Friday, 14 May 2021

Whether Parallel Claims of Maintenance under CrPC, 1973 and Domestic Violence Act, 2005 Permitted ? – To what extent husband is liable .

 

An effected wife can claim maintenance   under various provisions. Bhagwan Dutt v Kamla Devi[1] Sec 125 (1) of Criminal Procedure Code, 1973 states that wife “who is unable to maintain herself” is entitled to seek maintenance. Similar provision is also made under Protection of Women from Domestic Violence Act, 2005 (DV Act). Section 20(1)(d) provides that maintenance granted under the D.V. Act to an aggrieved woman and children, would be given effect to, in addition to an order of maintenance awarded under Section 125 of the Cr.P.C., or any other law in force. The object of these provisions being to prevent vagrancy and destitution.

However a question arises “whether maintenance allowance awarded to the wife/opposite party is adjustable with the monetary relief granted to her under Section 23 of the Protection of Women from Domestic Violence Act”

Facts[2]

The Respondent wife has been granted interim maintenance under Sec 23 of DV Act. This was challenged by Petitioner on the ground that in parallel proceedings under Sec 125 CrPC the wife has been granted final order of maintenance. But the “learned Judicial Magistrate rejected the application on twofold grounds, viz, interim monetary relief granted in favour of the wife/opposite party No.1 cannot be adjusted with final order of maintenance passed in a proceeding under Section 125 of the Code of Criminal Procedure, against the scope of both the above mentioned statute and the relief granted under them are distinct and different.”

Appeal/Revision

The Respondent wife has placed reliance on judgement of Bombay High Court in Prakash Babulal Dangi & Anr. vs. State of Maharashtra[3] wherein it was held that “It has to be held so in view of Section 20(1)(d) of the Domestic Violence Act, which clearly provides that, 'in proceedings under the D.V. Act, the Magistrate may direct the Respondent to pay the maintenance to the aggrieved person as well as her children, if any, including an order under or in addition to an order of maintenance under Section 125 of Cr.P.C. or any other law for the time being in force.' Therefore, the power to award maintenance under D.V. Act is in addition to an order of maintenance under Section 125 of Cr.P.C. or any other law for the time being in force. Section 36 of the D.V. Act makes the things further clear by providing that, 'the provisions of the D.V. Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.' Therefore, it follows that the amount of maintenance awarded under the D.V. Act cannot be substituted to the order of maintenance under Section 125 of Cr.P.C.

however The Court has quoted from Supreme Court decision in Rajnesh vs. Neha & Anr.[4]wherein the latest position of law has been enunciated:

“It is well settled that a wife can make a claim for maintenance under different statutes. For instance, there is no bar to seek maintenance both under the D.V. Act and Section 125 of the Cr.P.C., or under H.M.A. It would, however, be inequitable to direct the husband to pay maintenance under each of the proceedings, independent of the relief granted in a previous proceeding……….. While deciding the quantum of maintenance in the subsequent proceeding, the civil court/family court shall take into account the maintenance awarded in any previously instituted proceeding, and determine the maintenance payable to the claimant”

Though the law is stated by Supreme Court as quoted above but in 2018 itself Bombay High Court too in Vishal v Aparna & Anr[5] had held,  The Court was considering the issue whether interim monthly maintenance awarded under Section 23 r.w. Section 20 (1)(d) of the D.V. Act could be adjusted against the maintenance awarded under Section 125 Cr.P.C. –

 “Though the wife can simultaneously claim maintenance under the different enactments, it does not in any way mean that the husband can be made liable to pay the maintenance awarded in each of the said proceedings.”

Thus the issue is settled.

 



[1] (1975) 2 SCC 386.

[2] Partha Sakha Maity v Bijali Maity & Anr. (Calcutta High Court, CRR 1094 of 2019)

[3] CriminalAppeal No.296 of 2017 dated 10th October, 2017.

[4] (2021) 2 SCC 324

[5] 2018 SCC OnLine Bom 1207

Wednesday, 14 April 2021

Injunction on Invocation of Bank Guarantees on Ground of Egregious Fraud

 

When there is default in performance of contract and an unconditional bank guarantee is furnished, Courts generally do not interfere in its invocation even though the dispute is still pending between beneficiary and person on whose behalf guarantee is given.  However there are exceptions to this rule. Situation of egregious fraud - Fraud committed of a nature that would vitiate the entire underlying transaction[1].

Facts[2]

A petition was filed by appellant under Sec 9 of Arbitration and Conciliation Act, 1996 seeking orders restraining the Respondent from encashing bank guarantees. The Ld Single Judge in fact directed encashing the four bank guarantees and transfer the encashed amount into the account of the learned Registrar General of this Court, to be put in a fixed deposit subject to the outcome of the arbitration proceedings. An appeal was preferred against this order

The case of appellant in brief is that it was assigned contract for extraction of coal from an ascertained coal block. The (Detailed Project Report) DPR for the same was cleared by Respondent. Consequent to this unconditional bank guarantees were furnished by appellant.

After sometime it was found upon examination of coal block (by Respondent) that the amount of coal extraction is likely to be greatly reduced. This was informed to appellant. This variation was, according to appellant, were at great variance to the earlier Geological Reports and called for entire fresh planning of work execution; its associated cost changes/variations; approval of a fresh mining plan; obtaining fresh environmental clearance; change in locations of ventilation shaft and inclined drivages and other key issues.

The issues were communicated to Respondent which decided to form a Committee to look into issues. However even after 12 months to communication was made to appellant and abruptly a shoe cause notice was issued by Respondent for cancellation of contract.

Even though appellant tried its best that respondent withdraws the cancellation notice but instead a letter communicating cancellation of contract was issued. The appellant filed the above Sec 9 petition seeking interim measures for protection against which an appeal was filed.

Ratio

It was noted that bank guarantees furnished by appellant are unconditional in nature meaning thereby “the bank has undertaken to pay to the beneficiary immediately on demand all monies payable by the contractor to the extent of the amounts specified therein, without any demur, reservation, recourse, contest or protest and/or without any reference to the appellant contractor”. Terms and Conditions stipulated in the contract give an absolute right to Respondent to encash the bank guarantees in accordance with the terms captured above.

Appellant raises the ground of egregious fraud by Respondent to obtain injunction against encashment of bank guarantee. But the Court states that – “the Appellant’s contention is vague and does not meet the requirement of law on the concept of fraud as a ground for restraining encashment of bank guarantees, as laid down in a plethora of judgments on the subject”

Further the appelants’s prayer that Contract be declared void ab intio also was not accepted by the court on a simple reason that arbitration proceedings are pending and it was beyond the scope of Sec 9 petition under the Act to grant such a relief.

The encashment of bank guarantee cannot be termed as fraudulent only because disputes arose between parties even if it was accepted that Respondent was at fault for failing to fulfill its obligations under the Contract. – “The existence of disputes between the parties to the Contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees.”

Also the Ld single judge has not assigned the amount to Respondent rather has been deposited in the Court subject to outcome of arbitration proceedings.

Thus the plea of appellant was not accepted.



[1]  U.P. State Sugar corporation v Sumac International Ltd (1997) 1 SCC 568

[2] AMR BBB Consortium v Bharat Cooking Coal Ltd (Delhi High Court, FAO(OS) (COMM) 20/2021)

Parallel Claims of Maintenance under CrPC and Domestic Violence Act

 

An effected wife can claim maintenance   under various provisions. Bhagwan Dutt v Kamla Devi[1] Sec 125 (1) of Criminal Procedure Code, 1973 states that wife “who is unable to maintain herself” is entitled to seek maintenance. Similar provision is also made under Protection of Women from Domestic Violence Act, 2005 (DV Act). Section 20(1)(d) provides that maintenance granted under the D.V. Act to an aggrieved woman and children, would be given effect to, in addition to an order of maintenance awarded under Section 125 of the Cr.P.C., or any other law in force. The object of these provisions being to prevent vagrancy and destitution.

However a question arises “whether maintenance allowance awarded to the wife/opposite party is adjustable with the monetary relief granted to her under Section 23 of the Protection of Women from Domestic Violence Act”

Facts[2]

The Respondent wife has been granted interim maintenance under Sec 23 of DV Act. This was challenged by Petitioner on the ground that in parallel proceedings under Sec 125 CrPC the wife has been granted final order of maintenance. But the “learned Judicial Magistrate rejected the application on twofold grounds, viz, interim monetary relief granted in favour of the wife/opposite party No.1 cannot be adjusted with final order of maintenance passed in a proceeding under Section 125 of the Code of Criminal Procedure, against the scope of both the above mentioned statute and the relief granted under them are distinct and different.”

Appeal/Revision

The Respondent wife has placed reliance on judgement of Bombay High Court in Prakash Babulal Dangi & Anr. vs. State of Maharashtra[3] wherein it was held that “It has to be held so in view of Section 20(1)(d) of the Domestic Violence Act, which clearly provides that, 'in proceedings under the D.V. Act, the Magistrate may direct the Respondent to pay the maintenance to the aggrieved person as well as her children, if any, including an order under or in addition to an order of maintenance under Section 125 of Cr.P.C. or any other law for the time being in force.' Therefore, the power to award maintenance under D.V. Act is in addition to an order of maintenance under Section 125 of Cr.P.C. or any other law for the time being in force. Section 36 of the D.V. Act makes the things further clear by providing that, 'the provisions of the D.V. Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.' Therefore, it follows that the amount of maintenance awarded under the D.V. Act cannot be substituted to the order of maintenance under Section 125 of Cr.P.C.

however The Court has quoted from Supreme Court decision in Rajnesh vs. Neha & Anr.[4]wherein the latest position of law has been enunciated:

“It is well settled that a wife can make a claim for maintenance under different statutes. For instance, there is no bar to seek maintenance both under the D.V. Act and Section 125 of the Cr.P.C., or under H.M.A. It would, however, be inequitable to direct the husband to pay maintenance under each of the proceedings, independent of the relief granted in a previous proceeding……….. While deciding the quantum of maintenance in the subsequent proceeding, the civil court/family court shall take into account the maintenance awarded in any previously instituted proceeding, and determine the maintenance payable to the claimant”

Though the law is stated by Supreme Court as quoted above but in 2018 itself Bombay High Court too in Vishal v Aparna & Anr[5] had held,  The Court was considering the issue whether interim monthly maintenance awarded under Section 23 r.w. Section 20 (1)(d) of the D.V. Act could be adjusted against the maintenance awarded under Section 125 Cr.P.C. –

 “Though the wife can simultaneously claim maintenance under the different enactments, it does not in any way mean that the husband can be made liable to pay the maintenance awarded in each of the said proceedings.”

Thus the issue is settled.



[1] (1975) 2 SCC 386.

[2] Partha Sakha Maity v Bijali Maity & Anr. (Calcutta High Court, CRR 1094 of 2019)

[3] CriminalAppeal No.296 of 2017 dated 10th October, 2017.

[4] (2021) 2 SCC 324

[5] 2018 SCC OnLine Bom 1207

Tuesday, 21 January 2020

Q. whether an Advocate can be appointed as Receiver under section 14 (1A) of the SARFAESI Act ?




The question came up recently before Delhi HC where it was answered in affirmative:

The appointment of  advocate as receiver by Learned CMM  has been challenged on basis of decision of Bom HC in Subir Chakravarty and Ors. vs. Kotak Mahindra Bank Ltd.  [Writ Petition No. 28480 of 2019]

Sub-section (1) of Section 14 of the SARFAESI Act, 2002 reads as under :-

(1) Where the possession of any secured asset is required to be taken by the secured creditor or if any of the secured asset is required to be sold or transferred by the secured creditor under the provisions of this Act, the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or, as the case may be, the District Magistrate shall, on such request being made to him.

(a) take possession of such asset and documents relating thereto; and
(b) forward such assets and documents to the secured creditor.

The Delhi HC, However rules that  Sec 14 uses the word ‘may’ and not ‘shall’ which would import either of below two interpretations:
1) “that the expression “may” relates to the choice of the subordinate officer.” ;
2)  that District Magistrate/CMM has the discretion to appoint officers subordinate to him to take possession of secured asset

Once an application is made on behalf of secured creditor under Sec 14(1) SARFAESI the District Magistrate/CMM has to take action. Even before when Sec 14(1A) was introduced advocates were appointed as receivers under sub-section (2) of Sec 14. The position is also settled by Rule 8(3) of The Security Interest (Enforcement) Rules, 2002.

The reason for appointing advocates as receivers was that District Magistrates/CMM  were over burdened and due to lack of subordinate staff a handicap arose in dealing large number of applications under Sec 14

In view of Hon’ble HC the insertion of sub-section (1A) has only conferred choice on District Magistrate/CMM to appoint subordinate officers as Receivers.

Thus the appointment of advocates as Receivers under  under section 14 (1A) of the SARFAESI Act is permissible.



Sunday, 12 June 2016

Compensation by MACT not subject to TDS : Madras HC

Keeping up the spirit of social jurisprudence evolved by writ courts in catena of cases beginning from Maneka Gandhi, the Madras High Court has ruled a commendable opinion. In Managing Director, TN State Transport Corp v Chinnadurai[1] the Court has declared compensation granted for motor accident not be subjected to TDS.

The facts leading to this permissive ruling, are straight:

“ Respondent in the instant Revision Petition  has filed an Execution Petition R.E.P.No.146 of 2010 before the Motor  Accident  Claims  Tribunal,  Dharmapuri  in  M.C.O.P.No.879  of  2006  wherein the amount that they are entitled to Rs.4,23,271/- and in the  memo filed before the Motor Accident Claims Tribunal, Rs.24,017/- has  been deducted for TDS.  R.E.P.No.146 of 2010 that has been filed was allowed by the Court below and accordingly, the bus belonging to the Revision Petitioner Corporation was attached and the Corporation was directed to deposit the balance amount of Rs.30,774.   Aggrieved by this order, the Petitioner has approached this Court”[2]

The Petitioner corporation submits that  as per Sections 194-A and 156 of  the Income Tax Act,  1961,  the  interest  portion  awarded  by  the  Motor  Accident  Claims Tribunal  should be subject  to  TDS.

The Question of Law
Q) Whether the provisions of the Income Tax  Act 1961,  and more specifically,  whether the compensation awarded  by the Motor Accident Claims Tribunal to the victim can be classified as  a taxable income under  the Income Tax law?.
The HC declines to classify compensation awarded by MACT to victim as a taxable income. To explain this conclusion the phrase compensation is first explained:

“An act  which a Court  orders  to  be done,  or  money  which a Court orders to be paid, by a person whose acts or   omissions have caused loss or injury to another in order that   thereby the person damnified may receive equal value for his  loss, or be made whole in respect of his injury; remuneration  or  satisfaction  for  injury  or  damage  of  every  description;  remuneration for loss of time, necessary expenditures and for   permanent  disability if  such be the result; remuneration for   the  injury  directly  and proximately  caused  by  a  breach  of   contract  or  duty;  remuneration  or  wages  given  to  an  employee or officer.”[3]

On the other hand the Income-Tax Act, 1961 would apply when there has been generation of taxable income, which is not the case here. In reaching to this conclusion the court cited opinions of two High Courts
·         Court on its Motion Vs. H.P.State Co-operative Bank  Ltd & Ors 2014 SCC Online HP 4273
“13.While going through the said provisions of law, one  comes to the inescapable conclusion that the mandate of the  said provisions does not apply to the accident claim cases and  the compensation  awarded  under  the  Motor  Vehicles  Act  cannot  be said to be taxable incomeThe compensation is  awarded in lieu of death of a person or bodily injury suffered in a vehicular accident, which is damage and not income.(emphasis supplied)

14.  Chapters X and XI of the Motor Vehicles Act, 1988  provides  for  grant  of  compensation  to  the  victims  of  a  vehicular accident.  The Motor Vehicles Act has undergone a  sea change and the purpose of granting compensation under  the Motor Vehicles Act is to ameliorate the sufferings of  the  victims  so  that  they  may  be  saved  from social  evils  and  starvation, and that the victims get some sort of help as early  as possible.  It is just to save them from sufferings, agony and  to  rehabilitate  them.    We  wonder  how  and  under  what  provisions of law the Income Tax Authorities have treated the  amount awarded or interest accrued on term deposits made in  Motor Accident Claims Cases as income.  Therefore, the said  Circular  is  against  the  concept  and  provisions  referred  to  hereinabove  and runs  contrary  to  the  mandate  of  granting  compensation.

...23.   Having said so,  the Circular,  dated 14.10.2011,  issued by the Income Tax Authorities,  whereby deduction of  income  Tax  has  been  ordered  on  the  award  amount  and  interest accrued on the deposits made under the orders of the Court in Motor Accident Claims Cases, is quashed and in case any such deduction has been made by respondents, they are  directed to refund the same, with interest at the rate of 12%  from the date of deduction till payment, within six weeks from  today”.[4]

·         Further in New India  Assurance  Company  Ltd.  Vs.Sudesh  Chawla  and  others[5], the P&H HC ruled:

“award of compensation is on the principle of  restitution to place the  claimant in the same position in which he would have been loss of life  or  injury has not  been suffered and accordingly held that  the orders  calling upon the Insurance Company to pay TDS/deduct  Tds on the  interest part are not sustainable.”[6] (emphasis supplied)

In HC’s view the above line of thought is in consonance with the social objective of legislations like Motor Vehicles Act which provided compensation to victims as sort of solatium which is in form of remedy. A remedy cannot be treated as income for purposes of Income-Tax Act

Also when there a conflict of interpretation arises between a social welfare legislation and a taxation legislation, the latter must give way for former. Courts will always approve interpretation which involves larger public interest which is in line with ensuring public good.
moreover the courts avoid any pedantic or hypertechnical understanding of issues to rule something which is against larger social interest

All these factors move on to one stable conclusion that as far as compensation awarded to victims by MACT is concerned it cannot be treated as taxable income  for purposes of Income-Tax Act, 1961




[1] Decided on June 2nd 2016
[2] Managing Director, TNSTC  v Chinnadurai [CRP (PD) No 1343 of 2012; decided on June 2, 2016]
[3] R.Ramanatha Aiyar law dictionary referring to Black’s Law dictionary
[4] Supra Note 3
[5] CR.No.430 of 2015 (O&M)
[6] Supra Note 3