|
Advanced Search Options
Case Laws
Showing 181 to 200 of 1439 Records
-
2015 (7) TMI 1265
Scope of consideration under the purview of section 254(2) - suppressed sales on account of settlement petition - Held that:- As before us while arguing the Miscellaneous Application, the Ld. Special AR has vehemently stressed that the Tribunal has erred in not extrapolating the sales for the entire year based on the evidence i.e. the petition before the Settlement Commission and hence, there is an error in assumption of facts and mistake of law in this regard. We find no merit in the said arguments raised by the Ld. Special AR before us during the course of hearing of Miscellaneous Application and the same is beyond the scope of consideration under the purview of section 254(2) of the Act.
As referred to by us in the paras hereinabove, such a plea could have been raised by the Department during the appellate proceedings before the Tribunal for the first time. However, in the absence of such plea being raised during the course of hearing of the main appeal, raising of such an argument before the Tribunal vide Miscellaneous Application is sheer waste of judicial time and process of law. This is a fit case for levy of costs against the Department for raising frivolous and vexatious arguments and pleas about estimation of income, which were never raised during the course of hearing of the appeal before the Tribunal
Admittedly, during the course of search and seizure operation on certain brokers, evidences of clandestine removal of material without payment of Excise duty, was found against the assessee. However, no search and seizure operation was carried out against the assessee, but the assessee claims that in order to buy peace of mind, it had declared the said amount by way of petition before the Settlement Commission. The said offer made by the assessee was accepted in toto. It may be noted that the Excise authorities have the power to re-visit the offer made by the assessee, in case, any adverse material is available against the person making the offer. It may also be noted that the Settlement accepted in the hands of the assessee is for the financial year and is not restricted to the number of days for which it has offered. In other words, once a person makes a settlement petition for a particular year on account of the evidence found for part of the period and once the petition is accepted in the hands of the assessee, no further addition can be made on account of alleged clandestine removal of goods or suppressed sales, in the absence of evidence for the balance period.
Even on merits, the Revenue has no case against the assessee. The reliance placed upon by the Ld. Special AR on the ratio laid down in assessee’s own case relating to assessment year 2006-07 is misplaced as the addition in the hands of the assessee in that year was made on account of search and seizure operations carried out by the Income-tax Department, wherein sales outside books were found for few days. However, no independent investigation / inquiry by the Income-tax Department has been made before completing assessment proceedings against the assessee.
The assessee had offered the additional income on account of such clandestine removal of goods before the Assessing Officer for assessment year 2007-08 and the same was the reason for reopening the assessment under section 148 of the Act. Once a particular fact was available with AO, which was taken note of and considered by him during the assessment proceedings, but the addition having been made on only on the issue of erratic consumption of electricity, which is the basis of order passed by CCE, Aurangabad, who was also in knowledge of the clandestine removal of material and the investigation carried out by the DGCEI and the petition before the Settlement Commission, even the Third Member of CESTAT was aware of all these proceedings, but since the settlement petition filed by the assessee had been accepted in toto by the Settlement Commission, no further addition could be made in the hands of the assessee on this ground, in the absence of any inquiry or investigation by the Assessing Officer.
As pointed out by us in the paras hereinabove, the Ld. Special AR has failed to establish its case of the Tribunal in not considering any material and in the absence of the same, no power can be exercised under section 254(2) of the Act. In the entirety of the above said facts and circumstances, we hold that the Miscellaneous Application moved by the Revenue is not maintainable and the same is dismissed. - Decided against revenue
-
2015 (7) TMI 1264
Quantification of suppressed production - G.P. rate - Held that:- Following the same parity of reasoning as per our order of even date in the case of Bhagyalaxmi Steel Alloys Pvt. Ltd. & Others relating to assessment years 2006-07 to 2008-09 and in view of the physical verification carried out by the authorities as referred to by us in the paras hereinabove and the consequent order of Division Bench of CESTAT in the case of present assessee’s before us relating to assessment year 2009-10, we find no merit in the orders of authorities below and we reverse the order of CIT(A). We find no merit in the addition made in the hands of the assessee on account of suppressed production consequent to erratic consumption of electricity.
Appeals of the Revenue against the adoption of GP rate of 4% and the deletion of working capital required for investment in suppressed production is also deleted by us by following order in the case of assessee and others in earlier years and following the same parity of reasoning, we dismiss the grounds of appeal raised by the Revenue.
-
2015 (7) TMI 1263
Release of detained goods - sale of goods or processing of goods? - the grievance of the petitioner is when the consignor is their branch at Kanyakumari District in Tamil Nadu, the consignee is their own branch at Visakhapatnam, Olam Agro India Private Limited is one and the same under the Act and there is no question of sale involved - Held that: - This Court agreeing with the statement made by the learned counsel appearing for the petitioner that the petitioner is ready to make the tax amount of ₹ 1,59,224 and produce the same for release of the goods as he is also entitled to challenge the impugned order by filing revision before the appropriate authority, finds no impediment to release the goods - the petitioner is directed to pay the one time tax of ₹ 1,59,224/- and on payment of the said amount before the respondent, the goods are directed to be released - petition disposed off.
-
2015 (7) TMI 1262
Addition u/s 17(2)(iii)/28(iv) - perquisite in the hands of director - difference between the stamp duty valuation and sale consideration constituted as income in the hands of the assessee - assessee being a director of company purchased a property from the above said company - Held that:- Since the assessee happened to be the Share holder and Director of the company, which sold the property, the assessing officer has presumed that the assessee has derived benefit from the transaction of purchase of property for the reason that there was a difference between the sale consideration and the value determined for stamp duty purposes. Accordingly, the AO proceeded to assess the difference amount of ₹ 96.26 lakhs as income of the assessee. AO was not sure as to the section under which the said difference is assessable. Hence he has quoted both sec. 17(2)(iii) and sec. 28(iv) of the Act. We have noticed that the Ld CIT(A) has given proper reasoning that the above said difference cannot be assessed as income of the assessee under both the sections. During the course of hearing, the Ld D.R also could not controvert the reasoning given by Ld CIT(A).
The provisions of sec. 56(2)(vii), which provide for assessing difference between the Stamp duty valuation and the sale consideration in the hands of the buyer, has been inserted by the Finance Act, 2010 w.r.e.f from 1.10.2009. In the instant case, the impugned transaction has taken place on 17-7-2008 and hence the deeming provisions of sec. 56(2)(vii) are also not applicable to it. Under these set of facts, we are of the view that the assessing officer has made the impugned addition only on surmises - Decided in favour of assessee.
-
2015 (7) TMI 1261
Provision for warranty disallowed - there is no consistency in the formula on the basis of which provision is made and there is no reasonable basis behind making estimate for provision for warranty - Held that:- The provision of warranty expenses has been made by the assessee on the basis of past experience and on a scientific basis. Even the actual expenditure incurred on subsequent years is more than that for which the provision was made. We, therefore, do not find any justification on the part of the lower authorities in disallowing the claim of the assessee on this issue. The orders of the lower authorities are hereby set aside and the claim of the assessee on this issues is allowed.
Claim for deduction of prior period expenses - CIT-A rejecting the claim for deduction on the ground that the relief can be claimed only by filing the revised return - Held that:- The taxing authorities should charge the legitimate taxes from the tax payers. They are not supposed to punish them for their bonafide mistakes of not claiming a deduction to which they are otherwise eligible under the provisions of relevant laws. The ld. CIT(A) in appeal was supposed to look into the claim of the assessee and if found genuine then to allow the same as while adjudicating the appeal, he also acts as a quasi-judicial authority . He therefore has also failed to exercise his jurisdiction in the right manner - the order of the Ld. CIT(A) on this issue is set aside and the matter is again restored to him with a direction to look into and consider the claim of the assessee and if the assessee is found eligible for the said claim, then to allow the same accordingly.
-
2015 (7) TMI 1260
Amendment in a criminal complaint - the amendment was made prior to taking cognizance of the offence - Held that: - it is true that there is no specific provision in the Code to amend either a complaint or a petition filed under the provisions of the Code, but the Courts have held that the petitions seeking such amendment to correct curable infirmities can be allowed even in respect of complaints - In U.P. Pollution Control Board vs. Modi Distillery And Ors., [1987 (8) TMI 449 - SUPREME COURT], wherein the name of the company was wrongly mentioned in the complaint that is, instead of Modi Industries Ltd. the name of the company was mentioned as Modi Distillery and the name was sought to be amended.
In the instant case, the amendment application was filed on 24.05.2007 to carry out the amendment by adding paras 11(a) and 11 (b). Though, the proposed amendment was not a formal amendment, but a substantial one, the Magistrate allowed the amendment application mainly on the ground that no cognizance was taken of the complaint before the disposal of amendment application.
Appeal dismissed - decided against appellant.
-
2015 (7) TMI 1259
Taxable surplus - modification of account after Actuarial valuation - whether negative reserve has an impact of reducing th 'taxable surplus' as per Form-I and therefore corresponding adjustment for “negative reserve” need to be made to arrive at “taxable surplus”? - Held that:- Apex Court in LIC Vs. CIT [1963 (12) TMI 5 - SUPREME Court] has held that the Assessing Officer has no power to modify the account after Actuarial valuation is done. It is also pertinent to note that for the Assessment Year 200708, the Assessing Officer had raised an identical issue during the assessment proceedings and thereafter by the assessment order dated 30 December 2009 held that no adjustment of the Actuarial valuation is to be done by following the decision of the Apex Court in LIC (supra). Therefore we find no substantial question of law arising for our consideration.
Income on shareholders' account taxed as income from other sources - whether income earned on shareholders' account is not an income which represents income on account of Life Insurance Business? - Held that:- In terms of Section 44 of the Act, such income has to be taxed in accordance with First Schedule as provided therein. None of the authorities under the Act nor even before us is it urged that the assessee is carrying on separate business other than life insurance business. Accordingly, the impugned order holding that the income from shareholders' account is also to be taxed as a part of life insurance business cannot be found fault with in view of the clear mandate of Section 44 of the Act. Accordingly Question No.8 also does not raise any substantial question of law
Appeals admitted on Question Nos. 1, 2, 3, 4 and 7.
-
2015 (7) TMI 1258
Winding up petition - Official Liquidator was directed to take charge of the assets and properties of the Respondent company - petition against the Respondent company, its promoters / directors and others seeking inter alia recovery of sums owed by these parties to the Petitioner - Petitioner seeks leave to implead the Official Liquidator, High Court, Bombay as a party in place of the Respondent Company - Held that:- Leave is granted. The Petitioner to carry out the amendment in the plaint within a period of two weeks from today.
-
2015 (7) TMI 1257
Validity of assessment - notice u/s 148 of the act - notice on deceased person - Held that: - the assessee had already expired on 06.12.2002 and the legal heir Smt. Raj Rani Malhotra wife of the deceased assessee informed the AO on 03.05.2010 that the assessee had expired on 06.12.2002 and the return in the name of deceased assessee was filed by the legal heir on 29.08.2003. Thereafter also the AO did not issue any notice u/s 148 of the Act or 143(2) of the Act in the name of the legal heir, therefore, the assessment framed by the AO on the basis of the notice issued u/s 148 of the Act in the name of the deceased assessee was invalid.
The notice issued u/s 148 was invalid and the assessment framed on the basis of the said invalid notice was void ab initio - appeal dismissed.
-
2015 (7) TMI 1256
Offence under PMLA - attachment orders - joint appeal preferred by twenty appellants - Held that:- During the course of arguments in the present appeal, learned counsel for appellants submitted that though the respondent has alleged that the subject properties have been acquired by the accused out of proceeds of crime in the names of appellants but this allegation of the respondent is being contested on the ground that subject properties are independently acquired properties of the appellants from their legitimate sources. This goes on to show that each of the appellants will have separate arguments regarding source of acquisition of the subject properties.
Here all the 20 appellants are independent persons. They cannot file a joint appeal. In a combined appeal, a declaration, plea/contention by one appellant will not be binding on other appellant(s). Each of the appellant is aggrieved only of his/her property attached and not for property attached of other appellant(s). In other words as each appellant is independently aggrieved, therefore the aggrieved appellants has to file separate appeals with appropriate copies.
A perusal of appeal reveals that though appeal has been filed jointly by 20 appellants but only one appeal fee has been filed and it is not the plea of the appellants that though joint appeal has been filed by twenty appellants but twenty appeal fees has been paid for twenty appellants and for the purpose of pursuing appeal on behalf of twenty appellants, joint appeal may be allowed to be pursued. It is also not the plea of the appellants that all the subject properties whose attachment is contested are jointly owned by all the twenty appellants and they should be treated jointly as one appellant. Thus joint appeal preferred by twenty appellants would not be maintainable. Consequently, the plea of the appellants is liable to be rejected.
-
2015 (7) TMI 1255
Provisional attachment - Manner of taking possession of immovable property - plea of the applicant is that the four immovable properties valued at ₹ 5.6 crores and one fixed deposit of ₹ 3 crores which have been attached are not proceed of crime but they have been attached for the value thereof so that assets equal to proceeds of crime i.e. ₹ 8.6 crores are available for proceedings relating to confiscation under PMLA and if the four immovable properties are allowed to be replaced by fixed deposits of equivalent value, the purpose of the attachment will be served in full
Held that:- At this stage we are not deciding whether the attachment of properties is right or wrong as the same will be decided at the time of disposal of the appeal. Assuming that the attachment order is sustainable, we agree with the plea of the respondent that in the facts and circumstances of the present case, there is no provision under PML Act and Rules made thereunder which will entitle the applicant for replacement of immovable property under attachment with fixed deposit.
The applicant has also not made out a case for exceptional circumstances and to justify the same for release of immovable properties in lieu of fixed deposits. Though the counsel for applicant also offered extra amount of fixed deposit equal to interest for the period from the date of attachment but such a plea cannot be accepted in the absence of any provision under the law and considering the fact that after attachment of immovable property, there may be appreciation in the market value of those properties which is not ascertained. Further, the applicant has not challenged that on the date of attachment, other properties such as deposits in bank were available which could or should have been attached by the respondent instead of four immovable properties as attached which would have served the purpose of attachment. Rather the plea of the respondent that he has attached assets of the applicant on 4-10-2012 on the basis of the statement of the director of applicant company u/s 50 of PMLA and other material/detail of assets as available after investigation till then was not even disputed by the applicant. Application dismissed.
-
2015 (7) TMI 1254
Disallowance of claim of interest payable - Held that:- The balance sheet and profit and loss account clearly shows that no person from Bagga Group is Director of M/ s. Intra Port India Ltd. Further a copy of Form No.29 submitted before the Registrar of Companies was also submitted which clearly indicates that Sri Satpal Singh Bagga, brother of the assessee was appointed as Director of the company only from 24th April, 2004, copies of which were enclosed. The payment of interest was made only after series of negotiations and was purely out of business activities.
We find that a mistake has occurred which is apparent on record at Para No.102 of the Tribunal’s order in the case of Balwinder Singh Bagga and others dated 3.8.2012. Hence we recall the order of Tribunal [2012 (8) TMI 1114 - ITAT HYDERABAD] for limited purpose of hearing the issue in Para No.102 and direct the Registry to re-fix the hearing.
-
2015 (7) TMI 1253
Estimation of Annual Letting Value (ALV) of the vacant flats at Central Garden Complex - Held that:- As decided in case of father of the assessee Sh. Anand jain [2015 (4) TMI 1218 - ITAT MUMBAI] as directed that the ALV be computed as per the municipal rateable value as deemed income from house property.
Addition u/s 69B - addition on the basis of loose paper found in search - expenditure on the purchase of land more than that was recorded in the books of account - Held that:- As held by the Tribunal in the case of Anand Jain (supra) and as also in the cases of another group companies (supra), that the said loose paper at the most can be considered to have raised a suspicion about the transfer of money other than the sale consideration, but the suspicion itself and solely cannot be held to be a justifiable ground for making the additions, especially in the absence of any corroborative evidence. Except the loose papers in question no evidence, what to say of any direct or corroborative evidence, even no circumstantial evidence has been detected or brought on record by the Revenue. More over the explanation given by the assessee has been straightaway rejected by the AO. Hence, the additions solely on the basis of suspicion, how strong it may be, in our view, are not sustainable in the eyes of law. Additions in this case also under section 69B of the Act are not warranted
-
2015 (7) TMI 1252
Amount received in lieu of relinquishment of rights in the property - as per AO it is a transfer of a capital asset taxable under the head “capital gains” - assessee had inherited 1/3rd share in the said property - family arrangement - Held that:- The assessee inherited 1/3rd property in the estate of her deceased husband’s father (i.e. her father-in-law) after the death of her minor son. A family arrangement was arrived to partition the interest of the assessee by paying her lump sum amount of ₹ 35,00,000/- to relinquish the right in the properties. A family settlement agreement was arrived at on 28th April, 2008 wherein, it was agreed that the assessee shall ceased to have any rights, title, interest, claims in any of the properties of late Shri R. L. Maheshwari i.e. her father-in-law.
Under a family arrangement, if a settlement is agreed, amongst the members then it cannot be held that it’s a case of transfer of a capital asset. The assessee had merely inherited the share on behalf of her late husband from the property belonging to her father-in-law. This share had been relinquished under the family arrangement, wherein all the parties who had antecedents’ rights have mutually agreed upon for settlement of the shares. Such a family settlement or arrangement does not tantamount to any transfer of a title, albeit it is akin to a partition of the family asset amongst the members, which is not regarded as a transfer u/s 47(i). In case of a family settlement, it only settles the conflicting claims which had pre-existing joint interest, to a separate interest and there is no conveyance of a property or transfer of a property. Here it is not a transfer of a capital asset but an arrangement for settling the interest and rights of the family members.
As decided in the case of CIT vs Kay Arr Enterprises & Others [2007 (7) TMI 171 - MADRAS HIGH COURT] when the parties entered into a family arrangement, that would not attract capital gain as the same was prudent arrangement to avoid possible litigation among family members. Further, a family arrangement has to be seen as an agreement between the Members of the same family for settling doubtful or disputed or preserving the family property or the members and security of the family by avoiding litigation or by saving its owner. Thus, we hold that the amount received by the assessee in terms of family settlement agreement cannot be treated on account of transfer of a capital asset which cannot be said to chargeable to tax under the head “capital gain” - Decided in favour of assessee.
-
2015 (7) TMI 1251
Auction of the mortgaged property - application under Section 17 of SARFAESI Act - Held that:- On the basis of assertion made on behalf of the petitioner, we deem it appropriate to direct the Tribunal to decide the application filed by the petitioner under Section 17 of the Act expeditiously. We further direct that the Tribunal and/or the secured creditors shall not confirm the auction till such time, the application is decided by the Tribunal. With such directions, the instant writ petition stands disposed of.
-
2015 (7) TMI 1250
Issues:
1. Application filed under Sections 391 to 394 read with Sections 100 to 103 of the Companies Act, 1956 and Section 52 of the Companies Act, 2013 for a Scheme of Arrangement.
2. Directions sought for convening separate meetings of Equity Shareholders, Preference Shareholders, and Secured Creditors.
3. Dispensation of meeting of Unsecured Creditors and procedures under Sections 100 and 101(2) of the Companies Act.
4. Proposed scheme's impact on Secured and Unsecured Creditors.
5. Proposed restructure of share capital and its relation to the Scheme of Arrangement.
6. Approval process for the Scheme of Arrangement.
7. Conduct of separate meetings for different stakeholders.
8. Quorum requirements and voting procedures for the meetings.
9. Reporting requirements to the Court post meetings.
Analysis:
1. The Applicant Company filed an application under relevant sections of the Companies Act for a Scheme of Arrangement involving Reconstruction and Compromise. The application sought directions for separate meetings of Equity Shareholders, Preference Shareholders, and Secured Creditors. The Applicant also requested dispensation of the meeting of Unsecured Creditors and certain procedural requirements under the Companies Act.
2. The proposed scheme aimed at compromising only with Secured Creditors, ensuring the rights of Unsecured Creditors were not adversely affected. A certificate from a Chartered Accountant confirmed substantial improvement in the company's net worth post-scheme implementation, supporting the claim that the Applicant would meet obligations to Unsecured Creditors. Consequently, the meeting of Unsecured Creditors for approving the scheme was deemed unnecessary and dispensed with.
3. The proposed restructure of share capital was integral to the Scheme of Arrangement, involving no diminution of liability or payments to shareholders. Approval by Equity and Preference Shareholders was considered sufficient as a Special Resolution under the Companies Act, with no adverse impact on creditors. Therefore, procedures under relevant sections and rules were dispensed with.
4. Separate meetings were to be convened for Equity Shareholders, Preference Shareholders, and Secured Creditors to consider and approve the proposed Scheme of Arrangement. Notices and relevant documents were to be dispatched to stakeholders in advance, ensuring transparency and compliance with legal requirements.
5. The Chairman of the meetings was designated, with powers to conduct and adjourn meetings, ascertain decisions through polls, and report the meeting outcomes to the Court within a specified timeline. Quorum requirements and voting procedures were outlined, allowing for proxy voting under prescribed conditions.
6. The value of votes for shareholders and creditors was determined based on company records, with the Chairman authorized to resolve disputes. The Chairman was required to submit a verified report to the Court post meetings, concluding the application process.
-
2015 (7) TMI 1249
Depreciation on Goodwill - Held that:- Following the above decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 the issue should be remanded to the AO for consideration. We do so keeping in mind the objection raised by the DR regarding valuation of the goodwill, its use etc. The AO shall examined the question of allowing depreciation on goodwill in the light of the material already available on record and such other material that the AO may require and such other material as the Assessee may rely upon to substantiate its claim for depreciation on goodwill. The AO will afford opportunity of being heard to the Assessee. For statistical purpose, the additional ground is treated as allowed
TPA - comparable selection - Held that:- Assessee is into software development service, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparable.
Liability in respect of the interest as charged u/s 234B and 234C - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala [2001 (10) TMI 4 - SUPREME Court ]. In this view of the matter, we uphold the action of the Assessing Officer in charging the assessee the said interest.
-
2015 (7) TMI 1248
Scheme of arrangement in the nature of amalgamation - Held that:- Separate proceedings are not necessary for the transferee company being the holding company, it is held in the present case also that separate proceedings are not required to be filed for the transferee company.
Attention of the court is drawn to Para 6 of the affidavit in support of the Judges' Summons. It has been pointed out that the applicant being a listed public limited company, pursuant to clause 24(f) of the Listing Agreement, the applicant company has obtained the requisite approval from the concerned stock exchanges viz. BSE Limited and National Stock Exchange of India Limited. A copy of each of them have been placed on record as Exhibit `E'. Perusal of the same makes it clear that an additional condition has been prescribed by the SEBI with reference to previous acquisition of shares. The same has now been included in clause 17(iii) of the scheme. The applicant company has undertaken to comply with the same by conducting an independent procedure for Postal Ballot and e voting in this regard. It has further undertaken that the result of the same shall be placed on record before final sanction of the scheme.
-
2015 (7) TMI 1247
Scheme of amalgamation - The meeting of the equity shareholder (3 in numbers) of the company, meeting of the creditors of the Applicant Company and meeting of the unsecured creditors of the applicant company is ordered to be dispensed with and adherence to other provisions related to it.
-
2015 (7) TMI 1246
Petition under Section 397 of the Act alleging acts of oppression - the registration of the subject transfer of shares was in contravention of Section 108 - directions concerning maintenance of adequate representation of the Appellants on the board of directors - Held that:- It is seen from the record of the case that the transfer of 536 shares was made purportedly as part of a family arrangement between the late Shankarrao and his brothers; it was made during the lifetime of Shankarrao; it was backed by transfer deeds purportedly executed by the late Shankarrao in favour of his four brothers Respondent Nos. 6 to 9; there is a board resolution as of 25 March 2003 duly recorded in the Minute Book maintained by the first Respondent company accepting such transfer and providing for its registration; the transfer is recorded in the original share certificates; the Annual Report of the first Respondent company of the year 20032004 reflects this transfer and shows the names of all the transferees; and finally, the AGM of the first Respondent company immediately following such transfer is admittedly attended by the transferees as members of the first Respondent company in the presence of Appellant No.3, who attended as a proxy of the late Shankarrao (who continued to hold 135 shares after the transfer). The conclusion of the CLB in the backdrop of these facts that the issue concerning the transfer of 536 shares being made fraudulently, that is to say, by forging the signatures or overwriting the transfer forms, etc., could not be adjudicated upon by the CLB, cannot be termed as an impossible or perverse conclusion.
Article 11 provides for the right of preemption of existing shareholders of the company in the case of a proposed transfer of shares. It is submitted that the transfer of 536 shares of the late Shankarrao was in contravention of this provision. Article 11 takes effect in a case which is not otherwise provided for under the Articles. It opens with the words "Except as herein provided". Article 10, which immediately precedes this Article, provides that notwithstanding the restrictions contained in the Articles, shares may be transfered by a member to another member or a person in any of the enumerated relationships with the transferor member. It is an admitted position that the transferees of these 536 shares are brothers of the late Shankarrao and fall within this clause. What is in dispute here is the applicability of that proposition to the facts of the present case. As discussed above, the transfers in the present case cannot be said to be in contravention of the Articles.
No submissions were advanced by learned Counsel for the Appellants on mismanagement under Section 398 of the Act. In that view of the matter, there is no merit in the Company Appeal.
As far as the Respondents' crossobjections in the appeal are concerned, the same are on the footing that the CLB has directed the Respondents to give an adequate representation to the Appellants on the board of directors of the first Respondent company - Whether or not the Appellants hold over 46% shareholding in the first Respondent company, is a matter of serious dispute between the parties. In fact, if 536 shares of the first Respondent company are treated as correctly transfered by late Shankarrao to Respondent Nos. 6 to 9, the total shareholding of the Appellants comes to about 26.46%. This appears to have been completely lost sight of by the CLB. The order that an adequate representation be given to the rival group of shareholders first on the basis of a purported finding in the original order and correcting that order later by maintaining the final direction but this time simply on the basis of the rival group's claim to hold a certain percentage of shareholding, clearly exhibits a perverse approach.
Even otherwise, the direction that an adequate representation should be given to the Appellants without indicating what is meant by such adequate representation is clearly impermissible and cannot be sustained.the findings of the CLB and the directions based thereon clearly exhibit errors of law and cannot be sustained, as discussed above. The crossobjections of the Respondents are, accordingly, allowed and the directions of the CLB requiring the Appellants to be given an adequate representation to the Appellants in the management of the business of the first Respondent company as also its finding concerning the Respondent company being a family company in the nature of quasi partnership, are set aside.
............
|
9911796707
