Property Law & Specific Relief Act S. 17 - Agreement to Sell - vendors not absolute owners but co-sharers - whether enforceable

Pemmada Prabhakar & Ors vs Youngmen’s Vysya Association & Ors

CA 7835/2014 d/d 20 Aug 2014

http://judis.nic.in/supremecourt/imgst.aspx?filename=41856

Since some of the co-sharers were not party to the agreement of sale, the agreement is not enforceable.

Refer to Paras below from the decision.

29. …Undisputedly, the  Agreement of Sale- Ex.-A1 is executed only by defendant Nos. 1 and 2. The 3rd son, mother and 3 sisters who have got equal shares in the property have not executed the Agreement of Sale. In view of the matter, the Agreement of Sale executed by defendant Nos. 1 and 2 who have no absolute right to property in question cannot confer any right whatsoever upon the plaintiffs for grant of decree of specific performance of Agreement of Sale in their favour. The said agreement is not enforceable in law in view of Section 17 of the Specific Relief Act in view of right accrued in favour of defendant Nos. 3 to 6 under Section 8 of the Hindu Succession Act. The provisions of Section 17 of the Specific Relief Act in categorical term expressly state that a Contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor who does not have absolute title and right upon the party.

Court relied on S. 17 of Specific Relief Act,1963 before negating the claim for specific performance

“17.-Contract to sell or let property by one who has no title, not specifically enforceable.- A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor;

(a) who, knowing not to have any title to the property, has contracted to sell or let the property

(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.”

In view of  the  aforesaid  provisions  of  the  Specific  Relief  Act,  the Agreement of Sale entered between the plaintiffs and some of the  co-sharers who do not have the absolute title to the  suit  schedule  property  is  not enforceable in law. 

‘Fundamental Policy of Indian Law’ - concept originated in 2003 in Arbitration Proceedings later elaborated in 2014 by Apex Court

‘Fundamental Policy of Indian Law’

‘Fundamental Policy of Indian Law’ is a concept referred to in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5  SCC  705 while laying down the principles enabling the court to set aside or modify the arbitral award. It was set out as one of the features of “Public Policy of India” under S. 34 of the Arbitration Act.

ONGC vs Western Geco international Ltd. CA No 3415 of 2007 d/d 4 Sep 2014

http://judis.nic.in/supremecourt/imgst.aspx?filename=41878

The court elaborated the principle of “Fundamental Policy of Indian Law” with the following tests :

i)             Decision affects the rights of a citizen or leads to civil consequences

ii)            Failure to adjudicate with due regard to principles of natural justice

iii)           Suffers from Non-application of mind

iv)           Perversity or irrationality in the decision

Quoting from the judgment

26.   What then would constitute the ‘Fundamental policy of Indian Law’ is the question. The decision in Saw Pipes Ltd. (supra) does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression “Fundamental Policy of Indian Law”, we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the Fundamental Policy of Indian law. The first and foremost is the principle that in every determination whether by a Court or other authority that affects the rights of a citizen or leads to any civil consequences, the Court or authority concerned is bound to adopt what is in legal parlance called a ‘judicial approach’ in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the Court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of Judicial approach in judicial and quasi judicial determination lies in the fact so long as the Court, Tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bonafide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a Court, Tribunal or Authority vulnerable to challenge.

28.   Equally important and indeed fundamental to the policy of Indian law is the principle that a Court and so also a quasi-judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated ‘audi alteram partem’ rule one of the facets of the principles of natural justice is that the Court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the Court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian Law.

29.   No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a Court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury’s principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a Court of law often in writ jurisdiction of the Superior courts but no less in statutory processes where ever the same are available.

30.   It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an arbitral tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest. 

Criminal Law - degree of credibility of testimony;

Pargan Singh Vs State Of Punjab & Anr. Crmnl Appeal 47 of 2014 d/d 5 Sep 2014

http://judis.nic.in/supremecourt/imgst.aspx?filename=41885

Offence : 

Appellants convicted under Section  302,  397  as  well  as Section 307 IPC read with Section 34 IPC.

Appeal resting on credibility of testimony of witnesses.

Decision :

19. The testimony of an injured  witness  requires  a higher degree of  credibility  and  there  have  to  be  strong  reasons  to describe the same. extra-judicial confession by its very  nature  is  rather  a  weak type of evidence and requires appreciation  with  great  deal  of  care  and caution. 

21. Where an extra-judicial  confession  is  warranted  by  suspicious circumstances,  its  credibility  becomes  doubtful   and   it   loses   its importance.   It  is  for  this  reason  that  Courts  generally  look   for independent reliable corroboration before placing any reliance upon  such  a confession.   

On the flip side : For the offence under Section 302 IPC, both the appellants were given the sentence of rigorous imprisonment of life and fine of Rs.50,000/- each and in default of payment of fine, they have to undergo further rigorous imprisonment for two years. For conviction under Section 307 IPC read with Section 34 IPC, sentence of 10 years rigorous imprisonment and fine of Rs.25,000/- is imposed and in default of payment of fine, they have to undergo further rigorous imprisonment for one year. Likewise, for offences under Section 397 IPC, rigorous imprisonment for a period of 10 years is imposed. All these sentences were ordered to run concurrently.

Is equating fine of every Rs 25,000/- with one year rigorous imprisonment just and fair?

Examine S. 397 of IPC for justness and fairness of such equation.

397. Robbery, or dacoity, with attempt to cause death or grievous hurt.—If, at the time of committing robbery or dacoity, the offender uses any deadly weapon, or causes grievous hurt to any person, or attempts to cause death or grievous hurt to any per­son, the imprisonment with which such offender shall be punished shall not be less than seven years.

Arbitration Law - specifically exempted issues from arbitration - not arbitrable; no presumption that the parties had agreed to refer the issue to the Arbitrator

M/s Harsha Constructions vs UOI CA 534 of 2007 d/d 5 Sep 2014

http://judis.nic.in/supremecourt/imgst.aspx?filename=41883

Question of Law :

Whether the Arbitrator could have decided the issues which were not arbitrable?

Presumption :

"when the law specifically makes a provision with regard to formation of a contract in a particular manner, there cannot be any presumption with regard to a contract if the contract is not entered into by the mode prescribed under the Act." [see para 20]

Facts :

Contract of arbitration between parties - certain disputes are expressly “excepted” under Clause 39 of the Contract. Arbitrator decided such issues holding that the same were not “excepted matters” but arbitrable, though the contractor had objected to arbitrability of the disputes which were not referable to the Arbitrator as per Clause 39 of the Contract. Being aggrieved by the Award, Union of India had preferred an appeal before the Chief Judge, City Civil Court, Hyderabad under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) and the said appeal was allowed, whereby the Award was set aside.

Decision :

20. Arbitration arises from a contract and unless there is a specific written contract, a contract with regard to arbitration cannot be presumed. Section 7(3) of the Act clearly specifies that the contract with regard to arbitration must be in writing. Thus, so far as the disputes which have been referred to in Clause 39 of the contract are concerned, it was not open to the Arbitrator to arbitrate upon the said disputes as there was a specific clause whereby the said disputes had been “excepted”. Moreover, when the law specifically makes a provision with regard to formation of a contract in a particular manner, there cannot be any presumption with regard to a contract if the contract is not entered into by the mode prescribed under the Act.

21. If a non-arbitrable dispute is referred to an Arbitrator and even if an issue is framed by the Arbitrator in relation to such a dispute, in our opinion, there cannot be a presumption or a conclusion to the effect that the parties had agreed to refer the issue to the Arbitrator. In the instant case, the respondent authorities had raised an objection relating to the arbitrability of the aforestated issue before the Arbitrator and yet the Arbitrator had rendered his decision on the said “excepted” dispute. In our opinion, the Arbitrator could not have decided the said “excepted” dispute.

22. We, therefore, hold that it was not open to the Arbitrator to decide the issues which were not arbitrable and the award, so far as it relates to disputes regarding non-arbitrable disputes is concerned, is bad in law and is hereby quashed. 

Note : There appears to be topographic error in the order posted on the web. Who disputed arbitrability of issues following under clause 39 - contractor or UOI?

Service Law - Seniority and Promotion of Diploma Holders and Degree Holders to same post

K.K. Dixit & Ors. etc. vs Rajasthan Housing Board & Anr. etc. 
CA No 8479-8482 of 2014 d/d 5-Sep-2014

1.  Prescribing different periods of service for two channels for promotion to same post is not assailable.

2. Prescription of period of service necessarily implies "after obtaining the requisite qualification". 

3.  Legal stipulation essential for altering seniority.

http://judis.nic.in/supremecourt/imgst.aspx?filename=41882

Question of Law

Whether Diploma  Holder  Project  Engineers  (Junior)  upon   acquiring   degree   / qualification of ‘AMIE’ would be  entitled  to  count  their  experience  of service prior to acquisition  of  such qualification  for  the  purpose  of eligibility of 3 years total experience of service  for  promotion  to  the post of Project Engineer (Sr.) in the quota fixed for Degree Holders?

Whether necessary to maintain two separate seniority lists for  Diploma Holders and Degree Holders for the purpose of promotion in their  respective quotas?

The main issue falling for determination  in these appeals only relates to what value, if any, is to be given to the service experience of a diploma holder - turned degree holder - Project Engineer (Junior) rendered by him as a diploma holder for the purpose of claiming eligibility for promotion as a degree holder Project Engineer (Junior) against 20% quota allotted for the degree holders. 

Facts :

7.    There are four higher  posts  in  the  hierarchy  above  the  post  of Project Engineer (Senior).  All of them are required to be  filled  up  only by promotion and require a Degree in Engineering in Civil, except  the  post of Resident Engineer just above that  of  Project  Engineer  (Senior)  which requires filling up “75% by degree holder  and  25%  by  diploma  holder  by granting promotion to eligible Project Engineer (Senior)”.  Column 6 of  the Schedule  Technical  provides  minimum  experience  and  qualification   for promotion to the post of Resident Engineer  as  (i)  Degree  Holder  with  5 years’ experience and (ii) Diploma  Holder  with  13  years  experience.   A diploma holder, as  noticed  earlier,  is  not  qualified  for  any  further promotion. 

8.    From the facts available on record  it  appears  that  initially  only diploma holders were appointed under the Regulations to the post of  Project Engineer (Junior) and on their acquiring the certificate of  AMIE  while  in service they were to be given benefit  of  their  past  service  as  diploma holders in the ratio of 3:7, i.e., 3 years of their service  with  AMIE  was treated as 7  years  of  service  as  diploma  holder  for  the  purpose  of eligibility for promotion. ............It appears that  a  common  Provisional  Seniority  List  of  Project  Engineer (Junior) including diploma, AMIE and  degree  holders  had  been  issued  on 11.8.1989 and although appellants had objected to the said  seniority  list, promotions were granted by the Board to few diploma holders on ad-hoc  basis in January and February 1992, as noted above.

Decision :

12. ........The words “category of employees” used in Clause (9)(B) in the context of the Regulations can only mean category of posts held by the employees. The word “category” has been used in the context of posts only in Clause (6) of the Regulations, although in the matter of absorption of employees working in the Board on deputation. Clause (9)(A) which provides for promotion when read together with the Schedule Technical leaves no manner of doubt that in respect of first promotion to higher post, i.e., promotion from post of Project Engineer (Junior) to Project Engineer (Senior), promotion of eligible person is required to be made on the basis of seniority-cum-merit. The High Court has rightly held that the cadre of Project Engineer (Junior) cannot be bifurcated for the purpose of seniority alone, only on the ground that for promotion to the cadre of Project Engineer (Senior) there is provision for 20% quota for degree holders and 30% quota for diploma holders. The practical view of the High Court cannot be faulted that the Board can legitimately prepare separate eligibility lists of Project Engineer (Junior) holding degree and those  holding  diploma. In absence of any legal stipulation for altering the initial seniority, pre-determined on the Board can legitimately prepare separate eligibility lists of Project Engineer (Junior) holding degree and those holding diploma. Such eligibility list could not be mistaken for seniority list which must remain common based upon merit assessed at the time of selection for recruitment. Only if the selection process had been different, there could have been any scope to argue for separate seniority lists. In absence of  any  legal stipulation for altering the initial seniority, pre-determined on the basis of merit at the time of initial selection and date of regular appointment, the seniority list cannot be altered only because some diploma holder Project Engineers (Junior) acquired the qualification of AMIE equivalent to a degree. The three years’ or seven years’ experience of service will entitle the degree holders and the diploma holders respectively only for inclusion of their names in the eligibility lists for promotion so as to work out satisfactorily the provision for different quota for the degree holders and the diploma holders.

....in the light of two water tight compartments created for the two classes for promotion with respective quotas of 20% and 30%, it must be held that three years’ total experience of service must be service as a degree holder. ... Such water-tight compartment and separate quotas cannot be rendered meaningless so as to affect the prospect of promotion of the degree holders by inducting into that category a diploma holder who does not have three years’ experience of service as a degree holder. In the absence of any such provision in the Regulations, no equivalence can be permitted in such a situation because even a diploma holder with seven years’ experience of service is confined to a prospect or chance of promotion only against 30% quota for the diploma holders. ..... The word ‘total’ cannot be construed to mean service rendered either as diploma holder or degree holder. If this had been the intention, the word ‘total’ would have been included only in the context of three years’ total experience of service of degree holders and not in the context of seven years’ experience of service as diploma holders.  A diploma holder in any case is required to have seven years’ experience of service for being eligible for promotion and hence the word ‘total’ would be otiose or redundant in the aforesaid context.

Project Engineers (Junior) recruited on the basis of diploma, upon their acquiring the qualification of ‘AMIE’, are not entitled to count their experience of service prior to acquisition of such qualification for the purpose of eligibility for promotion to the post of Project Engineer (Senior) against the 20% quota fixed for promotion of degree holder Project Engineers (Junior). In order to claim promotion against such 20% quota the three years’ experience of service must be acquired after  obtaining  the qualification or degree of AMIE. 

Effect of - S. 138 Negotiable Instruments Act - “stop payment” instructions issued to the bank

Pulsive Technologies P. Ltd. vs State of Gujarat & Ors.

http://judis.nic.in/supremecourt/imgst.aspx?filename=41838

Even “stop  payment”  instructions  issued to the bank are held to make a person liable for  offence  punishable  under Section 138 of the NI Act in case  cheque is dishonoured on that count.   In Modi Cements  v.   Kuchil Kumar Nandi[1] this Court made it clear that  even if a cheque is dishonoured because of “stop payment” instructions  given  to the bank, Section 138 of  the  NI  Act  would  get  attracted.   This  Court further observed that once the cheque is issued by the drawer a  presumption under Section 139 must follow and merely because the drawer issues a  notice to the drawee or to the bank  for  stoppage  of  the  payment  it  will  not preclude an action under Section 138 of the NI Act  by  the  drawee  or  the holder of the cheques in due course.  

11.   Again in M.M.T.C. Ltd. and anr.   v.    Medchl  Chemicals  and  Pharma (P) Ltd. and anr.[2] this Court reiterated the  same  view.   What  is  more important is the fact that this Court declared that the complaint cannot  be quashed on this ground.  Relevant observations of this Court read as under:

“… … …Even  when  the  cheque  is  dishonoured  by  reason  of  stop-payment instructions by virtue of Section 139 the court  has  to  presume  that  the cheque was received by the holder for the discharge, in whole  or  in  part, of any debt or liability. Of course this is a  rebuttable  presumption.  The accused can thus show that the “stop-payment” instructions were  not  issued because of insufficiency or paucity of funds. If the accused shows  that  in his account there were sufficient funds to clear the amount  of  the  cheque at the time of presentation of the cheque for encashment at the drawer  bank and that the stop-payment notice had been  issued  because  of  other  valid causes including that there was no existing debt or liability  at  the  time of presentation of cheque for encashment, then  offence  under  Section  138 would not be made out. The important thing is that the burden of so  proving would be on the accused. Thus a court  cannot  quash  a  complaint  on  this ground.”

Test of sufficient control vs Test of effective and absolute control - Which would be relevant ?

BALWANT RAI SALUJA & ANR vs AIR INDIA LTD. & ORS CA No 10264-10266 of 2013

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Controversy regarding liability  of  the  principal employer running statutory canteens and further regarding the status of  the workmen engaged thereof. S. 46  of Factories Act, 1948 statutory obligation toprovide and maintain canteen in  the  factory where more than two  hundred  and  fifty  workers  are  employed.

49.         To ascertain whether  the  workers  of  the  Contractor  can  be treated as the employees of the factory or company on  whose  premises  they run the said statutory canteen, this Court must apply the test  of  complete administrative control. Furthermore, it would  be  necessary  to  show  that there exists an employer-employee relationship between the factory  and  the workmen working in the canteen. 

55.         In Ram Singh v. Union Territory, Chandigarh, (2004) 1  SCC  126, as regards the concept of  control  in  an  employer-employee  relationship, observed as follows:
“15. In determining the relationship of employer  and  employee,  no  doubt, “control” is one of the important tests but is not to be taken as  the  sole test. In determining the relationship of employer and  employee,  all  other relevant facts and circumstances are required  to  be  considered  including the terms and conditions  of  the  contract.  It  is  necessary  to  take  a
multiple pragmatic approach weighing up all the factors for and  against  an employment instead of going by the sole “test  of  control”.  An  integrated approach is needed. “Integration” test is one of the relevant tests.  It  is applied by examining whether  the  person  was  fully  integrated  into  the employer’s concern or remained apart from and independent of it.  The  other factors which may be relevant  are  —  who  has  the  power  to  select  and dismiss, to pay remuneration, deduct insurance contributions,  organize  the work, supply tools and materials  and  what  are  the  “mutual  obligations” between them. (See Industrial Law, 3rd Edn., by I.T. Smith  and  J.C.  Wood, at pp. 8 to 10.)”

56.         In the case of Bengal Nagpur Cotton  Mills  case  (supra),  this Court observed that:

"......Two of the  well-recognized  tests  to  find  out whether the contract labourers are the direct  employees  of  the  principal employer are: (i) whether the principal employer pays the salary instead  of the contractor;  and  (ii)  whether  the  principal  employer  controls  and supervises the work of the employee."

Apex Court also placedreliance on Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of T.N.,  (2004)  3  SCC 514, wherein this Court had observed as follows:
“37. The control test and the organization  test,  therefore,  are  not  the only factors which can be said to be decisive. With a  view  to  elicit  the answer, the Court is required to consider several factors which  would  have a bearing on the result: (a) who is the appointing  authority;  (b)  who  is the paymaster; (c) who can dismiss; (d) how long alternative service  lasts;
(e) the extent of control and supervision; (f) the nature of  the  job  e.g. whether it is professional or skilled work;  (g)  nature  of  establishment; (h) the right to reject.

38. With a view to find out reasonable solution in  a  problematic  case  of this nature, what is  needed  is  an  integrated  approach  meaning  thereby integration of the relevant tests wherefor it may be  necessary  to  examine as  to  whether  the  workman  concerned  was  fully  integrated  into   the employer’s concern meaning  thereby  independent  of  the  concern  although attached therewith to some extent.”

Decision : At Para 61 Apex Court concluded that "the relevant factors to be  taken into consideration to  establish  an  employer-employee  relationship  would include, inter alia, (i)  who  appoints  the  workers;  (ii)  who  pays  the salary/remuneration; (iii) who has the authority to dismiss;  (iv)  who  can take disciplinary action; (v) whether there is continuity  of  service;  and (vi) extent of control and supervision, i.e. whether there  exists  complete control and supervision."