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1987 (11) TMI 386
Issues Involved:
1. Interpretation of the six-month period u/s 127 of the Maharashtra Regional & Town Planning Act, 1966.
2. Validity of the acquisition proceedings under s. 126(1) of the Act.
3. Waiver or abandonment of rights by the trustees.
4. Delay or laches in filing the petition under Art. 226 of the Constitution.
Summary:
1. Interpretation of the Six-Month Period u/s 127:
The primary issue was whether the six-month period specified in s. 127 of the Maharashtra Regional & Town Planning Act, 1966, should be reckoned from the date of service of the purchase notice by the owner or from the date on which the requisite information was furnished by the owner. The Court held that the period of six months begins from the date of service of the purchase notice, not from the date of receipt of additional information. The Court emphasized that the Municipal Corporation had access to all necessary records and could not extend the six-month period by requesting additional information.
2. Validity of the Acquisition Proceedings:
The Court found that the Planning Authority (Municipal Corporation of Greater Bombay) failed to take necessary steps for acquisition within the six-month period after the service of the purchase notice. Consequently, the reservation of the land for a recreation ground lapsed, and the impugned notification u/s 6 of the Land Acquisition Act, 1894, was declared invalid, null, and void.
3. Waiver or Abandonment of Rights:
The Court rejected the contention that the trustees had waived or abandoned their rights to question the validity of the acquisition proceedings. It was held that there was no voluntary and intentional relinquishment of a right by the trustees. The trustees' willingness to sell the property was conditional and did not constitute a waiver of their rights.
4. Delay or Laches in Filing the Petition:
The Court dismissed the argument of inordinate delay or laches in filing the petition under Art. 226 of the Constitution. It was held that the lapse of reservation and the invalidity of the acquisition proceedings were legal issues that could not be negated by any delay in filing the petition.
Conclusion:
The appeal was dismissed with costs, upholding the High Court's decision that the reservation of the land had lapsed due to the failure of the Planning Authority to take timely steps for acquisition within the stipulated six-month period.
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1987 (11) TMI 385
Issues involved: Admission denial based on academic performance criteria, weightage claim, writ petition dismissal after initial allowance, judgment operativeness post pronouncement, judicial power to alter judgments, significance of judgment pronouncement in open court.
Academic Performance Criteria Dispute: Appellant, having secured 54.4% in Bachelor's law examination, sought admission to Master's Course at Banaras Hindu University which required a minimum of 55% average over three years. Claimed weightage due to family donations to the university, citing a precedent. Despite two applications, was denied admission. Writ petition filed, initially allowed by a Division Bench on 28.7.1986 but later dismissed by a different Bench on 23.3.1987.
Judgment Operativeness: Appellant argued that once a judgment is pronounced in open court, it becomes operative and cannot be changed. Cited a case precedent emphasizing the finality of a judgment once pronounced. Highlighted the importance of the formal pronouncement of a judgment in open court as the decisive judicial act.
Judicial Power to Alter Judgments: Court acknowledged the power to alter or modify a judgment that has been pronounced but not signed, cautioning that such power should be exercised judiciously and with valid reasons. Emphasized that parties rely on the judgment pronounced in court as the final decision, with signing considered a formality.
Significance of Judgment Pronouncement: Stressed the importance of considering the pronouncement of a judgment in court as the conclusive act, with the judgment becoming operative upon delivery in open court. Exceptions exist where new facts emerge post-pronouncement or if a feature necessitates further consideration.
Final Decision: With no material indicating why the initial judgment was not signed, the court held the writ petition as disposed of on 28.7.1986, rendering the subsequent dismissal invalid. Directed the university to admit the appellant to the Master's Course in Law for the current session, considering the changed course structure. The appeal was allowed with no costs imposed.
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1987 (11) TMI 384
Issues Involved:
1. Whether the appellant was a licensee or a tenant.
2. Whether the Court of Small Causes, Bombay had jurisdiction to deal with the eviction petition.
Summary:
1. Licensee or Tenant:
The main contention in this appeal was whether the appellant was a tenant or a licensee. The resolution of this issue depended on the construction of the agreement dated 9th February 1965, described as an agreement of 'leave and licence.' The agreement specified that the licensor allowed the licensee to use the premises for a workshop business for five years, with several restrictions, including a prohibition on residential use and a stipulation that the licensee could not terminate the agreement early except for breaches of terms. The Court analyzed the terms of the agreement, which included the licensor's right to inspect the premises and the licensee's obligation to pay a monthly compensation of Rs. 225. The Court concluded that the document created a licence rather than a lease, emphasizing the intention of the parties and the restrictions on the use of the premises.
2. Jurisdiction of the Court of Small Causes:
The respondent filed an ejectment proceeding against the appellant u/s 41 of the Presidency Small Cause Courts Act, 1882. Section 41 allows for a suit to be filed against an occupant of immovable property when the tenancy or permission has been determined or withdrawn. The trial Judge and the High Court found that the appellant was a licensee and not a sub-tenant, thus affirming the jurisdiction of the Court of Small Causes to entertain the eviction petition. The High Court disallowed the special civil application under Article 227 of the Constitution, affirming the decision of the trial court.
Conclusion:
The Supreme Court upheld the decision of the High Court, concluding that the agreement in question created a licence and not a lease. The appeal was dismissed, and the appellant was given time until 31st March 1988 to vacate the premises, provided an undertaking was filed with the Registrar of the Court of Small Causes, Bombay.
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1987 (11) TMI 383
Issues Involved:
1. Levy of additional tax under Section 8 of the Karnataka Motor Vehicles Taxation Act, 1957.
2. Interpretation of the term "proposed to be used" in Section 8 of the Act.
3. Applicability of the decision in Noorullha Khan v. State of Karnataka.
4. Relationship between the Karnataka Motor Vehicles Taxation Act, 1957, and the Motor Vehicles Act, 1939.
5. Computation of additional tax in cases of overloading.
Issue-wise Detailed Analysis:
1. Levy of Additional Tax under Section 8 of the Karnataka Motor Vehicles Taxation Act, 1957:
The appellant challenged the levy of additional tax under Section 8 of the Karnataka Motor Vehicles Taxation Act, 1957, arguing that the tax was imposed due to occasional overloading of his stage carriage. Section 8 stipulates that additional tax is payable when a motor vehicle is altered or proposed to be used in such a manner that a higher rate of tax becomes applicable. The Supreme Court found that the appellant's vehicle had not been altered and was used as a stage carriage, even when carrying extra passengers. The Court concluded that there was no provision in the Act for a higher rate of tax based on occasional overloading.
2. Interpretation of the Term "Proposed to be Used" in Section 8 of the Act:
The Court examined whether occasional overloading constituted "proposed to be used" in a manner that would attract a higher rate of tax. The Court held that the term "proposed to be used" implies a consistent or planned change in the vehicle's use, not isolated incidents of overloading. Therefore, the appellant's occasional overloading did not meet the criteria for a higher rate of tax under Section 8.
3. Applicability of the Decision in Noorullha Khan v. State of Karnataka:
The High Court's decision was based on the precedent set in Noorullha Khan's case, where additional tax was imposed for carrying passengers in excess of the permitted number. The Supreme Court overruled this decision, stating that the High Court had overlooked the specific wording in the Act, which limits tax liability to the number of passengers permitted under the permit. The Court emphasized that tax laws should be construed strictly, and the presence of the words "which the vehicle is permitted to carry" in the Act was crucial.
4. Relationship between the Karnataka Motor Vehicles Taxation Act, 1957, and the Motor Vehicles Act, 1939:
The Motor Vehicles Act, 1939, is a central act governing the use of motor vehicles, while the Karnataka Motor Vehicles Taxation Act, 1957, is a state act imposing taxes on motor vehicles. The Court noted that the scope of these acts is different. The Motor Vehicles Act, 1939, includes provisions for penalties such as the suspension or cancellation of permits for violations, including overloading. The Court suggested that enforcement of Section 60 of the Motor Vehicles Act, 1939, which deals with permit violations, would be more appropriate for addressing overloading issues.
5. Computation of Additional Tax in Cases of Overloading:
The Court highlighted the difficulty in computing additional tax for occasional overloading. The tax rate is fixed on a quarterly basis, making it impractical to determine a higher rate of tax for brief periods of overloading. The Court also pointed out that the tax is not based on the actual number of passengers carried but on the number permitted under the permit. Therefore, occasional overloading should not result in additional tax liability.
Conclusion:
The Supreme Court set aside the High Court's judgment and directed the respondents not to levy additional tax on the appellant under Section 8 of the Act for occasional overloading. The Court emphasized the need to enforce Section 60 of the Motor Vehicles Act, 1939, to address permit violations. The appeal was allowed with no costs.
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1987 (11) TMI 382
Issues Involved:
1. Justification of termination of the appellant's services.
2. Rights of the United Bank of India to cross-examine the appellant after merger.
3. Applicability of principles of natural justice in the context of the merger.
Summary of Judgment:
1. Justification of Termination:
The appellant's services were terminated by the Narang Bank of India Ltd. on February 10, 1975, without assigning any reason. The Central Government referred the dispute to the Central Government Industrial Tribunal for adjudication. The Tribunal held that the termination was not justified, illegal, and unenforceable, directing reinstatement with full back wages and costs of Rs. 1,000.
2. Rights of the United Bank of India to Cross-Examine:
Upon the merger of Narang Bank of India Ltd. with United Bank of India on August 1, 1976, the United Bank of India was impleaded as a party. The Tribunal dismissed the United Bank of India's application to cross-examine the appellant, whose evidence had been closed on May 21, 1976, on the grounds that no new plea had been taken. The High Court's Single Judge set aside the Tribunal's award, stating that principles of natural justice required the United Bank of India to be given an opportunity to cross-examine the appellant. The Division Bench upheld this decision.
3. Applicability of Principles of Natural Justice:
The Supreme Court held that the United Bank of India, as the successor-in-interest, stepped into the shoes of the Narang Bank of India Ltd. and was bound by all proceedings that had taken place till its impleading. The Court emphasized that there was no exceptional circumstance justifying the recall of witnesses for cross-examination by the United Bank of India. The principles of natural justice were not violated by the Tribunal in passing the award. The Supreme Court set aside the judgments of the Division Bench and the Single Judge, remanding the case to the Single Judge to consider any other relevant grounds urged by the United Bank of India.
Conclusion:
The appeal was allowed, and the United Bank of India was directed to pay the costs of the appellant. The case was remanded to the learned Single Judge for further consideration of any other grounds.
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1987 (11) TMI 381
Issues Involved:
1. Applicability of the Madras Agriculturists Relief Act IV of 1938 to the Bank of India.
2. Interpretation of the term "special Indian law" in section 4(e) of the Act.
3. Validity of the latter part of section 4(e) of the Act under Article 14 of the Constitution.
Summary:
1. Applicability of the Madras Agriculturists Relief Act IV of 1938 to the Bank of India:
The appellant, Bank of India, contended that the provisions of the Madras Agriculturists Relief Act IV of 1938 (referred to as 'the Act') were not applicable to it due to section 4(e) of the Act. The High Court had decreed that the Bank could recover the amounts claimed only after scaling down the debt in accordance with the Act. The Supreme Court examined whether the Bank, being a nationalized entity, fell within the exceptions provided in section 4(e) of the Act.
2. Interpretation of the term "special Indian law" in section 4(e) of the Act:
The Supreme Court analyzed the interpretation of the term "special Indian law" within section 4(e) of the Act. The respondents argued that "special Indian law" referred to laws enacted by the British Parliament for India. The Court rejected this interpretation, stating that "special Indian law" clearly referred to laws enacted by the Indian Legislature. The Court emphasized that the Banking Companies Act, under which the Bank was nationalized, is a special Indian law.
3. Validity of the latter part of section 4(e) of the Act under Article 14 of the Constitution:
The respondents contended that the latter part of section 4(e) of the Act was void as it offended Article 14 of the Constitution, based on a Division Bench decision in Krishna Murthy's case. The Supreme Court disagreed, stating that the provision did not make invidious discrimination in favor of British corporations but applied to corporations formed under any special Indian law, including the Banking Companies Act. The Court held that the Banking Companies Act is legal and valid.
Conclusion:
The Supreme Court concluded that the provisions of the Act were not applicable to the Bank of India. Consequently, the Bank was entitled to recover the amount decreed in its favor by the High Court without any scaling down under the Act. The appeal was allowed, and the judgment and decree of the High Court directing the scaling down of the debts were set aside. There was no order as to costs in the Supreme Court.
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1987 (11) TMI 380
Issues Involved:
1. Non-compliance with principles of natural justice.
2. Denial of reasonable opportunity of defense.
3. Relevance and materiality of documents in disciplinary proceedings.
Summary:
1. Non-compliance with Principles of Natural Justice:
The primary issue in this appeal was whether the disciplinary proceedings resulting in the appellant's dismissal were null and void due to the Enquiry Officer's failure to comply with the principles of natural justice. The appellant contended that a copy of paper No. 5, mentioned in the memo of charges, was neither supplied to him nor was he permitted to inspect it. This, he argued, handicapped him in cross-examining a key witness, Shri A.C. Das, Dy. S.P., S.P.E. The High Court had previously ruled against the appellant, finding no violation of natural justice principles.
2. Denial of Reasonable Opportunity of Defense:
The appellant argued that the failure to supply the copy of paper No. 5 violated the principles of natural justice, rendering the dismissal proceedings void. He cited several precedents, including *State of Madhya Pradesh v. Chintaman*, *Trilokinath v. Union of India*, and *Kashinath Dikshita v. Union of India*, to support his claim that the denial of relevant documents amounted to a denial of reasonable opportunity to defend himself.
3. Relevance and Materiality of Documents:
The Court examined whether the non-supplied document (paper No. 5) was material and relevant to the charges against the appellant. It was established that paper No. 5 was the report submitted by the Special Police Establishment regarding a criminal case of theft of coal, which had concluded with a final report. The Enquiry Officer did not consider or rely on this report in recording findings against the appellant. The Court held that only material and relevant documents need to be supplied to the delinquent officer. Since paper No. 5 was neither referred to nor relied upon by the Enquiry Officer, its non-supply did not prejudice the appellant or violate principles of natural justice.
Conclusion:
The Supreme Court upheld the High Court's judgment, concluding that the disciplinary enquiry was conducted fairly and in accordance with the principles of natural justice. The appellant's claim of being denied a reasonable opportunity of defense was found to be without merit. Consequently, the appeal was dismissed with no order as to costs.
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1987 (11) TMI 379
The High Court allowed the revision, setting aside the Sales Tax Tribunal's order and remanding the matter back to the Tribunal to accept the assessee's books of account as correct and determine turnover accordingly.
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1987 (11) TMI 378
Issues Involved:
1. Entitlement to pension under Regulation 8(3) of the Punjab State Public Service Commission (Conditions of Service) Regulations, 1958.
2. Jurisdiction of the High Court under Article 226 of the Constitution regarding the claim for pension under the Himachal Pradesh Legislative Assembly (Allowances & Pension of Members) Act, 1971.
3. Retrospective application of Regulation 8(3) of the Punjab State Public Service Commission (Conditions of Service) Regulations, 1958.
Summary:
Issue 1: Entitlement to Pension under Regulation 8(3) of the Punjab State Public Service Commission (Conditions of Service) Regulations, 1958
The appellant, a retired Member of the Punjab State Public Service Commission, claimed entitlement to a pension of Rs. 400 per mensem under Regulation 8(3) of the Punjab State Public Service Commission (Conditions of Service) Regulations, 1958, effective from August 10, 1972. The High Court directed the State Government of Punjab to pay this pension from the date the regulation was introduced. However, the appellant's claim for pension from January 2, 1959, was disallowed as the regulation did not have retrospective effect. The Supreme Court upheld this view, stating that Regulation 8(3) being a remedial measure, must receive a beneficial construction but cannot be applied retrospectively without explicit provision.
Issue 2: Jurisdiction of the High Court under Article 226 of the Constitution
The appellant's claim for pension as a Member of the State Legislative Assembly under the Himachal Pradesh Legislative Assembly (Allowances & Pension of Members) Act, 1971, was dismissed by the High Court on jurisdictional grounds. The High Court held that no part of the cause of action arose within its territorial jurisdiction under Article 226 of the Constitution. The Supreme Court affirmed this decision, noting that the Himachal Pradesh Act is operative within the territories of that State, and hence no relief could be granted against the State of Himachal Pradesh.
Issue 3: Retrospective Application of Regulation 8(3)
The appellant contended that Regulation 8(3) should be deemed to have come into effect from November 1, 1956, the appointed day, and thus he should be entitled to pension from January 2, 1959. The Supreme Court rejected this contention, stating that the newly-added Regulation 8(3) cannot bear a greater retroactive effect than intended. The Court emphasized that the mere use of the word "substitution" does not imply retrospective application unless explicitly stated.
Conclusion
The Supreme Court dismissed the appeal, affirming the High Court's judgment. The appellant was directed to seek pension from the State of Himachal Pradesh afresh or file a petition in the Himachal Pradesh High Court under Article 226 of the Constitution for appropriate relief. The appeal was dismissed with no order as to costs.
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1987 (11) TMI 377
Issues Involved:
1. Applicability of the Uttar Pradesh Public Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.
2. Interpretation of the term "public building" u/s 3(o) of the Rent Act.
3. Legislative amendments and their impact on the case.
4. Validity of the eviction suit filed by the respondent.
Summary:
1. Applicability of the Uttar Pradesh Public Buildings (Regulation of Letting, Rent and Eviction) Act, 1972:
The appellant contended that the suit for eviction was barred by the provisions of the Rent Act. The respondent argued that the premises were not covered by the Rent Act due to an exclusion clause in s. 2(1)(a).
2. Interpretation of the term "public building" u/s 3(o) of the Rent Act:
The definition of "public building" in s. 3(o) includes buildings taken on lease by the Government. The building in question, leased by the State Government, falls within this definition, making it exempt from the Rent Act as per s. 2(1)(a).
3. Legislative amendments and their impact on the case:
The Rent Act underwent several amendments:
- The original 1972 Act excluded buildings belonging to the Government or local authority.
- The 1976 amendment expanded the exclusion to "public buildings."
- The 1977 Ordinance attempted to narrow the exclusion but lapsed.
- The 1983 Ordinance revived the 1977 amendment, effective from 18.5.1983.
- The 1985 Act regularized these changes.
The appellant argued that the 1976 amendment intended only to exclude buildings where the Government was the landlord. However, the Court found that the language of the 1976 amendment was broader, including buildings leased by the Government.
4. Validity of the eviction suit filed by the respondent:
The Court held that the respondent's remedy to recover possession lay under the general law, not the Rent Act, as the premises were a "public building." The trial court and High Court were correct in decreeing the suit for eviction.
Conclusion:
The Supreme Court dismissed the appeal, upholding the eviction suit. The interpretation of "public building" included buildings leased by the Government, exempting them from the Rent Act. The legislative history and amendments supported this broader interpretation, and the respondent's suit for recovery of possession was valid. The decision of the Full Bench of the Allahabad High Court in Punjab National Bank v. Sugan Chand was overruled on this point. No order regarding costs was made.
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1987 (11) TMI 376
Issues Involved:
1. Nature and extent of corroboration of an accomplice's evidence.
2. Procedure for the trial of offences by a "child" under the East Punjab Children's Act 1949.
3. Credibility and corroboration of the accomplice's testimony.
4. Examination of the appellant under Section 313 Cr. P.C.
5. Applicability of Section 27 of the East Punjab Children's Act 1949.
Detailed Analysis:
1. Nature and Extent of Corroboration of an Accomplice's Evidence:
The primary issue raised is the extent to which an accomplice's testimony needs corroboration. The court discussed the historical context and legal precedents regarding the credibility of an accomplice, noting that traditionally, an accomplice is considered an unreliable witness. The court cited Section 114 Illus: (b) of the Evidence Act which presumes the uncreditworthiness of an accomplice, but Section 133 allows for a conviction based on uncorroborated accomplice testimony. The court emphasized that judicial prudence requires corroboration of material particulars to ensure the safety of a conviction.
2. Procedure for the Trial of Offences by a "Child" under the East Punjab Children's Act 1949:
The appellant was approximately 15 1/2 years old at the time of the offence, classifying her as a "child" under the East Punjab Children's Act 1949. Section 27 of the Act prohibits sentencing a child to death, transportation, or imprisonment unless the child is deemed of such unruly or depraved character that other methods are unsuitable. The sessions court invoked this proviso, but the Supreme Court found it unnecessary to examine this further due to the benefit of doubt granted to the appellant.
3. Credibility and Corroboration of the Accomplice's Testimony:
The court examined the evidence provided by Ram Sarup, the accomplice-turned-approver, and the necessity for corroboration. The court referenced the principles laid down in R. v. Bhaskerville and Rameshwar Kalyan Singh v. State of Rajasthan, stating that corroboration must connect the accused with the crime. The court found that the approver's testimony lacked sufficient independent corroboration on material particulars to implicate the appellant conclusively.
4. Examination of the Appellant under Section 313 Cr. P.C.:
The court noted that crucial incriminating circumstances from the approver's testimony were not put to the appellant during her examination under Section 313 Cr. P.C. This procedural lapse meant that the appellant was not given an opportunity to explain or rebut these allegations, necessitating the exclusion of this part of the evidence from consideration.
5. Applicability of Section 27 of the East Punjab Children's Act 1949:
Given the appellant's age, the court examined the applicability of Section 27 of the East Punjab Children's Act 1949, which restricts sentencing options for children. The sessions court had certified the appellant as being of depraved character under the proviso to Section 27, but the Supreme Court found it unnecessary to delve into this due to the overall finding that the appellant was entitled to the benefit of doubt.
Conclusion:
The Supreme Court allowed the appeal, setting aside the conviction and sentence of the appellant due to insufficient corroboration of the accomplice's testimony and procedural lapses in her examination under Section 313 Cr. P.C. The appellant was directed to be released immediately. The convictions and sentences of the other accused were left undisturbed.
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1987 (11) TMI 375
Issues Involved:
1. Whether the invocation of the performance guarantees by the appellant was legal.
2. Whether the High Court was justified in restraining the appellant from invoking the bank guarantees.
3. The applicability of principles governing irrevocable letters of credit to performance guarantees.
Issue 1: Legality of Invocation of Performance Guarantees
The appellant, a State Government enterprise, entered into a contract with the respondent for the supply and installation of a Vanaspati manufacturing plant. The contract required the respondent to furnish performance bank guarantees. The appellant contended that the respondent defaulted at various stages and failed to complete the work within the stipulated time, thus invoking the performance guarantees. The High Court, however, held that the invocation of the performance guarantees was illegal, terming the appellant's contentions as "technical pleas."
Issue 2: Justification of High Court's Restraint on Invocation
The respondent filed a petition u/s 41 of the Arbitration Act, 1940, seeking to restrain the appellant from realizing and encashing the bank guarantees. The Civil Judge dismissed the application, but the High Court allowed the revision petition, restraining the appellant from invoking the bank guarantees. The Supreme Court, however, disagreed, emphasizing that the principles governing bank guarantees are well-settled. The Court reiterated that an irrevocable commitment, either in the form of a confirmed bank guarantee or an irrevocable letter of credit, cannot be interfered with except in cases of fraud or irretrievable injustice.
Issue 3: Applicability of Principles Governing Irrevocable Letters of Credit
The Supreme Court referred to various precedents, including English and Indian cases, to underline that the principles governing irrevocable letters of credit also apply to performance guarantees. The Court cited cases like Hamzeh Melas & Sons v. British Imex Industries Ltd. and Edward Owen Engineering Ltd. v. Barclays Bank International Ltd., emphasizing that banks must honor their commitments under such guarantees, irrespective of disputes between the contracting parties, unless there is clear evidence of fraud or irretrievable injustice.
Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order and restoring the Civil Judge's order. The Court held that commitments of banks must be honored free from interference by the courts, except in exceptional cases of fraud or irretrievable injustice. The Court emphasized that the respondent could seek damages but could not restrain the appellant from invoking the bank guarantees. Both judges concurred in the judgment, highlighting the importance of maintaining the integrity of bank guarantees in commercial transactions.
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1987 (11) TMI 374
Issues Involved:
1. Taxability of interest income earned during the construction period.
2. Set-off of miscellaneous receipts against capital expenditure.
3. Applicability of section 57(iii) of the Income-tax Act, 1961.
Summary of Judgment:
Issue 1: Taxability of Interest Income Earned During the Construction Period
The primary issue was whether the interest income of Rs. 15,092 earned on deposits made from borrowed funds during the construction period should be taxed as revenue or set off against the interest payment of Rs. 7,79,297. The Tribunal held that the interest income should not be considered as revenue but should be set off against the interest payment, and the balance should be capitalized. The High Court affirmed this view, stating that the interest earned should be treated as part of a single account with the interest paid, and the net interest should be capitalized. The Court relied on the Institute of Chartered Accountants of India's guidelines and previous judgments to support this approach.
Issue 2: Set-off of Miscellaneous Receipts Against Capital Expenditure
The second issue was whether the amount of Rs. 4,900 received as miscellaneous income should be treated as a separate revenue receipt or set off against larger amounts of capital expenditure. The Tribunal held that the miscellaneous income should be set off against the capital expenditure, and only the reduced amount should be considered for determining the actual cost of assets. The High Court agreed with this approach, emphasizing that the proper method is to offset such income against related expenditure during the construction period.
Issue 3: Applicability of Section 57(iii) of the Income-tax Act, 1961
In R.C. No. 8 of 1985, the question was whether the interest payable to Andhra Pradesh Industrial Development Corporation was wholly and exclusively incurred for earning the interest from short-term deposits within the meaning of section 57(iii). The Tribunal found that the interest income earned during the construction period should be set off against the interest expenses, treating them as a single transaction. The High Court affirmed this finding, stating that the interest income cannot be treated as "income from other sources" and should be set off against the interest paid.
Additional Cases:
- R.C. No. 12 of 1985: The High Court held that the interest received by the assessee on short-term deposits should be set off against the interest paid and the balance interest capitalized.
- R.C. No. 79 of 1985: The High Court reframed the question and held that the bank interest received during the construction stage should not be treated as income from other sources but should go towards reducing the actual cost of capital assets.
Conclusion:
The High Court consistently held that interest income earned during the construction period should be set off against the interest paid on borrowed funds, and the net interest should be capitalized. This approach aligns with the guidelines provided by the Institute of Chartered Accountants of India and previous judicial decisions. The Court emphasized a realistic and holistic assessment of the financial transactions during the construction period.
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1987 (11) TMI 373
Issues Involved:
1. The selection of the period for determining disproportionate assets.
2. The beneficial ownership of joint bank investments.
3. The adequacy of deductions for carried-forward assets.
4. Credit for gifts and brokerage on fixed deposits.
5. Treatment of withdrawals from the bank account of the respondent's wife.
Summary:
Issue 1: Selection of Period for Determining Disproportionate Assets
The High Court found the selection of the period from 1.4.1958 to 31.12.1968 for determining disproportionate assets to be arbitrary and prejudicial to the respondent. It suggested that the period should have been from 1946 to 1968 to provide a fuller picture. The Supreme Court disagreed, stating that the choice of the period must be determined by the allegations of fact on which the prosecution is founded. The Court emphasized that the prosecution discharges its burden once it establishes that the public servant is in possession of disproportionate assets, and it is then up to the defense to satisfactorily account for such possession.
Issue 2: Beneficial Ownership of Joint Bank Investments
The High Court held that it was erroneous to assume that the respondent was the beneficial owner of joint bank investments where his name was not the first name. The Supreme Court found this assumption to be erroneous, stating that the matter is guided by the terms of the agreement between the joint depositors. The Court noted that the respondent virtually acknowledged his beneficial interest in the deposits during his examination u/s 342 Cr. P.C.
Issue 3: Adequacy of Deductions for Carried-Forward Assets
The High Court found that the deduction of Rs. 41,839.17 as carried-forward assets from the period prior to 1.4.1958 was inadequate and should have been Rs. 56,822. The Supreme Court did not specifically address this issue but noted that the High Court's recalculations reduced the extent of disproportionate assets.
Issue 4: Credit for Gifts and Brokerage on Fixed Deposits
The High Court gave credit to the respondent for a sum of Rs. 6,000 as a probable gift from his mother and Rs. 1,275 representing brokerage on fixed deposits. The Supreme Court found the acceptance of the alleged gift from the mother to be unsupported by evidence but did not interfere with the High Court's overall conclusion.
Issue 5: Treatment of Withdrawals from the Bank Account of the Respondent's Wife
The High Court held that a sum of Rs. 82,827.99 withdrawn from the bank account of the respondent's wife during the relevant period should be treated as belonging to her and excluded from the value of the respondent's assets. The Supreme Court did not specifically address this issue but noted that the High Court's recalculations reduced the extent of disproportionate assets.
Conclusion:
The Supreme Court found errors in the High Court's approach and assumptions but did not interfere with its ultimate conclusion that the prosecution had not established the case against the respondent beyond reasonable doubt. The Court emphasized that a somewhat liberal view should be taken of what proportion of assets in excess of known sources of income constitutes "disproportion" for the purpose of Section 5(1)(e) of the Prevention of Corruption Act. The appeal was dismissed, and the respondent was given the benefit of doubt.
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1987 (11) TMI 372
Whether on the facts and in the circumstances, the Corporation was not justified in selling the property by private negotiations in favour of M/s. Gumraj Plantations at the instance of P.M. Jacob?
Held that:- Here is a case where the Corporation invited tenders for the sale of the property under notification dated January 18, 1983. The appellant submitted the highest tender in response to the said notification. He was given all concessions for payment of the tender amount. But he did not. He negotiated with the Managing Director of the Corporation for facilities for payment by instalments. That was also granted to him. There again he failed. If the appellant could not act according to his tender, we fail to see why the property should not be offered to the person who was next in order. The Corporation, in our opinion, did not do anything unfair with P.M.Jacob. The Corporation got the tender amount raised from ₹ 4,16,550 to ₹ 4,50,000. It shows the fairness with which the Corporation dealt with the property.
On a consideration of all the facts and circumstances of the case, we are satisfied that the action of the Corporation in offering the property to P.M.Jacob and selling the same at his request to M/s. Gumraj Plantations was perfectly justified and cannot be found fault with In the result the appeal fails and is dismissed.
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1987 (11) TMI 371
The High Court of Kerala ruled in favor of the Revenue in a tax dispute involving the classification of kattimore as a milk product under the Kerala General Sales Tax Act. The Appellate Tribunal's decision was reversed, determining that kattimore qualifies as a milk product. The revision petition was allowed with no costs. (Case citation: 1987 (11) TMI 371 - KERALA HIGH COURT)
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1987 (11) TMI 370
Detention orders - Held that:- Appeal dismissed. The impugned order of detention was clamped on 28th November, 1985 and the period of one year as provided in Section 13 of the National Security Act has also expired. Moreover, as already upheld the finding of the High Court that the order of detention is illegal and bad for non-supply of vital documents to the detenus to enable them to make an effective representation against the grounds of detention and as such their right to make an effective representation as contemplated under Article 22(5) of the Constitution of India has been infringed rendering the impugned order as illegal and bad. Furthermore, the nonproduction of relevant materials i.e. the statement of the under-trial prisoners in their application in the court that the detenus had been falsely implicated in the crime case No. 450 of 1985 under section 307;34 I.P.C. and also the statement to that effect in the bail petition and the police report thereon, before the detaining authority for his consideration before passing the order of detention, renders the order of detention invalid and illegal.
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1987 (11) TMI 369
Issues:
1. Interpretation of sales tax exemption notification for cattle feed.
2. Impact of subsequent amendments on the exemption eligibility.
3. Validity of assessment order denying exemption for mixed commodities.
Analysis:
1. The petitioner claimed exemption from sales tax for cattle feed, including mixtures of rice bran, pulses, husk, and molasses. The primary notification dated 4th March, 1974, exempted cattle feed but was later amended on 23rd March, 1974, to specify exclusions. A previous court ruling established that the addition of molasses to cattle feed did not alter its character, thus maintaining exemption eligibility.
2. A subsequent amendment on 12th April, 1979, replaced "cattle feed" with specific commodities like rice bran, wheat bran, husk, and pulses. The government argued that the new amendment required these commodities to be sold separately without molasses or salt to qualify for exemption. However, the court held that the earlier rulings permitting mixtures of commodities for exemption still applied, and the addition of molasses or salt did not change the character of the goods.
3. The second respondent denied the petitioner's exemption claim based on the mixed nature of the marketed goods and the presence of molasses and salt. The petitioner contended that the 1979 amendment did not alter the exemption criteria established by previous court decisions. The court agreed with the petitioner, emphasizing that the assessment order failed to consider the precedents set by the court, thus allowing the petitioner's writ petition and dismissing the pre-assessment notice challenge.
In conclusion, the court upheld the petitioner's entitlement to exemption for the mixed commodities under the sales tax notification, emphasizing the continuity of exemption criteria despite subsequent amendments. The judgment highlighted the importance of applying established legal principles in tax assessments and acknowledged the petitioner's right to exemption based on prior court decisions.
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1987 (11) TMI 368
Issues Involved:
1. Classification of printed materials as sale of goods or works contract.
2. Applicability of sales tax on various printed materials.
3. Distinction between sale of goods and works contract based on legal precedents.
4. Assessment of turnover for sales tax purposes.
Issue-wise Detailed Analysis:
1. Classification of printed materials as sale of goods or works contract:
The petitioner, a co-operative press, argued that its activities constituted works contracts rather than the sale of goods. The court examined various precedents to determine the nature of the contracts. It was noted that if the substance of the contract involves the production of something to be sold to the customer, it is a sale of goods. Conversely, if the contract primarily involves skill and labor, it is a works contract. The court referred to several cases, including *Kanpur Journals Ltd. v. Commissioner of Sales Tax, U.P.*, which held that the nature of the contract should be determined by its substance. The court found that the printed materials such as cheque books, registers, letter pads, bonds, forms, share certificates, and ration cards constituted the sale of finished goods rather than works contracts.
2. Applicability of sales tax on various printed materials:
The court addressed whether the printed materials supplied by the petitioner were subject to sales tax. It referred to the case of *Sardar Printing Works v. Sales Tax Commissioner*, which held that when printed material is sold to customers, it constitutes a sale of finished goods. The court concluded that the items listed in categories (1) to (7) (cheque books, registers, letter pads, bonds, forms, share certificates, and ration cards) were taxable as they were finished goods. However, the court distinguished annual audit reports and financial statements in book form and pamphlets such as "Jabalpur Zila Me Nalkoop Yojna" as works contracts, not subject to sales tax.
3. Distinction between sale of goods and works contract based on legal precedents:
The court analyzed various precedents to draw a distinction between the sale of goods and works contracts. In *Government of Andhra Pradesh v. Guntur Tobaccos Ltd.*, it was held that a contract for work involving the use of materials does not necessarily constitute a sale of those materials. The court also referred to *Hindustan Aeronautics Ltd. v. State of Karnataka*, which emphasized the primary object of the transaction and the intention of the parties. The court concluded that the printing of annual audit reports, financial statements, and pamphlets was primarily a contract for work and labor, not a sale of goods.
4. Assessment of turnover for sales tax purposes:
The court examined the assessment orders passed by the Additional Sales Tax Officer and the Additional Commissioner of Sales Tax. It was noted that the cost of labor and materials varied across different assessment years. The court directed the Additional Sales Tax Officer to pass fresh assessment orders in light of the observations made in the judgment. The court quashed the impugned orders regarding the printing and supply of annual audit reports, financial statements, and pamphlets, while upholding the orders for the remaining items.
Conclusion:
The writ petition was partly allowed. The court quashed the impugned orders concerning the printing and supply of annual audit reports, financial statements, and pamphlets, as they were deemed works contracts. However, the petition was dismissed regarding the turnover of items in categories (1) to (7), which were classified as the sale of finished goods and thus taxable. The Additional Sales Tax Officer was directed to pass fresh assessment orders in accordance with the court's observations. Each party was ordered to bear its own costs, and the outstanding security amount was to be refunded to the petitioner.
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1987 (11) TMI 367
The High Court of Madhya Pradesh allowed the writ petition in part, quashing orders that refused sales tax exemption when form No. E-I was produced but form No. C was not. The court directed the Additional Assistant Commissioner of Sales Tax to reassess accordingly. The petitioner will bear their own costs.
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