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2007 (2) TMI 711
Issues involved: Interpretation of Clause 23.3 of the Film Policy regarding subsidy for film production in Uttar Pradesh.
Facts of the case: The State Government of Uttar Pradesh established Film Bandhu to promote film production in the state, offering various incentives under the Uttar Pradesh Film Policy 2001. The respondents sought subsidy under Clause 23.3 of the policy, which provides a subsidy of 25% of the cost of production, subject to a maximum limit, for films made in regional languages in U.P.
Arguments: The appellant argued that the subsidy was intended for film processing costs in labs outside U.P., limited to three years. The respondents contended that other film producers had received 25% of the entire production cost as subsidy.
Judgment: The Supreme Court found ambiguity in the interpretation of Clause 23.3 and emphasized the importance of how the circular was understood by the department. The Court ruled that if other producers received 25% of the production cost, the same benefit should apply. However, if the subsidy was for film processing costs, it should be limited to that aspect. The Court set aside the previous judgment and remanded the matter to the High Court for further consideration based on the department's understanding of the policy and subsidies granted to other producers.
Conclusion: The appeal was allowed, the impugned judgment was set aside, and the case was remanded to the High Court for a fresh review. No costs were awarded in this matter.
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2007 (2) TMI 710
Issues Involved:
1. Validity of the rejection of compassionate appointment based on age criteria.
2. Conditional offer of voluntary retirement and its acceptance.
3. Discretionary nature of compassionate appointments under the scheme.
Summary:
1. Validity of the rejection of compassionate appointment based on age criteria:
The appellant, Food Corporation of India (FCI), introduced a scheme for granting compassionate appointments to dependants of departmental workers who died in service or retired on medical grounds. The scheme, updated on 3.7.1996, stipulated that the worker should seek voluntary retirement on medical grounds before completing the age of 55 years. The second respondent applied for voluntary retirement on medical grounds on 26.4.1999, at the age of 55 years, 2 months, and 20 days, requesting compassionate appointment for his son. FCI rejected the request for compassionate appointment on the grounds that the second respondent had crossed the age limit of 55 years, as per the scheme. The Supreme Court held that an employer cannot be directed to act contrary to the terms of its policy governing compassionate appointments and that the scheme clearly bars compassionate appointment to the dependant of an employee who seeks voluntary retirement on medical grounds after attaining the age of 55 years.
2. Conditional offer of voluntary retirement and its acceptance:
The second respondent's application was a composite one, seeking voluntary retirement on medical grounds, conditional upon the appointment of his son. FCI accepted the voluntary retirement without addressing the conditional nature of the offer. The Supreme Court noted that when an offer is conditional, the offeree (FCI) has the choice to accept or reject the entire offer, including the condition. By accepting the voluntary retirement without addressing the condition, FCI implicitly accepted the entire conditional offer, including the compassionate appointment of the son. The Court held that FCI could not refuse to comply with the condition after accepting the offer.
3. Discretionary nature of compassionate appointments under the scheme:
The scheme designated the Senior Regional Manager/Regional Manager as the competent authority and made it clear that compassionate appointment is discretionary. The Supreme Court acknowledged that even if all conditions prescribed in the scheme are fulfilled, there is no 'right' to appointment, and it remains a matter of discretion for the competent authority. However, in this case, the Court found that FCI's acceptance of the conditional offer implied an obligation to appoint the son, as the conditional offer was accepted in its entirety. The Court upheld the High Court's direction to appoint the first respondent, noting that FCI did not dispute the eligibility or suitability of the first respondent for the post of handling labour, nor did it contend that there was no vacancy.
Conclusion:
The Supreme Court dismissed the appeal, emphasizing that FCI, having accepted the conditional offer of voluntary retirement, could not refuse the compassionate appointment of the son. The Court granted FCI two months to appoint the first respondent as per the High Court's order, with no entitlement to monetary or other benefits for the delay in issuing the offer of appointment.
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2007 (2) TMI 709
Issues Involved:
1. Taxability of mesne profits received by the assessee.
2. Nature of mesne profits (whether revenue receipt or capital receipt).
3. Impact of the Supreme Court judgment in the case of P. Mariappa Gounder.
4. Enhancement of assessed income by the CIT(A).
5. Levy of interest under Sections 234B and 234C of the Income Tax Act.
Detailed Analysis:
1. Taxability of Mesne Profits Received by the Assessee:
The primary issue was whether the mesne profit of Rs. 34,57,01,137/- received by the assessee pursuant to a consent decree constituted revenue receipt assessable to tax. It was argued that this issue was settled by the Special Bench in the case of Sushil Kumar & Co., which held that mesne profits are taxable as revenue receipts. However, the assessee contended that the issue of taxability was not addressed by the Supreme Court in P. Mariappa Gounder, and therefore, the judgment did not merge with the Supreme Court's decision.
2. Nature of Mesne Profits (Revenue Receipt or Capital Receipt):
The Tribunal examined whether the mesne profits received under the consent decree were capital or revenue in nature. The CIT(A) had held that the mesne profits were revenue receipts, relying on the judgment of the Madras High Court in P. Mariappa Gounder. However, the Tribunal noted that several High Courts, including the Patna, Andhra Pradesh, Calcutta, and Kerala High Courts, had held mesne profits to be capital receipts. The Tribunal concluded that mesne profits received for wrongful possession and deprivation of property are capital receipts and not chargeable to tax. The Tribunal preferred the view favorable to the assessee, following the principle that where two views are possible, the view favorable to the subject should be preferred.
3. Impact of the Supreme Court Judgment in P. Mariappa Gounder:
The Tribunal clarified that the Supreme Court in P. Mariappa Gounder was only concerned with the year of taxability of mesne profits and not their nature. The Supreme Court's decision did not address whether mesne profits were revenue or capital receipts. Therefore, the Tribunal held that the Supreme Court judgment could not be considered an authority for the proposition that mesne profits are revenue receipts chargeable to tax.
4. Enhancement of Assessed Income by the CIT(A):
The CIT(A) had enhanced the assessed income by Rs. 1,18,75,000/-. Since the Tribunal held that the mesne profits were capital receipts and not chargeable to tax, this ground became infructuous and did not require further adjudication.
5. Levy of Interest under Sections 234B and 234C:
The Tribunal noted that the levy of interest under Sections 234B and 234C is consequential and directed the Assessing Officer to recompute the interest after giving effect to the Tribunal's order.
Summary of Legal Position:
1. The Supreme Court in P. Mariappa Gounder did not adjudicate on the nature of mesne profits.
2. Mesne profits received against wrongful possession of property amount to capital receipts, not chargeable to tax.
3. The Tribunal followed the principle that where two views are possible, the view favorable to the assessee should be preferred.
4. The enhancement of assessed income by the CIT(A) was set aside as the mesne profits were held to be capital receipts.
5. The levy of interest under Sections 234B and 234C was to be recomputed based on the Tribunal's findings.
Conclusion:
The appeal of the assessee was allowed, and it was held that the mesne profits received under the consent decree were capital receipts not chargeable to tax. The order of the CIT(A) enhancing the assessed income and confirming the addition was set aside. The Tribunal directed the Assessing Officer to recompute the interest under Sections 234B and 234C accordingly.
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2007 (2) TMI 708
Issues involved: Dispute over registration of land document due to a government notification under Section 22-A of the Registration Act, 1908.
Summary:
Issue 1: Validity of Government Notification under Section 22-A of the Registration Act
The petitioner, owner of land, faced refusal of registration by the second respondent due to a government notification under Section 22-A of the Registration Act. The High Court noted that the power granted to the Government under Section 22-A to prevent registration was held ultra vires by the Supreme Court in State of Rajasthan v. Basanth Nahata. As a result, the basis for the refusal of registration by the second respondent was deemed invalid.
Issue 2: Obligation of Second Respondent to Process Document
With the invalidity of the government notification under Section 22-A, the second respondent was directed by the High Court to receive and process the document presented by the petitioner. The court emphasized that the second respondent must consider the document in accordance with the provisions of the Indian Stamp Act and the Registration Act. The court ordered the second respondent to take necessary steps within one week from the date of receipt of the court's order.
In conclusion, the High Court disposed of the Writ Petition by directing the second respondent to proceed with the registration process of the land document as per the relevant legal provisions, emphasizing the importance of following the Indian Stamp Act and the Registration Act.
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2007 (2) TMI 707
The Appellate Tribunal CESTAT Kolkata ruled in favor of the appellant company, stating that charges for erection, installation, and commissioning are not covered under the category of consulting engineer services for the period from July 1997 to March 2002. The appeal was allowed based on Board's Circular No. 79/9/2004-ST dated 13-5-2004.
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2007 (2) TMI 706
Issues involved: Determination of service tax liability on a society providing training services to government officers and non-governmental organization candidates.
Issue 1: Classification under 'Commercial Coaching Services' heading
The appellant, a society registered under the Society Act, provides training to government officers and non-governmental organization candidates. They argue that they are not a commercial organization and should not be classified under 'Commercial Coaching Services' for service tax purposes. The Government recognizes their activity as non-commercial due to providing education to candidates selected for government services. Despite training outside candidates, the appellant claims no profit motive and financial hardship. The appellant's counsel emphasizes exemption from Income Tax due to lack of profit.
Issue 2: Profit element and pre-deposit requirement
The Departmental Representative contends that although the appellant is registered as a non-commercial organization, their accounts show a profit element. The Department seeks to impose terms on the appellant. However, upon review, it is found that the Government recognizes the appellant's activity as non-commercial. The appellant provides training to government-selected candidates and some private candidates without a profit motive. The appellant demonstrates financial inability to pre-deposit the required amount. Consequently, the stay application is granted, waiving the pre-deposit and staying recovery until appeal disposal. An out-of-turn hearing is granted due to the significant amount involved, with the final hearing scheduled for June 26, 2007. The Commissioner is directed to file comments and counter to the 'Grounds of Appeal.'
*(Pronounced and dictated in the open court)*
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2007 (2) TMI 705
Issues Involved:
1. Formation and dissolution of the coalition government.
2. The Governor's decision on the dissolution recommendation.
3. The petition for disqualification of 13 B.S.P. MLAs.
4. Recognition of a split in the B.S.P. by the Speaker.
5. The High Court proceedings and its handling of the writ petition.
6. The interpretation and application of the Tenth Schedule of the Constitution.
7. The role and jurisdiction of the Speaker under the Tenth Schedule.
8. The timing and relevance of disqualification under the Tenth Schedule.
9. Judicial review of the Speaker's decision.
10. The final decision on the disqualification of the 13 MLAs.
Detailed Analysis:
1. Formation and Dissolution of the Coalition Government:
The coalition government in Uttar Pradesh was formed in May 2002 after no party secured a majority in the February 2002 elections. The government was led by Ms. Mayawati from the Bahujan Samaj Party (B.S.P.). On 25.8.2003, the cabinet decided to recommend the dissolution of the Assembly, and Ms. Mayawati resigned the next day. However, before the resignation, the leader of the Samajwadi Party staked a claim to form the government.
2. The Governor's Decision on the Dissolution Recommendation:
The Governor did not accept the recommendation for dissolution. Instead, on 29.8.2003, he invited the leader of the Samajwadi Party, Mr. Mulayam Singh Yadav, to form the government, giving him two weeks to prove his majority.
3. Petition for Disqualification of 13 B.S.P. MLAs:
On 4.9.2003, Mr. Swami Prasad Maurya filed a petition before the Speaker under Article 191 and the Tenth Schedule, seeking the disqualification of 13 B.S.P. MLAs who had supported Mr. Mulayam Singh Yadav. The petition claimed they had voluntarily given up their membership in B.S.P.
4. Recognition of a Split in the B.S.P. by the Speaker:
On 6.9.2003, 37 MLAs, claiming to represent a split in B.S.P., requested the Speaker to recognize them as a separate group. The Speaker accepted this claim the same evening, recognizing the split and the formation of the Lok Tantrik Bahujan Dal. Later, he accepted the merger of this group with the Samajwadi Party.
5. The High Court Proceedings and Handling of the Writ Petition:
The writ petition challenging the Speaker's order was filed on 29.9.2003. The High Court's handling of the case was marked by multiple adjournments and delays. The petition was dismissed for default on 22.4.2004, restored on 20.12.2004, and finally admitted on 6.1.2005. The High Court ultimately quashed the Speaker's order, directing him to reconsider the disqualification petition.
6. Interpretation and Application of the Tenth Schedule of the Constitution:
The Tenth Schedule, added by the Constitution (Fifty-second Amendment) Act, 1985, deals with disqualification on the ground of defection. The Supreme Court in Kihoto Hollohan upheld its validity, allowing judicial review of the Speaker's decisions. The present case required examining the application of paragraphs 2, 3, and 4 of the Tenth Schedule.
7. The Role and Jurisdiction of the Speaker under the Tenth Schedule:
The Speaker's role is to decide on disqualification petitions. The Speaker must determine whether a split in the original political party occurred and whether the defecting members constitute one-third of the legislature party. The Speaker's decision-making process was scrutinized for procedural and jurisdictional correctness.
8. The Timing and Relevance of Disqualification under the Tenth Schedule:
The Supreme Court clarified that disqualification occurs at the moment a member voluntarily gives up party membership or defies a whip, not when the Speaker decides on it. The Speaker must consider the situation as it existed at the time of the alleged defection.
9. Judicial Review of the Speaker's Decision:
Judicial review of the Speaker's decision is limited to jurisdictional errors, violation of constitutional mandates, mala fides, non-compliance with natural justice, and perversity. The Supreme Court found the Speaker's decision flawed and not immune from judicial scrutiny.
10. The Final Decision on the Disqualification of the 13 MLAs:
The Supreme Court concluded that the 13 MLAs had voluntarily given up their B.S.P. membership by requesting the Governor to invite the opposition leader to form the government. The claim of a split in the B.S.P. was not substantiated with evidence. Consequently, the 13 MLAs were disqualified with effect from 27.8.2003. The appeals by the 37 MLAs were dismissed, and the appeal by the writ petitioner was allowed, resulting in the disqualification of the 13 MLAs.
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2007 (2) TMI 704
Murder - Challenged the Order of conviction and sentence recorded by the High Court - Scope of the Powers of Appellate Court - Offences punishable u/s 143, 147, 148, 302 and 324 r/w Section 149 of the Indian Penal Code ('IPC') - HELD THAT:- In our considered view, the following general principles regarding powers of appellate Court while dealing with an appeal against an order of acquittal emerge;
(1) An appellate Court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded;
(2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate Court on the evidence before it may reach its own conclusion, both on questions of fact and of law;
(3) Various expressions, such as, 'substantial and compelling reasons', 'good and sufficient grounds', 'very strong circumstances', 'distorted conclusions', 'glaring mistakes', etc. are not intended to curtail extensive powers of an appellate Court in an appeal against acquittal. Such phraseologies are more in the nature of 'flourishes of language' to emphasize the reluctance of an appellate Court to interfere with acquittal than to curtail the power of the Court to review the evidence and to come to its own conclusion.
(4) An appellate Court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court.
(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.
In our view, the submission of the learned Counsel for the appellants is well founded that it is not material whether Accused No. 1 had or had not filed a complaint or he was or was not examined by a doctor, but the fact that even though it was the case of prosecution that Accused No. 1 was injured during the course of incident, prosecution witnesses tried to suppress that fact which would throw doubt as to the correctness of the case or the manner in which the incident had happened.
The trial Court had also stated that it was unnatural that the prosecution witnesses and deceased Anjaniappa could have gone to Hanumanthapura Bypass at about 9.30 p.m. when a shorter route was available for going to their destination. The trial Court observed that there was inconsistency in prosecution evidence as to availability of electric light at the time of incident. The Court also noted that the knife produced before the Court as mudamal article was not the same which was used by Accused No. 8 for inflicting injury on the deceased. There was also no consistency in evidence as to injuries sustained by prosecution witnesses.
Trial Court felt that the accused could get benefit of doubt, the said view cannot be held to be illegal, improper or contrary to law. Hence, even though we are of the opinion that in an appeal against acquittal, powers of appellate Court are as wide as that of the trial Court and it can review, reappreciate and reconsider the entire evidence brought on record by the parties and can come to its own conclusion on fact as well as on law, in the present case, the view taken by the trial court for acquitting the accused was possible and plausible. On the basis of evidence, therefore, at the most, it can be said that the other view was equally possible. But it is well-established that if two views are possible on the basis of evidence on record and one favourable to the accused has been taken by the trial Court, it ought not to be disturbed by the appellate Court. In this case, a possible view on the evidence of prosecution had been taken by the trial Court which ought not to have been disturbed by the appellate Court. The decision of the appellate Court (High Court), therefore, is liable to be set aside.
Thus, the appeal deserves to be allowed and is, accordingly, allowed. The order of conviction and sentence recorded by the High Court is set aside and the order of acquittal passed by the Additional Sessions Judge is restored. The appellants are hereby acquitted of the offences with which they were charged. They are ordered to be set at liberty forthwith unless their presence is required in any other case.
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2007 (2) TMI 703
Issues involved: Regularization scheme for employees, applicability of scheme to contract employees, validity of termination of services, interpretation of policy decision, legality of circular letter extending scheme to autonomous bodies.
Regularization Scheme Applicability:
The case involved a scheme formulated by the State of Punjab for the regularization of its employees. The question before the court was whether the appellant was obligated to apply the scheme to its own employees. The High Court opined that the respondent was covered by the policy decision and entitled to its benefits.
Validity of Circular Letter:
The State extended the regularization scheme to public sector undertakings, corporations, boards, and autonomous bodies through a circular letter dated 23.01.2001. However, the court found that the circular letter was not made in accordance with the Constitution of India and lacked legal authority to be applied to statutory corporations like the appellant.
Termination of Services:
The respondent's services were terminated on the grounds of not being required further, leading to a legal challenge. The High Court directed the appellant to reconsider the case in light of the regularization scheme, but the respondent's claim was rejected based on a clarification that the scheme did not apply to contract employees.
Interpretation of Policy Decision:
The court analyzed whether the workmen engaged on a contract basis were covered by the scheme. It was highlighted that the terms and conditions of the appellant's employees were governed by statutory rules and could only be altered through rule amendments, not by a state policy decision or circular letter.
Legal Precedents and Conclusion:
Citing legal precedents, the court emphasized that regularization is not permissible if appointments have been made in contravention of statutory rules. The judgment was set aside, and the appeal was allowed with no costs. The court clarified that the regularization scheme could only apply to irregular appointments, not illegal ones, as per established legal principles.
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2007 (2) TMI 702
Issues Involved:
1. Interpretation of Section 167 of the Motor Vehicles Act, 1988.
2. Relationship of employer and employee between husband and wife.
3. Applicability of insurance provisions under the Motor Vehicles Act, 1988 to claims under the Workmen's Compensation Act, 1923.
Summary:
1. Interpretation of Section 167 of the Motor Vehicles Act, 1988:
The Supreme Court considered the interpretation of Section 167 of the Motor Vehicles Act, 1988 (1988 Act) in relation to claims under the Workmen's Compensation Act, 1923 (1923 Act). The Court noted that Section 167 provides an option to the claimant to file for compensation either under the 1988 Act or the 1923 Act, but not both. The doctrine of election, which is a branch of the rule of estoppel, precludes a claimant from seeking remedies under both Acts for the same relief.
2. Relationship of Employer and Employee Between Husband and Wife:
The Court examined whether a husband could be considered a "workman" under his wife in the absence of a specific contract. It was held that it is absurd to suggest that the husband would be a "workman" of his wife without any specific contract. The Court found that the claimants concocted the story of the husband and wife living separately to lay a claim against the insurer. The claim was deemed not bona fide as no documentary proof of employment was produced, and no independent witnesses were examined.
3. Applicability of Insurance Provisions Under the Motor Vehicles Act, 1988 to Claims Under the Workmen's Compensation Act, 1923:
The Court discussed the limited applicability of the 1988 Act to claims under the 1923 Act. It was noted that while the 1988 Act mandates compulsory insurance for motor vehicles, the 1923 Act does not. The statutory duty to indemnify the insured by the insurer arises under the 1988 Act, not the 1923 Act. The Court held that the provisions of the 1988 Act, including Section 143, apply only to cases arising under Chapter X of the 1988 Act and not to claims under Chapter XI. The insurer's liability under the 1923 Act is limited to the claim of the workman, and contracting out is permissible under the 1923 Act.
Conclusion:
The Supreme Court upheld the judgment of the High Court, stating that no Award could be passed against the insurer by the Commissioner for Workmen's Compensation. The appeal was dismissed, and the Court emphasized that the provisions of the 1988 Act do not automatically apply to proceedings under the 1923 Act.
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2007 (2) TMI 701
Dowry demands - Victim committed suicide - Seeking grant of anticipatory bail u/s 438 of the Code of Criminal Procedure 1973 - Offence u/s 304B of the Indian Penal Code, 1860 ('IPC') and Section 4 of the Dowry Prohibition Act, 1961('Act') - HELD THAT:- In the very nature of the direction which the Court can issue under Section 438 of the Code, it is clear that the direction is to be issued only at the pre-arrest stage. The direction becomes operative only after arrest. The condition precedent for the operation of the direction issued is arrest of the accused. This being so, the irresistible inference is that while dealing with an application under Section 438 of the Code the Court cannot restrain arrest.
Ordinarily, arrest is a part of the process of investigation intended to secure several purposes. The accused may have to be questioned in detail regarding various facets of motive, preparation, commission and aftermath of the crime and the connection of other persons, if any, in the crime. There may be circumstances in which the accused may provide information leading to discovery of material facts. It may be necessary to curtail his freedom in order to enable the investigation to proceed without hindrance and to protect witnesses and persons connected with the victim of the crime, to prevent his dis-appearance to maintain law and order in the locality. For these or other reasons, arrest may become an inevitable part of the process of investigation.
In view of what has been stated in some of the directions, given by learned Single Judge, as quoted, are not in line with what has been stated in Adri Dharan Das's case [2005 (2) TMI 817 - SUPREME COURT]. Accordingly we modify the directions.
Since the respondents have already surrendered and have been granted bail in terms of the High Court's directions, they shall surrender before the concerned court and shall move for bail in terms of Section 439 of the Code within four weeks from today. On that being done the case shall be considered in its proper perspective uninfluenced by the fact we have disapproved stipulation of conditions by the High Court. The concerned court shall deal with the matter appropriately. It is brought to our notice that the husband of the deceased has already been released on bail after his surrender. The effect and/or relevance of that order shall be duly considered by the concerned court while dealing with the application for bail to be filed within stipulated time.
The appeal is allowed to the aforesaid extent.
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2007 (2) TMI 700
Issues Involved:
1. Validity of the High Court's order based on alleged misrepresentation by the University.
2. The requirement and validity of the 6th advertisement for the reserved post.
3. The appellant's right to regularization after serving on a temporary basis for several years.
Summary:
1. Validity of the High Court's order based on alleged misrepresentation by the University:
The appellant challenged the High Court's orders, arguing that the initial order dated 13.4.2005 was based on a fraudulent misrepresentation by the University, which falsely claimed that the 6th advertisement had not been issued. The Supreme Court noted that the advertisement had indeed been issued on 13.4.1999 and interviews were conducted on 5.7.1999, with no backward class candidate appearing. The University had accepted the non-availability report on 1.11.1999. The Supreme Court found that the High Court had been misled by the University's false statements, which vitiated the review order dated 5.5.2005. The Court emphasized that orders founded upon fraud and misrepresentation can be recalled, an inherent power of the Court.
2. The requirement and validity of the 6th advertisement for the reserved post:
The Supreme Court observed that the 6th advertisement was issued as per the Government Resolution and University circular, and no backward class candidate applied. The University later acknowledged in a letter dated 6.9.2005 that it would not be proper to issue another advertisement. The High Court's direction to issue a 6th advertisement was based on incorrect facts, and thus, the basis of the impugned order was incorrect.
3. The appellant's right to regularization after serving on a temporary basis for several years:
The appellant had been serving as a temporary lecturer for over 12 years due to the non-availability of backward class candidates. The Supreme Court noted that the appellant was fully qualified and had been performing her duties satisfactorily. The Court held that it was a fit case for regularization after de-reserving the post, as the appellant would otherwise be age-barred for any other service and would suffer irreparable injury if terminated. The Court directed the respondents to regularize the appellant's services on the post in question after de-reserving the same.
Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's orders, and directed the respondents to regularize the appellant's services after de-reserving the post. The Court emphasized the importance of addressing fraudulent misrepresentations and ensuring justice for long-serving temporary employees. No order as to costs was made.
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2007 (2) TMI 699
Issues Involved:
1. Disallowance of expenditure on land lease charges.
2. Disallowance of entertainment expenses.
3. Disallowance under Rule 6B of the Income Tax Rules, 1962.
4. Disallowance of contractual warranty obligations as contingent liability.
5. Addition of leave encashment provision.
6. Disallowance of provision for liquidated damages.
7. Restriction of deduction under Section 80HHC.
8. Exclusion of interest income from profit of the undertaking under Section 80-IA.
9. Exclusion of commission income from business profit under Section 80HHC.
10. Inclusion of cash discount and warehousing charges in business profit under Section 80-IA.
11. Exclusion of benefits received in respect of deemed export under Section 80-IA.
12. Allowance of deduction under Section 80-O.
Detailed Analysis:
1. Disallowance of Expenditure on Land Lease Charges
The Tribunal confirmed the disallowance of Rs. 46,163 on account of land lease charges, as it was previously decided against the assessee in earlier assessment years. The expenditure was deemed not of a revenue nature.
2. Disallowance of Entertainment Expenses
The Tribunal decided to exclude 20% of the entertainment expenses attributable to employees, following its earlier decision for the assessment year 1994-95. The ground was partly allowed.
3. Disallowance under Rule 6B of the Income Tax Rules, 1962
The Tribunal, following its earlier decision, upheld the disallowance of Rs. 30,000 under Rule 6B, rejecting the contention that the provisions of the said Rule were not applicable.
4. Disallowance of Contractual Warranty Obligations as Contingent Liability
The Tribunal remitted the matter back to the assessing officer for fresh adjudication, following its earlier decision. It was noted that no new facts were presented compared to the earlier year.
5. Addition of Leave Encashment Provision
The Tribunal remitted the matter back to the assessing officer to ascertain the incremental liability by making actuarial valuation for the previous year ended on 31-3-1997, following its earlier decision.
6. Disallowance of Provision for Liquidated Damages
The Tribunal held that the provision for liquidated damages was not a contingent liability but an accrued liability, citing various judgments including Calcutta Co. Ltd. v. CIT and Bharat Earth Movers v. CIT. The matter was remitted back to the assessing officer to determine the accrued liability for the year in question based on the terms of the contract agreements.
7. Restriction of Deduction under Section 80HHC
The Tribunal decided several sub-issues under this ground:
- Excise Duty Refund: Following its earlier decision, the Tribunal held that excise duty refund is not to be excluded under Clause (baa) of Explanation to Section 80HHC.
- Inclusion in Total Turnover: Sales-tax and excise duty were excluded from the total turnover, following the jurisdictional High Court's decision. Client balances written back, compensation for cancellation of orders, increase in contract-in-progress, packing recoveries, and freight recovery were included in the total turnover.
- Profit Element Exclusion: The Tribunal upheld the exclusion of 90% of the profit element in cash discount, write back suspense account, and service charges received.
- Warehouse Charges: The issue was remitted back to the assessing officer to ascertain the nature of warehouse charges.
8. Exclusion of Interest Income from Profit of the Undertaking under Section 80-IA
The Tribunal, following its earlier decision, excluded interest income of Rs. 44,97,004 from the profit of the undertaking, holding that it was not derived from the industrial undertaking.
9. Exclusion of Commission Income from Business Profit under Section 80HHC
The Tribunal upheld the exclusion of commission income from business profit for computing deduction under Section 80HHC, following its earlier decision.
10. Inclusion of Cash Discount and Warehousing Charges in Business Profit under Section 80-IA
- Cash Discount: The Tribunal held that cash discount is not directly related to the business activity of the assessee and thus not includible under Section 80-IA.
- Warehouse Charges: The issue was remitted back to the assessing officer to ascertain the true nature of the warehouse charges.
11. Exclusion of Benefits Received in Respect of Deemed Export under Section 80-IA
- REP Licence: The Tribunal decided against the assessee, following the Supreme Court's decision in CIT v. Sterling Foods.
- DGFT Claim: The Tribunal held that DGFT claims are not derived from the industrial undertaking and thus not eligible for deduction under Section 80-IA.
- Excise Duty Claim: Similarly, the Tribunal held that excise duty claim is not eligible for deduction under Section 80-IA.
12. Allowance of Deduction under Section 80-O
The Tribunal dismissed the ground as it was not pressed by the assessee.
Conclusion:
The appeal was partly allowed, with several issues remitted back to the assessing officer for fresh adjudication. The Tribunal followed its earlier decisions and various legal precedents in deciding the issues.
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2007 (2) TMI 698
Issues Involved:
1. Release of the entire loan amount sanctioned.
2. Release of the soft loan amount as per the National Equity Fund Scheme.
3. Awarding damages, interest, and waiver of interest on the amount already released.
Summary:
1. Release of the Entire Loan Amount Sanctioned:
The entrepreneur-petitioner, M/s Garg Steel, sought directions for the Punjab Financial Corporation (PFC) to release the entire loan amount sanctioned. The petitioner applied for financial assistance of Rs. 30 lacs, which was sanctioned in two parts: a term loan of Rs. 21,25,000/- at 15.5% interest p.a. and a soft loan of Rs. 7,50,000/- at 5% interest p.a. The petitioner availed Rs. 17,00,000/- of the term loan but faced delays in the release of the remaining amount due to non-compliance with certain conditions, including obtaining an NOC from the Pollution Control Board, installing a factory main gate, and securing a power connection letter from PSEB.
2. Release of the Soft Loan Amount as per the National Equity Fund Scheme:
The PFC admitted the sanction of the soft loan but stated that it was contingent on the availability of refinance from the Small Industries Development Bank of India (SIDBI). The SIDBI clarified that both the term loan and the soft loan were sanctioned to the PFC on 7.5.2004, and the PFC should have disbursed these amounts to the petitioner. The PFC's refusal to release the soft loan was due to an inter se controversy with SIDBI regarding the linkage of refinance for the soft loan and term loan.
3. Awarding Damages, Interest, and Waiver of Interest:
The petitioner argued that withholding the soft loan and the remaining term loan caused significant financial strain, leading to a standstill in the unit's operations. The court found merit in the petitioner's claim, invoking the principle of promissory estoppel as laid down by the Supreme Court in the cases of Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of U.P. and Gujarat State Financial Corporation v. M/s Lotus Hotels Pvt. Ltd. The court directed the PFC to release the soft loan of Rs. 7,50,000/- at 5% interest and the balance term loan without charging interest from March 2003. Interest on the remaining term loan would accrue from the date of its release.
Conclusion:
The writ petition was allowed, directing the PFC to release the soft loan and the remaining term loan within one month, subject to compliance with the conditions detailed in the mortgage deed dated 18.11.2002.
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2007 (2) TMI 697
Issues Involved:
1. Interpretation of the Punjab Pre-emption Act, 1913.
2. Validity of the consent decree and the right of pre-emption.
3. Non-impleadment of a necessary party.
4. Alleged collusion and fraud in obtaining the decree.
Summary:
1. Interpretation of the Punjab Pre-emption Act, 1913:
The case involves the interpretation of the Punjab Pre-emption Act, 1913. The Act confers a special right of pre-emption on specified persons, allowing them to acquire agricultural land or village immovable property in preference to others. The right arises only in the case of sales or foreclosures. Sections 5, 6, and 10 of the Act outline the limitations and prohibitions on this right. Section 19 provides the procedure for claiming pre-emption, requiring notice to pre-emptors through the court.
2. Validity of the Consent Decree and the Right of Pre-emption:
The constitutionality of the Act was upheld by a Constitution Bench in Atam Prakash v. State of Haryana, which validated the right of pre-emption for co-sharers and tenants but struck down the right based on consanguinity. The court found no justification for the classification of kinsfolk entitled to pre-emption, declaring it inconsistent with modern ideas and the constitutional scheme. Consequently, Respondent No. 8, as a daughter of Respondent No. 9, could not claim a right of pre-emption.
3. Non-impleadment of a Necessary Party:
The appellant was not impleaded as a party in the suit for pre-emption, despite being in possession of the land and having purchased it through a registered deed of sale. The court held that the appellant's right to own and possess the land could not be taken away without giving him an opportunity of hearing, as it is a constitutional and human right under Article 300A of the Constitution of India. The right of pre-emption, being a weak statutory right, must comply with procedural requirements, and the appellant was a necessary party in the suit.
4. Alleged Collusion and Fraud in Obtaining the Decree:
The court observed that the manner in which the consent decree was entered into indicated collusion between Defendant Nos. 1 and 2 and Defendant No. 9. The consent decree was void ab initio as Defendant Nos. 1 and 2, having transferred their rights, could not convey any right in the property of Defendant No. 9. The court found that the parties committed fraud by suppressing material facts and obtaining the decree without the appellant's involvement.
Conclusion:
The impugned judgment was set aside, and the appeal was allowed. The respondents were ordered to bear the costs of the appellant, with an advocate's fee assessed at Rs. 5,000/-.
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2007 (2) TMI 696
Suit for recovery of a sum due - liability to be repay with interest and damages - misjoinder of parties or a misjoinder of causes of action - rejection of the plaint under Order VII Rule 11(d) of the Code - HELD THAT:- In the present suit, all that the appellants have done is to combine their respective claims which are in the nature of counter claims or cross suits to the suits filed by the respondent. The ultimate question for decision in all the suits is the nature of the transactions that was entered into by the respondent with each of the appellants and the evidence that has to be led, in both the suits, is regarding the nature of the respective transactions entered into by the respondent with each of the appellants. To a great extent, the evidence would be common and there will be no embarrassment if the causes of action put forward by the appellants in the present suit are tried together especially in the context of the two suits filed by the respondent against them and withdrawn for a joint trial. In the case on hand, therefore, even assuming that there was a defect of misjoinder of causes of action in the plaint filed by the appellants, it is not a case where convenience of trial warrants separating of the causes of action by trying them separately. The three suits have to be jointly tried and since the evidence, according to us, would be common in any event, the Division Bench was in error in directing the appellants to elect to proceed with one of the plaintiffs and one of the claims.
We do not think that on the facts and in the circumstances of the case one of the appellants should be asked to file a fresh plaint so as to put forward her claim. Even if such a plaint were to be filed, it will be a clear case for a joint trial of that plaint with the present suit and the two suits filed by the respondent. In any event, therefore, the Division Bench was not correct in interfering with the decision of the learned single judge. The effect of withdrawal of the two suits filed by the respondent against the appellants for a joint trial has not been properly appreciated by the Division Bench. So, on the facts of this case, the decision of the Division Bench is found to be unsustainable and the course adopted by it unwarranted.
We are of the view that on the facts and in the circumstances of the case and the nature of the pleadings in the three suits that are now before the Original Side of the Calcutta High Court, it would be just and proper to try them together and dispose them of in accordance with law for which an order has already been made. A joint trial of the three suits based on the evidence to be taken, in our view, would be the proper course under the circumstances.
We therefore allow this appeal and reversing the decision of the Division Bench restore the decision of the learned single judge. We request the learned single judge of the High Court to try and dispose off the three suits expeditiously in accordance with law.
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2007 (2) TMI 695
Issues Involved:
1. Validity of the sale agreement and payment of consideration.
2. Entitlement to possession of the property.
3. Admissibility of evidence contradicting the written agreement.
4. Relief granted by the District Forum, State Commission, and National Commission.
Summary:
1. Validity of the Sale Agreement and Payment of Consideration:
The appellant, a construction company, and the respondent, a purchaser, entered into an agreement dated 27.7.1997 for the sale of an office room for Rs. 7,75,000/-. The respondent initially issued cheques totaling Rs. 9,00,000/-, which were returned uncashed. Subsequently, a cheque for Rs. 5,00,000/- was issued and encashed. The respondent claimed to have paid an additional Rs. 4,00,000/- in cash, which the company denied. The District Forum found no evidence of the cash payment and upheld the written agreement's terms.
2. Entitlement to Possession of the Property:
The respondent sought possession of the office room, claiming full payment. The District Forum dismissed the complaint, directing the respondent to either pay the balance amount with interest and obtain possession or demand a refund of Rs. 5,00,000/- with interest. The State Commission remanded the case, and upon further evidence, the District Forum reiterated its stance, finding no proof of the alleged cash payment.
3. Admissibility of Evidence Contradicting the Written Agreement:
The National Commission dismissed the company's revision, decrying builders' practices of demanding cash payments. However, the Supreme Court emphasized that u/s 91 of the Evidence Act, evidence contradicting the written agreement is inadmissible. The respondent's case in evidence was at variance with his complaint, and no receipt or independent evidence supported the cash payment claim.
4. Relief Granted by the District Forum, State Commission, and National Commission:
The District Forum's decision was to allow the respondent to pay the balance and take possession or get a refund with interest. The State Commission modified this, directing possession based on full payment, which the National Commission upheld. The Supreme Court found the State and National Commissions' reasoning unsustainable, restoring the District Forum's decision and dismissing the respondent's claims of cash payment as unproven.
Conclusion:
The Supreme Court allowed the appeal, setting aside the decisions of the State and National Commissions, and restored the District Forum's decision, emphasizing the inadmissibility of evidence contradicting the written agreement and the lack of proof for the alleged cash payment. Each party was ordered to bear their own costs.
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2007 (2) TMI 694
Issues Involved:
1. Legality of the transfer order dated 18-1-2007 u/s 127(2) of the Income-tax Act.
2. Compliance with principles of natural justice.
3. Validity of the reasons for transfer provided in the notice dated 10-11-2006.
Summary:
Issue 1: Legality of the transfer order dated 18-1-2007 u/s 127(2) of the Income-tax Act
The petitioner challenged the transfer order dated 18-1-2007 issued by the Commissioner of Income-tax-II, Kanpur, transferring its cases to the Deputy Commissioner of Income-tax, Central Circle-19, New Delhi. The petitioner argued that the notice dated 10-11-2006 was vague and did not state the grounds for transfer, rendering the petitioner unaware of the reasons for the transfer. The court examined the provisions u/s 127(2) of the Act, which allow transfer of cases with the concurrence of respective authorities and require reasonable opportunity of being heard and recording of reasons. The court found that these requirements were met as the petitioner was issued a show-cause notice and its reply was considered before passing the transfer order.
Issue 2: Compliance with principles of natural justice
The petitioner contended that the transfer order was a non-speaking order and violated principles of natural justice. The court referred to several precedents, including *Ajantha Industries v. CBDT* and *Canara Bank v. Debasis Das*, emphasizing the necessity of recording and communicating reasons for transfer to ensure fairness. The court found that the notice provided to the petitioner mentioned the search conducted at the premises of M/s. Radico Khaitan Ltd. and the need for coordinated investigation, which were sufficient grounds for transfer. The court concluded that the principles of natural justice were complied with as the petitioner was given an opportunity to respond to the notice.
Issue 3: Validity of the reasons for transfer provided in the notice dated 10-11-2006
The petitioner argued that the reasons for transfer were not adequately detailed in the notice, causing prejudice. The court examined the sufficiency of the reasons provided and found that the notice mentioned the search operation and the need for centralizing cases for assessment, which were valid reasons. The court held that the extent of details required in the notice depends on the nature of the case and the proposed action. The court concluded that the reasons provided were adequate and the transfer order was not arbitrary or based on irrelevant considerations.
Conclusion:
The court dismissed the writ petition, finding no merit in the petitioner's arguments. The transfer order dated 18-1-2007 was upheld as it complied with the statutory requirements u/s 127(2) of the Act and adhered to principles of natural justice. The reasons for transfer provided in the notice were deemed sufficient and valid.
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2007 (2) TMI 693
Appointment for the Posts of field staffs - Commissioner allegedly made certain appointments, without the knowledge of the State - offers of appointment issued in favour of the Respondents were cancelled - Principles of Natural Justice - violation of the provisions contained in Articles 14 and 16 of the Constitution of India - HELD THAT:- The State while offering appointments, having regard to the constitutional scheme adumbrated in Articles 14 and 16 of the Constitution of India, must comply with its constitutional duty, subject to just and proper exceptions, to give an opportunity of being considered for appointment to all persons eligible therefor.
The posts of field staffs of the Revenue Department of the State of Manipur were, thus, required to be filled up having regard to the said constitutional scheme. We would proceed on the assumption that the State had not framed any recruitment rules in terms of the proviso appended to Article 309 of the Constitution of India but the same by itself would not clothe the Commissioner of Revenue to make recruitments in violation of the provisions contained in Articles 14 and 16 of the Constitution of India.
The Commissioner furthermore was not the appointing authority. He was only a cadre controlling authority. He was merely put a Chairman of the DPC for non-ministerial post of the Revenue Department. The term "DPC" would ordinarily mean the Departmental Promotion Committee. The respondents had not been validly appointed and in that view of the matter, the question of their case being considered for promotion and/ or recruitment by the DPC did not and could not arise. Even assuming that DPC would mean Selection Committee, there is noting on record to show who were its members and how and at whose instance it was constituted. The Commissioner, as noticed hereinbefore, was the Chairman of the DPC. How the matter was referred to the DPC has not been disclosed. Even the affidavit affirmed by Shri Tayeng before the High Court in this behalf is silent.
The appointing authority, in absence of any delegation of power having been made in that behalf, was the State Government. The Government Order dated 12.01.1998 did not delegate the power of appointment to the Commissioner. He, therefore, was wholly incompetent to issue the appointment letters.
The respondents, therefore, in our opinion, were not entitled to hold the posts. In a case of this nature, where the facts are admitted, the principles of natural justice were not required to be complied with, particularly when the same would result in futility. It is true that where appointments had been made by a competent authority or at least some steps have been taken in that behalf, the principles of natural justice are required to be complied with.
We, as noticed hereinbefore, do not know as to under what circumstances the orders of appointments were issued. We in the facts and circumstances of this case do not see any arbitrariness on the part of the State in its action directing cancellation of appointments.
Thus, the impugned judgments cannot be sustained. They are set aside accordingly. The appeals are allowed.
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2007 (2) TMI 692
Challenging the partial award given by the Arbitration Tribunal - Whether against the order of partial award an appeal is maintainable directly u/s 37 of the of the Arbitration and Conciliation Act, 1996 (Act) Or Not - Jurisdiction by the Arbitral Tribunal in terms of Sub-section (2) of Section 16 of the Act - HELD THAT:- An appeal under sub-section (2) of Section 37 only lies if there is an order passed u/s 16(2) & (3) of the Act. Section 16(2) & (3) deals with the exercise of jurisdiction. The plea of jurisdiction was not taken by the appellant. It was taken by the respondent in order to meet their counterclaim. But it was not in the context of the fact that the Tribunal had no jurisdiction, it was in the context that this question of counterclaim was no more open to be decided for the simple reason that all the issues which had been raised in counterclaim Nos. 1 to 10 had already been settled in the minutes of meeting and it was recorded that no other issues to be resolved in 1st and 3rd contracts. Therefore, we fail to understand how the question of jurisdiction was involved in the matter.
In fact it was in the context of the fact that the entire counterclaims have already been satisfied and settled in the meeting that it was concluded that no further issues remained to be settled. In this context, the counterclaims filed by the appellant was opposed. If any grievance was there, that should have been by the respondent and not by the appellant. It is only the finding of fact recorded by the Tribunal after considering the counterclaim vis-a-vis the minutes of the meeting. Therefore, there was no question of jurisdiction involved in the matter so as to enable the appellant to approach the High Court directly.
Therefore, the question of jurisdiction in the present controversy did not arise because the counter-claim was opposed by the respondent-SAG as the same has since been stood settled. In view of the finding of fact recorded by the Tribunal that all the counter-claims stood covered by the decisions of the minutes of meeting though it was initially opposed by the respondent-SAG that it was not arbitrable or the Tribunal could not go into counter-claim, despite that it examined on the merit of the matter and on the merits the Tribunal disposed of the counter-claim by giving partial award. We fail to understand how can the appellant-NTPC can raise the question of jurisdiction and bring its case u/s 16(2) & (3).
We are satisfied that the view taken by the High Court is correct, appeal was not maintainable u/s 37(2) of the Act before the High Court and there is no ground to interfere with the order passed by the High Court.
Accordingly, the appeal is dismissed
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