Income Tax – Final Assessment Order – Draft Assessment Order Requirement – Petitioner contended that the final assessment order passed by the Assessing Officer (AO) was invalid as it was not preceded by a draft assessment order, violating Section 144C of the Income Tax Act, 1961 – Court held that the failure to issue a draft assessment order during remand proceedings as mandated by Section 144C rendered the final assessment order invalid – Assessment and demand notices quashed [Paras 1-6, 14].

Jurisdictional Error – Procedural Compliance – Court emphasized the mandatory nature of the procedural requirement under Section 144C, underscoring that any final assessment order passed without adherence to this process, particularly in remand cases, is legally untenable [Paras 4-5, 51-52].

Procedure under Section 144C – Scope of "In the First Instance" – The respondents argued that the expression "in the first instance" in Section 144C obviates the need for a draft assessment order upon remand – The Court rejected this argument, affirming that the draft order requirement is mandatory regardless of whether the proceedings are initiated anew due to remand by the Tribunal [Paras 14-16, 19-23].

Comparative Analysis – Section 144B vs. Section 144C – The Court found that Section 144C establishes a distinct and comprehensive assessment regime for eligible assessees, which differs fundamentally from the earlier Section 144B. Section 144C involves multiple levels of review and corrective mechanisms that are not merely procedural but essential to ensuring a fair assessment process [Paras 36-45].

Limitation and Remand – Statutory Period – The Court rejected the respondents' contention that the assessment could be remanded for fresh proceedings despite the lapse of the statutory period under Section 153. The Court held that extending the limitation period or condoning the delay in such cases would be impermissible [Paras 54-60].

Decision:
Writ Petition allowed. The impugned final assessment orders and consequent demand and penalty notices were quashed due to non-compliance with Section 144C. The petitioners were entitled to all consequential reliefs.
 

Limitation Act Applicability – Section 31 of the State Financial Corporation Act – The appellant argued that the Limitation Act does not apply to enforcement against the surety under Section 31 of the State Financial Corporation Act, 1951 – Held: The court rejected this argument, stating that unless there is an express provision excluding the Limitation Act, it is applicable – The application under Section 31 is not a suit but a claim application, and Article 137 of the Limitation Act applies, which prescribes a three-year period – The appellant’s contention that Article 112 applied was also rejected, as the proceedings under Section 31 are not considered a suit [Paras 8-12].

Commencement of Limitation – Right to Sue and Enforcement Against Surety – The appellant sought to enforce the guarantee after selling the mortgaged property of the principal borrower – Held: The right to claim from the surety arises after the assets are sold, as per Article 55 of the Limitation Act – In this case, the sale occurred on 11.08.2003, and the application was filed on 07.12.2009, making it barred by limitation – The court referred to precedents, including Deepak Bhandari v. H.P. State Industrial Development Corpn. Ltd., and H.P. Financial Corpn. v. Pawna, to establish the three-year period [Paras 10, 13].

Provisions of the Limitation Act – Articles 136, 137, and 55 – The court analyzed the applicability of different articles of the Limitation Act – It concluded that Article 136, which applies to the execution of decrees, was not applicable to proceedings under Section 31, as established in Maharashtra State Financial Corpn. v. Ashok K. Agarwal – Article 137, which provides a three-year limitation period from the date the right to apply accrues, was applicable – The right to sue on a contract of indemnity arose after the sale of assets, making the claim barred [Paras 11-12].

Delay in Filing – Laches and Vigilance – The court found that the appellant corporation failed to act promptly and was not vigilant in enforcing its rights – The corporation took possession in 1996 but filed the application only in 2009, after several unsuccessful auction attempts – The court applied the principle “vigilantibus et non dormientibus jura subveniunt” (the law assists those who are vigilant with their rights and not those who sleep on them) to deny the appeal [Paras 13-14].

Decision – Appeal Dismissed – The court dismissed the appeal, upholding the trial court’s decision that the claim under Section 31 was barred by limitation – It held that the appellant corporation's application was filed beyond the permissible period under Articles 55 and 137 of the Limitation Act [Paras 15-16].

Criminal Procedure – Quashing of Criminal Proceedings – Petition under Section 482 CrPC seeking quashing of a complaint filed by the Drug Inspector against the directors of Tidal Laboratories Private Ltd. for manufacturing drugs of substandard quality – Held that for criminal proceedings to continue against directors, the company must also be arraigned as an accused – Prosecution without impleading the company is unsustainable – Complaint quashed [Paras 1-50].

Directors' Liability – Drugs and Cosmetics Act – No allegations in the complaint that the petitioners, as directors, were in charge of the day-to-day affairs of the company – Impleadment of the company is mandatory for prosecution of its directors – Mere appointment as directors without specific involvement in the offence does not attract criminal liability under Section 18(a)(i) of the Drugs and Cosmetics Act [Paras 35-40].

Inherent Powers of High Court – Exercise of inherent powers under Section 482 CrPC justified to prevent abuse of process where the complaint does not disclose any material connecting the accused to the offence – Continuation of trial against the directors without arraigning the company would be an abuse of process of law [Paras 20-30].

Decision: Petition allowed – Complaint and order issuing process quashed – Petitioners acquitted of all charges.

Criminal Law – Quashing - NDPS Act - Vicarious Liability of Property Owner - The petitioner was implicated under the NDPS Act for allegedly allowing his property to be used for a drug-related event without his knowledge. The court analyzed the applicability of Section 25 of the NDPS Act, which requires conscious knowledge for the owner to be held liable. Citing precedents, the court emphasized that the prosecution must prove that the owner had "knowingly permitted" the use of the property for illegal activities. In the absence of such evidence, vicarious liability under Section 25 cannot be imposed. [Paras 8-10].

Judicial Review - Quashing of Proceedings - Abuse of Process - The court underscored that continuing proceedings against the petitioner without prima facie evidence of his knowledge would result in an abuse of the legal process and a miscarriage of justice. The court quashed the FIR and related proceedings against the petitioner, noting that the prosecution failed to establish the foundational facts required to invoke Section 25 of the NDPS Act. [Paras 9-11].

Decision: The writ petition was allowed, and the FIR registered in Crime No. 329 of 2024 at Hebbagodi Police Station was quashed insofar as it concerned the petitioner. The court clarified that the observations made were limited to the petitioner's case and should not influence the ongoing investigation against other accused persons. [Paras 10-11].

Criminal Law – Prevention of Corruption – Demand and Acceptance of Bribe – Appeal against conviction under Sections 7 and 13(2) of the Prevention of Corruption Act, 1988 – Appellant, a storekeeper in the ESI Department, was accused of demanding ₹1000 as a bribe for supplying a Botex injection prescribed by NIMHANS hospital to the complainant – Prosecution relied on evidence from the complainant, shadow witnesses, and trap proceedings – Court held that the demand and acceptance of the bribe were proved beyond reasonable doubt based on corroborative evidence, including the recovery of tainted money and the presumption under Section 20 of the Act – Conviction confirmed [Paras 1-78].

Evidence Law – Reliability of Witness Testimony – Cross-examination of Shadow Witnesses – The appellant claimed that the money was forcibly put into his pocket by the complainant – Court rejected this argument, noting that the shadow witnesses consistently corroborated the demand and receipt of bribe during the trap – Minor contradictions in witness testimony did not shake the prosecution’s case, and the evidence from the trap operation was found to be reliable [Paras 32-55].

Sentencing – Modification of Sentence Due to Passage of Time – The trial court sentenced the appellant to six months' rigorous imprisonment under Section 7 and one year under Section 13(2) of the Prevention of Corruption Act – Considering the appellant’s superannuation and the time elapsed since the incident in 2007, the Court reduced the sentence to three months under Section 7 and six months under Section 13(2), maintaining the fine imposed by the trial court – Set-off allowed for the time already spent in custody [Paras 60-78].

Decision:

Appeal partly allowed – Conviction under Sections 7 and 13(2) of the Prevention of Corruption Act confirmed – Sentence reduced to three months' rigorous imprisonment under Section 7 and six months under Section 13(2) – Fine imposed by the trial court remains unaltered – Set-off granted under Section 428 of Cr.P.C. for the period of custody already undergone.

Drugs and Cosmetics Act – Quashing of Criminal Proceedings due to Delay in Drug Analysis Report – Violation of Statutory Rights – Right to Challenge the Government Analyst’s Report Nullified Due to Delay – Petitioners challenged the prosecution initiated under the Drugs and Cosmetics Act, alleging that the delay of more than 20 months in testing the drug sample deprived them of their right to challenge the Government Analyst's report. The court held that the statutory rights of the petitioners were violated as the shelf life of the drug had expired before the report was furnished, rendering the prosecution futile. The impugned proceedings were quashed. [Paras 56-106].

Legislative Intent and Procedural Requirements – Timely Conduct of Drug Tests Mandatory – The court emphasized the importance of prompt testing and reporting by Government Analysts to prevent harmful drugs from remaining in circulation. Rule 45 of the Drugs and Cosmetics Rules (as amended in 2017) mandates that the Government Analyst must conduct tests and submit reports within 60 days of receiving the drug sample. Failure to comply with these timelines defeats the statutory purpose. Directions were issued to streamline the testing process to avoid undue delays. [Paras 107-121].

Vicarious Liability – Allegations Against Directors of Company Insufficient – The complaint against the Chairman, Managing Director, and Executive Director of the petitioner company was held unsustainable due to the lack of specific averments detailing their role in the manufacturing or distribution of the substandard drug. General allegations were insufficient to establish their vicarious liability. [Paras 72-97].

Prosecution of Company Officials – Inadequate Allegations – The complaint lacked the necessary details to establish how the company's senior officials were responsible for the manufacturing of the alleged substandard drug. The court applied the principles laid down by the Supreme Court in Brij Lal Mittal and Lalankumar Singh, quashing the proceedings against the company's higher management for failure to state specific facts. [Paras 77-97].

Delay in Drug Testing and Shelf Life Expiration – Prejudice to the Accused – The petitioners were deprived of their right to challenge the report due to the delayed analysis, which occurred after the shelf life of the drug had expired. The court held that this delay resulted in serious prejudice to the petitioners and vitiated the proceedings. [Paras 59-66, 98-105].

Compliance Directions – Prompt Drug Analysis and Reporting – The court directed the Drugs Controller General (India) to ensure that all drug samples are analyzed within the statutory 60-day period and that a real-time online system is developed for the monitoring of test reports to prevent unnecessary delays. [Paras 110-121].

Decision – Prosecution Quashed – The criminal petitions were allowed, and the proceedings against the petitioners were quashed due to the statutory violation of their right to defend themselves. Directions were also issued for reforms in drug testing procedures to prevent future delays. [Paras 106-123].

Bail – Regular Bail – Conspiracy and Murder Charges – Petitioner sought regular bail, claiming false implication and lack of direct evidence. The petitioner was not named in the original FIR and was arrested based on the co-accused’s disclosure. The court noted the petitioner’s prolonged detention, absence of a direct role in the crime, and the bail granted to co-accused. Emphasized the constitutional right to a speedy trial under Article 21. Bail granted subject to furnishing of surety bonds [Paras 1-10].

Criminal Jurisprudence – Presumption of Innocence – Right to Speedy Trial – Reaffirmed the presumption of innocence and the right to a speedy trial as integral to criminal jurisprudence. The court stressed that pre-conviction detention should be limited and that bail should generally be granted unless there are compelling reasons for denial [Paras 4-8].

Decision: Regular bail granted – The petitioner is to be released upon furnishing bail and surety bonds to the satisfaction of the trial Court/Duty Magistrate. The decision does not reflect on the merits of the case [Para 5].

Criminal Law – Bail – Parity with Co-accused – Petitioners sought regular bail on the grounds of parity with co-accused who were similarly situated and had already been granted bail. The petitioners had been in custody for over a year and there was prima facie evidence connecting them to the offense. However, considering the parity principle, the prolonged incarceration without trial, and the bail granted to co-accused, the court granted bail to the petitioners, imposing strict conditions to ensure no tampering with evidence or influencing of witnesses [Paras 1-8].

Bail Conditions – Firearms and Influence – The court imposed conditions restricting the possession of firearms by the petitioners to ensure the safety of the victim and society, and to prevent any influence on witnesses. The petitioners were required to surrender all firearms and ammunition and were prohibited from entering the victim’s property until all key witnesses had been examined. These conditions aimed to balance the petitioners' liberty with the need for a fair trial [Paras 11-15].

Decision: Bail granted – The petitioners were released on bail subject to furnishing bonds to the satisfaction of the concerned Court. The court emphasized the need for compliance with the imposed conditions to prevent any potential harm to the victim or society [Paras 9-18].
 

Service Law – Appointment and Qualification – Higher Qualification – Petitioner, with qualifications higher than those prescribed for the position of JBT Teacher, was not approved for appointment by the Chandigarh Administration. Despite serving continuously for 32 years and retiring, her pension was denied due to the lack of formal approval for her appointment. The court recognized that while higher qualifications cannot substitute prescribed ones, the petitioner's long service, regular appointment process, and unblemished record justify her claim for pension. The denial of pension was deemed unjust and the rejection of her appointment was quashed [Paras 1-13].

Pension – Right to Pension After Long Service – Despite not meeting the exact qualifications at the time of appointment, the petitioner's 32 years of continuous service and the fulfillment of her duties justified her right to pension. The court directed the respondents to consider her case for pension and treat her date of appointment as December 1, 1994, without interest on arrears [Paras 12-13].

Decision: Petition allowed – The impugned order was quashed, and the respondents were directed to consider the petitioner's case for pension within three months [Para 13].