List of Current Affairs

Source: Madras High Court 

Why in News? 

Recently, the Madras High Court in the matter of Nalin Gupta v. Commissioner of Customs has held that the court emphasized that proper procedure is required i.e. response to Show Cause Notice on merits and then any procedural requests like cross-examination can be made. This sequence cannot be bypassed or reversed 

What was the Background of Nalin Gupta v. Commissioner of Customs Case?  

• In the present case, a Show Cause Notice was issued by the Principal Commissioner of Customs, Preventive Commissionerate, Chennai-III on 28th September 2022. 
• The case falls under Section 28(4) of the Customs Act, 1962 (CA), which as per Section 28(9)(b) requires determination of duty or interest within one year from the date of notice. 
• According to the appellant, the limitation period for determining the duty expired on 27^th September 2023. 
• The Customs Department (respondent) contends that the time period was extended up to 27th September 2024 through an Order/Communication dated 7^th May 2024, issued by the Chief Commissioner of Customs, Chennai Customs Zone. 
• The Madras High Court had directed the department to conclude the proceedings in terms of Section 28(9) of the Customs Act, 1962.  
• The assessee has challenged the order passed by the Madras High Court. 

What were the Court’s Observations? 

• The Madras High Court observed that: 
  • Cross-Examination Rights: 
    • The court firmly established that a party cannot demand cross-examination of witnesses in a Show Cause proceeding without first responding to the merits of the notice. 
    • Cross-examination requests without substantive replies should be rejected outright. 
  • Limitation Period and Extensions: 
    • The court clarified the sequential nature of extensions under Section 28(9): 
      • The initial limitation period must first expire (6 months/1 year as applicable).  
      • Only after this expiry can a senior officer consider granting extensions. 
      • Extensions cannot be granted preemptively or during the initial period. 
  • Procedural Sequence: 
    • The court emphasized that proper procedure requires: 
      • First: Response to Show Cause Notice on merits. 
      • Then: Any procedural requests like cross-examination. 
      • This sequence cannot be bypassed or reversed. 
  • Extension Powers: 
    • The court explained that: 
      • Senior officers can grant extensions only after the initial statutory period ends. 
      • For cases under clause (a): Additional 6 months. 
      • For cases under clause (b): Additional 1 year. 
      • These extensions are not automatic but discretionary. 
  • The court noted that if no orders are passed even after the extended period the proceedings automatically conclude, the effect is as if no notice was ever issued. 
  • The appeal became ineffective (infructuous) due to the 7th May 2024 communication validly extended the limitation period. Therefore, the challenge to limitation was premature 
• The Madras High Court dismissed the appeal.  

What is a Show Cause Notice? 

• A Show Cause Notice is a formal communication issued by a court, government agency, or another authoritative body to an individual or entity, asking them to explain or justify their actions, decisions, or behavior.  
• The purpose of a show cause notice is to give the recipient an opportunity to provide a response or clarification regarding specific concerns or alleged violations. 

What is Section 28(9) of the Customs Act, 1962? 

• It states that the proper officer shall determine the amount of duty or interest under sub-section (8). 
  • Within six months from the date of notice, in respect of cases falling under clause (a) of sub- section (1). 
  • Within one year from the date of notice, in respect of cases falling under sub-section (4). 
• Under the first proviso to Section 28(9) of the Customs Act, a senior officer can extend the period specified in clause (b) by one additional year, having regard to circumstances that prevented the proper officer from determining the amount. 
• The second proviso to Section 28(9) states that if the proper officer fails to determine within such extended period, the proceedings shall be deemed concluded as if no notice had been issued. 
• Section 28(9-A) provides exceptions where the limitation period can be paused if: 
  • A similar matter is pending before the Appellate Tribunal, High Court, or Supreme Court. 
  • An interim stay order has been issued. 
  • The Board has issued specific directions to keep the matter pending. 
  • The Settlement Commission has admitted an application. 

No Cross Examination Request Without a Reply in Show Cause Notice 

• Section 124: Issue of show cause notice before confiscation of goods, etc. 
  • As per Section 124(b) of the Customs Act, which deals with- issue of show cause notice before confiscation of goods, etc., Noticee is required to submit his reply as he is bounded by the said provision 
• Section 138B: It states that Relevancy of statements under certain circumstances as: 
  • Subsection (1) states that a statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, 
    • When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable. 
    • When the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.  
  • The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court.

Source: Madras High Court  

Why in News? 

The Madras High Court recently discussed the impact of the 2005 amendment to the Hindu Succession Act, which granted daughters equal rights in ancestral property. Justice N. Seshasayee observed that while this empowered daughters, it reduced the shares of the widow and mother of the deceased, who are also Class I heirs.  

• The court ruled that the amendment aimed to balance the interests of female heirs without altering the core principles of coparcenary or ancestral property.  
• The court further noted that the notional partition introduced by the amendment affected both the rights of surviving coparceners and the overall distribution of property. 

What was the Background of Vasumathi and Another v R Vasudevan and Others Case? 

• Two daughters filed a suit seeking partition of immovable property against their father and two brothers, claiming 1/5th share each as coparceners in ancestral property. 
• The property in question was originally allotted to their father through a partition deed (Ext. A1) dated 1st September 1986, which divided the property between him and his brother. 
• Just before the daughters filed their partition suit, their father executed settlement deeds (Ext. B1 and B2) dated 22nd August 2008, transferring the property to his two sons. 
• The sons (defendants 2 and 3) subsequently filed a separate suit (O.S. 484 of 2011) seeking an injunction to prevent their sisters from interfering with their possession of the property. 
• The daughters contested the injunction suit, arguing that their father wasn't the absolute owner and couldn't transfer their rightful shares through settlement deeds, especially since these deeds were executed after they had sent a notice demanding partition. 
• The daughters based their claim on the 2005 amendment to Section 6 of the Hindu Succession Act, 2006 which granted daughters equal rights as coparceners in ancestral property. 
• The original partition deed (Ext. A1) contained a joint statement by the father, his brother, and their four sisters acknowledging that the properties were ancestral in nature, having belonged to one Rangasamy Chettiar. 
• Both suits were tried jointly, with the second plaintiff testifying as PW1 and producing exhibits A1 to A5, while the second defendant testified as DW1 and produced the settlement deeds (Ext. B1 and B2). 
• The core dispute centered around whether the property retained its ancestral character after the 1986 partition, and consequently, whether the daughters had rights as coparceners under the 2005 amendment to the Hindu Succession Act. 

What were the Court’s Observations? 

• The High Court observed that while the 2005 amendment to Section 6 of the Hindu Succession Act elevated daughters to coparcener status, it inadvertently reduced the quantum of property that would otherwise vest with other Class I female heirs (widow and mother of the deceased coparcener). 
• The Court noted that Parliament, despite the amendments, has not attempted to dismantle the fundamental concepts of Hindu law such as coparcenary, ancestral property, and their inter-relationship and legal incidences. 
• The Court noted that notional partition under Section 6 serves a dual purpose:  
  • It interferes with survivorship rights of surviving coparceners. 
  • Reduces the combined holding to accommodate Class I female heirs' shares. 
• The Court interpreted that what emerges from ancestral property necessarily remains ancestral property in the hands of those entitled to hold it as such, and what remains after providing for female heirs retains its ancestral character. 
• The Court held that when a property holder consciously subscribes to a deed treating property as ancestral, they are estopped from later resiling from their stated position regarding the property's character. 
• The Court stated that without economic freedom through property rights, it would be futile to presume that women could effectively enjoy other personal rights guaranteed under the Constitution. 
• The Court observed that the right to a dignified life, when viewed through the lens of equality doctrine, requires both men and women to have substantially similar property rights to achieve identical levels of dignified existence. 
• The Court held that the father's undivided 1/3rd share along with the 1/18th share obtained from his father constituted ancestral property, making the daughters eligible as coparceners. 
• The Court determined that settlement deeds executed by the father in favor of his sons could not defeat the daughters' pre-existing rights as coparceners, which had vested upon the 2005 amendment coming into effect. 

What is Section 6 of Hindu Succession Act ,2005? 

About: 

• Under the Mitakshara law governing Joint Hindu families, a daughter of a coparcener shall become a coparcener by birth in her own right, with the same rights and liabilities in coparcenary property as a son. 
• Any property that a female Hindu acquires under this provision shall be held with coparcenary ownership rights, including the right to dispose of it through testamentary disposition (will). 
• When a Hindu dies after the commencement of this Act, their interest in joint family property shall devolve by testamentary or intestate succession, not by survivorship. 
• Upon such death, the coparcenary property shall be deemed divided as if a partition had taken place, with daughters receiving equal shares as sons. 
• In the case of pre-deceased sons or daughters, their share shall be allotted to their surviving children as if they were alive at the time of partition. 
• For pre-deceased children of pre-deceased sons or daughters, their share shall be allotted to their children (i.e., grandchildren of the original coparcener). 
• A coparcener's interest shall be deemed to be the share they would have received if partition had occurred immediately before their death, regardless of whether they could claim partition. 
• The Act abolishes the Hindu law concept of "pious obligation" - courts cannot recognize claims against sons, grandsons, or great-grandsons for recovering debts of their father, grandfather, or great-grandfather. 
• However, for debts contracted before the Act's commencement, creditors retain their rights to proceed against sons, grandsons, or great-grandsons, and any existing alienations remain enforceable. 
• The Act does not affect partitions effected before December 20, 2004, and cannot invalidate any disposition, alienation, partition, or testamentary disposition made before this date. 
• For the Act's purposes, "partition" means either a registered deed of partition under the Registration Act, 1908, or a partition decreed by a court. 

Legal Provision: 

Section 6 of the Hindu Succession Act (as amended in 2005): 

• Equal Rights for Daughters (Sub-section 1): 
  • Daughters now have equal rights as sons in ancestral/coparcenary property. 
  • This applies by birth, just like sons. 
  • Daughters have the same rights and liabilities as sons would have. 
  • This change came into effect on 9th September 2005. 
• Property Rights of Female Hindus (Sub-section 2): 
  • Property received under this provision can be disposed of by the female Hindu through a will. 
  • She holds it with full coparcenary ownership rights. 
• Death and Succession Rules (Sub-section 3): 
  • When a Hindu dies after September 9, 2005, their property devolves by:  
    • Testamentary succession (if there's a will). 
    • Intestate succession (if there's no will). 
  • The old rule of survivorship no longer applies. 
  • Property is treated as if partition had taken place with:  
    • Equal shares to sons and daughters. 
    • Shares for children of pre-deceased sons/daughters. 
    • Shares for grandchildren of pre-deceased sons/daughters. 
• Pious Obligation (Sub-section 4): 
  • Courts can't hold sons, grandsons, or great-grandsons liable for ancestral debts based solely on "pious obligation". 
  • Exception: Debts contracted before 9th September 2005 can still be recovered under the old rules. 
• Partitions (Sub-section 5): 
  • These provisions don't apply to partitions made before 20th December 2004. 
  • Valid partitions must be either:  
    • Registered under the Registration Act, 1908 
    • Made through a court decree 
• Important Notes: 
  • The law applies retrospectively, giving daughters rights from birth. 
  • However, it doesn't invalidate partitions made before 20th December 2004. 
  • The amendment aims to remove gender discrimination in Hindu succession law. 
  • It significantly improves the property rights of Hindu women in ancestral property.