Prakash Chand Sachdeva Vs. the State and Another - Court Judgment

Excerpt:
criminal - proceedings - sections 107 and 145 of criminal procedure code, 1973 - appeal against order dismissing application filed under section 145 - where dispute is not right to possession but on question of possession magistrate is empowered to take cognizance under section 145 - proceedings under section 107 are of public peace and tranquility and proceedings under section 145 relates to dispute regarding possession between parties concerning any land or boundaries thereof - dropping of proceedings under section 107 cannot furnish foundation for dropping proceedings under section 145 - magistrate and high court failed to exercise their jurisdiction - order passed cannot be maintained. - [s.m. sikri, c.j.,; h.r. khanna,; j.m. shelat and; g.k. mitter, jj.] p and a carried on business. as chartered accountants in the name of d.v. & co.. on p retiring from partnership a deed of dissolution was executed which provided that the business would be carried on by a. by clause 2 of the deed, p, who owned the rights and interest in the goodwill, "agreed to sell" the goodwill to a and "as consideration for and in full satisfaction of the purchase price of the goodwill" a was to pay eight annas in the rupee in the net profits of the business payable during the life time of p and after him during the life time of his wife and then to their son during his life time. clause 6 provided that in the event of a entering into partnership or transferring or assigning his business so long as the business was carried on in the name of d.v. & co.. the partnership, the assignee or the transferee was to pay the share in the profits in the manner provided in cl. (2). a entered into partnership with c, the deed of partnership reciting that the goodwill of the business belonged solely to p which a had "bought" in consideration of his agreeing to pay a share of eight annas in the rupee and that the parties thereto pay five annas four pies share in the profits, by way of purchase price of the goodwill as agreed by p. the firm paid to p's wife, after the death of p, various amounts during the years 1955-59. it claimed that those amounts should be deducted in its assessments for those years. the income-tax officer and the appellate assistant commissioner rejected the claim holding that the payments were capital and not revenue payments and the transaction evidenced by the deed of dissolution was one of outright sales. on appeal, the tribunal held that the payment,constituted only fee or rent for the use of the goodwill so long as it was used and accordingly they were in the nature of revenue expenditure. on reference the high court answered in favour of the revenue. allowing the appeal, belt) : (sikri c.j. dissenting) on the facts of the case the transaction was a licence and not, a sale of the goodwill: the disbursements in question, therefore, were in the nature of royalty and must be treated as admissible deduction. [232 b] (i) there is no single test of universal application for deciding the question whether in agreement is for payment of price in stipulated instalments or for making annual payment in the nature of income and. therefore, the court has to look not only into the document relating to the transaction, but also the surrounding circumstances to decide its true nature, the name which the parties give to it being of little consequence. this does not mean that the legal character of the transaction which is the source of the receipt in question can be ignored and substituted by what the taxing authority considers the substance of the matter. [224 b] travancore sugars and chemicals ltd. vs. c.i.t., (1966) 62 i.t.r. 566, referred to. (ii) one of the tests courts have applied in distinguishing between capital and revenue expenditure is whether the expenditure in question was for bringing into existence an asset or an advantage of "an enduring nature", and is made "once and for all". it may be payable not necessarily al at once but even by instalments as against a recurrent expenditure in the nature of operational expenses. the question in such cases would be, is the expenditure the assessee's working expenditure laid out as part of the process of profit earning or a capital outlay necessary for the acquisition of a property or rights of a permanent character the possession of which is a condition of carrying on the trade. but the expressions "enduring benefit", and rights of a permanent character are only descriptive and not definitive and are relative in meaning, not synonymous with 'perpetual' or 'everlasting'. the expression "enduring benefit" is thus a relative term not enduring in the sense of its being permanent, but is sufficiently durable depending upon the nature of the terms upon which it can be acquired. so also the the expression "once and for all" which does not mean payment at one time of the whole amount but includes payment of a lump-sum, as distinct from recurrent, distributed in periodic instalments. [22 f] atherton v. british insulated and helsby cables ltd., 10 t.c. 155; assam bengal cement co. ltd. v. ci..t. 27 i.t.r. 34, 46; robert addie and sons' collieries ltd. v. commissioner of inland revenue, 8 t.c. 671; commissioner of taxes v. nchanga consolidated copper mines ltd., (1965) 58 i.t.r. 241; c.i.t. west bengal v. coal shipment (p) ltd., civil appeals nos. 1494 to 1498 of 1971, decided on october 14, 1971; c.i.t. v. finlay mills, (1951) 20 i.t.r. 475; henriksen.v. grafton hotel lid., 24 t.c. 453 and strick v. regent oil co. ltd., 43 t.c. 1, 38 referred to. the other test sometimes applied, is payment when it is referrable to fixed capital or capital assets as against payment referrable to circulating capital or stock-in-trade. this test also is not capable of being treated as of uniform application. [226 f] assam bengal cement co. ltd. v. c.i.t., 27 i.t.r., 34. 46, referred to. (iii) acquisition of the goodwill of a business is, without doubt acquisition of a capital asset, and therefore, its purchase price would be capital expenditure. it would not make any difference whether it is paid in a lump-sum at one time or in instalments distributed over a specific period. where, however, the transaction is not one for acquisition of the goodwill but, for the right to use it, the expenditure would be a revenue expenditure. [226 h] in re ramjidas jaini & co., (1945) i.t.r. 430; kuppuswami v. c.i.t. (1954) 25 i.t.r. 349; ogden v. medway cinemas ltd., 18 t.c. 691; the secretary of state for india v. scoble, [19o3], a.c. 299; jones v. commissioner of inland revenue, 7 t.c. 310; commissioner of inland revenue v. ramsay, 20 t.c. 79; vithaldas thakerdas and co. v. c.i.t., [1946] i.t.r. 822 and travancore sugars and chemicals ltd. v. c.i.t., (1966) 62 i.t.r. 566, referred to. (iv) in the present case even though cl. (2) of the deed of dissolution uses expressions such as "agreed to sell" and "the purchase price of the goodwill," these expressions are not determinative of the exact nature of the transaction or the relationship between the parties arising therefrom. clause (2), no doubt, prescribes the mode and the quantum of payment. but, the duration of payment is indefinite and secondly the amount is indefinite depending upon the rise and fall in the profits of the business. the payment is not related to any lumpsum fixed as the purchase price. but on the contrary it is directly related to and dependent upon whether at all and what profits are made. further, the document is totally silent as to what is to happen to the goodwill it a, or his partners, if he were to enter into a partnership, cease to carry on the business in the name of d.v. & co. the transaction thus contains all the grounds given in the case of travance sugars and chemicals ltd., upon which this court concluded that such payments could not be treated as capital disbursement, namely, an indefinite period, absence of any expressed lumpsum and payment relat- ing to profits and not being tied up with any fixed sum agreed to as the purchase price_of the capital assets. [230 f-h; 232 b] travancore sugars and chemicals ltd. v. c.i.t. (1966) 62 i.t. r. 566 applied. (v) quite apart, cl (6) itself contains indication of the transaction not being an outright purchase of the goodwill. if the transaction was an outright purchase of goodwill there was no necessity of cl. (6) providing for the partnership which a would enter into or his assignee or transferee having to pay the share so long as he or they continued to carry on business in that name. [231 b] per sikri, c.j. dissenting. (i) clause (2) of the dissolution deed says what it meant to convey, that is, there is an agreement to sell and sale of the goodwill of the partnership. the word,-, "as consideration for and in full satisfaction of the purchase price of the goodwill" cannot be watered down by any of the subsequent clauses. further, the deed executed by a and c also recited that a had "bought" the goodwill in consideration of his agreeing 10 pay a share of the profits. it is difficult to go against the express wording of the deed when there is no clear clause overriding these words. [216 e] (ii) a mode of payment of purchase price of any capital asset cannot convert a capital payment into a revenue payment in the hands of the vendee. it may be that the mode of payment may affect the character of the receipt in the hands of the vendor. [218 h] (iii) the grounds adopted by this court in travancore sugars and (chemicals ltd. cannot he regarded as conclusive in a case where there can be no doubt that the capital asset has been sold. [219 b-c] the absence of a clause providing what is to happen if the vendee of the goodwill ceases to carry on the business further reinforces the conclusion that it was an out and out sale. this clause was not inserted because it would be out of place in a case of sale. [219 d] (v) clause (6) does not have any bearing on the question under consideration. this clause has been inserted in order to safeguard the interest of the vendor who was keen to see that he would get as much as possible for the sale of the goodwill. [219 f] therefore, on the facts, the goodwill was an asset of an enduring nature. the fact that payment was to be made over a number of years and the nature of a chartered accountant's business lead to this conclusion. [219 f] - today and possession of the same was handed over to your good-self. there being no dispute of title between the appellant and respondent the only claim to be decided was if the appellant had been forcibly or wrongly dispossessed within two months next before the date on which the information was received by the magistrate and the high court instead of deciding this crucial aspect, failed to exercise its jurisdiction as the appellant had sought the remedy in civil suit without applying the mind if that decision was in any way helpful for dropping the proceedings.orderr.m. sahai, j.1. ingratitude of a son, compelled his father, the appellant, a retired assistant engineer aged 77 years to knock the doors of the courts, both, civil and criminal, to enter into possession of his own house. as this by itself was not sufficient, the respondent son in the affidavit, filed in this court, has accused his father of, 'abusing process of court' on 'false and fabricated allegations'. he has even taken the plea that his father was 'trying to overawe him' an instead of seeking partition of the property as it was ancestral and he was co-owner of it, he was harassing him.2. dispute arose about an independent portion in house no. g-39, jangpura extension, new delhi. it was in occupation of a tenant who admittedly vacated in february 1992. the appellant claims to have occupied it. the claim is supported by a letter written by the tenant to the appellant on 14th april 1992 to the following effect :i have vacated your ground floor flat at g-39, jangpura extn. today and possession of the same was handed over to your good-self.please issue me a no dues certificate at the earliest. thanking you and with regards,the authenticity of the letter is not disputed. but its effect had been attempted to be diluted by the respondent by claiming that it was written to harm him as he got the house vacated. the respondent claims that the appellant never resided in the house in dispute. may be so. why the appellant who was residing in another house no. 15/239, new moti nagar of his own with family of his other son, who died, decided to shift to the house in dispute, is immaterial. an owner of the house could at his option reside at his one or the other house. even if it is assumed that the disputed house is ancestral the appellant was not required to explain the reason for his decision to come and live in it. his right to reside could not be disputed. but no sooner he came the problem started. and according to the appellant his report to the police for misbehaviour of his son and his family members went unheeded. that the father, had to approach the police authorities against his own son is indeed painful. but that speaks volume about the son. the inaction of the police on which reliance was placed by the son is explainable but not understandable. it does not help the respondent. it only adds to the helplessness of the appellant. in june 1992 it is alleged when he and his wife went to jaipur to see their ailing daughter, they to their shock, on return after four days, found that their belongings had been removed, the portion had been locked and they were treated harshly and abusively. and that too by his family members. what must have been his feeling is not easy to comprehend but as said by shakespeare in king leare, 'how sharper than is serpent tooth it is to have a thankless child'. failing to understand the, 'cause in nature that make these hard hearts', the appellant approached the criminal court by way of proceedings under sections 107 and 145 criminal procedure code. he also filed a civil suit for injunction in which, status quo order was granted. but status quo of what? he had already been thrown out of possession. it is not necessary to comment on the merits of these proceedings. however, proceedings under section 107 were dropped, and in our opinion rightly, as the nature of these proceedings 'are of preventive justice' as held by this court in madhu limaye and anr. v. sub-divisional magistrate, monghyr and ors : 1971 crilj1720 . it is to be invoked when any person is likely to commit a breach of peace or disturb public tranquillity. but the order dropping the proceedings under section 107 led the sub-divisional magistrate to drop the proceedings under section 145 cr. p.c. as the proceedings under section 107 having been dropped there was no apprehension of breach of peace. the high court while agreeing with this reasoning added that the appellant having sought civil remedy the proceedings under section 145 could not be continued.3. true, a suit or remedy in civil court for possession or injunction normally prevents a person from invoking jurisdiction of the criminal court as observed by this court in ram sumer puri mahant v. state of u.p. and ors. : air 1985 sc472 , 'particularly when possession is being examined by the civil court and parties are in a position to approach the civil court for interim orders such as injunction or appointment of receiver for adequate protection of the property during pendency of the dispute. multiplicty of litigation is not in the interest of the parties nor should public time be allowed to be wasted over meaningless litigation.' the normal rule is as stated by the court in puri's case. but that was a suit based on title. and that could be decided by civil court only. that ratio cannot apply where there is no dispute about title. when claim or title are not in dispute and the parties on their own showing are co-owners and there is no partition one cannot be permitted to act forcibly and unlawfully and ask the other to act in accordance with law. where the dispute is not on the right to possession but on the question of possession the magistrate is empowered to take cognisance under section 145 cr.p.c. neither the high court nor the sub-divisional magistrate cared to ascertain if the respondent had any claim to lawfully prevent the appellant from entering into his own house. the proceedings under section 107 are for public peace and tranquillity whereas under section 145 relates to disputes regarding possession between parties concerning any land or water or boundaries thereof. therefore, dropping of proceedings under section 107 could not furnish foundation for dropping the proceedings under section 145. nor the law laid down in puri's case could result in rejecting the application filed under section 145 of the cr. p.c. there being no dispute of title between the appellant and respondent the only claim to be decided was if the appellant had been forcibly or wrongly dispossessed within two months next before the date on which the information was received by the magistrate and the high court instead of deciding this crucial aspect, failed to exercise its jurisdiction as the appellant had sought the remedy in civil suit without applying the mind if that decision was in any way helpful for dropping the proceedings. in law, therefore, the order passed by two courts below cannot be maintained.4. in equity and justice the appellant has still stronger case. on own showing of the respondent the property is ancestral. the behaviour of the son is cruel and unjust. the learned counsel for the respondent during arguments stated that the son was willing to keep his father with him. what a charitably disposed son the respondent appears to be. he is willing to permit the father to live with him but not agreeable to permit him to occupy a separate portion which was in his possession. in the light of the averments made by the son in the affidavit filed in this court and the alleged misbehaviour by him and his family members this appears to be only an excuse for preventing the father from living in peace in the end of his life.5. in the circumstances we allow this appeal, set aside the order passed by the high court and the magistrate dismissing the application filed under section 145 cr.p.c. and direct that the appellant shall be placed in possession of the green portion forthwith, shown in the map filed by the appellant the correctness of which was not disputed even if third party interest had been created with the help of the police, if necessary. we hope that the respondent shall not create any further hindrance in peaceful living of his father. the map filed by the appellant is made a part of this order. any observation that has been made shall not be taken as binding in any civil dispute between parties.

Judgment:
ORDER

R.M. Sahai, J.

1. Ingratitude of a son, compelled his father, the appellant, a retired Assistant Engineer aged 77 years to knock the doors of the Courts, both, civil and criminal, to enter into possession of his own house. As this by itself was not sufficient, the respondent son in the affidavit, filed in this Court, has accused his father of, 'abusing process of Court' on 'false and fabricated allegations'. He has even taken the plea that his father was 'trying to overawe him' an instead of seeking partition of the property as it was ancestral and he was co-owner of it, he was harassing him.

2. Dispute arose about an independent portion in house no. G-39, Jangpura Extension, New Delhi. It was in occupation of a tenant who admittedly vacated in February 1992. The appellant claims to have occupied it. The claim is supported by a letter written by the tenant to the appellant on 14th April 1992 to the following effect :

I have vacated your Ground Floor Flat at G-39, Jangpura Extn. today and possession of the same was handed over to your good-self.

Please issue me a no dues certificate at the earliest. Thanking you and with regards,

The authenticity of the letter is not disputed. But its effect had been attempted to be diluted by the respondent by claiming that it was written to harm him as he got the house vacated. The respondent claims that the appellant never resided in the house in dispute. May be so. Why the appellant who was residing in another house No. 15/239, New Moti Nagar of his own with family of his other son, who died, decided to shift to the house in dispute, is immaterial. An owner of the house could at his option reside at his one or the other house. Even if it is assumed that the disputed house is ancestral the appellant was not required to explain the reason for his decision to come and live in it. His right to reside could not be disputed. But no sooner he came the problem started. And according to the appellant his report to the police for misbehaviour of his son and his family members went unheeded. That the father, had to approach the police authorities against his own son is indeed painful. But that speaks volume about the son. The inaction of the police on which reliance was placed by the son is explainable but not understandable. It does not help the respondent. It only adds to the helplessness of the appellant. In June 1992 it is alleged when he and his wife went to Jaipur to see their ailing daughter, they to their shock, on return after four days, found that their belongings had been removed, the portion had been locked and they were treated harshly and abusively. And that too by his family members. What must have been his feeling is not easy to comprehend but as said by Shakespeare in King leare, 'how sharper than is serpent tooth it is to have a thankless child'. Failing to understand the, 'cause in Nature that make these hard hearts', the appellant approached the criminal court by way of proceedings under Sections 107 and 145 Criminal Procedure Code. He also filed a civil suit for injunction in which, status quo order was granted. But status quo of what? He had already been thrown out of possession. It is not necessary to comment on the merits of these proceedings. However, proceedings under Section 107 were dropped, and in our opinion rightly, as the nature of these proceedings 'are of preventive justice' as held by this Court in Madhu Limaye and Anr. v. Sub-Divisional Magistrate, Monghyr and ors : 1971 CriLJ1720 . It is to be invoked when any person is likely to commit a breach of peace or disturb public tranquillity. But the order dropping the proceedings under Section 107 led the Sub-Divisional Magistrate to drop the proceedings under Section 145 Cr. P.C. as the proceedings under Section 107 having been dropped there was no apprehension of breach of peace. The High Court while agreeing with this reasoning added that the appellant having sought civil remedy the proceedings under Section 145 could not be continued.

3. True, a suit or remedy in civil court for possession or injunction normally prevents a person from invoking jurisdiction of the criminal court as observed by this Court in Ram Sumer Puri Mahant v. State of U.P. and Ors. : AIR 1985 SC472 , 'particularly when possession is being examined by the civil court and parties are in a position to approach the civil court for interim orders such as injunction or appointment of receiver for adequate protection of the property during pendency of the dispute. Multiplicty of litigation is not in the interest of the parties nor should public time be allowed to be wasted over meaningless litigation.' The normal rule is as stated by the Court in Puri's case. But that was a suit based on title. And that could be decided by civil court only. That ratio cannot apply where there is no dispute about title. When claim or title are not in dispute and the parties on their own showing are co-owners and there is no partition one cannot be permitted to act forcibly and unlawfully and ask the other to act in accordance with law. Where the dispute is not on the right to possession but on the question of possession the Magistrate is empowered to take cognisance under Section 145 Cr.P.C. Neither the High Court nor the Sub-Divisional Magistrate cared to ascertain if the respondent had any claim to lawfully prevent the appellant from entering into his own house. The proceedings under Section 107 are for public peace and tranquillity whereas under Section 145 relates to disputes regarding possession between parties concerning any land or water or boundaries thereof. Therefore, dropping of proceedings under Section 107 could not furnish foundation for dropping the proceedings under Section 145. Nor the law laid down in Puri's case could result in rejecting the application filed under Section 145 of the Cr. P.C. There being no dispute of title between the appellant and respondent the only claim to be decided was if the appellant had been forcibly or wrongly dispossessed within two months next before the date on which the information was received by the Magistrate and the High Court instead of deciding this crucial aspect, failed to exercise its jurisdiction as the appellant had sought the remedy in civil suit without applying the mind if that decision was in any way helpful for dropping the proceedings. In law, therefore, the order passed by two courts below cannot be maintained.

4. In equity and justice the appellant has still stronger case. On own showing of the respondent the property is ancestral. The behaviour of the son is cruel and unjust. The learned Counsel for the respondent during arguments stated that the son was willing to keep his father with him. What a charitably disposed son the respondent appears to be. He is willing to permit the father to live with him but not agreeable to permit him to occupy a separate portion which was in his possession. In the light of the averments made by the son in the affidavit filed in this Court and the alleged misbehaviour by him and his family members this appears to be only an excuse for preventing the father from living in peace in the end of his life.

5. In the circumstances we allow this appeal, set aside the order passed by the High Court and the Magistrate dismissing the application filed under Section 145 Cr.P.C. and direct that the appellant shall be placed in possession of the green portion forthwith, shown in the map filed by the appellant the correctness of which was not disputed even if third party interest had been created with the help of the police, if necessary. We hope that the respondent shall not create any further hindrance in peaceful living of his father. The map filed by the appellant is made a part of this order. Any observation that has been made shall not be taken as binding in any civil dispute between parties.