Income Tax – Bogus Purchases – Disallowance of 10% – The appellant challenged the disallowance of 10% of purchases deemed bogus by the ITAT, despite the acceptance of sales as genuine by the Revenue – Held: The ITAT found no cogent or convincing evidence to support the Revenue's allegation that all purchases were bogus – The ITAT, however, upheld the CIT-A's disallowance of 10% of purchases as a convenient measure, without sufficient justification – The High Court held that disallowing 10% of the expenses without concrete evidence or proper analysis is arbitrary and unsustainable – The ITAT's decision is set aside, and the disallowance is fully reversed [Paras 13-24].

Burden of Proof – Purchases and Sales – Once the ITAT found no cogent evidence from the Revenue to prove the purchases were bogus, the burden shifted to the Revenue to justify any disallowance – Held: The ITAT’s failure to examine why the disallowance was justified, despite its finding that sales were genuine, reflects a flawed approach – The court reiterated that the law does not expect the assessee to prove a negative where no evidence is presented against them [Paras 20-22].

Reliance on Precedent – Nikunj Eximp Enterprises Case – The ITAT relied on CIT v. Nikunj Eximp Enterprises but failed to apply its principles correctly – Held: In cases where the Revenue has not conclusively proven that purchases are bogus, the disallowance should not be upheld merely as a compromise measure – The High Court emphasized the need for clear findings before any disallowance is sustained [Paras 16-18].

Decision: All three income tax appeals are allowed in favor of the appellant – The ITAT's decision to disallow 10% of purchases is set aside – No costs [Paras 24-25].

SARFAESI Act – Bar under Section 34 – Fraud Allegations and Collusion – Suit Maintainable – The petitioner, a shareholder and director, alleged fraud and collusion between respondent-bank and other directors regarding the sanctioning of a loan without board authorization – The trial court and appellate court rejected the suit under Order VII Rule 11, citing the bar under Section 34 of the SARFAESI Act – Held: Section 34 does not bar the civil court's jurisdiction in cases where fraud or collusion is alleged – The allegations of fraud were sufficiently pleaded, and the suit is maintainable under Section 9 of CPC [Paras 30, 31, 44, 45].

Company Affairs – Director’s Rights – Loan Sanction without Board Resolution – Fraud Claims Established – The petitioner claimed that the loan was sanctioned by the bank without a valid board resolution – The court accepted that this amounts to collusion and fraud between the bank and other directors – The plaint contained specific averments supporting this allegation [Paras 42, 44, 45, 47].

Jurisdiction of Civil Courts – Scope of Section 34 of SARFAESI Act – Section 34 does not preclude civil courts from deciding matters involving fraud – The court emphasized that Section 34’s bar is not absolute, especially when the claim involves fraud, as held in Mardia Chemicals Ltd. v. Union of India – The civil court retains jurisdiction to adjudicate such disputes [Paras 51, 70, 71, 83].

Decision: Both the orders of the trial court and appellate court rejecting the plaint were quashed, and the plaint was restored for trial. The court held that the bar under Section 34 of the SARFAESI Act does not apply in cases of fraud and collusion.

Criminal Law – Relevance of Evidence from Another Crime – Section 311 CrPC – The prosecution sought to introduce evidence from a subsequent crime (Cr.No.1031 of 2021) in the ongoing trial (SC.No.113 of 2018) – Held: The evidence relating to the subsequent crime was irrelevant to the current trial, as the accused had not been charged in the latter case, and the proposed witness (Sub Inspector) was not an eyewitness – Introducing such evidence would violate fair trial principles and the accused’s right to defend against the charges solely in the ongoing trial – The impugned order permitting the evidence was set aside [Paras 1-20].

Bad Character Evidence – Sections 53 and 54 of the Indian Evidence Act – The court noted that introducing evidence of another crime could unfairly suggest the bad character of the accused – Held: Under Sections 53 and 54 of the Evidence Act, evidence of bad character is inadmissible unless the accused himself introduces evidence of good character – The prosecution’s attempt to introduce such evidence was impermissible [Paras 21-30].

Fair Trial – Prejudice Against the Accused – Allowing evidence from a separate ongoing case could force the accused to disclose his defense prematurely, prejudicing the trial process – Held: The trial court’s decision was improper and violated norms of a fair trial – The revision petition was allowed, and the trial court's order was set aside [Paras 31-40].

Decision: Criminal Revision allowed – The order dated 29.08.2024 in Crl.M.P.No.359 of 2024 was set aside – The trial court was directed to proceed with the trial in SC.No.113 of 2018 without considering evidence from the subsequent case.

Tenancy Law - Landlord-Tenant Relationship – Unlawful Subletting – Tenant's Liability Confirmed – The plaintiffs (landlords) challenged the finding that Defendant Nos. 2 and 3 were direct tenants of the plaintiffs, asserting that they were unlawfully inducted as subtenants by Defendant No. 1 (son of the original tenant) – Held: The Trial Court and Appellate Court erroneously inferred a landlord-tenant relationship between the plaintiffs and Defendant Nos. 2 and 3 based on a stray admission in cross-examination – Plaintiffs' claim of unlawful subletting by Defendant No. 1 upheld, and eviction decree modified to reflect this – Defendant Nos. 2 and 3 ordered to vacate the suit premises [Paras 27-31, 58].

Default in Payment of Rent – Eviction Upheld – Defendant Nos. 2 and 3 failed to pay rent to the plaintiffs or deposit it in court as required under Section 15(3) of the Maharashtra Rent Control Act – Held: Default in rent payment established, warranting eviction – Failure to deposit rent regularly during the pendency of the suit violated the statutory provisions, and the eviction decree is sustainable on this ground as well [Paras 54-60].

Additional Evidence – Application Rejected Under Order 41 Rule 27 – Defendant Nos. 2 and 3 sought to introduce additional evidence in the form of rent receipts to prove direct tenancy with Dara K. Irani, but this application was rejected – Held: The Appellate Court correctly rejected the application for additional evidence, as the documents did not substantiate the claim of direct tenancy and would not alter the outcome of the case [Paras 40-45].

Decision: Civil Revision Application No. 71/2024 is dismissed – Writ Petition No. 8788/2024 is allowed – The eviction decree is modified to reflect that Defendant No. 1 was the tenant who unlawfully sublet the premises to Defendant Nos. 2 and 3 – Defendants are directed to hand over possession of the premises by 31 December 2024 – Plaintiffs are entitled to an inquiry into mesne profits from 9 September 2014 [Paras 60-65].
 

Maintenance – Entitlement of Wife – Section 125 of Cr.P.C. – The petitioner sought reduction of the maintenance amount awarded to the respondent (wife) on the grounds that she is well qualified (M.Com. degree) and capable of earning – Held: Merely being qualified does not disentitle the wife from claiming maintenance – Financial support is required even if the wife is capable of earning – Maintenance entitlement upheld, but quantum reduced [Paras 15-18, 25].

Quantum of Maintenance – Financial Status and Socio-Economic Standard – While determining the quantum of maintenance, the court must consider the standard of living the wife was accustomed to during her matrimonial life – The maintenance amount should not be oppressive to the husband or insufficient for the wife – In this case, considering the wife's qualifications and abilities, the court reduced the maintenance amount from Rs. 25,000/- to Rs. 20,000/- per month [Paras 30-35].

Child's Maintenance – Continuance Till Majority – The maintenance awarded to the minor child (respondent No. 2) shall continue until the child attains the age of majority – No changes made to the amount of maintenance awarded for the child [Para 36].

Decision: The criminal revision is partly allowed. The maintenance awarded to the respondent-wife is reduced from Rs. 25,000/- to Rs. 20,000/- per month. The maintenance for the child remains unchanged. The remaining part of the Family Court's order remains intact.
 

Civil Law – Declaration of Title and Recovery of Possession – Plaintiff filed a suit seeking declaration of title over agricultural land and recovery of possession, challenging the proceedings under the ROR Act as null and void – Trial Court decreed in favor of the plaintiff, holding that the ROR proceedings were void as no notice was served to the plaintiff – First Appellate Court upheld the Trial Court's decision – Second Appeal preferred by the defendants challenging both judgments – Held: Suit barred by limitation as it was filed after 6 years of denial of title by the defendants in the earlier suit – Appeal allowed [Paras 8, 9, 10, 24.9].

Limitation – Suit for Declaration – Plaintiff sought declaration of title based on Article 65 of the Limitation Act (12 years), but the Court found that Article 58 (3 years) was applicable for the relief of declaration of title – Defendants denied the plaintiff's title in 1990, and the suit was filed in 1997, beyond the 3-year limitation period – Courts below erred in applying Article 65 and placing the burden of limitation on the defendants – Suit barred by limitation [Paras 24.4, 24.5, 24.9].

Record of Rights Proceedings – Nullity of ROR Proceedings – Plaintiff challenged the ROR proceedings initiated by the defendants under Section 5-A of the ROR Act – No appeal was filed by the plaintiff under Section 5-B of the Act – MRO not made a party to the suit – Courts below declared the ROR proceedings null and void without proper consideration – Second Appeal held that without joining the MRO as a necessary party, the suit could not succeed – Declaration of nullity of ROR proceedings set aside [Paras 27, 28.1, 28.2].

Possession – Plea of Dispossession – Plaintiff failed to specify the date of dispossession by the defendants – No legal action taken between 1990 and 1997 – Evidence showed inconsistency in plaintiff’s claim of dispossession – Courts below overlooked the lack of specific pleadings on dispossession – Second Appeal upheld the defendants' possession of the land under Section 53-A of the Transfer of Property Act – Relief of possession denied to the plaintiff [Paras 26, 26.4].

Decision: Second Appeal allowed – Judgments of Trial Court and First Appellate Court set aside – Suit dismissed – No costs [Paras 29].
 

Family Law – Interim Maintenance – Execution of Maintenance Orders – Appeal Dismissed – The appellant challenged the execution of an interim maintenance order passed under Section 36 of the Special Marriage Act, contending that the order was not enforceable under Section 39A, which applies to orders passed under Chapters V or VI, while Section 36 is in Chapter VII – Held: The Court ruled that orders passed under Section 36 are linked to proceedings under Chapters V or VI, and hence enforceable under Section 39A – The appeal against the execution was dismissed [Paras 7-12].

Adjustment of Payments in Domestic Violence Proceedings – Limited Credit Allowed – The appellant claimed an adjustment for amounts deposited in separate proceedings under the Domestic Violence Act and additional cash payments – The Court allowed credit for Rs. 48,000 deposited in the Domestic Violence case but rejected the claim for Rs. 2,90,000 in cash, finding no evidence of direct payment for maintenance under the relevant order [Paras 13-17].

Limitation for Filing Execution Petitions – Recurring Cause of Action – The appellant argued that the execution petition was time-barred – The Court, citing Article 136 of the Limitation Act, held that the petition was filed within the 12-year limitation period and noted that maintenance orders create a recurring cause of action, enforceable monthly – The second execution petition was held valid, as the first one was withdrawn without being decided on merits, and thus, not barred by res judicata [Paras 19-25].

Decision: Appeal dismissed – Interim maintenance order upheld – Adjustment of Rs. 48,000 allowed from the amount due, but further claims rejected – Execution proceedings to continue [Paras 26-28].
 

Criminal Law – NDPS Act – Compliance with Section 50 – Acquittal Upheld – The prosecution’s appeal questioned the acquittal on grounds that the Special Court gave undue importance to minor discrepancies and failed to appreciate substantial compliance with the NDPS Act – The High Court observed that the Investigating Officer improperly offered himself as an option for the search, violating Section 50, as only a Gazetted Officer or Magistrate should be involved in the search consent – Held: Non-compliance with Section 50 was fatal, warranting acquittal [Paras 23-28].

Procedural Irregularities – FIR Number on Recovery Memos – Chain of Custody Doubts – Evidence showed that recovery and site plan documents included the FIR number even before the formal registration of the FIR, casting doubt on their authenticity – Additionally, inconsistencies in the description of the contraband’s color between the recovery and the FSL report further weakened the prosecution’s case – Held: Procedural lapses justified dismissal of the appeal [Paras 29-31].

Possession of Stolen Property – Section 411 IPC – Lack of Proof of Ownership – The laptop allegedly stolen and recovered from Ajay Kumar was not conclusively proven to belong to the complainant, as the invoices did not match the model number on the recovered item – Held: Prosecution failed to prove that the recovered laptop was stolen property as required under Section 411 IPC [Paras 33-34].

Decision: The application for leave to appeal is dismissed. The High Court found no reason to interfere with the acquittal judgment of the Special Court due to substantial procedural lapses and lack of credible evidence linking the accused to the charges [Paras 36-37].
 

Motor Accident – Liability of Insurance Company – Principle of ‘Pay and Recover’ – The appellant-owner challenged the award on the grounds that his driver held a valid license verified before employment – However, the driver was found to lack a valid driving license at the time of the accident – Held: Following Supreme Court precedents, including Parminder Singh and Swaran Singh, the court affirmed that in cases where the driver lacks a valid license, the insurer is liable to pay compensation to third parties but may recover the amount from the vehicle’s owner – The appeal was dismissed on this basis [Paras 12-15].

Assessment of Compensation – Future Prospects, Loss of Consortium, and Conventional Heads – The cross-objectors argued for higher compensation, contending that the Tribunal inadequately accounted for future prospects, loss of consortium, and other non-pecuniary losses – Held: Citing Sarla Verma and Pranay Sethi, the court applied an 11-multiplier and accounted for future prospects and consortium, adjusting the total compensation to include Rs.18,000 for loss of estate, Rs.18,000 for funeral expenses, and Rs.1,92,000 for consortium (covering spousal, parental, and filial loss) [Paras 16-19].

Final Decision – Appeal Dismissed, Cross-Objections Allowed with Enhanced Compensation – The appeal by the owner was dismissed, and the cross-objections were allowed, enhancing the award from Rs.6,60,000 to Rs.10,99,200 with 9% annual interest from the claim petition filing date – The Insurance Company was directed to pay and recover the enhanced amount from the owner [Paras 20-23].