The 2021-22 Budget tabled in the Parliament by the Finance Minister, Nirmala Sitharaman, has received a mixed response from stakeholders in the energy sector. While the massive outlay for revamping the power distribution sector was lauded across the board, the response to the Budget proposals from the renewable energy sector was not too enthusiastic.
The industry is positive about the Budget outlays for Solar Energy Corporation of India (SECI) and Indian Renewable Energy Development Agency Limited (IREDA).
Some of the key proposals in the Budget include:
• 3.05 trillion (~$41.92 billion) outlay for a revamped reforms-based result-linked power distribution sector program over five years
• Infusion of additional capital of Rs.10 billion (~$137 million) in SECI and Rs.15 billion (~$205.6 million) in IREDA
• Increase in customs duty on solar inverters from 5% to 20% and on solar lanterns from 5% to 15% to encourage domestic production
The finance minister also said that a phased manufacturing plan for solar cells and solar modules would be announced soon to build up India’s solar capacity.
In Budget 2020, an allocation of Rs.220 billion (~$3.08 billion) went to the power and renewable sector.
Some of the major budget outlays in the power sector include the Rs.26 billion (~$356 million) for solar power and Rs.11 billion (~$150 million) for wind power. The largest outlay was for the Integrated Power Development Scheme (IPDS), which received a whopping $53 billion (~$724 million). One of the main programs of IPDS is smart meter installations.
The Union Budget of 2021-22 has been met with a general sense of optimism but also a few reservations. One such review is that is that the budget is public sector centric and the private sector has largely been left to fend for itself. Whilst participants in the power sector may have even more reason to justify this sentiment, there have been certain welcome announcements. It will be crucial to see how these measures are implemented.
The key announcements are as follows:
DISCOM reform has been identified as a major agenda item for the present Government and has seen significant focus. It has been proposed that a revamped reforms based result linked power distribution sector scheme will be launched with an outlay of INR 3,05,984 crores over a period of five years to provide assistance to DISCOMS for infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems which are connected with financial improvements. This is a welcome step to curb mounting aggregate technical and commercial losses (AT&C Losses).
The Finance Minister has also proposed that a framework will be put in place to give consumers the power to decide their choice of supply from among more than one distribution companies (DISCOMS). As a large number of DISOMS are state owned, monopolistic and strapped of liquidity, these distribution utilities are ineffective in ensuring round the clock supply of power to consumers.
If implemented well, this could be a first (and major) step in introducing competitiveness and thus forcing DISCOMS to focus more on the needs of the final consumer. However, it is unclear how this move would and could be implemented at the individual consumer level. Extensive infrastructure development along with co-ordination and co-operation would be required not only with the supply chain, but also amongst DISCOMS in order to implement this on a meaningful scale.
It would be remiss not to mention here that there are massive outstanding regulatory assets. Despite the provision of a liquidity package infusing INR 1.2 lakh crore which helped at reducing systemic stress over the DISCOMS, the financial viability of DISCOMS is still a serious concern as has also been highlighted in the budget speech. The high regulatory assets/liabilities of DISCOMS has also been a major issue with respect to attracting private investment in the distribution sector, and attempts to privatise DISCOMS in the Union Territories have not seen major progress.
Although, the proposals in the Budget are a step in the right direction to promote competition in the sector and provide relief to the consumers, it will be important to see what impact this move could have on the financial position of DISCOMS. There is a concern that in the current status of things, such state owned or debt ridden DISCOMS are being set up for failure.
Perhaps, the renewables sector will feel most let down by this budget. Not only have the asks of the sector not been addressed but some of the existing benefits have also been taken away. A critical and unwelcome change in this regard relates to the custom duty for items of machinery, instruments, appliances, components or auxiliary equipment (including those required for testing and quality control) for setting up of solar power generation projects, which was capped at a 5% ad valorem rate previously. This exemption has been taken away. Developers would now be burdened by the increased costs of import and this would also lead to litigation under the power purchase agreements for change in law claims (adding to the burgeoning list including safeguard duty, GST et al).
Nevertheless, the announcement of the ‘Hydrogen Energy Mission’ (generating hydrogen from green sources) and the announcement of additional capital infusion into Solar Energy Corporation of India (Rs 1000 Crores) and Indian renewable Energy Development Agency (Rs 1500 Crores) are a few welcome measures in relation to an otherwise damp budget for the renewables sector.
‘Minimum Government and Maximum Governance’ is one out of the six pillars for this budget under over which it has been proposed by the government that in order to promote ease of doing business for those who deal with government or central public sector enterprises (CPSEs) and carry out contracts, a conciliation mechanism for quick resolution of contractual disputes will be set up. It is however unclear whether such a mechanism will be extended to disputes with DISCOMs, which are predominantly state owned and how such a conciliation mechanism will co-exist with the prevailing contractual and regulatory mechanism available to the participants of the sector. The key to the success of any such mechanism would depend on the relevant institution/authority having adequate non-governmental participation as resolution professionals and not showing any tendency to subscribe to the view of the government and the efficacy. Given past experiences, it would be difficult to win over the trust of the private sector in any such government driven conciliation and therefore this would have to be time tested in order for it to bring any considerable reform to the sector.
FUNDING STRUCTURES AND DISINVESTMENT
The budget has also announced strategic disinvestment of public sector enterprises with an objective of minimising presence of the CPSEs to create a new space for private sector investment and has classified various sectors as strategic and non-strategic. The power sector has been classified as a strategic sector and it is proposed that it will have bare minimum presence of CPSEs and the remaining CPSEs will be privatised, merged with other CPSEs or closed. This appears to be a conducive step towards reform in the sector which is dominated by public sector enterprises, however in order to attract private sector investment the government has to work towards resolving the debt situation of the DISCOMS and generally ease the regulatory burden on entities in the sector.
An asset reconstruction company is being proposed to be set up, essentially as a “bad bank”, to take over stressed debt of the public sector banks, then manage and dispose of the assets to AIFs and other potential investors. This will go a long way in managing the non-performing status of several power sector debts and potentially rejuvenate several stalled projects.
Another welcome suggestion is the setting up of a development finance institution (DFI), the National Bank for Financing Infrastructure & Development (NaBFID). The intention is to reduce the burden on banks which are struggling to provide liquidity to the power sector, as well as to be able to raise long term capital at low rates from the international market. NaBFID will however face quite a few challenges, not least the continued lack of maturity of the corporate debt market and the problem with identifying a sustainable source for long-term funds.
Additional relaxations have been made for InVITs, including allowing FPIs to invest in debt instruments issued by InVITs and a proposal that dividends from project companies to the InVIT will be exempted from taxation.
In the previous budget, the Government had provided a tax exemption for sovereign wealth funds and pension funds investing in infrastructure. This was subject to certain conditions which were difficult to meet. The present budget proposes to ease some of these restrictions including the prohibition on private funding, prohibition on loans and borrowings and restriction on commercial activities and direct investment in infrastructure. The ability to attract long term funds in infrastructure is a critical aspect for continued growth and these changes should be crucial from this perspective.
RATIONALISATION OF PROVISIONS RELATING TO SOVEREIGN WEALTH FUNDS OR PENSION FUNDS
Traditionally, investments in the infrastructure or energy sector are made using a non-operating holding company structure, which, in turn, holds investments in power generating SPVs. In line with the stated intent and objective of the exemption, it is now proposed that the benefit of tax exemption is proposed to be extended to sovereign wealth funds or pension funds making investments in an Indian non-operating holding company or NBFC, registered as infrastructure finance company or infrastructure debt fund which, in turn, makes investment in wholly-owned subsidiaries, joint ventures, or SPVs carrying on specified infrastructure projects. Further, there is a relaxation of condition from 100% investment in eligible infrastructure company, to 50% investment in an eligible infrastructure company. Apart from this, certain additional amendments have been proposed to remove the difficulties faced by these funds in meeting the condition required for seeking tax exemption.
No TDS on dividends paid to a business trust by the special purpose vehicle
While the dividends paid to a business trust by the special purpose vehicle are exempt under the existing tax provisions, the withholding tax provisions did not provide any specific exclusion for not withholding the tax when making dividend payouts to business trust. This lacunae has now been plugged by inserting a second proviso to Section 194 of the Act, to exclude the applicability of withholding tax on dividend paid to business trust.
Expanding TDS provisions on purchase of goods by energy players
While the previous Budget introduced TCS provisions on sale of goods, this Budget has proposed to replace the same with tax deduction on purchase of goods @ 0.1% subject to conditions prescribed. Hence, the liability to deposit taxes has been shifted to energy companies making payments towards the purchase of equipment / goods, subject to satisfaction of other conditions. The amendment may create unintended litigation in future, especially on composite contracts which may be subject to TDS under other provisions of the Act at a higher rate.
Also, higher tax rate is proposed for specified persons who have not filed income tax returns in earlier 2 years for which time limit of filing the tax return is already expired and taxes are more than INR 50,000 in each of these years. This would put an additional burden on energy players to obtain additional documentation from payees while deducting the taxes, while making payments.
GOODWILL NO LONGER A DEPRECIABLE ASSET
The contentious issue on whether goodwill is a depreciable asset has now been put to rest by amending the relevant tax provisions to state that goodwill is not a depreciable asset and would not be eligible for depreciation under Section 32 of the Act, thereby, overriding the SC decision in this context. Further, if this acquired goodwill is transferred, then appropriate long-term or short-term capital gains would be levied after deducting the cost paid in this regard.
This amendment may act as a deal breaker, wherein acquiring company would now not be eligible for tax deduction (by way of depreciation) on the excess consideration paid. Also, it would be interesting to note that the aforesaid amendment though prospective in nature, may prompt tax authorities to contend to deny the depreciation benefit to earlier years as well.
Advance Tax applicable on dividend income only on declaration /payment basis.
With the abolition of DDT, shareholders were made liable to pay tax on such dividends. However advance tax was applicable on such dividend income. Considering this genuine hardship, the advance tax requirement on dividends (other than dividend under Section 2(22)(e)) is now applicable only on declaration or payment basis.
PROCEDURES FOR REOPENING OF ASSESSMENTS REVAMPED
With the advent of the technology and integration of information from all reporting agencies, the government has realised that it is now far more simpler to track down the income escapement cases. Therefore, the Budget has revamped the reopening provisions and reduced the time limit from the current 6 years to a period of 3 years. Further, in case of serious income escapement exceeding INR 50 lakhs or more in a year, the reopening may happen up to a period of 10 years after prior approval. However, considering the income escape limit, in a way, this amendment would now provide the reopening up to 10 years (unlike 6 years in earlier regime). Also, a notice would be issued before reopening the assessment to provide the opportunity of being heard and order in this regard would be passed by the assessing officer before initiating the assessment.
The other amendments covered reduction in the time limit for filing revised and belated tax returns, completion of assessments, faceless ITAT appeals and revamping the AAR. Few key demands of power sector such as concessional withholding tax rates for Indian ECBs, relaxations in thin cap provisions etc. remained unmet. Holistically, this Budget had more to do with clarificatory and compliance-oriented amendments.
In conclusion, the budget announcements for the coming financial year have placed strong emphasis on revival of the public sector in India, however in respect of the power and energy sector the government could have introduced more systemic reforms like tax consolidation schemes for large energy projects, relaxations in indirect taxes, incentives for renewables etc. Overall, for the time being, it appears that all the eggs for the sector continue to be placed in one basket of the “Electricity (Amendment) Bill 2020” (Bill). The Bill has seen opposition from power sector workers and is also one of the items of protest under the current farmers agitation. In the backdrop of the current budget, it becomes even more critical that the government shows political will to pass this legislation on a fast track basis, to ensure meaningful reforms in the sector. As regards the budget, the effectiveness of the positive announcements made in the budget will depend on the will of the public sector enterprises to implement or exploit these changes until such time that the Bill is made into law.
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PUNJAB & HARYANA HC GRANTS BAIL TO MAN BOOKED UNDER POSCO ACT ON CHARGES BY WIFE REGARDING INCIDENT THAT TOOK PLACE WHEN SHE WAS A MINOR
The Punjab and Haryana High Court in the case Dinesh Versus State of Haryana observed and has recently granted a regular bail to a man booked under the POCSO Act after the complainant, the petitioner wife, accused him of penetrative sexual assault in an incident that allegedly took place prior to their marriage, when the petitioner wife was still a minor.
The bench comprising of Justice Vikas Bahl observed that no date of the alleged incident has been mentioned in the FIR and it was registered after the petitioner moved a plea for restitution of conjugal rights, the bench noted that the FIR was registered after much delay.
It was observed that the FIR was registered under Sections 6, 12 and 17 of POCSO Act and Sections 506, 376(2) (N), 323, 328 and 406 of Indian Penal Code, 1860.
The Court noted that no date of incident has been mentioned in the FIR and the said FIR has been registered after filing of the petition by the petitioner under Section 9 of the Hindu Marriage Act, 1955. Prima facie, it also appears that after much delay, the FIR has been registered.
Further, the Court observed that the affidavit suggests that the complainant married the petitioner without coercion or pressure and also the Aadhaar Card that suggests her to have attained the majority age at the time of her marriage.
The bench after considering the fact that the petitioner is not involved in any other matter and prosecution is to take time and also that the co-accused Yogesh has been granted interim protection. It was stated that this court deemed it fit to extent the relief of regular bail to the petitioner. It observed that since 07.12.2021, the petitioner has been in custody and there are 22 prosecution witnesses and none of them have been examined. Therefore, the trial is likely to take time.
Moreover, the court allowed the instant petition and released the petitioner on regular basis subject to its cancellation if he threatens or influences the witness.
The present petition is allowed by the court, while keeping in view the facts and circumstances and the petitioner is ordered to be released on bail on his furnishing bail or surety bonds to the satisfaction of the concerned trial Court or Duty Magistrate and subject to him not being required in any other case. In the present case, it is made clear, the petitioner threatens or influences any witness, it would be open to the State to move an application for cancellation of the present regular bail granted to the petitioner by the court.
Accordingly, the petition is disposed off in above terms.
Allahabad High Court refuses to quash case against government, madrasa teachers allegedly found with cow meat, 16 live cattle stock
The Allahabad High Court in the case Parvez Ahmad And 3 Others v. State of U.P. and Another observed and refused to quash the criminal case against a government teacher and a madrasa teacher from whose alleged possession cow meat (beef) and 16 live cattle were recovered.
The bench comprising of Justice Rohit Ranjan Agarwal observed that the First Information Report (FIR) that prima facie cognizable offence is made out against the applicants and thus, no case was made out against them, to quash the case.
Facts of the Case:
In the present matter, the court was dealing with the 482 CrPC plea filed by 4 applicants booked under Sections 153- A, Section 420, Section 429, Section 188, Section 269, Section 270, Section 273 of the Indian Penal Code, 1860 and section 3/5/8 of Prevention of Cow Slaughter Act, 1955 and section 11 of Prevention of Cruelty to Animals Act, 1979 and section 7/8 of Environment (Protection) Act, 1986, plea seeking to quash the case.
An Assistant teacher, Applicant no. 1 in the education department of the State. As Assistant Teacher, the applicant no. 2 is also working in the Madrasa Darul Ulum Gausia Kasba Salempur. A medical shop is run by the applicant no. 3 and applicant no. 4 is Hafiz Quran.
It was observed that their submission that a report from the Forensic Investigation Laboratory had received did not disclose that the sample sent for analysis was of the cow. Their case was case that no case under the Prevention of Cow Slaughter Act was made out.
It was argued by the State counsel that the FIR is a detailed report, the FIR which categorically mentioned that out of 16 live cattle stock which included 7 buffaloes, 1 cow, 2 female buffalo’s calf, 5 male buffalo’s calf, and one male cow-calf.
It was further argued by the state that it was wrong to say that the FSL report gave a clean chit to the applicants. Moreover, as 16 cattle were found in the possession of the applicants and other co-accused and they were not having any license to run the slaughterhouse.
The argument of the Applicant was discarded by the Court on the ground that no offence was made out from the reading of the First Information Report. It was underscored by the court that even though the FSL report had revealed that the sample which was sent for chemical analysis was not cow meat, but from the custody of the applicants and another co-accused, 16 live cattle were also recovered.
The court observing that defence regarding the FSL report shall be considered by the trial court as such defence set up in the present application cannot be considered at this stage by this Court, at the stage of quashing of the charge sheet
Accordingly, the case was dismissed.
MP HIGH COURT SEEKS DGP’S REPLY: DOES POLICE’S FAILURE TO COMMUNICATE FULL CRIMINAL ANTECEDENTS OF ACCUSED AMOUNTS TO MISCONDUCT, INTERFERENCE WITH JUSTICE?
The Madhya Pradesh High Court in the case Kuldeep Dohare Versus the State of Madhya Pradesh observed, recently the Gwalior bench directed the Director General of Police, State of Madhya Pradesh to file an affidavit explaining as to whether non-communication of criminal antecedents of an Applicant or Accused to the Court is a minor misconduct or if it amounts to interference with the criminal justice dispensation system. Before the next date of hearing, the affidavit is to be filled.
The bench comprising of Justice G.S. Ahluwalia observed and remarked that the court was frequently finding that the police authorities were not sending the complete criminal antecedents, in spite of the circular issued by Police Headquarters.
It was observed that the police authorities did not send the criminal antecedents of the applicant. Furthermore, it is clear that it is a clear attempt to facilitate the applicant to obtain bail by projecting that he has no criminal antecedents. The issue raised is weather the conduct of police officers can be said to be a minor negligence or it is an interference with the criminal justice dispensation system?
In the present case, the court was dealing with a bail application moved by the accused applicant for offences punishable under section 307, Section 149, section 148, section 147, section 506, section 294, section 201. On an earlier hearing, the court had observed that even though the case diary did not reflect any criminal antecedents on the part of the Applicant. The impugned order passed by the lower court rejecting his bail application mentioned otherwise.
It was observed that a reply was sought by the court from the Superintendent of Police, District Bhind as to why the important information with regard to the criminal antecedents of the Applicant were withheld by the respective SHO. The SP informed the Court on the subsequent hearing that the SHO concerned as well as the Investigating Officer in the case were found guilty of misconduct and were fined with Rs. 2,000 and Rs. 5,000, respectively.
The Court observed that since the problem was stemming from different police stations. However, the DGP should file his reply regarding the prevailing situation-
Since in different police station, this situation is prevailing. Therefore, an affidavit is directed to be filled by the DGP, State of Madhya Pradesh as to whether non- communication of criminal antecedents of an applicant is a minor misconduct or it amounts to interfere with the criminal antecedents of justice dispensation system.
Accordingly, the affidavit needs to be filled within a period of 1 week, the matter would be heard next on 08.07.2022.
HIGH COURT OF MADHYA PRADESH: SECTION 5 OF THE LIMITATION ACT APPLIES TO ARBITRATION REFERENCE UNDER NATIONAL HIGHWAY ACT, 1956
The High Court of Madhya Pradesh in the case Ghanshyam Gupta v. State of Madhya Pradesh and Ors observed and stated that Section 5 of the Limitation Act would be applicable to reference to arbitration under the National Highways Act, 1956.
The Division Bench comprising of Justice Ravi Malimath and Justice Purushiandra Kumar Kaurav observed and reiterated that since no limitation is provided under Section 3G (5) of the National Highways Act. The bench stated that the provisions of Article 137 of the Schedule to the Limitation Act, 1963 would apply to such proceedings.
Therefore, the court held that the limitation period for filing an appeal against the decision of the competent authority before the arbitrator from the date of expiry of 90 days is three years from the decision of the competent authority.
FACTS OF THE CASE:
The petitioner, Mr. Ghanshyam Gupta was the landowner of the land which was acquired by the Respondent, Madhya Pradesh Road Development Corporation. Thereafter, the competent authority determined the quantum of compensation payable to the petitioner and passed an award to that effect on 30.07.2015.
The petitioner being dissatisfied with the quantum of compensation determined by the competent authority. On 04.12.2019, an appeal was filled by the petitioner before the arbitrator. The appeal was dismissed by the arbitrator as time-barred filed after the expiry of three years limitation period.
the petitioner filed a writ petition before the High Court, Aggrieved by the decision of the arbitrator.
Contentions Raised by the Parties:
It is stated that Section 5 of the Limitation Act is applicable to arbitration reference under Section 3G (5) of the National Highways Act, 1956.
It was observed that the petitioner was unaware of the availability of the remedy of appeal against the decision of the competent authority, the petitioner only after consulting his lawyer, that the petitioner came to know that he could seek enhancement. Further, there is a valid ground to condone the delay.
The submissions of the petitioner were countered by the Respondent on the following grounds:
Though, in the absence of a period of limitation for filing an appeal under Section 3G (5) of the Act of 1956, it was construed that the provisions of Article 137 of the Limitation Act would stand applicable.
It was stated that Article 137 provides for 3 years period, and the petitioner filed the appeal after a delay of 4 years.
The court observed and stated that since no limitation is provided under Section 3G (5) of the National Highways Act, the provisions of Article 137 of the Schedule to the Limitation Act would apply to such proceedings.
Therefore, the court held that the limitation period for filing an appeal against the decision of the competent authority before the arbitrator from the date of expiry of 90 days is three years from the decision of the competent authority.
The court observed that there is nothing in the National Highways Act that excludes the applicability of Section 5 of the Limitation Act. However, Section 5 of the Limitation Act would be applicable to reference to arbitration under the National Highways Act, 1956 and the arbitrator has the power to condone the delay against the award, in filing an appeal by the competent authority.
The court noted that the petitioner was not aware that an appeal could be filed against the decision of the Competent Authority and it is only after consulting his lawyer that the petitioner came aware of any such right, therefore, there is sufficient reason to condone the delay.
Accordingly, the application was allowed by the court and the court directed the arbitrator to decide the case of the petitioner on merit.
KERALA HIGH COURT APPOINTS AMICUS CURIAE IN SARITHA NAIR’S PLEA; IS A STATEMENT RECORDED U/S 164 CRPC A PUBLIC DOCUMENT?
The Kerala High Court in the case Saritha S. Nair v. Union of India & Anr observed and appointed an amicus curia to assist the court to decide the legal question of whether a statement recorded under Section 164 of the CrPC is a public document.
The bench comprising of Justice Kauser Edappagath appointed the amicus curiae, in the petition filled by Saritha S. Nair, the prime accused in the infamous solar panel scam seeking a direction to provide her with copies of the Section 164 statement given by Swapna Suresh, the accused in the gold smuggling case.
The court appointed Advocate K.K. Dheerendrakrishnan, as the amicus curiae in the case.
In the present case, it was observed that Saritha Nair is accused of having duped several influential people to the tune of 70 lakhs, by offering to install solar power units for them or by making them business partners and by receiving advance payments for the same.
Moreover, Swapna Suresh is accused of smuggling 30 kilograms of gold through diplomatic cargo dispatched to UAE Consulate at Thiruvananthapuram.
It was observed that when the petition came up for hearing, the counsel appearing for the petitioner, Advocate B.A Aloor appearing that the statement given by Swapna was a public document and therefore the petitioner was entitled to get a copy.
Further, Nair approached the Court apprehending that certain allegation may have been brought on record against her in the statement given by Suresh. It was prayed by Nair, that the c court allow her plea, directing the production of certified copies of the said document to her, failing which she would sustain an irreparable injury, the hardship and as well as physical and mental agony.
It was observed that the Nair had had initially moved the Principal District and Sessions Court of Ernakulam, with the same request, but this was denied. The court noted and adjourned the matter to July 11, while on a petition filed by the accuse, Saritha S. Nair in the solar scam cases, for seeking a directive to provide a copy of the statement given by Swapna Suresh, accused in the diplomatic gold smuggling case before a subordinate court.
Supreme Court issues notice in an SLP; can section 156 (3) CRPC be invoked after failing to get desired relief in a civil suit?
It was observed that before the Calcutta High Court, it was contended by the accused that the allegations made in the application under Section 156(3) CrPC fails to make out any offence against them. Further, it was submitted that a frustrated unsuccessful litigant before the Civil Court has approached the Criminal Court and the Criminal Investigation.
The Supreme Court in the case Usha Chakraborty vs State of West Bengal observed and issued a notice in a Special Leave Petition filled, raising an issue whether in a dispute essentially in a dispute of civil nature that can a person, after having failed to get the desired relief from a civil suit, invoke Section 156(3) of the Code of Criminal Procedure?
In the present case, an FIR was registered against the accused under Sections 323, Section 384, Section 406, Section 423, Section 467, Section 468, Section 420 and Section 120B of the Indian Penal Code, 1860 following an order passed by the Magistrate under Section 156(3) CrPC.
It was observed that before the Calcutta High Court, it was contended by the accused that the allegations made in the application under Section 156(3) CrPC fails to make out any offence against them. Further, it was submitted that a frustrated unsuccessful litigant before the Civil Court has approached the Criminal Court and the Criminal Investigation, which has commenced, is for the purposes of throttling them. The petition was dismissed by the High Court observing that the materials which have already been collected by the Investigating Agency, prima facie, make out a case for investigation. The issue raised before the court was weather the same would make out an offence after the investigation is concluded is absolutely at the end of the investigation to be analysed.
Therefore, challenging this order, one of the accused approached the Apex Court. However, It was submitted that the dispute is essentially of civil nature, for which the applicant in Section 156(3) CrPC petition filed a civil suit but having failed to get the desired relief, he invoked Section 156(3) CrPC.
The bench comprising of Justice Surya Kant and the Justice JB Pardiwala, while issuing notice also stayed further proceedings in FIR lodged against the accused.
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