List of Current Affairs

Source: Supreme Court 

Why in News? 

Recently, the Supreme Court in the matter of Mr. Ajayan v. The State of Kerala and Ors has held that  

• Section 195 (1) of the Code of Criminal Procedure, 1973 (CrPC) does not bar the investigation when directed by the High Court. 
• The Supreme Court emphasized that Section 195 of CrPC should not be a technical barrier preventing the investigation of serious allegations of judicial process interference.  
• The provision's primary purpose is to maintain the integrity of judicial proceedings while protecting individuals from frivolous complaints. 

What was the Background of Mr. Ajayan v. The State of Kerala and  Ors. Case?  

• In April 1990, an Australian named Andrew Salvatore was traveling from Thiruvananthapuram to Mumbai when he was caught at the airport with two packets of charas (hashish) hidden in his underwear, totaling about 61.6 grams. 
• After his arrest, the seized items, including his personal belongings and the underwear, were kept in police custody at the Valiyathura Police Station. 
• When the items were produced before a Judicial First Class Magistrate, a court clerk (Accused No. 1) was entrusted with custody of these items. 
•  In July 1990, an application was filed on behalf of Andrew Salvatore seeking release of his personal belongings, which was permitted by the court. 
• The items were released to a junior lawyer (Accused No. 2/Kerala MLA Antony Raju) who was representing Salvatore. Notably, Salvatore's underwear was also released along with his other personal items. 
• Later, Accused No. 2 returned the underwear to Accused No. 1, who then forwarded it to the Sessions Court, in the drug case. 
• The Sessions Court initially convicted Andrew Salvatore, sentencing him to 10 years' imprisonment and a fine of Rs. 1 lakh under the Narcotics Drugs and Psychotropic Substances Act, 1985(NDPS). 
• However, when Salvatore appealed, the Kerala High Court acquitted him after conducting a practical test, which revealed that the underwear did not match Salvatore's size. 
• The High Court strongly suggested that the underwear might have been planted to help Salvatore and recommended a proper investigation. 
• Following this, a Vigilance Officer of the High Court investigated and submitted a report recommending a detailed investigation. 
• In October 1994, based on the High Court's recommendation, a First Information Report (FIR) was registered alleging that the underwear was replaced by an unknown person. 
• In 2006, a charge sheet was filed against the court clerk and the lawyer, alleging they conspired to alter and replace the evidence to help Salvatore escape conviction. 
• In 2022, the clerk and the Kerela MLA (Antony Raju) filed a separate petition before the High Court for quashing of the criminal proceedings. 
• They claimed that cognizance could not have been taken by the Judicial Magistrate 1st Class as there was a bar under Section 195(1)(b) CrPC. 
• The High Court allowed the petition and quashed the criminal proceedings against them. 
• The High Court also issued directions to be taken for taking de novo steps against the allegations raised. 
• Based on the High Court’s order Raju and MR Ajayan (Editor, Green Kerala News) approached the Supreme Court raising the issue that: 
  • Whether Section 195(1)(b) CrPC, which puts embargo on taking of cognizance in certain situations (except upon complaint by a Court), was attracted to the present case?  

What were the Court’s Observations? 

• The Supreme Court observed that:  
  • Locus Standi of M.R. Ajayan: 
    • The Court held that M.R. Ajayan, as a socially spirited person and editor of "Green Kerala News", has locus standi to file the Special Leave Petition.  
    • The Court emphasized that in cases involving serious allegations of interference with judicial processes, third-party interventions can be allowed
    • The Court noted that the locus standi should not prevent examining the correctness of the High Court's approach.
  • Section 195(1)(b) of CrPC:
    • The bar under Section 195 is mandatory but should not be interpreted to prevent legitimate investigations.  
    • The proceedings originated from a judicial order (the High Court's 1991 judgment) and not a private complaint. 
    • The alleged act of tampering with evidence strikes at the foundation of judicial integrity.
  • Public Interest:  
    • The Court strongly emphasized that the case involves a significant public interest.  
    • The alleged interference with judicial proceedings erodes public trust in the judicial system.  
    • Such actions compromise the principles of rule of law and fairness.
  • Nature of the Proceedings:  
    • The Court rejected the High Court's distinction between judicial and administrative orders.  
    • It noted that the initiation of proceedings was directly linked to the High Court's 1991 judgment acquitting Salvatore.
  • Retrial and Exceptional Circumstances:  
    • The Court affirmed that retrials can be ordered in exceptional circumstances 
    • The principles of fair trial and search for truth are paramount. 
    • Procedural violations that seriously prejudice the trial can justify a retrial. 
  • The Supreme Court set aside the High Court's order quashing the criminal proceedings:  
    • Restored the order taking cognizance in the criminal proceedings. 
    • Directed the Trial Court to conclude the trial within one year. 
    • Ordered the accused to appear before the Trial Court on 20th December 2024.
• The Supreme Court highlighted the following principles based on precedents for section 195 CrPC as: 
  • Mandatory Procedural Requirement: 
    • Section 195 of CrPC is a mandatory procedural provision. 
    • It restricts the general right of individuals and magistrates to register complaints for specific types of offenses.
  • The section deals with three distinct categories of offenses: 
    • Contempt of lawful authority of public servants. 
    • Offenses against public justice. 
    • Offenses relating to documents given in evidence.
  • Scope and Purpose: 
    • The section applies to offenses that: 
      • Directly impact the discharge of public servants' duties. 
      • Directly correlate with court proceedings. 
      • Affect the administration of justice.
    • Cognizance Restriction: 
      • The provision creates a bar against taking cognizance of certain specified offenses. 
      • Cognizance can only be taken upon a complaint by: 
        • The court concerned 
        • An authorized officer of the court 
        • A subordinate court
  • Document-Related Offenses: 
    • The bar applies specifically when an offense involves a document in "custodia legis" (court's custody). 
    • Forgery of a document before its court production is not covered by this bar. 
    • The bar only applies to offenses occurring after a document's production in court.
  • High Courts can exercise jurisdiction under Section 195: 
    • On an application 
    • Suo-motu (on its own) 
    • When the interests of justice demand
  • The section aims to protect innocent persons from: 
    • False complaints 
    • Frivolous legal proceedings by private individuals. 
  • The term "Court" is interpreted broadly includes civil, revenue, and criminal courts and can include tribunals established by central or state acts.
  • Hierarchical Considerations: 
    •  Courts to which appeals ordinarily lie. 
    •  Principal courts with original civil jurisdiction. 
    •  Specific provisions for multiple appellate courts.
  • Exceptional Circumstances:
    • While the bar is mandatory, it should not: 
      • Prevent legitimate investigations. 
      • Obstruct the pursuit of justice. 
      • Shield genuine instances of judicial misconduct.
  • Key Principle Underlying the Interpretation: 
    • The Supreme Court emphasized that Section 195 of CrPC should not be a technical barrier preventing the investigation of serious allegations of judicial process interference.  
    • The provision's primary purpose is to maintain the integrity of judicial proceedings while protecting individuals from frivolous complaints. 

What is Section 215 of Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS)? 

• This section was earlier covered under Section 195 of CrPC. 
• This section states the provision related to Prosecution for contempt of lawful authority of public servants, for offences against public justice and for offences relating to documents given in evidence. 
• It states as follows: 
  • Two primary categories of offenses are covered: 
    • As per subsection 1(a), No court shall take the cognizance of: 
      • Offenses under sections 206-223 of BNS (excluding section 209  
      • Including direct offenses, abetment of such offenses and criminal conspiracy to commit such offenses. 
      •  Cognizance can only be taken on written complaint by: 
      • Concerned public servant. 
      • Administratively subordinate public servant. 
      • Public servant authorized by the concerned public servant. 
  • As per Subsection 1(b): 
    • Offenses under sections 229-233, 236, 237, 242-248, and 267. 
    • Offenses related to court proceedings or documents. 
    • Including offenses committed during court proceedings, offenses involving documents produced as evidence and criminal conspiracy, attempt, or abetment of such offenses. 
    • Cognizance can only be taken on written complaint by: 
      • The concerned court 
      • An officer authorized by the court 
      • A subordinate court
  • Subsection 2 of this section states the provisions related to withdrawal of complaints as: 
    • Authorized administrative authorities can order withdrawal of complaint. 
    • No withdrawal allowed if the trial has concluded.
  • Subsection 3 defines the “Court “as:
    • Civil Courts 
    • Revenue Courts 
    • Criminal Courts 
    • Tribunals constituted under Central/State Acts
  • Subsection 4 states subordination of court as: 
    • Courts receiving appeals 
    • Principal Courts with original civil jurisdiction.
  • It is further provided that: 
    • where appeals lie to more than one Court, the Appellate Court of inferior jurisdiction shall be the Court to which such Court shall be deemed to be subordinate. 
    • where appeals lie to a Civil and also to a Revenue Court, such Court shall be deemed to be subordinate to the Civil or Revenue Court according to the nature of the case or proceeding in connection with which the offence is alleged to have been committed. 

Source:  Kerala High Court 

Why in News?

The Kerala High Court recently ruled on a review petition in a custody dispute, clarifying that a party is not estopped from challenging an order if the error was made by the court itself. The court ordered its duty to correct its own mistakes and stated that custody orders can be varied if circumstances change.  

• The case involved a father seeking custody of his child, but the court had initially granted permanent custody to the mother, subject to the father's visitation rights, based on a mediation settlement. 

What was the Background of the Amith v. Divya Case? 

• The case involves a custody dispute between a divorced couple concerning their minor child, with the father working in Dubai and the mother pursuing higher studies in Canada. 
• Initially, the couple had a mediation settlement where permanent custody of the child was granted to the mother, with visitation rights for the father. 
• After remarrying and relocating to Canada, the mother left the child with her parents in India while she continued her studies. 
• The father filed multiple applications in the Family Court seeking:  
  • Permanent custody of the child 
  • Permission to take the child to Dubai for education 
  • Interim custody of the child 
• The mother simultaneously filed cross-applications, including requests to:  
  • Take the child to Canada 
  • Modify the existing visitation rights 
• The Family Court initially dismissed some of the mother's applications and allowed the father to take the child to Dubai in the upcoming academic year, subject to certain conditions. 
• Subsequently, both parties filed original petitions challenging the Family Court's orders, leading to further legal proceedings in the higher court. 

What were the Court’s Observations? 

• The court identified a patent error in the single judge's order, specifically noting that the original petitions' core issues regarding the Family Court's orders were not adequately considered. 
• The court stated that custody orders, whether interim or permanent, can be modified based on changing circumstances and are not immutable. 
• The bench highlighted the potential procedural complications that could arise if court records are not maintained properly, which might impede the Family Court's ability to exercise its jurisdiction in subsequent proceedings. 
• The court articulated a nuanced interpretation of the legal doctrine of estoppel, asserting that while parties accepting benefits of an order may be prevented from challenging it, this principle cannot override principles of equity and good conscience. 
• The court observed that the mother's right to seek future custody in Canada appeared to be a "windfall" obtained due to the court's error, which was not warranted based on the previous Family Court orders. 
• The bench suggested that the respondent was strategically invoking the doctrine of approbate and reprobate to sustain an unentitled benefit and prevent the review petition's consideration. 
• The court determined that when an error is committed by the court itself, there can be no valid estoppel against the party seeking to rectify that error, emphasizing the court's fundamental duty to correct its own mistakes. 

What is Estoppel? 

• Estoppel is a legal doctrine preventing a person from contradicting a previous assertion or behavior if others have relied on it to their detriment. 
• It ensures fairness and consistency in legal and personal dealings, rooted in the Latin maxim “allegans contraria non audiendus est” (a person alleging contradictory facts should not be heard). 

What are the Types of Estoppel? 

• Res Judicata (Estoppel by Record):  
  • Prevents re-litigation of the same matter between the same parties once it has been conclusively decided by a competent court. 
  • Basis in Law: Section 40-44 of the Indian Evidence Act codifies this concept. 
• Estoppel by Deed:  
  • Parties to a formal agreement or deed cannot later deny the facts it contains if they have acted upon it. 
  • Fraudulent deeds are exceptions to this rule. 
• Estoppel by Conduct:  
  • Occurs when a person's behavior or omission leads another to believe a certain fact, causing reliance.  
  • The person cannot later deny the validity of their representation. 
• Promissory Estoppel:  
  • If a person makes a promise, leading another to act upon it, they are prevented from reneging on the promise, even without formal consideration. 
  • Key Case: Central London Property Trust v High Trees House Ltd. introduced this in English law. Under Indian law, promissory estoppel extends to both private and government parties under Section 115 of the Indian Evidence Act. 

Who Can Be Estopped? 

• Tenants, Licensees, and Possessors:  
  • Tenants or licensees cannot deny their landlord’s title at the beginning of their tenancy (Section 116 of Indian Evidence Act, 1872). 
  • Even if ownership changes, tenants cannot dispute the new owner’s title during tenancy unless fraud is involved. 
• Acceptor of Bill of Exchange, Bailee, or Licensee:  
  • The acceptor of a negotiable instrument cannot dispute the drawer’s authority if the instrument is validly issued (Section 117 of Indian Evidence Act, 1872). 
  • A bailee who receives goods for safekeeping cannot dispute the title of the bailor unless a third party claims a superior title. 
• Minors:  
  • Minors, as a rule, are not bound by estoppel since contracts with minors are void ab initio. 
  • Exception: Under English law, minors may be estopped to the extent of restoring benefits received, as in Leslie v Sheill. 
• Government and Government Agencies:  
  • While governments are generally exempt from estoppel in sovereign acts, promissory estoppel can bind them in cases of clear, unambiguous promises leading to detrimental reliance. 
  • Limitations: Estoppel doesn’t apply if enforcing the promise would breach the law or public interest. 

What are the Exceptions to Estoppel? 

• Fraud or Misrepresentation:  
  • Estoppel cannot be used to protect fraudulent or illegal acts. 
  • A forged deed or fraudulent representation nullifies estoppel. 
• Competency of Parties:  
  • Parties invoking estoppel must have the legal capacity to make or rely upon the statements. 
• Public Interest and Sovereign Acts:  
  • Governments are exempt from estoppel in sovereign functions

Source: Kerela High Court 

Why in News? 

A bench of Justice AK Jayasankaran Nambiar and Justice KV Jayakumar held that income from sale of immovable property is to be treated as ‘Capital gains’ and not ‘business income’.    

• The Kerela High Court held this in the case of M/s Knowell Realtors India Pvt Ltd v. Assistant Commissioner of Income Tax. 

What was the Background of M/s Knowell Realtors India Pvt Ltd v. Assistant Commissioner of Income Tax Case?   

• The Company was incorporated on 27th September 1996 and is involved in the business of property leasing and sale. 
• Previously, the appellant declared rental receipts as "Income from House Property". 
• The tax returns earlier were accepted without any objection. 
• For assessment years 2012-13 and 2015-16, the tax department changed its approach.  
• The department reclassified rental receipts from "House Property Income" to "Business Income".  
• The consequence of the above was: 
  • Sale of properties now assessed as business income. 
  • It differs from the appellant's original declaration of capital gains. 
  • This potentially results in different tax implications and liability. 
• The key issue to be determined here was to determine the correct head of income for rental receipts under the Income Tax Act.

What were the Court’s Observations?  

• The Court observed that it is a basic requirement that the tax assessment should be uniform and consistent. 
• The Court noted that the assessee has been deriving income from letting out the house property owned by it in all the years prior and subsequent to the assessment year. 
• It was further noted that merely because in a given year the assessee affected sale of its properties it cannot be said that he has embarked upon the business of selling and buying the properties over the years. 
• Finally, the Court held that the sale of the properties in the two years under consideration should only be seen as an activity which is incidental to the activity of letting out the property for rent. 
• Thus, the Court held that the income derived by the assessee from the sale of properties owned by it during the two years in consideration can only be assessed under the head ‘capital gains’ and not as ‘business income’.

What are the Types of Taxes?

• There are two types of taxes: direct tax and indirect tax. 
• Direct Taxes: Direct taxes are levied directly on an individual's or organization's income or wealth. These are paid directly to the government by the taxpayer. These are as follows: 
  • Income Tax: Imposed on individuals, Hindu Undivided Families (HUFs), and businesses based on their income. 
  • Corporate Tax: Levied on the net income or profits of companies. 
  • Capital Gains Tax: Charged on profits earned from the sale of capital assets like property, stocks, or bonds. It can be: 
    • Short-term capital gains tax (STCG) 
    • Long-term capital gains tax (LTCG) 
  • Securities Transaction Tax (STT): Tax on transactions in the stock market, like the sale or purchase of equity shares. 
  • Dividend Distribution Tax (DDT): Paid by companies distributing dividends (abolished in 2020 and shifted to shareholders). 
  • Wealth Tax: (Abolished in 2015) Previously levied on an individual's net wealth exceeding a certain threshold. 
• Indirect Taxes: Indirect taxes are levied on goods and services and are included in the price of goods and services, paid indirectly by the consumer. Following are the types of indirect taxes: 
  • Goods and Services Tax (GST): A comprehensive tax on the supply of goods and services, subsuming several other indirect taxes. It includes: 
    • CGST: Central Goods and Services Tax 
    • SGST: State Goods and Services Tax 
    • IGST: Integrated Goods and Services Tax 
    • UTGST: Union Territory Goods and Services Tax 
  • Customs Duty: Levied on goods imported into or exported from India. 
  • Stamp Duty: Charged on legal documents such as property sale deeds. 
  • Entertainment Tax: (Subsumed under GST in most cases) Previously levied on movie tickets, events, etc. 

What is Income from “Capital Gain” and Income from “Business”? 

• Whenever the transaction involves transfer of capital assets it is income from capital gain. 
• However, when the transaction is entered in normal course of business it is business income. 
• In the case of Kenton Leisure Services (P) Ltd v. DCIT 18 taxmann.com 158 (ITA T-Cochin) (2012), the Court held that where there are multiple agreements that are interconnected all of them should be considered as a part of single, integrated transaction and should not be viewed distinctly. 
  • Also, the Court held that the entire income from these agreements have to be assessed under the head of ‘business income’. 
• In order to determine if the income is business income or the capital gaisn income following points should be considered: 
  • The Normal course of business: if the transaction is similar to normal course of business it is considered to be business income. 
  • The frequency of transaction: the greater the frequency of transaction the higher is the likelihood of it being treated as a business income. 
  • The adventure in the nature of trade: The income from adventure or concern in the nature of trade is to be treated like business income.