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Property Litigation and Legal Provisions: An Overview

Maximum civil litigation in India courts is generated because of disputes relating to immovable property. Some cases are based on breach of contract of transfer of property. The provisions relating to transfer of property are mainly governed by the Transfer of Property Act, 1882 and the Registration Act, 1908. Though, we can not overlook the constitutional provision relating to property. Under Article 300A of the Constitution of India, no person shall be deprived of his property save by the authority of law. The Supreme Court of India had observed that the right to property is a human right as well as a constitutional right. The case of Indian Handicrafts Emporium v. Union of India, reported in AIR 2003 SC 3240 should be referred to in this regard.

Statutory provisions related to transfer

It is notable that for the recognition of right to property, certain important provisions in statutes are made by the legislature. These are as follows:

The Transfer of Property Act, 1882

Section 54 of this Act deals with the ‘Sale’ and prescribes “sale how made.” According to this provision, any such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

In the case of tangible immovable property of value less than one hundred rupees, such transfer may be made either by a registered instrument or by the delivery of the property.

Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

The Registration Act, 1908

Section 17 of this Act directs that the registration of certain documents relating to immovable property is compulsory in certain cases. The said documents are:

  1. An instrument of gift deed of immovable property;
  2. Any other non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish any right, title or interest of the immovable property of the value of one hundred rupees and upwards;
  3. Lease of the immovable property for any term exceeding one year;
  4. Non-testamentary instrument transferring or assigning any decree or order of a Court or any award which purports or operates to create, declare, assign, limit or extinguish any right, title or interest of the immovable property of the value of one hundred rupees and upwards;
  5. Any document which purports or operates to affect any contract for sale of any immovable property. This is a Local amendment of Madhya Pradesh with effect from 14.01.2010.
  6. Power of attorney relating to sale of immovable property in any way. This is a Local amendment of Madhya Pradesh with effect from 14.01.2010.

Law commission’s recommendations

The Law Commission of India, in its report No. 221 of 2009 on “Need for Speedy Justice – Some Suggestions” had made recommendation with respect to sale of immovable property in the following words:

“Para 2.16 When a person purchases immovable property, the sale deed is required to be registered. Normally, the vendor and the vendee show case transaction for sale consideration and an endorsement is also made by the Registrar/ Sub-Registrar to the effect. But when a person has to play a foul game, the major portion of the sale considerations shown to have been paid outside and not before the Registrar/Sub-Registrar and it gives rise to unnecessary litigation, both criminal and civil. With the vast network of Banks and the growing awareness amongst the common people, a time has come to make it mandatory that the consideration for the every sale shall be paid through Bank Draft. This will check frivolous transactions as well unnecessary litigation.”

It is highly surprising that the Central Government i.e. Ministry of Law and Justice, Government of India did not appreciate the report. Resultantly, an important revision in the Transfer of Property Act, 1882 is still pending and has not received any attention of the Parliament.

Amendment needs to prevent corruption

It is pertinent to note that an amendment based on the aforesaid recommendation by the Law Commission could carry out an important role to fight against corruption and prevent offences like “Money Laundering and Income Tax Evasion”.  It is well known that the investment in immovable property is very common. It is equally known that cash payment of consideration is a common practice for tax evasion. The report ‘Black Money in the Real Estate Sector: A Study’ by National Institute of Public Finance and Policy made some stark revelations on tax evasion and the prevalent corruption in the real estate sector in India. To an extent, section 40A (3) of Income Tax Act, 1961, directs the disallowance of business expenditure incurred during the course of business or profession in respect of which payment in a sum exceeding rupees 20,000/- is made otherwise than by an account payee cheque drawn on a bank or account payee draft. However, this statutory provision has a limited impact. If the recommendation made by the Law Commission of India is effected, the transactions relating to immovable property shall be transparent and to a extremely great extent, corruption free.

Civil Litigation: Some Jurisdictional Aspects

The Code of Civil Procedure, 1908, (the “Code”), plays a very important role in Civil Courts and Revenue Courts in India. Many quasi-judicial authorities exercise the powers conferred under the Code. In this Article, we will concentrate our discussion on “Civil Procedure for the issue of Territorial Jurisdiction under the Code.”

Order XIV of the Code deals with issues in disputes. This Order prescribes the procedure for framing and amendments in respect of issues in disputes. We are aware that framing of issues is a very important stage in trial. This Order consists of Rules. Rule 2 provides the procedure for framing preliminary issues and its disposal in the event of objection regarding Jurisdiction and/ or a legal embargo.

At this juncture, it is necessary to refer to Rule 2[1] of the Order XIV of the Code. From the perusal of this statutory provision, it is clear that in the Code, it is the discretionary powers of the Court to decide preliminary issue regarding jurisdiction or if there is any restriction on the suit created by any law. Though, there are several judgements that have held that the issue regarding Territorial Jurisdiction is a mixed question of law and fact and it could not be decided as preliminary issue.  We must refer to the latest judgment of Satti Pardeshi Samadhi & Pillayar Temple v. M. Shakuntala[2], in which it has been held that –

“On a plain consideration of the language employed in sub-section (2) of Order 14 CPC, it can be stated with certitude that when an issue requires an inquiry into facts, it can not be tried as a preliminary issue.”  

The State Assembly of Maharashtra made an important local amendment in the Code and inserted Section 9-A[3] after Section 9. From the perusal of this statutory provision, it is clear that it is mandatory in Maharashtra that if any party raises objection regarding jurisdiction, the Court shall proceed to determine that objection first. This statutory provision is meant to curb the issue of frivolous litigation. If a court has no jurisdiction to hear a suit, then why such suit should be continued in that court? Why the important time of courts and nation should be wasted for the misuse of judicial process?

In this context, in the interest of the nation and the society, the provision inserted in the Code by the Legislature Assembly of Maharashtra must be incorporated by the Indian Parliament also. If the Parliament amends the central legislation, the bona fide litigants of the country shall be benefitted by this proposed amendment. The same will reduce unnecessary burden mounted on the civil courts and revenue courts.

[1] Rule 2. Court to pronounce judgement on all issues.—(1) Notwithstanding that a case many be disposed of on a preliminary issue, the Court shall subject to the provisions of sub-rule (2), pronounce judgement on all issues.

(2) Where issues both of the law and fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to—

(a) the jurisdiction of the Court, or

(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on the issue.

[2] (2015) 5 SCC 674, Para 14

[3] Section 9A inserted by Maharastra Amendments.—Where at the hearing of application relating to interim relief in a suit, objection to jurisdiction is taken, such issue to be decided by the Court as a preliminary issue –

(1) Notwithstanding anything contend in this Code or any other law for the time being in force, if ,at the hearing of any application for granting or setting aside an order or otherwise, made in any suit, an objection to the jurisdiction of the Court to entertain such a suit is taken by any parties to the suit, the Court shall proceed to determine at the hearing of such application the issue as to the jurisdiction as a preliminary issue shall be heard and disposed of by the Court as expeditiously as possible and shall not in any case be adjourned to the hearing of the suit.

(2) Notwithstanding anything contained in sub-section (1), at the hearing of any such application, the Court may grant such interim relief as it may consider necessary, pending determination by it the preliminary issue as to the jurisdiction.

Administrative Reforms qua Judicial Reforms

The pendency of cases in Court of Law is a big challenge for Indian judicial process. This issue not only affects litigants but also creates a threat to national resources. It also violates Constitutional rights of “Speedy Trial” guaranteed under Article 21.

When we talk about pendency of cases, we generally consider the cases pending only in Civil and Criminal Courts, High Courts and Supreme Courts. We don’t consider cases pending before Tribunals, Revenue Courts and other quasi-judicial fora. Litigants whose cases are pending before the said quasi-judicial bodies, also have the rights of speedy trial, as cases before them are in relation to valuable rights of the citizens of India. A State without Litigation cannot be thought of; but being a Welfare State, efforts should be made to reduce litigation. The Latin Maxim “interest reipulicae ut sit finis litiuum” means it is in the interest of the State that there should be an end of law suit.

It is experienced that in Civil Courts and High Courts many litigants come after getting unsuccessful results in Revenue Courts and other quasi-judicial authorities. This is owing to the fact that under Article 227 of the Constitution of India, High Courts have Supervisory Jurisdiction. Furthermore, under Article 226, High Courts may issue Writs against orders, where no appeal lies in respective statutes. If quasi-judicial authorities do not perform their duty in proper manner, the unsuccessful party is bound to come before the High Courts. It means institution of cases in High Courts, to a great extent, depends upon the performance of quasi-judicial authorities.

Recently, while observing the functioning of quasi-judicial authorities, the Central Board of Excise and Customs issued Instructions to all its senior officials for following due process of law for adjudicating matters, conducting hearings and recording submissions of both parties in their judgments. The said Instruction noted that in its Order No 40344/2016 dated 29th February 2016 in the case of Commissioner of Customs (Import) Vs Do Best Info way, the Custom Excise & Service Tax Appellate Tribunal (CESTAT) has commented adversely at paras 9 to 13, and highlighted the casual manner in which the matter was handled by the Adjudicating Authority and the Commissioner (Appeal).

Process of passing Administrative Orders

The administrative officers, while passing their orders, ought to follow Departmental manuals, circulars and own administrative discretions. They must also base their findings on the recommendations of their subordinate staff, but not fully depend on them. While passing orders, they must exercise their own discretion and good conscious. They must not blindly follow their superiors. They must follow Rules of Law and procedure recognized by principles of natural justice. They must be guided by Judicial Precedents. If administrative authorities adopt such practice and procedure in adjudicating matters and passing orders, then automatically appeals against their orders would reduce.

Suggestions for Administrative Reforms:

  1. It is surprising that in many States, no statutory Rules have been framed for procedure to be followed in quasi-judicial proceedings. Like Civil Courts Rules and Orders, Rules of Procedure must be framed for quasi-judicial proceedings also. In this regard, the President of India and the Governors of States are empowered to frame Rules under Article 309 of the Constitution of India for central and state government employees respectively.
  2. The Government of India had framed the National Litigation Policy, in which the Central Government has expressed its vision/mission that its aim is to transform Government into an efficient and responsible litigant. This Policy expects that every State will formulate similar Litigation Policy. It is in the interest of society and Nation that every State must formulate a Litigation Policy.
  3. The States should also issue Administrative Circulars demonstrating how administrative authorities should pass orders in quasi judicial proceedings. In these circulars, specific guidelines must be given to the authorities. That will help to avoid procedural defects in quasi judicial proceedings.
  4. There should be an effective mechanism to control administrative officers working under undue political pressure. Until and unless administrative officers are protected from unnecessary harassment, effective and unbiased rulings cannot be expected from them.
  5. As the National Litigation Policy declares – “Government must cease to be compulsive litigants. The philosophy that matters should be left to the Courts for ultimate decision has to be discarded. The easy approach, ‘let the court decide’ must be eschewed and condemned”. In this light, one important strategy could be to appoint in all government departments Law Officers having suitable qualification and experience in the field of law, so that cases could be scrutinized and opinion on merits of each case could be taken at the initial stage. In those circumstances, the department will be prevented from unnecessary litigation.

Conclusion

The third joint conference of Chief Justices of all high courts and Chief Ministers of all states was held on 24 April 2016 in which the core agenda was “pendency of cases in the High Courts and Subordinate Courts”. In my humble opinion, Administrative Reforms is the foundation of Judicial Reforms. If we think about Judicial reforms then we must think about Administrative Reforms. It is imperative to understand that it is not the Union of India or other state governments that are parties in maximum cases against the government. A large number of such cases filed in Courts are the consequences of Government Orders.

Advocate Fees in Madhya Pradesh and its revision

In India, the Advocate fee for Advocates practicing in High Courts and Subordinate Courts is payable as per Rules framed by concern High Courts. In the Context of Madhya Pradesh, we must refer the Madhya Pradesh Civil Court Rules, 1961 herein after called “The M.P. Rules”. These Rules are framed under Section 23 of the Madhya Pradesh Civil Court Act, 1958. As per Section 23 of the aforementioned Act, the High Court of Madhya Pradesh is delegated the powers to make Rules. Obviously, the High Court is the Rule Making Authority. In exercise of these powers, the High Court of M.P. had framed the MP Rules. Under Rule 523 in Chapter 24 of Part 6 of these Rules the table of the Advocate Fees has been prescribed. According to these Rules, in the minimum advocate fee is fixed INR 20 and maximum advocate fee is fixed INR 5000.

In 1961 when these Rules were framed, the value of Indian rupee was so high that in 1961, some of class III and class IV employees were getting salary of Rs. 20. The salary of Government Servants was so enhanced in every five years as per the recommendations of pay commissions. But advocate fee remains unchanged since 1961. It is pertinent to mention that in the exercise of the powers conferred by clause (v) of the Explanation to Section 48 of the Income Tax Act, 1961, the Central Government has issued Notification on the Cost Inflation. According to this Notification, by considering basic year of 1981-82 and determining Cost Inflation Rupees 100.00 in that year, the Cost Inflation Index in the year 2014-15 has been fixed Rupees 1024.00. This means that the rise in Cost Inflation Index is more than ten times.

Apart from these facts we must realise the ground realities that in ordinary course, no lawyer can work on the fee of rupees 20 only. It could be analysed from media reports published from time to time. On the other side, the Civil Courts follow the Rules for allowing the Costs of litigation. The Costs of litigation include Advocate Fees. This means the successful litigants cannot claim the real costs of litigations because there are lot of variations in the Advocate fee payable as per Statute and fee payable practically. This is a big threat to the Social Justice System.

Although, it is admitted that there is no comparison of Advocates and workmen employed in different fields. But it is beneficial to refer the Minimum Wages Act, 1948 which provides the wages security and time bound enhancement with Cost of Living Allowance for the employees working in scheduled employments. At present, the Advocate fee is much less then minimum wages fixed by State Government.

It is pertinent to note that the Law Commission of India has submitted its 240th Report in May 2012 which addressed the issue of “COSTS IN CIVIL LITIGATIONS”. This report says that the Costs of the Civil Suits include the Advocate fees. The Law Commission in the Para 3.14 of the report opined that it is equally urgent to revise the Advocate Fee provided in the Schedule to the Rules, as most of the said fees are outdated and have no correlation with the prevailing rate of fee.

Para 3.17 of the report, is mentioned below:

3.17 While stressing the need to provide for awarding realistic advocate’s fee by amending   the  relevant   Rules periodically, a  serious fall-out of not levying actual, realistic cost has been expressed in the following terms:

“A litigant, who starts the litigation, after some time, being unable to bear the delay and mounting costs, gives up and surrenders to the other side or agrees to settlement which is something akin to creditor who is not able to recover the debt, writing off the debt.  This happens when the costs keep mounting and he realizes that even if he succeeds he will not get the actual costs.  If this happens frequently, the citizens will lose confidence in the civil justice system.”

 In this regard, we should also refer the Judgement of the Supreme Court passed in the case of Rameshwari Devi versus Nirmala Devi, (2011) 8 SCC 249 in which it was observed that Costs should be realistic keeping in view ever increasing litigation expenses. In the light of aforementioned Judgement the Advocate Fee structure must be fixed in the realistic pattern.

        The Law Commission of India in its report referred so many Rules effective in the States and in Para 6.5 says that the Andhra Pradesh Advocate Fee Rules, 2010 are quite realistic and reasonable. In the light of aforementioned factual and legal position the Advocate Fee structure prescribed in Madhya Pradesh Civil Court Rules, 1961 must be revised.

Joint conference on judicial reforms

On 24 April 2016 a joint conference of Chief Ministers and Chief Justices of all states is being held at New Delhi. The conference shall be presided by Chief Justice of India. In this conference the core issue of concern in Judicial Reforms. It is pertinent to mention that earlier on a conference was held on 5th April 2015 in which a comprehensive agenda was drawn up for the Conference. In these conferences the great cause of concern is with 2.64 crore undecided cases in the subordinate courts and 42 lakh cases in the High Courts,  expeditious disposal of cases is the key issue to be discussed.

Undoubtedly, in this conference the top Jurists and Executives are participating and they are very conscious about the issues which shall be discussed. But the author with great respect would like to draw the attention of the policymakers on following points:

  1. In this Country, most of the people resides in rural area and connected with agricultural lands. Their disputes regarding  Agricultural lands are triable by Revenue Courts under tenancy laws. In Revenue Courts, the disputed cases may take much time. Unfortunately, the cases pending before Revenue Courts are not taken into consideration while framing National Litigation Policy, 2015. Resultant, the poor former of this country got no relief on this count.
  2. It is experienced that maximum cases in the High Courts and Subordinate Courts are being filed by persons being aggrieved with the orders of administrative authorities. It means the administrative authorities may play major role to reduce pendency of court cases. If administrative authorities follow proper procedure prescribed by Rule of Law, the disputes may be resolved at their Laval, the institution of Court Cases shall automatically reduced.
  3. In the year of 2005 the Law Commission of India, in its 192nd Report on PREVENTION OF VEXATIOUS LITIGATION recommended the requirement to enact a Central Legislation on this subject, which is very relevant today.