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Showing 121 to 140 of 580 Records
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2001 (3) TMI 972
The Revenue's appeal against the Order-in-Appeal disallowing Cenvat credit and imposing a penalty on M/s. Indian Casting Co. was rejected by the Appellate Tribunal CESTAT, New Delhi. The Tribunal found no merit in the appeal as the respondent did not violate the terms of either the Cenvat credit scheme or the clearance scheme under Notification No. 10/2002.
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2001 (3) TMI 971
The Supreme Court of India allowed the civil appeals, stating that when there are two exemption notifications covering the same goods, the assessee is entitled to the benefit of the notification that provides greater relief. The orders under appeal were set aside, and no costs were awarded. (Citation: 2001 (3) TMI 971 - SC)
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2001 (3) TMI 970
Issues Involved:
1. Validity of the process issued under Section 138 of the Negotiable Instruments Act, 1881, and Section 420 of the Indian Penal Code, 1860.
2. Allegations against the accused regarding being in charge of the company's management and day-to-day affairs.
3. Validity and effect of the accused's resignation.
4. Compliance with Section 141 of the Negotiable Instruments Act, 1881.
5. The authority of the court to recall the process based on the accused's defense documents.
Detailed Analysis:
Issue 1: Validity of the process issued under Section 138 of the Negotiable Instruments Act, 1881, and Section 420 of the Indian Penal Code, 1860
The case involved 23 criminal revision applications and 23 criminal writ petitions arising out of complaints under Section 138 of the Negotiable Instruments Act, 1881. The Judicial Magistrate First Class had issued process against the company and the accused, which was later quashed by the Sessions Judge. The complainants filed revision applications against this order.
Issue 2: Allegations against the accused regarding being in charge of the company's management and day-to-day affairs
The complainants alleged that the accused, as the managing director of the company, was responsible for the conduct of the business. The Sessions Judge quashed the process on the grounds that the complaints did not sufficiently allege that the accused was in charge of the company's management or day-to-day affairs, as required under Section 141 of the Act.
Issue 3: Validity and effect of the accused's resignation
The accused contended that he had resigned from the company on May 6, 1996, and thus was not responsible for the cheques issued thereafter. The complainants disputed the resignation date, relying on Form No. 32, which showed the resignation date as March 15, 1997. The court noted that the resignation's validity and date were crucial and required thorough examination.
Issue 4: Compliance with Section 141 of the Negotiable Instruments Act, 1881
The court examined whether the complaints met the requirements of Section 141, which holds every person in charge of the company's conduct liable for offenses under Section 138. The court found that the complaints by Mr. Nadkarni sufficiently alleged that the accused was in charge of the company's affairs, while the complaints by Mr. Tamba and Mr. Mulgaokar did not.
Issue 5: The authority of the court to recall the process based on the accused's defense documents
The court considered whether it could look into the accused's defense documents, such as the resignation letter and Form No. 32, to decide on recalling the process. The court concluded that it could consider these documents, as established in previous judgments, to determine whether the process should be recalled.
Conclusion:
(a) Criminal Revision Applications by Mr. Tamba: Dismissed. The court confirmed the Sessions Judge's order recalling the process against the accused, based on the acceptance of the accused's resignation date as May 6, 1996.
(b) Criminal Revision Applications by Mr. Nadkarni: Allowed. The court set aside the Sessions Judge's order and remanded the cases to the trial court for decision on merits, as the complaints sufficiently alleged that the accused was in charge of the company's affairs.
(c) Criminal Revision Applications by Mr. Mulgaokar: Dismissed. The court upheld the Sessions Judge's order recalling the process, as the complaints did not meet the requirements of Section 141 of the Act.
(d) Criminal Revision Applications by Mr. Kholkar: Allowed. The court set aside the Sessions Judge's order and remanded the cases to the trial court for decision on merits, as the complaints sufficiently alleged the accused's responsibility.
(e) Criminal Writ Petitions by the accused: Disposed of based on the orders passed in the criminal revision applications, with no order as to costs.
The court clarified that the accused could file for exemption in the remanded cases, which would be considered by the trial court.
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2001 (3) TMI 969
Issues Involved:
1. Legality and validity of the ex parte ad interim order of injunction.
2. Failure of the Single Judge to decide on the application for vacation of the ex parte ad interim order within the stipulated time.
3. Maintainability of the suit for mandatory injunction and specific performance.
4. Prima facie case and irreparable loss for granting an injunction.
Detailed Analysis:
1. Legality and Validity of the Ex Parte Ad Interim Order of Injunction:
The appellant challenged the ex parte ad interim order of injunction passed on 18-2-1999 by the Single Judge, which restrained the appellant from getting the machines released from the bond of Bombay Customs. The appellant argued that this order was issued without proper consideration and needed to be vacated.
2. Failure of the Single Judge to Decide on the Application for Vacation of the Ex Parte Ad Interim Order:
The appellant contended that despite applying for the vacation of the ex parte ad interim order, the Single Judge failed to decide the application within the time-limit provided under Rule 3(A) of Order 39 C.P.C. This delay in decision-making was argued to make the appeal maintainable, referencing the Supreme Court decision in CA No. 5102 of 2000 (A. Venkatasubbiah Naidu v. S. Chellappan and Others).
3. Maintainability of the Suit for Mandatory Injunction and Specific Performance:
The respondent initially filed a suit for mandatory injunction to direct the appellant to accept payment and complete documentation for the sale of two machines. However, the suit was not properly valued and did not initially seek specific performance of the contract. The court noted that such a suit was not maintainable under Section 58 of the Sale of Goods Act, 1930, which requires a suit for specific performance subject to Chapter II of the Specific Relief Act, 1877. The respondent later amended the plaint to seek specific performance of the agreement dated 12-1-1999 or, alternatively, damages of Rs. 56,00,000/-.
4. Prima Facie Case and Irreparable Loss for Granting an Injunction:
The court evaluated whether the respondent had a prima facie case and whether irreparable loss would be caused if the injunction was not granted. The court found that the respondent did not have a strong prima facie case. Additionally, the court noted that the respondent would not suffer irreparable loss as compensation could be awarded if the respondent's claim was ultimately upheld. The appellant's counsel also assured the court that similar machines could be supplied if specific performance was decreed.
Conclusion:
The court concluded that the ex parte order of injunction should be vacated. It noted that the suit as initially filed was not maintainable and that the respondent did not demonstrate a prima facie case or irreparable loss. The court took on record the appellant's commitment to supply similar machines if specific performance was decreed. Consequently, the appeal was allowed, the impugned order was set aside, and the respondent's application was dismissed. The observations made were specific to the appeal and would not prejudice the merits of the case for either party.
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2001 (3) TMI 967
Issues:
1. Compliance with section 434(1)(a) of the Companies Act, 1956 regarding service of notice at the registered office.
2. Interpretation of legal fiction under section 434(1)(a) for deeming a company unable to pay its debts.
3. Applicability of section 434(1)(c) for winding up petition based on company's inability to pay debts.
Comprehensive Analysis:
1. Compliance with Section 434(1)(a):
The respondent filed a winding-up petition under section 439 read with section 433(e) of the Companies Act, 1956, claiming an amount due from the company. The issue arose regarding the service of a demand notice at the registered office as required by section 434(1)(a). The appellant contended that the notice served at the administrative office did not comply with the mandatory requirement of serving it at the registered office. The court emphasized that strict compliance with section 434 is necessary, and service at the registered office is crucial to raise the presumption under section 434(1)(a).
2. Interpretation of Legal Fiction under Section 434(1)(a):
The court analyzed the legal fiction under section 434(1)(a) which deems a company unable to pay its debts upon specific conditions being met. It was highlighted that the language of the statute is significant, emphasizing service of notice at the registered office. The court referred to precedents where it was held that service at the registered office is essential to trigger the presumption under section 434(1)(a). The court rejected the argument that service at an administrative office could be considered substantial compliance with the statutory requirement.
3. Applicability of Section 434(1)(c) for Winding-Up Petition:
While the appeal succeeded in setting aside the order regarding non-compliance with section 434(1)(a), the court directed the consideration of the petition under section 434(1)(c) as well. It was noted that even if the legal fiction under section 434(1)(a) is not established, the petition could still be evaluated under section 434(1)(c) based on the company's inability to pay debts. The court emphasized the need for the creditor to produce supporting documents for the claim under section 434(1)(c) and for the company to have the opportunity to respond with objections and evidence.
In conclusion, the court partially allowed the appeal, setting aside the order related to non-compliance with section 434(1)(a) and directing further proceedings to consider the petition under section 434(1)(c) with the necessary submission of documents and objections by the parties.
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2001 (3) TMI 966
Issues Involved:
1. Validity of the transfer of CGL's shares to Bharti.
2. Compliance with the Joint Venture Agreement (JVA).
3. Legal standing and actions of Satwant Singh.
4. Management and control of Sky Cell.
5. Interim reliefs and injunctions sought by parties.
Detailed Analysis:
1. Validity of the Transfer of CGL's Shares to Bharti:
The core issue is whether the transfer of CGL's shares to Bharti is valid. The judgment acknowledges that CGL contracted to sell its shares to Bharti, received the price, and none of the other shareholders were interested in purchasing those shares. DSS and Millicom had earlier given their consent for such sale, and Bharti was recognized as a leading telecom group in India. The Department of Telecommunications (DoT) approved the substitution of CGL by Bharti, provided the 49% cap on foreign equity was maintained and management control remained in Indian hands. The transfer was approved by a majority on the Board of Sky Cell, including the director nominated by ICICI, and Bharti's name was entered in the register as a member of Sky Cell. The judgment notes that the transfer did not violate the articles of association of Sky Cell, as the Board had not nominated any other outsider to buy those shares.
2. Compliance with the Joint Venture Agreement (JVA):
The JVA required written consent from other shareholders for the transfer of shares. Bellsouth, DSS, and Millicom argued that the transfer was void under article 7.6 of the JVA due to the lack of Bellsouth's written consent. However, the judgment highlights that these restrictions were not incorporated into Sky Cell's articles of association. The law in India states that restrictions on the transfer of shares must be in the articles of association to be binding. The judgment references the Supreme Court's rulings in Laxmi Tea Co. Ltd. v. Pradip Kumar Sarkar and V.B. Rangaraj v. V.B. Gopalkrishnan, affirming that shares are transferable like any other movable property unless restricted by the articles. The judgment leaves the determination of whether Bellsouth's refusal to consent was arbitrary or a bargaining tactic to the arbitrators, if arbitration occurs.
3. Legal Standing and Actions of Satwant Singh:
Satwant Singh, claiming to be the Chairman and Managing Director of Sky Cell, issued notices and convened meetings, which were contested. The judgment finds that Singh's appointment as Chairman and Managing Director was not lawful. The minutes of the Board meeting on 26-8-2000, which Singh relied upon, were not part of the company's official minutes book. The judgment concludes that Singh's actions, including the dismissal of the Company Secretary and Chief Financial Officer, were not valid and did not bind Sky Cell.
4. Management and Control of Sky Cell:
The judgment addresses the struggle for control of Sky Cell between the factions led by Bellsouth, DSS, and Millicom on one side, and CGL and Bharti on the other. The judgment appoints a neutral third party, Mr. Justice K.A. Swami, as Chairman of the Board of Sky Cell to preside over meetings and ensure proper management. The Board of directors is to comprise those who were directors immediately prior to the disputed AGM of 23-8-2000, with alternate directors entitled to function as such. The judgment emphasizes that the powers of the Board should be exercised in conformity with the JVA, and meetings should be convened only with the Chairman's consent.
5. Interim Reliefs and Injunctions Sought by Parties:
The judgment denies interim reliefs sought by Satwant Singh in CS No. 930 of 2000 due to a lack of prima facie case, lack of bona fides, and balance of convenience against granting such relief. The judgment highlights that the strategy of Bellsouth, DSS, and Millicom was to neutralize 40.5% of Sky Cell's shares and gain control of the company, which would defeat the policy of limiting foreign direct investment in the telecommunication sector to 49%. The judgment directs the maintenance of status quo and provides for the proper management of Sky Cell during the pendency of the suits and any potential arbitration.
Conclusion:
The judgment sets aside the impugned order of the learned Single Judge, denies the interim reliefs sought by Satwant Singh, and appoints a neutral Chairman to oversee the management of Sky Cell. The judgment emphasizes compliance with the JVA and the articles of association, maintaining the balance of power among shareholders, and ensuring managerial control remains in Indian hands as per government policy.
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2001 (3) TMI 965
The appellant purchased National Savings Certificates in the name of a firm instead of an individual. The District Forum found deficiency on behalf of the Post Office and ordered payment of Rs. 4,030 with interest. The appeal was dismissed, confirming the District Forum's decision. Compliance to be made within two months.
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2001 (3) TMI 964
Issues:
1. Possession of office premises by the Liquidator of a bank under winding up.
2. Suitability of alternative premises offered by the landlord to the Liquidator.
3. Legal principles governing the requirement of premises by the Liquidator during liquidation proceedings.
Analysis:
1. The judgment concerns a company application where the landlord sought the return of office premises from the Liquidator of a bank under winding up. The bank was ordered to be wound up, and the landlord, who purchased the premises, requested the Liquidator to hand over possession. The Liquidator, citing the sensitive nature of stored documents and pending legal matters involving the bank, expressed the need to retain the premises for official purposes.
2. The Liquidator inspected alternative premises offered by the landlord but found them unsuitable due to security concerns and the nature of the work requiring ground floor access. The Liquidator emphasized the importance of the premises for handling sensitive documents and conducting official duties related to pending legal cases. The court referred to established legal principles from previous Supreme Court judgments regarding the necessity for premises to carry out winding up activities effectively.
3. The court acknowledged the significance of the Liquidator's work in the context of the bank's liquidation and the sensitivity of the documents involved. It highlighted the relevance of the Liquidator's reasons for retaining possession and rejected the landlord's application for the return of the premises. The court emphasized the need to consider the nature of the work performed by the Liquidator and the importance of safeguarding documents related to ongoing legal matters involving the bank.
Conclusion:
The judgment underscores the critical role of the Liquidator in handling the affairs of a bank under winding up and the necessity of retaining possession of premises for official purposes. It upholds the principle that the requirement for keeping records in safe custody, especially in cases involving sensitive documents and significant legal proceedings, takes precedence over mere storage needs. The court's decision reflects a balanced approach considering the complexities of the liquidation process and the public interest involved in such cases.
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2001 (3) TMI 963
Unfair Trade Practice - Held that:- Appeal dismissed. The impugned order suffers from no infirmity. The appellants could not have, on the basis of the changed Policy on 15-7-1996, refused to complete the formalities so far as the 1st respondent is concerned. In the case of 1st respondent there had already been an allotment. Thus, the process of allotment had been completed. In this view of the matter the Commission was right in issuing the directions that it did. As the allotment was completed the 1st respondent could not be asked to pay any rate higher than the one of which he had been allotted the plot. We see no reason to interfere.
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2001 (3) TMI 962
Issues:
1. Appeal against dismissal of complaint by District Consumer Disputes Redressal Forum-II.
2. Non-receipt of maturity amount by complainant.
3. Allegations of deficient service by respondents.
4. Failure to provide proof of demand draft sent by courier.
5. Error in dismissing complaint without considering crucial points.
Issue 1:
The appeal was filed against the order of dismissal of the complaint by the District Consumer Disputes Redressal Forum-II. The appellant/complainant contested the dismissal, claiming that the District Forum-II erred in dismissing the complaint based solely on the reply filed by the respondent No. 1. The appellant argued that the District Forum-II failed to consider the facts of the case, specifically the loss of interest for 9 months due to deficient service by the respondents.
Issue 2:
The complainant alleged non-receipt of the maturity amount despite depositing Rs. 15,000 with the respondent/opposite party. The complainant claimed to have received a fixed deposit receipt but did not receive the maturity amount of Rs. 17,370. The complainant sent a legal notice regarding the non-receipt of the money, to which the respondent replied that the demand draft was returned undelivered and was later sent after revalidation.
Issue 3:
The appellant contended that the respondents were deficient in their service, leading to the complainant's loss of interest for 9 months. The appellant argued that the respondent failed to provide proof of the demand draft being sent by the courier. The Commission held that the respondents were deficient in their service and liable to pay interest for the 9-month period, albeit at a reduced rate of 9 per cent.
Issue 4:
The respondent's failure to furnish proof of the demand draft being sent by the courier was a crucial point in the case. The Commission noted that the respondent's version was uncorroborated by any document from the courier agency. This lack of evidence contributed to the Commission's decision to hold the respondents liable for deficient service and to award compensation to the complainant.
Issue 5:
The District Forum-II's order was overturned on appeal as it failed to consider important aspects of the case. The Commission found that the District Forum-II did not properly assess the facts of the case, especially regarding the date of maturity and receipt of the amount by the complainant. The Commission held that the District Forum-II erred in accepting the respondent's version without sufficient evidence and, therefore, set aside the order and allowed the appeal in favor of the complainant.
This detailed analysis of the judgment highlights the key issues involved in the case, the arguments presented by the parties, and the Commission's decision on each issue, ensuring a comprehensive understanding of the legal proceedings and outcome.
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2001 (3) TMI 961
Issues:
1. Dismissal of complaint by City Consumer Disputes Redressal Forum.
2. Claim for allotment of shares and compensation.
3. Consumer status of the complainant.
4. Liability of the bank as a collecting agent.
5. Applicability of previous judgments.
Analysis:
1. The appeal arose from the dismissal of the complaint by the City Consumer Disputes Redressal Forum, where the complainant sought allotment of shares and compensation for a failed share application process. The Forum dismissed the complaint citing the complainant's status as a prospective purchaser of shares and an honest error by the bank in not forwarding the application to the company.
2. The complainant's claim for allotment of shares and compensation was based on the failed share application process. However, the Forum found that the complainant, as a prospective purchaser, was not entitled to the claim against the company. The complainant's request was further denied due to the shares' current market value being below face value, making the claim irrelevant.
3. Regarding the consumer status of the complainant, it was established that the complainant would not be considered a consumer in relation to the company based on the decision in Morgan Stanley Mutual Fund's case. The Supreme Court's ruling in this case determined that the complainant did not have a valid claim against the company.
4. The liability of the bank, acting as a collecting agent, was also considered. The Commission found that the bank, as a collecting agent of the company, did not owe any duty or liability to the complainant. The bank's responsibility was solely to the company, and there was no deficiency in service towards the complainant.
5. The Commission referred to previous judgments, including the decision in Smt. Kailash Rajanikant Shah's case and Anilkant Gajendrarai Buch's case, to support the dismissal of the appeal. The complainant's case was deemed to be covered by these precedents, leading to the conclusion that the appellant was not entitled to the claims made in the complaint. Therefore, the appeal was dismissed in line with the previous decisions, with no costs awarded.
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2001 (3) TMI 960
Issues Involved:
1. Validity of the restriction on transfer of shares as per Article 7 of the Articles of Association.
2. Applicability of restrictions on share transfer in the context of a court auction sale.
3. Rights of auction purchasers in relation to company shares subject to transfer restrictions.
Issue-wise Detailed Analysis:
1. Validity of the restriction on transfer of shares as per Article 7 of the Articles of Association:
The defendant-company's Articles of Association, specifically Article 7, prohibits the transfer of shares to non-shareholders and requires transfers to be made only among existing members of the company. This article also mandates prior sanction from the directors for any transfer and allows them to decline without assigning reasons. The court noted that the transfer of shares is permitted only among the shareholders of the company inter se, implying a prohibition on transferring shares to non-shareholders.
2. Applicability of restrictions on share transfer in the context of a court auction sale:
The plaintiff argued that restrictions on share transfers do not apply to court auction sales, citing precedents from the Madras High Court (Soma Veerappa v. Muthurasappa Chettiar) and the Calcutta High Court (Mahadeo Lal Agarwala v. New Darjeeling Union Tea Co. Ltd.). However, the defendant contended, supported by the Nagpur High Court (Abdul Rashid Hafizdin Hohammad v. Commissioner of Sales Tax) and Bombay High Court (Manilal Brijalal v. Gordhan Spg. and Mfg. Co.), that a court auction sale does not override the restrictions in the Articles of Association.
The court held that shares are movable property and their transfer is governed by Section 82 of the Companies Act, 1956, which states that shares are transferable in the manner provided by the articles of the company. The court emphasized that the restrictions on transfer continue to apply even after a court auction sale.
3. Rights of auction purchasers in relation to company shares subject to transfer restrictions:
The court examined the procedures under Order 21, Rules 79 and 80 of the Civil Procedure Code, which govern the delivery and transfer of shares sold in execution of decrees. It was clarified that these rules do not enlarge the judgment-debtor's rights or remove any pre-existing restrictions on transfer. The court referenced judgments from the Bombay and Nagpur High Courts, which held that an auction purchaser acquires the same limited rights as the original shareholder, subject to the company's Articles of Association.
The court concluded that the auction purchaser does not gain an absolute right to have the shares transferred and registered in their name. The intervention of the court and the compulsory nature of the sale do not prejudice the company's rights or alter the purchaser's position regarding transfer restrictions.
Conclusion:
The court dismissed the appeal, affirming that the restrictions in Article 7 of the Articles of Association remain applicable even in the case of a court auction sale. The company was within its rights to refuse the transfer and registration of the shares purchased by the plaintiffs, as the court sale did not remove the pre-existing transfer restrictions. The trial judge's failure to distinguish between the nature of rights passing in a court sale and the company's discretion under its Articles of Association led to an erroneous decree, which the appellate court rightly reversed. The appeal was dismissed with no costs.
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2001 (3) TMI 959
Issues Involved:
1. Validity of the orders of the BIFR and AAIFR.
2. Validity of the Government of India's order under section 25-O of the Industrial Disputes Act, 1947.
3. Consideration of revival proposals for Bharat Gold Mines Ltd. (BGML).
4. Evaluation of the Voluntary Separation Scheme (VSS) circular issued by BGML.
Detailed Analysis:
1. Validity of the Orders of the BIFR and AAIFR:
The petitioners challenged the orders of the BIFR and AAIFR, arguing that these bodies failed to take adequate steps for the revival of BGML and relied excessively on the Government of India's statements without verifying their correctness. The BIFR's order dated 21-2-2000 recommended winding up BGML due to the Government's decision not to support its revival. The AAIFR affirmed this order on 15-11-2000. The court found that the BIFR and AAIFR did not explore all possible revival options and failed to consider various reports and proposals submitted for BGML's revival. The court concluded that both bodies had not discharged their statutory obligations and relied unduly on the Central Government's stance.
2. Validity of the Government of India's Order under Section 25-O:
The Government of India passed an order on 29-1-2001 for the closure of BGML under section 25-O of the Industrial Disputes Act, 1947. The petitioners argued that this order violated natural justice principles and was a mere formality, as the decision to close BGML had already been made. The court found that the order lacked proper consideration of public interest, financial aspects, and the workers' plight. It was deemed arbitrary and not based on a thorough evaluation of all factors, thus failing to meet the statutory requirements.
3. Consideration of Revival Proposals for BGML:
The court examined the history and various attempts to revive BGML, including reports from committees and parliamentary bodies. It noted that despite several proposals and potential joint ventures, the BIFR and AAIFR ultimately recommended winding up BGML due to the Government's refusal to provide financial support. The court criticized the BIFR for not making serious attempts to implement revival schemes and for yielding to the Government's decision without exploring alternative funding sources or joint ventures.
4. Evaluation of the Voluntary Separation Scheme (VSS) Circular Issued by BGML:
The petitioners challenged the VSS circular dated 8-12-2000, arguing it was not properly approved by BGML's management and was issued by the Deputy General Manager in his personal capacity. The court found this contention incorrect, stating that the circular was issued based on directions from the Government of India. Consequently, the petitions challenging the VSS circular were dismissed.
Conclusion:
The court allowed the petitions challenging the orders of the BIFR, AAIFR, and the Government of India, quashing the orders dated 12-6-2000 (BIFR), 15-11-2000 (AAIFR), and 29-1-2001 (Government of India). The BIFR was directed to reconsider the revival of BGML, taking into account the proposals and claims made by the petitioners. The petitions challenging the VSS circular were dismissed.
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2001 (3) TMI 958
Issues Involved:
1. Non-payment of debt by the respondent-company.
2. Appointment of provisional liquidator for the respondent-company.
3. Validity of orders passed under the Punjab Co-operative Societies Act, 1961.
4. Conflict between the Punjab Co-operative Societies Act and the Companies Act, 1956.
5. Equitable distribution of assets among creditors.
Detailed Analysis:
1. Non-payment of Debt by the Respondent-Company:
The petitioner, engaged in manufacturing watches and jewelry, supplied watches to the respondent-company, which failed to make substantial payments. Despite statutory notices, the respondent-company did not respond, leading to the filing of the winding-up petition under section 439 of the Companies Act, 1956.
2. Appointment of Provisional Liquidator for the Respondent-Company:
The court noted that the respondent-company failed to file any written statement despite multiple opportunities. The provisional liquidator of Punwire requested to file a written statement, but it was eventually filed by an Assistant Manager of the respondent-company. The court observed that the respondent-company was not effectively managed, with directors absconding or resigning, and assets being mismanaged or taken away. Consequently, the court appointed the official liquidator as the provisional liquidator to manage the respondent-company's affairs during the pendency of the winding-up petition.
3. Validity of Orders Passed Under the Punjab Co-operative Societies Act, 1961:
The Registrar, Co-operative Societies, Punjab passed orders attaching the properties of the respondent-company and appointing receivers for the management of these properties. The court examined the provisions of sections 55 and 56 of the Punjab Co-operative Societies Act, 1961, and concluded that these orders were void as they were passed without the leave of the court after the commencement of winding-up proceedings.
4. Conflict Between the Punjab Co-operative Societies Act and the Companies Act, 1956:
The court held that the provisions of the Companies Act, 1956, which are referable to entry 43 of List-I (Union List) of the Seventh Schedule of the Constitution, have overriding effect over the Punjab Co-operative Societies Act, 1961, a state legislation referable to entry 32 of List-II (State List). The court emphasized that any attachment of properties after the commencement of winding-up proceedings without the court's leave is void under section 537 of the Companies Act.
5. Equitable Distribution of Assets Among Creditors:
The court noted that there were multiple winding-up petitions filed by unsecured creditors against the respondent-company. It was observed that the appointment of receivers by the Registrar, Co-operative Societies, Punjab, was to the exclusion of other creditors, which was contrary to the spirit of the Companies Act. The court stressed the need for equitable distribution of assets among all creditors, both secured and unsecured.
Conclusion:
1. The court allowed C.P. No. 4 of 2001, quashing the orders of attachment and appointment of receivers passed by the Registrar and Deputy Registrar, Co-operative Societies, Punjab.
2. The winding-up petition (C.P. No. 47 of 2000) was admitted, and its admission was ordered to be published.
3. The official liquidator was appointed as the provisional liquidator of the respondent-company during the pendency of the winding-up petition.
4. The provisional liquidator was directed to manage the respondent-company effectively and file a written statement by the specified date.
The court deferred further proceedings to allow the respondent-company to file an effective reply and demonstrate its ability to discharge its liabilities.
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2001 (3) TMI 944
Issues Involved:
1. Jurisdiction of the High Court to entertain the petition.
2. Merger of the order of the Debt Recovery Tribunal (DRT) with the order of the Debt Recovery Appellate Tribunal (DRAT).
3. Cause of action arising in Mumbai.
Summary:
1. Jurisdiction of the High Court:
The Petition challenges the orders dated 18th November 1999 and 11th December 2000 passed by the DRAT, Mumbai. The Respondent's counsel raised a preliminary issue challenging the jurisdiction of the Bombay High Court to hear the matter, relying on the Supreme Court judgment in Sita Ram Singhania v. Bank of Tokyo-Mitsubishi Ltd. and Ors. (1999 4 SCC 382). The Court found that the Supreme Court judgment did not apply to the present case as it involved a challenge to the vires of a notification, not an order of the DRAT adjudicating disputes on merits.
2. Merger of Orders:
The Petitioners argued that the original order of the DRT, Jaipur merged into the order of the DRAT, Mumbai, thus conferring jurisdiction on the Bombay High Court. The Court agreed, citing the Supreme Court judgment in Collector of Customs v. East India Commercial Co. Ltd. (AIR 1963 SC 1124), which held that the appellate order is the operative order after the appeal is disposed of. Therefore, the order of the DRT in Jaipur merged into the order of the DRAT, Mumbai, giving jurisdiction to the Bombay High Court.
3. Cause of Action in Mumbai:
The Petitioners contended that a part of the cause of action arose in Mumbai, where the DRAT is situated, and where the consequences of the order fell on the Petitioners. The Court agreed, referencing the Division Bench judgment in Damomal Kausomal Raisinghani v. Union of India and Ors. (AIR 1967 Bom. 355) and the Delhi High Court judgment in Indian Institute of Technology v. Dr. P.C. Jain and Ors. [45 (1991) Delhi Law Times 42]. The Court also cited Article 226(2) of the Constitution of India, which allows High Courts to exercise jurisdiction where the cause of action arises, wholly or in part.
Conclusion:
The Bombay High Court held that it had jurisdiction to entertain the petition, as the order of the DRT, Jaipur merged into the order of the DRAT, Mumbai, and a part of the cause of action arose in Mumbai. The petition was adjourned to 2nd March 2001 for consideration on merits.
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2001 (3) TMI 943
The Appellate Tribunal CEGAT, Chennai allowed the appeals filed by a textile machinery manufacturer regarding the classification of imported goods under Customs Notification No. 156/86. The Tribunal found that the goods were eligible for the benefit of the notification as they were imported along with the machines and should be assessed accordingly. The Tribunal set aside the lower authorities' orders and directed refunds upon submission of original documents.
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2001 (3) TMI 938
Issues: Valuation of aerated waters for excise duty, Permissibility of deductions in assessable value, Inclusion of costs in assessable value, Time bar for demand
Valuation of Aerated Waters for Excise Duty:
The case involved a dispute regarding the valuation of aerated waters manufactured and cleared by the appellants during a specific period. The impugned order confirmed duty demand upon the appellants, along with penalties, based on the valuation issue. The show cause notice alleged that certain deductions claimed by the appellants were not permissible as they related to items of expenditure that should be included in the assessable value of goods. The impugned order held that costs like advertisement, publicity, and maintenance of depot, including employee salaries, should not be excluded from the assessable value.
Permissibility of Deductions in Assessable Value:
The appellants contended that the demand raised in the show cause notice was unjustified as it related to transport and distribution activities, not manufacturing. They argued that certain costs, such as depreciation for bottles and employee costs at the depot, should not be included in the assessable value. The appellants also challenged the order's inclusion of rent for the godown, claiming it was part of the factory rent. They emphasized that the costs in question were post-manufacture distribution activities and should not be included in the assessable value.
Inclusion of Costs in Assessable Value:
The learned DR argued that all costs incurred by the manufacturer, including depot maintenance costs, form part of the manufacturing cost and should be included in the assessable value. Referring to legal precedents, it was contended that costs like rent, electricity, water, and employee costs at the depot are rightly includible in the assessable value. The DR disputed the appellants' assertion that the costs should be excluded and supported the impugned order's findings.
Time Bar for Demand:
The appellants raised a time bar defense, claiming that the extended period for demand was not applicable as they had not suppressed any facts with intent to evade duty payment. However, it was held that the appellants did not inform the authorities about the deductions claimed, including depot maintenance costs and employee expenses. The judgment found that the proviso to Section 11A was attracted in the case due to lack of disclosure in the price list filed by the appellants.
Judgment:
The appeal was partially allowed and remanded for reconsideration of the issues related to the inclusion of depreciation for bottles and rent in the assessable value. The rest of the demand was confirmed. The Commissioner was directed to recompute the demand and reconsider the quantum of penalty in the remand proceedings. The judgment emphasized the need for a factual verification and reconsideration of certain aspects related to the valuation of aerated waters for excise duty.
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2001 (3) TMI 933
Issues Involved:
1. Whether the petitioner, as a secured creditor, is entitled to maintain the petition for winding up without relinquishing the security.
2. Whether the company has failed to secure the petitioner's debt.
3. Whether the petition for winding up can be maintained despite the petitioner having filed a civil suit.
4. Whether the petition contains adequate disclosure regarding the sufficiency of the security.
Summary:
Issue 1: Entitlement of Secured Creditor to Maintain Winding Up Petition Without Relinquishing Security
The principal point addressed was whether the petitioner, as a secured creditor, can maintain a winding-up petition without relinquishing its security. The court held that there is no merit in the respondent's submission that the secured creditor must relinquish the security before or at the time of filing the petition. Section 439 of the Companies Act, 1956, allows a secured creditor to present a winding-up petition. The court referenced the Division Bench decision in Bharat Overseas Bank Ltd. v. Shree Arcee Steels (P.) Ltd., which affirmed that a secured creditor could petition for winding up without relinquishing security. The court emphasized that the stage for relinquishing security arises when the secured creditor seeks to prove the whole of his debt in the winding-up proceedings, not at the time of filing the petition.
Issue 2: Failure to Secure the Petitioner's Debt
The respondent argued that the petitioner has valuable security in the form of an equitable mortgage of immovable property, thus the company cannot be deemed to have failed to secure the debt. The court noted that the company had acknowledged its liability of Rs. 4.42 crores as of 1-4-1998, and the offer of additional security indicated the inadequacy of the existing security. Therefore, the court found that the company had substantial dues owing to the petitioner, justifying the admission of the petition.
Issue 3: Maintenance of Winding Up Petition Despite Civil Suit
The respondent contended that the petition should not be entertained as the petitioner had already filed a civil suit. The court held that the object of a winding-up petition is to realize the property of the company for distribution to all creditors. The filing of a civil suit by the petitioner to enforce its security does not preclude the maintenance of the winding-up petition. The court clarified that when the stage for proving the debt arises, the petitioner would need to prove for the balance due after realizing the security.
Issue 4: Adequate Disclosure Regarding Sufficiency of Security
The respondent claimed that the petition did not disclose whether the security was sufficient to meet the petitioner's dues. The court found that the acknowledgment of liability by the company and the offer of additional security indicated that the existing security was inadequate. The court concluded that the petition contained sufficient disclosure regarding the dues and the inadequacy of the security.
Conclusion:
The company petition was admitted and made returnable on 4-7-2001. The respondent waived service. The court found no merit in the respondent's contentions and upheld the petitioner's right to maintain the winding-up petition as a secured creditor without relinquishing its security at the filing stage.
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2001 (3) TMI 932
Issues Involved:
1. Legality of convening an extraordinary general meeting (EGM) at a location other than the registered office.
2. Applicability of Section 166(2) of the Companies Act to EGMs.
3. Validity of Articles of Association in context to Sections 166 and 169 of the Companies Act.
4. Alleged hardship to shareholders due to the location of the EGM.
5. Prima facie case for granting an injunction.
6. Request for initiation of criminal contempt proceedings against the plaintiff.
7. Awarding of exemplary costs to the respondent.
Detailed Analysis:
1. Legality of Convening an EGM at a Location Other Than the Registered Office:
The plaintiff contended that the EGM should be held at the registered office or within the city where the registered office is situated, as per Section 166(2) of the Companies Act. The defendant argued that Article 74 of the Articles of Association allows the Board of Directors to convene meetings at any place. The court found that the plaintiff was aware of the distinction between annual general meetings (AGMs) and EGMs and that the EGM in question was not an AGM. Therefore, Section 166(2) did not apply, and the Board had the authority to decide the meeting's location.
2. Applicability of Section 166(2) of the Companies Act to EGMs:
The plaintiff argued that Section 166(2) applies to all meetings, including EGMs. The court clarified that Section 166(2) specifically pertains to AGMs, not EGMs. The court also noted that the plaintiff's pleadings did not support the claim that the meeting was an AGM. Consequently, the statutory provision of Section 166(2) was not applicable to the EGM.
3. Validity of Articles of Association in Context to Sections 166 and 169 of the Companies Act:
The plaintiff challenged Articles 73 and 74 of the Articles of Association, claiming they were void under Sections 166 and 169. The court held that Section 169 provides for EGMs on requisition by shareholders but does not exclude the Board's power to convene EGMs. Article 74, which allows the Board to convene EGMs, was found consistent with the law. Section 291 of the Companies Act empowers the Board to exercise all powers of the company, including convening EGMs.
4. Alleged Hardship to Shareholders Due to the Location of the EGM:
The plaintiff argued that holding the EGM in Mumbai would cause hardship to shareholders, especially those from Rajasthan. The court found that the majority of shareholders resided in Mumbai, making it a reasonable location for the meeting. The court also noted that the plaintiff's hardship was not sufficient to outweigh the convenience of the majority.
5. Prima Facie Case for Granting an Injunction:
The court evaluated whether the plaintiff had a prima facie case for an injunction. It concluded that the plaintiff failed to prove any irreparable injury or balance of convenience in his favor. The plaintiff's stake was negligible, and no other shareholders joined the suit. Therefore, the court found no grounds to grant an injunction.
6. Request for Initiation of Criminal Contempt Proceedings Against the Plaintiff:
The defendant requested criminal contempt proceedings against the plaintiff, alleging abuse of the court process. The court found no sufficient material to hold the plaintiff in contempt and declined the request.
7. Awarding of Exemplary Costs to the Respondent:
The defendant sought exemplary costs, arguing that the plaintiff's litigation was frivolous and caused harm to the company. The court did not find sufficient evidence of mala fide intent by the plaintiff and declined to award exemplary costs.
Conclusion:
The court dismissed the appeal, finding no prima facie case for the plaintiff and no irreparable injury. The balance of convenience was not in the plaintiff's favor, and the statutory provisions did not support his claims. The request for criminal contempt and exemplary costs was also denied. The appeal was dismissed with no order as to costs.
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2001 (3) TMI 931
Oppression and mismanagement - Held that:- Appeal dismissed. The Division Bench noticed that the position that petitioner No. 1 ceased to be a director is seriously disputed and the Division Bench ultimately concluded that the termination of directorship would not entitle such person to ask for winding up on just and equitable grounds inasmuch as there is an appropriate remedy by way of company suit which can give him full relief if such action had been taken by the company on inadequate ground. The Division Bench found that if a director even if illegally terminated cannot bring his grievance as to termination to winding up the company for that single and isolated act, even if it was doing good business and even if the director would obtain each and every adequate relief in a suit in a court. Thus no good reason to interfere with such an order
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