Madras High Court

K.Y.Ravi Kumar vs M/S.Raymond Pharmaceutical Pvt. on 29 June, 2021

                                                                              S.A.No.467 of 2021
                                                                        and CMP.No.9023 of 2021



                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                Dated : 29.06.2021

                                                    CORAM:

                                     THE HONOURABLE Mr.JUSTICE M.SUNDAR

                                                S.A.No.467 of 2021
                                                       and
                                               CMP.No.9023 of 2021

                  K.Y.Ravi Kumar
                  Deputy General Manager (HR)
                  at M/s.Nagarjuna Oil Corporation Limited,
                  MD Chambers, Block “A”,
                  New No: 53 Old No: 31,
                  Dr.Radhakrishnan Salai,
                  Mylapore, Chennai-600 004.
                                                                                ... Appellant
                                                       Vs.
                  M/s.Raymond Pharmaceutical Pvt., Ltd.,
                  Having its Registered Ofice at
                  No: 4/19, 2nd Cross Street, Dr.Radhakrishnan Nagar,
                  Thiruvanmiyur, Chennai-600 041.
                  Represented by its Director Sudhir Khanna.
                                                                              ... Respondent

                  Prayer: Second Appeal has been filed under Section 100 of Code of Civil
                  Procedure, 1908 against the Judgment and Decree dated 06.08.2019 passed
                  in A.S.No.454 of 2018 on the file of the VI Additional City Civil Judge,
                  Chennai partially reversing the judgment and decree dated 15.11.2017 in
                  O.S.No.4571 of 2014 on the file of the VII Assistant City Civil Judge,
                  Chennai.

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https://www.mhc.tn.gov.in/judis/
                                                                                      S.A.No.467 of 2021
                                                                                and CMP.No.9023 of 2021




                                   For Appellant    : Mr.M.R.Uma Vijayan
                                                         ***
                                                   JUDGMENT

In about six weeks from now i.e., by 11th August 2021, age of the lis

which has given rise to the captioned Second Appeal will be seven. In other

words, age of the lis which has given rise to the captioned Second Appeal is

six years now as a money suit was filed on 11.08.2014 by the sole respondent

in captioned Second Appeal, the suit being O.S.No.4571 of 2014 on the file

of 'VII Assistant Judge's Court, City Civil Court, Chennai' [hereinafter 'trial

Court' for the sake of brevity]. Parties in the captioned Second Appeal shall

from hereon be referred to by their respective ranks in trial Court for the sake

of convenience and clarity. Therefore, lone appellant in captioned Second

Appeal shall be referred to as 'defendant' and lone respondent in captioned

Second Appeal shall be referred to as 'plaintiff'.

2. Facts are fairly simple. Pleadings of plaintiff in the trial Court is

that the defendant approached the plaintiff to act as a broker for a

consolidated fee of Rs.8,00,000/- (Rupees Eight Lakhs only) and this was

regarding plaintiff's then proposed sale of its immovable property in Alathur

https://www.mhc.tn.gov.in/judis/ S.A.No.467 of 2021 and CMP.No.9023 of 2021

Pharmaceutical Industrial Estate. It is not necessary to delve more into those

factual aspects as there is no disputation that defendant and plaintiff agreed

for brokerage qua a sale and the defendant was paid brokerage of

Rs.8,00,000/- (Rupees eight lakhs only) on 27.01.2014 vide Cheque

No.000169 dated 27.01.2014 drawn on Canara Bank, Besant Nagar Branch.

Thereafter, post payment plaintiff realised that they have not made the

statutory income tax deduction at source i.e., 'Tax Deduction at Source'

['TDS' for the sake of brevity] which is 10% of brokerage amount. In other

words, plaintiff realised that they have paid out Rs.8,00,000/- [Rupees eight

lakhs only] without deducting TDS of Rs.80,000/- (Rupees eighty thousand

only), which is statutory income tax deduction at source, which the plaintiff

in turn has to pay to Income Tax Department. When the plaintiff requested

the defendant to make good this Rs.80,000/- (Rupees eighty thousand only),

defendant took the stand that the agreed brokerage is Rs.8,00,000/- (Rupees

eight lakhs only), Rs.8,00,000/- has been paid out as full and final settlement

and therefore, the question of making good Rs.80,000/- does not arise. This

is the central theme of the lis before trial Court.

3. After completion of pleadings, trial Court framed issues and the

parties went to trial on the issues. There was one witness each on either side

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i.e., PW1 and DW1, there were seven exhibits on the side of plaintiff i.e.,

Exs.A1 to A7, no exhibits on the side of the defendant and after full contest,

trial Court decreed the suit in and by judgment and decree dated 15.11.2017.

The defendant carried the matter in appeal by way of a regular First Appeal

under Section 96 of 'The Code of Civil Procedure, 1908' ['CPC' for the sake

of brevity] vide AS.No.454 of 2018 on the file of 'VI Additional City Civil

Judge's Court, Chennai' [hereinafter 'First Appellate Court' for the sake of

brevity]. First Appellate Court, after full contest, partly allowed the appeal

in and by judgment and decree dated 06.08.2019. To be noted, trial Court

decreed the suit to the tune of Rs.80,000/- TDS, Rs.1600/- penalty paid to the

Income Tax Department and interest at the rate of 18% per annum. First

Appellate Court, after full contest, knocked off the interest portion i.e.,

interest @ 18% per annum was knocked off. To this extent, defendant

benefited in the hands of First Appellate Court. This Court is informed that

the plaintiff has not carried the matter to this Court by way of a Second

Appeal.

4. Defendant, who has carried the matter by way of captioned Second

Appeal [obviously under Section 100 of CPC] has proposed three questions

which according to defendant, who is protagonist of captioned Second

https://www.mhc.tn.gov.in/judis/ S.A.No.467 of 2021 and CMP.No.9023 of 2021

Appeal are substantial questions of law and the same shall be dealt with

infra.

5. Mr.M.R.Uma Vijayan, learned counsel for defendant [appellant in

captioned Second Appeal], who was before this Second Appeal Court i.e., in

this virtual Court, made submissions, a broad summation of which is as

follows:

a) Courts below failed to look at Ex.A1, which is a receipt

for Rs.8,00,000/- and more particularly, failed to notice that this

receipt, which says 'full and final settlement' was prepared by

plaintiff.

b) adverting to evidence of PW1 [this Court is informed

that one Mr.Sudhir Khanna of plaintiff's Company deposed as

PW1] and submitted that besides saying that Ex.A1 receipt was

prepared by him has also gone on to say that Rs.8,00,000/- was

paid (accepted by the defendant) without mentioning anything

about TDS.

c) adverting to trial Court judgment more particularly

paragraph 10 of trial Court judgment (internal page 6 of trial

Court judgement and running page 34 of typed set), it was

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submitted that a completely unrelated fact has been adverted to

by trial Court.

d) Courts below, after returning a finding that TDS not

being deducted at the time of payment is plaintiff's error ought

not to have mulcted the defendant with the same and a penalty

of Rs.1600/-.

6. This Court now proceeds to discuss the submissions in the light of

the case file before it.

7. As already alluded to supra, facts are fairly simple.

8. The transaction regarding brokerage payment of Rs.8,00,000/- is not

in dispute. This payment being made by the plaintiff without deducting

income tax at source and defendant thereafter, refusing to make good this tax

component when the plaintiff realised that it has not deducted TDS and

demanded payment constitutes the central theme of lis, as already alluded to

supra. Trial Court, in its judgment, more particularly in paragraphs 12 and

13, has adverted to the deposition of DW1 [One Mr.K.Y.Ravikumar of

defendant's company has deposed as DW1] and has held that Rs.8,00,000/-

having been paid by commission, and more particularly TDS amount having

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been paid by plaintiff and the receipt having been filed as Ex.A5, has held

that the case of the plaintiff stands proved. This Court is unable to find this

approach of trial Court to be incorrect. The points 1 and 2 raised can be

answered in one swap in this regard as parties cannot avoid a statutory

requirement in fiscal law owing to some inter se lapse/arrangement in a

transaction. Therefore, Ex.A1 receipt not being paid as full and final

settlement or that PW1 having deposed that it was prepared by him hardly

cuts ice qua the case of the defendant. If a payment admittedly attracts

income tax and if the admitted position is that tax (as a statutory

requirement) has to be deducted at source, it is a fiscal law statutory

requirement and therefore, this exhibit and deposition can hardly cut ice

particularly when the plaintiff has established that they have paid tax payable

vide Ex.A5.

9. The next argument turns on paragraph 10 of judgment of trail Court.

This paragraph, on the face of it, at this admission stage appears to be out of

context but, it is clear that the contents of this paragraph 10 has not in any

way impacted the decree that has been made by trial Court that was partly

altered (in favour of defendant) by First Appellate Court. The law is well

settled that when extraneous material is relied on and when vital evidence is

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ignored in a legal drill under Section 100 CPC, unless it is demonstrable that

absent such exclusion of vital evidence or relying on extraneous evidence the

conclusion or decree would have been a bipolar opposite there can be no

interference. Therefore, this also hardly makes any cut in a legal drill under

Section 100 CPC. Be that as it may, it appears to be a inadvertent secretarial

error of insertion of some lines from a completely unconnected matter which

stands out as a precipitate.

10. This takes us to the last submission on penalty of Rs.1,600/-

[Rupees One thousand and six hundreds only]. A perusal of judgements of

Courts below make it clear that defendant has not given his PAN number

though the defendant is fully aware that tax deduction at source is a statutory

requirement for a transaction of this nature. Therefore, this Court finds it

impossible to convince itself that this can by itself become the basis for

entertaining the captioned second appeal, which is under Section 100 CPC

which turns only on substantial question of law.

11. Beyond all this there is absolutely nothing to demonstrate that

plaintiff agreed to pay Rs.8,00,000/- brokerage net of taxes or that plaintiff

agreed to absorb defendant's tax liability for this brokerage payment.

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12. This takes us to three questions which according to defendant

[protagonist of captioned second appeal] are substantial questions of law,

this is in page 4 of Memorandum of Ground of Appeal, which reads as

follows:

' SUBSTANTIAL QUESTIONS OF LAW

1. Whether the judgment of the lower appellate court is correct in law when Ex.A1 a concluded contract confirms that the payment paid therein is towards full and final settlement but directed the appellant to pay Rs.80000/- to the Respondent?

2. Whether the judgment of the lower appellate court is correct in law when it had concluded that the mistake is on the part of the Respondent for non deduction of TDS but directed the Appellant to pay Rs.1600/- to the Respondent towards penalty for such mistake?

3. Whether the lower appellate court is correct in law when it had traversed beyond the pleadings and issues framed by acting as a statutory authority holding that the appellant is liable to pay Income Tax?'

13. A perusal of aforementioned questions, in the light of the

discussion and dispositive reasoning set out supra, make it clear that they

hardly qualify as 'substantial questions of law', much less within contours of

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the expression 'substantial question of law' as occurring in Section 100 of

CPC as elucidatively explained in Sir Chunilal Mehta's case [Sir Chunilal

V.Mehta and Sons Ltd., Vs. Century Spinning and Manufacturing Co.,

Ltd., reported in AIR 1962 SC 1314]. To be noted, in Sir Chunilal Mehta's

case, the principles laid down by a Full Bench of this Court in Rimmalapudi

Subba Rao's case [Rimmalapudi Subba Rao Vs. Noony Veeraju and others

reported in AIR 1951 Mad 969 (FB)] was upheld. This Court deems it

appropriate to not to burden this judgment with extracts from those

celebrated judgments, but it will suffice to say that this continues to be good

law and holding the field as Hon'ble Supreme Court has applied these

principles qua the expression 'substantial question of law' occurring in

Section 100 CPC as recently as on 27.08.2020 in Nazir Mohamed case

[Nazir Mohamed Vs. J.Kamala, reported in (2020) SCC OnLine SC 676].

Most relevant paragraphs in Nazir Mohamed case law are 31 to 35 and the

same read as follows:

'31. The relevant paragraphs of the judgment of this Court in Hero Vinoth (supra) are set out hereinbelow:-

21. The phrase substantial question of law, as occurring in the amended Section 100 CPC is not defined in the Code. The word substantial, as qualifying question of law, means of having substance, essential, real, of sound worth, important

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or considerable. It is to be understood as something in contradistinction with- technical, of no substance or consequence, or academic merely. However, it is clear that the legislature has chosen not to qualify the scope of substantial question of law by suffixing the words of general importance as has been done in many other provisions such as Section 109 of the Code or Article 133(1)(a) of the Constitution.

The substantial question of law on which a second appeal 2(2006) 5 SCC 545 shall be heard need not necessarily be a substantial question of law of general importance. In Guran Ditta v. Ram Ditta [(1927-28) 5I5 IA 235 : AIR 1928 PC 172] the phrase substantial question of law as it was employed in the last clause of the then existing Section 100 CPC (since omitted by the Amendment Act, 1973) came up for consideration and their Lordships held that it did not mean a substantial question of general importance but a substantial question of law which was involved in the case. In Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] the Constitution Bench expressed agreement with the following view taken by a Full Bench of the Madras High Court in Rimmalapudi Subba Rao v. Noony Veeraju [AIR 1951 Mad 969 : (1951) 2 MLJ 222 (FB)] : (Sir Chunilal case [1962 Supp (3) SCR 549 : AIR 1962 SC 1314] , SCR p. 557) When a question of law is fairly arguable, where there is room for difference of opinion on it or where the Court thought it necessary to deal with that question at some length and discuss alternative views, then the question would be a substantial question of law. On the other hand if the question was practically covered by the decision of the highest court or if the general principles to be applied in determining the question are well settled and the only question was of applying those principles to the particular fact of the case it would not be a substantial question of law.

32. To be substantial, a question of law must be debatable, not previously settled by the law of the land or any binding precedent, and must have a material bearing on the decision of the case and/or the rights of the parties before it, if answered either way.

33. To be a question of law involved in the case, there must be first, a foundation for it laid in the pleadings, and the question should emerge from the sustainable findings of fact, arrived at by

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Courts of facts, and it must be necessary to decide that question of law for a just and proper decision of the case.

34. Where no such question of law, nor even a mixed question of law and fact was urged before the Trial Court or the First Appellate Court, as in this case, a second appeal cannot be entertained, as held by this Court in Panchagopal Barua v. Vinesh Chandra Goswami.

35. Whether a question of law is a substantial one and whether such question is involved in the case or not, would depend on the facts and circumstances of each case. The paramount overall consideration is the need for striking a judicious balance between the indispensable obligation to do justice at all stages and the impelling necessity of avoiding prolongation in the life of any lis. This proposition finds support from Santosh Hazari v. Purushottam Tiwari'.

14. The aforesaid extract is elucidative qua the fact setting of this case

more so in the light of the discussion and dispositive reasoning delineated

supra. Therefore, this Court has no hesitation or difficulty in coming to the

conclusion that no substantial question of law arises in the captioned second

appeal. Hon'ble Supreme Court, in a recent judgment i.e., Kirpa Ram case

being judgment rendered in Kirpa Ram Vs. Surendra Deo Gaur reported in

2020 SCC OnLine SC 935, has held that a second appeal can be dismissed at

the admission stage without formulating substantial questions of law if none

arises in the matter. Following Kirpa Ram principle, captioned second

appeal is dismissed at the admission stage holding that no substantial

question of law arises. Considering the nature of the matter, the trajectory

https://www.mhc.tn.gov.in/judis/ S.A.No.467 of 2021 and CMP.No.9023 of 2021