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Divorced Muslim wife petition for maintenance under sec.125 Cr.P.C. is directed to be converted suo-moto by Magistrate and directed to decided the same under MWP ACT = i. That divorced muslim wife would be entitled to maintenance from her husband under section 125 of Criminal Procedure Code subject to provisions of MWP Act. ii. That law laid down by the Apex Court in Saha Bano’s case (Supra) [Mohammad Ahamad Khan Vs. Saha Bano Begam AIR1985 SC 945: (1985)2 SCC 556] has been analyzed and codified the same in Muslim Women (Protection of Rights on Divorce) Act 1986. iii. In Dainial Latifi’s case (Supra) The validity of Muslim Women (Protection of Rights on Divorce) Act, 1986 has been upheld. iv. In view of provisions contained in section of 5 of MWP Act if the parties have exercised their option, the parties to be governed by provisions of Section 125 to 128 of Criminal Procedure Code, and not in accordance with the provisions contained in MWP Act. The application so given under MWP Act shall be disposed of in view of the provisions contained in Section 125-128 Cr.P.C. v. In section 125 the word ‘ Divorced women’ include muslim women, who has been married accord to Muslim Law and has been divorced by or has obtained divorce from her husband in accordance with Muslim Law. vi. That MWP Act will not apply to a muslim women whose marriage has been solemnized either under the Indian Special Marriage Act 1954 or a Muslim women whose marriage was dissolved either under Indian Divorce Act, 1969 or Indian Special Marriage Act, 1954. vii. When a petition is filed by divorced muslim women for her maintenance before a family court, section 7 of the Family Court Act, 1987 would be applied. In view of of section 20 of Family Courts Act 1984, the provisions of Family Courts Act shall have overriding effect over all other law for the time being in force including the provisions of MWP Act . Any suit or proceeding for maintenance filed before family Court by any women including muslim women be governed by provisions of Section 125 Cr.P.C, which is a common law applicable to all the women and thus Family Courts are competent to decide the application of muslim divorced women under section 125 Cr.P.C. viii. The court proceeding under section 125 Cr.P.C. if is of the opinion that the matter relates to reasonable and fair provision and maintenance to divorced muslim women it would be open to him to treat the application under MWP Act instead of rejecting the same because the proceeding under section 125 Cr.P.C. and claim made under MWP Act could be tried by one and the same court.

reported/published in http://elegalix.allahabadhighcourt.in/elegalix/WebShowJudgment.do HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH  Reserved AFR High Court of judicature at Allahabad, Lucknow Bench, Lucknow District- Lucknow Writ Petition No. – 4909 (M/S) of 2008 Rafiquddin son of Raisul Zama, resident of Village and post Vaishpur, P.S.-Mandhata, District Pratapgarh. ………………… Petitioner Vs. 1. Kishwar Jehan, daughter of Sri Habibur … Continue reading

Gift under income tax – credit-worthiness of the donor = We find that it is not in dispute that the aforesaid two amounts have been deposited by the two partners in their capital account. The partners are income tax payee. They have explained the source as having received gift from various persons, who have also filed their Income Tax Returns and have been assessed accordingly. Merely because, the donors are weavers and they own only one loom would not make any difference. They have filed their Income Tax Returns and have also filed the return under the Gift Tax Act. They have paid the gift tax also. Assessment under the Gift Tax Act has also been made, though the assessments made were summary in nature. In the case of Anil Rice Mills (supra), this Court has held that the assessee can not be asked to prove the source of source or the origin of origin. Taking the various facts enumerated above, we are of the considered opinion that the Tribunal had erred in holding that the amount deposited by the two partners is liable to be added under section 68 of the Act on the ground that the gifts received by the respective partners from the various persons could not be explained as the credit-worthiness of the donors had not been established. The Tribunal had wrongly drawn an adverse inference upon the fact that the donors had filed their Income Tax Return for the Assessment Years 1988-89 to 1991-92 on a single day and further the return for the Gift Tax was filed on 25.08.1992, which was well within the due date. The appellant has explained the nature and source of the deposit and has discharged its burden. The order of the Tribunal on this ground therefore can not be sustained and is liable to be set-aside. The appeal succeeds and is allowed.

reported/published in  http://elegalix.allahabadhighcourt.in/elegalix/WebShowJudgment.do HIGH COURT OF JUDICATURE AT ALLAHABAD  Reserved Income Tax Appeal No. 71 of 2002 M/s. Zafa Ahmad & Company Versus The Commissioner of Income Tax, Varanasi *********************** Hon’ble R.K. Agrawal, J. Hon’ble B. Amit Sthalekar, J. (Delivered by R.K. Agrawal, J.) The present appeal has been filed under section 260A of the … Continue reading

whether the Company Judge under the Companies Act, 1956 (for short “the 1956 Act”) has jurisdiction at the instance of the Official Liquidator to set aside the auction or sale held by the Recovery Officer under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (for brevity “the RDB Act”) or whether the Official Liquidator is required to follow the route as engrafted under the RDB Act by filing an appeal assailing the auction and the resultant confirmation of sale.= It is well settled in law that if there is only one remedy, the doctrine of election does not apply and we are disposed to think that the Official Liquidator has only one remedy, i.e., to challenge the order passed by the Recovery Officer before the DRT. Be it noted, an order passed under Section 30 of the RDB Act by the DRT is appealable. Thus, we are inclined to conclude and hold that the Official Liquidator can only take recourse to the mode of appeal and further appeal under the RDB Act and not approach the Company Court to set aside the auction or confirmation of sale when a sale has been confirmed by the Recovery Officer under the RDB Act. in M.V. Janardhan Reddy (supra) wherein the sale was aside by the Company Judge. It may be stated here that the Company Court had imposed a condition that the permission of the Company Court shall be obtained before the sale of the properties, immoveable or moveable, is confirmed or finalized. On the aforesaid basis, this Court opined that when the bank was permitted to go ahead with the proposed sale of the assets of the company under liquidation by way of auction but such sale was subject to confirmation by the Company Court and all the parties were aware about the condition as to confirmation of sale by the Company Court, it was not open to the Recovery Officer to confirm the sale and, therefore, the sale was set aside by the Company Court, being in violation of the order. Thus, we find that the facts in the said case were absolutely different and further this Court did not deal with the jurisdiction of the Company Court vis-à-vis DRT as the said issue really did not arise. Hence, it is not an authority for the proposition that the Official Liquidator can approach the Company Court to set aside the auction or sale conducted by the Recovery Officer of the DRT.- the Official Liquidator can prefer an appeal before the DRT. As he was prosecuting the lis in all genuineness before the Company Court and defending the order before the Division Bench, we grant him four weeks’ time to file an appeal after following the due procedure. On such an appeal being preferred, the DRT shall deal with the appeal in accordance with law. The DRT is directed to decide the appeal within a period of two months after offering an opportunity of hearing to all concerned. Till the appeal is disposed of, the interim order passed by this Court shall remain in force. We hasten to clarify that we 3Page 34 have not expressed anything on the merits of the case. 30. Consequently, the appeal is disposed of in the above terms leaving the parties to bear their respective costs.

Page 1 Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2511 OF 2013 (Arising out of S.L.P. (C) No. 35627 of 2011) The Official Liquidator, U.P. and Uttarakhand … Appellant Versus Allahabad Bank and others …Respondents J U D G M E N T Dipak Misra, J. Leave granted. 2. The … Continue reading

severe strictures It is settled legal position that no adverse remark can be made against any judicial officer without giving an opportunity to explain the conduct.- “This conduct of the Chief Judicial Magistrate is deplorable and wholly mala fide and illegal.” “Vexatiously illegal.” “… and has done unpardonable injustice to the injured and the informant. His lack of sensitivity and utter callous attitude has left the accused of murderous assault to go scot-free to this day”. Our legal system acknowledges the fallibility of the Judges, hence it provides appeals and revisions. lower judicial officers mostly work under a charged atmosphere and are constantly under psychological pressure and they do not have the facilities which are available in the higher courts, we are of the view that the remarks/observations and strictures are to be avoided particularly if the officer has no occasion to put-forth his reasonings. We, once again, reiterate that harsh or disparaging remarks are not to be made against judicial officers and authorities whose conduct comes into consideration before courts of law unless it is really for the decision of the case as an integral part thereof. Under these circumstances, the adverse remarks passed in the impugned judgment and the final orders dated 01.03.2012 and 23.04.2012 insofar as the appellant is concerned are set aside. Since these appeals are confined only for expunging the strictures, the same are allowed as pointed above. No costs.

Page 1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1340-1341 OF 2013 (Arising out of S.L.P. (C) Nos. 18859-18860 of 2012) Awani Kumar Upadhyay …. Appellant(s) Versus The Hon’ble High Court of Judicature at Allahabad and Ors. …. Respondent(s) J U D G M E N T P. Sathasivam, J. … Continue reading

for quashing the proceedings in Complaint Case No.628 of 2011 (Sudha Kant Pandey v. K.L. Singh & Anr.) under Sections 403 and 406 of Indian Penal Code, 1860 (hereinafter referred to as the‘IPC’).=A complaint made after a lapse of 15 years is barred by the provisions of Section 468 Cr.P.C., and the High Court has erred in holding the same to be a continuing offence. As, in pursuance of the High Court’s order dated 25.5.2001, the representation of respondent no.2 dated 21.3.2001 was decided by the Managing Director, IFFCO vide order dated 15.10.2001, the limitation period began from the date of the said order, or at the most from 29.10.2001, that is, the date on which, the order of rejection was communicated. The initiation of criminal proceedings is nothing but an attempt by the frustrated litigant to give vent to his frustration, by invoking the jurisdiction of the criminal court and thus, the proceedings are liable to be quashed .= “In cases where there is a delay in lodging a FIR, the Court has to look for a plausible explanation for such delay. In absence of such an explanation, the delay may be fatal. The reason for quashing such proceedings may not be merely that the allegations were an afterthought or had given a coloured version of events. In such cases the court should carefully examine the facts before it for the reason that a frustrated litigant who failed to succeed before the Civil Court may initiate criminal proceedings just to harass the other side with mala fide intentions or the ulterior motive of wreaking vengeance on the other party. Chagrined and frustrated litigants should not be permitted to give vent to their frustrations by cheaply invoking the jurisdiction of the criminal court. The court proceedings ought not to be permitted to degenerate into a weapon of harassment and persecution. In such a case, where an FIR is lodged clearly with a view to spite the other party because of a private and personal grudge and to enmesh the other party in long and arduous criminal proceedings, the court may take a view that it amounts to an abuse of the process of law in the facts and circumstances of the case.-The instant appeals are squarely covered by the observations made in Kishan Singh (Supra) and thus, the proceedings must be labeled as nothing more than an abuse of the process of the court, particularly in view of the fact that, with respect to enact the same subject matter, various complaint cases had already been filed by respondent No.2 and his brother, which were all dismissed on merits, after the examination of witnesses. In such a fact-situation, Complaint Case No. 628 of 2011, filed on 31.5.2001 was not maintainable. Thus, the Magistrate concerned committed a grave error by entertaining the said case, and wrongly took cognizance and issued summons to the appellants. 34. In view of above, the appeals are allowed. The impugned judgment dated 13.3.2012 is set aside and the proceedings in Complaint Case No. 628 of 2011 pending before the Additional C.J.M., Allahabad, are hereby quashed.

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 61 of 2013 Udai Shankar Awasthi …Appellant Versus State of U.P. & Anr. …Respondents WITH CRIMINAL APPEAL NO. 62 of 2013 J U D G M E N T Dr. B.S. CHAUHAN, J. 1. Both these appeals have been preferred against the … Continue reading

whether it was a fit case to send the appellants for trial when the FIR failed to make out a prima facie case against them regarding the allegation of inflicting physical and mental torture to the complainant demanding dowry from the complainant. We, therefore, deem it just and legally appropriate to quash the proceedings initiated against the appellants Geeta Mehrotra and Ramji Mehrotra as the FIR does not disclose any material which could be held to be constituting any offence against these two appellants. Merely by making a general allegation that they were also involved in physical and mental torture of the complainant-respondent No.2 without mentioning even a single incident against them as also the fact as to how they could be motivated to demand dowry when they are only related as brother and sister of the complainant’s husband, we are pleased to quash and set aside the criminal proceedings in so far as these appellants are concerned and consequently the order passed by the High Court shall stand overruled. The appeal accordingly is allowed.

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1674 OF 2012 (Arising out of SLP (Crl.) No. 10547/2010) Geeta Mehrotra & Anr. ..Appellants Versus State of U.P. & Anr. . Respondents J U D G M E N T GYAN SUDHA MISRA, J. 1. This appeal by special leave in … Continue reading

Oudh Lands Act, 1876-Sections 7(b) & 8-U.P. Urban Areas Zamindari Abolition and Land Reforms Act, 1957-Right of pre-emption-Property brought within the municipal limits of a town-Transfer of the property through sale-Claim of the right being a co-sharer of the property- Availability of-Held, the customary right of pre-emption existed for a long time and is available in view of recognition by the courts-On facts the right existed with the co- sharer on the date of the transfer of the property-Right not ceased to exist after the latter enactment. One S transferred the suit property to his wife in lieu of dower debt. The property is situated in a village. A part of the village was included within municipal limits of a town. She sold the property in 1951 to one M, who is the predecessor of respondent Appellant filed a suit before trial court claiming a right of pre-emption on the property being a co-sharer under the provisions of the Oudhs Land Act, 1876. The trial court decreed the suit holding that the right of pre-emption existed with the appellant even after the property is included within the municipal limits. Appellate Court dismissed the appeal of the respondent on the basis of a finding of Commissioner that the property was within the municipal limits on the date of the transfer of the property. High Court allowed the second appeal of the respondent holding that the custom relating to pre-emption was not available in that town under the Act and that the appellant could not prove the right on the date of transfer. Hence the appeal. The respondent contended that the appellant failed to produce evidence to show that the customary right of pre-emption existed on the date of transfer of the property; that the appellant is not a co-sharer of the property and that after the enactment of the U.P. Urban Areas Zamindari Abolition and Land Reforms Act, 1957, the right of pre-emption ceased to exist =Allowing the appeal, the Court HELD: 1.1 It is the burden of the respondent to show that the customary right of pre-emption was either abandoned or discontinued and was not continuing on the date of the transfer of the suit property in view of the recognition of the customary right of pre-emption of a co-sharer in respect of town land by the courts. Judicial decisions recognising custom are relevant and admissible notwithstanding that they are not inter parties and such evidence is the most satisfactory evidence. [836-F-G] 1.2. The view of the High Court that there was complete transformation in the social system prevailing in cities is contrary to the recognition by the courts of such customary right in respect of town land. The finding of the High Court that there is no evidence that the custom was a continuing one is erroneous since this custom was prevalent in the town for a long period. Further there was no evidence from the side of the respondent that this custom was discontinued at any point of time. [837-D-E] Abdul Alim and Ors. v. Hayat Mohammad and Ors., AIR 33 (1946) Oudh 188, distinguished. 1.3. The appellant is a co-sharer in view of the finding by the lower courts. The contention of the respondent that the right of pre-emption ceased to exist after the enactment of the U.P. Urban Areas Zamindari Abolition and Land Reforms Act, 1957 was not urged either before the High Court or before the lower courts. Further, on perusal of the Act, it is not acceptable that the customary right of pre-emption ceased to exist in the area. Hence the appellant, being a co-sharer, has acquired a right of pre- emption over the suit property. [837-G-H] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 661 of 1997 =, 2002(1 )SCR833 , 2002(2 )SCC652 , 2002(2 )SCALE23 , 2002(2 )JT1

CASE NO.: Appeal (civil) 661 of 1997 PETITIONER: FAZLE RAB Vs. RESPONDENT: MOHD. YAKEEN DATE OF JUDGMENT: 05/02/2002 BENCH: Syed Shah Mohammed Quadri & S.N. Phukan JUDGMENT: Phukan, J. This appeal arising out of judgment of the High Court of Judicature at Allahabad is by the plaintiff. The parties shall be referred to as arrayed … Continue reading

Indian Arbitration and Conciliation Act, 1996: Section 11(5)-Appointment of arbitrator-Application by the legal heir of the deceased partner-Held, maintainable. Indian Partnership Act, 1932; Section 46-Rendition of accounts-Legal representative of a deceased partner-Right to sue-Held, survives on the legal representative. The Short questions involved in the appeals were: (a) Where right to sue for rendition of accounts survives on the legal representative of a deceased partner, are the legal representative not entitled to invoke arbitration clause contained in the Partnership Deed? (b) Whether the arbitration can be commenced by the heirs after the death of partner especially where the dispute had arisen during the life time of the partner? (c) Whether in view of section 46 read with section 48 of the Indian Partnership Act, 1932 as well as section 40 of the Arbitration Act, 1996. The legal representative of the deceased partner is entitled to claim appointment of arbitrator under the arbitration clause of the Partnership Deed? =2007 AIR 1517, 2007(4 )SCR295 , , 2007(4 )SCALE562 , 2007(4 )JT523

CASE NO.: Appeal (civil) 1526 of 2007 PETITIONER: Ravi Prakash Goel RESPONDENT: Chandra Prakash Goel & Anr DATE OF JUDGMENT: 21/03/2007 BENCH: Dr. AR. Lakshmanan & Altamas Kabir JUDGMENT: J U D G M E N T (Arising Out of SLP (C) NO. 6723 OF 2006) Dr. AR. Lakshmanan, J. Leave granted. The above appeal … Continue reading

Code of Civil Procedure, 1908/Provincial Small Cause Courts Act, 1887- Order 9 Rule 13/Section 17(1)/Proviso-Ex-parte decree by Court of Small Causes for deposit of arrears of rent and eviction-Application by respondent to set aside the decree-Failure by respondent to deposit decretal amount or make a previous application seeking permission to furnish security-Application to furnish security filed subsequently and after delay- Maintainability of the main application-Held, the law is mandatory and not directory for deposit of decretal amount or filing a previous application- Hence, application for setting aside decree not maintainable on account of failure to comply with proviso. Appellant-landlord filed a suit before a Court of Small Causes for recovery of arrears of rent and for eviction against respondent-tenants under Section 20 of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. The suit was decreed ex-parte for recovery of arrears of rent and eviction. The appellant executed the decree and obtained possession of the premises with police help. The respondents filed an application before the trial court seeking setting aside of the ex-parte decree under Order 9 Rule 13 of CPC. Along with the application, the respondents neither deposited the decretal amount before the trial court nor filed an application seeking permission to furnish security of the decretal amount. During the course of hearing, the appellant contended that the application filed by the respondents was not maintainable and liable to be dismissed for non-compliance with the proviso to section 17 of the Provincial Small Cause Courts Act, 1887 (PSCC Act). The respondents then filed an application before the trial court seeking permission to furnish security for the decretal amount the trial court dismissed both the applications. The Court of Additional District Judge, in a revision preferred by the respondents, condoned the delay and directed the trial court to accept security and decide the application filed under Order 9 Rule 13 CPC on merits. A Writ Petition filed before High Court by the appellant was dismissed. In appeal to this Court, the appellant contended that the proviso to section 17 of the PSCC Act is mandatory and hence the non-compliance therewith cannot be condoned; and that, even assuming the court has power to condone the delay, no sufficient cause was made by the respondents. =Allowing the appeal, the Court HELD : 1.1. The object behind establishing the Courts of Small Causes conferred with jurisdiction to try summarily such specified category of cases which need to be and are capable of being disposed of by adopting summary procedure of trial is to secure an expeditious disposal and to curtail the lengthy procedure of litigation. The jurisdiction to entertain and hear an application to set aside a decree passed ex-parte or for a review of judgment by Courts of small Causes is sought to be qualified and narrowed down by imposing condition as to deposit or giving security for performance or compliance by enacting proviso to section 17(1) of the Provincial Small Cause Courts Act, 1887 (PSCC Act). [149-G; 150-A] 1.2. A bare reading of the provision shows that the legislature has chosen to couch the language of the proviso in a mandatory form and there is no reason to interpret, construe and hold the nature of the proviso as directory. An application seeking to set aside an ex-parte decree passed by a Court of Small Causes or for a review of its judgment must be accompanied by a deposit in the court of the amount due from the applicant under the decree or in pursuance of the judgment. The proviso as to deposit can be dispensed with by the court in its discretion subject to a previous application by the applicant seeking direction of the court for leave to furnish security and the nature thereof. The proviso does not provide for the extent of time by which such application for dispensation may be filed. It may be filed at any time up to the time of presentation of application for setting aside ex-parte decree or for review and the Court may treat it as a previous application. The obligation of the applicant is to move a previous application for dispensation. It is then for the court to make a prompt order. The delay on the part of the court in passing an appropriate order would not be held against the applicant because none can be made to suffer for the fault of the court. [151-B-D] 1.3. The application for setting aside ex-parte decree was not accompanied by the deposit in the court of the amount due and payable by the applicant under the decree. The applicant also did not move any application for dispensing with deposit and seeking leave of the court for furnishing such security for the performance of the decree as the court may have directed. The application for setting aside the decree was therefore incompetent. [151-F] Mohammad Ramzan Khan v. Khubi Khan, AIR (1938) Lahore 18 (DB); Murari Lal v. Mohammad Yasin, AIR (1939) Allahabad 46; Mt. Shikhani v. Bishambhar Nath, AIR (1941) Oudh 103; Jagdamba Prasad and Ors., v. Ram Das Singh and Anr., AIR (1943) Allahabad 288; Roshan Lal v. Brij Lal Amba Lal Shah, AIR (1944) Oudh 104; Vembu Amal v. Esakkia Pillai, AIR (1949) Madras 419; Khetra Dolai v. Mohan Bissovi, AIR (1961) Orissa 37; Dhanna v. Arjun Lal, AIR (1963) Rajasthan 240; Krishan Kumar v. Hakim Mohd. (1978) ALJ 738; Sharif v. Suresh Chand and Ors., (1979) AWC 256; Roop Basant v. Durga Prasad and Anr., (1983) 1 ARC 565; Mohd. Islam v. Faquir Mohammed, (1985) 1 ARC 54; Krishan Chandra Seth v. Dr. K.P. Agarwal and Anr.,(1988) 1 ARC 310; Mamta Sharma v. Hari Shankar Srivastava and Ors., (1988) 1 ARC 31; Mohd Yasin v. Jai Prakash, (1988) 2 ARC 575; Purshottam v. Special Additional Sessions Judge, Mathura and Ors. (1991) 2 ARC 129; Ram Chandra (deceased L.Rs.) and Ors. v. IXth Additional Distric Judge, Varanasi and Ors., AIR (1991) Allahabad 223; Sagir Khan v. The District Judge, Farrukhabad and Ors., (1996) 27 ALR 540; Mohammad Nasem v. Third Additional District Judge, Faizabad and Ors., AIR (1998) Allahabad 125; Beena Khare v. Vllth Additional District Judge, Allahabad and Anr, (2000) 2 ARC 616; Surendra Nath Mittal v. Dayanand Swarup and Anr., AIR (1987) Allahabad 132; Chigurupalli Suryanarayana v. The Amadalayalasa Co-operative Agricultural Industrial Society Ltd., AIR (1975) A.P. 196 and Tarachand Hirachand Porwal v. Durapa Tavanappa Patravali, AIR (1943) Bombay 237, referred to. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5109 of 1999.

CASE NO.: Appeal (civil) 5109 of 1999 PETITIONER: KEDARNATH Vs. RESPONDENT: MOHAN LAL KESARWARI & ORS. DATE OF JUDGMENT: 10/01/2002 BENCH: R.C. Lahoti & Brijesh Kumar JUDGMENT: R.C. Lahoti, J. The landlord-appellant filed a suit for recovery of arrears of rent and for eviction against the tenant-respondents on the ground available under Clause (a) of … Continue reading

Companies Act, 1956; Sections 529 and 529A-Provincial Insolvency Act, 1920; Section 47-Transfer of Property Act, 1882; Section 48-Company created first charge and second charge over its immoveable assets in favour of two lending banks respectively for loans obtained-Company Court ordered winding up of the Company and appointed an official Liquidator-First charge holder filed a suit for recovery before Debt Recovery Tribunal which is pending-Second charge holder filed a suit before trial court which was decreed-First charge holder lodged a claim before the Official Liquidator and filed an application before the Company Court for recovery of amount-Company Court dismissed the application holding that the bank is only entitled to pro-rata share since it had relinquished its first charge over the assets by filing a claim with the Official Liquidator-High Court dismissed the Second Appeal-Correctness of-Held, Section 529A of the Companies Act only deals with pari passu treatment of the dues of the workmen and secured creditors and does not deal with inter se priorities amongst the secured creditors-Claim of first charge holder will continue to prevail over the claim of the second charge holder as provided under Section 48 of the Transfer of Property Act-Provision in the Act must be given effect to the extent the Parilament intended and not beyond it-Parliament never intended to deprive the first charge holder of its right under any Act. Appellant-Bank and two other banks (respondent nos. 3 and 4) advanced loan to respondent no. 1-Company for setting up a manufacturing plant. Respondent no. 2-bank also advanced a loan to the company for providing working capital funds. The company created a first charge in favour of the appellant and the two banks by way of equitable mortgage of little deeds of its immovable property. The company created a second charge with respondent no.2 by way of constructive delivery of title deeds. Court passed an order directing winding up of the company and appointed an Official Liquidator under the provisions of the Companies Act, 1956. The appellant and the two banks filed a suit for recovery of money before Debt Recovery Tribunal. The appellant and the two banks filed an application before the Company Court under Section 446 of the Companies Act, 1956 to continue with the suit for recovery of the security and remain outside the winding up proceedings, which was granted. Respondent no.2 filed a suit before trial court against the company for recovery of money. In the meantime, the Official Liquidator issued a public notice to all the creditors to put forth their claim of their debts. The appellant lodged a claim with the Official Liquidator. The trial court decreed the suit filed by respondent no.2. The appellant and the two banks filed a Company Application before the Company Court claiming first charge over the assets of the company. The Company Court held that on filing a claim with the Official liquidator, the appellant and the two banks had relinquished their first charge over the assets of the company and are hence only entitled to pro-rata share out of the sale proceeds. The Second Appeal filed before Division Bench of the High Court was dismissed. In appeal to this Court, the appellant contended that section 47 of the Provincial Insolvency Act, 1920 comes into play by reason of the provisions of Chapter V of the Companies Act, 1956; that wrong reliance was placed on section 47(2) of the Provincial Insolvency Act, 1920 ignoring other provisions of the Act; the first charge holders and second charge holders could not be equated; that respondent no. 2 also having filed a claim before the Official Liquidator, it should not have been given any preferential treatment; and that the right of the secured creditor does not get obliterated only because the appellant responded to the public notice issued by the office Liquidator; and that section 48 of the Transfer of Property Act would override the provisions of Section 529 of the Companies Act, 1956. Respondent no. 2, the bank contended under section 529-A of the Companies Act, 1956, no distinction is made amongst the secured creditors and hence the appellant cannot have a priority over its claim; that Section 48 of the Transfer of Property Act is subservient to sections 529 and 529-A of the Companies Act as the latter had been enacted subsequent to the Transfer of Property Act; that the claim of the appellant shall rank pari passu only with all other secured creditors and not a preferential right; that having regard to the provisions of section 47 of the Provincial Insolvency Act, the appellant would be deemed to have relinquished its rights. Respondent Official Liquidator contended that having regard to the provisions of sub-section (2) of Section 47 of the Provincial Insolvency Act, 1920, the appellant would be deemed to have relinquished his rights. =Allowing the appeals, the Court HELD: 1.1. Section 529A of the Companies Act, 1956 contains a non-obstante clause. The non-obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. Only because the dues of the workmen and the debt due to the secured creditors are treated pari passu with each other, the same by itself would not lead to the conclusion that the concept of inter se priorities amongst the secured creditors had thereby been intended to be given a total go-by. A non-obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same. Section 529-A of the Companies Act does not ex facie contain a provision on the aspect of priority amongst the secured creditors and, hence, it would not be proper to read thereinto things, which the Parliament did not comprehend. [545-d, f, h; 546-a] 1.2. While enacting a statute, the Parliament cannot be presumed to have taken away a right in property. Right to property is a constitutional right. Right to recover the money lent by enforcing a mortgage would also be a right to enforce an interest in the property. In terms of Section 48 of the Transfer of Property Act, 1882 Act, the claim of the first charge holder shall prevail over the claim of the second charge holder. Such a valuable right, having regard to the legal position as obtaining in common law as also under the provisions of the Transfer of Property Act, must be deemed to have been known to the Parliament. Thus, while enacting the Companies Act, the Parliament cannot be held to have intended to deprive the first charge of the said right. Such a valuable right, therefore, must be held to have been kept preserved. [546-d, e, g] Workmen of M/s. Firestone Tyre and Rubber Co. of India (P.) Ltd. v. Management and Ors., [1973] 1 SCC 813, referred to. 1.3. If the Parliament, while amending the provisions of the Companies Act, 1956, intended to take away such a valuable right of the right charge holder, it could have stated so explicity. Deprivation of legal right existing in favour of a person cannot be presumed in construing the statute. In fact, a contrary presumption shall have to be raised. [546-h; 547-a] 1.4. Section 529(1)(c) of the Companies Act speaks about the respective rights of the secured creditors which would mean the respective rights of secured creditors vis-a-vis unsecured creditors. It does not envisage respective rights amongst the secured creditors. Merely because Section 529 of the Act does not specifically provide for the rights of priorities over the mortgaged assets, that, would not mean that the provisions of Section 48 of the Transfer of Property Act in relation to a company, which has undergone liquidation, shall stand obliterated. [547-b] 1.5. If the inter se priority of secured creditors gets obliterated by merely responding to a public notice, it would lead to deprivation of the secured creditor of his right over the security and would bring him at par with an unsecured creditor. The logical sequitor of such an inference would be that even unsecured creditors would be placed at par with the secured creditors. This could not have been the intendment of the legislation. [547-c, d] 1.6. The provisions of the Companies Act may be a special statute but if the special statute does not contain any specific provision dealing with the contractual and other statutory rights between different kinds of the secured creditors, the specific provisions contained in the general statute shall prevail. [547-e] Maru Ram v. Union of India and Ors., [1981] 1 SCC 107, referred to. 1.7. There does not exist any provision in the Companies Act which provides that the provisions of Section 48 of the Transfer of Property Act would not be applicable in relation to the affairs of a company. Unless, expressly or by necessary implication, such a provision contrary to or inconsistent therewith carrying a different intent can be found in the Companies Act, Section 48 of the Transfer of Property Act cannot be held to be inapplicable. [547-g, h] Mulla’s Transfer of Property, Act 9th edition, referred to. 1.8. Section 47 of the Provincial Insolvency Act is attracted by virtue of Section 529(1) of the Companies Act. Sub-section (2) of Section 47 of the Insolvency Act would become applicable where a secured creditor voluntarily relinquishes his security for the general benefit of the creditors. The expression “relinquish” envisages a conscious act, i.e., an act where a person was aware of his right and then relinquishes the same. The same must be for the general benefit of the creditors. His action must lead to a conclusion that he, for one reason or the other, intended to stand in the queue for receiving money owed to him. It, however, does not stand obliterated only by the filing of an affidavit or proof of claim with the official liquidator. Such a claim had been filed pursuant to a notice issued by the official liquidator. If the creditor does not respond to the said notice, he would not be in a position to bring to the notice of the official liquidator, the existance of his right. [549-b-e] Ramantha Aiyar’s Advanced Law Lexicon, referred to. 1.11. Sub-Section (3) of Section 47 of the Provincial Insolvency Act clearly envisages the position where he does not either relalise or relinquish his security. He, in such a situation, may state in his Affidavit of Proof, the particulars of the security and value at which he assesses the same. The consequences therefor would ensue. If the Official Receiver proceeds to sell the security, the Court first has to pay to amount at which the security was valued to the secured creditor out of the sale proceeds. [549-f] Mahindra and Mahindra Ltd. v. Union of India and Anr., [1979] 2 SCC 529 and State Bank of Mysore v. Official Liquidator and Ors., (1985) 58 Company Cases Kar 609, referred to. Rajiv Shakdher, U.A. Rana and Srabonee Roy (for Gagrat & Co.) for the Appellant. Shrish Kumar Misra, V.P. Singh, Pankaj Bhatia, M.T. George, Sanjay Bhatt and Amit Kumar for the Respondents.

CASE NO.: Appeal (civil) 2332 of 2006 PETITIONER: ICICI BANK LTD. RESPONDENT: SIDCO LEATHERS LTD. & ORS. DATE OF JUDGMENT: 28/04/2006 BENCH: S.B. Sinha & P.K. Balasubramanyan JUDGMENT: J U D G M E N T (Arising out of S.L.P. (C) No.23360/2004) S.B. SINHA, J : Leave granted. Interpretation of Sections 529 and 529-A of … Continue reading

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