Page 22 - Banking Finance June 2024

LEGAL UPDATE

over 'streedhan', Supreme Court held This is not in violation of Article 14 of sions judge or an additional sessions
that streedhan cannot become joint the Indian Constitution. This order was judge has the jurisdiction to try a com-
property of a couple, and a husband given in the case of All India Bank Of- plaint under the Insolvency and Bank-
has no control over his wife's assets, ficers' Confederation. The I-T Act con- ruptcy Code (IBC), 2016, the Supreme
which he may use during times of dis- tains provisions for taxation of perqui- Court held as it quashed a 2022 verdict
tress but must return to her. sites under the head 'Salary' in the of the Bombay High Court.
hands of employees.
Adjudicating a matrimonial dispute The Bombay High Court had allowed a
over streedhan, a bench of Justices Section 17 (2) defines perquisites to plea challenging the order passed by
Sanjiv Khanna and Dipankar Datta said include rent-free or concessional resi- an additional sessions judge directing
a woman has absolute rights over her dential accommodation, meeting of issuance of process against two former
streedhan - gifts given to a woman personal expenses by the employer, or directors of a firm on a complaint filed
before, during, or after marriage, such its contribution to various funds. Rule by the Insolvency and Bankruptcy
as money, jewellery, land, utensils and 3 lays down the valuation norms. Board of India.
other gifts from parents, parents-in- Section 17(2) contains a residual sub- While dealing with an appeal filed by
law, relatives and friends. clause (viii), introduced in 2001, which the Board challenging the high court
"It is her absolute property with all provides that the value of any other verdict, a bench of Justices BR Gavai
rights to dispose of at her own pleasure. fringe benefit or amenity as may be and Sandeep Mehta said the HC had
The husband has no control over her prescribed by CBDT shall be included in "grossly erred" in quashing the com-
streedhan. He may use it during times 'perquisite'. plaint only on the ground that it was
of his distress, but nonetheless, he has In this regard, Rule 3(7) prescribes vari- filed before a special court presided
a moral obligation to restore the same ous types of fringe benefits or amenity over by a sessions judge.
or its value to his wife. Therefore, like interest-free or concessional loan, "It is held that the special court pre-
streedhan property does not become travelling/touring/accommodation, sided by a sessions judge or an addi-
joint property of the wife and the hus- free food and non-alcoholic beverages, tional sessions judge will have jurisdic-
band, and the husband has no title or gifts or vouchers, credit card expenses, tion to try the complaint under the
independent dominion over the prop- club membership, use or transfer of Code," the bench said in its verdict.
erty as its owner," the bench stated. movable assets and any other benefit
or amenity, service, right or privilege. It remitted the matter to the high
The court noted that a man or his
Rule 3(7) also provides the basis of court for fresh consideration on
family members could be prosecuted
valuation for such fringe benefits. merits.
under Section 406 of IPC for criminal
Rule 3(7)(i), inter-alia, provides that The Bench noted the submissions of the
breach of trust if streedhan is dishon-
estly misappropriated. the value of the benefit to the tax- Board's counsel who argued that the
payer resulting from the provision of high court had erred in holding that in
It also held that in such cases, the dis- interest-free or concessional loan for view of the Companies (Amendment)
pute should not be decided based on any purpose made available to the Act, 2017, only the offences committed
proof beyond reasonable doubt as in employee or any member of his/her under the Companies Act can be tried
criminal cases. household shall be determined by reck- by a special court consisting of sessions
oning the interest rate charged by SBI or additional sessions judge.
Loans given to Bankers as on the first day of the relevant tax It noted that the Board's counsel has
Taxable: SC year for similar loans. submitted that the reasoning given by

In its recent order, a division bench of SC says special court pre- the high court that the offences other
the Supreme Court (SC) has held that than the Companies Act cannot be
provision of interest free or sided over by sessions tried by the special court consisting of
concessional loans provided by banks to judge can try plaints un- sessions judge or additional sessions
its employees shall be taxable in their judge was totally in ignorance of the
hands as a perquisite under section 17 der IBC provisions of sub-section (1) of section
of the Income-tax (I-T) Act. A special court presided over by a ses- 236 of the Code.

20 | 2024 | JUNE | BANKING FINANCE