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Criminal Law

Quashing of FIR in Economic Offences

 29-Apr-2025

Dinesh Sharma v. Emgee Cables and Communication Ltd. & Anr. 

“The High Court overlooked that credible evidence of criminal conspiracy required thorough investigation, which could only be properly assessed through a full trial.” 

Justices Bela M. Trivedi and Prasanna B. Varale

Source: Supreme Court  

Why in News? 

Recently, Justices Bela M. Trivedi and Prasanna B. Varale  held that the High Court erred in quashing the FIR, emphasizing that allegations of routing monetary transactions through shell companies indicate a prima facie case of economic offence warranting investigation. 

  • The Supreme Court held this in the matter of Dinesh Sharma v. Emgee Cables and Communication Ltd. & Anr. (2025). 

What was the Background of Dinesh Sharma v. Emgee Cables and Communication Ltd. & Anr. (2025) Case? 

  • Dinesh Sharma was the authorized representative of BLS Polymers Ltd., a company engaged in manufacturing and supplying plastic compounds used in making wires and cables. 
  • EMGEE Cables and Communications Ltd. was in the business of manufacturing copper alloys, wires, and conductors. 
  • In 2012, EMGEE Cables, through its representatives, approached Dinesh Sharma's company for supply of PVC. 
  • The respondents allegedly portrayed a positive financial position of their company, which led the appellant to supply goods on credit basis, with transactions continuing from 2012 to 2017. 
  • Between April 2017 and July 2018, the appellant supplied goods worth Rs. 2,20,82,000/- against purchase orders signed by Respondent No. 3, who was the technical director. 
  • The Respondent Company failed to make timely payments for the goods supplied. 
  • Due to financial losses from overdue payments, the appellant repeatedly reminded the company directors to clear the dues, which led one director to issue three cheques against the due payment. 
  • The first cheque presented by the appellant was dishonoured by the bank. 
  • On April 2, 2018, the appellant visited the office of Respondent No. 1 and found it closed. His attempts to contact company representatives were initially unsuccessful. 
  • The appellant subsequently filed FIR No. 218/2018 at Police Station Chomu, Jaipur, for offences punishable under Sections 420, 406, and 120B of the Indian Penal Code. 
  • The appellant also sent legal notices under Section 138 of the Negotiable Instruments Act, 1881 and Form 4 Notices under Rule 5 of Insolvency and Bankruptcy Rules demanding repayment. 
  • On 2nd May, 2018, Dena Bank filed separate FIR No. 135/2018 against Respondent No. 1 and its directors for offences under Sections 420, 406, 467, 468, 471, and 120B of IPC, alleging embezzlement and fraudulent activities. 
  • Respondent No. 2 filed a petition under Section 482 of CrPC before the High Court seeking quashing of FIR No. 218/2018. 
  • The High Court quashed the FIR, considering the matter purely civil in nature related to business transactions. 

What were the Court’s Observations? 

  • The Supreme Court held that the High Court committed a serious error in quashing the proceedings, as it failed to appreciate that the creation of shell companies and circulation of funds through them indicated a clear intention to deceive. 
  • The Court observed that when material evidence regarding criminal conspiracy was brought to the High Court's notice, it was necessary to allow the investigating agency to thoroughly investigate before the truth could be established through a proper trial. 
  • The Supreme Court emphasized that economic offences constitute a class apart, affecting the economy as a whole and posing serious threats to the financial health of the country, and therefore should not be viewed lightly. 
  • The Court concluded that while High Courts have wide powers under Section 482 CrPC, these powers should be exercised sparingly, and the High Court was not justified in quashing the FIR at the nascent stage of investigation. 
  • The Court concluded that the High Court was not justified in exercising its jurisdiction under Section 482 of CrPC to quash the FIR, particularly at the nascent stage of investigation. 

What is Section 528 of Bharatiya Nagarik Suraksha Sanhita (BNSS)? 

  • Section 528 of BNSS replaces the former Section 482 of Code of Criminal Procedure, preserving the High Court's inherent powers to prevent abuse of court process and secure justice. 
  • This provision does not confer new powers but merely recognizes the High Court's pre-existing inherent powers to make necessary orders to give effect to any order under the Code. 
  • Inherent powers under Section 528 cannot be invoked to quash police investigations following a cognizable FIR, interfere with statutory investigation rights, or question the reliability of FIR allegations. 
  • Case law establishes that these powers can be exercised to quash proceedings where there is a legal bar, where allegations don't constitute an offence, or where evidence fails to support charges. 
  • The Supreme Court cautions against entertaining Section 528 petitions if alternative remedies haven't been pursued and prohibits second petitions on grounds available when filing the first petition. 
  • As a saving provision, Section 528 preserves the High Court's discretionary power to intervene in exceptional circumstances when ordinary remedies are inadequate for complete justice. 
  • Exercise of powers under Section 528 requires judicial restraint, particularly in cases where investigations are at nascent stages. 
  • When considering such petitions, courts must balance protecting individuals from unwarranted prosecution against allowing legitimate investigation, especially for economic offences. 
  • These powers can prevent abuse where criminal proceedings are initiated with mala fide intentions or ulterior motives stemming from private grudges. 
  • Courts are generally more cautious about quashing proceedings in economic offence cases under Section 528, recognizing their distinct nature and wider impact on the financial system. 

Civil Law

Limitation Period Under Commercial Courts Act

 29-Apr-2025

Jharkhand Urja Utpadan Nigam Ltd v. M/s Bharat Heavy Electricals Limited  

“Thus, merely because Order XX Rule I enjoins a duty upon the commercial courts to provide the copies of the judgment that does not mean that the parties can shirk away all responsibility of endeavoring to procure the certified copies thereof in their own capacity.” 

Justice JB Pardiwala and Justice R Mahadevan

Source: Supreme Court 

Why in News? 

A bench of Justice JB Pardiwala and Justice R Mahadevan held that Order XX Rule 1 (1) of the Civil Procedure Code, 1908 (CPC) enjoins a duty upon the commercial courts to provide the copies of the judgment that does not mean that the parties can shirk away all responsibility of endeavoring to procure the certified copies thereof in their own capacity. 

  • The Supreme Court held this in the case of Jharkhand Urja Utpadan Nigam Ltd v. M/s Bharat Heavy Electricals Limited (2025). 

What was the Background of Jharkhand Urja Utpadan Nigam Ltd v. M/s Bharat Heavy Electricals Limited (2025) Case?   

  • The petitioner is seeking an exemption from filing an application. 
  • The case arises from a judgment by the Jharkhand High Court dated 14th February 2025, which rejected the petitioner's application under Section 5 of the Limitation Act, 1963 (LA) for condonation of a 301-day delay in filing an appeal. 
  • The respondent, Bharat Heavy Electricals Limited (a Central Government Company), had filed a civil suit against the petitioners to recover Rs. 26,59,34,854 plus 15.75% interest based on an award from the MSME Council Kanpur. 
  • The petitioners filed their statutory appeal 301 days late and requested condonation of this delay, but the High Court refused, stating that no sufficient cause was shown under Section 5 of the LA. 
  • The petitioners' counsel, Mr. Saurabh Kripal and Mr. Zain A. Khan, argued that the High Court erred by not considering the provisions of Order XX Rule 1 Civil Procedure Code, 1908 (CPC) specially inserted for commercial courts. 
  • They further argued that limitation should not begin from the pronouncement of judgment in open court but from when a free copy of the judgment is provided to parties as per Order XX Rule 1 CPC. 
  • Thus, the matter is before the Supreme Court. 

What were the Court’s Observations? 

  • The Court observed that Order XX Rule 1 (1) of CPC provides that: 
    • The Commercial Court, Commercial Division, or Commercial Appellate Division, as the case may be, shall, within ninety days of the conclusion of arguments, pronounce judgment and copies thereof shall be issued to all the parties to the dispute through electronic mail or otherwise.  
  • The Court held that the expression “pronounced judgment and copies thereof shall be issued to all the parties to the dispute through electronic material or otherwise” should be interpreted. 
  • The opposite party has contended that the above provision is mandatory and not directory hence the period of limitation will commence only from the date the copy of judgment is provided to the party in any of the modes. 
  • The Court however held that the above provisions cannot read as mandatory as it would mean that till the Registry does not provide the copy of the judgment, though not demanded, the period of limitation would not commence from the date of the pronouncement of the judgment. 
  • The Court held that the judgment of Housing Board Haryana v. Housing Board Colony Welfare Association (1995) which provides that the limitation for challenging the order would begin from the date of such communication, the same would be applicable only where despite best of efforts at the end of the parties in procuring the order the same could not be obtained and thereby resulting in unavoidable delay in the filing of appeals. 
  • The Court held that the one of the core tenets of the law of limitation is to enthuse diligence among the parties as to their rights.  
  • The law of limitation cannot be read in such a manner whereby parties stop showing any modicum of regard for their own rights and on the pre-text of untimely communication continue to litigate without being vigilante themselves. 
  • The Court thus laid down that merely because Order XX Rule I enjoins a duty upon the commercial courts to provide the copies of the judgment that does not mean that the parties can shirk away all responsibility of endeavoring to procure the certified copies thereof in their own capacity. 
    • Any such interpretation would result in frustrating the very fundamental cannons of law of limitation and the salutary purpose of the Act, 2015 of ensuring timely disposals. 
  • In the facts of the present case, the delay in filing the appeal is 301 days – way beyond 60 days + 60 days = 120 days permitted by the judgment of the Supreme Court to be condoned in exercise of power under Section 5 of the LA.  
  • Therefore, such inordinate delay caused by negligence of the applicants is not liable to be condoned. 

What is Order XX Rule 1 (1) inserted by the Commercial Courts Act, 2015? 

  • Order XX Rule 1 (1) was inserted by the Commercial Courts Act, 2015. 
  • The provision provides: 
    • The Commercial Court, Commercial Appellate Court, Commercial Division, or Commercial Appellate Division must pronounce judgment within 90 days after the conclusion of arguments. 
    • Copies of the judgment must be issued to all parties involved in the dispute. 
    • The copies can be distributed either through electronic mail or by other means. 

Family Law

Partition of Joint Family Property

 29-Apr-2025

Angadi Chandranna v. Shankar & Ors.  

“After partition, each party gets a separate and distinct share and this share becomes their self-acquired property and they have absolute rights over it and they can sell, transfer, or bequeath it as they wish.” 

Justice JB Pardiwala and Justice R Mahadevan  

Source: Supreme Court 

Why in News? 

A bench of Justice JB Pardiwala and Justice R Mahadevan held that after a partition, each party receives a separate and distinct share which becomes their self-acquired property with absolute rights to sell, transfer, or bequeath. 

  • The Supreme Court held this in the case of Angadi Chandranna v. Shankar & Ors. (2025). 

What was the Background of Angadi Chandranna v. Shankar & Ors. (2025) Case?   

  • The case involves a property dispute over land measuring 7 acres 20 guntas in Mahadevapura Village, Karnataka. 
  • The appellant (Defendant No.2) purchased this property from Defendant No.1 via a registered sale deed dated March 11, 1993. 
  • Defendant No.1 had earlier purchased this property from his elder brother C. Thippeswamy via a registered sale deed dated October 16, 1989. 
  • Before that, Defendant No.1 and his two brothers (C. Thippeswamy and C. Eshwarappa) had divided their joint family properties through a registered partition deed dated May 9, 1986. 
  • The respondents (Plaintiffs) are the sons and daughters of Defendant No.1, who filed a suit seeking partition and separate possession of the property. 
  • The trial Court initially ruled in favor of the plaintiffs, granting them partition rights. 
  • The First Appellate Court overturned this decision, ruling in favor of Defendant No.2. 
  • The High Court of Karnataka then reversed the First Appellate Court's decision, reinstating the original judgment in favor of the plaintiffs. 
  • The central dispute is whether the property was self-acquired by Defendant No.1 (and thus his to sell) or whether it remained ancestral property in which his children had rights by birth. 
  • The appellant argues the property was self-acquired using personal funds and loans, while the respondents claim it was purchased using joint family funds. 
  • The respondents' position is that even after partition, property received remains ancestral for male issues who acquire interest by birth. 
  • The case has now reached what appears to be the Supreme Court of India on appeal from Defendant No.2. 

What were the Court’s Observations? 

  • The central issue in this dispute concerns whether the suit property was ancestral or self-acquired property of Defendant No.1. 
  • The High Court's framing of a substantial question of law was inappropriate as it essentially involved re-appreciation of evidence rather than addressing a genuine legal question. 
  • According to established legal principles, there is no automatic presumption that property is joint family property merely because a joint Hindu family exists. 
  • The burden of proof lies on the party asserting that property belongs to the joint family. 
  • If such party establishes the existence of a nucleus from which joint family property could be acquired, then the presumption shifts, requiring the other party to prove the property was self-acquired. 
  • The plaintiffs consistently claimed that Defendant No.1 purchased the suit property using family nucleus funds, specifically income derived from lands allotted to him, earnings from coolie work, cash received during partition, and money from their grandmother Mallamma. 
  • Based on this claim, the plaintiffs asserted the property remained ancestral and they had rights as co-parceners. 
  • The evidence presented by the defendants showed that Defendant No.1 purchased the property with his own funds and a loan from DW3-Narasimhamurthy. 
  • Multiple witnesses testified about this loan and its subsequent repayment through the sale of other land. 
  • The sale deed explicitly characterized the property as self-acquired. 
  • The court found no sufficient evidence supporting the plaintiffs' claims about family nucleus funds and noted contradictions between oral testimony and documentary evidence regarding the alleged Rs.10,000 payment at partition. 
  • Under Hindu law, after a partition, each party receives a separate and distinct share which becomes their self-acquired property with absolute rights to sell, transfer, or bequeath. 
  • The evidence established that Defendant No.1 acquired the suit property through a loan, not from joint family funds. 
  • Defendant No.1 used the proceeds from selling the property partly for his daughter's marriage, which the court considered an act of necessity and duty as a Kartha. 
  • Regarding the doctrine of blending, the court clarified that self-acquired property can only become joint family property if voluntarily contributed to the common stock with clear intention to abandon separate claims. 
  • Mere joint use of property or acts of generosity do not constitute such abandonment of separate property rights. 
  • In this case, the doctrine of blending was inapplicable as the suit property was determined to be self-acquired. 
  • The court concluded that the suit property should be considered Defendant No.1's self-acquired property, making his sale to Defendant No.2 legally valid and binding.

What is Joint Family Property and Self Acquired Property?

  • Joint family property, also known as ancestral property under Hindu law, refers to property that has been inherited by a Hindu from his father, father's father, or father's father. 
  • Joint family property belongs collectively to all members of the Hindu Undivided Family (HUF), with male members acquiring an interest in it by birth. 
  • Under the traditional Hindu law, male descendants up to three generations from the original owner acquire a birthright in joint family property. 
  • No single coparcener (member with birthright) can claim a specific portion of joint family property until partition, as each has an undivided right in the whole property. 
  • The Karta (usually the eldest male member) manages joint family property but cannot alienate it except for legal necessity, benefit of estate, or with consent of all coparceners. 
  • After the 2005 amendment to the Hindu Succession Act, daughters also acquire birthright in joint family property equal to sons. 
  • Self-acquired property, by contrast, is property that an individual has acquired through his own efforts, without using any joint family resources or nucleus. 
  • Self-acquired property may be obtained through personal income, individual enterprise, or personal skill without drawing upon ancestral resources. 
  • The owner of self-acquired property has absolute rights over it, including the right to sell, mortgage, gift, or bequeath it without requiring consent from other family members. 
  • Self-acquired property does not automatically become joint family property merely because the owner has sons or daughters. 
  • A person can voluntarily convert his self-acquired property into joint family property through the doctrine of "blending," but this requires clear intention to abandon separate rights. 
  • When joint family property is partitioned, the divided shares become self-acquired property of the respective recipients. 
  • The income generated from self-acquired property remains self-acquired, unless specifically blended with joint family property. 
  • The mere fact that other family members used the property or benefited from it does not automatically convert self-acquired property into joint family property. 
  • The burden of proving that property is joint family property lies on the person making such a claim, while the burden shifts to the person claiming it as self-acquired if evidence of existing nucleus is established.