Tag: #notice

-Report by Arunima Jain

The Supreme Court on Monday, in the case of Essemm Logistics v. Darcl Logistics Limited& Anr., delved into the meaning and extent of Section 16 of the Carriers by Road Act, 2007read with the Order VII Rule 11 of the Civil Procedure Code (CPC). According to the court, no notice is required under Section 16 of the new Act for instituting any suit or legal proceedings, much less a counter-claim against the common carrier for recovering any loss other than the loss of or damage to the consignment.

FACTS

In the matter at hand, the appellant is a high-end carrier providing service, governed by theCarrier by Road Act, 2007. The first respondent had originally instituted a suit against theappellant for the acquisition of Rs.4,09,53,847/- with 18% interest until its realization,because the current appellant had failed to make payments due on 530 bills raised between November 14, 2011, and January 31, 2012. Accordingly, the first defendant/current appellant had filed a counterclaim of Rs. 13,03,00,000/- with 24% interest on the said amount till realization. This was majorly on three grounds:- Loss of business opportunity due to the diversification of cargo;- Loss of reputation;- Loss on account of idling of men, machines & overheads.

The present first respondent sought to dismiss the counterclaim of the first defendant on thegrounds that it was preferred without issuing the necessary notice, as mistakenly intended bySection 10 of the Carriers Act, 1865, but in fact by Section 16 of the new Act. The Court ofFirst Instance dismissed the plaint for failure to issue mandatory notice prior to thepresentation of the counter-claim, and the High Court upheld that decision. Accordingly, thefirst defendant has filed this appeal in the Supreme Court to allow the plea for a counterclaim.

JUDGEMENT

Upon giving due regard to the facts and law in the above-mentioned case, it is contended bythe Hon’ble Court that a simple reading of Section 16 of the new Carriage by Road Actindicates that it is only relevant in the event of a suit or legal procedure being institutedagainst a common carrier for any loss or damage to the consignment. The provision is inapplicable to any other type of loss or any suit or legal procedures brought to recover damages for loss of a different sort. In the court’s opinion, there was no violation of Section 16 and it was observed that the first courts have erred in their judgement by rejecting thecounterclaim under Order VII Rule 11 of the CPC as barred by Section 16 of the new Act. Hence, the impugned judgement and order have been repealed and the current appeal is allowed. The Court of first instance is directed to further allow the counterclaim.

READ FULL JUDGEMENT: https://bit.ly/3ns8J2E

-Report by Kanishka

The recent judgment of ISOLATORS AND ISOLATORS THROUGH ITS PROPRIETOR MRS. SANDHYA MISHRA V/S MADHYA PRADESH MADHYA KSHETRA VIDYUT VITRAN CO. LTD. & ANR. is concerned with the debarring of the contractor in course of tender.

FACTS:

The appellant, a sole proprietorship company, has been in the transformer manufacturing and maintenance industry for the past 30 years. Its facility is located at Govind Pura, Bhopal. The appellant’s only clients are distribution businesses (Discoms). Two renders were issued by the respondent Madhya Pradesh Madhya Kshetra Vidyut Vitran Company Limited. No response on rescheduling the delivery and due to extraordinary storm accompanied by heavy rains caused the roof of their plant to collapse. Half of the project is ready to be delivered and the same was asked to defer by the respondent. Chief General Manager has cancelled all the purchase orders and debarred the company for 3 years and also imposed a fine of 27,98,960. The aggrieved party approached the high court Also high court didn’t even consider the other part(penalty) of the review petition. Nevertheless, the High Court issued an order that was identical to the chief general manager’s order.

APPELLANT’S CONTENTIONS:

The learned counsel for the appellant contended that there has been a violation of natural justice and there was no reason specified by the respondent for debarring the appellant. TS-494, the appellant had supplied 300 out of 586 transformers and as regards TS-532, the appellant had supplied all 63 KVA transformers. It was unlawful to terminate the order for the delivery of the remaining transformers after a significant quantity of transformers had been provided against purchase. The respondent intentionally had not considered the heavy rains resulting in damage to the plant and loss of raw material.

RESPONDENT’S CONTENTIONS:

It was contended by the learned counsel for the respondent that the appellant has not performed on the terms and conditions of the contract and debarring was done after the hearing opportunity given to the appellant. The order has been given in the exercise of the relevant clauses of the purchase order. The termination order had never been challenged by the appellant and the same has attained finality. The learned counsel, imposition of penalty has been consequential to the aforesaid order the same had been as per the terms and conditions of the rate/contract/purchase order.

JUDGEMENT:

The court has quashed and set aside in debarment of the appellant and imposition of penalty, no recovery shall be made from the appellant thereunder and if any amount has been recovered, the same shall be refunded to the appellant within a month from today or else, it shall carry simple interest at the rate of 9% per annum from the date of recovery and until the date of repayment.

The further court explained that:-

1) Imposing of penalty 

A) the appellant was only made aware of the potential debarment in the show-cause notice, and nothing concerning the proposed imposition of penalty was included in the notice.

B) Without explaining why the maximum penalty was sought to be applied, the relevant body has gone ahead and levied the maximum fine of 10% of the deficit supply. The appellant’s list of pertinent considerations could not have been completely disregarded. The respondents have not provided a particular amount of loss in order to support the imposition of the maximum penalty.

Therefore, the lack of particular show-cause notice, the application of a penalty against the appellant cannot be allowed and it is to be set aside.

2) Debarring the appellant for 3 years 

The respondent themselves postponed taking the balance of delivering further there has been no instructions, or communication provided by the respondent to resume the supply. The debarment judgment had been made against the appellant without taking into account the evident factual situation, in which the appellant could not have been solely blamed or held responsible.

Court has also referred to a case Gorkha Security Services v. State (NCT of Delhi) where it was ruled that a prior show-cause notice granting a reasonable opportunity to be heard is a crucial component of all administrative decision-making, especially when those decisions involve blacklisting and carry serious repercussions for the entity being blacklisted. In these situations, providing a legitimate show-cause notice is essential, and failing to do so would render any order of blacklisting based on said order null and void.

Therefore, debarring the appellant for 3 years is also set aside.❖ Both of the orders could only be disapproved because the High Court failed to approach the situation correctly, whether in deciding the writ case or the review petition.

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

-Report by Arunima Jain

The Delhi High Court on Thursday while referring to Section 73 of the Finance Act, 1994, upheld that the question of whether the notice or demand for recovery was given within a reasonable length of time considering the case’s facts and circumstances should be considered by the pertinent official. Moreover, it is established law that jurisdiction must be exercised within a reasonable amount of time even if a time limit is not specified. If there exist nojustified reasons to condone the delay cause, then the relevant case becomes unreasonable in the court of law. Through the case of Sanghvi Reconditioners Pt. Ltd. v. Union of India through the Secretary, Department of Revenue & Ors^., the court further iterated the fact that the definition of ‘reasonable time’ is sufficiently open-ended to take account of the particular facts and circumstances of each case.

FACTS

In the matter at hand, the petitioner is a partnership firm registered under the IndianPartnership Act, 1932. The petitioner company was a contractual worker which was tasked with building residential flats by the Housing Board, Haryana (HBH) during July 2005 which had been completed thereafter. The Anti-Evasion branch of the Respondent organisation proceeded investigation as to why the petitioner company hadn’t paid taxes amounting toapproximately

2.15 crores in addition to not having registered with the Service Tax Department.Accordingly show cause notices and letters were issued to the petitioner from the respondent. After initial proceedings, the petitioner did not receive further communication from the respondent, and considered the case to be closed. But the respondent further asked the petitioner to submitshow cause as to the inability to pay taxes. The show cause notices and letters are being challenged in the present court by the petitioner on the grounds of exceeding the limitationperiod and the nature of the contracts between the petitioner company and its clients beingstatutory bodies in nature.

CONTENTIONS

Petitioner

The petitioner’s learned counsel has submitted before the High Court that the contractsprovided by the Housing Board of Haryana were composite in nature and were solely ‘workcontracts. Moreover, since the construction of the residential flats was made in the interest ofpublic good, alongside HBH, the petitioner company was merely aiding in a statutory activityand was hence not liable for service tax. In addition, the petitioner also claimed that theperiod of limitation under Section 73 of the Finance Act, the present case had exceeded its capacity.

 Respondent

Contrary to the petitioner’s counsel, the respondent’s learned counsel submits that therespondent no.1 had immediately placed the matter at hand in the ‘Call Book’ with theapproval of the commissioner, as had been prescribed by the norms of the CBEC Circulars.Additionally, the respondent also claims that the petitioner was not eligible to attain 67%value of the benefits from the taxable service since the supplies for these services were received by the Petitioner at zero cost from the HBH.

JUDGEMENT

Upon giving due regards to the facts and law in the above-mentioned case, the Hon’ble HighCourt finds it challenging to accept that the impugned show cause notice could not have been decided upon because the Supreme Court was still debating the controversy it involved as regards to the matter of M/s Sobha Developers Ltd. when it came to the concept of ‘CallBooks.’ Even if the concept of such books was assumed to be true, it was still quintessentialfor the respondents to have maintained communication with the petitioner company which itwas unable to do. Moreover, there is no excuse for delaying the decision on the notice formore than fifteen years after the show cause notice and letters were issued. The respondents were directed to restrain from taking any actions regarding the same and the petition was allowed, disposing of all other pending applications.

READ FULL JUDGEMENT: https://bit.ly/43EQvvj