In a first of its kind order passed by the Hon’ble
Supreme Court in exercise of its powers under Article 142 of the Constitution
of India, in view of the pandemic that the country and the world is reeling
under the effect of, the Court issued the following directions which are binding
on Courts throughout India:
(i)
All measures to ensure social distancing adopted by
the Courts in India, so as to secure functioning of Courts with best public
health practices, shall be deemed lawful;
(ii)
The Supreme Court and the High Court are authorized
to adopt measures to ensure robust functioning of Courts through the use of
video conferencing technology;
(iii)
Every High Court is authorized to determine
modalities which are suitable to temporary transition to the use of video
conferencing technology. The mode of video conferencing prescribed by the High
Court shall be binding on the District
Courts within its jurisdiction, and all appropriate Courts will maintain a
helpline to address technical difficulties arising during this process;
(iv)
The Court is to notify and make available facilities
for video conferencing to those litigants who do not have appropriate means for
the same, themselves;
(v)
Video conferencing shall only be used for hearing
arguments at trial or appellate stage, and not for evidence stage, unless
expressly consented to by the parties involved, until appropriate Rules are
framed by the High Courts. In case of physical recording of evidence, social
distancing norms shall be adhered to;
(vi)
The presiding officer of the Court shall be
empowered to restrict entry in the Court, and take appropriate measures to
prevent crowding of Courts.
Alembic
Pharmaceuticals Limited v. Rohit Prajapati &Ors.
[Civil Appeal
No. 1526 of 2016 and connected matters decided on 1.4.2020]
In this batch of appeals from the National Green
Tribunal (“NGT”), the Supreme Court examined the question whether a Ministry of
Environment and Forests (“MoEF”) Circular dated 14.5.2002 (“Circular”) was
contrary to law, as held by the NGT. The said Circular operated to permit
defaulting units [i.e., units which had not obtained prior environmental
clearance for industrial activity in accordance with the Environmental Impact
Assessment (“EIA”) Notification dated 27.1.1994 issued under Section 3 of the
Environment Protection Act, 1986 (“Act”)] to obtain ex post facto
environmental clearance upto an extended deadline.
The Court examined the following issues emerging
from the facts of the case and the submissions of the parties:
(i)
The first question examined by the Court was as to
whether the NGT was empowered to strike down a Circular under Section 3 of the
Act. The question arose in view of the decision of the Supreme Court in Tamil
Nadu Pollution Control Board v. Sterlite Industries (I) Ltd., wherein it
was held that the NGT did not have the power to strike down rules and
regulations made under the Act. The Court, in the present case, then noted that
the stand of the Union of India had not been that the Circular was traceable to
Section 3 of the Act, but that the Circular was an administrative decision of
the Government. Further, the Circular was, in terms, contradictory to the EIA
Notification of 1994 which proscribed post facto clearance by its very
wordings. The Circular could not therefore be traceable to Section 3 which
speaks of measures, inter alia, to ‘protect’ and ‘improve’ the quality
of environment. It was held therefore that the Circular not being traceable to
the Act, the NGT was within jurisdiction to examine its legality;
(ii)
The very concept of ex post facto grant of
environmental clearance was held to be contrary to environmental jurisprudence.
It was held that the grant of an environmental clearance requires several
detailed steps prior to the commencement of the project. The decision of the
Court in Common Cause v. Union of India was relied upon, which
specifically rejected the submission that the EIA Notification of 1994 did not
prohibit ex post facto clearance;
(iii)
The reliance placed by the Appellants before the
Court on the exemption clause in the EIA Notification of 1994 was also rejected
by the Court, while finding that the Appellants had not been able to satisfy
the conditions for claiming the exemption under the said Clause. It was held
that the burden was on the project proponent who intended to alter the state of
the environment to demonstrate that the terms on which the exemption has been
granted have been fulfilled. An exemption must be construed in its strict sense
according to its plain terms.
The Appeals were thus rejected. The Court however
did take note of the fact that the industries in question had subsequently
obtained environmental clearances as required from time to time. At the same
time, the adverse environmental impact of the industries was also a part of the
record.
In these facts, the Court reversed the revocation of
the clearances by the NGT and permitted them to function upon payment of a
compensation of Rs. 10 Crores each.
New Delhi Television
Limited v. Deputy Commissioner of Income Tax
[Civil Appeal
No. 1008 of 2020 decided on 3.4.2020]
In this case, the Court was considering the
correctness of rejection of a writ petition by the High Court, wherein a
challenge had been laid to a notice under Section 148 of the Income Tax Act,
1961 (“Act”) whereby the assessing officer formed and conveyed the opinion that
he had reason to believe that income of the Appellant NDTV for AY 2008-09
amounting to at least Rs. 405.09 Crores had escaped assessment, due to failure
on the part of the assessee to disclose fully and truly all material facts
pertaining to the transaction.
It was the allegation of the Revenue that the
Appellant had indulged in round tripping of funds, through the medium of
issuance of Step Up Coupon Bonds to the tune of $100 million by its UK
subsidiary. The allegation was that the bonds had been subscribed by foreign
subsidiaries/ associates of NDTV and the funds were routed back to NDTV through
the UK subsidiary by way of an intermediary entity in Mauritius.
The questions of law for consideration, however,
pertained to the existence of ‘reason to believe’ as required under Section 148
of the Act, the correctness of the allegation of non-disclosure of material
facts by the assessee(so as to entitle the Revenue to an extended period of
limitation under the 1st proviso to Section 147), and the invocation
of the 2nd proviso to Section 147 of the Act by the Revenue (which
provided for an extended period of limitation for invocation of Section 148, if
the income in relation to an asset outside India had escaped assessment).
On the question as to whether there existed a
‘reason to believe’ for reopening of assessment, the Court relied upon
precedents to conclude that subsequent facts which come to the knowledge of the
assessing officer can be taken into account to decide whether assessment is to
be reopened or not. It was further held, that at the stage of issuance of
notice, the assessing officer is only called upon to form a prima facie view.
Applying these precedents, the notice in the present facts was found proper
insofar as the first question was concerned.
On the second question, the Court decided that the
assessee had made all material disclosures at the time of assessment, and
therefore it could not be alleged that there was deliberate withholding of
relevant material on the part of the assessee. The Court relied on Calcutta
Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta
&Anr. wherein in the context of
this provision a distinction was made between primary facts and facts that
could be inferred therefrom, and further legal inferences that could be drawn
from the primary facts and the inferred facts. It was held that the duty of
full disclosure was only of primary facts and not factual and legal inferences.
It was found in the present case that the primary facts had been duly disclosed
by the assessee at the time of assessment proceedings.
On the applicability of the 2nd proviso
to Section 147, it was found that the notice issued to the Appellant did not
make any reference to facts underlying the applicability of the same. This was
found to be in violation of the principles of natural justice since the
assessee had no opportunity to contest the underlying facts for applicability
of the 2nd proviso until it approached the High Court.
Accordingly, the assessee’s appeal was allowed. The
Court did however observe that it was open to the Revenue to issue notice to
the assessee in terms of the 2nd proviso to Section 147 if it was
permissible in law. The parties were given liberty to avail applicable remedies
against any such notice if issued.
SushilabenIndravadan
Gandhi &Anr. v. The New India Assurance Company Limited &Ors.
[Civil
Appeal No. 2235 of 2020 decided on 15.4.2020]
This
case arose out of a petition under Section 166 of the Motor Vehicles Act, 1988
filed by the Appellants herein in respect of the death of the husband of the
Appellant No. 1 (“deceased”), who was a surgeon and was travelling in a mini
bus owned by the Rotary Eye Institute, Navsari (“REIN”), which mini bus met
with an accident- being the cause of death of the deceased. The deceased was
party to a contract of services with REIN at the time of the accident. REIN had
entered into a comprehensive Private Car ‘B’ Policy with Respondent No. 1(“NIAC”)
which, subject to certain limitations, covered the death or injury of the employees
of REIN. The exception was, that the death or injury ought not to have been one
arising out of or in the course of employment of the said employees.
In
the event that the accident was shown to be arising out of or in the course of
the deceased’s employment with REIN (on the basis that the deceased was, in
fact, an employee of REIN), the NIAC (the only contesting party) would not have
been liable. The Motor Accident Claims Tribunal (“MACT”) had held in favour of
the Appellants, upon recording a finding that the deceased had entered into a
contract for service with REIN, and was therefore not an employee. The
compensation was directed to be paid by the driver, NIAC and REIN jointly and
severally. The High Court reversed the view of the MACT, on the basis that the
contract was one of service and not for service and therefore
NIAC was not liable except to the extent of INR 50,000, which was arrived at
after setting out Regulation 27 of the General Regulations of the Indian Motor
Tariffs dated 01.08.1989. The balance compensation was ordered to be paid by
REIN and the driver of the vehicle.
The
Court examined a catena of judgments, starting from Dharangdhara Chemical
Works Ltd. v. State of Saurashtra (1957) to Indian Overseas Bank v.
Workmen (2006) on the difference between a contract of service and a
contract for service (i.e. the question whether a person could be said
to be an ‘employee’ or not), and opined that:
(i)
The
early ‘control of the employer’ test in the sense of controlling not just the
work that is given but the manner in which it is to be done obviously breaks
down when it comes to professionals who may be employed;
(ii)
The
control test, after moving away from actual control of when and how work is to
be performed to the right to exercise control, is one in a series of factors
which may lead to an answer on the facts of a case to determine whether the
contract is one of service or for service;
(iii)
The
test as to whether the person employed is integrated into the employer’s
business or is a mere accessory thereof is another important test in order to
determine on which side of the line the contract falls;
(iv)
The
test of who owns the assets with which the work is to be done and/or who
ultimately makes a profit or a loss so that one may determine whether a
business is being run for the employer or on one’s own account, is another
important test; the economic reality test laid down by the U.S decisions and
the test of whether the employer has economic control over the workers’
subsistence, skill and continued employment can also be applied when it comes
to whether a particular worker works for himself or for his employer;
(v)
No
one test of universal application can ever yield the correct result. It is a
conglomerate of all applicable tests taken on the totality of the fact
situation in a given case that would ultimately yield, particularly in a
complex hybrid situation, whether the contract to be construed is a contract of
service or a contract for service. Depending on the fact situation of each
case, all the aforesaid factors would not necessarily be relevant, or, if
relevant, be given the same weight;
(vi)
the
context in which a finding is to be made assumes great importance. Thus, if the
context is one of a beneficial legislation being applied to weaker sections of
society, the balance tilts in favour of declaring the contract to be one of
service. where the context is that of legislation other than beneficial
legislation or only in the realm of contract, and the context of that
legislation or contract would point in the direction of the relationship being
a contract for service then, other things being equal, the context may then
tilt the balance in favour of the contract being construed to be one which is
for service
Applying
the above principles to the facts of the case, the Court held that the contract
between the deceased and REIN was one forservice and not of
service, and the deceased could not be said to be an employee of REIN. The
Court also reiterated the legal principle that insurance policy contracts were
to be construed ‘contra preferentum’ in case of ambiguity, meaning
thereby that in case of ambiguity in the contract, an interpretation of the
terms which favoured the insured, was to be preferred against that which
favoured the insurer.
In
the result, the judgment of the High Court was set aside, and that of the MACT
was restored.
Bhagwat
Sharan (Dead) Thru LRs v. Purushottam and Others
[Civil
Appeal No. 6875 of 2008 decided on 3.4.2020]
In
this case arising out of a suit for partition in respect of a property alleged
to belong to a joint family of the plaintiffs and the defendants in the suit,
the following important propositions of law were discussed:
(i)
On
the question of the attributes of a Hindu Undivided Family and the manner in
which it is constituted, several precedents were examined to conclude that the
general principle evolved by the Court was that a Hindu family was presumed to
be joint unless the contrary was proved. It was held that, however, the
aforesaid presumption could not necessarily lead to the conclusion that the
property held by any member of the joint family was also joint family property.
The burden was upon the person alleging the existence of joint family property
to prove the fact;
(ii)
On
the question of ‘admissions’ in pleadings, it was held that admissions were
merely pieces of evidence and could not be held to conclusively prove the fact
admitted. Himani Alloys Ltd. v. Tata Steel Ltd. was relied upon for the
proposition that an admission must be categorical, and must be the conscious
and deliberate act of the party making it;
(iii)
The
Court also discussed and relied upon the doctrine of election, viz. that a
party cannot be permitted to ‘blow hot and cold at the same time’. It has been
held that any party which takes advantage of any instrument must accept all
that is said in the said document.
Applying
the above principles of law to the facts of the present case, the Court
dismissed the appeal.
Ramjit
Singh Kardam&Ors. v. Sanjeev Kumar &Ors.
[Civil
Appeal No. 2103 of 2020 and connected matters decided on 8.4.2020]
This
case arose out of a challenge by the Appellants to a judgment of the Division
Bench of the High Court which confirmed a Learned Single Judge’s decision,
thereby allowing writ petitions filed by the Respondents challenging the
selection of the Appellants to the post of Physical Training Instructors by the
Haryana Staff Selection Commission.
The
Court set out certain important principles of law in the course of its
judgment:
(i)
The
Court acknowledged the settled principle of law that candidates who had
participated in a selection process without demur, taking a calculated chance
to get selected, cannot turn around and challenge the criteria of selection
and/ or the constitution of the selection committee. The Court however held
that this principle could not be applied to a situation where the candidates
are not aware of the criteria of selection, and the same is published for the
first time along with the results of the selection process, as in the present
case;
(ii)
Having
found that the procedure for selection was changed mid way through the
selection process by the Chairman of the Commission (while it ought to have
been decided by the Commission itself), the Court held that the right to
challenge the selection survived. The Court relied on Raj Kumar and Others
v. Shakti Raj and Others wherein it was held that where glaring
illegalities have been committed in the procedure for selection of candidates,
the principle of estoppel by conduct or acquiescence had no application;
(iii)
The
Court relied upon previous decisions and reiterated that it was impermissible
to change the selection criteria after the selection process was underway. The
Court acknowledged the submission that the aforesaid principle stood referred
to a larger bench in Tej Pratap Pathak and Others v. Rajasthan High Court
&Ors., but held that even if the procedure was assumed to be subject to
subsequent change, the subsequent procedure could not be permitted to be
effected arbitrarily;
(iv)
The
Court held that if the power to set out the procedure for selection was
conferred on the Commission as a multi-member body, the same could not be taken
by the Chairman of the Commission independently;
(v)
The
Court further reiterated the well known differences between ‘malice in law’ and
‘malice in fact’. The Court held that the present set of facts were a case of
malice in law, viz., mala fide exercise of lawful power, or something done
without lawful excuse;
(vi)
It
was urged by the Appellants that the order of the Single Judge directing a
fresh selection process could not be complied with, since the posts in question
had been converted to TGT under certain statutory rules, with the effect that
no further recruitment could be carried out in respect of those posts. The
Court held that the selection process which was subject matter of challenge
before the Single Judge having been found illegal, the same ought to be brought
to its logical end by rectifying the illegalities. The new set of rules could
not be said to come in the way;
(vii)
The
Court also rejected the submission of the Appellants (i.e. the successful
candidates) to the effect that they had been enjoying protection of interim
orders in the present case for nine years, and ought not to be displaced now as
a result of affirmation of the High Court judgments. The Court relied upon the
Constitution Bench decision in C. Channabasavaih Etc. Etc. Vs. State of
Mysore and Others to hold that allowing persons who were beneficiaries of
an illegal process to continue in their posts would render ineffective the
equal protection of laws and equality before law granted by the Constitution.
The appeals were
thus dismissed.
