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“Supreme Court Upholds Rajasthan’s Stamp Duty on Out-of-State Insurance Stamps”

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Case Title – Life Insurance Corporation of India vs. The State of Rajasthan & Ors.

Case No. – Civil Appeal No. 3391 of 2021

Dated on – 30th April, 2024

Quorum – Hon’ble Justice Pamidighatam Sri Narasimha and Hon’ble Justice Aravind Kumar

Facts of the Case –

The appellant, a life insurance company, was subjected to demands by the State of Rajasthan for stamp duty on insurance policies issued within the state, pursuant to the Rajasthan Stamp Law (Adaptation) Act, 1952. The company, facing a lack of availability of India Insurance Stamps in Rajasthan, purchased these stamps from Maharashtra based on a letter from the Treasury Officer, Jaipur, which indicated that the central government’s insurance stamps were not available through the state. The state authorities-initiated proceedings for recovery of stamp duty, asserting that the stamps should have been procured within Rajasthan. The appellant contended that their actions were consistent with the Indian Stamp Act, 1899, as interpreted in the VVS Rama Sharma case, where it was held that purchasing stamps from outside the state did not constitute an offense. However, the High Court ruled against the appellant, leading to the current appeal before the Supreme Court, which involved questions of legislative competence, the applicability of the relevant state law, and the procedural propriety of the state’s demands for stamp duty.

Issues –

  • Whether the 1952 Act or the 1998 Act applies to the facts of the present case?
  • Whether the state government has the legislative competence to impose and collect stamp duty on policies of insurance as per Entry 91 of List I read with Entry 44 of List III?
  • Whether the 1952 Act requires the purchase of insurance stamps from and payment of stamp duty to the Rajasthan government for insurance policies issued within the state?
  • Whether, in the facts of the present case, the appellant is liable to pay stamp duty?

Legal Provisions –

  • Article 254 of The Constitution of India, 1950
  • Article 265 of The Constitution of India, 1950
  • Section 3 of Indian Stamp Act, 1899
  • Section 74 & 75 of Indian Stamp Act, 1899

Contentions of the Appellant –

The appellants contended that the imposition of stamp duty by the State of Rajasthan on insurance policies issued within the state, under the Rajasthan Stamp Law (Adaptation) Act, 1952, was unjustified as they had to purchase India Insurance Stamps from Maharashtra due to their unavailability in Rajasthan, as confirmed by the Treasury Officer’s letter dated October 7, 1991. They argued that the High Court erred in overlooking this evidence and in failing to recognize the applicability of Section 3A(4) of the 1952 Act, which excluded instruments under Entry 91, List I from cash payment of stamp duty in the absence of adhesive or impressed stamps. The appellants further relied on the precedent set by VVS Rama Sharma, asserting that purchasing insurance stamps from outside the state did not violate any legal provisions and should not attract penalty or demand for additional stamp duty. They maintained that the stamp duty regime was improperly applied and that their actions were consistent with the Indian Stamp Act, 1899, making the state’s demands invalid and their recovery proceedings unlawful.

Contentions of the Respondent –

The respondents contended that the appellants were legally obligated to pay stamp duty on insurance policies issued within the State of Rajasthan, as mandated by the Rajasthan Stamp Law (Adaptation) Act, 1952. They argued that the state legislature had the authority to impose and collect stamp duty under Entry 44 of List III, as prescribed by the Parliament under Entry 91 of List I. The respondents maintained that the purchase of insurance stamps from outside the state amounted to evasion of stamp duty and resulted in the instruments being considered not duly stamped. They asserted that the appellants had the option to pay stamp duty in cash under Section 3A of the 1952 Act if the stamps were unavailable, but they failed to do so. Additionally, they differentiated the case from VVS Rama Sharma, emphasizing that the latter involved interpretation of rules under a central act without an applicable state law having Presidential assent, unlike the present case where the 1952 Act had received such assent and therefore prevailed over the central Act within Rajasthan. The respondents thus argued for the validity of the state’s demands for stamp duty and the initiation of recovery proceedings against the appellants.

Court Analysis and Judgement –

The Hon’ble  Supreme Court analyzed the case by examining the applicability of the Rajasthan Stamp Law (Adaptation) Act, 1952 and the Rajasthan Stamp Rules, 1955, which mandate the imposition of stamp duty on insurance policies executed within the state. The Court held that the 1952 Act, a state law enacted under Entry 44 of List III and having received Presidential assent, prevailed over the Indian Stamp Act, 1899 within Rajasthan. Differentiating the case from VVS Rama Sharma, the Court noted that the latter involved the interpretation of central rules without an equivalent state law with Presidential assent. The Court further held that, despite the unavailability of insurance stamps within Rajasthan, Section 3A(4) of the 1952 Act, which excludes instruments under Entry 91, List I from its application, meant that the appellants could not have paid the stamp duty in cash as suggested by the High Court. Consequently, the Court upheld the legislative competence and jurisdiction of the state to levy and collect stamp duty on insurance policies but directed the state not to demand and collect the stamp duty as per the specified orders. Thus, the Court dismissed the appeals, affirmed the High Court’s judgment, and directed the parties to bear their own costs.

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Judgement Reviewed by – Anurag Das

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Kerala High Court Rules Maternity Benefit Act Inapplicable to Private Educational Institutions Before March 2020

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Case title:  CHAIRMAN, PSM COLLEGE OF DENTAL SCIENCES & RESEARCH VS RESHMA VINOD & ORS

Case no.:   WP(C) NO. 13201 OF 2018

Dated on: 03rd May 2024

Quorum:  Hon’ble. MR Justice DINESH KUMAR SINGH

FACTS OF THE CASE

The petitioner is a Dental College & Research Centre, an educational institution established with the permission of Ministry of Health & Family Welfare, Government of India. The permission to conduct academic session 2017-2018 was renewed by order dated 3rd February 2017 of the Government of India. the petitioner received a show cause notice dated 11th September 2017 from the second respondent, Inspector under Maternity Benefit Act, 1961 (The Asst. Labour Officer), Kunnamkulam alleging non-payment of maternity benefit to the first respondent under the provisions of Maternity Benefits Act, 1961 (hereinafter referred to as ‘Maternity Act’). The petitioner submitted a detailed reply dated 15.9.2017 to the second respondent. However, the second respondent passed an order dated 20th September 2017 directing the petitioner to pay an amount of Rs.64,393.56 as maternity benefit and medical bonus to the first respondent under the provisions of the Maternity Act. The petitioner filed an appeal under Section 17(3) of the Maternity Act before the third respondent. The Appellate Authority vide the impugned order dated 25.01.2018 had dismissed the appeal. This Writ Petition has been filed impugning the orders passed by the 2nd and 3rd respondents in Exts.P4 and P6.

ISSUES

  • whether the provisions of the Maternity Act would be applicable to the educational institutions which are not shops or establishments falling within the meaning of Kerala Shops & Establishments Act or under any other law?

LEGAL PROVISIONS

Maternity Benefit Act, 1961 (Maternity Act)

Section 2(a): States that the Act is applicable to every factory, mine, or plantation, and to establishments where persons are employed for the exhibition of equestrian, acrobatic, and other performances.

Section 2(b): Extends the applicability of the Act to every shop or establishment within the meaning of any law related to shops and establishments in a State where 10 or more persons are employed. Additionally, it allows a State Government, with the approval of the Central Government and after giving not less than two months’ notice, to declare by notification that the Act shall apply to other establishments or classes of establishments.

Kerala Shops and Commercial Establishments Act, 1960: Defines the term “establishment” and its applicability within the State of Kerala.

CONTENTIONS OF THE APPELLANT

The learned counsel for the petitioner submits that the provisions of Maternity Act have no universal application. Section 2(a) of the Maternity Act provides that the provisions of the Act would be applicable to every factory, mine or plantation and establishments wherein persons are employed for the exhibition of equestrian, acrobatic and other performances. Further, Section 2(b) of the Act provides that provisions of the Act are applicable to every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State where 10 or more persons are employed. The proviso to Section 2(b) provides that a State Government with the approval of the Central Government, after giving not less than two months’ notice of its intention, by notification in the official gazette, declare that all or any of the provisions of the Act shall apply also to any other establishment or class of establishments, industrial commercial, agricultural or otherwise. The submission of the learned counsel for the petitioner is that the petitioner is an educational institution and it is not a shop or establishment to which the provisions of the Maternity Act are applicable. The learned counsel for the petitioner, therefore, submits that the provisions of Maternity Act are not applicable to the petitioner Institution which is a medical educational institution, the orders impugned are unsustainable in law and liable to be set aside. The learned counsel for the petitioner, in support of his submission has placed reliance on the judgment in the case of Ruth Soren v Managing Committee, East ISSDA and others1. It is therefore submitted that the impugned orders in Ext.P4 and P6 are to be set aside and the Writ Petition is to be allowed.

CONTENTIONS OF THE RESPONDENTS

The learned counsel for the first respondent submits that Maternity Act is a beneficial legislation and it is an establishment for the purposes of Section 2(1)(b) of the Act. The Government has not exempted the medical educational institution from the purview of the provisions of Kerala Shops & Commercial Establishments Act, 1960 and therefore, the Maternity Act would be applicable to the petitioner institution and the impugned orders are not likely to be interfered with. In support of the submission, the learned counsel for the respondent has placed reliance on the judgment of the Division Bench of this Court in Noorul Islam Educational Trust v Asst. Labour Officer.

 COURT’S ANALYSIS AND JUDGEMENT

The Supreme Court in the case of Ruth Soren (supra) has held that the educational institution will not come within the definition of “establishment”, carrying on any business, trade or profession or any work in connection with, or incidental or ancillary thereto. Under the provisions of Bihar Shops and Establishments Act, 1953 which has parametria provisions to the Kerala Shops and Establishments Act, 1960, an “establishment” for the purposes of the Act would mean that establishment which carries on any business or trade or profession or any work in connection with, or incidental or ancillary thereto. The concept of industry as defined under the Industrial Disputes Act would include any business, trade, undertaking, manufacture or calling of employees and includes any calling service, employment, handicraft or industrial occupation or avocation of workmen. In an educational institution, there is an organized activity between employers and employees to impart education. Such an activity, though may be industry, however, would not be a profession, trade or business for the purpose of Article 19(1)(g) of the Constitution, would not be one falling within the definition of establishment under the Act. “Establishment” as defined under the Act, is not as wide as “industry” as defined under the Industrial Disputes Act. The Supreme Court held that an educational institution is not an establishment under the provisions of Shops and Establishments Act. The Division Bench of this Court in its judgment in Noorul Islam Educational Trust v Asst. Labour Officer and another (supra) has failed to take note of the Supreme Court judgment in the case of Ruth Soren (supra). Therefore, I am ignoring the judgment passed by the Division Bench of this Court while deciding the present Writ Petition. The State Government only by notification dated 6th March 2020 issued in exercise of the proviso to sub section 1of section 2(b) of the Maternity Act has extended the provisions of the Maternity Act to private educational institution including unaided school inclusive of teachers in the State of Kerala. Therefore, it can be safely inferred that the State Government did not concede that the provisions of the Maternity Act were applicable to the private educational institution and therefore it issued a notification dated 6th March 2020 as mentioned above to bring the private educational institution as well within the ambit of the provisions of the Maternity Act. Considering the gazette notification and the judgment of the Supreme Court in the case of Ruth Soren and the provisions of the Maternity Act, it can be said that the provisions of the Maternity Act were not applicable to the private educational institution before 6th March 2020, when the Government issued notification bringing the private educational institution including the school education within the ambit of the provisions of the Maternity Act. The impugned orders are with respect to the period prior to the notification dated 6th March 2020 and therefore, the impugned orders are not sustainable. The Writ Petition is thus allowed. The impugned orders in Exts.P4 and P6 are quashed.

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Judgement Reviewed by – HARIRAGHAVA JP

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Tripura High Court: Reinstatement Not Automatic in Case of Dismissal Order Overturned for Procedural Flaws

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Case title: Rajesh Das VS Society for Tripura Medical College & Dr. B.R. Ambedkar Memorial Teaching Hospital & ANR

Case no.: WA No. 17 of 2024

Dated on:  19TH MARCH OF 2024

Quorum: HON’BLE THE CHIEF JUSTICE MR. APARESH KUMAR SINGH HON’BLE MR. JUSTICE S.D. PURKAYASTHA

FACTS OF THE CASE

The learned writ court by the impugned order dated 12th February, 2024 set aside the order of dismissal of the petitioner dated 28th April, 2023 and directed the respondent employer to start the proceeding from the stage of evidence, as it was of the view that the petitioner had been dismissed from the service on the basis of the statements he made in his written statement. Before us the appellant is aggrieved as there is no direction for reinstatement pending fresh departmental enquiry from the stage of evidence. On the part of the appellant, learned senior counsel, Mr. P Roy Barman, submits that as per Articles of Charges No. I, II & III as per Memorandum dated 30th December, 2020, the petitioner was charged with criticizing the respondent-Society through his social media accounts i.e. Twitter handle relentlessly and had also indulged in indiscipline to disturb normal functioning of the Society. He was alleged to be involved in activities which were detrimental to the interest of the Society by posting offensive posts on his social media account criticizing the functioning the society though being an employee of the Society. He was also alleged to have left his work place during working hours without permission of his Controlling Authority and as such, was liable for indisciplined behaviour. Earlier, writ petitioner had approached this court in WP(C) No.700/2021, being aggrieved by the issuance of the memorandum of the charges. The learned writ court vide order dated 10th January, 2022 directed the Disciplinary Authority to take a fresh look in the objections raised by the petitioner by way of his representation dated 26th August, 2021. If it was found that the Facebook post, which is the source of Disciplinary Proceeding, has in any way, directly or indirectly criticized the appointment of the respondent No.3, the principle of fairness would warrant removal of respondent No.3. Else he should be allowed to continue as the Inquiry Officer. Pursuant thereto, the Inquiry Officer was changed vide Order dated 21st January, 2022.

ISSUES

  • Whether the Disciplinary Proceedings Violated Principles of Natural Justice:
  • whether the petitioner’s actions, allegedly criticizing the respondent-Society on social media, were protected under the right to freedom of speech and expression.
  • whether the petitioner should be reinstated to his position pending the outcome of a fresh departmental inquiry, following the setting aside of the dismissal order.

 LEGAL PROVISIONS

Article 19(1)(a) of the Constitution of India: This article guarantees the right to freedom of speech and expression. The petitioner had invoked this right to justify his criticism of the respondent-Society on social media, arguing that it should not be a ground for disciplinary action.

CONTENTIONS OF THE APPELLANT

The Learned counsel for the petitioner submits that though the petitioner denied having any Twitter handle ID to post such comments and refuted the charges under Article ‘I’ as baseless but without properly adducing the offending posts as evidence in the Disciplinary Proceeding, the Inquiry Officer proceeded to hold him guilty. His written statement of defence is at Annexure-12 at page 88. He has also referred to the rebuttal of his defence statement reflected in the inquiry report as contained in the second show cause notice vide memorandum dated 21st March, 2023 (Annexure-13) wherein the inquiry officer has categorically stated that the AO was denying uploading of any FB or Twitter postings concerning the internal affairs of TMC as charged by the Disciplinary Authority. It is submitted that the petitioner had also taken a plea of Right to Freedom of Speech and Expression under Article 19(1)(a) of the Constitution of India to criticize the follies of the management. As such, the learned Writ Court found that the impugned order of dismissal was passed only on the basis of his defence statement. However, the learned Writ Court while setting aside the order of dismissal did not issue any direction for consequential relief, i.e. reinstatement in service pending departmental inquiry. Learned senior counsel for the petitioner has placed reliance on para 31 of the Constitution Bench judgment rendered by the Apex court in the case of Managing Director, ECIL, Hyderabad & Ors. vs. B. Karunakar & Ors. reported in (1993) 4 SCC 727. He submits that in such a case when the dismissal has been set aside on account of violation of principles of natural justice in conduct of Disciplinary Inquiry the proper course for any court or tribunal is to direct restatement of the delinquent during the period of departmental enquiry though the question of back wages etc. would arise only on conclusion of the fresh inquiry. As such, the impugned order may be interfered to that extent.

CONTENTIONS OF THE RESPONDENTS

The Learned senior counsel for the respondents, Mr. SS Dey submits that the inquiry proceedings have been conducted in a proper manner after due opportunity to the petitioner to submit his defence statement and after service of the inquiry report along with the second show cause notice whereby the punishment of termination from service was proposed. As such, the learned Writ Court was not right in setting aside the penalty of dismissal from service and directing fresh inquiry to restart the proceedings from the stage of evidence. He has also countenanced the plea of reinstatement pending Departmental inquiry raised by the appellant. He has also referred to the same decision of the Apex court in the case of B Karunakar (supra). He submits that para 31 of the report which contains the opinion of the three judges comprising the majority do not specifically convey that reinstatement is automatic. If the observations of the Apex court at para 31 are looked into in detail, the order of punishment in this case has not been set aside on non-service of inquiry report, as was the case therein. The order of termination had been set aside to restart the disciplinary inquiry from the stage of evidence, as according to the learned Writ Court, the punishment was based only on the defence statement of the delinquent, which finding is not correct.

COURT’S ANALYSIS AND JUDGEMENT

We have considered the submissions of the learned counsel for the parties and taken note of the relevant materials placed on record as referred to hereinabove. In the present case, the order of termination has been set aside by the learned Writ Court being persuaded by the plea that the findings of the inquiry officer suffered from violation of principles of natural justice as the Presenting Officer had not established the charges by adducing evidence of such offending social media posts alleged to have been posted by the delinquent employee. Instead, though the delinquent employee had denied that he had no Twitter handle ID and that the posts were not from his mobile either but the Inquiry Officer proceeded to hold the charges established. As such, the penalty imposed upon the petitioner was only on the basis of his defence statement. The petitioner, however, is aggrieved by the impugned order only to the extent that despite setting aside of the order of dismissal the learned Writ Court did not direct reinstatement pending departmental inquiry. Though reliance had been placed on para 31 of the Constitution Bench judgment of the Apex Court on such plea but on a reading of the said judgment and as has been considered and interpreted in subsequent decisions of the Apex Court, we are of the view that the plea of the petitioner for automatic reinstatement upon setting aside of the dismissal order is not tenable. This view finds further support from the subsequent decisions rendered by the Apex Court such as Union of India Vs. YS Sadhu, Ex-Inspector reported in (2008) 12 SCC 30 (para 3&7), Chairman, Life Insurance Corporation of India and Ors. Vs. A. Masilamani reported in (2013) 6 SCC 530 (Para 16 & 17) and State of Uttar Pradesh & Ors. Vs. Rajit Singh, reported in (2022) 15 SCC 254 (para 12-14) wherein the Apex Court after noticing the Constitution Bench decision in the case of B Karunakar (supra) had occasion to hold that once the court sets aside an order of punishment, on the ground that the inquiry was not properly conducted, the court cannot reinstate the employee. It must remit the case dismissal. The instant appeal is disposed of with the aforesaid modification(s) in the impugned order. Pending application(s), if any, also stand disposed of.

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Judgement Reviewed by – HARIRAGHAVA JP

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