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2006 (1) TMI 657
The Gujarat High Court rejected the appeal and civil application based on a consolidated order passed by the Tribunal. (2006 (1) TMI 657 - GUJARAT HIGH COURT)
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2006 (1) TMI 656
Issues:
1. Challenge to order confirming service tax demand on Consulting Engineer services.
2. Interpretation of tax liability for services rendered outside India.
3. Appealability of order passed by Additional Commissioner.
4. Consideration of circular dated 3.3.2004 in appeal process.
5. Application of Rule 6 of Service Tax Rules in determining tax liability.
6. Assessment of service tax payment based on presence in India.
1. Challenge to Service Tax Demand:
The writ petition challenges the order confirming a service tax demand on Consulting Engineer services provided to a chemical fertilizer manufacturer. The petition argues that services were rendered outside India, making them non-taxable under the Act. It contests the imposition of penalty and interest, claiming the order failed to consider material contentions and evidence presented.
2. Interpretation of Tax Liability:
The petition asserts that services provided by the Consulting Engineer were to be rendered only in the Netherlands, where the provider operated from. It argues that the destination-based consumption tax principle is irrelevant when services are performed outside India. The petition highlights the presence of the provider's representatives in India for data collection purposes, not for service provision, and challenges the tax liability based on the limited duration of their stay.
3. Appealability of Order:
The respondents argue that the order is appealable to the Commissioner under Section 85 of the Act. However, the petition contends that a subsequent circular dated 3.3.2004 restricts the appeal process, stating that no appeal lies against the order. The court determines that the circular issued before the appeal period expired renders the appeal to the Commissioner non-maintainable.
4. Consideration of Circular in Appeal Process:
The petition raises the issue of the circular dated 3.3.2004 impacting the appeal process, indicating that orders by the Additional Commissioner cannot be revised or appealed under Sections 84, 85, and 86 of the Act. The court acknowledges the circular's effect on the appeal rights and rules against the appealability of the order to the Commissioner.
5. Application of Rule 6 of Service Tax Rules:
The debate centers on the application of Rule 6 of the Service Tax Rules, particularly before and after the circular dated 16.8.2002. The respondents argue that the circular clarifies tax liability for both service providers and recipients, enabling the recovery of service tax from the provider. The petition contests this interpretation, emphasizing the limited tax liability for services rendered in India.
6. Assessment of Service Tax Payment:
The court notes the failure of the Additional Commissioner to consider the petitioners' argument regarding the proportionate service tax payment based on the representatives' presence in India for 161 days. It highlights the lack of specific consideration of the key contention determining tax liability, leading to the order's setting aside and remittance for proper adjudication based on the petitioner's submissions.
In conclusion, the court allows the petition, setting aside the order and remitting the matter for reconsideration by the competent authority in light of the arguments presented and legal provisions discussed in the judgment.
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2006 (1) TMI 655
Issues Involved:
1. Compliance with Section 50 of the NDPS Act.
2. Compliance with Sub-section 2 of Section 42 of the NDPS Act.
3. Compliance with Sub-section 5 of Section 50 of the NDPS Act.
4. Consideration of sentence reduction.
Issue-wise Detailed Analysis:
1. Compliance with Section 50 of the NDPS Act:
The appellant contended that the notice (Ex.P.I) given by the SHO was not in accordance with Section 50 of the NDPS Act, as it failed to inform the accused of his legal right to be searched in the presence of a Magistrate or Gazetted Officer. However, the court referred to the Supreme Court's decision in Prabha Shankar Dubey v. State of M.P., which held that no specific form is required for the notice under Section 50, as long as the accused is made aware of his right. The court found that Ex.P.3 sufficiently complied with Section 50, and thus, this contention was dismissed.
2. Compliance with Sub-section 2 of Section 42 of the NDPS Act:
The appellant argued that the SHO did not properly forward the information to his superior officer as required by Sub-section 2 of Section 42. The court found that although the information was forwarded to S.P. Jhalawar (Ex.P.13), the SHO, being a Gazetted Officer, made the requirement of sending a copy to the superior officer non-mandatory, as per the Supreme Court's ruling in G. Srinivas Goud v. State of A.P. Therefore, this contention was also dismissed.
3. Compliance with Sub-section 5 of Section 50 of the NDPS Act:
The appellant contended that the SHO did not make sincere efforts to call independent witnesses for the search, as required by Sub-section 5 of Section 50 and Section 100 of the Cr.P.C. The court examined the evidence, including testimonies and documents, and found that the SHO did not issue written notices to any local inhabitants to attend and witness the search, despite the area being busy and witnesses being available. The court cited previous judgments, including Nadeem v. State of Rajasthan and Saudan and Anr. v. State of Rajasthan, which emphasized the necessity of independent witnesses to ensure the sanctity of the search. The court concluded that the recovery of contraband was not free from doubt due to non-compliance with these mandatory provisions.
4. Consideration of Sentence Reduction:
The appellant requested a reduction in the sentence, arguing that he had already served more than six and a half years in jail and that the quantity of contraband was only 5 grams. The court did not address this issue directly, as it found the conviction itself to be unsustainable due to the procedural lapses discussed above.
Conclusion:
The court allowed the appeal, set aside the trial court's judgment, and acquitted the appellant due to non-compliance with mandatory provisions regarding the presence of independent witnesses during the search. The appellant was ordered to be released forthwith, provided he was not required in any other case.
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2006 (1) TMI 654
The Supreme Court dismissed the appeal as premature because the application for rectification is pending before the Tribunal.
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2006 (1) TMI 653
Suit for grants temporary injunction - condition (relating to furnishing of Bank Guarantee) for temporary injunction - Validity of Arbitration agreement - "the purchase order" - Letters of Intent - Whether BINDAL and KGK are estopped from contending that there is no arbitration agreement, in view of their counsel having stated in his telex dated 11.4.1993, that his clients were in the process of jointly appointing an arbitrator? - rejection of the applications u/s 3 of the Foreign Awards Act - HELD THAT:- We find that the said submission of DR is based on two premises. The first is that there is an 'arbitration agreement' between 'DR' on the one hand and 'BINDAL' on the other as per Clause 27.4.2 of the 'General Conditions of Purchase'. The second is that even if Clause 27.4.2 of General Conditions of Purchase itself may not operate as an arbitration agreement between the parties, the Letters of Intent by KGK are purchase orders placed on behalf of BINDAL which are made subject to the General Conditions of Purchase including the arbitration clause (clause 27.4.2) and therefore, there is an arbitration agreement between DR and BINDAL/KGK. On a careful examination, we find that both premises are erroneous and are baseless assumptions.
When DR suggested modifications to the general conditions of purchase, and when BINDAL agreed to them, and both parties initialled Revision No. 4 containing the modifications to the General Conditions of Purchase, on 10.6.1991, no contract or agreement came into existence as it did not involve either an offer or acceptance or performance of any promise. "Revision No. 4" dated 10.6.1991 only consisted of the modifications to the General Conditions of Purchase, subject to which it was willing to enter into a contract with BINDAL for sale of machinery. Parties merely agreed that when an order was placed or contract was entered for supply of a machinery by DR to BINDAL, it will be subject to the 'General Conditions of Purchase' stipulated by BINDAL as modified by Revision No. 4 dated 10.6.1991 agreed by both parties.
Parties agreeing upon the terms subject to which a contract will be governed, when made, is not the same as entering into the contract itself. Similarly, agreeing upon the terms which will govern a purchase when a purchase order is placed, is not the same as placing a purchase order. A prelude to a contract should not be confused with the contract itself. The purpose of Revision No. 4 dated 10.6.1991 was that if and when a purchase order was placed by BINDAL, that would be governed by the "general conditions of purchase" of BINDAL, as modified by Revision No. 4. But when no purchase order was placed, neither the 'general conditions of purchase' nor the arbitration clause in the 'General Conditions of Purchase' became effective or enforceable.
The purchase order is the "agreement entered into between BINDAL and the prospective supplier as recorded in the purchase order form (prepared in the form of Attachment-VII to the General Conditions of Purchase) signed by the parties, including all Attachments and annexures thereto and all documents incorporated by reference therein together with any subsequent modifications thereof in writing." Admittedly, no such purchase order was placed by either BINDAL or any one authorized by BINDAL. It is also evident from Clause (I) of the Letters of Intent that the purchase order was to be issued simultaneously with the Letter of Credit. Clause (M) made it clear that the Letters of Intent were being issued subject to necessary approvals being given by the Authorities of the Indian Government. These provisions clearly indicate that the Letters of Intent were only a step leading to purchase orders and were not, by themselves, purchase orders. Therefore, issue the Letters of Intent by KGK, assuming that it was done on behalf of BINDAL, did not mean that the General Conditions of Purchase which contains the provision for arbitration became a part of the Letters of Intent or became enforceable.
When all the terms of the Letter of Intent are harmoniously read, what is clear is that Letters of intent merely required the supplier to keep the offer open till 31.8.1991 with reference to the price and delivery schedule. They also made it clear that if the purchase orders were not placed and Letter of Credit was not opened by 31.8.1991, DR was at liberty to alter the price and the delivery schedule. In other words, the effect of Letters of intent was that if the Purchase Orders were placed and LCs were opened by 31.8.1991, DR would be bound to effect supply within 151/2 months, at the prices stated in the Letter of Intent. Therefore, it may not be possible to treat the Letters of Intent as Purchase Orders.
Even if we assume that the Letters of Intent were intended to contracts for supply of machinery in accordance with the terms contained therein, it may only enable DR to sue for damages or sue for the expenses incurred in anticipation of the order and opening of LC. But that will not be of any assistance to contend that there was an arbitration agreement between the parties.
It is now admitted by DR that there is no document (Revision No. 4 or otherwise) modifying the general conditions of purchase, which is initialled by DR and KGK. The Revision No. 4 was initialled only by DR and BINDAL. Therefore, the general conditions of purchase containing the arbitration clause, never became a term of the letters of intent dated 12.6.1991. Clause (C) of the letters of intent made it clear that it is only the purchase orders which were to be placed in future on or before 31.8.1991 (along with opening of LC) that was to be subject to the General Conditions of Purchase. Therefore, we hold that the letters of intent, even if assumed to result in any binding contract, did not provide for arbitration.
Thus, neither the General Conditions of Purchase forming part of Invitation of Bid nor Revision No. 4 dated 10.6.1991, nor the Letters of Intent dated 12.6.1991 contain any arbitration agreement. There is also no other document or correspondence which can be read as containing a provision that can be interpreted as an agreement to resolve disputes by arbitration. We are, therefore, of the view, though for slightly different reasons, that the decision of the learned Single Judge and the Division Bench of the High Court holding that there is no arbitration agreement, does not suffer from any infirmity.
It is rightly pointed out by Shri Adarsh Kumar Goel, learned Counsel for the appellant that they had by mistake agreed for reference and that arbitrators could not decide the existence of the arbitration agreement or arbitrability of the disputes without prejudice to their stand that no valid agreement existed. Shri Nariman contended that having agreed to refer the dispute, the appellant had acquiesced to the jurisdiction of the arbitrators and, therefore, they cannot exercise the right u/s 33 of the Act. We find no force in the contention. As seen, the appellant is claiming adjudication u/s 33 which the Court alone has jurisdiction and power to decide whether any valid agreement is existing between the parties. Mere acceptance or acquiescing to the jurisdiction of the arbitrators for adjudication of the disputes as to the existence of the arbitration agreement or arbitrability of the dispute does not disentitle the appellant to have the remedy u/s 33 through the Court. In our considered view the remedy u/s 33 is the only right royal way for deciding the controversy.
We, therefore, do not find any reason to interfere with the decision of the Division Bench of the High Court. The appeals are, therefore, dismissed. Parties to bear their respective costs.
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2006 (1) TMI 652
Issues Involved:
1. Quashing of summoning order dated 27.7.1999 under Section 138 of the Negotiable Instruments Act.
2. Declining to recall the summoning order dated 10.2.2005.
3. Role and responsibility of the petitioner as a Director.
4. Non-service of individual notice to the petitioner.
5. Dismissal of proceedings against the Company Secretary.
6. Amendments in the Negotiable Instruments Act to curb delays.
7. Exercise of powers under Section 482 of the Code of Criminal Procedure.
Detailed Analysis:
1. Quashing of Summoning Order Dated 27.7.1999:
The petition was filed under Section 482 of the Code of Criminal Procedure to quash the summoning order dated 27.7.1999 under Section 138 of the Negotiable Instruments Act. The Metropolitan Magistrate, after hearing and perusing the record, opined that a prima facie case was made out and accordingly summoned the accused persons. The petitioner moved an application to recall the summoning order after more than four years, which was dismissed by the Metropolitan Magistrate on 10.2.2005.
2. Declining to Recall the Summoning Order Dated 10.2.2005:
The prayer for recall of the summoning order was declined based on the Supreme Court ruling in Adalat Prasad v. Roop Lal Jindal and Ors., which stated that the Magistrate cannot recall his own order and the only remedy is to approach the High Court under Section 482 of the Cr.P.C. The inherent jurisdiction of the High Court is to be exercised sparingly and in extraordinary situations.
3. Role and Responsibility of the Petitioner as a Director:
The petitioner, a Director at the time the financial assistance was taken and the cheque issued, was argued to be attending company meetings as required by company law. The complaint mentioned that the accused persons were in charge and responsible for the conduct of the business and played an active role in the management and day-to-day affairs. This satisfied the requirements of Sections 141(1) and 141(2) of the Negotiable Instruments Act.
4. Non-Service of Individual Notice to the Petitioner:
The petitioner contended that no individual notice was sent to him. However, it was established that under Section 141 of the Negotiable Instruments Act, notice sent to one partner or director operates as notice to the firm and other partners or directors. This view was supported by various judgments, including Jain Associates and Ors. v. Dipak Chaudhary and Co.
5. Dismissal of Proceedings Against the Company Secretary:
Proceedings against the Company Secretary were dropped as he was neither a Director nor a signatory to the cheque. The Company Secretary, being a mere employee acting upon the policy and resolutions of the company, had no active role in the demand for financial assistance or the issue of the cheque.
6. Amendments in the Negotiable Instruments Act to Curb Delays:
The Act has been repeatedly amended to curb delays in the disposal of cases under the Negotiable Instruments Act. The amendments aimed at early disposal of cases, enhancing punishment for offenders, and introducing electronic forms of cheques. The amendments also mandated that the Trial Court make efforts to conclude the trial within six months.
7. Exercise of Powers Under Section 482 of the Code of Criminal Procedure:
The inherent power of the High Court under Section 482 should not be exercised to stifle a legitimate prosecution. The High Court should refrain from making prima facie decisions where the facts are incomplete and evidence has not been fully presented. The Supreme Court in Raj Lakshmi Mills v. Shakti Bhakoo held that at the summoning stage, the High Court could not assume facts to find that the respondent was not responsible for the conduct of the business.
Conclusion:
The petition was dismissed with costs of Rs. 10,000 in favor of the respondent. The Trial Court was directed to dispose of the matter preferably within four months. The judgment emphasized that attempts to challenge every order without sufficient material would negate the purpose of the amendments in the Negotiable Instruments Act and delay justice.
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2006 (1) TMI 651
Issues:
- Denial of Modvat credit and penalty imposition on appellants.
Analysis:
1. The appeal challenges the denial of Modvat credit and imposition of penalties on the appellants. The primary issue revolves around the classification of inputs used by the appellants, namely steel plates and dissolved acetylene gas, in their sugar manufacturing factory.
2. The appellants used steel plates for machinery repairs and acetylene gas for machinery maintenance. The contention was that steel plates were essential for repairing machinery used in sugar production. The Tribunal referred to a previous case where Modvat credit on steel plates for sugar manufacturers was allowed, establishing a precedent for the current case.
3. The Tribunal noted that the use of steel plates for repairing machinery directly involved in sugar production warranted Modvat credit. However, concerning the dissolved acetylene gas, the Tribunal cited a previous decision where it was held that such inputs, not co-extensively used in the manufacturing process, were not eligible for credit. Consequently, the appellants were denied Modvat credit on the duty paid for acetylene gas.
4. In terms of penalties, the Tribunal found that the appellants had relied on established case laws for claiming duty credit, indicating no malicious intent. Therefore, the penalty imposed on the appellants was deemed unwarranted and subsequently set aside.
5. Ultimately, the Tribunal allowed the appeal in part, granting Modvat credit on steel plates used for machinery repairs but rejecting the credit for dissolved acetylene gas. The penalty imposed on the appellants was also overturned due to the lack of malicious intent in claiming duty credit based on legal precedents.
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2006 (1) TMI 650
Issues Involved:
1. Disinvestment and acquisition of shares.
2. Appointment of directors.
3. Allotment and transfer of shares.
4. Voting rights on preference shares.
5. Allegations of financial mismanagement.
6. Legal validity of board meetings and resolutions.
7. Allegations of fraud and oppression.
Detailed Analysis:
1. Disinvestment and Acquisition of Shares:
The Government of India, through ITDC, decided to divest its ownership of Indraprastha Hotel by transferring it to Hotel Queen Road Private Ltd. The 6th respondent, a public company, acquired the majority shares held by GOI and Indian Hotels Ltd through a Share Purchase Agreement dated 8.10.2002. The acquisition was funded through loans and cash contributions from the 2nd and 2nd petitioners.
2. Appointment of Directors:
Post-acquisition, the 2nd, 3rd respondents, and the 2nd petitioner were appointed as additional directors on 8.10.2002, and later as regular directors in the AGM on 28.12.2002. The 6th respondent transferred shares to various individuals, including the 2nd and 3rd respondents and the 2nd petitioner.
3. Allotment and Transfer of Shares:
The 1st petitioner challenged the allotments of equity shares and the transfer of shares from the 6th respondent to the 2nd respondent, seeking cancellation of these transactions. The petitioners alleged that these allotments and transfers were made to benefit the directors and their group companies, violating fiduciary duties and statutory provisions.
4. Voting Rights on Preference Shares:
The 1st petitioner claimed voting rights on preference shares due to non-payment of dividends for two consecutive years, as per Section 87(2) of the Act. The company contested this, and the High Court ruled that the 1st petitioner had no voting rights on the preference shares. The 1st petitioner appealed this decision.
5. Allegations of Financial Mismanagement:
The petitioners alleged financial mismanagement based on the auditor's qualified report for the year 2003-2004. However, these allegations were not pressed during the hearing, and the respondents provided satisfactory explanations for the auditor's remarks.
6. Legal Validity of Board Meetings and Resolutions:
The petitioners argued that board meetings held without notice to the 2nd petitioner were invalid, citing various legal precedents. The respondents countered that the 2nd petitioner never received notices for any board meetings and did not raise this issue earlier. The court held that invalidating only the impugned meetings would be unjust, as it would affect the petitioners' own status as shareholders.
7. Allegations of Fraud and Oppression:
The petitioners alleged that the transfer of shares and the allotments were fraudulent and oppressive, aimed at denying the 1st petitioner its voting rights on preference shares. The court found no evidence of fraud or suppression of material facts. The court also noted that the 1st petitioner's primary objective was to gain control of the company, not to redress grievances of oppression.
Conclusion:
The court concluded that the petitioners failed to establish acts of oppression or mismanagement. It dismissed the petition but granted some relief to the 2nd petitioner, directing the respondents to offer proportionate shares to the 2nd petitioner and to transfer shares against his loan. The court also directed the company to pay dividends due on preference shares if requested by the 1st petitioner and to ensure proper notice for future board meetings.
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2006 (1) TMI 649
Issues Involved:
1. Legality of the sanction of building plans for additions/alterations to convert an existing cinema into a multiplex-cum-commercial complex.
2. Adequacy of parking facilities and impact on traffic circulation.
3. Compliance with the Master Plan of Delhi, Unified Building Bye-Laws, and the Cinematograph Act.
4. Timeliness of the writ petition and the doctrine of laches.
5. Judicial restraint and the separation of powers between the judiciary and executive authorities.
Detailed Analysis:
1. Legality of the Sanction of Building Plans:
The writ petition sought to quash the sanction of building plans for converting an existing cinema into a multiplex-cum-commercial complex. The petitioner alleged that the construction was unauthorized and in violation of the Master Plan of Delhi, Unified Building Bye-Laws, and the Cinematograph Act. The respondent countered that all necessary sanctions and approvals were obtained from relevant authorities, including the MCD, DUAC, and DCP (Traffic), and that the plans complied with all statutory requirements. The court found that the necessary approvals were indeed obtained, and the construction was in compliance with the sanctioned building plans.
2. Adequacy of Parking Facilities and Impact on Traffic Circulation:
The petitioner argued that the multiplex would attract a large number of cars, leading to traffic congestion and insufficient parking facilities. The respondent provided evidence that the parking space was increased from 78 to 98 car spaces, exceeding the statutory requirement. The court noted that the DCP (Traffic) had prescribed entry and exit gates, and these directives were followed. The court concluded that the parking provisions were adequate and met the requirements under the Master Plan, 2001, and other relevant regulations.
3. Compliance with the Master Plan of Delhi, Unified Building Bye-Laws, and the Cinematograph Act:
The petitioner claimed that the construction violated the Master Plan of Delhi and the Unified Building Bye-Laws. The respondent demonstrated that the plans were sanctioned in accordance with the Master Plan, 2001, and other relevant laws. The court observed that the authorities had considered all relevant standards and requirements, and the sanctioned plans conformed to the provisions of the Building Bye-Laws, Master Plan, and Delhi Cinematograph Rules.
4. Timeliness of the Writ Petition and the Doctrine of Laches:
The court emphasized the doctrine of laches, noting that the writ petition was filed after the construction was completed and the application for the Completion Certificate was submitted. The court held that the petition should have been dismissed on the ground of laches, as it was filed after unreasonable delay without any proper explanation. The court cited several precedents to support the principle that writ jurisdiction is discretionary and may be denied if there is undue delay in filing the petition.
5. Judicial Restraint and the Separation of Powers:
The court underscored the importance of judicial restraint and the separation of powers between the judiciary and executive authorities. It stated that granting permissions and regulating traffic are executive functions, and it is inappropriate for the judiciary to encroach upon these functions. The court reiterated that it should defer to the opinion of administrative authorities unless there is a clear violation of law or something shockingly arbitrary. The court found no illegality or shocking arbitrariness in the decisions of the MCD and other authorities, and thus, it was not appropriate for the court to interfere.
Conclusion:
The court set aside the impugned judgment of the learned Single Judge and allowed the appeal, upholding the sanction order of the MCD dated 4.12.2002. The court emphasized the need for judicial restraint and the doctrine of laches, concluding that the writ petition was filed after unreasonable delay and that the construction complied with all relevant statutory requirements.
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2006 (1) TMI 648
The High Court of Delhi allowed the petition and directed the winding up of the respondent due to admitted liability of Rs. 73,106. The Official Liquidator was appointed to take necessary steps as per law.
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2006 (1) TMI 647
Applications to quash the investigation - seeking to released on bail - large economic scam - violation of applicable banking procedures and regulations - application for recall of the order of the learned Chief Metropolitan Magistrate directing investigation u/s 156(3) of the CrPC - Offences under Sections 405, 406, 408, 409 and 120B of the Indian Penal Code, 1860 ("IPC"), read with Section 35A of the Banking Regulation Act, 1949 - HELD THAT:- In the facts of the present case, we are satisfied that the complaints, which were filed in respect of malfeasance and misfeasance within the jurisdiction of the Ahmedabad Police, were not in respect of the same cognizable offence or the same occurrence giving rise to one or more cognizable offences, nor were they alleged to have been committed in the course of the same transaction or the same occurrence as the ones alleged in First C.R. No. 67/2001.
In our view, the distinctions drawn by the High Court are fully justified. The High Court was right in observing that the FIRs, which were under challenge before it, were regarding independent and distinct offences. Hence, the FIRs could not be prohibited on the ground that some other FIR had been filed against the Petitioner in respect of other allegations made against the Petitioner.
Moreover, the High Court was correctly cognizant of limitations while exercising its powers u/s 482 of the CrPC, which should not in any event, be exercised lightly. Reading the impugned judgment of the High Court as a whole, we are satisfied that there is no scope for interference by us. The High Court was justified in declining to exercise its powers u/s 482 of the CrPC and in refusing to interfere with the orders passed by the learned Chief Metropolitan Magistrate. Finally, considering the nature of the allegations involved and the facts and circumstances of the present case, we too are not inclined to exercise our extraordinary powers under Article 136 of the Constitution to interfere.
Special Leave Petition (Crl.) is directed against the judgment of the Gujarat High Court declining to grant bail to the Petitioner. Having perused the order and the record, Thus, we are not satisfied that in the facts and circumstances of the case, the Petitioner is entitled to be released on bail. The order of the High Court appears to be justified. We find no reason to interfere.
In the result, Special Leave Petition (Crl.) are found to be without merit and are hereby dismissed. Special Leave Petition is also dismissed.
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2006 (1) TMI 646
Initiation of contempt proceedings - directions given form the subject matter of challenge - default in complying with the directions - whether the earlier decision which has received its finality had been complied with or not? - HELD THAT:- If any party concerned is aggrieved by the order which in its opinion is wrong or against rules or its implementation is neither practicable nor feasible, it should always either approach the court that passed the order or invoke jurisdiction of the appellate court. Rightness or wrongness of the order cannot be urged in contempt proceedings. Right or wrong, the order has to be obeyed. Flouting an order of the court would render the party liable for contempt. While dealing with an application for contempt the court cannot traverse beyond the order, non-compliance with which is alleged. In other words, it cannot say what should not have been done or what should have been done. It cannot traverse beyond the order. It cannot test correctness or otherwise of the order or give additional direction or delete any direction. That would be exercising review jurisdiction while dealing with an application for initiation of contempt proceedings. The same would be impermissible and indefensible.
We notice that pursuant to the direction given by the High Court, the exercise directed to be undertaken was in fact undertaken. The respondent was given promotion and in the meantime he has retired. That being so, it is not necessary to go into the correctness of the direction given, except clarifying the position in law.
The appeal is accordingly disposed of.
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2006 (1) TMI 645
Constitutional scheme - fundamental right of education - State to establish Project Schools - Petition filled by Teaching and non-teaching staff - seeking payment of salaries to the teaching and non teaching staff of 300 schools - Validity of circular letter dated 04.02.1989 - appointment by the Vidyala Sewa Board - decision of the Cabinet to sanction four additional posts in each of the 300 Project Schools - educational qualification of the teaching staff - HELD THAT:- So far as taking over of the services of the teaching and non-teaching staff of the Project Schools is concerned, even the same is surrounded by mystery. Counsel appearing on behalf of the Respondents had unequivocally stated that the services of the teaching and non-teaching staff had been regularized. The expression ’regularization’ has a definite connotation. Regularization of services must precede a legislative act or in absence of legislation, rules framed in terms of proviso appended to Article 309 of the Constitution of India.
There is nothing on record to show as to the precise job required to be performed by the three men Committee i.e. they were to identify such schools which met the criteria laid down in the Circular letter dated 25.9.1981 or 25.1.1985 or whether they were also to scrutinize the academic and other qualifications required for appointment of the teaching and nonteaching staff. Except certain statements made in the affidavit before the High Court as also before us the parties herein had not produced any document to show that on what term or terms the process of recognition/taking over of the private schools had been made.
There is no dispute about 150 schools. Various documents as also the affidavits filed on behalf of the State in no uncertain terms show that besides the schools which were established by the State and are being run by it, there are various other schools over which there was a dispute about their identification.
The Government established 75 schools and three men Committee identified 57 schools. The teachers of the said schools were appointed by Vidyala Sewa Board, but the documents produced and the affidavits affirmed by the parties point out 300 schools. We have noticed some discrepancies hereinbefore to show that the number of the schools mentioned by either side may not be entirely correct but the fact remains that before the Cabinet also, a representation was made by the authorities of the State themselves that 300 schools are in place. It is only on that basis the Cabinet sanctioned 1200 more posts.
We have noticed that there is no dispute that in the years 1982-83 and 1983-84, no school was recognized or established. We have also noticed hereinbefore that one of the conditions for recognition was that the teachers were required to be appointed by the Vidyala Sewa Board. In the aforementioned context, the letter dated 4.2.1989 is required to be considered for the purpose of this case.
Indisputably, if somebody has any say in this behalf it will be the Bihar Senior School Education Board, a statutory authority who is statutorily enjoined to lay down the criteria for the purpose of recognition of said schools by it. But for all intent and purport this issue has become academic. In view of the fact that the State itself has realized the difficulty which the schools would face if only 5 posts are sanctioned in each school. The Cabinet itself realized that like any school run by the Government, it is necessary to have at least 9 teachers even in the project schools. The strength of the teachers for such schools has not only been sanctioned, sanction therefor was given with retrospective effect and retroactive operation. Necessary funds were allocated for the said purpose. Although, thus, it was the prerogative of the State to lay down the criteria, the same has been laid down. Therefore, correctness or otherwise of the finding of the High Court that the State was bound to recognize at least 9 teachers in each school, for all intent and purport is now academic.
It is furthermore not in dispute that the State for the first time in its letter dated 04.02.1989 laid down the qualifications for the teachers as also the strength thereof.
The validity and/or legality of the said Government order dated 04.02.1989 was questioned before the High Court. The High Court, as noticed supra set aside the said directions holding that 9 teachers were required to be appointed in each of the schools. This part of the order of the High Court does not require elaborate consideration as the State Government had now sanctioned 4 additional posts with retrospective effect.
Even if there is no dispute as regard number of schools, in view of the stand taken by the State and particularly in view of the fact that it appears from the records that recognition of the school, if any, had wrongly been granted to some schools where buildings were also not completed or the process of selection was also not over, it may be necessary for the State to have a further look in the matter.
It is furthermore necessary to scrutinize as to whether the teaching and non-teaching staff appointed for the said purpose fulfill the criteria in terms of the policy decision of the State or not. Their qualifications laid down under other relevant statutes for the purpose of obtaining permission must also be scrutinized.
We do not find any merit in the contention raised by the learned counsel appearing on behalf of the Respondents that the principle of equitable estoppel would apply against the State of Bihar. It is now well known, the rule of estoppel has no application where contention as regard constitutional provision or a statute is raised. The right of the State to raise a question as regard its actions being invalid under the constitutional scheme of India is now well recognized. If by reason of a constitutional provision, its action cannot be supported or the State intends to withdraw or modify a policy decision, no exception thereto can be taken. It is, however, one thing to say that such an action is required to be judged having regard to the fundamental rights of a citizen but it is another thing to say that by applying the rule of estoppel, the State would not permitted to raise the said question at all. So far as the impugned circular dated 18.02.1989 is concerned, the State has, in our opinion, a right to support the validity thereof in terms of the constitutional framework.
Having said so, we must observe that the ultimate decision must be left at the hands of the State. In view of the Cabinet decision dated 25.01.2000, 300 schools are said to have been recognized. We have, however, our doubts as to whether all correct facts have been placed before the Cabinet or not particularly in view of the fact that many of the schools which were established in Chhotanagpur and Santhal Pargana are now in the State of Jharkhand. We have pondered over the matter but we are not very sure as to whether apart from the schools which had been identified by the three-man committee and admittedly recognized by the State, any final decision had been taken as regard recognition or otherwise of the remaining schools by the appropriate authority.
Thus, we are of the opinion that a committee should be constituted for the said purpose.
The Chief Secretary of the State of Bihar is, therefore, requested to constitute a committee comprising of two officers and one Educationist of repute and/or a retired Judicial officer. In the event a Judicial Officers is appointed as a member of the committee, he would be the chairman thereof. Remuneration of the Judicial Officers and/or the Educationist shall be determined by mutual agreement.
The Chief Secretary is hereby requested to place at the disposal of the committee the requisite staff, which may be required by the committee, from amongst the staff of one or the other department of the State.
In the event it is found that teachers have been appointed on ad hoc basis, the Vidayalay Sewa Board shall be directed to make regular recruitment strictly in accordance with law.
All the concerned Regional Deputy Directors of Education must also submit their reports in respect of the Project Schools within four weeks from date before the committee.
The Committee shall also deal with all such individual cases of the Appellants, as has been directed in para 35 of the judgment of the High Court.
All the educational institutions claiming recognition or having any other claims would file their representations together with all supporting documents within three weeks from date. In their applications, the institutions must also give details of the students admitted in each class year-wise. Although from the records, it appears that about 300 schools laid their claims having been recognized which is also evident from the decision of the Cabinet, we are of the opinion that the question as to how many schools fulfil the criteria laid down by the State Government in terms of its policy decision must be considered afresh.
As the constitution of the Committee may take some time, such claims may be filed in the office of the Education Secretary, who would open an appropriate cell in this behalf. The committee upon scrutinizing the claims of the institutions and/or the teaching and non-teaching staff would submit a report before the Chief Secretary within three months.
The Chief Secretary is requested to place the said report together with his comments thereupon before the appropriate authority in terms of the Rules of Executive Business and it is expected that the said authority of the Government of Bihar shall take appropriate decision thereupon within four months from date.
We would appreciate, if the State Government takes suitable action against those who may be found responsible for commission of irregularities and/or illegalities in the process of implementation of the Government scheme in accordance with law. As regard minimum age of the teaching and non teaching staff, indisputably the same should be 18 years.
So far as educational qualification of the teaching staff is concerned, we are of the opinion that having regard to the fact that the limited number of teachers were to be appointed with a view to accomplish a constitutional goal of spreading literacy in the villages, particularly amongst the girls, the standard adopted in Zila Schools or Government schools constituted in urban areas may not be insisted upon, as was observed by the High Court, but keeping in view the fact that it is essentially a Government function, the question as to whether some teachers having B.T. training or training in Physical Education would be allowed to continue in the said Project Schools or not is left to the State, wherefor a decision in a decision in accordance with law may be taken.
These appeals are disposed of with the aforementioned observations and directions. Thus, there shall be no order as to costs.
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2006 (1) TMI 644
The High Court of Bombay heard a case where the Commissioner of Customs sought to restrain the CESTAT from hearing an appeal. The appeal was heard by CESTAT despite objections, and the petition was allowed to be withdrawn with all contentions kept open.
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2006 (1) TMI 643
Issues:
Appeal against High Court judgment reducing sentence and awarding compensation to victims.
Analysis:
The case involved two appeals, one by the State of Gujarat and the other by the victim of the crime, challenging the judgment of the Division Bench of the Gujarat High Court. The accused were charged under various sections of the Indian Penal Code and the Bombay Police Act for assaulting the victims, resulting in serious injuries. The trial court convicted the accused and sentenced them to rigorous imprisonment, but acquitted them of certain charges. During the appeal before the High Court, the conviction was not disputed, but the accused sought leniency due to being students with no criminal antecedents. The High Court, while upholding the conviction, reduced the sentence to the period already served and imposed a fine as compensation to the victims.
The Supreme Court emphasized the importance of the law in regulating social interests and maintaining order in society through the criminal justice system. It highlighted the need for sentencing to be proportionate to the crime committed, considering factors such as the nature of the offense, motive, conduct of the accused, and the impact on the victims and society. The Court stressed that undue sympathy leading to inadequate sentences could undermine public confidence in the legal system. It cited previous judgments to support the principle that appropriate punishment should reflect the gravity of the crime and serve as a deterrent to future offenses.
In this case, the Supreme Court found that the High Court had not considered crucial factors such as the criminal antecedents of the accused and the number of pending cases against them. The Court observed that the High Court's decision was based on erroneous premises and lacked adherence to correct sentencing principles. As a result, the Supreme Court set aside the High Court's judgment and remitted the matter for a fresh hearing on the question of sentencing, directing the High Court to reconsider the case without influence from the previous appeals. The appeals were allowed to the extent of setting aside the High Court's judgment.
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2006 (1) TMI 642
Issues:
1. Imposition of penalty under section 17(3) of the M.P. General Sales Tax Act, 1958 without a positive finding of lack of sufficient cause.
2. Interpretation of provisions related to penalty under section 17(3)(b) of the Act.
3. Discretion of the Commissioner in imposing penalties for failure to furnish returns or proof of payment.
Analysis:
Issue 1: The case involved a reference under section 44 of the M.P. General Sales Tax Act, 1958 regarding the imposition of a penalty of Rs. 19,191 under section 17(3) of the Act on M/s Eastern Air Products (Pvt.) Ltd. for late filing of returns and non-payment of monthly tax for the Diwali year 1983-84. The Board of Revenue set aside the penalty, stating that there was no positive finding of lack of sufficient cause in the assessment order, which is necessary to initiate penalty proceedings. The High Court clarified that the absence of sufficient cause alone does not automatically authorize penalty proceedings; the Commissioner has discretion and must provide the dealer with an opportunity to establish sufficient cause before imposing a penalty.
Issue 2: The provisions under section 17(3)(b) of the Act allow for the imposition of a penalty if a registered dealer fails, without sufficient cause, to pay tax or furnish returns as prescribed. The Commissioner may direct the dealer to pay a penalty, but only after giving a reasonable opportunity to be heard. The Court emphasized that if a registered dealer shows sufficient cause for the delay in filing returns or providing proof of payment, the penalty cannot be imposed. The discretion to impose penalties lies with the Commissioner, who must consider the circumstances and reasons presented by the dealer.
Issue 3: The Court noted that the initiation of penalty proceedings can occur when a dealer fails to meet the prescribed deadlines, prompting the Commissioner to ask for an explanation. However, the Commissioner must record a finding that either no cause was shown or that the cause presented was insufficient before imposing a penalty. In this case, the Court found that the penalty was imposed without clarity on whether the assessee was given the opportunity to explain the defaults mentioned in the assessment order. The Court concluded that the imposition of the penalty would be justified only if the dealer was provided with a chance to show cause for the defaults.
In conclusion, the High Court clarified the requirements for imposing penalties under section 17(3) of the Act, emphasizing the need for a positive finding of lack of sufficient cause before penalties can be enforced. The Court highlighted the Commissioner's discretion in penalty imposition and the importance of providing dealers with an opportunity to explain any delays or defaults before penalties are levied.
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2006 (1) TMI 641
Supreme Court dismissed the appeal in the case. Citation: 2006 (1) TMI 641 - SC. Judges: Mrs. Ruma Pal, Dr. AR. Lakshmanan, Mr. Dalveer Bhandari.
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2006 (1) TMI 640
Issues:
Challenge to order on levy of interest under Section 234B of the Income-tax Act, 1961.
Analysis:
The appeal was filed under Section 260A of the Income-tax Act, 1961, contesting the order of the Income-tax Appellate Tribunal setting aside the levy of interest under Section 234B. The Tribunal based its decision on a previous judgment by a Division Bench in the case of KWALITY BUSCUITS LTD. v. COMMISSIONER OF INCOME-TAX, where it was held that the liability of the assessee for tax payment under Section 115J arises only when the total income is less than 30% of its book profits. The judgment emphasized that the determination of total income and book profits can only occur at the end of the assessment year, and the provisions of Section 207, 208, 209, or 210 cannot apply until the accounts are audited and the balance sheet is prepared. The liability for tax would arise only after the book profits are determined in accordance with the Companies Act. Consequently, the authorities were deemed unjustified in directing to charge interest under Section 234B and 234C of the Act.
The case in question falls under Section 115J(A) of the Act, which pertains to deemed income for certain companies. The court concurred with the principles established in the KWALITY BUSCUITS case, asserting that the same reasoning applies to the current assessment. As a result, the court found no merit in the appeal and proceeded to dismiss it accordingly.
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2006 (1) TMI 639
The Delhi High Court dismissed the writ petition after the petitioner sought to withdraw it, reserving the liberty to seek other remedies available under the law.
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2006 (1) TMI 638
Issues involved:
Whether the cost of scrap sold by respondent is includible in the value of components manufactured by it.
Analysis:
The Supreme Court heard the matter concerning the inclusion of the cost of scrap sold by the respondent in the value of components manufactured by it. A three-Judge Bench felt it necessary to obtain a report from a Cost Accountant to address the costing aspects of the case. The parties agreed to invoke the provisions of Section 14A of the Central Excise Act, 1944. The Court accepted the report of the Cost Auditor, Mr. Sanjay R. Bhargave, and heard the parties in reference to the report.
The Court determined that the matter required re-hearing by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench in Mumbai. This decision was based on the various costing aspects highlighted in the Cost Auditor's report. The Court noted that the report favored the respondent, but the Revenue's counsel raised the need for clarifications in certain areas. It was deemed essential for the Tribunal to decide the case based on factual aspects and relevant legal provisions.
Consequently, the Supreme Court remitted the matter to the Tribunal for a fresh hearing with reference to the Cost Auditor's report. Both parties were allowed to present their positions regarding the report. The Revenue's counsel was directed to submit a copy of the report to the Tribunal within six weeks for scheduling a new hearing date. The Tribunal was granted the authority to consider all connected issues during the rehearing process. Ultimately, the appeals were disposed of accordingly by the Supreme Court.
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