Satish Batra Vs. Sudhir Rawal (Property Dispute matter involving Earnest Money)

In above noted matter bearing Civil Appeal No. 7588 of 2012 arising out of Special Leave Petition (Civil) No. 4605 of 2012, hon’ble bench of Supreme Court of India comprising of Mr. K. S. Radhakrishanan J. and Mr. Dipak Mishra J has allowed the appeal and set aside impugned High Court judgment on October 18, 2012 while holding that earnest money is primarily a security for the due performance of the agreement to sell and, consequently, the seller is entitled to forfeit the entire earnest money.

The question of law to be decided by hon’ble court was whether the seller is entitled to forfeit the entire earnest money deposit where the sale of an immovable property falls through by reason of the fault or failure of the purchaser?

In order to come for any conclusion, hon’ble Court relied on Shree Hanuman Cotton Mills and Others v. Tata Air Craft Limited 1969 (3) SCC 522 wherein principles for earnest money was made as follows:

1. It must be given at the moment at which the contract is concluded.
2. It represents a guarantee that the contract will be fulfilled or, in other words, “earnest” is given to bind the parties to the contract.
3. It is part of the purchase price when the transaction is carried out.
4. It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
5. Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest money.

In addition to above precedent, hon’ble Suprme Court referred to various other judgments of its own including V. Lakshmanan vs. B.R. Mangalgiri and others (1995) Suppl. (2) SCC 33; Housing Urban Development Authority and another vs. Kewal Krishan Goel and others (1996) 4 SCC 249; Videocon Properties Ltd. vs. Dr.  Bhalchandra Laboratories and others (2004) 3 SCC 711; etc.

Finally, Supreme Court held that:

1. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor and can be forfeited in case of non-performance by the depositor.
2. To justify the forfeiture of advance money being part of ‘earnest money’ the terms of the contract should be clear and explicit.

Explanation:

1. If the payment is made only towards part payment of consideration and not intended as earnest money then the forfeiture clause will not apply, until otherwise agreed in contract between the parties.
2. There should be fault of purchaser, Seller cannot get benefit of its own fault and If there is default of seller himself, then he cannot have right to forfeit earnest money.

Girish Ramchandra Deshpande Vs. Central Information Commissioner & Ors. - RTI Matter

In above noted matter bearing Special Leave Petition (Civil) No. 27734 of 2012, hon’ble bench of Supreme Court of India comprising of Mr. K. S. Radhakrishanan J. and Mr. Dipak Mishra J. has dismissed the SLP on October 3, 2012, while holding that personal matters of individual pertaining to his service / career and details disclosed by a person in his income tax returns are “personal information” which stands exempted from disclosure under clause (j) of Section 8(1) of the RTI Act, unless it involves a larger public interest.

The question of law to be decided by hon’ble court was whether the Central Information Commissioner acting under the Right to Information Act, 2005 was right in denying information regarding the personal matters of individual pertaining to his service / career and also denying the details of his assets and liabilities, movable and immovable properties on the ground that the information sought for was qualified to be personal information as defined in clause (j) of Section 8(1) of the RTI Act.

The petitioner in SLP had sought for copies of all memos, show cause notices and censure/punishment awarded to the third respondent from his employer and also details viz. movable and immovable properties and also the details of his investments, lending and borrowing from Banks and other financial institutions. Further, he had also sought for the details of gifts stated to have accepted by the third respondent, his family members and friends and relatives at the marriage of his son. In fact most of such information was related to the income tax returns of the third respondent.

Central Information Commissioner and courts below denied to provide those information stating them to be personal information, which is not within purview of Right to Information Act, 2005. Hence, SLP was filed and while deciding the issue, hon'ble Supreme Court referred and interpreted the scope and interpretation to clauses (e), (g) and (j) of Section 8(1) of the RTI Act which are extracted herein below:

“8. Exemption from disclosure of information.-

1.     Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,-

(e) information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;

(g) information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;

(j) information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information.”

Hon'ble Supreme Court observed that performance of an employee/officer in an organization is primarily a matter between the employee and the employer and normally those aspects are governed by the service rules which fall under the expression “personal information”, the disclosure of which has no relationship to any public activity or public interest. On the other hand, the disclosure of which would cause unwarranted invasion of privacy of that individual. Of course, in a given case, if the Central Public Information Officer or the State Public Information Officer of the Appellate Authority is satisfied that the larger public interest justifies the disclosure of such information, appropriate orders could be passed but the same cannot be claimed as a matter of right.

Similarly, the details disclosed by a person in his income tax returns are “personal information” which stand exempted from disclosure under clause (j) of Section 8(1) of the RTI Act, unless involves a larger public interest and the Central Public Information Officer or the State Public Information Officer or the Appellate Authority is satisfied that the larger public interest justifies the disclosure of such information.

Having observed as above, hon'ble Supreme Court declined to entertain above mentioned SLP and dismissed the same.

MSR Leathers Vs. S. Palaniappan & Anr. - Negotiable Instruments Matter

One judgment in above noted case bearing Criminal Appeal No. 261 - 264 of 2002 was delivered by the bench of Supreme Court of India comprising of Mr. R. M. Loha J., Mr. T. S. Thakur J. and Mr. Anil R. Dave J. on September 26, 2012. This judgment marks crucial change in jurisprudence of proceedings under section 138 of Negotiable Instruments Act as the same over turns Supreme Court’s own earlier decision in Sadanandan Bhadran v. Madhavan Sunil Kumara [(1998) 6 SCC 514].

The crucial question of law for decision before the hon’ble court was whether a payee or holder of a cheque can issue a statutory notice to the drawer each time the cheque is dishonoured and institute proceedings solely on the basis of a second or successive statutory notice?

To answer this question, the hon’ble court relied on the proviso to Section 138, which stipulates three distinct conditions precedent that must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. They are:

1.     The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. [Since, as per recent RBI guidelines now cheques remains valid only for three months, hence now cheques can be presented for upto three months only instead of six months cap]  

2.     The second condition is that the payee or the holder in due course of the, as the case may be, ought to make a demand for the payment of the said cheque amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.

3.     The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, the holder in due course of the cheque within fifteen days of the receipt of the said notice.

It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque.

It was further observed that nothing in the proviso to Section 138 or in Section 142 makes it obligatory for the holder/payee of a dishonoured cheque to necessarily file a complaint on first dishonor itself even when he has acquired an indefeasible right to do so. The fact that an offence is complete need not necessarily lead to launch of prosecution especially when the offence is not a cognizable one. It follows that the complainant may, even when he has the immediate right to institute criminal proceedings against the drawer of the cheque, either at the request of the holder/payee of the cheque or on his own volition, refrain from instituting the proceedings based on the cause of action that has accrued to him. Such a decision to defer prosecution may be impelled by several considerations but more importantly it may be induced by an assurance which the drawer extends to the holder of the cheque that given some time the payment covered by the cheques would be arranged, in the process rendering a time consuming and generally expensive legal recourse unnecessary. It may also be induced by a belief that a fresh presentation of the cheque may result in encashment for a variety of reasons including the vicissitudes of trade and business dealings, where financial accommodation given by the parties to each other is not an unknown phenomenon. Suffice it to say that there is nothing in the provisions of the Act that forbids the holder/payee of the cheque to demand by service of a fresh notice under clause (b) of proviso to Section 138 of the Act, the amount covered by the cheque, should there be a second or a successive dishonour of the cheque on its presentation.

Besides those technical observations, the hon’ble court referred to the rule of purposive interpretation for interpreting the provisions of section 138 and 142 of Negotiable Instruments Act. Hence, the decisions in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar (AIR 1963 SC 1207) was referred to, where in following rule of interpretation was enshrined:

“It is a recognised rule of interpretation of statutes that expressions used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statute, and which effectuate the object of the Legislature. If an expression is susceptible of a narrow or technical meaning, as well as a popular meaning, the Court would be justified in assuming that the Legislature used the expression in the sense which would carry out its object and reject that which renders the exercise of its power invalid.”

In view of above rule of interpretation of statute, hon’ble court finally opined that no real or qualitative difference exist between a case where default is committed and prosecution immediately launched and in another case where the prosecution is deferred till the cheque is presented again and gets dishonoured for the second or successive time.

In the result, the decision in Sadanandan Bhadran’s case (supra) was over ruled and finally it was held that prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act.

M/s. Bonanzo Engineering & Chemical Private Limited v. Commissioner of Central Excise

Judgment of the above noted case bearing Civil Appeal No. 6433 of 2003 was delivered by the bench of Supreme Court of India comprising of Mr. H. L. Dattu J. and Mr. Anil R. Dave J. on February 14, 2012.

The prime question of law involved in this matter was “whether an assessee would become liable to duty if by mistake it makes payment of duty which is otherwise exempted from duty through any notification?”

While arriving at decision, the court referred to precedent Union of India v. Wood Papers Ltd., (1990) 4 SCC 256, where it observed:

“ Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstone. In fact an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provisions are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction.

… A construction which results in inequitable results and is incongruous, has to be avoided.”

Having referred to above, the hon’ble bench of apex court held that merely because the assessee, may be, by mistake pays duty on the goods which are exempted from such payment, does not mean that the goods would become goods liable for duty under the Act. Also, merely because the assessee has not claimed any refund on the duty paid by him would not come in the way of claiming benefit of the Notification No. 175/86- CE dated 1.3.86.

Therefore appeal was allowed and the judgement and order passed by the erstwhile Customs, Excise and Gold (Control) Appellate Tribunal [presently Customs, Excise and Service Tax Appellate Tribunal] in Appeal No. E/1352/ 2002-B, dated 25.10.2002 was set aside with direction to the adjudicating authority to apply the Notification dated 1.3.86 in the assessee's case without taking into consideration the excess duty paid by the assessee under the Notification dated 1.3.1988.

Dipak Shubhashchandra Mehta v. C.B.I. & Anr.

Judgment of the above noted case bearing Criminal Appeal No. 348 of 2012 arising out of SLP (Crl.) No. 8995 of 2011 was delivered by the bench of Supreme Court of India comprising of Mr. P. Sathasivam J. and Mr. J. Chelameswar J. on February 10, 2012.

Unlike my earlier posts, this judgment does not involve any significant question of law. Instead it provides brief guidelines for consideration in bail matters. 

Accordingly, The Court granting bail should exercise its discretion in a judicious manner and not as a matter of course. Though at the stage of granting bail, a detailed examination of evidence and elaborate documentation of the merits of the case need not be undertaken, there is a need to indicate in such orders reasons for prima facie concluding why bail  is being granted, particularly, where the accused is charged of having committed a serious offence. The Court granting bail has to consider, among other circumstances, the factors such as

1. the nature of accusation and severity of punishment in case of conviction and the nature of supporting evidence;
   
   
2. reasonable apprehension of tampering with the witness or apprehension of threat to the complainant and;
   
   
3. prima facie satisfaction of the court in support of the charge.

In addition to the same, the Court while considering a petition for grant of bail in a non-bailable offence apart from the seriousness of the offence, likelihood of the accused fleeing from justice and tampering with the prosecution witnesses, have to be noted.

AJAY PANDIT & Anr. Vs. STATE OF MAHARASTRA

Judgment of the above noted case bearing Criminal Appeal No. 864 of 2006 was delivered by the bench of Supreme Court of India comprising of Mr. K.S. Radhakrishnan J. and Mr. Dipak Misra J. on July 17, 2012.

The significant question in law involved in the case was whether non recording the statement of the accused after he was given an opportunity to express himself on the question of sentence would amount to non compliance of section 235(2) of Cr. P.C. and thus vitiate the court order?

In this case death sentence was awarded initially by the court of trial to the appellant for double murder, in separate incidents, one for the murder of Nilesh Bhailal Patel and another for the murder of Jayashree. The Bombay High Court heard both the appeals – Criminal Appeal No. 46 of 2000 and Criminal Appeal No. 789 of 2001 together and rendered a common judgment on 22nd December, 2005 confirming the order of conviction and enhancing the sentence of life imprisonment to death and ordered to be hanged till death.

While hearing on above said appeal, hon’ble Supreme Court has observed that, though the accused was informed by the court as to the nature of the show-cause notice, i.e. “Why the life sentence awarded by the trial court not be enhanced to death penalty”, no genuine effort was made by the high court to elicit any information either from the accused or the prosecution as to whether any circumstance exists which might influence the court to avoid and not award death sentence. It further observed that awarding death sentence is an exception, not the rule, and only in rarest of rare cases, the court could award death sentence. The state of mind of a person awaiting death sentence and the state of mind of a person who has been awarded life sentence may not be the same mentally and psychologically. Hence, the court has got a duty and obligation to elicit relevant facts even if the accused has kept totally silent in such situations.

The Supreme Court pointed out that hearing as envisaged Section 235(2) of the Cr.P.C. is not confined merely to oral hearing but also intended to afford an opportunity to the prosecution as well as the accused to place before the court facts and material relating to various factors on the question of sentence and either side [should be so interested], must be given opportunity to have evidence adduced to show mitigating circumstances to impose a lesser sentence. But the evidence must be only on question of sentence and not on conviction.

In this matter the judgment of Santa Singh v. State of Punjab; (1976) 4 SCC 190 was relied, wherein it was found that the requirements of Section 235(2) were not complied with, in as much as no opportunity was given to the appellant, after recording his conviction, to produce material and make submissions in regard to the sentence to be imposed on him. Hence accused was denied to have the opportunity to produce material and make submissions on the question of sentence, as contemplated by Section 235(2) [which is fundamental in criminal procedure], and if it be given the accused might have been in a position to persuade the Court to impose a lesser penalty.

Accordingly, said appeal was partly allowed and the death sentence awarded by the High Court was set aside & the matter was remanded back to the High Court to follow Section 235(2) Cr.P.C. in accordance with the principles laid down. However, conviction awarded by the high court was confirmed to attain finality.