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1963 (4) TMI 89
Issues Involved:
1. Whether the income of the Pepsu Road Transport Corporation is exempt from Union tax under Article 289 of the Constitution.
2. Whether the Pepsu Road Transport Corporation is a taxable entity.
3. Whether the Pepsu Road Transport Corporation qualifies as a charitable institution under Section 4(3)(i) of the Income-tax Act.
4. Whether the Pepsu Road Transport Corporation can be considered a local authority within the meaning of Section 4(3)(i) of the Income-tax Act.
Detailed Analysis:
1. Exemption under Article 289 of the Constitution:
The petitioner contended that the income of the corporation is the income of the Punjab State and hence exempt from Union tax under Article 289 of the Constitution. The counsel relied on Article 289(1), which exempts the property and income of a State from Union taxation unless Parliament provides otherwise. The petitioner argued that the corporation is an agent of the State, citing various legal precedents, including Rai Sahib Ram Jawaya Kapur v. State of Punjab and Montreal v. Montreal Locomotive Works Ltd. However, the court concluded that the corporation is not merely an agent of the State but a separate legal entity with its own personality. The court emphasized that the corporation has perpetual succession, can sue and be sued, and is bound by all laws in force, including the Income-tax Act. Therefore, the income of the corporation is not exempt under Article 289.
2. Taxable Entity:
The petitioner argued that it is neither an association of persons nor an individual and thus cannot be subjected to the impugned levy. The court referred to the Andhra Pradesh S.R.T. Corporation case and other legal precedents to conclude that the corporation is a taxable unit. The court held that the term "individual" in Section 3 of the Income-tax Act has a wider meaning and includes entities like the petitioner. The court also considered the possibility of the petitioner being an "association of persons" or a "company" and concluded that the petitioner can reasonably be described as an "individual" and is therefore a taxable unit.
3. Charitable Institution under Section 4(3)(i) of the Income-tax Act:
The petitioner claimed to be a charitable institution established by the State Government for providing utility service to the public, trade, and industry. The court examined Section 30 of the Road Transport Corporations Act, which provides for the disposal of net profits for the provision of amenities to passengers, welfare of labor, and road development. However, the court concluded that the corporation is not established for any religious or charitable purpose. The court emphasized that exemptions from taxes should be determined by the income-tax authorities and not by the writ court. The court also noted that the burden of proving the claim for exemption lies on the assessee and that exemptions should be construed liberally in favor of the revenue.
4. Local Authority under Section 4(3)(i) of the Income-tax Act:
The petitioner half-heartedly suggested that it is a local authority, but this contention was not persisted in. The court did not consider this argument in detail and dismissed it.
Conclusion:
The petition was dismissed, with the court holding that the Pepsu Road Transport Corporation is a taxable entity and not exempt from Union tax under Article 289 of the Constitution. The court also concluded that the corporation does not qualify as a charitable institution under Section 4(3)(i) of the Income-tax Act and is not a local authority within the meaning of the same section. The court emphasized that claims for exemption should be determined by the income-tax authorities and not by the writ court.
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1963 (4) TMI 88
The High Court of Patna ruled in favor of the assessee, a public limited company running a railway, allowing the expenditure on replacing old sleepers with new ones as revenue expenditure for assessment years 1953-54 and 1954-55. The Income-tax Appellate Tribunal's decision was upheld based on the interpretation of "current repairs" under the Income-tax Act, 1922.
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1963 (4) TMI 87
Issues Involved:
1. Applicability of Section 1(3) of the Employees' Provident Funds Act, 1952.
2. Retrospective effect of notices served.
3. Equitability of enforcing notices without employees' contributions.
4. Principal and subsidiary industrial activities within a composite factory.
5. Implications of amended Section 6 on contribution rates.
Detailed Analysis:
1. Applicability of Section 1(3) of the Employees' Provident Funds Act, 1952:
The primary issue was whether the factory run by the appellant fell within the scope of Section 1(3) of the Employees' Provident Funds Act, 1952. The appellant's factory consisted of a tile factory and an engineering works, both situated on the same premises and under the same license. The Court referenced a recent decision (A.I.R. 1962 S.C. 1536) which clarified that Section 1(3)(a) is not limited to factories exclusively engaged in industries listed in Schedule I but also includes composite factories running multiple industries, some of which fall under Schedule I. The Court concluded that since the appellant's factory ran two independent industries, one of which fell under Schedule I, it was subject to Section 1(3)(a).
2. Retrospective Effect of Notices Served:
The appellant argued that the notices served by the respondent were retrospective and thus illegal. The High Court rejected this argument, and the Supreme Court upheld this decision. The Court found no merit in the claim that the notices had a retrospective effect.
3. Equitability of Enforcing Notices Without Employees' Contributions:
The appellant contended that enforcing the notices was inequitable since employees had not made their contributions for the relevant period. The High Court noted that the respondent had conceded not to collect the employees' share of contributions for that period, deeming this concession proper and fair. Consequently, the Supreme Court found no substance in the appellant's grievance regarding the inequity of the notices.
4. Principal and Subsidiary Industrial Activities within a Composite Factory:
The Court examined whether the engineering industry or the tile industry was the primary activity of the appellant's factory. The appellant argued that the tile industry was the dominant one due to its earlier establishment and larger workforce. However, the Court held that since both industries were independent of each other, the question of which was primary or subsidiary did not arise. The Court reiterated that Section 1(3)(a) applied to composite factories running independent industries, one of which falls under Schedule I, regardless of the dominance of any particular industry.
5. Implications of Amended Section 6 on Contribution Rates:
The appellant expressed concerns about the increased contribution rates under the amended Section 6, applicable to certain industries by government notification. The Court declined to address this hypothetical issue, stating it was a matter for the respondent to decide. The Court noted that the tiles industry had been included in Schedule I after the High Court's decision, but the revised rate had not been applied to it.
Conclusion:
The Supreme Court dismissed the appeal, upholding the High Court's decision that the appellant's factory fell within the purview of Section 1(3)(a) of the Employees' Provident Funds Act, 1952. The Court found no merit in the appellant's arguments regarding the retrospective effect of notices, the inequity of enforcing notices without employees' contributions, and the primary versus subsidiary nature of the industries within the composite factory. The issue of increased contribution rates under the amended Section 6 was left to be decided by the respondent. The appeal was dismissed with costs.
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1963 (4) TMI 86
Issues Involved
1. Jurisdiction of the City Civil Court versus the Court of Small Causes, Bombay under Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
2. Interpretation of Section 28 and Section 29-A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
3. Determination of the relationship between the parties as landlord-tenant or licensor-licensee.
4. Applicability of general principles of jurisdiction at the inception of suits.
Issue-wise Detailed Analysis
1. Jurisdiction of the City Civil Court versus the Court of Small Causes, Bombay under Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947
The central issue in this appeal was whether the City Civil Court had jurisdiction to entertain the suit filed by the respondent or whether the Court of Small Causes, Bombay had exclusive jurisdiction under Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The respondent, a partnership firm, filed a suit in the City Civil Court for a declaration of lawful possession and an injunction against the appellants, claiming they were mere licensees whose rights had expired. The appellants contended they were sub-tenants, invoking Section 28 to argue that only the Court of Small Causes had jurisdiction.
The Supreme Court affirmed the High Court's decision that the City Civil Court had jurisdiction. It held that jurisdiction at the inception of the suit depends on the averments made in the plaint, not on the defendant's claims. The Court emphasized that Section 28 does not oust the jurisdiction of the City Civil Court based on the defendant's plea alone.
2. Interpretation of Section 28 and Section 29-A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947
Section 28(1) states that the Court of Small Causes, Bombay has exclusive jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises, and to decide any application made under the Act. Section 29-A saves suits involving title, allowing parties to sue in a competent court to establish title to premises.
The Supreme Court clarified that Section 28 confers exclusive jurisdiction on the Court of Small Causes only for claims arising under the Act between parties with an existing or previous landlord-tenant relationship. It does not extend to questions of title or to cases where the plaintiff does not admit a landlord-tenant relationship.
3. Determination of the Relationship between the Parties as Landlord-Tenant or Licensor-Licensee
The respondent's plaint asserted that the appellants were licensees, not tenants, and that their right to enter the shop had expired. The appellants countered that they were sub-tenants, alleging the agreement was a sham to avoid the penal provisions of the Act.
The Supreme Court held that the determination of whether the appellants were licensees or tenants was crucial. If the appellants were found to be licensees, the City Civil Court had jurisdiction. If they were tenants, the Court of Small Causes would have jurisdiction. The Court emphasized that the jurisdiction should be determined based on the plaint's averments, not the defendant's claims.
4. Applicability of General Principles of Jurisdiction at the Inception of Suits
The Court reiterated the general principle that jurisdiction at the inception of a suit depends on the plaint's averments. It cited the Full Bench decision of the Allahabad High Court in Ananti v. Chhannu, which stated that the plaintiff chooses the forum and files the suit based on the facts alleged. If the plaintiff's facts are correct, the chosen forum grants relief; if not, the suit is dismissed.
The Supreme Court agreed with the High Court that the City Civil Court's jurisdiction was not ousted by the appellants' plea. The Court held that Section 28 does not intend to change the forum based on the defendant's plea, and exclusive jurisdiction depends on an existing or previous landlord-tenant relationship.
Conclusion
The Supreme Court dismissed the appeal, affirming that the City Civil Court had jurisdiction to entertain the suit. The Court emphasized that jurisdiction depends on the plaint's averments and that Section 28 does not oust the City Civil Court's jurisdiction based on the defendant's claims. The decision clarified the interpretation of Sections 28 and 29-A, reinforcing the general principle of jurisdiction at the inception of suits.
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1963 (4) TMI 85
Issues Involved:
1. Whether the sum of Rs. 4,680-13-0 could be claimed as a revenue expenditure in the year of account.
2. Whether the sum of Rs. 10,430 paid by the assessee company as its contribution to the employees' provident fund is allowable as a deduction in the assessment year 1951-52.
Issue-wise Detailed Analysis:
1. Whether the sum of Rs. 4,680-13-0 could be claimed as a revenue expenditure in the year of account:
The primary issue in this case is whether the sum of Rs. 4,680-13-0 paid as stamp duty on an ineffective lease could be claimed as a revenue expenditure. The facts reveal that the assessee-company was the lessee of a jute mill and had renewed its lease in 1950, which was later disputed and deemed invalid. Consequently, a new lease was executed in 1951 at a higher rent. The assessee paid a stamp duty of Rs. 4,680-13-0 on the invalid lease and claimed it as a revenue expenditure.
The Tribunal rejected the assessee's claim, concluding that the expenditure was for acquiring an asset of an enduring character, and hence, it was capital in nature. The Tribunal's rationale was that the lease provided the right to run the mill, which is a capital asset.
The assessee argued that since the lease was ineffective, the expenditure did not secure any capital asset and should not be considered capital expenditure. However, the court noted that the law attributes expenditure to capital if it is made "with a view" to bring a capital asset or advantage into existence, regardless of the outcome. This principle is supported by cases such as Henderson v. Meade-King Robinson & Co. Ltd., Southwell v. Savill Brothers Ltd., and Pyrah v. Annis & Co. Ltd.
The court referred to the remarks of Viscount Cave L.C. in British Insulated and Helsby Cables v. Atherton, which emphasized that expenditure made with a view to securing an asset for the enduring benefit of a trade should be treated as capital expenditure. The Supreme Court of India has endorsed this view in Commissioner of Income-tax v. Finlay Mills Ltd., where it was held that the purpose of the expenditure determines its nature.
The court also examined other relevant cases, including Southwell v. Savill Brothers Ltd., where it was held that expenses for unsuccessful applications for new licenses were capital expenditure, and Pyrah v. Annis & Co. Ltd., which reinforced that expenditure aimed at improving capital assets is capital in nature.
Based on these authorities, the court concluded that the sum of Rs. 4,680-13-0, paid as stamp duty on an ineffective lease, was capital expenditure. Therefore, the assessee could not claim it as a revenue expenditure in the year of account.
2. Whether the sum of Rs. 10,430 paid by the assessee company as its contribution to the employees' provident fund is allowable as a deduction in the assessment year 1951-52:
The second issue was not pressed by the assessee's counsel, as relief had been obtained in the subsequent year. Consequently, the court did not address this question.
Conclusion:
The court answered the first question in the negative, holding that the sum of Rs. 4,680-13-0 could not be claimed as a revenue expenditure in the year of account. There was no order as to the costs of this reference. The second question was not addressed due to the assessee's counsel not pressing it.
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1963 (4) TMI 84
Issues Involved:
1. Validity of termination of employment by the District Board.
2. Applicability of Article 311 of the Constitution.
3. Jurisdiction of the High Court under Article 226 of the Constitution.
4. Interpretation of the District Boards Act, 1922, and related rules.
5. Nature of the termination order (whether it was a dismissal as punishment).
Issue-Wise Detailed Analysis:
1. Validity of Termination of Employment by the District Board:
The appellant's employment as an Engineer was terminated by the District Board, Agra, on October 18, 1954, with three months' salary in lieu of notice. The appellant challenged this termination, claiming it was unjustified and capricious. The Board, however, justified the termination by citing negligence and unfaithfulness on the appellant's part, supported by several incidents catalogued in an affidavit. The High Court upheld the termination, stating it was in accordance with rule 3A(iv) of the District Board Manual, which allows termination with three months' notice or salary in lieu thereof.
2. Applicability of Article 311 of the Constitution:
Counsel for the Board argued that the appellant, not being a member of the civil service of the State, was not entitled to the protection of Article 311 of the Constitution. The Supreme Court agreed, distinguishing the appellant's case from those involving public servants protected under Article 311. The Court noted that while common law generally does not compel employers to retain employees they wish to dismiss, statutory bodies must act within the bounds of their statutory obligations.
3. Jurisdiction of the High Court under Article 226 of the Constitution:
The appellant sought a writ of certiorari to quash the Board's resolution and a writ of mandamus to reinstate him. The Board contended that the High Court's jurisdiction was restricted by Section 21(b) of the Specific Relief Act, which generally does not allow for specific enforcement of a contract of personal service. However, the Supreme Court held that the High Court has the power to declare the statutory obligations of a statutory body and can intervene if the body acts in breach of mandatory statutory obligations.
4. Interpretation of the District Boards Act, 1922, and Related Rules:
The Supreme Court examined various provisions of the District Boards Act, 1922, particularly Sections 72, 82, 84, and 172, along with the rules framed under the Act. The Court noted that the power to appoint and dismiss an Engineer vests in the Board, subject to a right of appeal to the State Government. The rules allow for termination of employment with notice or salary in lieu thereof, as per rule 3A. The Court rejected the appellant's argument that the Board lacked the power to terminate employment without a specific statutory provision, affirming that the power to appoint includes the power to terminate, subject to the prescribed conditions.
5. Nature of the Termination Order (Whether it was a Dismissal as Punishment):
The appellant argued that the termination was, in reality, a dismissal for misconduct, camouflaged as a simple termination. The Supreme Court acknowledged that the form of an order is not conclusive of its true nature and that courts can look beyond the form to determine the real intent. However, the appellant had not raised this argument in the High Court, nor provided sufficient pleadings to support it. The Court refused to consider this new argument at the appellate stage, noting it would be unfair to the Board, which had no opportunity to address this claim in the lower court.
Conclusion:
The Supreme Court dismissed the appeal, holding that the Board had the power to terminate the appellant's employment in the manner it did. The Court found no merit in the appellant's arguments regarding the lack of statutory power and the alleged camouflaged dismissal. The appeal was dismissed without any order as to costs.
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1963 (4) TMI 83
Issues Involved:
1. Maintainability of the petition under Sections 397 and 398 of the Companies Act.
2. Validity of consent under Section 399(3) after the addition of transferees.
3. Enforceability of the agreement dated 27th July 1954 against the company post its conversion into a public company.
4. Validity of resolutions passed on 29th March 1958.
5. Mala fide intent behind the notice dated 25th August 1960 for increasing share capital.
6. Establishment of a case under Section 397 (oppression).
7. Establishment of a case under Section 398 (mismanagement).
8. Reliefs to be granted if the application is maintainable.
Detailed Analysis:
Issue I: Maintainability of the Petition
The petition was contested on the grounds that it did not make out a case under Sections 397 and 398 of the Companies Act. The court noted that all material facts must be pleaded in the petition itself and subsequent affidavits cannot supplement the original petition. The court found that the subsequent affidavits filed by the petitioner either repeated the material facts already pleaded or supplied fresh materials in reply to the respondents' counter-affidavit. Therefore, the subsequent affidavits were taken into consideration, but facts transpiring after the petition were excluded.
Issue II: Validity of Consent under Section 399(3)
The petitioner had initially obtained consent from members holding more than one-tenth of the issued share capital. The question arose whether fresh consent was needed after the addition of transferees. The court held that the application remains valid as the nature of the reliefs sought was not altered by the inclusion of the transferees, who merely stepped into the shoes of the transferors.
Issue III: Enforceability of the Agreement Dated 27th July 1954
The court examined whether the agreement, which was essentially a partnership agreement, could be enforced against the company after it became a public company. It was found that while the agreement was acted upon to some extent, it was not incorporated into the Articles of Association. The court concluded that the agreement could not be enforced against the public company as it would be contrary to the Articles of Association and the provisions of the Companies Act. The contractual obligations among the parties could no longer be worked out with reference to the theory of partnership.
Issue IV: Validity of Resolutions Passed on 29th March 1958
(a) Notice Dated 1st March 1958: The court found that the notice was clear and not misleading. The petitioner was aware of the implications of the notice and did not claim to be misled. The notice was deemed sufficient under Section 172(1) of the Act.
(b) Compliance with Section 81: The court held that the allotment of 39,000 shares was not the first allotment after the company became public and thus Section 81 applied. The General Meeting had the authority to give directions contrary to the pre-emptive rights of existing shareholders.
(c) Allotment of Shares: The court rejected the argument that the resolutions were infructuous as the allotment could not be made. The resolutions, when read together, allowed for the allotment of shares to a select group of persons, not necessarily the existing shareholders or the public.
(d) Mala Fide Intent: The court found no evidence that the allottees were under the control of the majority group. The allotment was not made with indecent haste and was necessary for the company's financial needs.
Issue V: Mala Fide Intent Behind the Notice Dated 25th August 1960
The court found that the notice for the Extraordinary General Meeting to increase the share capital was part of a continuing process to oust the petitioner and his group. However, this subsequent conduct was not admissible for determining the validity of the petition filed earlier.
Issue VI: Establishment of a Case Under Section 397
The court found that the petitioner failed to establish a case of oppression under Section 397. The actions of the majority group were legal and constitutional, and there was no evidence of fraud, misfeasance, or misconduct towards the minority shareholders.
Issue VII: Establishment of a Case Under Section 398
The court found no evidence of gross mismanagement. The allegations of mismanagement were either repetitions of the oppression claims or were not substantiated with sufficient evidence. The petitioner failed to make out a case under Section 398.
Issue VIII: Reliefs to be Granted
As the petition was not maintainable under Sections 397 and 398, no reliefs were granted. The judgment of the learned Company Judge was set aside, and the appeals were allowed.
Conclusion:
The court dismissed the petition under Sections 397 and 398 of the Companies Act, finding no evidence of oppression or mismanagement. The resolutions passed on 29th March 1958 were deemed valid, and the subsequent conduct of the majority group did not affect the maintainability of the petition. The appeals were allowed, and the judgment of the learned Company Judge was set aside.
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1963 (4) TMI 82
Issues Involved:
1. Legitimacy of the dismissal and subsequent removal from service of the respondent.
2. Validity of the High Court's jurisdiction in reviewing the departmental enquiry.
3. Adherence to principles of natural justice in the departmental enquiry.
4. Examination and summoning of defense witnesses.
5. Adequacy and specificity of the charges against the respondent.
Detailed Analysis:
1. Legitimacy of the Dismissal and Subsequent Removal from Service of the Respondent:
The respondent, a sub-inspector of police on probation, was dismissed from service by the Deputy Inspector General of Police on March 10, 1955. On appeal, the Inspector General of Police altered the dismissal to removal from service. The charges against the respondent included "reprehensible conduct in wrongfully confining a K.D., Chandana Durgalu accused in Cr.No.17/54: of Kodur Police Station from the night of 5-3-54: to 7-3-1954: in the Police Station when he went on five days casual leave." The departmental enquiry concluded that the respondent was guilty of the charges, leading to his dismissal, which was later reduced to removal due to his young age and inexperience.
2. Validity of the High Court's Jurisdiction in Reviewing the Departmental Enquiry:
The High Court quashed the orders of dismissal and removal, assuming jurisdiction under Art. 226 of the Constitution. However, the Supreme Court held that the High Court overstepped its jurisdiction. The High Court is not a court of appeal over departmental enquiries and is limited to ensuring that the enquiry is conducted by a competent authority, following prescribed procedures, and adhering to natural justice principles. The Supreme Court emphasized that the High Court cannot re-evaluate evidence or substitute its judgment for that of the departmental authorities if there is some evidence supporting the conclusion.
3. Adherence to Principles of Natural Justice in the Departmental Enquiry:
The High Court found the departmental enquiry flawed, stating that the Enquiry Officer and the departmental authorities did not consider all evidence collectively and failed to appreciate the rule concerning the onus of proof. The Supreme Court disagreed, stating that the High Court's approach was incorrect. The enquiry was conducted properly, and the Enquiry Officer's sarcastic remark about the Magistrate's judgment did not undermine the conclusion. The Supreme Court clarified that the principles of natural justice were not violated, and the enquiry was consistent with the rules.
4. Examination and Summoning of Defense Witnesses:
The High Court found fault with the enquiry for not summoning two defense witnesses. The Supreme Court examined the record and found that the respondent had the opportunity to produce witnesses. The respondent chose not to summon additional witnesses after police constable No. 506 was examined. The Supreme Court concluded that the respondent was given ample opportunity to present his defense, and there was no breach of natural justice in this regard.
5. Adequacy and Specificity of the Charges Against the Respondent:
The High Court noted that the respondent was not charged with "falsifying the record by omitting to write what he had done or what happened in the police station," yet was found guilty of this. The Supreme Court found this argument hypercritical, as the "statement of facts" accompanying the charge-sheet clearly mentioned the failure to record the custody of Durgalu. The respondent had full notice of the charges and had the opportunity to defend himself. The Supreme Court held that the charges were adequately specified and the enquiry was not vitiated by any lack of specificity.
Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order and dismissing the respondent's petition. The departmental enquiry was conducted properly, adhering to natural justice principles, and the High Court had no jurisdiction to interfere with the findings of the departmental authorities. The respondent's removal from service was upheld.
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1963 (4) TMI 81
Issues Involved:
1. Legality and jurisdiction of notices of demand for advance payment of tax issued to petitioners as agents of non-resident firms.
2. Validity of appointment of petitioners as statutory agents under section 43 of the Indian Income-tax Act for the assessment year 1962-63.
3. The requirement of notice and opportunity of being heard for valid appointment under section 43.
4. Applicability of previous year's appointment for subsequent assessment years.
5. Vicarious liability for advance tax under section 18A.
Issue-wise Detailed Analysis:
1. Legality and Jurisdiction of Notices of Demand:
The petitioners challenged the notices of demand for advance payment of tax issued under section 29 of the Indian Income-tax Act, claiming they were illegal, void, and without jurisdiction. The court found that the notices were issued without a valid appointment of the petitioners as agents for the assessment year 1962-63, making the demand for advance tax unlawful. The court concluded that the notices of demand were "illegal and void, and without jurisdiction."
2. Validity of Appointment as Statutory Agents:
The petitioners argued that no advance payment of tax could be demanded unless they were properly appointed as agents under section 43 for the assessment year 1962-63. The court agreed, noting that for the assessment year 1962-63, no notice under section 43 was issued, nor was any order passed appointing the petitioners as agents. The court emphasized that the appointment for the assessment year 1961-62 could not be used to impose liability for the subsequent year.
3. Requirement of Notice and Opportunity of Being Heard:
The court highlighted that section 43 required the Income-tax Officer to give notice and an opportunity to be heard before appointing someone as a statutory agent. The court referenced previous decisions, including Bhagwanji Laxmidas & Co. v. Commissioner of Income-tax, which established that compliance with these requirements was essential for a valid appointment. The court found that these formalities were not observed for the assessment year 1962-63, rendering any such appointment invalid.
4. Applicability of Previous Year's Appointment:
The court rejected the respondent's argument that the appointment for the assessment year 1961-62 could extend to the financial year 1962-63. Citing previous rulings, the court reiterated that each assessment year is self-contained, and a new notice under section 43 is required for each year. The court stated, "The appointment of the assessment year 1961-62 cannot be availed for the purposes of the liability in respect of the assessment year 1962-63."
5. Vicarious Liability for Advance Tax:
The court addressed the respondent's contention that the appointment for the assessment year 1961-62 made the petitioners liable for advance tax under section 18A for the financial year 1962-63. The court disagreed, stating that the vicarious liability imposed by section 43 was limited to the assessment year for which the appointment was made. The court clarified, "The vicarious liability imposed on a person by his appointment as a statutory agent under section 43 is only in respect of the liability for the assessment year for which the appointment is made."
Conclusion:
The court concluded that the notices of demand for advance payment of tax were illegal and without jurisdiction due to the absence of a valid appointment of the petitioners as agents for the assessment year 1962-63. The court ordered the notices to be quashed and directed the respondent not to take any further steps in enforcing them. The petitioners were awarded costs in Miscellaneous Petition No. 229 of 1962, with no order as to costs in Miscellaneous Petition No. 230 of 1962.
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1963 (4) TMI 80
Issues Involved:
1. Whether the applicant paid a higher price for styron for extra-commercial reasons.
2. The applicability of the proviso to section 13 of the Indian Income-tax Act, 1922.
3. The determination of the reasonableness of expenditure by tax authorities.
Issue-wise Detailed Analysis:
1. Whether the applicant paid a higher price for styron for extra-commercial reasons:
The applicant, a registered firm manufacturing plastic goods, showed a loss of Rs. 1,08,075 in the manufacturing account for the year ending December 31, 1952. The Income-tax Officer found that the firm purchased 71,488 lbs. of styron, with 3,280 lbs. bought from I.C.I. at Rs. 2-11-0 per lb. and the remaining 68,208 lbs. from Hindusthan Plastic Co. at Rs. 4-7-9 per lb. The constitution of Hindusthan Plastic Co. was the same as that of the applicant firm. The Income-tax Officer concluded that the purchase price was inflated by Rs. 1,18,000 and estimated the sales at Rs. 3,00,000 with a gross profit of Rs. 54,000, invoking the proviso to section 13 of the Indian Income-tax Act, 1922.
The Appellate Assistant Commissioner and the Appellate Tribunal upheld this view, noting that the appellant paid a higher price to Hindusthan Plastic Co. for reasons other than business, establishing the inflation of the purchase price.
2. The applicability of the proviso to section 13 of the Indian Income-tax Act, 1922:
The proviso to section 13 was invoked by the Income-tax Officer to estimate the sales and gross profit of the applicant. The Tribunal justified the use of this proviso, stating that the applicant paid a higher price to Hindusthan Plastic Co. for extra-commercial reasons, resulting in inflated purchase prices and deflated profits.
3. The determination of the reasonableness of expenditure by tax authorities:
The applicant argued that the tax authorities should not substitute their own standard of reasonable expenditure for that of the assessee, referencing cases such as Craddock vs Zevo Finance Co Ltd. (1946) and Newtone Studios Ltd. vs Commissioner of Income-tax (1955). The court acknowledged that while it is generally not open to tax authorities to determine the reasonableness of expenditure, this principle is subject to limitations. These include cases where the transaction is not genuine, is colourable, illusory, or fraudulent, or where considerations other than business purposes are involved.
The court referred to Supreme Court judgments in Commissioner of Income-tax vs Chandulal Keshavlal & Co (1960) and Commissioner of Income-tax vs Royal Calcutta Turf Club (1961), which established that expenditure must be justified on grounds of commercial expediency and should be wholly and exclusively for business purposes. The court concluded that in the present case, the applicant failed to show that styron was unavailable at a lower price, and the transaction appeared to deflate the profits of the assessee, justifying the Tribunal's conclusion.
Conclusion:
The court upheld the Tribunal's decision, affirming that the applicant paid a higher price for styron for extra-commercial reasons. The answer to the question raised was in the affirmative, and the applicant was ordered to pay the costs of the reference to the respondent.
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1963 (4) TMI 79
Issues:
1. Jurisdiction of the Income-tax Officer to assess the petitioner under section 23(4) of the Income-tax Act, 1922.
2. Compliance with the notice under section 23(2) of the Act for the assessment year 1959-60.
3. The obligation of the petitioner to produce account books under section 23(2) and the subsequent actions of the Income-tax Officer.
Analysis:
1. Jurisdiction of the Income-tax Officer:
The petitioner challenged the assessment order dated 19th November, 1962, made under section 23(4) of the Act, arguing that there was no non-compliance with the notice under section 23(2) for the assessment year 1959-60. The court agreed with the petitioner, emphasizing that the Income-tax Officer had no jurisdiction to assess under section 23(4) if there was compliance with the notice under section 23(2). The court highlighted the importance of the assessee's choice to produce evidence in support of the return and stated that the petitioner had fulfilled its obligation by producing account books multiple times.
2. Compliance with Notice under Section 23(2):
The court observed that a notice under section 23(2) was issued on 31st July 1959, and the petitioner had complied with it to the best of its ability by producing account books on several occasions. The court noted that the Income-tax Officer did not issue a notice under section 22(4) for the assessment year 1959-60, which would have been necessary if the Officer required the production of account books again. The petitioner's willingness to cooperate and produce account books, even when not obligated to do so, was highlighted as a factor supporting the lack of non-compliance with the notice under section 23(2).
3. Obligation to Produce Account Books:
The court emphasized that the petitioner's duty was to produce account books under section 23(2) to support the return, not to provide a basis for assessment under section 23(4). The Income-tax Officer's rejection of the petitioner's request for assistance in obtaining the books from authorities in Delhi was deemed unjustified. The court directed the Income-tax Officer to assist the petitioner in summoning the books or sending an officer to inspect them in Delhi for a lawful assessment. The assessment order dated 19th November, 1962, was quashed, and costs were awarded to the petitioner.
In conclusion, the court found that the Income-tax Officer's assessment under section 23(4) was without jurisdiction due to the petitioner's compliance with the notice under section 23(2. The court emphasized the importance of the assessee's choice to produce evidence and the obligation to support the return, ultimately ruling in favor of the petitioner and directing the Income-tax Officer to proceed with a lawful assessment process.
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1963 (4) TMI 78
Issues Involved:
1. Construction of proviso (b) to sub-section (1) of section 25 of the Wealth-tax Act, 1957.
2. Validity of the Wealth-tax Officer's valuation of shares.
3. Competence of the revision applications filed by the petitioner.
4. Right of the assessee to withdraw an appeal before the Appellate Tribunal.
5. Jurisdiction of the Commissioner of Wealth-tax to revise the orders in question.
Issue-wise Detailed Analysis:
1. Construction of Proviso (b) to Sub-section (1) of Section 25 of the Wealth-tax Act, 1957:
The primary issue was the interpretation of proviso (b) to section 25(1) of the Wealth-tax Act, which restricts the Commissioner from revising any order that is "the subject of an appeal" before the Appellate Tribunal. The petitioner argued that an order is only the subject of an appeal when the Tribunal addresses the merits of the case and pronounces its view. Conversely, the respondent contended that the mere filing of a competent appeal suffices to make the order the subject of an appeal. The court sided with the petitioner, holding that the order must be scrutinized on its merits by the appellate authority to be considered the subject of an appeal.
2. Validity of the Wealth-tax Officer's Valuation of Shares:
The petitioner challenged the valuation method adopted by the Wealth-tax Officer for shares of certain companies. The Wealth-tax Officer had rejected the petitioner's valuation method and adopted another method, which was subsequently upheld by the Appellate Assistant Commissioner. The petitioner sought to revise these valuations through the Commissioner of Wealth-tax, arguing that the valuations were based on an incorrect basis not warranted by law.
3. Competence of the Revision Applications Filed by the Petitioner:
The petitioner filed revision applications before the Commissioner of Wealth-tax after withdrawing appeals from the Appellate Tribunal. The Commissioner dismissed these applications as incompetent, citing that the orders had already been the subject of an appeal. The court found this dismissal unjustified, stating that the orders were not the subject of an appeal since the Tribunal had not decided on the merits but had permitted the withdrawal of the appeals.
4. Right of the Assessee to Withdraw an Appeal Before the Appellate Tribunal:
The petitioner's chartered accountant requested the Tribunal to withdraw the appeals, which was granted, and the appeals were dismissed for non-prosecution. The court held that the Tribunal's permission to withdraw the appeals meant that the orders of the Appellate Assistant Commissioner were not the subject of an appeal. The court emphasized that the right to withdraw an appeal, once granted by the Tribunal, does not imply the orders remain the subject of an appeal.
5. Jurisdiction of the Commissioner of Wealth-tax to Revise the Orders in Question:
The court examined whether the Commissioner had jurisdiction to revise the orders after the appeals were withdrawn. It concluded that the Commissioner was wrong in dismissing the revision applications on the grounds of incompetence. The court quashed the Commissioner's order and directed him to dispose of the revision applications in accordance with the law, considering the possibility of condoning the delay in filing the revisions due to sufficient cause.
Conclusion:
The court quashed the order of the Commissioner of Wealth-tax and directed that the revision applications filed by the petitioner be disposed of in accordance with the law. The court emphasized that the orders of the Appellate Assistant Commissioner were not the subject of an appeal after the Tribunal permitted the withdrawal of the appeals. The court also noted that the Commissioner has the power to admit revision applications filed beyond the period of limitation if sufficient cause is shown. The respondent was ordered to pay the costs of the petitioner.
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1963 (4) TMI 77
Issues Involved:
1. Incompleteness of the award
2. Creation of a trust for property
3. Valuation of properties by the arbitrator
Detailed Analysis:
1. Incompleteness of the Award:
The primary contention was that the award did not dispose of all disputes referred to the arbitrator, specifically regarding:
- Rendition of Accounts and Profits: The award declared the lease of the Glass Works Ltd. as invalid but did not provide directions for accounting for profits. The court held that the silence of the award implied the arbitrator's rejection of the claim for accounting, following the principle that an award made "de praemissis" (concerning all matters referred) is presumed to be complete unless expressly stated otherwise.
- Future Management of the Glass Company: The arbitrator did not provide specific directions for future management, which the appellants argued was required. The court reasoned that the arbitrator's silence on this matter implied reliance on the Indian Companies Act for management provisions, thus not leaving any lacuna in the award.
- Misappropriation Allegations: The award did not address the claim of misappropriation of company funds by the 6th respondent. The court interpreted the silence as a rejection of the claim, consistent with the principle that an award professedly complete and "de praemissis" implies final disposition of all matters.
2. Creation of a Trust for Property:
The appellants argued that the arbitrator exceeded his jurisdiction by creating a trust for a piece of land to cover the costs of filing the award and other court proceedings. The court clarified that the arbitrator merely made provisions for payment of costs, which was within his jurisdiction, and directed the surplus sale proceeds to be divided among the entitled parties. This contention was dismissed as it was based on a misreading of the arbitrator's actions.
3. Valuation of Properties by the Arbitrator:
The appellants contended that the arbitrator failed in his duty by not valuing the properties himself and instead adopting values suggested by the parties. The court found that the values were agreed upon by the parties during the arbitration proceedings, and thus, the arbitrator's adoption of these values was valid. This point was dismissed as it lacked merit.
Conclusion:
The Supreme Court dismissed the appeal, affirming the High Court's decision. The court held that the award was complete and valid, addressing all referred disputes either explicitly or implicitly. The objections regarding the creation of a trust and the valuation of properties were found to be without substance. The appeal was dismissed with costs.
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1963 (4) TMI 76
Issues Involved:
1. Validity of the arbitration agreement under Section 175(3) of the Government of India Act, 1935.
2. Whether the award is erroneous on the face thereof.
Detailed Analysis:
1. Validity of the Arbitration Agreement:
The primary issue was whether the arbitration agreement conformed to Section 175(3) of the Government of India Act, 1935. This section mandates that all contracts made in the exercise of the executive authority of the Dominion or a Province must be expressed to be made by the Governor-General or the Governor of the Province and executed on their behalf by authorized persons. The court noted that the acceptance letter issued by the Director of Purchases was signed on behalf of the Government of India and incorporated the general conditions of contract, including the arbitration clause. The court found that the correspondence, including the acceptance letter, amounted to a contract expressed to be made by the Government, thereby fulfilling the requirements of Section 175(3). The court emphasized that the authority of an arbitrator depends on the arbitration agreement, which must be in writing and accepted by the parties. However, it was noted that the Government of India did not waive the objection regarding the illegality of the contract by participating in the arbitration proceedings.
2. Errors on the Face of the Award:
The second issue was whether the award contained errors apparent on its face. The umpire awarded Rs. 1,32,417/10/- for loss suffered, Rs. 1,25,000/- for incidental expenses, and Rs. 68,833/12/3 as interest. The court upheld the award for the loss suffered, stating that no error was apparent in awarding the difference between the contract price and the sale price of the cigarettes. However, the court found errors in the award for incidental expenses and interest.
Incidental Expenses:
The court determined that the umpire's award of Rs. 1,25,000/- for incidental expenses was based on an erroneous assumption of law. The umpire incorrectly assumed that the respondent was entitled to expenses incurred for advertisement, publicity, storage, transport, and agency commission for the cigarettes taken back by the Government. The court clarified that the respondent, having taken delivery of the goods, became their owner and could not claim these expenses as compensation for breach of warranty. The court held that the respondent was only entitled to the difference between the contract price and the market price of the goods retained by him.
Interest:
The court found that the award of Rs. 68,833/12/3 as interest was also erroneous. The contract did not provide for payment of interest, and interest could not be awarded under Section 61 of the Sale of Goods Act. The court noted that the claim for interest was not for a refund of the price but for damages, and there was no provision in the law to award interest as damages for the wrongful detention of money. The court referred to the Judicial Committee's decision in Bengal Nagpur Railway Company Ltd. v. Ruttanji Ramji, which held that interest could not be awarded in the absence of a contract, statute, or usage.
Conclusion:
The court partially allowed the appeal, setting aside the award of the umpire in so far as it awarded interest and incidental expenses. The award for the loss suffered in respect of the packets of cigarettes was upheld. The court made no order as to costs throughout. The appeal was allowed in part.
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1963 (4) TMI 75
Issues Involved:
1. Whether the insurer had the right to directly approach the Tribunal for reassessment of compensation.
2. Whether the insurer's claim was barred by time.
3. Whether the Tribunal was correct in refusing to extend the time for making the application.
Issue-wise Detailed Analysis:
1. Right to Approach the Tribunal Directly:
The primary issue was whether the insurer could directly approach the Tribunal for reassessment of compensation. According to Section 16(2) of the Life Insurance Corporation Act, 1956, the insurer must move the Corporation to make a reference of the dispute to the Tribunal. The court emphasized that the insurer has no right under the section to approach the Tribunal directly. The procedure mandated that the insurer had to move the Corporation, which would then refer the dispute to the Tribunal. The insurer's direct approach to the Tribunal was deemed wholly misconceived, rendering the proceedings incompetent from the beginning. Consequently, neither the Tribunal nor the Court could grant any relief to the insurer or its successor-in-interest.
2. Claim Barred by Time:
The Tribunal held that the insurer's claim was barred by time, as it did not lodge a claim within the prescribed three months from the date on which the compensation was offered by the Corporation. Rule 12 of the Rules framed under the Act stipulates that a reference to the Tribunal must be made within three months from the date the compensation is offered. The insurer failed to act within this period, and the Tribunal found no sufficient cause to extend the time. The Supreme Court concurred with this view, stating that the insurer did not show any cause for the delay. The Tribunal's decision to dismiss the claim on the grounds of limitation was upheld.
3. Refusal to Extend Time:
The insurer had requested the Tribunal to extend the time for making the application. However, since the insurer had no right to move the Tribunal directly, the question of extending time did not arise. Even if the application for extension of time was considered competent under the proviso to Rule 12, the Tribunal found no sufficient cause to justify the delay. The Supreme Court agreed, noting that there was no justification to interfere with the Tribunal's order on this matter. The appeal, therefore, failed on this ground as well.
Conclusion:
The Supreme Court dismissed the appeal, concluding that the insurer's proceedings were incompetent from the start due to the incorrect procedure followed. The Tribunal's findings on the issues of direct approach, time-bar, and refusal to extend time were upheld. The insurer or its successor-in-interest was advised to move the Corporation for making a reference after the period for doing so is prescribed by the Central Government. No costs were awarded to the Corporation as it had not raised the point of incompetency before the Tribunal or in its statement of case in the appeal.
Additional Judgment:
The judgment delivered by Mudholkar, J., also emphasized that the insurer must move the Corporation for making a reference to the Tribunal. He highlighted that the Central Government had not prescribed the period within which the insurer must move the Corporation, as required by Section 16(2) of the Act. The rule-making authority's oversight in framing Rule 12 led to a lacuna, resulting in the proceedings before the Tribunal being quashed. Mudholkar, J., reiterated that the insurer could move the Corporation once the period is prescribed.
Final Order:
Appeal dismissed. Proceedings before the Tribunal quashed. No order as to costs.
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1963 (4) TMI 74
Issues Involved:
1. Whether the investigation conducted by Sub-Inspector Mathur before obtaining the Magistrate's permission vitiated the trial.
2. Whether the accused was prejudiced by the alleged irregularity in the investigation.
3. Whether the High Court was justified in setting aside the conviction based on the alleged irregularity.
Detailed Analysis:
1. Whether the investigation conducted by Sub-Inspector Mathur before obtaining the Magistrate's permission vitiated the trial:
The primary contention was whether Sub-Inspector Mathur's actions before obtaining permission from the Additional District Magistrate constituted an "investigation" under the Code of Criminal Procedure. The Supreme Court examined the steps taken by Mathur, including verifying allegations and checking railway records, and concluded that these actions did indeed constitute an investigation within the meaning of the Code. The Court emphasized that under Section 5A of the Prevention of Corruption Act, an officer below the rank of Deputy Superintendent of Police cannot investigate such offences without a Magistrate's order. The Court held that Mathur's initial investigation without permission violated this provision, which is designed to protect public servants from harassment and ensure bona fide investigations.
2. Whether the accused was prejudiced by the alleged irregularity in the investigation:
The Supreme Court analyzed whether the accused suffered any prejudice due to the irregularity in the investigation. The Court noted that after obtaining the Magistrate's permission, Mathur conducted a thorough and proper investigation, which included taking witness statements and seizing relevant documents. The Court found that the accused had a fair trial, with ample opportunity to present his defense. The evidence presented was convincing, and there was no indication that the initial irregularity affected the trial's fairness or the accused's ability to defend himself. Thus, the Court concluded that the accused was not prejudiced by the initial irregularity.
3. Whether the High Court was justified in setting aside the conviction based on the alleged irregularity:
The High Court had set aside the conviction on the grounds that the initial investigation by Mathur was conducted without the required permission, thus violating the mandatory safeguards of the Act. However, the Supreme Court held that the High Court erred in not considering whether this irregularity caused any actual prejudice to the accused. The Supreme Court emphasized that under Section 537 of the Code of Criminal Procedure, a conviction should not be set aside due to procedural irregularities unless they result in a failure of justice. Given the thorough and fair trial that followed the initial irregularity, the Supreme Court found no such failure of justice.
Conclusion:
The Supreme Court set aside the High Court's order and reinstated the conviction and sentence of one year's rigorous imprisonment under Section 5(2) of the Prevention of Corruption Act. The Court underscored that while procedural safeguards are crucial, they should not invalidate a conviction unless they cause actual prejudice to the accused. The separate judgment by Mudholkar J. concurred with the majority but differed on whether the initial actions by Mathur constituted an investigation, ultimately concluding that they did not and thus no irregularity occurred.
Final Judgment:
The appeal was allowed, and the respondent was convicted and sentenced as proposed by the majority judgment.
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1963 (4) TMI 73
Issues:
- Suit dismissed as barred by time
- Exclusion of time under Section 14 of the Indian Limitation Act
- Good faith in initiating the suit in a particular court
Analysis:
The judgment involves an appeal where the plaintiffs challenged the dismissal of their suit as barred by time. The suit was initially filed in the Court of a Civil Judge in U.P. on 31st August, 1950, but was later returned on jurisdictional grounds, leading to its re-presentation in the Civil Court at Delhi on 9th January, 1953. The defendant contended that the suit was time-barred, prompting the plaintiffs to rely on Section 14 of the Indian Limitation Act to exclude the time spent in the Kheri Court.
The lower court found against the plaintiffs on both issues raised. It held that the suit was indeed time-barred by one day, emphasizing the lack of evidence to prove diligent prosecution in the Kheri Court. The court also rejected the plaintiffs' reliance on acknowledgments to save the suit from limitation. On appeal, the appellants pointed out an endorsement on the returned documents indicating they were handed back on 8th January, 1953, not 7th January as previously assumed. This correction impacted the computation of time for limitation purposes.
Regarding the applicability of Section 14 of the Indian Limitation Act, the judgment scrutinized the plaintiffs' good faith in choosing the Kheri Court initially. The court highlighted the agreements between the parties specifying Delhi Courts as the jurisdiction for disputes, indicating a lack of due care by the plaintiffs in initiating the suit elsewhere. The judgment stressed the need for litigants to exercise diligence and caution, with exclusion of time under Section 14 reserved for those acting as reasonably prudent individuals.
Ultimately, the court upheld the lower court's decision, concluding that the plaintiffs failed to demonstrate good faith and due diligence in commencing the proceedings in Kheri. This finding rendered further discussion on the second issue unnecessary. The appeal was dismissed, with no order as to costs, as per the judgment delivered by the judges.
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1963 (4) TMI 72
Issues Involved:
1. Legality of the investigation under Section 5A of the Prevention of Corruption Act.
2. Validity of the sanction for prosecution.
3. Merits of the conviction and appropriateness of the sentence.
Issue-wise Detailed Analysis:
1. Legality of the Investigation:
The appellant argued that the investigation was irregular and not in accordance with Section 5A of the Prevention of Corruption Act. Section 5A mandates that no police officer below the rank of a Deputy Superintendent of Police shall investigate any offence under the Act without the order of a magistrate of the first class. Initially, the investigation was conducted by a sub-inspector of police, which was later taken over by an authorized officer who merely reviewed the earlier investigation papers. The Court referenced the case of H.N. Rishbud & Inder Singh v. The State of Delhi, which held that Section 5A is mandatory, and an investigation violating it is illegal. However, the Court emphasized that such an illegality does not vitiate the trial unless it results in a miscarriage of justice. The appellant failed to demonstrate any miscarriage of justice due to the irregular investigation, and thus, the Court rejected this contention.
2. Validity of the Sanction for Prosecution:
The appellant contended that there was no proper sanction for the additional three cases that were split from the original four cases, and that the sanction did not specifically cover Section 5(1)(c) of the Act. The Court clarified that the amounts involved in the split cases were included in the original four cases for which there was sanction. Therefore, the sanction for the original cases extended to the split cases as well. Regarding the argument that the sanction did not cover Section 5(1)(c), the Court noted that the sanction mentioned misappropriation and embezzlement, which are covered under Section 5(1)(c). Thus, the sanction was deemed sufficient for the Special Judge to take cognizance of the cases.
3. Merits of the Conviction and Appropriateness of the Sentence:
The appellant did not dispute the convictions but argued that the circumstances warranted a more lenient sentence. The evidence showed that the appellant was using the Board's money to advance it to officers and servants of the Board, including the Executive Officer, which was a well-known and long-standing practice. The Court acknowledged the scandalous state of affairs and noted that the appellant might have felt compelled to oblige the officers and servants to avoid their displeasure. Considering the appellant's role and the prolonged trial of eleven years, the Court found merit in the argument that the appellant was more sinned against than sinning. Consequently, the Court reduced the sentence to the period already undergone, noting that Mr. Mathur, representing the respondent State, did not press for the confirmation of the reduced sentence by the High Court.
Conclusion:
The appeals were dismissed with the modification that the sentence in each case was reduced to the period already undergone. The appellant, if on bail, was to be discharged from his bail bonds in respect of these appeals. The Court emphasized that the sentence already served, along with the prolonged duration of the trial, was sufficient punishment for the appellant.
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1963 (4) TMI 71
Issues Involved:
1. Whether the work carried on by the University of Delhi constitutes an "industry" under Section 2(j) of the Industrial Disputes Act, 1947.
2. Whether the applications made under Section 33C(2) of the Industrial Disputes Act by the respondents were competent.
Issue-wise Detailed Analysis:
1. Definition of "Industry" under Section 2(j):
The primary issue was whether the University of Delhi's activities could be classified as an "industry" under Section 2(j) of the Industrial Disputes Act, 1947. The respondents argued that the term "industry" should be interpreted broadly, including educational services. They referenced the decision in the State of Bombay v. The Hospital Mazdoor Sabha, which defined "industry" as any systematic activity involving cooperation between employers and employees for the production or distribution of goods or services.
Analysis:
The court examined whether the educational activities of the University of Delhi involved the kind of employer-employee cooperation typical of an industrial undertaking. It was noted that the primary function of educational institutions is to impart education, primarily through the labor and cooperation of teachers. The court highlighted that teachers are not considered "workmen" under Section 2(s) of the Act, which excludes them from the benefits of the Act. This exclusion indicates that the Act does not intend to cover educational activities as industries. The court concluded that the work of imparting education, which is primarily carried out by teachers, cannot be classified as an industry. The court emphasized that education is a mission and vocation, not a trade or business, and thus does not fit within the definition of "industry" under Section 2(j).
2. Competency of Applications under Section 33C(2):
Given the conclusion that the University of Delhi's activities do not constitute an industry, the next issue was whether the applications made by the respondents under Section 33C(2) of the Industrial Disputes Act were competent.
Analysis:
Since the court determined that the University of Delhi is not an industry, it followed that the applications made by the respondents under Section 33C(2) were incompetent. The court noted that the Act's provisions do not apply to the disputes between the university and its employees, as the university's primary activity of imparting education does not fall within the scope of the Act.
Conclusion:
The court concluded that the University of Delhi and the Miranda College for Women run by it cannot be regarded as carrying on an industry under Section 2(j) of the Industrial Disputes Act. Consequently, the applications made by the respondents under Section 33C(2) were held to be incompetent. The appeals were allowed, the orders passed by the Industrial Tribunal were set aside, and the petitions filed by the respondents were dismissed. There was no order as to costs.
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1963 (4) TMI 70
Issues Involved:
1. Whether ignorance of the respondent's death constitutes "sufficient cause" for not filing an application to bring legal representatives on record within the prescribed time.
2. Whether the appellant has a duty to make regular inquiries about the respondent's health or existence.
3. Interpretation of the term "sufficient cause" under Order XXII, Rule 9 of the Code of Civil Procedure (CPC).
4. Whether the court has inherent power to add legal representatives to do full justice.
5. Application of the Full Bench decision of the High Court to the facts of the case.
Detailed Analysis:
1. Ignorance of Respondent's Death as Sufficient Cause:
The appellant contended that mere ignorance of the respondent's death should be considered "sufficient cause" for the delay in filing the application to bring legal representatives on record. The court, however, held that mere ignorance is not sufficient. The appellant must provide reasons for not knowing about the death within a reasonable time and establish those reasons to the court's satisfaction. The court emphasized that the appellant must allege and establish facts that prevented timely action.
2. Duty to Make Regular Inquiries:
The appellant argued that once the respondent is served in the first appeal, there is no duty to make regular inquiries about the respondent's health or existence. The court agreed that there is no such duty but clarified that the appellant's belated knowledge of the respondent's death does not automatically justify setting aside the abatement. The appellant must still prove that there was "sufficient cause" for the delay.
3. Interpretation of "Sufficient Cause":
The court discussed the interpretation of "sufficient cause" under Order XXII, Rule 9 of the CPC. It stated that the term should not be construed liberally just because the party in default is the government or because the issue involves impleading legal representatives. The court must scrutinize the reasons provided for the delay and determine if they constitute "sufficient cause." The court noted that the legislature provided a three-month period for such applications, expecting that the plaintiff would learn of the death within this time. Additional time is allowed under Article 176 and Section 5 of the Limitation Act, but the reasons for the delay must be justified.
4. Inherent Power to Add Legal Representatives:
The appellant claimed that the court has inherent power under Section 151 of the CPC to add legal representatives to do full justice. The court rejected this argument, stating that inherent powers cannot be invoked to implead legal representatives if the suit has abated due to the appellant's failure to take timely steps. The court emphasized that the provisions of the CPC are designed to advance justice, and the appellant must satisfy the court that there was "sufficient cause" for the delay.
5. Application of Full Bench Decision:
The appellant argued that the High Court misapplied the Full Bench decision in Firm Dittu Ram Eyedan v. Om Press Co. Ltd., which held that ignorance of the defendant's death is not a sufficient cause for setting aside abatement. The court did not find it necessary to consider whether the High Court applied the decision correctly, as the main issue was whether the appellant established "sufficient cause" for the delay. The court reiterated that the appellant must allege and prove reasons for not knowing about the death within a reasonable time.
Conclusion:
The court dismissed the appeal, holding that the appellant failed to establish "sufficient cause" for not filing the application to bring legal representatives on record within the prescribed time. The court emphasized that the appellant's mere ignorance of the respondent's death is not sufficient and that the appellant must provide and prove reasons for the delay. The court also rejected the argument that it has inherent power to add legal representatives if the suit has abated due to the appellant's failure to take timely steps. The appeal was dismissed with costs.
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