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1991 (4) TMI 368
Issues:
- Quashing of orders dated 29th June, 1988, and 14th March, 1988, passed by the Divisional Level Committee
- Direction sought for granting exemption certificate under section 4-A of the U.P. Sales Tax Act for a new manufacturing unit
- Rejection of review application by the Divisional Level Committee
Detailed Analysis:
The petitioner sought to quash orders passed by the Divisional Level Committee and obtain an exemption certificate under section 4-A of the U.P. Sales Tax Act for a new manufacturing unit. The petitioner contended that the second unit, manufacturing different drugs, qualified as a new unit under the Act. The review application was rejected based on the absence of specific registration in the new unit's name. However, the Court found that both units were owned by the same company, and mere technicalities should not disqualify the petitioner from exemption eligibility. The definition of "new unit" under section 4-A was crucial, allowing for the establishment of a new unit adjacent to an existing one, even if manufacturing different goods.
The Court emphasized that the two drugs manufactured by the petitioner were distinct and did not fall under the same category, despite being medicines. The taxing entry covering all medicines did not negate the difference between the drugs for the purpose of exemption eligibility. The definition of "goods" under the U.P. Sales Tax Act was broad, supporting the argument that the two drugs were not the same goods under section 4-A.
Regarding the rejection based on a Commissioner's Circular, the Court clarified that the circular was meant as guidance and not binding law. The Committee erred in misinterpreting the circular and failing to apply the definition of "new unit" correctly. The Court set aside the impugned order and directed the Committee to reevaluate the case in light of the judgment, emphasizing the proper application of the legal provisions. The Court stayed further proceedings until the review application was decided, ensuring compliance with the law and providing relief to the petitioner.
In conclusion, the Court allowed the petition, highlighting the importance of accurate interpretation and application of legal provisions in determining exemption eligibility under the U.P. Sales Tax Act. The judgment provided clarity on the definition of a new unit and emphasized the need for a thorough review of the case based on established legal principles.
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1991 (4) TMI 367
The High Court of Karnataka dismissed revision petitions filed under the Karnataka Entry Tax Act, stating that no provision exists for such revisions. The Court clarified that the power of superintendence does not lie with the Court under the Act, and the petitioner was permitted to withdraw the petitions.
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1991 (4) TMI 366
Issues Involved:
1. Justification for addition based on materials secured from inspection.
2. Quantum of addition made.
3. Entitlement to raise new points before the Tribunal.
4. Applicability of different tax rates on sodium nitrate.
5. Competence of the Tribunal to entertain new grounds not raised before lower authorities.
Issue-wise Detailed Analysis:
1. Justification for Addition Based on Materials Secured from Inspection:
The assessee, engaged in the business of chemicals, had their accounts rejected following a surprise inspection, leading to a best judgment assessment. The total and taxable turnover were determined at Rs. 33,62,653 and Rs. 33,52,031 respectively, with a penalty levied under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959. The appellate authority sustained the addition but canceled the penalty. The Tribunal further reduced the turnover by Rs. 1,23,224, adopting an average rate of Rs. 2 per kilogram instead of Rs. 3 per kilogram. The Tribunal's decision was based on the materials secured during the inspection, which the assessee contended was unwarranted. The court upheld the Tribunal's decision, finding no error in the reasoning or legal infirmity in the conclusions.
2. Quantum of Addition Made:
The assessee disputed the quantum of addition of Rs. 3,82,572 based on the inspection materials. The appellate authority sustained the addition, and the Tribunal reduced the turnover by Rs. 1,23,224. The assessee argued that the quantum of addition was excessive and unjustified. However, the court found that the authorities below, including the Tribunal, had properly considered the aspects and provided partial relief. The court did not find anything palpably wrong in the Tribunal's reasoning or other legal infirmity warranting interference.
3. Entitlement to Raise New Points Before the Tribunal:
The assessee argued that they were entitled to raise new points before the Tribunal, even if not raised before the first appellate authority. The court examined various precedents, including decisions in State of Tamil Nadu v. Arulmurugan and Company, State of Tamil Nadu v. Pyarelal Malhotra, and Associated Cement Companies Ltd. v. State of Tamil Nadu. The court concluded that the Tribunal cannot entertain and deal with a plea not raised before the authorities below. Only points or grounds raised before the authorities below and kept alive at subsequent stages could be agitated before the Tribunal.
4. Applicability of Different Tax Rates on Sodium Nitrate:
The assessee contended that sodium nitrate sold by them fell under item 21(5) of the First Schedule and should be taxed at 3.5% instead of 8%. The Tribunal rejected this claim because it was not raised before the Appellate Assistant Commissioner. However, for a portion of the turnover amounting to Rs. 86,400, the Tribunal allowed the rate of 3.5% as claimed by the assessee. The court upheld the Tribunal's decision, emphasizing that new grounds could not be raised for the first time before the Tribunal.
5. Competence of the Tribunal to Entertain New Grounds Not Raised Before Lower Authorities:
The court extensively reviewed precedents, including Deputy Commissioner (C.T.) v. Govindaraju Chettiar, which held that the Tribunal cannot entertain new grounds not raised before the lower authorities. The court noted that decisions such as State of Tamil Nadu v. Arulmurugan and Company and Tamil Nadu Small Industries Corporation Limited v. State of Tamil Nadu did not directly address the issue in the form it arose in the present case. The court preferred to follow the decision in Deputy Commissioner (C.T.) v. Govindaraju Chettiar, concluding that the Tribunal was correct in rejecting the new grounds raised by the assessee.
Conclusion:
The revision was dismissed, with the court finding no error in the Tribunal's decision or legal infirmity in the conclusions. The plea of the petitioner was rejected, and the certificate of fitness to file an appeal to the Supreme Court was refused, as no question of law of general importance requiring consideration by the Apex Court was involved.
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1991 (4) TMI 365
Whether the accused committed the offence or has reason to believe to have committed the offence and the evidence available is sufficient to prove the offence and to submit his report to the competent Magistrate to take cognizance of the offence?
Whether the chargesheets are vitiated by the alleged mala fides on the part of either of the complainant R.K. Singh or the Investigating Officer G.N.Sharma?
Held that:- It cannot be considered that this court laid down as a preposition of law that in every case the court would examine at the preliminary stage whether there would be ultimate chances of conviction on the basis of allegation and exercise of the power under s.482 or Art. 226 to quash the proceedings or the charge-sheet. The learned Judges have committed gravest errors of law in quashing the F.I.R. and Charge-sheets. The appeals are allowed with no order as to costs.
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1991 (4) TMI 364
IMPORT SALE — SALE BY COLLECTOR OF CUSTOMS OF CONFISCATED AND NON-CONFISCATED GOODS — IS SALE BEFORE GOODS CROSSED CUSTOMS BARRIERS — CASH MEMO ISSUED BY COLLECTOR — NOT DOCUMENT OF TITLE — NO TRANSFER OF TITLE TO GOODS — SALES NOT SALES IN COURSE OF IMPORT.
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1991 (4) TMI 363
Vires of rule 15 of the Bombay Sales of Motor Spirit Taxation Rules, 1958 challenged
Held that:- Appeal dismissed. The basis of the petitioners' claim is on a misunderstanding of the provisions of the Act and the Rules as if the liability of sales tax arises on a further sale made by them to the consumers. The petitioners have also not placed the Act and the Rules of other States in order to show that traders in such business of the State of Maharashtra alone are treated differently.
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1991 (4) TMI 355
Whether the Tribunal was correct in law in holding that the notice under section 15 of the Bombay Sales Tax Act, 1953, served on Mr. N.A. Merchant, an employee of the concern was a valid service in law?
Whether on a true and correct interpretation of section 15 of the Bombay Sales Tax Act, 1953, the Tribunal was correct in law in holding that the assessment proceedings were valid in law, though the notice under the said section 15 was served on Mr. Merchant, an employee of the concern, and not on the dealer?
Held that:- Appeal dismissed. The 1953 Act has been repealed by the Bombay Sales Tax Act, 1959. Section 35 of the 1959 Act provides for reassessment and giving an opportunity to the dealer. The provisions of section 35 are structurally different from the provisions of section 15(1) of the 1953 Act. Under the 1959 Act what is required is that the dealer must be afforded a reasonable opportunity of being heard and there is no requirement of service of notice as contemplated under the 1953 Act and the rules framed thereunder. The question of law raised in these appeals is, therefore, sterile and cannot arise under the 1959 Act. Indeed, it has no general importance and become academic. We, therefore, express no opinion on the question of law raised in these cases
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1991 (4) TMI 351
Whether the sale that took place between the manufacturer and the Marketing Company can be taken to be covered by the explanation?
Held that:- Appeal dismissed. What has been found as a fact in the statement of the case is that there was preceding local sales complete in every respect within Madhya Pradesh by which title to the cement had passed from the appellant to the Marketing Company. The concept of inter-State sale as brought in by the Sixth Amendment or in the subsequent statute known as the Central Sales Tax Act, 1956, was not in existence for the relevant period now under consideration. The finding recorded by the authorities is that the delivery of the cement was not the direct result of such sale or purchase of the cement outside the State. In the absence of such privity the explanation is not attracted to the transactions.
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1991 (4) TMI 343
The Collector of Central Excise filed misc. applications seeking early hearing of appeals pending for over two years involving substantial revenue. The issue was whether paper-based laminated sheets are classifiable under Item 15A(2) as plastic articles or under Item 68 CET. Tribunal held they are classifiable under Item 68 CET based on previous decisions. Appeals by the Department were rejected, and impugned orders were upheld. (Case: Collector of Central Excise v. Various Companies)
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1991 (4) TMI 335
Issues Involved:
1. Allegations of oppression of minority shareholders.
2. Validity of the shareholders' agreement and its enforcement.
3. Appointment and re-appointment of directors.
4. Management and conduct of the company's affairs.
5. Rights issue and financial arrangements.
Detailed Analysis:
1. Allegations of Oppression of Minority Shareholders:
The petitioners, representing the Mehta group, contended that they were being oppressed as minority shareholders by the respondents, particularly the GIIC and the State Government. They alleged that their rights to appoint directors were being jeopardized through dubious methods, the injunction issued by the City Civil Court was violated, and funds of the company were being squandered due to wrong personnel policies and decisions aimed at ousting the Mehta group and inducting Gujarat Ambuja Cements Ltd.
2. Validity of the Shareholders' Agreement and Its Enforcement:
The shareholders' agreement between the Mehta group and the GIIC, dated April 9, 1981, provided that the Mehta group would have the right to nominate up to three directors on the board as long as they held 25% equity shares. The agreement also stipulated that the GIIC would not reduce its shareholding below that of the Mehta group and would offer any shares intended for public sale first to the Mehta group. The court upheld the agreement and noted that the GIIC was attempting to undermine it by not subscribing to the additional equity required for the project.
3. Appointment and Re-appointment of Directors:
The court found that Mr. M.N. Mehta, despite the alleged resignation or non-reappointment claims by the respondents, continued to be a director under section 256(4) of the Companies Act, 1956. The court noted that the adjourned meeting required by the statutory provision was not held, and thus, Mr. Mehta should be deemed re-appointed. The court also addressed the issue of Mr. Sanat Mehta, stating that it was not necessary to give a direction for his appointment as he was not previously appointed by the company.
4. Management and Conduct of the Company's Affairs:
The court addressed the petitioners' concerns about the management and conduct of the company's affairs, including the alleged mismanagement and financial irregularities. The court directed that the representation made by Mr. Mehta regarding the alleged charges against him and others should be forwarded to the chartered accountants appointed for investigation.
5. Rights Issue and Financial Arrangements:
The court directed that the rights issue, which was opened on January 2, 1990, should be closed on May 15, 1991, and the shares should be allotted within four weeks thereafter. The court also ordered that the amount received from the Mehta group or its associates should be utilized by the company to repay the bridge loan of Rs. 2.70 crores received from the Indian Bank. The court emphasized the need for the company to act in accordance with the shareholders' agreement and to provide necessary application forms to the petitioners or their nominees.
Conclusion:
The court partially allowed the judge's summons, directing that Mr. M.N. Mehta continues as a director of the company and that the rights issue be closed by May 15, 1991, with shares allotted within four weeks. The rest of the prayers were rejected, but the petitioners were allowed to move a fresh application if necessary. The operation of the order was stayed up to April 29, 1991, at the request of the respondents' advocates.
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1991 (4) TMI 334
The High Court of Delhi dismissed the company appeal regarding the realisation of tax dues from Dalmia Jain Airways Ltd. The court found that the petition was not maintainable under section 153A(1)(f) of the Indian Companies Act, 1913, and section 647 of the Companies Act, 1956. The appeal was dismissed as the court concluded that the petition was misconceived and not maintainable.
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1991 (4) TMI 333
Issues Involved:
1. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
2. Status of winding up petitions and applications for interim reliefs.
3. Effect on ad interim orders dated October 5, 1990, and October 11, 1990.
Detailed Analysis:
1. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985:
The court examined whether Section 22 of the Act is applicable to the current situation and whether the company can avail of its provisions. The court noted that the company had been declared a sick industrial company by the Board for Industrial and Financial Reconstruction (BIFR) under Section 3(1)(o) of the Act. The Board had adjourned the proceedings to allow the company to present a scheme for consideration. The court rejected the argument that Section 22(1) is only applicable if a scheme under Section 17(3) is under preparation. The court held that Section 22 is applicable as the proposed scheme is referable to the implied power of the Board under Sections 17(1) and 17(2) of the Act.
2. Status of Winding Up Petitions and Applications for Interim Reliefs:
The court had to decide whether the winding up petitions and applications for interim reliefs should be dismissed, treated as abated, or merely suspended and kept in abeyance. The court disagreed with the Gujarat High Court's interpretation that winding up petitions should be dismissed if the conditions of Section 22 are met. Instead, the court held that the petitions should be suspended and kept in abeyance, with the possibility of revival with the consent of the Board or the appellate authority, or if the conditions of Section 22(1) cease to exist.
3. Effect on Ad Interim Orders Dated October 5, 1990, and October 11, 1990:
The court considered whether the ad interim orders should be automatically suspended, vacated, or modified. The court held that these orders are not automatically suspended but cannot be taken up for final orders unless the petitioning creditors obtain the consent of the Board or Section 22(1) ceases to apply. The court modified the orders to allow the company to alienate its assets only with the prior leave of the Board and not otherwise, ensuring that the Board can exercise its statutory functions without being affected by the court's injunctions. If the Board sanctions a scheme for the sale of the company's properties, the injunctions will stand vacated.
Conclusion:
The court concluded that:
1. The winding up petition is not liable to be dismissed or treated as having abated.
2. The winding up petition and the judge's summonses are to be suspended and kept in abeyance, with liberty to revive them with the consent of the Board or the appellate authority, or if Section 22(1) ceases to apply.
3. The ad interim orders dated October 5, 1990, and October 11, 1990, are not automatically suspended but are modified to allow the company to alienate its assets with the prior leave of the Board and to ensure that the Board can implement the requisite scheme under the Act.
4. There shall be no order as to costs of the hearing on the issue of applicability and effect of Section 22 of the Act.
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1991 (4) TMI 316
Issues Involved:
1. Whether the plaintiff continues to be a director of the defendant-company.
2. Whether the plaintiff incurred disqualification u/s 283(1)(g) of the Companies Act.
3. Whether the plaintiff is entitled to an interim injunction.
Summary:
1. Continuation as Director:
The plaintiff sought a declaration that he continues to be a director of the defendant-company and has not incurred any disqualification u/s 283(1)(g) of the Companies Act. The plaintiff also sought a perpetual injunction to restrain the defendant from obstructing him from discharging his duties as a director. The plaintiff argued that he did not receive any written notice regarding the board meetings after October 1989 and thus could not attend them. The defendant contended that the plaintiff and his son deliberately absented themselves from three consecutive board meetings, thereby incurring disqualification under the Companies Act and the company's memorandum and articles of association.
2. Disqualification u/s 283(1)(g):
The court examined whether the plaintiff had incurred disqualification u/s 283(1)(g) for not attending three consecutive board meetings. The plaintiff argued that no written notices were served on him, and he was not given a show-cause notice to explain his absence. The defendant maintained that notices were duly served, and the plaintiff was aware of the meetings. The court held that u/s 283(1)(g), the vacation of office is automatic upon a director's absence from three consecutive meetings without obtaining leave of absence from the board. The court found no requirement for a show-cause notice before deeming the office vacated. The court agreed with the precedent set in Shekhar Mehra v. Kilpest (P.) Ltd., which held that no hearing is required under section 283(1)(g) as the vacation of office is automatic if absence is proved.
3. Interim Injunction:
The plaintiff sought an interim injunction to restrain the defendant from declaring that he had vacated the office of director. The court found no prima facie case in favor of the plaintiff, noting that he did not attend the annual general meeting and remained silent from October 1989 onwards, indicating a lack of interest in the company's affairs. The court also examined article 104B of the memorandum and articles of association, which allows the nomination of directors by those holding not less than 10% of the paid-up equity capital. The court held that the plaintiff alone did not have the authority to nominate directors as he and his associates did not hold the requisite 10% share capital. Consequently, the court dismissed the application for an interim injunction, stating that the plaintiff is not entitled to such relief.
Conclusion:
The court dismissed the plaintiff's application for an interim injunction, holding that the plaintiff did not have a prima facie case and had not demonstrated entitlement to the relief sought. The court's findings were made without prejudice to the final merits of the case, which are yet to be decided.
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1991 (4) TMI 315
Issues:
1. Maintainability of execution of the decree based on agreements after winding up order of a company.
Analysis:
The case involved the execution of a decree by Haryana State Industrial Development Corporation Limited against Transport Corporation of India Limited. The decree was based on a compromise agreement between the parties, where Transport Corporation of India Limited was to take over the shares of Haryana State Industrial Development Corporation Limited in Haryana Detergents Limited. However, before the obligations under the agreement could be fulfilled, Haryana Detergents Limited was ordered to be wound up. Transport Corporation of India Limited objected to the execution of the decree, citing the impossibility of fulfilling the obligations due to the winding up order. The executing court dismissed the objections, stating that the winding up order did not affect the execution of the decree as it was against Transport Corporation of India Limited. The High Court, however, held that the executing court erred in this decision.
The High Court referred to Section 536 of the Companies Act, 1956, which states that in the case of winding up of a company, any transfer of shares or alteration in the status of its members made after the commencement of winding up shall be void. The court emphasized that if Haryana State Industrial Development Corporation Limited could not fulfill its obligations under the agreement due to the winding up order, Transport Corporation of India Limited could not be compelled to make payments as per the agreement in execution of the decree. The court cited the Supreme Court ruling in Jai Narain v. Kedar Nath, AIR 1956 SC 359, which allows the executing court to consider whether the defendant can fulfill their part of the decree when obligations are reciprocal and interlinked.
The High Court concluded that the execution of the decree was not maintainable due to the impossibility of performance arising from the winding up order against Haryana Detergents Limited. The court set aside the order of the executing court, allowing the revision petition by Transport Corporation of India Limited. The decision was made with no order as to costs.
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1991 (4) TMI 314
Issues Involved:
1. Improper assignment or transmission of the registered trademark.
2. Non-application by Eastern Clay Works to the Registry notifying their assignment.
3. Non-use of the trademark by STC.
4. Entitlement of the petitioner to maintain a suit.
5. Dishonesty and public interest.
Detailed Analysis:
1. Improper Assignment or Transmission of the Registered Trademark:
The petitioner argued that STC improperly assigned the registered trademark to Eastern Clay Works without notifying the Registry as required by sections 41 and 44 of the Trade and Merchandise Marks Act, 1958. However, the respondent countered that there was no assignment or transmission of the trademark. The court found that the agreements between STC and Eastern Clay Works were merely licensing arrangements, not assignments. The court held that the use of the trademark by Eastern Clay Works was effectively under the control and supervision of STC, thereby maintaining the trademark's integrity.
2. Non-application by Eastern Clay Works to the Registry Notifying Their Assignment:
The petitioner claimed that Eastern Clay Works did not apply to the Registry to notify their assignment, which violated sections 41 and 44 of the Act. The respondent denied any assignment, asserting that Eastern Clay Works was merely a user of the trademark under STC's supervision. The court agreed with the respondent, stating that the provisions of sections 41 and 44 were not applicable as there was no assignment.
3. Non-use of the Trademark by STC:
The petitioner alleged that STC had not been using the registered trademark and thus it should be canceled under section 46 of the Act. The respondent argued that the use of the trademark by Eastern Clay Works, a subsidiary of STC, constituted use by STC itself. The court found that the use of the trademark by Eastern Clay Works under the supervision and control of STC was sufficient to constitute use by STC. The court cited various legal precedents to support this view, including the Radiation case and GE Trade Mark case, which established that use by a subsidiary could be considered use by the holding company.
4. Entitlement of the Petitioner to Maintain a Suit:
The petitioner argued that only the registered user could maintain a suit against them, and since Eastern Clay Works was not a registered user, the petitioner was entitled to maintain the original petition for rectification. The court found this argument unconvincing, noting that STC, as the registered proprietor, had the right to enforce the trademark and that the use by Eastern Clay Works was under STC's control.
5. Dishonesty and Public Interest:
The petitioner claimed that the trademark should be removed on the grounds of dishonesty by STC and in the public interest. The court found no evidence of dishonesty or public interest concerns that would warrant the cancellation of the trademark. The court noted that the petitioner had adopted a similar "umbrella" mark without explanation, suggesting dishonesty on the petitioner's part.
Conclusion:
The court dismissed both petitions, finding that the petitioners had not made out a case for rectification or cancellation of the trademark. The court held that the use of the trademark by Eastern Clay Works under the supervision and control of STC constituted legitimate use by STC. The petitions were dismissed with costs awarded to the first respondent, STC.
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1991 (4) TMI 295
Issues Involved:
1. Validity of the arbitration clause in the Technical Collaboration Agreement.
2. Requirement of Reserve Bank of India (RBI) permission under Section 28 of the Foreign Exchange Regulation Act (FERA), 1973.
3. Whether the agreement was void ab initio for lack of RBI permission.
4. The effect of SIA approval on the validity of the agreement.
5. Whether the arbitration clause survives if the agreement is declared void.
Detailed Analysis:
1. Validity of the Arbitration Clause:
The principal question was whether the arbitration clause in Article 12 of the Technical Collaboration Agreement was rendered void due to the agreement itself being void for lack of RBI permission under Section 28 of FERA. The court examined the broad scope of the arbitration clause, which included "any claim, dispute or controversy arising out of or relating to this agreement," and concluded that it was wide enough to cover disputes regarding the interpretation and validity of the agreement itself. The High Court had previously held that the arbitration clause does not perish even if the main contract is terminated or rendered void.
2. Requirement of RBI Permission under Section 28 of FERA:
Section 28(1) of FERA mandates that a person or company resident outside India must obtain general or special permission from the RBI to act as a technical or management adviser in India. The court scrutinized whether such permission was indeed obtained. Paragraphs 24A.11 and 25A.2 of the Exchange Control Manual were examined to determine the procedure for securing RBI permission. The court found that the SIA approval and subsequent actions taken by the appellant and respondent indicated substantial compliance with the requirement of RBI permission.
3. Whether the Agreement was Void Ab Initio:
The appellant argued that the agreement was void ab initio due to the lack of RBI permission, as required under Section 28(1) of FERA. The court, however, found that the SIA approval process and the subsequent actions taken by the appellant and respondent, including the remittance of the first installment, indicated that the necessary permissions were effectively in place. The court emphasized that the substance of compliance was more important than the form, and the failure to communicate the RBI's decision was a ministerial lapse that did not nullify the permission granted.
4. Effect of SIA Approval on the Validity of the Agreement:
The court noted that the SIA approval process was designed to streamline permissions and avoid duplication. Once the SIA approved the collaboration and the agreement was "taken on record," it was deemed that RBI permission was also granted. The court found that the SIA approval, followed by the RBI's actions, including the authorization of remittance, constituted substantial compliance with Section 28(1) of FERA.
5. Whether the Arbitration Clause Survives if the Agreement is Declared Void:
Given the court's conclusion that RBI permission was effectively obtained, the question of whether the arbitration clause would survive if the agreement was voided under Section 28(2) became moot. The court did not need to address this issue further as the agreement was not rendered void.
Conclusion:
The Supreme Court dismissed the appeal, holding that the Technical Collaboration Agreement was valid and enforceable as the necessary RBI permission was obtained. The court emphasized that the arbitration clause was wide enough to cover disputes regarding the agreement's validity and that substantial compliance with the procedural requirements was sufficient. The court also expressed disapproval of the appellant's attempt to invalidate a part-performed agreement on hypertechnical grounds, urging the parties to resolve their differences amicably. The appeal was dismissed with costs quantified at Rs. 5,000.
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1991 (4) TMI 294
Issues Involved:
1. Legality of the divestment of shares by public financial institutions.
2. Validity of the consent given by the Controller of Capital Issues for the issue of convertible debentures.
3. Allegations of mala fide actions and fraud on statutory powers.
4. Maintainability of the writ petition as a public interest litigation.
5. Compliance with Articles 14 and 39(b) and (c) of the Constitution.
6. Impact on public interest and economic policy.
Issue-Wise Detailed Analysis:
1. Legality of the Divestment of Shares by Public Financial Institutions:
The petitioners alleged that the transfer of 39 lakh shares of Larsen and Toubro Ltd. (L&T) by public financial institutions (UTI, LIC, GIC) to Trishna Investment and Leasing Ltd., through BOB Fiscal Services Ltd., was arbitrary, illegal, and a fraud on statutory powers. The court examined the sequence of events, noting that BOB Fiscal Services Ltd. acted as a conduit for transferring shares to the Ambani group. The court found that the transfer of shares was conducted in a circuitous manner to benefit the Ambani group, raising doubts about whether the transactions were in the public interest and based on purely business principles.
2. Validity of the Consent Given by the Controller of Capital Issues for the Issue of Convertible Debentures:
The court scrutinized the consent given by the Controller of Capital Issues for the issue of convertible debentures worth Rs. 820 crores by L&T. The petitioners argued that the consent was given in undue haste and without proper consideration of the impact on public interest. The court noted that the Controller of Capital Issues must ensure that public interest does not suffer as a result of the consent granted. However, the court concluded that the consent was given after due consideration and in accordance with the provisions of the Capital Issues (Control) Act, 1947.
3. Allegations of Mala Fide Actions and Fraud on Statutory Powers:
The petitioners alleged that the entire process of share transfer and the subsequent issue of debentures were conducted with mala fide intentions to benefit the Ambani group. The court examined the circumstances and found that the transfer of shares and the issue of debentures raised serious doubts about the propriety and public interest. However, the court did not find sufficient evidence to conclusively establish mala fide actions or fraud on statutory powers.
4. Maintainability of the Writ Petition as a Public Interest Litigation:
The court addressed the maintainability of the writ petition under Article 226 as a public interest litigation. The court referred to previous decisions, including S. P. Gupta v. Union of India and Bandhua Mukti Morcha v. Union of India, to affirm that the writ petition was maintainable as a public interest litigation. The court emphasized the importance of judicial scrutiny in cases involving public interest and economic policy.
5. Compliance with Articles 14 and 39(b) and (c) of the Constitution:
The petitioners argued that the actions of the respondents violated Articles 14 and 39(b) and (c) of the Constitution, which mandate the distribution of material resources to subserve the common good and prevent the concentration of wealth. The court found that the divestment of shares and the issue of debentures were not in violation of these constitutional provisions. The court emphasized the need for public financial institutions to act prudently and in the public interest while making such transactions.
6. Impact on Public Interest and Economic Policy:
The court examined the broader impact of the transactions on public interest and economic policy. The court noted that public financial institutions should consider the implications of their actions on market control and public interest. The court emphasized that the Controller of Capital Issues should ensure that public interest does not suffer as a result of the consent granted for capital issues. The court concluded that while the transactions raised serious concerns, they did not warrant the invalidation of the consent given by the Controller of Capital Issues.
Conclusion:
The court dismissed the writ petitions, finding that the divestment of shares and the issue of debentures, while raising serious concerns, did not constitute arbitrary or illegal actions warranting judicial intervention. The court emphasized the need for public financial institutions to act in the public interest and for the Controller of Capital Issues to ensure that public interest is safeguarded in capital market transactions. The court also dismissed the contempt petitions and interim applications, leaving the parties to bear their own costs.
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1991 (4) TMI 280
Issues Involved:
1. Whether the confiscation of the .32 Bore Revolver is in accordance with the law.
2. Whether the failure to give an option to the appellant for redeeming the revolver on payment of a fine is justified under Section 125 of the Customs Act, 1962.
Detailed Analysis:
Issue 1: Whether the confiscation of the .32 Bore Revolver is in accordance with the law.
The appellant received a .32 Bore Revolver from a relative in England but failed to produce a Customs Clearance Permit (CCP) before clearance. The Assistant Collector issued a Show Cause Notice and subsequently confiscated the revolver under Section 111(d) of the Customs Act, 1962, citing unauthorized importation. The Collector of Customs (Appeals) upheld this decision, noting that the appellant could not furnish the CCP despite being given time. The Tribunal examined the case under Para 158 of the Import & Export Policy 1985-88, which allows gifts from close relations (defined as father, mother, wife, husband, son, daughter, or real brother/sister) living abroad for over two years. The appellant did not claim the sender was a close relation under this definition and admitted to not having a CCP. Thus, the Tribunal found the confiscation justified, referencing a similar decision in P.C. Joshi v. Collector of Customs, New Delhi.
Issue 2: Whether the failure to give an option to the appellant for redeeming the revolver on payment of a fine is justified under Section 125 of the Customs Act, 1962.
The appellant argued that the authorities did not consider Section 125 of the Customs Act, which allows for redemption of confiscated goods on payment of a fine. The Tribunal acknowledged that while the confiscation was legally sound, the authorities failed to exercise discretion under Section 125(1). Past practices and instructions from the Central Board of Excise & Customs indicated that similar items had been released on payment of redemption fines. The Tribunal cited a Calcutta High Court decision emphasizing that such discretion should be exercised fairly and consistently with past practices. The case was remanded to the Assistant Collector for reconsideration, directing him to consider the appellant's plea for redemption in light of relevant circulars and past practices, and to pass a speaking order after hearing the appellant.
Conclusion:
The Tribunal upheld the confiscation of the revolver due to the lack of a CCP and non-compliance with the Import & Export Policy. However, it found merit in the appellant's argument regarding redemption under Section 125 of the Customs Act. The case was remanded to the Assistant Collector for a fresh decision on whether the appellant should be allowed to redeem the revolver on payment of a fine, considering past practices and relevant circulars.
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1991 (4) TMI 279
Issues Involved:
1. Validity of the show cause notice.
2. Admissibility and sufficiency of photostat copies as evidence.
3. Burden of proof and the necessity of expert opinion.
4. Applicability of the extended period for invoking penalty.
5. Examination of shipping bills and the role of customs officers.
Detailed Analysis:
1. Validity of the Show Cause Notice:
The appellant contended that the show cause notice was barred and should have come up by way of revision by higher authorities rather than the Assistant Collector. The appellant relied on decisions reported in 1986 (26) E.L.T. 873 and 1989 (41) E.L.T. 464 to support this contention. The respondent countered by stating that the plea regarding the Assistant Collector issuing the notice was a new plea raised before the Tribunal and that the show cause notice was not barred based on the decision of the Delhi High Court in 1982 (10) E.L.T. 45 and the Tribunal judgment in 1989 (41) E.L.T. 464. The Tribunal found that the question of time bar does not apply because the goods were not seized, and proceedings for penalty can be initiated even after six months.
2. Admissibility and Sufficiency of Photostat Copies as Evidence:
The appellant argued that photostat copies were insufficient to prove guilt and that original documents were necessary. The respondent asserted that the photostat copies were verified by the US Government, confirming that the signatures on the incriminating documents matched those on the shipping bills and invoices submitted by the appellant. The Tribunal noted that the correctness of these letters could be presumed as they were certified by US authorities. However, the appellant denied writing these letters and contended that the signatures were not his. The Tribunal found that no expert opinion was provided to the appellant and that the reliance on such verification was not in accordance with the law.
3. Burden of Proof and the Necessity of Expert Opinion:
The appellant argued that the burden of proof was on the Customs authorities to prove that the appellant exported banned items. The respondent contended that in departmental proceedings, strict proof is not required, and the case should be determined by the probability of the case, citing the Supreme Court decision in Bhormull's case. The Tribunal held that the burden of proof lies with the Customs authorities and that in the absence of expert opinion or concrete evidence, the benefit of doubt should go to the appellant.
4. Applicability of the Extended Period for Invoking Penalty:
The appellant contended that the extended period for invoking penalty could only be applied in cases of willful misstatement, suppression, or fraud, which was not present in this case. The respondent argued that the extended period could be invoked as the goods were not seized, and the proceedings for penalty could be initiated even after a period of six months. The Tribunal found that the extended period could not be applied as there was no evidence of fraud or willful misstatement by the appellant.
5. Examination of Shipping Bills and the Role of Customs Officers:
The appellant argued that the shipping bills showed endorsements stating that the consignments did not contain jungle cock necks and that the Customs officers had examined and passed the consignments. The respondent contended that there was no evidence to show that these shipping bills were produced before the adjudicating authority and that the charges were built on some consignments. The Tribunal found that there was nothing to show that the charges were built on consignments excluding those examined and passed by the Customs officers. The benefit of doubt was given to the appellant.
Conclusion:
The Tribunal concluded that the burden of proof was on the Customs authorities to prove that the appellant exported banned items, which they failed to do. The photostat copies of the documents were not sufficient to establish guilt without the original documents or expert verification. The extended period for invoking penalty was not applicable in the absence of fraud or willful misstatement. The examination and passing of the consignments by the Customs officers further supported the appellant's case. Accordingly, the appeal was allowed with consequential reliefs.
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1991 (4) TMI 272
Issues Involved:
1. Adjustment of refund against confirmed demand.
2. Overriding effect of the Textile Undertaking (Taking Over of Management) Act, 1983 over the Central Excises and Salt Act, 1944.
3. Entitlement of the custodian to receive refunds without liability for pre-takeover debts.
Issue-wise Detailed Analysis:
1. Adjustment of Refund Against Confirmed Demand:
The appellants, a Government of India Undertaking, challenged the adjustment of a refund amount of Rs. 85,071.83 against a confirmed demand of Rs. 1,91,381.80 by the Assistant Collector of Central Excise. The appellants argued that the adjustment was not permissible under the provisions of the Textile Undertaking (Taking Over of Management) Act, 1983 (Take Over Act, 1983), as the refund was due to them post-takeover, while the demand related to a period before the takeover.
2. Overriding Effect of the Take Over Act, 1983 Over the Central Excises and Salt Act, 1944:
The appellants contended that the Take Over Act, 1983, being specific legislation for textile undertakings, should prevail over the general provisions of the Central Excises and Salt Act, 1944 (CESA, 1944). They emphasized Section 3 of the Take Over Act, particularly sub-sections (1), (2), and (7), which vest the management and assets of the textile undertakings in the Central Government while excluding pre-takeover liabilities from being enforceable against the government or the custodian.
3. Entitlement of the Custodian to Receive Refunds Without Liability for Pre-Takeover Debts:
The appellants argued that they were entitled to receive all dues payable to the textile undertakings, including refunds, without bearing the liabilities incurred before the takeover. They cited a legal opinion from the Ministry of Law supporting their stance that the assets vested in the custodian were not liable for pre-takeover debts.
Judgment Analysis:
Adjustment of Refund Against Confirmed Demand:
The Tribunal examined whether the statutory provisions of the Take Over Act, 1983, allowed the appellants to recover dues without corresponding liability for pre-takeover debts. It was noted that both the refund and the demand related to the period before the takeover. However, the Tribunal concluded that the adjustment of the refund against the demand was not permissible, as it would enforce the demand against the custodian, contrary to the provisions of the Take Over Act, 1983.
Overriding Effect of the Take Over Act, 1983 Over the CESA, 1944:
The Tribunal acknowledged that both the Take Over Act, 1983, and the CESA, 1944, were central legislations. However, it emphasized that specific legislation (Take Over Act, 1983) should prevail over general legislation (CESA, 1944) when conflicting provisions exist. The Tribunal held that the provisions of the Take Over Act, 1983, specifically excluded the enforcement of pre-takeover liabilities against the custodian, thereby overriding the general provisions of the CESA, 1944.
Entitlement of the Custodian to Receive Refunds Without Liability for Pre-Takeover Debts:
The Tribunal agreed with the appellants' interpretation of Section 3 of the Take Over Act, 1983. It concluded that the appellants, as custodians, had a statutory right to receive all dues payable to the textile undertakings, including refunds, without being liable for pre-takeover debts. The Tribunal also referred to a similar case involving Tata Mills, where the adjustment was held impermissible, and the Bombay High Court's judgment in National Textile Corporation v. Shramik Janta Union, which supported the appellants' position.
Conclusion:
The Tribunal allowed the appeal, setting aside the order of adjustment of the refund against the confirmed demand. It directed the respondents to pay the sanctioned refund amount to the appellants. The Tribunal's decision was based on the overriding effect of the Take Over Act, 1983, and the statutory entitlement of the custodian to receive refunds without liability for pre-takeover debts.
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