BAR TO WRIT PETITIONS IN CONTEXT OF AVAILABILITY OF ALTERNATE REMEDIES

BAR TO WRIT PETITIONS IN CONTEXT OF AVAILABILITY OF ALTERNATE REMEDIES

Article 226 of the Constitution of India refers to power of High Court’s to issue certain writs throughout the territory in relation to which it exercises jurisdiction. However, there are bar to writ petitions when alternative remedies are available;

Article 226 of the Constitution sub clause 1 and 2 are as below:

  1. Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government within those territories directions, orders or writs, including writs in the nature of Habeas Corpus, Mandamus, Prohibition, Quo-Warranto and Certiorari, or any of them, for the enforcement of any of the rights conferred by part – III and for any other purpose.
  2. The power conferred by Clause (1) to issue directions, orders or writs to any Government, authority or any person also be exercised by any High Court exercising jurisdiction in relating to the territories within which the cause of action, wholly or in part, arises for the exercise of the such power, notwithstanding that the seat of the such government or authority or the residence of such person is not within those territories.

Subject of discussion is confined to bar to writ petitions in context of availability of alternate remedies. Before we proceed further with the discussion, it is necessary to elaborate the concept of bar to writ petitions.

Bar to writ petitions

Article 226 of the Constitution of India reserves original jurisdiction to the High Court to issue writs. The first thought which is to be pondered is as to whether the writ petition can be barred or whether there are any circumstances in which jurisdiction of High Court to entertain a writ petition is barred. The bar of entertaining the cases as you all well know can be expressly provided or can be read by necessary implication. Can there be any circumstances in which the writ jurisdiction can be barred by any Parliamentary legislation or by any State Act is the moot question. This aspect of the matter is now well settled and it has been held by the Hon’ble Supreme Court that the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution of India cannot be barred by any Act of Parliament or even by any constitutional amendment.

The right of judicial review granted under Article 226 of the Constitution of India is a basic feature of the Constitution and cannot be amended by even a constitutional amendment. When by any constitutional amendment, remedy of writ before a High Court cannot be barred, same cannot be done by any Parliamentary legislation or by State enactment. There is one Supreme Court judgement in this context which is relevant to be referred to that is the judgement of Apex Court in 1997 (3) SCC 261., L. Chandra Kumar Vs. Union of India and Others.

The above judgement of L. Chandra Kumar (supra) has been delivered by the Constitution Bench of seven Judges. The matter arose in context of creation of Tribunal in exercise of power under Articles 323-A and 323-B of the Constitution of India, by 42nd  Amendment part XIV (a) has been added in the Constitution which provides for adjudication or trial by Administrative Tribunal created by Parliament. Article 323-A (2) (d) provides that law made by the Parliament may exclude the jurisdiction of “all courts” except the jurisdiction of the Hon’ble Supreme Court under Article 136 of the Constitution of India.

In L. Chandra Kumar (supra) the Apex Court considered the validity of the above Article by which the jurisdiction of the High Court was excluded. The Apex Court after considering the earlier judgements of the Apex Court including the celebrity judgement of Kesavananda Bharati Vs. State of Kerala, 1973 (4) SCC 225 held that the jurisdiction of the High Court under Article 226 of the Constitution of India cannot be barred and any law barring the jurisdiction of the High Court under Article 226 of the Constitution of India offends the basic structure of the Constitution and hence not permissible.

Following was laid down in paragraphs

  1. “We may first address the issue of exclusion of the power of judicial review of the High Courts. We have already held that in respect of the power of judicial review, the jurisdiction of the High Courts under Articles 226/227 cannot wholly be excluded. It has been contended before us that the Tribunals should not be allowed to adjudicate upon matters where the vires of legislations is questioned, and that they should restrict themselves to handling matters where constitutional issues are not raised. We cannot bring ourselves to agree to this proposition as that may result in splitting up proceedings and may cause avoidable delay. If such a view were to be adopted, it would be open for litigants to raise constitutional issues, many of which may be quite frivolous, to directly approach the High Courts and thus subvert the jurisdiction of the Tribunals. Moreover, even in these special branches of law, some areas do involve the consideration of constitutional questions on a regular basis; for instance, in service law matters, a large majority of cases involve an interpretation of Articles 14, 15 and 16 of the Constitution. To hold that the Tribunals have no power to handle matters involving constitutional issues would not serve the purpose for which they were constituted. On the other hand, to hold that all such decisions will be subject to the jurisdiction of the High Courts under Articles 226/227 of the Constitution before a Division Bench of the High Court within whose territorial jurisdiction the Tribunal concerned falls will serve two purposes. While saving the power of judicial review of legislative action vested in the High Courts under Articles 226/227 of the Constitution, it will ensure that frivolous claims are filtered out through the process of adjudication in the Tribunal. The High Court will also have the benefit of a reasoned decision on merits which will be of use to it in finally deciding the matter.”
  2. “It has also been contended before us that even in dealing with cases which are properly before the Tribunals, the manner in which justice is dispensed by them leaves much to be desired. Moreover, the remedy provided in the parent statutes, by way of an appeal by special leave under Article 136 of the Constitution, is too costly and inaccessible for it to be real and effective. Furthermore, the result of providing such a remedy is that the docket of the Supreme Court is crowded with decisions of Tribunals that are challenged on relatively trivial grounds and it is forced to perform the role of a first appellate court. We have already emphasized the necessity for ensuring that the High Courts are able to exercise judicial superintendence over the decisions of the Tribunals under Article 227 of the Constitution. In R.K. Jain case, after taking note of these facts, it was suggested that the  possibility of an appeal from the Tribunal on questions of law to a Division Bench of a High Court within whose territorial jurisdiction the Tribunal falls, be pursued. It appears that no follow-up action has been taken pursuant to the suggestion. Such a measure would have improved matters considerably. Having regard to both the aforestated contentions, we hold that all decisions of Tribunals, whether created pursuant to Article 323-A or Article 323-B of the Constitution, will be subject to the High Court’s writ jurisdiction under Articles 226/227 of the Constitution, before a Division Bench of the High Court within whose territorial jurisdiction the particular Tribunal falls.”

The Apex Court, however in the said judgement further laid down that against the judgement of a Tribunal writ petition under Articles 226/227 of the Constitution of India is entertainable before a Division Bench of the High Court. The Apex Court further laid down that Tribunal created under Article 323-A and 323-B however shall entertain the matters falling in their jurisdiction and it will not be open for the litigants to directly approach the High Court and the remedy is to be first availed in the Tribunal.

Following was laid down in paragraph

  1. “In view of the reasoning adopted by us, we hold that clause 2(d) of Article 323-A and clause 3(d) of Article 323-B, to the extent they exclude the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the “exclusion of jurisdiction” clauses in all other legislations enacted under the aegis of Articles 323-A and 323-B would, to the same extent, be unconstitutional. The jurisdiction conferred upon the High Courts under Articles 226/227 and upon the Supreme Court under Article 32 of the Constitution is a part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution. The Tribunals created under Article 323-A and Article 323-B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the Tribunal concerned falls. The Tribunals will, nevertheless, continue to act like courts of first instance in respect of the areas of law for which they have been constituted. It will not, therefore, be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the Tribunal concerned. Section 5(6) of the Act is valid and constitutional and is to be interpreted in the manner we have indicated.”

Thus, from the above, it is clear that the jurisdiction under Article 226 of the Constitution of India cannot be barred by any constitutional amendment or by any Parliamentary or State Act, but while interpreting the power under Articles 226/227 of the Constitution of India the High Court and the Supreme Court have laid down a self-imposed rule of restriction i.e. jurisdiction under Articles 226/227 of the Constitution of India shall not be exercised if alternate remedy is available to a litigants. Now, it is well settled by catena of decisions that whenever there is alternate remedy available to a litigant, jurisdiction under Articles 226/227 of the Constitution of India which is a discretionary jurisdiction shall not be exercised by the High Court. The alternate remedy may be by way of normal forum of hierarchy of Courts or forum provided in a statutory provision or may otherwise exists. Various facets of this aspect has been examined time and again by the Apex Court which can be illustrated by giving reference to some decided cases of the Hon’ble Supreme Court. Various propositions have been laid by the Apex Court in this context.

AIR, 1958 SC 86, State of U.P. Vs. Mohammad Nooh.

Facts:

The matter arose before the Hon’ble Supreme Court against the judgement of the High Court passed in a writ petition quashing the departmental proceedings against a police constable. A police constable was departmentally proceeded and a dismissal order was passed. The most important feature of the case was that the Deputy Superintendent of Police who conducted the enquiry recorded his own statement in the proceeding. The High Court held that there was a violation of principle of natural justice since the Deputy Superintendent of Police who conducted the proceedings himself appeared as witness in the inquiry which makes a case of strong bias resulting in violation of principle of natural justice. Before the Supreme Court an argument was raised that there being an alternate remedy, the High Court ought not to have entertained the writ petition. In this context, the Apex Court laid down the principle which provides for exception to the rule of non-entertainability of writ petition when there is an alternate remedy.

Paragraphs 10 and 11 are relevant which are to the following effects:

  1. “In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will be only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury’s Laws of England, 3rd Edn., Vol. 11, P. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior Court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. In the King v. Postmaster-General; Ex parte Carmichael, 1928-1 KB 291 (E), a certiorari was issued although the aggrieved party had an alternative remedy by way of appeal. It has been held that the superior court will readily issue a certiorari in a case where there has been a denial of natural justice before a Court of summary jurisdiction. The case of Rex v. Wands-worth Justices; Ex parte Read, 1942-1 KB 281 (F) is an authority in point. In that case a man had been convicted in a court of summary jurisdiction without giving him an opportunity of being heard. It was held that his remedy was not by a case stated or by an appeal before the quarter sessions but by application to the High Court for an order of certiorari to remove and quash the conviction. At p. 284 Viscount Caldecote, C.J., observed:

“It remains to consider the argument that the remedy of certiorari is not open to the applicant because others were available. It would be ludicrous in such a case as the present for the convicted person to ask for a case to be stated. It would mean asking this Court to consider as a question of law whether justices were right in convicting a man without hearing his evidence. That is so extravagant an argument as not to merit a moment’s consideration. As to the right of appeal to quarter sessions, it may be that the applicant could have had his remedy if he had pursued that course, but I am not aware of any reason why, if in such circumstances as these, he preferred to apply for an order of certiorari to quash his conviction, the Court should be debarred from granting his application.”

Likewise in Khurshed Modi v. Rent Controller, Bombay; AIR 1947 Bom 46 (G), it was held that the High Court would not refuse to issue a writ of certiorari merely because there was a right of appeal. It was recognized that ordinarily the High Court would require the petitioner to have recourse to his ordinary remedies, but if it found that there had been a breach of fundamental principles of justice, the High Court would certainly not hesitate to issue the writ of certiorari. To the same effect are the following observations of Harries, C.J., in 56 Cal WN 453: (AIR 1952 Cal 656) (D) at p. 470 (of Cal WN): (at p. 665 of AIR):

“There can, I think, be no doubt that Court can refuse to issue a certiorari if the petitioner has other remedies equally convenient and effective. But it appears to me that there can be cases where the Court can and should issue a certiorari even where such alternative remedies are available. Where a Court or tribunal, which is called upon to exercise judicial or quasi-judicial functions discards all rules of natural justice and arrives at a decision contrary to all accepted principles of justice then it appears to me that the Court can and must interfere.”

It has also been held that a litigant who has lost his right of appeal or has failed to perfect an appeal by no fault of his own may in a proper case obtain a review by certiorari. (See Corpus Juris Secundum Vol. 14, Art. 40, p. 189). If, therefore, the existence of other adequate legal remedies is not per se a bar to the issue of certiorari and if in a proper case it may be the duty of the superior court to issue a writ of certiorari to correct the errors of an inferior Court or tribunal called upon to exercise judicial or quasi-judicial functions and not to relegate the petitioner to other legal remedies available to him and if the superior Court can in a proper case exercise its jurisdiction in favour of a petitioner who has allowed the time to appeal to expire or has not perfected his appeal e.g., by furnishing security required by the statute, should it then be laid down as an inflexible rule of law that the superior Court must deny the writ when an inferior Court or tribunal by discarding all principles of natural justice and all accepted rules of procedure arrived at a conclusion which shocks the sense of justice and fair play merely because such decision has been upheld by another inferior Court or tribunal on appeal or revision? The case of 1889-22 QBD 345 (C) referred to in 1951 SCR 344: (AIR 1951 SC 217) (B) furnishes the answer. There the manager of a club was convicted under a certain statute for selling beer by retail without an excise retail license. Subsequently he was convicted of selling intoxicating liquor, namely, beer without a license under another statute. Upon hearing of the later charge the Magistrate treated it as a second offence and imposed a full penalty authorized in the case of a second offence by the latter statute. His appeal to the quarter sessions having been dismissed, he applied for a writ of habeas corpus and it was granted by the King’s Bench Division on the ground that the Magistrate could not treat the later offence as a second offence, because it was not a second offence under the Act under which he was convicted for the second time. Evidently the point was taken that if there had been any error, irregularity or illegality committed by the Magistrate, the quarter sessions could have on appeal corrected the same and that the quarter sessions having dismissed the appeal the Court of Queen’s Bench Division could not issue the writ of habeas corpus. This was repelled by the following observation of Hawkins, J.:

“This is true as a fact, but it puts the prosecution in no better position, for if the Magistrate had no power to give himself jurisdiction by finding that there had been a first offence where there had been none, the justices could not give it to him.”

  1. On the authorities referred to above it appears to us that there may conceivably be cases – and the instant case is in point – where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior court or tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision. If an inferior Court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court’s sense of fair play the superior Court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the Court or tribunal of first instance, even if an appeal to another inferior Court or tribunal was available and recourse was not had to it or if recourse was had to it, it confirmed what ex facie was a nullity for reasons aforementioned. This would be so all the more if the tribunals holding the original trial and the tribunals hearing the appeal or revision were merely departmental tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally come to our notice. The superior Court will ordinarily decline to interfere by issuing certiorari and all we say is that in a proper case of the kind mentioned above it has the power to do so and may and should exercise it. We say no more than that.”

Labour and Industrial Disputes

Large number of cases come to the High Court in the writ petition challenging the violation of provisions of Industrial Disputes, Act, 1947 and other statutory enactment. The Apex Court laid down the principle that whenever a writ petition is filed for enforcement of right flowing from any statutory enactment, forum of which is provided to be a specific forum, the High Court should decline to entertain the writ petition under Articles 226/227 of the Constitution of India. Some important cases of the Apex Court are:

(2004) SCC 268., U.P. State Bridge Corporation Ltd And Others. Vs. U.P. Rajya Setu Nigam S. Karamchari Sangh.

Facts:

The Corporation had undertaken a work at Betwa Bridge Jhansi. Certain workmen did not report for duty. A notice was published by the Corporation that those workmen who continuously absents for more than 10 days of their service be terminated according to certified Standing Orders of the Corporation. Services of one workman was terminated. He filed writ petition in this High Court. The writ petition was dismissed that the workman could raise an industrial dispute if he so desired.

Another writ petition was filed by the Union of the workman which was allowed by the High Court against which order the Corporation went to the Supreme Court. The Supreme Court in the said judgement again reiterated and laid down principle. It is relevant to refer to paragraphs 11 and 12 of the said judgement.

  1. “We are of the firm opinion that the High Court erred in entertaining the writ petition of the respondent Union at all. The dispute was an industrial dispute both within the meaning of the Industrial Disputes Act, 1947 as well as U.P. IDA, 1947. The rights and obligations sought to be enforced by the respondent Union in the writ petition are those created by the Industrial Disputes Act. In Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke [(1976) 1 SCC 496] it was held that when the dispute relates to the enforcement of a right or an obligation created under the Act, then the only remedy available to the claimant is to get adjudication under the Act. This was because the Industrial Disputes Act was made to provide

“a speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers. The idea has been to ensure that the workmen do not get caught in the labyrinth of civil courts with their layers upon layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill-afford. The procedurers followed by civil courts, it was thought, would not facilitate a prompt and effective disposal of these disputes. As against this, the courts and tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or revisions. Because of their informality, the workmen and their representatives can themselves prosecute or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the punishment in many cases. They can make and remake the contracts, settlements, wage structures and what not. Their awards are no doubt amenable to jurisdiction of the High Court under Article 226 as also to the jurisdiction of this Court under Article 32, but they  are extraordinary remedies subject to several self-imposed constraints. It is, therefore, always in the interest of the workmen that disputes concerning them are adjudicated in the forums created by the Act and not in a civil court. That is the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the courts in interpreting these enactments and the disputes arising under them.”[Ed.: So held in Rajasthan SRTC v. Krishna Kant, (1995) 5 SCC 75 at p. 91 to 92b in para 28 after quoting the principles enunciated in Premier Automobiles; as explained in (2002) 2 SCC 542 at 547]

  1. Although these observations were made in the context of the jurisdiction of the civil court to entertain the proceedings relating to an industrial dispute and may not be read as a limitation on the Court’s powers under Article 226, nevertheless it would need a very strong case indeed for the High Court to deviate from the principle that where a specific remedy is given by the statute, the person who insists upon such remedy can avail of the process as provided in that statute and in no other manner.”

(2005) 6 SCC, 725., Hindustan Steel Works Construction Ltd. And Another Vs. Hindustan Steel Works Construction Ltd. Employees Union.

Facts:

Appeal was filed by the Company challenging the judgement of the Andhra Pradesh High Court by which the writ petition was allowed challenging the withdrawal of construction allowances to the workmen. The employer raised objection that the writ petition could not have been entertained, since remedy of the workmen was to raise an industrial dispute.

Following was said in paragraphs 8 and 9 of the said judgement:

  1. “In U.P. State Bridge Corpn. Ltd. v. U.P. Rajya Setu Nigam S. Karamchari Sangh [(2004) 4 SCC 268: 2004 SCC (L & S) 637] it was held that when the dispute relates to enforcement of a right or obligation under the statute and specific remedy is, therefore, provided under the statute, the High Court should not deviate from the general view and interfere under Article 226 except when a very strong case is made out for making a departure. The person who insists upon such remedy can avail of the process as provided under the statute. To same effect are the decisions in Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke [(1976) 1 SCC 496: 1976 SCC (L & S) 70], Rajasthan SRTC v. Krishna Kant [(1995) 5 SCC 75: 1995 SCC ( L & S) 1207: (1995) 31 ATC 110], Chandrakant Tukaram Nikam v. Municipal Corpn. of Ahmedabad [(2002) 2 SCC 542: 2002 SCC (L & S) 317 and in Scooters India v. Vijai E.V. Eldred [(1998) 6 SCC 549: 1998 SCC (L & S) 1611].
  2. In Rajasthan SRTC case [(1995) 5 SCC 75: 1995 SCC ( L & S) 1207: (1995) 31 ATC 110] it was observed as follows:

“[A] speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers. The idea has been to ensure that the workmen do not get caught in the labyrinth of civil courts with their layers upon layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill afford. The procedures followed by civil courts, it was thought, would not facilitate a prompt and effective disposal of these disputes. As against this, the courts and tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or revisions. Because of their informality, the workmen and their representatives can themselves prosecute or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the punishment in many cases. They can make and remake the contracts, settlements, wage structures and what not. Their awards are no doubt amendable to jurisdiction of the High Court under Article 226 as also to the jurisdiction of this Court under Article 32, but they are extraordinary remedies subject to several self-imposed constraints. It is, therefore, always in the interest of the workmen that disputes concerning them are adjudicated in the forums created by the Act and not in a civil court. That is the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the courts in interpreting these enactments and the disputes arising under them.”

(2005) 8 SCC 264., U.P. State Spinning Company Ltd. Vs. R.S. Pandey and Another.

Facts:

A workmen filed a writ petition challenging the termination order. The writ petition was allowed on the ground that services were terminated in violation of the principles of natural justice. Before the Apex Court the Company submitted that the High Court ought not to have entertained the writ petition when there being alternate remedy available.

Following was laid down in paragraphs 16,17, and 20 of the said judgement:

  1. “If, as was noted in Ram and Shyam Co. v. State of Haryana [(1985) 3 SCC 267: AIR 1985 SC 1147] the appeal is from “Caesar to Caesar’s wife” the existence of alternative remedy would be a mirage and an exercise in futility. In the instant case the writ petitioners had indicated the reasons as to why they thought that the alternative remedy would not be efficacious. Though the High Court did not go into that plea relating to bias in detail, yet it felt that alternative remedy would not be a bar to entertain the writ petition. Since the High Court has elaborately dealt with the question as to why the statutory remedy available was not efficacious, it would not be proper for this Court to consider the question again. When the High Court had entertained a writ petition notwithstanding existence of an alternative remedy this Court while dealing with the matter in an appeal should not permit the question to be raised unless the High Court’s reasoning for entertaining the writ petition is found to be palpably unsound and irrational. Similar view was expressed by this Court in First ITO v. Short Bros. (P) Ltd. [(1966) 3 SCR 84: AIR 1967 SC 81] and State of U.P. v. Indian Hume Pipe Co. Ltd. [(1977) 2 SCC 724: 1977 SCC (Tax) 335].That being the position, we do not consider the High Court’s judgment to be vulnerable on the ground that alternative remedy was not availed. /There are two well-recognized exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings themselves are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.
  2. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. ITO [(1970) 2 SCC 355: AIR 1971 SC 33] that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non-exhaustion of statutory remedies, unless the High Court finds that factual disputes are involved and it would not desirable to deal with them in a writ petition.
  3. In a catena of decisions it has been held that writ petition under Article 226 of the Constitution should not be entertained when the statutory remedy is available under the Act, unless exceptional circumstances are made out.”

Cases pertaining to election.

With regard to cases pertaining to election, the Apex Court has clearly laid down that when the remedy of challenging an election is provided in an enactment, the writ petition challenging an election of an office be not entertained.

In Harnek Singh Vs. Charanjit Singh and Others, (2005) 8 SCC 383.

Facts:

In the election for the post of Chairman, Panchayat Samiti the Returning Officer adjourned the poll and thereafter a date was fixed and election was completed. The High Court entertained the writ petition under Article 226 of the Constitution of India and set-aside the election.

Relevant paragraphs are 15, 16 and 18.

  1. “Prayers (b) and (c) aforementioned, evidently, could not have been granted in favoaur of the petitioner by the High Court in exercise of its jurisdiction under Article 226 of the Constitution. It is true that the High Court exercises a plenary jurisdiction under Article 226 of the Constitution. Such jurisdiction being discretionary in nature may not be exercised inter alia keeping in view the fact that an efficacious alternative remedy is available therefore. (See Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd. (2005) 8 SCC 242: (2005) 7 Scale 290)
  2. Article 243-O of the Constitution mandates that all election disputes must be determined only by way of an election petition. This by itself may not per se bar judicial review which is the basic structure of the Constitution, but ordinarily such jurisdiction would not be exercised. There may be some cases where a writ petition would be entertained but in this case we are not concerned with the said question.
  3. Yet again in Jaspal Singh Arora [(1998) 9 SCC 594] this Court opined:

“3. These appeals must be allowed on a short ground. In view of the mode of challenging the election by an election petition being prescribed by the M.P. Municipalities Act, it is clear that the election could not be called in question except by an election petition as provided under that Act. The bar to interference by courts in electoral matters contained in Article 243-ZG of the Constitution was apparently overlooked by the High Court in allowing the writ petition. Apart from the bar under Article 243-ZG, on settled principles interference under Article 226 of the Constitution for the purpose of setting aside election to a municipality was not called for because of the statutory provision for election petition and also the fact that an earlier writ petition for the same purpose by a defeated candidate had been dismissed by the High Court.”

Writ petition challenging Assessment Proceedings/Recovery of Tax.

The Apex Court in several cases has held that in assessment proceedings when there are specific statutory remedy available, High Court should not entertain the writ petition.

AIR 1983 SC, 603, Titagurh Paper Mills Co., Ltd., and Another Vs. State of Orissa and Another.

Facts:

The appellant had challenged two assessment orders of Assistant Sales Tax Officer in writ petition under Article 226 of the Constitution of India. The High Court dismissed the writ petition. Against which a S.L.P. was filed.

Relevant paragraphs are 4, 6 and 11

  1. “The only contention raised before the High Court was that the impugned orders of assessment being a nullity, the petitioners were entitled to invoke the extraordinary jurisdiction of the High Court under Art. 226 of the Constitution, but the High Court was not satisfied that this was a case of inherent lack of jurisdiction. The High Court while dismissing the writ petitions observed:

“Having heard the learned counsel for both the parties and having gone through the records, we are not inclined to interfere with the impugned order(s) in exercise with our extraordinary jurisdiction since there is a right of appeal against the same. It is contended on behalf of the petitioner that the impugned order being a nullity is entitled to invoke our extraordinary jurisdiction. We are not satisfied that this is a case of inherent lack of jurisdiction. There is no violation of principles of natural justice.”

  1. We are constrained to dismiss these petitions on the short ground that the petitioners have an equally efficacious alternative remedy by way of an appeal to the prescribed authority under sub-s. (1) of Section 23 of the Act, them a second appeal to the Tribunal under sub-s. (3)(a) thereof, and thereafter in the event the petitioners get no relief, to have the case stated to the High Court under Section 24 of the Act. In Raleigh Investment Co. Ltd. v. Governor General in Council; (1947) 74 Ind. App. 50: (AIR 1947 PC 78) Lord Uthwatt, J. in delivering the judgment of the Board observed that in the provenance of tax where the Act provided for a complete machinery which enabled an assessee to effectively raise in the courts the question of the validity of an assessment denied an alternative jurisdiction to the High Court to interfere. It is true that the decision of the Privy Council in Raleigh Investment Company’s case, (supra) was in relation to a suit brought for a declaration that an assessment made by the Income-tax Officer was a nullity, and it was held by the Privy Council that an assessment made under the machinery provided by the Act, even if based on a provision subsequently held to be ultra vires, was not a nullity like an order of a court lacking jurisdiction and that S. 67 of the Income-tax, 1922 operated as a bar to the maintainability of such a suit. In dealing with the question whether S. 67 operated as a bar to a suit to set aside or modify an assessment made under a provision of the Act which is ultra vires, the Privy Council observed:

“In construing the section it is pertinent in their Lordships opinion to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the courts the question whether a particular provision of the Income-tax Act bearing on the assessment made is or is not ultra vires. The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to inquire into the same subject-matter.”

  1. Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the prescribed authority under sub-s. (1) of S. 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-s. (3) of S. 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under S. 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Art. 226 of the Constitution. It is now well recognized that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. v. Hawkesford; (1859) 6 CBNS 336 at p. 356 in the following passage:

“There are three classes of cases in which a liability may be established founded upon statute * * * * * * * * * * * * * * *  But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it  * * * * * * * * * * * * * * * * the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to”

The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspaper Ltd.; 1919 AC 368 and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordon Grant & Co.; 1935 AC 532 and Secretary of State v. Mask & Co.; AIR 1940 PC 105. It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine.”

AIR 1985 SC 330., Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd and Others.

Facts:

Central Excise Department filed a S.L.P. challenging an interim order granted by the Calcutta High Court challenging the proceedings under Central Excise.

The Apex Court in the said judgement also deprecated the practice of granting interim order by the Calcutta High Court on an oral application. The Apex Court further held that in such matters whether the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India.

Relevant paragraphs 3 and 4:

  1. “In Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 SC 603) A.P. Sen, E.S. Venkataramiah and R.B. Misra, JJ, held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the Tribunal and thereafter to have the case stated to the High Curt, it was not for the High Court to exercise its extraordinary jurisdiction under Art. 226 of the Constitution ignoring as it were, the complete statutory machinery. That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Art. 226 is not meant to short circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Art. 226 of the Constitution. But then the Court must have good and sufficient reason to by pass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Art. 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.
  2. In Union of India v. Oswal Woollen Mills Ltd. (AIR 1984 SC 1264), we had occasion to consider an interim order passed by the Calcutta High Court in regard to a matter no part of the cause of action relating to which appeared to arise within the jurisdiction of the Calcutta High Court. In that case the interim order practically granted the very prayers in the writ petition. We were forced to observe:

“It is obvious that the interim order is of a drastic character with a great potential for mischief. The principal prayer in the writ petition is the challenge to the order made or proposed to be made under Cl. 8-B of the Import Control Orders. The interim order in terms of prayers (j) and (k) has the effect of practically allowing the writ petition as the stage of admission without hearing the opposite parties. While we do not wish to say that a drastic interim order may never be passed without hearing the opposite parties even if the circumstances justify it, we are very firmly of the opinion that a statutory order such as the one made in the present case under Cl. 8-B of the Import Control Order ought not to have been stayed without at least hearing those that made the order. Such a stay may lead to devastating consequences leaving no way of undoing the mischief. Where a plentitude of power is given under a statute, designed to meet a dire situation, it is no answer to say that the very nature of the power and the consequences which may ensure is itself a sufficient justification for the grant of a stay of that order, unless,  of course, there are sufficient circumstances to justify a strong prima facie inference that the order was made in abuse of the power conferred by the statute. A statutory order such as the one under Cl. 8-B purports to be made in the public interest and unless there are even stronger grounds of public interest an ex parte interim order will not be justified. The only appropriate order to make in such cases is to issue notice to the respondents and make it returnable within a short period. This should particularly be so where the offices of the principal respondents and relevant records lie outside the ordinary jurisdiction of the court. To grant interim relief straightway and leave it to the respondents to move the court to vacate the interim order may jeopardize the public interest. It is notorious how if an interim order is once made by a court, parties employ every device and tactic to ward off the final hearing of the application. It is, therefore, necessary for the courts to be circumspect in the matter of granting interim relief, more particularly so where the interim relief is directed against orders or actions of public officials acting in discharge of their public duty and in exercise of statutory powers. On the facts and circumstances of the present case, we are satisfied that no interim relief should have been granted by the High Court in the terms in which it was done.” ”

(2002) 5 SCC 521., Secretary Minor Irrigation & Rural Engineering Services, U.P. And Others Vs. Sahngoo Ram Arya and Others.

Facts:

In this case the Apex Court held that even if the U.P. Public Services Tribunal has no jurisdiction to pass an interim order that cannot be a ground for bypassing the alternate remedy.

Relevant paragraphs 11 and 12:

  1. “These appeals are preferred against the order made by the High Court of Judicature at Allahabad in Civil Misc. WP No. 47130 of 2000 etc. on 1.2.2001. A DivisionBench of the High Court of Allahabad by the impugned judgment has held that the petitioner in the said writ petitions has an alternate remedy  by way of petitions before the U.P. Public Services Tribunal (the Tribunal), and had permitted the writ petitioner therein to approach the Tribunal and directed the Tribunal to entertain any such petition to be filed by the writ petitioner without raising any objection as to limitation. There was a further direction to the Tribunal to decide the matter expeditiously.
  2. Mr. Sunil Gupta, learned counsel appearing for the petitioner contended that the remedy before the Tribunal under the U.P. Public Services (Tribunals) Act is wholly illusory inasmuch as the Tribunal has no power to grant an interim order. Therefore, he contends that the High Court ought not to have relegated the petitioner to a fresh proceeding before the said Tribunal. We do not agree with these arguments of the learned counsel. When the statute has provided for the constitution of a Tribunal for adjudicating the disputes of a government servant, the fact that the Tribunal has no authority to grant an interim order is no ground to bypass the said Tribunal. In an appropriate case after entertaining the petitions by an aggrieved party if the Tribunal declines an interim order on the ground that it has no such power then it is possible that such aggrieved party can seek remedy under Article 226 of the Constitution but that is no ground to bypass the said Tribunal in the first instance itself. Having perused the impugned order, we find no infirmity whatsoever in the said order and the High Court was justified in directing the petitioner to approach the Tribunal. In the said view of the matter, the appeals are dismissed. No costs.”

(1981) 4 SCC., 247, V. Vellaswamy Vs. Inspector General of  Police, Tamil Nadu, Madras and Another.

Facts:

In this case the Apex Court held that even though there is a power of review under a statutory enactment that cannot be a ground for not entertaining the writ petition under Article 226 of the Constitution of India.

Now, before closing the discussion on this topic, it will be useful to recollect again the exceptions to the principles of not entertaining the writ petition when alternate remedy is available.

The Apex Court in (1998) (8) SCC 1., Whirlpoorl Corporation Vs. Registrar of Trade Marks, Mumbai, considered the said aspect and reiterated the principles and also noticed the exception to the rule.

Relevant paragraphs are 15, 16, 17, 18, 19, 20 and 21:

  1. “Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic  whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.
  2. Rashid Ahmed v. Municipal Board, Kairana [AIR 1950 SC 163: 1950 SCR 566] laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting writs. This was followed by another Rashid case, namely, K.S. Rashid & Son v. Income Tax Investigation Commission [AIR 1954 SC 207: (1954) 25 ITR 167]  which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, “unless there are good grounds therefore”, which indicated that alternative remedy would not operate as an absolute bar and that writ petition under Article 226 could still be entertained in exceptional circumstances
  3. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh [AIR 1958 SC 86: 1958 SCR 595] as under:

“But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.”

  1. This proposition was considered by a Constitution Bench of this Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani [AIR 1961 SC 1506: (1962) 1 SCR 753] and was affirmed and followed in the following words:

“The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court.”

  1. Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO, Companies Distt. [AIR 1961 SC 372: (1961) 41 ITR 191] laid down:

Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against the Income Tax Officer acting without jurisdiction under Section 34, Income Tax Act.”

  1. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.
  2. That being so, the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show-cause notice issued to the appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the “Tribunal”.

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The Hindu Succession (Amendment) Act, 2005 A Misnomer 

The Hindu Succession (Amendment) Act, 2005 A Misnomer 

Though the Act is Hindu Succession Amendment Act, it appears to be a misnomer as there is nothing new qua daughters’ rights of succession. Equal rights by way of succession were already given to daughters as that of sons by Section 8 of Hindu Succession Act, 1956 r/w The Schedule. 

The Hindu Succession (Amendment) Act, 2005 A Misnomer 

The Hindu Succession (Amendment) Act, 2005 A Misnomer 

Section 8 : General rules of succession in the case of males – 

The property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter – 

(a) Firstly, upon the heirs, being the relatives specified in class I of the Schedule; 

THE SCHEDULE 

CLASS – I 

Son; daughter; widow; mother; son of a pre-deceased son; daughter of a pre-deceased son; son of a pre-deceased daughter; daughter of a pre-deceased daughter; widow of a pre-deceased son; son of a pre-deceased son of a pre- deceased son; daughter of a predeceased son of a pre- deceased son; widow of a predeceased son of a pre- deceased son. 

CLASS – II 

  1. Father. 
  2. (1) Son’s daughter’s son, (2) son’s daughter’s daughter, (3) brother, (4) sister.
  3. (1) Daughter’s son’s son, (2) daughter’s son’s daughter, (3) daughter’s daughter’s son, (4) daughter’s daughter’s daughter.

Only addition is conferring succession rights on great grandson and great granddaughter through daughter/female. However, while amending the Schedule only four such descendants are included in Class-I, who are in entry No.II S.No.2 and entry No.III S.No.2 to 4 of Class-II, whereas there are six such descendants, two are in entry No.II and four are in entry No.III of Class-II. Those are at S.No.1 entry No.II and S.No.1 entry No.III of Class-II are not mentioned in amended Class-I of Schedule. 

Chance of getting such right is very very less i.e. remote. However, before amendment great grandson/daughter through son i.e. only through male descendants were included in Class-I of the Schedule. Now, by way of amendment, great grandson / great granddaughter even through female descendants are included in the Schedule so as to grant them right of succession. 

Birth Rights in The Hindu Succession (Amendment) Act, 2005

Major amendment is qua substitution of new Section 6 for Section 6 of Principal Act of 1956. New Section 6 (1) is qua conferring birth right on the daughter of a coparcener. Hence, no right of succession is conferred by that sub-section 1 of Section 6. 

Sub-section 2 of Section 6 is qua nature of the property acquired by the said daughter under sub-section 1. Hence, not concerned with succession.

Sub-section 3 of Section 6 is in respect of succession.

Sub-section 3 reads as “Where a Hindu dies after the commencement of the Hindu Succession (Amendment) Act, 2005, his interest in the property of a Joint Hindu family governed by the Mitakshara law, shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship, and the coparcenary property shall be deemed to have been divided as if a partition had taken place and –

(a) the daughter is allotted the same share as is allotted to a son;

(b) the share of the pre-deceased son or a pre-deceased daughter, as they would have got had they been alive at the time of partition, shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter; and

(c) the share of the pre-deceased child of a pre-deceased son or of a pre-deceased daughter, as such child would have got had he or she been alive at the time of the partition, shall be allotted to the child of such pre-deceased child of the pre-deceased son or a pre-deceased daughter, as the case may be.

Explanation :- For the purposes of this sub-section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition  of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.

However, what is provided by sub-section 3(a) & (b) was already provided by proviso to Section 6 of Principal Act and by Section 8 & Schedule of Principal Act. Hence, nothing new is in clause (a) & (b) of sub-section 3 of Section 6 of the Act of 2005.

Clause (c) of sub-section 3 of Section 6 provides right of succession to great grandson / great granddaughter through female descendants. This clause only provides new right of succession. Schedule is accordingly amended, however, two categories of descendants who are coming under Clause (c) sub- section 3 of Section 6 are not included in Class-I of amended Schedule.

  • Important right conferred by Amendment Act on the daughter of a coparcener is the birth right and not right by succession.

It is germane to note that the coparcenary birth right is conferred on the daughter of a coparcener and not on all the daughters.  The words “the daughter of a coparcener” are very important for interpreting the provision.  Wording “the daughter of a coparcener” is used in the provision. Only the daughter or a daughter is not used in the provision. It means all daughters shall not by birth become coparceners, but only the daughter of a coparcener shall by birth become coparcener. 

Now the question remains who is “the daughter of a coparcener” under the Hindu Succession Act?

For that it is to be seen who is a coparcener?  Son, grandson and great grandson of a male hindu form the coparcenary and they all inclusive of said male hindu are coparceners. 5th generation is not part of coparcenary and the person of 5th generation is not a coparcener. When the person of 1st generation dies then he ceases to be a coparcener and person of 5th generation will be included in the coparcenary and he will be coparcener. It means as soon as person dies he ceases to be a coparcener.

The wording used in the Amendment Act is the daughter of a coparcener. It means what is contemplated in the provision is the daughter of a person who is coparcener. Unless a person is alive he cannot be a coparcener. On his death he ceases to be a coparcener. Hence, the daughter of a person, who ceased to be a coparcener, is not the daughter of a coparcener. Such daughter is the daughter of the deceased coparcener. Thus, it is very clear that the daughter whose father is alive on the date of commencement of the Amendment Act, 2005 is the daughter as contemplated in the provision. The daughter whose father is not alive on the commencement of the Amendment Act, 2005 is not the daughter of a coparcener as her father ceased to be a coparcener on his death.

Thus, only the daughter whose father is alive on the date of commencement of the Amendment Act, 2005 shall by birth become a coparcener. Hence, the only daughter whose father is alive on the date of commencement of the Amendment Act, 2005, acquires birth right as coparcener. 

The question, Whether the Amendment Act is retrospective or prospective in operation? is often raised. In view of the wordings of the provision, there is no question of retrospective or prospective operation. Operation of the Amendment Act, 2005 particularly amended Section 6 depends upon the facts of the case.

On commencement of the Amendment Act, 2005 operation of the Amendment Act, 2005 starts. It will apply to some cases which are covered by provision of Section 6 of The Amendment Act, 2005 and not to other cases. It can be explained properly by way of illustrations.

Illustration :-

  1. The father of the girl ‘X’ was alive on the commencement of the Amendment Act, 2005. Hence, ‘X’ being the daughter of a coparcener acquires status of coparcener on the commencement date of the Act, hence acquires birth right in ancestral / coparcenary property on that day.
  2. The father of the girl ‘Y’ was not alive on the commencement of the Amendment Act, 2005. Hence, ‘Y’ being “not the daughter of coparcener’ (whose father ceases to be a coparcener due to death prior to commencement of the Amendment Act, 2005) does not and cannot acquire status of coparcener, hence, does not and cannot acquire birth right in ancestral / coparcenary property. 

Thus, the Amendment Act, 2005 is operative since the date of commencement of the Amendment Act, 2005 qua the property contemplated in the Act and the daughters contemplated in the Act.

Equal rights to daughters in Hindu Succession Act

Intent of Legislature appears to give equal rights as that of son in the coparcenary property to the daughter of a coparcener. However, the rights given to the daughter are much more than the son. It is clear from the position that when son gets any property as a coparcener then that property does not remain his exclusive property but his children get equal share in it in view of the nature of the property and effect of the law. Whereas, if the daughter gets any property as a coparcener that will be her exclusive property. Her children will not get any share in it. The position can be explained properly by way of illustration.

Illustration :- A person ‘X’ has wife ‘Y’, son ‘S’ and daughter ‘D’. ‘X’ has 40 acres ancestral land. Prior to the amendment Act, 2005; ‘X’ & ‘S’ were having equal rights in the land being coparceners. On commencement of the Amendment Act, 2005, ‘D’ also becomes coparcener and acquires birth right in that land equal to as that of ‘S’. Thus, ‘X’, ‘S’ & ‘D’ being coparceners have equal rights in the land. On the demand of partition by ‘S’, the land will be equally divided amongst ‘X’, ‘Y’, ‘S’ & ‘D’. The reason is that as per law mother gets equal share as that of son in case of  partition of ancestral property. Thus, out of 40 acres land ‘X’, ‘Y’, ‘S’ & ‘D’ each will get 10 acres land. That prima-facie shows equality between son & daughter. However, there is no equal rights of ‘S’ & ‘D’. Reason is that 10 acres land acquired by ‘S’ on said partition is not his exclusive property but his children acquire birth right in that 10 acres land. If ‘S’ has wife ‘W’, son ‘S1’ and daughter ‘D1’, then ‘S1’ & ‘D1’ acquire equal birth rights in that 10 acres land and on partition, ‘S’, ‘W’, ‘S1’ & ‘D1’ each will get 21⁄2 acres land. As far as 10 acres land acquired by ‘D’ remains her exclusive property as her children are not her coparceners and hence, cannot acquire birth right in that 10 acres land. Thus, the son ‘S’ will be exclusive owner of 21⁄2 acres land whereas the daughter ‘D’ will be exclusive owner of 10 acres land. The Act of 2005 confers birth right on the daughter of a coparcener and no new right by way of succession was conferred on the daughters. Hence, the name of the Act “The Hindu Succession Amendment Act 2005” is A Misnomer. The name of the Act should have been “The Hindu Daughters’ Birth Right to Coparcenary Property Act”. 

 

Chapter 13 Appointing A Sales Agents

Introduction

Selling a product through an overseas agent is a very successful strategy. Sales agents are available on commission basis for any sales they make. The key benefit of using an overseas sales agent is that you get the advantage of their extensive knowledge of the target market. Sales agent also provides support to an exporter in the matter of transportation, reservation of accommodation, appointment with the government as and when required. It is, therefore, essential that one should very carefully select overseas agent.

Merits of Appointing a Sales Agent

There are various types of merits associated with appointed a sales agent for export purpose are as follow:

  • Sales agent avoids the recruitment, training, time and payroll costs of using own employees to enter an overseas market.
  • An agent is a better option to identify and exploit opportunities in overseas export market.
  • An agent already have solid relationships with potential buyers, hence it saves the time of the exporter to build own contacts.
  • An agent allows an exporter to maintain more control over matters such as final price and brand image – compared with the other intermediary option of using a distributor.

Demerits of Appointing a Sales Agent

There are also certain disadvantages associated with appointing a sales agent for export purpose which are as follows:

  • After-sales service can be difficult when selling through an intermediary.
  • There is a risk for exporter to lose some control over marketing and brand image.

Important Points While Appointing a Sales Agent:
Appointing right sales agent not only enhance the profit of an exporter but also avoid any of risks associated with a sales agent. So it becomes important for an exporter to take into consideration following important points before selection an appropriate sales agent for his product.

  • Size of the agent’s company.
  • Date of foundation of the agent’s company.
  • Company’s ownership and control.
  • Company’s capital, funds, available and liabilities.
  • Name, age and experience of the company’s senior executives.
  • Number, age and experience of the company’s salesman.
  • Oher agencies that the company holds, including those of competing products and turn-over of each.
  • Length of company’s association with other principal.
  • New agencies that the company obtained or lost during the past year.
  • Company’s total annual sales and the trends in its sales in recent years.
  • Company’s sales coverage, overall and by area.
  • Number of sales calls per month and per salesman by company staff.
  • Any major obstacles expected in the company’s sales growth.
  • Agent’s capability to provide sales promotion and advertising services
  • Agent’s transport facilities and warehousing capacity.
  • Agent’s rate of commission; payment terms required.
  • References on the agents from banks, trade associations and major buyers.

Some source of Information on Agents is:

  • Government Departments Trade Associations.
  • Chambers of Commerce.
  • Banks.
  • Independent Consultants.
  • Export Promotion Councils.
  • Advertisement Abroad.

Agent v Distributor
There is a fundamental legal difference between agents and distributors and an exporter should not confuse between the two. An agent negotiates on the behalf of an exporter and may be entitled to create a legal relationship between exporter and the importer

A distributor buys goods on its own account from exporter and resells those products to customers. It is the distributor which has the sale contract with the customer not the exporter. In the case of distributor, an exporter is free from any kinds of risks associated with the finance.

 

Chapter 12 Understanding of Foreign Exchange Rates.

Introduction

An exporter without any commercial contract is completely exposed of foreign exchange risks that arises due to the probability of an adverse change in exchange rates. Therefore, it becomes important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates. In this section, we have discussed various topics related to foreign exchange rates in detail.

Spot Exchange Rate
Also known as “benchmark rates”, “straightforward rates” or “outright rates”, spot rates represent the price that a buyer expects to pay for a foreign currency in another currency. Settlement in case of spot rate is normally done within one or two working days.

Forward Exchange Rate
The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.

Method of Quoting Exchange Rates
There are two methods of quoting exchange rates:

  • Direct Quotation: In this system, variable units of home currency equivalent to a fixed unit of foreign currency are quoted.
    For example: US $ 1= Rs. 42.75
  • Indirect Quotation: In this system, variable units of foreign currency as equivalent to a fixed unit of home currency are quoted.
    For example: US $ 2.392= Rs. 100

Before 1993, banks were required to quote all the rates on indirect basis as foreign currency equivalent to RS. 100 but after 1993 banks are quoting rates on direct basis only.

Exchange Rate Regime

The exchange rate regime is a method through which a country manages its currency in respect to foreign currencies and the foreign exchange market.

  • Fixed Exchange Rate
    A fixed exchange rate is a type of exchange rate regime in which a currency’s value is matched to the value of another single currency or any another measure of value, such as gold. A fixed exchange rate is also known as pegged exchange rate. A currency that uses a fixed exchange rate is known as a fixed currency. The opposite of a fixed exchange rate is a floating exchange rate.
  • Floating Exchange Rate
    A Floating Exchange Rate is a type of exchange rate regime wherein a currency’s value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency. A Floating Exchange Rate or a flexible exchange rate and is opposite to the fixed exchange rate.
  • Linked Exchange Rate
    A linked exchange rate system is used to equlise the exchange rate of a currency to another. Linked Exchange Rate system is implemented in Hong Kong to stabilise the exchange rate between the Hong Kong dollar (HKD) and the United States dollar (USD).

Forward Exchange Contracts
A Forward Exchange Contract is a contract between two parties (the Bank and the customer). One party contract to sell and the other party contracts to buy, one currency for another, at an agreed future date, at a rate of exchange which is fixed at the time the contract is entered into.

Benefits of Forward Exchange Contract

  • Contracts can be arranged to either buy or sell a foreign currency against your domestic currency, or against another foreign currency.
  • Available in all major currencies.
  • Available for any purpose such as trade, investment or other current commitments.
  • Forward exchange contracts must be completed by the customer. A customer requiring more flexibility may wish to consider Foreign Currency Options.

Foreign Currency Options
Foreign Currency Options is a hedging tool that gives the owner the right to buy or sell the indicated amount of foreign currency at a specified price before a specific date. Like forward contracts, foreign currency options also eliminate the spot market risk for future transactions. A currency option is no different from a stock option except that the underlying asset is foreign exchange. The basic premises remain the same: the buyer of option has the right but no obligation to enter into a contract with the seller. Therefore the buyer of a currency option has the right, to his advantage, to enter into the specified contract.

Flexible Forwards
Flexible Forward is a part of foreign exchange that has been developed as an alternative to forward exchange contracts and currency options. The agreement for flexible forwards is always singed between two parties (the ‘buyer’ of the flexible forward and the ‘seller’ of the flexible forward) to exchange a specified amount (the ‘face value’) of one currency for another currency at a foreign exchange rate that is determined in accordance with the mechanisms set out in the agreement at an agreed time and an agreed date (the ‘expiry time’ on the ‘expiry date’). The exchange then takes place approximately two clear business days later on the ‘delivery date’).

Currency Swap
A currency swap which is also known as cross currency swap is a foreign exchange agreement between two countries to exchange a given amount of one currency for another and, after a specified period of time, to give back the original amounts swapped.

Foreign Exchange Markets
The foreign exchange markets are usually highly liquid as the world’s main international banks provide a market around-the-clock. The Bank for International Settlements reported that global foreign exchange market turnover daily averages in April was $650 billion in 1998 (at constant exchange rates) and increased to $1.9 trillion in 2004 [1]. Trade in global currency markets has soared over the past three years and is now worth more than $3.2 trillion a day. The biggest foreign exchange trading centre is London, followed by New York and Tokyo.

 

Chapter 11 Export Pricing And Costing

Introduction

Pricing and costing are two different things and an exporter should not confuse between the two. Price is what an exporter offer to a customer on particular products while cost is what an exporter pay for manufacturing the same product.

Export pricing is the most important factor in for promoting export and facing international trade competition. It is important for the exporter to keep the prices down keeping in mind all export benefits and expenses. However, there is no fixed formula for successful export pricing and is differ from exporter to exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or exporting through a canalising agency.

Determining Export Pricing

Export Pricing can be determine by the following factors:

  • Range of products offered.
  • Prompt deliveries and continuity in supply.
  • After-sales service in products like machine tools, consumer durables.
  • Product differentiation and brand image.
  • Frequency of purchase.
  • Presumed relationship between quality and price.
  • Specialty value goods and gift items.
  • Credit offered.
  • Preference or prejudice for products originating from a particular source.
  • Aggressive marketing and sales promotion.
  • Prompt acceptance and settlement of claims.
  • Unique value goods and gift items.

Export Costing
Export Costing is basically Cost Accountant’s job. It consists of fixed cost and variable cost comprising various elements. It is advisable to prepare an export costing sheet for every export product.

As regards quoting the prices to the overseas buyer, the same are quoted in the following internationally accepted terms which are commonly known as Incoterm.

 

Chapter 10 Exporting Product Samples

Introduction
The foreign customer may ask for product samples before placing a confirmed order. So, it is essential that the samples are made from good quality raw materials and after getting an order, the subsequent goods are made with the same quality product.

Extra care should be taken in order to avoid the risk associated in sending a costly product sample for export. Secrecy is also an important factor while sending a sample, especially if there is a risk of copying the original product during export.

Before exporting a product sample an exporter should also know the Government policy and procedures for export of samples.

While sending a product sample to an importer, it is always advised to send samples by air mail to avoid undue delay. However, if the time is not an issue then the product sample can also be exported through proper postal channel, which is cheaper as compared to the air mail.

Sending Export Samples from India

Samples having permanent marking as “sample not for sale” are allowed freely for export without any limit. However, in such cases where indelible marking is not available, the samples may be allowed for a value not exceeding US $ 10,000, per consignment.

For export of sample products which are restricted for export as mentioned in the ITC (HS) Code, an application may be made to the office of Director General of Foreign Trade (DGFT).

Export of samples to be sent by post parcel or air freight is further divided into following 3 categories, and under each category an exporter is required to fulfill certain formalities which are mentioned below :

  1. Samples of value up to Rs.10, 000- It is necessary for the exporter to file a simple declaration that the sample does not involve foreign exchange and its value is less than Rs. 10,000.
  2. Samples of value less than Rs. 25,000- It is necessary for the exporter to obtain a value certificate from the authorised dealer in foreign exchange (i.e. your bank). For this purpose, an exporter should submit a commercial invoice certifying thereon that the parcel does not involve foreign exchange and the aggregate value of the samples exported by you does not exceed Rs. 25,000 in the current calendar year.
  3. Samples of value more than Rs. 25,000- It becomes necessary for the exporter to obtain GR/PP waiver from the Reserve Bank of India

Export Samples against Payment
A sample against which an overseas buyer agrees to make payment is exported in the same manner as the normal goods are exported. Sample can also be carried personally by you while travelling abroad provided these are otherwise permissible or cleared for export as explained earlier. However, in case of precious jewellery or stone the necessary information should be declared to the custom authorities while leaving the country and obtain necessary endorsement on export certificate issued by the Jewelry Appraiser of the Customs.

Export of Garment Samples
As per the special provision made for the export of garment samples, only those exporters are allowed to send samples that are registered with the Apparel export Promotion Council (AEPC). Similarly, for export of wool it is necessary for the exporter to have registration with the Woolen Export Promotion Council.

Export of Software
All kinds electronic and computer software product samples can only be exported abroad, if the exporter dealing with these products is registered with the Electronics and Computer Software Export Promotion Council (ESC)

Similarly samples of other export products can be exported abroad under the membership of various Export Promotion Councils (EPC) of India.

 

Chapter 9 Export Sales Leads

Introduction

Export Sales leads are initial contacts a seller or exporter seeks in order to finalize a deal or agreement for export of goods and are considered as the first step in the entire sales process. After getting the first lead, a company should respond to that lead in a very carefully manner in order to convert that opportunity into real export deal.

Generating Sales Leads

Sales leads can be generated either through a word-of-mouth or internet research or trade show participation.

Qualifying sales leads

As the buyer is far away and sometimes communication process can be difficult, so it’s always better to make an extra effort to understand the exact need of the customer.

Sending Acknowledgement

After receiving a lead it is quite important to acknowledge the enquirer within 48 hours of receiving the enquiry either through e-mail or fax. Acknowledgement also gives an option to provide further detail about the product or to make an enquiry about the buyer.

Responding with quality products

Quality products strengthen buyer seller relationship, so it’s always better to provide quality products to the buyers.

Follow Ups

Always try to be in touch with the buyer or customer. For this purpose one can ask a phone number and a convenient time to call. It is always better to make the call in the presence of an Export Adviser. One should avoid high pressure call during follow up.

 

Chapter 8 Myths About Exporting

Introduction

Many first time exporters or firm managers believe the myths about exporting  that it’s too difficult or too costly to sell their product in a foreign country. But given below the some of the important facts that will help a first time exporter to clear all his misconceptions.

  1. Myth: I Am Too Small to Export

Only large firms with name recognition, abundant resources, and formal export departments can export successfully.

It is true that large firms typically account for far more total exports but the real fact is that vast majority of exporting firms in most countries are small and medium-sized enterprises (SMEs).

  1. Myth: I Cannot Afford to Export

I don’t have the money for hiring new employees, for marketing abroad, or expanding production for new business.

There are various low-cost ways to market and promote abroad, handle new export orders, and finance receivables. This does not require hiring new staff or setting up an export department. At little or no cost for example, you can receive product and country market research, worldwide market exposure, generate trade leads, and find qualified overseas distributors through various Commodity Boards and Export Promotion Councils.

  1. Myth: I Cannot Compete With Large Overseas Companies

My products are unknown and my prices are too high for foreign markets.

If the product is known in the domestic market then it’s a plus point but even an unknown product can be exported in a foreign market. Low demand of a product doesn’t indicates that it will be also not accepted in the international market.

Price is also an important, but it is not the only selling point. Other competitive factors play a large role including quality, service, and consumer taste – these may override price. Also prices of a product may not be relatively high in countries with a strong currency, as in the European Union.

  1. Myth: Exporting is Too Risky

I might not get paid.

Selling anywhere has risks even in the domestic market, but it can be reduced with reasonable precautions. To assure you get paid, use Letters of Credit (L/Cs). A L/C is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Proper documentation can minimize the risk associated with the export business.

  1. Myth: Exporting is Too Complicated

Exporting is too complicated; I won’t understand the laws and documentation requirements.

You don’t need to be an expert to export. There is an abundance of resources available online that helps the first time exporter about all ins and outs of the export operations. Government of India and its associated agencies like Commodity Boards and Export Promotion Councils also provide guidelines to the exporters.

Chapter 7 Export License

Introduction

An export license is a document issued by the appropriate licensing agency after which an exporter is allowed to transport his product in a foreign market. The license is only issued after a careful review of the facts surrounding the given export transaction. Export license depends on the nature of goods to be transported as well as the destination port. So, being an exporter it is necessary to determine whether the product or good to be exported requires an export license or not. While making the determination one must consider the following necessary points:

  •  What are you exporting?
  • Where are you exporting?
  • Who will receive your item?
  • What will your items will be used?

Canalisation

Canalisation is an important feature of Export License under which certain goods can be imported only by designated agencies. For an example, an item like gold, in bulk, can be imported only by specified banks like SBI and some foreign banks or designated agencies.

Application for an Export License

To determine whether a license is needed to export a particular commercial product or service, an exporter must first classify the item by identifying what is called ITC (HS) Classifications. Export license are only issued for the goods mentioned in the Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application can be submitted to the Director General of Foreign Trade (DGFT). The Export Licensing Committee under the Chairmanship of Export Commissioner considers such applications on merits for issue of export licenses.

Exports Free unless regulated

The Director General of Foreign Trade (DGFT) from time to time specifies through a public notice according to which any goods, not included in the ITC (HS) Classifications of Export and Import items may be exported without a license. Such terms and conditions may include Minimum Export Price (MEP), registration with specified authorities, quantitative ceilings and compliance with other laws, rules, regulations.