|
Advanced Search Options
Case Laws
Showing 121 to 140 of 364 Records
-
1995 (11) TMI 358
Exigibility to sales tax on the transactions in question challenged on the ground that the sale was in the course of export.
Held that:- Appeal allowed. It would not be just and proper to deny relief to the appellant, which is otherwise due, on the ground that earlier it had only assailed the question of exigibility to tax. It is correct that the plea now taken could have been advanced earlier as well, but the fact this was not done, should not be a ground to deny the relief which is otherwise due to the appellant. The technical plea of constructive res judicata should not stand in the way of the appellant in a case of the present nature.
-
1995 (11) TMI 352
Issues Involved
1. Legality of the search and seizure conducted by the Enforcement Directorate under the Foreign Exchange Regulation Act (FERA).
2. Validity of the arrest and detention of the petitioners by the Enforcement Directorate.
3. Timeliness and validity of the show-cause notice issued by the Enforcement Directorate.
4. Constitutionality of Section 40 of the FERA.
5. Return of the seized currency and other documents.
6. Allegations of mala fide actions and procedural violations by the Enforcement Directorate.
Detailed Analysis
1. Legality of the Search and Seizure
The petitioners argued that the search and seizure conducted on May 10, 1994, were illegal, lacking "reason to believe" as required under Section 37 of the FERA. They contended that the Enforcement Officers acted without credible information, and the search was a fishing expedition. The respondents countered by stating that the search was based on reliable information and conducted in accordance with the law. The court examined the legal standards for "reason to believe" and concluded that the Enforcement Officers had sufficient grounds for their actions. The court noted that the belief must be held in good faith and cannot merely be a pretense. The court found that the respondents had a reasonable belief based on the materials available to them, and the search and seizure were justified.
2. Validity of the Arrest and Detention
The petitioners claimed that they were illegally arrested and detained for over 30 hours without being produced before a Magistrate, violating Article 21 of the Constitution and Section 35 of the FERA. The respondents denied these allegations, stating that the petitioners were summoned for questioning and were not arrested. The court noted that the second petitioner in W.P. No. 9539 of 1994 did not file an affidavit alleging arrest or detention, and the petitioners in W.P. No. 9380 of 1994 were summoned and not detained. The court found no evidence to support the claim of illegal detention and concluded that the Enforcement Officers acted within their powers.
3. Timeliness and Validity of the Show-Cause Notice
The petitioners argued that the show-cause notice issued on October 20, 1994, but served only on January 11, 1995, was beyond the six-month period and therefore invalid. The respondents contended that the notice was issued within the stipulated time, and the delay in service was due to the petitioner's non-availability. The court held that the issuance of the show-cause notice within six months was sufficient to initiate proceedings, and the delay in service did not invalidate the notice. The court relied on the presumption of service of a letter sent under registered cover and found no fault with the respondents' actions.
4. Constitutionality of Section 40 of the FERA
Although the petitioners initially questioned the constitutionality of Section 40 of the FERA, they reserved this argument to be raised in another case. Consequently, the court did not address the constitutionality of Section 40 in this judgment.
5. Return of the Seized Currency and Other Documents
The petitioners sought the return of the seized currency, arguing that it represented legitimate trade balance and that the Enforcement Directorate had no authority to retain it. The respondents maintained that the currency was seized based on reasonable belief of a violation of the FERA. The court found that the seizure was justified and that the currency could be retained for the purpose of adjudication. The court also noted that Indian currency is considered a "document" under the FERA for the purposes of search and seizure.
6. Allegations of Mala Fide Actions and Procedural Violations
The petitioners alleged that the Enforcement Officers acted with mala fide intentions, violated procedural fairness, and misused their powers. The court examined these allegations and found that the Enforcement Officers acted in good faith and within the scope of their statutory powers. The court dismissed the claims of mala fide actions and procedural violations, concluding that the Enforcement Directorate's actions were lawful and justified.
Conclusion
The court dismissed Writ Petition No. 9380 of 1994, Writ Petition No. 9539 of 1994, and Writ Appeal No. 679 of 1995, finding no merit in the petitioners' claims. The court upheld the legality of the search and seizure, the validity of the show-cause notice, and the actions of the Enforcement Directorate. The court also dismissed the miscellaneous petitions filed in connection with the main writ petitions.
-
1995 (11) TMI 350
The High Court of Rajasthan disposed of applications under section 446(2) of the Companies Act by directing RIICO and RFC to remain out of liquidation proceedings. RIICO to sell property under supervision of the official liquidator. Sale proceeds to be deposited in court for distribution. Applications disposed of accordingly.
-
1995 (11) TMI 342
Whether the respondent-unit qualifies as a "new unit" within the meaning of Explanation (i) to sub-section (2) of section 4-A of the U.P Sales Tax Act?
Held that:- Appeal allowed. There is no room for contention of Sri Dhaon in view of the specific language of clause (a). The clause uses all the three words-machinery, accessories or components. The use of the word "or" indicates that use of either of them, which are already used or acquired for use in any other factory or workshop in India, would disqualify the factory or workshop from being called a "new unit" within the meaning of section 4-A. The clause does not say or indicate in any manner that only where the entire machinery installed in the unit (claiming to the new unit) has already been used or was acquired for use in any other factory or workshop in India, that the disqualification contained therein gets attracted. In the face of the clear language of the clause, it is not possible to entertain the submission of substantial compliance urged by Sri Dhaon.
-
1995 (11) TMI 339
Whether any penalty has been levied in this case, and if so, on what ground?
Held that:- Appeal allowed. The two notices/orders impugned in the writ petition are ambiguous and do not make it clear whether the amount of Rs. 5,000 mentioned therein is a tax or a penalty. The impugned notices also speak of fine but do not say, under which provision are they levied. In these circumstances, the proper course is to quash the two orders/notices impugned in the writ petition with a direction to the assessing authority to pass appropriate orders afresh in accordance with law, after hearing the assessee, keeping in view the position of law explained in this judgment. The authority can also ascertain whether the appellant' s case that he has deposited Rs. 10,000 in advance is correct and, if so, what is its effect in law-and its relevance in the matter of levy of penalty, fine or interest.
-
1995 (11) TMI 331
Issues Involved:
1. Whether the order of framing charge by the trial court is sustainable.
2. Whether Mr. Dighe committed any offence in signing the vakalatnama and is liable for action.
Issue-wise Detailed Analysis:
Issue 1: Whether the order of framing charge by the trial court is sustainable.
Background:
The petitioner, a former General Manager of the respondent company, was accused of not vacating a company-provided flat after resigning. The company filed a complaint under Section 630 of the Companies Act, 1956, and Section 408 of the Indian Penal Code, 1860. The trial court found sufficient material to frame charges against the petitioner.
Arguments:
- Petitioner: Argued that the complainant company no longer exists due to amalgamation with another company, and thus, the prosecution cannot continue. Also argued that the company sold the flat, so it cannot continue the prosecution.
- Respondent: Argued that the new company (Forbes Gokak Ltd.) will continue the prosecution and will file an appropriate application. Claimed the framing of charges does not suffer from any illegality.
Judgment:
- The original complainant company (Forbes Forbes Campbell & Co. Ltd.) amalgamated with Gokak Patel Vokart Ltd., forming Forbes Gokak Ltd. The new company alone can continue the prosecution as per Clause 6 of the amalgamation scheme and Section 394 of the Companies Act.
- The court can invoke Section 302 of the Code of Criminal Procedure to allow the new company to continue the prosecution.
- The subsequent sale of the flat by the complainant does not affect the maintainability of the prosecution. The relevant date is the date of the offence, not the date of framing charges.
- The court held that the original complainant company, being non-existent, cannot continue the prosecution. However, the transferee company can file an application under Section 302 of the Code of Criminal Procedure to continue the prosecution.
- The court dismissed the argument that the complainant must be the owner of the flat on the date of framing charges, emphasizing that the offence is determined by the date of the complaint.
- The court confirmed that Mr. Dighe, as an officer of the new company, has the right to give evidence, with or without a power of attorney.
Conclusion:
The petition challenging the framing of charges was dismissed. The new company was permitted to file an application to continue the prosecution within six weeks. The trial court was directed to expedite the trial.
Issue 2: Whether Mr. Dighe committed any offence in signing the vakalatnama and is liable for action.
Background:
The petitioner alleged that Mr. Dighe committed forgery by signing a fabricated vakalatnama without mentioning his designation or the company's name.
Arguments:
- Petitioner: Claimed that Mr. Dighe's vakalatnama was improper and constituted forgery.
- Respondent: Argued that Mr. Dighe had the right to file the vakalatnama as he was representing the company.
Judgment:
- The court found the application to be wholly misconceived. If the vakalatnama was improperly signed, it could be rejected by the court, but it did not constitute forgery.
- Mr. Dighe, being an officer of the new company, had the right to file the vakalatnama. Any irregularity could be cured under Section 465 of the Code of Criminal Procedure.
- The court dismissed the criminal application alleging forgery against Mr. Dighe.
Conclusion:
The criminal application alleging forgery against Mr. Dighe was dismissed. The court confirmed that Mr. Dighe had not committed any offence in signing the vakalatnama.
Final Order:
Both Criminal Revision Application No. 319 of 1994 and Criminal Application No. 2103 of 1995 were dismissed. The order of framing charges by the learned Magistrate was confirmed, and the trial court was directed to expedite the trial and dispose of it within four months.
-
1995 (11) TMI 330
Issues Involved:
1. Limitation of the claim.
2. Acknowledgment of debt.
3. Bona fide disputed debt.
4. Just and equitable grounds for winding up.
Summary:
1. Limitation of the Claim:
The petition for winding up the respondent company was filed u/s 433(e) and (f) read with sections 434(a) and 439(1)(b) of the Companies Act, 1956. The petitioner claimed to have advanced Rs. 71,00,000 to the respondent between July 2, 1985, and March 8, 1990, with interest. The court noted that the petitioner did not take any action within three years from April 2, 1990, to enforce its claim, and there was no acknowledgment of liability for the amount claimed by the petitioner after this date. The court emphasized that claims made beyond the prescribed period of limitation must be dismissed as per section 3 of the Limitation Act.
2. Acknowledgment of Debt:
The petitioner relied on acknowledgments dated January 21, 1994, and January 24, 1994, which confirmed a sum of Rs. 19,03,500. This amount was paid by the respondent by cheques, and the petitioner's counsel reported the receipt to the court on September 14, 1994. The court held that the petitioner cannot claim to be a creditor for sums barred by limitation and that the acknowledgment of Rs. 19,03,500 does not extend the limitation period for the remaining claim.
3. Bona Fide Disputed Debt:
The respondent contended that the petitioner's claim was collusive and disputed any amount in excess of Rs. 19,03,500. The court found that the petitioner's failure to produce its documents and the alleged benami accounting indicated that the claim was speculative. The court held that the debt claimed, except for the admitted amount, was a bona fide disputed debt for which the company had a prima facie defense. A winding-up petition for a disputed debt intended to pressurize the company would not lie.
4. Just and Equitable Grounds for Winding Up:
The petitioner also invoked section 433(f) on just and equitable grounds. The court held that after the petitioner ceased to be a creditor, the winding-up petition on these grounds would not lie. The court noted that a petition on just and equitable grounds would not be entertained when an adequate alternative remedy was available. The court concluded that the petitioner had not made out a case for winding up on just and equitable grounds.
Conclusion:
The court dismissed the winding-up petition, stating that the petitioner had no enforceable claim within the period of limitation and that the debt claimed was a bona fide disputed debt. The petitioner's application for issuing a subpoena to its auditor was also rejected. The court emphasized that a winding-up order could not be made at the instance of a person who was not a creditor at the time the order was to be made. There was no order as to costs.
-
1995 (11) TMI 322
Issues:
1. Approval of Scheme of Amalgamation between GAL Offshore Services Ltd. and Great Eastern Shipping Company Ltd.
2. Share exchange ratio modification from 7:4 to 1:1.
3. Official Liquidator and Regional Director's no objection to the scheme.
4. Court's decision to sanction the scheme.
Analysis:
1. The judgment involves two petitions filed by the Transferor-Company and Transferee-Company seeking the Court's approval for the Scheme of Amalgamation between GAL Offshore Services Ltd. and Great Eastern Shipping Company Ltd. The proposed merger aims to increase GESCO's equity capital by Rs. 8.5 crores and transfer GAL's assets worth around Rs. 82 crores to GESCO.
2. Initially, the draft scheme proposed a share exchange ratio of 7:4, which was later revised to 5:2. However, following suggestions from shareholders, the share exchange ratio was further amended to 1:1, indicating a more shareholder-friendly approach. The Court granted leave to amend the scheme, substituting the share exchange ratio as 1:1, which was considered and sanctioned by the Court.
3. The Official Liquidator and the Regional Director of the Department of Company Affairs raised no objections to the scheme as amended. The Official Liquidator's report confirmed that the Transferor-Company did not act prejudicially towards shareholders or others. Similarly, the Regional Director expressed no objections to the sanctioned scheme.
4. Considering the absence of opposition to the scheme and the no-objection stance of concerned parties, the Court passed an order sanctioning both petitions. The Court made the petitions absolute, directing the petitioners to pay specified costs and file certified copies of the order with the Registrar of Companies. The judgment reflects the Court's approval of the Scheme of Amalgamation between GAL Offshore Services Ltd. and Great Eastern Shipping Company Ltd., with the revised 1:1 share exchange ratio.
This detailed analysis of the judgment highlights the key issues addressed by the Court, including the approval process, share exchange ratio modifications, official endorsements, and the final decision to sanction the scheme of amalgamation.
-
1995 (11) TMI 321
Issues:
1. Jurisdiction of the Company Law Board to direct rectification of the register of members.
2. Authority of the Regional Bench to modify an earlier order of the Principal Bench.
Jurisdiction of the Company Law Board:
The High Court of Calcutta addressed the issue of whether the Company Law Board had the jurisdiction to direct the Bench Officer to rectify the register of members of the appellant-company. The appellant argued that such a direction was not within the Board's powers and sought intervention under section 10F of the Companies Act, 1956. However, the court found that Section 634A of the Act provides the Board with broad enforcement powers, allowing it to direct its officers to rectify registers. Despite the absence of specific regulations on this matter, the court concluded that the Board's actions were not an abuse of power, and the appellant's argument failed.
Modification of Earlier Order by Regional Bench:
The court also examined whether the Regional Bench had the authority to modify an earlier order of the Principal Bench. The appellant contended that the Regional Bench's order contradicted the injunction issued by the Principal Bench. However, the court noted that the Regional Bench had acknowledged the Principal Bench's order and ensured its compliance in its own directive. The Regional Bench's order was found to be in line with the Principal Bench's injunction, maintaining the status quo of the shares. Therefore, the court rejected the appellant's argument that the Regional Bench was acting as an appellate authority over the Principal Bench's order. The application for stay was denied, and the company was directed to comply with the Company Law Board's order.
Conclusion:
The High Court concluded that the Company Law Board had the jurisdiction to direct rectification of the register of members and that the Regional Bench's order did not contradict the Principal Bench's injunction. The application for stay was dismissed, and the company was instructed to adhere to the Board's order. The court extended the time for compliance and directed strict adherence to the law. Both parties were provided with a certified copy of the order promptly.
-
1995 (11) TMI 320
Issues:
1. Maintainability of the petition under section 633(2) of the Companies Act, 1956.
2. Determination of whether the petitioner qualifies as an "officer" of the company.
3. Assessment of the petitioner's liability for loss or consequences to the respondent or debenture holders as trustee.
4. Examination of the failure to execute the trust deed and its implications.
5. Consideration of the violation of statutory obligations regarding the protection of debenture holders' interests.
Analysis:
The petitioner, a company, sought relief under section 633(2) of the Companies Act, 1956, claiming it is not liable for any loss or consequences to the respondent or debenture holders as trustee. The respondent failed to execute a trust deed despite obligations, leading to a dispute over the petitioner's status as an "officer" of the company. The court analyzed the definition of "officer" under the Act and concluded that the petitioner did not qualify as an officer, rendering the application under section 633(2) not maintainable, ultimately dismissing the petition.
The respondent argued that it had fulfilled its obligations by clearing liabilities and implementing a rehabilitation scheme approved by the Board for Industrial and Financial Reconstruction. The Registrar of Companies highlighted irregularities committed by the company, leading to a prosecution. However, the court emphasized the importance of protecting debenture holders' interests through the appointment of a debenture trustee and the execution of a trust deed, which had not been done in this case, constituting a violation of statutory obligations.
Despite the company's challenges in obtaining a pari passu charge from financial institutions and the freezing of funds by a bank, the court held that these circumstances did not absolve the company of its duty to safeguard debenture holders' interests. The court directed the Registrar to take appropriate action to ensure the protection of debenture holders' rights, emphasizing the significance of adhering to statutory requirements for the benefit of stakeholders.
-
1995 (11) TMI 319
Issues Involved:
1. Jurisdiction of the Court
2. Interpretation of Order Dated October 31, 1984
3. Validity of Transfer and Assignment of Leasehold Rights
4. Payment of Differential Premium
5. Compliance with Transfer Guidelines
Detailed Analysis:
1. Jurisdiction of the Court
The first issue addressed was whether the court had jurisdiction to entertain Company Application No. 261 of 1995. It was contended by respondent No. 1 that the application did not fall within the ambit of section 446 of the Companies Act, 1956, and that the State Bank of Hyderabad, being a secured creditor, was outside the winding-up proceedings. The court found no merit in this contention, stating that section 446 was irrelevant as it dealt with the stay of suits or proceedings, which was not applicable here. Instead, the court relied on section 457(1)(c) of the Companies Act, 1956, which grants the liquidator power to sell the company's property with the court's sanction. The court emphasized its jurisdiction to issue necessary directions to effectuate the sale of the company's assets, including leasehold rights.
2. Interpretation of Order Dated October 31, 1984
Respondent No. 1 argued that the order dated October 31, 1984, did not exempt the applicants from paying the differential premium. The court examined clause 3 of the order, which restricted the transfer and assignment of the lease to the transferee alone and required a fresh application for any further transfer. The court clarified that this was the first transfer by the official liquidator in favor of applicant No. 2 as a nominee of applicant No. 1, and not a further transfer. Therefore, the clause did not apply, and respondent No. 1 was bound by its decision not to charge any premium for this transfer.
3. Validity of Transfer and Assignment of Leasehold Rights
The court noted that applicant No. 1 had paid the entire consideration amount and interest for the transfer of assets, including leasehold rights. The official liquidator was directed to execute the transfer deed in favor of applicant No. 2. The court rejected respondent No. 1's argument that applicant No. 2 was incorporated to evade the transfer fee, stating that respondent No. 1 failed to prove any circumvention or fraud. The court found it just to impose reasonable conditions on the applicants before granting effective relief.
4. Payment of Differential Premium
Respondent No. 1 demanded a differential premium of Rs. 65 lakhs for the transfer of leasehold rights. The court examined the transfer guidelines issued by respondent No. 1, which stipulated that no differential premium was payable for formal transfers, only a standard transfer fee. The court applied these guidelines by analogy and directed the applicants to pay the standard transfer fee of Rs. 10 per square meter, amounting to Rs. 3,27,600, instead of the differential premium.
5. Compliance with Transfer Guidelines
The court imposed conditions based on the transfer guidelines to ensure compliance:
- The official liquidator was directed to execute the transfer deed within four weeks.
- The applicants were required to pay the standard transfer fee and submit the necessary documents for the transfer.
- Applicants Nos. 1 and 2 were to file an undertaking to maintain their holding-subsidiary relationship for at least two years.
- Applicant No. 1 was to provide a written guarantee for the performance of applicant No. 2's obligations for two years.
- The applicants were to bear all costs related to the transfer, including stamp duty and registration charges.
The court concluded by directing the official liquidator to act on an authenticated copy of the order and expedited the issuance of a certified copy. There was no order as to costs.
-
1995 (11) TMI 318
Issues Involved:
1. Misleading claims about investment returns
2. Insurance coverage for teak plantations
3. Adequacy of land acquired for plantation
4. Agricultural income tax exemption
5. Public interest and investor protection
Detailed Analysis:
1. Misleading Claims About Investment Returns:
The main issue examined was whether the respondent misled investors by making "tall and unrealistic claims." The respondent's brochure promised substantial returns on investments in teak saplings, projecting a sale value of Rs. 76,800 per tree after 20 years and claiming this income would be tax-free. The Commission found these claims to be based on "various uncertain events" and lacking a reasonable prospect of fulfillment, thus amounting to "unfair trade practices" under section 36A(1)(ii), (iv), (vi), and (viii) of the Monopolies and Restrictive Trade Practices Act, 1969.
2. Insurance Coverage for Teak Plantations:
The respondent claimed that insurance would cover input costs after the first year of plantation. However, the Commission noted that this coverage was insufficient as it did not protect against long-term risks such as pests and drought. The lack of comprehensive insurance was deemed inadequate for investor security, thus constituting an unfair trade practice.
3. Adequacy of Land Acquired for Plantation:
The respondent initially claimed to have purchased two acres of land for the plantation but later revealed that the land was leased, not purchased, and the lease covered only one acre and 80 cents. The Commission found this area insufficient for the number of investors involved and noted the absence of a buffer stock scheme. This inadequacy was seen as misleading and prejudicial to investors' interests.
4. Agricultural Income Tax Exemption:
The respondent asserted that income from the sale of teak trees would be tax-free, based on current agricultural income tax exemptions. The Commission referenced its previous rulings in similar cases, noting that it is speculative to predict future tax legislation. The claim of tax-free returns was not considered a valid basis for declaring the scheme misleading under section 36A.
5. Public Interest and Investor Protection:
The Commission emphasized the need to protect public interest and ensure transparency in investment schemes. It found the respondent's scheme to be fraught with risks and potential losses for investors, thus constituting an unfair trade practice. The Commission directed the respondent to cease and desist from continuing these practices and allowed the respondent to modify the scheme to address the identified issues transparently.
Conclusion:
The Commission concluded that the respondent's scheme involved unfair trade practices by making misleading claims about returns, providing inadequate insurance coverage, and failing to secure sufficient land for the plantation. The scheme was deemed prejudicial to public interest, and the respondent was ordered to cease these practices and submit a compliant affidavit within four weeks. The respondent was also given the opportunity to revise the scheme to ensure investor protection and transparency. No order was made regarding costs.
-
1995 (11) TMI 317
The High Court of Bombay approved the petition for the amalgamation of Milind Holdings Pvt. Ltd. with Mihir Engineers Ltd. The scheme was found reasonable and not prejudicial to shareholders or creditors. All necessary approvals were obtained, and the Official Liquidator had no objections. No opposition was raised, and the petition was granted with costs to be paid to the Regional Director and Official Liquidator.
-
1995 (11) TMI 316
The High Court of Bombay sanctioned the scheme of amalgamation of Inland Waterways Limited with Coastal Shipping Limited. All members and unsecured creditors consented to the scheme. Notices were published as directed. The Official Liquidator found no prejudice to members' interests. The petition was unopposed and granted, with costs to be paid.
-
1995 (11) TMI 315
Issues:
1. Rejection of petitioner's application for recognition under the Securities Contract (Regulations) Act, 1956.
2. Delegation of powers to SEBI by the Central Government.
3. Legality and validity of the impugned order.
4. Feasibility of establishing a Stock Exchange at Trivandrum.
5. Need for a recognized Stock Exchange at Trivandrum.
6. Challenge to the decision on the petitioner's application.
7. Direction to SEBI for reconsideration of the application.
Analysis:
1. The petitioner's application for recognition under the Securities Contract (Regulations) Act, 1956 was rejected by the Joint Secretary to the Government of India. The subsequent developments highlighted the delegation of powers to SEBI by the Central Government, indicating that SEBI would now consider applications for recognition of Stock Exchanges. The court refrained from delving into the legality and validity of the impugned order, directing SEBI to reconsider all pending applications for recognition.
2. The court emphasized that SEBI should independently consider the petitioner's application and those of the interveners, ensuring a fair and unbiased evaluation. It was noted that SEBI would exercise powers concurrently delegated to it under the Act, and all references related to recognition of Stock Exchanges would be forwarded to SEBI for consideration.
3. The court dismissed the argument that a decision on the feasibility of establishing a Stock Exchange at Trivandrum had not been taken by the Government. It highlighted that the impugned decision encompassed both the establishment of a Stock Exchange and the rejection of the recognition application. The court directed SEBI to evaluate the applications based on objective criteria and merits, emphasizing the importance of investor protection.
4. The court acknowledged the inflow of funds from NRIs and local savings in Trivandrum, indicating the potential benefits of establishing a Stock Exchange in the region. It stressed the need for a broad-based membership and efficient management to serve investors effectively. The court emphasized that SEBI should vet the Articles of Association, Bye-laws, and Regulations of the proposed Stock Exchange to ensure investor protection.
5. The court noted the arguments regarding the necessity of setting up Stock Exchanges in all capital cities and the submissions made by the petitioner and other relevant parties regarding the need for a recognized Stock Exchange in Trivandrum. It highlighted that the decision to reject the recognition application was made after careful consideration of the material facts presented.
6. The court clarified that the decision to reject the recognition application was based on the feasibility and necessity of establishing a new recognized Stock Exchange in Trivandrum. It was emphasized that this decision had not been challenged by any party before the court, including the respondents. The court's direction for SEBI to reconsider the applications was made with the consensus of all parties involved.
7. The court concluded by disposing of the writ petition and instructing the petitioners and interveners to present their cases before SEBI for reconsideration. SEBI was tasked with making a decision on the grant of recognition promptly and in accordance with the court's observations and directions.
-
1995 (11) TMI 314
Issues Involved:
1. Whether the respondent could reject the petitioner's request on the ground of common directors in some of its industrial undertakings.
2. Whether the respondent could club the investments of all the industrial undertakings of the petitioner.
Detailed Analysis:
Issue 1: Rejection of Petitioner's Request Based on Common Directors
The petitioner, Inalsa Ltd., a limited company with five small-scale industrial undertakings, faced rejection of its applications for registration and reassessment by the respondents. The rejections were based on the ground that the directors were common across these undertakings, leading to the clubbing of investments, which exceeded the permissible limit of Rs. 35 lakhs. The court examined whether the presence of common directors justified the rejection.
The court noted that the Ministry of Industry's notification under section 29B of the Industries (Development and Regulation) Act, 1951 ('the IDR Act') specified that an undertaking should not be a subsidiary of or controlled by another undertaking to qualify as a small-scale industrial unit. The respondents argued that the presence of common directors implied control by a single entity, thus disqualifying the petitioner's undertakings from separate registration.
However, the court found that the mere presence of common directors did not necessarily imply control or ownership. The legal entity of a company is distinct from its directors. The court emphasized that the respondents failed to provide a definitive finding that the undertakings were controlled by a single entity. The rejection based solely on common directorship was deemed insufficient and arbitrary.
Issue 2: Clubbing of Investments of All Industrial Undertakings
The second issue was whether the respondents could club the investments of all the petitioner's industrial undertakings. The respondents argued that all the undertakings, despite being located at different places and manufacturing different products, were under the control of a single entity, thus justifying the clubbing of investments.
The court examined the criteria for constituting a small-scale industrial undertaking, which included investment limits and the condition that the undertaking should not be controlled by another entity. The court found that the respondents' interpretation of control was flawed. The presence of common directors did not equate to control or ownership. The court highlighted that the legislative intent was to regulate products and ensure that exemptions were granted to genuine small-scale units, not to large business houses masquerading as small units.
The court noted that the respondents failed to establish that the petitioner's undertakings were controlled by a single entity. The rejection of the applications based on the clubbing of investments was deemed arbitrary and without proper justification.
Conclusion:
The court quashed the impugned orders dated 27-11-1990, rejecting the petitioner's applications for registration and reassessment. The respondents were directed to reconsider the applications afresh, keeping in view the court's observations. The court emphasized the importance of distinguishing between control and mere directorship and ensuring that genuine small-scale units receive the benefits intended by the legislation. No order as to costs was made.
-
1995 (11) TMI 313
Issues Involved:
1. Applicability of the doctrine of promissory estoppel.
2. Correctness of the maturity dates as per the scheme.
3. Authority of the Chairman or Executive Trustee to exercise discretionary power under Clause XXXII.
4. Jurisdiction of the State Commission and District Forum.
Issue-wise Detailed Analysis:
1. Applicability of the Doctrine of Promissory Estoppel:
The District Forum applied the doctrine of promissory estoppel, stating that the complainants' grandfather invested based on the representation made in the brochure issued in October 1992. The Forum held that the exceptions to promissory estoppel, such as legislative functions or statutory provisions, did not apply here. The State Commission upheld this view, emphasizing that the complainant's grandfather relied on the brochure's promise for the maturity amount upon the complainants reaching 20 years of age. However, the National Consumer Disputes Redressal Commission (NCDRC) concluded that the doctrine of promissory estoppel was not applicable. The NCDRC reasoned that the scheme, being a statutory one framed under Section 21 of the Unit Trust of India Act, 1963, and published in the Gazette, overrides the brochure. The Supreme Court's decision in Post Master, Dargamitta H.P.O. Nellore v. Ms. Raja Prameelamma was cited, where it was held that promissory estoppel does not apply against statutory provisions.
2. Correctness of the Maturity Dates as per the Scheme:
The complainants argued that the maturity dates should align with the completion of 20 years of age, as initially stated in the October 1992 brochure. UTI contended that the maturity dates were correctly calculated based on the 'lock-in-period' introduced in the revised brochure. The District Forum and State Commission found in favor of the complainants, directing UTI to rectify the maturity dates to when the complainants would turn 20. However, the NCDRC held that the scheme as published in the Gazette, which included the 'lock-in-period', was the authoritative document. The NCDRC found that the initial brochure's terms were not in accordance with the approved scheme and thus were rightly withdrawn and corrected by UTI.
3. Authority of the Chairman or Executive Trustee to Exercise Discretionary Power under Clause XXXII:
Both the District Forum and State Commission relied on Clause XXXII, which allows the Chairman or Executive Trustee to relax, vary, or modify scheme provisions to mitigate hardship. They suggested that the Chairman should exercise this power in favor of the complainants. The NCDRC disagreed, stating that no court or authority could compel the Chairman or Executive Trustee to exercise discretionary power in a particular way. It is within their discretion to determine if any hardship warrants such an exercise of power.
4. Jurisdiction of the State Commission and District Forum:
The NCDRC found that the State Commission had exercised its jurisdiction with material irregularity by rejecting UTI's appeal and confirming the District Forum's order. The NCDRC emphasized that the scheme, as published in the Gazette, is the binding document, and any terms in the initial brochure that contradicted the scheme were invalid. Hence, the orders of the District Forum and the State Commission were set aside, and the complaint was dismissed.
Conclusion:
The NCDRC concluded that the principles of promissory estoppel were not applicable against the statutory scheme. The maturity dates as per the revised scheme were correct, and the discretionary power under Clause XXXII could not be compelled. The State Commission's jurisdiction was exercised with material irregularity, leading to the dismissal of the complaint.
-
1995 (11) TMI 312
Issues Involved:
1. Jurisdiction of the High Court vs. Special Court
2. Registration of IRFC bonds in the appellant's name
3. Compensation for non-payment of interest on IRFC bonds
4. Transfer of the case to the Special Court
Issue-wise Detailed Analysis:
1. Jurisdiction of the High Court vs. Special Court:
The primary issue was whether the High Court had the jurisdiction to hear the case or if it should be transferred to the Special Court constituted under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. The appellant argued that the High Court had jurisdiction, while the respondent contended that the case fell under the jurisdiction of the Special Court due to the involvement of a notified person and the transaction period falling between April 1, 1991, and June 6, 1992.
The court referred to the Supreme Court's judgment in Canara Bank v. Nuclear Power Corporation of India Ltd., which clarified that the Special Court has exclusive jurisdiction over matters involving transactions in securities during the specified period if a notified person is involved. The court concluded that since the transaction in question occurred during the interregnum period and involved a notified person, the matter fell within the jurisdiction of the Special Court.
2. Registration of IRFC Bonds in the Appellant's Name:
The appellant, ABN Amro Bank, sought to have its name registered as the holder of 1 lakh 9% tax-free secured redeemable non-convertible IRFC bonds. The appellant argued that the ownership of the IRFC bonds was transferred to them as purchasers in due course and for valuable consideration upon delivery of the letter of allotment and transfer deed.
However, the respondent, Indian Railway Finance Company Ltd. (IRFC), did not register the bonds in the appellant's name, disputing the ownership. The court did not delve into the merits of this issue, as it determined that the jurisdiction to decide this matter lay with the Special Court.
3. Compensation for Non-Payment of Interest on IRFC Bonds:
The appellant also sought compensation for the non-payment of interest on the IRFC bonds from June 26, 1992, to October 1, 1994, and for future interest. The appellant contended that respondents Nos. 1 to 4 should be directed to pay the accrued interest and compensation for the delay in payment.
Again, the court did not address the merits of this issue, as it concluded that the Special Court had the jurisdiction to decide on matters arising out of transactions in securities during the specified period.
4. Transfer of the Case to the Special Court:
The court examined the provisions of Section 9A of the Special Court Act, which grants the Special Court exclusive jurisdiction over civil matters related to transactions in securities during the specified period. The court observed that the intention of Parliament was to have all such transactions dealt with by the Special Court to ensure uniformity and consistency in handling cases arising from the securities scam.
Given that the transaction in question occurred within the specified period and involved a notified person, the court concluded that the case should be transferred to the Special Court. The court allowed the application for transfer and directed that the appeal and other connected applications be transferred to the Special Court.
Conclusion:
The court allowed the application for transfer, concluding that the Special Court had exclusive jurisdiction over the matter due to the involvement of a notified person and the transaction period falling within the specified dates. The appeal and other connected applications were transferred to the Special Court, and the petition was disposed of without any order as to costs.
-
1995 (11) TMI 311
Issues Involved:
1. Sanction of the scheme of amalgamation between the transferor-company and the transferee-company.
2. Objection by the Central Government regarding the amalgamation.
3. Revaluation of fixed assets of the transferor-company.
4. Exchange ratio of shares.
5. Compliance with SEBI guidelines and future public issue.
Detailed Analysis:
1. Sanction of the scheme of amalgamation between the transferor-company and the transferee-company:
The court was presented with two company petitions seeking sanction for the amalgamation of Apco Electrical Products Pvt. Ltd. (the transferor-company) and Apco Industries Ltd. (the transferee-company). The transferor-company, a private limited company incorporated on March 3, 1978, and engaged in manufacturing PVC battery separators, sought to amalgamate with the transferee-company, a public limited company promoted for manufacturing glass fiber separators in collaboration with Evanite Fiber Corporation of the USA. The scheme proposed that, effective from February 1, 1995, all assets, liabilities, and obligations of the transferor-company would transfer to the transferee-company under Section 394 of the Companies Act, 1956. The scheme also included provisions for issuing 150 fully paid-up equity shares of Rs. 10 each of the transferee-company for every fully paid-up equity share of Rs. 100 each held by the members of the transferor-company. The court examined the scheme to ensure it was fair, reasonable, and beneficial to shareholders and public interest.
2. Objection by the Central Government regarding the amalgamation:
The Central Government, through an affidavit-in-reply by the Assistant Registrar of Companies, objected to the amalgamation on several grounds. The primary objection was that the transferee-company, incorporated on January 16, 1995, had no assets, business, performance, or past record, and amalgamating it with an existing private limited company within 15 days of its incorporation seemed unjustified. However, the court found that the amalgamation was justified as the transferee-company, being a public limited company, could secure a collaboration program with a foreign-based company, which the private limited transferor-company could not achieve.
3. Revaluation of fixed assets of the transferor-company:
The Central Government raised concerns about the revaluation of the transferor-company's fixed assets, which were revalued to Rs. 65,49,642. The court noted that there was no contention or evidence suggesting that the valuation expert was guilty of inflating the assessment. The court emphasized that the revaluation was done as of March 31, 1994, and there were no allegations of fraud or mala fides against the valuer. The court concluded that the revaluation was reasonable and should not hinder the sanction of the amalgamation.
4. Exchange ratio of shares:
The exchange ratio of 150 shares of the transferee-company for each share of the transferor-company was challenged as being high. The court observed that the exchange ratio was determined based on the revalued fixed assets of the transferor-company. There was no evidence of fraud or mala fides in the valuation process. The court referenced the Kerala High Court decision in Malayalam Plantation (India) Ltd. v. Mathew Philip, which supported the view that objections to valuation should be overruled in the absence of evidence of fraud or mala fides. Consequently, the court found the exchange ratio fair and reasonable.
5. Compliance with SEBI guidelines and future public issue:
Concerns were raised about the promoters' contribution and the issuance of bonus shares out of the revaluation reserves. The court noted that the SEBI guidelines for disclosure and investor protection did not apply to existing private, closely held, and unlisted companies. However, the court accepted the concession from the transferor-company's counsel that necessary disclosures would be made to SEBI and other relevant authorities if the transferee-company went for a public issue in the future. The court emphasized that compliance with SEBI guidelines and proper disclosure would ensure investor protection and prevent any violation of relevant provisions.
Conclusion:
The court allowed and sanctioned the scheme of amalgamation, effective from February 1, 1995. All assets, liabilities, and obligations of the transferor-company would transfer to the transferee-company, and the transferor-company would be dissolved without winding up. The court directed the petitioners to file the order with the Registrar of Companies within 30 days and pay the fees of the Central Government's counsel. The company petitions were disposed of accordingly.
-
1995 (11) TMI 310
Issues Involved:
1. Whether the respondent-company had a bona fide dispute regarding the quality of adhesives supplied by the appellant.
2. Whether the respondent-company admitted the amount due to the appellant.
3. Whether the winding-up petition was an appropriate remedy for the appellant.
Issue-wise Detailed Analysis:
1. Bona Fide Dispute Regarding Quality of Adhesives:
The appellant, Chem-Crown India Ltd., supplied adhesives to the respondent, Sports Equipment (P.) Ltd., from April 1988 to July 1991. The respondent utilized these adhesives in shoe manufacturing without any initial complaints. However, disputes arose in August 1991 when the respondent alleged bond failures in shoes due to sub-standard adhesives. The appellant countered that the supplied adhesives had a solid content of 16% and 12%, which had been satisfactory for years. The appellant also indicated that Liberty Footwear received adhesives with 19% solid content at a higher price and with a bond failure guarantee. The respondent's claim of sub-standard adhesives was not substantiated by any test reports or prior complaints during the three years of transactions. The court found that the respondent's objections were raised long after the adhesives were consumed and were not bona fide.
2. Admission of Amount Due:
The appellant claimed an outstanding amount of Rs. 1,34,146 as of August 24, 1992, which was reflected in both parties' account books. The respondent issued cheques for part payments, some of which were dishonored. The court noted that the respondent did not dispute the amount due until May 23, 1992, when it vaguely stated that the amount was "much less" without specifying how much less. The court inferred that the respondent initially acknowledged the amount due but later raised disputes to avoid payment.
3. Appropriateness of Winding-Up Petition:
The learned Company Judge dismissed the winding-up petition, stating that winding-up procedures should not be used for debt recovery where bona fide disputes exist. The court referred to the Supreme Court's decision in Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami, emphasizing that winding-up orders are inappropriate if there is a bona fide dispute. However, the appellate court found no bona fide dispute and noted that the respondent's financial instability and failure to pay the admitted amount justified the winding-up petition. The court concluded that the appellant had made a case for admitting the petition and issuing a citation.
Conclusion:
The appellate court set aside the learned Company Judge's order, finding that the respondent did not raise a bona fide dispute and admitted the amount due. The court allowed the winding-up petition to be admitted and issued a citation, giving the respondent four weeks to pay the due amount before further proceedings. The company appeal was disposed of accordingly.
............
|
9911796707
