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aa71c92d23d8-2 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | Sheikh Anchal 800 231 0.25
Purnahiya P.S. 217 0.32
Sheohar No. 128 216 0.08
District Sitamarhi 215 0.08
Now Total 0.96 D
Sheohar
<span class="hidden_text" id="span_1"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span>
In the present case, the claim has been made that a proceeding vide Land Acquisition Proceeding No. 18/1989-1990, in view of Section 24(2) of the Right to Fair Compensation in Land Acquisition, Rehabilitation and Resettlement Act, 2013, has lapsed.
Precisely, it appears from the record that Rehabilitation Officer, Bagmati Project, Sitamarhi for rehabilitation of villagers sent a requisition for acquisition of 0.90 acres of land of village-Basahiya Seiku, Thana-Sheohar No. 128, Pargana-Babara, PS-Piprarhi, District-Sitamarhi vide letter dated 14th June 1989.
In pursuance of the same, the Special Land Acquisition Officer, Muzaffarpur initiated a case vide Land Acquisition Case No. 18/1989-1990 for acquisition of the aforesaid area. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-3 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | In pursuance thereof, a notification u/s 4 of the Act vide letter no. 825 dated 26/8/1989 was issued and the same was published in Hindi newspaper and after that, notification u/s 6 and 9 under Land Acquisition Act was issued on 16/02/1990 and 18/6/1990 respectively with respect to the land mentioned in the Gazette notification vide Annexure-G series, as per the State, award was prepared on 18/9/1990 under section 11 of the Act. In the year 1984, there was a partition of land of Jamabandi No. 671, <span class="hidden_text" id="span_3"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> standing in the name of father of the petitioners, Late Ram Ayodhya Sah and accordingly, land in question was recorded in the name of two petitioners respectively. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-4 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | The counsel for the petitioners submits that father of the petitioners had purchased the land vide registered sale deed dated 21/3/1987, Mauza- Basahiya, Tauzi -938, Khata no. 242, Khesra no. 157, area one decimal and P.S.-Piparahi, Khata no. 809, Khesra no. 218, area .23 decimal. He further submits that petitioners are in possession of the land they have no knowledge of pendency of proceeding under the Land Acquisition Act and in the year 2013, they could know, their land has been acquired for the purpose of Kabrishthan, they filed the application under the RTI Act and collected information. He further submits that the Circle Inspector, Piprahi in his report dated 14.8.2013 submitted that land in dispute is the raiyati land of the petitioners and they belong to the category of Simant Kisan.
This Court is not required to see the status of the petitioners and only the Court has to see whether the proceeding for the land in dispute initiated in the year 1989-90 stands lapsed in view of the section 24 (2) of the Land Acquisition Act. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-5 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | As per the claim of the petitioners, award has been prepared in the year 1990 but till date, it is in their possession so much so that no award money has been paid to them and to show <span class="hidden_text" id="span_5"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> their possession, they have annexed the land possession certificate issued by Circle Officer vide Annexure-4. He further submits that in view of Section 24 (2) of the new Act now proceeding will be deemed to have been lapsed and in support of the contention, petitioners have relied on two judgments reported in 2014 (3) SCC 183 (Pune Municipal Corporation Vs. Harakchand Misirimal Solanki) 2013 (8) SCC 789 (Singareni Collieries Company Limited Vs. Vemuganti Ramakrishan Rao), Civil Appeal No. 5478-5483 of 2014 decided on 07.05.2014 (Union of India Vs. Shiv Raj and others) and they also relied on judgment of this Court passed in CWJC No. 14921 of 2013 (Vinay Kumar and another Vs. the State of Bihar and others.).
It will be relevant to examine Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as „the Act, 2013‟). For proper appreciation, it is relevant to quote Section 24 of the Act, 2013:
"24. (1) Notwithstanding anything contained in this Act, in any case of land acquisition proceedings, initiated under the Land Acquisition Act, 1894, -- | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-6 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | a) Where no award under section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the <span class="hidden_text" id="span_7"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> determination of compensation shall apply; or
b) Where an award under said section 11 has been made, then such proceedings shall continue under the provisions of the said Land Acquisition Act, as if the said Act has not been repealed.
(2) Notwithstanding anything contained in sub- section(1), in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894, where an award under the said section 11 has been made five years or more prior to the commencement of this Act but the physical possession of the land has not been taken or the compensation has not been paid the said proceedings shall be deemed to have lapsed and the appropriate Government, if it so chooses, shall initiate the proceedings of such land acquisition afresh in accordance with the provisions of this Act.
Provided that where an award has been made and compensation in respect of a majority of land holding has not been deposited in the account of the beneficiaries, then, all beneficiaries specified in the notification for acquisition under section 4 of the said Land Acquisition Act, shall be entitled to <span class="hidden_text" id="span_9"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> compensation in accordance with the provisions of this Act."
Section 24(1)(a) provides that where no award under Section 11 of the said Land Acquisition Act has been made, then, all provisions of this Act relating to the determination of compensation shall apply. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-7 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | Sub-section (1)(b) of Section 24 of Act, 2013 provides that where an award under section 11 has been made then such proceedings shall continue under the provisions of Land Acquisition Act as if the said Act has not been repealed. Sub Section (2) of Section 24 of the Act, 2013 provides in case of land acquisition proceedings initiated under the Land Acquisition Act, 1894 where an award under section 11 has been made five years or more prior to the commencement of new Act but the physical possession of the land has not been taken or compensation amount has not been paid, the said proceedings shall be deemed to have lapsed and the appropriate Government, if it so chooses, shall initiate fresh land acquisition proceedings in accordance with the provisions of this Act. Emphasis has been given to sub-section (2). | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-8 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | According to the petitioner the award has been prepared in the year 1990, possession of land has still remained with the petitioner which is apparent from land possession certificate. From the letter dated 26.10.2013 issued by the Circle Officer, Piprahi <span class="hidden_text" id="span_11"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> (Annexure-10) where it has been written that the land appertaining to Thana No. 128, Khesra Nos.218, 231, 217, 216 and 215, area 0.096 Acre have been divided in between two sons (petitioners) It has been mentioned that they are small farmers, already Kabristhan is available in that village. Details have been given and it has been said that petitioners have filed an application that they are the small persons and if their land would be taken away they will became landless and for that they have filed the present application. The Circle Officer highly recommended for release of land from acquisition. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-9 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | Second aspect is also important that from the counter affidavit it appears that land acquisition proceeding was initiated in the year 1989. Accordingly notification was issued u/s 4 of L.A. Act on 26/8/89, Notification u/s 6 of L.A. Act was issued on 16.2.1990 and notice was issued under Section 9 on 6.6.1990. It appears that in the year 1990 the award was prepared, from the letter it shows that still the authorities have asked to transfer the compensation amount so that payment to be made. Letter dated 25.7.2007 shows that an award amounting to Rs.6,85,945/- has been prepared but the amount of award could not have been paid to the petitioner and requested for transfer of the amount. These facts show that though proceeding was initiated in the 1989, award has been prepared in 1990, even it may be accepted that there is <span class="hidden_text" id="span_13"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> dispute about the possession of land as there is no clear cut document to show that the petitioner is still in possession of land but one thing is clear that the award money which was prepared to pay has not been paid to the petitioner. In terms of Section 24(2) of the Act, 2013 which provides that if the award has been prepared under Section 11 of the Act five years or more prior to commencement of this Act but physical possession of the land has not been given or compensation has not been paid to the person concerned in that circumstances by operation of Section 24(2) of the Act, 2013 the whole proceeding stands lapsed. This issue came up for consideration before Hon‟ble Supreme Court in the case of Pune Municipal Corporation and another v. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-10 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | for consideration before Hon‟ble Supreme Court in the case of Pune Municipal Corporation and another v. Harakchand Misirimal Solanki and others, reported in 2014(3) SCC 183. Specifically the issue was raised about the status of the proceeding which was initiated under the Old Act, award was prepared but award amount has not been paid. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-11 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | The Court has considered the manner the compensation is to be paid while interpreting Section 31 of the Old Land Acquisition Act where it has been provided that the money has to be tendered to the beneficiary in the event of refusal the awarded amount has to be deposited in the court.
In the present case it is apparently clear that money was demanded from the Government by the Land Acquisition Officer <span class="hidden_text" id="span_15"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> for payment of the same to the petitioners, admittedly without any iota of any doubt, it can safely be arrived that money has not been paid to the petitioner.
Reliance has also been placed on Nazir Ahmad V King Emperor, reported in A.I.R. 1936 Privy Council 253(2) where the Court has held that when a thing has to be done in particular manner that thing should be done in that manner along. As there no payment of award amount, in view of provisions of Section 24(2) of the Act, 2013, the Hon‟ble Court held, land acquisition proceeding will be deemed to have lapsed.
Again this issue came up for consideration before this Court in Union of India and others v. Shiv Raj and others in Civil Appeal Nos. 5478-5483 of 2014 where the Court has considered the scope and application of Section 24 (2) of the Act, 2013 and has approved the view taken by the Hon‟ble Supreme Court in the case of Pune Municipal Corporation (supra). It will be relevant to quote relevant portion of the aforesaid judgment: | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-12 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | "The provisions of the Act 2013 referred to hereinabove have been considered by a three judge bench of this court in Pune Municipal Corporation and Anr. v. Harakchand Misirimal Solanki and Ors., (2014) 3 SCC 183. In the said case, the tenure-holders had challenged the <span class="hidden_text" id="span_17"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> acquisition proceedings before the Bombay High Court by filing nine writ petitions, although two of such writ petitions had been filed before making the award and seven had been filed after the award. The land acquisition proceedings had been challenged on various grounds. The High Court allowed the writ petitions and quashed the land acquisition proceedings and issued certain directions including restoration of possession as in the said case the possession had been taken from the tenure-holders. This Court in the appeal filed by the authority for whose benefit the land had been sought to be acquired, and who had been handed over the possession as the land vested in the State, approached this Court but the Court did not enter into the merit regarding the correctness of the judgment impugned therein rather held that it was not so necessary to deal with the correctness of the judgment in view of the provisions of the Act 2013 which provide for re-compulsory acquisition of land from the very beginning. The Court held as under: "11. Section 24(2) also begins with non obstante clause. This provision has overriding effect over <span class="hidden_text" id="span_19"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> Section 24(1). Section 24(2) enacts that in relation to the land acquisition proceedings initiated under 1894 Act, where an award | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-13 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | enacts that in relation to the land acquisition proceedings initiated under 1894 Act, where an award has been made five years or more prior to the commencement of the 2013 Act and either of the two contingencies is satisfied, viz.; | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-14 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | (i) physical possession of the land has not been taken or (ii) the compensation has not been paid, such acquisition proceedings shall be deemed to have lapsed. On the lapse of such acquisition proceedings, if the appropriate government still chooses to acquire the land which was the subject matter of acquisition under the 1894 Act then it has to initiate the proceedings afresh under the 2013 Act. The proviso appended to Section 24(2) deals with a situation where in respect of the acquisition initiated under the 1894 Act an award has been made and compensation in respect of a majority of land holdings has not been deposited in the account of the beneficiaries then all the beneficiaries specified in Section 4 notification become entitled to compensation under 2013 Act.
XXX | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-15 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | XXX
19. Now, this is admitted position that award was <span class="hidden_text" id="span_21"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> made on 31.01.2008. Notices were issued to the landowners to receive the compensation and since they did not receive the compensation, the amount (Rs. 27 crores) was deposited in the government treasury. Can it be said that deposit of the amount of compensation in the government treasury is equivalent to the amount of compensation paid to the landowners/persons interested? We do not think so. In a comparatively recent decision, this Court in Ivo Agnelo Santimano Fernandes and Ors. v. State of Goa and Anr. (2011) 11 SCC 506, relying upon the earlier decision in Prem Nath Kapur v. National Fertilizers Corpn. of India Ltd. (1996) 2 SCC 71, has held that the deposit of the amount of the compensation in the state's revenue account is of no avail and the liability of the state to pay interest subsists till the amount has not been deposited in Court.
XXX | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-16 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | XXX
21. The argument on behalf of the Corporation that the subject land acquisition proceedings have been concluded in all respects under the 1894 Act and that they are not affected at all in view of Section 114(2) of <span class="hidden_text" id="span_23"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> the 2013 Act, has no merit at all, and is noted to be rejected. Section 114(1) of the 2013 Act repeals 1894 Act. Sub-section (2) of Section 114, however, makes Section 6 of the General Clauses Act, 1897 applicable with regard to the effect of repeal but this is subject to the provisions in the 2013 Act. Under Section 24(2) land acquisition proceedings initiated under the 1894 Act, by legal fiction, are deemed to have lapsed where award has been made five years or more prior to the commencement of 2013 Act and possession of the land is not taken or compensation has not been paid. The legal fiction under Section 24(2) comes into operation as soon as conditions stated therein are satisfied. The applicability of Section 6 of the General Clauses Act being subject to Section 24(2), there is no merit in the contention of the Corporation." (Emphasis supplied) | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-17 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | 18. The judgment of Bharat Kumar v. State of Haryana & Ors, 2014 (3) SCALE 393 was a reverse case wherein the land owner had lost before the High Court. The Court held: "Sub-section (2) of Section 24 commences with a non-obstante clause. <span class="hidden_text" id="span_25"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> It is a beneficial provision. In view of this provision, if the physical possession of the land has not been taken by the Acquiring Authority though the award is passed and if the compensation has not been paid to the land owners or has, not been deposited before the appropriate forum, the proceedings initiated under the Act, 1894 is deemed to have been lapsed." (See also: Bimla Devi & Ors. v. State of Haryana & Ors., Civil Appeal Nos. 3871-3876 of 2014 decided on 14.3.2014) | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-18 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | 19. In order to clarify the statutory provisions of the Act 2013 with respect to such lapsing, the Government of India, Ministry of Urban Development, Delhi Division, came up with a circular dated 14.3.2014 wherein on the basis of the legal opinion of the Solicitor General of India, it has been clarified as under: "3. Interpretation of five years period: "With regard to this issue viz., interpretation of five years period two situations have been envisaged in cases where the acquisition has been initiated under the Land Acquisition Act, 1894 viz., (1) parties whose lands have been acquired have refused to accept the compensation and <span class="hidden_text" id="span_27"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> (2) parties whose lands have been acquired having just parted with physical possession of the land. However, in both the above situations, as on 1.1.2014, the period of 5 years would not have ended and in such cases, the advisory seeks to clarify that the new law shall apply only if the situation of pendency continues unchanged for a period that equals to or exceeds five years. In my view, it should be further clarified that in none of the cases the period of five years would have elapsed pursuant to an award made under Section 11 from the date of commencement of the Act and that the benefit of Section 24(2) will be available to those cases which are pending and where during pendency, the situation has remained unchanged with physical possession not being handed over or compensation not having been accepted and the period equals to or exceeds five years. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-19 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | 4. Limitation:
As regards this item relating to the period spent during litigation would also be accounted for the purpose of determining whether the period of five years has to be counted or not, it should be clarified that it will <span class="hidden_text" id="span_29"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> apply only to cases where awards were passed under Section 11 of the Land Acquisition Act, 1894, 5 years or more prior to 1.1.2014 as specified in Section 24(2) of the Act, to avoid any ambiguity. Since this legislation has been passed with the objective of benefiting the land-losers, this interpretation is consistent with that objective and also added as a matter of abundant caution that the period spent in litigation challenging an award cannot be excluded for the purpose of determining whether the period of five years has elapsed or not. If the possession has not been taken or compensation has not been paid due to the challenge to the land acquisition proceedings, the pendente lite period will be included to determine the five year period and including such period if the award was made five years or more prior to the commencement of the Act, then the said acquisition proceedings will be deemed to have elapsed and fresh proceedings, if so desired, will have to be initiated in accordance with the new Act." | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-20 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | The objects and reasons of the Act 2013 and particularly clause 18 thereof fortify the view taken <span class="hidden_text" id="span_31"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> by this court in the judgments referred to hereinabove. Clause 18 thereof reads as under: "The benefits under the new law would be available in all the cases of land acquisition under the Land Acquisition Act, 1894 where award has not been made or possession of land has not been taken."
This Court has also considered this aspect of the matter in C.W.J.C. No.14921 of 2013 (Vinay Kumar and others V. State of Bihar and others) where in a similar situation, the Court has dealt with the issue involved in the present case relying on the judgment of Pune Municipal Corporation (supra). It will be relevant to quote paragraph of the aforesaid judgment: | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-21 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | "Having considered the submission on behalf of petitioners and in view of the counter affidavit of the State, it must be held that on both the propositions, the writ petition must succeed and the entire land acquisition proceedings being Land Acquisition Case No 5 of 1984-1985 must be held to have lapsed. So far as the first contention is concerned, Section 11A of the Land Acquisition Act 1894, in no uncertain terms, lays down that award must be made within two years of the declaration under Section 6. From the facts, as noted above <span class="hidden_text" id="span_33"> Patna High Court CWJC No.19011 of 2013 (5) dt.26-06-2014</span> which are from the counter affidavit of the State itself, the Section 6 declaration was on 16.07.1984 and as per the notice of payment, it clearly stipulates that the award was prepared on 23.08.1986. Thus, it was clearly beyond two years. Thus, in view of the provisions of Section 11A of the Land Acquisition Act and the decision of the Apex Court in the case of Singareni Collieries Company Limited (supra), the land acquisition proceedings would be deemed to have lapsed."
In view of the admitted position that though the award has been prepared more than five years earlier before commencement of the New Act and the award money has not been paid to the petitioner, in view of Section 24 (2) of the New Act, the land acquisition proceeding vide Land Acquisition Case No. 18 of 1989-90 is declared to have lapsed.. If the State is still in need of the land they can acquire the land in terms of provisions of the New Act. | https://indiankanoon.org/doc/71207862/ |
aa71c92d23d8-22 | Amiri Lal Sah And Anrs vs The State Of Bihar & Ors on 26 June, 2014 | With the aforesaid observation and direction this writ petition is allowed.
(Shivaji Pandey, J) Mahesh/-
U T | https://indiankanoon.org/doc/71207862/ |
1acc1a187869-0 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.21307 of 2011
==============================================
1. Abhishek Kumar S/O Ramanand Prasad Resident Of Village- Chainpura,
P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar), Pin Code-801109
2. Ashok Prasad S/O Rambalak Prasad Resident Of Village- Chainpura,
P.O- Dariyapur, P.S- Naubatpur, District- Patna(Bihar)
3. Yugal Kishore S/O Vishwanath Thakur Resident Of Village- Chainpura,
P.O- Dariyapur, P.S- Naubatpur, District- Patna(Bihar)
4. Pramod Mahto S/O Jaleshwar Mahto Resident Of Village- Chinpura,
P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
5. Mahfooj Ansari S/O Late Noor Mohammad Ansari Resident Of Village-
Chainpura, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
6. Saiyed Hussain S/O Mohd. Nasir Ansari Resident Of Village- Chainpura,
P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
7. Mohd. Muskat Ansari S/O Mustafa Ansari Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
8. Mintu Ansari S/O Hamid Ansari Resident Of Village- Chainpura, P.O- | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-1 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
9. Sanjay Kumar S/O Late Sharma Singh Resident Of Village- Chainpura,
P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
10. Chandeshwar Singh S/O Late Devan Mauar Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
11. Rajni Devi W/O Late Ram Bacchan Mahto Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
12. Lalti Devi W/O Sidha Nath Mahto Resident Of Village- Chainpur, P.O-
Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
13. Shakila Khatoon W/O Md. Salim Ansari Resident Of Village- Chainpur,
P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
14. Vanaspati Devi W/O Late Ram Ashish Ram Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
15. Radhika Devi W/O Late Subash Thakue Resident Of Village- Chainpur,
P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
16. Premi Devi W/O Late Ram Anuj Thakur Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar) | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-2 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 17. Shambhu Prasad S/O Gurucharan Prasad Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
18. Ram Babu Ram S/O Late Ram Kishun Ram Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
19. Bidheshwari Ram S/O Later Ram Kishun Ram Resident Of Village-
Chainpur, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
20. Ranjit Thakur S/O Sarekha Thakur Resident Of Village- Chainpur, P.O-
Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
21. Jhamar Thakur S/O Late Sita Thakur Resident Of Village- Kopakal,
P.O- Dariyapur, P.S- Kopakala, District- Patna (Bihar)
22. Satish Kumar S/O Late Kamta Prasad Singh Resident Of Village-
Kopakal, P.O- Dariyapur, P.S- Kopakala, District- Patna (Bihar)
23. Sachidanand Sharma S/O Sitaram Sharma Resident Of Village-
Kopakal, P.O- Dariyapur, P.S- Kopakala, District- Patna (Bihar)
24. Akhilesh Sharma S/O Late Ramnak Singh Resident Of Village-
Kopakal, P.O- Naubatpur, P.S- Kopakala, District- Patna (Bihar) | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-3 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 2 | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-4 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 25. Bhim Thakur S/O Late Lagan Thakur Resident Of Village- Dariyapur,
Chainpura, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
26. Sudeshwar Prasad S/O Late Jagarnath Thakur Resident Of Village-
Chainpura, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
27. Sanjay Prasad S/O Late Baijnath Thakur Resident Of Village-
Chainpura, P.O- Dariyapur, P.S- Naubatpur, District- Patna (Bihar)
.... .... Petitioner/s
Versus
1. The State Of Bihar Through The Secretary Land Reforms, Govt. Of
Bihar, Patna
2. The Bihar Industrial Area Development Authority Through It'S
Managing Director, Patna.
3. The Executive Director, Biada, Patna.
4. The Collector-Cum-District Magistrate, Patna.
5. The Land Acquisition Officer, Patna.
6. The Secretary, Industry Department, Bihar, Patna.
7. M/S United Breweries Ltd., Ub City,24, Vittal, Mallya Road, Bangalore,
Karnataka. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-5 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | .... .... Respondent/s
==============================================
WITH
Letters Patent Appeal No.580 of 2008
IN
Civil Writ Jurisdiction Case No. 921 of 2008
==============================================
Rajan Sharma, S/o. late Chulhan Singh, R/o. Vill. Kopa, Kala, P.O. + P.S.
Naubatpur, District- Patna.
.... .... Appellant/s
Versus
1. The State Of Bihar,
2. District Collector, Patna,
3. District Land Acquisition Officer, Patna,
4. Sub-Divisional Officer, Danapur, Patna.
.... .... Respondent/s
==============================================
Appearance :
(In CWJC No.21307 of 2011)
For the Petitioner/s : Mr. Ambuj Nayan Chaubey
For the Respondent/s : Mr. Dhurandhar Pd. Chy Sc2
(In LPA No.580 of 2008)
For the Appellant/s : Mr.
For the Respondent/s : Mr.
==============================================
CORAM: HONOURABLE MR. JUSTICE PRAKASH CHANDRA VERMA
AND
HONOURABLE MR. JUSTICE VIKASH JAIN | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-6 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | AND
HONOURABLE MR. JUSTICE VIKASH JAIN
ORAL ORDER14 06-07-2012 This writ application and L.P.A. have been filed in which challenge has been made to the Land Acquisition Proceedings initiated vide L.A. No.19 of 2007-08 whereby the State Government has acquired 96.71 acres of land to set up an industrial area at village- Kopakala, Naubatpur, District- Patna and also for quashing the allotment letter dated 03.06.2011 contained under Ref: No.2815/D issued by the Bihar Industrial Area Development Authority (hereinafter referred to as „BIADA‟) annexed as Annexure-4 by which BIADA has allotted 42 acres of land out of aforesaid 96.71 acres to United Breweries Limited for establishment of a beer industry and also for quashing the entire process of land acquisition under notification dated 10.12.2007 issued by the Land Acquisition Directorate under the Revenue and Land Reforms Department contained in Annexure-1. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-7 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 2. The writ petition as well as the L.P.A. was disposed on 31.03.2012 on the concession granted to Mr. Ambuj Nayan Chaubey learned Senior Counsel appearing for the petitioner and the appellant in L.P.A. that he moved the application for review/recall of the order withdrawing his concession accordingly, the order so was recalled on 16.05.2012.
Parties were heard on merit on the writ petition and L.P.A. and were also required to give their written argument. The <span class="hidden_text" id="span_2"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 4</span> written arguments filed by the respective parties are taken on record.
3. Learned counsel for the petitioners has submitted that the allotment letter is illegal and it frustrates the very public purpose in the garb of which the acquisition was made. The government has played fraud upon the citizens of the State by allotting the land to establish a beer factory. The land acquired for Sugar Mill cannot be allotted for establishment of a beer factory. The Government cannot do business over the lands of its citizens. The action and omission on the part of the Government is violative of the right of the petitioners guaranteed under Article 14, 21 & 300A of the Constitution of India. For the acquisition purpose Land Acquisition Case No.19 of 2007-08 was instituted before the District Land Acquisition Officer, Patna. Although after preparation of award notices were issued for payment of 80% amount on the fixed dates under Section 17A of the Act but nothing has been paid so far to any of the petitioner. It is worth mentioning here that the notices were also not served upon all the petitioners. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-8 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 4. It is pertinent to mention here that one Rajan Sharma being one of the victims of the aforesaid irregular acquisition proceeding, preferred CWJC No.921 of 2008 <span class="hidden_text" id="span_3"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 5</span> challenging the acquisition. The aforesaid writ application was dismissed vide order dated 09.05.2008 against which LPA No.580 of 2008 is connected with the present writ petition.
5. Learned counsel for the petitioners further submitted that the acquisition was made for establishment of a sugar factory which might be in public interest keeping in view the production of sugarcane and employment but nonetheless no one turned up before the Government showing its interest in establishment of Sugar Mill. The BIADA time and again advertised the availability of the acquired land for establishment of the Sugar Mill inviting interest from the interested entrepreneur but of no avail. Suddenly the BIADA for the reasons best known to the concerned authorities, issued an allotment letter dated 03.06.2011 contained in reference No.2815/D in favour of one M/S. United Breweries Ltd. Allotting thereby 42 acres of land out of aforesaid acquired land on lease of 90 years for the purpose of establishment of a Beer Industry. The BIADA charged Rs.46934748/- from M/S United Breweries Ltd., at the rate of more than Rs.11 lakhs per acre which is more than twice the compensation amount of about Rs.5.5 lakhs per acre as per the aforesaid notice. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-9 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 6. It is further submitted that respondent No.7 has <span class="hidden_text" id="span_4"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 6</span> started changing the nature of the land. It will be very difficult for the petitioners and others to regain the nature of the land, if it would be changed in the manner by the respondent No.7 for establishing beer factory. For the purpose of establishment of either Sugar Mill or Beer Factory, there are various waste lands at nearby location but the Government deliberately choose the fertile lands of the petitioners to suit industrialist without there being any cogent public purpose. The Government ought to have returned the lands of the petitioners and others, if it did not succeed in establishing any sugar mill as was shown as the sole purpose of the public interest. Moreover, the whole acquisition process itself vitiated by virtue of non-existence of the public interest and non- payment of the compensation amount to the petitioners and others. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-10 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 7. Learned counsel for the petitioners has further submitted that it is well settled by the Apex Court that Section 17(1) read with Section 17(4) confers power upon the State to acquire private property without complying with the mandate of Section 5A. These provisions can be invoked only when the purpose of acquisition cannot brook the delay of even a few weeks or months. Therefore, before excluding the application of Section 5A, the authority concerned must be fully satisfied that time of few weeks or months is likely to be taken in conducting inquiry <span class="hidden_text" id="span_5"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 7</span> under Section 5A which will frustrate the public purpose for which and is proposed to be acquired. The exercise of Power by the Govt. under Section 17(1) does not necessarily result in exclusion of Section 5A of the Act in terms of which any person interested in land can file objection and is entitled to be heard in support of this objection. The use of word "May" in Sub-section (4) of Section 17 makes it clear that it merely enables the Government to direct that the provisions of Section 5A would not apply to the cases covered under Sub-section (1) or (2) of Section | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-11 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 17. In other words, invoking of Section 17(4) is not a necessary concomitant of the exercise of power under Section 17(1). The acquisition of land for residential, commercial, industrial or institutional purposes can be treated as an acquisition for public purposes within the meaning of Section 4 but that by itself does not justify the exercise of power by the Government under Section 17(1) and/or 17(4). The Court can take judicial notice of the fact that planning, execution and implementation of the schemes relating to development of residential, commercial, industrial and institutional areas usually take few years. Therefore, the private property cannot be required for such purpose by invoking the urgency provision contained in Section 17(1). In this case exclusion of the rule of audi alteram partem embodied in Section <span class="hidden_text" id="span_6"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 8</span> 5A (1) & (2) is not at all warranted in such matters. The Government has miserably failed in even finding out a proposer for establishment of Sugar Mill in last four years. So, it was not warranted on the part of the Government to notify the acquisition under Section 17(1) or (4) of the Act. The Government cannot run a business with the valuable lands of the Citizens and the Government/BIADA had no right to allot the lands for establishment of beer factory. The establishment of Sugar Mill would not come under the purview of public purpose. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-12 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 8. In reply learned Additional Advocate General-I appearing for the respondent Nos. 2 to 6 Bihar Industrial Area Development Authority submitted that the land in question was acquired for the purpose of industrialization of the State for setting up an industry including sugar industry, in furtherance of the object of industrialization of the State, the acquisition of the land was for industrialization and the present allotment of land is also for industrialization which would lead to increase in agriculture based raw material for the brewery, it would lead to increase employment opportunities for local farmers and people and would bring in revenue to the State. Thus, the petitioners cannot contend that the acquisition and the present allotment are not for public purpose.
9. Learned counsel for the respondent no. 2 to 6 further contended that the authority under the Bihar Industrial Area Development Act, 1974 allots lands for setting up industries which is a public purpose and once the land has been acquired and its possession taken, it is not necessary that the land should be utilized only for the purpose for which it had been acquired and not for any other public purpose later on. Thus, the contention of the learned counsel for the petitioners that as the Sugar Mill was not established the lands which have been acquired for it should be returned to them as it could be utilized only for putting up a sugar mill is not sustainable. The process of acquisition of the above land was undertaken by the Government through the Collector, Patna for the purpose of Land Bank Scheme for the Industrial Development Authority for industrialization, Sugar Mill and for important development schemes granted as is evident from the administrative approval granted by the Industries Department, Bihar vide letter bearing Memo No.1397 dated 16.03.2007. Thus, the land was to be acquired for public purpose. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-13 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 10. It is further stated on behalf of the respondents that the notification under Section 4 of the Act on 10.12.2007 and declaration under Section 6 of the Act was issued on 13.12.2007, out of 105 acres of land, 6.83 acres of land were released from <span class="hidden_text" id="span_8"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 10</span> acquisition proceeding as the land owners of these lands were not willing to give their lands for acquisition and acquisition proceeding was initiated only with respect to the remaining 98.17 acres of land for which the land owners had expressed their consent as it clear from letter dated 04.05.2007 (Annexure-C) and Agreement (Annexure-E) with 60 farmers were also entered with recital that they have agreed to sell the land to Government. Thus, in view of the above consent of the land owners and the agreement with their consent to sell the land, it appears that the land acquisition proceeding vide Notification dated 10.12.2007 and Declaration dated 13.12.2007 was initiated by the Government under the Emergency Provisions of the Land Acquisition Act as after the said consents there remained no occasion for the land owners to raise any objection to the acquisition and thus purpose of Section 5A of the Act was no longer in existence. Therefore, the grievance of the petitioners is that there was no occasion to resort to emergency provisions under Section 17 of the Land Acquisition Act is not sustainable and both these applications are devoid of any merit is fit to be dismissed. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-14 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 11. Mr. Satyabir Bharti, learned counsel for the respondent No.7 submitted that for the purpose of planned development of industrial areas and promotion of industries, the <span class="hidden_text" id="span_9"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 11</span> Bihar Industrial Areas Development Authority Act, 1974 has been enacted by the State Legislature under which BIADA has been constituted as an Authority for fulfillment of the aforesaid object. Section 9(1) of the aforesaid Act enables the State Government to acquire any land required for the purpose of the Authority, which shall be deemed to be "public purpose" under the land Acquisition Act, 1894. He further submitted that on 16.03.2007 (Annexure- A), the Industries Department, Government of Bihar gave an administrative approval for acquisition of 105 acres of land at Vill. Kopakalan for the purpose of Land Bank Scheme of Infrastructure Development Authority for Industrialization, setting up a sugar mill and for important development schemes. Thereafter, the Industries Department vide letter dated 17.03.2007 (Annexure-B) sent requisition to the Collector, Patna to acquire lands at Mauza Kopakalan, Block- Naubatpur measuring an area of 105 acres which was subsequently reduced to 96.71 acres of land invoking the emergent provisions as contained in Section 17(4) of the Land Acquisition Act. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-15 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 12. Learned counsel for respondent No.7 submitted that a proposal to BIADA for setting up of a brewery was made. The proposed investment was to the tune of more than 200 crores and would be a State of Art brewery with zero discharge of trade <span class="hidden_text" id="span_10"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 12</span> effluent, thus causing absolutely no pollution. Besides the expected revenue collection to the State Government would be at least Rs. 250 crores per annum and at the same time will create employment opportunity to more than 250 people. Since, it is an agriculture based industry and barley is the major raw material which is an agricultural produce, as such it will provide opportunity for the agriculturists of the area for cultivation of barley and sale to the industry. The project upon approval by the BIADA by the impugned allotment letter dated 03.06.2011 allotted 41.97 acres of land at Industrial Plot No.A-1 in Industrial Area, Kopakala which was acquired by the impugned land acquisition proceedings. The Respondent No.7 for allotment of the aforesaid land paid a sum of Rs.4,69,34,748.00 to BIADA and possession was handed over on 06.09.2011. The Respondent No.7 additionally paid compensation to the land owners @ Rs.10.40 lacs per acre and has made payment to the tune of Rs.2.50 crores to the land owners and Rs.15 crores have already been invested in the project till date. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-16 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 13. He further submitted that a delay of three years in preferring the writ application inasmuch as admittedly the acquisition proceedings was initiated in the year 2007 whereas the writ application came to be filed in the fag end of 2011 and in the <span class="hidden_text" id="span_11"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 13</span> meantime after acquisition, the lands was handed over to BIADA and thereafter a portion of the land to the Respondent No.7 to set up an industry in the industrial area so created by BIADA upon possession being handed over to BIADA. The writ petitioners admittedly had no objection to the acquisition proceedings and had in fact consented to the acquisition of the lands and after three years they have turned around and challenged the acquisition proceedings. Law is well settled that in matters involving challenge to the acquisition of land for "public purpose", delay in filing the writ petition should be viewed seriously and relief denied to the petitioners if he fails to offer plausible explanation for the delay in preferring the writ petition. The Courts have also held that the delay of even few years would be fatal to the cause of the petitioner, if the acquired land has been partly or wholly utilized for the public purpose. In the case of Girdharan Prasad Missir V. State of Bihar reported in (1980) 2 SCC 445 and (2002)7 SCC 712, the delay of 17 months & two years respectively were considered as a good ground for declining reliefs to the petitioner. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-17 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 14. He further submitted that the lands in question were acquired upon express consent of the land owners and only after the consent had been granted by the land owners, notification <span class="hidden_text" id="span_12"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 14</span> under Section 4 r/w Section 17(4) was issued on 10.12.2007. It is relevant to mention here that the records as disclosed in the supplementary counter affidavit filed by Respondent No.7 in the pending writ petition and by the State respondent in the L.P.A. that except for the writ petitioner Nos.22 & 23, none of the writ petitioners as well as the sole appellant in the appeal are awardees in pursuance to the land acquisition proceedings and the awardees/owners of the lands so claimed by the writ petitioners and the appellant are persons different from the writ petitioners and appellant. In the light of the recent decision of the Hon‟ble Apex Court in the case of Radhey Shyam Vs. The State of Uttar Pradesh, as reported in (2011) 5 SCC 553, it has been sought to be contended that the acquisition for lands for industrial purpose does not justify the exercise of powers by the Government under Section 17(1) and/or 17(4). At the outset, it is stated that the facts and circumstances of the said case are absolutely different from the facts and circumstances of the present case as in the present case the acquisition have been made with consent of land owners. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-18 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 15. Learned counsel for respondent No.7 submitted that law is well settled as enunciated in the celebrated judgment in the case of Kesavananda Bharti Vrs. State of Kerela (1973) 4 SCC 225 that legislation designed to secure public good and to <span class="hidden_text" id="span_13"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 15</span> implement the Directives under Article 39(b) and (c) should have priority over individual rights and that the Fundamental Rights were to be subordinate to Directive Principles of State Policy. It was further held that Directive Principles under Article 39(b) and
(c) are not limited to agrarian reforms. Directives Principles are necessary for the uplift and growth of industry in the country. Industrial democracy is the necessary complement to political democracy. The State has to serve its members by organizing an avenue of consumption. This can be done by socializing of those elements in the common welfare which are integral to the well being of the community. Thus, the acquisition for upliftment and growth of industry is in terms of the Directives contained in Article 39(b) and (c) and individual rights should give way to secure public goods. In the facts and circumstances of the case, this writ petition and the appeal are fit to be dismissed.
16. We proceed to examine the points raised by Shri Chaubey and the reply thereon. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-19 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 17. First and important point raised by Shri Chaubey is that transfer of acquired land by the Bihar Industrial Area Development Authority vide letter dated 03.06.2011 contained under Ref: No. 2815/D deserves to be quashed on the ground that the public purpose for which the land in dispute was acquired <span class="hidden_text" id="span_14"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 16</span> became non-existent as after advertisement no company came to establish the sugar factory for the purpose of which the land was acquired. He emphatically argued that the establishment of alcohol factory cannot be said to be a public purpose as every State are making endeavour to prohibit the consumption of intoxicating drinks or alcohol as it does not improve the public health as enshrined under Article 47 of the Constitution of India. In Chapter-4 the larger public interests in the various articles have been enumerated for which the policy of the State should be directed or endeavour has to be made by the State to achieve that policy in the larger public interest.
18. In reply to this learned counsel for the petitioners submitted that land was acquired by BIADA for growth in State of Bihar and in the wake of non-coming up of any company to establish sugar mill, the other auctions were considered for industrial growth in the State and the land was allotted to respondent No.7 for establishment of beer factory. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-20 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 19. Regulation of production, supply and sale of alcohol fit for human consumption including the beer have become very good source of revenue of the States and every State has enacted enactment in this regard. Thus, the reason of the Government to establish the Beer Factory is for the industrial <span class="hidden_text" id="span_15"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 17</span> growth in the State and for the more augmentation of revenue which is in the largest interest. Article-31C of the Constitution was inserted by 1971 3 of the Constitution (Twenty-fifth Amendment) Act, 1971 with effect from 28th April, 1972. The validity of 25th Amendment Act was challenged in Supreme Court which was decided in celebrated case well famous in the name of Fundamental Rights Case. Kesavananda Bharti Sripadagalvaru and others V. The State of Kerala and Another reported in AIR 1973 SC 1461. The majority in the aforesaid judgment upheld the constitutional validity of Article 31C by which the provisions of Clause B and Clause-C of Article-39 have given primacy over the fundamental right contained in Articles-14 & 19 of the Constitution, if the Act really seeks to achieve the objectives contained therein.
20. By 42nd Amendment Act an amendment was made in Article-31C by Clause 4 of the Constitution 42 Amendment Act, 1976 land was inserted as under:
"4. Amendment of article 31C.- In article 31C of the Constitution, for the words, brackets, letters and figures "the principles specified in clause (b) or clause
(c) of article 39", the words and figures "all or any of the principles laid down in Part IV" shall be substituted." | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-21 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | Validity of this Act came to be considered in 42nd Amendment Act especially it was considered in Minerva Mills <span class="hidden_text" id="span_16"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 18</span> case and in Waman Rao‟s case quoted respectively by the same Constitution Bench by majority in both the judgments (supra). It has been held that insertion of Article-31C as it stood prior to 42nd Amendment Act made was valid and 4 of the 42nd Amendment was unconstitutional. Thus, violation of fundamental rights under Articles-14 & 19 will not be a ground to challenge the Act which really seeks to achieve the objectives contained in Clause-B or Clause-C of Article-39. In respect of other articles or clauses of the article of Chapter 4. The Violation of Articles-14 & 19 can be claimed. Thus, the larger interest contained under Clauses-B & C of Article-39 have been given supremacy over the other directive principles contained in Chapter-4. It has been held in Kesavananda Bharti Sripadagalvaru and others V. The State of Kerala and Another reported in AIR 1973 SC 1461 that directive principles contained under Article 39B & C is not grant refused. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-22 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | Thus, the principles are necessary for the upliftment and growth of industry in the country. Industrial democracy is the necessary complements to political democracy. The State has to be served its member by organizing and avenue of augmentation of revenue. This can be done only by socialization of these elements in the common welfare which are integral to the well being of the community. Since the grant of permission and allotment of land <span class="hidden_text" id="span_17"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 19</span> to establish beer industry is for more augmentation of revenue and production of beer fit for human consumption which shall create avenue of more revenue to the State as well as shall generate employment is in the larger public interest of the State. It is settled law that after acquisition of land for public purpose can be transferred to any other public purpose. Thus, the argument of learned counsel for the petitioners fails and is hereby rejected.
21. The next point argued by Shri Chaubey is that urgency clause has wrongly been invoked. Learned counsel for the respondent has submitted that a proposal was sent by the BIADA for industrial growth in the Bihar to acquire the land for establishment of industries which was accepted by the Secretary, Industrial Development and accordingly decision was taken to acquire the land. Before acquisition proceedings, the efforts were made to negotiate with the owners of the land and these owners gave consent of the land who gave consent for acquisition their land have been acquired. Therefore, the petitioners cannot say that urgency clause was wrongly invoked. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-23 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 22. From perusal of Annexure-A to the counter affidavit, it is clear that on 16.03.2007 the industries department Government of Bihar, Patna wrote to the Accountant General for administrative approval of acquisition of 105 acres of land in the <span class="hidden_text" id="span_18"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 20</span> first phase situated in Mauza-Kopkala, Block- Naubatpur, Thana No.151 for Industrial Development Scheme on 17.03.2007. The Industries Department, Government of Bihar requested to the Collector, Patna to take steps for acquisition. The Collector informed to the Government of Bihar vide Memo No.2176 dated 04.05.2007 that a general meeting was held between the owners of the land and the Collector, Patna and the local representatives. The owners of 6.83 acres had expressed their unwillingness remaining land owners of 98.17 acres expressed their consent for acquisition of the land which is evident from Annexure-C. Accordingly, the 6.83 acres of land was not taken into acquisition proceedings and only 98.17 acres was taken for which every land owners gave their consent. Acquisition proceedings were initiated. On 20.07.2007 60 farmers entered into agreement with BIADA with regard to acquisition of land. One proforma is annexed as Annexure-E to the counter affidavit. The notification under Section 4 of the Land Acquisition Act (hereinafter referred to as the Act) read with Section 74 was issued and published in two newspapers and gazette for acquisition of 98.17 acres of land. After notification under Section 4 & 17(4) notification under Section 6 was issued on 13.12.2007 and published in gazette and newspapers as required | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-24 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | was issued on 13.12.2007 and published in gazette and newspapers as required under the Act. On 01.05.2008 BIADA <span class="hidden_text" id="span_19"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 21</span> deposited 80% of estimated amount of compensation worth Rs.60573419 vide Cheque No.84399. The Collector on 17.02.2008 handed over the possession of land to the BIADA as per possession of transfer certificate. This writ petition was filed on 24.11.2011 and came up for orders before this Court. Three Judges Bench of Hon‟ble Supreme Court in Case of Satyendra Pd. Jain and others V. State of U.P. & Others reported in (1993) 4 SCC 369 after referring various judgments relying by the same Court in Rajasthan Housing Board Vs. Shree Kishan reported in (1993) 2 SCC 84, wherein it was held that when the possession of the land is taken over under Section 17(1) of the Act the land vests in the Government. There is no provision by which land statutorily vested would transfer to the original owner held in para-15 of the Satyendra Pd. Jain and others case as under:- | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-25 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | "15. Ordinarily, the Government can take possession of the land proposed to be acquired only after an award of compensation in respect thereof has been made under Section 11. Upon the taking of possession the land vests in the Government, that is to say, the owner of the land loses to the Government the title to it. This is what Section 16 states. The provision of Section 11-A are intended to benefit the landowner and ensure that the award is made within a period of two years from the date of the Section 6 declaration. In the ordinary case, therefore, when Government fails to <span class="hidden_text" id="span_20"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 22</span> make an award within two years of the declaration under Section 6, the land has still not vested in the Government and its title remains with the owner, the acquisition proceedings are still pending and, by virtue of the provisions of Section 11-A, lapse. When Section 17(1) is applied by reasons of urgency, government takes possession of the land prior to making the award under Section 11 and thereupon the owner is divested of the title on the land which is vested in the government states so in unmistakable terms. Clearly, Section 11-A can have no application to cases of acquisitions under Section 17 because the lands have already vested in the Government and there is no provision in the said Act by which land statutorily vested in the Government can revert to the owner." | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-26 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 23. In the present case possession was taken over under Section 17(1) of the Act on 17.02.2008. After that date the owners of the land has lost their title to the government. Thus, the petitioners have no locus to challenge the acquisition proceeding on the ground that the urgency clause was wrongly invoked. Here in the present case award has also been made and thereafter advertisement was made by the BIADA for allotment of land for setting up sugar mill. Since no entrepreneur came up therefore the decision to establish the beer factory was taken by the government, which was duly advertised and respondent No.7 was given allotment by the BIADA. Respondent No.7 taken <span class="hidden_text" id="span_21"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 23</span> possession on 21.10.2011. Before taking over possession by the respondent No.7, the award was also made. It has further come that Development and Construction work is going on and respondent No.7 has incurred heavy expenditure to establish beer factory before filing of writ petition. Thus, at this stage, the grounds for wrongly invoking of urgency clause under Section 17(4) cannot be sustained and rejected accordingly. For the same reasoning and for the reasoning given by the learned Single Judge we agree with the judgment which was delivered on 09.05.2008. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-27 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 24. The Connected L.P.A. has been filed challenging the same acquisition proceeding against the judgment of the learned Single Judge in CWJC No. 921 of 2008. The learned Single Judge has dealt with every pleading raised by the petitioner and reply by the respondents and has elaborately dealt with the point raised mala fide in exercise of power under Section 17(4) has rejected. After considering several decisions, we agree with the reasoning given by the learned Single Judge, we do not find any merit in the L.P.A. as well as writ petition and are liable to be dismissed. | https://indiankanoon.org/doc/88416932/ |
1acc1a187869-28 | Rajan Sharma vs The State Of Bihar & Ors on 6 July, 2012 | 25. The filing of this writ petition after receipt of the award and additional compensation paid by the respondent No.7 after due bargain shows that the petitioners are pressing for <span class="hidden_text" id="span_22"> Patna High Court CWJC No.21307 of 2011 (14) dt.06.07.2012 24</span> undue/illegal bargain just to pressurize the Respondent No.7 for more compensation which is not permissible in the interest of public at large and if under such circumstances any disturbance is made, by the petitioners, the DGP, Bihar and D.M., Patna shall provide full protection and maintain law and order.
26. For the reasons recorded above, the writ petition as well as the L.P.A. are dismissed.
(Prakash Chandra Verma, J) Mkr./-
(Vikash Jain, J) | https://indiankanoon.org/doc/88416932/ |
9e2a5662617f-0 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | JUDGMENT Jagannadha Rao, J. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-1 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 1. Questions relating to the interpretation of International Tax Agreements containing international tax language fall for consideration in this reference.
2. The question of law referred to us at the instance of the Commissioner of Income-tax, Andhra Pradesh, Hyderabad, is as follows :
"Whether, on the facts and in the circumstances if the case, the assessee is immune from liability either wholly or partly to tax on the basis of the Double Taxation Avoidance Agreement between Germany and India?"
3. The Income-tax Appellate Tribunal, Hyderabad, has consolidated 21 reference applications as common question are involved and it has drawn up a single reference application.
4. The assessee is the Visakhapatnam Port Trust (hereinafter called the "Port Trust"). The Port Trust is under the Ministry of Shipping and Transport, Govt. of India. The Visakhapatnam Port exports a large amount of iron ore. In order to speed up the export operations, the Port Trust felt it necessary to install a plant known as "Bucket Weel Reclaimer". The purpose of this was to remove iron ore mechanically from the wharfs and put it on a conveyer belt which takes the ore directly into the ship. Global tenders were called for by the Port Trust in June, 1967. A German company known as M/s. Maschinenfabrik Buckau R. Wilf (hereinafter called at the "German company) tendered a contract for supply of the Bucket Wheel Reclaimer on June 26, 1967.
5. After several negotiation the contract was finalised on 12th September, 1968. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-2 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 6. The terms of the lengthy contract dated September 12, 1968, may be briefly noticed. The German company, (i) undertook to supply and deliver to the Port Trust one Bucket Wheel Reclaimer as per drawing, and(ii) to delegate one engineer-erector for supervising the total erection and one special fitter for installation of electrical equipment. It is not in dispute that the engineer-erector delegated was Mr. Bremer and that no special fitter was delegated. The period of contract was 131/2 months and shipments were to be so effected that the material would arrive at the Visakhapatnam Port in ten months. The price payable was as follows (in DM & Rupees separately).
(a) Reclaimer weight Valye Payable in Rupees
(Tons) (DM) in DM &
(i) Supply items 326 1,889,687 1,399,860+ 9,19,900
inluding ballast DM 9,19,000
(ii)Erection costs & -- 101,726 90,000 + 27,000
Travelling expense DM 22,000
------------------------------------------- 326 1,991,413 1,489,860+
326 1,99,413+ 1,489,860+ 9,41,000
DM
(b) Spares 16 210,416 210,416
DM DM
--------------------------------------------
342 2,201,829 1,700,276+
DM 9,41,000 | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-3 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 7. The terms of payment in clause 12 were in several parts : | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-4 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | (i) DM 1,700,276 = (DM 1,399,860+DM 210,416) DM 1,610,276 + DM 90,000 was payable in Germany. 5% of the above amount was payable at the conclusion of the contract, 10% by opening letters of credit in four weeks and 85% (DM 1,445,240) in 20 equal semi-annual installments each of DM 72,22262, of which the first installment was payable as soon as the Port Trust certified that the unit was ready. For the credit remaining after payment of each of these installments, interest was to be paid by the Port Trust at 6% p. a. The deferred payment was to be guaranteed by the State Bank of India. The interest portion for the deferred payment was DM 451,637. Of course, the figures were to be redetermine according to the formula agreed in the price variation clause which depended on such variable factors like "the mixed material price" and the "standard wage" in Germany which would vary from time to time.
(ii) Rs. 9,19,000 : This amount was payable to the German company towards the supply of certain items. But the invoice had to be made out by the person appointed by the German company, vide para. 12(b) and the address and the bank account would be informed to the Port Trust by the German company. 10% of this amount was to be paid at the time of signing the contract, 40% in six months and 50% when the German company informed that the items were ready.
(iii) Rs.. 22,000 was to be paid for the erecting supervising staff. Out of this 20% was to be paid at the commencement of the erection and 80% in monthly installments as demanded by the German engineer. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-5 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | (iv) In case of delayed payments, clause 12(c) Provided that the German company shall be entitle to claim interest on arears at 6% p. a.
8. Thus there were two different types of interest charged at 6% p. a. which are specified in the contract and we are concerned with the tax on the interest in clause 12(a).
9. The German company had to supply the mechanical equipment, the structural steel-work, the lubrication system, the rubber-belting, the electrical equipment, ballast and spares.
10. Clause 10 of the contract provided that the German company could delegate the erection work to the supervision staff as stated earlier. The Port Trust was to provide suitable skilled and unskilled labour, scaffolds, ect, water and electricity and the Port Trust alone had to pay for these items.
11. Clause 11 provided the price variation formula and it was to be applied to, (i) for DM 1,610,276 (DM 1,399,860 for items of supply and DM 210, 416 dor spares); (ii) for DM 90,000 (erection = wages and travelling expenses). Total : DM 1,700,276. But in respect of (iii) Rs. 9,41,000 = (Rs. 9,19,000+Rs. 22,000), the price variation formula was to be mutually agreed after the German company appointed its agent. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-6 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 12. The contract proceeds on the basis that the German company is to send all the parts. But cls. 7 and 17 do contemplate the employment of a sub-contractors or sub-supplier. What work is to be given to the subcontractor is also not mentioned in the contract., All that we get is that Rs. 9,19,000 is set apart to be paid to the sub-contractor upon the direction of the German company.
13. Later, an Indian company incorporated under the Indian Companies Act known as the Buckau-Wolf India Engineering Works Ltd, Pimpri, near Poona (hereinafter called the Poona company), came into the picture. It is common ground that the Poona company is not a subsidary of the German company nor is it, in any manner whatsoever, controlled by the German company. This Poona company was employed to fabricate a single thick steel sheet. Such of the items (items 13 to17 of the contract) which the German company manufactured in Germany and dispatched to Bombay Port were to be firmly imbedded on the steel plate (Boom) by the Poona company and delivered at Visakhapatnam where the items which would be directly sent by the German company to the Visakhapatam Port were to be put on the said plate under the supervision of the German engineer, Mr. Bremer. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-7 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 14. The assembling at the Visakhapatnam Port was to be done at the expense of the Port Trust. This is also clear from the fact that clause 10 of the contract provided that the Port Trust had to provide suitable skilled and unskilled labour, scaffolds, ect., water and electricity and pay for these items of expenditure. The Port Trust has filed a lot of documentary evidence to prove that the Port Trust itself, as a fact, paid for all the assembling and erection expense at Visakhapatnam as per the contract which came to Rs. 66,613.72 + Rs. 72,856 + Rs. 33, 137.40 and Rs. 2,22,448.26 = Total of Rs. 3,97,034.66. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-8 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 15. In clause 11, the words "erection" were said to mean "wages and travelling expenses"."Erection" according to the contract meant the payment of wages, i.e., to Mr. Bremer, the German Supervising Engineer and his travel expenses. These were covered partly in DM 90,000 to be paid in Germany (including travel outside India) and Rs. 22,000 for erection (i.e., wages and travelling expenses) in India. The German company's engineer-erector, Mr. Bremer was, according to it, only in charge of supervision. Documentary evidence has been filed by the Port Trust which shows that the amount payable in DM including DM 90,000 is to be paid in Germany as per the terms of the contract. After the contract was signed on September 12, 1968, letters of credit were opened in Germany to enable the German company to receive from a German bank (the Deutsche Bank, Cologne) payments of the price in installments for each export consignment, by sea or air. Eight export consignments of the component parts of the Bucket Wheel Reclaimer including spare parts were dispatched on May 15,1969 (to Bombay), August 20, 1969 (to Bombay), September 13, 1969 (to Visakhapatnam), December 22, 1969 (to Bombay), November 6, 1969 (to Visakhapatnam), November 6, 1969 (to Visakhapatnam). These are covered by bills issued by the German company and these bills refer to the import license dated June 5, 1968, taken out by the Port Trust and irrevocable letters of credit dated May 17, 1969, and May 22, 1969, State Bank of India, Visakhapatnam. All the bills specify that the price is to be noted for delivery (C. I. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-9 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | All the bills specify that the price is to be noted for delivery (C. I. F. Bombay or Visakhapatnam) "without assembly" or "without erection". The shipping documents on record show that the Port Trust paid the installments of the price as they fell due in 20 installments in German currency in Germany. The Port Trust itself paid the customs duuty and the landing charges and carriage expenses from Visakhapatnam Port to the erection site from Bombay Port to Pimpri, Pimpri to Poona, and Poona to Visakhapatnam. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-10 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 16. On a consideration of the terms of the contract and the mode of payment made by the Port Trust, and other facts of the case, the ITO was of the view that the Port Trust should have deducted tax at source in accordance with the provisions of s. 195 of the I. T. Act, 1961 (hereinafter referred to as "the Act"). The assessee raised various objections but they were overruled by the ITO who passed as order under s. 195(2) of the Act directing the assessee to pay the tax as well as the interest under s. 20 (1A) in a sum of Rs. 2,83,44,178.
17. The assessee carried the mater in appeal before the AAC. The assessment years involved were 1968-69 to 1974-75. In the appeal it was argued that s. 195 (2) of the Act did not apply as the property in the money and goods passed in Germany. It was alternatively contended that the entire amount should not be taxed inasmuch as the machinery portion was supplied in Germany for which the payment was also made in Germany. The AAC substantially accepted the contention of the assessee but held that so far as the interest paid along with the twenty semi-annual instalments was concerned, it was liable to be taxed in accordance with the provisions of s. 195 of the Act. Accordingly, he directed that the interest should be grossed-up, i.e., the interest portion of the payment was held to fall within the mischief of s. 195 of the Act. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-11 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 18. The assesse preferred appeals to the Tribunal in so far as the interest wa concerned. The question of interest arose only in respect of the assessment years 1970-71 to 1974-75. There was no question of interest for the assessment years 1968-69 and 1969-70. Thus the appeal for the assessment years 1968-69 and 1969-70 were indeed redundant. The assessee had also filed seven appeals against the assessee. The Revenue filed seven appeals against the finding of the appellate authority that only interest was liable to be charged to tax. That was how, in all, the Tribunal had 21 appeals before it.
19. For the first time before the Tribunal the assessee raised the question that the tax was not payable in India in view of the Indo-German Double Taxation Avoidance Agreement (hereinafter called "the Agreement" for brevity). The Tribunal thought it fit to consider the question of the applicability of the Agreement inasmuch as it would be unnecessary to decide all other question in the event of the assessee obtaining the benefit of the said agreement. There was no objection on behalf of the Revenue before the Tribunal for considering the applicability or otherwise of the said Agreement to the facts of the case.
20. The Tribunal firstly rejected the preliminary objection raised by the Department regarding the jurisdiction of the Tribunal relying upon art XVIII of the agreement.
21. The Tribunal then considered the rival contentions on facts and summarised its findings as follows :
(i) that the actual installation work or erection work or assembly work was not undertaken by the German company to be done at their cost;
(ii) payment in respect of the sub-contract had nothing to do with the assembly, erection or installation of the Bucket Wheel Reclaimer :
(iii) The German company merely supervised the installation : | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-12 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | (iii) The German company merely supervised the installation :
(iv) The Port Trust did not recover any money from the German company in respect of any part of the erection job :
(v) the activity which was carried on by the German company in relation to the supply and delivery of the Bucket Wheel Reclaimer cannot be designated as amounting to the German company having a permanent establishment in India within the terms and spirit of the Agreement :
(vi) Interest is not de hors the contract and it is part of the purchase money and it is not a separate source by itself and it forms part of the industrial and commercial profits which are covered by the Agreement :
(vii) There is no indebtedness independent of the terms of the contract and interest is not on any debt but it is on account of the terms of the contract itself.
22. Before this court, the learned counsel for the Department, Sri. M. Suryanarayan Murthy, contended that the Tribunal had no jurisdiction to apply the Agreement in view of art. XVIII contained therein. He also submitted that s. 9(1) (i) of the I. T. Act was attracted as the German company and the Poona company had "business connection" and that the Indo-German Agreement did not override s. 9. He further submitted that art. II(1) (i) (aa), (bb), and (dd) (1) applied to the facts of the case and thereby the German company had a "Permanent establishment" in india, and the income was taxable by applying the latter part of the art. III. We shall deal with the various aspects of this question a little later. He also argued that the interest payable in DM on the 20 instalments to the German company is an independent source income taxable under art. VIII. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-13 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 23. On the other hand, the learned counsel for the assessee (Port Trust) Sri. B. V. Subrahmanyam, contended that art. XVIII of the Agreement did not oust the jurisdiction of the Tribunal to apply the said Agreement. He submitted further that s. 9 was subject to the agreement and that the German company had no "permanent establishment" in India either by itself or through the Poona company or through Mr. Bremer as contended by the Revenue. He then argued that interest payable along with the instalments was part of the consideration for the contract itself and was not an independent source of income on any indebtedness of the Port Trust.
24. In our view, the points that arise for consideration are the following :
" (1) Whether, under art. XVIII of the Agreement, the remedy of moving the Competent Authority specified therein was in substitution of the ordinary remedies of appeal, etc., available under the Income-tax statues of the respective countries ?
(2) Whether the German company is liable to income-tax in India on the basis that income is deemed to accure or arise in India, directly or indirectly, through or from any 'business connection' in India or other-wise through an agent, the Poona company, in view of section 9(1) (i) of the Income-tad Act, 1961, and, if so, what is the effect of the first part of art. III of the Agreement on such income?
(3) Whether the German company can be said to have a 'permanent establishment' in India by itself or through the Poona company or through Mr. Bremer so as to attract the levy of income-tax with reference to the later part of art. II(1) (i) of the Agreement? | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-14 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | (4) Whether the interest payable to the German company along with each of the twenty instalments in DM can be classified as interest arising out of any indebtedness within art. VII of the Agreement?"
25. As the case turns upon the meaning of either technical expressions or clauses which have been evolved in model conventions since the time of the League of Nations, it would be useful to briefly trace the history of the model forms. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-15 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 26. Model forms applicable to all countries were first prepared by the fiscal committee of the League of Nations in 1927. Later the said committee conducted meetings at Mexico during 1943 and in London in 1946 and proposed minor variations. The model conventions were published in Geneva in April, 1976, by the fiscal committee of the U. N. Social & Economic Council. Later the fiscal committee of the organisation for European Economic Co-operation (O. E. E. C.), published a draft on 6th July, 1963 (vide Halsburys Laws of England, 4th Edn., VOl 23, para. 1040). In the meantime in September, 1961, the organisation for Economic Co-operation and Development (O. E. C. D.), was established to succeed the O. E. E. C. and the draft dated 6th July, 1963, submitted to the O. E. E. C. was confirmed by the O. E. C. D. These are called the O. E. C. D. models (vide Simon's Taxes 3rd Edn., Butterworths, p. 351, para. F(4,401). They have been further modified in 1974 and 1977 by either the O. E. C. D. or in individual cases by the contracting countries. The O. E. C. D. provided its own commentaries on the technical expressions and the clauses in the model conventions. Lord Radcliffe in Ostime v. Australian Mutual Provident Society [190] AC 459, 480; 39 ITR 210, 219 (HL), has described the language employed in these Agreements as the "internal tax language". For a complete but history of the tax treaties from 1270 in various countries and the League of Nation and U. N. - see Dr. M. B. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-16 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | various countries and the League of Nation and U. N. - see Dr. M. B. Rao's Books on Double Tax Treaties between Developing and Developed Countries (Milend Publications, New Delhi, 1983). Dr. Rao quotes M. B. Carrol to say that international tax law is "in a state of perpetual becoming" (p. 69). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-17 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 27. We shall now take up the first point relating to the jurisdiction of the domestic courts or tribunals. Article XVIII of the Agreement reads thus :
"XVIII, Where a resident of one of the territories show proof that the action of the taxation authorities of the other territory resulted or will result in double taxation contrary to the provisions of the present Agreement, he shall be entitled to present his case to the COmpetent Authority of the territory of which he is a resident. Should has claim be deemed worthy of consideration, the Competent authority to which the claim is made shall endeavour to come to an agreement with the Competent Authority of the other territory with a view to avoiding double taxation."
28. The above article is called "mutual agreement procedure" and corresponds to art. XXV of the O. E. C. D Model (Simon's Taxes, p. 369) and it has come up for consideration in various countries. From the article by John Averi Jones and other "The Legal Nature Agreement Procedure under the O. E. C. D. Model Convention-I" (British Tax Review (1979) p. 333), we have obtained useful material on this question which is mentioned below. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-18 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 29. The German Federal Supreme Tax court has held that the existence of the 'mutual agreement procedure' does not prevent the court from proceeding with the case. (German Federal Supreme Tax Court 1-2-67, I 220/64 (B. St. B 1, 1967 III 495). The same view has been taken by the Swiss Federal Tribunal (Swiss Federal Tribunal, 17-3-67, BGE 93I-189). This was in 1967 even before the words "irrespective of the remedies provided by the domestic law of those States" were introduced in the O. E. C. D. Model. The commentary on the O. E. C. D. model (Commentary to art. 25, para. 6), also makes it clear that this procedure is in addition to and not in substitution of the remedies in the domestic courts or tribunals (Robert Verhoeven, Counseller, Ministry of Finance, Belguim in his Commentary on the O. E. D. C. Model published in Bulletin of Income-tax No. 553, July, 1977 and 25/11) (5).
30. In Simon's Taxes, already referred to, it is stated at p. 169 (F. 1.263) as follows :
"This step may be taken in addition to any legal form of appeal in the country concerned, and may be taken before any additional tax has been imposed." | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-19 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 31. Even where the taxpayer initially invokes the mutual agreement procedure, in case the said authorities fail to agree or their agreement is not satisfactory to the taxpayer, all countries (except Sweden) are agreed that there will be no objection to the taxpayer then moving the courts within the prescribed time, if any (British Tax Review). In Canada (No. 76-15) and the United States (Rev. Proc. 70-18) the Government tax publications suggest that taxpayers should protect their rights of appeal before the courts while applying for the mutual agreement procedure (British Tax Review (1979), p. 333).
32. We respectfully agree with the rulings mentioned above. We are also of the opinion that art. XVIII underlines a procedure which is in addition to and not in substitution of the remedies before the domestic courts or tribunals. Hence the assessee was entitled to rely on the agreement before the Income-tax Appellate Tribunal. The first point is, therefore, held in favour of the assessee.
33. The second point turns upon the effect of art. XVI of the Agreement on s. 9(1) of the Act.
34. Article XVI of the Agreement reads as follows :
"The laws in force in either of the territories will continue to govern the assessment and taxation of income in the respective territories except where express provision to the contrary is made in this Agreement."
35. What is the express provision to the contrary that is made in the Agreement?
36. Now art. III(1) of the Agreement is so far as it is material on this point reads as follows :
"Subject to the provisions of paragraph (3) below, tax shall not be levied in one of the territories on the industrial or commercial profits of an enterprise of the other territory unless profits are derived in the first-mentioned territory through a permanent establishment. ....." | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-20 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 37. In para. 3 of art. III are enumerated certain specified items of income, i.e., rents, royalties, interest, dividends, etc., which are excluded from the "industrial or commercial profits" of the foreign enterprise.
38. It is contended that in this case the German company must be taken to have derived its profits in India even though the money might have been paid in West Germany and further that the Poona company which has prepared the steel plate and has assembled items 13 to 17 thereupon must be taken to have a "business connection" with the German company and that the income must be taken to have been derived in India.
39. It is true that under s. 9(1) (i) of the Act all income accuring or arising whether directly or indirectly, through or from any "business connection" in India, or other income mentioned in that section shall be deemed to accure or arise in India. But the charging provision, s. 4, as well as s. 5 of the Act defining the "total income" of either a resident or a non-resident are expressly made" subject to the provisions of the Act", including agreements made under s. 90.
40. A similar view was taken by the House of Lords in Ostime (Inspector of Taxes) v. Australian Mutual Provident Society [1960] AC 459, 480-81; 39 ITR 210, where it was held that if there was a conflict between the terms of the agreement and the taxation statue, the agreement alone would prevail. Later, however, s. 497 of the U. K. Income and Corporation Taxes Act, 1970, provided expressly for legislation by way of statutory instrument in the form of an Order-in-Council declaring the arrangements specified in the order to have effect, "notwithstanding anything in any enactment". | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-21 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 41. The decision of the Supreme Court in Turner Morrison & Co. Ltd. v. CIT , relied upon for the Department is, in our opinion, not relevant in the context of the Double Taxation Avoidance Agreements which override the liability of a non-resident principal or an Indian agent who may be otherwise liable to tax under ss. 4 and 5 read with s. 9. Similarly, we hold that the ruling in P. C. Ray & Co. (India) P. Ltd. v. A. C. Mukherjee, ITO [1959] 36 ITR 365 (Cal), of the Calcutta High Court is also not relevant.
42. Coming to the part played by Mr. Bremer, we are of the view that even there, no "business connection" is established. It may be noted that Chinnappa Reddi J. (as he then was), sitting with Punnayya J. in CIT v. Hindustan Shipyard Ltd. , held that an agreement providing for guarantees, deputing of technical and other personnel by a Polish company to the Hindustan Shipyard for supervision of the erector and for sending a supervising engineer, did not establish a business connection" with the shipyard. It was held that they were dealing with each other on a principal to principal basis. So is the relationship between the German company and the Poona company as shown by us under the this point. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-22 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 43. Therefore, the legal position on the second point may be summarised as follows : The provisions of ss. 4 and 5 of the Act are expressly made subject to the provisions of the Act which means that they are subject to the provisions of s. 90. By necessary implication they are subject to the terms of the Double Taxation Avoidance Agreement. If any, entered into by the Govt. of India. Therefore, the income arising or accuring to a foreign company through or from any "business connection" in India which is deemed to arise or accure in India, being part of the total income specified in s. 5 and chargeable to income-tax under s. 4, is also subject to the provisions of the Agreement to the contrary.
44. Therefore, even assuming for a moment that all the profits of the German company are to be deemed to have accrued or arisen in India by virtue of s. 9 of the ACt, the terms of art. III of the Agreement prevail over s. 9 of the Act. In effect, the industrial or commercial profits of the German company are not liable to tax under s. 9 of the Act except to the extent permitted by art. III. We shall deal with these exceptions separately under points Nos. 3 and 4.
45. The second point is, therefore, held against the Department and in Agreement separately under points Nos. 3 and 4.
46. The third point that arises is whether the German company can be said to be deriving profits in India through a "permanent establishment" which can be taxed in India in view of the latter part of art. III of the Agreement?
47. That leads us to art. (II) (1) (i) of the Agreement. Article II(1) (i) reads as follows " (to the extent that it is relied upon before us) : | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-23 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | "Article II. (1) In the present Agreement, unless the context other-wise requires :......
(i) the term 'permanent establishment' means a fixed place of business in which the business of the enterprise is wholly or partly carried on :
(aa) the term "fixed place of business" shall include a branch, an office, a factory, a workshop, a warehouse, a mine, quarry or other place of extraction of natural resources, and a permanent sales exhibition :
(bb) an entereprise of one of the territories shall be deemed to have a fixed place of business in the other territory if it carries on in that other territory a construction, installation or assembly project or the like;.....
(dd) a person acting in one of the territories for or on behalf of an enterprise of the other territory shall be deemed to be a permanent establishment in the first mentioned territory, but only it | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-24 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 1. he has and habitually exercises in the first mentioned territory a general authority to negotiate and enter into contracts for or on behalf of the enterprise, unless the activities of the person are limited exclusively to the purchase of goods or merchandise for the enterprise, or | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-25 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 2. he habitually maintains, in the first mentioned territory a stock of goods or merchandise......
3. he habitually secures orders in the first mentioned territory, ...."
48. Was the German company having a "permanent establishment" in India?
49. The word "permanent establishment" is one of those technical expressions which is invariably used in all international Double Taxation Avoidance Agreements as these are based on standard O. E. C. D. models.
50. In view of the standard O. E. C. D. models which are being used in various countries, a new area of genuine "international tax law" is now in the process of developing. Any person interpreting a tax treaty must now consider decisions and rulings worldwide relating to similar treaties : (British Tax Review [1978] p. 394). The maintenance of uniformity in the interpretation of a rule after its international adaption is just as important as the initial removal of divergencies (Per Scott L. J., in Eurymedon [1938] 1 All ER 122 (CA). Therefore, the judgments rendered by courts in other countries or ruling given by other tax authorities would be relevant. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-26 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 51. The Supreme Court of Belgium (judgment of the Supreme Court of Belgium on French-Belgium Treaty) has held that a Belgiaan subsidiary of a French parent company was not the parent's "permanent establishment", notwithstanding the very tight control exercised by the parent company over the sales-territory and product lines allocated to the sub-sidiaries notwithstanding the considerable amount of management and financial reporting which was required of the subsidiary. This decision of the Belgium Supreme Court, if regarded as persuasive in other countries, if of immense relief to multinational corporations (MNC) which often do lay down strict guidelines for the operations of their subsidiaries : (vide Michael Edwards-Ker's Book, the International Tax Treaty Service published by In-Depth Publishing Ltd., 1978 Dublin (13)).
52. The Swiss Bundesgericht (judgment of the Swiss Bundesgericht dt. 17-9-77 on Swiss-Spanish Treaty) had to interpret the Swiss-Spain treaty and decided whether the representative-office" of a Spanish bank constituted a "permanent establishment" in Switzerland. The Budesgericht, whilst it cited the commentary of the 1963 O. E. C. D. model, held that it was not such a "permanent establishment" of the Spanish bank in Swizerland (British Tax Review [1978] p. 394).
51. Similarly, the U. S. Revenue Ruling (No. 72-1-418 on U. S.-Germany Treaty) has decided while dealing with U. S. /German tax treaty that a German bank's representative office in U. S. did not constitute a "permanent establishment" of the German bank in the U. S. (British Tax Review [1978] p. 394). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-27 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 52. A "Permanent establishment" connotes a projection of the foreign enterprise itself into the territory of the taxing state in a substantial and enduring form : (vide F. E. Koch's Book on the Double Taxation Conventions published by Stevens & Sons, London., 1947, Vol. I, at p. 51, quotating Mitchell B. Caroll before the sub-committee of the committee of U. S. Senate Foreign Relations). It is common practice for an enterprise which carries on trade or business in one country to expand its operation, with out incorporation or further incorporation into another country, for it then has a branch there, or a permanent establishment which can be regarded as having sufficient presence in that country to make then tax-able there in the same manner as the residents of that country. (Harvey Mc. Gregor, Old Exemptions - New Credits. The or Permanent Establishment under the Double Taxation Agreements between U. K. and U. S. A.-1 (British Tax Review [1977] Pt. 6, p, 327).
53. In our opinion, the words "permanent establishment" postulate the existence of a substantial element of an enduring or permanent nature of a foreign enterprise in another country which can be attributed to a fixed place of business in that country. It should be of such a nature that it would amount to a virtual projection of the foreign enterprise of one country into the soil of another country.
54. First we shall take up sub-clause (aa). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-28 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 54. First we shall take up sub-clause (aa).
55. Applying the above tests to sub-clause (aa) of art. III(1) (i), there is, in our view, nothing in the contract between the German company is to establish in India any establishment of a permanent or enduring nature either wholly or substantially which would amount to a virtual projection of the German company in India. Nor has any material been brought to our notice in this behalf. The agreement was purely for the supply of parts and for sending of an expert engineer to supervise the erection of the Reclaimer by the Port Trust. We have no difficulty whatsoever in holding that sub-clause (aa) is not attracted.
56. The submission for the Department under sub-clause (bb) is in several parts which we shall now consider.
57. (A) It was urged that by virtue of the deeming provision in sub-clause (bb) the German company was to be treated as having a "permanent establishment" in India as it was, according to the Department, duty bound to manufacture and install and assemble the Reclaimer as a single unit in India and, therefore, the German enterprise must be deemed to have had a "permanent establishment" in India.
58. We are of the firm opinion that the contract between the parties did not contemplate any work of installation or assembly or the like to be performed by the German company. As already stated, the contract was limited to the supply of the items from Germany and to the delegation of an expert engineer to supervise the installation or assembly work to be conducted by the Port Trust. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-29 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 59. Apart from this, we are of the view that clause 10 of the contract entered into between the parties is absolutely clear and that it clinches the issue. It states that it is the duty of the Port Trust to provide suitable "skilled" and "unskilled" labour, one crane with a boom, scaffolds and tackles for erection and other consumables required for erection and to secure the necessary quantity of water and electricity that may be required during their operations, and also to provide for the transportation of various items. As already stated, the Port Trust has produced voluminous evidence to show that it was the Port Trust that spent Rs. 3,97,034.66 towards the expenditure for wages for the workmen, etc. Our attention has not been drawn to any material which will show that the German company has conducted these operations or has paid for them either wholly or partly, or that it has reimbursed the Port Trust. This is also clearly found by the Tribunal against the Department. This submission, therefore, clearly lack factual foundation.
60. Reliance is then placed on the eight bills issued by the German company which refer to the price being payable C. I. F. Bombay or Visakhapatnam "without assembly" or "without erection". It is argued that theses operations of assembly and installation must, therefore, be taken to have been conducted in India by the German company. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-30 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 61. In our pinion, the above words in these bills do not raise a presumption that these operations have been conducted by the German company. The question must depend solely on the evidence as to who has actually got the operations of assembly or installation or erection made or paid for it. The material on record in this reference is only one way, namely, that it was the Port Trust that got the Reclaimer assembled, installed and erected at Visakhapatnam and that, in fact, the Port Trust paid Rs. 3,97,034.66 to the workers. There is absolutely no material in favour of the Department on this question. There is no evidence that the German company even reimbrused the expenditure of the Port Trust in this regard. This contention is, therefore, liable to be rejected.
62. According to the learned counsel for the Department, the contract between the parties used the word "erection" and, therefore, it must be presumed that the German company was in charge of the "erection" of the Reclaimer.
63. Firstly, on a reading of the entire contract as a whole, we have no doubt that the word "erctio" has been used in this contract in a limited sense as meaning the expense involved in respect of the salary payable to Mr. Bremer and for his travelling expenses. Secondly, this is also made explicit in clause 11 of the contract. The word "erectin" is clearly described as being equivalent to "wages and travelling expenses". Thirdly, the word "wages" here cannot be understood to mean the wages of the workmen at Visakhapatnam for which the responsibility is in that regard, as already pointed out by us, rested on the Port Trust alone under clause 10 of the contract. Therefore, there is no force in this submission either. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-31 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 64. (B) It is then vehemently contended that even so, the German company would fall under clause (bb) inasmuch as, according to the Department, the said company carried the work of construction, installation or assembly or the like through its agent (i.e., Poona company) and that the German company must, therefore be deemed to have had a "permanent establishment" through such agent in India.
65. This submission is based on an assumption that the word "it" in clause (bb) can be applied not only to the German company but also to its agent. It is based on a further assumption that the Poona company is an agent of the German company.
66. In our view the Agreement has made special provision in clause (dd) in respect of agents who satisfy certain conditions. When such a special provision is made in respect of agents in clause (dd), it is highly doubtful if the respective Governments in India and Germany intended that sub-clause (bb) is to cover once again the case of an agent so as to render the conditions imposed in clause (dd) otiose.
67. In any event, the Poona company cannot, as we shall presently show, be said to be in the position of an Indian agent of the German company, and our conclusion is based on the following reasons :
In Lakshminarayan Ram Gopal and Son Ltd. v. Government of Hyderabad , their Lordships of the Supreme Court pointed out the distinction between an agent, a servant and an independent contractor and quoted the following passage from Halsbury's Laws of England (Hail-sham Edn., Vol. I, p. 193, para 345), as follows (p. 456 of 25 ITR) : | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-32 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | "An agent is to be distinguished on the one hand from a servant and on the other from an independent contractor. A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result employing his own means to produce that result. An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in his exercise to the direct control or supervision of the principal."
68. Further in Pritchett & Gold and Electrical Power Storage Co. Ltd. v. Currie [1916] 2 Ch D 515 (CA) and Mohamed Shafi v. Fazal Din AIR 1930 Lah 1062, it was held that the relationship between a contractor and his sub-contractor is similar to that between one principal and another.
69. In the light of these principles of law applicable to the cases of a servant, agent and sub-contractor, let us examine the facts of the case. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-33 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 70. The contract itself, in cls. 7 and 17, contemplates the employment of a sub-contractor or sub-supplier. The Poona company was so employed later. It is admitted before us that it is not a subsidiary of the German company. The Poona company is neither a party to the contract nor is there reference to it in the contract. Even in clause 11(c) relating to price variation, the German company stipulated that its own agent in India or (the contractor's Indian agent) will be appointed to negotiate the said question. Clause 12(b) also deals with appointment of an agent. The contract itself, therefore, draws a clear distinction between "agents" of the German company on the one hand and a "sub-contractor" on the other. (Contrast cls. 7, 17 with cls. 11(c) and 12(b)). There is also no proof that the Poona company is to transmit the profit it made to the German company or that it had drawn any commission. As submitted on behalf of the Port Trust, there is neither any identity of interest nor identity of character nor of personality, nor is there any unity in profit-making between the Poona company and the German company. They were in the position of principal to principal and were dealing with each other at arm's length. The German company had no control nor could it interfere with the performance of the sub-contract by the Poona company. We are of the opinion that the Poona company cannot, therefore be treated as an "agent" of the german company, and, therefore, the "assembly" and "installation", in so far as the work relating to the steel-plate at Pimpri is concerned, cannot be attributed to the German company so as to attract the provisions of clause (bb) of art. II(1) (i). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-34 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | (C) The further submission of the learned counsel for the Department under clause (bb) is that the German Engineer, Mr. Bremer who was deputed to India to "supervise" the assembly and installation operation of the Reclaimer brings the German company within the mischief of clause (bb).
71. The German Federal Finance Court (British Tax Review, 1972, p. 265 quoting Bundesfinanzh of March 4, 1970, (IR 140/66) while interpreting the U. K.-German treaty was dealing with the case of a British company having no permanent establishment in the Federal Republic of Germany and which supplied technical information and advice or know-how to two German enterprises against payment. The German tax authorities regarded these profits as earnings from independent work performed in Germany in the sense of s. 18 of the (German) Income Tax Law, and subjected to restricted tax liability in pursuance of s. 49(1) No. 3 and the relevant corporation tax provisions. But the court decided that the know-how fees were not to be regarded as earnings from independent work based on the personal activities of a taxpayer but as profits derived from an industrial enterprise. The British company having no permanent establishment in Germany, these profits were not taxable. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-35 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 72. In our opinion, Mr. Bremer did not carry on any construction, installation or assembly project or the like on behalf of the German company in India. He was only delegated to India for supervision. As already pointed out, the work of construction, installation or assembly was actually done by the Port Trust and not by the German engineer. It is not, therefore, permissible to equate the situation with one where the German engineer has, instead of merely supervising the above operations, was himself in charge of those operations on behalf of the German company. The Income-tax Tribunal was, therefore, right in holding that the role of Mr. Bremer does not result in bringing the German company within clause (bb). In this context it may be noted that the very same Indo-German Agreement came up for consideration before the Income-tax Appellate Tribunal, Delhi, and the said Tribunal had also taken a view similar to the one taken by the Hyderabad Tribunal, when it held that the mere "supervision" done by the German engineer in that case, viz., of Mr. Ritacher, on behalf of M/s. Carl Schenck of West Germany in respect of erection and commissioning of a plant at Hyderabad did not amount to the German manufacturer having a "permanent establishment" in India-vide Bharat Heavy Electricals Ltd. v. ITO [1982] 65 Taxation (section 6) p. 12, (Appellate Tribunal decision).
73. We are, therefore, of the opinion that the German company cannot be brought within clause (bb) of art. II(1) (i) by reason of any of the submissions made on behalf of the Department. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-36 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | (D) The next argument of the learned counsel for the Department is that the German company falls within clause (dd) inasmuch as the Poona company must be treated as an agent of the german company within sub-clause (1) of clause (dd). No submission has, however, been made under sub-cls. (2) and (3) of clause (dd).
74. We have already held while dealing with clause (bb) that the Poona company cannot be treated as an agent of the German company but that it is in the position of an independent contractor dealing, at arm's length, with the German company on a principal to principal basis. Further, clause (dd) requires that the agents shall exercise a general authority in India to negotiate and enter into contracts on behalf of the German enterprise. There is no material placed before us to show that the Poona company had any such general authority as above stated. Therefore, clause (dd) (i) cannot be invoked on behalf of the Revenue.
75. For all the above reasons we are unable to accept any of the submissions made on behalf of the Department under art. II(1) (i) of the Agreement. Therefore, the third point is held against the Department.
76. Now we shall deal with the last point regarding interest. We have to see whether the interest paid by the Port Trust in DM along with each of the 20 instalments under clause 12(a) of the contract, namely, DM 451,637 is liable to income-tax in India.
77. This leads us once again to a consideration of the relevant portions of art. III in relation to art. VIII of the Agreement : | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-37 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | "Art. III (1) Subject to the provisions of paragraph (3) (below) tax shall not be levied in one of the territories on the industrial or commercial profits of an enterprise of the other territory unless profits are derived in the first-mentioned territory through a permanent establishment.....
(3) Fro the purposes of this Agreement the term 'industrial or commercial profits' shall not include income in the form of rents, royalties, interest, dividends, management charges, remuneration for labour or personal services or income from the operation of ships or aircraft but shall include rents or royalties in respect of cinematographic films."
78. The items enumerated in sub-clause (3) are referred to in the later articles. Article V deals with the conditions for taxation of income from the operation of aircraft, article VI in respect of shipping operations, art. VII dividends, art. VIII interest, and so on.
79. The first question that arises for consideration is with regard to the construction of sub-clause (3) in relation to the first part of art. III(1). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-38 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 80. The words "subject to the provisions of paragraph (3) " in art. III(1) would in our view indicate that while "industrial or commercial income" of the foreign enterprise are not taxable in India, the rents, royalties, interest, dividends, etc., derived by the foreign enterprise from sources in India are taxable. Obviously, sub-clause (3) cannot be construed as excluding these items from the taxable income of the permanent establishment by applying sub-clause (3) to the latter part of art. III, Sub-clause (3) has relevance only to the first part of art. III(1). Further, in our opinion, the items : rents, royalties, dividends, interest, etc., are taxable only when they satisfy the conditions mentioned for their liability to tax as envisaged in the various specific article such as arts. V, VI, VII, VIII, etc. Article VIII refers to the taxability of interest in India.
81. In all OECD models, these items in sub-clause (3) in art. III are normally dealt with separately in the Agreement (Simons Taxes 3rd Edn., para. F. 1.212 (para. 147)). Lord Radcliffe has also held in Ostime's case [1960] AC 459; 39 ITR 210 (HL) (at pp. 481-482 of the report), that except and in so far as art. VI dealing with dividends (in the Australian Treaty) makes certain special stipulations about double taxation of dividends, the taxation of these item is not otherwise permissible - see also Harvey Mcgregor's article (British Tax Review, 1978, p. 394), dealing with this interpretation and the unjust departure therefrom by some countries). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-39 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 82. Therefore, we have to look to the first part of art. III and clause (3) of art. III, and then refer to art. VIII alone and decide whether the interest paid along with the 20 instalments satisfies the provisions of art. VIII, so as to attract income-tax in India.
82. Article VIII reads :
83 Interest on bonds, securities, notes, debentures or any other form of indebtedness derived by a resident of one of the territories from sources in the other territory may be taxed in both countries.
84. Does the "interest" payable on these 20 instalments in DM in Germany under clause 12(a) of the contract fall within the words any form of "indebtedness" mentioned in art. VIII of the Agreement, so as to create an independent source of income liable to income-tax in India? | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-40 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 85. The law relating to interest arising out of "indebtedness" is well settled. A "debt" is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro : Webb v. Stenton [1883] 11 QBD 518, 527 (CA). A liability depending upon a contingency is not in praesenti or in futuro till the contingency happened. But if there is a debt is certain and does not make it any the less a debt if the liability is certain and what remains is only the quantification of the amount. The expression "debt" may take colour from the provisions of the concerned Act. It may have different shades of meaning; Kesoram Industries and Cotton Mills Ltd v. CWT [1977] 59 ITR 767 (SC). It money is due to a person and is not paid for but has been withheld from him by the debtor after the time when payment is to have been made, in breach of his legal rights, it is a compensation whether it is liquidated under agreement or statute. The compensation is properly described as interest : (Westminster Bank Ltd. v. Riches [1974] 28 TC 159, 189; 15 ITR (Supp) 86 (HL). Therefore, when interest is paid not as part of the compensation but is given for the deprivation of the use of the money, it is an independent source of income and is taxable. Dr. Shamlal Narula v. CIT , and similarly if the right to interest arises because the person is kept out of his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the court or the arbitrator gives effect to the terms of the agreement and awards interest : T. N. | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-41 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | or the arbitrator gives effect to the terms of the agreement and awards interest : T. N. K. Govindaraju Chetty v. CIT . | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-42 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 86. But where the interest is merely in name but constitutes part of the compensation or part of the damages, it is not "interest" chargeable to income-tax. As an integral part of such compensation it may be either slumped-up with the other elements in the gross sum or may be separately stated but treated as part of the gross sum. IRC v. Ballantine [1924] 8 TC 595 (C. Sess). Mere description of the amount as interest which in fact is part of compensation does not have the effect of altering the true character of the compensation. Simpsom v. Executors of Bonner Maurice as Executor of Edward Kay [1929] 14 TC 580 (CA). That, in fact, is also position with regard to unpaid purchase money coupled with a liability to pay interest along with each of the instalments.
87. Where as here, parties enter into an agreement to accept a portion of the purchase money immediately and the balance to be paid in certain instalments along with interest on the instalment of purchase money, the agreement though it vested the property agreed to be sold in the purchaser, does not have the effect of converting the price due into a loan. The intrinsic nature of the money due to the vendor is as unpaid purchase money and not as debt. The parties may, however, agree to convert the unpaid purchase money as a debt-Radha Kissen v. Keshardeo, . An agreement to pay the balance of consideration due by the purchaser does not in truth give rise to a loan : Bombay Steam Navigation Co. (1953) Pvt. Ltd. v. CIT [1965] 56 ITR 52, 57 (SC). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-43 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 88. When, therefore, there is no agreement initially or any novation between the parties to treat the unpaid purchase money as a debt repayable with interest, even though the purchaser incurred the obligation of paying the sale proceeds to the seller, he does not become, in any sense, a debtor of the seller. If there is no agreement initially or by way of novation to treat the balance of sale consideration as paid off in full and no novation to treat the balance of consideration as a loan, the amount received by the seller cannot be regarded as interest on money.
89. The word "source" means somethings from which income arises. The seller would have, in a contract for sale of goods, got any way interest on sale proceeds under s. 61 of the Sale of Goods Act even had not untilised the money : Lakhmichand Muchhal v. CIT [1961] 43 ITR 315 (MP). The interest in such a case is received as part of the purchase price itself, that is to say, as part of the consideration for sale of goods on deferred payment basis and not as a separate source : CIT v. Saurashtra Cement & CHemical Industries Ltd. , the mere nomenclature employed by the parties notwithstanding. When the payment of interest is as part and parcel of the agreement to pay the unpaid purchase money on a deferred payment basis, there is no indebted-ness (Chittela Venkata Subba Reddi v. Jayanthi Audinaraya - A. S. No. 446 of 1964, dt. 2-8-68 (per Kondaiah J., as he then was), affirmed in L. P. A. No. 267 of 1968, dt 14-3-69). | https://indiankanoon.org/doc/865397/ |
9e2a5662617f-44 | Commissioner Of Income-Tax, ... vs Visakhapatnam Port Trust on 17 June, 1983 | 90. Bearing these well-settled principles in mind, it has to be seen whether interest payable on the agreed instalments of unpaid purchase money can be treated as a separate "source" being interest on any form of "indebtedness" contemplated in article VIII of the Agreement.
91. We are of the opinion that the interest agreed to be paid along with each of the instalments of unpaid purchase money was agreed to be part of the sale consideration itself and cannot be treated as an independent "source" of income. The words "any other form of indebtedbess from sources" in the other territory can only mean interest arising or accuring as a separate "source" of income. It cannot include interest payable on the unpaid purchase money agreed to be part of the sale consideration. There is nothing in the initial contract or any novation converting the interest payable with the instalments as a "loan". Hence the interest specified in clause 12(a) of the contract is, in our opinion, not liable to income-tax.
92. Therefore, we hold on the fourth point in favour of the Port Trust and against the Department.
93. For all the above reasons, we agree with the Tribunal and answer the question referred to us in the affirmative, in favour of the assessee, Port Trust, and against the Department, that the assessee is immune from liability either wholly or partly to income-tax in view of the provisions of the Double Taxation Avoidance Agreement between the Federal Republic of Germany and India. | https://indiankanoon.org/doc/865397/ |
773ecf5cc908-0 | Sirsilk Ltd., Sirpur, ... vs Regional Director, The ... on 16 August, 1963 | JUDGMENT Chandra Reddy, C. J.
1. This is an appeal under Section 82 (2) of the Employees State Insurance Act (34 of 1948) (hereinafter referred to as the Act) against the order of the Employees' Insurance Court, Hyderabad, holding that the workmen in the canteen attached to the Sirsilk Limited, Sirpur-Kagaznagar, are employees of the appellant, and, consequently, the appellant is liable to contribute to the Employees' insurance fund.
2. The Regional Director, the Employees' State Insurance Corporation called upon the appellant to make a contribution to this fund for the staff of the canteen. It is to avoid compliance with the requisition of the Regional Director that the appellant had recourse to Section 75 of the Act inviting the decision of the Employees' Insurance Court. The Insurance Court took the view that the workmen of the canteen are the employees of the appellant for purposes of the Act and hence the appellant was obliged to contribute to the insurance fund for the workers in the canteen. It is this conclusion of the Insurance Court that is challenged before us. | https://indiankanoon.org/doc/1153319/ |
773ecf5cc908-1 | Sirsilk Ltd., Sirpur, ... vs Regional Director, The ... on 16 August, 1963 | 3. It is urged by the learned Advocate General appearing for the appellant that the canteen being an autonomous body managed by the canteen committee, it is a separate entity unconnected with the factory, that there was no contract of service between the employees of the canteen and the management of the factory, that separate accounts are maintained for the canteen and that the employees of the canteen are not under the control and supervision of the management and, therefore, there Is complete dissociation between this institution and tin factory. The learned Advocate-General fortified this argument by adverting to the testimony of D. K. Birla, member of the Managing Committee. On the basis of his evidence, the learned Advocate-General contended that there is no scope for the workmen of the canteen to invoke the aid of the provisions of the Act. He maintains that It is difficult to bring the staff of the canteen within the range and sweep of the relevant sections of the Act.
4. To appreciate the contentions urged on either side, it is necessary to lead the sections of the Act and also of the Factories Act (63 of 1948) in so far as they have a material bearing on the present enquiry. Section 2 (9) of the Act defines an "employee" thus:
" 'employee' means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and .....
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or | https://indiankanoon.org/doc/1153319/ |
773ecf5cc908-2 | Sirsilk Ltd., Sirpur, ... vs Regional Director, The ... on 16 August, 1963 | (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or xx xx xx xx"
5. We are unconcerned with Clause (iii) and, therefore, we need not extract it here.
6. Pausing here for a moment, we see that any person employed for wages in or in connection with the work of a factory or establishment or who satisfies the tests propounded in Clause (i), (ii) or (iii) is an "employee''. We are unable to accede to the proposition of the learned Advocate-General that the two elements contemplated by the main Clause and any of the Clauses (i) to (iii) should exist before a person could satisfy the definition of an "employee". It looks to us that the word "and" at the and of the main clause is disjunctive. We do not think that it has to be read cumulatively with one or other of the Clauses (i) to (iii) because if the employment must of necessity be in connection with the work of the factory the provisions of Clause (ii) would be intelligible as that clause provides for the work which is inter alia incidental to the purpose of the factory or establishment. Of course, if both the expressions, "in connection with the work of a factory or establishment" and "incidental to the purpose of the factory or establishment" are intended to convey the same thought, it is a different matter. But the learned Advocate-General argues that the two expressions embody two different concepts. If that were so, that would be importing repugnancy between the two. | https://indiankanoon.org/doc/1153319/ |
773ecf5cc908-3 | Sirsilk Ltd., Sirpur, ... vs Regional Director, The ... on 16 August, 1963 | 7. Even assuming that the interpretation sought to be put upon this section is correct, we do not think that it will make much difference in the ultimate conclusion to be reached by us.
8. It was next contended by the learned Advocate-General that the definition of "employee" should be read in conjunction with the definition of "worker" in the factories Act, as, according to him, it is only a "worker" that could take advantage of the State Insurance Act. According to Section 2, Clause (1) of the Factories ACT, "'worker' means a person employed, directly or through any agency, whether for wages or not in any manufacturing process or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process;"
"Manufacturing process" is defined in Clause (k) as meaning:
"any process for making, altering, repairing, ornamenting, finishing, packing, Oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adopting any article or substance with a view to its use, sale, transport, delivery or disposal."
9. On the language of this clause, It is submitted by ins learned Advocate-General that it is only a person who is engaged in the process of manufacturing that would fulfil the requirements of the definition of "worker" and that since the staff of the canteen cannot be said to be engaged in the manufacturing process, they could not be termed as the employees of the appellant. He argues that the work in the canteen, by no stretch of imagination, could be described as being incidental to or connected with the manufacturing process and, consequently, a worker in the canteen cannot avail himself of the benefits of the Act. | https://indiankanoon.org/doc/1153319/ |
773ecf5cc908-4 | Sirsilk Ltd., Sirpur, ... vs Regional Director, The ... on 16 August, 1963 | 10. In support of the proposition that only such things as are integrally connected with the manufacturing process or with the actual working of the factory that could be described as being incidental to or connected with the manufacturing process, some of the decisions of English Courts are cited to us.
11. In London County Council v. Attorney General,(1902) A C 165 at p. 169, the question arose whether the statutory powers of the London County Council to purchase and work tramways would include the power to work omnibuses in connection with the tramways and It was answered in the negative since it was thought that the omnibus business was not incidental to the tramway business. In the speach of Lord Macnaghten occurs the following passage:
"The London County Council are carrying on two businesses -- the business of a tramway company and the business of omnibus proprietors. For the one they have the express authority of Parliament; for the other, so far as I can see, they have no authority at all. It is quite true that the two businesses can be worked conveniently together but the one is not incidental to the other. The business of an omnibus proprietor is no more incidental to the business of a tramway company than the business of steamship owners is incidental to the undertaking of a railway company which has its terminus at a seaport ......"
The argument founded on these observations is that though the canteen is run for the convenience of the workmen in the appellant-factory, it could not be said that the canteen was incidental to or in connection with the work in the factory. | https://indiankanoon.org/doc/1153319/ |