Benami plea when available ? ; Admissions in Earlier suit whether admissible ? ;Hindu Succession Act

Benami plea when available ?- in the absence of pleadings and evidence that 'purchase in the name of wife or unmarried daughter is not intended to confer any benefit on the person in whose name document was obtained'. it can not be said that the husband is the owner but not wife though holds register document in her favour as Benami for her husband before commencement of Benami Prohibition Act - the document was that of 1933 much earlier to the Act - Benami Plea can be raised but mere pleading and evidence that his father purchased the properties in the name of  first wife is not sufficient to bring the properties of partition - Burden lies on the plaintiff who claims that it is a Benami for real owner but his evidence is silent as to whether Rama Swamy obtained documents in the name of Narasamma without intending to confer any benefit on her.  ;

Admissions in Earlier suit whether admissible ? - Section 21  and 115 of the Act of 1872. -admissions may be proved as against the person who makes them or his representatives in interest.  - Admissions though not conclusive proof, they estopped the person who made such admissions or representatives in interest in view of Section 31 of the Act of 1872. - At the same time, judicial admissions need not be proved by adducing any evidence in view of Section 58 of the Act of 1872.-If for any reason the plaintiff is allowed to deny the truth in the statement or declaration of Rama Swamy, it amounts to encouraging concealment of truth. - Hence, by applying the principle of estoppel, the plaintiff is debarred from disputing the earlier statement made by his father Rama Swamy.;
 Hindu Succession Act - first wife children Two in number and her husband are equally entitled to 1/3 rd share each - in the said 1/3 rd of father children of first wife and second wife are all entitled to equal shares for each family.Therefore, the plaintiff is entitled to 1/21st share; defendant Nos. 11 to 15, being legal-heirs of the deceased 1st defendant, are entitled to 1/3rd share + 1/21st share i.e. 8/21st share; defendant Nos. 2 to 6, being legal-heirs of the deceased Kishan Rao, are entitled to 1/3rd share + 1/21st share i.e. 8/21st share and defendant Nos. 7 to 10 are entitled to 1/21st share each.  Since the 7th defendant is also died, the plaintiff and defendant Nos. 8 to 10 are entitled to 1/4th share each in the 1/21st share of the 7th defendant i.e. 1/84th share each.  Thereby, the plaintiff is entitled to 5/84th share i.e. 1/21st +1/84th share; defendant Nos.2 to 6 are entitled to 32/84th share; defendant Nos. 8 to 10 are entitled to 5/84th share each and defendant Nos. 11 to 15 are entitled to 32/84th share in A and B schedule property;-2015 Telangana & A.P. msklawreports

 The plaintiff,
defendant Nos. 8 to 10 are children of Rama Swamy and the 7th defendant while
Kishan Rao and the 1st defendant are sons of Rama Swamy and his first wife
Narasamma.  These facts are not disputed.
 Admittedly, vacant site at Himayat
Nagar (A schedule property) was registered in the name of Narasamma, first
wife of Rama Swamy, under the original of Ex.B3 (Ex.B4 is translation copy of
Ex.B3) but no registered sale deed pertaining to purchase of B schedule property
was produced before the trial Court except relying on Ex.B1 i.e. certified copy
of judgment in A.S.No. 95 of 1968 whereas the contention of the plaintiff is that
the property was purchased by Rama Swamy in the name of his first wife
Narasamma.
The specific plea in para No. 2 of the plaint is required to be
adverted to find out the exact plea of the plaintiff and it is extracted
hereunder for better appreciation:
"Late G. Ramaswamy during his life time acquired two immovable properties two
plots of land in the name of his first wife Smt. Narsamma.  Smt. Narsamma died
in the year 1945 Ramswamy then was working in P.W.D. and constructed with
his earnings the compound wall and the structures, which bear Municipal No.
13-2-371, and piece of open land admeasuring 1000 sq. yards situated at
Dhoolpet, Hyderabad and another at Himayatnagar now bearing and covered
M.C.H.No. 3-6-596 on land admeasuring about 980 sq. yards."
      The specific plea extracted above would indicate that Rama Swamy
purchased the property in the name of his first wife Narasamma but it is not
clear
whether Rama Swamy purchased the property in the name of Narasamma to  
confer any benefit on her or as a benamidar for Rama Swamy and the plaint
does not disclose anything about reasons for obtaining sale deeds in the name
of Narasamma while paying consideration by Rama Swamy. 
On close analysis
of para No. 2 and other paras of the plaint, the plea of the plaintiff is that
the transaction is benami or nominal or sham transaction.
Purchase of property in
the name of wife is not totally prohibited under the Benami Transactions
(Prohibition) Act, 1988 (for brevity, 'the Act of 1988'). 
However, the Act of
1988 has no retrospective effect since it operates only prospective.  ]
Since the
property was purchased in the years 1933 and 1936 itself, the provisions of the Act of
1988 have no application to these transactions. 
 The trial Court, on
appreciation of evidence, recorded a finding that Narasamma is only a registered owner but
Rama Swamy is the real owner.  
The said finding is now challenged before this Court on various grounds referred supra

In view of the law declared by
Apex Court in Nand Kishore Mehra  judgment, plea of benami is available to claim right or defence.
 However, burden is upon such
person, who is claiming such right, to prove that 'purchase in the name of wife
or unmarried daughter is not intended to confer any benefit on the person
in whose name document was obtained'.
Therefore, the plaintiff is entitled to
raise plea of benami even according to the provisions of the Act of 1988.  In
fact, the provisions of the Act of 1988 have no application to the present facts of
the case for the reason that the transactions were entered long prior to
commencement of the Act of 1988.
Therefore, the plaintiff is entitled to
contend that the sale transactions are benami transactions and Narasamma is only
benamidar but subject to proving that the sale deeds were not obtained in the
name of Narasamma without intending to confer any benefit on her.
On analysis
of the plaint, there is no whisper in the entire plaint that the documents were
obtained not intending to confer any benefit on Narasamma except contending
that Rama Swamy purchased the property in the name of Narasamma while
working as an employee in P.W.D.

   In Jaydayal Poddar (deceased) , the
Apex Court laid down certain tests to decide the nature of a transaction and
ruled as follows:
 "It is well settled that the burden of proving that a particular sale is benami
and the apparent purchaser is not the real owner, always rests on the person asserting
it to be so.
This burden has to be strictly discharged by adducing legal evidence of a
definite character which would either directly prove the fact of benami or establish
circumstances, unerringly and reasonably raising an inference of that fact.
The
essence of a benami is the intention of the party or parties concerned; and not unoften
such intention is shrouded in a thick veil which cannot be easily pierced through.
But such
difficulties do not relieve the person asserting the transaction to be benami of
any part of the serious onus that rests on him; nor justify the acceptance of mere
conjectures or surmises, as a substitute for proof.
The reason is that a deed is a solemn document prepared and executed after considerable deliberation and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs."

Section 21 of the Act of 1872.

"Admissions are relevant and may be proved as against the person who makes
them, or his representative in interest; but they cannot be proved by or on
behalf of the person who makes them or "by his representative in interest", except in
the following cases:-
(1)     An admission may be proved by or on behalf of the person making it,
when it is of such a nature that, if the person making it were dead, it
would be relevant as between third persons under Section 32.
(2)     An admission may be proved by or on behalf of the person making it,
when it consists of a statement of the existence of any state of mind or
body, relevant or in issue, made at or about the time when such state of
mind or body existed, and is accompanied by conduct rendering its
falsehood improbable.
(3)     An admission may be proved by or on behalf of the person making it, if it
is relevant otherwise than as an admission."
      In view of the plain language of Section 21 of the Act of 1872, 
that admissions may be proved as against the person who makes them or his
representatives in interest.  
In the present case, the plaintiff and defendant
Nos.7 to 10, who are claiming 1/7th share each, are only representatives in interest
of Rama Swamy.
Therefore, the admission made by Rama Swamy can be proved  against the plaintiff and defendant Nos. 7 to 10 as they are representatives in interest.
The word, "representatives in interest", has not been defined in the Act
but evidently means privies.  From the meaning of the word privies, admissions
by persons from whom the parties have derived interest can be said to be
representatives in interest.
The phrase representative in interest means that the person who has derived his title from the author of a statement.
 Admission is of two types; one is judicial admission and the other is
evidentiary admission.  
Admissions though not conclusive proof, they estopped
the person who made such admissions or representatives in interest in view of
Section 31 of the Act of 1872. 
At the same time, judicial admissions need not
be proved by adducing any evidence in view of Section 58 of the Act of 1872.
Whether an admission is evidentiary or judicial, the party who made such
admission if explained under what circumstances he made such admission, the
admission can be ignored.

 In the present case, the deceased Rama Swamy
filed suit along with Kishan Rao and the 1st defendant herein; obtained decree;
contested the matter even in the appeal and got it confirmed.  
Even now, the
plaintiff and defendant Nos. 7 to 10 did not explain under what circumstances
such admission was made except contending that due to claiming share illegally
by brothers of Rama Swamy, Rama Swamy filed the suit to protect the property
but this explanation is not sufficient to take away the earlier admission made
by Rama Swamy in the first round of litigation with regard to B schedule property.

Applying the principle
laid down in Nagubai Ammal and others (1st supra), it can safely be concluded
that admission made by Rama Swamy is binding on his privies i.e.
representatives in interest, who are the plaintiff and defendant Nos. 7 to 10,
since admission is the best piece of evidence and, unless it is explained, it
can be relied upon in subsequent proceedings.  Even according to Section 31 of the
Act of 1872, though admission is not a conclusive proof, still it estops the
person who made such admission or the representatives in interest of such person who
made such admission.

Section 115 of the Act of 1872 deals with the principle of estoppel.
According to it, when one person has, by his declaration, act or omission,
intentionally caused or permitted another person to believe a thing to be true
and to act upon such belief, neither he nor his representative shall be allowed, in
any suit or proceeding between himself and such person or his representative, to
deny the truth of that thing.  In view of the plain language used under Section
115 of the Act of 1872, even representative in interest of the person who made a
declaration, act or omission, intentionally permitting another person to act
upon such representation, the representative of such person is precluded to dispute
the truth of such statement.
The principle of estoppel is a rule of evidence
whereas the doctrine of res judicata is a rule of procedure. 
 In the instant
case,Rama Swamy, by his declaration or statement, made Kishan Rao and the 1st
defendant herein to believe such declaration or statement; acting upon such
statement or declaration, they claimed right in the property and, thereby, the
plaintiff and defendant Nos. 7 to 10 cannot deny the statement or declaration
made by Rama Swamy in the earlier suit and the appeal.
If for any reason the
plaintiff is allowed to deny the truth in the statement or declaration of Rama
Swamy, it amounts to encouraging concealment of truth.
 Hence, by applying the
principle of estoppel, the plaintiff is debarred from disputing the earlier
statement made by his father Rama Swamy.

the Hindu Succession Act, 1956 (for brevity, 'the Act of 1956'), Section 32 read
with Section 35 of the Indian Succession Act, 1925, would govern the rule of
succession of a Hindu female and, thereby, defendant Nos. 2 to 6 are the legal-
heirs of the deceased Kishan Rao.  Since the property was the absolute property
or exclusive property of Narasamma, defendant Nos. 1 to 6 and 11 to 15
admitted that the plaintiff and defendant Nos. 7 to 10 are entitled to 1/21st
share in the 1/3rd share of Rama Swamy irrespective of the rules governing succession
of property by a female Hindu prior to 1956.  
That apart, under the original of
Ex.B1, Rama Swamy is entitled to 1/3rd share in B schedule property which
attained finality.  If the contention of the plaintiff is accepted, it certainly
amounts to annulling the decree and judgment. 
 In view of Ex.B1 and admissions in
pleadings, irrespective of succession of property of a Hindu female, who died
intestate before commencement of the Act of 1956, I am of the considered view
that the plaintiff and defendant Nos. 7 to 10, along with Kishan Rao and the 1st
defendant, are entitled to 1/7th share each in the 1/3rd share of Rama Swamy.
Therefore, the plaintiff is entitled to 1/21st share; defendant Nos. 11 to 15,
being legal-heirs of the deceased 1st defendant, are entitled to 1/3rd share + 1/21st
share i.e. 8/21st share; defendant Nos. 2 to 6, being legal-heirs of the
deceased Kishan Rao, are entitled to 1/3rd share + 1/21st share i.e. 8/21st share and
defendant Nos. 7 to 10 are entitled to 1/21st share each.  Since the 7th
defendant is also died, the plaintiff and defendant Nos. 8 to 10 are entitled to 1/4th
share each in the 1/21st share of the 7th defendant i.e. 1/84th share each.  Thereby,
the plaintiff is entitled to 5/84th share i.e. 1/21st +1/84th share; defendant Nos.
2 to 6 are entitled to 32/84th share; defendant Nos. 8 to 10 are entitled to 5/84th
share each and defendant Nos. 11 to 15 are entitled to 32/84th share in A and B
schedule property-2015 Telangana & A.P. msklawreports

whether the commodities RB Fatty Acid and RB Acid Oil which emerged in the unit of the dealer, which is manufacturing Rice Bran Oil, are different commodities and entities known differently in commercial parlance and whether such emerged commodities are distinct from Rice Bran Oil. Secondly, whether such distinct and different commodities are capable of being put to the same use? Thirdly, whether such distinct and different commodities differ not only in character and economic perspective but also in common and commercial parlance understanding? On the application of the tests and on consideration of the facts and circumstances of the case, we are of the considered view that RB Fatty Acid and RB Acid Oil are distinct and different from Rice Bran Oil. Admittedly Rice Bran Oil is an edible oil whereas the other two commodities viz., RB Fatty Acid and RB Acid Oil are useful for manufacturing of soaps and are not edible. How an article or commodity is understood in the trade i.e., by the dealer or customer is also one of the important considerations. Functional utility and predominant usage have also to be taken into account while determining the class of commodity. The law is well settled that in the law dealing with sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, it is necessary to examine whether the goods ceased to be the goods of one taxable description and had become commercially different commodity of different category and description during the course of manufacture. When un-refined raw rice bran oil is subjected to a process of refining, two distinct and different commodities namely RB Fatty Acid and RB Acid Oil had also emerged. Therefore, the manufacturing process had altered the identity of one commercial commodity and new commercial commodities had emerged. The law of sales tax is also concerned with goods of various descriptions. It cannot be disputed that the two commodities namely RB Fatty Acid and RB Acid Oil, which are of commercially different category and description, had emerged during the process of manufacture of Rice Bran Oil. The principle which is fairly well settled is that the words or expressions under the statute must be construed in the sense in which they are understood in the trade, by the dealer and the consumer because it is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the Statute was enacted. Therefore, the test is how the product is identified by the class or section of people dealing with or using the product. That is the test which is attracted whenever the Statute does not contain any definition. It is generally, by its functional character that a product is so identified. Therefore, coming to the commodities in the case on hand, Rice Bran Oil which is fit for human consumption can only be a different and distinct commodity from the other two commodities viz., RB Fatty Acid and RB Acid Oil as the former is fit for human consumption while the latter two commodities are only used in the process of manufacture of soaps/cattle feed. It is pertinent to note that RB fatty acid and RB acid oil and Rice Bran oil are considered as distinct and different commodities for the purpose of levy and collection of excise duty. 7. (e) Therefore, we do not find any merit in the contention of the learned counsel for the appellant/dealer that RB Acid Oil and RB Fatty Acid could not be considered as distinct and different from Rice Bran Oil. As a sequel we find that the order of the respondent, which is impugned, is in accordance with the law and does not brook interference. The point is accordingly answered against the appellant/dealer. In the result, the Special Appeal is dismissed. There shall be no order as to costs.

THE HONBLE SRI JUSTICE K.C. BHANU AND THE HON'BLE SRI JUSTICE  M. SEETHARAMA M.SEETHARAMA MURTI                

Special Appeal No.1 of 2004

12-03-2015

M/s.Sri Venkata Rama Oil Industries Limited, Hussainpuram, Samalkot, East
Godavari District.. Appellant                                

Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad.... Respondent  

Counsel for the appellant: Sri S.Krishna Murthy

Counsel for Respondent No.1     : None appeared
Counsel for Respondent No.2     : Special Standing Counsel for
                                  Commercial Taxes

<Gist :

>Head Note:

? Cases referred:

1.  1989(4) E.L.T. 287 (SC)
2.  1960 (Vol.XI) STC page 827
3.  1988 (Vol.7) APSTJ page 4
4.  1994 (Vol.95) STC page 181


THE HONBLE SRI JUSTICE K.C. BHANU      
AND
THE HONBLE SRI JUSTICE M.SEETHARAMA MURTI          
Spl.A.No.1 of 2004

JUDGMENT: (per Honble Sri Justice M. Seetharama Murti)

        This special appeal by the appellant/dealer is directed against the
orders dated 23.09.2003 of the Commissioner of Commercial Taxes in
CCTs.Ref.No.LV(3)/2409/2002-II.
2.      We have heard the submissions of the learned counsel for the
appellant and the learned Special Standing Counsel for Commercial
Taxes.  We have perused the material record.
3.      The facts, which are necessary for consideration, in brief, are as
follows: - The appellant/dealer is an assessee on the rolls of Commercial
Tax Officer, Peddapuram (the CTO, for brevity).  They were finally
assessed for the year 1998-99 under the CST Act by the said assessing
authority and their turnovers are as under: Gross turnover:
Rs.17,67,76,050/- ; Exempted Turnover: Rs.13,58,41,010/- and Net
Turnover: Rs.4,09,35,040/-.  A tax of Rs.2,23,875/- was levied.  The
Assistant Commissioner (CT) (Intelligence), Kakinada (the AC (CT) for
brevity) vide proceedings dated 24.06.1999 in CF.No.75/98-99 had
initially assessed the dealers provisionally for the said year under the CST
Act and levied tax @ 10% on the sales of rice bran fatty acid and rice
bran acid oil (RB fatty acid and RB acid oil for brevity) treating them
as general goods falling under the VII schedule of the APGST Act.
Aggrieved of the orders of the A C (CT) (Intelligence), the appellant had
preferred an appeal before the Appellate Deputy Commissioner (CT)
(the ADC (CT) for brevity) in E.94/1999-2000 inter alia contending that
the said goods are to be treated as falling under entry 24(c) of the first
schedule of the APGST Act but not as general goods and that therefore,
tax has to be levied at the rate of 1% as applicable to the goods under
the said entry.  The ADC (CT) while allowing the said appeal had held
that rice bran acid oil and rice bran fatty acid though not specifically
mentioned in entry 24(c) of first schedule of the APGST Act are to be
held as falling under the said entry 24(c) and are, therefore, liable to tax
at 2% under the APGST Act.  Having held so, he had directed the
assessing authority (CTO) to take up the final assessment of the dealers
and pass fresh orders.  Pursuant to the said orders of the said ADC, the
CTO, Peddapuram had passed final assessment orders through the  
reference vide GINO.10087/98-99 dated 30.03.2001 levying tax at 1% on
the sales of RB fatty acid and RB acid oil.  The Commissioner/respondent
herein having examined the orders of the ADC (CT), Kakinada had found
that the said orders are not correct and are prejudicial to the interests of
the revenue of the State and had, therefore, entertained a suo motu
revision by exercising the revisional jurisdiction vested in him under
Section 9(2) of the CST Act read with Section 20(1) of the APGST Act and
had proposed to set aside the orders of the ADC (CT), Kakinada and also
the consequential final orders of the CTO, Peddapuram.  Accordingly, the
Commissioner had issued a show cause notice.  Finally, on merits, the
Commissioner had held that RB fatty acid and RB Acid oil are different
and distinct from rice bran oil/refined oil and had, therefore, set aside
the orders of the ADC (CT) and the consequential orders of the CTO to
the extent of the relevant disputed turnovers.  Thus, the Commissioner
by the orders impugned had revised the rate of tax from 1% to 4% on the
interstate sales turnovers of the following goods.


Turnover
Rate of tax
1.
Sales of R.B.Fatty Acid
(covered by C forms)
Rs.1,46,47,870/-

4%
2.
Sales of R.B. Acid Oil
(covered by C Forms)
Rs.13,52,720/-
4%

Aggrieved of the said orders of the respondent, the dealer had preferred
this appeal.
3.      (a)     The learned counsel for the appellant would contend as
follows: - The ADC (CT) had made personal inspection of the business
premises of the appellant and had observed the method of production of
refined rice bran oil and other intermediary byproducts in the
manufacturing unit.  In fact, he had observed that there are no separate
units to produce different commodities and that rice bran oil was being
produced by a continuous process in a single unit.  He had also noted
that only the raw unrefined rice bran crude oil becomes refined after the
process and that the intermediary byproducts are not separately
produced by making use of separate manufacturing units and that the
unit is manufacturing refined oil as a finished product and in the process
of refining, the unit is removing the intermediary products viz., RB fatty
acid and RB acid oil as concomitant products.  Thus, the ADC had rightly
concluded that the said RB acid oil and RB fatty acid continue to be Rice
Bran Oil.  The ADC, before passing the orders, had bestowed his
attention to the process of refining by making a personal inspection and
had, in detail, examined the processes involved in obtaining Rice Bran
Oil, RB fatty acid and RB acid oil.  Hence, the finding of the ADC that RB
acid oil and RB fatty acid are intermediate products and are not being
separately produced in separate manufacturing units and that they are
generated in a single unit in a continuous process of manufacturing and
that they cannot be treated as different commodities from Rice Bran Oil
is a well considered finding.  The Commissioner had found fault with such
unassailable finding without properly appreciating the facts and without
assigning any valid reasons. The ADC had quoted extensively from the
various decisions in support of his findings and, therefore, the findings of
the ADC are sustainable and are unassailable both under facts and in law.
By Act No.30 of 2001 entry 24-F was inserted with effect from
01.11.2000.  The said entry reads as under:
24-F
Sledge Oil, Acid Oil
& Fatty Acid
At the point of first
sale in the State
8 paise
01.11.2000
It is, therefore, clear that RB fatty acid and RB acid oil are considered as
distinct and different commodities for the purpose of levy and collection
of tax under the APGST Act only with effect from 01.11.2000 and not
before.  The subject assessment year relates to the period prior to the
said amendment.  The Commissioner, Commercial Taxes in his impugned  
orders had erroneously relied upon the decisions which are inapplicable
to the facts of the case of the appellant.
3.      (b)     In support of his contentions, the learned counsel for the
appellant had placed reliance on the following decisions.
1.      Collector of C.Ex v. Jayant Oil Mills Pvt. Ltd.,
2.      Tungabhadra Industries Ltd., Kurnool v. Commercial Tax
Officer, Kurnool
3.      The State of A.P. v. M/s.Coromandel Agro Products and Oils
Ltd.,
4.      State of Andhra Pradesh v. Modern Proteins Ltd., (and another
appeal)

4.      On the other hand, the learned Special Standing Counsel would
contend as follows: - Rice Bran Oil is altogether different from RB fatty
acid and RB acid oil.  They differ not only in character and nature but
also in common parlance understanding.  They are also different in
economical perspective.  The relevant entries in the statute need no
interpretation and they have to be assigned the plain meaning they
convey on a plain reading.  All the three commodities are understood as
different commodities by the customers and traders.  As soon as a
separate commercial commodity comes into existence during the process
of manufacture by one unit or several units, such commodity, if it is a
different commodity, is a taxable entity or commodity for the purpose of
sales tax. Even in common commercial parlance, the said three
commodities are distinct and different.  Admittedly Rice Bran Oil is fit
for human consumption whereas RB fatty acid and RB acid oil are not fit
for human consumption and they are used in manufacture of soaps and
cattle feed.  Therefore, the order impugned is sustainable and does not
call for any interference.  There is no merit in the special appeal.
5.      We have given earnest consideration to the facts and the
submissions.  We have carefully gone through the relevant provisions and
the entries in the schedule of the statute.
6.      Now the point for determination is:
Whether RB Acid Oil and RB Fatty Acid can be
considered as distinct and different from Rice Bran Oil?
7.      POINT:
        The facts are not in dispute.
7.      (a)     Since the first contention of the appellant/dealer is based
upon the amendment introducing entry 24-F with effect from 01.11.2000
by Act No.30 of 2001, it is necessary to refer to the relevant entries
hereunder. Entry 24-A reads as under:
24-A
Vegetable Oils, (non-
refined) including
groundnut oil, gingelly oil,
safflower oil, sunflower oil,
soya been oil, mustard oil,
kusum oil, tobacco seed oil,
castor oil, washed cotton
seed oil other than rice
bran oil and coconut oil.
At the point of first sale
in the State
2
4
16.08.1995
01.01.2000
By Act No.30 of 2001 entry 24-F was inserted with effect from
01.11.2000.  The said entry reads as under:
24-F
Sledge Oil, Acid Oil &
Fatty Acid
At the point of first
sale in the State
8 paise
01.11.2000
Entry 24-C of Schedule I of APGST Act reads as under:
24-C
Rice bran oil (1206)
At the point of first
sale in the State
2
16.08.1995

24-B reads as under:
24-B
Vegetable
oil(refined)(1205)
At the point of first
sale in the State
2
16.08.1995

By Act 19 of 2000 item 24-B was substituted and the words obtained
from non refined oil mentioned in 24-A other than rice bran oil were
omitted and the rate of tax was increased to 4 paise with effect from
01.01.2000.  However, TOT was exempted by G.O.Ms.No.911. Rev. dated  
31.12.1999 with effect from 01.01.2000.
      Reverting to the facts of the present case, 1998-99 is the year of
assessment in the case on hand.  There is no entry in the said schedule
dealing separately with acid oil and fatty acid by that year.  Since
entry 24-F was introduced by GOMs.No.751 Rev. dated 23.10.2000 with
effect from 01.11.2000 it is contended on behalf of the appellant/dealer
that it is clear that RB fatty acid and RB acid oil are considered as
distinct and different commodities for the purpose of levy and collection
of tax under the APGST Act only with effect from 01.11.2000 and not
before and that since the subject assessment year relates to the period
prior to the said amendment, the ADCs Order is unassailable.  The said
contention based on the amendment to the entries of Schedule I cannot
be countenanced.  Amendment to entries may be made by the legislature
in its wisdom for various reasons.  An amendment may be made and a
commodity like one of the many vegetable oils may be specially brought
under a separate entry by such amendment if the legislature intends to
subject that commodity to a different rate of tax than the other
commodities falling under the same category like vegetable oils.
Similarly, an amendment to the schedule may also be brought in to
explain the existing position rather than altering the existing position.
An amendment may also be made to explain an ambiguity and avoid any  
confusion.  Therefore, the contention of the appellant/dealer that entry
24-F dealing with acid oil and fatty acid was introduced by way of an
amendment of schedule I is not going to advance the case of the
appellant.
7.      (b)     The Notification IV issued by the State of A.P. under the CST
Act, 1956 and which is relevant reads as follows:
In exercise of the powers conferred by sub-section (5) of Section
8 of the Central Sales Tax Act, 1956 (Act 74 of 1956), the
Governor of Andhra Pradesh hereby directs that the tax payable
under sub-section (1) of Section 8 of the said Act by a dealer
having his place of business in the State of Andhra Pradesh shall
in respect of the sales in the course of inter-State trade or
commerce, of rice bran oil be at the reduced rate of one paise in
the rupee.
This notification shall be deemed to have come into force with
effect from 01.04.1997 and shall be in force upto 31st March,
1999 only.

7.      (c)     It is necessary to now advert to the cited decisions.  In the
decision in Collector of C. Ex. v. Jayant Oil Mills Pvt. Ltd., (1st cited)
the facts are as follows: - The respondent therein manufactured
hydrogenated rice bran oil which was sold to industrial consumers.  The
said hydrogenated rice bran oil is used as raw material in the
manufacture of soap.  The respondent had classified the same under
Tariff Item 12 for approval and claimed exemption under a Notification.
However the Assistant Collector, Central Excise held that the
hydrogenated rice bran oil was classifiable under Tariff Item 68 of the
Central Excise Tariff because hydrogenated rice bran oil is solid at the
ordinary temperature and therefore, should be considered as fat and not
as oil.  When the said order was challenged, the Appellate Collector had
taken a view that even after the super hardening or hydrogenation, the
vegetable oil did not cease to be oil even when it became solid.
However, considering that the order of the Appellate Collector was not
proper, legal and correct, the Central Government, Ministry of Finance,
Department of Revenue had issued a show cause notice requiring to show
as to why the order of the Appellate Collector should not be set aside
and that of the Assistant Collector be restored.  The matter came up
before CEGAT.  The CEGAT in its impugned order noted that the appeal
was concluded by the judgment of the five member Bench of the
Tribunal in the case of M/s.Tata Oil Mills Co. Ltd.,[1986 (24) ELT 290] and
held that the order dated 30.11.1981 of the Appellate Collector was
correct and dismissed the appeal of the appellant.  Therefore, the
appellant i.e., the Collector of Central Excise under Section 35L of the
Central Excises and Salt Act, 1944 had preferred an appeal from the
orders of the Customs, Excise and Gold (Control) Appellate Tribunal.  In
the above stated factual background, the Supreme Court held as follows:
We are of the opinion that the Tribunal particularly emphasized
that the hardened technical oil is the same thing as the oil from
which it is made.  It is clearly akin to the oil in homologue, a
product of scientific modification but unaltered in its essential
character.  Therefore, in our opinion, the Tribunal was right in the
conclusion it arrived at.

The ratio in the decision is to the following effect.
Edible rice bran oil falling under Tariff Item 12 CET would even
after extra hardening or the process of hydrogenation will not fall
under Tariff item 68 but will continue to fall under Item 12 for two
reasons  firstly the essential properties of the rice bran oil are not
changed even after process of hydrogenation/hardening as there is
hardly any distinction between vegetable oil in liquid form and
hydrogenated oil which is hardened with a melting point higher
than 41 degree centigrade, and secondly restore to the residuary
entry 68 cannot be made when there is a specific entry in Tariff
Item 12 for the goods in question.  The subject goods admittedly
produced for industrial purposes and not for human consumption.
Hence, the ratio in the said decision is not applicable to the facts of the
present case.
        In Tungabhadra Industries Ltd., (2nd cited) the question was as to
whether hydrogenated oil was not groundnut oil.  One of the questions
also considered was whether if beyond the process of refinement of the
oil, the oil is hardened, again by the use of chemical processes it is
rendered any the less groundnut oil. The Supreme Court held as
follows:
No-doubt several oils are normally viscous fluids, but they do
harden and assume semi-solid condition on the lowering of the
temperature.  Though groundnut oil is, at normal temperature, a
viscous liquid, it assumes a semi-solid condition if kept for a long
enough time in a refrigerator.  It is therefore not correct to say
that a liquid state is an essential characteristic of a vegetable oil
and that if the oil is not liquid, it ceases to be oil.  Mowrah oil and
Dhup oil are instances where vegetable oils assume a semi-solid
state even at normal temperatures.  Neither these, nor coconut oil
which hardens naturally on even a slight fall in temperature, could
be denied the name of oils because of their not being liquid.  Other
fats like ghee are instances where the physical state does not
determine the identity of the commodity.
        Therefore, it is clear from the facts of the reported case that both
the commodities namely hydrogenated oil and the groundnut oil serve
the same purpose as cooking medium and are having identical food value
and therefore, it was held hydrogenated oil still continues to be
groundnut oil notwithstanding the processing.  Hence, this decision is not
helpful to the appellant.
      In The State of A.P. v. M/s.Coromandel Agro products and oils
Ltd.,( 3 cited) the question that arose for consideration was  whether
Sledge Oil and Cotton seed acid oil are vegetable oils falling under entry
128 of the First schedule to attract lower rate of tax u/s.8(2-A) of the
C.S.T.Act.?  The Tribunal held that the said oils are liable to tax under
entry 128 at reduced rate.  The department contended that such oils are
general goods and are liable to tax at higher rates under the CST Act.
This Court while dealing with entry 128 held that the said entry relates
to vegetable oils and that the various oils mentioned therein are only
illustrative and that the entry specifically says vegetable oils including
those mentioned therein and that in the circumstances there is no
warrant for placing the construction that the said entry relates only to
those vegetable oils which are edible.  Further, having regard to the
wide language used, it was held that it is not possible to restrict it only
to edible vegetable oils.  This Court had also noted that groundnut oil
which is also edible oil is shown as a separate entry no.24 and therefore,
negatived the contention that entry 128 relates to edible oils.
      In State of Andhra Pradesh v. Modern Proteins Ltd (4th cited)
the question that fell for consideration was  whether groundnut protein
flour is a deoiled cake within entry 29 of Schedule I of the Act?  The
Supreme Court considered the facts like process of manufacture and the
resultant produce and held as follows:
It is true that the analyst report in this appeal does indicate that both
deoiled cake and groundnut protein flour contain common properties
but the use and purpose being different and distinct, they cannot be
considered to be the same commodity.  The groundnut protein flour is
an edible protein food for human consumption and is a different
commercially marketable entity and thereby is distinct from deoiled
cake for animal feed though obtained in the course of same process at
different stages.  Both emerge into different and distinct commodities
commercially known in common parlance for distinct and different
use.  Thereby groundnut protein flour did not remain part of the
genus, i.e., deoiled cake, but became a new and different entity
known in the commercial parlance.  Accordingly, it is exigible to CST at
the relevant time at 4 per cent.  The appeals, therefore, are allowed.
        In the latest decision in Aluva Sugar Agency v. State of Kerala
the short question which arose for consideration was  Whether sale of
margarine is to be taxed at 8% or 4% under the provisions of Kerala
General Sales Tax Act, 1963?  Under the said question the main issue
that was considered was whether margarine can be treated as edible
oil and thus falls under entry 17A of the said Act.  The Supreme Court
held as follows:
Margarine is a generic term and it is used as a substitute for butter.  It
is used in preparation of food articles and specially used for preparing
bakery products.  For the purpose of manufacturing margarine, refined
and/or hydrogenated oils of sun-flower, soyabean, cotton seed,
palmoline, palm and sesame oils are used.  Moreover, vegetable oils,
salt, permitted emulsifiers and stabilizers are also used for
manufacturing margarine.  So far as the margarine manufactured by
the appellant is concerned, it is made only from vegetable oils as
stated by the appellant and as borne out from the record.  The
margarine manufactured by the appellant is exclusively used as raw-
material by bakeries and those who manufacture confectionaries.
Looking to the contents of margarine, it is clear that it contains all
edible things.  Margarine is used exclusively as a raw material for
preparing bakery products and is also used in confectionary industry.
Like butter, margarine also contains almost 80% fat and remaining
constituents of margarine are edible things which are added thereto by
the manufactures of margarine.  Vegetable and hydrogenated oils are
used in manufacturing margarine and as it is used for making eatables,
margarine is also edible though it is not used for normal cooking as
other oils like coconut, sunflower, soyabean, sesame oils are used but
it cannot be disputed that it is an edible oil.
The Supreme Court further held as follows:
In the aforestated circumstances, one has to consider whether
margarine can be considered as an edible oil.  We clearly understand
that edible oil is that oil which can be used for human consumption.  It
is not necessary that all edible things should be consumed in the form
in which they are available.  There are number of ingredients used in
cooking for preparation of food articles which we do not consume in
the same form but they are used in preparation of food articles which
are consumed.
  So as to simplify the conclusion, we may say that normally anything
which is used for preparation of a food article is edible because
ultimately it is being consumed by human beings.  Though one may not
consume margarine directly or may not use for normal cooking, the
fact is that margarine is used for preparing bakery items which are
consumed by human beings and, therefore, margarine is also edible.
Having around 80% fat, and being in the nature of oil, in our opinion, it
should be considered as edible oil.
7.      (d)     We have gone through the cited decisions carefully.  From a
careful reading of the decisions and a conspectus of the legal position, it
emerges that the following tests have to be applied in a case of this
nature.  Firstly, it is to be examined as to whether the commodities  RB
Fatty Acid and RB Acid Oil which emerged in the unit of the dealer,
which is manufacturing Rice Bran Oil, are different commodities and
entities known differently in commercial parlance and whether such
emerged commodities are distinct from Rice Bran Oil.  Secondly, whether
such distinct and different commodities are capable of being put to the
same use?  Thirdly, whether such distinct and different commodities
differ not only in character and economic perspective but also in
common and commercial parlance understanding?  On the application of
the tests and on consideration of the facts and circumstances of the
case, we are of the considered view that RB Fatty Acid and RB Acid Oil
are distinct and different from Rice Bran Oil.  Admittedly Rice Bran Oil is
an edible oil whereas the other two commodities viz., RB Fatty Acid and
RB Acid Oil are useful for manufacturing of soaps and are not edible.
How an article or commodity is understood in the trade i.e., by the
dealer or customer is also one of the important considerations.
Functional utility and predominant usage have also to be taken into
account while determining the class of commodity.  The law is well
settled that in the law dealing with sales tax, the taxable event is the
sale and not the manufacture of goods.  Nevertheless, if the question is
whether a new commercial commodity has come into existence or not, it
is necessary to examine whether the goods ceased to be the goods of one
taxable description and had become commercially different commodity
of different category and description during the course of manufacture.
When un-refined raw rice bran oil is subjected to a process of refining,
two distinct and different commodities namely RB Fatty Acid and RB Acid
Oil had also emerged.  Therefore, the manufacturing process had altered
the identity of one commercial commodity and new commercial
commodities had emerged.  The law of sales tax is also concerned with
goods of various descriptions.  It cannot be disputed that the two
commodities namely RB Fatty Acid and RB Acid Oil, which are of
commercially different category and description, had emerged during the
process of manufacture of Rice Bran Oil.  The principle which is fairly
well settled is that the words or expressions under the statute must be
construed in the sense in which they are understood in the trade, by the
dealer and the consumer because it is they who are concerned with it
and it is the sense in which they understand it that constitutes the
definitive index of the legislative intention when the Statute was
enacted.  Therefore, the test is how the product is identified by the class
or section of people dealing with or using the product. That is the test
which is attracted whenever the Statute does not contain any definition.
It is generally, by its functional character that a product is so identified.
Therefore, coming to the commodities in the case on hand, Rice Bran Oil
which is fit for human consumption can only be a different and distinct
commodity from the other two commodities viz., RB Fatty Acid and RB
Acid Oil as the former is fit for human consumption while the latter two
commodities are only used in the process of manufacture of soaps/cattle
feed.   It is pertinent to note that RB fatty acid and RB acid oil and Rice
Bran oil are considered as distinct and different commodities for the
purpose of levy and collection of excise duty.
7.      (e)     Therefore, we do not find any merit in the contention of the
learned counsel for the appellant/dealer that RB Acid Oil and RB Fatty
Acid could not be considered as distinct and different from Rice Bran Oil.
As a sequel we find that the order of the respondent, which is impugned,
is in accordance with the law and does not brook interference.  The point
is accordingly answered against the appellant/dealer.
8.      In the result, the Special Appeal is dismissed.  There shall be no
order as to costs.
      Miscellaneous petitions pending, if any, in this appeal shall stand
closed.
_______________  
K.C. BHANU, J
________________________  
M. SEETHARAMA MURTI, J    
12.03.2015 

we are of the well considered view that the panel of Arbitrators who are experts in the field had considered all the clauses in the contract and also the change in the legislation revising Works Contract Tax from 2% to 4% under the composition scheme before answering the reference. The learned Additional Advocate General appearing for the appellant could not show as to how the view taken by the Arbitral Tribunal and confirmed by the Court below can be said to be beyond the scope of the agreement. It could not also be shown as to how the Tribunal traveled beyond the scope of reference and its jurisdiction. Except contending that the claims are made contrary to the terms of the contract and that the panel of Arbitrators exceeded the jurisdiction, the appellant could not point out any specific terms of the contract which are violated by the Arbitrators while passing the Award. It is not the case of the appellant that the panel of Arbitrators mis-conducted themselves or any part of the Award is contrary to the Public Policy of India. The appellant could not show that the facts were not accurately considered and that there is misreading or mis-appreciation of evidence and improper application of the evidence to the facts. Therefore, the material aspects on record also do not support any of the contentions now raised before this Court. There is nothing on record to show that the approach of the panel of Arbitrators is arbitrary or capricious. On the other hand, we find that the Arbitrators who are experts in the field had considered the issues properly having regard to the terms/clauses of the contract between the parties and the law applicable. The reasons assigned also could not be shown to be faulty. No grounds based on facts, much less, the required statutory grounds were made out and therefore, none of the grounds urged merit consideration. The point is accordingly answered against the appellant. In the result, the Civil Miscellaneous Appeal fails and is, accordingly, dismissed.

THE HONBLE SRI JUSTICE K.C. BHANU AND THE HON'BLE SRI JUSTICE  M. SEETHARAMA                

Civil Miscellaneous Appeal No.238 of 2008

18-03-2015

Managing Director, A.P. Road Development Corporation  And Ex-officio Engineer-
in-Chief (R & B), Errum Manzil, Hyderabad. . Appellan

M/s.IRCON International Limited, Secunderabad and 3 others. Respondents  

Counsel for the appellant:  Additional Advocate General

Counsel for Respondent No.1     : Sri K.Prabhakar
Counsel for Respondent No.2 to 4: None appeared

<Gist :

>Head Note:

? Cases referred:

1.  (2008) 13 SCC 80
2.  2014(13) SCALE 226
3.  2014(9) SCALE 687

THE HONBLE SRI JUSTICE K.C. BHANU      
AND
THE HONBLE SRI JUSTICE M.SEETHARAMA MURTI          

C.M.A.No.238 of 2008

JUDGMENT: (per Honble Sri Justice M. Seetharama Murti)

                This civil miscellaneous appeal filed by the appellant under
Section 37 of the Arbitration & Conciliation Act, 1996 is directed against
the order dated 20.02.2007 passed in OP.No.348 of 2005 by the learned
III Additional Chief Judge, City Civil Court, Hyderabad.
2.              We have heard the submissions of the learned Additional
Advocate General appearing on behalf of the appellant (i.e., the
respondent before the Tribunal) and the learned counsel appearing for
the 1st respondent (i.e., the claimant).  The other respondents herein are
the learned Arbitrators.
3.              The parties in this appeal shall hereinafter be referred to as
the appellant and the claimant for convenience and clarity.
4.              The introductory facts necessary for consideration, in brief,
are as follows: - The claimant and the appellant had entered into an
agreement bearing No.1/1997-98 dated 26.03.1998 for the work of
widening and strengthening of Warangal - Raipatnam Road.  Certain
disputes and differences had arisen between them in respect of the said
work under the said contract. As per the terms agreed to under the
contract, the disputes were first referred to the Disputes Review Board
(the DRB for short).  The DRB had submitted recommendations on
04.02.2003 accepting one of the two claims and rejecting the other.
Having not been satisfied with the recommendations of the DRB, the
appellant had made a request for referring the parties to arbitration.
Simultaneously, the claimant had also expressed its intention to have the
parties referred to arbitration as one of their claims was also rejected by
the DRB.  The claimant had nominated its Arbitrator; and the appellant
had also nominated its Arbitrator.  The said two Arbitrators by mutual
agreement had nominated the third member of the Tribunal as the
Presiding Arbitrator.  Both the parties had submitted their documents
and the same were exhibited.  
5.              The final findings of the Tribunal as confirmed by the Court
below are as follows:  The claim number 1 was allowed and interest was
also awarded on the amount claimed. On claim no.2, which related to
price adjustment of POL due to steep hike in prices, no separate award
was passed as claim no.3 of the second set of disputes covered claim
no.2 of the first set of disputes.  The claim No.3 was stated to have
arisen as a consequence of claim no.1.  The recovery of Rs.19,02,465/-
by the appellant was held not justified and the recovered amount is
directed to be reimbursed to the claimant.  The counter claim was not
considered since withdrawn.
6.              Assailing the orders of the Arbitral Tribunal, the appellant
had preferred an application under Section 34 of the Act.  On merits the
learned Additional Chief Judge had dismissed the said Original Petition
viz., OP.No.348 of 2005 with costs of the claimant/1st respondent herein.
Therefore, the appellant is now before this Court.
7.              The learned Additional Advocate General appearing for the
appellant would contend as follows: - The Panel of Arbitrators had
traveled beyond the reference and the scope of the agreement and had
dealt with the claims, which are beyond the scope of the agreement.
Thus, they had acted in the matter without jurisdiction.  Hence, the
Award is liable to be set aside.  The Tribunal and the Court below have
failed to see that advance works contract tax is to be deducted at 4%
only in view of the change of the legislation.  Therefore, the request of
the claimant for interest on the excess liability of 2% is untenable.  The
court below ought to have found that the Arbitral Tribunal should have
seen that from 1.1.2000 the rates of works contract tax were revised and
the rate of tax under Section 5(G) of the APGST Act was increased to 4%
from 2% and the Department had started recovering at the rate of 4% as
per the revised rates.  The Court below ought to have seen that the
Arbitrators ought to have taken note of the fact that the claimant was
asked by the department/appellant to get the excess liability figures
confirmed by sales tax authorities and that the actual amount to be
refunded is communicated to the Department only on 18.03.2004 and
that the excess liability was refunded to the Contractor on 24.07.2004
i.e., much prior to the passing of the Award. The court below ought to
have seen that the claimant had produced the details/figures of excess
liability through Sales Tax Department only on 18.03.2004 and the same
was certified by the Commercial Taxes department; and as such the
question of paying any interest and award of interest by the Panel of
Arbitrators from 1.1.2000 does not arise.  As per clause 70.1 price
adjustment is to be made based on the indices prevailing at the time of
tendering and those on the date of payment which the Court below had
ignored.  The price escalation is allowed on 85% of the value of the work
done and the balance 15% is not allowed for price escalation as it
comprises profits and overheads, which the Court below had failed to
take note of.  The Court below ought to have held that contract price
includes works Contract Tax also and that amount is deducted from value
of the work done and the price escalation allowed and therefore, any
increase in the liability of the contract tax is being reimbursed to the
claimant under clause 70.8 of the Agreement and therefore, the court
below ought to have held that the original liability of the contractor is to
be deducted from the value of the work done and then the price
escalation allowed and hence, the escalation amount of Rs.19,02,465/- is
not permissible.  The Audit had also pointed out that seignorage charges
have to be deducted before allowing price escalation and therefore, on
the same analogy works contract tax has also been deducted.  The court
below ought to have interfered with the Award which called for
interference.  The court below wrongly placed reliance on the decision in
Oil and Natural and Gas Commission v. SAW Pipes Limited [2003(3) ALD  
82] though the ratio in the precedent is not applicable to the facts of the
case.
8.              On the other hand, the learned counsel for the 1st
respondent/claimant would submit that the Arbitrators have interpreted
the clause in the agreement with respect to escalation and Works
Contract Tax in the light of the provisions under the APGST Act and
applied the law accurately to the facts and that the appellant could not
show that the findings of the learned Arbitrators are contrary to law of
India or that the learned Arbitrators traveled beyond the reference or
the scope of the agreement and that therefore, none of the contentions
raised by the appellant merit consideration and that the well reasoned
order of the court below confirming the award of the Arbitral Tribunal
suffers from no factual and legal infirmities and that no grounds, much
less valid grounds, are made out by the appellant and that therefore, the
same deserves to be confirmed and the appeal, which is devoid of merit,
is liable to be dismissed.
9.               Now the point for determination is as to whether the
appellant had made out valid and sufficient grounds for setting aside the
order of the Court below confirming the Award of the Tribunal?
10.             POINT:
10.             (a)     The introductory facts and the facts leading to the
present stage of the matter are already stated supra, in detail. We have
given earnest consideration to the facts, documentary evidence and the
submissions and we have carefully gone through the cited decisions.
The following precedents were relied upon on the aspect of extent of
judicial intervention or the scope of interference of the Court. (1) Delhi
Development Authority v. R.S.Sharma and Company, New Delhi ;  
(2) Associate Builders v. Delhi Development Authority  and (3)
M/s.Navodaya Mass Entertainment Ltd., v. M/s.J.M.Combines .  The
settled principles for interference with an arbitral award under Section
34(2) of the 1996 Act as per the decision of the Supreme Court in Delhi
Development Authority (1 supra) are as follows:
(a)     An award, which is
(i) contrary to substantive provisions of law; or
(ii) the provisions of the Arbitration and Conciliation Act, 1996 or
(iii) against the terms of the respective contract; or
(iv) patently illegal; or
(v) prejudicial to the rights of the parties;
is open to interference by the court under Section 34(2) of the Act.
(b)      The award could be set aside if it is contrary to:
(a)     fundamental policy of Indian law; or
(b)     the interest of India; or
(c)     justice or morality.
(c)     The award could also be set aside if it is so unfair and
unreasonable that it shocks the conscience of the court.
(d)  It is open to the court to consider whether the award is against
the specific terms of contract and if so, interfere with it on the
ground that it is patently illegal and opposed to the public policy of
India.

      In the decision in Associate Builders (2nd cited), the Honble
Supreme Court referred to the ratios in various earlier decisions including
the decision 1st cited and further elucidated the law on the point and had
further held that when a Court is applying the public policy test to an
arbitral award, it does not act as a Court of appeal and consequently
errors of fact cannot be corrected and that a possible view by the
Arbitrator on facts has necessarily to pass muster as the Arbitrator is the
ultimate master of the quality and quantity of evidence to be relied upon
when he delivers his arbitral award and thus, an award based on little
evidence or no evidence, which does not measure up in quality to a
trained legal mind would not be held to be invalid on this score and that
once it was found  that the Arbitrators approach is not arbitrary or
capricious then, his word is the last word on facts.
        In the decision in M/s. Navodaya Mass Entertainment Ltd (3rd
cited) the scope of interference of the Court was considered and it was
held that even if two views are possible the view taken by the Arbitrator
would prevail.
10.             (b)     The claim No.1 relates to refund of Work Contract
Tax deducted at enhanced rates.  The relevant factual matrix is as
follows: - The value of the contract is Rs.90,02,29,699/-.  The contract
sub clause 60.1(i) and 60.2 of conditions of Particular Application
stipulate that Advance Works Contract Tax shall be deducted monthly
at the rate of 4% of the value of the payments made.   The claimant
represented and opted for composition of tax as per Section 5(G) of the
APGST Act, which provides for deduction of Works Contract Tax at 2%.
The claimant had obtained permission from the Commercial Tax Officer,
Secunderabad for composition of the tax and for adopting such a
procedure on an year to year basis.  The copies of such permissions were
sent to the appellant from time to time. The scheme for composition of
tax provided for deduction of works contract tax at 2%.  The department
accordingly deducted works contract tax at 2% in accordance with the
approval given by the CTO in regard to payments made up to October
1999.  However, through a subsequent legislation i.e., by notification
dated 31.12.1999 the Government had revised the Works Contract Tax
from 4% to 8% and under section 5(G) from 2% to 4% under the
composition scheme.  Therefore, the department began deducting the
advance works contract tax at 4% from all the payments made after
31.12.1999.  Therefore, placing reliance on sub clause 70.8, the claimant
had contended that the difference on account of enhancement of tax
from 2% to 4% should be added to the contract price and not deducted
from their payments inasmuch as the enhancement had occurred much  
later than the 28 days prior to the latest date of submission of bids
stipulated in the above clause.   The department justified their action on
the ground that sub-clause 60.1 (i), wherein, the deduction of advance
works contract tax at 4% is stipulated, states in the foot note that the
percentages as indicated will be subject to change applicable according
to law from time to time.  Therefore, the department/appellant
contended that the deduction at 4% in the place of 2% hitherto made till
IPC 13 is to be made for all the payments as per clause 60.1 (i).  And
accordingly the department claimed that an amount of Rs.58,06,642/- is
to be recovered from the contractors as per the details in their defence.
Therefore, the department/appellant had made a counter claim for
Rs.58,06,642/-; whereas the claim of the contractor/claimant is that an
excess amount of Rs.1,17,31,766/- has been recovered from them at 4%
instead of at the rate of 2% from IPC 15 to 26, i.e., on the payments
made after 31.12.1999 and consequently, the said amount is due to be
refunded to them.
      On merits, on claim no.1 including the claim for interest, the
Arbitral Tribunal held as under:
Both the parties agreed with the figures furnished by the CTO.
We are, therefore, of the view that on the basis of the
assessment completed by the CTO up to 30.03.2002 an amount of  
Rs.1,26,03,830/- is to be refunded by the appellant to the
claimant being the excess tax collected.  For the further
assessments to be done for the period from 01.04.2002 onwards,
the tax liability for the claimant will be at the rate of 2% only.
The balance 2% on account of subsequent legislation will be
added to the contract price.
The claim arose because the Respondents deducted Works  
Contract Tax at the rate of 4% from 1.1.2000 in place of the
earlier 2% because of change in legislation, instead of adding the
difference on account of change of legislation to the value of the
contract as per C1.No.70.8 of the Agreement.  It was this failure
of the Respondents, in not adhering to the conditions of the
agreement that gave rise to the claim.  As the claimants have
been denied the use of money that they were rightfully entitled
to, they are entitled for the interest on the delayed payment
from the date the amount was due.
Finally, it was held that an amount of Rs.20,68,701.63 paise (claim
limited to the said amount) is to be paid by the appellant to the claimant
towards interest on the delayed excess amount of Works Contract Tax
deducted from the bills.
10.             (c)     During the course of Arbitral proceedings suggestions
were made for settlement of the issue and both the parties had agreed
to try and reach an agreement in regard to claim No.1 and also further
agreed to approach the Tribunal by 15.12.2003 for further action in case
of failure of settlement.  The appellant wanted the claimant to furnish
the break up for the two packages along with certificates of increased
liability separately.  Finally, after protracted efforts from both sides, the
CTO by letter dated 18.03.2004 furnished figures for APSH-I and APSH-III
related to the two projects as the claimants are having one APGST
registration.  The relevant figures were taken into consideration by the
Tribunal.
10.             (d)     The claim No.2 is related to price adjustment of POL
due to steep hike in prices.   The amount claimed under this claim is
Rs.46,14,100/-.  No separate award was passed in respect of this claim as
the award on claim No.3 of the second set of disputes covered claim No.2
of the first set of disputes.
10.             (e)     The claim no.3 is related to reimbursement of
recovered amount of Rs.19,02,465/- from IPC 28 on 24.07.2004.  The
panel of Arbitrators considered the facts accurately and adverted to the
issues which fell for consideration and had recorded the findings to the
following effect: There is no specific provision in the agreement
excluding Works Contract Tax from the escalation calculations. The
counter claim is an after thought and it was put forward after the
submissions of the claimant. The respondents themselves are not
convinced about the validity of audit objections as they have taken up
the matter with the CAG and the same was referred to PAC.  Both the
parties have agreed that only 85% of the value of the work is considered
while computing the R value for price adjustment and the balance 15%
comprises tax.  The CAGs report deals with seigniorage charges.  The
relevant paragraph in the said report related to the said charges was
questioned by the appellant.  Therefore, it was finally held that the
recovered amount of Rs.19,02,465/- from IPC 28 on 24.07.2004 is to be
reimbursed.
10.             (f)     The counter claim was treated as withdrawn by the
appellant.
11.             Thus, on an analytical examination of the award of the
Tribunal which is a reasoned award, we are of the well considered view
that the panel of Arbitrators who are experts in the field had considered
all the clauses in the contract and also the change in the legislation
revising Works Contract Tax from 2% to 4% under the composition
scheme before answering the reference.  The learned Additional
Advocate General appearing for the appellant could not show as to how
the view taken by the Arbitral Tribunal and confirmed by the Court below
can be said to be beyond the scope of the agreement.  It could not also
be shown as to how the Tribunal traveled beyond the scope of reference
and its jurisdiction.  Except contending that the claims are made
contrary to the terms of the contract and that the panel of Arbitrators
exceeded the jurisdiction, the appellant could not point out any specific
terms of the contract which are violated by the Arbitrators while passing
the Award.  It is not the case of the appellant that the panel of
Arbitrators mis-conducted themselves or any part of the Award is
contrary to the Public Policy of India.  The appellant could not show that
the facts were not accurately considered and that there is misreading or
mis-appreciation of evidence and improper application of the evidence to
the facts. Therefore, the material aspects on record also do not support
any of the contentions now raised before this Court.   There is nothing on
record to show that the approach of the panel of Arbitrators is arbitrary
or capricious.  On the other hand, we find that the Arbitrators who are
experts in the field had considered the issues properly having regard to
the terms/clauses of the contract between the parties and the law
applicable.  The reasons assigned also could not be shown to be faulty.
No grounds based on facts, much less, the required statutory grounds
were made out and therefore, none of the grounds urged merit
consideration.  The point is accordingly answered against the appellant.
12.             In the result, the Civil Miscellaneous Appeal fails and is,
accordingly, dismissed.  There shall be no order as to costs.
        Miscellaneous petitions pending, if any, in this appeal, shall stand
closed.

_______________  
K.C. BHANU, J
______________________  
M. SEETHARAMA MURTI, J    
18.03.2015 

Whether a Magistrate, who forwarded the private complaint filed before him to the police for investigation under Section 156(3) Cr.P.C. can interfere in the pending investigation by directing the police to add some more sections of offences in the FIR and investigate? - yes - Private complaint under sec.420, 406 r/w 34 and 120 B I.P.C. forward for investigation - Crl.M.P. filed to added additional sections 409 and 477 A I.P.C., and to investigate - Magistrate allowed the petition - their lordships held that Section 2(h) " investigation" includes all the proceedings under this Code for the collection of evidence conducted by a police officer or by any person (other than a Magistrate) who is authorised by a Magistrate in this behalf; - So, the investigation is an exercise conducted by the police or by the person authorised by magistrate to collect the evidence relating to a particular offence.- as held by Apex court It is well-settled that when a power is given to an authority to do something it includes such incidental or implied powers which would ensure the proper doing of that thing - In my considered view, by this order, he has not committed any judicious overreaches and made an impermissible penetration into the domain of investigation. The prerogative of police to investigation has been kept in tact, but they were only asked to investigate whether the accused have in fact committed the offences under the newly added sections including the ones which are already referred. So, the act of Magistrate cannot be found fault with.- 2015 Telagana & A.P. msklawreports

The defacto complainant filed a private compliant against A1 to A3
before I AJMFC, Kothagudem on the allegations that complainant and
accused are employees of Singareni Collieries Company Limited,
Kothagudem  under Sections 420, 406 r/w 34 and 120B
IPC.
The Court referred the complaint to I Town PS, Kothagudem under
Section 156 (3) Cr.P.C. and the police registered a case in Cr.No.443 of
2014 and investigating the case.
 While so, the complainant filed
Crl.M.P.No.8 of 2015 under Section 156 (3) Cr.P.C. requesting the Court to
direct the police to incorporate Sections 409 and 477A IPC in FIR No.443
of 214. 
The accused opposed the petition on the ground that the Court
cannot interfere with the investigation. 
However, the learned Magistrate
turned down the objection and allowed the petition.

Section 156 in The Code Of Criminal Procedure, 1973
156. Police officer' s power to investigate cognizable case.
(1) Any officer in charge of a police station may, without the order of a
Magistrate,
investigate any cognizable case which a Court having jurisdiction over the local
area within the limits of such station would have power to inquire into or try
under
the provisions of Chapter XIII.
(2) No proceeding of a police officer in any such case shall at any stage be
called
in question on the ground that the case was one which such officer was not
empowered under this section to investigate.
(3) Any Magistrate empowered under section 190 may order such an investigation
as
above- mentioned.
a)      Section 156 (3) Cr.P.C. lays down that a Magistrate who is
empowered under Section 190 Cr.P.C. to take cognizance of an offence,
may refer the compliant to police under Section 156(3) Cr.P.C. for
investigation without taking cognizance. This reference is thus a
pre-cognizance reference. In such an instance, the concerned police have
to register the FIR basing on such reference and shall conduct investigation
and file a final report/charge sheet under Section 173(2) Cr.P.C. or file a
referred report. Now, the question is whether during the pendency of
investigation whether a Magistrate can interfere with the registration and
give directions.
        The word investigation is defined under Section 2(h) Cr.P.C. as
follows:
Section 2(h) " investigation" includes all the proceedings under this Code for
the collection of evidence conducted by a police officer or by any person (other
than a Magistrate) who is authorised by a Magistrate in this behalf;

So, the investigation is an exercise conducted by the police or by the person
authorised by magistrate to collect the evidence relating to a particular
offence
The
Apex Court laid down that Magistrate under Section 156(3) Cr.P.C. has
power to monitor investigation to ensure that it is properly done, if the
investigation is not done properly

held thus:
13. We would further clarify that even if an FIR has been registered and even
if
the police has made the investigation, or is actually making the investigation,
which
the aggrieved person feels is not proper, such a person can approach the
Magistrate under Section 156(3) Cr.P.C., and if the Magistrate is satisfied he
can
order a proper investigation and take other suitable steps and pass such order
or
orders as he thinks necessary for ensuring a proper investigation. All these
powers
a Magistrate enjoys under Section 156(3) Cr.P.C.
The Apex Court further observed thus:
 In our opinion Section 156(3) Cr.P.C. is wide enough to include all such
powers in a Magistrate which are necessary for ensuring a proper
investigation, and it includes the power to order registration of an F.I.R. and
of ordering a proper investigation if the Magistrate is satisfied that a proper
investigation has not been done, or is not being done by the police. Section
156(3) Cr.P.C., though briefly worded, in our opinion, is very wide and it
will include all such incidental powers as are necessary for ensuring a
proper investigation.
 It is well-settled that when a power is given to an authority to do
something it includes such incidental or implied powers which would ensure
the proper doing of that thing. In other words, when any power is expressly
granted by the statute, there is impliedly included in the grant, even without
special mention, every power and every control the denial of which would
render the grant itself ineffective. Thus where an Act confers jurisdiction it
impliedly also grants the power of doing all such acts or employ such means
as are essentially necessary to its execution.
The reason for the rule (doctrine of implied power) is quite apparent.
Many matters of minor details are omitted from legislation. As Crawford
observes in his 'Statutory Construction' (3rd edn. page 267):
If these details could not be inserted by implication, the drafting of
legislation would be an indeterminable process and the legislative intent
would likely be defeated by a most insignificant omission.
x x x x x
In view of the abovementioned legal position, we are of the view that
although Section 156(3) is very briefly worded, there is an implied power in
the Magistrate under Section 156(3) Cr.P.C. to order registration of a
criminal offence and/or to direct the officer in charge of the concerned police
station to hold a proper investigation and take all such necessary steps that
may be necessary for ensuring a proper investigation including monitoring
the same. Even though these powers have not been expressly mentioned in 
Section 156(3) Cr.P.C., we are of the opinion that they are implied in the
above provision.
           So, a perusal of the above decision would show that for ensuring
proper investigation the Magistrate has power to monitor the investigation
under Section 156(3) Cr.P.C. However, such a power has to be exercised
cautiously and with judicious discretion.
 Now, coming to the instant case, the Magistrate under the impugned
order directed the police to add Sections 409 and 477A IPC to the FIR and
investigate and file the report.  In my considered view, by this order, he has
not committed any judicious overreaches and made an impermissible 
penetration into the domain of investigation. The prerogative of police to
investigation has been kept in tact, but they were only asked to investigate
whether the accused have in fact committed the offences under the newly
added sections including the ones which are already referred. So, the act of
Magistrate cannot be found fault with.- 2015 Telagana & A.P. msklawreports