidence could not be relied upon. It was
further contended that the medical evidence did not
D support the presence of A-1 as he was allegedly armed
with a ‘lathi’ while no injury with a ‘lathi’ had been found
on the deceased.
Allowing the appeal of A-1 and dismissing the appeal
of
A-3,
the Court
E
HELD: This is a case of parricide. It is clear that the
incident was sparked off by a dispute between brothers
and their family members pertaining to the land which
had been gifted by mother of PW-2 to his wife which was
F resisted by the accused as they too had laid claim to the
said land. This is apparent from the depositions of PW-1
and PW-2. PW-1 has also given a very cogent explanation
for his presence at the time of the murder. In this view of
the matter that PWs-4 and 5, who were related to both the
G parties, had turned hostile is not surprising. However, in
a matter which involves close relatives belonging to
farming families with deep set animosities some evidence
beyond the ocular evidence should also be looked for.
In this case the medical evidence corroborates the
H
ANJANI CHAUDHARY v. STATE OF BIHAR
229
presence of A-2 and A-3 as they were armed with a ‘farsa’
and a ‘bhala’ which could have caused the incised and
penetrating wounds found on the dead body. The
medical evidence, however, does not support the
presence of A-1 as there was no injury with a pistol or a
‘lathi’ on the body of the deceased. A-1 is directed to be
acquitted. [Paras 7, 9] [232-C-G; 233-B]
230
A
B
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 140 of 2004.
From the Judgment & Order dated 25.04.2003 of the High
Court of Patna in Criminal Appeal No. 120 of 1998 (D.B.)
C
A reached the site and saw part of the alleged occurrence. The
motive for the murder was that the family property had been
partitioned amongst the four brothers and their mother, and the
mother had started living with the deceased Prem Kumar
Chaudhary and had also executed a gift-deed in respect of her
B land in favour of PW-2’s wife on which PW-2’s brothers Mukti
Chaudhary and Ram Pukar Chaudhary as well as the appellants
had raised a dispute. On receiving information about the
incident, a police party reached the village and recorded the
statement of PW-2 and on that basis and after due investigation
C a charge-sheet was submitted against the appellants under
Section 302/34 of the Indian Penal Code, to which they pleaded
not guilty and were brought to trial.
WITH
Crl. Appeal No. 1739 of 2010.
2. The prosecution, in support of its case, examined inter
D
S.C. Patel, Jai Prakash Narayan Gupta, Pankaj Kr. Singh
for the Appellant.
Chandan Kumar (for Gopal Singh) for the Respondent.
The Judgment of the Court was delivered by
E
HARJIT SINGH BEDI, J.
These appeals by way of special leave arise out of the
following facts :
1. On 6th February, 1989 at about 2:45 p.m., the first
informant Ram Pukar Chaudhary (PW-2), had gone to ease
himself when he heard some sounds coming from outside his
house. On returning, he saw his nephews Anjani Chaudhary
armed with a pistol and a lathi, Bhimsen Chaudhary armed with
a farsa and KinKin Chaudhary armed with a bhala assaulting
his brother Prem Kumar Chaudhary, killing him on the spot. PW2 raised an alarm, whereafter Satyadeo Chaudhary (PW-1),
Madan Chaudhary (PW-5) and Ahsarfi Chaudhary (PW-4) also
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
F
G
H
D
alia:
PW-3 Ramadhaar Chaudhary who proved the F.I.R
(Exhibit-2), CW-2 Sikan Shahani proved the gift deed dated
15th December, 1987 executed between Suhagwati in favour
of Dharamsheela Devi and several other formal witnesses who
E proved the animosity and prolonged litigation between the
warring brothers. PW-4- Ahsarfi Chaudhary and PW-5 Madan
Chaudhary who had been named as eye-witnesses, however,
turned hostile and did not support the prosecution. The
prosecution, accordingly, fell back on the eye-witnesses; PWF 1 Satyadeo Chaudhary, PW-2 Ram Pukar Prakash Chaudhary,
PW-13-Ram Padarath Chaudhary and PW-14 Tarawati Devi,
the wife of deceased.
3. The Trial Court held that the evidence of PW-14 could
not be believed as her presence had not been noted in the FIR.
G The court then went into the eye-witness account of Satyadeo
Chaudhary PW-1 and observed that though he belonged to a
village at a distance of about eight miles from the place of
incident, his presence was proved on record as the wife of the
deceased was his sister and on the day in question he had
H
ANJANI CHAUDHARY v. STATE OF BIHAR
[HARJIT SINGH BEDI, J.]
231
been present to participate in a religious ceremony in her
house. The court also found that as the statement of this
witness had been recorded by the police at about 5:00 p.m.
that is within half an hour of the recording of the F.I.R, his
presence was proved on record for this additional reason.
Likewise, the Trial court examined the evidence of PW-2 Ram
Pukar Chaudhary, the brother of deceased, who deposed that
as his mother had gifted her share of the land in favour of his
wife, the other members of the family were annoyed on that
account. He further stated that Bhimsen Chaudhary had been
armed with a farsa, Kinkin Chaudhary with a Bhala and Anjani
Chaudhary with a lathi and they had inflicted injuries to the
deceased with their weapons. The court also found that the
ocular evidence was corroborated by the medical evidence as
there were thirteen (13) injuries on the deceased, out of which
twelve (12) injuries were incised and injury No.5 was a
penetrating wound which could have been caused by a Bhala.
It was, however, noted that there was no injury with a lathi on
the deceased. The court further observed that there was
absolutely no delay in the lodging of the FIR. The Trial Court
accordingly convicted all the accused under Section 302 of the
Indian Penal Code and awarded a sentence of rigorous
imprisonment for life and a fine of Rs.15,000/- with a default
sentence as well.
4. An appeal was, thereafter, taken to the High Court which
has, by the impugned judgment, dismissed the appeal.
5. During the course of hearing, the learned counsel for the
appellants has raised several arguments before us. It has been
submitted that in the light of the fact that PW’s 4 and 5, who
were alleged to be the eye-witnesses to the incident, had not
supported the prosecution and that the High Court had found
that the PW-14 was not an eye-witness as claimed by her,
whereas PW-1 was a chance witness who belonged to a
village situated at a distance of about 8 miles from the place
of the incident, the entire prosecution story rested upon PW-
232 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
A 2’s statement and as he admittedly had grave animosity with
the appellants on account of the land dispute, his evidence
could not be relied upon. It has also been submitted that the
medical evidence did not support the presence of Anjani
Chaudhary who is said to have been armed with a lathi and no
B injury with a lathi had been found on the deceased.
6. The learned counsel for the State of Bihar has, however,
supported the judgment of the High Court and Trial Court. He
has pointed out that in the light of the fact that the Trial Court
and the High Court had given concurrent findings on the
C evidence, no interference was called for in this matter.
7. We have considered the arguments advanced by the
learned counsel for the parties. This is a case of parricide. It is
clear that the incident was sparked off by a dispute between
D brothers and their family members pertaining to the land which
had been gifted by Suhagwati, mother of PW-2 to his wife
Dharamsheela Devi which was resisted by the accused as they
too had laid claim to the said land. This is apparent from the
depositions of PW-1 and PW-2. PW-1 has also given a very
E cogent explanation for his presence at the time of the murder.
In this view of the matter that PWs.-4 and 5, who were related
to both the parties, had turned hostile is not surprising. We must
however keep in sight that in a matter which involves close
relatives belonging to farming families with deep set
F animosities some evidence beyond the ocular evidence should
also be looked for. In this case the medical evidence
corroborates the presence of Bhimsen Chaudhary and Kinkin
Chaudhary as they were armed with a farsa and a bhala which
could have caused the incised and penetrating wounds found
on the dead body. The medical evidence, however, does not
G
support the presence of Anjani Chaudhary as there was no injury
with a pistol or a lathi on the body of the deceased.
8. It is also apparent from the record that Bhim Sen
Chaudhary has not filed an appeal in this court. Criminal Appeal
H
H
ANJANI CHAUDHARY v. STATE OF BIHAR
[HARJIT SINGH BEDI, J.]
233
[2010] 13 (ADDL.) S.C.R. 234
No. 140 of 2004 has been filed by Anjani Chaudhari and
Criminal Appeal No.1739 of 2010 (arising out of special leave
to appeal (Crl.) No.5187 of 2003) by Kinkin Chaudhary and
both are being disposed of by this judgment.
A
A
9. In view of what has been stated above, we dismiss the
appeal of Kinkin Chaudhary but allow Criminal Appeal No.140
of 2004 filed by Anjani Chaudhary and order his acquittal. He
shall be released forthwith if not required in any other case.
B
B
B.B.B.
Appeals disposed of.
ORYX FISHERIES PRIVATE LIMITED
v.
UNION OF INDIA AND OTHERS
(Civil Appeal No. 9489 of 2010)
OCTOBER 29, 2010
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Administrative law:
Bias – Quasi judicial authority – Show cause notice –
Quality complaint filed before the Development Authority
alleging export of poor quality sea food by exporter – Issue
of show cause notice and thereafter cancellation of registration
certificate by authority in exercise of his statutory power under
D r.43 – Show cause notice indicating that the authority had
completely made up his mind and reached definite
conclusion about the alleged guilt of exporter – Held: A quasi
judicial authority must act fairly and with an open mind while
initiating show cause proceedings – If at the stage of show
cause notice, the authority completely makes up his mind and
E
reaches a definite conclusion about the alleged guilt of the
noticee, the entire proceedings initiated by show cause notice
gets vitiated by unfairness and bias and the subsequent
proceedings are rendered idle formality – Bias of the authority
which was latent in show cause notice was apparent in order
F of cancellation of registration certificate – The order cancelling
the registration certificate was non-speaking and was virtually
no order in the eyes of law – Show cause notice as also the
order of cancellation of the registration certificate quashed –
Marine Products Export Development Authority Rules, 1972
G – r.43, 44 – Principle of natural justice.
C
Quasi judicial authority – Order of – Requirement of
reasons – Held: Reasons are indispensable component of a
decision making process – A non-speaking order is virtually
H
234
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS.
235
no order in the eyes of law – A quasi-judicial authority must
record reasons in support of its conclusions – Absence of
reasons in the original order cannot be compensated by
disclosure of reasons in the appellate order.
The appellant-exporter agreed to supply sea food to
a company incorporated in UAE. Prior to the dispatch of
the consignment, inspection was carried out and the
quality of the consignment was found to be satisfactory.
The consignment was dispatched. On 12.11.2006, the
buyer took possession of the consignment. After 10 days,
the buyer alleged that the consignment was of very poor
quality. Thereafter, the buyer informed the appellant that
it had rejected the entire consignment and it sent a debit
note which represented the material cost and destruction
charges and requested the appellant to settle the same
at the earliest.
On 3.9.2007, the buyer made a quality complaint to
the Marine Products Export Development Authority
(MPEDA) and a claim of total loss arising from intentional
cheating by way of delivery of decomposed sea foods,
unfit for human consumption. The Deputy Director (third
respondent) sought clarification from the appellant
regarding the same. The appellant replied that the entire
consignment exported by it was of standard quality. The
third respondent convened a meeting with the buyer and
the appellant for amicable settlement between them. The
appellant in order to amicably settle the dispute offered
to the buyer 25% of the value of the goods exported.
However, the buyer refused to accept the same. The third
respondent issued a notice calling upon the appellant to
show cause why their certificate of registration should
not be cancelled. The appellant refuted the allegations.
The third respondent without giving any reason and
without giving personal hearing to the appellant cancelled
the registration certificate. Aggrieved, the appellant filed
an appeal under Rule 44 of the Marine Products Export
236 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
A Development Authority Rules, 1972. The appellate
authority upheld the decision of the third respondent.
The appellant filed a writ petition before the High Court,
which was dismissed. The instant appeal was filed
challenging the order of the High Court.
B
Allowing the appeal, the Court
C
C
D
D
E
E
F
F
G
G
H
H
HELD: 1. A quasi-judicial authority, while acting in
exercise of its statutory power must act fairly and with an
open mind while initiating a show cause proceeding. A
show cause proceeding is meant to give the person
proceeded against, a reasonable opportunity, of making
his objection, against the proposed charges/allegations
indicated in the notice. It is no doubt true that at the stage
of show cause, the person proceeded against must be
told the charges/allegations against him so that he can
take his defence and prove his innocence. It is obvious
that at that stage the authority issuing the charge-sheet,
cannot, instead of telling him the charges, confront him
with definite conclusions of his alleged guilt. If that is
done, the entire proceeding initiated by the show cause
notice gets vitiated by unfairness and bias and the
subsequent proceeding become an idle ceremony.
Justice is rooted in confidence and justice is the goal of
a quasi-judicial proceeding also. If the functioning of a
quasi-judicial authority has to inspire confidence in the
minds of those subjected to its jurisdiction, such
authority must act with utmost fairness. Its fairness is
obviously to be manifested by the language in which
charges are couched and conveyed to the person
proceeded against. The principle that justice must not
only be done but it must eminently appear to be done as
well is equally applicable to quasi judicial proceeding if
such a proceeding has to inspire confidence in the mind
of those who are subject to it. In the instant case, the third
respondent while issuing the show cause notice and
cancelling the registration certificate was acting in a
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS.
237
quasi-judicial capacity and in exercise of his statutory
power under Rule 43 of the MPEDA Rules. A perusal of
the impugned show cause notice showed that the third
respondent had completely made up his mind and
reached definite conclusion about the alleged guilt of the
appellant. This rendered the subsequent proceedings an
empty ritual and an idle formality. Such a close mind was
inconsistent with the scheme of Rule 43. The alleged guilt
of the appellant was prejudged at the stage of show
cause notice itself. The appellant gave a reply to the
show cause notice but in the order of the third
respondent by which registration certificate of the
appellant was cancelled, no reference was made to the
reply of the appellant, except saying that it was not
satisfactory. The bias of the third respondent which was
latent in the show cause notice became patent in the
order of cancellation of the registration certificate. The
cancellation order was a non-speaking one and was
virtually no order in the eyes of law. Since the order was
appealable it was incumbent on the third respondent to
give adequate reasons. The procedure of cancellation
registration was not fair. Although the appellate order
contained reasons, however, absence of reasons in the
original order cannot be compensated by disclosure of
reason in the appellate order. The show cause notice as
also the order of cancellation of the registration certificate
passed by the third respondent are quashed. The
registration would be valid, if it is not vitiated for any other
reason. [Paras 19, 20, 22, 24, 28, 29, 35- 39, 42, 45] [244D-E; 245-G-H; 246-B, G-H; 247-A-D; 249-E-F-G; 251-C;
253-E-F; 254-B-D]
238
A
Khem Chand v. Union of India and others AIR 1958 SC
300 – referred to.
Ridge v. Baldwin and others (1964 A.C. 40) – referred
to.
B
C
D
B
C
Case Law Reference:
AIR 1958 SC 300
referred to
Para 26
(2001) 1 SCC 182
relied on
Para 34
(1964 A.C. 40)
referred to
Para 3
2010(10) SCR 1070
relied on
Para 40
(1986) 4 SCC 537
relied on
Para 43
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
D 9489 of 2010.
From the Judgment & Order dated 16.10.2008 of the High
Court of Judicature at Bombay in Writ Petition No. 2251 of
2008.
E
E
F
F
S. Ganesh, Pratap Venugopal, Surekha Raman, Pratap
Venygopal, Puroshattam Jha, Varun Singh, K.J. John & Co. for
the Appellant.
Joseph Markose, Subhash Pandey, Ajay K. Jain, M.P.
Vinod, Harish Chander, Shweta Verma, A.K. Sharma for the
Respondents.
The Judgment of the Court was delivered by
G
Kumaon Mandal Vikas Nigam Limited v. Girja Shankar
Pant & others, (2001) 1 SCC 182; Institute of Chartered
Accountants of India v. L.K. Ratna and others (1986) 4 SCC
537; Kranti Associates Pvt. Ltd. & Anr. v. Sh. Masood Ahmed
Khan & Others 2010(10) SCR 1070 – relied on.
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
G
GANGULY, J. 1. Leave granted.
2. The appellant, a Private Limited Company engaged in
the production, procurement and processing and export of seafoods, and other related products, agreed to supply MT of
pealed and undeveined (PUD) shrimps to one Cascade Marine
H
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
239
Foods LLC (hereinafter referred to as, “Cascade”}, a company
incorporated under the relevant laws of UAE at Sharjah. The
Purchase Contract dated 26.09.2006, was signed by Pristine
Food Inc., a local agent of Cascade, and as per the details of
the contract, the PUD Shrimps were to be Block frozen-with
mandatory labels on both individual block and master carton
and the destination was Sharjah, UAE. By a subsequent
amendment dated 19.10.2006 to the purchase contract, the
PUD quantity was increased to a total of 24 MT without
changing other terms of the purchase contract. Prior to the
dispatch of the consignment, inspection was carried out by
Sakson Fisheries Consultants, local agents of Cascade, on
18.10.2006, whereby it was found that there was no bad odour.
Rather there was a fairly fresh smell and the quality of the
consignment was found to be satisfactory.
3. On 25.10.2006, the consignment was dispatched from
Mumbai, which arrived at Sharjah Port on 02.11.2006 via
Delivery Order, dated 06.11.2006. The Director of Customs,
Sharjah, was requested to authorize the release of the PUD
Shrimps to Cascade. Following this, on 07.11.2006 Sharjah
Customs, vide its Customs Declaration Form, stated that the
consignment was not to be released before Health Inspection.
It appears from the facts that the customs and health authorities
of UAE, had inspected the PUD Shrimps’ quality and quantity
and they were satisfied that it was fit for human consumption.
The health authorities resealed the consignment and numbered
it as MSLA 18 J 550015, as against the original seal no. YME
166813. It appears from the Store Receipt voucher No. 9232
dated 12.11.2006 of Cascade, the buyer, that they had taken
possession of the consignment. After a lapse of more than 10
days, Cascade alleged that the PUD Shrimp was of very poor
quality as it transpired from their analysis report dated
21.11.06.
4. As per the minutes of the meeting held on 17.12.2006
in the office of Cascade at Sharjah which was attended by Mr.
240 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
E
F
G
A S.D. Puranik and Mr. P.R. Sakthivel, respectively Managing
Director and Director Marketing of the appellant and Mr. Vijay
Paranjape, Group QA Manager Al-Kabeer and Ajit Pillai,
General Manager, Cascade Marine Foods LLC, the appellant
agreed to compensate Cascade to the extent of the value of
B the defective goods and the minutes of the meeting were signed
by all the aforementioned individuals.
5. It has been mentioned in the note attached to the letter
dated 03.09.2007 sent by Cascade to the Secretary, Ministry
of Commerce, Government of India that Cascade was asked
C by the appellant on 21.12.2006 to issue necessary samples to
Mr. Celestine of M/s Starfish Trading FZE and several samples
were handed over to him. The fact that the samples were
handed over to M/s Starfish Trading FZE has been disputed
because the appellant’s stand before this Court was that
D Cascade failed to hand-over the necessary samples to the
said M/s Starfish Trading FZE.
6. The appellant called upon Cascade to hand over the
consignment to one Freshly Frozen Foods LLC and as a result
E of that 1081 cartons of goods were delivered to the cold store
designated by Freshly Frozen Foods on 14.04.2007 vide
Cascade Store Issue Voucher 0390. Freshly Frozen Foods
could retrieve only 25 kgs from 4 MT of product they had
thawed out and they had directed Cascade to take back the
F material. When the Municipality Audit found out that the validity
of PUD shrimp packages had expired they compulsorily
destroyed the entire consignment of shrimps and the
destruction cost was debited to Cascade. As a result, Cascade
by its facsimile transmission dated 13.08.2007 informed the
appellant that they rejected the entire consignment and they
G
enclosed a Debit Note No.CMF/DN/108/07 for US$ 86,104.00
which represented the material cost and destruction charges
and requested the appellant to settle the same at the earliest.
7. On 3.09.2007 Cascade by its letter addressed to
H
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
241
Chairman, Marine Products Export Development Authority (for
short, MPEDA), made a quality complaint on the shipment
effected by the appellant for a value of US$ 83000 and a claim
of total loss arising from intentional cheating by way of delivery
of decomposed shrimp, unfit for human consumption.
8. The Deputy Director, MPEDA, the third respondent by
its letter dated 12.09.2007 forwarded the quality complaint
made by Cascade and sought clarification from the appellant
regarding the same. To that the appellant vide its letter dated
18.09.2007 stated that the consignment that they had sent was
of standard quality and also pointed out that they were very
doubtful whether the sample shown to the appellant’s officers
during their visit to Cascade’s factory and the analysis report
dated 21.11.2006 pertained to the consignment sent by them.
9. In addition to this, Cascade, through its advocates,
served a legal notice on the appellant on 23.09.2007 asking it
to pay US$ 83104 plus destruction costs within 7 days of
receipt of the notice and on failing to do so, appropriate legal
proceedings would be filed in India and UAE to recover the said
amount. The appellant, through its Advocate, replied on
17.10.2007 denying that the entire consignment of shrimps
exported by the appellant had deteriorated in quality. In
furtherance they also denied any liability to compensate
Cascade for the value of the goods along with storage charges,
distribution costs of USD 83104 plus destruction costs as
alleged.
10. The third respondent vide its letter dated 25.10.2007,
addressed to the appellant, directed it to settle the dispute with
Cascade urgently by 10.11.2007, which was duly replied to by
the appellant in the negative by its letter dated 11.11.2007. After
a series of correspondence between the appellant and the third
respondent, finally the third respondent decided on 20.11.2007
to convene a joint meeting on 5.12.2007 between the appellant
and Cascade to find out an amicable settlement of the issue
242
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
D
A in the presence of the officers of MPEDA. The appellant in
order to amicably settle the dispute offered Cascade 25% of
the value of the goods exported, by way of deferred payment
against adjustments, from future supplies, in the presence of
officers of MPEDA, Cochin.
B
11. However, Cascade refused to accept the same. Then
the third respondent issued a show cause notice dated
23.01.2008. As per the show cause notice the MPEDA called
upon the appellant to show cause why their certificate of
registration should not be cancelled.
C
12. The appellant replied to the show cause notice vide
its letter dated 4.2.2008 seeking to refute the allegations levied
upon it and further stated that MPEDA would not be justified in
canceling its certificate of registration on the above-mentioned
D grounds.
E
13. Third respondent without giving any reason and without
giving the appellant any personal hearing held, vide its order
dated 19.3.2008, that the registration certificate of the appellant
stood cancelled.
B
C
F
G
H
E
14. Being aggrieved by the said order, the appellant
appealed before the second respondent under Rule 44 of the
Marine Products Export Development Authority Rules, 1972
(hereinafter referred to as, “the MPEDA Rules”). The appellate
F body fixed a personal hearing on 28.04.2008. The appellant
vide letter dated 26.05.2008 addressed to the appellate body
stated that despite several attempts made by the appellant to
resolve the dispute with Cascade as advised by the MPEDA,
the attempts proved futile and once again requested appellate
G body to adjudicate the dispute on merits as well as to revoke
the order of cancellation.
H
15. The second respondent vide its letter dated
20.06.2008 informed the appellant that no more personal
hearing was required and directed them to send any further
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
243
evidence of proof of settlement with Cascade, if any. On 1908-2008, the second respondent passed an order holding, inter
alia, that:
“……The appellant in a very unethical way, had reneged
on the promises made earlier. It is also clear that the
appellant company has made every attempt to disown its
responsibility for supplying poor quality seafood to M/s.
Cascade Marine Foods LLC, Sharjah. Even during the
personal hearing before the undersigned on the 28th April,
the appellant was given ample time to settle the matter.
Time was also given beyond the deadline fixed. However,
the appellant seems to have taken a decision not to settle
the complaint.
The appellant’s contention that they were pressured
to sign the documents is quite illogical and unjustifiable
because if they had any difference of opinion they could
have recorded then and there. Hence there is ample
evidence that this is definitely a case of cheating of M/s.
Orxy Fisheries by shipping substandard material to M/s.
Cascade Marine that brought heavy loss to one of the
leading buyers in UAE. Such erring and unrepentant
exporters if they continue to export seafood from India
could easily damage the reputation of India among buyers
abroad.
244 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A 2008, before the High Court of Bombay. The High Court found
no error of law on the face of record, and upheld the findings
of the appellate authority and dismissed the writ petition by an
order dated 16.10.2008.
B
B
C
18. In the backdrop of these facts the first question which
C falls for consideration of this Court is whether the respondents
in cancelling the registration certificate of the appellant acted
fairly and in compliance with principles of natural justice and
also whether the respondents acted with an open mind.
D
D
E
E
19. It is obvious that in passing the impugned order of
cancellation, the respondents were acting in a quasi-judicial
capacity and also they were acting in exercise of their statutory
powers. Indisputably, the third respondent while purporting to
cancel the registration certificate was acting in exercise of his
power under Rule 43 of the MPEDA Rules.
20. The show cause notice dated 23.01.2008 was issued
by the third respondent in exercise of this power.
In view of the facts and circumstances as mentioned
above, this appellate authority finds no lapse on the part
of the Deputy Director in canceling the registration of the
appellant as an exporter.
F
I, therefore disallow the appeal and uphold the order
of cancellation issued by the Deputy Director, RO,
Mumbai.”
G
16. Being aggrieved, by the order dated 19.03.2008 and
19.08.2008, the appellant preferred a Writ Petition No.2251 of
17. Assailing the High Court’s order, this Court was moved
on a Special Leave Petition whereupon this Court on
28.11.2008 issued notice and continued the stay granted by
the High Court on 16.10.2008.
F
21. For a proper appreciation of the points involved, the
show cause notice is set out in etenso:
“Sub: SHOW CAUSE NOTICE
H
G
H
Your attention is invited to our HQ’s letter No.IV/53/
06-MS/HO dated 25.10.2007 and subsequent joint
meeting with the buyer held at our Head office on 5th
September, 2007 on the trade complaint received from M/
s Cascade Marine Foods LLC, Sharjah.
At the meeting it was convincingly proved that the
cargo shipped by you to the above mentioned buyer was
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
245
defective and you have not so far settled the complaint.
Therefore, in exercise of the powers vested in me vide
Office Order Part-II No.184012005 dated 25.11.2005 read
with Rule 43 of the MPEDA Rules, I hereby call upon you
to show cause why the Certificate of Registration as an
Exporter granted to you should not be cancelled for
reasons given below:
1.
2.
It has been proved beyond doubt that you have
sent substandard material to M/s Cascade Marine
Foods, LLC, Sharjah.
You have dishonoured your written agreement with
M/s Cascade Marine Foods, LLC, Sharjah to settle
the complaint made by the buyer as you had agreed
to compensate to the extent of the value of defective
cargo sent by you and have now evaded from the
responsibility.
246
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
A
B
24. It is well settled that a quasi-judicial authority, while
acting in exercise of its statutory power must act fairly and must
act with an open mind while initiating a show cause proceeding.
B
A show cause proceeding is meant to give the person
proceeded against a reasonable opportunity of making his
objection against the proposed charges indicated in the notice.
C
23. This Court finds that there is a lot of substance in the
aforesaid contention.
25. Expressions like “a reasonable opportunity of making
C objection” or “a reasonable opportunity of defence” have come
up for consideration before this Court in the context of several
statutes.
D
26. A Constitution Bench of this Court in Khem Chand v.
D Union of India and others, reported in AIR 1958 SC 300, of
course in the context of service jurisprudence, reiterated certain
principles which are applicable in the present case also.
Your reply should reach the undersigned within 10
days from the date of receipt of this letter failing which it
will be presumed that you have no explanation to offer and
we will proceed with action for cancellation of your
registration certificate without further notice to you. If
ultimately a decision is reached to deregister you under
the provisions of the MPEDA Rules, it will automatically
entail de-registration under Registration Exporters’ policy
also.”
E
27. Chief Justice S.R. Das speaking for the unanimous
Constitution Bench in Khem Chand (supra) held that the
E concept of ‘reasonable opportunity’ includes various
safeguards and one of them, in the words of the learned Chief
Justice, is:
F
“(a) An opportunity to deny his guilt and establish his
innocence, which he can only do if he is told what the
charges leveled against him are and the allegations on
which such charges are based;”
22. Relying on the underlined portions in the show cause
notice, learned counsel for the appellant urged that even at the
stage of the show cause notice the third respondent has
completely made up his mind and reached definite conclusion
about the alleged guilt of the appellant. This has rendered the
subsequent proceedings an empty ritual and an idle formality.
G
3.
This irresponsible action have brought irreparable
damage to India’s trade relation with UAE.
H
F
28. It is no doubt true that at the stage of show cause, the
person proceeded against must be told the charges against
G him so that he can take his defence and prove his innocence.
It is obvious that at that stage the authority issuing the chargesheet, cannot, instead of telling him the charges, confront him
with definite conclusions of his alleged guilt. If that is done, as
has been done in this instant case, the entire proceeding
H
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
247
initiated by the show cause notice gets vitiated by unfairness
and bias and the subsequent proceeding become an idle
ceremony.
29. Justice is rooted in confidence and justice is the goal
of a quasi-judicial proceeding also. If the functioning of a quasijudicial authority has to inspire confidence in the minds of those
subjected to its jurisdiction, such authority must act with utmost
fairness. Its fairness is obviously to be manifested by the
language in which charges are couched and conveyed to the
person proceeded against. In the instant case from the
underlined portion of the show cause notice it is clear that the
third respondent has demonstrated a totally close mind at the
stage of show cause notice itself. Such a close mind is
inconsistent with the scheme of Rule 43 which is set out below.
The aforesaid rule has been framed in exercise of the power
conferred under Section 33 of The Marine Products Export
Development Authority Act, 1972 and as such that Rule is
statutory in nature.
248 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
D
Where the Secretary or other officer is satisfied that any
person has obtained a certificate of registration by
furnishing incorrect information or that he has contravened
any of the provisions of this rule or of the conditions
mentioned in the certificate of registration, or any person
who has been registered as an exporter fails during the
period of twelve consecutive months to export any of the
marine products in respect of which he is registered, or if
the secretary or other officer is satisfied that such person
has become disqualified to continue as an exporter, the
Secretary or such officer may, after giving the person who
holds a certificate a reasonable opportunity of making his
objections, by order, cancel the registration and
communicate to him a copy of such order.”
D
E
32. Therefore, while issuing a show-cause notice, the
authorities must take care to manifestly keep an open mind as
they are to act fairly in adjudging the guilt or otherwise of the
person proceeded against and specially when he has the power
to take a punitive step against the person after giving him a
E show cause notice.
F
33. The principle that justice must not only be done but it
must eminently appear to be done as well is equally applicable
to quasi judicial proceeding if such a proceeding has to inspire
confidence in the mind of those who are subject to it.
30. Rule 43 of the MPEDA Rules provides as follows:
“43. Cancellation of registration
31. It is of course true that the show cause notice cannot
be read hyper-technically and it is well settled that it is to be
read reasonably. But one thing is clear that while reading a
show-cause notice the person who is subject to it must get an
impression that he will get an effective opportunity to rebut the
B allegations contained in the show cause notice and prove his
innocence. If on a reasonable reading of a show-cause notice
a person of ordinary prudence gets the feeling that his reply to
the show cause notice will be an empty ceremony and he will
merely knock his head against the impenetrable wall of
C prejudged opinion, such a show cause notice does not
commence a fair procedure especially when it is issued in a
quasi-judicial proceeding under a statutory regulation which
promises to give the person proceeded against a reasonable
opportunity of defence.
A
G
H
F
34. A somewhat similar observation was made by this
Court in the case of Kumaon Mandal Vikas Nigam Limited v.
Girja Shankar Pant & others, (2001) 1 SCC 182. In that case,
this court was dealing with a show cause notice cum chargeG sheet issued to an employee. While dealing with the same, this
Court in paragraph 25 (page 198 of the report) by referring to
the language in the show cause notice observed as follows:
H
“25. Upon consideration of the language in the show-cause
notice-cum-charge-sheet, it has been very strongly
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
249
250
contended that it is clear that the Officer concerned has a
mindset even at the stage of framing of charges and we
also do find some justification in such a submission since
the chain is otherwise complete.”
A
35. After paragraph 25, this Court discussed in detail the
emerging law of bias in different jurisdictions and ultimately held
in paragraph 35 (page 201 of the report), the true test of bias
is:
B
B
C
C
“35. The test, therefore, is as to whether a mere
apprehension of bias or there being a real danger of bias
and it is on this score that the surrounding circumstances
must and ought to be collated and necessary conclusion
drawn therefrom — in the event however the conclusion is
otherwise inescapable that there is existing a real danger
of bias, the administrative action cannot be sustained:”
36. Going by the aforesaid test any man of ordinary
prudence would come to a conclusion that in the instant case
the alleged guilt of the appellant has been prejudged at the
stage of show cause notice itself.
37. The appellant gave a reply to the show cause notice
but in the order of the third respondent by which registration
certificate of the appellant was cancelled, no reference was
made to the reply of the appellant, except saying that it is not
satisfactory. The cancellation order is totally a non-speaking
one. The relevant portion of the cancellation order is set out:-
D
D
E
E
F
“Sub: Registration as an Exporter of Marine Products under
MPEDA Rules 1972.
Please refer to the Show Cause Notice No.10/3/MS/2006/
MS/3634 dated 23.01.2008 acknowledged by you on 28/
01/2008 directing you to show cause why the certificate
of registration as an exporter No.MAI/ME/119/06 dated 03/
03/2006 granted to you as Merchant Exporter should not
be cancelled for the following reasons:-
A
G
H
F
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
1.
It has been proved beyond doubt that you have
sent sub-standard material to M/s. Cascade
Marine Foods, L.L.C., Sharjah.
2.
You have dishonoured your written agreement with
M/s. Cascade Marine Foods, L.L.C, Sharjah to
settle the complaint made by the buyer as you had
agreed to compensate to the extent of the value of
the defective cargo sent by you and have now
evaded from the responsibility.
3.
This irresponsible action has brought irreparable
damage to India’s trade relation with UAE.
Your reply dated 04/02/2008 to the Show Cause Notice
is not satisfactory because the quality complaint raised by
M/s. Cascade Marine Foods, L.L.C, Sharjah have not
been resolved amicably. Therefore, in exercise of the
power conferred on me vide Rule 43 of the MPEDA Rules,
read with office order Part II No.1840/2005 dated 25/11/
2006, I hereby cancel the Registration Certificate No.MAI/
ME/119/06 dated 03/03/2006 issued to you. The original
Certificate of Registration issued should be returned to this
office for cancellation immediately.
In case you are aggrieved by this order of cancellation, you
may prefer an appeal to the Chairman within 30 days of
the date of receipt of this order vide Rule 44 of the MPEDA
Rules.
38. Therefore, the bias of the third respondent which was
latent in the show cause notice became patent in the order of
G cancellation of the registration certificate. The cancellation
order quotes the show cause notice and is a non-speaking one
and is virtually no order in the eye of law. Since the same order
is an appealable one it is incumbent on the third respondent
to give adequate reasons.
H
39. On the question whether the entire proceeding for
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
252 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
251
A
cancellation of registration initiated by the show cause notice
and culminating in the order of cancellation is vitiated by bias
we can appropriately refer to the succinct formulation of the
principle by Lord Reid in Ridge v. Baldwin and others (1964
A.C. 40). The Learned Law Lord, while dealing with several
concepts, which are not susceptible of exact definition, held that
by fair procedure one would mean that what a reasonable man
would regard as fair in the particular circumstances (see page
65 of the Report). If we follow the aforesaid test, we are bound
to hold that the procedure of cancellation registration in this
case was not a fair one.
C
C
40. On the requirement of disclosing reasons by a quasijudicial authority in support of its order, this Court has recently
delivered a judgment in the case of Kranti Associates Pvt. Ltd.
& Anr. v. Sh. Masood Ahmed Khan & Others on 8th
September 2010.
h. The ongoing judicial trend in all countries committed to
rule of law and constitutional governance is in favour of
reasoned decisions based on relevant facts. This is virtually
the life blood of judicial decision making justifying the
principle that reason is the soul of justice.
D
D
E
E
i. Judicial or even quasi-judicial opinions these days can
be as different as the judges and authorities who deliver
them. All these decisions serve one common purpose
which is to demonstrate by reason that the relevant factors
have been objectively considered. This is important for
sustaining the litigants’ faith in the justice delivery system.
B
A
B
b. A quasi-judicial authority must record reasons in support
of its conclusions.
j. Insistence on reason is a requirement for both judicial
accountability and transparency.
k. If a Judge or a quasi-judicial authority is not candid
enough about his/her decision making process then it is
impossible to know whether the person deciding is faithful
to the doctrine of precedent or to principles of
incrementalism.
F
F
G
G
l. Reasons in support of decisions must be cogent, clear
and succinct. A pretence of reasons or ‘rubber-stamp
reasons’ is not to be equated with a valid decision making
process.
H
H
m. It cannot be doubted that transparency is the sine qua
c. Insistence on recording of reasons is meant to serve the
wider principle of justice that justice must not only be done
it must also appear to be done as well.
d. Recording of reasons also operates as a valid restraint
on any possible arbitrary exercise of judicial and quasijudicial or even administrative power.
f. Reasons have virtually become as indispensable a
component of a decision making process as observing
principles of natural justice by judicial, quasi-judicial and
even by administrative bodies.
g. Reasons facilitate the process of judicial review by
superior Courts.
41. In M/s Kranti Associates (supra), this Court after
considering various judgments formulated certain principles in
para 51 of the judgment which are set out below
a. In India the judicial trend has always been to record
reasons, even in administrative decisions, if such
decisions affect anyone prejudicially.
by the decision maker on relevant grounds and by
disregarding extraneous considerations.
e. Reasons reassure that discretion has been exercised
ORYX FISHERIES PRIVATE LIMITED v. UNION OF
INDIA AND ORS. [ASOK KUMAR GANGULY, J.]
253
non of restraint on abuse of judicial powers. Transparency
in decision making not only makes the judges and decision
makers less prone to errors but also makes them subject
to broader scrutiny. (See David Shapiro in Defence of
Judicial Candor (1987) 100 Harward Law Review 731737).
n. Since the requirement to record reasons emanates from
the broad doctrine of fairness in decision making, the said
requirement is now virtually a component of human rights
and was considered part of Strasbourg Jurisprudence.
See (1994) 19 EHRR 553, at 562 para 29 and Anya vs.
University of Oxford, 2001 EWCA Civ 405, wherein the
Court referred to Article 6 of European Convention of
Human Rights which requires, “adequate and intelligent
reasons must be given for judicial decisions”.
o. In all common law jurisdictions judgments play a vital
role in setting up precedents for the future. Therefore, for
development of law, requirement of giving reasons for the
decision is of the essence and is virtually a part of “Due
Process”.
254
A
A
B
B
C
D
E
42. In the instant case the appellate order contains reasons.
However, absence of reasons in the original order cannot be
compensated by disclosure of reason in the appellate order.
43. In Institute of Chartered Accountants of India v. L.K.
Ratna and others,(1986) 4 SCC 537, it has been held:
“……after the blow suffered by the initial decision, it is
difficult to contemplate complete restitution through an
appellate decision. Such a case is unlike an action for
money or recovery of property, where the execution of the
trial decree may be stayed pending appeal, or a
successful appeal may result in refund of the money or
restitution of the property, with appropriate compensation
by way of interest or mesne profits for the period of
C
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
deprivation. And, therefore, it seems to us, there is
manifest need to ensure that there is no breach of
fundamental procedure in the original proceeding, and to
avoid treating an appeal as an overall substitute for the
original proceeding.” (See para 18, pages 553-554 of the
report)
44. For the reasons aforesaid, this Court quashes the show
cause notice as also the order dated 19.03.2008 passed by
the third respondent. In view of that, the appellate order has no
legs to stand and accordingly is quashed.
45. We are constrained to observe that unfortunately this
aspect of the matter was not considered by the High Court. We
cannot, therefore, approve the order of the High Court and the
same is accordingly quashed. The cancellation of the
D registration certificate of the appellant is set aside and we
declare the registration to be valid if it is not vitiated for any
other reason.
46. We, however, make it clear that if the authorities are
so inclined, they can proceed from the stage of show cause
E
notice afresh but strictly in accordance with law and following
the fair procedure indicated in this judgment.
47. The appeal is allowed. Parties are left to bear their own
costs.
F
F
D.G.
G
H
Appeal allowed.
256 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
[2010] 13 (ADDL.) S.C.R. 255
VIJAYSINH CHANDUBHA JADEJA
v.
STATE OF GUJARAT
(Criminal Appeal No. 943 of 2005)
OCTOBER 29, 2010
A
B
[D.K. JAIN, B. SUDERSHAN REDDY, DR.
MUKUNDAKAM SHARMA, R.M. LODHA AND DEEPAK
VERMA, JJ.]
Narcotic Drugs and Psychotropic Substances Act, 1985:
Section 50 – Search of persons (suspects) –
Requirements – Expression “if the person to be searched so
requires” – Scope of – HELD: Obligation of the authorised
officer under sub-s.(1) of s.50 is mandatory and requires a
strict compliance – The mandate of s.50 is precise and clear
– If the person intended to be searched expresses to the
authorised officer his desire to be taken to the nearest
gazetted officer or the Magistrate, he cannot be searched till
the gazetted officer or the Magistrate, as the case may be,
directs the authorised officer to do so – The insertion of subss. (5) and (6) does not obliterate the mandate of sub-s.(1) to
inform the person to be searched of his right to be taken
before a gazetted officer or Magistrate –Though s.50 gives an
option to the empowered officer to take the suspect either
before the nearest gazetted officer or the magistrate, but in
order to impart authenticity, transparency and credit worthiness
to the entire proceedings, in the first instance, an endeavour
should be made to produce the suspect before the nearest
Magistrate.
C
Answering the reference, the Court
D
D
E
E
F
HELD: 1.1 In order to prevent abuse of the provisions
of the NDPS Act, which confer wide powers on the
empowered officers, the safeguards provided by the
Legislature have to be observed strictly. [para 12] [269A-B]
1.2 The issue before the Court in terms of the referral
order is not about the applicability of s.50 of the NDPS
Act per se but is confined to the scope and width of the
expression “if the person to be searched so requires” as
figuring in sub-s. (1) of the said Section. However, it may
be seen that while considering the question of
compliance with s. 50 of the NDPS Act, the Constitution
Bench in Baldev Singh considered the provisions of s. 41
as well. [para 16] [271-G-H; 272-A-B]
G
1.3 The object with which the right u/s 50(1) of the
NDPS Act, by way of a safeguard, has been conferred on
the suspect, viz. to check the misuse of power, to avoid
harm to innocent persons and to minimise the allegations
H
1.
Section 50 – Object of – Explained.
A Bench of three Judges of the Supreme Court
before which the instant appeals were listed for hearing,
255
A felt that there was divergence of opinion as regards the
dictum laid down by the Constitution Bench of the Court
in Baldev Singh’s case 1 . The appeal was, therefore,
referred to the Constitution Bench. The question for
consideration before the Court was: “whether Section 50
B of the Narcotic Drugs and Psychotropic Substances Act,
1985 casts a duty on the empowered officer to ‘inform’
the suspect of his right to be searched in the presence
of a Gazetted Officer or a Magistrate, if he so desires or
whether a mere enquiry by the said officer as to whether
C the suspect would like to be searched in the presence of
a Magistrate or a Gazetted Officer can be said to be due
compliance with the mandate of the said Section?”
State of Punjab vs. Baldev Singh 1999 (3) SCR 977.
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT
257
of planting or foisting of false cases by the law
enforcement agencies, it would be imperative on the part
of the empowered officer to apprise the suspect of his
right to be searched before a gazetted officer or a
Magistrate. In so far as the obligation of the authorised
officer under sub-s. (1) of s. 50 is concerned, it is
mandatory and requires a strict compliance. Failure to
comply with the provision would render the recovery of
the illicit article suspect and vitiate the conviction if the
same is recorded only on the basis of the recovery of the
illicit article from the person of the accused during such
search. Thereafter, the suspect may or may not choose
to exercise the right provided to him under the said
provision. [para 22] [278-B-E]
Re: Presidential Poll 1975 (1) SCR 504 = 1974 (2)
SCC 33 – referred to.
1.4 Section 50 prescribes the conditions under which
personal search of a person is required to be conducted.
Sub-s. (1) of the said Section provides that when the
empowered officer is about to search any suspect, he
shall, if the person to be searched so requires, take him to
the nearest gazetted officer or the Magistrate for the
purpose. Under sub-s.(2), it is laid down that if such
request is made by the suspect, the officer who is to take
the search, may detain the suspect until he can be
brought before such gazetted officer or the Magistrate.
The mandate of s.50 is precise and clear, viz. if the person
intended to be searched expresses to the authorised
officer his desire to be taken to the nearest gazetted
officer or the Magistrate, he cannot be searched till the
gazetted officer or the Magistrate, as the case may be,
directs the authorised officer to do so. [para 14-15] [270A-B; 271-B-F]
1.5 Although the Constitution Bench in Baldev Singh
did not decide in absolute terms the question whether or
258
A
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A not s. 50 of the NDPS Act was directory or mandatory yet
it was held that provisions of sub-s. (1) of s. 50 make it
imperative for the empowered officer to “inform” the
person concerned (suspect) about the existence of his
right that if he so requires, he shall be searched before a
B gazetted officer or a Magistrate; failure to “inform” the
suspect about the existence of his said right would
cause prejudice to him, and in case he so opts, failure to
conduct his search before a gazetted officer or a
Magistrate, may not vitiate the trial but would render the
C recovery of the illicit article suspect and vitiate the
conviction and sentence of an accused, where the
conviction has been recorded only on the basis of the
possession of the illicit article, recovered from the person
during a search conducted in violation of the provisions
of s. 50. The Court also noted that it was not necessary
D
that the information required to be given u/s 50 should
be in a prescribed form or in writing but it was mandatory
that the suspect was made aware of the existence of his
right to be searched before a gazetted officer or a
Magistrate, if so required by him. The Court concurred
E with the conclusions. Any other interpretation of the
provision would make the valuable right conferred on the
suspect illusory and a farce. [para 18] [274-D-H; 275-A]
F
State of Punjab vs. Baldev Singh 1999 (3) SCR 977 =
1999 (6) SCC 172 – explained and relied on.
1.6 Sub-ss. (5) and (6) were inserted in s. 50 by Act 9
of 2001. It is pertinent to note that although by the
insertion of the said two sub-sections, the rigour of strict
procedural requirement is sought to be diluted under the
G
circumstances mentioned in the sub-sections, viz. when
the authorised officer has reason to believe that any delay
in search of the person is fraught with the possibility of
the person to be searched parting with possession of any
narcotic drug or psychotropic substance etc., or article
H
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT
259
or document, he may proceed to search the person
instead of taking him to the nearest gazetted officer or
Magistrate. However, even in such cases, a safeguard
against any arbitrary use of power has been provided
under sub-s.(6), viz. the empowered officer is obliged to
send a copy of the reasons, so recorded, to his immediate
official superior within seventy two hours of the search.
The insertion of these two sub-sections does not
obliterate the mandate of sub-s. (1) of s.50 to inform the
person, to be searched, of his right to be taken before a
gazetted officer or a Magistrate. [para 19] [275-B-F]
1.7 The object and the effect of insertion of sub-ss.
(5) and (6) were considered by another Constitution
Bench of this Court in Karnail Singh**. Although in the
said decision the Court did observe that by virtue of
insertion of sub-ss. (5) and (6), the mandate given in
Baldev Singh’s case is diluted, but the Court also opined
that it cannot be said that by the said insertion, the
protection or safeguards given to the suspect have been
taken away completely. [para 19] [275-E-G]
260 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
C
C
D
D
E
E
F
F
G
G
**Karnail Singh Vs. State of Haryana 2009 (11) SCR 470
= 2009 (8) SCC 539 - referred to.
1.8 It can, thus, be seen that apart from the fact that
in Karnail Singh, the issue was regarding the scope and
applicability of s. 42 of the NDPS Act in the matter of
conducting search, seizure and arrest without warrant or
authorisation, the said decision does not depart from the
dictum laid down in Baldev Singh’s case in so far as the
obligation of the empowered officer to inform the suspect
of his right enshrined in sub-s. (1) of s. 50 is concerned.
It is also plain from Karnail Singh’s case that the flexibility
in procedural requirements in terms of the two newly
inserted sub-sections can be resorted to only in emergent
and urgent situations, contemplated in the provision, and
A not as a matter of course. Additionally, sub-s. (6) of s. 50
makes it imperative and obligatory on the authorised
officer to send a copy of the reasons recorded by him for
his belief in terms of sub-s. (5), to his immediate superior
officer, within the stipulated time, which exercise would
B again be subjected to judicial scrutiny during the course
of trial. [para 20] [276-D-G]
1.9 As regards the judgments in Joseph Fernandez
and Prabha Shanakar Dubey £, it is manifest that Joseph
Fernandez does not notice the ratio of Baldev Singh and
in Prabha Shankar Dubey, Joseph Fernandez is followed
ignoring the dictum laid down in Baldev Singh’s case. The
concept of “substantial compliance” with the requirement
of s. 50 of the NDPS introduced and read into the
mandate of the said Section in Joseph Fernandez and
Prabha Shankar Dubey is neither borne out from the
language of sub-s. (1) of s.50 nor is it in consonance with
the dictum laid down in Baldev Singh’s case. The question
whether or not the procedure prescribed has been
followed and the requirement of s.50 had been met, is a
matter of trial. It would neither be possible nor feasible
to lay down any absolute formula in that behalf. Further,
though s. 50 gives an option to the empowered officer to
take such person (suspect) either before the nearest
gazetted officer or the Magistrate but in order to impart
authenticity, transparency and creditworthiness to the
entire proceedings, in the first instance, an endeavour
should be to produce the suspect before the nearest
Magistrate, who enjoys more confidence of the common
man compared to any other officer. It would not only add
legitimacy to the search proceedings, it may verily
strengthen the prosecution as well. [para 21-22] [278-AB-F-H; 279-A-C]
£
H
Joseph Fernandez Vs. State of Goa 2000 (1) SCC 707
Prabha Shankar Dubey Vs. State of M.P. 2003 (6) Suppl.
H SCR 444 = 2004 (2) SCC 56 – disapproved.
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT
261
Krishna Kanwar (Smt) alias Thakuraeen Vs. State of
Rajasthan 2004 (1) SCR 1101 = 2004 (2) SCC 608 –
referred to.
Beckodan Abdul Rahiman Vs. State of Kerala 2002
(3) SCR 53 = 2002 (4) SCC 229; M.Prabhulal Vs. Assistant
Director, Directorate of Revenue Intelligence 2003 (3) Suppl.
SCR 958 = 2003 (8 ) SCC 449; and Union of India Vs.
Satrohan 2008 (10) SCR 888 = 2008 (8) SCC 313; Ahmed
Vs. State of Gujarat (2000) 7 SCC 477; State of Rajasthan
Vs. Ram Chandra 2005 (3) SCR 496 =2005 (5) SCC 151;
State of Punjab Vs. Balbir Singh 1994 (2) SCR 208 =1994
(3) SCC 299; Saiyad Mohd. Saiyad Umar Saiyad & Ors. Vs.
State of Gujarat 1995 (3) SCR 117 = 1995 (3) SCC 610; Ali
Mustaffa Abdul Rahman Moosa Vs. State of Kerala 1994 (4)
Suppl. SCR 52 = 1994 (6) SCC 569 - cited.
262
A
B
para 2
2003 (6) Suppl. SCR 444
disapproved
para 2
2004 (1) SCR 1101
referred to
para 2
1999 (3) SCR 977
relied on
para 2
2002 (3) SCR 53
cited
para 7
2003 (3) Suppl. SCR 958
cited
para 8
2008 (10) SCR 888
cited
para 8
(2000) 7 SCC 477
cited
para 8
2005 (3) SCR 496
cited
para 9
1994 (2) SCR 208
cited
para 10
1995 (3) SCR 117
cited
para 10
1994 (4) Suppl. SCR 52
cited
para 10
referred to
para 19
1975 (1) SCR 504
cited
para 22
B
From the Judgment & Order dated 21.10.2002 of the High
Court of Gujarat at Ahmedabad in Criminal Appeal No. 962 of
1999.
C
WITH
C
Crl. A. No. 974 of 2003.
Crl. A. No. 809 of 2009.
Case Law Refeence:
disapproved
2009 (11) SCR 470
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 943 of 2005.
D
2000 (1) SCC 707
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
E
Pravin H. Parekh Siddharth Luthra, S.K. Dubey, P.P.
D Malhotra, ASG, Sameer Parekh, Lalit Chauhan, Ranjeeta
Rohatgi, Rajat Nair, Pallavi Srivastava (for Parekh & Co.) Tara
Chandra Sharma, Neelam Sharma, Ajay Sharma, Kishan
Datta, Chittaranjan, Radha Shyam Jeena, Hemantika Wahi,
Jesal, Somnath Pradhan, Ranjan Mukherjee, S. Bhowmick, P.K.
E Dey, Shashi Kumar Dubey, Sadhna Sandhu, Anil Katiyar and
Subhash Kaushik for the appearing parties.
The Judgment of the Court was delivered by
F
G
H
D.K. JAIN, J. 1. The short question arising for
consideration in this batch of appeals is whether Section 50
of the Narcotic Drugs and Psychotropic Substances Act, 1985
(for short “the NDPS Act”) casts a duty on the empowered
officer to ‘inform’ the suspect of his right to be searched in the
presence of a Gazetted Officer or a Magistrate, if he so desires
G or whether a mere enquiry by the said officer as to whether the
suspect would like to be searched in the presence of a
Magistrate or a Gazetted Officer can be said to be due
compliance with the mandate of the said Section?
F
H
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
2. When these appeals came up for consideration before
a bench of three Judges, it was noticed that there was a
divergence of opinion between the decisions of this Court in
the case of Joseph Fernandez Vs. State of Goa1, Prabha
Shankar Dubey Vs. State of M.P.2 on the one hand and
Krishna Kanwar (Smt) alias Thakuraeen Vs. State of
Rajasthan3 on the other, with regard to the dictum laid down
by the Constitution Bench of this Court in State of Punjab Vs.
Baldev Singh4, in particular regarding the question whether
before conducting search, the concerned police officer is
merely required to ask the suspect whether he would like to be
produced before the Magistrate or a Gazetted Officer for the
purpose of search or is the suspect required to be made aware
of the existence of his right in that behalf under the law. It would
be expedient to extract the relevant portion of the order:“When the matter came up before this Court, it was
found that in some of the decisions rendered by this Court,
a slightly different view was taken than what was expressed
by the Constitution Bench with regard to interpretation of
Section 50 of the NDPS Act. In the case Joseph
Fernandez Vs. State of Goa, 2001 (1) SCC p.707, a
Bench of three Hon’ble Judges held that even when the
searching officer informed him that “if you wish you may
be searched in the presence of a gazetted officer or a
Magistrate”; it was held that it was in substantial
compliance with the requirement of Section 50 of the
NDPS Act, and the Court observed that it did not agree
with the contention that there was non-compliance of the
mandatory provisions contained in Section 50 of the
NDPS Act. In another decision of this Court in Prabha
Shankar Dubey Vs. State of M.P. 2004(2) SCC p.56, the
following information was conveyed to the accused: “By
1.
(2000) 1 SCC 707.
2.
(2004) 2 SCC 56.
3.
(2004) 2 SCC 608.
4.
(1999) 6 SCC 172.
264 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
263
A
A
B
B
C
C
D
D
E
E
way of this notice, you are informed that we have received
information that you are illegally carrying opium with you,
therefore, we are required to search your scooter and you
for this purpose. You would like to give me search or you
would like to be searched by a gazetted officer or by a
Magistrate”. This was held to be substantial compliance
of Section 50 of the NDPS Act. In Krishan Kanwar (Smt.)
Alias Thakuraeen Vs. State of Rajasthan, 2004(2) SCC
p.608, the same question was considered and it was held
that there is no specific form prescribed or initiated for
conveying the information required to be given under
Section 50 of the NDPS Act and it was held that “what is
necessary is that the accused (suspect) should be made
aware of the existence of his right to be searched in the
presence of one of the officers named in the section itself.
Since no specific mode or manner is prescribed or
intended, the court has to see the substance and not the
form of intimation. Whether the requirement of Section 50
have been met is a question which is to be decided on
the facts of each case and there cannot be any sweeping
generalization and/or a straitjacket formula.
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Thus, in a way, it all depends on the oral evidence
of the officer who conducts search, in case nothing is
mentioned in the search mahazar or any other
contemporaneous document prepared at the time of
search. In view of the large number of cases coming up
under the provisions of the NDPS Act the interpretation of
Section 50 of the Act requires a little more clarification as
its applicability is quite frequent in many cases. In
appreciating the law laid down by the Constitution Bench
in Baldev Singh’s case (supra), we have noticed that
conflicting decisions have been rendered by this court. We
feel that the matter requires some clarification by a larger
Bench. The matter be placed before the Hon’ble Chief
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
265
Justice of India for taking further action in this regard.”
266
A
That is how these appeals came to be placed before this
Constitution Bench.
3. Since the cases have come up before us for a limited
purpose of clarification as to the interpretation of Section 50
of the NDPS Act by the Constitution Bench in Baldev Singh’s
case (supra), we deem it unnecessary to state the background
facts, giving rise to these appeals.
4. We have heard learned counsel for the appellant, State
of Gujarat, State of West Bengal, Government of National
Capital Territory of Delhi and learned Additional Solicitor
General on behalf of Union of India.
5. Mr. P.H. Parekh, learned senior counsel appearing on
behalf of appellant (Criminal Appeal No.943 of 2005),
strenuously urged that a conjoint reading of Section 50(1) and
50(3) of the NDPS Act, in its common grammatical connotation,
makes it abundantly clear that the procedural safeguards
envisaged under Section 50 are to be employed effectively and
honestly while informing, apprising and advising the suspect of
his vested right to be searched only by a Gazetted Officer or a
Magistrate. It was contended that the ambit of statutory
protection granted by the Parliament under Section 50(1) of the
NDPS Act having been explained unambiguously and clearly
by the Constitution Bench in the case of Baldev Singh (supra),
there is no scope for any other interpretation or clarification of
Section 50 of the NDPS Act.
6. Learned counsel vehemently contended that in the light
of the dictum laid down in Baldev Singh (supra), the decisions
of this Court in Joseph Fernandez (supra) and Prabha
Shankar Dubey (supra) wherein the concept of ‘substantial
compliance’ has been erroneously read into Section 50 of the
NDPS Act, do not lay down the correct proposition of law. It
was argued that Section 50 being the only safeguard provided
B
C
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A to the suspect under the NDPS Act, the legislature, while
enacting it, gave it the character of a “due process” clause,
thereby placing some minimum procedural limitations on the
exercise of such extensive statutory power, by insisting on the
strict observance of the procedure established under the said
B Section. According to the learned counsel, this safeguard is
meant to ensure that the powers under the NDPS Act are not
abused and a person is not falsely implicated and subjected
to grave consequences which are likely to follow under the said
Act. Relying on the decision of this Court in Beckodan Abdul
5
C Rahiman Vs. State of Kerala , learned counsel submitted that
the harsh provisions of the NDPS Act cast a heavier duty upon
the prosecution to strictly follow and comply with the safeguards.
7. Learned counsel thus, argued that the theory of
‘substantial compliance’ cannot be applied to defeat, negate
D or neutralise important safeguards provided by the legislature.
It was asserted that merely asking the suspect whether he
would like to be produced before a Magistrate or a Gazetted
Officer for the purpose of the search can never amount to due
compliance with Section 50 of the NDPS Act.
E
8. Mr. Siddharth Luthra, learned senior counsel appearing
on behalf of State of Gujarat, on the other hand, submitted that
the rigours of Section 50 of the NDPS Act are neither
applicable to the officers who have been empowered by a
F warrant under Section 41(1); nor to the gazetted/empowered
officers who order search or arrest under Section 41(2). It was
argued that Section 41(1) of the NDPS Act grants the
Magistrate the power to issue warrants for arrest or search,
whether by day or night, inter alia, in relation to a person whom
the Magistrate has reason to believe has committed an offence
G
under the NDPS Act. It was urged that a reading of Sections
41(1), 41(3), 42, 43 and 50 of the NDPS Act shows that an
officer acting under a warrant by a Magistrate under Section
41(1) would not fall within the ambit of Section 50(1) of the
H
5.
(2002) 4 SCC 229.
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
268 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
267
NDPS Act. It was submitted that from the language of Section
41(2) of the NDPS Act, it is clear that the Central Government
or the State Government, as the case may be, can only
empower an officer of a gazetted rank who can either himself
act or authorise his subordinate on the terms stated in the
Section. On the contrary, however, under Section 42(1) of the
NDPS Act, there is no restriction on the Central Government
or the State Government to empower only a gazetted officer
and, therefore, additional checks and balances over officers
acting under Section 42 have been provided in the proviso to
Section 42(1) and in Section 42(2) of the NDPS Act. It was,
thus, contended that the language of Section 42 of the NDPS
Act makes it clear that the provision applies only to an officer
empowered under Section 42(1) and not an empowered
Gazetted Officer under Section 41(2) of the NDPS Act. In
support of the submission that a distinction between a Gazetted
Officer and an officer acting under Section 42 of the NDPS Act
has to be maintained, learned counsel commended us to the
decisions of this Court in M. Prabhulal Vs. Assistant Director,
Directorate of Revenue Intelligence6 and Union of India Vs.
Satrohan7. It was pleaded that the divergent view on the point
expressed by this Court in Ahmed Vs. State of Gujarat8, does
not lay down the correct proposition of law.
9. It was then contended by Mr. Luthra that a reading of
sub-sections (1) and (3) of Section 50 of the NDPS Act makes
it clear that the right granted to a suspect is not the right to be
searched before the nearest Gazetted Officer or nearest
Magistrate, but the right to be taken before the nearest Gazetted
Officer or nearest Magistrate, whereupon such officer or
Magistrate is duly empowered under Section 50(3), to either
discharge the suspect from detention or direct that a search
be made. In support of the proposition, reliance is placed on a
A
B
C
D
E
F
G
9
A decision of this Court in State of Rajasthan Vs. Ram Chandra .
10. Learned counsel also submitted that the decisions of
this Court in State of Punjab Vs. Balbir Singh10, Saiyad Mohd.
Saiyad Umar Saiyad & Ors. Vs. State of Gujarat11, Ali Mustaffa
Abdul Rahman Moosa Vs. State of Kerala12 and affirmed in
B Baldev Singh (supra) have all read the phrase ‘for making the
search’ into Section 50(1) of the NDPS Act, which has led to
safeguards and protections to an accused person, as
envisaged under Section 50 of the NDPS Act to be read down,
making the said provision virtually ineffective and, therefore, the
C decision of this Court in Baldev Singh (supra) needs
reconsideration.
11. Adopting the same line of arguments, Mr. P.P.
Malhotra, the learned Additional Solicitor General, appearing
D on behalf of the Government of NCT of Delhi maintained that it
is clear from language of Sections 41(2), 42 and 43 of the
NDPS Act that the legislature has dealt with gazetted officers
differently, reposing higher degree of trust in them and,
therefore, if a search of a person is conducted by a gazetted
E officer, he would not be required to comply with the rigours of
Section 50(1) of the Act. It was argued that the view expressed
by this Court in Ahmed (supra), is incorrect and, therefore,
deserves to be reversed.
12. The NDPS Act was enacted in the year 1985, with a
view to consolidate and amend the law relating to narcotic
drugs, incorporating stringent provisions for control and
regulation of operations relating to narcotic drugs and
psychotropic substances. The object of the said legislation has
been explained time and again by this Court in a plethora of
G cases and, therefore, we feel that it is not necessary to delve
F
9.
(2005) 5 SCC 151.
6.
(2003) 8 SCC 449
10. (1994) 3 SCC 299.
7.
(2008) 8 SCC 313.
11. (1995) 3 SCC 610.
8.
(2000) 7 SCC 477.
H
H
12. (1994) 6 SCC 569.
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
269
upon this aspect all over again, except to re-emphasise that in
order to prevent abuse of the provisions of the NDPS Act,
which confer wide powers on the empowered officers, the
safeguards provided by the Legislature have to be observed
strictly. Moreover, having regard to the terms of reference to
the larger Bench, extracted above, it is equally unnecessary to
extract extensively all the provisions of the NDPS Act to which
reference was made by learned counsel appearing for the
States, and a brief reference to these provisions would suffice.
13. Under Section 41 of the NDPS Act, certain classes of
Magistrates are competent to issue warrants for the arrest of
any person whom such Magistrates have reason to believe to
have committed any offence punishable under the NDPS Act,
or for the search of any building, conveyance or place in which
such Magistrate has reason to believe any narcotic drug or
psychotropic substance or controlled substance in respect of
which an offence punishable under the said Act has been
committed or any document or other article which may furnish
evidence of the commission of such offence or any illegally
acquired property or any document or other article which may
furnish evidence of holding any illegally acquired property which
is liable for seizure or freezing or forfeiture under Chapter VA
is kept or concealed. Under Section 42 of the NDPS Act, the
empowered officer can enter, search, seize and arrest even
without warrant or authorisation, if he has reason to believe from
his personal knowledge or information taken down in writing,
that an offence under Chapter IV of the said Act has been
committed. Under proviso to sub-section (1), if such officer has
reason to believe that a search warrant or authorisation cannot
be obtained without affording opportunity for the concealment
of evidence or facility for the escape of an offender, he may
enter and search such building, conveyance or enclosed place
at any time between sunset and sunrise after recording the
grounds of his belief and send the same to his immediate
official superior in terms of sub-section (2) of the Section.
270
A
B
A
14. Section 50 of the NDPS Act prescribes the conditions
under which personal search of a person is required to be
conducted. Being the pivotal provision, the Section, (as
amended by Act 9 of 2001 – inserting sub-sections (5) and (6)
with effect from 2nd October 2001) is extracted in full. It reads
B as under:
C
C
D
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SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
E
“50. Conditions under which search of persons shall be
conducted.—(1) When any officer duly authorised under
section 42 is about to search any person under the
provisions of section 41, section 42 or section 43, he shall,
if such person so requires, take such person without
unnecessary delay to the nearest Gazetted Officer of any
of the departments mentioned in section 42 or to the
nearest Magistrate.
(2) If such requisition is made, the officer may detain the
person until he can bring him before the Gazetted Officer
or the Magistrate referred to in sub-section (1).
(3) The Gazetted Officer or the Magistrate before whom
any such person is brought shall, if he sees no reasonable
ground for search, forthwith discharge the person but
otherwise shall direct that search be made.
(4) No female shall be searched by anyone excepting a
female.
F
F
G
G
H
H
(5) When an officer duly authorised under section 42 has
reason to believe that it is not possible to take the person
to be searched to the nearest Gazetted Officer or
Magistrate without the possibility of the person to be
searched parting with possession of any narcotic drug or
psychotropic substance, or controlled substance or article
or document, he may, instead of taking such person to the
nearest Gazetted Officer or Magistrate, proceed to search
the person as provided under section 100 of the Code of
Criminal Procedure, 1973 (2 of 1974).
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
271
(6) After a search is conducted under sub-section (5), the
officer shall record the reasons for such belief which
necessitated such search and within seventy-two hours
send a copy thereof to his immediate official superior.”
15. Sub-section (1) of the said Section provides that when
the empowered officer is about to search any suspected
person, he shall, if the person to be searched so requires, take
him to the nearest gazetted officer or the Magistrate for the
purpose. Under sub-section (2), it is laid down that if such
request is made by the suspected person, the officer who is to
take the search, may detain the suspect until he can be brought
before such gazetted officer or the Magistrate. It is manifest that
if the suspect expresses the desire to be taken to the gazetted
officer or the Magistrate, the empowered officer is restrained
from effecting the search of the person concerned. He can only
detain the suspect for being produced before the gazetted
officer or the Magistrate, as the case may be. Sub-section (3)
lays down that when the person to be searched is brought
before such gazetted officer or the Magistrate and such
gazetted officer or the Magistrate finds that there are no
reasonable grounds for search, he shall forthwith discharge the
person to be searched, otherwise he shall direct the search to
be made. The mandate of Section 50 is precise and clear, viz.
if the person intended to be searched expresses to the
authorised officer his desire to be taken to the nearest gazetted
officer or the Magistrate, he cannot be searched till the gazetted
officer or the Magistrate, as the case may be, directs the
authorised officer to do so.
16. At this juncture, we must state that the issue before us
in terms of the referral order is not about the applicability of
Section 50 of the NDPS Act per se but is confined to the scope
and width of the expression “if the person to be searched so
requires” as figuring in sub-section (1) of the said Section.
Therefore, we deem it unnecessary to evaluate the submissions
made by the learned counsel regarding the applicability of the
272 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
A rigours of Section 50 of the NDPS Act when a search of the
suspect is conducted by an officer empowered under Section
41 of the said Act. We may, however, add that while
considering the question of compliance with Section 50 of the
NDPS Act, the Constitution Bench in Baldev Singh (supra)
B considered the provisions of Section 41 as well. It observed
as under :-
C
C
D
D
E
E
F
F
G
H
“8. Section 41 of the NDPS Act provides that a
Metropolitan Magistrate or a Magistrate of the First Class
or any Magistrate of the Second Class specially
empowered by the State Government in this behalf, may
issue a warrant for the arrest of and for search of any
person whom he has reason to believe to have committed
any offence punishable under Chapter IV. Vide sub-section
(2) the power has also been vested in gazetted officers of
the Departments of Central Excise, Narcotics, Customs,
Revenue Intelligence or any other department of the
Central Government or of the Border Security Force,
empowered in that behalf by a general or special order of
the State Government to arrest any person, who he has
reason to believe to have committed an offence punishable
under Chapter IV or to search any person or conveyance
or vessel or building etc. with a view to seize any
contraband or document or other article which may furnish
evidence of the commission of such an offence, concealed
in such building or conveyance or vessel or place.”
17. In the above background, we shall now advert to the
controversy at hand. For this purpose, it would be necessary
to recapitulate the conclusions, arrived at by the Constitution
G Bench in Baldev Singh’s case (supra). We are concerned with
the following conclusions:-
H
“57. (1) That when an empowered officer or a duly
authorised officer acting on prior information is about to
search a person, it is imperative for him to inform the
person concerned of his right under sub-section (1) of
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
273
Section 50 of being taken to the nearest gazetted officer
or the nearest Magistrate for making the search. However,
such information may not necessarily be in writing.
(2) That failure to inform the person concerned about the
existence of his right to be searched before a gazetted
officer or a Magistrate would cause prejudice to an
accused.
(3) That a search made by an empowered officer, on prior
information, without informing the person of his right that if
he so requires, he shall be taken before a gazetted officer
or a Magistrate for search and in case he so opts, failure
to conduct his search before a gazetted officer or a
Magistrate, may not vitiate the trial but would render the
recovery of the illicit article suspect and vitiate the
conviction and sentence of an accused, where the
conviction has been recorded only on the basis of the
possession of the illicit article, recovered from his person,
during a search conducted in violation of the provisions of
Section 50 of the Act.
xxxxx xxxxx xxxxx xxxxx
(5) That whether or not the safeguards provided in Section
50 have been duly observed would have to be determined
by the court on the basis of the evidence led at the trial.
Finding on that issue, one way or the other, would be
relevant for recording an order of conviction or acquittal.
Without giving an opportunity to the prosecution to
establish, at the trial, that the provisions of Section 50 and,
particularly, the safeguards provided therein were duly
complied with, it would not be permissible to cut short a
criminal trial.
(6) That in the context in which the protection has been
incorporated in Section 50 for the benefit of the person
intended to be searched, we do not express any opinion
274
A
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B
B
C
C
D
D
E
F
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
whether the provisions of Section 50 are mandatory or
directory, but hold that failure to inform the person
concerned of his right as emanating from sub-section (1)
of Section 50, may render the recovery of the contraband
suspect and the conviction and sentence of an accused
bad and unsustainable in law.
(7) That an illicit article seized from the person of an
accused during search conducted in violation of the
safeguards provided in Section 50 of the Act cannot be
used as evidence of proof of unlawful possession of the
contraband on the accused though any other material
recovered during that search may be relied upon by the
prosecution, in other proceedings, against an accused,
notwithstanding the recovery of that material during an
illegal search.”
18. Although the Constitution Bench did not decide in
absolute terms the question whether or not Section 50 of the
NDPS Act was directory or mandatory yet it was held that
provisions of sub-section (1) of Section 50 make it imperative
E for the empowered officer to “inform” the person concerned
(suspect) about the existence of his right that if he so requires,
he shall be searched before a gazetted officer or a Magistrate;
failure to “inform” the suspect about the existence of his said
right would cause prejudice to him, and in case he so opts,
F failure to conduct his search before a gazetted officer or a
Magistrate, may not vitiate the trial but would render the
recovery of the illicit article suspect and vitiate the conviction
and sentence of an accused, where the conviction has been
recorded only on the basis of the possession of the illicit article,
recovered from the person during a search conducted in
G
violation of the provisions of Section 50 of the NDPS Act. The
Court also noted that it was not necessary that the information
required to be given under Section 50 should be in a
prescribed form or in writing but it was mandatory that the
suspect was made aware of the existence of his right to be
H
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
276 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
275
searched before a gazetted officer or a Magistrate, if so
required by him. We respectfully concur with these conclusions.
Any other interpretation of the provision would make the
valuable right conferred on the suspect illusory and a farce.
19. As noted above, sub-sections (5) and (6) were inserted
in Section 50 by Act 9 of 2001. It is pertinent to note that
although by the insertion of the said two sub-sections, the rigour
of strict procedural requirement is sought to be diluted under
the circumstances mentioned in the sub-sections, viz. when the
authorised officer has reason to believe that any delay in search
of the person is fraught with the possibility of the person to be
searched parting with possession of any narcotic drug or
psychotropic substance etc., or article or document, he may
proceed to search the person instead of taking him to the
nearest gazetted officer or Magistrate. However, even in such
cases a safeguard against any arbitrary use of power has been
provided under sub-section (6). Under the said sub-section, the
empowered officer is obliged to send a copy of the reasons,
so recorded, to his immediate official superior within seventy
two hours of the search. In our opinion, the insertion of these
two sub-sections does not obliterates the mandate of subsection (1) of Section 50 to inform the person, to be searched,
of his right to be taken before a gazetted officer or a Magistrate.
The object and the effect of insertion of sub-sections (5) and
(6) were considered by a Constitution Bench of this Court, of
which one of us (D.K. Jain, J.) was a member, in Karnail Singh
Vs. State of Haryana13. Although in the said decision the Court
did observe that by virtue of insertion of sub-sections (5) and
(6), the mandate given in Baldev Singh’s case (supra) is diluted
but the Court also opined that it cannot be said that by the said
insertion, the protection or safeguards given to the suspect have
been taken away completely. The Court observed :-
A
A
B
B
C
C
D
D
E
F
G
“Through this amendment the strict procedural requirement
as mandated by Baldev Singh case was avoided as
13. (2009) 8 SCC 539.
H
relaxation and fixing of the reasonable time to send the
record to the superior official as well as exercise of
Section 100 CrPC was included by the legislature. The
effect conferred upon the previously mandated strict
compliance with Section 50 by Baldev Singh case was
that the procedural requirements which may have
handicapped an emergency requirement of search and
seizure and give the suspect a chance to escape were
made directory based on the reasonableness of such
emergency situation. Though it cannot be said that the
protection or safeguard given to the suspects have been
taken away completely but certain flexibility in the
procedural norms were adopted only to balance an urgent
situation. As a consequence the mandate given in Baldev
Singh case is diluted.”
20. It can, thus, be seen that apart from the fact that in
Karnail Singh (supra), the issue was regarding the scope and
applicability of Section 42 of the NDPS Act in the matter of
conducting search, seizure and arrest without warrant or
authorisation, the said decision does not depart from the dictum
E laid down in Baldev Singh’s case (supra) in so far as the
obligation of the empowered officer to inform the suspect of his
right enshrined in sub-section (1) of Section 50 of the NDPS
Act is concerned. It is also plain from the said paragraph that
the flexibility in procedural requirements in terms of the two
F newly inserted sub-sections can be resorted to only in emergent
and urgent situations, contemplated in the provision, and not
as a matter of course. Additionally, sub-section (6) of Section
50 of the NDPS Act makes it imperative and obligatory on the
authorised officer to send a copy of the reasons recorded by
G him for his belief in terms of sub-section (5), to his immediate
superior officer, within the stipulated time, which exercise would
again be subjected to judicial scrutiny during the course of trial.
21. We shall now deal with the two decisions, referred to
in the referral order, wherein “substantial compliance” with the
H
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
277
278
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
requirement embodied in Section 50 of the NDPS Act has
been held to be sufficient. In Prabha Shankar Dubey (supra),
a two Judge bench of this Court culled out the ratio of Baldev
Singh’s case (supra), on the issue before us, as follows:
A
A Fernandez (supra) does not notice the ratio of Baldev Singh
(supra) and in Prabha Shankar Dubey (supra), Joseph
Fernandez (supra) is followed ignoring the dictum laid down
in Baldev Singh’s case (supra).
“What the officer concerned is required to do is to convey
about the choice the accused has. The accused (suspect)
has to be told in a way that he becomes aware that the
choice is his and not of the officer concerned, even though
there is no specific form. The use of the word “right” at
relevant places in the decision of Baldev Singh case
seems to be to lay effective emphasis that it is not by the
grace of the officer the choice has to be given but more
by way of a right in the “suspect” at that stage to be given
such a choice and the inevitable consequences that have
to follow by transgressing it.”
B
B
C
C
D
D
E
E
F
F
“The use of the expression “substantial compliance” was
made in the background that the searching officer had
Section 50 in mind and it was unaided by the interpretation
placed on it by the Constitution Bench in Baldev Singh
case. A line or a word in a judgment cannot be read in
isolation or as if interpreting a statutory provision, to impute
a different meaning to the observations.”
G
G
It is manifest from the afore-extracted paragraph that Joseph
H
H
However, while gauging whether or not the stated requirements
of Section 50 had been met on facts of that case, finding
similarity in the nature of evidence on this aspect between the
case at hand and Joseph Fernandez (supra), the Court chose
to follow the views echoed in the latter case, wherein it was held
that searching officer’s information to the suspect to the effect
that “if you wish you may be searched in the presence of a
gazetted officer or a Magistrate” was in substantial compliance
with the requirement of Section 50 of the NDPS Act.
Nevertheless, the Court indicated the reason for use of
expression “substantial compliance” in the following words:
22. In view of the foregoing discussion, we are of the firm
opinion that the object with which right under Section 50(1) of
the NDPS Act, by way of a safeguard, has been conferred on
the suspect, viz. to check the misuse of power, to avoid harm
to innocent persons and to minimise the allegations of planting
or foisting of false cases by the law enforcement agencies, it
would be imperative on the part of the empowered officer to
apprise the person intended to be searched of his right to be
searched before a gazetted officer or a Magistrate. We have
no hesitation in holding that in so far as the obligation of the
authorised officer under sub-section (1) of Section 50 of the
NDPS Act is concerned, it is mandatory and requires a strict
compliance. Failure to comply with the provision would render
the recovery of the illicit article suspect and vitiate the conviction
if the same is recorded only on the basis of the recovery of the
illicit article from the person of the accused during such search.
Thereafter, the suspect may or may not choose to exercise the
right provided to him under the said provision. As observed in
Re Presidential Poll14, it is the duty of the courts to get at the
real intention of the Legislature by carefully attending to the
whole scope of the provision to be construed. “The key to the
opening of every law is the reason and spirit of the law, it is
the animus imponentis, the intention of the law maker
expressed in the law itself, taken as a whole.” We are of the
opinion that the concept of “substantial compliance” with the
requirement of Section 50 of the NDPS Act introduced and
read into the mandate of the said Section in Joseph Fernandez
(supra) and Prabha Shankar Dubey (supra) is neither borne
out from the language of sub-section (1) of Section 50 nor it is
in consonance with the dictum laid down in Baldev Singh’s
case (supra). Needless to add that the question whether or not
14. (1974) 2 SCC 33.
VIJAYSINH CHANDUBHA JADEJA v. STATE OF
GUJARAT [D.K. JAIN, J.]
279
the procedure prescribed has been followed and the
requirement of Section 50 had been met, is a matter of trial. It
would neither be possible nor feasible to lay down any absolute
formula in that behalf. We also feel that though Section 50 gives
an option to the empowered officer to take such person
(suspect) either before the nearest gazetted officer or the
Magistrate but in order to impart authenticity, transparency and
creditworthiness to the entire proceedings, in the first instance,
an endeavour should be to produce the suspect before the
nearest Magistrate, who enjoys more confidence of the
common man compared to any other officer. It would not only
add legitimacy to the search proceedings, it may verily
strengthen the prosecution as well.
23. Accordingly, we answer the reference in the manner
aforesaid. The appeals shall, now, be placed before the
appropriate Bench for disposal.
R.P.
Reference answered.
[2010] 13 (ADDL.) S.C.R. 280
A
A
B
B
COMMISSIONER OF CUSTOMS (GEN), MUMBAI
v.
ABDULLA KOYLOTH
(Civil Appeal No. 1608 of 2005)
OCTOBER 29, 2010
[D.K. JAIN AND T.S. THAKUR, JJ.]
Customs Act, 1962:
C
D
Section 14(1) – Valuation of imported goods for purposes
of assessment – Mis-declaration with respect to country of
origin, quantity and value of imported items – However,
Tribunal accepting the transaction value as declared by
assessee – HELD: Price paid by an importer to the vendor
in the ordinary course of commerce is to be taken the
D
transaction value in the absence of any special
circumstances indicated in s.14(1) of the Act and
particularized in Rule 4(2) of 1988 Rules – In the instant case,
the assessee admitted that there was difference between the
items declared and seized and that the value arrived at after
E market inquiries was acceptable to him – In the
circumstances, the Tribunal failed to apply the procedure
envisaged in s.14(1) of the Act read with 1988 Rules – Order
of Tribunal set aside and matter remitted to it for
consideration afresh – Customs Valuation (Determination of
F Price of Imported Goods) Rules, 1988 – Rules 3(ii), 4(2) and
5 to 8.
C
The proprietorship concern of the respondent
imported a consignment of assorted consumer goods
G like glass ware, hair dryers, gas filled cylinders and
refrigerant-22 gas (R-22). The bill of entry for the said
goods was filed on 3.5.2002. The goods were seized, as
it was found that there was mis-declaration with respect
to country of origin, quantity and value of imported items,
280
H
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v.
ABDULLA KOYLOTH
281
and there was no actual user licence for import of R-22
gas filled cylinders. The Commissioner of Customs
rejected the value declared by the respondent for the
purpose of Section14 of the Customs Act, 1962 and held
that the assessable value of the goods had to be
determined under Rules 6-A and 7 of the Customs
Valuation (Determination of Price of Imported Goods)
Rules, 1988. The Commissioner confirmed the
assessable value of the goods and the duty demand.
Additionally, the goods were ordered to be confiscated
under sections 111(d) and (m) with the option of
redemption and payment of fine, and penalty was also
imposed on the respondent. R-22 gas cylinders were
confiscated absolutely u/s 111(d) of the Act, in the
absence of actual user licence. The Customs, Excise and
Service Tax Appellate Tribunal confirmed the order as
regards R-22 gas cylinders, but in respect of the other
items, it allowed the claim of the assessee.
In the instant appeal filed by the Revenue, it was
contended for the appellant that as there was misdeclaration in the bill of entry in relation to quantity,
country of origin and value of the goods, the transaction
value had to be rejected in terms of Section 14(1) of the
Act and Rule 4(2) of the 1988 Rules, and in the absence
of contemporaneous imports of similar goods, Rule 7 of
1988 Rules would apply.
282
A
B
C
D
E
F
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A in Section 14(1) of the Act and particularized in Rule 4(2)
of the 1988 Rules. Therefore, the Customs authorities are
bound by the declaration of the importer unless on the
basis of some contemporaneous evidence the Revenue
is able to demonstrate that the invoice does not reflect
B the correct value. It is only when the transaction value
under Rule 4 is rejected, that by virtue of Rule 3(ii), the
value shall be determined by proceeding sequentially
through Rules 5 to 8 of the 1988 Rules. [para 15] [292-H;
293-A-C]
C
Commissioner of Customs, Mumbai Vs. J.D. Orgochem
Limited 2008 (6) SCR 200 = (2008) 16 SCC 576; and
Commissioner of Customs, Calcutta Vs. South India
Television (P) Ltd. 2007 (8) SCR 95 = (2007) 6 SCC 373;
Commissioner of Customs, Mumbai Vs. Bureau Veritas &
D Ors. 2005 (2) SCR 118 = 2005 (3) SCC 265; and Eicher
Tractors Ltd., Haryana Vs. Commissioner of Customs,
Mumbai 2000 (4) Suppl. SCR 597 = (2001) 1 SCC 315 –
relied on.
Prasant Glass Works P. Ltd Vs. Collector of Customs,
Calcutta 1996 (87) E.L.T. 518 (Tri.-Del); Prasant Glass Works
P. Ltd Vs. Collector of Customs 1997 (89) E.L.T. A 179;
Varsha Plastics Private Limited & Anr. Vs. Union of India &
Ors. 2009 (1) SCR 896 = (2009) 3 SCC 365; and Collector
of
Customs, Calcutta Vs. Sanjay Chandiram 1995 (1) Suppl.
F
SCR 19 = 1995 (4) SCC 222, cited.
E
Allowing the appeal, the Court
HELD: 1.1 Both, Section14 (1) of the Customs Act,
1962 (as it existed at the relevant time) and Rule 4 of the
Customs Valuation (Determination of Price of Imported
Goods) Rules, 1988, provide that the price paid by an
importer to the vendor in the ordinary course of
commerce shall be taken to be the transaction value in
the absence of any of the special circumstances indicated
G
H
1.2 It is evident from a bare reading of the impugned
order that having regard to the factual scenario emerging
from the record, the Tribunal has failed to apply the
G procedure envisaged in Section 14(1) of the Act read with
1988 Rules for determining the value of the imported
goods. The finding of the Tribunal that “in the absence
of any evidence to show that the invoice value was not
correct and further in the absence of contemporaneous
H imports of identical goods the value declared by the
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v.
ABDULLA KOYLOTH
283
assessee should be accepted as transaction value” is
clearly perverse and cannot be sustained, particularly, in
light of the fact that the information collected by the
revenue from the market, veracity whereof was not
questioned by the respondent, has also not been
examined by the Tribunal. Importantly, the Tribunal has
also overlooked the statement made by the respondent
on 13.9.2002 under Section 108 of the Act, whereby he
admitted that there was difference between the items
declared, and the items actually seized by the Customs
authorities, and that the value arrived at after market
enquiries was acceptable to him. The said statement was
not contested by the respondent either before the
Commissioner or the Tribunal. [para 18] [294-E-G; 295-A]
1.3. In the facts and circumstances of the case, the
Tribunal needs to re-examine the entire matter afresh,
particularly, in relation to the manner of valuation,
redemption fine and penalty. Consequently, the matter is
remitted back to the Tribunal for consideration afresh in
accordance with law after affording proper opportunity
of hearing to both the parties. [para 19] [295-A-B]
284 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
A
B
A
B
cited
para 11
1997 (89) E.L.T. A 179
cited
para 11
2000 (4) Suppl. SCR 597
relied on
para 11
2009 (1) SCR 896
cited
para 11
2008 (6) SCR 200
relied on
para 15
2007 (8) SCR 95
relied on
para 15
2005 (2) SCR 118
relied on
para 15
1995 (1) Suppl. SCR 19
cited
para 18
From the Judgment & Order dated 10.12.2004 of the
Customs, Excise and Service tax Appellate Tribunal, West
Regional Bench at Mumbai in Appeal Noc./493/2003/Mum.
K. Swami, T.V. Ratnam, D.L. Chidananda, B. Krishna
Prasad for the Appellant.
C
Tarun Gulati, Ramesh Singh, Kishore Kunal, Rony John,
Praveen
Kumar for the Appellant.
C
The Judgment of the Court was delivered by
D
E
D.K. JAIN, J. 1. Challenge in this appeal, by the revenue,
under Section 130E(b) of the Customs Act, 1962 (for short “the
D Act”) is to the order dated 10th December 2004 passed by the
Customs, Excise and Service Tax Appellate Tribunal, (for short
“the Tribunal”) whereby the appeal preferred by the respondent
has been allowed holding that the assessable value declared
by the respondent in the bill of entry should be accepted for the
E purpose of valuation in terms of Section 14 of the Act.
Case Law Reference:
1996 (87) E.L.T. 518 (Tri.-Del)
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1608 of 2005.
F
F
G
G
2. M/s. IPCO Enterprise, Thane, a proprietorship concern
of the respondent imported a consignment of assorted
consumer goods ranging from glass ware, hair dryers etc. to
gas filled cylinders and refrigerant-22 gas (R-22). The bill of
entry for the said goods was filed on 3rd May 2002, by M/s
Vegha Shipping & Transport Pvt. Ltd. on behalf of M/s. IPCO
Enterprise, whereby the total assessable value of the goods
was declared at ‘ 6,75, 796.90/- with duty liability of ‘ 3,86,352/
-.
3. On an examination of the bill of entry, invoice dated 17th
April 2002, and packing list issued by one M/s. Plizer Trading,
Dubai, certain discrepancies were noticed by the Central
Intelligence Unit, and therefore, first check appraisement was
H
H
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v. 285
ABDULLA KOYLOTH [D.K. JAIN, J.]
286
A
A
4. On 31st May 2002, the respondent was summoned by B
the Central Intelligence Unit, and his statement under Section
108 of the Act was recorded. Subsequently, another statement
was recorded on 6th June 2002, wherein the respondent stated
that he was not aware that he required license for import of
certain goods, and that he did not remember the country of
C
origin of some of the goods.
B
ordered. Subsequently, 100% examination of the goods was
carried out on 13th-14th May 2002, and it was found that there
was mis-declaration with respect to country of origin, quantity
and value of the imported items.
5. Due to large number of discrepancies found in the bill
of entry, and the fact that the import of R-22 gas filled cylinders
required actual user license, the goods were seized on 4th July
D
2002.
6. On 26th August 2002, the respondent wrote a letter to
the Central Intelligence Unit whereby he stated that he had
accepted the wholesale prices found out by the department by
market survey, and that the case be finalized and settled at the
earliest. Thereafter, duty liability was calculated in terms of Rule
6A and 7(1) of the Customs Valuation (Determination of Price
of Imported Goods) Rules, 1988 (for short “the 1988 Rules”)
as it was observed that Rules 3(i) and 4 were not applicable
due to mis-declaration, and Rule 5 and 6 could not be invoked
as there were no contemporaneous imports of similar or
identical goods.
D
E
E
F
F
7. On 13th September 2002, another statement of the
respondent was recorded under Section 108 of the Act, wherein
he admitted, inter alia, that there was difference in the items G
declared and the items actually found and seized under
Panchnama, and that the prices of the items, in question, found
by the market survey were acceptable to him.
8. Vide his order dated 21st April 2003, the Commissioner
C
H
G
H
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
of Customs rejected the assessable value declared in the bill
of entry. Dealing with explanation furnished on behalf of the
respondent regarding some of the crockery items, the
Commissioner observed thus :
“As regards the contention that inadvertently in the packing
list and the invoice, the word “Set” was omitted and
officers took it as single piece in place of set, I find that
whoever there are dinner sets mentioned in the invoice
and packing list, the quantities in sets have been
specifically mentioned while for other items the declaration
have been in pieces. If the contention of the learned
advocates that value declared is for a set is accepted then
the value of these crockery items would become so low
that such a proposition itself appears ridiculous. For
example, the wholesale price of a single Arc brand, 25
CI, glass mug of France origin in the local markets is
Rs.40/- and of a set of 6 mugs is Rs.240/-, the declared
CIF price of a single same mug, if it is accepted that this
price is for a set of 6 mugs as agitated by the learned
advocates, would thus be Rs.0.41 or Rs.2.46/- per set of
6 pieces. It is beyond any comprehension how the
wholesale price of a single or set of this mug in the local
markets can be Rs. 40/- and Rs.240/-respectively if they
are so cheap as (sic) declared by the importers. Similar
is the situation in case of all other crockery items. The
advocates have not given me any explanation for such a
vast difference in market values of the goods and the
declared prices. On the other hand Shri Abdulla Koyloth,
the proprietor of the import firm has, in his letters dated
26,08,02,09.02 and statement dated 13.09.02, accepted
the determination of assessable value and the duty liability
thereon in the basis of market surveys which were
conducted in his presence. Under the circumstances, I am
not inclined to accept the contention of the advocates that
the value declared is of a complete set. In any case, these
goods are mis-declared in respect of both quantities as
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v. 287
ABDULLA KOYLOTH [D.K. JAIN, J.]
well as value. This was done with a clear intention of evade
duty.”
Thus, having rejected the value declared by the respondent
for the purpose of Section 14 of the Act, the Commissioner held
that the assessable value of the goods had to be determined
under Rules 6A and 7 of the 1988 Rules. Accordingly, he
confirmed the assessable value of the goods at ‘23,69,838/and the duty demand of ‘13,17,091/- as customs duty on them.
Additionally, the Commissioner ordered the confiscation of the
said goods under Sections 111(d) and (m) of the Act, with the
option of redemption on payment of fine of ‘30,11,525/-.
However, R-22 gas filled cylinders were confiscated absolutely
under Section 111(d) of the Act. The Commissioner also
imposed a penalty of ‘10 lakhs on the respondent under
Section 112(a) of the Act.
9. Being aggrieved by the said order of the Commissioner,
the respondent carried the matter in appeal before the Tribunal.
As afore-mentioned, the Tribunal allowed the appeal of the
importer in relation to the assessable value and confiscation
of the imported glassware, inter alia, observing thus:
“4. After going through the impugned order, we find that
the Commissioner has rejected the invoice value on the
sole ground that majority of the goods were declared with
their generic description only without disclosing any brand
name or make, etc. He has also gone on the reason that
the glass items were found to be in excess quantity than
the declared one. However, we find that the invoice as also
the packing list was annexed with the bill of entry and the
consignments in any case were of assorted items from
different countries. As such, it cannot be said that there is
mis-declaration as regards description of the goods. As
regard, variation in quantity of glass items, the appellant
have submitted that they had declared the number of sets
instead of number of pieces.
288
A
B
C
A
………………………………………………………………….
The explanations tendered by the importer are plausible,
and no case be made for rejecting the invoice value in the
absence of any importation or evidence to reflect upon the
flow back of money by the importer to the
supplier…..…………………………………
B
6. We are of the view that in the absence of any evidence
to show that the invoice value was not correct and further
in the absence of contemporaneous imports of identical
goods, the value declared by the appellant should be
accepted as transaction value and not to be rejected.”
C
D
D
E
E
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
In relation to the confiscation of the R-22 gas filled
cylinders, the Tribunal held that the confiscation of the said
goods was justified on the ground that the said goods had
to be imported against an actual user license, which the
respondent did not possess. The Tribunal also deleted the
penalty levied on the respondent on the ground that since
the value enhancement had not been upheld by it, there
was no cause for imposition of penalty.
10. Hence, the present appeal.
F
G
H
11. Mr. K. Swami, learned counsel appearing for the
revenue, while assailing the order of the Tribunal, strenuously
F urged that since the respondent had made mis-declarations in
the bill of entry in relation to quantity, country of origin and value
of the goods, the transaction value had to be rejected in terms
of Section 14(1) of the Act and Rule 4(2) of the 1988 Rules.
Learned counsel further contended that in the absence of
G contemporaneous imports of identical or similar goods, Rule
7 of 1988 Rules would apply. Commending us to the decision
of the Tribunal in Prasant Glass Works P. Ltd Vs. Collector of
Customs1, Calcutta which attained finality because of dismissal
of assessee’s appeal by this Court in Prasant Glass Works P.
H
1.
1996 (87) E.L.T. 518 (Tri.-Del)
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v. 289
ABDULLA KOYLOTH [D.K. JAIN, J.]
290
Ltd Vs. Collector of Customs.2, wherein it was held that in a A
case where the invoice value shown is inadequate, incomplete
or erroneous, then such invoice and the price declared therein
will carry little weight, and the department is not required to show
that the invoice price is defective and cannot be accepted.
B
12. Per contra, Mr. Tarun Gulati, learned counsel appearing
for the respondent contended that in light of the decisions of this
Court in Eicher Tractors Ltd., Haryana Vs. Commissioner of
Customs, Mumbai3 and Varsha Plastics Private Limited & Anr.
Vs. Union of India & Ors.4, the onus lies on the revenue to
C
establish that the transaction value disclosed by the importer
is not correct. Learned counsel contended that in the instant
case, the revenue having failed to bring on record any material
indicating undervaluation in the invoice, the value declared by
the importer had to be accepted. While candidly conceding that
though there could be some discrepancy in the mode of D
declaration of the quantity of certain glassware, in as much as
the respondent had declared the quantity in sets, whereas the
Commissioner had gone by the actual numbers, learned
counsel asserted that as such there was no mis-declaration in
relation to the assessable value, more so, when the bill of entry E
was supported by the invoice and the packing list. It was thus,
pleaded that there is no merit in this appeal.
13. Thus, the short issue that arises for determination
relates to the manner of computing the assessable value of the
imported goods. For the sake of ready reference, it would be
useful to extract Sections 2(41), 14 (1) (as it stood at the relevant
time) and 14(1-A) of the Act, which read as follows:
F
1997 (89) E.L.T. A 179.
3.
(2001) 1 SCC 315.
4.
(2009) 3 SCC 365.
B
C
14. Valuation of goods for purposes of assessment.—(1)
For the purposes of the Customs Tariff Act, 1975 (51 of
1975), or any other law for the time being in force
whereunder a duty of customs is chargeable on any goods
by reference to their value, the value of such goods shall
be deemed to be—
the price at which such or like goods are ordinarily sold,
or offered for sale, for delivery at the time and place of
importation or exportation, as the case may be, in the
course of international trade, where—
(a) the seller and the buyer have no interest in the business
of each other; or
D
E
F
(b) one of them has no interest in the business of other,
and the price is the sole consideration for the sale or offer
for sale:
Provided that such price shall be calculated with reference
to the rate of exchange as in force on the date on which a
bill of entry is presented under Section 46, or a shipping
bill or bill of export, as the case may be, is presented under
Section 50;
(1A) Subject to the provisions of sub-section (1), the price
referred to in that sub-section in respect of imported goods
shall be determined in accordance with the rules made in
this behalf.”
14. It would be also useful to extract Rules 2(f), 3 and 4 of
the 1988 Rules, which provide that:
“2(41) ‘value’, in relation to any goods, means the value
thereof determined in accordance with the provisions of G
sub-section (1) of Section 14;
2.
A
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
G
“2(f) “transaction value” means the value determined in
accordance with Rule 4 of these rules.
3. Determination of the method of valuation.-For the
purpose of these rules –
H
H
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v. 291
ABDULLA KOYLOTH [D.K. JAIN, J.]
i. the value of imported goods shall be the transaction
value,
ii. if value cannot be determined under the provisions
of clause (i) above, the value shall be determined by
proceeding sequentially through Rules 5 to 8 of these rules.
4. Transaction value.—(1) The transaction value of
imported goods shall be the price actually paid or payable
for the goods when sold for export to India, adjusted in
accordance with the provisions of Rule 9 of these rules.
292
A
A
B
B
C
C
D
D
(2) The transaction value of imported goods under sub-rule
(1) above shall be accepted:
Provided that—
(a) there are no restrictions as to the disposition or
use of the goods by the buyer other than restrictions
which—
(i) are imposed or required by law or by the public
authorities in India; or
E
E
(d) the buyer and seller are not related, or where the
buyer and seller are related, that transaction value is
acceptable for customs purposes under the provisions of
sub-rule (3) below.
(3)(a) Where the buyer and seller are related,
transaction value shall be accepted provided that
examination of the circumstances of the sale of
imported goods indicate that the relationship did
influence the price.
the
the
the
not
(b) In a sale between related persons, the
transaction value shall be accepted, whenever the importer
demonstrates that the declared value of the goods being
valued, closely approximates to one of the following values
ascertained at or about the same time—
(i) the transaction value of identical goods, or of similar
goods, in sales to unrelated buyers in India;
(ii) the deductive value for identical goods or similar
goods;
(iii) the computed value for identical goods or similar
goods:
(ii) limit the geographical area in which the goods
may be resold; or
(iii) do not substantially affect the value of the goods;
Provided that in applying the values used for comparison,
due account shall be taken of demonstrated difference in
commercial levels, quantity levels, adjustments in
accordance with the provisions of Rule 9 of these Rules
and cost incurred by the seller in sales in which he and the
buyer are not related;
F
F
G
G
H
15. Both Sections 14(1) of the Act (as it existed at the
relevant time) and Rule 4 of the 1988 Rules provide that the
H price paid by an importer to the vendor in the ordinary course
(b) the sale or price is not subject to same condition
or consideration for which a value cannot be determined
in respect of the goods being valued;
(c) no part of the proceeds of any subsequent resale,
disposal or use of the goods by the buyer will accrue directly
or indirectly to the seller, unless an appropriate adjustment
can be made in accordance with the provisions of Rule 9
of these rules; and
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
(c) substitute values shall not be established under the
provisions of clause (b) of this sub-rule.”
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v.
ABDULLA KOYLOTH [D.K. JAIN, J.]
293
of commerce shall be taken to be the transaction value in the
absence of any of the special circumstances indicated in
Section 14(1) of the Act and particularized in Rule 4(2) of the
1988 Rules. Therefore, the Customs authorities are bound by
the declaration of the importer unless on the basis of some
contemporaneous evidence the Revenue is able to
demonstrate that the invoice does not reflect the correct value.
(See: Commissioner of Customs, Mumbai Vs. J.D.
Orgochem Limited5 and Commissioner of Customs, Calcutta
Vs. South India Television (P) Ltd. 6) It is only when the
transaction value under Rule 4 is rejected, that by virtue of Rule
3(ii), the value shall be determined by proceeding sequentially
through Rule 5 to 8 of the 1988 Rules. (See: Commissioner of
Customs, Mumbai Vs. Bureau Veritas & Ors.7 and Eicher
Tractors Ltd. (supra)). Rule 5 allows for the transaction value
to be computed on the basis of identical goods imported into
at the same time whereas Rule 6 provides for the computation
of transaction value on the basis of the value of similar goods
imported into India at the same time as the subject goods. In
the absence of contemporaneous imports into India, the value
is to be determined under Rule 7 on the basis of a process of
deduction contemplated therein. If this is not possible, then
recourse must be had to Rule 7-A, and if none of these methods
can be employed to compute the transaction value, Rule 8
provides that the transaction value can be determined by using
reasonable means consistent with the principles and general
provisions of these Rules and sub-section (1) of Section 14 of
the Act and on the basis of data available in India.
16. In Varsha Plastics Private Limited (supra), this Court
while dealing with a similar situation where the importer had
misdeclared in terms of value, description and quality of the
imported goods, had held that:
5.
(2008) 16 SCC 576.
6.
(2007) 6 SCC 373.
7.
(2005) 3 SCC 265.
294
A
A
B
B
C
D
E
F
G
H
C
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
“It has to be kept in mind that once the nature of goods
has been misdeclared, the value declared on the imported
goods becomes unacceptable. It does not in any way
affect the legal position that the burden is on the Customs
Authorities to establish the case of misdeclaration of goods
or valuation or that the declared price did not reflect the
true transaction value.”
17. Similarly, in Collector of Customs, Calcutta Vs.
Sanjay Chandiram, 8 a three judge bench of this Court
observed that:
“These rules are based on the assumption that the price
actually paid or payable for the goods has been genuinely
disclosed by the importer. But, if the certificates of origin
of the goods have been found to be false, the value
declared in the invoices cannot be accepted as genuine.”
D
18. It is evident from a bare reading of the impugned order
that having regard to the factual scenario emerging from the
record, the Tribunal has failed to apply the procedure envisaged
in Section 14(1) of the Act read with 1988 Rules for
E
determining the value of the imported goods. Having carefully
perused the Tribunal’s order, in particular the above-extracted
paragraph, we are convinced that the finding of the Tribunal in
para 6 (supra) of the impugned order is clearly perverse and
cannot be sustained, particularly in light of the fact that the
F information collected by the revenue from the market, veracity
whereof was not questioned by the respondent, has also not
been examined by the Tribunal. Importantly, the Tribunal has
also overlooked the statement made by the respondent on 13th
September 2002 under Section 108 of the Act, whereby he
G admitted that there was difference between the items declared,
and the items actually seized by the Customs authorities, and
that the value arrived at after market enquiries was acceptable
to him. The said statement was not contested by the
H
8.
(1995) 4 SCC 222.
[2010] 13 (ADDL.) S.C.R. 296
COMMISSIONER OF CUSTOMS (GEN), MUMBAI v. 295
ABDULLA KOYLOTH [D.K. JAIN, J.]
A
A
19. In light of the foregoing discussion, we are of the
opinion that the Tribunal needs to re-examine the entire matter
afresh, particularly in relation to the manner of valuation,
redemption fine and penalty. Consequently, the appeal is B
allowed, and the matter is remitted back to the Tribunal for fresh
consideration in accordance with law after affording proper
opportunity of hearing to both the parties.
B
respondent either before the Commissioner or the Tribunal.
OCTOBER 29, 2010
[DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE,
JJ.]
PENAL CODE, 1860:
20. There will be no order as to costs.
R.P.
VARUN CHAUDHARY
v.
STATE OF RAJASTHAN
(Criminal Appeal No. 705 of 2008)
C
Appeal allowed.
C
s.302 – Conviction under, by courts below, based on
circumstantial evidence –Held: In the case of circumstantial
evidence, there must be a complete chain of evidence which
would lead to a conclusion that the accused was the only
person, who could have committed the offence and nobody
D else – In the instant case, there is nothing to show that the
accused had committed the offence – Judgments of courts
below set aside and the accused acquitted – Evidence –
Circumstantial evidence – Test Identification parade.
E
F
EVIDENCE:
Identification of vehicle – A motor cycle recovered as the
vehicle used in the offence – Held: Unless tyre marks are
lifted from the place of occurrence and upon its comparison
with the tyre marks of the motor cycle recovered, are found to
be the same, it cannot be said that the motor cycle recovered
was used in the offence – In the instant case, there is no such
evidence – Penal Code, 1860 – s. 302.
The father of P.W. 11 was found dead in the night of
22.8.2000
at a place near his residence. In the course of
G
investigation, the appellants (A-1 and A-2) and A-3 were
arrested. A knife from A-1 and blood-stained clothes of
A-3 were recovered. The trial court, in view of recovery
of the knife from A-1, the incised wounds found on the
296
H
VARUN CHAUDHARY v. STATE OF RAJASTHAN
297
body of the deceased, and the evidence of PW-3 and PW6, held A-1 guilty and convicted him u/s 302 IPC. A-1 filed
an appeal against his conviction; whereas the State
appealed against acquittal of A-2 and A-3. The High Court
dismissed the appeal of A-1, allowed that of the State and
convicted and sentenced A-2 and A-3 also u/s 302 read
298
A
A
B
B
with s. 34 IPC. Aggrieved, A-1 and A-2 filed the appeals.
Allowing the appeals, the Court
HELD: 1.1 It was a case of circumstantial evidence
as nobody had seen the commission of the offence. It is
a settled legal position that in the case of circumstantial
evidence, there must be a complete chain of evidence
which would lead to a conclusion that the accused was
the only person, who could have committed the offence
and none else. In the instant case, there is nothing to
show that the accused had committed the offence and
on the basis of the material on record, it would be
dangerous to convict the accused. [para 3 and 24] [302C; 309-D-E]
G. Parashwanath vs. State of Karnataka, 2010 (10)
SCR 377 = (2010) 8 SCC 593; C. Chenga Reddy v. State of
A.P. 1996 (3) Suppl. SCR 479 = (1996) 10 SCC 193 - relied
on.
1.2 The Home Guard, PW-3, who was on duty near
the place of the incident on the date of occurrence, stated
that he had seen three persons on a motor cycle around
midnight. However, he stated that he could not identify
the persons on the motor cycle. Similarly, the Police
Constable, PW-6, had stated that around 12 midnight on
22.8.2000, he had seen three persons on a motor cycle
and he whistled so as to stop the said motor cyclist but
it did not stop. It is pertinent to note that these two
witnesses did not say that they had seen any of the
C
D
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
accused. They did not even see the faces of the three
persons, who were on the motor cycle. In these set of
circumstances, having identification parade would be
futile and, therefore, there was no test identification
parade. Thus, nobody had seen any of the accused. [para
5, 6 and 20] [302-F-H; 303-A; 307-E-F]
1.3 So far as identification of the motor cycle is
concerned, PW-6 merely stated that he saw one digit of
registration number of the motor cycle, which was ‘9’. It
would be dangerous to believe that the motor cycle
C recovered, which also had digit ‘9’ in its number, was
used in the offence. On such scanty evidence it cannot
be said that the accused had been identified or the motor
cycle which had been recovered was the one which was
used by the accused at the time of the offence. [para 20]
D [307-F-H]
1.4 The so-called recovery of knife and blood stained
clothes would not help the prosecution. Recovery of the
motor cycle cannot be said to be proved because PW-9
admitted the fact that he had signed the recovery
panchnama in the police station; whereas another
witness, P.W.25, could not establish recovery of the knife
as he was not present while the knife was recovered.
Moreover, the knife was never produced before the court
nor was it shown to the accused and, therefore, the said
evidence could not have been relied upon by the courts
below for passing the order of conviction. [para 21] [308A-C]
E
E
F
F
G
Abdulwahab Abdulmajid Baloch vs. State of Gujarat,
2009
(4) SCR 956 = 2009 (11) SCC 625; and Mohd. Abdul
G
Hafeez v. State of Andhra Pradesh, AIR 1983 SC 367 –
referred to.
H
1.5 So as to establish the presence of the motor cycle
at the place of the offence, the prosecution must show
H that the tyre marks which were found at the place of the
VARUN CHAUDHARY v. STATE OF RAJASTHAN
299
offence were that of the motor cycle used by the
accused. There is no evidence and not even a reference
to the fact that any one from Forensic Science Laboratory
or from the police personnel had lifted marks of the motor
cycle tyre from the place of the offence so that the same
could be compared with the tyre marks of the motor cycle
alleged to have been used in the offence. Therefore, it
cannot be said that the motor cycle recovered was used
in the offence. It is pertinent to note that marks of the
motor cycle tyre which were received by the FSL were
not in a sealed condition. These facts clearly denote that
the marks of the motor cycle tyre could not have been
relied upon either by the trial court or by the High Court
for establishing that the motor cycle having particular tyre
marks was used in the alleged offence. [para 22] [308-CG]
1.6 It is also pertinent to note that the prosecution
could not establish the purpose for which the deceased
was murdered by the accused. Of course, it is not
necessary that in every case the motive of the accused
should be proved. However, in the instant case, where
there is no eye witness nor any scientific evidence to
connect the accused with the offence, the prosecution
ought to have established that there was some motive
behind commission of the offence of murder. It was the
case of the prosecution that the deceased, an Income
Tax Officer, had raided the premises belonging to some
scrap dealers and, therefore, he had received some
threats from such scrap dealers. It is an admitted fact that
the accused are not scrap dealers nor is there anything
to show that they had been engaged by scrap dealers to
commit the offence. Thus, there was no motive behind
the commission of the offence so far as the accused are
concerned. [para 23] [308-G-H; 309-A-C]
Surinder Pal Jain v. Delhi Administration 1993 Crl.L.J.
1871 = 1993 SCC (Crl.) 1096 and Tarseem Kumar vs. Delhi
300
A
A
B
B
C
C
D
E
F
D
E
F
SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.
Administration 1994 (2) Suppl. SCR 740 =1994 Sup. (3)
SCC 367 – referred to.
1.7 The conclusion reached by the courts below is
not correct. On the basis of such scanty evidence, which
is practically no evidence at all in the eyes of law, the
courts below could not have passed the order of
conviction. The orders convicting the accused-appellants
in both the appeals are not justified and are, therefore,
set aside. [para 26] [310-D-E]
Case Law Reference:
2009 (4) SCR 956
referred to
para 12
AIR 1983 SC 367
referred to
para 14
1993 Crl.L.J. 1871
referred to
para 15
1994 (2) Suppl. SCR 740 referred to
para 15
2010 (10) SCR 377
relied on
para 24
1996 (3) Suppl. SCR 479 relied on
para 25
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No. 705 of 2008.
From the Judgment & Order dated 14.11.2007 of the High
Court of Judicature for Rajasthan at Jaipur in D.B. Criminal
Appeal No. 935 of 2005.
WITH
Crl. Appeal No. 561 of 2008.
G
Sanjay R. Hegde, Ramesh Kr. Mishra, Krutin Joshi,
G Ramesh S. Jadhav, Vikrant Yadav, J.S. Sodhi, Sawaran S.
Saran for the Appellant.
Dr. Manish Singhvi, AAG, Devanshu Kumar Devesh, Milind
Kumar for the Respondent.
H
H
VARUN CHAUDHARY v. STATE OF RAJASTHAN
301
The Judgment of the Court was delivered by
ANIL R. DAVE, J. 1. Being aggrieved by the Judgment
delivered in Criminal Appeal No.935 of 2005 and in Criminal
Appeal No. 798 of 2006 by the Rajasthan High Court, Criminal
Appeal No.705/2008 and Criminal Appeal No.561 of 2008 have
been filed respectively. The appellants in both the appeals have
been convicted under the provisions of Section 302 of the Indian
Penal Code to suffer imprisonment for life and a fine of
Rs.1,000/-, in default 3 months’ simple imprisonment. As the
appellants in both the afore-stated appeals were involved in the
same offence, both the appeals were heard together and they
are disposed of by this common judgment.
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2. Facts giving rise to the appeals referred to above in a
nutshell are as under:(a) Bhawani Singh (deceased) was an Income Tax Officer
who was posted at Ajmer and was a member of a search party,
function of which was to conduct raids on certain persons’
premises to find out whether the concerned persons had
evaded payment of income-tax.
(b) In the evening of 22nd August, 2000, the deceased had
left his residence for going to Ajmer Club with an intimation to
his son Ajit Singh(P.W.11), that he would return by 10 p.m. As
Bhawani Singh did not return till midnight, Ajit Singh (PW-11)
had enquired from Vasudev (P.W.5), as to why the deceased
had not returned. Vasudev (P.W.5), had thereupon informed Ajit
Singh (P.W.11), that he had given lift to the deceased from
Ajmer Club and had dropped him near Ricoh circle, which was
near his residence. In the circumstances, Ajit Singh (P.W.11)
had gone to make inquiry near the residence of Vasudev (P.W.
5), but in the meantime it was informed that body of the
deceased was lying near Ricoh circle which was not quite far
from the residence of the deceased. Incised wound on left side
of chin and stab wounds were found on his body and it was
found that the deceased died as somebody had attacked him.
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In the circumstances, First Information Report (Ext.P.15) was
lodged around 2 a.m. and thereafter necessary investigation
was made by the Investigation Officer (P.W. 26 ). In the course
of investigation, Varun Chaudhary- Accused No.1, Sudhir @
Bunty –Accused no.2 and Himmat Singh @ Bobby –accused
no.3 were arrested.
3. It was the case of the prosecution that the afore-stated
accused had committed the offence of murder by inflicting
serious injuries upon the deceased. It was a case of
circumstantial evidence as nobody had seen the commission
of the offence. It was, however, recorded in the evidence that
immediately after arrest of accused no.1 on 1st September,
2000, and arrest of accused no.2, a knife had been recovered
from accused no.1 whereas blood-stained clothes of Himmat
Singh, accused no.3 had been recovered.
4. The trial court had considered the facts and on the basis
of evidence recorded, accused no.1 was found to be guilty of
having committed an offence under Section 302 of the IPC and
was sentenced to undergo life imprisonment and pay a fine of
Rs. 1,000/-, in default three months simple imprisonment
whereas accused Nos. 2 and 3 were acquitted.
5. The Trial Court had considered the fact that a knife had
been recovered from accused no.1 and in view of the fact that
incised wounds were found on the body of the deceased, it
F came to the conclusion that accused No.1 was guilty of the
offence under the provisions of Section 302 of the IPC. The trial
court considered the evidence of Pawan Kumar, Home Guard
(P.W.3), who was on duty near the Ricoh Circle. He had seen
three persons riding on a motor cycle around midnight.
G However, he could not identify the persons who were on the
motor cycle.
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6. Pooran Singh (P.W.6) , a police constable, had also
seen around same time three persons going on a motor cycle
and as there were three persons on a motor cycle, he had given
VARUN CHAUDHARY v. STATE OF RAJASTHAN
[ANIL R. DAVE, J.]
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an indication to stop them by blowing his whistle but the
motorcyclist did not stop and he could not record the full number
of the motor cycle but he noticed that one of the digits was ‘9’
in the number of the motor cycle.
7. Post Mortem of the body of the deceased revealed that
the following injuries had been inflicted on the deceased:
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suffer simple imprisonment for three months.
Being aggrieved by the aforesaid order passed by the
High Court, the aforesaid two appeals have been filed by
accused Nos.1 and 2.
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(i)
Incised wound of 3 x 0.5 cm muscle deep on
left side of chin.
(ii)
Stab wound 2.5 x 0.5 cm on the lower part C
of the chest on the left side.
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8. The said injuries were caused with a sharp edged
weapon and in the opinion of the doctor, the said injuries were
sufficient to cause death of the deceased. (Post Mortem Report
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– Ext. 21).
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9. The trial court was of the view that the chain of
circumstances had been completed and on the said basis, the
order of conviction was passed.
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10. Being aggrieved by the order of conviction, an appeal
had been filed by accused No.1, whereas against the order of
acquittal, so far as accused Nos. 2 and 3 are concerned, state
had filed an appeal in the High Court. The appeals had been
heard together and ultimately, after considering the submissions
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made on behalf of the learned advocates and upon perusal of
the evidence, the High Court confirmed the order of conviction
of accused No.1. So far as accused Nos. 2 and 3 are
concerned, the High Court came to the conclusion that they were
also guilty of the offence for which they were charged and,
therefore, the appeal filed by the State had been allowed and G
the findings of acquittal rendered by the Trial Court in favour of
accused Nos. 2 and 3 had been set aside and the said
accused were also convicted under the provisions of Section
302 read with Section 34 of the Indian Penal Code to suffer
imprisonment for life and a fine of Rs. 1,000/-, in default to H
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11. Criminal Appeal No.705 of 2008, which pertains to the
conviction of A-1 - Varun Chaudhary, was argued by Mr. U.U.
Lalit, learned senior counsel and Criminal Appeal No.561 of
2008 was argued by learned counsel Mr. Sanjay R. Hegde. The
learned counsel vehemently submitted that the order of
conviction is bad in law for the reason that there was no eyewitness and there was no complete chain of events, which
would lead to the only conclusion that the accused were guilty
of the offence referred to hereinabove and there was no
possibility of their being innocent. In a case of circumstantial
evidence, it must be established beyond doubt that except the
accused, nobody else could have committed the offence and
the chain of events must be complete in such a manner that
one can come to the conclusion that the accused was the only
person who could have committed the offence and none else.
To substantiate their case, they submitted that there was no eye
witness and only evidence which a police constable (P.W.6)
had given was that he had seen three persons going on a motor
cycle. Though he could not see the full number of the motor
cycle, he could notice no.’9’ as one of the digits in the number
of the motor cycle. The said witness specifically stated that he
could not recognize any of the accused. There was no
identification parade so as to identify as to whether the three
accused had been noticed by the Home Guard (P.W.3) and the
Police Constable (P.W.6), who had seen three persons on the
motor cycle.
12. Thereafter, they submitted that recovery of knife and
blood stained clothes could not have been relied upon by the
trial court or by the High Court. The said recovery had not been
duly proved for the reason that witness Madanlal (PW.25), who
had made an effort to prove the recovery had admitted in his
VARUN CHAUDHARY v. STATE OF RAJASTHAN
[ANIL R. DAVE, J.]
305
cross examination that he had remained outside the premises
from which the knife and the blood stained clothes (Ext. P-7)
had been recovered. It was specifically stated by the P.W.25
that when A-1 - Varun Chaudhary had taken the police party
and the witnesses to show the place where the knife had been
hidden, he was asked to remain outside the premises and the
police and accused no.1 had gone in the premises and returned
with a knife and blood stained clothes. Another witness,
Bhanwar Singh, PW.9, who was supposed to prove recovery
of the motor cycle had admitted that recovery Panchnama was
signed by him in the police station. In view of the said fact, the
trial court should not have relied upon the said witnesses. They
further submitted that the knife which was alleged to have been
recovered was never shown to the accused or was never
produced in the court. According to them, as law laid down by
this Court in Abdulwahab Abdulmajid Baloch vs. State of
Gujarat, 2009 (11) SCC 625, the weapon recovered ought to
have been produced before the court and should have been
shown to the accused but admittedly, neither the weapon was
produced before the Court nor it was shown to the accused at
any point of time.
13. So far as the evidence, which pertains to the tyre marks
of the motor cycle, which was alleged to have been used in the
offence is concerned, they submitted that there was no
evidence that the marks of the tyre had been compared with
the marks which were found at the place of the offence. In fact
there was nothing to show that tyre marks at the place of the
offence and tyre marks found by FSL Report were same.
14. They further submitted that even at the time when the
accused were questioned by the court under the provisions of
Section 313 of the Code of Criminal Procedure, the weapon
and the blood stained clothes had not been shown to the
accused. They relied upon the judgment delivered by this Court
in Mohd. Abdul Hafeez v. State of Andhra Pradesh, AIR 1983
SC 367, to substantiate their case that the articles recovered
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must be shown to the accused during the trial or at the time
when his statement under Section 313 of Cr.P.C. is recorded.
15. They further submitted that no motive was attributed
against the accused. They fairly admitted that though motive is
not important in each and every case, according to the learned
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counsel, even if one relies upon the statement made by the son
of the deceased, the deceased might have some enmity with
persons dealing in scrap as the deceased had raided
premises of some scrap dealers and due to the said fact, some
threats had also been received by the deceased from persons
C dealing in scrap. The accused were neither dealers in scrap
nor there was any evidence that at the behest of the scrap
dealers, the accused had murdered the deceased. According
to the learned counsel, in absence of any motive, in a case
which is based only on circumstantial evidence, it would not be
D just and proper to convict the accused, especially when there
was no material to come to a conclusion that the accused had
committed the offence. So as to substantiate the above
submission, they relied on the Judgments delivered by this Court
in Surinder Pal Jain v. Delhi Administration 1993 Crl.L.J. 1871
E = 1993 SCC (Crl.) 1096 and Tarseem Kumar vs. Delhi
Administration 1994 Sup.(3) SCC 367, respectively.
16. For the aforestated reasons, they submitted that the
order convicting the accused could not have been passed and,
therefore, the appeals should be allowed and the accused
should be acquitted.
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17. On the other hand, the learned public prosecutor made
an effort to support the judgments delivered by the High Court
whereby the accused have been convicted. He submitted that
G the evidence recorded by the trial court was properly
appreciated by the High Court and looking to the reasons given
by the High Court, interference with the Order of the High Court
was not called for.
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18. We have heard the learned counsel and have
VARUN CHAUDHARY v. STATE OF RAJASTHAN
[ANIL R. DAVE, J.]
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considered the submissions referred to hereinabove and
relevant record.
19. Upon going through the judgments relied upon by the
counsel appearing for the appellants and looking to the
evidence adduced before the trial court, we are in agreement
with the submissions made by the learned counsel appearing
for the appellants.
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20. Home Guard, Pawan Kumar (PW-3), had seen three
persons on a motor cycle. However, he stated that he could not
identify the persons on the motor cycle. Similarly, police C
constable Pooran Singh (PW- 6) had stated that around 12
midnight on 22nd August, 2000, he had seen two persons
going on motor cycle and one of them was the deceased. After
sometime he had seen another motor cycle which was Suzuki,
but he could not read complete number of the motor cycle, but D
he could read one of the digits, namely No. ‘9’. He whistled so
as to stop the said motor cyclist but the motor cyclist did not
stop. Thereafter, he had seen another motor cycle, being Hero
Honda which had hit a dog near Santoshi Mata Temple. It is
pertinent to note that the afore-stated two witnesses did not say E
that they had seen any of the accused. Possibly even they did
not see faces of the three persons, who were on the motor
cycle. Possibly, in these set of circumstances, having
identification parade would be futile and, therefore, there was
no test identification parade. Thus, nobody had seen any of the F
accused. So far as identification of the motor cycle is
concerned, PW-6 merely stated that he saw one digit of
registration number of the motor cycle, which was ‘9’. In our
opinion, on the basis of one digit of the registered number, it
would be dangerous to believe that the motor cycle recovered,
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which also had digit ‘9’ in its number, was used in the offence.
In our opinion, on such a scanty evidence it cannot be said that
the accused had been identified or the motor cycle which had
been recovered was the one which was used by the accused
at the time of the offence.
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21. In our opinion, so called recovery of knife and blood
stained clothes would not help the prosecution. Recovery of the
motor cycle can not be said to be proved because Bhanwar
Singh, PW-9 admitted the fact that he had signed the recovery
panchnama in the police station whereas another witness,
Madan Lal, P.W.25 could not establish recovery of the knife as
he was not present at the time and place from which the knife
had been recovered. Moreover, the knife was never produced
before the court and was never shown to the accused and,
therefore, in our opinion, the said evidence could not have been
relied upon by the courts below for passing the order of
conviction.
22. It is pertinent to note that there is no evidence or even
there is no reference to the fact that any one from Forensic
Science Laboratory or from the police personnel had lifted
marks of the motor cycle tyre from the place of the offence so
that the same can be compared with the tyre marks of the motor
cycle alleged to have been used in the offence. Unless tyre
marks are lifted from the place of the offence and upon
comparison with the tyre marks of the motor cycle recovered
are found to be the same, it cannot be said that the motor cycle
recovered was used in the offence. So as to establish the
presence of the motor cycle at the place of the offence, the
prosecution must show that the tyre marks which were found
at the place of the offence were that of the motor cycle used
by the accused. It is also pertinent to note that marks of the
motor cycle tyre which were received by the FSL were not in a
sealed condition. Aforestated facts clearly denote that the
marks of the motor cycle tyre could not have been relied upon
either by the Trial Court or by the High Court for establishing
that the motor cycle having particular tyre marks was used in
the alleged offence.
23. It is also pertinent to note that the prosecution could
not establish the purpose for which the deceased was murdered
by the accused. Of course, it is not necessary that in every case
VARUN CHAUDHARY v. STATE OF RAJASTHAN
[ANIL R. DAVE, J.]
309
motive of the accused should be proved. However, in the instant
case, where there is no eye witness or where there is no
scientific evidence to connect the accused with the offence, in
our opinion, the prosecution ought to have established that
there was some motive behind commission of the offence of
murder of the deceased. It was the case of the prosecution that
the deceased, an Income Tax Officer had raided the premises
belonging to some scrap dealers and, therefore, he had
received some threats from such scrap dealers. It is an
admitted fact that the accused are not scrap dealers or there
is nothing to show that the accused had been engaged by scrap
dealers to commit the offence. Thus, there was no motive
behind the commission of the offence so far as the accused
are concerned.
24. It is a settled legal position that in case of
circumstantial evidence, there must be a complete chain of
evidence which would lead to a conclusion that the accused was
the only person, who could have committed the offence and
none else. In the instant case, there is nothing to show that the
accused had committed the offence and on the basis of the
aforestated material, in our opinion, it would be dangerous to
convict the accused. In the case of G. Parashwanath vs. State
of Karnataka, (2010)8 SCC 593, para 24, it has been stated
that “in deciding the sufficiency of the circumstantial evidence
for the purpose of conviction, the court has to consider the total
cumulative effect of all the proved facts, each one of which
reinforces the conclusion of guilt and if the combined effect of
all these facts taken together is conclusive in establishing the
guilt of the accused, the conviction would be justified even
though it may be that one or more of these facts by itself or
themselves is/are not decisive. The facts established should be
consistent only with the hypothesis of the guilt of the accused
and should exclude every hypothesis except the one sought to
be proved…………. There must be a chain of evidence so
complete as not to leave any reasonable ground for the
conclusion consistent with the innocence of the accused and
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must show that in all human probability the act must have been
done by the accused, where various links in chain are in
themselves complete, then the false plea or false defence may
be called into aid only to lend assurance to the court”.
25. In another case of C. Chenga Reddy v. State of A.P.,
reported in (1996) 10 SCC 193, this Court has held that “In a
case based on circumstantial evidence, the settled law is that
the circumstances from which the conclusion of guilt is drawn
should be fully proved and such circumstances must be
conclusive in nature. Moreover, all the circumstances should be
complete and there should be no gap left in the chain of
evidence. Further the proved circumstances must be consistent
only with the hypothesis of the guilt of the accused and totally
inconsistent with his innocence.”
26. Due to the above stated facts, in our opinion, the
conclusion reached by the courts below is not correct. On the
basis of such scanty evidence, which is practically no evidence
at all in the eyes of law, the courts below could not have passed
the order of conviction. For the reasons stated hereinabove, we
are of the view that the orders convicting the accusedappellants in both the appeals are not justified and, therefore,
the appeals are allowed. The impugned orders are quashed
and set aside. The accused-appellants shall be released
immediately, if not required in any other offence.
R.P.
Appeals allowed.