|
Advanced Search Options
Case Laws
Showing 121 to 140 of 509 Records
-
1998 (8) TMI 491
Issues involved:
Interpretation of section 10F of the Companies Act, 1956 for filing an appeal to the High Court based on questions of law arising from the order of the Company Law Board.
Analysis:
The judgment revolves around the interpretation of section 10F of the Companies Act, 1956, which allows an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board on any question of law arising out of such order. The intention of the law maker is to permit an appeal only on questions of law and not otherwise. The original pleading did not contain any such question of law, but additional pleadings were allowed to set out the questions of law warranting intervention under section 10F. The questions of law raised include the sustainability of the Company Law Board's order without discussing prima facie case, balance of convenience, and interest of justice, consideration of subsequent events in interim orders, failure to give findings on diversion of company's assets, and the legality of actions by respondents in calling for rights issue without a special resolution. The court held that none of these questions can be considered as questions of law arising from the Company Law Board's order, and thus, the appeal cannot be entertained under section 10F.
The judgment emphasizes that the order under challenge was an interlocutory order for the appointment of an administrator at the interim stage. The Company Law Board exercised discretion in the contextual facts, and the use of discretion was not so perverse as to warrant interference or intervention of the appellate court. The court highlighted that the matter was pending before the Company Law Board for final adjudication, and there was no reason to entertain an appeal based on the grounds raised under section 10F. As a result, the appeal was dismissed, and it was advised that the Company Law Board should expedite the disposal of the matter without any order as to costs.
In conclusion, the judgment clarifies the scope of section 10F of the Companies Act, 1956, in allowing appeals to the High Court based on questions of law arising from the Company Law Board's order. It underscores the importance of distinguishing questions of law from other considerations and highlights the limited grounds on which appeals can be entertained under this provision. The court's decision to dismiss the appeal and advise expeditious disposal by the Company Law Board reflects a commitment to efficient resolution of disputes within the legal framework provided.
-
1998 (8) TMI 490
Issues Involved:
1. Locus standi of the petitioner to file the winding-up petition.
2. Whether the dues of the transferor-company have become time-barred.
3. The liability of the respondent-company to pay interest after the expiry of the intercorporate deposit period.
4. Compliance with Rule 21 of the Companies (Court) Rules, 1959.
Detailed Analysis:
1. Locus Standi of the Petitioner:
The petitioner, Fortis Financial Services Limited, sought the winding up of the respondent-company under sections 433(e) and 434 of the Companies Act, 1956, on the grounds of unpaid debts. The respondent contended that the petitioner had no locus standi as it was not a creditor. However, the court noted that the petitioner had merged with Empire Finance Company Limited, and the scheme of amalgamation was approved by the Bombay High Court and the Delhi High Court. The relevant order stated: "with effect from the appointed date all the debts, liabilities, duties and obligations of the transferor-company may be transferred without further act or deed to the transferee-company." This transfer included the right to recover debts, thus giving the petitioner locus standi to file the petition.
2. Time-Barred Dues:
The respondent argued that the dues were time-barred. However, the court found that the respondent had acknowledged the debt in a letter dated August 4, 1995, which stated, "the account will be cleared very shortly." This acknowledgment extended the limitation period under section 18 of the Limitation Act. The court dismissed the respondent's contention that the acknowledgment was invalid due to the signatory's authority, noting that the letter was on the respondent's letterhead and signed by the Assistant Vice-President (Finance), a senior executive.
3. Liability to Pay Interest:
The respondent contended that it was not liable to pay interest after the expiry of the intercorporate deposit period and that interest claims were not debts unless adjudicated. The court did not delve deeply into this issue at this stage, as the primary matter was whether a prima facie case existed for admitting and advertising the petition under rule 24 of the Companies (Court) Rules, 1959. The court noted that the respondent had admitted to owing Rs. 88,310, which remained unpaid despite statutory notice, thus establishing prima facie grounds for the petition.
4. Compliance with Rule 21 of the Companies (Court) Rules, 1959:
The respondent argued that the petition was not maintainable as it did not comply with Rule 21 of the Companies (Court) Rules, 1959. The court did not find merit in this argument at this stage, focusing instead on the prima facie case for admitting the petition.
Conclusion:
The court found that a prima facie case was made out for admitting the petition and advertising it. However, to mitigate serious repercussions for the running company, the court ordered that the petition would not be advertised for two months if the respondent deposited Rs. 88,310 with the court within six weeks. If the amount was not deposited, the order for advertisement would become operative. The case was listed for further orders after six weeks.
-
1998 (8) TMI 489
Issues Involved:
1. Proper institution of the suit.
2. Barred by limitation.
3. Privity of contract between the plaintiff and defendant Nos. 2 and 3.
4. Contract for supply of machinery on 'no profit no loss' basis and advance payment.
5. Terms of the agreement for supply of machinery.
6. Effect of the agreement dated 24-1-1981.
7. Deleted issues (7, 8, 9, 10).
8. Entitlement to the sum of Rs. 2,30,017.04.
9. Entitlement to interest.
10. Relief.
Issue-wise Detailed Analysis:
Issue Nos. 1 and 3: Proper Institution of the Suit and Privity of Contract
The plaintiff argued that the suit was properly instituted based on a resolution passed by the board of directors on 14-1-1984, authorizing Shri R.K. Bhalla to file the suit. However, the resolution only mentioned filing a suit against defendant No. 1, not against defendant Nos. 2 and 3. The court concluded that the suit was not properly instituted against defendant Nos. 2 and 3. Additionally, the agreement dated 24-1-1981, which the plaintiff relied upon, was between individuals and did not bind defendant Nos. 2 and 3 to the plaintiff. Thus, there was no privity of contract between the plaintiff and defendant Nos. 2 and 3.
Issue No. 2: Barred by Limitation
The court determined that the suit was governed by Article 13 of the Limitation Act, which provides a three-year limitation period from the date the goods ought to have been delivered. The order was placed on 2-11-1979, and the delivery was to be made by 2-2-1980. Therefore, the suit should have been filed by 2-2-1983. Since the suit was filed on 20-1-1984, it was barred by limitation. Arguments that the limitation period started from the agreement date (24-1-1981) or from subsequent payments were rejected.
Issue Nos. 4, 5, and 6: Contract Terms and Agreement Effect
The plaintiff claimed the machinery was to be supplied on a 'no profit no loss' basis, referencing the agreement dated 24-1-1981. The court found this agreement pertained to the sale and purchase of shares and did not bind defendant No. 1 company. The terms of the original order dated 2-11-1979 (exhibit D-1) were accepted by the plaintiff, which did not include the 'no profit no loss' basis. The court concluded that the plaintiff failed to prove the terms and conditions of the machinery supply as alleged.
Issue Nos. 11, 12, and 13: Entitlement to Sum and Interest
The court found that the plaintiff only paid Rs. 3,15,000, not Rs. 4,05,000 as claimed. The receipts provided by the plaintiff were deemed unreliable due to inconsistencies and lack of proper entries in the defendant's account books. Therefore, the plaintiff was not entitled to the recovery of Rs. 3,54,217.04 or any interest. The suit was dismissed with costs of Rs. 12,000.
Deleted Issues (7, 8, 9, 10):
These issues were deleted as per the statements of the learned counsel for the parties on 4-8-1998.
Conclusion:
The court dismissed the suit, concluding that the plaintiff was not entitled to any relief, including the claimed sum and interest, and imposed costs of Rs. 12,000 on the plaintiff.
-
1998 (8) TMI 487
Issues:
Winding up petition under sections 433(e), 434(1)(a) and section 439 of the Companies Act, 1956.
Analysis:
The petitioner filed a winding-up petition against the respondent company, Subash Oil Mills (P.) Ltd., based on its indebtedness and failure to pay debts despite statutory notice. The respondent acknowledged the debt but cited financial constraints for non-payment, stating the factory was closed, leading to an inability to pay immediately. The court, after prima facie satisfaction of the case, directed the respondent to deposit the claimed amount with interest in two installments within two months to stay advertisement publication. Despite extensions, the respondent failed to comply, leading to the advertisement of the petition under rule 24. The respondent did not dispute the liability or propose any rehabilitation scheme, indicating an inability to pay its debts, resulting in the court's decision to allow the petition for winding up.
The court, after considering the arguments, allowed the petition and ordered the winding up of Subash Oil Mills (P.) Ltd. The Official Liquidator of the High Court was appointed to take necessary steps in accordance with the rules. The petitioner was directed to take further steps as per rule 113 within one month from the date of the judgment.
-
1998 (8) TMI 485
Issues Involved:
1. Appointment of an independent arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996.
2. Whether there was full and final settlement of the claim.
3. Allegations of coercion and undue influence in obtaining the settlement.
4. Determination of whether the dispute is arbitrable.
Detailed Analysis:
Issue 1: Appointment of an Independent Arbitrator
The petitioner/firm sought the appointment of an independent arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996, to adjudicate the dispute with the respondent/company. The agreement dated 16-2-1995 included an arbitration clause (Clause 56) for resolving disputes. The petitioner/firm claimed that despite repeated requests and exchanges of letters, the respondent/company failed to appoint an arbitrator, necessitating court intervention.
Issue 2: Full and Final Settlement of the Claim
The respondent/company argued that the petitioner/firm had accepted Rs. 1,02,041 as full and final settlement of the amount due, with Rs. 1 lakh paid through cheque and Rs. 2,041 retained for TDS. The respondent/company claimed there was accord and satisfaction, negating any subsisting dispute. They alleged the petitioner/firm abandoned the site without completing the work. Conversely, the petitioner/firm contended that the final bill submitted on 23-1-1996 was drastically reduced, and the acceptance of Rs. 1 lakh was under duress due to financial crisis.
Issue 3: Allegations of Coercion and Undue Influence
The petitioner/firm alleged that the respondent/company's Chairman/Managing Director exerted undue influence and coercion, forcing the acceptance of Rs. 1 lakh as full payment. The petitioner/firm argued that the financial crisis and the respondent/company's dominant position led to this coerced settlement. The respondent/company denied these allegations, asserting that the petitioner/firm voluntarily accepted the settlement and signed the final bill without protest.
Issue 4: Determination of Arbitrability
The court examined whether the issue of full and final settlement, when disputed, is a matter for arbitration or court determination. Citing precedents, the court noted that disputes regarding accord and satisfaction are typically decided by the arbitrator. However, if the settlement is found to be voluntary and unconditional, it ceases to be an arbitrable dispute. The court referenced cases like Hindustan Petroleum Corpn. Ltd. v. V.D. Swami & Company Ltd and P.K. Ramaiah & Co. v. Chairman & Managing Director, National Thermal Power Corpn., emphasizing that voluntary settlements are not arbitrable.
Conclusion:
The court found that the petitioner/firm's acceptance of Rs. 1,02,041 on 13-3-1996 was voluntary and constituted a full and final settlement. The subsequent allegations of coercion and undue influence were deemed afterthoughts, unsupported by evidence. The court held that there was no existing arbitrable dispute to refer to arbitration. Consequently, the application for appointing an independent arbitrator was dismissed, with costs as incurred.
-
1998 (8) TMI 484
Issues:
Claim for non-payment of lease rents and winding up of respondent-company.
Analysis:
The petitioner claimed that the respondent-company failed to pay lease rents totaling Rs. 15,92,012, leading to a total recoverable amount of Rs. 59,35,802. The respondent argued that due to a default by a sister concern of the petitioner, an oral agreement was made to cancel the lease deed and adjust outstanding rentals against damages. The respondent also mentioned an adjustment of Rs. 3 lakhs for bank guarantee cancellation expenses, which the petitioner allegedly suppressed in the company petition.
The court noted discrepancies in the company petition regarding the adjustment of Rs. 3 lakhs and the respondent's reply dated 4-7-1997. However, correspondence revealed that the adjustment was voluntary, with no mention of the alleged oral agreement to forgo future lease rents. The court observed that the respondent's claim did not seem genuine, and the issue of commercial insolvency would be investigated later. A prima facie case was established that the respondent owed at least Rs. 12,92,012 plus interest, leading to the admission of the petition for winding up the respondent-company.
In conclusion, the judgment admitted the petition based on the petitioner's claim of non-payment of lease rents by the respondent-company. The court found discrepancies in the respondent's defense regarding an oral agreement and voluntary adjustments, leading to the decision to investigate commercial insolvency at a later stage. The court's decision was based on establishing a prima facie case of debt owed by the respondent, justifying the admission of the winding-up petition.
-
1998 (8) TMI 482
Issues: Application for winding up under sections 433(e) and (f) and 439 of the Companies Act, 1956 based on a disputed agreement for payment of dues.
Analysis:
1. The applicant sought winding up of the respondent-company under sections 433(e) and (f) and 439 of the Companies Act, 1956, based on an agreement dated 6-2-1994, where an amount of Rs. 2,03,330 was allegedly owed by the respondent-company. The applicant claimed a total amount of Rs. 7,89,575, including interest, which the respondent failed to repay despite notice.
2. The respondent-company contended that the agreement was not approved by its board of directors, rendering it non-binding. It argued that the balance-sheet acknowledgment did not constitute admission of liability, and an amount of Rs. 82,500 was already adjusted against past pressing work charges, fulfilling part of the alleged dues.
3. The court analyzed the agreement terms, noting that the pressing work charges were to be adjusted against the due amount. The respondent's assertion of adjusting Rs. 82,500 against past work was supported by the applicant's admission of partial payment. The court highlighted the need for oral evidence to resolve factual disputes, unsuitable for a summary procedure under section 433 of the Companies Act.
4. Emphasizing the requirement of a bona fide dispute for winding up, the court found the respondent's defense plausible, given the pending civil suit on the same matter. Citing a precedent, the court differentiated cases where acknowledgment of debt did not preclude winding up applications, unlike the present scenario where a genuine dispute existed.
5. Ultimately, the court dismissed the winding-up application at the admission stage, considering the likelihood of success for the respondent's defense and the ongoing civil suit. The court did not delve into detailed inquiries due to the genuine and probable nature of the respondent's defense, leading to the application's dismissal without costs.
-
1998 (8) TMI 479
Issues Involved:
1. Constitutional validity of Rule 8(2) of the Securities Contracts (Regulation) Rules, 1957.
2. Alleged violation of Articles 14 and 19(1)(g) of the Constitution of India.
3. The power of the Central Government to frame rules under the Securities Contracts (Regulation) Act, 1956.
4. The right to carry on business in securities as a fundamental right.
5. The amenability of the Stock Exchange to writ jurisdiction.
Detailed Analysis:
1. Constitutional Validity of Rule 8(2):
The petitioner challenged Rule 8(2) of the Securities Contracts (Regulation) Rules, 1957, arguing that it was unconstitutional. Rule 8(2) outlines specific conditions for membership in a recognized stock exchange, which the petitioner contended were unreasonable and arbitrary. The court examined the rule and found it to be within the rule-making power of the government under Section 30 of the Securities Contracts (Regulation) Act, 1956. The court held that the rule did not violate any constitutional provisions and was valid.
2. Alleged Violation of Articles 14 and 19(1)(g):
The petitioner argued that the restrictions imposed by Rule 8(2) violated Articles 14 and 19(1)(g) of the Constitution, which guarantee equality before the law and the right to practice any profession or to carry on any occupation, trade, or business. The court referred to the Supreme Court's decision in Madhubhai Amathalal Gandhi v. Union of India, which upheld similar restrictions as reasonable and necessary for the regulation of the securities market. The court found that the restrictions were not arbitrary and did not violate the petitioner's fundamental rights.
3. Power of the Central Government to Frame Rules:
The respondents argued that the Central Government had the authority to frame rules under Section 30 of the Securities Contracts (Regulation) Act, 1956. The court agreed, stating that the rule-making power was clearly provided for in the Act, and the government was competent to frame Rule 8(2).
4. Right to Carry on Business in Securities:
The petitioner claimed that the right to carry on business in securities was a fundamental right under Article 19(1)(g). The court, however, held that trading in securities is not a fundamental right but a statutory right, regulated by the Securities Contracts (Regulation) Act, 1956. The court cited the Supreme Court's decision in Ibrahim Sulaiman v. M.C. Mohammed, which stated that the right to contest an election is not a common law right but a statutory right, and similar principles applied to the business of trading in securities.
5. Amenability of the Stock Exchange to Writ Jurisdiction:
The petitioner sought a writ directing the Stock Exchange to grant him membership without imposing unreasonable terms. The respondents argued that the Stock Exchange was not amenable to writ jurisdiction. The court referred to the decisions in R. Jagadesh Kumar v. P. Srinivasan and Satish Nayak v. Cochin Stock Exchange Ltd., which held that Stock Exchanges do not perform public duties and are not authorities under Article 12 of the Constitution. Therefore, they are not amenable to writ jurisdiction under Article 226. The court agreed with this view and held that no writ could be issued against the Stock Exchange.
Conclusion:
The court dismissed the writ petition, holding that Rule 8(2) of the Securities Contracts (Regulation) Rules, 1957, is constitutionally valid. The court found no violation of Articles 14 and 19(1)(g) of the Constitution. It upheld the power of the Central Government to frame rules under the Securities Contracts (Regulation) Act, 1956, and stated that the right to trade in securities is a statutory right, not a fundamental right. The court also held that the Stock Exchange is not amenable to writ jurisdiction.
-
1998 (8) TMI 458
Issues Involved:
1. Maintainability of the petition.
2. Bona fide nature of the petition.
3. Ability of the respondent-company to pay its debts.
4. Privity of contract between the petitioner and the respondent-company.
5. Admission of dues and non-payment by the respondent-company.
6. Appointment of a Provisional Liquidator.
Issue-wise Detailed Analysis:
1. Maintainability of the petition:
The respondent-company contended that the petition was not maintainable before the Gujarat High Court as both the petitioner and the respondent-company's administrative office were in Bombay. However, the court overruled this preliminary contention by noting that the registered office of the respondent-company was at Navsari in Gujarat, and there was no specific denial of this statement by the respondent-company. The court treated this as an indication of the absence of a bona fide defense on the part of the respondent-company.
2. Bona fide nature of the petition:
The respondent-company argued that the petition was filed due to business rivalry and was not bona fide. The court, however, found that the petitioners had provided sufficient evidence of the respondent-company's failure to pay its debts, and the petitions were not merely a means to recover disputed debts. The court noted the respondent-company's repeated acknowledgments of its dues and its failure to honor payment agreements.
3. Ability of the respondent-company to pay its debts:
The court observed that the respondent-company had admitted to owing substantial amounts to the petitioners and had failed to make any payments after February 1996. The respondent-company's property was under attachment by the Income-tax Department for a claim of Rs. 70 lakhs, indicating its inability to pay its debts. The court concluded that the respondent-company was unable to pay its debts and that it was just and equitable to wind up the company to enable creditors to recover their dues.
4. Privity of contract between the petitioner and the respondent-company:
The respondent-company contended that there was no privity of contract between it and the petitioner, as the contract was between the petitioner and H.R. Desai Stran-Wires (P.) Ltd. The court found this contention to be not bona fide, noting that the respondent-company had agreed to co-accept the lease rental bills and had acknowledged its liability in various communications. The court held that the petitioner had a valid claim against the respondent-company.
5. Admission of dues and non-payment by the respondent-company:
The court noted that the respondent-company had admitted to owing more than Rs. 8 lakhs to the Bombay Leasing Co. (P.) Ltd. and had failed to make any payments after February 1996. The respondent-company had also failed to comply with court orders to deposit 60% of the dues to show its bona fides. The court found that the respondent-company had no bona fide dispute regarding the debts claimed by the petitioners and had not made any genuine efforts to pay its dues.
6. Appointment of a Provisional Liquidator:
The court had previously directed the respondent-company to deposit 60% of the dues before 25-6-1998, which the respondent-company failed to do. The court noted that the respondent-company had repeatedly sought adjournments and had not complied with court orders. Consequently, the court appointed the Official Liquidator attached to the court as the Liquidator of the respondent-company to take over possession of all its movable and immovable assets.
Conclusion:
The court ordered the winding up of Vitta Mazda Ltd. under sections 433 and 434 of the Companies Act, 1956, with the order relating back to 14-8-1990 when Company Petition No. 126 of 1990 was presented. The Official Liquidator was appointed to take possession of the company's assets, and public notice of the order was to be published in two daily newspapers. The operation of the order was stayed for three weeks on the condition that the respondent-company would not dispose of any of its assets during this period.
-
1998 (8) TMI 456
Issues Involved:
1. Exclusion of Chartered Accountants from handling tax cases of companies in liquidation.
2. Validity and implications of the Company Court's order regarding the engagement of advocates and Chartered Accountants.
3. Right of appeal under section 483 of the Companies Act, 1956.
4. Nature of the impugned order - whether administrative or judicial.
5. Necessity of modification in the impugned order to include Chartered Accountants.
Issue-wise Detailed Analysis:
1. Exclusion of Chartered Accountants from handling tax cases of companies in liquidation:
The appellants, Chartered Accountants, were aggrieved by the Company Court's order that excluded them from conducting tax cases for companies in liquidation. The Company Court had directed the Official Liquidator to entrust all tax matters to advocates included in the panel, thus sidelining the Chartered Accountants who were previously part of an approved panel.
2. Validity and implications of the Company Court's order regarding the engagement of advocates and Chartered Accountants:
The appellants argued that there was an existing panel of Chartered Accountants approved by the Company Court, and they were not given an opportunity to be heard before the impugned order was passed. The Official Liquidator had initially sought permission to engage both advocates for sales tax matters and Chartered Accountants for income-tax matters. However, the Company Court reviewed this and directed that all tax matters be handled by advocates, thus nullifying the efficacy of the Chartered Accountants' panel.
3. Right of appeal under section 483 of the Companies Act, 1956:
The counsel for the panel of advocates contended that the appeal was not maintainable as no leave had been obtained before filing the appeal. Section 483 provides a right of appeal against orders made in the matter of winding up of a company. The court noted that the absence of leave does not obliterate the substantive right of appeal, and since the Chartered Accountants were aggrieved parties excluded from handling tax matters, they were entitled to file the appeal.
4. Nature of the impugned order - whether administrative or judicial:
The counsel for the advocates argued that the impugned order was administrative and thus not appealable under section 483. The court examined the nature of the order and concluded that it was judicial, as it adjudicated the rights of the parties, had binding force, and followed procedural attributes typical of a court. Therefore, the order was appealable.
5. Necessity of modification in the impugned order to include Chartered Accountants:
The court acknowledged the need for flexibility in the impugned order. It recognized situations where the services of Chartered Accountants might be essential, such as auditing accounts or computing capital gains tax. The court suggested that the Official Liquidator should be allowed to engage Chartered Accountants when necessary, subject to the Company Court's approval, thus ensuring a balance between the panels of advocates and Chartered Accountants.
Conclusion:
The appeal was disposed of with modifications to the impugned order. The Official Liquidator was directed to entrust tax matters to advocates but could also engage Chartered Accountants when essential, subject to the Company Court's approval. This approach ensures a balanced and just handling of tax matters for companies in liquidation.
-
1998 (8) TMI 454
Issues Involved:
1. Application for winding up the respondent/company under section 433(e) of the Companies Act, 1956.
2. Alleged debt owed by the respondent/company to the petitioner.
3. Validity of the petition due to non-joinder of other trustees and beneficiaries.
4. Set-off claims by the respondent/company.
5. Maintainability of the petition under section 48 of the Trust Act and section 45 of the Contract Act.
Detailed Analysis:
1. Application for Winding Up:
The petitioner filed an application under section 433(e) of the Companies Act, 1956, seeking the winding up of the respondent/company on the grounds of its inability to pay a debt amounting to Rs. 8,80,000, including principal and interest. The petitioner alleged that despite demands made through registered and statutory notices, the respondent/company failed to pay the debt.
2. Alleged Debt Owed by the Respondent/Company:
The petitioner claimed that Vikas Trust had deposited Rs. 6 lakhs with the respondent/Nucon as a security deposit under a selling agency agreement dated 12-10-1981, carrying an interest of 10% per annum. The respondent/company acknowledged the receipt of Rs. 6 lakhs and agreed to pay interest. However, the respondent countered that the petitioner was liable for losses incurred by Nucon and owed money to SCC, a sister concern.
3. Validity of the Petition Due to Non-Joinder of Other Trustees and Beneficiaries:
The respondent argued that the petition was not maintainable as other trustees of Vikas Trust were not impleaded, violating section 48 of the Trust Act. Additionally, it was contended that under section 45 of the Contract Act, all co-promisees must join in the action. The court noted that the trust was dissolved on 2-6-1988, and Vikas Jalan was substituted in place of the Trust. The court allowed the petitioner to lead evidence regarding the payment of shares to Kavita Jalan or to make an application for the addition of necessary parties.
4. Set-off Claims by the Respondent/Company:
The respondent claimed set-offs for amounts allegedly owed by Vikas Trust and the joint Hindu family to Nucon and SCC. The court found that the respondent did not provide sufficient evidence to ascertain the exact amount of losses or file a suit for recovery within the limitation period, thus making the set-off claims invalid and barred by limitation.
5. Maintainability of the Petition Under Section 48 of the Trust Act and Section 45 of the Contract Act:
The court examined whether the non-joinder of other trustees and beneficiaries rendered the petition non-maintainable. It was concluded that while the defect was formal and could be corrected by allowing the petitioner to amend the petition, the subsequent dissolution of the trust and substitution of Vikas Jalan as the petitioner mitigated the issue. The court emphasized that the primary question was whether the debt was genuine, which was found to be true.
Conclusion:
The court ordered that the petition for winding up the respondent/company be admitted and advertised, as the debt was genuine. The petitioner was given an opportunity to lead evidence regarding the payment of shares to Kavita Jalan or to amend the petition to include necessary parties. The operation of the order was suspended for two weeks to allow the respondent to appeal. The case was posted for further enquiry on 14-10-1998.
-
1998 (8) TMI 452
The High Court of Bombay allowed the application under sections 446 and 537 of the Companies Act, 1956, for continuing a suit against Kanakdhara Steel Ltd. in liquidation. The appointment of a receiver was not granted as there was already one appointed. The application was disposed of, subject to the rights of other secured creditors and workmen. (1998 (8) TMI 452 - High Court of Bombay)
-
1998 (8) TMI 451
The High Court of Bombay directed the State Government to take action against companies running fraudulent plantation schemes, collecting money from small investors. The Court emphasized the need for legislation to control such fraud and protect investors from unscrupulous promoters. The State of Maharashtra was specifically instructed to ensure compliance with relevant laws before allowing transfer of agricultural lands to such companies. Stand over to 14th September 1998.
-
1998 (8) TMI 450
Issues Involved:
1. Whether Mysore Paper Mills is a 'State' under Article 12 of the Constitution of India.
2. Whether the transfer order of the 2nd respondent is vitiated by mala fides, arbitrariness, and illegality.
Issue-wise Detailed Analysis:
1. Whether Mysore Paper Mills is a 'State' under Article 12 of the Constitution of India:
The Court examined several leading Supreme Court decisions to determine whether Mysore Paper Mills (MPM) falls within the definition of 'State' under Article 12. The key tests from cases like Ajay Hasia v. Khalid Mujib Sehravard and Som Prakash Rekhi v. Union of India were applied. These tests include factors such as the extent of government control, financial assistance, and whether the entity performs public functions.
The Court found that MPM satisfies these criteria:
- Government Control: The Government of Karnataka holds more than 97% of the share capital, and the company is managed by a board of directors, the majority of whom are government nominees.
- Public Functions: MPM is involved in manufacturing newsprint, a state monopoly, and undertakes rural development and social welfare activities, which are governmental functions.
- Financial Assistance: The company operates with significant financial support from government-controlled institutions.
Given these factors, the Court concluded that MPM is indeed a 'State' under Article 12 of the Constitution.
2. Whether the transfer order of the 2nd respondent is vitiated by mala fides, arbitrariness, and illegality:
The respondents argued that the transfer order was issued to victimise the 2nd respondent due to his involvement in trade union activities. They cited several instances of alleged victimisation, including a previous termination without inquiry and a transfer to an isolated department.
The Court, however, found no substantial evidence supporting the claim of mala fides:
- Chronological Events: The Court noted that the 2nd respondent had been promoted and reinstated after previous disputes, indicating no continuous victimisation.
- Transfer as an Incident of Service: The Court emphasized that transfer is a normal incident of service, and the 2nd respondent's appointment terms included a transfer clause.
- Administrative Grounds: The Court accepted the appellant's explanation that the transfer was necessitated by business exigencies, including addressing quality complaints from the Calcutta region and improving market conditions.
The Court also dismissed the significance of subsequent events, such as the 2nd respondent's health issues and the fire incident at his residence, as they occurred after the transfer order and did not influence its issuance.
Conclusion:
The Court concluded that MPM is a 'State' under Article 12, and the transfer order of the 2nd respondent was not vitiated by mala fides or arbitrariness. The writ petitions were dismissed, and the appeals were allowed.
-
1998 (8) TMI 449
Whether the respondent indulged in the unfair trade practices as alleged in the application of the D.G. and contained a Notice of Enquiry issued on the basis of that ?
Whether the said unfair trade practice is prejudicial to the public interest or to the interest of the consumer in general or to any consumer in particular?
Held that:- Appeal allowed. The Commission should have noted with advantage the expenditure incurred by the appellants in the year 1984-85 and 1985-86 on advertisements and marketing of Horlicks, namely, Rs. 2,33,33,637 and Rs. 2,96,69,208 respectively and contrasted it with the expenditure on the prizes under the said scheme, namely, Rs. 52,250. That would have indicated fairly clearly that the appellants were right in stating that no part of the comparatively insignificant expenditure on the prizes had been recouped from the consumers of Horlicks.
Thus it is difficult to hold that a consumer who bought a bottle of Horlicks that did not entitle him to a prize suffered a loss.
-
1998 (8) TMI 448
Issues Involved:
1. Liability of the respondent-companies to pay the claimed amounts.
2. Whether the respondent-companies are unable to pay their debts.
3. Whether the respondent-companies are liable to be wound up due to their indebtedness.
Detailed Analysis:
1. Liability of the Respondent-Companies to Pay the Claimed Amounts:
The petitioner, a public limited company, sought compulsory winding up of the respondent-companies under sections 433(e) and (f) and 439 of the Companies Act, 1956, due to unpaid bridge loans. The loans were sanctioned against the disbursement of capital incentives receivable under the Maharashtra Government's incentive scheme. The respondent-companies executed agreements and promissory notes for the loans, agreeing to pay interest and additional interest in case of default. Despite multiple demand notices, the respondent-companies failed to repay the loans, leading the petitioner to claim the amounts due.
The respondent-companies argued that the loans were intended as incentives and should be adjusted against the subsidies sanctioned by the Maharashtra Government, which were delayed. They claimed that the petitioner, as the implementing agency, was responsible for the delay and that the agreements were signed under duress. They also contended that the interest charges were arbitrary and unreasonable.
The court found that the respondent-companies had indeed received the bridge loans and had agreed to the terms of repayment, including interest. The petitioner had adjusted part of the subsidies received from the Maharashtra Government against the loan amounts, but substantial amounts remained unpaid. The court held that the respondent-companies were liable to pay the claimed amounts as per the agreements.
2. Whether the Respondent-Companies are Unable to Pay Their Debts:
The court examined whether the respondent-companies were unable to pay their debts, which is a ground for winding up under section 433(e) of the Companies Act. The petitioner provided evidence of multiple demand notices sent to the respondent-companies, which were either not replied to or contained requests for more time without denying the debt. The respondent-companies admitted their financial difficulties and the inability to repay the loans due to the delayed subsidies.
The court referred to the Supreme Court's observation in Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami, which stated that a winding-up petition is not a legitimate means of enforcing payment of a debt that is bona fide disputed. However, the court found no bona fide dispute regarding the debt in this case. The respondent-companies failed to provide substantial grounds for the dispute or evidence of financial capability to repay the debts.
3. Whether the Respondent-Companies are Liable to be Wound Up Due to Their Indebtedness:
The court considered whether it would be just and equitable to wind up the respondent-companies under section 433(f) of the Companies Act. The financial condition of the respondent-companies was found to be poor, with no material evidence suggesting a chance of resurrection. The court noted that the respondent-companies had neglected to pay the loan amounts despite statutory notices and had failed to pay interest as per the agreements.
The court concluded that the respondent-companies had become commercially insolvent and that winding up was in the interest of justice. The petitions were allowed, and the respondent-companies were directed to be wound up. The Official Liquidator was instructed to take charge of the companies' properties and effects, and the petitioner was ordered to advertise the notice in specified newspapers and serve a certified copy of the order on the Registrar of Companies.
Conclusion:
The court found the respondent-companies liable to pay the claimed amounts, unable to pay their debts, and commercially insolvent. Consequently, the respondent-companies were ordered to be wound up, with the Official Liquidator taking charge of their assets. The petitioner was directed to advertise the winding-up notice and serve the order on the Registrar of Companies.
-
1998 (8) TMI 447
Issues Involved:
1. Direction for the Official Liquidator to hand over possession of leased land.
2. Restraint on the Official Liquidator from accepting offers for the purchase of the land.
3. Jurisdiction of the Court to entertain the application.
4. Applicability of the Rent Act to the leased property.
5. Rights and obligations of the landlord and tenant under the Rent Act.
6. Validity of the Official Liquidator's actions under the Rent Act and Companies Act.
7. Precedents from the Supreme Court regarding similar issues.
Issue-wise Detailed Analysis:
1. Direction for the Official Liquidator to hand over possession of leased land:
The applicants sought a direction for the Official Liquidator to hand over possession of land bearing revenue Survey No. 375 of village Kalol, Taluka Kalol, Distt. Mehsana, arguing that the land was leased on 30-3-1933 for an indefinite period and was no longer required for the company's business. The applicants contended they were entitled to possession as landlords due to the company's liquidation.
2. Restraint on the Official Liquidator from accepting offers for the purchase of the land:
The applicants also sought to restrain the Official Liquidator from accepting any offer for the purchase of the land in question, which was advertised for sale on an "as is where is" basis in a local daily. They argued that the Rent Act prohibits the transfer of leased property without the landlord's consent and that the Official Liquidator should not be allowed to transfer the property in violation of this provision.
3. Jurisdiction of the Court to entertain the application:
The respondent's counsel argued that the jurisdiction to entertain a claim for recovery of possession of leased premises is governed by section 28 of the Rent Act, which grants exclusive jurisdiction to specified Tribunals. However, the court held that section 446 of the Companies Act, 1956, provides that the Court winding up the company has jurisdiction to entertain or dispose of any suit or proceeding by or against the company, notwithstanding any other law. This jurisdiction includes proceedings under the Rent Act.
4. Applicability of the Rent Act to the leased property:
The court acknowledged that the land in question is governed by the Rent Act and that section 15 of the Rent Act prohibits the transfer of leased premises by subletting, assigning, or transferring in any manner without the landlord's consent. The court emphasized that it could not sanction any act by the Official Liquidator that is prohibited by law.
5. Rights and obligations of the landlord and tenant under the Rent Act:
The court noted that the relationship of landlord and tenant continues between the owner and the company in liquidation until the company is dissolved. All provisions of the Rent Act, including those granting protection or imposing restrictions and obligations, continue to operate. The court held that the Official Liquidator could not transfer the leased property in contravention of the Rent Act.
6. Validity of the Official Liquidator's actions under the Rent Act and Companies Act:
The court examined the actions of the Official Liquidator in light of the Rent Act and Companies Act. It concluded that the Official Liquidator could not be permitted to transfer the possession of the leased property in violation of the Rent Act. The court also highlighted that the Official Liquidator's requirement to retain possession for winding up purposes, such as storing records or other assets, is a relevant consideration.
7. Precedents from the Supreme Court regarding similar issues:
The court referred to two Supreme Court decisions: Ravindra Ishwardas Sethna v. Official Liquidator and Smt. Nirmala R. Bafna v. Khandesh Spg. & Wvg. Mills Co. Ltd. In Ravindra Ishwardas Sethna's case, the Supreme Court held that the Official Liquidator could not part with possession of leased property in contravention of the Rent Act. In Smt. Nirmala R. Bafna's case, the Supreme Court opined that the rights of the company vis-a-vis its landlord do not change merely because the company goes into liquidation. The court concluded that the Official Liquidator could retain possession if required for winding up purposes.
Conclusion:
The court allowed the application to the extent of restraining the Official Liquidator from transferring the land independently and not as part of a going concern. The court held that the Official Liquidator must continue to pay the annual rent and any arrears from the date of winding up. The application for immediate return of possession was not pressed by the applicant, in line with the Supreme Court's ratio in Smt. Nirmala R. Bafna's case. The court disposed of the application accordingly.
-
1998 (8) TMI 446
Issues Involved:
1. Lack of notice and hearing before the appointment of the provisional liquidator.
2. Justification for the appointment of the provisional liquidator.
3. Impact of the provisional liquidator on the company's ability to approach other forums like BIFR.
4. Equitability and necessity of continuing the provisional liquidator.
Detailed Analysis:
Issue 1: Lack of Notice and Hearing
The applicant argued that they had no notice and were not heard before the order dated 11-6-1998 was passed, appointing the provisional liquidator. However, the court found this contention devoid of merit. The record showed that notice was issued along with C.P. No. 196 of 1997, and despite several opportunities, no reply was filed by the respondent-company. The requirements of section 450 of the Companies Act were fully satisfied, and the provisional liquidator was appointed justly. The court also noted that the applicant had been heard at length and had placed all desired documents on record.
Issue 2: Justification for Appointment of Provisional Liquidator
The applicant contended that there were no serious allegations or grounds for the appointment. The court, however, found that sufficient material and reasons existed, which remained unrefuted at the time of the order. The company's conduct and the reasons recorded in C.P. No. 196 of 1997 justified the appointment. The review application failed to present any new facts or grounds that could persuade the court to recall the order. The affidavit filed by the company's manager was found to be factually incorrect and intended to withhold correct facts. The official liquidator's affidavit revealed that the company's units were closed and heavily indebted, further justifying the appointment.
Issue 3: Impact on Approaching Other Forums
The applicant argued that the appointment of the provisional liquidator would obstruct the company from approaching forums like BIFR. The court dismissed this contention as misconceived, noting that no attempt was made by the company to pursue remedies before the BIFR. The court provided directions to the provisional liquidator to ensure that the company could still pursue its matters before competent forums, including BIFR.
Issue 4: Equitability and Necessity of Continuing the Provisional Liquidator
The court found it just and equitable to continue the provisional liquidator to protect the interests of creditors and prevent the pilferage and disposal of the company's limited assets. The company had no free assets, was heavily indebted, and had no viable scheme for revival. The court emphasized that the appointment of a provisional liquidator is a serious step but necessary in this case to protect the interests of all concerned. The court provided detailed directions to the provisional liquidator to prepare inventories and reports, and to assist the company in pursuing its matters before other forums.
Conclusion:
The review application was dismissed. The court issued specific directions to the provisional liquidator to ensure transparency and assist the company in pursuing its matters before competent forums. The appointment of the provisional liquidator was found to be justified and necessary to protect the interests of creditors and prevent asset disposal.
-
1998 (8) TMI 423
Issues:
Liability to duty of "sugar syrup" manufactured for cough syrup, marketability of the product, applicability of extended period for duty demand, levy of interest and penalty.
Liability to Duty:
The appeal considered the liability to duty of "sugar syrup" manufactured by the appellant for use in cough syrup production. The product, consisting of various ingredients, was classified by the Commissioner under Heading 17.02 of the Central Excise Tariff Act. The Commissioner invoked the extended period under the proviso to Section 11A of the Act to demand duty on the quantity produced between December 1991 and September 1996. Additionally, penalty under Section 11AC and interest under Section 11AD were imposed.
Marketable Product:
The order was challenged on the grounds that the product was not marketable due to the absence of buyers and the violation of Rule 47 of the Prevention of Food Adulteration Rules, which prohibits the sale of food articles containing sodium saccharin. The department argued for marketability citing an unrelated instance of a biscuit manufacturer paying duty on syrup and rose syrup sold by another firm. However, the Tribunal found that these instances did not establish the marketability of the product in question, as the ingredients and circumstances differed significantly.
Applicability of Extended Period and Levy of Interest and Penalty:
The Tribunal concluded that since the product was deemed not marketable due to regulatory violations, it was not liable for duty. Therefore, it was unnecessary to address the arguments regarding the applicability of the extended period for duty demand, as well as the imposition of interest and penalty. Consequently, the appeal was allowed, and the impugned order was set aside.
This judgment highlights the importance of marketability in determining the liability to duty, emphasizing compliance with regulatory standards and the absence of buyers as crucial factors. The decision underscores the significance of legal requirements in assessing the marketability of a product and its consequent duty obligations.
-
1998 (8) TMI 414
The Appellate Tribunal CEGAT, New Delhi upheld the order discharging duty demand on calcium citrate produced for captive consumption, ruling it was not excisable as it was not marketable. The Tribunal referred to a previous order in the respondent's case and rejected the Revenue's appeal.
............
|
9911796707
