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Category: The Word

Generalia Specialibus non derogant

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The ‘WORD’

Legal disputes generally become entrenched in cases of clash
of provisions in different statutes, or in the same statute when all such
provisions have application to the issues involved. In such situation the
controversy created is resolved by application of the legal maxim ‘generalia
specialibus non derogant’ which means that general things do not derogate
from special things. Conversely, special things derogate from general things. In
law it means that where there are more than one dispensations, the special
dispensation overrules the general one and it is the special one that has
application in resolving the issue.

2. The principle helps in resolving the conflict arising
between two different Acts. In a recent landmark decision relating to the
Arbitration and Conciliation Act, 1996 where there were conflicting provisions
in the A & C Act and in the Limitation Act, 1963 as to the bar of limitation for
commencement of proceedings in a Court, the Supreme Court in Consolidated
Engineering Enterprises v. The Principal Secretary (Irrigation Department) &
Ors., (2008) INSC 574 held the Arbitration and Conciliation Act, 1996 to be
a special law, consolidating and amending the law relating to arbitration and
matters connected therewith overriding the provisions of the Limitation Act. The
A&C Act does not prescribe the period of limitation for starting various
proceedings under the Act, except where it intends to prescribe a period
different from what is prescribed in the Limitation Act. There is no express
provision excluding the application of the provisions of the Limitation Act to
proceedings under the A&C Act. On the other hand, S. 43 makes the provisions of
the Limitation Act applicable to proceedings under the A&C Act, except in
certain specified areas and insofar as they are not inconsistent with the
provisions of the A&C Act. When the question arose as to whether the Limitation
Act will apply to proceedings in arbitration which are proceedings before a
Tribunal, an argument was advanced that the Limitation Act has application to
proceedings in Courts only and, therefore, will have no application to
proceedings in arbitration. However, considering the provisions of S. 43 of the
A&C Act, Ss.(1) of which specifically extended application of the Limitation Act
to arbitration as it applies to proceedings in Court, it was held by the Supreme
Court, having regard to the legislative intent and the principle of generalia
specialibus non derogant, that the Limitation Act will apply with its
extended scope in relation to arbitration proceedings and will have application
to such proceedings whether before the Tribunal or the Courts.

3. The determination as to which of the various statutes is a
special Act is based on the relative evaluation of the two Acts in the context
of the subject-matter in dispute. In relation to the same Act i.e., the
Arbitration and Conciliation Act, 1996, when there was a clash between the
provisions of the A&C Act and the Electricity Act, the Supreme Court in
Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., (2008) 4 SCC 755, where
the issue was whether the provisions of dispute resolution between the licensees
and generating companies contained in the Electricity Act, 2003 will prevail
over the provision of the A&C Act dealing with appointment of arbitrators,
applied the very same principle of generalia specialibus non derogant and
held that the provisions in the Electricity Act are special and hence will
override the general provisions of the A&C Act, 1996.

4. The maxim applies when there are overlapping provisions in
the same statute not consistent with each other. Issues have arisen in the
interpretation of S. 37 vis-à-vis the provisions of S. 30 to S. 36 of the
Income-tax Act. All these provisions govern admissibility of business expenses.
Whereas S. 37(1) is a general provision laying down the broad yardsticks
applicable to admissibility of expenses, S. 30 to S. 36 are special provisions
providing for the admissibility of specified expenses subject to conditions and
limitations prescribed therein. The issue arose as to whether total amount of
bonus paid to employees governed by the Payment of Bonus Act in excess of the
monetary limit prescribed therein can be allowed deduction in computation of
business income. The argument was that to the extent of amount payable under
that Act, the same should be allowed under the proviso to S. 36(1)(ii) and the
excess amount under the general provision of S. 37(1) being the expenditure laid
out or expended wholly and exclusively for the purpose of business. The view was
taken that there being a specific provision for such bonus contained in proviso
to S. 36(1) (ii), the general provisions of S. 37(1) had no application and,
therefore, the CBDT vide Circular No. 414, dated 14-3-1985 clarified that the
allowance for bonus to employees governed by the Payment of Bonus Act has to be
restricted to the amount payable under that Act. This view was upheld by the
Bombay High Court in Sabodhchandra Popatlal v. CIT, (1953) 24 ITR 566 and
Madras High Court in N. M. Rayaloo Iyer and Sons v. CIT, 26 ITR 265. The
proviso having been deleted, the overlapping now stands removed.

5. A similar situation arose in relation to the allowability
of expenses on the maintenance of any residential accommodation in the nature of
a guest-house. Whereas S. 30 allows deduction in respect of rent, rates, taxes,
repairs and insurance for premises used for the purposes of business, Ss.(4) of
S. 37 (now stands deleted )denied such guesthouse maintenance expenses. Treating
Section 30 as the special provision not to be overridden by the general
provision of S. 37, the Bombay High Court in CIT v. Chase Bright Steel Ltd.,
177 ITR 124 and in Century Spinning and Manufacturing Co. Ltd., 189 ITR 660 held
these guesthouse expenses allowable u/s.30 regardless of the provision contained
in S. 37(4). The Supreme Court in Britannia Industries Ltd. v. CIT, 278
ITR 546, however, agreed with the contention of the Revenue that ‘premises used
for purpose of business’ is a broad expression, whereas guesthouse in S. 37(4)
refers to a special category within that broad expression. By the specific
provision in Ss.(4) of S. 37, guesthouse is to be treated differently from the
general category of premises and S. 37(4) brings out clear and unambiguous
intention of the Legislature to make such expenses disallowable.

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Non est factum

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The Word

Non est factum is the stand taken by a party to the suit
when he challenges the enforceability of an agreement or a document on the
ground that even though the document bears his signatures, the same is not his
document as his signatures were obtained by fraud, coercion or misrepresentation
or he signed under misunderstanding of substantial nature. Such pleas generally
do not find acceptance by courts except under special circumstances. On
acceptance of the plea, a document is held void as opposed to voidable as the
element of consent is regarded as totally absent.


2. The term ‘non est factum’ is a latin expression and
is used in legal parlance to mean ‘not his document’. Such a claim is made by
the party signing the document to dispel a general presumption that the person
signing ought to be aware of its meaning, content and character. The law
protects an innocent person raising such plea only when it is diligently proved
that he was swayed into signing the document without knowing the true content
and character as a result of some tricky situation he was placed in.

3. The defence to the plea of non est factum is
basically on facts evidencing that the person arguing non est factum
signed the document with full knowledge and will, or that even if there was some
misunderstanding, the effect thereof is unsubstantial. In Anirudhan v. The
Thomco’s Bank Ltd., 1963 AIR 746 (SC), the plaintiff stood surety for an
overdraft granted by the respondent bank to the principal debtor. A blank signed
surety bond was given by the appellant-surety to the principal debtor who
submitted the same to the lending bank, after filling in the amount of
Rs.25,000. As the bank was not prepared to grant an overdraft of Rs.25,000, the
figure was changed by the principal debtor to Rs.20,000 without the knowledge of
the surety. When the guarantee was sought to be enforced on the default made by
the principal debtor, the surety on ground of non est factum claimed that
he stands discharged after unilateral alteration. Rejecting the claim, the Court
held that the document was not altered in the possession of the promisee, the
principal debtor was acting as agent of the surety and above all the alteration
has not caused any prejudice to the promisor, the same being unsubstantial.
Quoting with approval the observations of Cotton L. J. in Holme v. Bruskill,
(1877) 3QBD 495, the Court held — “The true rule in my opinion is that, if there
is any agreement between the parties with reference to the contract guaranteed,
the surety ought to be consulted, and that if he has not consented to the
alteration, in cases where it is without enquiry evident that the alteration is
unsubstantial or that it cannot be otherwise than benefit to the surety, the
surety may not be discharged.”

4. The plea of non est factum has greater force when
taken by an illiterate or otherwise deficient person not adequately equipped
with power of proper understanding or a person acting under dominance of others.
This, however, is not a decisive factor. In Smt. Hansraj v. Yasodanand,
1996 AIR 761 (SC), the plaintiff was an illiterate, harijan, childless widow who
was given employment in Railways on the death of her husband on compassionate
ground. She wanted to make a will of her inherited house in favour of her
brother’s son. A person pretending to assist her in preparing the document of
will got her signed some papers and, as claimed by her, prepared a sale deed
instead of the will in favour of the brothers’ son. Having lost in all the
Courts, the lady appealed to the Supreme Court taking additional ground based on
non est factum, alleging that the signatures were never made for the
purpose of sale deed. Dismissing the appeal, the Supreme Court held that the
transfer was not vitiated for non est factum. As observed “when it has
been concurrently found by all Courts below on evidence on record that the
document was executed as a sale deed by the appellant, the aforesaid additional
ground pales into insignificance.”

5. Subhash Mahadevasa Habib v. Nemasa Ambasa Dharamdas (D)
by LRS & Ors. INSC 303 (19-3-2007) is a case where alienation was questioned
on the ground that it was vitiated by fraud, coercion and undue influences. The
plea was that the executor of the document was under the impression when he
executed the sale deed that he was executing a document to secure repayment of a
loan of Rs.10,000 which he had taken. He had not intended to execute a sale
deed. The document writer had played a fraud on him. He, in other words, pleaded
a case of non est factum. The Courts negatived the claim and dismissed
the suit as the claimant was not able to prove any fraud on the part of the
document writer, which finding was not disturbed by the Supreme Court.

6. The decisions in such matter rest on direct and
circumstantial evidence. The maxim follows the provisions of the Contract Act
which makes the consent actuated by coercion, under influence and
misrepresentation as voidable at the option of the consenting persons. Non
est factum even defies the maxim ‘ignorantia juris non excusat’ and
even such ignorance can be a valid defence in appropriate cases particularly
involving illiterate persons genuinely but not negligently falling victim to an
unintended action.

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Ex debito justitiae

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The Word

The expression ‘ex debito justitiae’ literally stands
for doing justice. In legal usage, it speaks of a remedy which enables one to
get justice when principles of equity and justice are violated in any order of
the Court. The principle embodied in the maxim is that a Court of plenary
jurisdiction should have powers to correct its own judgments and order of
subordinate Courts, regardless of any specific power conferred on it, for the
purpose of preventing abuse of process and grave palpable errors.


2. A judgment pronounced by a Court is generally final until
disturbed by a Court of competent jurisdiction. However, if for any reason — a
glaring omission or a patent mistake — there is some manifest illegality or want
of jurisdiction in the order, the Courts are empowered to remedy the abuse of
process by reviewing its decisions on petition or suo motu ‘ex debito
justitiae’, as no suitor should suffer for the wrong of the Court.

3. Drawing distinction between remedies available for regular
and irregular orders, the Privy Council in Isaacs v. Robertson, (1984) 3
AER 140 observed that “if an order is regular it can be set aside by an
Appellate Court; if the order is irregular, it can be set aside by the Court
that made it on application being made to that Court either under the rules of
that Court dealing expressly with setting aside orders for irregularity or,
‘ex debito justitiae’, if the circumstances warranted, namely, violation of
the rules of natural justice or fundamental rights.

4. Cases of frank failure of natural justice are obvious
cases where relief is granted as of right. The principle finds acceptance in S.
151 of the Code of Civil Procedure which reads :

“151. Nothing in this code shall be deemed to limit or
otherwise affect the inherent power of the Court to make such orders as may be
necessary for the ends of justice or to prevent abuse of the process of the
Court.”


5. In criminal cases, the maxim was recognised in spirit by
S. 561A of the 1898 Code which finds expression in S. 482 of the Code of
Criminal Procedure, 1973. The Section reads :

“482. Nothing in this Code shall be deemed to limit or
affect the inherent powers of the High Court to make such orders as may be
necessary to give effect to any order under this Code, or to prevent abuse of
the process of any Court or otherwise to secure the ends of justice.”


6. The Apex Court relied heavily on the maxim in A. R.
Antulay v. R. S. Nayak & Anr., [1988 AIR 1513 (SC)] where the appellant, the
then Chief Minister of Maharashtra who resigned in deference to a High Court
judgment, but continued as MLA, was charged before the Special Judge u/s.161 and
u/s. 165 IPC for taking gratification in respect of official act. After several
proceedings in lower and the High Court, the Supreme Court, in appeal before it,
set aside the order of the Special Judge discharging the accused and, as the
proceedings had dragged too long, withdrew the case from the Special Judge
suo motu and assigned it to a sitting Judge of the High Court. As the order
of the Supreme Court was in disregard of the provisions of the Criminal Law
Amendment Act, 1952, under which such offences could be tried by Special Judge
only, the same was challenged before the High Court and then, in appeal, before
the Supreme Court. Admitting the wrong, the Court repelled the argument that as
the Superior Court is deemed to have general jurisdiction, the law presumes that
the Court acted within jurisdiction. The Court observed that ‘the impugned
direction were in deprival of the constitutional rights, contrary to the express
provisions of the Criminal Law Amendment Act, 1952, in violation of the
principles of natural justice, and without precedent in the background of the
Act of 1952. The directions definitely deprived the appellant of certain rights
of appeal and revision and his rights under the Constitution. The Court further
observed “having regard to the enormity of the consequences of the error to the
appellant and by reason of the fact that the directions were given suo motu,
there is nothing which detracts the power of the Court to review its judgment
‘ex debito justitiae’, in case injustice has been caused.

7. The maxim can operate even against the express bar on
review, if circumstances so require. In Madhu Limaye v. State of Maharashtra,
1978 AIR, SC 47, the appellant was prosecuted u/s.500 IPC for making defamatory
statement against the then Law Minister Shri A. R. Antulay. The same was
challenged on the ground that the statement made was in personal capacity. The
challenge having been rejected by the Sessions Judge, revision petition was
filed before the High Court, which was held not maintainable on the ground of
specific bar in relation to interlocutory orders in S. 397(2) of the Cr. P.C.
Holding that the High Court has inherent power to be exercised ‘ex debito
justitiae’ to do the real and substantial justice for the administration of
which alone Courts exist, the Supreme Court observed that “The instant case
wherein the order impugned rejected the application challenging the jurisdiction
of the Court to proceed with the trial, undoubtedly fell for exercise of the
power of the High Court in accordance with S. 482, even assuming, although not
accepting that invoking the revisional power of the High Court is
impermissible.” Similar issue was involved in V. C. Shukla v. State, 1980
AIR 962 SC where the jurisdiction to issue directions by the Judge of Special
Court for charges to be framed against the appellant were challenged. The High
Court held the revision petition not maintainable on the ground of the order
being interlocutory. Not agreeing with the High Court, the Supreme Court held
that “apart from the revisional power, the High Court under the code of 1898
possessed an inherent power to pass order ‘ex debito justitiae’ in order
to prevent abuse of the process of the Court.”

8.    The power of review or revision ‘ex debito justi-tiae’ is exercisable only by Courts exercising original, appellate or revisional jurisdiction. The High Court’s power to grant stay of demand in reference proceedings u/s.256 of the Income-tax Act, 1961 came for consideration before the Supreme Court in CIT Delhi v. Bansidhar and Sons, [157 ITR 665 (SC)]. The assessee sought injunction and stay of demand relying upon the inherent jurisdiction u/ s. 151 of the Code of Civil Procedure, which was granted by the High Court on condition of furnishing of adequate security. Upholding the Revenue’s challenge, the Supreme Court ruled that the power to act I ex debito justitiae’ related to matters of procedure and not substantive rights of the parties. In answering questions or disposing of references either u/ s.66 of the 1922 Act or S. 256 of 1961 Act, the High Courts do not exercise any jurisdiction conferred upon them by the C.P.C. or the Charters or by the Act establishing respective High Courts. It is a special jurisdiction of a limited nature conferred by the Income-tax Act for limited purpose of”obtaming the High Court’s opinion on questions of law. Rendering advice has nothing to do with recovery of tax or granting stay. Therefore, the concept of granting stay In a reference’ ex debito justitiae’ does not arise. That concept might arise in case of the Appellate Authority exercising its power to grant stay where there is no express provision.

9.    With the deletion of S. 256 and insertion of S. 260A and S. 260B conferring Appellate jurisdiction on High Courts, the aforesaid observations no longer remain relevant.

10.    Even though it is neither advisable nor possible to enumerate all the grounds on which the petition ‘ex debito justitiae’ is maintainable, the Courts have been acting only in cases of grave justice and breach of principle of natural injustice where consequences are grave for the aggrieved. In Shivnath Prasad v. State of W.B. and Others, [2006] INSC 62, the High Court’s order refusing to intervene in proceedings launched u/s.120B, u/s.406, u/s.417 and u/s.420 of IPC against R S Lodha in connection with the allegedly forged will of Late Smt. Priyamvada Birla was challenged. An argument was made that since the complaint was frivolous, vexatious, oppressive and malicious, the High Court should have exercised its powers u/ s.482 of Cr. P. C, because such powers are required to be exercised ‘ex debito justitiae’ or for the ends of justice. After going in detail into the facts of the case and scope of the inherent power enshrined in S. 482, the Apex Court declined to inter-fere and the appeal was dismissed.

Fractionem Diei

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The ‘Word’


When it comes to determine the applicability of any provision
of law with reference to an event occurring on a day, the maxim ‘Fractionem
Diei non recipit lex’ applies according to which the law does not recognise
and take notice of fraction of a day except in cases of necessity and for the
purpose of justice. [Clarke v. Bradlaugh, (1881) 8 QBD 63].

2. When, therefore, a thing is to be done on a certain day,
all the day is allowed to do that thing i.e. from the commencement to the
end of the day. For instance, an Act of Parliament becomes law as soon as the
day on which it is passed commences, unless the commencement be expressly
postponed [Tomlinson v. Bulock, (1879) 4 QBD 230]. Under Indian law also
a central enactment comes into force on the date it receives Presidential
assent. Section 5 of General Clauses Act 1897 provides that any Central Act, not
expressed to come into operation on any particular date, shall come into
operation on the date it receives assent of the President.

3. Every minor comes of age on the beginning of the
anniversary after the years prescribed for majority. S. 3 of the Indian Majority
Act 1872, lays down that every person domiciled in India shall attain the age of
majority on his completing the age of eighteen years and not before. It is
clarified that in computing the age of any person, the day on which he was born
is to be included as a whole day and he shall be deemed to have attained
majority at the beginning of the eighteenth anniversary of that day. His
minority ceases on the day preceding the eighteenth anniversary of his birthday
and he may act as of full age from the first moment of his anniversary date. The
principle applies equally in determining attainment of the age of 65 years
anytime during the previous year for availing income tax benefits of higher
exemption limit prescribed for senior citizens under the Finance Acts.

4. Certain provisions prescribe qualifying period for
attaining certain legal status or for eligibility to commence certain
proceedings. Such period is to be reckoned from the day of certain event upto
the day of some other event. In such a case, while the whole day of both the
events is to be recognised as per the maxim, the issue remains whether both the
days are to be reckoned in working out the prescribed period or only one of them
and if so, which of the two days. The issue in the context of S. 6 of the
Income-tax Act prescribing residence of 182 days or more in India for acquiring
the status of ‘resident’, was examined by the A.A.R. in P. No. 7 of 1995, in
re (1997) 223 ITR 462 (AAR). It was held that in determining the period of
182 days, even a part of the day will be construed as full day so that both the
days i.e. the date of arrival in as well as the date of departure from
India is to be reckoned The principle should equally apply in reckoning the time
period prescribed under various articles of Double Tax Avoidance Agreements such
as article relating to service PE, independent personal services, dependent
personal services and others.

5. The import of the words ‘from’ and ‘to’ in any legislation
for computing the period prescribed under the statute is laid down in S. 9 of
the General Clauses Act 1897 as under :

(1) In any Central Act or Regulation made after
commencement of this Act, it shall be sufficient, for the purpose of excluding
the first in a series of days or any other period of time, to use the word
‘from’ and, for the purpose of including the last in a series of days or any
other period of time, to use the word ‘to’.

6. The principle contained in the above provision of General
Clauses Act governs a large number of charging provisions under the income tax
law in India. With the requirement of recognising part of a day as the whole
day, these provisions require exclusion of the day from which the period begins
and inclusion of the day when the period ends. S.217, for instance, requires
charging of interest at 15% per annum from 1st day of April next following the
financial year in which the advance tax was payable upto the date of regular
assessment. The period for charge of interest should exclude 1st day of April
but include the date of regular assessment. Similarly the amount specified in
the notice of demand u/s. 156 needs to be paid within 30 days of the service of
notice of demand, which means exclusion of the day of service in computing the
period of 30 days.

7. Interest provisions under the Income-tax Act, however, are
worded in a manner so as to exclude the operation of the general provision
contained in the General Clauses Act or make them inconsequential. S. 220, S.
234A, S. 234B and S. 244 relating to charge of interest on taxes due and on
refunds specify the interest period as month or part of month comprised in the
period commencing from a specified date. These specified days are not the days
of event but the days following the day on which some event took place or
following the end of the month suggesting inclusion of the first day in the
period to be computed for charge of interest. S. 220 for instance prescribes
liability to pay simple interest for the period comprised in the period
commencing from the day immediately following the expiry of 30 days of the
service of notice. Further, with the treatment of part of a month as full month
and rate of interest expressed ‘per month’, the actual number of days have lost
significance.

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Res Ipsa Loquitur

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The Word

1. The maxim res ipsa loquitur is used as an aid to
evidence when the fact situation speaks for itself or tells its own story.
Literally meaning, ‘thing speaks for itself’ the latin maxim eases the burden of
establishing an abstract situation or a mental state when the event by its very
nature points glaringly to the existence of such a state. It is used as an aid
in the evaluation of evidence and in appropriate cases, a substitute for
evidence itself at least shifting the onus of proof to the accused.


2. Res ipsa loquitur is a rule of evidence which in
reality belongs to the law of torts. There are two lines of approach, as held by
the Supreme Court in Syad Akbar v. State of Karnataka, 1979 AIR 1848, in
regard to the application and effect of the maxim. According to the first, the
maxim, wherever it applies, operates as an exception to the general rule that
the burden of proof of the alleged negligence is, in the first instance, on the
plaintiff. In such a case the burden shifts to the defendant to disprove his
liability. According to the other line of approach ‘Res ipsa loquitur’ is
not a rule of substantive law; but only an aid in the evaluation of evidence, a
means of estimating logical probability from the circumstances of the event. It
does not require raising of any presumption of law which must shift the onus on
to the defendant. It only allows the drawing of a permissive inference of fact,
as distinguished from a mandatory presumption, having regard to the totality of
the circumstances and the probabilities of the case. The Courts do not generally
favour invoking the first line of approach in the trial of criminal cases as an
abstract doctrine, for the reason that in a criminal trial the burden of proving
everything essential to the establishment of the charge rests on the
prosecution. Also, while in civil proceedings, a mere preponderance of
probability is sufficient to establish a fact in issue, it is not so in criminal
proceedings where the presumption of guilt must amount to such a moral certainty
as convinces the Court beyond all reasonable doubt.

3. The other line of approach treating the maxim as a
convenient aid in assessment of evidence and in drawing permissive inferences
under the Evidence Act does not conflict with the provisions and principles of
the Evidence Act peculiar to criminal jurisprudence if inferring a fact in issue
from another circumstantial fact is subjected to satisfaction of essential
conditions for an accused to be convicted on the basis of circumstantial
evidence alone. As held by Lahoti J in Jacob Mathew v. State of Punjab and
Anr., (2005) INSC 390 (5.8.2005), res ipsa loquitur is only a rule of
evidence and operates in the domain of civil law specially in case of torts and
helps in determining the onus of proof in action relating to negligence. It
cannot be pressed in service for determining per se the liability for
negligence within the domain of criminal law. Res ipsa loquitur has, if
at all, a limited application in trial on a charge of criminal negligence.

4. In cases, however, where because of the very nature of the
event the plaintiff can only prove the accident, but cannot prove how it
happened to establish negligence, the rule of res ipsa loquitur has been
invoked. In Pressing Co. Pvt. Ltd. and Another (AIR 1977 SC 1735) the Apex Court
observed :

“The normal rule is that it is for the plaintiff to prove
negligence, but as in some cases considerable hardship is caused to the
plaintiff as the true cause of the accident is not known to him, but is solely
within the knowledge of the defendant who caused it, the plaintiff can prove
the accident but cannot prove how it happened to establish negligence on the
part of the defendant. This hardship is sought to be avoided by applying the
principle of res ipsa loquitur. The general purport of the word res
ipsa loquitur is that the accident ‘speaks for itself’ or tells its own
story.”


5. In Syad Akbar case (supra) when the driver of a bus
was charged of causing the death of a child by negligent driving and where the
eye witness was treated hostile, the Sessions Judge applied ‘res ipsa
loquitur’ and held the accused guilty. The view was affirmed by the High
Court. After considering the facts of the case in detail and various judicial
pronouncements of Indian and foreign authorities regarding its application in
criminal cases, the Apex Court set aside the conviction awarded on the basis of
application of res Ipsa loquitur only.

6. Even though the principle is applied with great caution in
criminal cases, its application is not ruled out in cases with high probability
and where the defendant does not come forward to rebut the inference. In a case
where the conductor of a bus had committed similar misconduct 36 times prior to
the time he was found guilty, the Court observed “Be that as it may, the
principle of res ipsa loquitur, namely, the facts speak for themselves is
clearly applicable in the instant case [B. S. Hullikatti (2001) 2 SCC 574]. In
State of Punjab v. Modern Cultivators, Ladwa 1965 AIR 17, damages were
claimed for defendant’s negligence which caused break in the bank of canal. The
Supreme Court upheld the application of res ipsa loquitur holding that
there would not have been a breach in the bank of the canal if those in
management took proper care and the breach itself would be prima facie
proof of negligence. Similarly where damages were claimed by the heirs of three
persons who died as a result of the collapse of the clock tower in Chandni Chawk
Delhi, the SC upheld invoking the rule for the reason that the mere fact that
there was a fall of clock tower, which was exclusively under the ownership and
control of the appellant would justify raising an inference of negligence so as
to establish a prima facie case against the appellant (Municipal
Corporation of Delhi v. Subhagwanti and Ors., 1966 AIR 1750).

7. The application of the maxim was examined in cases of
corruption where the accused is trapped and caught. The following observations
of Krishna Iyer J in Rughubir Singh v. State of Haryana, 1974 AIR 1516
are often relied upon in such cases :


“But we may notice that even if the statutory presumption is unavailable, Courts may presume what may in the ordinary course be the most probable inference. That an Assistant Station Master has in his hands a marked currency note made over to him by a passenger whose bedding has been detained by him for which no credible explanation is forthcoming and he is caught red-handed with the note, is a case of res ipsa loquitur. The very thing speaks for itself in the circumstance. We need not, therefore, scrutinize the substance of the argument based on the inapplicability of S. 4 of the Evidence Act.”

Following the aforesaid observations, the Court in State of AP v. V. Vasudeva Rao, (2003) INSC 560 (13.11.03), where an Asstt. Collector, Weights and Measures was trapped for demanding bribe, held that the very fact that the accused was in possession of the marked currency notes against an allegation that he demanded and received the amount is res ipsa loquitur.

8.    Commenting on growing dependence on res ipsa loquitur in case of driver’s negligence, the Supreme Court in Shyam Sunder & Others v. The State of Rajasthan, (1974) INSC 53 observed that over the years the general trend in the application of the maxim has undoubtedly become more sympathetic to plaintiffs. Concomitant with the rise in safety standards and expanding know ledge of the mechanical devices of our age, less hesitation is felt in concluding that the miscarriage of a familiar activity is so unusual that it is most probably the result of some fault on the part of whoever is responsible for its safe performance.

9.    Proceeding for imposition of penalties under the Income-tax Act and other fiscal legislation, as distinguished from prosecution, are not criminal in nature. They are quasi criminal, but require existence of mens rea to be shown. The standard of proof for imposition of penalty is not as rigorous as that for prosecution which proceeds on proof of commission or omission beyond doubt. Penalties for any default under the Act are dictated by preponderance of probabilities as appearing from totality of circumstances. In cases where the fact situation is found to be res ipsa loquitur decisively pointing to such pre-ponderance of probabilities, the burden cast on Assessing Officer is considerably discharged in matters of penalty, which is not the case when prosecution proceedings are launched for any offence.

Exceptio Probat Regulam

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The ‘ WORD’

The maxim describes the role of an exception in inferring,
establishing, confirming and explaining the general rule to which the exception
relates. Understood in its ordinary and literal sense, it means that presence of
an exception establishes that a general rule exists. Derived from medieval Latin
legal principle Exceptio probat regulam in casibus non exceptis,
it indicates existence of a rule having application in cases other than those
stated in the exception.

2. Fowler in ‘Modern English Usages’ explains the principle
with the help of example of an order giving “special leave for men to be out of
barracks tonight till 11 p.m.” Application of the maxim will interpret grant of
special leave as implying a general rule requiring men to be in earlier.
Similarly, a sign that says “parking prohibited on Sundays” (the exception)
proves that parking is allowed on other six days of the week (the rule). The
phrase is also invoked to claim the existence of a rule that usually applies,
when a case to which it does not apply is specially mentioned.

3. The above is, however, a view of the rule somewhat loosely
worded and works differently in different contexts. At times the word ‘prove’
actually means ‘test’. An unusual case in that sense is used to test whether or
not a rule is valid. If the rule stands up to the unusual case, then that
reinforces its truth, if not, then the rule is disproved. In such a case the
main rule and the exception supplement each other in which one gives meaning to
other.

4. Exceptions in law are generally by way of a negative
provision, specific exclusion, proviso or explanation. In tax laws while the
general rule is stated by way of the main provision, exclusions are provided for
by proviso to the general rule. A proper understanding of the law therefore,
requires reading the general rule and the proviso together. The proviso in tax
laws apart from proving the existence of the general rule, confirming,
explaining or harmonising the provision, gets its scope and meaning from the
general rule of which it is an exception.

5. Explaining the purpose of a proviso in a taxing statute,
the Supreme Court in Commissioner of Income-Tax vs. Indo-Mercantile Bank Ltd.
[1959] 36 ITR 1, observed, “The proper function of a proviso is that it
qualifies the generality of the main enactment by providing an exception and
taking out, as it were, from the main enactment, a portion which, but for the
proviso, would fall within the main enactment. Ordinarily, it is foreign to the
proper function of a proviso to read it as providing something by way of an
addendum or dealing with a subject which is foreign to the main enactment.” In
this case whereas the main provision contained in Section 24(1) of the
Income-tax Act, 1922 provided for set-off of loss under one head against profit
under another, the proviso which restricted such set-off was attempted to be
used to prevent set off within the same business head arising from two different
businesses. The Court refused to accept the argument observing that a proviso
must be considered with relation to the principal matter to which it stands as a
proviso. Since the proviso in dispute has no positive words which would support
an interpretation in favour of the disintegration of the head ‘business’, it
cannot stop set-off within the same head of income.

6. To put if differently, in taxing statutes an exception
contained in a proviso takes its scope and meaning from the main provision.
Being a carved out exception, in no circumstance can it be construed in such a
manner as to obliterate and swallow up the main provision to which it is a
proviso. In Commissioner of Income-Tax vs. Ajax Products Ltd., (55 ITR
741 SC) Section10(2)(vii) of the I.T. Act, 1922 [Section 41(2) of I.T. Act,
1961] came for consideration in reference to insertion of words “whether during
the continuance of the business or after cessation thereof” in the proviso by
Act 67 of 1949. Arguments were advanced for the Revenue that insertion of these
words takes away the essential condition in the main provision that the asset
should have been used for business conducted during the previous year. Rejecting
the argument and reiterating their observations in Indo- Mercantile Bank case (supra)
about the scope of the proviso, the Court held that as a result of the amended
proviso, surplus arising from machinery sold or discarded or demolished or
destroyed can be taxed even when such events take place after cessation of
business, but only if the machinery was used in the business carried on for any
part during that financial year, as the amended provision has to be considered
with relation to the principal matter to which it stands as a proviso. Unless
the language is so clear that a proviso may be construed as a substantive
clause, it cannot do violence to the main provision.

7. Harmonious construction of the provision and the exception
contained in proviso thereto require consideration of the two as a whole so as
not to set at naught the real object of the main enactment or put in danger the
legitimacy of the rule in its globality. Deciding about retrospective or
prospective application of the proviso to Section 43B inserted by the Finance
Act, 1987 making exception to the general rule contained in Section 43B in
respect of payments of tax, duty, cess or fees, if payment of such liability is
made on or before the due date of furnishing of return, the Orissa High Court in
Commissioner of Income Tax vs. Pyarilal Kasam Manji and Co. 198 ITR 110
went into the intention of the Legislature, the objects and reasons of the main
provision, the mischief sought to be remedied and came to the conclusion that
the proviso, although stated to be applicable w.e.f. 1.4.1988, is to
cover cases from April 1, 1984.

8. In CIT vs. Hico Products Pvt. Ltd. (No.2) Bom, 201
ITR 575 the issue was whether proviso to Section 40A (5)(a) carves out a
different category of director-employees so as to free them from separate
ceilings of allowability of expenditure on payment of salary as laid down in
sub-clause (i) of clause (a) and on provision of perquisite as laid down in
sub-clause (ii) or subjects them, like any other employee, to such separate
ceilings subject to overall ceiling of Rs.72,000. Applying the characteristics
of a proviso as laid down by the Courts, the Bombay High Court held that the
proviso carves out a separate category of employee-directors and, unlike other
employees, subjects them to uniform ceiling of Rs.72,000.

9. What applies to provisos equally applies to specific
provisions laying down exceptions to the general rule. Reference may be made to
the provisions of Section 37(1) containing the general rule of allowability of
business expenditure laid out or expended wholly and exclusively for the
purposes of the business or profession. Exceptions to the general proposition
are contained in Sections 40 and 40A. It will be too simplistic to hold that what is not excepted is allowable under the general rule as the allowability of unexcepted is still to be judged by the touchstone of the broad basis in Section 37(1). The same applies to exceptions contained in explanations. Section 37(1) itself has an explanation carving out exception to the general rule in respect of expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law.

10. To sum up ‘exceptio probat regular’ is a rule of commonsense in which exceptions prove existence of a general rule and the two make a cohesive whole wherein each derives its scope and meaning from the other. The two cannot be read independently unless there are clear words indicating the exception as laying down a substantive provision.

Autrefois acquit

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The Word

1. ‘Autrefois acquit’ is a preemptory plea to be taken
by the defendant in a criminal proceeding to estop the government from carrying
on with a trial against him. Its etymology is derived from Anglo-French meaning
‘formerly acquitted’. Related to this is ‘Autrefois convict’ and ‘autrefois
attaint’ literally meaning ‘formerly convicted’ and ‘formerly attainted’.


2. The significance of the term lies in the precept embedded
in Anglo-Saxon common law predating the eleventh century, which protects a
person from being tried and indicted for the same offence more than once. Once a
defendant is found not guilty; the case cannot be re-opened for holding him
guilty regardless of any compelling inculpatory evidence found subsequently, nor
can he be tried for the same offence under the same or any different Act.
Conversely, ‘autrefois convict’ protects a person convicted once to be
convicted again under any Act in any criminal proceeding involving action on the
same set of facts.

3. The roots of the principle, as stated by Bhagwati J. in
Maqbool Hussain v. State of Bombay, AIR 1953 SC 325, are to be found in the
well-established rule of common law of England that “where a person has been
convicted of an offence by a court of competent jurisdiction, the conviction is
a bar to all further criminal proceedings for the same offence”. [Per Charles J.
in Reg. v. Miles, (1890) 24 QBD 423(A)]. To the same effect is the
ancient maxim ‘Nimo bis debut punir pro uno delicto’ meaning no one ought
to be twice punished for one offence or, as it is sometimes written, ‘pro
eadem cause’ i.e., for the same cause. This is the principle on which
the party persued has available to him the plea of ‘autrefois convict’ or
‘autrefois acquit’.

4. The fifth amendment of the American Constitution
enunciated the principle as :

“. . . . . . nor shall any person be subject for the same
offence to be twice put in jeopardy of life or limb, not shall be compelled,
in any criminal case, to be witness against himself”.


The principle of protection against double jeopardy, as it
has come to be known, is another expression for ‘autrefois convict’ or ‘autrefois
acquit’.

5. The principle is embodied in Indian laws in S. 26 of the
General Clauses Act, 1897, which states that “where an act or omission
constitutes an offence under two or more enactments, then the offender shall be
liable to be prosecuted and punished under either or any of those enactments,
but shall not be liable to be punished twice for the same offence”. The maxim
finds expression also in S. 403(1) of criminal Procedure Code 1898 when it says,
“A person who has been tried by a Court of competent jurisdiction for an offence
and convicted or acquitted of such offence shall, while such conviction or
acquittal remains in force, not be liable to be tried again for the same
offence, nor on the same facts for any other offence for which a different
charge from the one made against him might have been made u/s.236, or for which
he might have been convicted u/s.237”.

6. The aforesaid common law doctrine and provisions in Indian
as well as foreign laws provided the background for the guarantee of fundamental
right enshrined in Article 20(2) of the Constitution of India, which reads as
under :

“No person shall be prosecuted and punished for the same
offence more than once.”


S. 3(38) of the General Clauses Act, applicable for the
interpretation of the constitution by virtue of Article 367, defines an
‘offence’ to mean any act or omission made punishable by any law for the time
being in force. Expatiating on Article 20(2), the Supreme Court in Maqbool
Hussain case (supra) observed :

“It incorporated within its scope the plea of ‘autrefois
convict’ as known to the British Jurisprudence or the plea of double jeopardy
as known to the American constitution but circumscribed it by providing that
there should be not only a prosecution, but also a punishment in the first
instance in order to operate as a bar to a second prosecution and punishment
for the same offence.”


The Court also, having regard to the whole background,
imported the requirement of prosecution and punishment ‘before a Court of law or
judicial Tribunal’ for invoking Article 20(2) of the constitution and held that
“in order that the protection of Art. 20(2) be invoked by a citizen, there must
have been a prosecution and punishment in respect of the same offence before a
Court of law or a Tribunal required by law to decide the matters in controversy
judicially on evidence on oath, which it must be authorised by law to
administer, and not before a Tribunal which entertains a departmental or an
administrative enquiry, even though set up by a statute, but not required to
proceed on legal evidence given on oath”.

7. The applicability of these two essential ingredients
viz. (i) prosecution and punishment, and (ii) by a Court of law or judicial
Tribunal, came to be examined in the above case where the question to be decided
was whether confiscation of gold by Customs authorities with option to pay an
amount in lieu of such confiscation is punishment by Court of law/judicial
Tribunal to justify the plea based on ‘autrefois convict’ against
pursuing criminal proceedings under the Sea Customs Act and Foreign Exchange
Regulations Act. The Court concluded that far from being authorities bound by
rules of evidence or procedure established by law and invested with power to
ensure their own judgments or orders, the Sea Customs Authorities are merely
constituted administrative machinery for the purpose of adjudging confiscation,
increased rates of duty and penalty prescribed in the Act. As to the nature of
confiscation, it was held that confiscation is more in the nature of proceedings
in rem than proceedings in personam. On both the counts the
protection of ‘autrefois convict’ was denied.

8. In effect the decision in earlier proceedings not only provides res judicata for the succeeding ones, but prevents proceedings to go ahead. In tax laws where an act or omission attracts penalty and is also subjected to prosecution, plea of double jeopardy has been raised in certain prosecution proceedings based on the order imposing penalty. In Gulab Chand Sharma v. H. P. Sharma, Commissioner of Income-tax, Delhi, 95 ITR 117, penalty was imposed u/s.274 read with S. 271 and S. 273 for making a false return and prosecution proceedings were also launched u/s.277 of the Income-tax Act, S. 193 of IPC and also S. 467/471 of IPC, the prosecution proceedings were sought to be quashed on the plea of ‘autrefois convict’. The Court after detailed discussion of various provisions held that the proceedings for the imposition of penalty taken against the accused under the Income-tax Act are distinct from the criminal complaints filed against him. They can, therefore, continue simultaneously. Imposition of penalty is neither a prosecution, nor a punishment for any offence to bar prosecution proceedings. The objects of the two provisions are different. It is an anathema to suppose that when a civil remedy is available, criminal prosecution is completely barred. The two types of actions are quite different in content, scope and import [Pratibha Rani v. Suraj Kumar, 155 ITR 190 (SC)]. The one containing the prosecution and punishment is to vindicate public justice by punishing the offender, whereas the object of the penalty proceedings is to render evasion unprofitable and to secure to the State the compensation for the damages for attempted evasion. They are mutually exclusive remedies [Po Ummali Umma V. lAC, (1967) 64 ITR 669 (Ker.)]


Impotentia excusat legam

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The

Law does not compel one to do that which one cannot
possibly perform. Where the law creates a duty or charge and circumstances
make it impossible to be performed for no fault of his, the law will, in
general, excuse him. The principle is expressed in the Latin maxim
‘impotentia excusat legam’ literally meaning ‘law excuses impossibility’.
The maxim is referred to in English judgments as ‘lex non cogit ad
impossibilia’ and is akin to Roman maxim ‘nemo tenetur ad impossibilia’.

2. As per Broom’s Legal Maxims “Where the law creates a duty
or charge, and the party is disabled to perform it, without any default in him,
and has no remedy over there, the law will in general excuse him, and though
impossibility of performance is in general no excuse for not performing an
obligation which a party has expressly undertaken by contract, yet when the
obligation is one implied by law, impossibility of performance is a good
excuse”.

3. Broom distinguishes obligation undertaken by the party
under a contract and one which is cast on him or implied by law. While the
former is not excused unless so provided expressly, the latter i.e.,
obligation implied by law stands excused by a supervening or other impossibility
beyond the control of the person obliged. The application of maxim in legally
implied obligation is illustrated by the case in which consignees of cargo are
prevented from unloading a ship promptly by reason of a dock strike. In the
absence of an express agreement to unload in a specified time, there was implied
obligation to unload within a reasonable time and the performance having become
impossible, the maxim ‘lex non cogit ad impossibilia, execuses it.

4. In Industrial Finance Corporation of India v. Spinning
and Weaving Mills, (2002) INSC 201, the Supreme Court was seized with the
question as to whether the guarantors of loan advanced by the plaintiff to the
respondent were discharged from their obligation on nationalisation of the
respondent’s undertaking and consequent vesting of its properties, which were
given as security, with the Government. Reliance was placed from the side of
guarantors on the provision of S. 141 of the contract Act under which a surety
is entitled to the benefit of every security which the creditor has against the
principal debtor and, if the creditor loses or without the consent of the surety
parts with the security, the surety is discharged to the extent of the value of
the security. The plea of ‘impotentia excusat legam’ from the side of the
plaintiff was sought to be countered on behalf of the sureties and it was argued
that loss of securities by the creditor will cover both voluntary and
involuntary act or acts of the creditor which will discharge the sureties from
their obligation to the extent of their value. After extensive discussion, the
Supreme Court held recourse to the principle of impossibility as misplaced and
held that despite vesting of properly in the government consequent to
nationalisation the contract of guarantee being an independent contract
unaffected by nationalisation and consequences thereof has, in all fairness, to
be honoured to fulfil the contractual obligation.

5. Even though the application of doctrine of impossibility
was considered not relevant, the IFCI decision (supra) makes in-depth
discussion of the doctrine. Even in matters of contractual obligation
distinction is to be drawn between cases where the event which causes the
impossibility was or might have been anticipated when the promisor, by an
absolute contract bound himself or where the impossibility arises from the act
or default of the promisor and cases where it cannot reasonably be supposed
to have been in the contemplation of the contracting parties when the contract
was made. In the latter case the principle of impossibility will apply. It
is for this reason that an act of God, in some cases, excuses the breach of
contract. It is not, however, uncommon in large contracts to incorporate a
force majeure clause providing for circumstances in which the performance
will be excused.

6. In Appeal No. 95/2007 decided on 17-3-2007 in the matter
of M/s. CSL Securities (P) Ltd v. Securities and Exchange Board of India,
the Securities Appellate Tribunal (SAT) relied on the doctrine of impossibility
as explained in the case of IFCI (supra) and held that if on
corporatisation, the erstwhile proprietor shareholder could not continue to be a
whole-time director for the required period of three years under Para 4 of
Schedule III of SEBI (Stock Brokers and Sub-brokers) Rules 1992, the company
will not be liable to pay the fees for the period for which the founder
shareholder has already been paid.

7. There are situations of impossibility sometimes in legal
provisions also. The maxim of ‘impotentia excusat lagam’ requires
application of legal provision keeping in view the impossibility of
implementation so as not to insist on application of that part of the provision
which is not capable of application. In Standard Chartered Bank v. the
Directorate of Enforcement, (2005) 4 SCC 50, the applicability of the
provision prescribing punishment of imprisonment and fine for an offence came to
be considered in the context of offence by corporations which, being juristic
persons, are incapable of being imprisoned. While both the majority as well as
minority judgments relied on the maxim ‘Lex non cogit ad impossibilia,
they differed on whether the entire provision is to be ignored or the same is to
be modified so as to remove the impossibility. Delivering the minority judgment
Srikrishna, J observed that the application of the maxim could persuade the
Court to ignore the language of the statutory provision in the case of juristic
person, there being no warrant for dissecting of the Section and treating only
one part as capable of implementation when the mandate of the Section is to
impose the whole of the prescribed punishment. K.J. Balkrishnan J, on the other
hand, delivering the majority decision, quoted from Bennions Statutory
Interpretation and observed that if an enactment requires what is legally
impossible, it will be presumed that Parliament intended it to be modified so as
to remove the impossibility element.

8. The principle also known as doctrine of frustration
finds expression in the Contract Act. As per Lord Radcliffe, “Frustration
occurs whenever the law recognises that without default of either party a
contractual obligation has become incapable of being performed, because the
circumstances in which performance is called for would render it a thing
radically different from that which was undertaken by the contract” (Davis
Contractors v. Fareham UDC, 1956AC696) S. 56 of the Contract Act provides
that an agreement to do an act impossible in itself is void. It further provides that a contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Impossibility renders the act unlawful and therefore unenforceable.

Ignorantia Juris

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The ‘WORD’

The ‘WORD’

N. C. Jain
Advocate

Ignorantia Juris

‘Ignorantia Juris’
is generally a defence against the violation of law which the courts are quite
circumspect in accepting in view of the legal maxim ‘ignorantia juris non
excusat’ or ‘ignorantia legis neminem excusat’ meaning that
ignorance of law does not excuse. The principle holds that a person who is
unaware of a law may not escape liability for violating that law merely because
he or she was unaware of it.

2. The rationale behind the doctrine is that if ignorance of
law is taken as an excuse, it would be conveniently used by any person charged
with criminal offence or subjected to civil lawsuit without any conceivable
basis to decide on such ignorance. The law, therefore, imputes such knowledge to
all within the jurisdiction, no matter how transiently.

3. The maxim is juxtaposed to ignorance of facts relevant to
the charge of violation of law or commission of offence which is contained in
the maxim ‘ignorantia facit excusat’. While the ignorance of facts
excuses, ignorance of law does not. If the heir pleads ignorance of the
death of his ancestors, he is ignorant of fact but ignorance of rights vested in
him on the death of ancestor is ignorance of law which does not generally afford
an excuse.

4. In order, however, for the maxim to apply it is necessary
that the law in question is properly published and distributed. In Harla v.
State of Rajasthan, 1951 AIR 467 where Jaipur Opium Act 1923 was passed by
Council of Ministers but not promulgated or published in gazette, the Supreme
Court observed that natural justice requires that before a law can become
operative, it must be promulgated or published. It must be broadcast in some
recognisable way so that all men may know what it is, or at very least, there
must be some special rule or regulation or customary channel by or through which
such knowledge can be acquired with the exercise of due and reasonable
diligence. In the absence of any special law, or custom, it would be against the
principle of natural justice to permit the subjects of a state to be punished or
penalised by laws of which they had no knowledge and of which they could not,
even with the exercise of reasonable diligence have acquired any knowledge. The
court referred to the decision in Johnson v. Sargent, ILR 1944 Karachi
107 where such a publication or publicity was held to be necessary particularly
in regard to orders of empowered authorities as compared to Acts of British
Parliament which are publicly enacted. The debates in the case of Parliamentary
legislation are open to the public and the Acts are passed by accredited
representatives of the people who in theory can be trusted to see that the
constituents know what has been done. They also receive wide publicity in papers
and now, on wireless.

5. The maxim based on presumed knowledge of law, however,
stands considerably diluted with heavily increasing corpus of national
legislation which works more in favour of lawyers rather than citizens for whom
it is enacted. Taking a practical view, the Courts in genuine cases of ignorance
take account of total facts and circumstances including the object of
legislation, nature of default, its impact and its social cost. In cases
involving penal action, particularly in fiscal matters, where the determinative
issue is existence of reasonable cause or deliberate, contumacious conduct on
the part of the defaulter, ignorance of law is taken as a material factor. The
decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa,
(1972) 83 ITR 26 (SC) and similar other decisions could be taken as suggestive
of ignorance of law being taken as relevant to establish absence of guilty
intention when it lays down two basic requirements for imposition of penalty,
viz. deliberate defiance of law and conscious disregard of obligation. Both
these mental states presuppose knowledge of law and obligations flowing
therefrom.

6. The Courts in taking such liberal view have even gone to
the extent of excusing defaults arising out of wrong legal advice given by
eligible legal consultants. In Shyam Gopal Charitable Trust v. DIT
(Exemption), 290 ITR 99, 105, Delhi High Court, while deciding appeal
against order of imposition of penalty u/s.272A(2)(e), recalled the observations
of the Kerala High Court in State of Kerala v. Krishna Kurup Madhava Kurup,
AIR 1971 Ker 211, which was approved and extracted by the Supreme Court in
Concord of India Insurance Co. Ltd. [1979] 118 ITR 507.

"I am of the view that legal advice given by the members of
the legal profession may sometimes be wrong even as pronouncement on questions
of law by Courts are sometimes wrong. An amount of latitude is expected in such
cases for, to err is human and laymen, as litigants are, may legitimately lean
on expert counsel in legal as in other departments, without probing the
professional competence of the advice".

The Court, however, made it clear that it cannot be taken as
laying down a general proposition that in all cases where the failure is
attributed to legal advice, it should be taken as constituting sufficient cause.

7. Such dilution in the application of ‘ignorantia juris
non excusat’ even though justified on grounds of modern day multiplicity and
complexity of litigation coupled with standard of education, is to be
resorted to with utmost caution and subjected to the satisfaction that such a
plea is without any taint of malafide or element of recklessness, gross
negligence or a mere ruse. Willful or deliberate default or disregard of
obligation should not be camouflaged as bonafide mistake caused by ignorance of
law. In V. G. Paneerdas & Co. P. Ltd. v. CWT, 284 ITR 444, the Madras
High Court while commenting on the plea of ignorance of the provisions of
Finance Act 1983 bringing closely held companies into the ambit of wealth tax
observed "Going beyond the well known principles that the ignorance of law is no
excuse, it has to be pointed out that the assessee could not point out any
material fact showing that it was prevented from getting to know the relevant
provisions of the Finance Act 1983." In the facts of the case, the court held
that the provision was well published and a much discussed affair, it is clear
and unambiguous and the assessee was assisted in tax matt

Actus Curiae Neminem Gravabit

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The Word

The legal maxim ‘Actus Curiae Neminem Gravabit’
expresses the fundamental principle that Courts are to dispense justice and any
action of theirs, which is found erroneous or bad should not be allowed to
prejudice the interest of any party. Literally meaning that the act of the Court
shall prejudice nobody, it is a maxim founded upon justice and good sense and
affords a safe and certain guide for administration of law. The maxim operates
on principle of restitution by relegating the parties to the same position which
prevailed before the order causing the prejudice was passed.


2. The doctrine as explained by the Supreme Court in
Karnataka Rare Earth & Anr. v. The Sr. Geologist, Department of Mines and
Geology, (2004) 2 SCC 783 is not confined in its application to erroneous
acts only. The same is applicable to all such acts as to which it can be held
that the Court would not have so acted had it been correctly apprised of the
facts and the law. In the case before the Apex Court (supra), the mining
lease granted to the appellant was challenged in a public interest litigation
and the grant order was quashed by a Single Judge Bench of the Karnataka High
Court. The order of the Single Bench was confirmed by the Division Bench and
also by the Supreme Court. During pendency of appeal before the Supreme Court,
however, the lessees were permitted, by an interim order, to operate the
quarries and transport granite blocks after paying applicable royalty. The
lessee appellant as a result of the interim order, continued the work of
extraction and exported granite on 24-1-1996, which was after their appeal was
dismissed on 18-1-1996. The Department of Mines, by an order, demanded price of
blocks exported against which writ petition was filed by the lessees. The
lessees’ writ petition was dismissed by the High Court. In appeal, the Supreme
Court rejected the plea of absence of knowledge of the Supreme Courts’ order
dismissing the appeal. Lahoti J. speaking for the Court referred to the doctrine
of ‘Actus Curiae Neminem Gravabit’ and observed —

“When an act of the party, persuading the Court to pass an
order which at the end is held as not sustainable, has resulted in one party
gaining advantage which it would not have otherwise earned, or the other party
has suffered an impoverishment which it would not have suffered but for the
order of the Court and the act of such party, then the successful party
finally held entitled to a relief, assessable in terms of money at the end of
the litigation, is entitled to be compensated in the same manner in which the
parties would have been if the interim order of the Court would not have been
passed.”

The applicants were asked to pay the price of exported blocks
as demanded by the Department. For the purpose of the law, the Court observed,
it is enough that the appellants have enjoyed the benefit under the interim
order of the Court which has stood vacated with the dismissal of their appeal.

3. The maxim has also formed the basis for interpreting the
provisions of statutes. In Bharat Damodar Kale and Anr. v. State of A.P.,
(2003) 8 SCC 599, the issue for consideration was whether the limitation of one
year contained in Chapter XXXVI of the Code of Criminal Procedure is applicable
to the institution of prosecution or to the taking of cognizance by the Court.
Taking support form the maxim, the Court held,

“The legal phrase ‘Actus Curiae Neminem Gravabit’
which means an act of the Court shall prejudice no man, or by a delay on the
part of the Court neither party should suffer, also supports the view that the
Legislature could not have intended to put a period of limitation on the act
of the Court of taking cognizance of an offence so as to defeat the case of
the complainant.”

It was, accordingly, held that the limitation governs the
filing of complaint and the Court will not take cognizance if the complaint is
filed beyond the prescribed period of one year.

The above decision also makes it clear that taking of
cognizance is an act of the Court over which prosecuting agency or the
complainant has no control. In other words, failure to take action of such a
nature is an act of the Court and, if it causes prejudice, the maxim is
attracted.

4. The maxim is quite significant in view of the delays in
dispensation of justice, particularly in criminal matters. The following
observations of the Supreme Court of US in Parker v. Ellis, 362 US 574
(1960) are quite relevant in the context of delays on the part of the Courts in
rendering judgments :

“The rule established by the general concurrence of the
American and English Courts is, that where the delay in rendering a judgment
or a decree arises from the act of the Court, that is, where the delay has
been caused either for its convenience, or by the multiplicity or press of
business, either the intricacy of the questions involved, or of any other
cause not attributable to the laches of the parties, the judgment or the
decree may be entered retrospectively, as of a time when it should or might
have been entered up. In such cases, upon the maxim ‘Actus Curiae Neminem
Gravabit’ which has been well said to be founded in right and good sense,
and to afford a safe and certain guide for the administration of justice — it
is the duty of the Court to see that the parties shall not suffer by the
delay. A nunc protunc order should be granted or refused, as justice
may require in view of the circumstances of the particular case.”


5. In a recent case of Food Corporation of India and
Another v. SEIL Ltd. & Others, (2008) 3 SCC 440 where while ordering payment
to be made by the appellant for sugar supplied to the Central Government, the
Court omitted to give direction about payment of interest and such directions
were given in the review petition. The Supreme Court in appeal found nothing
wrong in it holding that “A clear error or omission on the part of the Court to
consider a justifiable claim on its part would be subject to review, amongst
others, on the principle of ‘Actus Curiae Neminem Gravabit’ (an act of
the court shall prejudice none)”.

6. The maxim applicable to the action of the Courts is equally applicable in administration of law. Being based on justice and good sense it provides safe guidance in legislative as well as administrative actions. In tax laws collection of taxes on the strength of erroneous order is required to be refunded with interest. Failure of authorities to pass assessment orders within the prescribed period of limitation prevents the authorities to complete the assessment resulting in no prejudice to the assessees. Provisions exist where the legislature has laid down periods for completion of proceedings or passing of orders, but legislature has desisted from providing for consequences which are adverse to the assessees in case of failure to take action or pass order within the period. For instance, S. 254(2A) expects the Income Tax Appellate Tribunal to decide appeals within a period of four years, S. 12AA(2) enjoins upon the Commissioner to pass order granting or refusing registration of trust/institution before the expiry of six months from the end of the month in which application was received, but failure to adhere to these time limits does not result in dismissal of appeal or the application.

7. One has, in this context, to consider the provision of S. 245HA(1)(iv) introduced vide Finance Act 2007 where under, an application allowed to be proceeded with by the Settlement Commission is to abate if the Commission fails to pass settlement order u/s.245D(4) within the time prescribed u/s. 245D(4A), irrespective of whether the failure to pass order is attributable to applicant or not. One may attempt to justify the provisions technically on the basis that the Settlement Commission, even though proceedings before it are judicial proceedings, is not a Court. But what constitutes guidance to the Courts in dispensation of justice should ideally not be ignored by the Legislature in making laws. In the spirit of the Supreme Court decision in Bharat Damodar Kale’s case (supra), passing or not passing an order over which the applicant has no control is an act of the Commission. In the Scheme of the Settlement mode of determining the tax liabilities, it will not be correct to say that abatement does not prejudice the interest of the applicant, particularly when the facts disclosed and additional income offered for tax is allowed to be utilised for framing assessment under the normal assessment mode.

Ex Abundanti Cautela

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The Word

A Latin expression, literally meaning ‘as abundant
caution’ is a legislative practice followed to obviate any possibility of a
view different from what is intended by the Legislature. By its nature,
therefore, a provision ‘ex abundanti cautela’ explains the provision
contained in a statute to put certain areas beyond controversy and clarify the
legislative intent in situations where a reasonable apprehension can exist of a
different interpretation being taken by the courts.


2. Strangely, a provision to provide certainty and clarity is
often itself a matter of controversy as to its nature. Whether a particular
provision is ‘ex abundanti cautela’ or an independent provision is quite
often a subject of debate. This issue becomes significant because the provision
not considered ‘ex abundanti cautela’ results in a restricted meaning
eliminating, by implication, all that is not said therein. On the other hand a
provision held ‘ex abundant cautela’ does not restrict the provision in
any way and allows it to have the meaning which it would have, even if the
cautioning provision had not existed. It merely dispels apprehension about a
possible view in respect of certain items/areas in relation to the provision to
which it is ‘ex abundanti cautela’.

3. A few examples will make the import of the expression
clear. Under the Central Excise tariff, item 17(2) is ‘paper subject to
coating’. The nature of item 17(3) inserted for the category ‘carbon paper’ was
subject matter of dispute in a case where demand was raised in respect of
‘carbon paper’, for the period prior to introduction of item 17(3). The
Department took the plea that the amendment was merely ‘ex abundanti cautela’,
as carbon paper was always covered under item 17(2). The Supreme Court after
considering the case from different angles, upheld the Department’s view that
carbon paper was covered by item 17(2) (Collector of Central Excise Kanpur v.
Krishna Carbon Paper Co., 1988 AIR 2223).

4. In Central Provinces Transport Services Ltd. v.
Raghunath Gopal Patwardhan, (1957 AIR 104) — a case under the Industrial
Disputes Act — an employee was prosecuted for a charge of theft in 1950, but was
acquitted in 1952, after which he claimed reinstatement and compensation. The
employer refused to entertain the application, inter alia, on the ground
that the applicant was not an employee, as dismissed employees are not employees
under the Act. The Act in S. 2(10) defines an employee ‘to mean any person
employed by an employer to do any skilled or unskilled, manual or clerical work
for contract or hire or reward in any industry and includes an employee
discharged on account of any dispute relating to a charge, in respect of which a
notice is given u/s.31 or 32 whether before or after the discharge”.
(emphasis supplied). It was argued on behalf of the employer that the inclusive
part of the definition reflects the legislative intention to include only those
who are proceeded against u/s.31 and u/s.32 and not all the discharged employees
in general, as otherwise there was no need for the further provision in S. 2(10)
that discharged employees would in certain cases be employees. Disagreeing, the
Supreme Court observed :

“In our opinion, the clause was inserted ‘ex abundanti
cautela’ to repel a possible contention that employees discharged u/s.31
and u/s.32 of the Act would not fall within S. 2(10) and cannot be read as
importing an intention generally to exclude dismissed employees from that
definition.”


5. The provision ‘ex abundanti cautela’ is generally
in the form of a sub-section or an inclusive expression or explanations
expressly stated as ‘for benefit of doubt’ and also sometimes as non-obstante
clause. The examples of inclusive expression in tax laws can be multiplied.
Wherever the Legislature finds it difficult to express a term of wide import in
language, it leaves it open to the judiciary to provide meaning to it, taking
care to include or exclude specific areas where there can be possibility of
different interpretations, as a measure of precaution. The very definition of
‘income’ is of the nature. The same is the case with ‘transfer’ u/s.2(47),
‘salary’ u/s.17(1), ‘perquisite’ u/s.17(2) and host of other provisions where
specific areas are specified as included within these terms instead of a general
broad-based definition.

6. Examples of provisions expressly stated as for removal of
doubt can also be multiplied. One such example is explanation inserted in S.
10A, S. 10AA and S. 10B to repel the possibility of profits derived from the
site development of computer software not being treated as profit derived from
export of computer software. Another explanation in S. 10B dispels the possible
impression that cutting and polishing of precious and semi-precious stones do
not fall within ‘manufacture or produce’ in that Section. S. 263 which gives
power to the Commissioner of Income-tax to revise the order of the Assessing
Officer has provision ‘ex abundanti cautela’ by way of explanation to say
that orders passed by the Assessing Officer in pursuance of the directions
u/s.144A and orders passed by Joint Commissioners in exercise of power of
Assessing Officer conferred on them will be orders of the Assessing Officer,
subject to the revisional power of the Commissioner of Income-tax. More and more
explanations are being inserted, as a measure of precaution, to clarify the
legislative intention whenever there is any indication arising from the Court’s
decision that a view different from what is intended can possibly be taken.

7.    Even non-obstante clauses are sometimes taken as ‘ex abundanti cautela’. In a case relating to Administration Evacuation of Property Act, 1950 where the nature of a non-obstante provision contained in S. 12(1) came for consideration, the provisions “not-withstanding anything contained in any other law for the time being in force, the custodian may cancel any allotment or terminate any lease or agreement ….. ” was argued as being a provision which overrides a bar imposed by any law, but not the bar imposed by a contract under which the lease was held. The Supreme, Court, after considering various aspects of the case, came to the conclusion that the operative portion of the Section which confers powers on the custodians to cancel the lease or vary the terms thereof is unqualified and absolute and that power cannot be abridged by reference to the provision that it could be exercised “notwithstanding anything contained in any other law”. The non-obstante provision is obviously intended to repel a possible contention that S. 12 does not, by implication, repeal statutes conferring rights on lessees and cannot prevail as against them and has been inserted ‘ex abundanti cautela’. (Raibahadur Kanwar Rajnath & Others v. Pramod C. Bhatt, Custodian of Evacuee Property, 1956 AIR 105).

8. In deciding  as to whether  the expression  is ‘exabundanti cautela’ or not, the courts are generally guided by the object of the legislation and the purpose it is intended to serve. The following ex-tract from the decision rendered by Justice Krishna Iyer in R. S. Joshi STO, Guj. v. Ajit Mills Ltd., Ahd., & Another, 1977 AIR 2279 succinctly brings out the approach.

“A law has to be adjudged for its constitutionality by the generality of cases it covers, not by the freaks and exceptions it martyrs. The professed object of the law being clear, the motive of the Legislature is irrelevant to castigate an Act as a colour able device. The interdict on public mischief and the insurance of consumer interests against likely, albeit unwitting or ‘ex abundanti cautela’, excesses in the working of a statute are not merely an ancillary power, but surely a necessary obligation of a social welfare State.”

Quo warranto

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The Word

1. A Latin expression for ‘by what warrant ?’ is a legal
process demanding to know by what right a person exercises the controversial
authority. As one of the prerogative writs, the process is a constitutional
remedy which can be availed against a person not qualified to hold a public
office or post. The petition filed against a person alleged to have usurped any
franchise or liberty or office of public nature enables enquiry into the
legality of the claim which a person asserts to an office or franchise and to
oust him from such position if he is found to be a usurper. As observed by the
Supreme Court in the University of Mysore v. C. D. Govinda Rao and Another,
AIR 1965 SC 491, “the procedure of quo warranto confers
jurisdiction and authority on the judiciary to control executive action in the
matter of making appointments to public offices against the relevant statutory
provision; it also protects a citizen from being deprived of public office to
which he may have a right. It would be seen that if these proceedings are
adopted subject to conditions recognized in that behalf, they tend to protect
the public from usurpers of public offices; in some cases, persons not entitled
to public office may be allowed to occupy them and to continue to hold them as a
result of the connivance of the executive or with its active help, and in such
cases, if the jurisdiction of the Courts to issue writs of quo warranto
is properly invoked, the usurper can be ousted and the person entitled to the
post allowed to occupy it”.


2. Halsbury in Law of England, 3rd Vol. II (P.145) puts it as
under :

“The writ of quo warranto is a common law process of
great antiquity a writ of right for the king against one who claimed or
usurped any office, franchise or liberty. An information in the nature of
quo warranto is obviously its modern form.”


Post the aforesaid observations, informations in quo
warranto were abolished by Administration of Justice (Miscellaneous
provisions) Act, 1938 giving power to grant an injunction to restrain the
executive of power in an office to which a man is not entitled. The injunction
took place with all the old substantive rules, though the cumbersome and
reconciled procedure of the old writ had been given up.

3. The writ of quo warranto is a discretionary remedy
which the Court may grant or refuse. For a citizen to claim such remedy, he has
to satisfy the Court that (a) the office is of public and of a substantial
nature, (b) it is created by statute or by the constitution itself, and (c) The
respondent has asserted his claim to the office.

4. The remedy of quo warranto is a limited remedy. The
jurisdiction of the High Court to issue such writ can only be used when the
appointment is in clear violation of statutory provisions and rules. Where the
order of appointment is within law, but mala fides of the appointing
authority is alleged, the High Court of Delhi in P. L. Lakhanpal v. Ajit Nath
Ray, AIR 1975 Delhi 66 held that even though it is indisputable that mala
fide action is no action in the eye of law, the motives of the appointing
authority in making the appointment of a particular person are irrelevant in
considering issue of writ of quo warranto. The Court in R. K. Jain v.
Union of India, (1993) 4 SCC 119, held that the evaluation of comparative
merits of the candidates would not be gone into such litigation. In B.
Srinivasa Ready v. Karnataka Urban Water Supply and Drainage Board Employees
Association (2006), coming out of SLP (C) No. 9393/ 2006, the question to be
decided was whether an order appointing a person ‘until further orders’ can be
challenged in a writ. It was argued that a writ of quo warranto would not
lie against order ‘Until further orders’, as it is not a regular appointment.
Moreover it ensures that appointment continues without limit. Holding that a
writ will not lie, the Court in the facts of the case observed that “When the
statute does not lay down the method of appointment or terms of appointment, the
appointing authority who has power to appoint has absolute discretion in the
matter and it cannot be said that discretion to appoint does not include power
to appoint on contract basis”.

5. The existence of the legal right of the petitioner which
is alleged to have been violated, is the foundation for invoking the
jurisdiction of the High Court in matters of writs. This orthodox rule regarding
the locus standi to reach the Court has gradually undergone a change and
the constitutional Courts have been adopting a liberal approach in dealing with
the cases or dislodging the claim of a litigant merely on hyper technical
grounds. This rule is particularly relaxed in quo warranto matters. The
Supreme Court in Ghulam Qadir v. Special Tribunal & Others, (2002) I SCC
33, observed that there is no dispute regarding the legal proposition that
rights under Article 226 of the Constitution of India can be enforced only by an
aggrieved person except in the case where the writ prayed is for habeas
corpus or ‘quo warranto’.

6. Courts have, however, been taking the view that the writ
of quo warranto should be refused where it is an outcome of malice or ill
will. The Supreme Court in Dr. B. Singh v. Union of India and others,
(2004) 3 SCC 363, held that only a person who comes to the Court with bona
fides and public interest can have locus. Coming down heavily on busybodies,
meddlesome interlopers, wayfarers or officious interveners having absolutely no
public interest except for personal gains or private profit either of themselves
or as a proxy for others or for any other extraneous motivation or for glare of
publicity, it was held that apart from credentials of the applicant and prima
facie correctness and definiteness, the information should show gravity and
seriousness involved.

7. Other grounds on which a writ can be refused are when it
is vexatious or would be futile, or when an alternative remedy will be equally
efficacious or where there is mere irregularity in the election of the office.
Refusal can also arise in cases of laches or where there has been prior
acquiescence of the applicant in respect of the act complained of.

Mandamus

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The Word

Literally meaning ‘command’ or ‘order’ in Latin, the term ‘mandamus’
has come to be used in law for a judicial remedy in the form of an order from a
superior court to a court, tribunal, authority, board, corporation or any other
individual or body charged with the performance of a public duty, to discharge
that duty. Mandamus compels them to do acts which they are obliged under
law to do or refrain from doing, which they are not authorised to do in
discharge of public duty or statutory duty. The remedy is in the form of a
prerogative writ under Articles 32 and 226 of the Constitution of India.


2. While there are judicial remedies by way of appeals,
certiorari and others to remedy the wrong done, the order of mandamus
is an effective remedy against injustice caused by non-performance of duty
affecting legal rights vested in the person aggrieved by such non-performance of
the public duty. It lies in cases where there is a specific right, but no
specific legal remedy for enforcing that right and also in cases where, even
though there is an alternative remedy, the mode of redress is less convenient,
beneficial and effective or where there is a total absence of jurisdiction. When
a petition for issue of writ of mandamus was filed seeking directions to
the State to refund money illegally collected as tax, the same was held not
maintainable, because a claim for such refund could always be made in a suit
against the authority which had illegally collected the money as tax. Further,
it was held that in the absence of statutory provision whereby the tax realised
had to be refunded when the appellate authority set aside the assessments, no
duty was cast on the State to refund the amount it had realised which was
subsequently found by the appellate authority to be not in accordance with law.
The question whether the State was bound u/s.72 of the Contract Act to return
the amount on the ground that it was paid under mistake was a matter to be
decided in a regular suit and not in proceedings under Article 226 [Sugan Mal
v. State of M.P., 56 ITR 84 (SC)]. In another case where mandamus was
sought for stopping the recovery proceedings by the TRO for alleged
irregularities, the Supreme Court observed that the existence of an alternative
remedy is not generally a bar to the issuance of a writ or order in the nature
of prohibition. But, in order to substantiate a right to obtain a writ, an
applicant has to demonstrate total absence of jurisdiction to proceed on the
part of the officer or authority complained against. It is not enough if a wrong
Section or provision of law is cited in a notice or order if the power to
proceed is actually there under other provision [Isha Beevi v. TRO, 101
ITR 449 (SC)].

3. Mandamus does not lie to enforce a private right,
neither to enforce a duty of purely ministerial nature which the officer is
bound to perform under orders of competent authority, nor in matters where duty
is discretionary, not imperative. Mandamus was sought against the CBDT
claiming refund of taxes paid for years in respect of which no appeals were
preferred and assessments were allowed to become final. The claim was made on
the basis of the decision in appeal relating to an earlier year, received after
those assessments became final which revealed that no tax was payable in those
years. Rejecting the writ, the Supreme Court held that it is doubtful that the
Central Board can exercise any judicial power and direct refund. Nor is there a
statutory duty cast on it to consider applications for refund, and so a writ of
mandamus would not issue from the court. [Raja Jagdambika Pratap
Narain Singh v. CBDT, 100 ITR 698 (SC)].

4. A public duty enforceable through mandamus must
also be an absolute duty i.e., one which is mandatory and not
discretionary. Where a bottling company’s application for grant of licence was
rejected by the Commissioner and in a writ filed against the Commissioner, the
High Court not only quashed the order but also directed the Commissioner to
grant the licence, the Supreme Court disapproved mandamus on the ground
that in order to compel the Commissioner, by an order of mandamus, to
grant the licence, it must be shown that under the Act and the Rules framed
thereunder there was a legal duty imposed on the Commissioner to issue a licence
without the prior approval of the State Government. In this case the
Commissioner was under no legal duty to grant the licence till he received the
prior approval of the State Government. [Chingleput Bottles v. Majestic
Bottling Co., (1984) INSC 60].

5. Distinction has to be drawn between public duties
enforceable by mandamus and duties arising merely from contract.
‘Contractual duties’ are enforceable as matters of private law by the ordinary
contractual remedies such as damages, injunction, specifics performance and
declaration. Such duties are not enforceable by mandamus which is
confined to public duties and is generally not granted if other remedies are
adequate.

6. While mandamus applies to public duties only, it is
not necessary that the person or the authority on which the statutory duty is
imposed, need be a public official or an official body. A mandamus may
issue, for instance, to official of a society to compel him to carry out the
terms of the statute under or by which the society is constituted or governed
and also to companies and corporations to carry out duties placed on them by the
statutes authorizing their undertakings. A mandamus would also lie
against a company constituted by a statute for the purpose of fulfilling public
responsibilities. A writ would lie even against a private individual. The words
‘any person or authority’ used in Article 226 are not to be confined only to
statutory authorities and instrumentalities of the State. They may cover any
other person or body performing public duty. The form of the body concerned is
not very much relevant. What is relevant is the nature of the duty imposed on
the body [Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti
Mahotsav Smarak Trust v. V. R. Rudani, 1989 AIR (SC) 1669].

7. The remedy is prerogative. Apart from existence of
alternative remedy, the Court may decline to interfere where circumstances so
warrant, including the delay in making claims. In Jagdambika Pratap Narain’s
case (supra) the Supreme Court upheld the order of the High Court,
observing that Article 226 of the Constitution is not a blanket power regardless
of temporal and discretionary restraint. If a party is inexplicably insouciant
and unduly belated due to laches, the Court may ordinarily deny redress.

8. Mandamus may take the form of ‘Alternative
mandamus’ when issued upon the first application for relief, commanding the defendant either to perform the act or to appear before the Court to show cause for not performing it. It may be ‘Pre-emptory’ when it is an absolute and unqualified command to do the act in question and is issued when one defaults on, or fails to show sufficient cause in answer to ‘alternative mandamus’.  It is Continuing  mandamus when issued in general public interest commanding performance for an unstipulated period of time for preventing miscarriage of justice. Such an order has relevance where a mere issue of mandamus would be futile against a public agency guilty of continuing inertia and thus continuing mandamus may be issued [Vineet Narain v. UOI, 1998 AIR (SC) 889].

9. Mandamus is a relatively inexpensive and expeditious remedy. In an era where extensive powers are vested in the executive and their inaction in discharge of duties or action which is malafide, beyond jurisdiction or influenced by extraneous considerations might play havoc with the life and liberties of individuals and orderly running of societies mandamus works as the most effective instrument to ensure order and justice. No wonder, the trend of judicial pronouncements is towards a liberal approach with the object of extending its scope and taking a broader view of its coverage. As observed by the Supreme Court in Rudani’s case (supra) “the judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartments. It should remain flexible to meet the requirements of variable. circumstances. Mandamus is a very wide remedy, which must be easily available to reach injustice wherever it is found. Technicalities should not come in the way of granting that relief under Article 226”.

Certiorari

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The_Word

Certiorari is a latin term used in law referring to a
type of writ seeking judicial review. Derived from Certiorare, it
literally means ‘to search’. In law it is used for requesting the court to look
for irregularity and provide remedy against injustice meted out.


2. Historically in the U.K., Certiorari was used to
bring the record of an inferior court into the King’s Bench for review or to
remove indictment for trial from that court. It evolves now as a general remedy
to bring decision of an inferior court or Tribunal or Public Authority before
the superior court for review, so that the court can determine whether to quash
such decisions or allow them to operate. In the U.S.A., Certiorari is one
of the two ways to have a case from US Court of Appeal reviewed by the U.S.
Supreme Court. Appeal being one, Certiorari is the other. In India,
Certiorari is not an alternate remedy, but operates generally in cases where
the relevant statute does not provide for remedy and where gross injustice has
occurred or where fundamental rights are violated.

3. The provisions in many modern statutes attempt to keep
away decisions of authorities — administrative or judicial — from review by the
higher courts by making these decisions ‘final’ or ‘conclusive’. The legal
import of these words was discussed by Denning L.J. in R v. Medical Appeal
Tribunal ex p.Gilmore, (1957) I.O.B. 574, 583. His Lordship observed “The
remedy by certiorari is never to be taken away by statute except by the
most clear and explicit words. The word ‘final’ is not enough. That only means
‘without appeal’. It does not mean without recourse to certiorari. It
makes the decision final on facts, but not final in law. Notwithstanding that
the decision is by a statute made ‘final’, certiorari can still issue for
excess of jurisdiction or for error of law on the face of the record”.

4. The Constitution of India in Articles 32 and 226 grants
remedy by way of certiorari. Article 32 grants right to move the Supreme
Court for enforcement of fundamental rights by authorising the court to issue
directions or orders or writs including writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari. Similar
powers under Article 226 have been vested in High Courts. Powers of High Courts
are not confined to enforcement of fundamental rights, but extend to other cases
involving breach of right resulting in failure of justice.

5. Writs of certiorari are issued after review of
records of proceedings of the Tribunals or Public Authority having legal
authority to determine questions affecting the rights of subjects and having the
duty to act judicially. Writ quashes the orders which go beyond jurisdiction. It
is corrective in nature issued to the inferior tribunals dealing with civil
rights of persons as a public authority and is issued for absence of
jurisdiction, wrongly usurping the jurisdiction, acting in excess of
jurisdiction or failing to exercise jurisdiction. Certiorari is also
issued for violation of principles of natural justice. Errors apparent on the
face of the record are, for the purpose of interference by certiorari,
treated as errors of jurisdiction.

6. The Court acting in certiorari does not act in
appellate jurisdiction, but only in supervisory capacity. It, therefore, follows
that while a decision to deny certiorari lets the lower court’s ruling
stand, it does not constitute a decision by the Supreme Court/High Court on any
of the legal issues raised. The decision to grant or deny certiorari is
discretionary.

7. Determination of jurisdiction in many cases involves
decision about the existence of ‘jurisdictional fact’ which must exist before a
court, Tribunal or an Authority assumes jurisdiction over a particular matter.
By erroneously assuming existence of such jurisdictional fact, no authority can
confer upon itself jurisdiction which it otherwise does not possess. The Supreme
Court in Arun Kumar and Others v. U.O.I., (2006) 286 ITR 89 (SC) was
seized of the question of the legality of Rule 3 of I.T. Rules dealing with
house perquisite. While holding the Rule as intra vires, the Court held
that ‘concession’ under clause (ii) of Ss.(2) of S. 17 is a ‘jurisdictional
fact’. It is only when there is a concession in the matter of rent respecting
any accommodation provided by an employer to his employee that the mode, method
or manner as to how such concession can be computed can arise. In other words,
concession is a ‘jurisdictional fact’, method of fixation of amount is ‘fact in
issue’ or ‘adjudicatory fact’. It was therefore, held that in spite of the legal
position that Rule 3 is intra vires, valid and not inconsistent with the
provisions of the parent Act u/s.17(2)(ii) of the Act, it is still open to the
assessee to contend that there is no ‘concession’ in the matter of accommodation
provided by the employer to the employee and hence the case did not fall within
the mischief of S. 17(2)(ii) of the Act. The jurisdiction to invoke Rule 3
arises only when the existence of concession in the matter of rent is
established. The decision led to insertion of an explanation to S. 17(2)(ii)
nullifying the effect of the Supreme Court decision.

8. In Province of Bombay v. Kusaldas S. Advani  & Ors., 1950 AIR 222, where the order of the State Authorities requisitioning land was challenged in a writ of certiorari for want of jurisdiction, the existence of ‘Public purpose’ was a ‘jurisdictional fact’. The issue was whether determination of such fact is judicial, quasi-judicial or administrative act. Kania CJ, Fazal Ali, Patanjali Shastri and Das JJ held that on proper construction of S. 3 of the ordinance, the decision of the Bombay Government that the property was required for a public purpose was not a judicial or quasi-judicial decision, but an administrative act and the High Court of Bombay had, therefore, no jurisdiction to issue a writ of certiorari in respect of the order of requisition. In their dissenting judgment, Mahajan and Mukherjea JJ held the view that the Government of Bombay is a body of persons having legal authority to determine questions affecting the rights of subject and in deciding whether a land was required for public purpose ul s.3 of the Ordinance, it had to act judicially. The conditions necessary for the granting of a writ of certiorari were, accordingly satisfied and the High Court of Bombay had power to issue the writ.

9. The observations of Denning L. J. (supra) that the remedy by certiorari is never to be taken away by the statute, finds expression in Indian judicial decisions. Articles 323-A and 323-B provide for setting up Administrative Tribunals and other Tribunals for adjudication or trial of disputes in respect of recruitment and conditions of service of public servants and disputes with regard to other matters including levy, assessment collection and enforcement of any tax. Both these Articles exclude the jurisdiction of all courts except the jurisdiction of the Supreme Court under Article 136. The legality of ouster of jurisdiction of High Courts was considered by the Supreme Court in L. Chandrakumar v. UOI, (1997) 3 SCC 261 in a matter decided by the Central Administration Tribunal set up under Article 323-A. The Act constituting the Tribunal in S. 28 incorporated the provision of the Constitution providing for ouster of jurisdiction of courts except the Supreme Court under Article 136. The Apex Court was to decide whether the power to exclude jurisdiction of all courts runs counter to the powers of judicial review conferred on the High Courts under Article 226/227 and on the Supreme Court under Article 32 of the Constitution. It was held that such Tribunals could not be held to be substitute of the High Court for the purpose of exercising jurisdiction under Article 226/227 of the constitution. Following this judgment, the Court in RK lain v. U.O.I., 1993(4) SCC 119 held that judicial review applications lie to the High Court against judgment of CAT and only thereafter one can approach the Supreme Court. The procedure is based on the basic structure doctrine in relation to Art. 226, 227 of the Constitution which cannot be circumvented by any law which seeks to oust the jurisdiction of the High Court. National Tax Tribunal is a Tribunal set up under Article 323 B. The Act constituting the Tribunal having similar provision ousting the jurisdiction of High Courts is under challenge. With the view already taken by the Supreme Court in the matter, the sustainability of this part at least is doubtful.

10. Whether remedy of certiorari is available when remedy is prescribed in the relevant statute itself? The issue was considered by the Supreme Court in Commissioner of Wealth Tax, Hyderabad v. Trustees of H.E.H., (2003) INSC 193. As observed, it has been settled by a long catena of decisions that when a right or liability is created by a statute which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before seeking the discretionary remedy under Article 226 of the Constitution.
This rule of exhaustion of statutory remedies is, no doubt, a rule of policy, convenience and discretion and the court may in exceptional cases issue a discretionary writ of certiorari. Such cases are where there is complete lack of jurisdiction for the officer or Authority or Tribunal to take the action or there has been a contravention of fundamental rights or there has been a violation of rules of natural justice or where the Tribunal acted under a provision of law, which is ultra vires.

Non Sequitur

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The ‘WORD’

Non Sequitur
is latin for ‘it does not follow’. It is used in speech and reasoning to
describe a statement in which premise and conclusions are totally unrelated but
are used as if they are. In other words, where a conclusion, even if correct, is
sought to be derived from the premise from which such conclusion does not
follow, it is said to be non-sequitur.


2. The expression is often used in legal decisions to
discard, declare irrelevant or unrelated an argument used to establish a
particular fact or a legal position. The fact that a statement or conclusion of
facts or law is non-sequitur does not necessarily imply that the same is
incorrect. What it implies is that the same does not logically follow from the
premise from which it is arrived at. In other words the premise and the
conclusions are unrelated having no cause and effect relationship.

3. A legal decision is a combined effect of finding of
relevant facts — direct and inferential — and application of appropriate legal
principles to the problems disclosed by those facts. Finding of a particular
factual situation from a bundle of facts, not all leading to the same legal
situation, is one area where the conclusion can be termed non-sequitur
i.e., not arising from the facts presented. In Alembic Chemical Works Co.
Ltd., v. CIT Gujarat, 1989 AIR 1913, where the issue was whether payment to
a Japanese company for supply of requisite technical know-how was revenue
expenditure being laid out for existing business or capital expenditure on a new
business, the High Court on reading of various clauses of the agreement
concluded that initiation and exploitation of the new process as per the
know-how brought in their wake a new venture requiring an altogether new plant
and, accordingly, held it capital expenditure. In appeal the Supreme Court
basing their decision on terms of the same agreement held the conclusion drawn
by the High Court as non-sequitur.

4. Doctrine of ‘Precedent’ makes the decisions of higher
judicial authorities binding on all lower judicial bodies operating within the
jurisdiction. Doctrine of ‘stare decisis requires Courts to stand by
their earlier decisions, unless a review becomes necessary for reasons of
compelling contemporary social conditions or when additional reasons exist
pointing to a wrong precedent having been created. Legal decisions favouring the
stand of the concerned parties are, therefore, cited to support the views
advocated by them. But, as held by the Supreme Court in State of Orissa v.
Mohd Illiyas, (2006) ISCC 275, reliance on such decisions without going into
the factual background of the cases before it, is clearly impermissible. A
decision is a precedent on its own facts. It is an authority for what it
actually decides and no more. Their Lordships quoted with approval the
observations of Earl of Halsbury L. C in Leathem (1901) AC 495 (HL) to the
effect that every judgment must be read as applicable to the particular facts of
the case in which such expressions are found. When arguments are based on the
earlier legal decisions of the same or higher judicial authority without due
consideration of the factual background in which those decision were made, the
resulting decision becomes non-sequitur as the conclusion therein does
not follow the cited cases. In Wajid Ali Abid Ali v. CIT Lucknow, 1987
AIR 2074 where the Court was to give meaning to the word ‘cease’ in the context
of a partner ceasing to be a partner and large number of cases were cited, the
Court for the above-stated reason did not consider it necessary to be bogged by
these decisions, holding “These (cases) though throwing light, however, are
non-sequitur for the issue before us”.

5. In Azadi Bachao Andolan v. UOI reported in 263 ITR
706 where the Supreme Court was to adjudicate on the legality of the Circular
No. 789, dated 13-4-2000 making certificate of residence issued by Mauritius
Authorities as sufficient proof of residence and beneficial ownership, the
argument about the inconsistency of the impugned Circular with the provisions of
the Act, was found to be total non-sequitur for the simple reason that
the impugned Circular No. 789 was a Circular within the meaning of S. 90 and,
therefore, should have legal consequences contemplated by Ss.(2) of S. 90 and
not any other provision of the Act. In other words, the Circular, it was held,
shall prevail even if inconsistent with the provisions of Income-tax Act 1961,
insofar as the parties covered by the provisions of DTAC are concerned, as the
convention overrides the provisions of the Act. The consistency of what is
contained in the Circular, therefore, needs to follow the provisions of S. 90
which alone prevails.

6. Many a time, an order is supported by several reasons out
of which some may be found to be of no relevance to the determination of issue
involved. Mention of such reasons is held non-sequitur even if the
conclusions are upheld in appeal. In State of Maharashtra v. Chandrabhan
Tale, 1983 AIR 803, the Supreme Court was to decide on the legality of the
second proviso to Rule 151(1)(ii)(b) of the Bombay Civil Service Rules 1959
which provided for award of subsistence allowance at rupees one per month to a
government servant who is convicted and sentenced to imprisonment and whose
appeal against the conviction is pending. Concurring with his fellow Judge who
held that rule as illegal, inter alia, for reason of ludicrously low
amount of subsistence allowance, Chinnappa Reddy, J considered the observations
about the nature of public employment opportunity made by the fellow judge as
non-sequitur and held that “Though the view that public employment
opportunily is national wealth in which all citizens are equally entitled to
share and that no class of people can monopolise public employment in the guise
of efficiency or other ground, is correct, it is non-sequitur“.

He did not favour the right to equal opportunity to public
employment to be treated as a new form of private property and saw no reason to
introduce a new concept of property so as to bring in its wake the vestiges of
the doctrine of leissez faire and create, in the name of efficiency, a
new oligarchy.

Ab inconvenienti

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The Word

Literal interpretation is normally the rule, unless such an
interpretation leads to injustice, absurdity, extreme hardship or fails to avoid
the mischief sought to be avoided when different rules of interpretation are
applied to arrive at the most probable legislative intent conforming to the
objectives of the legislation. An interpretation is sometimes assailed on ground
of inconvenience likely to be faced if a particular view is taken. Such
challenges based on argumentum ‘ab inconvenienti’, though relevant in
judicial decisions, have a limited force and is generally applied with great
care.


2. “Every Legislation” as observed by Krishna Iyer, J in
Swantraj & Others v. State of Maharashtra, 1974 AIR 517 “is a social
document and judicial construction seeks to decipher the statutory mission,
language permitting, taking the cue from the rule in Heydon’s case of
suppressing the evil and advancing the remedy”. Laws enacted for general
advantage do sometimes result in individual hardship, notably in laws relating
to limitation, registration, attestation and the like. Such individual hardships
or injustice are not taken as having bearing on the legality and do not become
the basis for rejecting a natural construction. Arguments based on inconvenience
assume significance only when the resulting hardship is likely to be faced by
the community at large or affects the general good of the society.

3. The aforesaid view finds expression in Mohinder Singh
Gill and Anr. v. The Chief Election Commissioner, [1978 AIR 851 (SC)] where
an order of the Election Commission directing repoll in the entire constituency,
on destruction of papers and ballot boxes of some segments in a mob violence,
was challenged as arbitrary and violative of any vestige of fairness. The
failure of the Commission to provide opportunity before directing a repoll was
an argument taken by the appellant against which the plea ‘ab inconvenienti’
was advanced on behalf of the Commission, considering the supposedly large
number of persons affected. Reliance was placed on the earlier decision of the
Supreme Court in Subhash Chander Sinha’s case (1970) 3 SCR 963, where
re-examination was ordered by the Board after the examination was vitiated by
adoption of unfair means on a mass scale. In that case Hidayatullah, J repelled the plea of violation of natural
justice in not affording opportunity of hearing to affected persons. The Court
upheld the action taken without prior opportunity, considering that students
generally had outside assistance in answering question which results in
impossible plurality, frustrating the feasibility of notice and hearing.

4. While agreeing with the ratio of Subhash Chander (supra)
based on argument ‘ab inconvenienti’ dispensing with natural justice of
providing hearing in that case, the Supreme Court in Mohinder Singh Gill (supra)
distinguished that case from the case directing repoll. The Court observed
“attractively ingenious and seemingly precedented, argumentum ‘ab
inconvenienti’ has its limitation and cannot override established
procedures”. Whereas vitiated examination was not a case of any particular
individual who was charged and rested on conduct of a vast majority of examinees
at a particular centre, there is no such plurality in vitiated election as the
candidates concerned stand on a different footing from the electorate in
general. The plea of ‘ab inconvenienti’ was, therefore, held
inapplicable, and not giving the notice was taken an infirmity. As observed by
the Court, there may be a parallel in electoral situation if the Election
Commission cancels a poll because it is satisfied that the procedure adopted has
gone away on a wholesale basis.

5. Even in cases of hardship or inconvenience to persons in
general, Courts are generally reluctant to go by such considerations if the
interpretation/action otherwise conforms to the purpose and objective of the
legislation and such difficulties are possible to be taken care of by other
measures. A few decided cases will bring out the judicial approach in the
matter. In Smt. Ujjain Bai v. State of Uttar Pradesh, 1962 AIR 1621 (SC)
the issue was the entertainability of a writ petition challenging the order of
the sales tax officer, which was filed when the appellate proceedings before the
sales-tax authorities were in the midstream. The Court disapproved the argument
‘ab inconvenienti’ of the State. As it is the duty of the Court to
enforce a fundamental right of a party, if any authority has infringed his
rights, considerations based upon inconvenience are, of no relevance”. In a
situation like this, the Court indicated measures to avoid alleged inconvenience
including allowing the petitioner to withdraw the petition with liberty to file
it at a later stage, or, if the party does not agree to withdraw, may adjourn it
sine die till after the remedies are exhausted.

6. Swantraj and Ors v. State of Maharashtra, (supra),
was a case where the issue involved was whether the licence under the Drugs and
Cosmetics Act, 1940 which permitted stocking and selling drugs in a specified
vehicle, covered the brief interval of storage in the godown before loading the
drugs on to the appellant’s van. An argument ‘ab inconvenienti’ was
advanced from the side of the appellant and it was contended that it would be
impossible to furnish the details of very many possible places where for short
intervals drugs may have to be stored awaiting the arrival of the van. Krishna
Iyer, J speaking for the Court, referred to the paramount purpose of the
regulations through licensing as setting in motion vigilant medical watch over
the proper protection of drugs and medicines and held that the objective will be
frustrated if godowns, temporary stores, etc. can be unlicensed. The argument
‘ab inconvenienti’ was held to be affording no answer.

7. In Bengal Immunity Company Ltd. v. The State of Bihar and Ors., (1954) INSC 120, the Court was to decide the constitutionality of inter-state sales tax levied by the State of Bihar in respect of sales made in some other State but delivered in Bihar for consumption purpose. Delivering the dissenting judgment holding it constitutional, J. Das, Venkatararna Ayyer and B. P. Sinha JJ considered, among other, the argument ‘ab inconvenienti’ and disapproved its application. They observed that “even with reference to the inconvenience that might result from the multiplicity of assessment proceedings, it is one which is capable of being removed without disturbing the existing scheme of the Constitution, by Parliament enacting a law constituting an Authority under Article 367 and conferring on it power to receive from the sellers one consolidated statement of all their sales outside their State and determining the precise extent thereof effected in the several States and making that determination final for purposes of assessment by the States. That would, on the one hand, secure to the States the finance legitimately due to them and at the same time, save the sellers from the harassment of multiplicity of proceedings.

8. The  question   as  to  whether   a voluntary income-tax return showing income less than the taxable limit filed on the last day would be a valid return so as to deprive the Department of the power to initiate reassessment proceedings u/s.34(1) of the Income-tax Act, 1922, was decided in assessee’s favour rejecting the Department’s argument ‘ab inconvenienti’. Countering the argument that if the return is held valid, the Department will be drivert to complete the assessment proceedings within a few hours or lose the right to send a notice u/s.34(l), the Court observed that the Income-tax Officer could have avoided the result by issuing a notice u/ s.23(2) and not remaining inactive until the period was about to expire. All laws of limitation lead to some inconvenience and hard cases. The remedy is for the Legislature to amend the law suitably [The Commissioner of Income-tax, Bombay v. V Ranchhoddas Karsondas, 1959 AIR 1154 (SC)].

Debitum in Presenti

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The

‘Debitum in presenti’ refers to the debt which is a present obligation in contradistinction to the debt which may become an obligation in future on the happening of certain event. When a statute mentions ‘debt’ in any context or, where a debt is implied, it refers to ‘debitum in presenti’ i.e., a sum of money which is now payable or will become payable in the future by reason of a present obligation.

2 Existence of an obligation to pay is the essence of a debt. The same may be payable in present in which case it is ‘debitum in presenti, solvendum in presenti’ or payable on future when it is ‘debitum in presenti solvendum in futuro’. Irrespective of the time of payment, an obligation in order to become enforceable debt has to exist in presenti. The debt payable in present may be termed as ‘debt accruing or due’ and one payable in future as ‘debt owing’ but in both the cases they are debt represented by an existing obligation. The Supreme Court of California in People v. Arguello, (1969) 37 calif 524 observed “Standing alone , the word ‘debt’ is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable. If we wish to distinguish between the two, we say of the former that it is a ‘debt owing’, and of the latter that it is a ‘debt due’. Where no obligation exists, it is only a contingent debt howsoever probable and howsoever soon it may become a debt.


3 The significance of ‘debitum in presenti’ may be understood with reference to certain decided cases where the decision depended on existence of debt. The material point of consideration in a such cases was whether an obligation is created or is yet to be created. In Shanti Prasad Jain v. The Director of Enforcement, 1962 AIR 1764 (SC), the appellant had a claim against a foreign company, in settlement of which the company deposited certain amount in the appellant’s account with a foreign bank in India on the condition that the amount can be withdrawn only for the purpose of purchase of machinery from the foreign company after obtaining import licence from the Government. In a dispute arising under FERA, the appellant was charged u/s.4(1) of the Act for giving loan to a non-resident bank in violation of the FERA regulations. The Supreme Court held that there was no present debt owing to the appellant, as the right of the appellant to the amount in deposit in the bank was to arise only on happening of contingency such as grant of import licence. The Court quoted with approval the observations of Lord Lindley in Webb v. Stanton, (1883) QBD 518,




where the point for decision was whether an amount payable by a trustee to the beneficiary in futuro could be attached by a judgment creditor as a debt ‘owing or accruing’. Answering in negative, the Court observed, “I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing; but it must be debt, and a debt is a sum of money which is now payable or, will become payable in the future by reason of a present obligation, debitum in presenti, solvendum in futuro”. It was held that money which may or may not become payable from a trustee to his cestui que trust are not debts.


4 A similar issue arose in Raymond Synthetics Ltd. & Ors. v. UOI & Ors., 1992 AIR 847(SC), where the company issued shares and was required to make allotment within 10 weeks of the closure and refund the excess share application money within 8 days of the company becoming liable to repay. Allotment was made before the expiry of permitted period of 10 weeks and the issue arose whether interest is payable from the expiry of 10 weeks or from the date of allotment. The Court considered the issue together with the provisions of S. 73(1A) of the Companies Act, whereunder in the event of permission not being granted by the Stock Exchange before the expiry of ten weeks from the closure, the allotment is to become void and held that a debt remains contingent till the permission is received or the period of ten weeks is over. In the facts of the case it was held that the debt became due on expiry of 10 weeks.

5.    The issue generally arises in matters of income taxation where there is change of ownership of business or managing agency rights in the middle of the accounting period. In E. D. Sassoon & Co. Ltd. v. the CIT, (1954 AIR 470) where the managing agency was transferred by the appellant before the completion of the definite period of one year service which was a condition precedent to their being entitled to receive the remuneration or commission.

The question arose as to whether the appellant was chargeable to tax in respect of the commission for the broken period up to which they rendered services. It was held that no debt payable by the companies was created in favour of transferor. No remuneration or commission could, therefore, be said to have accrued to them at the date of transfer. Even though they rendered services as managing agents for the broken period, their contribution or parenthood cannot be said to have brought into existence a debt or a right to receive the payment or in other words I debitum in presenti solvendum in futuro’.

6.    Similar issue was decided in Cottons Agents Ltd. Bombay v. CIT Bombay, 1960 AIR 1279 (SC), where answering the question as to whether any income accrued to the transferor from transfer of managing agency agreement before the end of the financial year, the Court observed, “On our view of the managing agency agreement, the commission of the managing agents became due at the end of financial year and that is when it accrued; and there were neither any debt created nor any right to receive payment when each transaction of sale took place.”

7.    An interesting  question  came for decision  in J. Jermons v. Aliammal & Ors., (1999) INSC 275. The tenant in that case was served with a prohibitory order restraining payment of debt due from him to the defaulter viz. the landlord. The tenant in compliances to the notice stopped payment of rent after the receipt of notice. Thereafter, on receipt of notice u/s.226(3), he made payment to the TRO. The landlord sued him for eviction on ground of default in payment of rent to him. Accepting the argument that the rent which became due after the receipt of notice was not a debt covered by the notice, the Court held that the word ‘debt’ in the said prohibitory order is used in the sense that it is ‘debitum in presenti’ or ‘debitum in presenti, solvendum in futuro’. In that sense, rent that would become due and payable in future is in the nature of contingent debt and was not covered by the notice which was good only for rent that had become due up to the date of notice.

8.    The relevance of ‘debitum in presenti’ was elaborately discussed and applied in Kesoram Industries and Cotton Mills Ltd. v. CWT, (1966) 59 ITR 767 (SC). In this case the dividend proposed to be distributed was shown in P & L A/c. but declared at the general meeting held after the close of the year. The question arose as to whether the amount set apart as dividend was a debt owed by the company on the valuation date. It was held that nothing had happened as on the valuation date beyond a mere recommendation of the directors as to the amount that might be distributed as dividend, there was no debt owed by the company on that date. A further question arose as to whether the provision made for taxes in respect of the year was a debt. Even though the judgment was divided, both majority as well as minority decision examined the issue of creation of ‘debitum in presenti’. Whereas the majority decision held that it was a present liability of ascertained amount and, therefore a debt, the minority view was that the liability to pay tax arises only on the 151 day of April of the assessment year and hence was not a debt on the valuation date.

9.    In tax matters ‘debitum in presenti’ is the basis for determining accrual of income and expenditure under mercantile system. The material point is I whether any debt became due to or from the assessee. As held by the Supreme Court in Morvi Industries Ltd. v. CIT, 82 ITR 835 (SC), income accrues when if becomes due. The postponement of the date of payment does not affect accrual of income. The fact that the amount of income is not subsequently received would also not detract from or efface the accrual of the income.

Sub-silentio

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The Word

Literally sub-silentio means ‘under or in silence’.
When used in relation to a finding in a judicial decision, it refers to ‘without
notice being taken or without making a particular point of the matter in
question’ [Merriam-Webster’s Dictionary of Law]. As a doctrine, it determines
the value, as a precedent, of a decision to be followed in other cases.

2. The cardinal rule of ‘Stare Decisis’ requires
standing by the decided cases, upholding precedents and maintaining former
adjudication. The doctrine of binding precedence ensures stability and
uniformity in judicial interpretation and keeps the scale of justice even and
steady without being liable to waiver with every new judge’s opinion. The
question, however, arises as to whether all declarations or conclusions
constitute binding precedents. A decision which is not express and is not
founded on reasons, nor does it proceed on consideration of issues, cannot be
deemed to be a law or authority of a general nature binding as a precedent. Such
a decision is sub-silentio and is deprived of its value as precedent. As
observed by R. M. Sahai J in State of U.P. and Anr. v. M/s. Synthetics and
Chemicals Ltd. and Anr., (1992) 87 STC 289 (SC), “Restraint in dissenting or
overruling is for sake of stability and uniformity, but rigidity beyond
reasonable limits is inimical to the growth of law. Law declared is not that can
be culled out, but that which is stated as law to be accepted and applied. A
conclusion without reference to relevant provisons of law is weaker than casual
observation. In the absence of any discussion or any argument, the order was
founded on a mistake of fact and, therefore, it could not be held to be law
declared”. Overruling its own earlier decision in Synthetics and Chemicals
Ltd. v. State of U.P. and Anr., (1990) 1 SCC 109, the Court held that the
decision fell in both the exceptions viz. the rule of sub-silentio
and being in per incurrium to the binding authority of the precedents.

3. The issue involved in the case was the competency of the
U.P. State Legislature to impose sales tax on industrial alcohol in view of the
Ethyl Alcohol (Price Control) Order, enabling the Central Government to control
its prices. The High Court, following the earlier 1990 decision of the Supreme
Court (supra) held the levy as beyond the legislative competence. In
appeal, it was argued before the Supreme Court that reference to sales tax in
their earlier decision was accidental, in per incurrium and not arising
from the judgment. The levy of sales tax was not in question at any stage of
arguments, nor was the question considered as it was not in issue and the Court
gave no reason whatsoever for abruptly stating that sales tax was not leviable.
Agreeing with the arguments, the Court in 1992 decision held the earlier
decision as not an authority for the proposition canvassed by the assessee.

4. In Armit Das v. State of Bihar, 2000 AIR SCW 2037,
where the issue involved was the crucial date for determination whether a person
is juvenile as per the Juvenile Justice Act. Various decisions were cited to
canvass the view that the crucial date was commission of offence. Disagreeing
with their value as precedent, the Court observed that “a decision not
expressed, not accompanied by reasons and not proceeding on conscious
consideration of an issue cannot be deemed to be a law declared to have a
binding effect as is contemplated by Article 141. That which has escaped in the
judgment is not ratio decidendi. This is the rule of sub-silentio
in the technical sense when a particular point of law was not consciously
determined”.

5. In CIT v. Kanji Shivji & Co., (242 ITR 0124) where
there were conflicting decisions of the Supreme Court itself as to the
applicability of Explanation to S. 40(b) — whether prospective or retrospective
— the Court overruled its own decision in Rasik Lal & Co. v. CIT, (229
ITR 458), which held the explanation as prospective on the ground that in that
case, the explanation was not really an issue. In Chamber of Income-Tax
Consultants v. Central Board of Direct Taxes, (1994) 209 ITR 660, the Bombay
High Court considered the observations of the Supreme Court in Associated Cement
Co. (1993) 201 ITR 435 as to the inclusion of professional services within the
ambit of S. 194 C and held the same as not constituting a precedent when read as
a whole.

6. A decision is the outcome of consideration of the facts of
the case in reference to different related and inter-dependent provisions of
law. A declaration as to the meaning of any word or expression in the statue is
possible on reading the provision as a whole. If, for whatever reason, including
the failure on the part of the party to the proceeding to bring it to the
Court’s notice, the decision is made without consideration of another provision
or aspect of the matter which would have had a material influence on the
outcome, the declaration or conclusion becomes sub-silentio. In
Dhrangadhra Municipality v. Dhrangadhra Chemical Works Ltd., [174 ITR 77 (Guj.)],
where the issue concerned maintainability of suit u/s.72 of the Contract Act for
claiming refund of octroi paid under mistake and reliance was placed on the
Supreme Court decisions in Sales Tax Officer v. Kanhaiya Lal, AIR 1959 SC
135 and D. Cawasji & Co. v. State of Mysore, AIR 1975 SC 813 upholding
such maintainability, the Gujarat High Court did not go by those decisions for
the reason that in these cases the Court’s attention was never invited on that
aspect of the matter which concerned any prejudice or legal injury suffered by
the aggrieved party. The Court cannot be assumed to have spoken on it though it
was never canvassed before it. “Precedents sub-silentio and without
arguments are of no moment”, observed the Court in Divisional Controller
KSRTC v. Mahadeva Shetty, 7 SCC (2003) 199.

7. Courts may sometimes conclusively decide in favour or
against a party because of some legal point which it pronounces upon, ignoring
another point which too should have been decided in favour or against for
arriving at the conclusion reached. In such a case, that point passes sub-silentio
and the decision cannot be an authority so far as the point ignored is
concerned.

8. It is now well settled that a decision is not deprived of
the authority of precedent merely because it was badly argued or inadequately
reasoned. While total absence of argument and consideration vitiates the
precedent, inadequate arguments or consideration do not, unless they miss
something vital to the total outcome in a decision.

levitra

Fictione Legis

‘Fictio’ in old Roman Law was a term of pleading and signified a false averment on the part of the plaintiff which the defendant was not allowed to traverse e.g. an averment that the plaintiff was a Roman citizen, when he was a foreigner, if the object was to give jurisdiction over him [Maine’s Anc. Law Ch. II]. The term, meaning ‘fiction’, therefore, came to be used for those things that have no real essence in their own body but are so accepted in law for a special purpose. In the words of Viscount Dunedin in CfT v. Bombay Trust Corporation, AIR 1930 PC 54, “Where a person is deemed to be something, the only meaning possible is that whereas he is not in reality that something, the Act of Parliament requires him to be treated as if he were”.

2. Fictions in law are created for definite purposes to result in a situation which would not otherwise have resulted and to treat an imaginary state of affairs as real. It is introduced for necessity, generally to avoid inequity caused by mischief made possible under general provisions and concepts of law. In tax laws the object is mainly ‘to prevent mischief arising out of circumvention of normal legal provisions resulting in tax avoidance while remaining within the confines of the law, as also to remove unintended consequences. The introduction of legal fictions thus introduces equity in legislation which is expressed in the maxim, “In fictione legis acquitas exist it” i.e. the legal fiction is consistent with equity. Beyond the purpose for which they are created legal fictions must injure no one as expressed in the maxim ‘fictio legis neminem ladit’.

3. The English law has always abounded in fictions, so are taxation laws in India. The unrestricted operation of treating the imaginary as real has the potentiality of upsetting the whole scheme of legislation and the basic fundamentals of law causing injury to untargeted subjects and areas and thus violating equity. Courts have, therefore, in keeping with the maxim, been cautioning against extending them beyond their legitimate field. The Apex court has repeatedly observed that legal fictions are created only for a definite purpose. They are limited to the purposes for which they are created and should not be extended beyond their legitimate field. [CfT v. Elphinstone Spg. & Wvg. Mills Co. Ltd., 40 ITR 124].

4. In CfT v. Amarchand N. Shroff, 48 ITR 59, the court was to interpret the fiction contained in S. 24B(1) of 1922 Act making a legal representative an assessee in respect of the income which the deceased would have earned had he not died. Attempt was made to extend the fiction to post-death income as well. The court disapproved extending the fiction, the legitimates purpose of which was to tax income earned upto the year in which death took place. As a result, the 1961 Act made a specific provision in S. 168 to cover income upto the date of complete distribution of assets.

5. Commenting on Rule 8 of the Income-tax Rules which apportions the business income of the growers and manufacturers of tea, between agricultural and business income in the context of deduction u/s.80 HHC, the Calcutta High Court in Warren Tea Ltd v. UOf, 236 ITR 492 held that the applicability of the fiction is limited to computation of taxable income from business by apportioning the total business income computed after all deductions and, accordingly, held that since the stage of grant of deduction u/s.80HHC would be at the time before applying Rule 8 and not after apportionment is made, the Rule cannot be extended to computation of deduction u/s.80HHC. On that basis it struck down the CBDT Circular No. 600 dated May 23, 1991.

6. Fictions are suppositions and, unless it is clearly and expressly provided, it is not permissible to impose a supposition on a supposition of law. In Executors and Trustees of Sir Cawasji Jehangir v. CFT, 35 ITR 537, the Bombay High Court was to consider the scope of the jictio juris’ in S. 23A of the 1922 Act under which the undistributed income of the company, as computed in accordance with that provision, was deemed to have been distributed as dividend amongst the shareholders and included in their total income as such. The issue arose that if such income of the company constituted partly of capital gains, should the dividend which is deemed as distributed also be apportioned between capital gains and dividend in the hands of the shareholder. While accepting  that  full effect has to ‘fictio juris’ the court ruled out sub-joining or tacking a fiction upon fiction and observed that there is nothing even remotely suggesting the assessee to identify himself with the company or to assert an equivalence between his income and the income of the company. The argument, if accepted, would amount to imposing supposition upon the supposition of law.

7. Within its legitimate area of application, the fictione legis has to have its full effect. The question of chargeability of interest u/s.234B and u/s.234C came for consideration before the Gauhati High Court in Assam Bengal Carriers Ltd v. CIT, 239 ITR 862. Brushing aside all the arguments based on the impracticability of estimation of income before the book profit is arrived at, the Court directed full effect to be given to the fiction contained in the provision with its obvious fall out. Observing that, where fall out of the fiction leads to an obvious inference, there can be no half way house, the court held S. 234B & S. 234C applicable even in case where income is determined u/s.115JB. They quoted with approval the following observations of Lord Asquith in East End Dwellings Co. Ltd v. Finsbury Borough Council, (1951) 2 All ER 587 (HL) which was also relied upon by the Bombay High Court in the case of Executors and Trustees of Sir Cawasji Jehangir (supra).

“If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real, the conse-quences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it”.

The Supreme Court, however, in CIT v. Kwality Biscuits Ltd., 284 ITR 434 disapproved the judgment of the Gauhati High Court on a different ground of the impracticability of arriving at the total income before arriving at the ‘book profit’.

8. In a recent judgement delivered by the Special Bench of the Ahmedabad Tribunal in Assistant Commissioner of Income-tax v. Goldmine Shares and Finance P. Ldt 302 ITR (AT) 208, the Tribunal  considered the fiction contained in S. 80IA(5) which bids one to treat the eligible business as the only source of income of an undertaking. Applying the observations of Lord Asquith (supra), the Tribunal took note of the consequences and incidents flowing from it and held that the profit from the eligible business for the purpose of deduction u/s.80IA has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years.

9. Fictions are generally by way of deeming provisions where imaginary or unreal state of affairs is deemed to exist in the presence of certain facts. Income-tax Act abounds in deemed provisions in which, all are not restricted to imaginary state only. Deemed provisions are sometimes used to give an artificial construction to a word or phrase that would otherwise not prevail. A clear example is to be found in the provisions of S. 2(22)(e) of the Act deeming advances to specified persons as dividend to shareholders. The Act defines ‘Income’ in an inclusive manner including receipts of the nature which would not otherwise be taken as such. They are also used to put beyond doubt a particular construction that might otherwise be capable of different interpretation. One may refer to the provisions of S. 9 which deems certain income as accruing or arising in India to keep them outside the pale of uncertainly. We have fiction in S. 45(3) and S. 45(4) to avoid unintended situation legalised by courts decisions and S. 115 JB to partly neutralise the impact of various tax incentives and thus introduce horizontal equity. All these provisions involve some digression from the normal provisions and the concepts in tax law. The peculiar sense in which the provision is employed has to be judged in the light of the scheme of the section and the context in which deeming is made.

10. Fictions in law, therefore, give completeness to the scheme of law and the intention of the legislature.