Tag: #BombayHighCourt

Case Number

158 Ind Cas 554

Equivalent Citation

(1935) 37 BOMLR 461

Bench

The Bombay High Court

Decided On

12.03.1935

Relevant Act / Section

• The Indian Contract Act, 1872
• The Insurance Act, 1938

Brief Facts and Procedural History

Introduction

This legal case centres around a minor named Madanlal Sonulal, who initiated legal proceedings against The Great American Insurance Co. Ltd. for failing to fulfil a contractual promise. The agreement was made between the minor’s guardian and the insurance company and was deemed valid. Madanlal was the only surviving son of a joint Hindu family that operated a business in Devalgaum. The family had taken out a fire insurance policy with the defendant company to cover their cotton bales. However, when the cotton bales were destroyed in a fire, the plaintiff sued the defendant company for the recovery of their loss. The defendant company, which was incorporated in New York, USA, was conducting business in Bombay, India. To represent him in the case, Madanlal was aided by his next friend, Goverdhandas Mohanlal, who was the husband of the plaintiff’s sister and with whom the plaintiff was living.

The case raises several legal issues, including the enforceability of contracts entered into by minors, the obligations of an insurance company under a fire insurance policy, and the jurisdiction of foreign companies operating in India. The court had to determine whether the contract was binding on the minor, whether the insurance company had fulfilled its obligations, and whether the court had jurisdiction to hear the case. The case has significant implications for Indian contract law, particularly in relation to minors and the obligations of insurance companies. Ultimately, the court’s ruling would have a profound impact on the rights of Indian citizens in similar legal disputes.

Facts

This is an appeal case regarding a point of law arising from Mr Justice Kania’s decision. The plaintiff, Madanlal Sonulal, is represented by Goverdhandas Mohanlal, his next friend, and has filed a lawsuit against The Great American Insurance Co., Ltd. This company is based in New York, USA, but operates in Bombay at Apollo Street within the Fort of Bombay. According to the lawsuit, the plaintiff is the only surviving coparcener of a joint Hindu family that carries on a joint family business in Devalgaum under the name Surajmal Sonulal. The plaintiff lives with his sister’s husband, Goverdhandas Mohanlal, who oversees the firm’s operations. The plaintiff had effected an insurance policy against fire with the defendant company on certain cotton bales Nevertheless, at the precise moment when the ultimate insurance was granted to the plaintiff’s company, the bales were set on fire, prompting the plaintiff to file a lawsuit seeking compensation for the resulting loss through the insurance policy. The defence raised in the written statement is that there was collusion between the agent of the defendant company and the persons who affected the insurance and that the insurance was affected after the fire. The defendants did not plead that the plaintiff was a minor and that the insurance policy was void. However, during the proceedings, the defendant’s counsel drew the attention of the learned Judge to the fact that the plaintiff was a minor and invited the Court to raise an issue as to whether the contract was void on the ground of a minority of the plaintiff. The learned Judge raised such an issue, but at the trial, he came to the conclusion that it was not necessary to answer the issue since the minority had not been pleaded.

The defendants have appealed the judgment of the learned Judge. They have not challenged the findings of fact. However, they contend that the insurance policy is void because the plaintiff is a minor, relying on the well-known decision of the Privy Council in Mohori Bibee v. Dhurmodas Ghose^[1]. The Privy Council held that any contract by a minor is wholly void under the Indian Contract Act since the Act requires that parties to a contract should be persons competent to contract, and if one of the parties is a minor, he is not competent to contract, and therefore, no contract results.

The learned Judge had found that the contract was valid and negatived the case of fraud and collusion set up by the defendant company, and gave judgment for the plaintiff. The only answer raised by the defendants is that the insurance is void because the plaintiff is a minor. This contention is alarming since it means that the property of minors cannot be insured 

In numerous joint family enterprises, minors inherit ownership rights, and typically an adult member of the family manages the business under the minor’s name. However, if this family member is unable to secure insurance on behalf of the minor, it can create a highly precarious situation. Nonetheless, the evidence indicates that the agreement was actually established by Goverdhandas, who acted as a representative through his agent Trimbaksha. In other words, the minor who entered into the contract did so through the agent Trimbaksha, who was serving as the minor’s guardian. The Court need not delve into the principles of the previous cases since the answer to the defendants’ contention is a simple one. The contract was made by the guardian of the minor, and not by the minor himself. Thus, the insurance policy is not void.

Before this case, in Mohori Bibee and Ors. Vs. Dharmodas Gosh (1903), the Privy Council had held that a contract by a minor is void-ab-initio. Yet, the Privy Council ruled in Sri Kakulam Subrahmanyam Vs. Kurra Subba Rao (1948)^[2] that an agreement made by a guardian on behalf of a minor for their advantage is considered legally binding. In Suraj Narain Dube v. Sukhu Aheer and Anr (1928)^[3], the Allahabad High Court held that the old consideration by the minor is not valid consideration for a fresh contract. In the case of Kunwarlal Daryavsingh vs Surajmal Makhanlal And Ors. (1963)^[4], the Madhya Pradesh High Court held that a minor is liable to pay rent for the property given to him on rent due to necessities for living and continuing study.

The case of General American Insurance Co v/s Madanlal Sonulal^[5] thus stands in line with the legal precedents established by the above cases, where the validity of a contract made on behalf of a minor or involving a minor was challenged and resolved.

Issues Of The Case

• Validity of the insurance made by the minor: An important matter to be addressed in this case pertains to the validity of the insurance policy made by the minor. As the minor is not legally competent to enter into a contract, the enforceability of the policy is uncertain. Thus, the court must decide whether the policy is binding or whether it should be rendered void on account of the minor’s legal incapacity.
• Liability of the insurance company to pay losses under the policy: A second matter for the court to consider is whether the insurance company is responsible for covering the losses under the policy. In the event that the policy is deemed valid, the court must then decide whether the insurance company is legally required to fulfil the terms and conditions outlined in the contract. In making this determination, the court may need to evaluate various factors such as the nature of the loss, the degree of damage incurred, as well as any provisions or restrictions included in the policy.

The case of Madanlal Sonulal v. The Great American Insurance Co. Ltd. dealt with several legal issues, including:

1. Whether a policy of insurance is void if entered into on behalf of a minor by an adult member of their family.
2. Whether the defendant could raise the defence that the contract was void on the ground of the minority of the plaintiff, citing the well-known decision of the Privy Council in Mohori Bibee v. Dhurmodas Ghose.
3. Whether the contract was actually made by the minor’s guardian acting through an agent, or whether it was made directly by an adult member of the minor’s family.
4. Whether the defendant could use technical defences to policies, especially in cases involving minors and joint family businesses.
5. Whether the law strikes an appropriate balance between protecting the rights of minors and ensuring the smooth functioning of businesses and transactions involving minors.

Decision Of The Court

In the case at hand, Defendant had raised a claim in their written statement that there was collusion between Plaintiff and the agent of Defendant’s company. According to Defendant, the insurance came into effect after the occurrence of the fire, and therefore, they were not liable for the damages. The Plaintiff’s minority was not pleaded, and as a result, the learned judge concluded that since the issue of the minority was not raised, it was not necessary to address it. The judge further held that the insurance was valid and ruled in favour of the Plaintiff in the case of collusion and fraud.

However, Defendant appealed this decision on the grounds that Plaintiff was a minor at the time the insurance was taken out, and therefore, the insurance should be considered void ab initio. The court analyzed the circumstances surrounding the insurance policy and found that it had been entered into by Goverdhandas on behalf of the minor through the agent Trimbaksha with Puranmal on behalf of the Defendant’s company. The court further noted that Puranmal had knowledge of the Plaintiff’s minority, which made the Defendant’s company aware of the Plaintiff’s status as a minor.

The court then considered whether Goverdhandas could be considered a guardian within the meaning of the relevant Act. The Act defines a guardian as a person who has the care of the person of a minor or of their property, or both. In this case, the insurance was made for the benefit of the minor and their property, and Goverdhandas had acted on behalf of the minor in entering into the insurance agreement. Therefore, the court held that the insurance was valid and dismissed the Defendant’s appeal with costs.

In light of the court’s decision, the parties agreed that the insurance company would pay Rs. 7000 to the Plaintiff. This decision reflects the court’s careful consideration of the legal issues at play, including the definition of a guardian under the relevant Act and the circumstances surrounding the insurance policy in question.

Conclusion

The case of Madanlal Sonulal v. The Great American Insurance Co. Ltd. serves as a reminder of the importance of understanding the legal implications of contracts entered into on behalf of minors and the role of guardians in such transactions. In this case, the defendant raised the defence that the contract was void on the grounds of the plaintiff’s minority, citing the decision of the Privy Council in Mohori Bibee v. Dhurmodas Ghose (1903).

However, the court ultimately ruled that the contract was not made by the minor but by Goverdhandas, acting through his agent Trimbaksha. Thus, it was the person acting as the guardian for the minor who entered into the contract through the agent. This ruling underscores the importance of understanding who the contracting parties are and whether the person entering into the contract has the legal authority to do so on behalf of the minor.

Furthermore, this case highlights the need for insurance companies to carefully consider technical defences to policies, especially in cases involving minors and joint family businesses. Insurance companies must be diligent in their review of the policy and ensure that the person who enters into the contract on behalf of the minor has the legal authority to do so.

In conclusion, while the law seeks to protect minors from entering into contracts that may be detrimental to their interests, it is essential to balance the need to protect their rights with the smooth functioning of businesses and transactions involving minors. It is important to take into account the role of guardians in such transactions and to ensure that all parties understand the legal implications of the contract before entering into it. Overall, this case serves as a valuable reminder to all parties involved in contractual relationships to be aware of the legal implications of their actions and to seek legal advice where necessary.

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Endnotes:

1. Mohori Bibee v. Dhurmodas Ghose, (1903) 30 Cal. 539 (India).
2. Sri Kakulam Subrahmanyam v. Kurra Subba Rao, AIR 1948 Mad 207 (India).
3. Suraj Narain Dube v. Sukhu Aheer and Anr, AIR 1929 All 210 (India).
4. Kunwarlal Daryavsingh v. Surajmal Makhanlal and Ors., AIR 1964 SC 193 (India).
5. Madanlal Sonulal v. The Great American Insurance Co. Ltd., AIR 1962 SC 439 (India).

This case is analysed by Sohini Chakraborty, a first-year law student at RGNUL Patiala.

RELATED POST: When Age Matters: Examining the Implications of Minors Entering into Contracts

-Report by Jay Prakash Chandravanshi

This case pertains to the appointment of a Peon on the sympathetic ground after his father died in harness. The petitioner challenged his termination by Maharashtra state electricity Distribution Company Limited (MSEDCL). The service conditions of the employees are regulated by the Classification and Recruitment Regulations, 2005 (2005 Regulations), Clause 16 of the 2005 Regulations.

FACTS 

The petitioner was appointed as a peon after the death of his father on compassionate grounds.  The father of the petitioner worked as a lineman with respondent no. 1 – Maharashtra State Electricity Distribution Company Limited (MSEDCL).  There was a certain condition which stated that the employee must fill out the character and antecedents verification form contained with the appointment order while reporting to work, and if it shows negative results, the employee will be fired. It was clear that the petitioner does not fulfil information specified in column 11 and the police report reveals that the petitioner is charged with a crime under various sections of the Indian Penal Code and Section 3(1)(r)(s) of the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989 [Atrocities Act]. The respondent issued a show cause notice asking him why he should not be terminated and the petitioner reply the notice that he was falsely framed and had a limited role. The employer was not satisfied with the response provided and terminated the service of the employee.

PETITIONER’S CONTENTION

The petitioner’s position is limited to intervening in the fight, rather than with the righteous aim of stopping the fight.Taking reference from Avtar Singh Vs. Union of India and others, emphasized the nature of duties and sensitivity of position, the impact of suppression on suitability and post peon not per se sensitive.

RESPONDENT’S CONTENTION

If a criminal case was pending against the respondent and the facts were hidden, the employer would have to ignore such defaults and deficiencies, but a non-disclosure of material information could be a ground for dismissal.

JUDGEMENT

The high court held that there are exceptional circumstances that could have been taken into account by the employer in making the decision to terminate employment. We would make a concerted effort not to due to the sequential nature ofour discussion, we will direct the employer to reconsider the issue from anew with the observation based on Avtar Singh. We are setting aside the order of termination.

READ FULL JUDGEMENT: https://bit.ly/44smYoP

-Report by Sejal Jethva

In Suraj VS the State of Maharashtra Home Department (Special), the petitioner filed a writ petition alleging that a total of seven violations were committed between the years of 2013 and 2022, with just two of those offences occurring in the latter year.

FACTS

The petitioner is challenging the legality or lack thereof of the impugned order dated 20/10/2022 made by respondent No.2 / District Magistrate, Amravati in accordance with Section 3(1) of the Maharashtra Prevention of Dangerous Activities of Slumlords, Bootleggers, Drug Offenders, Dangerous Persons, Video Pirates, Sand Smugglers, and Persons Engaged in Black Marketing of Essential Commodities Act, 1981 (MPDA Act)

PETITIONER’S CONTENTION

Senior Counsel testifying on behalf of the petitioner fiercely argued that both of the impugned orders are defective in law, lacking in rational thought and reflecting subjective pleasure with the claimed detainee’s actions. He would contend that the detention order essentially violates the tenets on four different levels. First, he claimed that neither the Sub-Divisional Police Officer (SDPO) nor the Detaining Authority interacted with Witnesses ‘A’ and ‘B’ to record their subjective satisfaction or the accuracy of the statements made by the witnesses. Second, he asserted that the Detaining Authority disregarded the bail decisions made in various cases.

The Detaining Authority was not given or given copies of these bail orders, and this fact was not taken into consideration before the detention order was granted. Thirdly, he asserted that the detenue’s alleged actions are primarily directed against individuals and would most likely result in a law and order issue rather than a threat to the general public order. Finally, he asserted that there was an unexplained delay in serving the confirmation order on the detinue, which led to the petitioner’s filing of an effective response.

RESPONDENT’S CONTENTION

Contrarily, the Public Prosecutor testifying on behalf of respondents Nos. 1 and 2 State argued that the detention’s grounds contain all pertinent information, demonstrating unequivocally that the detaining authority carefully considered all of the information presented to it before reaching a conclusion that, in his view, is grounded in legal principles. While taking such drastic action, the detaining authority is not breaking any laws. He would contend that the SDPO spoke with both witnesses, went to the location they had described, and only then filed his report, which the Detaining Authority had looked over as material.

Then he would contend that the grounds for detention reflect the Detaining Authority’s consideration of the bail orders. He further argued that the detinue’s activities have a negative impact on public order and that residents in the area are afraid to approach law enforcement agencies or the court to freely testify against the detinue because of this fear. He continued by saying that the situations that the detaining authority was considering were directly related to the custody order.

JUDGMENT

1. The third paragraph of the reasons for imprisonment states that a total of seven violations were reported between 2013 and 2022. Similar preventative measures were taken against the detained in Chapter Case No. 38/2017, and a bond was executed for three years of good conduct. Only two of the seven offences, those registered in 2022 at the Paratwada Police Station, along with the in-camera statements of witnesses A and B, were taken into consideration by the detaining authority for the current order of detention, as stated in Paragraph No. 4.

2. In the present case, the issue was brought before the Advisory Board, which determined that there was adequate justification to maintain custody. Only then, the State Government affirmed the detention in its decision dated 24 November 2022, which was effective immediately and would last for 12 months. The confirmation order was issued by the government on 24 November 2022, but the detention order was issued on 20 October 2022. It demonstrates that the order was upheld within five weeks of the date of the detention order. As a result, there is no delay in confirming the government’s custody order.

3. As a result, we believe the petitioner’s argument in the current writ petition lacks merit.  The petition is consequently without merit and subject to dismissal for the grounds listed above. Therefore, the petition is denied. The rule is still in effect.

READ FULL JUDGEMENT: https://bit.ly/3AFsZB0

-Report by Moksh Kapoor

Interest was granted to the petitioners in the case of ROSHANBI AZIZ MOTIWALA THROUGH POA MR. ILIYAS AZIZ MOTIWALA AND ORS. Vs THE COMPETENT AUTHORITY AND DEPUTY COLLECTOR AND ORS. Decided on 06-04-2023.

FACTS:

The properties of the petitioners in the present case were acquired by the Competent Authorities. It was contended by the petitioners that the authorities passed an order under section 3(G) of the national highways act dated 15th July 2017 that the compensation awarded to the petitioners according to their building structure will be for an amount of Rs. 1,08,92,995/-. The petitioners contended that the compensation amount which was paid had not been added with the interest on the amount determined by the Competent Authority under the Award from the date of declaration of the Award till the date of payment of the amount of compensation. A similar claim was rejected by the Competent Authority and the petitioners moved to the high court for redressal under Article 226 of the Indian constitution.

APPELLANT’S CONTENTION:

Petitioners claimed they are entitled to interest on the sum given under the Award from the date of the Award until the date of payment. They also claimed that the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement (Removal of Difficulties) Order dated August 28, 2015, which went into effect on September 1, 2015, provided that the provisions of The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 (“the said Act of 2013”) relating to the determination of compensation. They further contended that it was the duty of the competent authority to disperse the compensation amount after passing the reward and the competent authority has failed to do the same. Petitioners also stated the case of Tarsem Singh, in which the apex court held that Sections 23(1-A) and (2) of the Land Acquisitions Act relating to Solatium and interest, as well as Section 28 in which interest is payable this provision will also apply to any acquisition made under the 1956 Act.

RESPONDENTS CONTENTION:

The respondent contended the notice to collect the reward to both the petitioner was issued and the petitioner by their will claimed the award in February/March 2015 and the amount was given to them during that time only. The competent authority also contended that after the award was issued the valuation of the property can’t be done therefore the award concerning structure was not passed. They stated that the supplementary compensation amount was deposited in the petitioner’s account as per the letter issued by NHAI dated 27, September 2017 and the notice for the same was issued on 28th September 2017. They claimed the petitioner is provided with the full compensation of their land therefore they are not liable to pay any interest.

JUDGEMENT:

The Bombay High Court in this case held that the claims made by the competent authority of issuing notices to both the petitioners are not maintainable in the court as there is no proof for the same. There was no material produced in the court to back up the claim. The court also held that the question here is not of providing the actual compensation, but rather providing the interest for the delay of providing the compensation by the competent authority. If there is a delay in the actual payment of compensation amount from the date of respective Awards in Petition, the Petitioners would, in our opinion, be entitled to interest from the date of respective Awards. Award valid till the date of payment. In light of the facts and circumstances of both Writ Petition and for the reasons stated above, it would be necessary to direct the Respondents to pay the Petitioners interest at the rate of 9% per annum from the date of award until the date of actual payment.

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-Report by Sejal Jethva

In this case, the custody of two children—who should live with their mother or father—is being settled between SALIM YOUSUF JAMADAR VS RESHMA SALIM JAMADAR

FACTS:

On May 19, 2010, the appellant and respondent were married in Pune in line with the customs and principles of Mohammedanism. The respondent-wife gave birth to a girl called Akira on May 16, 2014, and a son named Arsalan on September 21, 2011, both outside of marriage. Arsalan is currently about 11 years old, while Akira is about 8 years old. The respondent and her children were then violently forced out of her marital home on August 28, 2019, due to a marital quarrel. It is claimed that the children were kidnapped from the respondent’s wife’s custody at her parent’s house in Aloor by the appellant’s relatives under the guise of feeding them chocolates.

On October 11, 2021, the respondent-wife filed a case in the Omerga Court of Judicial Magistrate (First Class) under the provisions of the Protection of Women from Domestic Violence Act. The court only granted the respondent-wife visitation rights, allowing her to see her children once a month in Pune at the office of the protection officer, without interfering with the minor children’s custody arrangements with their father. The respondent-wife does not contest the court’s decision to deny custody and solely grant visitation rights in the aforementioned judgment. The wife ultimately filed a procedure under Section 8 of the Guardians and Wards Act in the trial Court over the custody of minor children as a result of the marital strife between the parties.

APPELLANT’S CONTENTION:

The attorney for the applicant has submitted a written statement outlining the events leading up to the Respondent’s (wife) filing of this application under Section 8 of the Guardians and Guardians Act. He also brought up the issue of jurisdiction, claiming that an educated trial judge had incorrectly ruled that the children had a habitual abode in Alloa based solely on inference. Welfare and child protection Concerning the query, he said that the Scientific Court had neglected to consider a few clauses in Articles 17 and 25 of the Guardians and Guardians Act.

RESPONDENT’S CONTENTION:

The respondent-wife vehemently disagreed with the arguments put out by the knowledgeable Attorney representing the appellant’s spouse. He defended the contested order and argued that the learned trial court correctly dismissed the husband’s complaint about jurisdiction. He emphasised that although the children were enrolled in an English-medium school in Aloor, the appellant-husband requested that they attend an Urdu-medium school instead, which is unquestionably dangerous for the development of young children.

He did reasonably acknowledge, however, that up until this point, the respondent-wife had not requested maintenance from her husband. He contends that the respondent, who does not leave the house for employment, is better able to provide for the children’s needs because the appellant is unable to do so because of his continued absence from the home for work. He called for the appeal to be dismissed as a result.

JUDGEMENT:

1. Upon reading the contested decision, it is clear that this aspect of the highest consideration was not discussed in detail by the competent court, given the applicant’s capacity. It can be seen that the entire judgment discusses the jurisdictional aspect and the Labor Court only made a puzzling statement on this aspect of the child’s well-being in the last paragraph. , does not argue whether it is fit to act in the best interest of children by providing them with a good future education and the facilities they need. Under guardianship laws, custody of minors remains with the mother until the age of five. However, in this case, both minor children are over 5 years of her age. Their son Arsalan is 11 years old and their daughter Akira is 8 years old. Therefore, with their best interests in mind, they must be provided with a good education, safety, and other conveniences. On the other hand, the applicant’s husband discovered that he was not at home due to his work and his wife. Therefore, she is promoted to a higher level, giving her time to grow and care for her children. However, feeding a minor child is not only about giving the child time to grow, but other aspects such as financial support, a good atmosphere, and safety are also important. 

2. As a result, the appeal is upheld, and the contested order from the learned District Judge-1, Omerga, District Osmanabad in Civil Miscellaneous Application No. 45/2020 is revoked and reversed. There is no expense order.

READ FULL JUDGEMENT: https://bit.ly/42ye1cA

-Report by Karan Gautum

Heard Ganesh Datt Mishra, learned counsel for the petitioner and Sri B.N. Pathak, learned standing counsel for the state-respondents.

FACTS

The petitioner is an educational institution run by a society registered under the Society Registration Act, 1860, and Ram Yagya Chaudhary executed a registered gift deed of his agricultural land in favour of the petitioner’s institution on 20.9.2016. However, the Assistant Inspector General (Registration) reported that the gift deed was undervalued and the valuation was not shown on the market value. The dispute was referred to the Collector and the petitioner filed an objection. Stamp Case No.27/281/D-2016171404706 (State vs. Ram Yagya Tara Devi Chaudhary Inter College) was registered under Section 47A of the Stamp Act. The petitioner challenged the order dated 29.5.2017 and filed a Writ Petition No.3447 of 2018, granting interim protection to the effect that further recovery in pursuance of the impugned order shall remain stayed and the revision shall be decided by respondent no.1 within a period of 6 months.

PETITIONER’S CONTENTION

This Court passed an interim order granting four weeks’ time to file the counter affidavit and two weeks to file the rejoinder affidavit. It also directed the petitioner to deposit 50% of the deficient stamp amount, which in the instant case is to the tune of Rs. 4,21,500/- and the sum of Rs. 1,00,000/- towards the amount fixed under the head of penalty, within one month from today. Any amount already deposited by the petitioner shall be adjusted towards the amount directed to be deposited. The petitioner submitted that the demand of deficient stamp duty by the respondent authorities is illegal, as according to the provisions of Section 47-A of the Indian Stamp Act, the value of the property as provided under Article 33 of Schedule I B of the Stamp Act will be applicable and the deficiency determined by the respondent nos. 1 & 2 based on market value is illegal. Counsel also submitted that the impugned orders be set aside and the writ petition be allowed.

RESPONDANT’S CONTENTION 

B.N. Pathak, learned standing counsel, submitted that the impugned order has been rightly passed and that the rate for the agricultural plot cannot be fixed for payment of stamp duty. He also cited Sections 27 & 47-A of the Indian Stamp Act to demonstrate that the power has been rightly exercised by the respondents against the petitioner. He submitted that no interference is required in the matter and the writ petition is liable to be dismissed. The Court has held that on the ground of the future potential of the property, the stamp duty cannot be imposed in respect of the property in dispute. The true test for determination by the Collector is the market value of the property on the date of the instrument, as every instrument is required to be stamped before or at the time of execution.

JUDGEMENT

The judgment of a learned Single Judge of this Court in Writ Petition (C) no. 66621 of 2010, Sumit Gupta vs State of U.P. and others, states that there is a difference in the language used in Article 33 of the Schedule I-B of the Act and Section 47-A of the Act when levying stamp duty on a gift-deed. The legislature has deliberately used the word “value of the property” in Article 33 while subjecting the gift to stamp duty and has refrained from using the term “market value”. This means that when the market value is not at all relevant, the provisions of the Act do not come into play which necessitates the determination of market value. This court has followed the earlier judgment of AWC 1087, Ram Khelawan alias Bachcha Vs State of U.P. and Shiva Dutt Mishra Vs. Commissioner Gorakhpur Division and 2 Others on the point of imposition of stamp duty on the gift deed in respect to the agricultural plot. Paragraphs 5,6 and 7 of these judgments.

READ FULL JUDGEMENT: https://bit.ly/3LpwS3J

CITATION: WRIT – C No. – 43196/2018

-Report by Sejal Jethva

In the present case MINAKSHI CHITRA MANDIR SAILU THROUGH ITS PROPRIETOR SANJAY PRABHAKAR RAJURKAR Vs THE STATE OF MAHARASHTRA THROUGH THE COLLECTOR LATUR based on that petitioner is exempt from entertainment tax but still collects it from customers. Who received the money collected—the state or the petitioner?

FACTS:

In Sailu, District Parbhani, the petitioner operates a movie theatre that is now a multiplex cinema under the name and branding Minakshi Chitra Mandir, Sailu. The theatre in question is legally operated by the petitioner. The petitioner requested for an exemption from paying the entertainment tax after renovating the entire theatre in accordance with a State Government plan.

According to the Maharashtra Entertainment Duty Act, respondent number two Divisional Commissioner Aurangabad granted the petitioner a five-year exemption from paying entertainment tax from 26.6.2014 to 15.6.2019. When the entertainment tax was exempt, the theatre was inspected, and the inspector discovered that the tickets had the caption “entertainment tax” and that money had been taken from patrons towards “entertainment tax.” As a result, the petitioner was found responsible for paying the entertainment tax. Collector, Respondent No. 3, assessed the aforementioned tax at Rs. 7,97,514/-. In addition, Respondent No. 3 imposed a penalty equal to double the amount of the responsibility and mandated payment of a total of Rs. 23,92,542.00. The

PETITIONER’S CONTENTION:

The State is not permitted to collect the exemption from the petitioner under section 3 of the Maharashtra Entertainment Duty Act once it has been granted in accordance with section 9 (1) of the aforementioned Act. The knowledgeable attorney for the petitioner contends that because the ticket roles received approval from the relevant authorities, they are prohibited from requesting the entertainment tax’s deposit. The petitioner’s main and most significant argument is that once the entertainment tax exemption has been granted, even though the tax was mentioned on the entire value of the ticket, the respondent/State is not entitled to receive the entertainment tax, and the entire amount collected as ticket price, including the amount collected under the caption “entertainment.”

RESPONDENT’S CONTENTION:

Despite the petitioner receiving an exemption from entertainment tax, respondent No. 2 – Divisional Commissioner claimed that the petitioner was still obligated to pay the entertainment tax to the State Government because the amount was displayed on the petitioner’s ticket and was money that was taken from customers. The present writ petition is brought because the aforementioned orders of respondents Nos. 2 and 3 have wronged the petitioner.

JUDGEMENT:

1. Neither the petitioner is allowed to retain the money obtained under the caption ‘entertainment tax’, nor the State is entitled to receive the amount collected under the caption ‘entertainment tax’, as there is an exemption given by the State. The amount that the petitioner placed in this Court is not one that either the State or the petitioner is entitled to receive; therefore, the question of how best to use that money arises.

2. The deposited money in this case is used to acquire the defibrillator device, which will be done by a committee of three people made up of the Registrar (Administration) of the High Court Bench in Aurangabad, the President of the Bar Association of the High Court, Aurangabad, and Dr. Sanjay Varade, Medical Officer of the High Court Medical Clinic. Upon request from the Committee, the Registry will pay for the machine. The device would be used for anyone in need of emergency medical care and would stay in possession and under the supervision of the Medical Officer connected to the High Court Medical Dispensary.

3. The Registrar (Administration) of the High Court Bench in Aurangabad and the Medical Officer of the High Court Medical Dispensary. On the Committee’s instruction, the Registry will pay for the machine. The device will continue to be held in custody and under the direction of the Medical Officer assigned to the High Court Medical Dispensary, and it will be used for anyone in need of urgent medical attention.

4. Any remaining funds, if any, will be split equally between the Government Cancer Hospital in Aurangabad and the non-profit organisation “Shantivan,” which runs an orphanage for children who have lost their parents in Arvi, Tq. Shirur Kasar, District Beed.

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-Report by Tannu Dahiya

Bombay High Court while hearing the petition on 27th February 2023 in the case Sandeep Arjun Kudale v. State of Maharashtra directed the police to carefully look into the matter and must find whether an offence has been made or not before arresting a person. 

Facts

The facts of the case are as follows:

In Writ petition no. 21880 of 2022

The complainant is a resident of Kothrud, Pune. One fine day while browsing on Twitter, he came across a video which was uploaded by the petitioner on his account wherein he was seen standing in front of the bungalow of Mr Chandrakant Patil, Minister of Higher and Technical Education and Cabinet Minister, Maharashtra State and Palak Mantri (Guardian Minister), making objectionable remark against him which has created disharmony in the communities and has provoked the sentiments of people belonging to Dr. Ambedkar and Phule’s community.Hence he registered an FIR against him alleging offences punishable under Sections 153A(1)(a) and 153A(1)(b) of the IPC, on 11.12.2022.

In the 2nd writ petition no. 21886 of 2022

Here the complainant is a resident of Wajre, Pune. He is an active social worker of the BJP. He mentioned that Mr. Chandrakant Patil mentioned about Dr. Ambedkar and Mahatma Phule in his speech which was misinterpreted by the petitioner.It is alleged that the petitioner by uploading the video had created an negative opinion of the said Minister and had also promoted enmity among the different groups in society. 

Petitioner’s contentions

The petitioner seeks to quash both the FIR against him. 

Mr Desai learned counsel for the petitioner submits that no offence as alleged has been disclosed against the petitioner in both the FIRs. The FIR was made with a political motive and the sole intention was to harass the petitioner who is also a member of the Congress Party. He was also arrested and kept in custody for two days without any justification. He was falsely framed in this case as he questioned one of the sitting cabinet members of the state. By lodging, this complaint his fundamental right to freedom of speech and expression is clearly violated. Hence the learned counsel pleads that both FIRs should be quashed and set aside. He also relied on the judgements made in Manzar Sayeed Khan v. State of Maharashtra & AnrBalwant Singh & Anr. v. State of Punjab, and Bilal Ahmed Kaloo v. State of Andhra Pradesh. 

Respondent’s contentions

Dr Saraf learned Advocate General opposed the petition claiming that the sections have been rightly invoked by the police. He submits that the video posted by the petitioner has created an atmosphere of enmity between different groups in society. He also argues that the Police were correct in every manner to register the FIRs as it is their duty to maintain public peace and tranquillity. 

Judgement

Since the issues involved in both the writ petitions are the same, they are heard together. The court made observations regarding different cases. In the Manzar Sayeed Khan case the Apex court held that it was not only the words of the book which should be for provoking the charge. It is the language of the book which decides its intention. 

In Balwant singh case, held that the appellants have committed an offence under Sections 124A and 153A of the IPC, for raising anti-national slogans after Indra Gandhi’s assassination.  In this case, the Court had accepted that mens rea is an essential ingredient of the offence

under Section 153-A and the spoken or written words must have an intention of creating public disorder for disturbance of law and order or affect public “tranquillity”, in order to commit an offence. Having considered the provision of law, the court held that no offence has been committed in this case and the FIRs are quashed and set aside. 

The reasons stated for this are that the petitioner in the video can be seen just commenting on the speech of the Minister which is clearly his opinion and he has the right to freedom of speech and expression as guaranteed under the Constitution. There is clearly no intention of the petitioner to create public disharmony and disturb the public “tranquillity”. The court asked the police to apply their mind before arresting a person as arrest makes a serious impact on the person as well his family’s reputation and mental health. 

The law cannot be used as a tool to harass people and stop them from expressing their views and raising their voices which the Constitution guarantees them. Hence the petitions are disposed of accordingly. The court also directed the state Government to pay Rs25000/- for the unjustified arrest made within four weeks of the order. 

Citation: C. W. P no. 21880 of 2022
               C. W. P no. 21886 of 2022

–Report by Shreya Gupta

In any circumstances, the interest expense cannot be denied u/s14A r.w. Rule 8D(2)(ii) of the IT Act. The disallowance made by adopting Rule 8D is not only opposed to the statutory requirement, but also to the legal principles established.

FACTS:

The case is an appeal by the petitioner against the order passed by the Income Tax Appellate Tribunal in which the court allowed the respondent’s appeal. The respondent filed a return for the income of Rs.358,47,29,328/- under normal provisions and book profit of Rs.431,48,93,079/- under section (u/s) 115JB of the I.T. Act. The AO made various disallowances u/s.14A r.w. Rule 8D amount to Rs.5,11,85,000/-. The AO investigated u/s 143(2) of the I.T. Act 1961. The case then went to The Ld. CIT (A) which allowed the respondent’s appeal but then the case went to the Hon’ble ITAT which again ruled in favor of the respondent. 

PETITIONER’S CONTENTIONS:

The petitioner contended on the previous orders by the courts given against his favor and asked if they were correct. He contended that “the assessment order that setting-off interest costs of dividend income against other taxable income areagainst the matching concept of income and expenditure. He submitted that there was no need to rely on any presumption of own funds on account of the changed law that came into force from 2007-08 followed by the introduction of rule 8D in 2008- 09 which provides for a method of calculations. It is submitted that because of the above, the ITAT erred in endorsing the CIT(A)’s order which drew the presumption of its interest-free funds. He further submitted that the ITAT ought not to have deleted the addition of interest disallowed by the AO, in the absence of any evidence that indicated that borrowed funds were not used to make investments that yielded exemption. He further submitted that the ITAT ought not to have been considered interest while calculating disallowance u/s. 14A read with Rule 5D since the assessee had not maintained a separate account for the investment related to exempt income.” 

RESPONDENT’S CONTENTIONS:

The respondent took the court through previous orders and stated that they were correct u/s. 14A read with Rule 8D (2)(ii) and prayed that the appeal deserves to be dismissed. In justification to his arguments, he took the help of the previous cases Godrej & Boyce Manufacturing Co. Ltd. Vs. Deputy Commissioner of Income-Tax and Another and South Indian Bank Ltd. vs. Commissioner of Income-tax. 

JUDGEMENT:

The court stated that “To put it another way, in respect of payment made out of the mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it may not be permissible for the Revenue to estimate a proportionate figure.” The court stated that the AO has not recorded that there was any inadmissible expenditure u/s 14A. He stated that there are no powers u/s 14(2) which allow AO to apply Rule 8D straightaway without considering the correctness of the assessee’s claim in respect of expenditure incurred concerning the exempt income. The court further stated that the interest expenditure cannot be disallowed u/s14A r.w. Rule 8D(2)(ii) under any circumstances and therefore dismissed the appeal.

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–Report by Mushkan Vasani

High Court Of Bombay at Aurangabad Bench while hearing the writ petition on 16th February 2023 in the case of Rohit Enterprises (Reg. no. 27AHQPD2485F1Z7) Through its proprietor, Changdeo Punjaji Deokar (Petitioner) Versus The Commissioner State GST Bhavan, The Dy. Commissioner, State Tax (Appeal) and The State Tax Officer. (Respondents), allowed the writ petition by restoring the GST registration number and setting aside the order passed by the State Tax Officer and the Dy. Commissioner, State Tax (Appeal).

FACTS:

In the present case, the petitioner is a proprietary firm engaged in the business of fabrication work. And is registered in the year 2018 under the Central Goods and Services Tax Act, 2017 (GST Act) as well as Maharashtra State Goods and Services Tax Act, 2017. The Petitioner states that the firm suffered a huge loss in the pandemic situation and the proprietor had undergone angioplasty during that period due to which the GST returns from August 2021 could not be filed.

However, Section 29(2) of the GST Act enables the concerned officer to cancel registration if the registered person/firm fails to furnish three consecutive returns. The State Tax Officer, Aurangabad (Respondent No. 3) issued a notice calling upon the petitioner to furnish his explanation within a period of 7 working days. The notice stipulated that the registration of the petitioner stood suspended. The petitioner replied to the notice within the given period citing the reason for the financial crunch. However, the State Tax Officer vide its order dated 14-03-2022 cancelled the registration with effect from 28-02-2022.

The petitioner requested for revocation of the cancellation of registration but the State Tax Officer issued a notice for rejection of the application. The petitioner was called upon to furnish the reply within 7 days along with some specific documents and a late filing penalty. The matter was taken up for hearing and finally, the State Tax Officer vide its order rejected the application of the petitioner seeking revocation of cancellation.

Further, the petitioner filed an appeal challenging cancellation of registration before the Dy. Commissioner/State Tax (Appeal), Aurangabad Division but however the appeal was rejected on technical grounds as it was time-barred and hence this petition is filed before this Hon’ble Court.

PETITIONERS CONTENTIONS:

The petitioner contended before this hon’ble court that :

1. The order passed by the Dy. Commissioner (Appeal) Aurangabad (Appellate authority) be set aside and quashed.
2. The Order passed by the State Tax Officer for cancellation of registration and suspending the registration w.e.f. 28.2.2022 may kindly be quashed and set aside.
3. And Finally that the petitioner registration no.27AHQPD2485F1Z7 is valid from 28.02.2022 onwards.

RESPONDENTS CONTENTIONS:

The respondents supported the impugned order.

JUDGEMENT:

The Hon’ble High Court of Bombay at Aurangabad Bench while referring to the judgment of the Supreme Court in the case of Mafatlal Industries Ltd. Vs Union of India reported in (1997) allowed the petition by quashing the order dated 28-02-2022 suspending the GST registration, the order dated 14-03-2022 cancelling GST registration of the petitioner passed by the State Tax Officer and the order dated 21-10-2022 passed by the Dy. Commissioner of Tax, Aurangabad (Appeal) (Appellate Authority) and declared that the registration No.27AHQPD2485F1Z7 in the name of the petitioner is valid from 28-02-2022 onwards subject to the condition that the petitioner files up-to-date GST returns and deposits entire pending dues along with applicable interest, penalty, late fees in terms of Rule 23 (1) of MAST Rules, 2017

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CITATION: (1997) 5 SCC 536