List of Current Affairs

Source: Rajasthan High Court 

Why in News? 

A bench of Justice Arun Monga held that condition of pre-deposit under Section 148 of Negotiable Instruments Act, 1881 is not mandatory in nature.                  

• The Rajasthan High Court held this in the case of Asha Devi v. Narayan Keer & Anr. 

What was the Background of Asha Devi v. Narayan Keer & Anr. Case?  

• The petitioner in this case has filed an application to suspend sentence under Section 389 of Criminal Procedure Code, 1973 (CrPC).  
• The Sessions Court held that the petitioner will have to pay 20% of the amount of fine/compensation as per Section 148 of Negotiable Instruments Act, 1881 (NI Act). 
• In case the petitioner fails to pay the same as per the Sessions Court order the petitioner was to undergo the sentence awarded by the trial Court. 
• The order of the Sessions Court was mainly on the premise that as per Section 148 of NI Act the sentence can only be suspended if a minimum of 20% of the fine amount is paid to the complainant. 
• It is the case of the petitioner that she is a poor lady who works on daily wages and hence is not in a position to deposit such a huge i.e. 20% of the amount of the cheque. 
• Hence, the matter was before the High Court.  

What were the Court’s Observations?  

• The Court held that in the facts on hand looking at the financial condition of the petitioner directing her to deposit 20% of the amount would jeopardize a very important right of the petitioner. 
• Since the lady is in financial distress in the larger interest of justice, she has to be granted indulgence in order to enable her to defend herself in the pending appeal. 
• Hence, the Court set aside the condition of pre-deposit of 20% of interim compensation.

What is Section 148 of NIA? 

• Section 148 of NIA provides for the power of the Appellate Court to order payment pending appeal against conviction. 
• Section 148 (1): Condition of pre-deposit on Appeal. 
  • Non-obstante clause: This Sub-section starts with the words “Notwithstanding anything contained in CrPC”.  
  • This clause comes into picture when an appeal is filed by the drawer against the conviction under Section 138 of NIA. 
  • In such a situation the Appellate Court may order the appellant to deposit a sum which is minimum of 20% of fine or compensation awarded by the trial Court. 
  • Proviso: This provides that the amount payable under this section shall be in addition to any interim compensation paid by the appellant under Section 143 A of NIA.   
• Section 148 (2): Timeline for deposit of Amount. 
  • The amount under sub-section 1 shall be deposited within 60 days from the date of order. 
  • This period can be extended on showing sufficient cause within such further period not exceeding 30 days as may be directed. 
• Section 148 (3): Direction of Release of amount  
  • During the pendency of appeal, the Appellate Court may order release of the amount deposited by the appellant. 
  • Proviso: It provides that the appellant is acquitted the Court shall direct the complainant to repay to the appellant the amount so released with interest at the bank rate as published by the Reserve Bank of India prevalent at the beginning of the relevant financial year. 
    • Time period for the above payment: Within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

What are the Landmark Judgments on Section 148 of NIA? 

• Jamboo Bhandari v. MP State Industrial Development Corporation Ltd & Ors (2023): 
  • The Court held that a purposive interpretation should be made of Section 148 of NIA. 
  • Hence, the Court held that normally the Appellate Court would be justified in imposing a condition of deposit under Section 148 NI Act.  
  • However, in cases where deposit of 20% will be unjust or imposing such a condition would amount to deprivation of the right of appeal of the appellant the exception can be made for reasons to be recorded in writing.  
  • Thus, the Court held that it is always open to the Appellate Court to consider whether it is an exceptional case which warrants grant of suspension of sentence without imposing the condition of deposit of 20% of the fine/compensation amount. 
  • The Court also reiterated that when the Appellate Court comes to the conclusion that it is an exceptional case the reasons of coming to such a conclusion should be recorded.
• Surinder Singh Deswal v. Virender Gandhi (2019): 
  • The issue before the Court was whether Section 148 of NI Act as amended by the 2018 amendment Act is retrospective or prospective in application. 
  • The Court held that it cannot be said that any vested right of appeal of accused- appellant has been taken away and/or affected. 
  • Thus, no substantive right of appeal has been taken away and/or affected. 
  • The Court thus held that considering the statement of object and reasons of amendment in Section 148 NIA and on purposive interpretation of the same it can be concluded that the amendments to Section 148 NIA are retrospective in nature.

Source: Supreme Court 

Why in News? 

Recently, the Supreme Court in the matter of Sonu Choudary v. State of NCT Delhi has held that a restaurant cannot be said to be a place which fulfills the requirement of house trespass. 

What was the Background of Sonu Choudary v. State of NCT Delhi Case? 

• In the present case, a criminal incident that occurred at Baithak Restaurant in Delhi. 
• The complainant Rajat Dhyani (PW-1) was running the Baithak Restaurant when the accused Sonu Choudary came to the establishment. 
• The accused requested a jug of water with the intention of consuming alcohol. 
• When Rajat Dhyani refused to provide the water, the situation escalated. 
• The accused allegedly pulled out a blade and inflicted injuries on Rajat Dhyani's thigh, shoulder, and back. 
• When Rajat called his friend Imran Khan (PW-3) for help, the accused allegedly attacked Imran as well, causing an injury to his stomach with the blade. 
• Upon receiving information about the incident, the Investigating Officer arrived at the scene and found two injured people. 
• The accused was apprehended on the spot. 
• A medical examination was conducted, which confirmed Rajat's injuries. 
• During the trial, while Rajat Dhyani supported the prosecution's case, Imran Khan turned hostile and did not support the prosecution's version of events. 
• The injuries sustained by Rajat were later classified as simple in nature by the doctors. 
• Initially, the accused was charged under two sections of the Indian Penal Code, 1860 (IPC): 
  • Section 324 (voluntarily causing hurt) 
  • Section 452 (house-trespass after preparation for hurt) 
• The trial court convicted the accused for the charged offence and the High Court confirmed the order the of the High Court. 
• Aggrieved by the decision of the lower courts the appellant filed the present appeal before the Supreme Court. 

What were the Court’s Observations? 

• The Supreme Court observed that: 
  • Regarding Section 324 of IPC (Voluntarily Causing Hurt): 
    • The Court confirmed the conviction under Section 324 IPC.: 
    • The prosecution successfully proved the accused's guilt beyond reasonable doubt 
  • Regarding Section 452 of IPC (House-trespass): 
    • The Court found significant flaws in the conviction under this section. 
    • Both lower courts failed to properly consider the essential ingredients of Section 452. 
  • The Supreme Court pointed out that a restaurant cannot be classified as: 
    • A place used for human dwelling 
    • A place of worship 
    • A place for custody of property 
  • The prosecution failed to establish the basic requirements of criminal trespass (Section 441) and house trespass (Section 442). Therefore, the conviction under Section 452 was legally unsustainable.  
  • The Supreme Court upheld the conviction under Section 324 of IPC with two years simple imprisonment, fine of Rs. 1,00,000 and an additional six month imprisonment in default of fine payment. 
  • The Supreme Court also set aside the conviction under Section 452 of IPC. 
  • Since the accused had already served two years in prison, the Court ordered immediate release if not required in any other case and direction to pay the fine if not already paid. 
  • The Supreme Court also issued process direction for the Trial Court to: 
    •  Verify the status of sentence completion 
    •  Check fine payment status 
    •  Take appropriate legal action for any pending aspects of the sentence 

What is House Trespass After Preparation for Hurt? 

• House Trespass 
  • It is a more specific type of criminal trespass. 
  • The House trespass specifically protects residential, religious, and storage spaces. 
  • House trespass is considered more serious because it involves invasion of private spaces or sacred places. 
  • Sub section (2) of Section 329 of Bharatiya Nyaya Sanhita, 2023(BNS) states that whoever commits criminal trespass by entering into or remaining in any building, tent or vessel used as a human dwelling or any building used as a place for worship, or as a place for the custody of property, is said to commit house-trespass. 
  • Subsection (4) of this section states that punishment for house trespass as Whoever commits house-trespass shall be punished with imprisonment of either description for a term which may extend to one year, or with fine which may extend to five thousand rupees, or with both. 
  • Sub section (2) of Section 330 of BNS states the conditions when a house trespass is said to be committed: 
    • A person is said to commit house-breaking who commits house-trespass if he effects his entrance into the house or any part of it in any of the six ways hereinafter described; or if, being in the house or any part of it for the purpose of committing an offence, or having committed an offence therein, he quits the house or any part of it in any of the following ways, namely:  
      • If he enters or quits through a passage made by himself, or by any abettor of the house-trespass, in order to the committing of the house-trespass.  
      • If he enters or quits through any passage not intended by any person, other than himself or an abettor of the offence, for human entrance; or through any passage to which he has obtained access by scaling or climbing over any wall or building. 
      • If he enters or quits through any passage which he or any abettor of the house-trespass has opened, in order to the committing of the house-trespass by any means by which that passage was not intended by the occupier of the house to be opened. 
      • If he enters or quits by opening any lock in order to the committing of the house-trespass, or in order to the quitting of the house after a house-trespass. 
      • If he effects his entrance or departure by using criminal force or committing an assault, or by threatening any person with assault. 
      • If he enters or quits by any passage which he knows to have been fastened against such entrance or departure, and to have been unfastened by himself or by an abettor of the house-trespass. 
  • Section 333 of BNS states the provision for House Trespass after Preparation for Hurt as: 
    • Whoever commits house-trespass, having made preparation for causing hurt to any person or for assaulting any person, or for wrongfully restraining any person, or for putting any person in fear of hurt, or of assault, or of wrongful restraint, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

Source: Supreme Court  

Why in News? 

The Supreme Court in M/s Crystal Transport Private Limited & Anr. v. a Fathima Fareed Unisa & Ors. has ruled that an outgoing partner of a dissolved firm has the right to seek accounts, and a share of the profits earned from the firm's assets, even if the assets are taken over by another entity without the partner's consent.  

• The bench, led by Chief Justice DY Chandrachud, emphasized that profits derived from the firm’s assets should be proportionally distributed to the outgoing partner.  
• This ruling came in a dispute over the dissolution and settlement of accounts of the Crystal Transport Service partnership. 

What was the Background of M/s Crystal Transport Private Limited & Anr. v. a Fathima Fareed Unisa & Ors. case? 

• A partnership firm named Crystal Transport Service was established in the early 1970s with four partners, each holding a one-fourth share in the business. 
• In 1978, three partners allegedly diverted funds from the partnership firm to a private limited company (the fourth defendant) without obtaining consent from the fourth partner (plaintiff). 
• When the plaintiff demanded accounts from the other three partners regarding this diversion of funds, they refused to provide the same. 
• Subsequently, the plaintiff filed Original Suit No.286 of 1978 seeking dissolution of the partnership, settlement of accounts, distribution of shares, and appointment of a receiver to manage the firm's assets until winding up. 
• The three defendant partners contested the suit claiming that the joint stock company was formed with the approval of all partners, including the plaintiff, and that all assets and liabilities of the firm were transferred to the fourth defendant company through an agreement dated 25th June1978. 
• Multiple receivers were appointed over time to manage the assets and take accounts, but faced challenges in executing their duties effectively, leading to several interim applications and legal proceedings. 
• The matter involved complex proceedings including preliminary decrees, appeals, revisions, and cross-objections, primarily centered around the proper accounting of firm assets and determination of the plaintiff's rightful share. 
• The core dispute revolved around whether the plaintiff was entitled to profits generated from the firm's assets after the date of dissolution, particularly those earned by the fourth defendant company.  

What were the Court’s Observations? 

• The Supreme Court upheld the High Court's finding that parties were not afforded proper opportunity to prove or challenge the reports which formed the basis of the final decree, thereby necessitating a remand of the matter. 
• The Court observed that as per the preliminary decree, which attained finality, there existed a clear direction that the Commissioner shall take accounts with due regard to Sections 37 and 48 of the Indian Partnership Act, 1932. 
• The Court noted the significant finding on record that the fourth defendant (appellant company) had taken over the assets of the firm, bringing the matter squarely within the ambit of Section 37 of the Partnership Act. 
• The Court interpreted Section 37 to hold that where an entity carries on business with the assets of the firm without final settlement of accounts, the outgoing partner is entitled to such share of profits made since cessation of partnership as may be attributable to the use of their share of property. 
• The Bench clarified that the quantum of business derived from the firm's assets by the appellant company remains a matter of evidence, which parties must establish during proceedings for preparation of the final decree pursuant to remand. 
• The Court, while disposing of the appeals, explicitly refrained from expressing any binding opinion on the merits of either party's claims, making them subject to evidence led during final decree proceedings. 
• The Court emphasized that the outgoing partner's entitlement to profits extends until final settlement is achieved, regardless of the dissolution date, provided the business continues to operate using the firm's assets. 

Section 37 of the Partnership Act 1932 

• Section 37 primarily deals with the rights of outgoing partners or their estates in scenarios where the business continues to operate using firm property without a final settlement of accounts. 
• The section applies in two specific circumstances:  
  • When a partner has died, or  
  • When a partner has otherwise ceased to be a partner 
• Three essential conditions must be satisfied for invoking Section 37:  
  • The surviving/continuing partners must carry on the firm's business. 
  • They must use the property of the firm. 
  • There must be no final settlement of accounts with the outgoing partner/estate. 
• In the absence of any contrary agreement, the outgoing partner or their estate has two options:  
  • Claim a share in profits attributable to their share in the firm's property, OR 
  • Claim interest at 6% per annum on their share in the firm's property 
• The right to claim subsequent profits continues until there is a final settlement of accounts between the parties, regardless of the date of cessation of partnership. 
• The section includes a proviso that creates an exception where there exists a contract giving surviving/continuing partners an option to purchase the interest of the outgoing/deceased partner. 
• If such an option is properly exercised in accordance with the contract, the outgoing partner/estate loses the right to claim any further share in profits. 
• However, if the continuing partners fail to comply with all material terms of the purchase option, they become liable to account under the main provisions of Section 37. 
• The section essentially acts as a safeguard against misuse of firm property by continuing partners and ensures fair compensation to outgoing partners until final settlement. 

Section 48 of the Partnership Act 1932 

• Section 48 prescribes the statutory rules for settlement of accounts between partners after dissolution of a firm, which are subject to any contrary agreement between partners. 
• The section establishes a hierarchical order for payment of losses:  
  • First from profits 
  • Then from capital 
  • Finally, if necessary, from partners individually in their profit-sharing ratio 
• For application of firm's assets, the section creates a mandatory waterfall mechanism in the following order:  
  • Priority 1: Payment of third-party debts 
  • Priority 2: Payment of advances made by partners 
  • Priority 3: Payment of capital contribution to partners 
  • Priority 4: Distribution of residue among partners in profit-sharing ratio 
• Partners' advances are distinguished from capital contributions and are given priority over return of capital, reflecting the principle that advances are essentially loans made by partners to the firm. 
• The section ensures equitable distribution by mandating that payments to partners for advances and capital must be made 'rateably', meaning proportionately according to their respective entitlements. 
• While the section provides a default framework, partners retain the freedom to contractually modify these rules through partnership agreement, emphasizing the primacy of partner autonomy in determining settlement terms.