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2003 (9) TMI 811
Title: Supreme Court of India dismisses review petition
Judges: Mr. M.B. Shah and Mr. Arun Kumar
Decision: Delay condoned. Review petition and connected documents reviewed, no grounds found for review. Review petition dismissed.
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2003 (9) TMI 810
Seeking to Quash the FIR - Applicability of Section 195 of the Criminal Procedure Code - HELD THAT:- We are unable to accept the submissions made on behalf of the Respondents, Firstly it is to be seen that the High Court does not quash the complaint on the ground that Section 195 applied and that the procedure under Chapter XXVI had not been followed. Thus such a ground could not be used to sustain the impugned judgment, Even otherwise there is no substance in the submission. The question whether Sections 195 and 340 of the Criminal Procedure Code affect the power of the police to investigate into a cognizable offence has already been considered by this Court in the case of State of Punjab v. Raj Singh [1998 (1) TMI 533 - SUPREME COURT].
It was submitted that In the petition it had been squarely urged that Section 195 applied. It was submitted that the High Court should have considered this aspect. It was pointed out that the question whether Section 195 applies to documents forged prior to the proceedings in which they are tendered has, due to conflict of decisions, been referred to a 5 Judge bench. We see no substance in this submission. The law on the point is clear. At the stage of investigation Section 195 has no application. We are therefore not concerned with the question whether Section 195 applies to documents forged/fabricated prior to their being produced in Court. That question only arises after the Court takes cognizance. At this stage the only question is whether the investigation should be permitted to proceed or not. As stated above there is no ground or reason on which the complaint/FIR can be quashed.
For the above reasons the impugned order needs to be and is accordingly set-aside. The petition for quashing will stand dismissed. The Appeal is allowed accordingly. There will be no order as to cost.
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2003 (9) TMI 809
Issues:
Bail application under Sections 439 read with Section 482 of Cr.P.C. for a former judge in a corruption case involving IPC and POC Act charges.
Analysis:
1. The petitioner, a former judge, sought bail in a corruption case under Sections 120-B IPC, read with Sections 7, 8, 11, and 12 of the Prevention of Corruption Act, 1988. The prosecution alleged that the petitioner had a close relationship with a businessman who acted as a conduit for settling cases in the petitioner's court. The prosecution presented evidence such as tape-recorded conversations, draft orders, and witness statements to support their case. The petitioner's counsel argued against the allegations, claiming that the orders passed did not confer any rights to the plaintiff and were not part of a conspiracy. The court reserved the order after hearing arguments from both sides.
2. The CBI opposed the bail and presented evidence collected during the investigation. However, on a subsequent date, the CBI sought to withdraw the evidence filed, stating that it was not being pressed at that stage. The medical condition of the petitioner's wife was also a factor considered in the bail decision. The court noted that no incriminating evidence was found during the petitioner's police remand, and there was no charge of disproportionate assets. The court emphasized that moral violations alone cannot constitute proof of an offense and that any alleged offense must be established through due legal process. The court confirmed the interim bail for the petitioner, considering the ongoing investigation and the bail granted to other accused persons.
3. The court highlighted that tape-recorded conversations, if genuine and untampered, serve as corroborative evidence. It was noted that the case was still under investigation, and the nature of the offense would be determined once the investigation is complete and charges are filed. The court emphasized that social condemnation for moral deviations does not equate to legal proof of an offense. Therefore, the petitioner was granted bail pending the final disposal of the case, with specific conditions regarding the bail bond. The court clarified that any observations made in the order would not impact the trial's merits, and the petition was disposed of accordingly.
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2003 (9) TMI 808
Issues Involved:
1. Applicability of the Employees' State Insurance Act, 1948 (ESI Act) to toddy shops.
2. Liability of appellants as principal employers.
3. Coverage of toddy shops under the ESI Scheme.
4. Applicability of Section 1(6) of the ESI Act.
Issue-wise Detailed Analysis:
1. Applicability of the Employees' State Insurance Act, 1948 (ESI Act) to toddy shops:
The appellants argued that toddy shops were not covered by the ESI Act as they were not specifically included in the notification issued under Section 1(5) of the Act by the State of Kerala in 1974. They contended that the employees of toddy shops were receiving benefits under the Abkari Welfare Fund Act, which were substantially similar or superior to those under the ESI Act. The respondents countered that toddy shops were covered by the ESI Act from 1983 onwards and that the appellants failed to pay contributions during their license period. The High Court, referencing judgments from the Supreme Court, concluded that toddy shops qualified as 'shops' under the ESI Act and thus were covered by the Act. The Supreme Court upheld this view, agreeing that toddy shops fell under the entry 'shop' in the schedule.
2. Liability of appellants as principal employers:
The appellants claimed they could not be treated as principal employers since the Excise Department of the State Government was the owner and principal employer of the toddy shops. They argued that their role was limited to that of immediate employers, with the primary responsibility for contributions lying with the Excise Department. The High Court, however, found that the toddy shops neither belonged to nor were under the control of the Government. The Supreme Court supported this finding, noting that the State's control over the toddy shops was merely regulatory and did not extend to financial, functional, or administrative participation in the business operations.
3. Coverage of toddy shops under the ESI Scheme:
The El Court initially ruled that toddy shops were not covered under the ESI Scheme as the employees were receiving similar benefits under the Abkari Act and Rules. However, the High Court overturned this decision, stating that the toddy shops were indeed covered by the ESI Act. The Supreme Court upheld the High Court's decision, emphasizing that the appellants failed to prove that the toddy shops were not previously covered by the Act or that the number of employees was insufficient for coverage.
4. Applicability of Section 1(6) of the ESI Act:
The appellants argued that even if the Act was applicable from 20.10.1989, it did not automatically apply to them as they began operating the toddy shops in 1991-92. The High Court dismissed this argument, and the Supreme Court agreed, noting the lack of necessary pleas and material evidence regarding the number of employees and continuity of employment in the toddy shops. The Supreme Court left the question of law based on Section 1(6) of the Act open for future cases.
Conclusion:
The Supreme Court dismissed the appeals, affirming the High Court's judgment that the ESI Act applied to the toddy shops and that the appellants were liable for contributions under the Act. The Court found no merit in the appellants' contentions and upheld the High Court's interpretation of the relevant legal provisions.
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2003 (9) TMI 807
Issues Involved:
1. Maintainability of appeals from judgments, decrees, or orders passed by a Single Judge of the High Court in light of Section 100A of the Code of Civil Procedure as amended by Act 22 of 2002.
2. Interpretation of Section 54 of the Land Acquisition Act and Section 173 of the Motor Vehicles Act regarding appeals.
3. Conflict between provisions of the Kerala High Court Act and the amended Section 100A of the Code of Civil Procedure.
4. Substantive right of appeal and its applicability post-amendment.
Detailed Analysis:
1. Maintainability of Appeals under Section 100A of the Code of Civil Procedure:
The core issue is whether an appeal from a judgment, decree, or order passed by a Single Judge of the High Court is maintainable despite the amendment to Section 100A of the Code of Civil Procedure by Act 22 of 2002. The amended Section 100A states, "Notwithstanding anything contained in any Letters Patent for any High Court or in any other instrument having the force of law or in any other law for the time being in force, where any appeal from an original or appellate decree or order is heard and decided by a Single Judge of a High Court, no further appeal shall lie from the judgment and decree of such Single Judge." This provision aims to abolish the intra-court appeal process, thereby reducing the workload and expediting the finality of adjudications.
2. Appeals under Section 54 of the Land Acquisition Act and Section 173 of the Motor Vehicles Act:
Section 54 of the Land Acquisition Act allows appeals to the High Court from any award or decree of the court, and further appeals to the Supreme Court. Similarly, Section 173 of the Motor Vehicles Act provides for appeals against awards passed by the Motor Accidents Claims Tribunal to the High Court. Both sections imply that appeals from these special enactments should follow the normal procedure prescribed under the High Court Act, which includes the possibility of a further appeal to a Division Bench if the value of the subject matter exceeds one lakh rupees.
3. Conflict between Kerala High Court Act and Amended Section 100A of the Code of Civil Procedure:
The Kerala High Court Act, particularly Section 5(11), allows for an appeal to a Bench of two Judges from a judgment or order of a Single Judge in appellate jurisdiction. However, the amended Section 100A of the Code of Civil Procedure overrides this provision by explicitly barring further appeals from judgments or orders passed by a Single Judge, except in cases under Articles 226 and 227 of the Constitution. The non-obstante clause in Section 100A gives it overriding effect over any conflicting provisions in other laws, including the Kerala High Court Act.
4. Substantive Right of Appeal Post-Amendment:
The appellants argued that the right of appeal is a substantive right that accrues at the commencement of the lis (legal action). However, the court held that the amendment to Section 100A, which took effect on 1.7.2002, abolishes the right to a further appeal under Section 5(ii) of the Kerala High Court Act, even if the proceedings were initiated before this date. The court concluded that no substantive right for a further appeal exists post-amendment for judgments, decrees, or orders passed by a Single Judge under Section 3(13)(b) of the High Court Act.
Conclusion:
The court dismissed both A.F.A. Nos. 83 of 2002 and 87 of 2002 as not maintainable, affirming that the amended Section 100A of the Code of Civil Procedure prevails over the provisions of the Kerala High Court Act regarding further appeals from decisions of a Single Judge. The legislative intent to abolish intra-court appeals to expedite judicial processes and reduce the High Court's workload was upheld.
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2003 (9) TMI 806
Effect of non-compliance of all time tested and ancient principle of natural justice - Applicability of Section 8B of the Commissions of Inquiry Act, 1952 ('the Act') - HELD THAT:- It may be noticed that the amendment was brought about, about 20 years after passing of the main Act itself. The experience during past two decades must have made the Legislature to realize that it would but be necessary to notice a person whose conduct the Commission considers it necessary to inquire into during the course of the inquiry or whose reputation is likely to be prejudicially affected by the inquiry. It is further provided that such a person would have a reasonable opportunity of being heard and to adduce evidence in his defence. Thus the principle of natural justice was got inducted in the shape of statutory provision. It is thus incumbent upon the Commission to give an opportunity to a person, before any comment is made or opinion is expressed which is likely to prejudicially affect that person.
Needless to emphasise that failure to comply with principles of natural justice renders the action non-est as well as the consequences thereof. Shri Dinesh Dwivedi, learned counsel appearing for the appellant submits that since no action has been taken against the respondent no.1 so far, in pursuance of the report of the Inquiry Commission there was no occasion for him to move the Court in the matter. It was not the appropriate stage to raise any grievance by filing a petition challenging certain observations made by the Commission of Inquiry. The petition was thus premature.
We feel that it may not be necessary for a person to wait till certain action is initiated by the Government considering the report of the Inquiry Commission where the observations made by the Commission are such which militate against the reputation of a person and particularly without giving any chance to such a person to explain his conduct. It would be open for him to move the Court for deletion of such remarks made against him violating the provisions of Section 8B of the Act.
We have observed that had it been only a question of any adverse action being taken against the person against whom some adverse finding has been recorded, the contention of the learned counsel for the appellant may perhaps would have been entertainable. The government actually takes action or it does not or the fact that the report is yet to be considered from that angle, cannot be a reason to submit that it won't be appropriate stage to approach the Court. There may be occasions where after consideration of report the government may not decide to take any action against the person concerned yet the observation and remarks may be such which may play upon the reputation of the person concerned and this aspect of the matter has been fully taken care of under clause (b) of Section 8B of the Act. It is not, therefore, necessary that one must wait till a decision is taken by the government to take action against the person after consideration of the report. We have already dealt with the point about the right to have and protect one's reputation. We, therefore, find no force in the submission that the respondent no.1 had approached the Court at pre-mature stage. No other point has been urged on behalf of the appellant. In our view, the judgment of the High Court calls for no interference. In view of the discussion held above, the appeal is dismissed. There will, however, be no order as to costs.
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2003 (9) TMI 805
Challenged the Acquittal of accused persons by the High Court - Murder - Offence punishable u/s 302 of the Indian Penal Code, 1860 ('IPC') - HELD THAT:- In view of the unsatisfactory nature of disposal of the appeal and the inherent improbabilities and incongruities in the conclusions, the unreasoned impugned judgment of the High Court warrants reversal. So far as Accused-Modan Lal is concerned, his conviction u/s 302 IPC as done by the Trial Court is restored. So far as acquittal of other accused persons u/s 302 read with Section 34 is concerned, the Trial Court had elaborately dealt with the evidence to extend benefit of doubt to them. The High Court did not interfere in the State's appeal so far as their acquittal is concerned. Nothing could be shown to us as to why the conclusions are to be reversed and in what way they are fallacious.
Coming to the appeal filed by the State and the challenge of Ramakant Rai to the acquittal of accused respondents Sachidanand, Rasbehari and Janardan u/s 440 IPC, for which two years imprisonment was imposed, is concerned the High Court's judgment is reversed. The respondents Sachidanand, Rasbehari and Janardan were rightly convicted by the Trial Court u/s 440 IPC along with accused Madan Rai. The sentence of two years rigorous imprisonment and a fine of ₹ 500/- as imposed can be in no way termed to be excessive to warrant a different sentence.
In the ultimate result, the judgment of the Trial Court is restored and that of the High Court is set aside. The respondents shall surrender to custody to serve the remainder of the sentence, if any, to be served.
The appeals are allowed.
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2003 (9) TMI 804
Issues Involved:
1. Sanctioning of the Scheme of Restructuring under Sections 391 and 394 of the Companies Act.
2. Approval of the scheme by the requisite majority of shareholders and creditors.
3. Objections raised by SBI Home Finance (SHF) regarding the scheme.
Detailed Analysis:
1. Sanctioning of the Scheme of Restructuring under Sections 391 and 394 of the Companies Act:
The petitioner company filed a petition under Sections 391 and 394 of the Companies Act seeking the sanctioning of the Scheme of Restructuring. The meetings of shareholders and creditors were convened as directed by the Court, and the scheme was approved by the requisite majority. The Official Liquidator and the Regional Director, Department of Company Affairs, did not object to the proposed scheme. The scheme was formulated due to the delay and stoppage of work on the real estate project, causing a burden on the company's cash flow. The scheme aimed at restructuring the company, settling debts, and fulfilling obligations to customers.
2. Approval of the scheme by the requisite majority of shareholders and creditors:
The scheme was approved by more than the requisite majority of three-fourths in number and value of the shareholders and creditors. The salient features of the scheme included the restructuring of the company, repayment of debts in installments, and acquisition of development rights. The scheme also provided for the restructuring of debt and offered two options for settlement to financial institutions and banks. The results of the meetings indicated overwhelming support for the scheme, with 100% of shareholders and a significant majority of secured and unsecured creditors voting in favor. The Court emphasized the collective wisdom of shareholders and creditors and the necessity of the scheme for the company's revival.
3. Objections raised by SBI Home Finance (SHF) regarding the scheme:
SHF raised several objections, including the manipulation of the majority in the meeting of secured creditors, the release of personal guarantees, the viability of the project, and the experience of DEIL in the real estate business. SHF also contended that the scheme was a fraud on creditors and that DCM should not be considered an unpaid vendor. In response, the Court noted that consents given after the meeting by other secured creditors were valid, and the requisite majority had approved the scheme. The Court found that the objections raised by SHF were not sustainable, as the other secured creditors had accepted the scheme, and the commercial wisdom of the shareholders and creditors should not be substituted by the Court's judgment.
Conclusion:
The Court concluded that the scheme was fair and reasonable, complied with statutory requirements, and was approved by the requisite majority. The objections raised by SHF were addressed and found to be without merit. The scheme was sanctioned, and the petition was disposed of accordingly.
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2003 (9) TMI 803
Validity of the permission granted by the Municipal Corporation of Hyderabad to the appellant for erecting advertisement/street signs - violation of Article 14 of the Constitution of India - Compliance with statutory formalities and regulations under the Hyderabad Municipal Corporation Act - HELD THAT:- The fact that no other private advertising agencies, including the writ petitioner could offer to undertake such a venture in the other available areas when their participation was sought for belies the tall claims of the writ petitioner now made, after finding the project to have become successful and apparently fruitful - more perhaps than it could have been thought of, initially by everyone. Perhaps irked by this only the interests of the writ petitioner seem to have gained momentum, to try in desperateness for the 'Shylock's pound of flesh', to ruin the vary project, unmindful of any concern for the Corporation, public good and the appellant.
It is by now well settled that non-floating of tenders or absence of public auction or invitation alone is no sufficient reason to castigate the move or an action of a public authority as either arbitrary or unreasonable or amounted to malafide or improper exercise or improper abuse of power by the authority concerned. Courts have always leaned in favour of sufficient latitude being left with the authorities to adopt its own techniques of management of projects with concomitant economic expediencies depending upon the exigencies of a situation guided by appropriate financial policy in the best interests of the authority motivated by public interest, as well in undertaking sThe provisions relating to Section 420/421 would also have relevance only when any such installations are to be made for the benefit/utility of private person/licensee, who executes it and not to a peculiar case like the one wherein the installations are such which are to be normally made and maintained by the Corporation for public good, but instead being permitted to be made on its behalf and at its behest by a private property for the use and benefit of public at large, which ultimately have to be left as the property of the Corporation only, and that too when executed on a self-financing basis.
The Commissioner or other, authorities of the Corporation, who seem to have undertaken this at a point of time when there is no concrete scheme/project or sufficient funds with the Corporation, appear to have embarked upon this venture in good faith, keeping in view not only the public good but also in an earnest endeavour to secure such a novel project executed without any financial commitments or expenditure whatsoever either for the installations or subsequent upkeep and maintenance for at least 15 years. Merely because as an ultimate outcome in the long range, the appellant is able to make some more profit than what was envisaged itself could not render the exercise undertaken or scheme executed vulnerable for being challenged to be either as one in improper abuse of powers or by means of any reprehensible/condemnable conduct, calling for interference in the hands of Court of Law ventures.
The Division Bench, except cataloguing the catena of decisions, has not chosen to objectively consider the extent of their applicability, relevance or otherwise of the principle befitting the merits of the peculiar of the case. The case on hand does not constitute or at any rate can by no means said to be the outcome of any unreasonable or arbitrary exercise of power so as to warrant interference under. Article 226 of the Constitution of India. The appeal is allowed, the order of the Division Bench is set aside and the order of the learned Single Judge dismissing the writ petition filed before the High Court shall stand restored.
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2003 (9) TMI 802
Initiation of contempt proceedings for violation of court orders - Non Compliance with the terms of the scheme for Ashok Paper Mills - HELD THAT:- Under the Scheme which was formulated on 28.6.1996 and had been approved by this Court by the order dated 8.7.1996, NCFL had to pay a fixed Consideration of ₹ 6 crores over a period of four years in 16 quarterly installments of ₹ 37.5 lakhs each. The NCFL has no doubt defaulted in payment of the aforesaid amount as it has paid only two installments of ₹ 37.5 lakhs each. The IDBI has disbursed a term loan of ₹ 15 crores towards Phase I of the revival scheme. The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India in cooperation with Department of Banking was instrumental in obtaining the sanction for additional term loan of ₹ 11 crores from IDBI and a working capital of ₹ 9.25 crores from United Bank of India. Therefore, so far as the IDBI and the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India are concerned, they have complied with the directions issued by this Court and have also taken all other steps which they were required to take for the revival of the unit.
According to the affidavit filed by Shri Dharam Godha, NCFL has invested ₹ 18 crores towards promoter's contribution which was much more than the amount contemplated in Phase I of the Scheme. It is also averred therein that for the loan of ₹ 15 crores given by IDBI, security of properties situate in Mumbai worth ₹ 10 crores, other than that of the mill, had been furnished by NCFL. Though the entire amount of consideration has not been paid by the NCFL but they claim to have made substantial investment for running of the unit.
Section 2(b) of Contempt of Courts Act defines 'civil contempt' and it means willful disobedience to any judgment, decree, direction, order, writ or other process of a Court or willful breach of undertaking given to a Court. 'Wilful' means an act or omission which is done voluntarily and intentionally and with the specific intent to do something the law forbids or with the specific intent to fail to do something the law requires to be done, that is to say with bad purpose either to disobey or to disregard the law. It signifies a deliberate action done with evil intent or with a bad motive or purpose. Therefore, in order to constitute contempt the order of the Court must be of such a nature which is capable of execution by the person charged in normal circumstances. It should not require any extra ordinary effort nor should be dependent, either wholly or in part, upon any act or omission of a third party for its compliance. This has to be judged having regard to the facts and circumstances of each case.
The facts mentioned above show that none of the respondents to the petition can be held to be directly responsible if the Scheme which had been formulated by Government of India on 28.6.1996 and had been approved by this Court by the order dated 8.7.1996 could not be implemented in letter and spirit as many factors have contributed to the same. The reasons given for non inclusion of Shri Umadhar Prasad Singh in signing of the agreement appear to be quite plausible. NCFL has undoubtedly not discharged its liability of making payment of its entire liability of ₹ 6 crores. However it has come out with a case that some additional expenditure has been incurred in running the unit. It is not possible to get the complete financial picture only on the basis of the affidavits filed in the present petition. On the material on record, therefore, it is not possible to hold that the charge of having committed contempt of Court on account of alleged non-compliance of the orders passed by this Court on 8.7.1996, 1.5.1997 and 31.7.2000 has been established against any one of the respondents.
The petition is accordingly dismissed and the notices issued to the respondents are discharged. It is made clear that any observation made in this order is only for the limited purpose of deciding the present contempt petition and shall not be construed as an expression of opinion on the rights and claims of the parties. The order will also not come in the way of any party in seeking to recover its dues or to establish any kind of right or taking any other action.
G.P. Mathur, J. - For the reasons given in Contempt Petition No. 210 of 2001 in Writ Petition (Civil) No. 174 of 1991, the present petition is dismissed.
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2003 (9) TMI 801
Issues Involved:
1. Validity of Rule 3 of the Income Tax Rules, 1962.
2. Rule 3's consistency with Section 17(2) of the Income Tax Act, 1961.
3. Alleged discrimination under Article 14 of the Constitution of India.
4. Whether the new rule goes beyond the rule-making power under Section 295(2) of the Act.
Issue-wise Detailed Analysis:
1. Validity of Rule 3 of the Income Tax Rules, 1962:
The petitioners challenged Rule 3 of the Income Tax Rules, 1962, introduced by the Income-tax (Twenty-second Amendment) Rules, 2001, as ultra vires, invalid, and inoperative. They argued that the new rule contradicted Section 17(2) of the Income Tax Act, 1961, and exceeded the rule-making power under Section 295(2) of the Act. The petitioners claimed that the rule was discriminatory, violating Article 14 of the Constitution of India. The court noted that the basic question was common to all writ petitions and decided to hear them analogously for clarity and convenience.
2. Rule 3's consistency with Section 17(2) of the Income Tax Act, 1961:
The petitioners argued that the new rule was inconsistent with Section 17(2) of the Act, which defines perquisites. They contended that the rule's valuation method for unfurnished accommodation did not align with the parent statute. The respondents, represented by the Central Board of Direct Taxes and the Commissioner, countered that the rule was consistent with Section 17(2) and aimed to introduce uniformity in the valuation of perquisites. They argued that the rule-making authority had not exceeded its power and that the rule was necessary for maintaining uniformity in tax assessments.
3. Alleged discrimination under Article 14 of the Constitution of India:
The petitioners claimed that the new rule violated Article 14 of the Constitution, which guarantees equality before the law. They argued that the rule lacked intelligible differentia and was arbitrary and irrational. The respondents, however, contended that the rule did not violate Article 14. They argued that the rule aimed to bring uniformity in tax assessments and that any perceived harshness was a necessary consequence of implementing a uniform rule. The respondents also cited decisions from other High Courts, which had upheld the rule as intra vires and consistent with the Constitution.
4. Whether the new rule goes beyond the rule-making power under Section 295(2) of the Act:
The petitioners argued that the new rule exceeded the rule-making power conferred by Section 295(2) of the Act. They relied on previous judicial interpretations of the old rule, which had been deemed consistent with the parent statute. The respondents countered that the rule-making authority was within its rights to amend the rule to ensure uniformity. They cited decisions from other High Courts that had upheld the new rule as within the rule-making power.
Conclusion and Recommendation:
The court acknowledged the complexity and importance of the issues raised. It noted that the decision in the case of Officers' Association, Bhilai Steel Plant v. Union of India, which had interpreted the old rule, was binding precedent. However, given the conflicting decisions from other High Courts and the need for clarity, the court recommended that the matter be heard by a larger bench. The court emphasized that until the decision in the Bhilai Steel Plant case was overruled or clarified, it would be challenging to conclude that the new rule was within the rule-making power under Section 295 of the Act. The court directed that the matter be placed before the Chief Justice for the constitution of an appropriate larger bench.
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2003 (9) TMI 798
Issues:
1. Deduction of unpaid bottling fee under section 43B of the Income-tax Act, 1961.
2. Allowance of depreciation on research and development assets related to a closed business division.
Analysis:
Issue 1:
The first issue revolves around the deduction of unpaid bottling fee under section 43B of the Income-tax Act, 1961. The appellant contended that the bottling fee should be considered as actual payment upon furnishing a bank guarantee, even if not paid before the due date of filing the return. The Tribunal favored the appellant's argument based on the bank guarantee, deeming it as actual payment. However, the High Court examined whether the bottling fee falls under the purview of section 43B. The Court held that the bottling fee is not a fee in the technical sense but a consideration for parting with the exclusive privilege of dealing in potable liquor. Therefore, the Court decided in favor of the appellant, allowing the deduction as an allowable revenue expenditure if accounts are maintained on a mercantile basis.
Issue 2:
The second issue concerns the allowance of depreciation on research and development (R&D) assets related to a closed business division. The Assessing Officer disallowed the claim for depreciation on the basis that the fast food division, to which the R&D assets were linked, had been closed. The appellant argued that the R&D assets were not solely related to the closed division but also served the liquor business, which was operational. Additionally, the appellant highlighted changes in the scheme of depreciation under the Taxation Laws Act, 1986, emphasizing that the R&D assets formed part of block assets and were used in the operational business. The Court agreed with the appellant, stating that the R&D division was active and providing services to other operational businesses of the assessee. Therefore, the Court upheld the Tribunal's decision to allow depreciation on the R&D assets as part of the block assets.
In conclusion, the High Court dismissed the appeal, upholding the decisions in favor of the appellant on both issues. No costs were awarded in this matter.
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2003 (9) TMI 797
Issues:
Recovery of loan amount from guarantor, Execution of guarantee deed, Continuing guarantee, Equitable mortgage, Barred by limitation, One time settlement scheme
Analysis:
The judgment deals with an appeal against a judgment and decree passed by the XII Additional District Judge, Jabalpur, in a Civil Suit regarding the recovery of a loan amount. The suit was filed by a Nationalised Bank against borrowers and a guarantor. The guarantor had executed a guarantee-deed in favor of the Bank, which was a continuing guarantee until the repayment of the entire outstanding dues. The Bank alleged poor maintenance of the account by the borrowers, leading to accumulated dues. Despite executing guarantee documents, the outstanding dues were not paid, resulting in the Bank filing the suit for recovery of the amount.
The trial Court proceeded ex parte against the borrowers, while the guarantor appeared and denied giving the guarantee for the loan. Evidence was presented by Bank officials proving the execution of loan documents by the borrowers and the guarantee deed by the guarantor. The Court found that the borrowers had taken the loan and the guarantor had executed a continuing guarantee, including mortgaging his property by way of equitable mortgage. The judgment upheld the trial Court's decree based on the evidence presented.
Regarding the limitation argument raised by the appellant's counsel, the Court found it to be without merit. Since the suit was based on documents of continuing guarantee and equitable mortgage, it was held to be within the limitation period of 12 years. The appellant's counsel requested consideration under a one-time settlement scheme by the Reserve Bank of India. The Court directed the respondent Bank to extend the time for the appellant to submit the application for one-time settlement and consider the case sympathetically under the scheme, provided the appellant approached the Bank within the specified timeline.
In conclusion, the appeal was dismissed, and no costs were awarded. The Court directed the Bank to consider the appellant's case for one-time settlement if approached within the specified timeframe, emphasizing that the Bank should decide the case independently of the Court's judgment and pass appropriate orders.
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2003 (9) TMI 796
Issues Involved:
1. Validity of SEBI's Order under Section 11B of SEBI Act, 1992.
2. Allegations of Fraudulent and Unfair Trade Practices.
3. Role and Involvement of the Appellant in the Alleged Market Manipulation.
4. Applicability of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
5. Adequacy and Scope of Show Cause Notice.
6. Delay in Issuance of SEBI's Order.
Detailed Analysis:
1. Validity of SEBI's Order under Section 11B of SEBI Act, 1992:
The SEBI's order dated 29.11.2002 debarring the Appellant from accessing and being associated with the capital market for five years was challenged. The Appellant argued that Section 11B does not empower SEBI to impose punitive measures. The Tribunal noted that Section 11B is preventive and remedial, not punitive, and the order was set aside due to lack of evidence supporting the charges against the Appellant.
2. Allegations of Fraudulent and Unfair Trade Practices:
SEBI's investigation revealed that the Appellant financed six multiple applications for shares in the public issue of MFL, resulting in irregular allotments. SEBI alleged that these actions facilitated an artificial rise in MFL's share prices, constituting market manipulation and unfair trade practices under regulations 4 and 6 of the FUTP Regulations. However, the Tribunal found no convincing evidence of the Appellant's involvement in post-allotment market manipulation, and thus, the charge of fraudulent activities was not substantiated.
3. Role and Involvement of the Appellant in the Alleged Market Manipulation:
The Appellant contended that its role was limited to providing financial accommodation to Shri Gopal Khadaria as a professional financier, without any knowledge of the alleged market manipulation. The Tribunal observed that the Appellant's actions were in line with a legitimate business transaction and there was no evidence to prove that the Appellant knowingly participated in fraudulent activities. The Tribunal noted that the Appellant handed over the shares to Shri Khadaria upon receiving interest, and there was no further involvement in the alleged manipulation.
4. Applicability of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995:
The Appellant argued that the FUTP Regulations, notified on 25.10.1995, were not applicable as the agreement and applications were made before this date. SEBI countered that the actions continued until 27.12.1995, making the regulations applicable. The Tribunal agreed with SEBI on the applicability of the regulations but found no evidence of the Appellant's violation of these regulations.
5. Adequacy and Scope of Show Cause Notice:
The Appellant argued that the show cause notice did not adequately charge it with knowingly participating in market manipulation. The Tribunal noted that the show cause notice focused on the Appellant's role in financing multiple applications, but there was no charge of intentional fraud. The Tribunal found that SEBI's order went beyond the scope of the show cause notice, making the order untenable.
6. Delay in Issuance of SEBI's Order:
The Appellant contended that the delay of over seven years in issuing the order was unjust. SEBI argued that market manipulation investigations take time. The Tribunal acknowledged the delay but did not find it a sufficient reason to set aside the order solely on this ground. However, the lack of evidence substantiating the charges was the primary reason for setting aside the order.
Conclusion:
The Tribunal set aside SEBI's order to the extent it applied to the Appellant, as SEBI failed to substantiate the charges of violating the FUTP Regulations. The Appellant's role was limited to providing financial accommodation, and there was no evidence of its involvement in market manipulation.
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2003 (9) TMI 795
Issues involved:
1. Validity of a deed of settlement executed by an individual.
2. Determination of the mental and physical state of the executant at the time of executing the deed.
3. Burden of proof in cases involving fraud, misrepresentation, or undue influence.
4. Jurisdiction of the High Court to interfere with concurrent findings of fact under Section 100 of the Code of Civil Procedure.
Detailed Analysis:
1. The judgment in question revolves around the validity of a deed of settlement executed by an individual, which was declared void and invalid by a learned Single Judge of the Calcutta High Court. The dispute arose among relatives of the executant regarding the authenticity of the deed, with allegations of it being a forged document created to grab property. The High Court examined the factual aspects, including the age and physical condition of the executant, and ultimately held the deed to be void and invalid, permanently enjoining the defendants from disturbing the plaintiffs' possession of the property.
2. The issue of the mental and physical state of the executant at the time of executing the deed was crucial in determining its validity. The trial Court and the first Appellate Court had differing views on this matter, with the former dismissing the suit while the latter also ruling in favor of the defendants. However, the High Court found that the lower courts had wrongly placed the burden of proof on the plaintiffs to establish the validity of the deed. It was observed that the executant, an illiterate person in poor physical and mental health, was not in a fit state to execute the deed, rendering it void and invalid.
3. The judgment delves into the burden of proof in cases involving fraud, misrepresentation, or undue influence. It was highlighted that when such allegations are made, the burden of proof lies on the party in a fiduciary relationship or position of active confidence to demonstrate the fairness and genuineness of the transaction. The High Court emphasized the need for the dominant party to prove the absence of fraud or undue influence, especially when dealing with vulnerable individuals like the executant in this case. Legal principles from the Indian Evidence Act were cited to support this stance.
4. The jurisdiction of the High Court to interfere with concurrent findings of fact under Section 100 of the Code of Civil Procedure was also a significant issue. While acknowledging the limited scope for interference, the judgment clarified that if the trial Court and the first Appellate Court misdirected themselves in appreciating the question of law or wrongly placed the burden of proof, there is room for the High Court to intervene. Citing relevant legal precedents, the judgment justified the High Court's decision to overturn the lower courts' findings based on misinterpretation of evidence and erroneous conclusions.
In conclusion, the Supreme Court upheld the High Court's judgment, dismissing the appeal and emphasizing the importance of protecting vulnerable individuals in legal transactions, especially when issues of fraud, undue influence, or incapacity are raised. The detailed analysis provided a comprehensive overview of the legal principles applied in the case, highlighting the significance of evidence, burden of proof, and proper appreciation of facts in determining the validity of legal documents.
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2003 (9) TMI 794
Issues Involved:
1. Interpretation of a consent order.
2. Validity and effect of an undertaking given to the Supreme Court.
3. Impact of the dismissal and subsequent review of a specific performance suit on the execution of an eviction decree.
Issue-wise Detailed Analysis:
1. Interpretation of a Consent Order:
The appeal concerns the interpretation of a consent order passed by the Supreme Court, which affirmed the High Court's eviction decree while staying its execution until the decision of a specific performance suit (Title Suit No.49 of 1990). The consent order recorded an agreement between the parties that the eviction decree would not be executed until the specific performance suit was decided.
2. Validity and Effect of an Undertaking Given to the Supreme Court:
The appellant argued that the undertaking lost its efficacy after the specific performance suit was dismissed. The respondents contended that the execution proceedings should remain stayed due to the undertaking, as the specific performance suit had been reopened following a review application. The Supreme Court emphasized that the undertaking was given to prevent the execution of the eviction decree until the decision of the specific performance suit, not beyond it. The Court clarified that the term "decision" in the consent order referred to the trial court's decision and did not extend to the finality of appellate or review processes.
3. Impact of the Dismissal and Subsequent Review of a Specific Performance Suit on the Execution of an Eviction Decree:
The Supreme Court noted that the specific performance suit was dismissed, and the review application was allowed only to the extent of considering the refund of earnest money. The substantive prayer for specific performance was not granted. The Court held that the respondents' right to possess the premises based on part performance of the contract was negated by the trial court's dismissal of the specific performance suit. Therefore, the respondents could not resist eviction based on the reopened suit, which was limited to the issue of earnest money refund.
Conclusion:
The Supreme Court concluded that the undertaking given by the appellant to stay the execution of the eviction decree until the decision of the specific performance suit did not extend beyond the trial court's decision. The Court set aside the High Court's judgment, allowing the appellant to proceed with the eviction. The appeal was allowed, and the respondents were directed to vacate the premises, with no costs awarded.
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2003 (9) TMI 793
The Rajasthan High Court dismissed the appeal, citing previous judgments that allowed deduction of depreciation even when the net profit rate was applied. The Court followed its consistent view on the matter. (Citation: 2003 (9) TMI 793 - RAJASTHAN HIGH COURT)
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2003 (9) TMI 792
Issues Involved:
1. Confiscation of goods under Section 111(m) of the Customs Act, 1962.
2. Imposition of redemption fine under Section 125 of the Customs Act, 1962.
3. Demand of duty under proviso to Section 28(1) of the Customs Act, 1962.
4. Imposition of penalty under Section 114A of the Customs Act, 1962.
5. Imposition of penalty under Section 112(a) of the Customs Act, 1962.
6. Penalty on the Managing Director under Section 112(a) of the Customs Act, 1962.
7. Adjustment of payment made towards differential duty and enforcement of PD Bond and Bank Guarantee.
Detailed Analysis:
1. Confiscation of goods under Section 111(m) of the Customs Act, 1962:
The Commissioner had ordered the confiscation of goods valued at Rs. 14,58,842/- under Bill of Entry No. 36803 dated 14.7.97. The Tribunal found that only goods valued at Rs. 3,68,064/- were not declared to customs and thus, only these goods were liable for confiscation under Section 111(m). The order of confiscating the entire consignment valued at Rs. 14,58,482/- was reduced accordingly.
2. Imposition of redemption fine under Section 125 of the Customs Act, 1962:
The Commissioner had imposed a redemption fine of Rs. 1,50,000/-. The Tribunal reduced the redemption fine to Rs. 85,000/-, considering that only goods valued at Rs. 3,68,064/- were liable for confiscation.
3. Demand of duty under proviso to Section 28(1) of the Customs Act, 1962:
The Commissioner had demanded a duty of Rs. 16,73,368/- from M/s. Comptech Electronics Pvt. Ltd. Chennai. The Tribunal directed that no duty should be charged on goods that were confiscated but not redeemed. The duty demand was to be adjusted accordingly, and a refund was to be granted for the excess amount paid.
4. Imposition of penalty under Section 114A of the Customs Act, 1962:
The Commissioner had imposed a penalty of Rs. 2,48,409/- under Section 114A. The Tribunal reduced this penalty to Rs. 1,25,000/-, considering the circumstances and the submissions made by the appellants.
5. Imposition of penalty under Section 112(a) of the Customs Act, 1962:
The Commissioner had imposed a penalty of Rs. 3,00,000/- for goods imported prior to 28.9.96. The Tribunal confirmed this penalty, finding it appropriate under the circumstances.
6. Penalty on the Managing Director under Section 112(a) of the Customs Act, 1962:
A penalty of Rs. 1,00,000/- was imposed on the Managing Director, Shri Vikas Chandra. The Tribunal found this penalty to be on the higher side and reduced it to Rs. 25,000/-.
7. Adjustment of payment made towards differential duty and enforcement of PD Bond and Bank Guarantee:
The Commissioner had ordered that the payment of Rs. 14,00,000/- made by M/s. Comptech Electronics P. Ltd., Chennai be adjusted for the differential duty amount, and the PD Bond and Bank Guarantee be enforced for recovery of balance duty, fine, and penalty. The Tribunal directed that the duty should not be charged on goods that were confiscated but not redeemed, and a refund should be granted for the excess amount paid.
Conclusion:
The Tribunal modified the order of the Commissioner by reducing the redemption fine, adjusting the duty demand, reducing the penalties imposed under Sections 114A and 112(a), and confirming the rest of the order. The impugned order was sustained with these modifications.
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2003 (9) TMI 791
The Supreme Court dismissed the appeals citing a previous court decision and Tribunal findings regarding factory gate sales and ascertainable factory prices. No costs were awarded. (2003 (9) TMI 791 - SC Order)
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2003 (9) TMI 790
Challenged the panel prepared for the post of Vice-Chairman in various branches of the Central Administrative Tribunal ('the Tribunal') in India and seeking for preparation of a fresh panel - Validity of Explanation to Section 6 of the Administrative Tribunals Act, 1985 - HELD THAT:- From the observations, it is clear that this Court held that it was not desirable to stop the appointment of members of administrative services as administrative members to the Tribunal. Rather the judicious mix of Judicial Members and those with grass root experience would serve the purpose better for which the Tribunals were created. Contention that Tribunal should consist only of Judicial members was rejected and it was held that such a direction would attack the primary basis of the theory pursuant to which the Tribunals were constituted. It was observed that a Selection Committee which was headed by a sitting Judge of the Supreme Court would ensure that Administrative Members would be chosen from amongst those who had the requisite background to deal with the cases coming up before the Tribunal.
In view of the observations of this Court in S.P. Sampath [1986 (12) TMI 136 - SUPREME COURT] and L. Chandra Kumar cases [1997 (3) TMI 90 - SUPREME COURT] the High Court was not right in observing that henceforth the appointment of Vice-Chairman should be made from amongst the persons mentioned in of Section 6(2)(a) of the Act alone. The findings recorded by the High Court run contrary to the law laid down by this Court.
Thus, the Civil appeals are accepted, the interim order dated 25th February, 2002 which merged with the final order dated 9th April, 2002 passed by the High Court are set aside. The stay granted by the High Court is vacated. The authorities would be at liberty to make appointment as per selection made which would of course be subject to the final result of the writ petition by the High Court.
Since the High Court did not decide the inter se dispute between writ petitioner Shri Shambhu Dayal and Shri V.K. Majotra, respondent No. 5 in the writ petition, we remit the case back to the High Court for decision in accordance with law. We would request the High Court to dispose of the matter at an early date and if possible within four months from the date of receipt/production of a certified copy of this judgment.
Since we are not deciding the dispute on merits and remitting the case back to the High Court for appropriate decision we refrain to go into merits of the dispute in writ petition and dismiss the same with liberty to the petitioner to approach the High Court, if so advised.
Appeals are allowed. No costs.
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