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Showing 101 to 120 of 305 Records
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1995 (9) TMI 288
Whether respondents were entitled to exemption from octroi or not because of what has been stated in clause (i) of the clarification?
Held that:- Appeal dismissed. If the new undertaking by separate and independent production units were to come in existence in the sense of producing a distinct commercial product and the undertaking could be carried on separately, the same would not be treated as being formed by reconstruction of the old business. From the material on record, we are satisfied that unit No. 2 did meet these requirements, and so, exemption could not have been denied, by taking a view that unit No. 2 was not a new industry, because of what has been stated in clause (i) of the clarification.
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1995 (9) TMI 286
Whether the High Court could issue a writ or direction prohibiting a statutory authority, viz., the appellate authority under section 9 of the Uttar Pradesh Sales Tax Act, 1948 from discharging the quasi-judicial functions; direction to the State Government to withdraw all powers from it and transferring the pending cases before the officer to any other authority?
Whether advocates would be justified to go on strike as a pressure group in that behalf?
Held that:- Appeal allowed. Having given our anxious and careful consideration, we are of the considered view that the High Court does not have the aforesaid power. Exercise of such power generates its rippling effect on the subordinate judiciary and statutory functionaries. On slightest pretext by the aggrieved parties or displeased members of the Bar, by their concerted action they would browbeat the judicial officers or authorities, who would always be deterred from discharging their duties according to law without fear or favour or ill-will. Therefore, we hold that writ petition is not maintainable. The impugned orders are clearly and palpably illegal and are accordingly quashed.
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1995 (9) TMI 275
Issues Involved:
1. Direction to convene shareholders' meetings for the proposed scheme of amalgamation.
2. Objections by the Central Government regarding the procedure for reduction of capital.
3. Consent of creditors for the proposed scheme.
4. Compliance with statutory requirements for reduction of capital.
5. Reappointment of the managing director post-amalgamation.
6. Change of name of the transferee company.
7. Sanctioning of the scheme of amalgamation and arrangement.
Issue-wise Detailed Analysis:
1. Direction to Convene Shareholders' Meetings for the Proposed Scheme of Amalgamation:
Company Application No. 46 of 1995 by the transferor-company and Company Application No. 47 of 1995 by the transferee-company were filed under section 391 of the Companies Act, 1956, seeking a direction to convene the meeting of the shareholders for considering the proposed scheme of amalgamation. The scheme included the transfer of business, assets, and liabilities of the transferor-company to the transferee-company and the allotment of shares of the transferee-company to the shareholders of the transferor-company. The court ordered the meetings to be convened, and the shareholders unanimously approved the scheme on 26-4-1995.
2. Objections by the Central Government Regarding the Procedure for Reduction of Capital:
The Central Government, through the Registrar of Companies, raised objections stating that the scheme involved both merger and capital reduction, which required a separate procedure under rules 46 to 65 of the Companies (Court) Rules, 1959. The Registrar highlighted that the consent of all creditors, including unsecured creditors, was necessary. Additionally, the scheme did not comply with the requirement of adding "and capital reduced" to the company's name as per section 102(2) of the Act.
3. Consent of Creditors for the Proposed Scheme:
The managing director of the transferee-company stated that the consent of all creditors, including the IDBI, Canara Bank, and other secured creditors, was obtained for the proposed reduction of share capital. Consent letters from these institutions were annexed to the reply affidavit. The court found that there was no need to call for a separate meeting of the creditors for sanctioning the scheme.
4. Compliance with Statutory Requirements for Reduction of Capital:
The court examined the objections concerning compliance with statutory requirements for reduction of capital. It was noted that the scheme proposed the reduction of the issued, subscribed, and paid-up share capital from Rs. 14.78 crores to Rs. 2.95 crores by canceling the paid-up share capital to the extent of Rs. 8 per share. The reduction was to be followed by the consolidation of shares. The court referred to the decision in Maneckchowk & Ahmedabad Mfg. Co. Ltd., which held that section 391 was a complete code and that procedures for reduction of capital must be complied with. The court found substantial compliance with rule 85 and noted that the creditors had given their consent.
5. Reappointment of the Managing Director Post-Amalgamation:
The Registrar of Companies objected to the continuance of the managing director's tenure post-amalgamation without the approval of the post-amalgamation members. The managing director's tenure was to expire on 9-8-1995, and her reappointment required the sanction of the board of directors and subsequent ratification by the shareholders. The court noted that the necessary sanction would be obtained as and when the scheme was approved.
6. Change of Name of the Transferee Company:
The scheme proposed changing the name of the transferee-company to Novopan Industries Ltd. The Registrar of Companies had made the name available for adoption. The court held that there was no need to delete the clause from the scheme as the change of name could be effected only after the scheme was sanctioned and the necessary approvals were obtained.
7. Sanctioning of the Scheme of Amalgamation and Arrangement:
The court considered the unanimous approval of the scheme by the shareholders and the report of the Official Liquidator, which stated that the affairs of the transferee-company had not been conducted in a manner prejudicial to the interests of its members or public interest. The court found no harm in sanctioning the scheme and confirmed the amalgamation and arrangement, including capital restructuring by way of reduction and consolidation of share capital.
Conclusion:
The scheme of amalgamation as approved unanimously by the shareholders of the transferor and transferee-companies and the arrangement between the transferee-company and its members, including capital restructuring, was sanctioned and confirmed. The transferor-company was directed to be dissolved without being wound up. The parties were given liberty to approach the court for any direction required for carrying out the scheme. Both companies were directed to deliver a certified copy of the order to the Registrar of Companies within 30 days.
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1995 (9) TMI 269
Issues Involved:
1. Jurisdiction and validity of the review application.
2. Finality of the first order dated 24-10-1979.
3. Miscalculation of shareholding percentage.
4. Consideration of subsequent events in the review order.
Issue-wise Detailed Analysis:
1. Jurisdiction and Validity of the Review Application:
The appeal contested the jurisdiction of the Company Court to review its own orders. The argument was that no review application lies and the Company Court has no jurisdiction to review its orders. However, the Court held that the Company Judge can pass orders as required by the facts and circumstances of the case. The Supreme Court's order dated 28-5-1992, made by consent of the parties, waived any technical objections regarding the review application.
2. Finality of the First Order Dated 24-10-1979:
The appellant argued that since Taneja's appeal against the first order dated 24-10-1979 was dismissed, the order had become final. However, the Court found that due to the Supreme Court's directive for fresh consideration, this objection did not survive.
3. Miscalculation of Shareholding Percentage:
The review order dated 18-2-1981 was based on a miscalculation of the shareholding percentages. The Court noted that the shareholding of Jaggi, Uberoi, and Taneja was incorrectly calculated as 60%, whereas it was actually 48%. The Jain Group held 51%, and 1% was miscellaneous. This miscalculation was acknowledged by the Supreme Court, which directed a fresh consideration of the matter.
4. Consideration of Subsequent Events in the Review Order:
The Court examined the subsequent events that influenced the review order. Initially, the Jaggi Group and Jain Group had a combined majority shareholding of 74%, but later, Jaggi Group aligned with Uberoi and Taneja, altering the dynamics. The review order suspended the registration of shares in favor of the Jain Group due to ongoing disputes and the pendency of Suit No. 37 of 1980, which challenged the transfer of shares to the Jain Group. The Court emphasized that the paramount consideration for refusing to register the transfer of shares is the interest of the company and the general interest of the shareholders.
Conclusion:
The Court decided that it would not be appropriate to quash the review order solely based on the principle of majority shareholding due to the fluid situation and the pending litigation challenging the transfer of shares. To protect the interests of the Jain Group and avoid further complications, the Court issued specific directions for the management of the company. The directions included the suspension of certain clauses from the order dated 24-10-1979 until the disposal of Suit No. 37 of 1980 and the reconstitution of the Board of Directors to include representatives from all major groups, with Justice P.N. Khanna continuing as Chairman to safeguard the interests of the Jain Group. The appeal was disposed of with no order as to costs.
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1995 (9) TMI 268
Issues:
1. Contempt of court for not honoring promise and undertaking given in a company petition.
2. Enforceability of consent terms and undertaking under Section 634 of the Companies Act, 1956.
3. Relationship between contempt proceedings and execution process.
4. Allegation of civil contempt for breach of undertaking before the court.
Detailed Analysis:
1. The petition was filed under the Contempt of Courts Act against respondents for not honoring a promise and undertaking made in a company petition. The undertaking by J.P. Patel and P.J. Patel stated that they would be personally liable if the company failed to pay the agreed amount. The petitioner alleged wilful breach of the promise and sought action under the Contempt of Courts Act.
2. The consent terms required the company to pay the principal amount in 12 monthly installments. The respondents' undertaking made them personally liable if the company defaulted. Section 634 of the Companies Act, 1956, allows court orders to be enforced like decrees. The consent terms and undertaking could have been enforced through execution under the Civil Procedure Code.
3. The judgment highlighted that contempt proceedings are not a substitute for the execution process, citing the Supreme Court case of Alhar Co-operative Credit Service Society v. Sham Lai. The petitioner could have executed the order as a decree under the Civil Procedure Code. Contempt proceedings are not intended to be a substitute for execution, making the petition not maintainable.
4. The alleged civil contempt was based on the respondents' failure to honor their undertaking before the court. However, the judgment noted that there was no evidence of the company failing to discharge its liability. Without such evidence, the situation outlined in the undertaking did not become operative. The consent terms were seen as a means to resolve the dispute, with the petitioner retaining the right to revive the petition if the arrangement failed. Therefore, no case of contempt was established against the respondents under the Contempt of Courts Act. The petition was deemed not maintainable and dismissed, with no costs awarded.
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1995 (9) TMI 267
The High Court of Madhya Pradesh heard an appeal under section 483 of the Companies Act, 1956, regarding a petition for winding up of a company. The court allowed an application for an amendment, emphasizing the liberal approach to amendments unless serious injustice is caused. The court did not address the question of the petition's validity, leaving it open for consideration by the company judge. The appeal was dismissed without costs.
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1995 (9) TMI 266
Validity of the complaint made by the Assistant Director of Enforcement Directorate, Government of India, Bombay, against the appellants alleging commission of offences under section 120B of the Indian Penal Code, read with sections 4(1), 4(2), 5(1)(a), 5(1)(aa) and 5(1)(c ) of the Foreign Exchange Regulation Act, 1947, corresponding to section 120B of the Indian Penal Code, read with sections 8(1), 8(2), 9(1)(a), 9(1)(b) and 9(1)(d ) of the Foreign Exchange Regulation Act challenged
Held that:- Appeal dismissed. The complaint being maintainable no interference is called for as in the facts and circumstances of the case, it is not necessary to consider any of such contentions raised by Mr. Mahajan because in the instant case, the complaint has been lodged not only for the violation of. the provisions of the Foreign Exchange Regulation Act, 1947, but also nor an offence under section 120B of the Indian Penal Code. Such complaint of commission of an offence under section. 120B of the Indian Penal Code, in any event, could not have been decided by the departmental authority either under the old Act or under the new Act. Such complaint therefore, was to be made only before the criminal court.
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1995 (9) TMI 265
Issues:
1. Revocation of winding up order
2. Approval of revival scheme
3. Interim stay during winding up proceedings
4. Restraint on official liquidator
5. Feasibility and viability of the revival scheme
6. Bona fides of the scheme
7. Public interest considerations
8. Creditor's interests
Revocation of Winding Up Order:
The case involved the revocation of a winding up order issued in 1986 against a company that had faced financial difficulties. The petitioners sought approval for a revival scheme proposed by T. S. Rai and Associates, which had been accepted by the Industrial Finance Corporation of India. The court directed meetings of shareholders, secured creditors, and unsecured creditors to consider the revival scheme.
Approval of Revival Scheme:
Meetings were held with shareholders, secured creditors, and unsecured creditors to approve the revival scheme. Shareholders and secured creditors supported the scheme, with interest on secured loans waived. Eight out of 12 unsecured creditors approved the scheme, while four opposed it. The official liquidator reported that payments were being made as per the memorandum of understanding.
Interim Stay and Restraint:
During the proceedings, the court granted an interim stay on alienating or disposing of company assets and allowed the usual business operations to continue. The court also directed the official liquidator to hand back possession of assets and books of account to the company's managing director.
Feasibility and Viability of Revival Scheme:
The court assessed the feasibility and viability of the revival scheme, considering factors such as the solvency of the applicants, public interest, commercial morality, and the interests of creditors. The court emphasized the importance of ensuring the scheme was not a cover for misdeeds and that it was just and reasonable.
Public Interest and Creditor's Interests:
In evaluating the scheme, the court considered the welfare of labor, investments made by non-resident Indians, and the support of a significant number of creditors. Despite opposition from some unsecured creditors, the court found no evidence of the scheme lacking feasibility, viability, or bona fides. The court highlighted the importance of providing a chance for rehabilitation to prevent detrimental consequences for creditors and shareholders.
This detailed analysis highlights the court's thorough assessment of the revival scheme, ensuring it was in the best interest of all stakeholders involved and addressing concerns related to public interest, creditor's rights, and the company's financial viability.
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1995 (9) TMI 264
Issues Involved:
1. Whether the petition filed under section 155 of the Companies Act is maintainable.
2. Whether the claim that the petitioner is owner of shares consequent to the extinguishment of the trust declared by Mr. A.V. Reddy can be enquired into and a declaration granted in a petition under section 155 of the Companies Act, 1956.
3. Whether the trust declared by Mr. A.V. Reddy was extinguished and the consequences thereof.
4. Whether the rectification can be granted as prayed for.
Issue-wise Detailed Analysis:
Issue No. 1: Maintainability of the Petition under Section 155 of the Companies Act
The respondents raised a preliminary objection that the petition does not fall within the scope of section 155 of the Companies Act, 1956. They argued that the section refers only to the rectification of the name of any person and since the petition does not deal with the name of the shareholder which is recorded as Anam Venkat Reddy, no order can be passed under this section. Additionally, they contended that the section provides for a decision on any question relating to the title of the person who wants to have his name entered or omitted from the register, and since the application does not seek such prayer, it is not maintainable. Furthermore, they argued that no notice of any trust can be entered in the register of members under section 153, thus the notice of such trust entered under section 187C cannot be regarded as part of the register of share members amenable to rectification.
The petitioners countered that the section had to be construed liberally as a beneficial legislation to ensure that the real owner of the share finds his place in the register of members. They argued that section 155 is not merely a summary procedure and should be invoked in this case due to the absence of any other remedy against the erroneous recording of beneficial interests under section 187C.
The court held that the petition is maintainable. It was noted that section 155 should be liberally construed to ensure the register of members reflects the true and correct members of the company and their status as declared under section 187C. The court emphasized that the essential purpose of section 155 is to correct errors in the register of members, including the capacity or status of the person as declared under section 187C.
Issue No. 2: Declaration of Ownership of Shares
The court found that the provisions of section 83 come into operation only if there is an extinguishment of trust under section 77. Since the court found that there was no extinguishment of the trust, there was no question of reversion of the trust property to the author. The trust property was declared to be the sum of Rs. 1,116, and the shares were purchased with borrowed funds, forming part of the corpus of the trust but not originally belonging to the author of the trust.
The court concluded that no part of the trust could be treated as the property of the third respondent and he could not declare any beneficial interest in the property for himself. However, the petitioners could not be declared the owners of the shares as they were only entitled to the distribution of income and not the corpus. The court held that section 155 provides only for rectification of an entry in the register of members and not for a declaration of title.
Issue No. 3: Extinguishment of the Trust
The primary question was whether the trust was extinguished. Section 77 of the Indian Trusts Act, 1882 states that a trust is extinguished when its purpose is completely fulfilled, becomes unlawful, becomes impossible to fulfill by destruction of the trust property, or is expressly revoked if revocable. The respondents contended that the trust property must be considered unavailable due to the value of the shares being less than the amount of the loan and interest outstanding, thus extinguishing the trust.
The court held that the trust property existed and was not destroyed. The word "destruction" was interpreted to mean that the property has gone out of existence and is unavailable for distribution. The court found that the shares existed, though burdened with debt, and the trust could not be considered extinguished. The trust deed indicated that the trust was non-discretionary and irrevocable, and the beneficiaries had rights to the income and corpus.
The court concluded that the trust was not extinguished by operation of law and the third respondent could not declare the trust extinguished based on an estimated value of the shares being less than the outstanding liability.
Issue No. 4: Rectification of the Register of Members
The original declaration under section 187C was given by the third respondent, and the register of members initially read as follows: "Sri Anam Venkata Reddi, Chairman, Anam Venkata Reddi Family Trust, Kadiyam." After the execution of the extinguishment deed, the entry was changed to: "Transmitted to Sri A.V. Reddi (individual) on extinguishment of the trust."
The court held that even if a declaration was made under section 187C(3), the entry in the register could not be changed without the matter being considered by the board of directors. The principles of natural justice required that the persons whose names were registered as having beneficial interests be notified and their objections taken before recording the declaration under section 187C(3).
The court ordered the rectification of the entries newly made at folios 38 and 39 by deleting the words "transmitted to A.V. Reddi (individual) on extinguishment of the trust" and directed that the original entries remain intact.
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1995 (9) TMI 263
Issues:
- Applicability of section 163(6) of the Companies Act, 1956
- Validity of the impugned order by the Company Law Board
- Justifiability of the demand for advance payment by the appellant-company
- Timeframe for supplying copies and practical difficulties faced by the appellant-company
- Modification of the impugned order
- Challenge to the vires and validity of section 163(3) and (4) of the Companies Act
Analysis:
The judgment in this case revolves around an appeal against an order issued by the Company Law Board, Western Region Bench, Bombay, concerning the appellant-company's refusal to provide extracts from the register of its members to the respondent. The respondent had requested the extracts, but a dispute arose regarding the advance payment demanded by the appellant for preparing the copies. The Company Law Board directed the appellant to quantify the amount payable by the respondent and subsequently provide the copies within a specified timeframe. The appellant challenged the order, arguing that the demand for advance payment was justified due to the voluminous work involved in preparing the copies.
The appellant contended that the time frame given by the Company Law Board to supply the copies was inadequate considering the practical difficulties faced by the company. The appellant highlighted the substantial number of members in the company and the time required to prepare the copies, suggesting that the given timeframe was unreasonable. The judgment acknowledged the practical challenges faced by the appellant and emphasized the statutory obligation to provide copies upon request, subject to reasonable charges.
The judgment delved into the specifics of preparing the copies, considering the number of members and the cost implications. It was suggested that the appellant could either charge Rs. 2,280 for typed copies to be provided within six months or Rs. 3,800 for xerox copies to be supplied within two weeks. The court modified the impugned order accordingly, providing these options to the respondent for obtaining the copies.
Furthermore, the judgment briefly addressed the challenge to the vires and validity of sections 163(3) and (4) of the Companies Act, noting that it was not necessary to delve into this issue for the disposal of the appeal. The court left this question open for future consideration, focusing primarily on the specific matter at hand.
In conclusion, the appeal was partially allowed, and the impugned order was modified to provide a reasonable timeframe and payment options for the respondent to obtain the copies of the register of members. The judgment emphasized the balance between statutory obligations and practical constraints faced by the company in fulfilling such requests, ultimately aiming to resolve the dispute effectively.
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1995 (9) TMI 247
Issues Involved:
1. Interaction between proceedings under Section 52 and Section 57 of the Foreign Exchange Regulation Act, 1973.
2. The impact of pending appeals on the prosecution under Section 57.
3. The obligations of the Appellate Board regarding the disposal of appeals and applications for dispensing with the pre-deposit of penalties.
4. The discretionary powers of the criminal court in handling prosecutions under Section 57.
Issue-wise Detailed Analysis:
1. Interaction between Proceedings under Section 52 and Section 57 of the Foreign Exchange Regulation Act, 1973:
The court discussed the relationship between Section 52, which deals with appeals against adjudication orders and the dispensation of penalty deposits, and Section 57, which pertains to prosecution for failure to pay penalties. It was argued that there is no direct interaction between these sections, and the pendency of an appeal under Section 52 does not bar prosecution under Section 57. The court held that the right of appeal and the right to prosecute must be harmoniously construed to ensure neither is rendered ineffective.
2. The Impact of Pending Appeals on the Prosecution under Section 57:
The court reviewed various precedents and concluded that the pendency of an appeal does not automatically bar prosecution. It cited the Supreme Court's decision in P. Jayappan v. S.K. Perumal, ITO, which established that criminal prosecution can proceed independently of reassessment or appeal proceedings. The court emphasized that the prosecution launched under Section 57 cannot be deemed premature solely because an appeal or application for dispensing with the pre-deposit of the penalty is pending.
3. The Obligations of the Appellate Board Regarding the Disposal of Appeals and Applications for Dispensing with the Pre-deposit of Penalties:
The court highlighted the statutory obligation of the Appellate Board to expeditiously dispose of appeals and applications for dispensing with the pre-deposit of penalties. It stressed that the Board must act without undue delay to ensure the rights of appellants are not prejudiced. The court noted that the Appellate Board should devise procedures to handle these applications within a reasonable time frame to prevent arbitrary enforcement of Section 57.
4. The Discretionary Powers of the Criminal Court in Handling Prosecutions under Section 57:
The court affirmed that the criminal court has discretionary power to adjourn or postpone proceedings if the outcome of an appeal under Section 52 could impact the prosecution. However, this discretion must be exercised judicially to avoid frustrating the objectives of the criminal proceedings. The court also acknowledged that if an appeal results in the setting aside of the adjudication order, it would significantly influence the prosecution, potentially leading to the dropping of charges.
Conclusion:
The court set aside the order of the learned single judge, dismissed the writ petition, and clarified that the criminal court retains the discretion to handle prosecutions under Section 57 in light of pending appeals. The Appellate Board must act promptly on appeals and applications for dispensing with pre-deposits to ensure justice and effective operation of the law.
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1995 (9) TMI 229
Issues:
1. Validity of the letter issued by defendant No. 1
2. Application for ad interim injunction
3. Arbitration clause in the memorandum and articles of association
4. Suspension of a member under article 99E
5. Alleged violation of bye-laws 350(xii)
Analysis:
1. The case involves a suit filed by a partnership firm against the Delhi Stock Exchange Association Ltd. challenging the legality of a letter issued by the defendant. The plaintiffs sought a declaration that the letter was illegal, null, void, and vitiated by malice, along with a permanent injunction against the defendant. An application for an ad interim injunction was filed under Order 39, rules 1 and 2 of the Code of Civil Procedure, 1908, to restrain the defendant from taking any action based on the letter until the suit's disposal.
2. Despite service being reported, some defendants did not appear on the specified date, leading to a request for an adjournment by the counsel for other defendants. The dispute arose between the plaintiff and defendant No. 4, both being members of the defendant No. 1, governed by an arbitration clause in the association's memorandum and articles. The plaintiff contested the amount claimed by defendant No. 4, leading to a special audit and the issuance of the contentious letter, threatening suspension and demanding payment within seven days.
3. The court analyzed the relevant provisions, including article 127 and article 99E of the association's rules. It emphasized the importance of arbitration in resolving disputes and highlighted the need for a factual determination of the claimed amount before disciplinary action could be taken. However, the court noted a potential violation of bye-laws 350(xii) regarding the failure to report transactions, which could justify action under article 99E.
4. The court ruled that no action should be taken under article 99E or bye-laws 350(xii) concerning the claimed amount until further orders. However, it declined to stay action based on the alleged violation of bye-laws 350(xii, indicating a nuanced approach to the different aspects of the dispute. The judgment emphasized that the decision did not reflect an opinion on the case's merits, ensuring impartiality in the ongoing legal proceedings.
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1995 (9) TMI 228
Issues Involved:
1. Application of second proviso to subsection (1) of section 394 of the Companies Act, 1956.
2. Necessity of the official liquidator's report for dissolution without winding up.
3. Role and appointment of the official liquidator under section 448 of the Companies Act, 1956.
Detailed Analysis:
1. Application of Second Proviso to Subsection (1) of Section 394 of the Companies Act, 1956
The primary issue in these appeals is the application of the second proviso to subsection (1) of section 394 of the Companies Act, 1956, in the context of an application made under section 391 for the amalgamation of two companies, where the order is to be passed for dissolution without winding up of the transferor-company. The court clarified that sections 391 and 394 must be read together. Section 391 allows the court to sanction a scheme of amalgamation without the company first being wound up. Section 394 sets out the procedure, including the necessity for a report from the official liquidator, ensuring that the affairs of the company are not conducted in a manner detrimental to the interests of shareholders or public interest.
2. Necessity of the Official Liquidator's Report for Dissolution Without Winding Up
The court emphasized that no order for the dissolution of any transferor-company shall be made by the court unless the official liquidator has scrutinized the books and papers of the company and reported that the affairs have not been conducted prejudicially. The court rejected the appellants' contention that the order for dissolution without winding up is not required if the scheme prescribes merger. The court held that amalgamation inherently involves the dissolution of the transferor-company, necessitating the official liquidator's report as per the second proviso to subsection (1) of section 394.
3. Role and Appointment of the Official Liquidator Under Section 448 of the Companies Act, 1956
The court addressed the submission that the official liquidator's role is limited to the winding up of companies by the court. The court clarified that section 448 provides for the appointment of an official liquidator for each High Court, and the official liquidator's principal function is related to winding up. However, this does not preclude the official liquidator from performing other duties as prescribed by the Act. The second proviso to subsection (1) of section 394 specifically demands the official liquidator's report for the dissolution of a company without winding up, indicating that the official liquidator's role extends beyond mere winding up.
Conclusion
The court upheld the impugned order passed by the Company Judge, which required the official liquidator to file a report under the second proviso to subsection (1) of section 394 for the transferor-companies not in liquidation. The court found no merit in the appeals and dismissed them without any order as to costs. The judgment reinforces the necessity of the official liquidator's report in the dissolution process and clarifies the broader role of the official liquidator under the Companies Act, 1956.
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1995 (9) TMI 227
Issues Involved:
1. Legality of the notice calling for the 25th annual general meeting.
2. Implementation of resolutions Nos. 10, 11, and 12.
3. Allegations of oppression and mismanagement.
4. Validity of the adjournment of the meeting.
5. Deployment of funds for the beer project.
6. Preferential allotment of shares to non-resident Indians and overseas corporate bodies.
7. Approval and implementation of resolutions by shareholders.
Issue-wise Detailed Analysis:
1. Legality of the Notice Calling for the 25th Annual General Meeting:
The appellants challenged the legality of the notice issued for the 25th annual general meeting scheduled for September 12, 1994, arguing that the notice was illegal, void, and unenforceable. The court found that the respondents had given an undertaking to defer the consideration of resolutions Nos. 10, 11, and 12 until further orders, allowing the meeting to proceed with other resolutions. The Supreme Court permitted the meeting to take place but directed that the results of the voting on the disputed resolutions be kept confidential until further orders.
2. Implementation of Resolutions Nos. 10, 11, and 12:
The appellants sought to restrain the implementation of these resolutions. Resolution No. 10 pertained to the utilization of proceeds from a rights issue for a beer project. Resolution No. 11 involved the issuance of shares to non-resident Indians and overseas corporate bodies. Resolution No. 12 aimed to increase the stake of existing promoters. The court found that the resolutions were passed with overwhelming support from shareholders, including financial institutions holding substantial stakes in the company.
3. Allegations of Oppression and Mismanagement:
The appellants alleged acts of oppression and mismanagement by the respondents, including attempts to rectify the share register to exclude the appellants. The court noted that the Company Law Board and the Central Government were already investigating these allegations. The court held that the pendency of these proceedings could not stall the implementation of the resolutions.
4. Validity of the Adjournment of the Meeting:
The appellants contended that the adjournment of the meeting for consideration of resolution No. 12 was illegal as it was done without a proper motion or consent of the shareholders. The court found that the proceedings of the meetings were duly recorded, and the appellants had not raised any objections to the minutes. The court upheld the validity of the adjournment and the subsequent meeting held on March 20, 1995.
5. Deployment of Funds for the Beer Project:
The appellants argued that funds earmarked for other projects were diverted for the beer project without shareholder approval. The court found that the beer project had been approved by the lead institution (ICICI), debenture holders, and the shareholders. The court noted that the project was already in progress, and substantial sums had been invested. The court rejected the appellants' request to keep the funds in a separate bank account.
6. Preferential Allotment of Shares to Non-resident Indians and Overseas Corporate Bodies:
The appellants argued that private placements in a rights issue were contrary to the guidelines issued by the Securities and Exchange Board of India (SEBI). The court found that the SEBI had permitted the company to determine the terms of the issue, including pricing, after obtaining shareholder consent. The court noted that the shares were allotted at a high price, benefiting the company and its members.
7. Approval and Implementation of Resolutions by Shareholders:
The court emphasized the importance of corporate democracy and the role of shareholders in managing the company's affairs. The court found that the resolutions were passed with overwhelming support from shareholders, including financial institutions. The court held that it was not for the court to interfere with the decisions of the shareholders, especially when the appellants had participated in the meetings and failed to convince the majority.
Conclusion:
The court dismissed all the appeals, upholding the validity and implementation of resolutions Nos. 10, 11, and 12. The court emphasized the principles of corporate democracy and the role of shareholders in managing the company's affairs. The court found that the appellants had not established a prima facie case for the grant of injunction and that the balance of convenience lay in favor of the respondents. The court held that the implementation of the resolutions was essential for the company's progress and development.
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1995 (9) TMI 226
Whether no distinction can be made between transfer of share of a limited company limited by shares and transfer of other interest of a member in a company limited by guarantee?
Held that:- The High Court should have examined all these relevant aspects and ought not to have disposed of the matter by merely observing that no distinction can be made in the matter of transfer of share or other interest between a company limited by shares and a company limited by guarantee. We, therefore, set aside the judgment and order passed by the High Court in Company Appeal No. 1 of 1991 and in Civil Review No. 55 of 1992 and remit the matter back to the High Court for deciding the appeal afresh after hearing both the sides and considering all the relevant aspects. It is clarified that it will also be open to the parties to raise their contentions regarding fulfilment of the requirements of section 108 of the Act.
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1995 (9) TMI 225
Issues Involved:
1. Quashing of proceedings under section 482 of the Code of Criminal Procedure.
2. Allegations of wrongful withholding of property under section 630 of the Companies Act, 1956.
3. Determination of whether the matter is a civil wrong or a criminal offense.
4. Evaluation of the memorandum of understanding and its impact on the case.
Issue-wise Detailed Analysis:
Quashing of Proceedings under Section 482 of the Code of Criminal Procedure:
The petitioner sought the quashing of proceedings in S.T.C. No. 594 of 1995 on the file of the Judicial Magistrate No. VI, Coimbatore. The court considered whether the complaint of the respondent was liable to be quashed under section 482 of the Code of Criminal Procedure. The petitioner argued that the complaint was an abuse of the process of the court and was filed to harass and coerce him. The court, however, found that it was not appropriate to quash the proceedings at this stage as the allegations in the complaint needed to be evaluated during the trial.
Allegations of Wrongful Withholding of Property under Section 630 of the Companies Act, 1956:
The respondent filed a complaint alleging that the petitioner, a former managing director, wrongfully retained properties belonging to the respondent-company after ceasing to be the managing director. The properties included a Hindusthan Contessa car, a diesel generator set, computers, and an automatic exhaust gas analyser. The court noted that section 630 of the Companies Act makes it an offense for any officer or employee of a company to wrongfully withhold or misapply company property. The court emphasized that the wrongful retention of company property is punishable under section 630 and that the petitioner had no right to retain the properties after ceasing to be an officer of the company.
Determination of Whether the Matter is a Civil Wrong or a Criminal Offense:
The petitioner contended that the allegations amounted to a civil wrong and not a criminal offense. The court, however, highlighted that criminal law and civil law can run side by side and are not mutually exclusive. The court referred to the Supreme Court's decision in Pratibha Rani v. Suraj Kumar, which stated that providing a civil remedy does not take away the right to file a criminal complaint. The court concluded that the allegations in the complaint, if proven, would constitute an offense under section 630 of the Companies Act and that the matter could not be dismissed as merely a civil wrong.
Evaluation of the Memorandum of Understanding and Its Impact on the Case:
The petitioner relied on a memorandum of understanding dated July 15, 1994, to assert his rights over the disputed properties. The court, however, found it inappropriate to consider the memorandum at this stage without legal proof. The court emphasized that disputed questions of fact, such as whether the memorandum could bind the corporate body and whether the petitioner's possession of the properties was wrongful, could only be decided during the trial. The court declined to evaluate the genuineness or credibility of the memorandum at this stage, stating that these were matters of evidence to be addressed during the trial.
Conclusion:
The court dismissed the petition for quashing the proceedings, stating that the allegations in the complaint needed to be evaluated during the trial. The court found that the petitioner had an opportunity to present his contentions during the trial and that no prejudice would be caused to him by allowing the proceedings to continue. Consequently, the court also dismissed the related Criminal Miscellaneous Petitions Nos. 1861 and 1862 of 1995.
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1995 (9) TMI 200
Issues:
Appeals filed against Collector of Central Excise (Appeals) orders. Modvat credit on re-rollable material. Allegations of taking credit without proper documents/payment. Deemed credit transfer. Description of inputs as melting scrap. Allegations of irregularities in Modvat credit. Endorsed gate passes. Admissibility of deemed credit.
Analysis:
The judgment involves four appeals by M/s. Vimal Alloys Pvt. Ltd. against Collector of Central Excise (Appeals) orders. The main issue revolves around the Modvat credit on re-rollable material used in the manufacturing process. The appellant received inputs under endorsed gate passes through third parties, leading to allegations of irregularities in taking the Modvat credit without proper documentation or approval. The appellant's defense was based on the description of inputs as melting scrap, which they argued was appropriate based on their manufacturing process. The Tribunal considered whether the inputs received were actually used in the manufacture of final products and the admissibility of deemed credit under the Modvat scheme.
In Appeal No. 3185, the allegations included taking Modvat credit on slab end cuttings, transfer of deemed credit, and the suitability of various materials as inputs. In Appeal Nos. 3186, 3187, and 3188, the issues involved the absence of proper declaration under Rule 57G, lack of documents for central excise duty payment, and permission/approval for taking credit. The appellant contended that all inputs were fit for melting and had been used in the manufacturing process, justifying their claim for Modvat credit.
The Tribunal examined the specifics of the inputs received by the appellant and their utilization in the manufacturing process. It was noted that the description of inputs as melting scrap was crucial in determining the eligibility for Modvat credit. The Tribunal considered the provisions of Rule 57G and the requirement for proper documentation and approval for claiming credit. The judgment emphasized the actual use of inputs in the manufacturing process and the relevance of the description provided by the appellant in their declaration.
Regarding inputs purchased before 7-4-1986, the Tribunal found that the lack of documents evidencing central excise duty payment rendered the credit inadmissible. The appellant's request for ex post facto permission was not considered valid, leading to the rejection of credit related to inputs purchased prior to the specified date. However, in other aspects of the case, the Tribunal found merit in the appeals and ordered their acceptance.
In conclusion, the Tribunal confirmed the rejection of credit related to inputs purchased before 7-4-1986 but accepted the appeals on other grounds. The judgment highlighted the importance of proper documentation, accurate description of inputs, and their actual utilization in the manufacturing process for claiming Modvat credit.
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1995 (9) TMI 199
Issues:
1. Refund of central excise duty at normal rates instead of concessional rates.
2. Justification of adjustment of demand against refund claim.
3. Validity of plea of unjust enrichment.
4. Interpretation of Rule 57E of the Central Excise Rules, 1944.
5. Applicability of Central Excises and Customs Laws (Amendment) Act, 1991 to pending refund applications.
Analysis:
1. The case involved a dispute regarding the refund of central excise duty paid at normal rates instead of the concessional rates applicable to small scale manufacturers. The appellant, M/s. Oscar Televideo Pvt. Ltd., filed a refund claim for the excess duty paid, which was partially sanctioned by the Asstt. Collector of Central Excise but later annulled by the Collector of Central Excise (Appeals), New Delhi.
2. The appellant argued that the adjustment of demand against the refund claim was not justified, citing a Tribunal case and a Supreme Court decision. The Collector of Central Excise (Appeals) had annulled the refund on grounds that the Modvat credit amount was deducted from the total refund claim, which was deemed erroneous without providing a legal basis for the decision.
3. The validity of the plea of unjust enrichment was contested by the appellant, asserting that the bar of unjust enrichment did not apply to their case as the refund application had been disposed of before the relevant date. The appellant also highlighted a Calcutta High Court decision to support their argument.
4. The Tribunal analyzed Rule 57E of the Central Excise Rules, 1944, which governs the adjustment of duty paid on inputs when a refund is granted. It was noted that there was no legal impediment for the refund to the manufacturer of the inputs, and the adjustment of Modvat credit by the appellants did not render the refund erroneous.
5. The Tribunal considered the applicability of the Central Excises and Customs Laws (Amendment) Act, 1991 to pending refund applications. The Tribunal emphasized that the refund claim in this case had been disposed of before the relevant date, and no conditions were attached to the refund issued to the appellant, making the plea for unjust enrichment inapplicable.
6. Ultimately, the Tribunal set aside the order of the Collector of Central Excise (Appeals) and accepted the appeal of M/s. Oscar Televideo Pvt. Ltd., directing accordingly for the refund of the excess central excise duty paid at normal rates.
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1995 (9) TMI 198
Issues Involved:
1. Classification of Lip Salve
2. Eligibility for Notification Benefits
3. Abatement of Duty
4. Prospective Demand of Duty
Summary:
1. Classification of Lip Salve:
M/s. Alpine Industries classified Lip Salve u/s 3003.20 of the Central Excise Tariff as a medicament. The Department contended it should be under Heading 3304.00, subject to duty @ 105% ad valorem. The Principal Collector agreed with the Department's classification but extended the benefit of Notification No. 339, dated 22-8-1986. The Tribunal upheld the classification under Heading 3304.00, stating the product did not meet the requirements of Note 2 of Chapter 33 and lacked therapeutic or prophylactic properties.
2. Eligibility for Notification Benefits:
The manufacturer later claimed the benefit of Notification 27-C.E., dated 20-3-1990, under Heading 3304.00. The Assistant Collector denied this benefit, and the decision was upheld by the Collector, Central Excise (Appeals). The Tribunal confirmed that after the amendment of Notification 27 in 1990, the benefit was not available.
3. Abatement of Duty:
The Tribunal agreed with the appellant that in arriving at the assessable value, the duty element should be excluded, referencing the Supreme Court judgment in Bata Shoe Co. v. Collector of Central Excise. This matter was remanded to the Assistant Collector for recalculating the duty after allowing abatement.
4. Prospective Demand of Duty:
The Tribunal ruled that the demand should be prospective from the date of the show cause notice, following the Supreme Court judgment in Rainbow Industries v. Union of India. The Principal Collector's order to demand duty for a period prior to the show cause notice was modified accordingly.
Separate Judgment by Member (J):
Member (J) S.L. Peeran concurred with the classification under Heading 3304.00 but differed on the duty confirmation for six months, referencing the Supreme Court ruling in Ballarpur Industries Ltd. v. Collector of Central Excise. He upheld the duty confirmation for six months and the penalty imposed.
Vice President's Opinion:
Vice President S.K. Bhatnagar disagreed with the majority, classifying the product under Heading 30.03 as a medicament. He remanded the matter to the Assistant Collector for reclassification and determination of the sub-classification and effective rate of duty.
Final Order:
The majority opinion confirmed the classification and rate of duty under Heading 3304.00, with duty demand limited to six months prior to the show cause notice, pending recalculation of assessable value. The penalty imposed was also confirmed.
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1995 (9) TMI 197
Issues Involved:
1. Whether the process of purification of chemicals by distillation and recrystallisation amounts to "manufacture" u/s 2(f) of the Central Excises and Salt Act, 1944.
2. Whether the purified chemicals are distinct commercial commodities from the raw materials.
Summary:
1. Process of Purification as Manufacture:
The appellants, a Central Excise licensee, filed a classification list effective from 1-4-1983, declaring laboratory and fine chemicals under Tariff Item 68. The dispute arose regarding the purification of bought-out chemicals by distillation/recrystallisation. The appellants argued that this process does not amount to "manufacture" u/s 2(f) of the Central Excises and Salt Act, 1944, as no new product with a distinct name, character, and use emerged. The Assistant Collector initially agreed, but the Collector (Appeals) reversed this decision, stating that the purified products have distinct identities and uses compared to the raw materials.
2. Distinct Commercial Commodities:
The appellants contended that the purified chemicals retained the same name, character, and use as before purification. They argued that the increase in purity levels was marginal and did not result in a new product. The Tribunal, in its earlier decision, agreed with the appellants, but the Revenue appealed to the Supreme Court, which remitted the matter for fresh consideration. The Tribunal, upon rehearing, reaffirmed that the purification process did not result in a new commercial commodity, emphasizing that the chemicals' names, compositions, and uses remained unchanged.
Legal Precedents and Reasoning:
The Tribunal referenced several legal precedents, including Union of India v. Delhi Cloth Mills, South Bihar Sugar Mills v. Union of India, and Empire Industries Ltd. v. Union of India, which established that "manufacture" implies the creation of a new and distinct article. The Tribunal concluded that the purification process did not meet this criterion, as the chemicals remained essentially the same before and after purification. The Tribunal also noted that imposing excise duty on the purified chemicals would amount to double taxation, as they would still be classified under the same tariff heading.
Conclusion:
The Tribunal held that the process of distillation and recrystallisation undertaken by the appellants does not amount to "manufacture" u/s 2(f) of the Central Excises and Salt Act, 1944, as no new commercial commodity with a distinct name, character, or use emerged from the process. The appeal was allowed, and the impugned order was set aside.
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