Legislative Disqualification – Joining Political Party – Constitution of India, 1950 – Appellants, elected as independent members, joined the Cabinet of the BJP-led government and were disqualified by the Speaker for allegedly joining the BJP – Supreme Court held that merely supporting a government or joining the Cabinet does not amount to joining a political party under Paragraph 2(2) of the Tenth Schedule [Paras 42-48].

Violation of Natural Justice – Judicial Review – Speaker’s Decision – Disqualification proceedings conducted hastily and without proper notice as required under the Karnataka Legislative Assembly (Disqualification of Members on Ground of Defection) Rules, 1986 – Supreme Court found the Speaker’s decision violated rules of natural justice and was motivated by mala fides – Decision subject to judicial review despite finality clause in the Tenth Schedule [Paras 49-56].

Malafide Intent – Speaker’s Conduct – Evidence showed Speaker acted with undue haste to disqualify appellants before a scheduled confidence vote – Supreme Court concluded Speaker’s actions were intended to favor the ruling party and were not impartial [Paras 52-55].

Decision:

Appeals Allowed – Speaker’s disqualification orders and High Court’s affirming judgment set aside – No order as to costs [Paras 57-58].

Arbitration Law – Statutory Arbitration – Madhya Pradesh MadhyasthamAdhikaranAdhiniyam, 1983 – The Appellants challenged the High Court's decision appointing an arbitrator under the Arbitration and Conciliation Act, 1996, instead of referring the dispute to the statutory tribunal constituted under the Madhya Pradesh MadhyasthamAdhikaranAdhiniyam, 1983 – Supreme Court examined whether the state act is repealed by the central act in light of the doctrine of repugnancy and Article 254 of the Constitution [Paras 2-10, 19-24].

Doctrine of Per Incuriam – Judicial Precedent – Supreme Court held that the decision in Va Tech Escher WyassFlovel Ltd. v. MPSE Board (2005) was rendered per incuriam as it did not consider relevant provisions of the Madhya Pradesh Act and prior case law – Reaffirmed that the M.P. Act's tribunal should handle disputes if the works contract exists, but disputes regarding the termination of the contract should be handled under the Arbitration and Conciliation Act, 1996 [Paras 18-31, 41].

Repugnancy – Constitution of India, 1950 – Article 254 – The Court found no repugnancy between the state and central acts as the M.P. Act was reserved for and received the President's assent, complying with Article 254(2) – The state law continues to operate for specified types of arbitration within the state [Paras 44-47].

Decision:

Appeal Allowed – High Court's judgment set aside – Arbitration proceedings to proceed under the Madhya Pradesh MadhyasthamAdhikaranAdhiniyam, 1983, for disputes relating to execution of works contract – Disputes on termination or cancellation to be referred under the Arbitration and Conciliation Act, 1996 [Paras 48-62].

Constitutional Law – Article 14 – Equality Before Law – Section 32(5A) of Bangalore Development Authority Act, 1976 – High Court declared Section 32(5A) as violative of Article 14 and void – Supreme Court analyzed legislative intent and found no guidelines for the BDA’s power to levy charges on development schemes – Concluded the provision granted arbitrary power leading to potential discrimination [Paras 27-28].

Administrative Law – Sanction of Layout Plans – Conditional Approvals – BDA’s conditional approval for residential layout plans required payment of various charges including Cauvery Water Scheme and Ring Road surcharge – Supreme Court upheld the High Court's decision to quash these conditions – Found BDA’s demands exceeded statutory powers and violated constitutional principles [Paras 16-18, 22-28].

Decision:

Appeals Dismissed – High Court’s decision affirmed – Section 32(5A) declared unconstitutional – Conditions for payment of charges quashed – BDA directed to refund amounts collected under invalidated conditions [Paras 29-30].

Summary Suit – Leave to Defend – Order 37 CPC – HDFC filed a summary suit under Order 37 CPC for recovery of dues from the borrower and guarantors – Trial court denied leave to defend to guarantors and decreed the suit – High Court allowed leave to defend, citing triable issues under Section 139 of the Contract Act – Supreme Court found no triable issue existed as the guarantors had explicitly waived their rights under Section 139 in the deed of guarantee [Paras 2-10].

Guarantor's Liability – Section 139 of Contract Act – Deed of Guarantee – The liability of guarantors was found to be co-extensive with the borrower – Supreme Court emphasized that explicit clauses in the deed waived the guarantors’ rights under Section 139 – Held that guarantors cannot avoid liability on this basis [Paras 8-10].

Decision:

Appeal Allowed – High Court's judgment set aside – Trial court’s order and decree restored – No order as to costs [Paras 10-11].

Compromise Decree – Bar to Fresh Suit – Civil Procedure Code, 1908 – Order 23 Rule 3A – Supreme Court held that under Order 23 Rule 3A, a compromise decree can only be challenged in the same court that recorded the compromise – However, this bar does not apply to suits seeking to set aside decrees of courts or tribunals with limited jurisdiction, such as revenue courts under the U.P. Zamindari Abolition and Land Reforms Act [Paras 6-12].

Fraud – Jurisdiction of Civil Courts – Section 9 CPC – Allegations of fraud require adjudication by civil courts – Revenue courts are not equipped to handle such matters – Supreme Court emphasized the inherent jurisdiction of civil courts to try all civil disputes unless expressly barred [Paras 11-12].

Maintaining Suit in Civil Court – Compromise Decree by Revenue Court – Decree passed by Assistant Collector under U.P. Zamindari Abolition and Land Reforms Act challenged as fraudulent – Supreme Court held that civil court can adjudicate on fraud despite provisions of Order 23 Rule 3A, as revenue courts are of limited jurisdiction [Paras 8-13].

Decision:

Appeal Allowed – High Court’s order set aside – Suit restored before Munsif for expedited trial – Suit to be disposed of within one year from the date of receipt of the order [Paras 13-14].

Taxation – International Transactions – Indirect Transfers – Income Tax Act, 1961 – Vodafone International Holdings B.V. acquired CGP Investments (Holdings) Ltd., indirectly holding Indian assets – Indian Tax Authorities claimed tax on capital gains, stating transfer involved Indian assets – Supreme Court held no tax liability on Vodafone as the transaction was between non-resident entities and did not trigger tax under Indian law [Paras 68-70].

Corporate Veil – Lifting Doctrine – The Court examined whether the corporate veil should be lifted to tax the underlying transaction – Supreme Court concluded that Vodafone structured the deal within legal bounds and the transaction had genuine business purpose, thus corporate veil should not be lifted [Paras 66-67, 73-74].

Applicability of Section 9 – Income Deemed to Accrue in India – Revenue argued that Section 9 of the Income Tax Act should apply to indirect transfers – Supreme Court rejected this view, stating Section 9 does not cover indirect transfers and no income accrued or arose in India as per the provision [Paras 71-72].

Decision:

Appeal Allowed – High Court’s judgment set aside – Indian Tax Authorities' order quashed – No tax liability on Vodafone for the transaction – No costs [Paras 72-75].

Stamp Duty – Valuation of Property – Constitution of India, 1950 – The dispute concerns the adequacy of stamp duty paid on a property transaction – Additional Collector found deficiency in stamp duty based on subsequent valuation – Supreme Court upheld High Court's quashing of the Additional Collector’s order, emphasizing procedural fairness and appropriate valuation based on the property's status at the time of sale [Paras 2-8].

Procedural Fairness – Article 226 – Writ Jurisdiction – High Court’s intervention justified due to procedural lapses by the Additional Collector, including issuing the order on a public holiday and lack of adequate opportunity for the respondents to present their case – Supreme Court noted the absence of a serious objection from the State regarding alternative remedies, affirming the High Court's jurisdiction [Paras 5-9].

User of Property – Relevance for Stamp Duty – The nature and user of the property at the time of purchase is crucial for determining stamp duty – Later commercial use irrelevant for assessing the stamp duty retrospectively – Supreme Court reiterated that stamp duty calculation must reflect the property’s use at the time of sale [Paras 8-9].

Decision:

Appeal Dismissed – High Court’s judgment upheld – Order dated 27.09.2004 by the Additional Collector quashed – No order as to costs [Paras 9].

Representing Advocates:

for appellant: Shail Kumar Dwivedi, AAG U.P.; Sanjay Visen; Abhinav Srivastava; Vandana Mishra; Gunnam Venkateswara Rao

for respondent: K.V. Viswanathan; Liz Mathew

Property Law – Bhumidhar's Rights – Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 – The appellant challenged the dismissal of his suit seeking to restrict the respondent's right to transfer land inherited under a will – Supreme Court held that under Section 169(1) of the Act, a bhumidhar can validly bequeath property with restrictions, and Section 14(2) of the Hindu Succession Act, 1956 allows such restrictions in a will [Paras 9-12].

Doctrine of Lis Pendens – Transfer of Property Act, 1882 – The Court affirmed that any transfer of property during the pendency of a suit remains subject to the outcome of the litigation – Applied the principle to hold that the sale of land by the respondent during the litigation was subject to the appellant's rights as determined by the suit [Paras 17-21].

Procedural Fairness – Civil Procedure Code, 1908 – Considered whether the lower courts erred in dismissing the appellant’s suit without proper examination of the will's restrictions and the doctrine of 'lis pendens' – Supreme Court found procedural lapses and set aside the lower courts' decisions [Paras 22-23].

Decision:

Appeal Allowed – Judgments of the High Court, Additional District Judge, and Civil Judge set aside – Declaration granted that the respondent had no right to sell the disputed land – Suit No. 121/1994 decreed to that extent – Parties to bear their own costs [Paras 23-24].

Arbitration – Setting Aside Award – Limitation Period – Arbitration and Conciliation Act, 1996 – The appeal challenges the dismissal of applications to set aside arbitral awards on grounds of limitation – Supreme Court held that the three-month period prescribed under Section 34(3) is the ‘prescribed period’ and the additional 30 days allowed by the proviso is not – Section 4 of the Limitation Act, 1963, which allows extension if the period expires when the court is closed, does not apply to the 30-day extension under the Arbitration Act [Paras 11-14].

Section 4 of Limitation Act – Applicability – The Court clarified that Section 4 of the Limitation Act applies only to the ‘prescribed period’ of limitation and not to any extension beyond that period – Applications filed after the 30-day grace period beyond three months are not covered by Section 4 and are time-barred [Paras 12-13].

Decision:

Appeal Dismissed – Applications for setting aside arbitral awards dismissed as time-barred – High Court and District Judge's decisions upheld – No order as to costs [Paras 14-16].