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2005 (3) TMI 814
The Supreme Court of India allowed an appeal in a case under Section 138 of the Negotiable Instruments Act, 1881, where the appellant was acquitted due to a joint petition of compromise filed by the parties. The conviction and sentence were set aside, and the appellant was discharged from the liability of bail bonds.
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2005 (3) TMI 813
Issues Involved:
1. Computation of total income of the appellant firm.
2. Disallowance of gross interest paid under section 36(iii).
3. Taxability of interest received from loans advanced.
Detailed Analysis:
1. Computation of Total Income:
The primary issue was whether the computation of the total income of the appellant firm at Rs. 20,97,850 by the CIT(A) was correct. The appellant firm had returned an income of Nil, which was contested.
2. Disallowance of Gross Interest Paid:
The appellant firm contested the disallowance of Rs. 23,96,372 as interest paid to various parties, which the Assessing Officer (AO) and CIT(A) held was not allowable under section 36(iii) of the Income-tax Act. The AO observed that the interest-bearing loans were not utilized for advancing loans to earn interest, as the dates of loans received did not coincide with the loans advanced. The appellant firm argued that the funds were used as a common kitty for various business activities, including investment in shares and advancing loans, making it difficult to bifurcate the funds' utilization.
3. Taxability of Interest Received:
The AO held that the interest received from loans advanced, amounting to Rs. 7,83,041, was taxable, while the interest paid was not allowable as a deduction since the loans were not taken for business purposes. The appellant firm argued that the interest received and paid were part of its business activities and should be treated as such.
Judgment Analysis:
Computation of Total Income:
The Tribunal did not independently adjudicate Ground No. 1 as it was general in nature and interconnected with Grounds Nos. 2 and 3. The focus was on the disallowance of interest paid and the taxability of interest received.
Disallowance of Gross Interest Paid:
The Tribunal examined the appellant's contention that the funds used for business activities were from a common pool, including partners' capital, interest-free deposits, and loans. The appellant firm cited several case laws to support its claim that the interest paid should be allowable as a deduction. The Tribunal referred to the case of Mafatlal Holdings Ltd., where it was held that for a deduction under section 36(1)(iii), the money borrowed must be used for business purposes, and the interest paid on such borrowing is allowable. The Tribunal noted that the appellant firm had both interest-bearing and interest-free funds and used these for various business purposes, including investment in shares and advancing loans. The Tribunal found that the AO's observation that the loans received were not used for earning interest was incorrect. The Tribunal concluded that the interest paid was part of the appellant's business activities and was allowable under section 36(1)(iii).
Taxability of Interest Received:
The Tribunal noted that the interest received from loans advanced was part of the appellant's business activities. The appellant firm provided evidence, including bank statements and account copies, showing the sources of funds used for advancing loans. The Tribunal observed that the appellant firm had been engaged in money lending and investment in shares for several years, and the interest received was part of its business income. The Tribunal referred to the case of Mafatlal Holdings Ltd., where it was held that the interest paid on borrowed funds used for business purposes is allowable under section 36(1)(iii). The Tribunal concluded that the interest received should be treated as business income, and the interest paid should be allowed as a deduction.
Conclusion:
The Tribunal reversed the findings of the CIT(A) and allowed the grounds raised by the appellant firm. The Tribunal held that the interest paid was allowable as a deduction under section 36(1)(iii) and that the interest received should be treated as business income. The appeal of the appellant firm was allowed.
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2005 (3) TMI 812
Issues Involved:
1. Validity of the detention order under Section 3(1)(i) and Section 3(1)(iii) of COFEPOSA.
2. Applicability of Section 5-A of COFEPOSA.
3. Subjective satisfaction of the Detaining Authority.
4. Sufficiency of materials to support the detention order.
Issue-wise Detailed Analysis:
1. Validity of the Detention Order under Section 3(1)(i) and Section 3(1)(iii) of COFEPOSA:
The petitioner challenged the detention order dated 3-11-2004 issued against the detenu under Section 3(1)(i) and (iii) of COFEPOSA. The detenu was intercepted with foreign currency equivalent to Rs. 40,08,244.50, which was seized under the Customs Act, 1962. The petitioner argued that there was no material to justify the satisfaction of the Detaining Authority under Section 3(1)(iii), which relates to preventing the detenu from transporting or concealing smuggled goods. The respondents contended that the detenu's activities, including acquiring and carrying smuggled currency, justified the detention under both heads.
2. Applicability of Section 5-A of COFEPOSA:
The petitioner argued that Section 5-A, which allows for the detention order to be sustained on multiple grounds even if one is defective, does not apply to defective heads of detention. The respondents argued that the detention order under each head is independent, and the failure of one head does not invalidate the entire order.
3. Subjective Satisfaction of the Detaining Authority:
The petitioner contended that the Detaining Authority did not have sufficient material to justify the subjective satisfaction required for issuing the detention order under Section 3(1)(iii). The respondents argued that the detenu's activities, including carrying undeclared foreign currency, justified the detention under both heads.
4. Sufficiency of Materials to Support the Detention Order:
The court examined whether the materials before the Detaining Authority were sufficient to support the detention order under Section 3(1)(i) independently of Section 3(1)(iii). The grounds of detention included the detenu's attempt to smuggle foreign currency out of India without declaring it to customs authorities, which was confirmed by the detenu's statement under Section 108 of the Customs Act.
Judgment Summary:
The court held that the Detaining Authority is empowered to issue a detention order on one or more heads under Section 3 of COFEPOSA. If an order is issued on multiple heads, the grounds must support each head independently. The court rejected the general proposition that the failure of one head invalidates the entire order. It emphasized that subjective satisfaction must be based on the materials before the Detaining Authority, and each case must be assessed individually.
The court found that there were sufficient materials to support the detention order under Section 3(1)(i) independently of Section 3(1)(iii). The detenu was found carrying undeclared foreign currency, which justified the detention under the head of "smuggling of goods." Therefore, the order under Section 3(1)(i) was valid, even if the order under Section 3(1)(iii) was not sustainable.
Conclusion:
The petition was dismissed, and the detention order was upheld based on the valid grounds under Section 3(1)(i) of COFEPOSA. The court found no justification for interference in the impugned order of detention.
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2005 (3) TMI 811
Issues:
- Whether departmental proceedings can continue after an acquittal by the criminal court based on the same set of facts.
- Whether the acquittal by the criminal court was on technical grounds or merits.
- Whether the charge memo should be allowed to proceed to a departmental inquiry considering the delay and prejudice caused.
Analysis:
1. The primary issue in this case revolves around whether departmental proceedings can be pursued after an individual has been acquitted by the criminal court based on the same set of facts. The Tribunal initially quashed the charge memo against the first respondent, citing that continuing the departmental proceedings would be futile after the criminal court's acquittal. The State argued that the acquittal does not bar the departmental inquiry, relying on a Supreme Court judgment. However, the first respondent cited Supreme Court judgments emphasizing that an acquittal on merits precludes the need for further departmental proceedings.
2. The court delved into the distinction between acquittal on technical grounds and acquittal on merits. It noted that the criminal court's acquittal based on giving the benefit of doubt to the accused does not equate to a technical acquittal. The court emphasized that the same set of facts were relied upon in both the criminal case and the charge memo, leading to the conclusion that the acquittal by the criminal court on merits precludes the necessity for a departmental inquiry. The court referred to previous Supreme Court decisions to support this position.
3. Another critical issue addressed was the delay and prejudice caused by allowing the charge memo to proceed to a departmental inquiry. The court highlighted that considerable time had passed since the incident in question occurred, with the authorities failing to take action promptly. The charge memo was issued post the criminal court's acquittal, further contributing to the prejudice faced by the first respondent. Considering these factors, the court concluded that allowing the charge memo to lead to a departmental inquiry would cause significant prejudice to the respondent.
4. In the final analysis, the court upheld the order quashing the charge memo, emphasizing that the first respondent should not face further departmental proceedings after the criminal court's acquittal on merits. The court dismissed the writ petition, highlighting the need to prevent prejudice and acknowledging the delay and lack of action by the authorities over the years.
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2005 (3) TMI 810
Issues Involved:
1. Validity of the decision-making process by the U.P. Financial Corporation in finalizing the sale of assets.
2. Allegations of unreasonableness, unfairness, and non-transparency in the sale process.
3. Maintainability of the writ petition filed by the petitioner.
4. Validity of the sale agreement and subsequent sale deed executed in favor of the respondent No. 3.
5. Rights of subsequent purchasers (respondent Nos. 5 & 6) under the doctrine of lis pendens.
Detailed Analysis:
1. Validity of the Decision-Making Process by U.P. Financial Corporation:
The petitioner challenged the decision-making process of the U.P. Financial Corporation, arguing that it was unreasonable, unfair, and non-transparent, violating Article 14 of the Constitution of India. The court scrutinized the entire transaction, including the advertisement for sale, negotiation meetings, approvals, and the finalization of the sale. The court found that the advertisement lacked essential details and terms, and the decision to accept the respondent No. 3's offer was made before the expiry of the stipulated period, indicating a pre-determined and unfair approach.
2. Allegations of Unreasonableness, Unfairness, and Non-Transparency:
The court noted that the U.P. Financial Corporation did not disclose the terms and conditions of the sale in the advertisement or the notice to the borrower. The negotiation committee's decision was approved in undue haste, and the agreement to sell was executed without proper transparency. The court emphasized the need for maximum participation and adequate publicity to secure the best price, which was not followed in this case. The court concluded that the actions of the U.P. Financial Corporation were unreasonable, unfair, and non-transparent.
3. Maintainability of the Writ Petition Filed by the Petitioner:
The respondents argued that the writ petition was not maintainable as the petitioner was allegedly set up by the principal borrower, whose earlier writ petitions were dismissed. The court rejected this contention, stating that the petitioner's claim was independent and based on his offer to purchase the property. The petitioner was not a party to the earlier proceedings, and thus, had the right to maintain the writ petition.
4. Validity of the Sale Agreement and Subsequent Sale Deed Executed in Favor of Respondent No. 3:
The court examined the sale agreement and found that it was not a registered document, which is necessary for conveying immovable property. The court also noted the manipulation where the offer was initially made by M/s K.P. Cold Storage but was later transferred to M/s Dass Cold Storage without any offer from the latter. The court held that the entire sale process was vitiated by unfair practices and struck down the sale agreement and the subsequent sale deed executed in favor of respondent No. 3 as null and void.
5. Rights of Subsequent Purchasers (Respondent Nos. 5 & 6) Under the Doctrine of Lis Pendens:
The subsequent purchasers (respondent Nos. 5 & 6) argued that they were bona fide purchasers for value without notice of the pending litigation. The court referred to the doctrine of lis pendens, which binds subsequent purchasers to the outcome of the pending litigation. The court held that the rights of respondent Nos. 5 & 6 could not supersede the petitioner's claim, as the sale in favor of respondent No. 3 was invalid. Consequently, the sale deed executed in favor of respondent Nos. 5 & 6 was also declared null and void.
Conclusion:
The court allowed the writ petition, quashing the entire sale proceedings in favor of respondent No. 3 and the subsequent sale to respondent Nos. 5 & 6. The U.P. Financial Corporation was directed to consider the petitioner's offer and negotiate the property sale to secure the best possible price. The amount deposited by the petitioner was ordered to be released to him. The judgment emphasized the need for transparency, fairness, and reasonableness in the decision-making process of public authorities.
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2005 (3) TMI 809
Issues Involved:
1. Service of demand notice under Section 138 of the Negotiable Instruments Act (NI Act).
2. Suppression of material facts in the complaint.
3. Effect of Reserve Bank of India (RBI) orders and Delhi High Court stay on criminal proceedings.
4. Vicarious liability of directors and officers under Sections 138 and 141 of the NI Act.
5. Validity of the complaint in light of the accused's resignation and other defenses.
Issue-Wise Detailed Analysis:
1. Service of Demand Notice:
The petitioners argued that the demand notice was not served by registered post as required under Section 138 of the NI Act, making the complaint invalid. The complainant countered that notice was served by multiple modes, including hand delivery, which is permissible under Section 94 of the NI Act. The court emphasized that service of notice is a factual matter to be proven at trial and that notice can be oral or written, not necessarily by registered post. The court cited the Supreme Court decision in V. Raja Kumari v. P. Subbarama Naidu, which supports the validity of service by other means if the sender can prove it.
2. Suppression of Material Facts:
The petitioners contended that the complainant suppressed the fact that the Delhi High Court had stayed all criminal proceedings under Section 138 of the NI Act and that the RBI had frozen the company's accounts. The complainant argued that the stay applied only to the company, not its directors, and that the RBI's order did not prohibit payment of legal obligations. The court found that the RBI's order did not cover inter-corporate deposits and that the stay by the Delhi High Court was limited to the company, allowing proceedings against the directors to continue. The court also noted that the issue had been previously decided, invoking the principle of estoppel.
3. Effect of RBI Orders and Delhi High Court Stay:
The court held that the RBI's order and the Delhi High Court's stay did not bar criminal proceedings against the directors under Section 138 of the NI Act. The court emphasized that the RBI's order did not prohibit the payment of debts or legal obligations and that the stay order applied only to the company, not its directors. The court cited the Supreme Court decision in Prudential Capital Mkt. Ltd. v. State of Bihar, which clarified that RBI orders do not bar criminal proceedings for offenses under Sections 420, 120B of IPC, and Section 138 of the NI Act.
4. Vicarious Liability of Directors and Officers:
The petitioners argued that they were not responsible for the day-to-day affairs of the company and had resigned, which was not reflected in the complaint. The complainant maintained that the petitioners were involved in the company's daily operations and had signed the cheques. The court found that the complaint contained sufficient allegations against the petitioners, indicating their involvement in the company's affairs. The court cited the Supreme Court decision in Anil Hada v. Indian Acrylic Ltd., which held that directors could be prosecuted even if the company was under winding up proceedings.
5. Validity of the Complaint:
The petitioners argued that the cheques were for interest payments and not for discharge of any liability, and that they had resigned from the company. The court held that these are factual matters to be determined at trial. The court emphasized that the presumption under Section 139 of the NI Act is in favor of the holder of the cheque and that the accused can rebut this presumption during the trial. The court also noted that it could not consider unverified documents annexed to the revisional application, as these matters should be addressed during the trial.
Conclusion:
The court dismissed the revisional applications, finding no merit in the petitioners' arguments. The court directed the trial to proceed expeditiously and allowed the petitioners to be represented by their authorized advocate under Section 205 of Cr. PC, considering their residence in Mumbai. The court emphasized that its observations were limited to the revisional applications and that the trial court should decide the case based on evidence and law.
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2005 (3) TMI 808
Issues involved:
Classification of Risograph machine under sub-heading 8443.50 or 8472.90 of the Customs Tariff Act.
Analysis:
The main issue in this appeal was the classification of the Risograph machine under the Customs Tariff Act. The appellant, M/s. HCL Ltd., contended that the Risograph should be classified under sub-heading 8443.50 as a printing machine, while the Commissioner (Appeals) had classified it under sub-heading 8472.90 as a duplicating machine. The appellant's representative argued that the machine should be considered a printing machine based on the Explanatory Notes of HSN, which stated that machines under Heading 84.43 cover special machines like small office printing machines, which are mistakenly referred to as duplicating machines due to their appearance and operating principles. The appellant also provided certificates from various government organizations stating that they used the Risograph for printing purposes.
On the other hand, the Senior Department Representative argued that the Tribunal had already considered similar aspects in the case of Pioneer International, where it was established that the machine was a printing machine based on letters from government organizations. The Tribunal, in its decision, noted that the issue of classifying the Risograph had been settled in the case of Pioneer International. After reviewing the Explanatory Notes of HSN and the Operational Panel, the Tribunal concluded that the Risograph could not be classified as offset printing machinery under sub-heading 84.43 and upheld the previous classification decision. Therefore, the Tribunal rejected the appeal filed by the appellants.
In conclusion, the Tribunal upheld the classification of the Risograph machine as a duplicating machine under sub-heading 8472.90 of the Customs Tariff Act, based on the previous decision in the case of Pioneer International and the interpretation of the Explanatory Notes of HSN. The certificates provided by the appellants were not sufficient to change the classification, as the Tribunal found no reason to differ from its earlier decision.
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2005 (3) TMI 807
Issues:
Challenge to order rejecting setting aside sale of property under Order 21, Rule 90 of the Code of Civil Procedure based on property being immovable, collusion with Bank Officers, and violation of sale procedure.
Analysis:
The appeal challenged the rejection of I.A. 7 filed under Order 21, Rule 90 of the Code of Civil Procedure, seeking to set aside the sale of property. The property in question, a Centerless Bar Turning Machine, was sold in execution of a decree for a sum lower than its alleged value due to being embedded in the factory. The appellants argued that the property should be considered immovable, worth more than the sale price, and the sale procedure was not followed correctly. The key contention was whether the property auctioned was immovable.
The learned Counsel for the appellants relied on legal interpretations of immovable property under Section 3(26) of the General Clauses Act, 1897, citing precedents like J. Kuppanna Chetty v. Collector of Anantapur and K.N.K. Iyengar v. Vijaya Bank. On the other hand, the respondent's Counsel cited a conflicting decision in South Indian Bank Limited v. V. Krishna Chettiar, arguing that machinery fixed to the earth was not immovable property. The central question for consideration was whether the property auctioned was immovable.
The judgment emphasized the definition of immovable property, highlighting that for chattel to be immovable, it must be permanently attached to the earth. The court referenced the Transfer of Property Act to define attachment to earth, emphasizing rootedness, embedding, or attachment for permanent beneficial enjoyment. Analyzing the fixtures of the Centerless Bar Turning Machine, the court concluded it did not qualify as immovable property as it was mounted on a cement base and fastened with bolts and nuts, akin to the decision in Perumal Naicker v. T. Ramaswami Kone. The court dismissed the appeal, stating the property was not immovable, and the auction procedure was valid, finding no collusion or legal violations.
In conclusion, the court dismissed the appeal, ruling that the property auctioned was not immovable, and the procedure followed was valid. The judgment clarified the legal interpretation of immovable property and highlighted the importance of permanent attachment to earth for such classification. The appellants' failure to prove collusion or legal violations led to the dismissal of the appeal without costs.
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2005 (3) TMI 806
Issues Involved:
1. Legality of unauthorized construction.
2. Right to inspection of documents and grant of certified copies.
3. Jurisdiction of the Municipal Council to regularize unauthorized constructions.
4. Validity of the Municipal Council's resolution dated 12th October 1998.
5. Discretionary power of the High Court to order demolition.
Issue-wise Detailed Analysis:
1. Legality of Unauthorized Construction:
The First Respondent, an advocate and Chief Trustee of Ganpati Devasthan, Bhiwandi, filed a writ petition alleging illegal constructions on private and government lands in Bhiwandi. The Appellants had obtained a repair permission for ground and two upper floors but constructed a building with ground plus six floors. The High Court noted that the Appellants did not deny the allegations and had not filed any return. The Municipal Council had issued a notice to the Appellants to stop the unauthorized construction and comply with the directions, failing which the construction would be demolished. The Supreme Court confirmed that only repair permission had been granted, and the Appellants had not filed an application for regularization within a reasonable time.
2. Right to Inspection of Documents and Grant of Certified Copies:
The High Court held that the First Respondent was entitled to inspection of documents and grant of certified copies on payment of requisite charges. The Supreme Court upheld this decision, directing the Municipal Council to issue certified copies of the documents within four weeks.
3. Jurisdiction of the Municipal Council to Regularize Unauthorized Constructions:
The Appellants argued that the Municipal Council had the jurisdiction to regularize unauthorized constructions by compounding offences upon accepting compounding fees. However, the Supreme Court noted that the Municipal Council, being a statutory authority, must operate within the confines of the statute. The power to regularize unauthorized constructions is not vested in the Municipal Council, and its jurisdiction is limited to dealing with applications for construction permissions as per Section 44 of the MRTP Act.
4. Validity of the Municipal Council's Resolution Dated 12th October 1998:
The High Court quashed the Municipal Council's resolution dated 12th October 1998, which sought to regularize unauthorized constructions upon imposition of penalties. The Supreme Court upheld this decision, noting that the State of Maharashtra had not approved the resolution. The Municipal Council's power is confined to compounding offences in certain cases, and the resolution was beyond its statutory authority.
5. Discretionary Power of the High Court to Order Demolition:
The High Court directed the demolition of the unauthorized structure if the interim order was vacated by the Civil Court. The Supreme Court supported this directive, emphasizing that unauthorized constructions must be dealt with sternly to uphold the rules of planned development. The Court cited previous judgments to reinforce that unauthorized constructions should not be condoned and must be demolished if they cannot be regularized. The Supreme Court dismissed the appeals and directed the Municipal Council to carry out the High Court's order expeditiously.
Conclusion:
The Supreme Court dismissed the appeals, directing the Municipal Council to demolish the unauthorized structure within four weeks. The Appellants were also ordered to deposit Rs. 50,000 with the National Legal Services Authority for misleading the Court. The judgment emphasized strict adherence to statutory provisions and the importance of planned urban development.
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2005 (3) TMI 805
Issues Involved:
1. Prima facie case for temporary injunction.
2. Balance of convenience.
3. Irreparable loss and injury.
4. Perversity of the trial court's order.
5. Appellate court's power to interfere with the trial court's discretion.
Issue-wise Detailed Analysis:
1. Prima Facie Case for Temporary Injunction:
The appellants filed a Title Suit (T.S. No. 10/04) and an application under Order 39, Rules 1 and 2 of the Code of Civil Procedure, 1908, seeking a decree of declaration of their right, title, and interest over the suit land and cancellation of a Sale Deed No. 9109 dated 1-11-03. The trial court initially granted an interim status quo order on 30-1-04 but later dismissed the application for temporary injunction on 15-7-04, stating that the appellants had no prima facie case. The appellants challenged this finding, arguing that the trial court's decision was based on a misinterpretation of the Jamabandi entry and that they had a strong prima facie case.
2. Balance of Convenience:
The appellants contended that the balance of convenience lay in their favor as the respondents had started construction on the disputed land, which could lead to irreversible changes and multiplicity of proceedings. They argued that the trial court failed to consider this aspect properly. The respondents, however, maintained that they had legal possession and title over the land, and the balance of convenience did not favor the appellants.
3. Irreparable Loss and Injury:
The appellants claimed that they would suffer irreparable loss and injury if the temporary injunction was not granted, as the construction by the respondents would change the character of the land permanently. The trial court, however, found that the appellants would not suffer irreparable loss by the rejection of the injunction. The respondents argued that no case of irreparable loss was made out by the appellants, and the trial court's decision was justified.
4. Perversity of the Trial Court's Order:
The appellants argued that the trial court's order was perverse and mechanical, as it misinterpreted the Jamabandi entry and failed to consider the documents properly. They relied on judicial precedents to support their claim that the trial court's refusal to grant a temporary injunction resulted in a miscarriage of justice. The respondents countered that the trial court acted within its discretion and did not commit any perversity.
5. Appellate Court's Power to Interfere with the Trial Court's Discretion:
The appellate court noted that its power to interfere with the trial court's discretion in matters of temporary injunction is limited. It should only intervene if the trial court's decision was arbitrary, capricious, or unreasonable. The appellate court found that the trial court had exercised its discretion judiciously and had considered all relevant factors, including the prima facie case, balance of convenience, and irreparable loss.
Conclusion:
The appellate court concluded that the trial court's order did not suffer from any arbitrariness or unreasonableness and that the trial court had not ignored any settled principles of law. Consequently, the appellate court upheld the trial court's decision to reject the temporary injunction and dismissed the appeal, stating that no wrong or illegality was committed by the trial court. The interim order of status quo was vacated, and the appeal was dismissed with no costs.
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2005 (3) TMI 804
The Supreme Court corrected a tariff heading from '3303.30' to '3003.30' in an order dated October 8, 2004. IA No. 4 was disposed of accordingly.
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2005 (3) TMI 803
The Supreme Court dismissed the appeals based on the decision in Commissioner of Central Excise, Mumbai-III v. I.S.P.L. Industries Ltd. (2003).
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2005 (3) TMI 802
Termination of service - violation of principles of natural justice - seeking reinstated in service of workman with full back wages - HELD THAT:- It is not a case where the Respondent has completed 240 days of service during the period of 12 months preceding such termination as contemplated under Section 25-F read with Section 25-B of the Industrial Disputes Act, 1947. The Badli workers, thus, did not acquire any legal right to continue in service. They were not even entitled to the protection under the Industrial Disputes Act nor the mandatory requirements of Section 25-F of the Industrial Disputes were required to be complied with before terminating his services, unless they complete 240 days service within a period of twelve months preceding the date of termination.
Even where an adverse report regarding the work of a temporary Government servant is made or a preliminary enquiry on the allegation of improper conduct is carried out, the same would not stand in the way of the employer to terminate his service.
The principles of natural justice cannot be applied in vacuum. It cannot be put in any straight jacket formula. The principles of natural justice are furthermore not required to be complied with when it will lead to an empty formality. What is needed for the employer in a case of this nature is to apply the objective criteria for arriving at the subjective satisfaction. If the criterias required for arriving at an objective satisfaction stands fulfilled, the principles of natural justice may not have to be complied with, in view of the fact that the same stood complied with before imposing punishments upon the Respondents on each occasion and, thus, the Respondents, therefore, could not have improved their stand even if a further opportunity was given.
We have noticed hereinbefore the relevant provisions of the Regulations. The status of a Badli cannot be better than a probationer. If the services of the probationer can be terminated for not being able to complete the period of probation satisfactorily, there is no reason as to why the same standard cannot be held to be applicable in the case of Badli worker.
Thus, the impugned judgments cannot be sustained which are set aside accordingly. The appeals are allowed.
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2005 (3) TMI 801
Issues Involved:
1. Territorial jurisdiction of the Delhi High Court to entertain the petition.
2. Cause of action and its components.
3. Forum convenience and its applicability.
Detailed Analysis:
1. Territorial Jurisdiction of the Delhi High Court:
The primary issue addressed is whether the Delhi High Court has territorial jurisdiction to entertain the petition filed by ABL. The respondent, NEIGRIHMS, raised a preliminary objection asserting that the Delhi High Court lacks this jurisdiction. The court examined the facts presented by both parties. ABL contended that the agreement dated 17.5.2000 and the supplementary agreement dated 31.12.2003 were executed at the registered office of HSCCI in New Delhi. Additionally, the letter of award was received in New Delhi, and payments under the contract were to be made to banks located in New Delhi. NEIGRIHMS argued that the agreements were executed at the corporate office of HSCCI in Noida, U.P., and that the works were to be performed in Shillong. The court concluded that there was sufficient prima facie evidence to suggest that part of the cause of action arose in Delhi, thus granting the Delhi High Court jurisdiction to entertain the petition, subject to final adjudication after evidence is led.
2. Cause of Action and Its Components:
The court analyzed the concept of cause of action, referring to Section 20(c) of the Code of Civil Procedure and Article 226(2) of the Constitution of India. It was noted that the cause of action includes every fact necessary for the plaintiff to prove to support their right to judgment. The court cited the Supreme Court's interpretations in Laminart Pvt. Ltd. Vs. A.P. Agencies and South East Asia Shipping Company Ltd. Vs. Nav Bharat Enterprises Pvt. Ltd., emphasizing that even a small fraction of the cause of action arising within the jurisdiction of a court is sufficient to confer jurisdiction. The court identified four key facts constituting the cause of action for ABL: the execution of the main and supplementary agreements in New Delhi, the nomination of banks in Delhi for receiving payments, the receipt of the letter of award in Delhi, and the execution and invocation of bank guarantees in Delhi.
3. Forum Convenience and Its Applicability:
The court discussed the doctrine of forum convenience, which allows a court to refuse to exercise its jurisdiction if another forum is more appropriate for the case. However, the court noted that in this particular case, the registered office of HSCCI, a key party involved in the correspondence and bank guarantees, is located in New Delhi. Additionally, some letters invoking the bank guarantees were issued by HSCCI. Given these factors, the court found that it was appropriate to exercise its jurisdiction in this matter.
Conclusion:
The court rejected the preliminary objection raised by NEIGRIHMS, holding that the petition is maintainable in the Delhi High Court. The decision was based on the assertion that part of the cause of action arose in Delhi, and the court's jurisdiction was thus established. The final adjudication on the issue will be subject to evidence being led on the execution of the agreements.
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2005 (3) TMI 800
Issues Involved:
1. Restraining defendant No. 1 from preparing and circulating MRV-3 and subsequent MRVs without the plaintiff's publication "Punjab Kesari-Delhi".
2. Mandatory injunction to include the name of "Punjab Kesari-Delhi" in MRVs from March 2002 onwards.
3. Authority and representation of plaintiff No. 3 in dealings with defendant No. 1.
4. Internal management disputes of plaintiff No. 1 and their adjudication.
Issue-wise Detailed Analysis:
1. Restraining defendant No. 1 from preparing and circulating MRV-3 and subsequent MRVs without the plaintiff's publication "Punjab Kesari-Delhi":
The plaintiffs sought to restrain defendant No. 1 from preparing and circulating MRV-3 and subsequent MRVs without including "Punjab Kesari-Delhi". The plaintiffs argued that the MRV return submitted by plaintiff No. 3 for February 2002 was not incorporated in the MRV, which they claimed was a deliberate omission by defendant No. 1, preventing action against defaulting advertising agencies.
2. Mandatory injunction to include the name of "Punjab Kesari-Delhi" in MRVs from March 2002 onwards:
The plaintiffs also requested a mandatory injunction to include "Punjab Kesari-Delhi" in MRVs from March 2002 onwards based on the statement submitted by the plaintiffs. Defendant No. 1 argued that MRVs were traditionally received from the registered office at Jallandhar under the signatures of defendant No. 2, and the MRV for February 2002 signed by Vinod Verma was not in accordance with past practices.
3. Authority and representation of plaintiff No. 3 in dealings with defendant No. 1:
The plaintiffs asserted that plaintiff No. 3 was the appointed nominee for "Punjab Kesari-Delhi" and that defendant No. 1 was bound to act through plaintiff No. 3. Defendant No. 1 admitted that plaintiff No. 3 was the authorized representative for the annual handbook but not for MRV returns. The court noted that past practices showed MRV returns were submitted under a common letter signed by defendant No. 2, sometimes including signatures of plaintiff No. 3.
4. Internal management disputes of plaintiff No. 1 and their adjudication:
The defense argued that the dispute pertained to the internal management of plaintiff No. 1 and should be addressed before the Company Law Board, where proceedings under Section 397 of the Companies Act were already pending. The court agreed, emphasizing that interim orders should maintain the status quo ante and not alter existing practices.
Conclusion:
The court concluded that the evidence suggested MRV returns for all four publications were submitted under a covering letter signed by defendant No. 2 before May 7, 2002. The plaintiffs' actions sought to alter this practice. Therefore, the court decided not to grant the interim relief requested, as it would disturb the existing status quo. Additionally, the court noted that the dispute related to internal affairs and management of plaintiff No. 1, which was already under adjudication by the Company Law Board. Consequently, I.A. 6084/02 was dismissed with no costs.
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2005 (3) TMI 799
Issues:
- Application for ad interim injunction to restrain defendant from employment with another company and divulging trade secrets.
Analysis:
1. The plaintiff sought an ad interim injunction to prevent the defendant from continuing employment with another company and disclosing trade secrets acquired during his employment. The plaintiff alleged that the defendant violated the agreement by joining a client of the plaintiff, causing wrongful loss. The plaintiff requested a permanent injunction against the defendant from dealing with its customers.
2. The defendant contested the injunction, arguing that the agreement was terminable by either party with notice. He claimed he had no access to confidential information and did not misuse his position. The defendant emphasized that the agreement with the client had ended, and he had the right to seek new employment.
3. The court referred to the law on contracts in restraint of trade, stating that employees are free to pursue other opportunities after leaving an employer. However, during employment, restrictions on engaging in other work or disclosing trade secrets are permissible. Trade secrets are confidential information acquired during employment that should not be shared.
4. The court found that the agreement's provision prohibiting the defendant from working with the plaintiff's customers for two years was void under Section 27 of the Indian Contract Act. The court viewed the restriction as against public policy and unconscionable, especially considering the defendant's need for employment and career advancement.
5. Additionally, the court noted that granting an injunction under Section 41(e) of the Specific Relief Act would not be enforceable, as the defendant could join another company or continue sharing information. The court emphasized that damages could be sought if there was a breach of the agreement, rather than granting an injunction.
6. Ultimately, the court dismissed the application for an ad interim injunction, finding no prima facie case in favor of the plaintiff. The balance of convenience favored the defendant, who needed to seek employment in his field. The court highlighted that the plaintiff could claim damages if there was a breach of the agreement.
7. The court clarified that its decision did not reflect an opinion on the pending suit's merits, as the observations made were provisional.
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2005 (3) TMI 798
The Appellate Tribunal CESTAT CHENNAI allowed the appeal regarding the recovery of service tax on the services of a 'goods transport operator' for a specific period. The Commissioner's decision to deny a refund after setting aside the original authority's orders demanding service tax was deemed unsustainable. The Tribunal held that the appellants are entitled to a refund in this case.
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2005 (3) TMI 797
Oppression and Mismanagement - Allotment of shares - Equitable to wind up the company - NRI investments in shares and balance by resident Indians - value of the imported second hand equipments - Whether the petitioners being qualified doctors would be more suitable for controlling the company having a hospital as the only project - HELD THAT:- It would appear from the said Section that a petitioner who files an application under Section 397, he has to satisfy two ingredients to make out a case under Section 397(a) that to wind up the company would unfairly prejudice the member or members who have the grievance and are the applicants before the court; and (b) that otherwise, the facts would justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up.
After analysing the facts of this case it appears to me that two groups are fighting to take control over the company. It have not been able to find out any fact nor has been shown by Dr. Dutta before the Company Law Board which would prejudice the petitioners Dr. Kamal Kumar Dutta and Dr. Binod Prasad Sinha if the company in question were to be wound up.
There is no pronouncement in the decision of the Company Law Board as to whether a just and equitable winding up would unjustly prejudice Dr. Dutta and his group or not. It further appears from the facts placed before me by the parties that it would be apparent that Dr. Dutta by way of relief asked a control over the company and if I try to find out an answer, the answer would automatically that none of the parties wants a winding up. Two groups are fighting for company and not for its winding up.
I do not have any hesitation to come to a conclusion that the Company Law Board in the instant case did not deal with the said aspect of the matter and not even investigate on those facts and failed to make a conclusion that whether the facts are such that a just and equitable winding up of the company is called for, yet such order of winding up would unfairly prejudice the petitioners and when passed the said order. Then I could have been hesitant to interfere with the order so passed by the Company Law Board. But as has been pointed out by Mr. Sen and I do accept the contention of Mr. Sen since I do not find that the decisions cited by Mr. Sarkar would help him to come across the said hurdle.
Since I am of the opinion that the petitioner has failed to fulfil the pre-conditions to have an order u/s 397/398 and the Company Law Board did not deal with the matter at all, I do not have any hesitation to set aside the order passed by the Company Law Board. I also express my opinion following the decision of the Division Bench of our High Court in Bagree Cereals P. Ltd. v. Hanuman Prasad Bagri [2000 (8) TMI 1120 - CALCUTTA HIGH COURT] that the termination of the directorship, even by suppression of notice, or termination of directorship by a show of majority, would not entitle the terminated person to petition for just and equitable winding up is, that there is an appropriate remedy by way of a company suit, which can give the terminated director every relief. If notice has been suppressed, he can file a suit for injunction and declaration and get himself reinstated as a director or if he has been removed from a directorship, he could have filed a suit for declaration. The facts as pleaded by Dr. Dutta, a suit would give him a remedial measure and cannot ordinarily find a petition for just and equitable winding up and I feel that he could obtain each and every adequate relief in the suit court.
I am of the opinion that Section 397 contained the essential requirement of the finding of a just and equitable winding up. It appears that the finding of the jurisdictional issue should contain a legal patent error. Granting of relief u/s 398 does not require to make out a case that it is just and equitable to wind up the company. Therefore, I do not have any hesitation to set aside the order passed by the Company Law Board.
Thus, the appeal is allowed.
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2005 (3) TMI 796
The Bombay High Court allowed the petitioner to withdraw the petition with liberty to file an appeal under Section 35(G) of the Central Excise Act, 1944. The petition stands dismissed with the mentioned liberty.
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2005 (3) TMI 795
The Supreme Court dismissed the Special Leave Petition after condoning the delay, stating that they see no reason to interfere. (2005 (3) TMI 795 - SC)
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