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Post the termination of sub lease agreement, the lessee is not meant to collect rent and add it as an income to the owner : Bombay HC

TITLE : T.V. Patel Pvt. Ltd.v The Dy. Commissioner of Income Tax

CITATION : Income Tax Appeal No.699 of 2002

CORAM : Hon’ble Justice G.S Kulkarni and Hon’ble Justice Jitendra Jain

DATE:  4th December, 2023

INTRODUCTION :

The appeals relate to the assessment year 1986-87, 1987-88, 1988-89, 1990-91, 1991-92 and 1993-94 for deciding the question of law on whether an Assessing Officer was justified in reopening the assessment under Section 148 of the Income Tax Act.

FACTS :

The appellant entered into an agreement with Bombay Builders to construct a building and sell 30 flats to the appellant. Bombay builders was substituted with IDBI through a tripartite agreement. IDBI on various accounts have failed to pay the rent and a suit was filed by the appellant. On 20th March 1989, an assessment order under section 143 read with section 148 of the Act for the assessment year 1986-87 came to be passed and the rent on account of sub-lease agreement of the Appellant with IDBI amounting to Rs.3,42,720/- was added as income of the Appellant including the other assessment years. The assessing officer held that no amount is due from IDBI as lease and rent and therefore the question of taxing does not arise.

COURT’S ANALYSIS

The court had to examine whether the sub-lease rent of Rs.3,42,720/- sought to be taxed accrues or arises to the appellant in the assessment year 1986-87. The court held that the right to receive Rs.3,42,720/- under the sub-lease agreement is not a subsisting right in favour of the Appellant which too is a subject matter of civil dispute. Further, it was held that the determination of the amount payable by the IDBI to the Appellant as prayed for by the Appellant in its suit is to be determined by the Small Causes Court. The appellant had terminated the agreement upon the return of cheques and therefore the same is not justified as an income revenue of Rs.3,42,720 to be taxed.

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Written by- Sanjana Ravichandran

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First pay, then recover : Bombay HC to insurance company on the failure to intimate cancellation of policy to the insurer

TITLE : HDFC ERGO General Insurance Company Ltd v Nayajoddin Nijamuddin and Ors

CITATION : First Appeal No. 2929 of 2019

CORAM : Hon’ble Justice Kishore C. Sant

DATE:  1st December, 2023

INTRODUCTION :

This appeal has been filed by the insurance company against the judgement of insurance claims to be granted by the Motor Accident Claims Tribunal.

FACTS :

The insurance company, appellant has opposed the claim of insurance on the ground of breach of terms and conditions of the policy. An autorickshaw met with an accident and the passenger succumbed to his injuries. An compensation of Rupees 25 lakhs was claimed against the owner of the rickshaw and the insure company. An insurance premium was paid of Rs.35,430 through cheque after the accident which later bounced as the account of insurance was closed and cancelled the insurance policy. The tribunal held that the policy was not valid and legal as there was no intimation of cancellation of policy.

COURT’S ANALYSIS

The issue infront of the court was whether there was sufficient notice of cancellation of insurance policy by the company to the insurer and whether third party can claim insurance. The court held that the intimation of cancellation was not delivered to the insurer as it was sent to an incomplete address. The court found that there is no reason to interfere with the findings of the tribunal which held that a third party is entitled to compensation on beneficial legislation grounds.

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Written by- Sanjana Ravichandran

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SEBI is a public body and should in the best interests of the Public : Bombay HC criticizes SEBI of non-compliance of court orders.

TITLE : Pina Pankaj Shah and Ors V Securities and Exchange Board of India

CITATION : W.P 530 of 2023

CORAM : Hon’ble justice G.S Kulkarni and Hon’ble Justice Jitendra Jain

DATE:  1st December, 2023

INTRODUCTION :

Two writ petitions were filed in which the petitioners were the minority shareholders of Bharat Nidhi Ltd (BNL) and complaint were lodged against them in SEBI for violations of various securities laws.

FACTS :

The petitioners claimed that BNL is violating securities laws including violations pertaining to the Minimum Public Sharing and contended that SEBI should investigate the same. SEBI issued a notice to BNL which was not shared to the petitioners. It was stated that BNL was listed in non functional stock exchange boards. BNL is also a major shareholder of Bennett Coleman and Co. Ltd. SEBI considered the illegalities of BNL. It was contended by the petitioners in front of SEBI board that settlement would not be enough and filed petitions directing SEBI to take appropriate action against BNL under Article 226 of the Constitution.  

The high court directed SEBI to provide the documents relating to the investigations to be published to the petitioners. SEBI issued a special leave in front of the Hob’ble Supreme Court  to dismiss the order which was subsequently rejected. However the documents relating to the investigations were not provided to the petitioners and they deemed it a misconduct.

COURT’S ANALYSIS

The court held that SEBI is a public body and should act in the best interests of the public. The court criticised SEBI for persistent non-compliance with the courts order and called it an unacceptable behaviour. SEBI’s claim for not publishing the documents to be fair was dismissed by the court. It held that, despite the orders of the court, SEBI has deliberately acted unreasonably. The court further ordered SEBI to issue the documents as it is a part of their substantive rights to know.

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Written by- Sanjana Ravichandran

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Assignee need not file a leave for continuance of suit proceedings : Bombay HC

Title: Ratnamala Mohan Aklujkar V Smt. Sushila Nirmalkumar Rungta and ors

Decided on: 29th November, 2023

Citation : Civil Writ Petition No. 1723

Coram: Hon’ble Justice Rajesh S. Patil

Introduction

A Writ petition was filed under Article 227 of the constitution of India challenging the Appellate bench of Small Causes of Bombay in the matter of an Eviction Suit.

Facts of the Case

An eviction suit was filed under Section 16(1)(a) and (b) of the Maharashtra Rent Control Act, 1999 in the Small Causes Court of Bombay. Subsequently, the owner of the property sold the building. The defendant in the eviction suit filed an application on the rejection of the Plaint on the grounds that the owner-tenant relationship to be ceased due to the conveyance of property and such plaint is barred by the provisions of CPC.

The suit was dismissed by the Small Causes Court of Bombay, however the appellate bench of the same reversed the order and allowed the eviction suit.  It was argued that the defendants reason for rejection of plaint was not mentioned in the provisions of Order VII, Rule 11 of the CPC.

Courts analysis and decision

The court relied on the judgement of Sharadamma v Mohammed Pyarejan that a dismissal cannot be done on the account of failure of filing an application to continue the proceedings by the assignee. Furthermore, it was declared that a suit cannot be dismissed on the ground that applicant did not file a leave for continuation of Suit under Order XXII, Rule 10 of the CPC. The court also dismissed the writ petition and held that the eviction proceedings to be continued for the benefit of the new owner.

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Written by- Sanjana Ravichandran

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Bombay High Court Appoints Paternal Aunt as Legal Guardian with Visitation Rights in Guardianship Case: considering the child’s best interest

Title: ABC v. XYZ

Citation: Guardianship Petition No. 9 of 2023

CORAM: Hon’ble R.I. Chagla J. 

Introduction

This case revolves around a guardianship petition filed before the Bombay High Court. The court was tasked with determining the legal guardian of a four-year-old boy while also considering the rights of the child’s parents to have frequent visitation. The court’s decision aimed to strike a balance between the child’s best interests and the rights of the parents.

Facts of the Case

The petitioner, identified as ABC, filed a guardianship petition seeking legal guardianship of a four-year-old boy.

The child, referred to as XYZ, is the son of the petitioner’s late brother and his wife.

The child’s mother had expressed her inability to care for the child, given her personal circumstances and other responsibilities.

The petitioner, being the paternal aunt, expressed her willingness and capability to provide a stable and loving environment for the child.

The child’s father initially opposed the petitioner’s petition for guardianship.

Court’s Analysis and Decision

The paramount consideration of the court in guardianship matters is the best interests of the child. The court examined the child’s age, emotional well-being, and potential future prospects. The court recognized the inherent and fundamental rights of parents in the upbringing of their child. The child’s father had initially opposed the petitioner’s guardianship, which the court duly considered. The court took into account the mother’s expressed inability to care for the child. Her willingness to entrust the child to the petitioner’s care was an important factor in the court’s analysis. The court evaluated the petitioner’s living situation, financial stability, and emotional preparedness to provide a suitable environment for the child. The petitioner demonstrated a strong commitment to the child’s well-being. Depending on the child’s age and maturity, the court may consider the child’s expressed wishes. While the child was relatively young, the court took into account his comfort and emotional connection with the petitioner.

After a comprehensive review of the facts and circumstances, the court arrived at the following decision: The Bombay High Court, in Guardianship Petition No. 9 of 2023, ruled in favor of the petitioner, ABC. The court appointed the paternal aunt as the legal guardian of the four-year-old boy, XYZ. This decision was reached after considering the child’s best interests, the mother’s inability to care for the child, the father’s initial opposition, and the petitioner’s commitment and suitability to provide a loving and stable environment.

The court also recognized the importance of the child’s relationship with his parents and ordered that XYZ’s parents be granted the right to visit him frequently. This decision aimed to balance the child’s best interests with the rights of the parents and ensure his overall well-being and development.

In summary, the court’s decision granted legal guardianship to the paternal aunt while preserving the child’s relationship with his parents through frequent visitation.

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Written by- Tarishi Verma

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