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1976 (11) TMI 3
Capital Gains - Foreign Company - amount received in excess of the face value of the shares held by a shareholder in the course of voluntary liquidation of a foreign company - provisions of s. 46(2) are applicable to in the case of liquidation of a company as per s. 2(17) - Since foreign company is not covered by this section, the receipts and its liquidation is not liable for facts under s. 46(2) - Revenue's appeal is dismissed
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1976 (11) TMI 2
Characterization of income derived from tea estates - agricultural and party non-agricultural - Whether any portion of the salaries so drawn for services rendered are at all agricultural income to be non- exigible to income-tax - Word "Firm" - HELD THAT:- Partnership is a certain relation between persons, the product of agreement to share the profits of a business. "Firm" is a collective noun, a compendious expression to designate an entity, not a person. In income-tax law a firm is a unit of assessment, by special provisions, but is not a full person which leads to the next step that since a contract of employment requires two distinct persons, viz., the employer and the employee, there cannot be a contract of service, in strict law, between a firm and one of its partners. So that any agreement for remuneration of a partner for taking part in the conduct of the business must be regarded as portion of the profits being made over as a reward for the human capital brought in. Section 13 of the Partnership Act brings into focus this basis of partnership business.
Plainly, only 40% of the income from tea sales is treated as taxable. The balance, viz., 60% is regarded as agricultural and exempt. 60% of the salaries to partners comes out of this exempted gross sum and shares the benefit (of course, this may be exigible, by the same token, to agricultural income-tax, if there be any).
The core of the logic--and failure to grasp this has faulted the reasoning in Mathew Abraham v. CIT, [1962 (11) TMI 78 - MADRAS HIGH COURT]- is that the true character of the salary (i.e., the impugned 60%) is the same as that of the profits. Both are agricultural and thus it is clear that the amount does not escape tax if the State has--and now it has--a levy on agricultural income but the title of the State to tax this sum is valid, not of the Union.
We abstain from that enterprise and confine ourselves to the statement of the law that although, for purposes of the Income-tax Act, a firm has certain attributes simulative of personality, we have to take it that a partnership is not a person but a plurality of persons.
We dismiss the appeals. When this court, as the apex adjudicator declaring the law for the country and invested with constitutional credentials under article 141, clarifies a confused juridical situation, its substantial role is of legal mentor of the nation. Such is the spirit of the ruling in Trustees of Port of Bombay, Premier Automobiles Ltd. [1974 (2) TMI 74 - SUPREME COURT].
Appeals dismissed.
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1976 (11) TMI 1
Income-Tax Officer's failed to consider initial depreciation - Officer relied on his records to determine the depreciation allowable in such a case, if he commits a mistake in quantifying the amount of depreciation allowable, the mistake cannot be attributed to the assessee - Assessment cannot be reopened - Assessee's appeal is allowed
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1976 (10) TMI 162
Issues Involved:
1. Validity of U.P. Government Notification No. 41/13/1968-Appointment-4, dated March 12, 1975.
2. Validity of U.P. Higher Judicial Service Rules, 1975.
3. Eligibility of Judicial Magistrates for appointment to the post of Additional Sessions Judge.
4. Interpretation of Articles 233, 234, 236, and 237 of the Constitution.
Issue-wise Detailed Analysis:
1. Validity of U.P. Government Notification No. 41/13/1968-Appointment-4, dated March 12, 1975:
The petitioners, members of the U.P. Civil Service (Judicial Branch), challenged the notification issued by the Governor of Uttar Pradesh under Article 237 of the Constitution. This notification directed that the provisions of Chapter VI of Part VI of the Constitution and any rules made thereunder apply to Judicial Magistrates, making them eligible for appointment to the post of Additional Sessions Judge. The court held that the Governor has wide powers under Article 237 to apply the provisions of Chapter VI to any class of Magistrates, thereby integrating them into the judicial service of the state. The notification was deemed valid as it aimed to separate the judiciary from the executive, in line with Article 50 of the Constitution.
2. Validity of U.P. Higher Judicial Service Rules, 1975:
The petitioners also challenged the U.P. Higher Judicial Service Rules, 1975, which regulated recruitment and appointment to the U.P. Higher Judicial Service. Rule 4 established a single cadre comprising District and Sessions Judges and Additional District and Sessions Judges. Rule 5 laid down two sources of recruitment: direct recruitment of pleaders and advocates with at least seven years of practice and promotion of confirmed members of the U.P. Nyayik Sewa and Judicial Officers. Rule 6 prescribed a quota for recruitment from these sources. The court found that these rules were valid and did not contravene Articles 233 or 236 of the Constitution, as the Judicial Officers were now part of the judicial service following the notification under Article 237.
3. Eligibility of Judicial Magistrates for Appointment to the Post of Additional Sessions Judge:
The petitioners contended that Judicial Magistrates did not fall within the definition of "judicial service" under Article 236(b) and were thus ineligible for appointment as Additional Sessions Judges. The court rejected this argument, stating that the notification under Article 237 effectively integrated Judicial Magistrates into the judicial service. Consequently, they became eligible for such appointments. The court emphasized that the Constitution allows for a judicial service comprising both civil and criminal wings, and the notification did not enlarge the definition of judicial service but merely applied the existing provisions to the Magistrates.
4. Interpretation of Articles 233, 234, 236, and 237 of the Constitution:
The court extensively analyzed Articles 233, 234, 236, and 237. Article 233 pertains to the appointment of District Judges, Article 234 to appointments to the judicial service other than District Judges, and Article 236 defines "District Judge" and "judicial service." Article 237 empowers the Governor to apply these provisions to Magistrates. The court held that the Governor's notification under Article 237 brought the Magistrates within the scope of judicial service, making them eligible for promotion to posts like Additional Sessions Judge. The court also clarified that the term "judicial service" in Article 236(b) should be interpreted to include both civil and criminal judicial posts, and the word "and" in the definition could be read as "or" to reflect the legislative intent.
Conclusion:
The court concluded that the impugned notification and the U.P. Higher Judicial Service Rules, 1975, were valid. The Judicial Magistrates, following the notification under Article 237, became part of the judicial service and were eligible for appointment as Additional Sessions Judges. The petitions were dismissed with costs.
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1976 (10) TMI 161
Issues Involved:
1. Entitlement to maintenance or share in the estate.
2. Validity and proof of the will.
3. Customary law vs. statutory law.
4. Suspicious circumstances surrounding the will.
Issue-wise Detailed Analysis:
1. Entitlement to Maintenance or Share in the Estate:
The plaintiff, Gulab Kaur, initially filed a suit claiming maintenance or alternatively a one-half share in her deceased husband's estate. The defendant contended that she had deserted her husband and was not entitled to any share. The trial court struck issues based on these pleadings. Later, Gulab Kaur gave up her claim for maintenance and sought a one-half share in the estate. The trial court decreed in her favor, granting her a one-half share based on "overwhelming documentary evidence" that under the customary law, a sonless widow was entitled to an equal share with the male progeny born of a co-wife. The High Court, however, set aside this judgment, holding that the will excluded the plaintiff from the estate, thus dismissing the suit.
2. Validity and Proof of the Will:
The defendant, Surjit Inder Singh, propounded a will allegedly made by Sardar Gobinder Singh on November 26, 1945, which left almost the entire property to him. The trial court held that the defendant failed to prove the will as the last testament of Gobinder Singh. The High Court, however, accepted the will as duly established. The Supreme Court emphasized that the burden of proof lies on the party asserting the will. The Court cited the principles from R. Venkatachala Iyengar v. B.N. Thirnmajamma, stating that a will must be proved like any other document, but with an additional solemnity due to the absence of the testator. The Supreme Court found that the defendant failed to provide satisfactory evidence to prove the due execution of the will.
3. Customary Law vs. Statutory Law:
The trial court's judgment relied on the customary law, which was openly conceded by the parties, that a sonless widow was entitled to a one-half share in the estate. The High Court dismissed this reliance by upholding the will, which excluded the plaintiff. The Supreme Court noted that if the will was invalidated, the plaintiff would be entitled to a half share under the customary law.
4. Suspicious Circumstances Surrounding the Will:
The Supreme Court found numerous suspicious circumstances surrounding the will:
- The will was not discovered until 2.5 years after the testator's death.
- The defendant's explanation of discovering the will was deemed "patently lame and unacceptable."
- The will was attested by two strangers, raising doubts about its authenticity.
- The will was drafted with legal jargon but lacked details about the properties.
- The appointment of executors, who were not consulted or examined, added to the suspicion.
- The will's content was deemed unnatural and unfair, as it excluded several close relatives without a plausible reason.
The Supreme Court concluded that the defendant failed to discharge the heavy onus of explaining these suspicious circumstances and establishing the will as the last testament of Gobinder Singh. The Court criticized the High Court for not addressing these suspicious circumstances and for accepting the will without proper scrutiny.
Conclusion:
The Supreme Court allowed the appeal, set aside the judgment of the High Court, and restored the trial court's judgment, granting the appellant a one-half share in the properties of her deceased husband. The appellant was also entitled to recover costs from the respondents. The appeal was thus allowed.
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1976 (10) TMI 160
Issues Involved:
1. Dissolution of 'Sethiya & Co.'
2. Agreement dated July 6, 1948
3. Applicability of Section 69 of the Partnership Act
4. Necessary party to the suit
5. Material alterations in the agreement
6. Suit based on settled accounts
7. Liability of defendants second set
Detailed Analysis:
Issue 1 & 2: Dissolution of 'Sethiya & Co.' and Agreement dated July 6, 1948
The plaintiff claimed that 'Sethiya & Co.' was dissolved on June 30, 1948, and that he entered into the agreement dated July 6, 1948, as the sole proprietor. However, the evidence, including the deed of agreement and the deed of dissolution, indicated otherwise. The preamble and signatures on Exhibit A-1 and Exhibit 168 described the plaintiff as a partner, not a sole proprietor. The dissolution deed was found to be fabricated, as it was written on stamp paper not available on the purported date. Additionally, financial transactions and lack of public notice about the dissolution further disproved the plaintiff's claim. Thus, the court concluded that the firm was not dissolved on June 30, 1948, and the agreement was entered into by the plaintiff as a partner of 'Sethiya & Co.'
Issue 3: Applicability of Section 69 of the Partnership Act
Section 69 of the Partnership Act mandates that a suit to enforce a right arising from a contract cannot be instituted by or on behalf of an unregistered firm. Since 'Sethiya & Co.' was not registered, and the suit was to enforce an agreement entered into by the plaintiff as a partner of this unregistered firm, the suit was deemed void and not maintainable.
Issue 4: Necessary Party to the Suit
The suit was filed by the plaintiff alone without including Seth Suganchand, who was a necessary party as a partner of 'Sethiya & Co.' Even if Section 69 did not apply, the suit could not be maintained without including all necessary parties.
Issue 5: Material Alterations in the Agreement
The agreement dated July 6, 1948, had material alterations made by the plaintiff without the consent of the defendants. These alterations included changes in payment terms and commission clauses, which substantially varied the rights and liabilities of the parties. Such alterations rendered the agreement void.
Issue 6: Suit Based on Settled Accounts
The lower courts found no settlement of accounts on April 4, 1949, as alleged by the plaintiff. Without a settled account, the courts should have either dismissed the suit or passed a preliminary decree for accounts, allowing the defendants to challenge the accounts on grounds of fraud, mistakes, or inaccuracies. The courts' approach to making out a new case for the plaintiff was incorrect.
Issue 7: Liability of Defendants Second Set
The High Court held that the goods on which the charge lay were available for satisfying the liabilities under the agreement. Therefore, the defendants second set could not be held personally liable for the decretal amount. The court found no justification to interfere with this finding.
Conclusion:
The Supreme Court concluded that the material alterations made by the plaintiff in the agreement rendered it void and that the suit was barred by Section 69 of the Partnership Act. Consequently, the suit was dismissed, and both appeals were resolved with parties bearing their own costs.
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1976 (10) TMI 159
Issues Involved:
1. Whether a copy of an instrument produced under Section 125 of the Companies Act is an instrument chargeable with duty under Section 7(1) read with Section 19 and Section 2 of the Bombay Stamp Act, 1958.
2. Whether the Collector and Assistant Superintendent of Stamps was right in impounding the copy of the instrument and ordering levy of duty and penalty under the provisions of Sections 33 and 39 of the Bombay Stamp Act, 1958.
Detailed Analysis:
Issue 1: Chargeability of a Copy of an Instrument under the Bombay Stamp Act
The primary issue was whether a copy of an instrument produced under Section 125 of the Companies Act is chargeable with duty under Section 7(1) read with Section 19 and Section 2 of the Bombay Stamp Act, 1958. The court noted that the original instrument creating a charge, if received in Gujarat, would attract differential stamp duty representing the difference between the Gujarat rate and the Maharashtra rate, as per Sections 18 and 19 of the Stamp Act.
Section 19 states that if an instrument executed outside the state and related to property situated in Gujarat is received in the state, it shall be charged with the differential duty. Section 7(1) extends this liability to copies of such instruments, stating that "the duty chargeable on an instrument of sale, mortgage or settlement other than a principal instrument or on a counterpart, duplicate or copy of any instrument shall, if the principal or original instrument would, when received in this State have been chargeable under this Act with a higher rate of duty, be the duty with which the principal or original instrument would have been chargeable under Section 19."
The court concluded that even a copy of an instrument is liable to differential duty as the original instrument would be under Section 19. Therefore, the first question was answered in the affirmative, with the clarification that while a copy of the original instrument cannot be called an "instrument" within the meaning of the Act, such a copy would be liable to stamp duty under Section 7(1) read with Section 19 of the Act.
Issue 2: Impounding of the Copy and Levy of Duty and Penalty
The second issue was whether the Collector and Assistant Superintendent of Stamps was right in impounding the copy of the instrument and ordering the levy of duty and penalty under Sections 33 and 39 of the Bombay Stamp Act, 1958. The court examined the role of the Registrar of Companies, who is a public officer charged with the duty of discharging functions under the Companies Act, including the registration of charges created by a company.
Section 33(1) mandates that every person in charge of a public office must impound an instrument not duly stamped if it comes before them in the performance of their functions. However, the court noted that the document in question was sent to the Collector by the Registrar of Companies, not produced before the Collector by the company. The court emphasized that the function of impounding a document must be located in a specific section of the Stamp Act, and in this case, it was not.
The court further analyzed Section 39, which allows the Collector to require payment of proper duty and impose a penalty if an instrument is not duly stamped. The term "instrument" as defined in Section 2(1) includes every document by which any right or liability is created, transferred, limited, extended, extinguished, or recorded. However, the court held that a copy of such an instrument does not create or purport to create any right or liability; it merely records the original instrument's details. Thus, a copy does not fall within the definition of "instrument" under Section 2(1) for the purposes of Section 39.
Consequently, the court held that while differential duty is payable under Section 7 read with Section 19 of the Stamp Act in respect of a copy of an instrument creating a charge, such a copy cannot be impounded, and neither the duty nor the penalty can be levied under the current provisions of the Stamp Act. The second question was therefore answered in the negative.
Conclusion
The court answered the questions as follows:
1. A copy of an instrument produced under Section 125 of the Companies Act is chargeable with duty under Section 7(1) read with Section 19 and Section 2 of the Bombay Stamp Act, 1958, with the clarification that such a copy would be liable to stamp duty but is not an "instrument" within the meaning of the Act.
2. The Collector and Assistant Superintendent of Stamps was not right in impounding the copy of the instrument and ordering the levy of duty and penalty under Sections 33 and 39 of the Bombay Stamp Act, 1958.
The reference was answered accordingly, and parties were directed to bear their own costs. The court also refused a certificate of fitness to appeal to the Supreme Court, noting that no substantial question of law of general importance requiring a decision by the Supreme Court arose in this case.
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1976 (10) TMI 158
Issues Involved:
1. Whether the execution petition was barred by limitation.
2. Which Limitation Act (1908 or 1963) applies to the execution petition.
3. The effect of payments made under the decree on the computation of the limitation period.
4. The impact of the injunction period on the limitation period.
5. The application of Section 6 of the General Clauses Act, 1897, in the context of the repeal of the old Limitation Act by the new Limitation Act.
Issue-wise Detailed Analysis:
1. Whether the execution petition was barred by limitation:
The respondents (judgment-debtors) contended that the execution petition was barred by limitation. The learned Master and initially the Judge in Chambers accepted this plea, dismissing the execution petition under Article 183 of the First Schedule to the Indian Limitation Act, 1908. However, upon review, the Judge held that the execution petition was within time.
2. Which Limitation Act (1908 or 1963) applies to the execution petition:
The primary contention was whether the old Limitation Act, 1908, or the new Limitation Act, 1963, should govern the execution petition. The judgment-debtors argued for the application of the new Act, which would bar the execution petition as it was filed after the new Act came into force. Conversely, the decree-holder argued for the application of the old Act, which would allow the execution petition to be within the limitation period.
3. The effect of payments made under the decree on the computation of the limitation period:
Article 183 of the old Act prescribes a twelve-year limitation period, which can be extended if payments are made under the decree. The last payment made by the judgment-debtors was on 2-4-1958. The decree-holder argued that this payment extended the limitation period, starting from the date of the last payment.
4. The impact of the injunction period on the limitation period:
The City Civil Court had issued an injunction preventing the execution of the decree from 28-2-1958 to 4-5-1963, a period of 5 years, 2 months, and 4 days. Under Section 15 of the old Act, this period should be excluded from the computation of the limitation period.
5. The application of Section 6 of the General Clauses Act, 1897, in the context of the repeal of the old Limitation Act by the new Limitation Act:
Section 6 of the General Clauses Act provides that the repeal of an enactment does not affect any right, privilege, obligation, or liability acquired under the repealed enactment unless a different intention appears. The court examined whether the new Limitation Act manifested an intention to destroy the rights accrued under the old Act.
Detailed Analysis:
Application of the Old Limitation Act:
The court held that the provisions of the old Limitation Act, 1908, should be applied to the execution petition. The judgment-debtors had made payments under the decree before the repeal of the old Act, which conferred a right on the decree-holder to execute the decree within twelve years from the date of the last payment. This right was preserved under Section 6 of the General Clauses Act, as the new Act did not manifest an intention to destroy such accrued rights.
Computation of Limitation Period:
The twelve-year limitation period under Article 183 of the old Act started from the date of the last payment (2-4-1958). Excluding the period of the injunction (5 years, 2 months, and 4 days), the last date for filing the execution petition was 6-6-1975. The execution petition was filed on 24-2-1972, which was within the limitation period.
Judgment:
The court concluded that the execution petition was within time and not barred by limitation. The appeal filed by the judgment-debtors was dismissed with costs.
Conclusion:
The execution petition was held to be within the limitation period as per the old Limitation Act, 1908, considering the payments made under the decree and the period of the injunction. The appeal by the judgment-debtors was dismissed, affirming the decree-holder's right to execute the decree.
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1976 (10) TMI 157
Issues Involved:
1. Validity of the Notification under Section 4(1) of the Rajasthan Land Acquisition Act, 1953.
2. Authorization of the Tehsildar to perform functions under Section 4(1).
3. Particularization of the purpose for land acquisition.
4. Compliance with the Land Acquisition (Companies) Rules, 1963 and Rule 32 of the Rajasthan Land Acquisition Rules, 1956.
Detailed Analysis:
1. Validity of the Notification under Section 4(1) of the Rajasthan Land Acquisition Act, 1953:
The appellant challenged the notification issued under Section 4(1) on the grounds that the State Government used the word "appear" instead of "consider," indicating a failure to apply its mind. However, the court held that the mere use of the word "appear" does not invalidate the order. The court emphasized that the State Government had sufficient material before it to base its decision and that the notification substantially complied with the requirements of Section 4. The court agreed with the reasons advanced by the learned single Judge and found no merit in the appellant's contention.
2. Authorization of the Tehsildar to perform functions under Section 4(1):
The appellant contended that the State Government erred in authorizing the Tehsildar to perform functions under Section 4(1) as the acquisition was for a company, invoking Section 38 of the Act. The court found no substance in this contention, stating that Section 38 is an enabling provision and does not take away the power vested in the State Government under Section 4(1).
3. Particularization of the purpose for land acquisition:
The appellant argued that the purpose mentioned in the notification was too vague, making it difficult for the interested parties to file effective objections. The court noted that the purpose stated was "for General Engineering Works, Bharatpur," which was sufficient to inform the public. The court further observed that the appellant was aware that the land was being acquired for Hindustan Development Corporation Ltd., and thus, no prejudice was caused to the appellant.
4. Compliance with the Land Acquisition (Companies) Rules, 1963 and Rule 32 of the Rajasthan Land Acquisition Rules, 1956:
The appellant argued that the non-compliance with the Land Acquisition (Companies) Rules, 1963, and Rule 32 of the Rajasthan Land Acquisition Rules, 1956, vitiated the entire proceedings. The court noted that the Land Acquisition (Companies) Rules, 1963, framed by the Central Government, do not apply to Rajasthan. However, Rule 32 of the Rajasthan Land Acquisition Rules, 1956, is applicable and requires an inquiry to be made before initiating proceedings. The court found that no such inquiry was made, and the owner of the land was not given an opportunity to be heard. The court held that the compliance of Rule 32 is mandatory and its non-compliance vitiates the entire proceedings.
Conclusion:
The court accepted the appeal, set aside the judgment of the learned single Judge, and allowed the writ petition. The impugned notification dated March 13, 1973, and all subsequent proceedings were quashed. The parties were directed to bear their own costs.
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1976 (10) TMI 156
Issues:
Interpretation of the term "cooked food" under Section 3(1)(a) of the Rajasthan Sales Tax Act, 1954.
Analysis:
The judgment involves a dispute regarding the classification of biscuits as "cooked food" under the Rajasthan Sales Tax Act, 1954. The Assistant Commercial Taxes Officer contended that biscuits should be classified as cooked food, falling under Section 3(1)(a) of the Act, thereby making the dealers liable to pay tax on their turnover exceeding a certain threshold. The Board of Revenue held that both bread and biscuits are considered cooked food. However, the Revenue challenged this classification, arguing that biscuits do not qualify as "cooked food" based on a judgment from the Madhya Pradesh High Court. The Madhya Pradesh High Court had defined "cooked food" as items consumed at regular meal hours, excluding items like biscuits.
The court analyzed the term "cooked food" in detail, emphasizing that the term should not be narrowly construed to include only items consumed at regular meal times. The court observed that biscuits are indeed consumed as a meal by certain segments of the population, including children from poorer backgrounds. The court also highlighted the process of baking involved in making biscuits, which qualifies as a form of cooking. The court disagreed with the Madhya Pradesh High Court's interpretation and concluded that biscuits should be considered as cooked food, especially given their preparation through baking.
Furthermore, the court distinguished the present case from the Madhya Pradesh judgment by noting that the Rajasthan Sales Tax Act's Section 3 serves as a charging section, categorizing dealers based on their taxable turnover. The court highlighted that biscuits fulfill the criteria of being cooked food as they undergo a baking process, are considered an article of food, and meet the definition of "cooked" according to various dictionaries. The court also referenced a Commissioner's notification regarding bread, which clarified that bread preparation constitutes manufacturing of cooked food, providing additional support for considering biscuits as cooked food.
In conclusion, the court rejected the applications under Section 15(3A) of the Rajasthan Sales Tax Act, upholding the classification of biscuits as cooked food and affirming the dealers' liability to pay tax based on their turnover exceeding the specified threshold. The court relied on the Commissioner's interpretation and the inherent characteristics of biscuits to determine that they should be categorized as cooked food for tax purposes.
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1976 (10) TMI 155
Issues Involved:
1. Authority to make complaints under Section 7(1) of the Telegraph Wires (Unlawful Possession) Act, 1950.
2. Judicial notice of notifications under Section 57(1) of the Evidence Act, 1872.
3. Validity of the decision in Mathuradas v. State, AIR 1954 Nag 296.
Issue-wise Detailed Analysis:
1. Authority to Make Complaints under Section 7(1):
The respondent was prosecuted under Section 5 of the Telegraph Wires (Unlawful Possession) Act, 1950, based on a complaint by the Station Officer, Rehli. The Magistrate convicted the respondent, but the First Additional Sessions Judge acquitted him, ruling that the Station Officer was not empowered under Section 7(1) to make the complaint. The State appealed, presenting Notification No. G. S. R. 1512 of December 24, 1960, which empowered the Station Officer and similar officers to make such complaints. The Division Bench referred the matter to a larger Bench to reconsider the correctness of Mathuradas' case, which influenced the decision.
2. Judicial Notice of Notifications under Section 57(1):
Section 57 of the Evidence Act mandates judicial notice of "all laws in force in the territory of India." The Court examined whether a notification under Section 7(1) of the Telegraph Wires Act qualifies as "law." The notification in question, published in the Gazette, empowered specific officers to make complaints. The Court held that such notifications, being legislative in nature, supplement the statute and thus have the force of law. Therefore, judicial notice must be taken of these notifications under Section 57(1).
3. Validity of the Decision in Mathuradas v. State:
Mathuradas' case held that a notification fixing the retail price of yarn under the Cotton Textiles (Control) Order, 1948, was not part of the law of the land and could not be judicially noticed under Section 57(1) of the Evidence Act. The Court in the present case disagreed, stating that statutory notifications, especially those fixing prices, are legislative measures and have the force of law. The Court noted that the general observation in Mathuradas' case, which excluded notifications from the definition of "law," was erroneous. The Court cited various precedents and legal principles to support that delegated legislation, including notifications, is part of the law.
Conclusion:
The Court concluded that Notification No. G. S. R. 1512 issued under Section 7(1) of the Telegraph Wires Act is legislative in nature and must be judicially noticed under Section 57(1) of the Evidence Act. Mathuradas' case was deemed wrongly decided. The appeal was referred back to the Division Bench for final disposal, with the larger Bench affirming the legislative nature of the notification and its inclusion within the scope of "law" for judicial notice purposes.
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1976 (10) TMI 153
Issues:
Claim for price of goods under section 70 of the Indian Contract Act; Proper pleading requirements for a cause of action under section 70; Acceptance of goods and wrongful rejection; Interpretation of restoration under section 70; Calculation of compensation under section 70; Costs awarded by the High Court.
Analysis:
The respondent filed a suit claiming payment for goods supplied to the appellant, alleging wrongful rejection of the goods. The appellant denied the existence of an enforceable contract and raised a plea regarding the rejection of goods based on quality. The trial court found that the goods were not properly rejected but also noted inconsistencies in the appellant's actions regarding the goods. The trial court held that since the goods were accepted, there was no basis for restoration, and thus dismissed the suit. The Division Bench, however, held that the goods were accepted, leading to confusion in its judgment as it treated the claim as one for damages for wrongful rejection under the Sale of Goods Act, which was erroneous. The High Court allowed the claim under section 70 of the Indian Contract Act, awarding compensation to the respondent for goods accepted.
The key issue in the case was the proper application of section 70 of the Indian Contract Act. The court emphasized that for a cause of action under this section, three essential ingredients must be pleaded: lawful delivery of goods, non-gratuitous intention, and benefit enjoyed by the recipient. The court noted that the respondent's pleadings lacked the necessary elements to constitute a claim under section 70, but due to the trial and appeal proceedings having progressed on this basis, the court refrained from non-suiting the respondent at that stage.
Regarding the concept of restoration under section 70, the court clarified that as long as there is an intimation by the defendant for the plaintiff to take back the goods, the intention of restoration is demonstrated. In this case, since the goods were accepted by the appellant, the question of restoration did not arise. The court criticized the trial court for dismissing the suit based on the premise of restoration when acceptance had occurred, and the Division Bench for erroneously deciding the case on the grounds of damages for non-acceptance instead of the principles of section 70.
In conclusion, the court upheld the High Court's decision to award compensation to the respondent under section 70 of the Indian Contract Act. The court specified the amount to be paid by the parties and maintained the costs awarded by the High Court. The appeal was ultimately dismissed, affirming the decree for compensation to the respondent.
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1976 (10) TMI 152
Issues Involved:
1. Whether the house was purchased by defendant No. 3 'benami' in the name of defendant No. 2.
2. Whether the sale of the house to the Company was a sham transaction intended to defeat and delay the creditors of defendant No. 3.
Detailed Analysis:
1. Benami Purchase Issue:
The main point in controversy was whether the house was purchased by defendant No. 3 'benami' in the name of defendant No. 2. The plaintiff alleged that the house was purchased by defendant No. 3, "benami", in the name of his son, defendant No. 2, using his own funds.
The trial court found that the house was purchased "benami" in the name of defendant No. 2, by defendant No. 3 with his own money. The High Court, however, set aside this finding, stating that there was no evidence either of the plaintiff or the defendants on which a finding as to the "benami" nature of the transaction could be based.
The Supreme Court examined the evidence and found that defendant No. 2 failed to establish the source of the consideration of Rs. 60,000 for the purchase of the house. Defendant No. 2 claimed that he got Rs. 10,000 from his mother and Rs. 50,000 from his grandfather, but he could not provide satisfactory evidence to support this claim. The Supreme Court noted that defendant No. 2 was only 18 years old at the time of the purchase and did not have any money of his own.
Moreover, defendant No. 3 had admitted in his statement dated August 12, 1950, that he purchased the house for Rs. 60,000 in the name of his son using his own funds. This statement was corroborated by the personal account of defendant No. 3, which showed that he spent Rs. 60,000 on "property" in that assessment year. The Supreme Court held that the purchase of the house was "benami" and that its ostensible owner, defendant No. 2, was not the real owner but was a "benamidar" for defendant No. 3.
2. Sham Transaction Issue:
The other important question was whether the sale of the house to the Company (defendant No. 1) was a sham transaction intended to defeat and delay the creditors of defendant No. 3. The trial court found that the sale of the house to the Company was a sham transaction and was effected to defeat or delay the creditors of defendant No. 3.
The Supreme Court noted that defendant No. 3 was assessed to income-tax for a sum of Rs. 1,25,090/11/- for the assessment year 1947-48 in March 1952. Defendant No. 3 failed to pay that amount on demand, and a recovery certificate was issued on October 8, 1952. The house was attached on October 13, 1952. Defendant No. 2 raised an objection and prayed for the release of the house, but the Collector rejected the objection on March 3, 1953. No appeal or other remedy was sought against that order.
The Company was incorporated in February 1953, and the assessment of income tax for the years 1944-45 and 1948-49 was completed in March 1953, raising the tax demand to Rs. 1,94,735.15. A recovery certificate was issued on May 4, 1953, and the house was again attached on August 6, 1953. In these circumstances, defendant No. 2 hastened to sell the house to the Company on May 25, 1953.
The Supreme Court found that the Company was dominated by defendant No. 2 and his close relations and did not even pay the sale price in cash. The shares of the other relations were insignificant, and the Company could not lead evidence to show that it was able to transact any substantial business. The Supreme Court held that the Company was formed just to transfer the house to it in an effort to save it from attachment and sale for the realization of the income-tax arrears of defendant No. 3.
Conclusion:
In conclusion, the Supreme Court allowed the appeals, set aside the impugned judgment and decree of the High Court, and restored the decree of the trial court with costs throughout. The Supreme Court held that the house was purchased "benami" by defendant No. 3 in the name of defendant No. 2, and the sale of the house to the Company was a sham transaction intended to defeat and delay the creditors of defendant No. 3.
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1976 (10) TMI 151
Issues involved: Appeal against judgment setting aside the appellate order and remitting the matter for fresh determination of annual value of a building u/s 138(b) of the Madhya Pradesh Municipal Corporation Act, 1956.
Details of the Judgment:
1. Background: The appeal was against the judgment of the Madhya Pradesh High Court setting aside the appellate order and remitting the matter for fresh determination of the annual value of a building known as "Viram Lodge" used as a hotel.
2. Legal Provisions: Section 138 of the Act prescribes the mode for determining the annual value of any land or building for property tax assessment. Clause (b) deals with the annual value of a building, emphasizing the gross annual rent at which the building might reasonably be expected to be let from year to year.
3. Interpretation of Clause (b): The Court interpreted clause (b) to mean that the reasonable letting value should determine the annual value of the building, notwithstanding any other law in force. It held that in cases where standard rent is not fixed, the Municipal Commissioner can adopt a suitable criterion for determining the annual value.
4. Precedents: The Court referred to previous cases to support its interpretation, emphasizing that the absence of a standard rent allows for flexibility in determining the reasonable rent for a building.
5. High Court Error: The High Court was found to have erred in concluding that the respondents were not given a full hearing during the valuation process. The judgment of the Second Additional District Judge confirmed that ample opportunity was provided for representation.
6. Decision: The appeal was allowed, setting aside the High Court judgment. The appellants were directed to pay the costs of the respondents as per the Court's order granting special leave.
This judgment clarifies the interpretation of section 138(b) of the Madhya Pradesh Municipal Corporation Act, emphasizing the determination of annual value based on reasonable letting value in the absence of a fixed standard rent, and highlights the importance of providing a fair hearing during valuation processes.
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1976 (10) TMI 150
Issues involved: Interpretation of Article 137 of the Limitation Act 1963 in relation to applications made to quasi-judicial bodies and executive bodies under special Acts.
Summary:
The Supreme Court of India heard an appeal from a judgment of the High Court of Kerala regarding a compensation claim under the Indian Telegraph Act 1885 and the Indian Electricity Act 1910. The respondent sought enhanced compensation for trees cut by the Kerala State Electricity Board for laying electric lines. The District Judge initially held the petition as time-barred under Article 137 of the Limitation Act, 1963. However, the High Court of Kerala, considering previous decisions, set aside the District Judge's order and remitted the matter for further proceedings.
The Supreme Court analyzed the provisions of Article 137 of the Limitation Act 1963 and its similarity to Article 181 of the Indian Limitation Act 1908. Referring to past cases like Town Municipal Council, Athani v. Presiding Officer Labour Court, Hubli, the Court emphasized that Article 137 does not apply to proceedings before bodies other than courts. The Court also discussed cases like Nityananda M. Joshi v. Life Insurance Corporation of India, highlighting the distinction between applications to ordinary courts and quasi-judicial bodies like Labour Courts.
Examining the Schedule to the Limitation Act, the Court noted the division into suits, appeals, and applications, with specific criteria for each category. Citing Sha Mulchand & Co. Ltd. v. Jawahar Mills Ltd, the Court emphasized that applications under Article 137 are not limited to the Civil Procedure Code. The Court concluded that Article 137 applies to petitions or applications filed under any Act to a civil court, including those under the Telegraph Act. Therefore, the appeal was allowed, setting aside the High Court's judgment and directing costs to be paid as per the special leave granted.
In conclusion, the Supreme Court clarified the interpretation of Article 137 of the Limitation Act 1963, affirming its applicability to petitions or applications under special Acts filed in civil courts, and overturned the High Court's decision in this case.
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1976 (10) TMI 149
Issues Involved:
1. Taxability of "Oriental Mixture" under the Central Provinces and Berar Sales Tax Act, 1947.
2. Applicability of Article 286 of the Constitution.
3. Validity of the amendment to Section 2(g) of the Act without the Governor-General's assent.
4. Interpretation of "sale" and "goods" under Explanation (II) to Section 2(g) of the Act.
5. Determination of whether "Oriental Mixture" constitutes a new commodity.
6. Factual findings regarding the existence of goods in Madhya Pradesh at the time of the contract.
Issue-wise Detailed Analysis:
1. Taxability of "Oriental Mixture" under the Central Provinces and Berar Sales Tax Act, 1947:
The core issue was whether the "Oriental Mixture" constituted a new commodity subject to sales tax. The assessee argued that the mixture came into existence only after unloading at the port, thus it could not be taxed in Madhya Pradesh. The court concluded that the mixture did not involve a process of "manufacture" as the term is ordinarily understood. The mere mixing of ores during transportation did not create a new commercial commodity. The court held that the term "Oriental Mixture" was a designation by the company and did not represent a new product.
2. Applicability of Article 286 of the Constitution:
The periods in question were prior to the enforcement of the Constitution. The court agreed with the High Court that Article 286, which restricts the imposition of sales tax on transactions occurring outside the state, was not applicable retrospectively. Therefore, the assessments made for periods before the Constitution came into force were not affected by Article 286.
3. Validity of the amendment to Section 2(g) of the Act without the Governor-General's assent:
The amendment to Section 2(g) of the Act, which sought to redefine "sale," was not assented to by the Governor-General, rendering it ineffective. The court held that the purported amendment did not take effect, and thus the unamended provision stood as it was. The argument that the repeal of the original provision was valid without substitution was rejected. The court emphasized that the legislative intent was to effect a substitution, which failed due to the lack of required assent, leaving the original provision intact.
4. Interpretation of "sale" and "goods" under Explanation (II) to Section 2(g) of the Act:
The court analyzed whether the goods existed in Madhya Pradesh at the time of the contracts. It was found that the ingredients of the "Oriental Mixture" were present in Madhya Pradesh, and the contracts were referable to these goods. The court upheld the Tribunal's interpretation that the goods were taxable in Madhya Pradesh as they existed in the state when the contracts were made.
5. Determination of whether "Oriental Mixture" constitutes a new commodity:
The court examined whether the mixing of ores during transportation resulted in a new commercial product. It concluded that no new commodity was produced; the ores remained the same and were merely given a new name by the company. The court distinguished this case from others where raw materials underwent significant processing to become new products. The mere mixing of ores did not amount to "manufacture" of a new product.
6. Factual findings regarding the existence of goods in Madhya Pradesh at the time of the contract:
The High Court's findings that the ingredients of the "Oriental Mixture" were present in Madhya Pradesh at the time of the contracts were upheld. The court agreed that the goods were in the state and were taxable under the Act.
Conclusion:
The appeals of the assessee company against the Full Bench decisions were dismissed, and the appeals of the State of Maharashtra against the Division Bench judgment were allowed. The court affirmed that the "Oriental Mixture" did not constitute a new commodity and was taxable in Madhya Pradesh. The legislative amendment without the Governor-General's assent was ineffective, leaving the original provision intact. The provisions of Article 286 were not applicable retrospectively. Parties were directed to bear their own costs.
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1976 (10) TMI 148
Whether Ajodhya Prasad was entitled to the issue of the licenses for the seven shops?
Whether the State Government had the authority to direct the withholding and reauctioning of the licenses, and held, inter alia, that the State Government had no power to interfere with the auction held by the Collector after it had "become final in appeal and revision", and could not direct a reauction?
Held that:- The State Legislature was authorised to make a provision for public auction by reason of the power contained in Entry 8 List II of the Seventh Schedule to the Constitution and that there was "no fundamental right of citizens to carry on trade or to do business in liquor. "The State has the exclusive right and privilege of manufacturing and selling liquor" and that it has the "power to hold a public auction for the grant of such a right or privilege and to accept payment of a sum therefor." It was accordingly held that the right granted to the appellants by public auction and the licenses issued to them was "clearly an exclusive privilege within the meaning of section 22(1) of the Act" and that it has expressly been provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "conSideration" of the exclusive privilege under section 22.
The High Court has taken the view that rule 103(1) of the Board’s Excise Rules regarding the manner of fixation and realization of the consideration for the grant of a license for the exclusive privilege of retail vend of country spirit was "incompetent and ultra vires the act." The High Court took that view under the mistaken impression that the State was not entitled to collect a tax "under the garb of a fee" and the "auction price for a license is not duty within the meaning of Entry 51 of List 11 of the Seventh Schedule to the Constitution." But, as has been shown, what was sought to be raised was consideration and not "fee". The use of the expression "fees" in the rule is therefore inaccurate, but that cannot detract from the real nature of the recovery. There can be no doubt therefore that the High Court erred in taking a contrary view. Appeal allowed.
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1976 (10) TMI 147
Whether entry 22 added by the Gujarat Government by notification dated March 27, 1967 to Part 1 of the Schedule to the Minimum Wages Act, 1948 covers Mangalore pattern roofing tiles?
Held that:- The Explanation says that, for the purpose of entry 22, potteries industry ’includes’ manufacture of the. nine articles of pottery named therein. It seems to us that the word ’includes’ has been used here in the sense of ’means’, this is the only construction that the word can bear in the context. In that sense it is not a word of extension, but limitation; it is exhaustive of the meaning which must be given to potteries industry for the purpose of entry 22. It must therefore be held that the manufacture of Mangalore pattern roofing tiles is outside the purview of entry 22. Against assessee.
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1976 (10) TMI 146
Whether the urgency is of such a nature as to require elimination of the enquiry under section 5A of the Land Acquisition Act, 1894 ?
Held that:- Appeal dismissed. The recital does not say at all that any opinion was formed on the need to dispense with the enquiry under section 5A of the Act. It is certainly a case in which’ the recital was at least defective. The burden, therefore, rested upon the State to remove the defect, if possible, by evidence to show that some exceptional circumstances which necessitated the elimination of an enquiry under section 5A of the Act and that the mind of the Commissioner was applied to this essential question. It seems to us that the High Court correctly applied the provisions of section ’106 of the Evidence Act to place the burden upon the State to prove those special circumstances although it also; appears to us. that the High Court was not quite correct in stating its view in such a manner as to make it appear that some part of the initial burden of the petitioners under sections 101 and 102 of the Evidence Act had been displaced by the failure of the State, to discharge its duty under’ section 106 of the Act. The correct way of putting it would have been to say that the failure of the State to produce the evidence of facts especially’ within the knowledge of its officials, which rested upon it under section 106 of the Evidence Act, taken together with the attendant facts gnu circumstances, including the contents of recitals, had enabled the petitioners to discharge their burdens under sections 101 and 102 of the Evidence Act.
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1976 (10) TMI 145
Issues Involved:
1. Whether the Government Medical Store Depot (the depot) is a "dealer" under section 2(d) of the Punjab General Sales Tax Act, 1948.
2. Whether the property of the Central Government can be taxed under a State law as per Article 285 of the Constitution.
3. Legality of the imposition of penalties on the depot.
4. Claim for exemptions for sales made to institutions outside Haryana.
Detailed Analysis:
1. Whether the Government Medical Store Depot (the depot) is a "dealer" under section 2(d) of the Punjab General Sales Tax Act, 1948:
The primary issue is whether the depot qualifies as a "dealer" under the Act. The depot, functioning under the Assistant Director General (Stores) and supplying medical stores and equipment to government hospitals and institutions, argued that it operated on a "no-profit-no-loss" basis and thus should not be considered a dealer. However, the court referred to the definition of "dealer" in section 2(d) of the Act, which includes any person or government department that sells or purchases goods in the normal course of trade, regardless of profit motive. The court also cited the Supreme Court's ruling in Enfield India Ltd. Co-operative Canteen Ltd. case, which held that supplying goods for a price constitutes a sale. The court concluded that the depot's activities, including adding a 10% service charge, fit the definition of a dealer as they involved systematic and regular transactions akin to trading activities.
2. Whether the property of the Central Government can be taxed under a State law as per Article 285 of the Constitution:
The depot contended that as per Article 285 of the Constitution, the property of the Union of India is exempt from state taxes. However, the court clarified that sales tax laws tax the transaction of sale or purchase, not the property itself. The court referred to the Supreme Court's judgment in In re Sea Customs Act (1878), section 20(2), which established that the incidence of sales tax is on the transaction, not the property. Thus, the depot's argument was dismissed.
3. Legality of the imposition of penalties on the depot:
The depot argued that the imposition of penalties was illegal, as the question of whether it was a dealer was not straightforward and had been a matter of legal interpretation. The court acknowledged that penalties are typically imposed for contumacious disregard of the law. Given the depot's reliance on legal advice and the complexity of the issue, the court suggested that the appellate authority should consider these factors when reviewing the imposition of penalties.
4. Claim for exemptions for sales made to institutions outside Haryana:
The depot sought to claim exemptions for sales made to institutions outside Haryana, arguing that it had not filed the required D forms due to a bona fide belief that it was not a dealer. The court noted that the depot had filed appeals before the appellate authority, which has the power to consider these claims. The court expressed confidence that the appellate authority would give due weight to the depot's arguments regarding exemptions and the imposition of penalties.
Conclusion:
The court held that the depot was a "dealer" under section 2(d) of the Act and dismissed the petitions, leaving the matters of penalties and exemptions to be addressed by the appellate authority. The petitions were dismissed with no order as to costs.
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