Kachrulal Bhagirath Agrawal and ors. Vs. State of Maharashtra and ors. - Court Judgment

Excerpt:
criminal - criminal procedure code (crpc), 1973 - section 129 to 132, 133 to 144 , 145 to 149 - public nuisance - conditional order for removal of nuisance - validity of - original non - applicant a proprietary concern of one 'b' - 'b' a commission agent in kirana goods and a wholesale dealer in dry chillies - applicants residents of locality in which 'b' having a godown - grievance of applicants that loading and unloading of chillies caused pollution in locality - application filed by appellants under section 133 - sdm , sakoli holding that applicants proved public nuisance passed order under section 133 directing non - applicant not to keep , store or transport chillies in godown of vishnu kunj as same was injurious to health and physical comfort of residents of locality - revision application - allowed by sessions judgment holding that sdm committed error in holding that business of non-applicant caused public nuisance - revisional order set aside by high court holding that sdm was justified in passing order under section 133 - appeal to supreme court - section 133(1)(b) relates to trade or occupation which is injurious to health or physical comfort - in order to bring a trade or occupation within the operation of section 133, it must be shown that the interference with public comfort was considerable and a large section of the public was affected injuriously - the word 'community' in clause (b) of section 33(1) cannot be taken to mean residents of a particular house - it means something wider, that is, the public at large or the residents of an entire locality - the conduct of the trade must be injurious in present to the health or physical comfort of the community - there must, at any rate, be an imminent danger to the health or the physical comfort of the community in the locality in which the trade or occupation is conducted - unless there is such imminent danger to the health or physical comfort of that community, an order under section 133 cannot be passed - in view of legal principles dealing with public nuisance held that impugned judgment of high court did not suffer from any infirmity - section 37: [s.h. kapadia & aftab alam, jj] business expenditure - provision for product warranty against defective items - in the instant case the assessee company sells valve actuators. bulk of the sales is to bhel. at the time of sale assessee provides a standard warranty whereby in the event of any becon rotork actuator or part thereof becoming defective within 12 months from the date of commissioning or 18 months from the date of dispatch, whichever is earlier, the company undertakes to rectify or replace the defective part free of charge. this warranty is given under certain conditions stipulated in the warranty clause. for the assessment year 1991-92, the assessee made a provision for warranty at rs. 10,18,8000/- at the rte of 1.5% of the turnover. this provision ws made by the assessee on account of warranty claims likely to arise on the sales effected by the appellant assessee and to cover up that expenditure. it may be noted that since the provision made was for rs. 10,18,800/- which exceeded the actual expenditure, the appellant reversed rs. 5,00,246/- as reversal of excess provision. consequently, the assessee claimed deduction in respect of the net provision of rs. 5,18,554/- which was disallowed by the assessing officer (a.o.) on the ground that the liability was merely a contingent liability not allowable as a deduction under section 37 of the income tax act, 1961. held, the disallowance by a.o. was unjustified. the statistical data indicates that every year some of the manufactured actuators are found to be defective. the statistical data over the years also indicates that being sophisticated item no customer is prepared to buy valve actuator without a warranty. therefore, warranty become integral part of the sale price of the valve actuators. in other words, warranty stood attached to the sale price of the product. these aspects are important, and obligations arising from past events to be recognized as provisions. these past events are known as obligating events. in the present case, therefore, warranty provision needs to be recognised because the assessee company is an enterprise having a present obligation as a result of past events resulting in an outflow of resources. in this case one is concerned with product warranties. to give an example of product warranties, a company dealing in computers gives warranty for a period of 36 months from the date of supply. the said company considers following options: (a) account for warranty expense in the year in which it is incurred; (b) it make a provision for warranty only when the customer makes a claim; and (c) it provides for warranty at 2% of turnover of the company based on past experience (historical trend). the first option is unsustainable since it would tantamount to accounting for warranty expenses on cash basis, which is prohibited both under the companies act as well as by the accounting standards which require accrual concept to be followed. in the present case, the department is insisting on the first option which, is erroneous as it rules out the accrual concept. the second option is also inappropriate since it does not reflect the expected warranty costs in respect of revenue already recognized (accrued). in other words, it is not based on matching concept. under the matching concept if revenue is recognized the cost incurred to earn that revenue including warranty costs had to be fully provided for. when the valve actuators are sold and the warranty costs are an integral part of that sale price then the assessee has to provide for such warranty costs in its account for the relevant year, otherwise the matching concept fails. in such a case the second option is also inappropriate. under the circumstances, the third option is most appropriate because it fulfils accrual concept as well as the matching concept. for determining an appropriate historical trend, it is important that the company has a proper accounting system for capturing relationship between the nature of the sales, the warranty provisions made and the actual expenses incurred against it subsequently. thus, the decision on the warranty provision should be based on past experience of the company. a detailed assessment of the warranty provisioning policy is required particularly if the experience suggests that warranty provisions are generally reversed if they remained unutilized at the end of the period prescribed in the warranty. therefore, the company should scrutinize the historical trend of warranty provisions made and the actual expenses incurred against it. on this basis a sensible estimate should be made. a reliable estimate of the obligation was also possible. therefore, the assessee has incurred a liability, on the facts and circumstances, of this case, during the relevant assessment year which was entitled to deduction under section 37 of the 1961 act. therefore, all the three conditions for recognizing a liability for the purposes of provisioning stands satisfied in this case. it is important to note that there are four important aspects of provisioning. they are-provisioning which relates to present obligation, it arises out of obligating events, it involves outflow of resources and lastly it involves reliable estimation of obligation. keeping in mind all the four aspects, the high court should not have interfered with the decision of the tribunal allowing claim of assessee under section 37 of income-tax act. [(2007) 293 itr 311 (mad.), reversed]. - or (c) to (f) xx xx xxsuch magistrate may make a conditional order requiring the person causing such obstruction or nuisance, or carrying on such trade or occupation, or keeping any such goods or merchandise, or owning, possessing or controlling such building, tent, structure, substance, tank, well or excavation, or owning or possessing such animal or tree, within a time to be fixed in the order -(i) xx xx xx(ii) to desist from carrying on, or to remove or regulate in such manner as may be directed, such trade or occupation, or to remove such goods or merchandise, or to regulate the keeping thereof in such manner as be directed; 'public nuisance' or 'common nuisance' as defined in section 268 of the indian penal code, 1850 (in short the 'ipc') is an offence against the public either by doing a thing which tends to the annoyance of the whole community in general or by neglecting to do anything which the common good requires. a conjoint reading of sections 133 and 138 of the code discloses that it is the function of the magistrate to conduct an enquiry and to decide as to whether there was reliable evidence or not to come to the conclusion to act under section 133. 12. section 133 of the code as noted above appears in chapter x of the code which deals with maintenance of public order and tranquillity.order for removal of nuisance. (1) whenever a district magistrate or a sub-divisional magistrate or any other executive magistrate specially empowered in this behalf by the state government, on receiving the report of a police officer or other information and on taking such evidence (if any) as he thinks fit, considers - (a) xx xx xx(b) that the conduct of any trade or occupation, or the keeping of any goods or merchandise, is injurious to the health or physical comfort of the community, and that in consequence such trade or occupation should be prohibited or regulated or such goods or merchandise should be removed or the keeping there of regulated; or(c) to (f) xx xx xxsuch magistrate may make a conditional order requiring the person causing such obstruction or nuisance, or carrying on such trade or occupation, or keeping any such goods or merchandise, or owning, possessing or controlling such building, tent, structure, substance, tank, well or excavation, or owning or possessing such animal or tree, within a time to be fixed in the order -(i) xx xx xx(ii) to desist from carrying on, or to remove or regulate in such manner as may be directed, such trade or occupation, or to remove such goods or merchandise, or to regulate the keeping thereof in such manner as be directed; or(iii) to (vi) xx xx xxor, if he objects so to do, to appear before himself or some other executive magistrate subordinate to him at a time and place to be fixed by the order, and show cause, in the manner hereinafter provided, why the order should not be made absolute.(2) no order duly made by a magistrate under this section shall be called in question in any civil court. xx xx xx' 10. a proceeding under section 133 is of a summary nature. it appears as a part of chapter x of the code which relates to maintenance of public order and tranquillity. the chapter has been classified into four categories. section 129 to 132 come under the category of 'unlawful assemblies'. sections 133 to 143 come under the category of 'public nuisance'. section 144 comes under the category of 'urgent cases of nuisance or apprehended danger' and the last category cover sections 145 to 149 relating to 'disputes as to immovable property'. nuisances are of two kinds, i.e. (i) public; and (ii) private. 'public nuisance' or 'common nuisance' as defined in section 268 of the indian penal code, 1850 (in short the 'ipc') is an offence against the public either by doing a thing which tends to the annoyance of the whole community in general or by neglecting to do anything which the common good requires. it is an act or omission which causes any common injury, danger or annoyance to the public or to the people in general who dwell or occupy property 'in the vicinity. 'private nuisance' on the other hand, affects some individuals as distinguished from the public at large. the remedies are of two kinds - civil and criminal. the remedies under the civil la are of two kinds. one is under section 91 of the code of civil procedure, 1908 (in short 'ipc'). under it a suit lies and the plaintiffs need not prove that they have sustained any special damage. the second remedy is a suit by a private individual for a special damage suffered by him. there are three remedies under the criminal law. the first relates to the prosecution under chapter xiv of ipc. the second provides for summary proceedings under sections 133 to 144 of the code, and the third relates to remedies under special or local laws. sub-section (2) of section 133 postulates that no order duly made by a magistrate under this section shall be called in question in any civil court. the provisions of chapter x of the code should be so worked as not to become themselves a nuisance to the community at large. although every person is bound to so use his property that it may not work legal damage or harm to his neighbour, yet on the other hand, no one has a right to interfere with the free and full enjoyment by such person of his property, except on clear and absolute proof that such use of it by him is producing such legal damage or harm. therefore, a lawful and necessary trade ought not to be interfered with unless it is proved to be injurious to the health or physical comfort of the community. proceedings under section 133 are not intended to settle private disputes between different members of the public. they are in fact intended to protect the public as a whole against inconvenience. a comparison between the provisions of section 133 and 144 of the code shows that while the former is more specific the latter is more general. therefore, nuisance specially provided in the former section is taken out of the general provisions of the latter section. the proceedings under section 133 are more in the nature of civil proceedings than of criminal nature. section 133(1)(b) relates to trade or occupation which is injurious to health or physical comfort. it itself deals with physical comfort to the community and not with those acts which are not in themselves nuisance but in the course of which public nuisance is committed. in order to bring a trade or occupation within the operation of this section, it must be shown that the interference with public comfort was considerable and a large section of the public was affected injuriously. the word 'community' in clause (b) of section 33(1) cannot be taken to mean residents of a particular house. it means something wider, that is, the public at large or the residents of an entire locality. the very fact that the provision occurs in a chapter with 'public nuisance' is indicative of this aspect. it would, however, depend on the facts situation of each case and it would be hazardous to lay down any straitjacket formula.11. the guns of section 133 go into action wherever there is public nuisance. the public power of the magistrate under the code is a public duty to the members of the public who are victims of the nuisance, and so he shall exercise it when the jurisdictional facts are present. 'all power is a trust - that we are accountable for its exercise - that, from the people, and for the people, all springs and all must exist'. the conduct of the trade must be injurious in presenti to the health or physical comfort of the community. there must, at any rate, be an imminent danger to the health or the physical comfort of the community in the locality in which the trade or occupation is conducted. unless there is such imminent danger to the health or physical comfort of that community or the conduct of the trade and occupation is in fact injurious to the health or the physical comfort of that community, an order under section 133 cannot be passed. a conjoint reading of sections 133 and 138 of the code discloses that it is the function of the magistrate to conduct an enquiry and to decide as to whether there was reliable evidence or not to come to the conclusion to act under section 133.12. section 133 of the code as noted above appears in chapter x of the code which deals with maintenance of public order and tranquillity. it is a part of the heading 'public nuisance'. the term 'nuisance' as used in law is not a term capable of exact definition and it has been pointed out in halsbury's laws of england that :'even in the present day there is not entire agreement as to whether certain acts or omissions shall be classed as nuisances or whether they do not rather fall under other divisions of the law of tour'.13. in vasant manga nikumba v. baburao bhikanna naidu it was observed that nuisance is an inconvenience which materially interferes with the ordinary physical comfort of human existence. it is not capable of precise definition. to bring in application of section 133 of the code, there must be imminent danger to the property and consequential nuisance to the public. the nuisance is the concomitant act resulting in danger to the life or property due to likely collapse etc. the object and purpose behind section 133 of the code is essentially to prevent public nuisance and involves a sense of urgency in the sense that if the magistrate fails to take recourse immediately irreparable danger would be done to the public. it applies to a condition of the nuisance at the time when the order is passed and it is not intended to apply to future likelihood or what may happen at some later point of time. it does not deal with all potential nuisances and on the other hand applies when the nuisance is in existence. it has to be noted that sometimes there is confusion between section 133 and section 144 of the code. while the latter is a more general provision the former is more specific. while the order under the former is conditional, the order under the latter is absolute.14. [see state of m.p. v. kedia leather & liquor ltd. and ors. : 2003crilj4335 ].15. in the background of legal principles set out above, the judgment of the high court does not suffer from any infirmity.16. the residential question, however, is whether learned sdm could consider the suggestions, if any, given by the appellants, as to the manner in which goods can be stored or connected activities by passing order of a regulatory nature. this is permissible by the provisions itself which provide that sdm can regulate such activities. therefore, without expressing any opinion on that matter for which material can be placed by the appellants before the learned sdm for appropriate orders in the matter, we direct that if any suggestion or alternative arrangement is brought to the notice of learned sdm it shall be considered in its proper perspective in accordance with law.17. with the aforesaid observations, the appeal is dismissed.

Judgment:
ORDER

FOR REMOVAL OF NUISANCE.

(1) Whenever a District Magistrate or a Sub-divisional magistrate or any other Executive Magistrate specially empowered in this behalf by the State Government, on receiving the report of a police officer or other information and on taking such evidence (if any) as he thinks fit, considers -

(a) xx xx xx(b) that the conduct of any trade or occupation, or the keeping of any goods or merchandise, is injurious to the health or physical comfort of the community, and that in consequence such trade or occupation should be prohibited or regulated or such goods or merchandise should be removed or the keeping there of regulated; or

(c) to (f) xx xx xxsuch Magistrate may make a conditional order requiring the person causing such obstruction or nuisance, or carrying on such trade or occupation, or keeping any such goods or merchandise, or owning, possessing or controlling such building, tent, structure, substance, tank, well or excavation, or owning or possessing such animal or tree, within a time to be fixed in the order -

(i) xx xx xx(ii) to desist from carrying on, or to remove or regulate in such manner as may be directed, such trade or occupation, or to remove such goods or merchandise, or to regulate the keeping thereof in such manner as be directed; or

(iii) to (vi) xx xx xxor, if he objects so to do, to appear before himself or some other Executive Magistrate subordinate to him at a time and place to be fixed by the order, and show cause, in the manner hereinafter provided, why the order should not be made absolute.

(2) No order duly made by a Magistrate under this section shall be called in question in any Civil Court. xx xx xx'

10. A proceeding under Section 133 is of a summary nature. It appears as a part of Chapter X of the Code which relates to maintenance of public order and tranquillity. The Chapter has been classified into four categories. Section 129 to 132 come under the category of 'unlawful assemblies'. Sections 133 to 143 come under the category of 'public nuisance'. Section 144 comes under the category of 'urgent cases of nuisance or apprehended danger' and the last category cover Sections 145 to 149 relating to 'disputes as to immovable property'. Nuisances are of two kinds, i.e. (i) Public; and (ii) Private. 'Public nuisance' or 'common nuisance' as defined in Section 268 of the Indian Penal Code, 1850 (in short the 'IPC') is an offence against the public either by doing a thing which tends to the annoyance of the whole community in general or by neglecting to do anything which the common good requires. It is an act or omission which causes any common injury, danger or annoyance to the public or to the people in general who dwell or occupy property 'in the vicinity. 'Private nuisance' on the other hand, affects some individuals as distinguished from the public at large. The remedies are of two kinds - civil and criminal. The remedies under the civil la are of two kinds. One is under Section 91 of the Code of Civil Procedure, 1908 (in short 'IPC'). Under it a suit lies and the plaintiffs need not prove that they have sustained any special damage. The second remedy is a suit by a private individual for a special damage suffered by him. There are three remedies under the criminal law. The first relates to the prosecution under Chapter XIV of IPC. The second provides for summary proceedings under Sections 133 to 144 of the Code, and the third relates to remedies under special or local laws. Sub-section (2) of Section 133 postulates that no order duly made by a Magistrate under this Section shall be called in question in any civil Court. The provisions of Chapter X of the Code should be so worked as not to become themselves a nuisance to the community at large. Although every person is bound to so use his property that it may not work legal damage or harm to his neighbour, yet on the other hand, no one has a right to interfere with the free and full enjoyment by such person of his property, except on clear and absolute proof that such use of it by him is producing such legal damage or harm. Therefore, a lawful and necessary trade ought not to be interfered with unless it is proved to be injurious to the health or physical comfort of the community. Proceedings under Section 133 are not intended to settle private disputes between different members of the public. They are in fact intended to protect the public as a whole against inconvenience. A comparison between the provisions of Section 133 and 144 of the Code shows that while the former is more specific the latter is more general. Therefore, nuisance specially provided in the former section is taken out of the general provisions of the latter section. The proceedings under Section 133 are more in the nature of civil proceedings than of criminal nature. Section 133(1)(b) relates to trade or occupation which is injurious to health or physical comfort. It itself deals with physical comfort to the community and not with those acts which are not in themselves nuisance but in the course of which public nuisance is committed. In order to bring a trade or occupation within the operation of this Section, it must be shown that the interference with public comfort was considerable and a large section of the public was affected injuriously. The word 'community' in Clause (b) of Section 33(1) cannot be taken to mean residents of a particular house. It means something wider, that is, the public at large or the residents of an entire locality. The very fact that the provision occurs in a Chapter with 'Public Nuisance' is indicative of this aspect. It would, however, depend on the facts situation of each case and it would be hazardous to lay down any straitjacket formula.

11. The guns of Section 133 go into action wherever there is public nuisance. The public power of the Magistrate under the Code is a public duty to the members of the public who are victims of the nuisance, and so he shall exercise it when the jurisdictional facts are present. 'All power is a trust - that we are accountable for its exercise - that, from the people, and for the people, all springs and all must exist'. The conduct of the trade must be injurious in presenti to the health or physical comfort of the community. There must, at any rate, be an imminent danger to the health or the physical comfort of the community in the locality in which the trade or occupation is conducted. Unless there is such imminent danger to the health or physical comfort of that community or the conduct of the trade and occupation is in fact injurious to the health or the physical comfort of that community, an order under Section 133 cannot be passed. A conjoint reading of Sections 133 and 138 of the Code discloses that it is the function of the Magistrate to conduct an enquiry and to decide as to whether there was reliable evidence or not to come to the conclusion to act under Section 133.

12. Section 133 of the Code as noted above appears in Chapter X of the Code which deals with maintenance of public order and tranquillity. It is a part of the heading 'Public nuisance'. The term 'nuisance' as used in law is not a term capable of exact definition and it has been pointed out in Halsbury's Laws of England that :

'even in the present day there is not entire agreement as to whether certain acts or omissions shall be classed as nuisances or whether they do not rather fall under other divisions of the law of tour'.

13. In Vasant Manga Nikumba v. Baburao Bhikanna Naidu it was observed that nuisance is an inconvenience which materially interferes with the ordinary physical comfort of human existence. It is not capable of precise definition. To bring in application of Section 133 of the Code, there must be imminent danger to the property and consequential nuisance to the public. The nuisance is the concomitant act resulting in danger to the life or property due to likely collapse etc. The object and purpose behind Section 133 of the Code is essentially to prevent public nuisance and involves a sense of urgency in the sense that if the Magistrate fails to take recourse immediately irreparable danger would be done to the public. It applies to a condition of the nuisance at the time when the order is passed and it is not intended to apply to future likelihood or what may happen at some later point of time. It does not deal with all potential nuisances and on the other hand applies when the nuisance is in existence. It has to be noted that sometimes there is confusion between Section 133 and Section 144 of the Code. While the latter is a more general provision the former is more specific. While the order under the former is conditional, the order under the latter is absolute.

14. [See State of M.P. v. Kedia Leather & Liquor Ltd. and Ors. : 2003CriLJ4335 ].

15. In the background of legal principles set out above, the judgment of the High Court does not suffer from any infirmity.

16. The residential question, however, is whether learned SDM could consider the suggestions, if any, given by the appellants, as to the manner in which goods can be stored or connected activities by passing order of a regulatory nature. This is permissible by the provisions itself which provide that SDM can regulate such activities. Therefore, without expressing any opinion on that matter for which material can be placed by the appellants before the learned SDM for appropriate orders in the matter, we direct that if any suggestion or alternative arrangement is brought to the notice of learned SDM it shall be considered in its proper perspective in accordance with law.

17. With the aforesaid observations, the appeal is dismissed.