Allied Laws

Ajay R. Singh, Advocate

    1. Agreement to sell – Stamp duty Suit for specific performance Specific recital in agreement that possession was delivered to plaintiff-Vendee on date of agreement – Plaintiff liable to pay stamp duty as per Art.47A of Sch.1A : Stamp Act 1899While deciding the question relating to paymentof stamp duty and penalty on a particular document, the recitals of the document have to be looked into and not the pleadings of the respective parties. The pleadings of the parties may be in deviation of the document in question. The levy of the stamp duty and penalty is always in relation to the document which is to be marked before the Court and such levy cannot depend upon the pleadings of the parties. Unless the document is sufficiently stamped it cannot be marked even for collateral purpose. The plaintiff filed suit seeking specific performance on the basis of possessory agreement of sale. Thus, the plea that no stamp duty need be paid and the document can be marked for collateral purpose and the stamp duty will be paid after the decree etc., is not tenable.

      In view of specific recital in the agreement with regard to delivery of property, the plaintiff is liable to pay stamp duty as per Art.47A of Sch.1A

      Kota Ganta Rao V. Kamineni Anjaneyulu and others AIR 2023 ANDHRA PRADESH 78

    2. Banking Regulation Act of 1949, S.6 – Foreclosure of bank account- – Ground of diversion of fundsOn the date of inspection, the petitioner was found to be non-existent and no machines were available as per the quotations/invoices submitted by the petitioner. Further, the petitioner had diverted the entire loan amount to other purpose. Therefore, the account of the petitioner was classified as NPA under fraud category. The petitioner has also not submitted the invoice of purchased machinery along with delivery challan and installation certificate, original lease deed, GST returns month wise and audited balance sheet etc.

      In view of the same, according to respondent No.2 bank, the petitioner is not entitled for restructuring of its account.

      Therefore, the petitioner failed to make any case, more particularly, violation of Circular, dated 05.05.2021 of RBI with regard to the restructure of loans in respect MSME Units and the Circular of respondent of No.2 bank dated 21.05.2021 for restructure of advances.

      Jyothi Laundry v. Union of India and others. AIR 2023 Telangana 93.

    3. Benami Transactions (Prohibition) Act section 3(2)(a), 4(1) – Declaration of ownership – Suit – MaintainabilityProperty purchased in name of married daughter For applicability of amended provisions of Act of 1988 the date of purchase of property would be relevant. Parties were, at time of purchase of suit property, governed by provisions of Old Act under which, purchase of property in the name of a married daughter was not exempted from the rigours of benami transactions. Suit filed by plaintiff seeking declaration qua property purchased in name of his married daughter. Plea by plaintiff that entire sale consideration was paid by him and provisions of S.2(9)(A) of Amended Act, 2016, will be applicable, rejected. Merely because suit was filed after enactment of Amended Act, 2016 would not alter fact that transaction took place much prior to enactment of amendment. In view of same, suit preferred by plaintiff was clearly hit by bar under S.4 of 1988 Act. Trial Court erred in holding that transaction would be governed by Amended Act, 2016 . Suit as instituted, was not maintainable. Declaration of ownership in favour of plaintiff, set aside.

      Sonia and another v. Jagat Singh Gahlot and another. AIR 2023 (NOC) 431 (DEL).

    4. Banking Regulation Act of 1949, S.35A – Reserve Bank Integrated Ombudsman Scheme (2021), – Online fraudulent transactions.Loss of money caused to customer due to breach of customers’ database of Online Store Customer entitled to compensation from Bank . Bank can recover same from Store if after investigation, it is found that Store was responsible for such fraudulent transactions. Online fraud Loss to customer, liability of Bank to compensate.

      The primary responsibility to provide adequate cyber security so as to protect the interest of the customers using online banking facility would always be with the Bank. Recognizing the above responsibility of the Banks, the RBI Circular dated 06/07/2017 has laid down certain guidelines to be followed by the Banks for the safety of the customers using online banking facility. Such guidelines include the necessity of putting in place a robust and dynamic fraud detection and prevention mechanism.

      Pallabh Bhowmick v. Ombudsman, Reserve Bank of India and others. AIR 2023 (NOC) 420 (GAU).

    5. Constitution of India, Art.141 — Precedent – Foreign Judgments Reliance on — Court not justified in following US Supreme Court judgments that were about interpretation of laws of United States, without adverting to differences and position of laws in IndiaDifferent position of laws in US and in India was required to be considered by the Court, more particularly provisions of Indian Constitution under which the right to freedom of speech is subject to reasonable restrictions and is not an absolute right. The constitution permits the Parliament to frame the laws only after taking into consideration the public order and/or the sovereignty of India. Without noticing the differences in American Laws and the Indian laws, the Court could not have straightway and directly followed US Supreme Court decisions, that too without adverting to the differences and the position of laws in India.

      Arup Bhuyan v. State of Assam & another.: AIR 2023 SUPREME COURT 1685.

    6. Constitution of India, Art.14 – Master directions on frauds Classification of borrowers’ accounts as fraud – Opportunity of hearing – Principles of natural justice, particularly the rule of audi alteram partem, has to be necessarily read into the Master Directions on Frauds to save them from the vice of arbitrariness.In the instant case classification of borrowers’ accounts as fraud as per the Reserve Bank of India (Frauds Classification and Re- porting by Commercial Banks and Select FIs) Directions 2016 (Master Directions on Frauds) without giving an opportunity of hearing to the affected borrowers was in issue.

      The Master Directions on Frauds did not expressly provide for an opportunity of hearing to the borrowers before classifying their account as fraud. The question before the Supreme Court was whether the principle of audi alteram partem should be read as part of the provisions of the Master Directions.

      Held, the principles of natural justice, particularly the rule of audi alteram partem, has to be necessarily read into the Master Directions on Frauds to save them from the vice of arbitrariness. Though no opportunity of being heard is required before a FIR is lodged and registered, classification of an account as fraud not only results in reporting the crime to investigating agencies, but also has other penal and civil consequences against the borrowers. Classification of the borrower’s account as fraud under the Master Directions on Frauds virtually leads to a credit freeze for the borrower, who is debarred from raising finance from financial markets and capital markets. The bar from raising finances could be fatal for the borrower leading to its ‘civil death’ in addition to the infraction of their rights under Article 19(1)(g) of the Constitution. Classification of a borrower’s account as fraud has the effect of preventing the borrower from accessing institutional finance for the purpose of business. It also entails significant civil con- sequences as it jeopardizes the future of the business of the borrower. Such action not only affects the business and goodwill of the borrower, but also the right to reputation. Administrative proceedings which entail significant civil consequences must be read consistent with the principles of natural justice to meet the requirement of Article 14. Where possible, the rule of audi alteram partem ought to be read into a statutory rule to render it compliant with the principles of equality and non-arbitrariness envisaged under Article 14. The Master Directions on Frauds do not expressly provide the borrowers an opportunity of being heard before classifying the borrower’s account as fraud. Audi alteram partem must then be read into the provisions of the Master Directions on Frauds.

      State Bank Of India and others v. Rajesh Agarwal and others. AIR 2023 Supreme Court 1859

    7. Constitution of India, Arts. 226, 300A – CPC of 1908, Section 80 – Right to property – Maintainability of writ – Merely because, right to property is a constitutional right, a writ petition is not maintainable to enforce private rights – Petitioner sought protection of his property from encroachmentUndoubtedly, right to property is enshrined under Article 300 A of the Constitution of India. It is a constitutional right. Merely because it is a constitutional right, a writ is not maintainable. The petitioner, in fact, is ventilating his private rights, i.e. right to property. It is against State as well.

      If the State is encroaching upon the property of the petitioner, the petitioner can very well file a civil suit to redress its right to property. Even if action is taken against the State Government, in each and every case, writ is not maintainable. In order to maintain a writ against the State, the action should be in the domain of public law.

      What the petitioner seeks by way of the instant petition is protection of his property from encroachment. The petitioner seeks to enforce his right to property. If State encroaches on somebody’s property, there are provisions which entitle the litigants to file a civil suit. If there is some urgency, there are provisions under Section 80 of the Code of Civil Procedure, 1908, where without expiry of the notice period, with the leave of the court, a suit may be instituted.

      In the instant petition, the petitioner is intending to enforce his private rights. Therefore, the Court does not find any reason to entertain this petition.

      Mohammad Yusuf v. State of Uttarakhand and others. AIR 2023 Uttarakhand 78.

    8. Constitution of India, Art.14 – Principles of natural justice- Explained, as being foundation of Art. 14 of the Constitution. Maxims-Nemo Judex In Causa Sua; Audi Alteram Partem.Principles of natural justice that are reflected in Article 311, are not an empty incantation. They form the very bedrock of Article 14 and any violation of these principles tantamount to a violation of Article 14 of the Constitution. Denial of the principles of natural justice to a public servant can invalidate a decision taken on the ground that it is hit by the vice of arbitrariness and would result in depriving a public servant of equal protection of law.

      Article 14, often described as the ‘Constitutional Guardian’ of the principles of natural justice, expressly forbids the State, as defined in Article 12, from denying to any person, equality before the law or equal protection of the laws. Article 14 provides an express guarantee of equality before the law to all persons and extends a protection to them against discrimination by any law. Article 13(3)(a) defines law to include any ordinance, order, bye-law, rule, regulation, notification, custom or usages having in the territory of India, the force of law. Thus, principles of natural justice guaranteed under Article 14, prohibit a decision-making adjudicatory authority from taking any arbitrary action, be it substantive or procedural in nature. These principles of natural justice, that are a natural law, have evolved over a period of time and been continuously refined through the process of expansive judicial interpretation.

      The twin anchors on which the principles of natural justice rest in the judicial process, whether quasi-judicial or administrative in nature, are Nemo Judex In Causa Sua, i.e., no person shall be a judge in his own cause as justice should not only be done, but should manifestly be seen to be done and Audi Alteram Partem, i.e. a person affected by a judicial, quasi-judicial or administrative action must be afforded an opportunity of hearing before any decision is taken.

      Aureliano Fernandes v. State of Gao and others. AIR 2023 SUPREME COURT 2485.

    9. Evidence Act of 1872, Section. 45 – Opinion of handwriting expert – To prove Will : Indian Succession Act section 63The point for consideration was that whether the expert opinion, in order to prove the will, is required or not ?

      In the case on hand, the Will in question has to be proved by the propounder of the Will. The burden of proof is upon the propounder of the Will. The Respondents are being the propounder of the Will owe the duty to prove the genuineness of the Will in question as per the requirements under Section 63 of the Indian Succession Act and Sections 68 to 71 of the Indian Evidence Act. The expert’s opinion may not tilt the scales in arriving at that conclusion as to the authenticity of the Will in question. It could only be firmly adjudicated based upon the evidence to be adduced by the Respondents as per the requirements of law.

      Further the expert’s opinion of the testator’s signature in the Will in question not being the crucial factor for determining the truth of the same and de hors the same, the Respondents should be required to establish the authenticity of the Will as provided under Section 63 of the Indian Succession Act and Sections 68 to 71 of the Indian Evidence Act, by examining the witnesses, who were associated with the Will in question.

      Meenambal v. Sudha and others AIR 2023 MADRAS 150.

    10. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54 of 2002), S.14 – Restitution of possession of secured assets – When can be grantedBank was put in possession of secured assets Respondents (firm & its partners) who had suffered loss of possession of secured assets on account of enforcement of statutory right took forcible possession of property conferred on Bank . Respondents contended that once order under S.14 was executed, Bank cannot seek indulgence of District Collector.

      The uncontroverted factual aspects in present matter depict that the respondent Nos. 5 and 6 (partners of firm – borrower) have devised novel, unimaginable and unsustainable modus operandi to defeat ends of justice and fair play. It is not only the matter of physical altercation, but would tantamount to assault on the law and statute. They have the audacity to overrule the law. The growing tendency of overpowering the law cannot be tolerated. In peculiar facts and circumstances of this case, the court exercised powers under Article 226 of the Constitution of India to protect the rule of law and deprecate rising tendency of using criminal force against recovery proceeding undertaken by the financial institutions in terms of SARFAESI Act. The court observed that there is no prohibition under the scheme of the SARFAESI Act that comes in the way of District Magistrate or his delegate to re- exercise the powers to execute the orders passed under section 14. Possession of secured assets resituated to Bank in exercise of power under Art.226.

      Nashik Merchant Co-operative Bank v. District Collector, Jalna and others. AIR 2023 Bombay 181.

    11. Succession Act of 1925, Ss.276 & 63 – Evidence Act of 1872, S.68- Grant of probate – Execution of Will.Will was executed by testator in favour of propounder to collect rent . Entire property was bequeathed to widow of testator. Substantial portion of evidence of attestor and scriber was not shaken. Execution and attestation of Will was proved as per S.68 of Evidence Act. Deprivation of other legal heirs cannot be held to be a suspicious circumstances in absence of any other suspicious circumstances. From evidence of witness and from recital of Will, it was proved that relation between appellant and testator was not cordial which justified his deprivation . Mere presence of propounder at time of preparation of Will cannot be held to be ‘taking prominent part in preparation of Will. No evidence adduced to prove that respondent was in position to dominate Will and had done so. Grant of probate in favour of propounder, proper.

      Ashoke Kumar Bag v. Nirmal Rani Kotal and another. AIR 2023 Calcutta 179.

    12. Succession Act of 1925, Ss. 63 (c), 69, 276 – Evidence Act (1 of 1872), S. 68 – Will – proof of – By attesting witnessesEarlier probate obtained without citing necessary parties. Probate got revoked. After 22 years fresh probate proceedings filed. Delay not satisfactorily explained. The Court observed that if the executor was really interested to have the probate there was no reason for him to wait for almost 22 years to file a fresh case by which time the scribe-cum-attesting witness was dead. Scribe-cum-attesting witness was examined in earlier proceedings but he was not cross- examined. Other attesting witness not produced. No cogent evidence produced to show that the testatrix was physically fit and mentally alert at the time of execution of Will. Executor being present at the time of execution of Will cannot dispense with the requirement of evidence of attesting witnesses. Held that order of Court refusing to grant probate, proper.

      Brojendra Nath Roy Chowdhury v. Chittaranjan Ghosh and others. AIR 2023 Calcutta 183.

    13. Insurance Act of 1938, Preamble – Settlement of claim – Denial – Ground of delay in intimating factum of accident of insured within 30 days from date of incident

In the present case, it cannot be said that there was no sufficient and reasonable cause for the delay in sending the written notice to the Insurance Company when the victim is the son of the petitioner and suddenly died in a road accident causing sudden shock and/or trauma. Therefore, the aforesaid delay cannot be regarded as valid ground for refusing and/or denying the claim of the petitioner in connection with the insurance policy.

Keeping in mind the propriety of law as held in the reported decision and the facts and circumstances as involved in the instant case, the Court held that considering the untimely accidental death of the insured Debabrata Chatterjee, the Insurance Company ought to have considered the mental trauma of the original writ petitioner, Sandhya Chatterjee and thus ought not to have reject the claim of the unfortunate mother of the insured by issuing the impugned letter dated December 28, 2004.

In further observed that, the original writ petitioner as well as substituted writ petitioners have given sufficient and reasonable explanation in not lodging the claim within 30 days and in intimating the incident of accident within two months for which the present substituted writ petitioners are entitled to get a favourable order from the Court.

As a result, the letter dated December 28, 2004 as issued by the Insurance Company was set aside. The National Insurance Company Limited directed to disburse the insurance amount in favour of the substituted writ petitioner Nos. 1 and 2 in equal proportions along with 7 per cent interest per annum. The interest amounts shall have to be calculated from the date of lodging of the claim by the original insured till the actual payment.

Ashis Chatterjee and another v. National Insurance Company Limited and others. AIR 2023 Calcutta 187.