Capital Gain in case of compulsory land acquisition accrues at the time of taking possession: Supreme Court of India

Capital Gains shall be deemed to have accrued upon arrival of the relevant stage of taking possession and not before that, the legal issue held by The Hon’ble Supreme Court of India in Raj Pal Singh V. Commissioner of Income Tax, Haryana, Rohtak [Civil Appeal No. 2416 of 2010] by a three-judge bench comprising of Hon’ble Justice AM Khanwilkar, Justice Hemant Gupta and Justice Dinesh Maheshwari.

The fact relating to this case is while referring to the statutory scheme of the Land Acquisition Act, the Hon’ble Court observed that the compulsory acquisition of land under the act for a public purpose, the property was to vest absolutely in the government only after taking possession in either of the methods i.e. after making of the award, as provided in section 16; or earlier than making of the award, as provided in section 17. In other words, the owner was divested of property and the same vested in the government in absolute terms only if and after the possession was taken by either of the processes envisaged in Sections 16 and 17 of the act.

The Hon’ble Court while referring to various judgements of High Court and Supreme Court held that the matters relating to compulsory acquisition of land under the Act of 1894, completion of transfer with the vesting of land in the government essentially correlates with taking over of possession of the land under acquisition by the government. However, where the possession is taken over before arriving at the relevant stage for such taking over, capital gains shall be deemed to have accrued upon arrival of relevant stage and not before. To be more specific, in such cases, capital gains shall be deemed to have accrued: (a) upon making of the award, in the case of ordinary acquisition referable to Section 16; and (b) after expiration of fifteen days from the publication of the notice mentioned in Section 9(1), in the case of urgency

Considering all the points Hon’ble Court held that as the result, this appeal fails and is, therefore, dismissed.

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Judgement reviewed by-Sarita Kumari


Central Government can authorize initiation of proceedings and the relief of freezing assets and disgorgement of property: Delhi High Court

Central Government can authorize initiation of proceedings and the relief of freezing assets and disgorgement of property as per the virtue of sections 241, 242 read with 246, and 339 of the Companies Act, 2013.

The aforementioned has been recently observed in the case that was filed in the Delhi High Court. The petition incorporated matters of:

  • Shriraj Investment & Finance Limited & Ors. v. Union of India Through Secretary & Another [W.P.(CRL) 1823/2020, CRL.M.A. 15208/2020, CRL.M.A. 11302/2021, CRL.M.A. 11304/2021]
  • Casper Consumer Electronics Pvt. Ltd. v. Union of India & Anr. [W.P.(CRL) 1414/2021 & CRL.M.A. 11968/2021]

The proceedings were taken place on September 14th, 2021, and the same was presided over by a single judge bench, consisting of Justice Yogesh Khanna.

The facts entailing the above case are hence as follows. The petitions had been filed under the purview of 241, 242, 246 read with 339 of the Companies Act, 2013, before the NCLT. It was stated that the letter calls for freezing and disgorgement of assets of 157 companies to be sold despite the fact such companies are functional. The above letter was impugned through the virtue of section 212(14) of the Companies Act. The officers of the Central government were obliged to go forth with scrutinizing the reports of the above companies. It was stated that “it was humanly impossible to examine such report, consisting of lakhs of pages within two days and then pass the impugned order”.

It was further stated that Section 212(14A) of the Companies Act came into effect on August 15th 2019, wherein for the first time power of disgorgement of properties came into effect. However, in the present case on dated June 29th, 2019, the order for disgorgement was issued hence it is a premature letter without any power. It was also stated that NCLT can’t decide jurisdiction of any issue. It was also argued that it was argued such power of disgorgement, even otherwise, can be ordered only after trial and not at filing of chargesheet as unless the State proves its case of disgorgement, no order can be passed by NCLT for such an action.

The learned counsels based their claims on precedents like Commissioner of Income Tax (Central) – I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC (1)], Hitendra Vishnu Thakur & Ors. v. State of Maharashtra & Ors. [(1994) 4 SCC 602].

The Court, while observing facts, arguments, and evidences, gave a comprehensive judgment which as follows:

  • With regards to the contention of invoking jurisdiction, it was ordained that “once the proceedings have been initiated before NCLT and if the NCLT is seized with the company petition, all contentions including power of the respondent to initiate such proceedings before NCLT must be raised before such forum and be determined in those proceedings.

Further the court, by the virtue of Section 430 if the Companies Act, also stated that jurisdiction of the civil courts can be barred in respect of the matter which NCLT has the power to determine.

  • The court, in respect of the above, by the persuasive value of the precedents in the cases of Raj Kumar Shivhare v. Directorate of Enforcement [(2010) 4 SCC 772], Arcelormittal India (P) Ltd. vs. Satish Kumar Gupta [(2019) 2 SCC 1] and State Bank of Travancore vs. Mathew K.C. [(2018) 3 SCC 85], held that the jurisdiction of the matter can only be entertained by NCLT and just because of the fact that the headquarters of Respondents fall in Delhi, doesn’t empower the Delhi High Court to entertain this petition.
  • By citing, [Kusum Ingots & Alloys Ltd. vs. Union of India, [(2004) 6 SCC 254] and SAS Hospitality Pvt. Ltd. vs. Surya Constructions Pvt. Ltd. [2018 SCC Online Delhi 11909], the court also held that the court shall not have any such jurisdiction over the said matter.
  • The court in the subject matter, took reference of judgments of Karvy Stock Broking Ltd. v. Securities and Exchange Board of India [MANU/SB/0064/2008] and Shadilal Chopra v. SEBI, [SAT, Mumbai, Appeal No.201/2009] also stated that “the reliefs for disgorgement can even be sought under section 241 and 242(1) (l) (m) de hors Section 212 (14A) amendment. The Central Government can authorize initiation of proceedings and the relief of freezing assets and disgorgement of property under Section 241, Section 242 r/w Sec.246, and Section 339/447 of the Companies Act inasmuch as disgorgement is a civil action in nature of an equitable relief and not a penal action.
  • The court while giving a concluding remark also ordered that the said letter should be treated as an executive order that flows from a statutory scheme, with the operation of 241, 242, 246 and 336 of the Act.
  • In the light of the above, the court disposed of the petition, accordingly.

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Judgment Review by Lakshya Sharma


Court directs to give twelve weeks in order to prove the claims for pro-rata pension eligibility: Delhi High Court

Pro-rata pension system has to be subjected to 15 years of services in the Air Force. If otherwise, exceptions are proven, then a lower set of time period can be considered only upon proving of such exception. The above has been observed in a recent matter in Delhi High Court. The matter was heard in Nemai Chand Ghose v. Union of India Ministry Defence Through its Secretary 7 Anr. [W.P. (C) 4976/2021]. The Proceedings for the same were held on September 13th, 2021, which was presided by a division bench, consisting of Justice Manmohan and Justice Naveen Chawla.

The facts of the case are that the petitioners have filed the suit in lieu of availing pro-rata pension, as per Pension Regulations of the Air Force, 1961. As per Regulation 11 of Pension Regulations of the Air Force, 1961, minimum regular qualifying service to earn Service Pension is 15 years.

It was contended by the respondents that taking into consideration the regulation 121, the petitioners haven’t duly met the guidelines and requirements to the same. It was alleged that the petitioners only had the rendered qualifying services for 11 years and 133 days.

It was further stated by the respondents that the said petitioners were, however, eligible for Service Gratuity and Death cum Retirement Gratuity (DCRG) in terms of Pension Regulations 127 that has already been paid as a result of discharge of the petitioner’s services.

However, the petitioners still based its claim by citing precedents in n Brijlal Kumar and ors. v. Union of India [2020 SCC OnLine Del 1477] and Govind Kumar Srivastava v. Union of India [2019 SCC OnLine Del 6425 (DB)].

 The court, after due consideration of the arguments, facts and evidences, held that if within the twelve weeks of the order, if the petitioner reliable claims made by the virtue of above precedents could be proven, then the respondents have to be adhered to the payment of pro-rata pension. Further, it was also opined that if there arises any such situation wherein Respondents are in need of certain documents to corroborate the claim, then such documents shall be subjected to be furnished by the petitioner within a week. In its last remarks, the court held that in case, “if the arrears of pro rata pension are not paid within twelve weeks, the same shall also incur interest thereon @ 7% per annum from the expiry of twelve weeks till the date of payment.

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Judgment Reviewed by Lakshya Sharma


Awarding life imprisonment without remission not within the powers: Punjab and Haryana High Court

While awarding the Petitioner the sentence of rigorous imprisonment for life could not have added that riders that it should be for the rest of her natural life or that she would not be entitled to any remission held by Hon’ble Justice S.Muralidhar in Savitri V. State of Haryana [CRWP-5238-2020(O&M)]. Awarding life imprisonment with deprivation of remissions of the sentence or of parole is not within the power of a Trial Court.

The Hon’ble court relied on the law laid down by the Hon’ble Apex court in Union of India Vs. V. Sriharan (2016 1 SCC 1), where the Hon’ble Supreme Court held that “the power to impose a modified punishment providing for any specific term of incarceration or till the end of the convict’s life as an alternative to the death penalty, can be exercised only by the High court and the Supreme Court and not by any inferior Court. “

 The Hon’ble High Court went on to further observe that “the judgement of the Constitution Bench of the Supreme Court in V. Sriharan, it is not open to a court inferior to the High Court and Supreme Court while awarding a sentence of life imprisonment under the Indian Penal Code to further provide for any specific term of incarceration or till the end of a convict’s life or to direct that there shall be no remission as an alternate to the death penalty. That power is available only with the High courts and the Supreme Court. Consequently, the trial court, in the instant case, while awarding the petitioner the sentence of rigorous imprisonment for life could not have added to the riders that it should be for the rest of her natural life or that she would not be entitled to any remission.”

The Hon’ble court also noted that despite the clear legal position explained in the V. Sriharan case the trial courts have been adding riders to orders on sentence passed by them and directed that the soft copy of the judgement in the present case with that of judgement in V. Sriharan case be circulated by the Chandigarh Judicial Academy to all the Judicial Officers and Jail authorities in States of Punjab and Haryana.

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Court can declare a property free of encumbrance against the will of encumbrancer: Kerala High Court

Exceptional nature of the legal issues presented in this appeal, I make or order as to costs and direct the parties to suffer their respective costs. The Hon’ble high court at Kerala in MR Varghese vs. Annamma Yacob & Ors. [MFA. No. 47 of 202]) held that section 57 of the Transfer of Property Act, 1882 permits that court to declare a property without any encumbrance.

The order passed by Hon’ble Justice Devan Ramachandran is particularly relevant since there is no case law/precedent on this subject explaining the procedural mechanism u/s 57 of the Act which provides for lifting encumbrance from immovable property.

 The Hon’ble court clarified that S. 57 of the act was enacted to assist any party to the sale of an immovable property, which is subjected to an encumbrance, to fructify the sale for its fair value. The Hon’ble high court placed reliance on the ruling of an English court in Wilberforce V. Wilberforce, (1915, 1 Ch 94) and observed that “Section 57 of the TPA is wider in its amplitude than S. 83 or Order XXXIV Rule 2 of the CPC, since it permits the court to declare a property free of encumbrance even against the will of the encumbrancer and even in the case of sales not directed by Order XXXIV of the CPC”

The Court further clarified that S/ 57 provides for the sale of immovable property, both by a court or out of court as also in the execution of a decree and held that “Section 57 also provides that in case of sale of immovable property subjected to an encumbrance being sold by a court, or in the execution of a decree or out of court any party to it can apply for a declaration that the said property is free of such; in which event, the appropriate court may direct or allow payment, sufficient to meet the encumbrance on the property, into court”. Court has allowed this appeal and set aside the impugned order of the learned District Judge; consequently, permitting the appellant to tender the amount of Rs.500/- to the first respondent, by depositing it in the District Court; in which event, the same will be entitled to be withdrawn by her. It is, resultantly, declared that on such payment by the appellant, the petition schedule property will stand freed from the charge on it, created as per the terms of the Partition Deed, Document No.1873/1980 of the Puthencruz SRO.

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