Public Auction: Definition.

Public auction means public sale:

Earliest definition of public auction:

This appears to be earliest case (Privy Council) defining the definition of public Auction.

“There is no definition in the Act of the words “public auction” and their Lordships are of opinion that there can be no doubt that they must bear the meaning which is ordinarily given to them in the English language. The words mean a public sale at which each bidder offers an increase upon the price offered by the preceding bidder, the article put up being sold to the highest bidder. This involves the auction being held in public, all members of the public having a right to attend, and a valuable element being the competition between the persons who are openly bidding for the subject matter of the sale. This is of importance not only to the Railway Company, but also to the owner of the goods, the competition being calculated to produce the highest price.”

[Source: Secy. of State v. Sunderji, AIR 1938 PC 12.]

The public auction means that it is being held in public, all members of the public having a right to attend, and a valuable element being the competition between the persons who are openly bidding for the subject matter of the sale.

[Source: Vishal Builders (P) Ltd. Vs. Delhi Development Authority ILR (1977) 1 Delhi 724.]

E-auction is also a public Auction:

By the process of e-auction, none of the intending bidder is forbidden to participate in the process of sale. Instead of a physical auction at the spot, it is virtual auction in the electronic format. The advantage of e- auction is that every bid is recorded within a specified slot and is free from the errors, which may be committed by the court auctioneer. Therefore, we find that e-auction is another form of the public auction.

[Source: Dr. Mandeep Sethi vs Union Bank Of India (P&H)]

Double jeopardy and dishonour of cheque with cheating

Prosecution for cheating and dishonour of cheque:

Principle of Double Jeopardy:

Double jeopardy or Autrefois Acquit is the name of doctrine which prohibits second trial of an acquitted accused. But it does not prohibit a second trial, on same facts, but for an offence, different from previous prosecution.

The statutes involved: General Clauses Act: Section 26; IPC: Section 420; Negotiable Instruments Act: Section 138; Criminal Procedure Code: Section 300.

Prosecution for dishonour of cheque:

However there appears to be conflict of opinion in two different benches of Supreme Court of India. This position was less complicated until the Supreme Court of India, quashed the criminal proceedings under Sections 406/420 IPC which were launched during the pendency of proceedings u/s 138 of Negotiable Instruments Act for dishonour of cheque, holding that it would amount to abuse of process of law. It was observed.

“…..A finance company also advances short term loans. In that case it is essentially a commercial transaction. After first two cheques were dishonoured two cheques were again issued, which again were dishonoured resulting in filing of complaint under Section 138 of the Negotiable Instruments Act. None of the respondents has been able to explain as to why offences under Sections 406/420, I.P.C. were not added in the complaint filed under Section 138 of the Negotiable Instruments Act and why resort was had to filing of a separate First Information Report. Certain motive has been attributed to the Investigating Officer but we think we need not go into that. There is also no answer as to why investigation against three other directors was still stated to be pending when same role is assigned to all the accused. In the FIR it is Sukhvender Singh, who first approached the complainant, but later it is Mukender Singh. There is no answer as to why there are two different names. As to who are the directors of Ganga Automobiles Ltd. could have been easily found by the complainant after going through the records of Register of Companies and also about its status. As noted above, in the subsequent statement by the complainant he does not assign any role to the first appellant. The allegation that in the first instance three persons contacted the complainant company, who told the complainant of other Directors with whom the complainant conversed on telephone appears to be rather improbable.
14. We agree with the submission of the appellants that the whole attempt of the complainant is evidently to rope in all the members of the family particularly who are the parents of the Managing Director of Ganga Automobiles Ltd. In the instant criminal case without regard to their role or participation in the alleged offences with a sole purpose of getting the loan due to the Finance Company by browbeating and tyrannizing the appellants of criminal prosecution. A criminal complaint under Section 138 of the Negotiable Instruments Act is already pending against the appellants and other accused. They would suffer the consequences if offence under Section 138 is proved against them. In any case there is no occasion for the complainant to prosecute the appellants under Sections 406/420, I.P.C. and in his doing so it is clearly an abuse of the process of law….”

[Source: G. Sagar Suri v. State of U.P. ( (2000) 2 SCC 636)]

Thus the above case involved addition of charge of cheating in a prosecution pending for dishonour of cheque. However in Kolla Veera Raghav Rao v. Gorantla Venkateswara Rao, it was held that once the conviction under Section 138 of N.I. Act has been recorded, the question of trying a same person under Section 420 IPC or any other provision of IPC or any other statute is not permissible being hit by Article 20(2) of the Constitution and Section 300(1) Cr.P.C. It was held:

“Thus, it can be seen that Section 300(1) of Cr.P.C. is wider than Article 20(2) of the Constitution. While, Article 20(2) of the Constitution only states that ‘no one can be prosecuted and punished for the same offence more than once’, Section 300(1) of Cr.P.C. states that no one can be tried and convicted for the same offence or even for a different offence but on the same facts. In the present case, although the offences are different but the facts are the same. Hence, Section 300(1) of Cr.P.C. applies. Consequently, the prosecution under Section 420, IPC was barred by Section 300(1) of Cr.P.C”

[Source: Kolla Veera Raghav Rao v. Gorantla Venkateswara Rao, (2011) 2 SCC 703]

Now the same question arose once again in Sangeetaben Mahendrabhai Patel‘ case unfortunately without adverting to the difference of scope of Section 300 of Cr. P.C., now it has been held that after prosecution under 138 of NI Act, a subsequent prosecution under section 420 of IPC would be maintainable.

“……..in order to attract the provisions of Article 20(2) of the Constitution i.e. doctrine of autrefois acquit or Section 300 Cr.P.C. or Section 71 IPC or Section 26 of General Clauses Act, ingredients of the offences in the earlier case as well as in the latter case must be the same and not different. The test to ascertain whether the two offences are the same is not identity of the allegations but the identity of the ingredients of the offence. Motive for committing offence cannot be termed as ingredients of offences to determine the issue. The plea of autrefois acquit is not proved unless it is shown that the judgment of acquittal in the previous charge necessarily involves an acquittal of the latter charge…….
…………….the appellant had been tried earlier for the offences punishable under the provisions of Section 138 N.I. Act and the case is sub judice before the High Court. In the instant case, he is involved under Sections 406/420 read with Section 114 IPC. In the prosecution under Section 138 N.I. Act, the mens rea i.e. fraudulent or dishonest intention at the time of issuance of cheque is not required to be proved. However, in the case under IPC involved herein, the issue of mens rea may be relevant. The offence punishable under Section 420 IPC is a serious one as the sentence of 7 years can be imposed. In the case under N.I. Act, there is a legal presumption that the cheque had been issued for discharging the antecedent liability and that presumption can be rebutted only by the person who draws the cheque. Such a requirement is not there in the offences under IPC. In the case under N.I. Act, if a fine is imposed, it is to be adjusted to meet the legally enforceable liability. There cannot be such a requirement in the offences under IPC. The case under N.I. Act can only be initiated by filing a complaint. However, in a case under the IPC such a condition is not necessary.
28. There may be some overlapping of facts in both the cases but ingredients of offences are entirely different. Thus, the subsequent case is not barred by any of the aforesaid statutory provisions.”

[Source: Sangeetaben Mahendrabhai Patel v. State of Gujarat, 2012 (7) SCC 621, ]

Now we are left in a piquant situation. Two judgments relying upon two different lines of reasoning. One relying upon the similarity of the facts of case and other relying upon the difference in ingredients of offence.

In the meanwhile Gujarat High Court in the case of Nandlal vs State and Uttrakhand High Court in Rihan v.s State has followed the Kolla Veera case above.

Judicial Review of Discretion

Judicial review of administrative discretion:

Principles of judicial review:

Every administrative decision by Executive is subject to Judicial Review. There is no such thing as absolute discretion. However Judicial Review is not an appeal. The earliest reported case in this regard is Associated Provincial Pictures (also called Wednesbury’s case) which laid down the law relating to scope of Judicial Review. It is more concerned with the decision making process rather than the merits of decision. Following extract clinches the issue:

It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word “unreasonable” in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting “unreasonably.” Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington L.J. in Short v. Poole Corporation [1926] Ch. 66, 90, 91 gave the example of the red-haired teacher, dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another………

The court is entitled to investigate the action of the local authority with a view to seeing whether they have taken into account matters which they ought not to take into account, or, conversely, have refused to take into account or neglected to take into account matters which they ought to take into account. Once that question is answered in favour of the local authority, it may be still possible to say that, although the local authority have kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the court can interfere. The power of the court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority have contravened the law by acting in excess of the powers which Parliament has confided in them.(By Lord Greene)

[Source: Associated Provincial Pictures ]

Foreign contribution to persons and organisation in India: restrictions!

What is an ‘Organisation of Political Nature’?:

Foreign contribution to political parties and certain other groups and officials is regulated by Foreign Contribution (Regulation) Act, 2010 of India. The Government can restrict such contribution as well. The object is that politics in India remains free from foreign influence. This question arose about validity and interpretation of Section 3 of Foreign Contribution (Regulation) Act, 2010 (of India) and the Rules framed thereunder. This section 3 is as under:

“3. Prohibition to accept foreign contribution. – (1) No foreign contribution shall be accepted by any:
(a) candidate for election;
(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
(c) Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;
(d) member of any Legislature;
(e) political party or office-bearer thereof;
(f) organisation of a political nature as may be specified under sub-section (1) of section 5 by the Central Government;
(g) association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) or any other mode of mass communication;
(h) correspondent or columnist, cartoonist, editor, owner of the association or company referred to in clause (g).

Explanation. – In clause (c) and section 6, the expression “corporation” means a corporation owned or controlled by the Government and includes a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956).

(2)(a) No person, resident in India, and no citizen of India resident outside India, shall accept any foreign contribution or acquire or agree to acquire any currency from a foreign source, on behalf of any political party, or any person referred to in sub-section (1), or both.
(b) No person, resident in India, shall deliver any currency, whether Indian or foreign, which has been accepted from any foreign source, to any person if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to any political party or any person referred to in sub- section (1), or both.
(c) No citizen of India resident outside India shall deliver any currency, whether Indian or foreign, which has been accepted from any foreign source, to:
(i) any political party or any person referred to in sub- section (1), or both; or
(ii) any other person, if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to a political party or to any person referred to in sub-section (1), or both. (3) No person receiving any currency, whether Indian or foreign, from a foreign source on behalf of any person or class of persons, referred to in section 9, shall deliver such currency:
(a) to any person other than a person for which it was received, or
(b) to any other person, if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to a person other than the person for which such currency was received.”

The Rule 3 framed under the Act had specified political organisation as:

3. Guidelines for declaration of an organisation to be of a political nature, not being a political party. – The Central Government may specify any organisation as organisation of political nature on one or more of the following grounds:-
(i) organisation having avowed political objectives in its Memorandum of Association or bylaws;
(ii) any Trade Union whose objectives include activities for promoting political goals;
(iii) any voluntary action group with objectives of a political nature or which participates in political activities;
(iv) front or mass organizations like Students Unions, Workers‟ Unions, Youth Forum and Women‟s wing of a political party;
(v) organisation of farmers, workers, students, youth based on caste, community, religion, language or otherwise, which is not directly aligned to any political party, but whose objectives, as stated in the Memorandum of Association, or activities gathered through other material evidence, include steps towards advancement of political interests of such groups;
(vi) any organisation, by whatever name called, which habitually engages itself in or employs common methods of political action like ‘bandh’ or ‘hartal’, ‘rasta roko’, ‘rail roko’ or ‘jail bharo’ in support of public causes.”

Restriction on foreign contribution if affects free speech:

It was contended before the court that above definition restricts free speech but the court rejected the argument on the ground that mere possibility of abuse is no reason to strike down a valid law. It was also held that it was neither discriminatory under article 14 nor violative of free speech under article 19(1)(a) of the Constitution of India.:

“On an x-ray of the provision of Section 5 of the Act, it is evincible that there is ample guidance inherent in it inasmuch as it refers to “activities of the organisation”, or “the ideology propagated by the organisation” or the “programme of the organisation” having nexus with the activities of any political nature. The said terms are in large expanse but can never be regarded as vague or uncertain. That apart, the proviso clearly sets out that the Rules shall be framed specifying the grounds on which the organisation shall be classified and regarded as an organisation of a political nature. On a scrutiny of the language employed, it is quite vivid that the rule making authority has been empowered to specify the grounds. Thus, the legislature after stating and laying down the area has left the specific grounds to the rule making authority. It by no means, can be regarded or treated as an abdication of the essential legislative function. At this juncture, we may state that despite the widening spectrum of Article 14 of the Constitution, it is to be borne in mind that the challenge on lack of guidance cannot be thought of in a vacuum…….
A provision is not to be tested on the parameters of abstraction. As we find there is guidance and further grounds have been envisaged to be set out regard being had to the activities and other facets and, hence, it cannot be termed as arbitrary. Thus, the assail under the touchstone of Article 14, is without any substance……

The 2010 Act has been brought into existence to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith and incidental thereto. The law has been enacted by the Parliament to ensure that the parliamentary institutions, political association and academic and other voluntary organizations as well as individuals working in important areas of national life should function in a manner consistent with the values of Sovereign Democratic Republic of India. Article 19(1)(a) confers on all citizens the right of freedom of speech and expression. Article 19(2) enables the State to impose reasonable restrictions in the interest of sovereignty and integrity of India, security of the State, friendly relations with foreign States, public order, decency or morality, etc. Thus, imposition of reasonable restriction is permissible.
What is restricted is acceptance of foreign contribution.There is no prohibition or restriction on voicing the plight or grievances of the marginalized sections of people or to protest as permissible in a democratic body polity under the framework of the Constitution.”

(For whole judgement of Delhi High Court See Indian Social Action vs The Union Of India; Dated 16 September, 2011 through its Division Bench consisting of Chief Justice Dipak Misra and Sanjeev Khanna, J.)