List of Current Affairs

Source: High Court of Orissa

Why in News? 

A bench of Justice Sashikanta Mishra held that where the tenancy is tenancy by holding over a minimum 15 days notice must be given before seeking to evict him.          

• The High Court of Orissa held this in the case of Sanatan Bardhan (since dead) through her LRs v. Ranu Sen and others. 

What was the Background of Sanatan Bardhan (since dead) through her LRs v. Ranu Sen and others. Case?  

• The suit was filed by the Plaintiff-respondents for eviction of defendant from the suit property. 
• The suit property belonged to Sisir Ch. Sen (predecessor of the plaintiffs) who inducted defendant as a monthly tenant for one year at Rs. 300. 
• The defendant paid house rent to Sisir till his death whereafter the plaintiffs having succeeded to the property accepted rent from him   
• The defendants were asked by the plaintiffs to pay enhanced rent of Rs 800 per month. 
• However, he did not pay the same nor cleared the arrears due. 
• On 15th December 1996 the suit house was found in a dilapidated condition for which the plaintiffs asked the defendants to vacate but he did not vacate the house and continued to default in paying the enhanced rent from October 1995. 
• Hence, the suit was filed. 
• It is the case of the defendant that no valid notice was issued under Section 106 of the Transfer of Property Act, 1882 (TPA). 
• The defendant detailed his attempts to pay rent. He contested the subsequent legal notices for rent enhancement. 
• The Trial Court held that the tenancy here would be treated as tenancy at will and it was held that notice under Section 106 is required to served on the defendant for evicting him from the suit house. Hence, the suit was dismissed by the Trial Court. 
• The appeal was filed in the First Appellate Court wherein the Court held the following: 
  • The lease agreement was unregistered and valid only for a year hence, it was deemed to be a month-to-month tenancy as per Section 17 of the Indian Registration Act, 1908. 
  • It was further held that the defendant has become a tenant by sufferance and under Section 111 (a) of TPA no notice was required to terminate the tenancy. 
  • Hence, the Court in this case allowed the appeal of the plaintiff and directed the defendant to vacate the suit property.  
• The defendant preferred the second appeal where the following substantial question of law was posed “Whether the finding of the Appellate Court that no notice was required under Section 106 of TPA is required to be served upon the defendant asking him to vacate the house is legally sustainable?”

What were the Court’s Observations?  

• The Court observed that it is admitted that the lease was for one year and therefore, the lease stood automatically determined at the expiry of one year by the virtue of Section 111 (a) of TPA. 
• The Court made a distinction between “tenant by holding over” and “tenant by sufferance”. 
• When the possession of the lessee is after the expiry of the lease is with the assent of the lessor he would be “tenant by holding over” but if the continuance is not by the assent of the lessor, he is merely a “tenant at sufferance”. 
• The Court held that the provision under Section 106 of the TPA requires the notice of 15 days’ and the same cannot be done away with. 
• The Court held that the First Appellate committed an error by treating the defendant as tenant at sufferance and not a tenant holding over. 
• Thus, the Court held that the First Appellate Court committed an illegality by holding that no notice under Section 106 of TPA is necessary. 
• Thus, the Court held that in the present facts the appeal has succeeded.

What is Section 106 of TPA?

• Section 106 of TPA provides for duration of certain leases in absence of written contract or local usage. 
• Section 106 (1) of TPA provides that: 
  • When the lease is for agricultural and manufacturing purposes: 
    • It will be considered year to year lease by default. 
    • Either lessor or lessee can terminate the lease. 
    • Termination requires a six- month notice. 
  • When lease is for other purposes: 
    • It will be considered a month to month lease by default. 
    • Either lessor or lessee can terminate the lease. 
    • Termination requires a fifteen-day notice
• As per Section 106 (2) the period mentioned in sub section (1) shall commence from the date of receipt of notice. 
• As per Section 106 (3) a notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section. 
• As per Section 106 (4) provides for the pre requisites of a notice: 
  • The notice must be in writing, signed by or on behalf of the person giving it 
  • It must be sent : 
    • By post to the party  
    • Or delivered personally to the party or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.

Who is “Tenant by Holding Over” and “Tenant by Sufferance”?  

• Where the possession of the lessee after the expiry of the lease is with the assent of the lessor, he is tenant by holding over. 
• Where the possession of the lessee after the expiry of the lease is without the assent of the lessor, he is tenant by sufferance. 
• Section 116 of TPA lays down the effect of holding over. It provides: 
  • If a lessee continues to occupy a property after their original lease has ended and the lessor accepts rent or otherwise consents to their continued possession, the lease is automatically considered renewed. 
  • The renewal of the lease occurs by default from year to year or month to month, depending on the original purpose of the property leasing, as specified in the previous Section 106. 
  • This renewal mechanism applies in the absence of any contrary agreement between the lessor and lessee, effectively providing a default mechanism for lease continuation when both parties continue to act as if the original lease is still in effect. 
• In the case of Raj Kishore Biswal and others v. Bimbadhar Biswal and others (1992) the Court observed regarding tenant holding over and tenant at sufferance as follows: 
  • “Tenant at sufferance” is an expression which is merely a fiction to distinguish him from a trespasser. 
  • A trespasser's possession is wrongful both in its inception as well as in its continuance whereas in case of "tenant at sufferance" his possession was rightful in its inception, but became wrongful in its continuance after termination of tenancy. 
  • There exists no relationship between a 'landlord' and 'tenant at sufferance' as lessor and lessee and a suit for his eviction was not necessary to be preceded by a notice u/s. 106 of the TPA. 
  • A tenancy at sufferance comes to an end by the demand for possession or by entry by the landlord without notice or by the tenant's quitting.

Source: Supreme Court  

Why in News? 

The Supreme Court ruled that a subsequent purchaser of an imported car cannot be deemed an "importer" under the Customs Act, 1962 and is not liable to pay customs duty. 

• A bench of Justices BV Nagarathna and N Kotiswar Singh set aside a High Court decision demanding ₹17.92 lakh in customs duty from a Porsche car's purchaser, clarifying that the liability rests with the original importer, not subsequent buyers. 

What was the Background of Nalin Choksey v. The Commissioner of Customs? 

• In June 2002, Sri Jalaludheen Kunhi Thayil imported a Porsche Carrera car into India. 
• The car was subsequently sold to Sri Shailesh Kumar in 2003 and then purchased by Nalin Choksey in October 2004. 
• In June 2007, the Customs Department issued a Show-Cause Notice to multiple parties, including Choksey, alleging serious import irregularities. 
• The allegations included misdeclaration of the car's model, year of manufacture, and chassis number, supposedly done to under-invoice and under-value the vehicle. 
• The Customs Department demanded a differential customs duty of ₹17,92,847 and proposed to confiscate the car. 
• The notice was issued under Sections 28(1) and 124 of the Customs Act, 1962, targeting the original importer and subsequent purchasers jointly and severally. 
• Initially, the Customs, Excise and Service Tax Appellate Tribunal allowed Choksey's appeal, finding him a bonafide purchaser with no role in the original import irregularities. 
• The Customs Department then appealed to the High Court of Kerala, which overturned the Tribunal's decision, leading Choksey to approach the Supreme Court. 

What were the Court’s Observations? 

• The Supreme Court examined the definition of 'importer' under Section 2(26) of the Customs Act, concluding that the appellant (Nalin Choksey) did not qualify as an importer since he was neither involved in the car's importation nor was the car imported for his benefit. 
• The Court rigorously analyzed the definition of 'owner' under Section 2(30) of the Motor Vehicles Act, 1988, determining that Choksey could not be considered the legal owner as the vehicle's registration certificate remained in the original importer's name. 
• The Court distinguished between possession and ownership, rejecting the Department's argument that mere possession of the vehicle could render Choksey liable for customs duty, particularly when the vehicle's actual owner (the original importer) was known. 
• The bench critically observed that the proceeding's initiation against Choksey—including the Show-Cause Notice, seizure, and confiscation—were fundamentally unlawful and not in accordance with the provisions of the Customs Act. 
• While quashing the proceedings against Choksey, the Court explicitly clarified that this decision would not impede the Department from pursuing legal action against the original importer and registered owner of the vehicle. 
• The Court ultimately held that a subsequent purchaser cannot be arbitrarily made liable for customs duty evasion committed during the original import of a vehicle.

What is the Custom Act, 1962? 

• Legal Framework: The Customs Act of 1962 is a comprehensive legislation that provides the legal basis for levy of customs duties, regulation of imports and exports, and management of international trade in India. 
• Constitutional Basis: The Act derives its power from Entry No. 83 of List 1 to Schedule VII of the Indian Constitution, which empowers the Union Government to legislate and collect duties on imports and exports. 
• Key Provisions of the Act:  
  • Section 12 specifically provides for the levy of duties on goods imported into or exported from India 
  • Defines the procedures for determining the value of imported and exported goods 
  • Establishes regulations for cargo, baggage, and international passenger clearance 
• Duty Determination: The Act works in conjunction with the Customs Tariff Act, 1975 to specify:  
  • Items subject to import and export duties. 
  • Rates of duties (specific, ad-valorem, or specific cum ad-valorem). 
  • Valuation methods for determining duty rates. 
  • Enforcement Functions:  
    • Governs imports and exports of cargo, baggage, and postal articles. 
    • Provides mechanisms for preventing smuggling. 
    • Enables enforcement of prohibitions and restrictions on international trade. 
• Modernization Aspect: The Act has been continuously updated to:  
  • Adopt international best practices. 
  • Implement electronic data interchange (EDI). 
  • Align with World Customs Organization standards. 
  • Facilitate ease of doing business. 
• Scope of Application: Covers a wide range of stakeholders including:  
  • International passengers 
  • Importers and exporters 
  • Traders 
  • Manufacturers 
  • Carriers 
  • Port and airport authorities 
  • Other government and semi-government agencies 
• Valuation Principles: Based on the WTO Valuation Agreement (formerly GATT), which provides standardized methods for determining the customs value of imported and exported goods. 

Valuation Principles Under Customs Act: 

Based on the WTO Valuation Agreement to ensure standardized and transparent duty assessment. 

• Section 28(1): Recovery of duties or penalties. 
• Section 124: Legal framework for confiscation and penalties 

Source: Supreme Court 

Why in News? 

Recently, the Supreme Court in the matter of Rohit Kochhar v. Vipul Infrastructure Developers Ltd. & Ors.  has held that the territorial jurisdiction for a suit involving immovable property should be where the property is located, and the court must be able to grant an effective judgment.   

What was the Background of Rohit Kochhar v. Vipul Infrastructure Developers Ltd. & Ors.  Case?  

• In the present case, the dispute involves a commercial property transaction between Rohit Kochhar (the plaintiff) and Vipul Infrastructure Developers Ltd. (the defendants). 
• In September 2003, the defendant offered to sell a commercial space of approximately 10,000 square feet located on the second floor of a commercial complex in Gurgaon. 
• The defendant sent a written communication containing the offer and transaction terms for the property. 
• On 20th January 2004, the plaintiff accepted the offer and issued a cheque for Rs. 20,00,000 to the defendant.  
• A subsequent payment of Rs. 20,00,000 was made on 6th February 2004. 
• Disagreements arose between the parties regarding the terms of the "Flat Buyers Agreement".  
• The plaintiff claimed the defendants were insisting on unreasonable and arbitrary terms, apparently attempting to avoid their contractual obligations. 
• Frustrated by what he perceived as the defendant's refusal to honor the contract; the plaintiff filed a civil suit in the Delhi High Court seeking specific performance of the contract and a permanent injunction against the defendant. 
• The defendants contested the suit on two primary grounds: 
• The Delhi High Court lacked territorial jurisdiction to hear the case. 
• There was no concluded and binding contract between the parties. 
• The key point of contention was the location of the property (in Gurgaon) versus the location where the suit was filed (Delhi), which raised complex questions about legal jurisdiction. 
• The Delhi High Cort applied the principle of Section 16 of the Code of Civil Procedure, 1908(CPC) and held that the suit is maintainable. 
• While this order was reversed by the Divisional Bench of the High Court and the matter was returned to the competent court. 
• Aggrieved by the decision of the High court the appellant filed the present appeal before the Supreme Court

What were the Court’s Observations? 

• Supreme Court made the following observations: 
  • The Supreme Court agreed with the High Court's observations and reasoning. 
  • The Court emphasized that: 
    • Section 16 of CPC recognizes that actions against property should be brought where the property is situated.  
    • A court without territorial jurisdiction over the property cannot effectively decide rights or interests in that property. 
  • The registration of the sale deed would have to occur in Gurugram. 
  • The defendants would need to leave Delhi's jurisdiction to execute the sale deed. 
  • The relief cannot be obtained entirely through the personal obedience of the defendants. 
  • The Supreme Court ultimately dismissed the Special Leave Petitions, agreeing that the Delhi High Court did not have territorial jurisdiction to hear the case.

What is Specific Performance?

• Specific performance constitutes an equitable remedy granted by a court to uphold the contractual commitments among the parties. 
• Unlike a claim of damages, which involves compensation for not fulfilling the contractual stipulations, specific performance operates as a remedy that enforces the terms agreed between the parties. 
• It is governed by the Specific Relief Act, 1963 (SRA). 
• Section 10 of SRA deals with the specific performance in respect of contracts. It states that- 
  • The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16. 
• The Supreme Court in the case of Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd. (2023) held that the relief of specific performance of a contract can only be granted when the party claiming such relief shows its readiness and willingness to perform its obligations under the contract. 

What is an Agreement to Sell? 

About: 

• An agreement to Sell is the transfer of property that can take place in a future date.  
• Section 54 of Transfer of Property Act, 1882 (TOPA) defines “sale”. This Section also defines “Contract for Sale”.  
• A “Contract for Sale” (Agreement to sell) is a contract that sale of immovable property shall take place on terms settled between the parties.  
  • Section 54 further provides that it does not of itself create any interest in or charge on such property. 

Difference between Sale and Agreement to Sell: 

What is Section 16 of CPC? 

Suits to be Instituted where Subject-Matter is Situated:

• Scope of the Section: 
  • This legal provision outlines the courts where various types of property-related lawsuits can be filed within India. 
• Types of Suits Covered: 
  • The section addresses suits related to: 
  • Immovable Property Suits: 
    • Recovery of immovable property (with or without rent/profits), Partition of immovable property, Mortgage-related actions 
    • Foreclosure 
    • Sale 
    • Redemption 
    • Determining rights or interests in immovable property 
    • Compensation for damages to immovable property 
  • Special Provision for Movable Property: 
    • Recovery of movable property under distraint or attachment. 

Basic Jurisdictional Rule: 

• General Principle: Suits must be filed in the court where the property is located. 

Exceptions: 

• When the suit involves immovable property held by the defendant, an additional option exists: 

Alternative Jurisdiction: 

•  The plaintiff may file the suit in either: 
• The court where the property is located, or 
• The court within the jurisdiction where the defendant: 
  • Actually, and voluntarily resides 
  • Carries on business 
  • Personally, works for gain 

Conditions for Alternative Jurisdiction: 

• The relief sought must be entirely obtainable through the defendant's personal compliance. 
• Must involve a wrong or relief related to the immovable property.

Case Laws:

• Harshad Chiman Lal Modi v. DLF Universal Ltd (2005): 
  • The Supreme Court observed that Section 16 of the CPC recognizes a well-established principle that actions against res or property should be brought in the forum where such res is situated.  
  • A court within whose territorial jurisdiction the property is not situated has no power to deal with and decide the rights or interests in such property. In other words, this Court held that a court has no jurisdiction over a dispute in which it cannot give an effective judgment.