The Supreme Court, which has been giving more rights to citizens and imposing more liabilities on public authorities in recent months, took an atypical stance last week when it diluted the law of torts in favour of the authorities.
The court was dealing with an important question of law on the liability for negligence in causing the death of a citizen who was killed on the footpath by a falling tree planted and maintained by the municipal authority (Rajkot Municipal Corporation vs Manjulben).
The court ruled that there is no duty to maintain regular supervision (of trees), though the authority/ owner of a property is under a duty to plant and maintain the trees. The reason given was that conditions in this country have not developed to such an extent that a corporation can keep constant vigil on the health of the trees in public places and roadsides frequented by passersby.
The court has been unnecessarily lenient towards the authorities. If maintenance of trees is insisted upon, it would be an intolerable burden on them and it would detract from performing their normal duties, the judgment says. If they were to think of the risk of litigation, they would avoid doing the public duty of planting trees altogether, thinking that it would be a heavy burden.
The court says that there must exist some proximity of relationship, foreseeability of danger and a duty of care. The court also stresses positive action by the public authorities to attract liability. While these principles have been taken from the English common law, which are accepted in the Indian law, the application of those rules has not been in tune with the times. As a result, the overall result of the judgment could be oppressive to those who have been wronged by public authorities due to their negligent acts or ommissions.
For instance, it is very common in our cities that sewerage is neglected and the sewer covers get stolen. We hear frequently of people falling into them and dying. Muncipal authorities who are sued for such deaths due to negligence could say that though the setting up sewerage was its duty, it had no duty to maintain them vigilantly. There was no positive action leading to the death nor was there any proximity of relationship between the authorities and the unfortunate pedestrian.
Similarly, a badly maintained municipal wall could collapse on a peddler on the road and the authorities could invoke the benefit of this judgment. Some 40 years ago, a clock tower in Delhi collapsed on such a family killing some members. In a leading judgment on the law of torts, the court asked the authorities to compensate the survivors. Now, the same authorities could contend that maintenance of walls is not their duty, there was no positive act and that the wall falling on people sleeping on the roads is too remote a possibility.
The Supreme Courts invocation of the neighbour principle has also gone against the citizens. You are duty-bound to take reasonable care to avoid injury to your neighbour. But then the court raises the biblical question: who is your neighbour?
The courts answer is anyone who is so closely affected by ones act that one ought to have them in contemplation as being so affected by ones act or omission. Having said that, the court rules that the civic authorities are not such. Every one knows that they are not good neighbours, but neighbours indeed they are; and our lives are constantly affected by the actions of the civic authorities. Therefore they should be fastened with the responsibility for their acts and omissions. In contrast, the court grants them virtual immunity.
Capital gains
Redemption of preference shares amounts to sale and any profit made in the transaction is assessable to capital gains tax, the Supreme Court held last week in Anarkali Sarabhai vs Commissioner of Income Tax.
The assessee in this case bought redeemable preference shares of Universal Corporation for less than the face value. Later the company decided to redeem the shares at face value. The assessee thus made some profit in the transaction. The tax authorities demanded capital gains tax, which she contested.
The Supreme Court favoured the taxmen. It explained that the company redeemed its preference shares only by paying the shareholders the value of the shares. In effect the company bought back the shares from the shareholders. Such transaction is nothing but sale of the shares by the shareholders to the company, the judgment said.
According to Section 2(47)(i) of the Income Tax Act, transfer in relation to a capital asset includes the sale, exchange or relinquishment of the asset. The assessee, in this case, has given up the shares and received a sum in lieu thereof. This amounts to relinquishment, the judgment said.
Even under the Companies Act provisions, the transaction would amount to sale, the court explained invoking Sections 85 and 77. By clarifying the law, the Supreme Court has also ironed out some differences among the high courts on the interpretation of the statutory provisions.
Tailpiece
Most Supreme Court lawyers think that judicial activism is waning. But the Astrological Magazine which is popular in the bar reading room predicts otherwise. According to the stars, judicial activism will reach new heights and all culprits will be roped in. But a move will also be in the offing to limit judicial activism.
While these principles have been taken from the English common law, the application of those rules has not been in tune with the times
