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2003 (11) TMI 633
Issues Involved:
1. Administration of the deceased's estate.
2. Allotment of legacy under the Will.
3. Application under Order 7 Rule 11 of the Code of Civil Procedure.
4. Jurisdiction of the Civil Court.
5. Applicability of the Indian Succession Act, 1925.
Detailed Analysis:
1. Administration of the Deceased's Estate:
The respondent/plaintiff instituted a suit for the administration of the deceased's estate, seeking various reliefs including the due administration of the estate, allotment of property, accounting, and injunctions. The plaintiff alleged that the defendant, despite having obtained probate, failed to administer the estate as per the Will and the law, thereby withholding the plaintiff's due share.
2. Allotment of Legacy Under the Will:
The plaintiff sought the allotment of the 'A' Schedule property as per the deceased's Will. The dispute centered around whether the administration of the estate was complete and whether the plaintiff was entitled to his share. The court noted that the plaintiff, being a joint executor, did not fulfill his duties, and the administration by the defendant was still ongoing. The court emphasized that title cannot pass to the legatee until the administration is complete, as per Section 141 of the Indian Succession Act, 1925.
3. Application Under Order 7 Rule 11 of the Code of Civil Procedure:
The defendant filed an application under Order 7 Rule 11 for the dismissal of the suit, which was initially granted by the Court of first instance. The First Appellate Court set aside this order, remanding the matter for fresh decision after considering evidence. The High Court, however, upheld the initial dismissal, stating that the suit was premature and barred by law, as the administration of the estate was not complete.
4. Jurisdiction of the Civil Court:
The court discussed whether the Civil Court had jurisdiction to entertain the suit. It was held that the Indian Succession Act, 1925, provides a comprehensive mechanism for dealing with issues related to the administration of estates, and the Civil Court's jurisdiction was impliedly barred. The court relied on Section 216 of the Indian Succession Act, which states that only the grantee of probate or letters of administration has the power to sue or act as the representative of the deceased until such probate or letters are revoked.
5. Applicability of the Indian Succession Act, 1925:
The court emphasized that the Indian Succession Act, 1925, is a complete code in itself, providing adequate remedies for grievances related to the administration of estates. The plaintiff should have sought relief under this Act rather than filing a civil suit. The court also referred to Section 263 of the Act, which allows for the revocation or annulment of probate or letters of administration for just cause.
Conclusion:
The High Court concluded that the suit was premature and barred by law as per the Indian Succession Act, 1925. The First Appellate Court's order was set aside, and the initial dismissal by the Court of first instance was confirmed. The court reiterated that the plaintiff should seek remedies within the framework of the Indian Succession Act rather than through a civil suit.
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2003 (11) TMI 632
Issues:
Interpretation of circulars regarding pay scale entitlement based on educational qualifications for JBT teachers appointed on ad hoc basis in Haryana schools in 1982-1983.
Analysis:
The case involved JBT teachers appointed on ad hoc basis in Haryana schools in 1982-1983, possessing JBT and Prabhakar qualifications. The State of Punjab issued a Circular in 1957 regarding higher pay scale upon acquiring specific educational qualifications, allegedly applicable to Haryana. Subsequent orders in 1979 and 1990 clarified the pay scale revision policy for teachers. The 1990 Order emphasized that higher qualifications do not automatically entitle teachers to higher pay scales, specifying that teachers should be placed in pay scales corresponding to their appointed posts, regardless of additional qualifications acquired during service.
The respondents filed a writ petition in 1995 seeking higher pay scales based on their B.A. or B.Ed. qualifications, citing a 1998 circular. The High Court, referencing a previous case, directed the appellant to grant the respondents the pay scale of a Hindi teacher. The appellant challenged this decision, arguing that the High Court's view was erroneous, referring to a Supreme Court decision from 1999. The respondents relied on another case to support the High Court's stance.
In a previous case, the Supreme Court held that a higher pay scale is not automatically granted based on acquired qualifications due to policy changes by the State. The Court directed that teachers who obtained B.T./B.Ed. before a specific date were entitled to higher pay scales as per the 1957 circular. Another case emphasized that teachers acquiring postgraduate qualifications must be appointed as per rules to receive pay scales applicable to lecturers. The respondents, appointed after 1957 with matriculate qualifications, were not automatically entitled to higher pay scales despite holding advanced degrees before appointment.
The Supreme Court concluded that teachers were only entitled to higher pay scales if they enhanced their qualifications during service, not prior to joining. The Court noted that similar qualifications did not guarantee higher pay scales unless acquired during service. The High Court's oversight of this aspect and the inability to pass orders contrary to statutes led to the appeal's allowance, setting aside the High Court's judgment.
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2003 (11) TMI 631
Constitutional validity of Sections 16(6), (7), (8), 20-A, and 20-B of the Madhya Pradesh Motoryan Karadhan Adhiniyam, 199 ['the Act'] - Repugnancy between the Madhya Pradesh Motoryan Karadhan Adhiniyam and the Motor Vehicles Act, 1988 - Proportionality and arbitrariness of the confiscation provisions - HELD THAT:- Section 192A of the MV Act provides that if a motor vehicle is driven in contravention of Section 66(1), that is, if a vehicle is driven or caused to be driven as a transport vehicle without permit, or in contravention of any or in contravention of any condition thereof relating to the route on which or the area in which or the purpose for which the vehicle may be used, the user is punishable with fine for the first offence and imprisonment for the subsequent offence but this section does not provide for confiscation of the vehicle. Section 16(6) of the Act provides that subject to the provisions of Sub-section (8), where upon receipt of report about the seizure of the vehicle under Sub-section (3), the Taxation Authority is satisfied that the owner has committed offence u/s 66 read with Section 192A of the MV Act of plying vehicle without permit and he may by order in writing and for reasons to be recorded confiscate the vehicle seized under the said provision. Under Section 16(3) of the Act, a vehicle seized for non-payment of tax or other dues is liable to be returned on showing that tax has been paid.
Thus if tax with regard to the seized vehicle is paid that vehicle has got to be released. So far as the link that is sought to be established with taxation procedures, snaps the moment tax is paid and vehicle is released. In such an event also motor vehicle can be confiscated on a report that such vehicle had been seized. The cause or basis for confiscation of motor vehicle is driving such vehicle contrary to Section 66 of the MV Act read with Section 192A of the MV Act and a report of seizure u/s 16(3) of the Act.
The mere fact that such vehicle is seized for that purpose by itself will not result in confiscation of the vehicle. For confiscation of the vehicle the factor that weighs with the authority as provided u/s 16(6) of the Act is that the owner of the vehicle should have committed an offence u/s 66 read with Section 192A of the MV Act for which provision has been made in the MV Act itself and that provision clearly sets out the nature and degree of punishment but does not include confiscation.
It is clear that confiscation would arise only in the event if an offence is committed u/s 66 read with Section 192A of the MV Act and, therefore, such provision could not have been enacted without the assent of the President as the same directly impinges upon Article 254 of the Constitution. Under Article 254 of the Constitution, the law made by Parliament will prevail in respect of subjects covered under List III of the Seventh Schedule to the Constitution. An exception is carved out in Clause (2) of Article 254 of the Constitution whereby the law made by the State Legislature will prevail if the Presidential assent is received. But before this clause can be invoked there must be a repugnancy between the State Act and an earlier Act made by Parliament. In effect, the scheme is that Article 254(2) gives power to the State Legislature to enact a law with the assent of the President, on any subject covered under List III of the Seventh Schedule to the Constitution, even though the Central Act may be inconsistent operating in that State relating to that subject.
In the case on hand the prescription of punishment is for the same offence arising u/s 66 read with Section 192A of the MV Act and further punishment is prescribed under the State MV Taxation Act for forfeiture of the vehicle. Thus, there is clear conflict between the two enactments. Therefore, we hold that the provision of Section 16(6) of the Act and the consequential provisions thereto are repugnant to Section 66 read with Section 192A of the MV Act and hence, invalid as the State Law has not complied with requirements under Article 254(2) of the Constitution of obtaining assent of the President to the State Law.
When the offences arising upon the Union Law and the State Law respectively are substantially identical, but additional penalties are imposed for the contravention by the provision of the State Law it would be inconsistent with the Law of the Union and, therefore, invalid. In the instant case, apart from what is available u/s 192A of the MV Act, there are additional penalties arising u/s 16(6) of the Act.
This discussion is enough to dispose of this case and we do not propose to deal with other contentions raised by the learned counsel of the appellants and are left open.
These appeals are thus allowed quashing Section 16(6) and the consequential provisions of Sections 16(7), 16(8), 20-A and 20-B of the Act and the order of the High Court stands set aside.
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2003 (11) TMI 630
Determination of quantum of mesne profit - Rate of interest to be awarded on the decretal amount - Wrongful use of the property - rate of interest - Principles of res-judicata - computation of net amount payable - Term 'goodwill' - HELD THAT:- We have no reason to differ with the view of the High Court on this aspect. We are not required to reappreciate the material. As a matter of fact during the course of hearing, counsel for the appellant indicated willingness to go by the Commissioner's report in this behalf. Therefore, we accept the finding of the High Court on this issue. Total amount by way of mesne profits as per the impugned judgment of the High Court comes to ₹ 39,41,920/-. This figure does not include interest.
Interest is leviable on the amount of mesne profits. The High Court has in its impugned judgment awarded interest w.e.f 5th May, 1970 till 5th August, 1986 on periodical basis at varying rate of interest. Periods have been fixed based on change in bank rate of interest. The rate of interest varies between 10% p.a. to 19% p.a. The award of interest by the High Court is based on its earlier order dated 16th December, 1985 regarding levy of interest as per prevailing bank rate of interest on commercial transactions from time to time. This part of the judgment of the High Court in our view, is not correct. The rate at which is to be awarded is being separately considered under Point No. 2. That decision will govern the award of interest on mesne profits.
A mistake has been committed by the High Court in calculation of interest on mesne profits. Interest has to be calculated on yearly basis because the amount of mesne profits on which interest is to be awarded has to be arrived at on year to year basis. Mesne profits for the first year would be from 5th May, 1969 to 4th May, 1970, for the second year it will be from 5th May, 1970 to 4th May, 1971 and so on. It keeps adding on from year to year. The total amount of mesne profits found due by the High Court on the basis of Commissioner's report comes to ₹ 38,41,920/-. This amount is the total of mesne profits calculated on yearly basis. Interest cannot be allowed on the whole amount from the beginning. Interest had to be worked out on amounts falling due towards mesne profits on yearly basis i.e. on the amount of mesne profits which could be taken to be due to the plaintiff at the end of each successive year.
A bare reading of Order VI Rule 17 of Code of Civil Procedure shows that amendment is of a plea contained in the pleadings and the object of allowing amendment of pleadings is to determine the real questions in controversy between the parties. This means the parties have to be given a chance to contest the questions in controversy and the Court has to give its decision ultimately on such contested issues. This procedure was not followed in the present case. The procedure followed is wholly illegal.
This Court had occasion to pronounce on this issue in J. Jermons v. Aliammal and Ors. [1999 (8) TMI 974 - SUPREME COURT]. It was held that a new plea cannot be allowed to be raised without effecting amendment of pleadings, without giving reasonable opportunity to the opposite party to file further pleadings and adduce evidence. Thus the decision of the High Court in allowing interest on mesne profits at rate of interest charged by nationalised banks from time to time on commercial transactions is wholly illegal and unsustainable. As noted earlier even the High Court while passing the final decree felt that in its earlier order dated 16th December, 1985, it should not have proceeded on the basis of amended Section 34 of the Code of Civil Procedure while awarding interest at the rate charged by nationalised bank on commercial transactions from time to time. The impugned award of interest is thus wholly unwarranted and illegal and has to be set aside.
A decree for mesne profit was granted in favour of the plaintiff respondent for wrongful use of the property. The quantum of mesne profit can be arrived at by the High Court keeping in view the well-known principles of valuation for determining the same. The Court is not enjoined with any duty to accept the quantification determined only on the basis of books of account maintained by the defendants, particularly when the same had not been proved. The High Court in our opinion has rightly considered the matte from different angle. Even if any of the methods adverted to the High Court and referred to hereinbefore is adopted, the plaintiff would have been entitled to much more amount than claimed by her. We are, therefore, of the opinion that the findings of the High Court being just and proper need not be interfered with.
So far as the question of rate of interest is concerned, it may be noticed that the High Court itself found that the rate of interest should have been determined at 6%. The principles of res judicata which according to the High Court would operate in the case, in our opinion, is not applicable. Principles of res-judicata is a procedural provision. The same has no application where there is inherent lack of jurisdiction.
We, therefore, are of the opinion that in the facts and circumstances of the present case, the principles of res judicata was not applicable.
The term 'goodwill' signifies the value of the business in the hands of a successor, so far as increased by the continuity of the undertaking being preserved in the shape of the right to use the old name and otherwise. It is something more than a mere chance of probability of old customers maintaining their connection, though this is a material part of the practical fruits. 'Goodwill' may be the whole advantage belonging to the firm, its reputation as also connection thereof. It, thus, means that every affirmative advantage as contrasted with negative advantage that has been acquired in carrying on the business whether connected with the premises of business or its name or style everything connected with or carrying the benefit of the business.
The goodwill has been claimed for the firm's continuous business since 1954. The court has proceeded to calculate the amount of goodwill on the basis of the profits derived by the firm for the last five years on an average. It is not contended that such a method is unknown in commercial field. Whenever a firm is dissolved the value of the goodwill has to be worked out and divided between the partners.
The claim of the appellant to the effect that the plaintiff's husband was liable to pay 13% interest to the defendants has been rejected by the High Court inter alia on the ground that no such case had been made out in the written statements. Even no counter claim therefore was filed.
We, therefore, accept the reasonings of the High Court recorded in relation to the said items. For the reasons aforementioned, I respectfully agree with the opinion of Brother Arun Kumar, J.
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2003 (11) TMI 629
The Karnataka High Court rejected the appeal as the questions raised were similar to a previous case. No costs were awarded.
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2003 (11) TMI 627
Operation and trading of vessels - Unpaid insurance premium due to the club - territorial jurisdiction of waters of India - failure to insure the security - Whether arrears of insurance premium would come within the term "necessaries" - Maintainability of the Letters's patent appeal - rejection of plaint - HELD THAT:- The term "necessary" is a term of art but the same cannot, in our opinion, be used in a limited context of mandatory claims made for goods or services supplied to a particular ship for her physical necessity as opposed to commercial operation and maintenance. Physical necessity and practicality would be a relevant factor for determination of the said question. Taking insurance cover would not only be a commercial prudence but almost a must in the present day context. The third party insurance may not be compulsory in certain jurisdiction but having regard to the present day scenario such an insurance cover must be held to be intrinsically connected with the operation of a ship.
An insurance transaction more often than not have links with more than one country. In a given case for resolution of a complex question the principles of private international law or the conflict of laws may have to be turned to but with a view to determine the same, disputes have to be resolved by reference to the system of law which governs the contract of insurance. The jurisdiction to deal with an action by or against insurers in England and EC Member States except Denmark are now governed by EC Council Regulation No. 44/2001. In other countries, however, the law which is prevailing therein would govern the field. It may be true that some conventions like Brussels and Lugano are no longer relevant in most cases involving EC Member States but they form an important part of the background to the current jurisdictional regime.
For defending the limits of the jurisdiction of the case of a particular company the same must, therefore, be governed by the law prevailing therein. The claim may be a maritime claim in a non-contracting country but not in others. The 'Club' in law, therefore, would be entitled to enforce its claims against the 'Vessel' keeping in view the law prevailing in India within whose territorial jurisdiction the ship is found. Only because, the claim can be enforced in our country and not in some other countries, by itself would not lead to the conclusion that it cannot be enforced at all irrespective of the domestic law.
SUMMARY OF THE DISCUSSIONS: - The discussions made hereinbefore lead to the conclusion that having regard to the changing scenario and keeping in tune with the changes in both domestic and international law as also the statutes adopted by several countries, a stand, however, bold, may have to be taken that unpaid insurance premium of P&I Club would come within the purview of the expression "Necessaries supplied to any ship". Other types of insurance, keeping in view the existing statutes may not amount to a "necessary". In any event, such a question, we are not called upon to answer at present. The discussions made hereinbefore under different sub-titles of this judgment separately and distinctly may not lead us to the said conclusion but the cumulative effect of the findings 'thereunder makes the conclusion inevitable. The question has not only been considered from the angle of history of the judicial decisions rendered by different Courts having great persuasive value but also from the angle that with the change in time interpretative changes are required to be made. We, therefore, in agreement with the judgment of the Bombay High Court, hold that unpaid insurance premium being a maritime claim would be enforceable in India.
MAINTAINABILIY OF THE LETTERS PATENT APPEAL: - Clause 15 of the Letters Patent is not a special statute. Only in a case where there exists an express prohibition in the matter of maintainability of an intra court appeal, the same may not be held to be maintainable. But in the event there does not exist any such prohibition and if the Order will otherwise be a 'judgment' within the meaning of Clause 15 of the Letters Patent, an appeal shall be maintainable.
It is true that in Shah Babulal Khimji [1981 (8) TMI 230 - SUPREME COURT] it is stated that an order rejecting the plaint would be appealable but does not expressly state that an order refusing to reject would not be appealable. Therein this Court gave 15 instances where an order would be appealable which are only illustrative in nature.
In our opinion the order refusing to reject the plaint falls in the category of a preliminary judgment and is covered by the second category carved out by this Court. It is trite that a party should not be unnecessarily harassed in a suit. An order refusing to reject a plaint will finally determine his right in terms of Order 7 Rule 11 of the Code of civil Procedure.
The idea underlying Order 7 Rule 11A is that when no cause of action is disclosed, the courts will not unnecessarily protract the hearing of a suit. Having regard to the changes in the legislative policy as adumbrated by the amendments carried out in the Code of civil Procedure, the Courts would interpret the provisions in such a manner so as to save expenses, achieve expedition, avoid the court's resources being used up on cases which will serve no useful purpose. A litigation which in the opinion of the court is doomed to fail would not further be allowed to be used as a device to harass a litigant.
We, therefore, are of the opinion that Letters Patent Appeal was maintainable.
Rejection of plaint - The approach of the High Court, in our considered opinion, is not correct. For the purpose of rejecting a plaint it is not necessary to consider whether the averments made in the plaint prove the factum that the defendant No. 1 "Sea Success-I" is a sister ship of "Sea Glory" and "Sea Ranger" or the said two ships are beneficially owned by the defendant No. 2. The reasons which have been assigned in support of the said aforementioned finding that that the ship is a valuable commercial chattel and her arrest undeservingly prejudices third parties as well as affect the interest of owner and others is a question which must be gone into when passing a final order as regard interim arrest of ship or otherwise. For the aforementioned purpose the Vessel herein could file an application for vacation of stay. While considering such an application, the Court was entitled to consider not only a prima facie case but also the elements of balance of convenience and irreparable injury involved in the matter. In such a situation and particularly when both the parties disclose their documents which are in their possession, the Court would be in a position to ascertain even prima facie as to whether the Club has been able to make out that "Sea Glory" and "Sea Ranger" are sister vessels of the "Vessel".
The reason for the aforementioned conclusion is that if a legal question is raised by the defendant in the written statement, it does not mean that the same has to be decided only by way of an application under Order 7 Rule 11 of the Code of civil Procedure which may amount to pre-judging the matter.
CONCLUSION: - We, therefore, direct that in the event, a proper application is filed either for dissolution of the interim order of injunction passed by the learned Single Judge or if the High Court in its wisdom thinks fit to decide any issue as a preliminary issue such questions may be gone into in greater details.
Thus, the judgment under challenge is set aside and the matter is sent back to the High Court. civil Appeal No. 5665 of 2002 is accordingly allowed and civil Appeal No. 5666 of 2002 is dismissed. No costs.
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2003 (11) TMI 626
Issues Involved:
1. Jurisdiction of election tribunal for inspection and recounting of votes.
2. Allegations of irregularities in counting votes.
3. Requirement of material facts in election petitions.
4. High Court's judgment on recounting of votes.
5. Submissions by the appellant and respondents.
6. Statutory provisions and legal precedents on recounting of votes.
Detailed Analysis:
Jurisdiction of Election Tribunal for Inspection and Recounting of Votes:
The primary issue in this appeal is the extent to which an election tribunal can exercise its jurisdiction to direct the inspection of ballot papers and recounting of votes under the Representation of the People Act, 1951. The Supreme Court examined whether the High Court was correct in ordering a recount based on the allegations of irregularities in the counting process.
Allegations of Irregularities in Counting Votes:
The election petitioner alleged several irregularities in the counting process, categorized under five heads:
- Category 1: Rejection of valid votes due to inadvertent thumb impressions.
- Category 2: Rejection of valid votes due to polling officer's rubber stamp impressions.
- Category 3: Rejection of valid votes cast on the border.
- Category 4: Rejection of valid votes due to the wrong instrument used by voters.
- Category 5: Rejection of postal votes cast in favor of the petitioner.
The petitioner claimed that these irregularities cumulatively affected the election outcome, given the narrow margin of 2847 votes between the returned candidate and the petitioner.
Requirement of Material Facts in Election Petitions:
The appellant argued that the allegations in the election petition were general and vague, lacking specific material facts as required under Section 83 of the Representation of the People Act, 1951. The Supreme Court emphasized that an election petition must contain a concise statement of material facts, and a recount can only be ordered if there is a prima facie case supported by adequate material facts.
High Court's Judgment on Recounting of Votes:
The High Court had directed a recount based on the evidence presented by the petitioner. However, the Supreme Court found that the High Court had erred in accepting the evidence of PWs 1 to 7 without proper verification of the material facts. The Supreme Court noted that the High Court should not have accepted the evidence when the election petition lacked specific details such as the names of counting agents, the centers where irregularities occurred, and the tables at which objections were raised.
Submissions by the Appellant and Respondents:
The appellant contended that the High Court committed a manifest error by accepting vague and general allegations without proper evidence. The respondents argued that the election petition contained sufficient material facts to justify a recount and that the High Court's judgment should be upheld.
Statutory Provisions and Legal Precedents on Recounting of Votes:
The Supreme Court referred to several legal precedents, including Ram Sevak Yadav v. Hussain Kamil Kidwai, Dr. Jagjit Singh v. Giani Kartar Singh, and others, to emphasize the necessity of maintaining the secrecy of ballot papers and the stringent requirements for ordering a recount. The Court reiterated that a recount cannot be ordered based on vague allegations and must be supported by precise material facts.
Conclusion:
The Supreme Court concluded that the High Court had misdirected itself in law by ordering a recount without a proper foundation of material facts in the election petition. The appeal was allowed, and the High Court's judgment was set aside. The Supreme Court directed the High Court to dispose of the election petition expeditiously, preferably within three months.
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2003 (11) TMI 625
Issues Involved:
1. Allotment of shares
2. Mismanagement and manipulation of accounts
3. Diversion of business
4. Removal of directors
5. Family arrangement and management control
Detailed Analysis:
1. Allotment of Shares:
The petitioners challenged the allotment of 1,55,000 shares on the grounds that the sole purpose was to reduce their shareholding from 52% to 29% and increase the 2nd respondent group's shareholding to over 50%, converting a majority into a minority, which they argued was a grave act of oppression. They sought to cancel the allotment of these shares. The respondents claimed the allotment was bona fide and in response to ICICI Bank's requirement to increase the company's capital. However, the court found that the allotment was made without proper notice to the petitioner directors, thus invalidating the meeting where the shares were allotted. The court held that the issuance of shares was a breach of fiduciary duties and aimed at creating a new majority, which was oppressive. The court directed that the impugned shares be equally divided among the four family groups.
2. Mismanagement and Manipulation of Accounts:
The petitioners alleged financial mismanagement, citing discrepancies in the balance sheets of 1998 and 1999, suggesting siphoning of funds. The court directed the statutory auditors to furnish a report explaining the discrepancies. If the report indicated siphoning of funds, the company was to take action to recover the same.
3. Diversion of Business:
The petitioners alleged that the company was diverting business to DG Industries, enriching it at the company's expense. The court found no evidence that the company could have undertaken the subcontracted work itself or that the subcontracting was unfavourable. The court directed that any future subcontracting to DG Industries should be approved by the Board.
4. Removal of Directors:
The petitioners argued that their removal as directors was based on the knowledge gained by the respondents in their capacity as directors, which was misused. The court found the removal resolutions invalid as they were passed in an EOGM convened without proper Board approval and based on the oppressive allotment of shares. The court also noted that the petitioners were not justified in convening a Board meeting on 2.4.2001 as they mixed their roles as directors and shareholders.
5. Family Arrangement and Management Control:
The court recognized the company as a family company managed by consensus among family members. The 2nd respondent, being the eldest surviving son, was invited to manage the company. The court found that the petitioners' proposal to appoint an outsider with overriding powers was against the family arrangement. However, this did not justify the creation of a new majority by the 2nd respondent. The court directed that the 2nd respondent continue in his management role as long as he is fit, and each family group retain their representation on the Board, overriding any contrary provisions in the Articles.
Conclusion:
The court invalidated the allotment of shares due to lack of proper notice and found it was done to create a new majority, which was oppressive. The shares were to be equally divided among the family groups. The removal of directors was also found invalid. The court directed the continuation of the family arrangement in management and ensured equal representation on the Board for each family group. The petitioners' allegations of financial mismanagement were to be investigated by the statutory auditors.
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2003 (11) TMI 624
Issues Involved:
1. Constitutionality of the High Court's administrative order transferring cases.
2. Jurisdiction of Additional Sessions Judges to try cases under Section 138 of the Negotiable Instruments Act.
3. Nature of trial for offences under Section 138.
4. Right of appeal and revision for the petitioners.
5. Alleged violation of principles of natural justice and Article 21 of the Constitution.
Issue-wise Detailed Analysis:
1. Constitutionality of the High Court's Administrative Order:
The petitioners challenged the High Court's administrative order dated 21st March 2002, transferring cases under Section 138 of the Negotiable Instruments Act (the "Act") to Additional Sessions Judges. They argued that this order was unconstitutional and illegal, violating Articles 14 and 21 of the Constitution of India. The High Court had transferred these cases due to a shortage of judicial officers at the magisterial level, aiming to expedite the disposal of cases.
2. Jurisdiction of Additional Sessions Judges:
Petitioners contended that complaints under Section 138 of the Act should only be tried by Metropolitan Magistrates or Judicial Magistrates, First Class, as specified in Section 142(c) of the Act. They argued that the transfer to Additional Sessions Judges was improper, as the Act did not vest jurisdiction in the Court of Sessions. The High Court's order was seen as overstepping its authority by bypassing the special legislation that conferred jurisdiction specifically on Magistrates of First Class.
3. Nature of Trial for Offences under Section 138:
The petitioners argued that offences under Section 138 are summon trial cases, not warrant trial cases, as the maximum punishment is two years. They cited Sections 2(w) and 2(x) of the Code of Criminal Procedure (the "Code") to support their argument. The High Court, however, found that the legislative intent was to allow only Metropolitan Magistrates or Judicial Magistrates, First Class, to try these cases, and not any superior court like the Court of Sessions.
4. Right of Appeal and Revision:
The transfer of cases to the Additional Sessions Judges was argued to have taken away the petitioners' right of appeal to the Court of Sessions under Section 374(3) of the Code and the right of revision to the High Court under Section 397(1) of the Code. The High Court agreed with this contention, noting that this transfer created discrimination between those whose cases were filed before and after 31st December 2001. The latter group would still be tried by Metropolitan Magistrates or Judicial Magistrates, First Class, retaining their right of appeal and revision.
5. Alleged Violation of Principles of Natural Justice and Article 21:
The petitioners claimed that the impugned order violated principles of natural justice and Article 21 of the Constitution by discriminating against them and depriving them of their legal rights. The High Court found merit in this argument, stating that the object of speedy trial could not justify such discrimination. The court emphasized that any curtailment of the accused's rights and safeguards provided under the Code would be unconstitutional.
Conclusion:
The High Court concluded that the impugned order transferring the cases to Additional Sessions Judges was in violation of the special legislation (the Act) and discriminatory. The court set aside the order, directing that the cases be sent back to the Metropolitan Magistrates for trial in accordance with the law. However, it clarified that judgments already delivered by the Additional Sessions Judges would not be treated as without jurisdiction.
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2003 (11) TMI 623
Issues Involved:
1. Validity of the arbitration agreement under Clause 30.
2. Jurisdiction and authority of the Superintending Engineer as an arbitrator.
3. Compliance with principles of natural justice during arbitration.
4. The binding nature of the arbitration award.
5. Procedural objections raised by the respondent in execution proceedings.
Detailed Analysis:
1. Validity of the Arbitration Agreement under Clause 30:
The core issue revolves around whether Clause 30 of the contract constitutes a valid arbitration agreement. The appellant argued that Clause 30 fulfills all the criteria for an arbitration agreement as laid down in the case of Bihar State Mineral Development Corporation v. Encon Builders (I) (P) Ltd. The clause stipulates that the decision of the Superintending Engineer, Gulbarga Circle, Gulbarga, would be final and binding on all disputes arising from the contract. The Court emphasized that Clause 30 indeed meets the essential elements of an arbitration agreement, which include:
- Present or future differences in connection with some contemplated affair.
- The intention of the parties to settle such differences by a private tribunal.
- Written agreement to be bound by the decision of such tribunal.
- Mutual agreement (ad idem) of the parties.
2. Jurisdiction and Authority of the Superintending Engineer as an Arbitrator:
The respondent contended that the Superintending Engineer did not have the authority to act as an arbitrator as per the contract. However, the Court found that the Superintending Engineer was an independent person and not an officer of the University. His role was confined to arbitration and not to supervision of the construction works. The Court concluded that Clause 30 explicitly provided for the resolution of disputes by the Superintending Engineer, thereby constituting a valid arbitration agreement.
3. Compliance with Principles of Natural Justice during Arbitration:
The respondent argued that they were not given sufficient opportunity to present their case. The Court noted that both parties were represented and had filed claims, counterclaims, and supporting documents. The Arbitrator recorded that the parties were given full opportunity to present their case and chose not to adduce oral evidence. The Court held that the principles of natural justice were implicitly followed in the arbitration process, and the Award could not be invalidated on this ground.
4. The Binding Nature of the Arbitration Award:
The Court emphasized that once an arbitration agreement is established, the decisions made by the arbitrator are final, conclusive, and binding on the parties. The Court found that the Arbitrator's decision was rendered after allowing both parties to present their cases, thus adhering to the principles of natural justice. The Award was deemed final and binding, and the respondent's objections were dismissed.
5. Procedural Objections Raised by the Respondent in Execution Proceedings:
The respondent raised objections under Section 47 of the Code of Civil Procedure during the execution of the Award, arguing that the arbitration agreement was invalid. The Court noted that the respondent had participated in the arbitration proceedings without raising such objections initially and had even filed counterclaims. The Court ruled that the respondent should have filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, if they believed the Award was beyond the Arbitrator's jurisdiction. The Court set aside the High Court's judgment and directed the executing Court to proceed with the execution of the Award.
Conclusion:
The Supreme Court concluded that Clause 30 of the contract constituted a valid arbitration agreement, the Superintending Engineer had the jurisdiction to act as an arbitrator, and the arbitration process complied with the principles of natural justice. The objections raised by the respondent were dismissed, and the execution of the Award was directed to proceed. The appeal was allowed, and the order under challenge was set aside.
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2003 (11) TMI 622
Issues:
1. Appellant's claim for recovery of debt from respondent.
2. Applicability of Section 52 of the Code of Civil Procedure.
3. Legal representative's liability for deceased's debt.
4. Interpretation of legal rights to raise defense in a debt recovery suit.
Analysis:
1. The appellant, a bank, filed a suit for recovery of a debt of Rs. 25,234.92 from the respondent, who was the mother and legal representative of the deceased debtor. The deceased had taken a loan and made partial payments before passing away, leaving the outstanding amount due. The trial court dismissed the suit, stating that the deceased had not left any assets to the respondent, making her not liable for the debt.
2. The appellant contested the trial court's decision, citing Section 52 of the Code of Civil Procedure, which allows legal representatives of debtors to object to the deceased leaving no property only during execution proceedings, not in the suit itself. The appellant argued that the trial court should have decreed the suit based on the debt being due from the deceased and the respondent being the legal representative.
3. The key question was whether the respondent could raise the defense of not inheriting any property from the deceased in the suit. Referring to previous judgments, the court noted a difference of opinion on when such a defense should be raised. However, considering the circumstances and evidence presented, the court held that the respondent had the right to raise the defense in the suit itself, and the trial court's decision was legally sound.
4. Drawing from legal precedents, the court affirmed that a legal representative can resist a debt recovery suit by claiming no inheritance of assets from the deceased. The court emphasized that the respondent's defense was valid and within her rights, leading to the dismissal of the appeal. Despite dismissing the appeal, the court ordered each party to bear their own costs for the appeal proceedings, confirming the trial court's decree.
In conclusion, the High Court upheld the trial court's decision, ruling in favor of the respondent based on her legal right to raise the defense of not inheriting any property from the deceased in the debt recovery suit. The judgment highlighted the importance of legal representatives' rights in such cases and clarified the applicability of Section 52 of the Code of Civil Procedure in debt recovery proceedings.
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2003 (11) TMI 621
Issues Involved:
1. Exclusion from management
2. Non-convening of meetings
3. Failure to render accounts and settle dues
4. Improper management and statutory violations
5. Validity of removal of the petitioner as Managing Director
Issue-wise Detailed Analysis:
1. Exclusion from Management:
The petitioners alleged that their group was excluded from the management of the Company despite being part of it since its inception. The petitioner's father and the second respondent's father were the promoters of the Company, and the petitioner's father was the Managing Director until his demise. The petitioner was subsequently appointed as Managing Director. However, the second respondent, who was a director and claimed to be the Chairman, managed the affairs of the Company without convening any Board or general meetings, thereby excluding the petitioners from management.
2. Non-convening of Meetings:
The second respondent did not convene or hold any general, annual general, or Board meetings since June 1990 and did not issue notices for such meetings. This resulted in the shareholders being kept in the dark about the Company's affairs. The second respondent also failed to file statutory returns with the Registrar of Companies and did not issue share certificates in conformity with the Companies (Issue of Share Certificates) Rules, 1960.
3. Failure to Render Accounts and Settle Dues:
The second respondent failed to render accounts of the Company and settle dues with financial institutions out of the sale proceeds of the Company's assets. The petitioner alleged that the second respondent received sale consideration from third parties but failed to remit the proceeds towards the Company's dues with PIPDIC. The petitioner was not allowed to authenticate the accounts of the Company, and the Income Tax returns were mostly filed by the second respondent.
4. Improper Management and Statutory Violations:
The second respondent managed the Company's affairs contrary to the Articles of Association by not convening meetings and failing to comply with statutory requirements. The balance sheets and profit and loss accounts were prepared and signed by the second respondent alone, violating Section 215 of the Companies Act, which requires the Managing Director and another director to sign these documents. The statutory auditor was appointed without consulting the petitioner, contravening Section 227 of the Act. The second respondent and the statutory auditor were held jointly responsible for the Company's state of affairs, violating Sections 166, 169, 215, and 220 of the Act.
5. Validity of Removal of the Petitioner as Managing Director:
The second respondent issued a notice convening an extraordinary general meeting to remove the petitioner as Managing Director and appoint the second respondent's brother in his place. The petitioner challenged the validity of this notice, arguing that no Board meeting was convened to approve the extraordinary general body meeting and that the special notice requirement under Section 190 was not met. The petitioner filed civil suits seeking to restrain the second respondent from convening the meeting. Despite these suits, the second respondent proceeded with the meeting and removed the petitioner, which was deemed an act of oppression.
The judgment concluded that the removal of the petitioner was oppressive to the minority shareholders, especially given the family nature of the Company. The petitioner was given the option to either continue on the Board or exit the Company with fair consideration for his shares. The statutory auditor was directed to compute the fair value of the petitioner's shares if he chose to exit, and the Company was authorized to reduce its share capital accordingly. The petition was disposed of with these directions.
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2003 (11) TMI 620
Issues:
1. Right of secured creditors to be heard at the stage of admission of a Company Petition for winding up.
2. Interpretation of Section 557 of the Companies Act, 1956 regarding the rights of creditors.
3. Impact of admission of a winding up petition on a company.
4. Comparison of legal principles from previous judgments regarding the intervention of creditors at different stages of winding up proceedings.
Analysis:
1. The judgment addresses the issue of the right of secured creditors to be heard at the stage of admission of a Company Petition for winding up. The petitioner questioned the secured creditors' right to be heard at this stage. However, the court emphasized that the statutory interpretation of Section 557 of the Companies Act, 1956 recognizes the right of creditors to appear and be heard in all matters relating to the winding up of a company, including the stage of admission.
2. The interpretation of Section 557 of the Companies Act, 1956 is crucial in determining the rights of creditors. The court highlighted that the provision allows the court to consider the wishes of creditors in all matters relating to the winding up of a company. This includes the stages of admission and final hearing of a Company Petition for winding up. The court emphasized that the right of creditors to be heard comprehends the stage of admission as well.
3. The judgment also delves into the impact of admitting a winding up petition on a company. It notes that an order of admission significantly affects a company's market position and the confidence of business or trade in the company's ability to meet its liabilities. The court recognized that the admission of a petition for winding up is a serious matter with far-reaching consequences for the company involved.
4. The judgment compares legal principles from previous judgments, such as the case of National Textile Workers Union and Madhusudan Gordhandas & Co. These cases established that both workers and creditors have a right to appear and be heard in winding up proceedings. The court emphasized that the wishes of creditors should be considered by the court, especially at the stage of admission, to ensure a fair and thorough evaluation of the situation. The court rejected a previous view that creditors opposing a petition for winding up are not entitled to be heard at the stage of admission, emphasizing that the interests of creditors must be considered even at this early stage.
In conclusion, the judgment upholds the rights of secured creditors to be heard at the stage of admission of a Company Petition for winding up, emphasizing the importance of considering the wishes of creditors in all matters relating to the winding up of a company.
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2003 (11) TMI 619
Seeking to grant re-instatement with full back wages and consequential benefits to the respondent who was involved in a criminal case - HELD THAT:- We are of the view that it is well accepted that an order rejecting a special leave petition at the threshold without detailed reasons therefore does not constitute any declaration of law by this Court or constitute a binding precedent.
Though exception taken to that part of the order directing re-instatement cannot be sustained and the respondent has to be re-instated, in service, for the reason that the earlier discharge was on account of those criminal proceedings and conviction only, the appellants are well within their rights to deny back wages to the respondent for the period he was not in service. The appellants cannot be made liable to pay for the period for which they could not avail of the services of the respondent. The High Court, in our view, committed a grave error, in allowing back wages also, without adverting to all such relevant aspects and considerations. Consequently, the order of the High Court in so far as it directed payment of back wages are liable to be and is hereby set aside.
The respondent will be entitled to back wages from the date of acquittal and except for the purpose of denying the respondent actual payment of back wages, that period also will be counted as period of service, without any break. The re-instatement, if not already done, in terms of the order of the High Court will be done within thirty days from today.
The appeal is allowed and disposed of on the above terms.
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2003 (11) TMI 618
Issues:
Amendment of complaint under Section 138 of the Negotiable Instruments Act, 1881 - Dismissal of amendment application by Addl. Chief Judicial Magistrate - Exercise of inherent powers by the lower court - Jurisdiction of High Court under Section 482 Cr.P.C. to allow the amendment.
Analysis:
Issue 1: Amendment of Complaint under Section 138 of the Negotiable Instruments Act, 1881
The complainant filed a complaint under Section 138 of the Act against the respondent for dishonoring a cheque. The complainant sought to amend the complaint due to typographical errors in mentioning the cheque number and the date of information by the bank. The respondent opposed the amendment, leading to the dismissal of the application by the Addl. Chief Judicial Magistrate.
Issue 2: Dismissal of Amendment Application by Addl. Chief Judicial Magistrate
The Addl. Chief Judicial Magistrate dismissed the amendment application citing the lack of inherent power to rectify such mistakes. The court held that since the lower court does not possess inherent power, the errors in the complaint could not be rectified by the Magistrate, leading to the aggrieved complainant filing a petition under Section 482 Cr.P.C.
Issue 3: Exercise of Inherent Powers by the Lower Court
The High Court analyzed whether the mistakes in the complaint were typographical errors or not. Upon examining the evidence, the Court concluded that the errors were typographical in nature. The Court further discussed the inherent powers of the judiciary, emphasizing that courts possess inherent powers necessary for the administration of justice, even if not explicitly provided in procedural laws.
Issue 4: Jurisdiction of High Court under Section 482 Cr.P.C. to Allow the Amendment
The High Court, noting its ample power under Section 482 Cr.P.C., allowed the petition and quashed the order of the Addl. Chief Judicial Magistrate. The Court highlighted that all criminal courts have auxiliary powers to rectify typographical mistakes to ensure justice between the parties, provided no prejudice or illegality is involved.
Conclusion:
The High Court allowed the petition, set aside the impugned order, and permitted the amendment application to correct the errors in the complaint. The Court emphasized the importance of dispensing justice and rectifying typographical mistakes to uphold fairness in legal proceedings. The case exemplifies the exercise of inherent powers by the judiciary to ensure the proper administration of justice.
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2003 (11) TMI 617
Seeking to renewal of lease for another term of 50 years and on such option being exercised before the expiry of term of 50 years of the existing lease - Acquisition of Land - Alleged Breach of Lease Terms - whether the respondent was entitled to a second renewal of the lease for the suit property - HELD THAT:- It is pertinent to note that the respondent is not claiming a lease in perpetuity or right to successive renewals under the covenant for renewal contained in the 1887 lease. The term of 50 years under the 1887 lease came to an end in the year 1937 and the option for renewal was exercised by the respondent as assignee of the original lessee which exercise was honoured by the lessor State executing a fresh deed of lease belatedly on February 20, 1945. This lease deed does not set out any fresh covenants, mutually agreed upon between the parties for the purpose of renewal. Rather it incorporates, without any reservation, all the covenants, provisos and stipulations as contained in the principal lease as if they had been herein repeated in full. Not only was a fresh deed of lease executed but the conduct of the parties also shows that at the end of the term appointed by the 1945 lease, i.e. in or around the year 1987, the lessor did not exercise its right of re-entry. On the other hand, the respondent exercised his option for renewal. The officials of the appellant State, i.e. the Collector and the Board of Revenue, all recommended renewal and advised the State Government to expedite the renewal. The State Government was generally renewing such like leases by issuing general orders/instructions to its officers. At no point of time prior to the filing of the counter-affidavit, on the present litigation having been initiated, the State or any of its officers took a stand that the right of renewal, as contained in the principal deed of lease, having been exhausted by exercise of one option for renewal, was not available to be exercised again.
Now that the covenant for renewal has been referentially incorporated without any reservation in the lease deed of 1945 the exercise of option for renewal cannot be denied to the respondent. However, in the lease deed to be executed for a period of 50 years commencing May 20, 1987, the covenant for renewal need not be incorporated and therefore the term of the lease would come to an end on expiry of 50 years calculated from May 20, 1987.
The other two pleas raised on behalf of the appellant State merit a short and summary burial. The appellant's plea that the land having been acquired there could be no renewal of lease has been termed by the High Court as 'ridiculous' and we find no reason to take a different view. Suffice it to refer to a recent decision of this Court in Sharda Devi Vs. State of Bihar [2003 (1) TMI 724 - SUPREME COURT], wherein it has been held that the Land Acquisition Act, 1894 cannot be invoked by the Government to acquire its own property. It would be an absurdity to comprehend the provisions of the Land Acquisition Act being applicable to such land wherein the ownership or the entirety of rights already vests in the State. The notification and declaration under Sections 4 and 6 of the Land Acquisition Act for acquisition of the land i.e. the site below the bungalow are meaningless. It would have been different if the State would have proposed the acquisition of leasehold rights and/or the superstructure standing thereon, as the case may be. But that has not been done. The renewal of lease cannot be denied in the garb of so called acquisition notification and declaration which have to be just ignored.
Lastly, it was submitted that the respondent is in breach of the terms of the lease and hence not entitled to renewal. Firstly, the High Court has held the plea taken by the appellant State not substantiated. Secondly, exercise for option for renewal cannot be stalled on the ground that the lessor proposes to exercise right of re-entry on account of alleged breach when no steps were taken for exercising the right of re-entry till the option for renewal was exercised by the lessee. If the lessee is in breach and the lease entitles the lessor to re-enter, that right is available to be exercised without regard to the renewal of the lease.
Thus, the appeal is held devoid of any merit and liable to be dismissed. It is dismissed accordingly. As the respondent has chosen not to appear we make no order as to the costs.
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2003 (11) TMI 616
Revisions u/s 115 of the Code of Civil Procedure - Applications for impleadment, joinder as a party, and amendment of pleadings under Order 1 Rule 10, Order 22 Rule 10, and Order 6 Rule 17 of the Code of Civil Procedure - Petitioner purchased the property during pendencey of the suit and without seeking leave of the court as required by section 52 of the Transfer of Property Act - HELD THAT:- The petitioner being a transferee pendente lite without leave of the court cannot, as of right, seek impleadment as a party in the suits which are long pending since 1983. It is true that when the application for joinder based on transfer pendente lite is made, the transferee should ordinarily be joined as party to enable him to protect his interest. But in instant case, the trial court has assigned cogent reasons for rejecting such joinder stating that the suit is long pending since 1983 and prima facie the action of the alienation does not appear to be bona fide. The trial court saw an attempt on the part of the petitioner to complicate and delay the pending suits.
The statement of law by this Court in the cases of Dhurandhar Prasad Singh [2001 (7) TMI 1278 - SUPREME COURT] clearly shows that the trial court has rightly exercised its discretion in rejecting the three applications for impleadment of the transferee pendente-lite as party to the suits and for amendment of the pleadings. The High Court was also justified in refusing to interfere with the order of the trial court. Consequently, there is absolutely no merit in any of these appeals. They are, accordingly, dismissed with costs to be borne by the petitioner of the contesting respondents.
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2003 (11) TMI 615
Sale of land by TANSI - Conspiracy to sell the property at a lower price to confer pecuniary advantage - misconduct u/s 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act - Violation of Section 169 IPC by purchasing government property - criminal breach of trust - HELD THAT:- In the present case, it cannot be said that the accused acted dishonestly because there was no wrongful gain or wrongful loss and hence it cannot be said that they acted fraudulently. It cannot also be said that the accused has converted the property of TANSI inasmuch as property was sold pursuant to a transparent tender process which is not shown to be vitiated in any manner. The property in question belonged to TANSI a Government Company and it was neither trust property nor was it entrusted to or under the control of the Chief Minister or any Minister. Hence, Section 13(1)(c) of the Prevention of Corruption Act is not attracted to the facts of the case.
The only evidence against A-6 is that he spoke about the disposal of file relating to sale of land in question to be expedited. This fact is spoken to by PW-12. PW 12 stated in her evidence that she voluntarily appeared before the Magistrate and gave a statement without being sponsored by the Investigating Officer though PW 23, Investigating Officer stated that he gave a requisition for recording her statement. A-6 did not participate in the meeting held on 14.10.1991 nor did he participate in the meeting held on 6.11.1991. The High Court did not accept the evidence of PW-12. This evidence does not in any manner advance the case of the prosecution to establish that A-6 has committed any offence.
In the present case, purchase of the TANSI Foundry land was prohibited by law to A-1 and, therefore, contended that a high official like a Chief Minister cannot purchase Government property or property over which the Government has control when such an elementary obligation is imposed on smaller officials. It is submitted that Rule 2(b) of the G.O.No.1012 issued by the Tamil Nadu Government states that after taking office and so long as he remains in office a Minister shall refrain from buying from, or selling to, the Government any immovable property. This order of the Government has been issued in exercise of the executive power of the State vested in the Governor under Article 154 read with Article 162 of the Constitution and the executive have power to make any regulation which would have the effect of a law so long as it does not contravene any legislation already covering the field and such executive orders having been made under Article 73 of the Constitution have for their operation an equal efficacy as an Act of Parliament or the rules made by the President under Article 309 of the Constitution. The order of the Governor bound A-1 not to purchase property from the Government.
For this purpose, it was also submitted that the question is not whether TANSI Foundry land was technically the property of the Government but of a Government company, but whether A-1 was purchasing it from Government within the prohibition of Rule 2(b) of the GO and whether A-1 was purchasing property which was completely under the charge and control of the Government. In this case, A-1 was the Chief Minister and the Minister for Industries at the relevant time and she was in charge of the said Department from 24.6.1991 to 13.5.1993. Article 77A(4) of the Articles of Association of TANSI forbids TANSI from disposing of lands transferred to the company by the Government without previous approval of the Government. Inasmuch as the Government's approval had to be given the Government had necessary control over the said properties and such properties fall within the concept of the G.O. which prohibited in terms of Rule 2(b) of GO from purchasing the property whose disposal was completely under the control of the Government. Even otherwise, he submitted that in a case of this nature it is necessary to lift the veil of the corporate personality of TANSI and find out that the property really belonged to the Government and TANSI was another emanation thereof and corporate personality cannot be used to commit fraud or improper conduct or to evade an existing obligation or to protect crime. In this context, heavy reliance is placed on the Code of Conduct.
Criminal breach of trust - In a case of this nature, where there is no dominion over the properties by a Chief Minister or a Minister it cannot be treated as entrustment of the properties creating a trust which is an obligation annexed to the ownership of the properties and arises out of the confidence reposed and accepted by the owner. Indeed there is no material in the whole case to come to the conclusion that any such trust has been or deemed to have been created in respect of the said properties and that the relationship between A-1 and TANSI is one of trustee and beneficiary. Therefore, the ingredients of Section 409 IPC are not attracted to the present case at all. There is absolutely no entrustment of the properties in any manner, which allows a dominion over it except approving or disapproving, an act on the part of the Corporation either to sell or to alienate the properties. It cannot be said that a public servant who holds a particular port folio and has an element of supervisory control in certain matters, has a dominion over the property so as to exercise any legal incidents attached to the right of ownership. Therefore, there was no entrustment of the said properties and it cannot be said that A-1 had dominion over the said properties either as the Chief Minister or as the Minister of Industries and in any case, the evidence does not establish the ingredient of dishonest disposal or conversion of property for personal use. Thus the charge under the aforesaid section is also not established as rightly held by the High Court.
Though we have come to the conclusion that A-1 is not guilty of the offences with which she was charged, it is clear that the property belonging to public sector undertakings was sold to firms of which A-1 is a partner at a time when she held the Office of the Chief Minister. Under the articles of association of the public sector undertaking, there is a requirement that before the sale of property is effected approval of the government is needed and sale cannot be completed without such approval because such an act will be ultra vires the powers of the Board of Directors of the company. Such approval was readily given by the Government machinery, though on paper she remained out of picture.
In the present case, in view of the fact that Government headed by the 1st Respondent has to give permission in respect of the sale of property of these two companies, it certainly exercises powers over the same and thus there is conflict of interest. Where there is conflict of interest law has always avoided such sales being effected in favour of those who can jeopardise the fair outcome of the transaction. Whatever may be our findings on the question of valuation of the property whether it resulted in a pecuniary advantage to A-1 or not, we are clear in our mind that if the officers and others become aware of the fact that the Chief Minister of the State is interested in purchasing some properties, the bureaucracy will be over-enthusiastic to see that the sale goes through smoothly and at a price desired by such Chief Minister. Though we can visualise such situation, such facts have to be established by concrete evidence to be convicted in a criminal case and is hard or difficult to get. At any rate, it is plain that such conduct is opposed to the spirit of the Code of Conduct if not its letter.
In the result, we dismiss these appeals and special leave petition, subject to the observations made above.
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2003 (11) TMI 614
Title: Supreme Court Judgment 2003 (11) TMI 614 - SC
Judges: S.N. Variava and H.K. Sema
Decision: Civil Appeal dismissed, no interference necessary.
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2003 (11) TMI 613
Issues:
Waiver of deposit of service tax and penalty for repair services provided by the assessee.
Analysis:
The judgment revolves around the application for waiver of deposit of service tax and penalty amounting to specific figures. The assessee, engaged in the manufacture of injection moulding machines, faced a demand following the finding that the repair services provided after the warranty period on the machines supplied were considered taxable services. The Counsel for the applicant argued that the repair services were not akin to services provided by a consulting engineer but were merely repairs carried out on the sold machines. The contention was supported by Circular No. B-47/5/97-TRU, dated 2-7-1997, which specified services provided by consulting engineers and firms, excluding repairs.
The departmental representative, however, argued that the repair services involved trouble shooting, a service specified in the circular, implying that the repair work necessitated identifying and solving problems, constituting a service provided by a consulting engineer. The Tribunal acknowledged the merit in this argument but found it challenging to categorize repairs on sold goods as services provided by consulting engineers. Consequently, the Tribunal directed the applicant to deposit a specific amount within a stipulated timeframe, following which the waiver of the remaining service tax and penalty was granted, and the recovery of the same was stayed.
The judgment highlights the interpretation of repair services provided by the assessee post-warranty period on the machines sold, in the context of taxable services under service tax regulations. It delves into the distinction between repair services and services provided by consulting engineers, referencing relevant circulars to support the arguments presented by both parties. The Tribunal's decision to grant partial waiver based on the nature of the services rendered underscores the nuanced assessment of the activities carried out by the assessee and the applicability of service tax and penalties in such scenarios.
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