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Showing 401 to 420 of 4740 Records
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1996 (11) TMI 399
Liability of the dealer to pay penal interest - Held that:- Having regard to the phraseology of section 23(3) of the Kerala General Sales Tax Act, the liability of the dealer to pay penal interest on the tax assessed or any other amount due under that Act arises only if such tax or amount is not paid “within the time specified therefor in the notice of demand”. There being no notice of demand, it was held that the liability to pay penal interest did not arise. It is necessary to emphasise that this is not a case of payment of interest at the ordinary statutory rate but a case of penal interest and it is, therefore, that the Act provides that the liability to pay the same arises only after there has been a failure to comply with the provisions of a notice in that behalf.
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1996 (11) TMI 391
Issues Involved:
1. Application by State Bank of India for permission to sell assets of Aryodaya Ginning & Mfg. Co. Ltd. (in liquidation).
2. Rights and objections of workmen represented by Textile Labour Organisation.
3. Legal provisions under sections 529 and 529A of the Companies Act, 1956.
4. Role of the Official Liquidator and the formation of a sale committee.
5. Potential revival of the company versus liquidation of assets.
Issue-wise Detailed Analysis:
1. Application by State Bank of India for Permission to Sell Assets:
The State Bank of India (SBI), as a secured creditor, filed an application seeking leave to sell the assets of Aryodaya Ginning & Mfg. Co. Ltd. to recover dues. SBI, along with other financial institutions (ICICI, IFCI, and IDBI), had provided financial assistance to the company and held a charge over its assets. Due to the company's financial difficulties and subsequent winding up order dated 27-10-1989, SBI sought to sell the assets outside the winding-up proceedings to realize their dues.
2. Rights and Objections of Workmen Represented by Textile Labour Organisation:
The Textile Labour Organisation, through its advocate Mr. DS Vasavada, opposed the application, arguing that selling the assets would render workmen permanently jobless. They hoped for a potential revival of the company and thus opposed any hasty disposal of assets. Mr. Vasavada emphasized the need for a humanitarian approach and the workmen's right to participate in the winding-up proceedings.
3. Legal Provisions under Sections 529 and 529A of the Companies Act, 1956:
SBI's advocate Mr. RM Desai highlighted that under sections 529 and 529A, workmen are entitled to a portion of the sale proceeds. He argued that selling the assets would benefit both secured creditors and workmen. The Official Liquidator, representing the workmen, had already made ad hoc payments from the sale of current assets. Mr. Desai stressed that delaying the sale would only diminish the value of the assets, adversely affecting all parties involved.
4. Role of the Official Liquidator and the Formation of a Sale Committee:
The court directed the formation of a sale committee consisting of the Official Liquidator as the convener and representatives from ICICI, IDBI, IFCI, and SBI. The committee was tasked with deciding the mode of sale and exploring possibilities for the company's revival. The sale would be subject to the court's confirmation, and proceeds would be deposited with the Official Liquidator in a separate account.
5. Potential Revival of the Company versus Liquidation of Assets:
The court acknowledged the slim chances of the company's revival, noting that no buyer had come forward since the winding-up order in 1989. The BIFR had also recommended winding up the company. Despite Mr. Vasavada's hope for financial assistance from the government, both the Union of India and the State of Gujarat had declined to provide any. The court concluded that selling the assets was in the best interest of all parties to expedite the winding-up process and ensure dues were paid to secured creditors and workmen.
Conclusion:
The court granted SBI's application to sell the assets, forming a sale committee to oversee the process. The implementation of the order was delayed for six weeks to allow the Textile Labour Organisation to challenge the order if desired. The decision aimed to balance the interests of secured creditors and workmen while acknowledging the improbability of the company's revival.
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1996 (11) TMI 390
Issues:
Winding up petition based on debt dispute.
Analysis:
The petition was filed seeking winding up of the respondent-company due to an alleged debt of Rs. 1,27,339.79 arising from the supply of white duplex board. The petitioner claimed that the respondent failed to pay the amount despite receiving the goods and issuing a statutory notice under section 434 of the Companies Act. The respondent contended that the goods were defective and therefore, it was not liable to pay the amount. The respondent also disputed placing any order with the petitioner for the stocks and mentioned the absence of samples sent along with the material. The petitioner relied on the assurance given by its representative, Mr. Gangooli, to clear the freight bill for Rs. 7,500. Both parties presented their evidence through witnesses and documents.
The respondent sent a letter to the petitioner on November 10, 1992, rejecting the goods due to quality issues, which the petitioner claimed not to have received. However, the respondent reiterated its denial of liability in subsequent communications. The respondent argued that the goods were substandard and not as per specifications, justifying its refusal to pay the amount. The respondent's counsel contended that the dispute over the liability was raised promptly, and therefore, the petitioner's recourse to winding up proceedings was unwarranted. The petitioner cited a previous case to support its claim that the debt dispute was not bona fide, emphasizing the respondent's financial capacity based on excise duty payments made in previous years.
The court dismissed the company petition, ruling that the liability was genuinely disputed by the respondent. The judge noted that the respondent had raised objections regarding the quality of the goods early on and had consistently denied liability. The court emphasized that the petitioner could pursue alternative avenues to recover the alleged amount instead of seeking winding up of the company. The judge highlighted the importance of considering the conduct of the parties, the nature of the dispute, and the circumstances surrounding the debt dispute in determining the legitimacy of the claim. The court's decision was based on the finding that there was a genuine dispute regarding the debt, and therefore, winding up was not deemed appropriate in this case.
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1996 (11) TMI 378
Issues:
1. Whether lacquering and printing of aluminium collapsible extruded tube constitute a process of manufacture prior to the amendment to Section 2(f) and Tariff Item No. 27(f) by Section 45 of the Finance (No. 2) Act, 1980?
Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal dated 29-1-1987, passed by the Collector of Central Excise (Appeals), Bombay. The Collector had opined that lacquering and printing of aluminium collapsible extruded tubes did not amount to a manufacturing process before the amendment to Section 2(f) and Tariff Item No. 27(f) by Section 45 of the Finance (No. 2) Act, 1980. The Collector held that the amendment was only prospective and not retrospective.
The matter was scheduled for a hearing on 21-11-1996. The appellants/Revenue were represented by Shri M. Jayaraman, JDR, while no one appeared for the respondents, M/s. Universal Cans & Containers Ltd. Despite the absence of the respondents, the Tribunal proceeded to hear the matter on its merits due to its age and the prior notice served to the respondents.
Shri M. Jayaraman, JDR, contended that the issue was settled by the Karnataka High Court in the case of Deepak Extrusion v. Assistant Collector of Central Excise, Bangalore, where it was held that lacquering and printing transformed plain tubes into a new commodity with distinct features. This decision was supported by the Supreme Court's ruling in Union of India v. Metal Box Co. of India Ltd., emphasizing the inclusion of charges for printing and lacquering in the assessable value of tubes.
Based on the precedents set by the Karnataka High Court and the Supreme Court, the Tribunal concluded that the Collector of Central Excise (Appeals) had erred in his decision. The impugned order-in-appeal was set aside, and the appeal by the Revenue was allowed.
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1996 (11) TMI 377
Issues Involved:
1. Validity of the inclusion of Diesel Generating (DG) Sets under Project Imports.
2. Requirement of contract registration for concessional duty rates.
3. Rejection of the refund claim for differential duty.
4. Post-facto amendments to the registered contract.
5. Interpretation of Heading 84.66 of the Customs Tariff Act.
Detailed Analysis:
1. Validity of the Inclusion of DG Sets under Project Imports:
The appellants argued that the DGTD certified the DG Sets merited concessional rates of duty as Project Imports, and thus, the Customs authorities were bound to accept this certification. They cited the Bombay High Court's decision in *Bombay Chemicals Pvt. Ltd. v. Union of India* and the CEGAT's decision in *Hindustan Aeronautics Ltd. v. Collector of Customs, Madras*. However, the Tribunal noted that the DG Sets were cleared without contest and that the refund claim was not tenable. The Tribunal emphasized that the registration of the contract was a mandatory condition precedent to the importation and could not be done post-facto. The Tribunal found no merit in the appellants' claim that the requirement of registration was a mere formality.
2. Requirement of Contract Registration for Concessional Duty Rates:
The Tribunal referenced the rationale behind Heading 84.66, as explained by the Madras High Court in *Appraiser, Madras Customs v. Tamil Nadu Newsprint Papers Ltd.*, which aimed to avoid hardship to importers by streamlining the clearance process for project imports. The Tribunal cited several judgments, including *Saurashtra Cement & Chemical Industries Ltd. v. Collector of Customs, Ahmedabad*, *Satelite Communication Project v. Collector of Customs*, and *Toyo Engineering (I) Ltd. v. Collector of Customs, Bombay*, which consistently held that the contract must be registered with Customs before the clearance of goods to avail the concessional rates under Heading 84.66. The Tribunal concluded that the appellants' failure to register the contract before clearance disqualified them from the concessional duty rates.
3. Rejection of the Refund Claim for Differential Duty:
The appellants contended that the duty collected at a higher rate amounted to a tax collected without authority of law, citing the Supreme Court's decision in *Commissioner of Sales Tax, U.P. v. Auriaya Chamber of Commerce, Allahabad*. However, the Tribunal noted that the DG Sets were cleared without indicating an intention to avail of the project import benefits, and the recommendation from the DGTD came after the clearance. The Tribunal referenced *Collector of Customs, Bombay v. Mihir Textiles Ltd., Bombay*, where it was held that the intention to avail concessional rates must be disclosed at the time of clearance. Consequently, the Tribunal upheld the rejection of the refund claim.
4. Post-Facto Amendments to the Registered Contract:
The appellants argued that obtaining the DGTD certificate was not a mandatory condition precedent and that the Assistant Commissioner should have granted post-facto amendments to the registration. They cited the Calcutta High Court's decision in *Asiatic Oxygen Ltd.*, which advocated for a liberal interpretation of the Project Imports facility to promote industrialization. However, the Tribunal distinguished this case, noting that the facts were not analogous. The Tribunal emphasized that the law required strict compliance with the registration requirement and that post-facto amendments were not permissible.
5. Interpretation of Heading 84.66 of the Customs Tariff Act:
The Tribunal discussed the purpose of Heading 84.66, which was to facilitate the clearance of materials for setting up projects by avoiding delays and hardships caused by classifying items under different tariff heads. The Tribunal cited several judgments, including *Punjab State Electricity Board, Patiala v. Collector of Customs, Bombay*, which held that auxiliary equipment must meet specific conditions to qualify for project import benefits. The Tribunal concluded that the DG Sets did not qualify as auxiliary equipment under the Project Imports heading and that the Customs authorities were not bound to accept the DGTD's recommendation in this case.
Conclusion:
The Tribunal found no infirmity in the impugned order and rejected the appeal, upholding the requirement for pre-importation contract registration and denying the concessional duty rates and refund claim for the DG Sets. The Tribunal emphasized strict compliance with the statutory conditions for availing benefits under Heading 84.66 of the Customs Tariff Act.
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1996 (11) TMI 372
Whether the desiccated coconut that is produced by the respondents falls outside the scope of “copra” within sub-entry (viii)?
Held that:- Appeal dismissed. Having regard to the fact that there is material on the record, which has been accepted by the High Court, to show that copra is produced by breaking the coconut, it is difficult to hold that desiccated coconut, which is shredded copra, is not copra within the meaning of sub-entry (viii). It is not in dispute, as the High Court has noted, that coconut oil can be extracted from watery coconuts, copra and desiccated coconut. The main object of the coconut for use in the kitchen is met as well by the shredded copra as it is by the coconut itself.
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1996 (11) TMI 358
Exemption totally from the levy of sales tax on the sale of edible oil claimed
Held that:- Appeal allowed. The exemption granted by Notification No. S.R.O. 93 of 1991 to local manufacturers/producers of edible oil is violative of the provisions contained in articles 301 and 304(a). At the same time, we direct that: (a) the appellants shall not be entitled to claim any amounts by way of refund or otherwise by virtue of or, as a consequence of, the declaration contained herein and (b) that the declaration of invalidity of the impugned notification shall take effect on and from April 1, 1977. Till that date, i.e., up to and inclusive of 31st March, 1977, the impugned notification shall continue to be effective and operative.
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1996 (11) TMI 355
Payment and recovery of tax in works contract - Held that:- Appeal allowed. Notwithstanding anything contained in sub-rule (2), any contractor who pays tax regularly in accordance with the rules, shall be entitled to payment of the full contract amount without any deduction by the awarder, if he produces a certificate issued by the assessing authority to the effect that no tax is due from him. All these provisions are designed to ensure due realisation of the tax due.
No exception can be taken thereto. The attack upon rule 30A is equally untenable. It merely provides the procedure according to which the option to come under the alternate method of taxation provided by sub-section (7) or (7A) of section 7 is to be exercised. The Division Bench was, therefore, in error in declaring the said rules as invalid.
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1996 (11) TMI 352
The Supreme Court allowed the appeal in a case involving a notification under the U.P. Sales Tax Act granting a rebate on cotton yarn sales for use in cloth manufacturing. The respondent-dealer failed to submit a required certificate within the specified time, leading to rejection of the claim. The High Court considered the condition as directory, but the Supreme Court deemed it mandatory based on precedent, setting aside the High Court's judgment.
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1996 (11) TMI 338
Whether the taxing provisions of the Orissa Municipal Act and the bye-laws made thereunder, permitted the Puri Municipal Council to charge octroi tax on a non-fisherman merely found in possession of fish and prawn within the municipal area, or while taking them out through exit points, or octroi posts?
Held that:- Appeal dismissed. The High Court in this fact situation properly saw through the matter and, in our view, afforded appropriate relief to the respondent, throwing out the specious plea of the appellant- municipality based on the fact that it was not in a position to put up octroi posts at every conceivable point alongside the sea shore. That aspect is the concern of the municipality and not that of the subject. If the words in the taxing statute fail, the tax must fail, without sentiment playing any role.
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1996 (11) TMI 332
Issues Involved:
1. Misjoinder of causes of action
2. Jurisdiction of the court
3. Time-barred suit
4. Declaration simpliciter
5. Insufficient court fee
6. Ownership of disputed shares
7. Transfer of shares without consideration
8. Authority to transfer shares
9. Qualification of directors
10. Alienation of company assets
11. Mandatory injunction for share certificates
12. Amendment of shareholder register
13. Waiver, acquiescence, and estoppel
14. Fraud by defendant
15. Relief entitlement
Detailed Analysis:
1. Misjoinder of Causes of Action:
The court examined whether the suits filed by the plaintiffs had improperly combined multiple causes of action. The issue was framed to determine if the combination of different claims in one suit was permissible under the law.
2. Jurisdiction of the Court:
The defendants argued that the court had no jurisdiction to grant the relief sought, as the rectification of the register of members could only be done under the Companies Act, 1956. The court rejected this argument, stating that the plaintiffs' claims were not merely for rectification but also involved other substantial issues.
3. Time-Barred Suit:
The defendants claimed that the suit was time-barred. The court examined the timeline and found that the plaintiffs had filed the suits within the permissible period, thus rejecting the time-bar argument.
4. Declaration Simpliciter:
The issue was whether a suit for declaration simpliciter (a simple declaration of rights) was barred. The court found that the plaintiffs' suits were not merely for a declaration but also included claims for injunctions and other reliefs, making them maintainable.
5. Insufficient Court Fee:
The defendants contended that the court fee paid was insufficient. The court examined the fee structure and found it to be adequate, dismissing the defendants' objection.
6. Ownership of Disputed Shares:
The court analyzed whether the plaintiffs were the rightful owners of the shares in question. It was held that the plaintiffs, Mrs. Surjeet Malhan and Mr. B.K. Malhan, were indeed the owners of their respective shares.
7. Transfer of Shares Without Consideration:
The plaintiffs argued that the transfer of shares to defendant No. 2, Mr. R.D. Bhagat, was without consideration and thus void. The court found that the alleged consideration of one rupee was inadequate and did not constitute a valid transfer, thus siding with the plaintiffs.
8. Authority to Transfer Shares:
The court examined whether Mr. B.K. Malhan had the authority to transfer his wife's shares. It was concluded that he had no such authority, and any transfer made without proper authorization was invalid.
9. Qualification of Directors:
The issue was whether defendants Nos. 2 and 3 could become members of the board of directors without acquiring qualifying shares within two months. The court found that they did not meet the qualifications, and their positions as directors were not valid.
10. Alienation of Company Assets:
The plaintiffs sought a permanent injunction to prevent the defendants from alienating the company's immovable assets. The court granted this relief, restraining the defendants from disposing of the company's property.
11. Mandatory Injunction for Share Certificates:
The plaintiffs requested a mandatory injunction directing the defendants to return the share certificates. The court ordered defendants Nos. 2 and 3 to hand over the share certificates to the plaintiffs.
12. Amendment of Shareholder Register:
The plaintiffs sought an amendment of the company's register of shareholders to reflect their ownership. The court directed defendant No. 1-company to rectify the register and show the plaintiffs as the rightful owners of the shares.
13. Waiver, Acquiescence, and Estoppel:
The defendants argued that the plaintiffs were barred by waiver, acquiescence, and estoppel. The court rejected this defense, finding no basis for these claims.
14. Fraud by Defendant:
The plaintiffs alleged that defendant No. 2 had practiced fraud. The court found sufficient evidence to support the plaintiffs' claims of fraud and ruled in their favor.
15. Relief Entitlement:
The court concluded that the plaintiffs were entitled to the relief sought. It decreed that Mrs. Surjeet Malhan was the owner of 1,500 ordinary shares and 10 preference shares, and Mr. B.K. Malhan was the owner of 2,330 ordinary shares and 64 preference shares. The court also issued mandatory injunctions and permanent injunctions as requested by the plaintiffs.
Conclusion:
The court set aside the judgment and decree of the learned single judge, decreeing the suits filed by the plaintiffs. It declared the plaintiffs as the rightful owners of their respective shares, directed the defendants to return the share certificates, ordered the amendment of the shareholder register, and restrained the defendants from alienating the company's assets. The court also awarded costs to the plaintiffs.
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1996 (11) TMI 331
The dispute involved outstanding principal sum against Desert Inn Pvt. Ltd. not paid to Swati Cement Pvt. Ltd. and Sushil Kumar and Company. Claim for interest made based on a letter signed by managing director of Desert Inn Ltd. Company ready to pay principal sum but disputed interest. Company directed to pay principal sum by November 13, 1996, interest dispute may be pursued in civil suit. Winding up proceedings deferred if payment made by deadline. Company petitions disposed with above directions.
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1996 (11) TMI 321
Issues:
1. Interpretation of section 621 of the Companies Act, 1956 regarding the requirement for a complaint in writing for taking cognizance of an offense.
2. Duty of the company and its officers under section 113 of the Companies Act, 1956 to transfer shares within a specified period.
3. Dispute regarding the designation of the managing director of the company.
Analysis:
1. The first issue in this case revolves around the interpretation of section 621 of the Companies Act, 1956, which specifies the conditions under which a court can take cognizance of an offense. The petitioner argued that since the shares were not transferred to the respondent's name, she did not qualify as a shareholder under the Act, and therefore, no complaint could be filed by her. However, the court rejected this contention, emphasizing that the respondent had purchased the shares and had the right to have them transferred in her name. The court held that accepting the petitioner's interpretation would defeat the purpose of the provision, allowing companies to evade liability for non-transfer of shares.
2. The second issue pertains to the duty imposed on companies and their officers under section 113 of the Companies Act, 1956, to transfer shares within a specified period. The court noted that the respondent had purchased the shares and sent them for transfer, making her the rightful owner. The court emphasized that the company and its officers had a duty to transfer the shares within two months, failing which they could be fined. The court dismissed the petitioner's argument that the respondent did not qualify as a shareholder, reiterating that she had paid for the shares and was entitled to their transfer.
3. The final issue concerns the dispute regarding the designation of the managing director of the company. The petitioner contested that Shri P.C. Chako was not the managing director of the company, and therefore, the court erred in taking cognizance against him. However, the court noted that the respondent had identified petitioner No. 2 as the managing director in the complaint and supporting statement. The court found no reason to doubt these allegations, especially when supported by the respondent's statement under section 200 of the Code. Consequently, the court held that summoning petitioner No. 2 as the managing director was not erroneous.
In conclusion, the court dismissed the petition, finding it without merit and upheld the impugned order summoning the petitioners based on the allegations and evidence presented before the Judicial Magistrate.
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1996 (11) TMI 318
Issues Involved:
1. Approval of amalgamation scheme.
2. Nature of amalgamation (merger vs. purchase).
3. Objections by the Registrar of Companies and the Official Liquidator.
4. Maintainability of the petitions.
5. Compliance with Accounting Standards (AS-14).
6. Tax implications and necessity of a sale deed.
Detailed Analysis:
1. Approval of Amalgamation Scheme:
The petitions were filed by SPS Pharma Ltd. (transferor company) and Targof Pure Drugs Ltd. (transferee company) seeking approval for the amalgamation. The scheme was proposed to enhance efficiency and economic operations, leading to a wider capital base. From the effective date, March 8, 1995, all debts, liabilities, duties, and obligations of the transferor company would transfer to the transferee company. The meetings of shareholders were conducted, and the scheme was approved by the shareholders of both companies. The scheme was also published in newspapers, and notices were issued to the official liquidator and the Registrar of Companies.
2. Nature of Amalgamation (Merger vs. Purchase):
The learned counsel for the petitioners argued that amalgamation could be either in the nature of a merger or a purchase. The Accounting Standards (AS-14) issued by the Institute of Chartered Accountants of India were cited, which define amalgamation in the nature of a merger and purchase. The key conditions for a merger include the transfer of all assets and liabilities, shareholders becoming equity shareholders of the transferee company, and the business of the transferor company being carried on by the transferee company. If any of these conditions are not met, the amalgamation is considered a purchase.
3. Objections by the Registrar of Companies and the Official Liquidator:
The official liquidator reported no objection to the proposed amalgamation but expressed doubts about the necessity of a sale deed. The Registrar of Companies objected, stating that the transaction was an outright purchase for cash and did not qualify as a compromise or arrangement, thus questioning the maintainability of the petitions.
4. Maintainability of the Petitions:
The court held that under section 394 of the Companies Act, 1956, the Registrar and the official liquidator could object only if the affairs of the company were conducted in a manner prejudicial to public interest. Previous cases, such as Sanghi Industries Ltd. v. Goldy Projects Ltd. and Vinay Metal Printers (P) Ltd., In re, were cited, where objections based on share exchange ratios and tax avoidance were overruled. The court concluded that the Registrar could raise a preliminary objection regarding the maintainability of the petitions, but the petitions were ultimately deemed maintainable.
5. Compliance with Accounting Standards (AS-14):
The court noted that although the accounting standards became mandatory from April 1, 1995, they could be applied as guidelines for the period prior to that date. The amalgamation by purchase was recognized as a valid mode of amalgamation, and the petitions were maintained accordingly.
6. Tax Implications and Necessity of a Sale Deed:
The court acknowledged the petitioners' argument that the Income-tax Act defines amalgamation in the nature of a merger but does not exclude amalgamation in the nature of a purchase. The court held that whether the transaction attracted capital gains tax or required a sale deed with necessary stamp duty was not necessary to determine in this proceeding and left these questions open.
Conclusion:
The court approved the scheme of amalgamation, noting that the shareholders of both companies had approved it and the auditors had certified that the assets and liabilities of the transferor company were taken at book value. The transferee company paid Rs. 55,00,000 in cash to the transferor company. The transferor company was to be dissolved with effect from March 8, 1995. Any shareholder could move the court for modification of the scheme if necessary. The petitions were allowed, and the order was to be communicated to the Registrar of Companies within six weeks. No costs were awarded.
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1996 (11) TMI 317
Issues:
1. Validity of the order directing the appellant to hold annual general meetings from 1986 to 1995.
2. Interpretation of the Companies Act in relation to the management committee constituted by the Supreme Court.
3. Compliance with statutory provisions excused under certain circumstances.
4. Effect of the Acquisition Act on the necessity of holding annual general meetings.
Analysis:
The judgment involves a dispute between the Madras Race Club (appellant) and a member of the club (respondent) regarding the holding of annual general meetings for the years 1986 to 1995. The respondent filed a petition under section 167 of the Companies Act, seeking to compel the club to hold these meetings. The Company Law Board directed the appellant to conduct the annual general meetings, leading to this appeal.
The appellant argued that the non-holding of meetings was due to the management committee appointed by the Supreme Court after the striking down of the Acquisition Act. The appellant contended that the club had become defunct under section 560 of the Companies Act, and the newly elected management committee had already held an annual general meeting for the year 1996, rendering the previous meetings unnecessary.
The court examined the events following the passing of the Madras Race Club (Acquisition and Transfer of Undertaking) Act, 1986, and the subsequent constitution of a management committee by the Supreme Court. It was noted that during the committee's tenure, the club remained largely inactive, with only race events being conducted. The court emphasized that the management committee appointed by the court was not the same as the managing committee under the club's articles, and thus, the responsibility for convening annual general meetings fell on the latter.
Additionally, the court considered the legal maxim "lex non cogit ad impossibilia," which excuses non-compliance when performance is impossible due to circumstances beyond the party's control. The court highlighted that the club's affairs were effectively taken over by the court-appointed committee, making it impractical to convene annual general meetings during that period.
Ultimately, the court allowed the appeal, setting aside the Company Law Board's order to hold annual general meetings for the years 1986 to 1995. The court found that the club's compliance with statutory obligations, given the circumstances, was reasonable, especially since the newly elected management committee had already conducted an annual general meeting for the year 1996. The respondent, acknowledging the meeting's completion and the accounts' approval, chose not to pursue the matter further.
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1996 (11) TMI 316
Issues Involved:
1. Allegations of oppression and mismanagement u/s 397 and 398 of the Companies Act, 1956.
2. Validity of the trial court's direction for the first appellant-company to purchase shares.
3. Applicability of the principle of 'lifting the corporate veil'.
4. Consideration of subsequent events in the company petition.
5. Compliance with section 397(2)(b) requirements.
6. Allegations of mala fides in filing the company petition.
Summary:
1. Allegations of Oppression and Mismanagement u/s 397 and 398:
The respondent filed a petition u/s 397 and 398 alleging oppression and mismanagement. The trial court found no evidence of mismanagement but concluded that the actions of the appellants were oppressive. The court directed the first appellant-company to purchase the respondent's shares, considering the paid-up capital and market value of assets.
2. Validity of the Trial Court's Direction:
The appellants argued that the direction to purchase shares was not legal, as section 77 of the Act was not considered. Additionally, the direction was vague regarding the amounts due and the market value of assets. The court found these arguments weighty and noted the lack of evidence for many allegations.
3. Applicability of 'Lifting the Corporate Veil':
The trial court lifted the corporate veil, treating the private limited company as a partnership. The appellants contended that this was inappropriate, citing the Supreme Court's observation in Hind Overseas (P.) Ltd. v. Raghunath Prasad Jhunjhunwalla, which restricts the application of partnership principles to companies. The High Court agreed with the appellants, finding no proof of the requirements for lifting the veil.
4. Consideration of Subsequent Events:
The appellants argued that events like the exclusion of the respondent and the increase in share capital occurred after the filing of the petition and should not be considered. The court noted that the respondent did not amend the petition to include these events, and thus they could not be taken into account.
5. Compliance with Section 397(2)(b) Requirements:
The court found no plea or proof that section 397(2)(b) was satisfied. The trial judge did not provide a specific finding in this regard. The court emphasized that specific allegations and proof are necessary to invoke section 397.
6. Allegations of Mala Fides:
The appellants claimed the petition was filed in bad faith, as the respondent had not complied with a notice demanding payment of dues. The court did not find it necessary to address this contention due to the conclusions reached on other issues.
Conclusion:
The High Court allowed the appeal, setting aside the trial court's order and dismissing the company petition. The court found that the allegations of oppression were not substantiated by evidence, the principle of lifting the corporate veil was misapplied, and the requirements of section 397(2)(b) were not met. The direction for the company to purchase shares was also deemed unlawful and vague.
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1996 (11) TMI 301
Effect of the Arbitration and Conciliation Act, 1996 in the present case on the arbitration agreement made prior to the commencement of the New Act.
Held that:- There is no dispute that the arbitral proceeding in the present case commenced after the New Act came into force and, therefore, the New Act applies. In view of the term in the arbitration agreement that the two arbitrators would appoint the umpire or the third arbitrator before proceeding with the reference, the requirement of sub-section (1) of section 10 is satisfied and subjection (2) thereof has no application. As earlier stated, the agreement satisfies the requirement of section 7 and, therefore, is a valid arbitration agreement. The appoint- ment of arbitrators must, therefore, be governed by section 11.
Thus direct that the Chief Justice of the High Court is to appoint the third arbitrator under section 11(4)(b) in view of the failure of the two appointed arbitrators to appoint the third arbitrator within thirty days from the date of their appointments.
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1996 (11) TMI 294
The appellate tribunal rejected the department's appeal regarding the classification of scrap as non-excisable, citing previous tribunal decisions in similar cases. The order of the Collector (Appeals) was upheld. The department's appeal was rejected.
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1996 (11) TMI 286
Issues:
1. Liability to pay interest on warehoused goods under Section 61(2) of the Customs Act, 1962.
2. Interpretation of provisions of Section 59 and Section 61(2) of the Customs Act, 1962.
3. Conflict between rulings of Madras High Court and Kerala High Court on payment of interest on warehoused goods.
Analysis:
1. The case involved the liability of the appellant to pay interest on warehoused goods under Section 61(2) of the Customs Act, 1962. The appellant imported consignments of nylon tyre yarn under the Advance Licensing Scheme but faced delays in receiving the license. The goods were bonded under Sections 17 and 18 of the Customs Act, and interest was demanded by the Assistant Collector for the overstay of goods in the warehouse beyond the bond period.
2. The Collector (Appeals) held that the liability to pay interest on warehoused goods arises under Section 61(2) of the Customs Act, 1962. He emphasized that the goods were assessed to duty at the time of warehousing, and the interest is payable on the amount of duty on warehoused goods if they remain in the warehouse beyond the specified period. The Collector rejected the appellant's argument based on the Kerala High Court ruling, stating that the liability to pay interest is determined by Section 61(2) of the Act.
3. The Tribunal considered the conflicting views of the Madras High Court and the Kerala High Court on the payment of interest on warehoused goods. The Madras High Court held that interest is a payment for delayed clearance of goods, even if no duty is due, to ensure prompt clearance from the warehouse. The Tribunal, following the Madras High Court's ruling, dismissed the appeal. Subsequently, a Reference Application was filed to refer the question of law to the Hon'ble High Court due to the conflicting views between the two High Courts.
4. The Tribunal, recognizing the conflicting decisions of the Madras and Kerala High Courts, referred the question of law to the Hon'ble Supreme Court under Section 130A of the Customs Act, 1962. The question posed for reference was whether the appellant is liable to pay interest under Section 61(2) of the Act for warehoused goods cleared after an overstay in the warehouse, even if no customs duty is payable.
This comprehensive analysis outlines the key issues and the legal interpretations provided by the authorities, leading to the reference of the matter to the Hon'ble Supreme Court for resolution.
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1996 (11) TMI 276
Issues Involved:
1. Interpretation of Section 35B of the Central Excises & Salt Act, 1944.
2. Delay in filing the appeal by the Collector of Central Excise, Hyderabad.
3. Consideration of sufficient cause for condonation of delay.
4. Compliance with the High Court's directive to submit an affidavit and necessary materials.
Issue-wise Detailed Analysis:
1. Interpretation of Section 35B of the Central Excises & Salt Act, 1944:
The judgment revolves around the interpretation of Section 35B, which provides for appeals to the Appellate Tribunal. Specifically, sub-section (3) mandates that every appeal must be filed within three months from the date the order is communicated to the aggrieved party. Sub-section (5) allows the Tribunal to admit an appeal after the expiry of the period if it is satisfied that there was sufficient cause for the delay.
2. Delay in filing the appeal by the Collector of Central Excise, Hyderabad:
The Collector of Central Excise, Hyderabad, filed the appeal on 28-7-1993, which was received by the Tribunal on 29-7-1993, resulting in a delay of 43 days from the statutory period ending on 16-6-1993. The reasons for the delay included the Collector being on long leave and the transfer of the officer holding additional charge.
3. Consideration of sufficient cause for condonation of delay:
The Tribunal initially condoned the delay by majority order. However, the High Court of Andhra Pradesh remitted the matter back to the Tribunal for fresh consideration, allowing the Collector to submit an affidavit and all relevant materials. The Collector's affidavit cited reasons such as the leave and transfer of officers, the complexity of the issue with all India ramifications, and the need for proper determination to avoid differential practices.
4. Compliance with the High Court's directive to submit an affidavit and necessary materials:
The Tribunal provided multiple opportunities for the Collector to submit a proper affidavit and necessary materials. The affidavit filed on 18-4-1996 reiterated the reasons previously given, including the leave and transfer of officers and the importance of the issue. However, the Tribunal noted that no new facts were presented, and the reasons remained insufficient as per the High Court's observations.
Tribunal's Final Decision:
The Tribunal carefully considered the submissions and previous judgments cited, including the Supreme Court's pragmatic approach in State of Haryana v. Chandramani & Others, which allows some latitude for governmental delays. Despite this, the Tribunal found that the reasons provided did not constitute sufficient cause, especially given the importance of the issue and the lack of explanation for inaction during the Collector's presence in office. Consequently, the application for condonation of delay was rejected, leading to the dismissal of Appeal No. E/1833/93-C filed by the Commissioner of Customs and Central Excise, Hyderabad.
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