Sunday, February 04, 2007

K.Kannan, Editor, Madras Law Journal with R.Yashod Vardhan,

Advocates, Madras High Court

The law must be stable, but must not stand still’, said an eminent US Jurist, Roscoe Pound. The march of law is forever a forward progression. Law obtains refinement only through lawyers’ oration and judges’ pen. The year 2006 has seen significant strides in the realm of law. We take pleasure in presenting this subject after a let-up for quite a few years. However, there is no pretension to digest all the case laws; we have limited our observations to footprints left behind by Supreme Court of India and the Madras High Court alone seen through the prism of the issues of the Madras Law Journal.

Of the Madras High Court judgments, there is a deliberate restrictive ring that we have drawn for ourselves by treading mostly on Bench decisions of the High Court. The salutary rule of stare decisis is: What has once been settled by a precedent will not be unsettled overnight, for certainty and uniformity are gains not lightly to be sacrificed.’ (Cardozo in The Paradoxes of Legal Science [1928]). There is no greater guarantee for strongly laid foundation than pronouncements from larger Benches. Resolving inconsistencies or vagueness in judgments through authoritative pronouncements by constituting Full Benches have been realized in full measure in the year 2006.

Arbitration and Conciliation Act

Can the time taken by a party in prosecuting bona fide his remedy before a court which has no jurisdiction be excluded for the purposes of computing the period of limitation prescribed for setting aside an award under Section 34 of the Arbitration and Conciliation Act 1996? The Supreme Court in State of Goa vs Western Builders (2006) 3 MLJ 97 (SC) held that Section 43 of the Act made the provisions of the Limitation Act applicable to arbitrations as it would apply to proceedings in court. Under Section 34 by virtue of sub section 3 the application for filing and setting aside an award would have to be preferred within three months and the delay can be condoned to the extent of 30 days. By virtue of sub section 2 of Section 29 of the Limitation Act, the applicability of Section 5 of the Limitation Act would stand excluded to that extent. However, the operation of Section 14 of the Limitation Act which provides for exclusion of the period spent bona fide in prosecuting remedy before a court without jurisdiction has not been excluded. Since there is no prohibition provided under Section 34 of Arbitration and Conciliation Act for the application of Section 14 of the Limitation Act and the statute is silent, the two acts can be read harmoniously to advance the cause of justice. The provisions of Section 14 of the Limitation Act have been held applicable to proceedings under the Arbitration and Conciliation Act.

In San-A Trading Co Ltd v I.C. Textiles Ltd (2006) 3 MLJ 154 (SC), the court considered whether arbitral proceedings against a sick industrial company can be proceeded without getting the consent of BIFR as provided in Section 22 of the Sick Industrial Companies (Special Provisions) Act 1985. Section 22 specifies certain types of proceedings, which would come within its purview. Only proceedings, which have the shape and effect of coercive nature, would fall within the ambit of Section 22. Arbitral proceedings being neither a suit nor coercive proceedings would not fall within the ambit of Section 22 of SICA and can be proceeded with without the consent of BIFR.

Acquisition Laws:

The normal principle that proceedings against dead persons are null and void is not without exception. If the proceedings are in the nature of judicial or quasi-judicial proceedings, an order passed against a dead person is a complete nullity. Observing that a distinction was always maintained between judicial/quasi judicial proceedings and other proceedings, the court in G.S. Gopalakrishnan and others v Government of Tamil Nadu and others (2006) 4 MLJ 65 held that the above principle cannot be imported to proceedings under the Land Acquisition Act, 1894 unless it is established that the factum of death was brought to the notice of the acquiring authorities at the appropriate stage. The liability of the acquiring authority to serve a notice of enquiry was held to be restricted only to persons whose names are found in the revenue records and the acquiring authorities were not obliged to conduct a roving enquiry to find out if the patta holder was dead or alive. For the same reason, want of notice to the son, who claimed right to the acquired land, when notice had been sent to the father in whose name the revenue entry stood was held not to vitiate acquisition in N.Vasanthi v The District Collector, Dindigul Mannar Thirumalai District (2006) 1 MLJ 472.

The scope and ambit of Section 48-B of the Land Acquisition Act was considered in R.Shanmugam & others v State of Tamil Nadu rep by its Secretary, Housing and Urban Development, Chennai & others (2006) 4 MLJ 805. Holding that the provision was unique and that the very object of introducing the same was to enable the State Government to re-convey the unutilised lands to the erstwhile owners subject to the conditions enumerated in the Section, the Division Bench that the mere fact that the erstwhile owners had received compensation and handed over possession cannot prevent them from making a request to the government seeking re-conveyance. In the event the government is of the opinion that the lands are not required for any public purpose then it must consider re-conveyance under Section 48-B. It is only when the government is of the view that the lands cannot be re-conveyed that the lands may be disposed by public auction. The court also cautioned that the exercise of the power cannot be mechanical and the discretion must be exercised on fair and reasonable grounds.

What is the proper course of action to be followed by a District Collector in disbursement of compensation when confronted with rival claims in respect of an acquisition under the Tamil Nadu Highways Act was the issue considered and decided in P. Ramakrishnan & another Vs District Collector, Kancheepuram & others (2006) 4 MLJ 1046. Observing that Section 21 (2) did not prescribe as to who would be entitled to claim compensation, the Bench ruled that the District Collector was not obliged to go into the niceties of the rights conferred by the Transfer of Property Act but merely referred the dispute for decision of the court.

Should there be a written request for higher compensation for acquired land? A conduct that unmistakably signifies protest or expression of dissatisfaction without there being anything in writing is sufficient for reference under section 18 of the Land Acquisition Act, according to Steel Authority of India Limited, Salem Steel Plant, Salem represented by its Chief Engineer – Project v Salem Urukkalai Thittathal Nilam Ilanthor Sangam (2006) 1 MLJ 252.

It was a restatement of the established law when the Court held that land acquisition could not be challenged after the award is passed, vide R.Somasundaram and others v State of Tamil Nadu (2006) 1 MLJ 89; Ayyadurai v Special Tahisildar, Adi Dravida Welfare (2006) 1 MLJ 561.

Banking Laws:

In Indian Bank v ABS Marine Products Pvt Ltd., (2006) 4 MLJ 870 (SC), the Supreme Court considered the question whether the Recovery of Debts due to Banks and Financial Institutions Act bars the borrower/ defendant from filing a separate suit or proceeding before a civil court or other appropriate forum. The court clarified that in the earlier decision in the United Bank of India, Calcutta v Abhijit Tea Company Pvt Ltd the court had directed the transfer of the defendant’s suit since the subject matter of the bank’s suit and the defendant’s suit were inextricably connected and the bank agreed for the independent suit to be considered as a counter claim in its suit. The court ruled that making a counter claim was only an option and a defendant having an independent claim against the bank can maintain a suit before a civil court and his suit before a competent civil court cannot be transferred to DRT against his wishes.

A suit was filed by the bank only against the guarantors. The guarantor undertook under the guarantee bond executed to pay and satisfy the bank on demand the sum owing to the bank. The question that arose was as to when the limitation in such a case would begin to run. The Supreme Court in Syndicate Bank v Channaveerappa Beleri & others (2006) 3 MLJ 5(SC) held that the meaning attached to the phrase “on demand” would not be one of universal application. Article 21 of the Limitation Act provides that for money lent under an agreement that it shall be payable on demand, the period of limitation begins to run when the loan is made. However, in Article 22 when money is deposited under an agreement that it shall be payable on demand, the period will begin to run when the demand is made. In the context of Article 21, the meaning of the words “payable on demand” would mean payable from the moment when the loan is made and demand is not a condition precedent. In the context of the Article 22 it would mean “payable when actually a demand for payment is made”. In the context of the guarantee the right to sue accrued when the demand for payment was made by the bank and refused by the guarantors. The court however observed that when the demand is made by the creditor on the guarantor under a guarantee which requires a demand as a condition precedent for the liability of a guarantor, such demand should be made when the sum is legally due and recoverable from the principal debtor. If the debt is barred by limitation at the time of the demand, the guarantor will not be liable. However, where the guarantor becomes liable in pursuance of demand made in time, the creditor can sue the guarantor within the period of three years even if the claim against the principal debtor becomes time barred in the interregnum between the demand and the filing of the suit against the guarantor. It would normally apply to a promissory note or bill of exchange which are payable on demand

Civil Procedure Code

Is a civil court powerless to set aside an order permitting withdrawal of a suit when the plaintiff by mistake had not sought for leave to file a fresh suit on the same cause of action at the time of withdrawal. Holding that in the absence of a specific provision in the CPC, the inherent power of the court can come to its aid to act ex debito justitiae for doing real and substantial justice between parties, the Supreme Court in Jet Ply Wood Private Ltd and another v Madhukar Nowlakha and Others (2006) 2 MLJ 433 (SC) ruled that an application can be filed for recalling the order permitting withdrawal of the suit and the exercise of inherent power by the civil court in ordering restoration was lawful.

A Division Bench of the High Court in Jayaprakash v Most Rev Dr. B.P. Sugandher (2006) 3 MLJ Page 42 had occasion to consider whether a petition invoking sections 10 & 12 of the Contempt of the Courts Act would lie for punishing persons for violating interim orders passed by the City Civil Court, Chennai. The High Court held that the remedy provided under Order 39 Rule 2A is equally effective and efficacious and unless and until the party concerned is able to show that the remedy provided in the Code will not be effective and further the injury and public interest which have been affected are of such a nature that it would require the consideration of the High Court, the High Court will not exercise its extraordinary jurisdiction and entertain an application under Section 10 read with Section 12 of the Contempt of the Courts Act.

A consent decree is nothing but a contract between parties that has the seal of approval of the court. The only remedy available to a party to a consent decree to question the same is to approach the same court and establish that there was no compromise. In view of the specific bar under Section 96(3) CPC, an appeal is not maintainable. An independent suit is also not maintainable, and until set aside, the consent decree will be valid and binding. The Supreme Court in Pushpa Devi Bhagat (deceased) through LR v Rajinder Singh and others (2006) 3 MLJ 258 (SC) laid down that just as a power of attorney holder can enter into a compromise on behalf of the principal, the counsel with a valid authorization can also so act and the phrase ‘signed by the parties in Order 23 Rule 3 will also include a compromise signed by the counsel. The court however cautioned that it will be prudent for a counsel not to act in such cases except when the circumstances warrant immediate adjustment and the signature of the party cannot be obtained without undue delay. The primacy of consent terms in an agreement would even override a clause for arbitration mentioned in the earlier partnership deed, said the High Court in Dr.Rajendran v Rama Chidambaram and others (2006) 3 MLJ 924 and a suit claim made based on compromise agreement cannot be non-suited by reference to the arbitral agreement.

While dealing with the powers of the executing court under O.21 Rule 64 CPC, the Supreme Court pointed out that the expression “necessary to satisfy the decree” cast a duty of care upon the Court to sell only such property or portion thereof as is necessary to satisfy the decree. If the sale is held without examining the aspect and not in conformity with the mandatory requirement, it would be illegal and without jurisdiction (2006) 2 MLJ 289 (SC).

In a case arising under the Original Side rules (Calcutta) and the new dispensation under the Civil Procedure Code (5of 1908) Sec.26, O.VI, O.VII, Amendment Act 46 of 1999 for filing an affidavit verifying facts in plaint filed, the Supreme Court in Vidyawati Gupta v Bhakti Hari Nayak (2006) 2 MLJ 312 said that the effect of failure to file the affidavit along with the plaint and the subsequent filing of affidavit would not invalidate or render non-est the institution of suit.. Filing of verifying affidavit subsequently cures the presentation and dates back to the date of original date of filing.

It was a reaffirmation of settled law when the Supreme Court said in (2006) 2 MLJ 206 (SC) that the court disposing of an application for interim Injunction cannot merely direct status quo to be maintained without specifying what the status quo is. The practice however, never dies with subordinate courts: to a lawyer who cannot convince the judge for injunction or stay, an order of status quo is a face saving weapon handed to a client; for a judge who cannot take a decision one way or other, it is a device for quick exit from the case!

Limitation for an application by auction purchaser for delivery of possession of property starts from the date of sale becoming absolute rather than the date of issuance of sale certificate. On the failure to avail such quick remedy the law relegates to the remedy of regular suit for possession based on title, subject again to limitation This judgment of the Supreme Court in (2006) 2 MLJ 290 (SC) settles the doubt that a remedy by way of suit will not be lost by failure to take action for execution within the stipulated period of one year after sale under Art 134 of the Limitation Act.

Companies Act

Section 48 of the Transfer of Property Act contains provisions regarding priority of charges. The claim of the first charge holder is to prevail over the claim of the second charge holder and the first charge holder is to be re-paid first. Sections 529 and 529 A of the Companies Act which deal with rights of secured creditors etc in winding up of insolvent companies do not deal with the issue of priority of claims amongst secured creditors. In the absence of a provision in the special law, namely Companies Act dealing with the issue, the rule laid down in the general law will prevail, the Supreme Court held in ICICI Bank Ltd vs SIDCO Leathers and others (2006) 3 MLJ 276 (SC). Parliament could not have intended to deprive a person’s valuable right to recover money by enforcing a mortgage by insertion of non obstinate clause, in Section 529A. The court held that the inter se priority among secured creditors will b e governed by the provisions in Section 48 of the Transfer of Property Act.

A suit filed by a bank against the principal debtor, a company and the guarantors was stayed by the trial court on the ground that the company had been ordered to be wound up. The application filed by the bank under Section 446(1) of the Companies Act seeking leave to proceed with the suit was resisted on the ground that such an application had become time barred as it was governed by Article 137 of the Limitation Act which provided a period of limitation of 3 years from the time the right to apply accrues in respect of application for which no period of limitation is provided in that part. The Supreme Court in Harihar Nath vs State Bank of India held that neither the Companies Act nor Rules prescribed a period of limitation. Article 137 of the Limitation Act was intended to apply to applications for enforcement of a claim or adjudication of a right or liability in a court. An application for leave to proceed with a pending suit or proceeding, not being such an application will not be governed by Article 137. It was also observed that the application seeking leave was only interlocutory in nature and interlocutory application are not subject to any period of limitation unless specifically provided by law.

Constitution of India

Power of Judicial Review:

Emphasizing that the court was the sentinel on the qui vive and cannot remain a silent spectator to the subversion of the Constitution a Constitution Bench of the Supreme Court in a 3:2 verdict in the case of Rameshwar Prasad and others v Union of India and another (2006) 2 MLJ 67 (SC). While examining the constitutional validity of the notification ordering dissolution of the Legislative Assembly of the State of Bihar held that under no circumstances can the action of a Governor be stated to be bona fide.

When it is intended to prevent a political party to stake claim for the formation of government, while holding that the personal immunity enjoyed by the President and Governor are complete and they cannot be made answerable to court even in respect of charges of mala fides, the court however ruled that the power of the court to examine the validity of the action including on the ground of mala fides was not taken away. When such a challenge arises, it will have to be defended by the Union of India or the State and it would not be open to them to plead the grant of immunity as a ground for not answering the contentions raised. Observing that apart from the ipse dixit of the Governor, there was no cogent material upon which the satisfaction of the Governor was based the court held that the Governor cannot refuse formation of Government and override the majority claim on his subjective assessment that the majority was cobbled by illegal and unethical means. The Governor was not an autocratic political ombudsman who could not against democratic principles of majority rule. Despite holding that the proclamation was unconstitutional, the court did not direct status quo ante. In view of the fact that fresh elections had been ordered and the process was under way.

State Election Commissioner- Term of Office

The Constitutional validity of the Tamil Nadu Panchayats (second Amendment) Act, 2005 in terms of which the State Election Commissioner was eligible for reappointment without any limit of terms and without any age limit was considered by the High Court in S.R. Balasubramaniyan v State of Tamil Nadu (2006) 2 MLJ 244 striking down the said provisions, the court ruled that public interest demanded that age of retirement be prescribed for public services. The conferment of power on the Government to appoint a retired civil servant of any age for any number of terms was neither reasonable nor rational and was thus violative of the scheme and policy of the Constitution.

Public Services

A Constitution Bench of the Supreme Court in Secretary, State of Karnataka and others v Umadevi and others (2006) 2 MLJ 326 (SC) has considered the power of the High Court to issue orders for absorption, regularization etc of persons in public employment. Holding that the constitutional scheme of public employment, envisaged equality of opportunity, the court ruled that recruitment to any service in the State of Union was governed by the Acts, Rules and Regulations framed to implement the constitutional guarantees. The executive or the court would have only the right to regularize such appointments that are made after following the due procedure and the right would not extend to directing permanency or absorption in respect of an appointment made in violation of the rules and the constitutional scheme. Unless the appointment was in terms of the relevant rules and after a proper competition among qualified persons, no right will be conferred on the appointee. Persons appointed on daily wages or casual or contract basis cannot claim absorption or permanency unless the original appointment was made in accordance with rules and after due process of selection. Cautioning that any directions to regularize such irregular or illegal appointments would be negation of the principle of equality of opportunity and would amount to perpetuating an illegality, the court held that it would not be just or proper to pass an order in exercise of jurisdiction under Article 226 or 32 of the Constitution or in exercise of power under Article 142 permitting such persons engaged to be absolved or made permanent. The court however clarified that the Government or their instrumentalities may as a one time measure take steps to regularize the services of irregularly appointed persons and not illegally appointed persons if they have worked for ten years or more in duly sanctioned ports but not under cover of orders of courts or tribunals

Candidates submitting applications for appointment to public services pursuant to notification by the Public Service Commission of the State are supposed to go through the notification, instructions to the candidates, information brochures and the application form carefully to ensure that the particulars and information required to be furnished are duly furnished and to see that the documents are enclosed along with the application form as per the requirements. These have the force of law and have to be strictly complied with and the terms and conditions cannot be relaxed unless such power is specifically provided to any authority. The court in exercise of the powers under Article 226 will not make any modification/relaxation to the said terms and conditions. Holding thus, the High court in Dr. M. Vennilla v Tamil Nadu Public Service Commission represented by Deputy Secretary, Chennai & others in (2006) 3 MLJ 376 refused to interfere with the decision of the commission in rejecting applications that had not been authenticated by candidates by affixing of signatures.

Adverting to the scheme of reservation in the Constitution, the Supreme Court said in Anjan Kumar v Union of Indian and others (2006) 2 MLJ 1 (SC) that the off shoots of the wedlock of a tribal woman married to a non-tribal husband of forward class (Kayastha in the present case) cannot claim scheduled tribe status. The impact of obtaining a false certificate and obtaining appointments from the reserved quota, the Supreme Court said, would have far-reaching grave consequences.


The High Court in Minor Nishanth Ramesh vs State of Tamil Nadu (2006) 2 MLJ 382 struck down the Tamil Nadu Regulation of Admission in Professional Courses Act, 2006. The Act which dispensed with common entrance test for State Board students bit introduced common entrance test for students of other Boards as eligibility test for admission to professional colleges in State of Tamil Nadu was held to make an invidious discrimination between State Board students and students of other boards. It was not permissible to determine the interse merit on the basis of two separate examinations – one the qualifying exam for State Board students and the other, the Common Entrance Test for non State Board students. The Act was thus violative of the principle of equality guaranteed by Article 14 of the Constitution. The Act was also held to be impinging upon the field occupied by the Central law, i.e. MCI Regulation and AICTE Regulations, which mandated an entrance exam in any State having more than one Board/University. The State, it was held had no legal competence to enact the law and it was also not saved by Article 15(5) of the Constitution.

Government’s preference under Rule 16 of Tamil Nadu Medical Subordinate Service Rules to Government Nursing School students for appointment in Government service, excluding students or private Nursing schools was held in (2006)2 MLJ 787 arbitrary, illegal and violative of Art. 14 and 16 of Constitution of India.

Minority Status

The primacy of the function to notify minority status to a community shall lie with the government and not with courts. Consequently, a writ petition seeking a direction from Court to the Central Government to notify ‘Jains’ as a ‘minority’ community was held to be not maintainable. The Supreme Court said in (2006) 2 MLJ 186 (SC). It said that in view of verdict in 2002 (8) SCC 481, unit for determining status of both linguistic and religious minorities would be the ‘State’; Statistical data cannot be the sole criterion to show that a community is in a minority. However, it is for the Central Government alone, on its assessment to accept or reject the claim. The Court cannot issue a mandate or direction in this regard.

Freedom of Press and pre-publication restraint

Freedom of speech is perhaps the most cherished of the fundamental rights in the progress of humankind. Precious lives have been sacrificed in defending this right. Press as a strong pillar of the fourth estate epitomizes the need for free expression for articulating and shaping public opinion. A Chief Minister of a State and her friend filed a suit against the Editor, Printer and Publisher of a Journal seeking an injunction and damages for publishing defamatory articles and further restraining them from publishing in future matters of a defamatory nature without prior permission of the plaintiffs. The trial court granted a limited interim injunction against publication of private life without prior verification. On appeal by the Editor, the Bench held in R.Rajagopal v J.Jayalalitha (2006) 2 MLJ 689, quoting American precedents that ‘Some degree of abuse is inseparable from the proper use of everything; and in no instance is this more true than in that of the press…We create a grave risk of serious impairment of the indispensable service of a free press if we saddle the press with the impossible burden of verifying to a certainty of facts associated in new articles with a person’s name, picture or portrait, particularly as related to non-defamatory matter.’ The case was heard in depth, as the court said that the ‘case would have direct bearing on the claims of right of privacy by public figures as against the right of the press to publish and write about such public figures.’ The Court further said that the interim order granted by the Trial judge is a blanket injunction virtually amounting to a gag order or censorship of the press. Such censorship cannot be countenanced in the Scheme of the Constitutional framework. Even assuming that the article published by the press in question amounted to a character assassination of the respondents, there is no justification for granting a blanket injunction. ‘In a free democratic society those who hold office in Government and who are responsible for public administration must always be open to criticism. Any attempt to stifle or fetter such criticism amounts to political censorship of the most insidious and objectionable kind.’ A word of advice from the Bench was that persons holding public offices must not be thin-skinned and ‘ignore vulgar criticism and abuses hurled against them and they must restrain themselves from giving importance to the same by prosecuting the person responsible for the same’. Rejecting the plea of prior verification before publication in all matters, it restricted its use against the press to matters ‘purely concerning the personal life of a person’, but it cannot be compelled to publish alongside the version of the official about whom the article is written.

Writ jurisdiction and Co-operative Society

The law is not so much carved in stone as it is written in water, flowing in and out with the tide’, said Jeff Melvoin. Even the strength of judicial opinion expressed by a 5 member bench in M.Thankkachalam v Madhuranthagam Agricultural Co-operative Society (2001) 1 LLJ 285 about the non-maintainability of writ was not to be left alone to hold the field without doubt and a Bench of co-equal strength in K.Marappan v Deputy Registrar of Co-operative Societies (2006) 4 SCC 641 did exactly that for good reasons! It said that bye-laws made by a Co-operative Society under the Tamil Nadu Co-operative Societies Act, 1983 do not have the force of law. Hence, it said, where a Society cannot be characterized as a State (refer: Ajay Hasia v Khalid Mujib Sehrewardi 1981 (1) LLJ 103 (SC)), the service conditions of its employees governed by its bye-laws cannot be enforced through a writ petition. It said the previous 5 member bench decision is no longer good law in view of the decision of the seven Judge Bench of the Supreme Court in Pradeep Kumar Biswas v Indian Institute of Chemical Technology 2002 (5) SCC 111. However, it still carved scope for judicial intervention in a case to enforce a statutory public duty cast upon the Society. In such a case, it said, ‘it is unnecessary to go into the question whether the Society is being treated as a ‘person’ or an ‘authority’ within the meaning of Article 226 of the Constitution and what is material is the nature of the statutory duty placed upon it and the Court will enforce such statutory public duty. Although it is not easy to define what a public function or public duty is, it can reasonably be said that such functions are similar to or closely related to those performable by the State in its sovereign capacity’.

Consumer Law

It is a fastidious consumer world, and why not, when the money paid for the product is huge? The owner of a ‘Maruti’ car that had a defective clutch system claimed a direction for taking back the car and for repayment of whole cost of the car supplied to him with interest. The State Commission and the High Court granted the reliefs but the Supreme Court in the appeal filed by the car manufacturer in Maruti Udyog Ltd v Slusheel Kumar Gabgotra and another (2006) 2 MLJ 437 (SC) set aside the orders and reading the warranty conditions in contract of sale, found that it did not provide for replacing the car or refunding the car price for manufacturing defects. In effect, it gave primacy to contract conditions and ordered the replacement of defective clutch assembly and payment of costs.


The vires of the policy of the Government in vogue for over two decades in taking into account the marks obtained in certain subjects in the Plus Two examination along with the qualifying marks in the common entrance exam for admission to MBBS/BDS courses was challenged in Minor S.Janani vs State of Tamil Nadu (2006) 3 MLJ 936. Holding that the policy did not go against the MCI Regulations, the High court observed that the policy had not been demonstrated to have affected the student community. The policy was within the competence of the State Government as it had the power to make rules for admission which were not inconsistent with the standards prescribed by the Union Government in exercise of its powers under Entry 66 of List I.


Section 146 of the Motor Vehicles Act mandates that no motor vehicle can be used in a public place without a policy of insurance complying with the requirements of chapter 11. Section 149 casts a duty on the insurer to satisfy the judgment and award against persons insured in respect of third party risks. The statutory liability under the Workmen’s Compensation Act is on the employer and not on the insurance company. There is no right conferred on the claimant to claim the payment of compensation from the insurer. Section 17 of the Act nullifies contracting out. The Section only prohibits a contract whereby a workman relinquishes any right of compensation for personal injury arising out of or in the course of employment. It does not prohibit the employer and the insurance company from entering into a contract whereby the obligation of the insurance company stands limited. Taking this view, the Supreme Court in New India Assurance Co Ltd v Harshadbhai Amruthbai Modhiya and another (2006) 4 MLJ 156 (SC) upheld the contract between the insurance company and the employer whereby the insurance company was specifically excluded from meeting the liability towards interest or penalty.

Labour & Service

The liability of the employer to compensate the workman for personal injury is restricted to accidents arising out of and in the course of employment of the workman. There has to be a causal connection between the death and the nature of employment. Holding that it is not every death at the work spot that would render the employer liable, the Supreme Court in Jyothi Ademma v Plant Engineer, Nellore and another (2006) 4 MLJ 154 (SC) held that liability can be fixed upon the employer only in cases where the employment is a contributory cause or has accelerated the death or if the death was due not only to the disease but also the disease coupled with the employment. The employer was absolved of liability in that case since the factual finding was that the death of the workman at the work spot due to heart attack had no causal connection with the employment, the nature of the job being such that there was no scope for stress or strain in the duty. The result may seem to flow from a factual finding as to whether heart attack is precipitated by work or not, since the High Court Bench in Management of Pachamalai Estate, Valparai v Smt. Mani (2006) 4 MLJ 1753 refused to interfere with the finding of the Commissioner and the Single judge that the death of a workman due to strenuous nature of work gave room to claim for compensation by his legal representatives.

The Supreme Court in V.Ramana v APSRTC and others (2006) 2 MLJ 162 (SC) would post an extracting standard of probity for persons holding trust, such as when a conductor of bus who does not collect fares or the correct amount is inflicted with the punishment of removal from service would not be subject to judicial review.

The law relating to compassionate appointment is in a way exception to normal rules of appointment relating to public service to relieve the family of its distress from the unexpected loss of its breadwinner. Rigors of entry on the ground of want of educational qualification cannot stand in the way. In the decision reported in (2006) 2 MLJ 200, the petitioner’s father, a helper in Educational Board died and the wife pleaded for employment to her daughter on compassionate ground. The Board rejected her request on the ground that she did not educational qualification. The High Court said that for the post of a sweeper no educational qualification was required and directed appointment. Relaxing the rigors of law in yet another case relating to a claim for refund of medical expenses for treatment in a hospital which was not notified by the employer as an approved hospital, the High Court said (2006) 2 MLJ 747 that the object of the scheme was to give financial support to the deserving persons who contributed towards the scheme and if the medical treatment was true and necessary, reimbursement of medical expenses ought to be given.

There is good news for employees of minor (?) deviant conduct for, it has been held in Manager, Public and Industrial Relations, Nuclear Power Corporation, Madras Atomic Power Station, Kalpakkam v P.Chinnaswamy (2006) 2 MLJ 188 that an employee who weds bigamously shall not face disciplinary action by removal from service, if bigamy is not an enumerated misconduct in the Standing Orders and a workman that is terminated would be entitled to reinstatement,. Another judge has said, dealing with matrimonial wrong of a husband seeking for divorce against the wife complaining of adultery, that acts adultery must be subsequent to marriage and acts prior to marriage are of no avail, vide Arokia Raj Morais v Mrs. Mabia Bibia Rani Morais and others (2006) 2 MLJ 537.

Landlord and Tenant

Rent Control Law

The constitutionality of Section 4 of the Tamil Nadu Buildings (Lease and Rent Control Act) prescribing the methodology of fixation of fair rent and Section 5 that prohibits further increase of the fair rent fixed except under certain circumstances was challenged in a bath of writ petitions. Repelling the challenge, the High Court in T.V. Angappan and another v State of Tamil Nadu and others (2006) 3 MLJ 1073, held that Article 14 does not authorize striking down of a law of one State on the basis of a comparative study of the provisions of enactments in different States. The scheme of Sections 4, 5 and 6 is such that a balance is maintained and fixation of fair rent is thus a fair return on a percentage of the total cost of the building. It is not solely dependent on the market value of the site and various relevant factors that are taken into account under the Section immune from the vice of arbitrariness. Likewise Section 5 is not arbitrary as it provides for refixation of fair rent depending on the improvement, addition or alteration made to the building.

Tenants who have but acquired the proprietary rights in the demised property only of some co-owners do not cease to be tenants and there could be no extinguishment of lease upon such acquisition of interest, as laid down by a three member Bench of the Supreme Court in Pramod Kumar Jaiswal and others v Bibi Husn Bano and others (2006) 2 MLJ 372 (SC).. There would be no termination of jural relationship of tenancy, unless the interest of lessor in whole of property becomes vested in the lessee.

Should the Rent Controller, while determining market value of the land for fixing fair rent of a premises use as basis the guideline value as contained in the revenue records or the market value as per the sale deeds executed at the relevant point of time. Holding that the guideline value contained in the Basic Valuation Register maintained by the Revenue Department or municipality was for the purpose of collecting stamp duty and had no statutory force, the Full Bench in Sakthi and Company v Shree Desigachary (2006) 2MLJ 295(FB) held that evidence of bonafide sales between willing prudent vendor and prudent vendee of lands nearly that possess same or similar advantages would furnish the basis to determine market value of the land.

A lease by a second wife, who has no legal status as a legitimate wife, will not enable her tenant to deny the maintainability of eviction petition, especially when the first wife had also died, if the tenant had been inducted in possession by the second wife, on the principle of estoppel, said the Supreme Court in Bhogadi Kannababu and others v Vuggina Pydamma and others (2006) 3 MLJ 105(SC)

Tamil Nadu City Tenants Protection Act

Will the vested rights of a tenant upon obtaining an order in an application under Section 9 of the Tamil Nadu City Tenants Protection Act, 1921 against the landlord religious institution be taken away by Section 3 of the Amendment Act of 1996 granting exemption to religious institutions from the purview of the Act was the subject matter of reference to the Full Bench in Arulmigu Kasi Viswanathaswamy Devasthanam by Fit Person v M.Kasthuriammal (2006) 2 MLJ 281 (FB). The trial court had directed the religious institution to execute the sale deed in favour of the tenant on 9.1.1996. The Amendment Act which was notified on 11.1.1996, was applicable only to proceedings that were pending before any court on the date of publication of the Act and where decree or order had not been executed or not satisfied in full. The High Court ruled that the scheme of the Act was that the court would first determine the minimum extent of land required, followed by fixing of the price and direction to tenant to deposit the same into court. The last step was the order directing conveyance by the landlord whereupon the suit or proceedings would stand automatically dismissed. As this had been done before the Amendment Act was notified, the order dated 9.1.1996 was not affected by the Amendment Act. The court also observed that upon deposit by the tenant of the price determined by the court, the order was satisfied in full. The court held that both the conditions stated supra for the applicability of Amendment Act were not satisfied and hence the vested right of the tenant to obtain the sale deed was not taken away by the Amendment Act

Matrimonial jurisdiction:

Indian law of Divorce is still based on theory of fault, except in cases of consensual dissolution cases by joint application of spouses. Even when the petition had not been filed for divorce by mutual consent, the Supreme Court, while dealing with a transfer petition from the Family Court directed a petition before the Family Court could be treated as a joint petition for divorce by mutual consent, in Manjula v K.R.Mahesh (2006) 3 MLJ 296 (SC). Pointing out to the highest evidentiary value of registration of marriages, the Supreme Court noted in Smt. Seema v Ashwani Kumar (2006) 2 MLJ 15 (SC) that except in four statutes applicable to States of Maharashtra, Gujarat, Karnataka, Himachal Pradesh and Andhra Pradesh, registration of marriages was not compulsory in any of the other States and hence directed the States and Central Government to notify compulsory registration of marriages within 3 months. It hoped that compulsory registration of marriages would be a step in the right direction for the prevention of child marriages still prevalent in many parts of the country.

In our considered opinion”, the Supreme Court observed in Naveen Kohli v Neelu Kohli (2006) 2MLJ 241(SC), “the Legislature must consider irretrievable breakdown of marriage as a ground for grant of divorce under the Hindu Marriage Act.” Though it is the obligation of the court and all concerned to preserve a marriage, it would be unrealistic, when the marriage has broken down beyond repair, to not take notice of the fact. By refusing to sever that tie, the law does not serve the sanctity of marriage and only shows scant regard for the feelings and emotions of the parties. Such a course is prejudicial to public interest and morals. In the same decision, the court also explained the concept of cruelty in matrimonial law. While court will have no problem in determining physical cruelty, in cases of mental cruelty, the court will have to take into account the nature of the conduct and its effect on the affected spouse. Where the conduct complained of is per se unlawful, its impact on the spouse need not be enquired into. The conduct must be more serious than ‘ordinary wear and tear of married life’ and the court should be satisfied that it would not be possible for the spouses to live together without mental agony, torture or distress. Cruelty in matrimonial life, the court ruled may be physical or mental, subtle or brutal. It may lie words, gestures or by mere silence, violent or non violent.

Interim maintenance is just not interim, said a judge in M.Kanakaraj v Jeeva and another (2006) 4 MLJ 569; it could stand even if main petition is dismissed or disposed of.

Motor Vehicles Act:

Can compensation be awarded by the Motor Accident Claims Tribunal separately under the heads of permanent disability and loss of earning capacity was the issue referred to the Full Bench in Cholan Roadways Corporation Limited v Ahmed Thambi & 6 others (2006) 4 MLJ 362? .Holding that the courts and tribunals have to approach the issue of awarding compensation from the larger perspective of justice, equity and good conscience, the court held that a victim must be awarded just compensation. While awarding damages, the tribunal should itemize the award under the heads pecuniary losses and non-pecuniary losses. (a) Pain and suffering, (b) loss of amenity (c) loss of expectation of life, hardship, mental stress etc., (d) loss of prospect of marriage will have to be considered under the head non pecuniary losses. Loss of earning capacity and loss of future earnings will have to be considered as one component apart from medical and other expenses under the head pecuniary losses. The loss of earning capacity and the non-pecuniary losses under (a) to (d) above would if compensated take within its fold compensation for permanent disability and hence here was no need to separately provide for compensation under the head permanent disability. The Full Bench observed that permanent disability has several consequences and when each of these like loss of earning, pain and suffering are duly compensated, there was no necessity to award compensation separately on account of permanent disability.

The Amendment Act 54 of 1994 wit effect from 14.11.1994deleted section 166(3) that originally set a time limit for filing a claim petition for compensation. Noticing that several courts have taken a consistent view that there was no period of limitation at all, the Bench said in United India Insurance Co Ltd, represented by its Manager, Madurai v Vijaya (2006) 1 MLJ 688, the failure to implead the legal representatives of the owner should not be allowed defeat the claim for compensation. It said that the abatement of the claim shall be set aside and the claimants would be permitted to implead the legal representatives even after a long lapse of time.

After an unambiguous statement of law by the Supreme Court in National Insurance Company Limited v Baljit Kaur and others (2004) 2 SCC 1 following New India Insurance Company Limited v Asha Rani 2003 ACJ 1, there was no scope for a claim on behalf of gratuitous passenger traveling in a goods vehicle against the Insurer. There is no legal requirement for compulsory insurance for a passenger in a goods vehicle and hence there was no question of making the insurance company and giving it a liberty of recovery from the owner of the vehicle. The Division Bench found a novel way of relieving the rigor of law, when it said in M/s United India Insurance Company Limited, Tiruvannamalai and another v Selvam and others (2006) 1 MLJ 154 that since the law became clear only from the date of judgment of the Supreme Court on 6.1.2004, ‘pay and recover’ principle against the insurer would be available for claims resulting from accidents that happened before 6.1.2004.

Tax Laws :

The issue referred to the Full Bench in State of Tamil Nadu v Tvl. Nu-Tread Tyres and another (2006) 4 MLJ 327 was whether mens rea was an essential ingredient for the levy of penalty under Section 10 (b) of the Central Sales Tax Act 1956. Answering the reference in the affirmative, it was held that false representation by the assessee was a necessary ingredient for invocation of the power to prosecute or in the alternative to initiate action leading to imposition of penalty. The court held that the expression “falsely represents” clearly shows that mens rea was a necessary component of the offence and in the absence of mens rea, no penalty can be imposed.

While computing the total income of the assessee under Section 64(1) (iii) of the Income Tax Act, is it lawful to club the share of the income of the minor children who cannot lay their hands on the same until attaining majority was the issue determined by the Full Bench in the case of Commissioner of Income Tax, Tamil Nadu II, Madras and another v K.J.Ramaswamy, Madras and another (2006) 4 MLJ 762. In terms of Explanation 2A to Section 64, the income arising for the benefit of the minor child, where the minor child of an individual is a beneficiary under a trust is deemed to be an income arising indirectly to the minor child from the admission of the minor to the benefits of the partnership in a firm. Holding that the phrase “for the benefit of the minor child” would mean that the income must be readily available for the use of the minor, the Full Bench held that the clubbing of the income of the minor child in the hands of the assessee cannot be done when it is shown that the minor, for whose benefit the income is available has no right to use the same until attaining majority.

The exemption granted to companies from the levy of Wealth Tax was partially withdrawn by the Finance Act 1983 in respect of certain categories of companies and certain categories of assets. Wealth Tax was chargeable on the assets of the closely held companies at the rate of 2% of such net wealth. The assets used by the assessee as factory, godown, wearhouse, hotel or office were excluded from taxation. The question whether the portion of the building let out by the assessee to various tenants would come within the purview of the exclusionary clause was the subject matter of reference to a Full Bench in the case of Commissioner of Wealth Tax, Tamil Nadu I, Madras v Fagun Co Pvt Ltd (2006) 4 MLJ 836. The Full Bench held that the section was clear and unambiguous and that the yardstick of the Income Tax Act cannot be applied to the exemption under the Wealth Tax Act. The court decided that the assessee was liable to be taxed on the value of the tenanted portion of the building since the let out portion did not come within the purview of the assets that formed the subject matter of the exclusionary clause.

What is the extent a bonafide purchaser for value is bound by the charge for payment of arrears of sales tax created under Section 24 of the Tamil Nadu General Sales Tax Act, 1959 was the question referred to the Full Bench in B.Suresh Chand Vs. State of Tamil Nadu represented by the Secretary, Revenue Department, Madras & another (2006) 4 MLJ 850. The court decided that a bonafide purchaser without notice of the charge under Section 24(1) cannot be proceeded against for the recovery of Sales Tax arrears. To decide whether a transaction was bonafide or not, all the facts relating to the conduct of the parties to the transaction will have to be weighed as a whole. The necessity of the purchase, the intention of the transfer, the relationship between the parties are vital factors to be considered. A purchaser cannot claim that he had no notice of the arrears if he had willfully abstained from an enquiry that he ought to have made or he was grossly negligent in failing to make an enquiry that any prudent person would make. The court found that the transfer in question was fraudulent and the purchaser was indeed aware of the sales tax arrears and hence was not a bonafide purchaser.

Transfer of Property Act

Article 61(a) of the Limitation Act provides that the period of limitation for a suit by a mortgagor to redeem or recover possession of the immovable property mortgaged is 30 years and the period begins to run when the right to redeem or recover possession accrues. In a usufructuary mortgage which does not fix any date for repayment, the right to redeem accrues immediately. The Supreme court in Prabhakaran and others v M. Azhagiri Pillai (Dead) by LRs and others (2006) 2MLJ 272(SC) spelt out the circumstances in which an acknowledgment by the mortgagee would extend the limitation. Observing that acknowledgment as per Section 18 of Limitation Act need not be only by debtors, the court held that Transfer of Property Act has created and recognized rights as well as obligations both in the mortgagor and mortgagee. An acknowledgment under Section 18 can be by a mortgagee also and such an acknowledgment will extend the limitation for a suit against the mortgagee. But to constitute such an acknowledgment the statement in writing signed by the mortgagee should relate to a subsisting mortgage and although it need not be in a document addressed to the mortgagor, the words used should indicate expressly or the implied existence of a jural relationship between the parties and it should appear that the statement was made by the mortgagee with the intention of admitting such jural relationship. But a statement by the mortgagee that merely refers to the mortgage without admitting the jural relationship will not be considered to be an acknowledgment under Section 18.

Tamil Nadu Town and Country Planning Act:

Observing that the Rule of Law will collapse if building rules and bye laws are not strictly enforced, the court in Salahudeen Babu Vs. P.T. Prabhakar (2006) 4 MLJ 22 held that only deviations made before the commencement of Amendment Act of 1998 can be regularized by the government on an application. From there began the hurtling down of multi-storeyed buildings erected with impunity in violation of building regulations.

Concluding remarks

Justice is”, as Whittier wrote in his Mantle of St. John, "the hope of all who suffer, the dread of all who wrong." Law books and journals have grown in size. You cannot any longer seize the law by the scruff, as it were, as easily as you could do, when judgments were written to a few pages in pithy style. Precedents are still inevitable tools to understanding law in all its facets and as it is some times stated, stare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law be settled than that it be settled right. The Court bows to the lessons of experience and the force of better reasoning, recognizing that the process of trial and error, so fruitful in the physical sciences, is appropriate also in the judicial function. The last word on law may not have been written but the guiding principle shall never be lost. It is in one word – as we began, also the last word, Justice.


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