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2010 (12) TMI 1083
Addition made on account of difference in opening balance – Held that:- In the assessee’s paper book, there are several entries and assessee tried to explain that this difference exists from the year 1998-99 - these documents were not examined by Assessing Officer and even the CIT(A) has recorded his finding that the assessee could not explain – thus, in the interest of justice, let these documents be placed before Assessing Officer, so he can find out exactly whether the difference is explained or not and accordingly decide this issue – the matter remitted back to the AO Decided in favour of Assessee.
Addition made u/s 68 of the Act – Addition of gift made – Held that:- The assessee received two gifts and the assessee has filed details in respect of said gift received with the Assessing Officer - in the case of Smt. Ritaben Hirpara, the papers should be examined at the level of AO and decide whether the donor has capacity or creditworthiness to give the gift - that they have substantial incomes but AO is free to note the creditworthiness of the donor - As regards to identity, genuineness of transactions both are established by assessee before the lower authorities - to ascertain creditworthiness of the donor the matter remitted back to the AO.
Nothing has been brought in respect of creditworthiness of the donor except confirmation - This being a gift from a non-resident Indian and this document will not suffice to prove the three ingredients as mentioned u/s.s68 of the Act - assessee is only able to prove identity and genuineness of the said transaction but her capacity or creditworthiness of the donor, he has not made any attempt to file the details - the gift received from Mrs. Varshaben Patel having no relationship with the assessee and particularly that the creditworthiness of donor is not established and same cannot be accepted as explained - the addition of the gift upheld added as unexplained u/s.68 of the Act – Decided partly in favour of Assessee.
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2010 (12) TMI 1082
Whether the P.W.D. is ready and willing to accept the petitioners on the same seniority and status as they originally enjoyed in their parent department?
Held that:- This Court is of the considered view that the present petition does not warrant any interference by this Court under Article 226 of the Constitution of India. Appeal dismissed.
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2010 (12) TMI 1081
Issues Involved:
1. Classification of income from the sale of shares and mutual fund units as either 'capital gains' or 'business income'.
Detailed Analysis:
Issue 1: Classification of Income from Sale of Shares and Mutual Fund Units
Background and Facts:
The assessee filed returns for the assessment years 2004-05 and 2005-06, declaring income from short-term and long-term capital gains. The Assessing Officer (AO) challenged this classification, arguing that the profits from the sale of shares and mutual fund units should be treated as 'business income' due to the regular and recurring nature of these transactions. The assessee contended that it was an investment company primarily holding shares in Kirloskar group companies to maintain control and ownership, not for trading purposes.
Assessing Officer's Findings:
The AO noted that the assessee engaged in frequent purchase and sale of shares and mutual fund units without a portfolio manager, indicating a systematic trading activity. The AO also observed that the assessee pledged some investments as security for loans, suggesting a business motive. Consequently, the AO reclassified the declared capital gains as business income.
Commissioner of Income-tax (Appeals) Decision:
The Commissioner upheld the AO's decision, emphasizing that even a single transaction could constitute a business activity, citing the Supreme Court judgment in CIT v Sutlej Cotton Mills Supply Agency Ltd. The Commissioner dismissed the assessee's arguments about the intent and treatment of shares as investments in its books.
Tribunal's Analysis and Decision:
The Tribunal considered the assessee's historical treatment of shares as investments, the purpose of holding shares to control group companies, and the absence of trading in the open market. The Tribunal noted that the assessee's activities were consistent with an investor's conduct rather than a trader's. It emphasized that the principle of consistency should apply, referencing the Bombay High Court's decision in Gopal Purohit, which upheld the classification of similar transactions as capital gains in previous years.
The Tribunal found that the AO failed to demonstrate any change in facts or law to justify a departure from the past treatment of the assessee's transactions. It highlighted that the assessee's intention to acquire and control shares in group companies was evident, and the transactions were not motivated by trading for profit. The Tribunal also addressed the AO's reliance on the Supreme Court judgment in Sutlej Cotton Mills, distinguishing the facts of the present case from those in the cited judgment.
Conclusion:
The Tribunal concluded that the gains from the sale of shares and mutual fund units should be classified as capital gains, not business income. It directed the AO to treat the long-term and short-term capital gains as such for both assessment years 2004-05 and 2005-06. The appeals of the assessee were allowed, setting aside the orders of the Commissioner of Income-tax (Appeals).
Pronouncement:
The judgment was pronounced in the open court on December 16, 2010, allowing both appeals of the assessee.
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2010 (12) TMI 1080
Excessive depreciation claimed in respect of building - contention of the assessee is that the payment of these amounts to NDMC was part of the total consideration amount payable by that company to Government of India for taking over of Hotel Kanishka - CIT(A) was of the view that these payments were part of the bid amount submitted by the company at the time of disinvestments of Hotel Kanishka owned by ITDC and these amounts were paid for regularization of procedural lapses and only after payment of these amounts completion certificate of hotel was issued by NDMC - HELD THAT:- The order of the CIT(A) does not require any interference. The same is based on the decision in the case of LOKE NATH AND CO. (CONSTRUCTION) [1984 (1) TMI 53 - DELHI HIGH COURT] which is the subject-matter of detailed discussions in para 3.3 of the order of CIT(A). It must be appreciated that qua the assessee it is only a part of purchase consideration paid and the payments were made to perfect the title of the buyer in the property which it had acquired from the Government of India under the disinvestment policy. The assessee has paid certain amounts which were accepted as part of purchase consideration. The payment of purchase consideration was made to different people having regard to the liabilities of the erstwhile ITDC which was the owner. In fact it could not have had a perfect title to the property which it had purchased, had it not got these things regularized from NDMC by payment of the sums in question - The payments made for perfecting the title or ownership of the business asset represent the expenditure for the purpose of the business and the assessee has rightly capitalized the sums in question which also represent as a part of purchase consideration of the asset.
Excessive depreciation claimed in respect of UPS and printers - AO classified the same as part of general machinery and allowed 25 per cent per annum instead of 60 per cent claimed by the assessee - HELD THAT:- The issue is now concluded by the decision of Delhi High Court in COMMISSIONER OF INCOME TAX VERSUS BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] wherein their Lordships have agreed with the view of the Tribunal and expressed that computer accessories and peripherals, such as printers, scanners and server, etc. form an integral part of the computer system. In fact, the computer system cannot be used in isolation or without the computer accessories and peripherals. Accordingly, the High Court upheld the assessee’s claim for higher rate of depreciation at 60 per cent - Following the same, there arise no need to interfere in the order of the CIT(A) who directed the allowance of higher depreciation on these peripherals and computer accessories at the same rate as applicable to computers.
Addition of interest income which was added by the AO as income from other sources - HELD THAT:- Respectfully following the decision of the jurisdictional High Court in the case of INDIAN OIL PANIPAT POWER CONSORTIUM LIMITED, NEW DELHI [2009 (2) TMI 32 - DELHI HIGH COURT], wherein their Lordships have clearly laid down the principle that when interest earned is inextricably linked with the setting up of the plant, such income is required to be set off against pre-operative expenses. There is no dispute that the interest income earned by the assessee in the instant case is inextricably linked with the setting up of the hotel, the bank guarantees and letter of credit required the margin money and the margin money has been provided in the form of fixed deposit which incidentally earned some interest. Such interest is inextricably linked with the setting up of the hotel and the order of the CIT (A), having regard to the facts and circumstances of the case cannot be found fault with. The orders of the CIT(A) on this issue in the respective assessment years are confirmed.
Allowability of landscaping expenses - AO was of the view that the term ‘building’ does not specifically include landscaping under the IT Rules and the claim of depreciation on the expenses incurred on landscaping cannot be allowed as deduction - HELD THAT:- The term ‘building’ has not been defined in the Act. The nature of the asset has to be ascertained and we have to understand the meaning of the term ‘building’ depending upon the context to which a reference has been made. Here the assessee is in a hotel business. His building is not merely a structure of four walls but includes all such things as are necessary to give the building a better look and is a matter of attraction for the customers to use it. Having regard to the assessee’s nature of business it cannot be said that the landscaping done by the assessee cannot be considered as a building. After all the assessee has given a better look to this building by provision of this landscaping which has become an integral part of the building to be used as a hotel - The CIT(A) has correctly applied the principle laid down in DELHI AIRPORT SERVICE. [2001 (9) TMI 39 - DELHI HIGH COURT] and also the decision of GWALIOR RAYON SILK MANUFACTURING CO. LIMITED [1992 (4) TMI 3 - SUPREME COURT] and the decision of SOUTHERN PETRO CHEMICAL INDUSTRIES CORPORATION LIMITED [1998 (6) TMI 85 - MADRAS HIGH COURT] to give an extended and more meaningful definition of the term ‘building’ - this view is thus agreed upon.
Addition made on account of the liabilities - AO went through the balance sheet and found that certain constant amounts were outstanding from the assessee for more than 3 years and are being carried forward as a liability from year to year and there has been no transaction during the year - HELD THAT:- There are no material to come to a view that the liabilities in question have ceased to exist on the date of the balance sheet. Merely because the accounts have become non-operational or the period of 3 years has expired, it does not mean that such liability has ceased to exist. It is not open to the AO to conclude that such liabilities have ceased to exist. The liability cannot become unenforceable merely because the period of 3 years has expired. Moreover in this case, the assessee has not even written off such liability to its P&L a/c. Having regard to the facts and circumstances of the case, there are no error in the order of the CIT(A) on this point.
Appeal of Revenue dismissed.
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2010 (12) TMI 1079
Issues:
Violation of Section 8(3) and 8(4) of FERA - Failure to submit Exchange Control Copy of Bill of Entry for imports - Service of Show Cause Notice at the correct address - Principles of natural justice - Burden of proof on the appellant - Remand and opportunity to produce required documents - Penalty amount deposited by the appellant.
Analysis:
The appeal challenges the penalty imposed on the appellant for violating Section 8(3) and 8(4) of FERA by failing to submit Exchange Control Copy of Bill of Entry for imports. The appellant contended that the Show Cause Notice was not served at the correct address, leading to an ex parte order. The appellant argued that the order violated principles of natural justice as the notice was not served at the registered office. However, it was found that under FERA, the notice can be served at the place of business or residence of the person concerned, as per Rule 3 of the Foreign Exchange Regulation Rules, 1974.
The appellant relied on judgments related to natural justice, but it was clarified that those judgments do not apply when ex parte orders are issued after issuing notices. The key issue was whether the notice was served on the appellant as per the law. The appellant claimed to have changed the address before the Show Cause Notice was issued, but as per Section 71 of FERA, the burden of proof that the foreign exchange was used for the permitted purpose lies on the appellant. To ensure justice, the appellant was granted an opportunity to produce the required documents, specifically the Bill of Entry, to prove compliance with the Exchange Control Manual.
In the interest of justice, the matter was remanded back to the Director of Enforcement for further inquiries upon the appellant's production of the necessary documents. The appellant was directed to pay a cost of Rs. 10,000 for not updating the address with the authorized dealer. The penalty amount deposited by the appellant would be subject to the final order passed by the Director of Enforcement and refunded accordingly. The Director of Enforcement was instructed to make inquiries and pass an appropriate order within two months from the appearance of the parties.
In conclusion, the appeal was disposed of with the appellant given a chance to meet the allegations by producing the required documents, subject to further proceedings by the Director of Enforcement.
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2010 (12) TMI 1078
the entire prosecution story would depend on the dying declarations. It must be borne in mind that all three dying declarations, the first one which formed the basis of the FIR, the second recorded by the ASI as a statement under Section 161 of the Cr.P.C. and a third recorded by the Tahsildar are unanimous as all the accused find mention therein. The High Court, has by way of abundant caution, already given the benefit to three of the assailants on the plea, that they, though armed, had not caused any injury to the deceased. Thus no fault whatsoever could be found in the dying declarations - Appeal dismissed.
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2010 (12) TMI 1077
Whether, on the facts and law, the Tribunal was right in holding that the initiation of proceedings under section 147 read with section 148 of the Act in all the three years is justified ?
Held that:- We are of the view that the majority view taken by the Tribunal was right and we concur with the same. The Tribunal was fully justified to remand the matter back to the Assessing Officer with certain directions. We do not find any reasons to interfere with the same. As a result, the question of law framed is answered in favour of the respondent and against the appellant resulting into dismissal of these appeals.
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2010 (12) TMI 1076
Issues:
Challenge to order of Commissioner of Central Excise (Appeals) - Pre-deposit of sum with interest - Alleged undue hardship faced by petitioner - Applicability of amended Rule 6 of Removal of Goods Rules - Opportunity to argue not given during hearing - Liberty granted to file application for review of order - Stay on realization of dues till review decision.
Analysis:
The petitioner challenged the order of the Commissioner of Central Excise (Appeals) directing a pre-deposit of a specific sum with interest, contending that undue hardship was not considered and an opportunity to argue on the applicability of the amended Rule 6 of the Removal of Goods Rules was not provided during the hearing. The Court noted that the stay petition did not include a plea of undue hardship, which is essential to establish a case for such relief. Consequently, the Commissioner's decision was deemed justified as the appellant failed to demonstrate that the pre-deposit would cause undue hardship. However, in response to the submission that the petitioner was not given a chance to argue on the rule's applicability, the Court disposed of the writ petition by granting liberty to file a review application within seven days. If such an application is submitted, the Commissioner must issue a reasoned order within a fortnight after a hearing. The notice for the realization of dues was stayed until the review decision, but if no application is filed within the stipulated time, authorities can proceed with the notice in accordance with the law.
The Court clarified that since the writ petition was disposed of at the admission stage without requiring affidavits from the respondents, the allegations made were considered denied by them. Additionally, an urgent certified copy of the order was directed to be provided to the parties upon completion of necessary formalities. The judgment focused on the petitioner's failure to plead undue hardship in the stay application, leading to the dismissal of that claim. However, recognizing the lack of opportunity to argue on the rule's applicability, the Court granted the petitioner the chance to seek a review of the Commissioner's order within a specified timeframe, ensuring a prompt decision with a hearing opportunity. The stay on the realization of dues was contingent upon the filing and consideration of the review application, emphasizing procedural fairness and the right to present arguments effectively during legal proceedings.
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2010 (12) TMI 1075
Validity of Rules 12A(5), 12B(4), 12C(3) and 25B(3) of the U.P. Trade Tax Rules as amended by the U.P. Trade Tax (Amendment) Rules, 2001 challenged and further seeking a direction in the nature of mandamus reading down the aforesaid Rules insofar as it provides that the forms issued in particular financial year shall be valid for the transactions of purchase and sale made during two financial years immediately preceding to that year, as not applicable to the transactions of sale or purchase which are not disputed by the Department
Held that:- Following the reasoning given in the cases of M/s. K.B. Hides (2003 (12) TMI 585 - ALLAHABAD HIGH COURT) the validity of Rules 12-A, 12-B, 12-C and 25-B of the Rules are upheld.
Now coming to the question of submissions of learned counsel for the petitioner that the Rule may be read down in the manner suggested by him. We do not find any substance. The question of reading down any provision arises only in a situation to save the provision. Once the provision is held to be valid, there is no question of reading down the provision in the manner suggested by him. It has to be read as such and nothing can be added and nothing can be substracted from it. Appeal dismissed.
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2010 (12) TMI 1074
Exemption u/s 11 - Cancellation of registration granted to the assessee-trust - acceptance of capitation fees for admitting students to medical, dental and nursing courses - HELD THAT:- In the light of the judgment of the DIRECTOR OF INCOME-TAX (EXEMPTIONS) VERSUS SRI BELIMATHA MAHASAMSTHANA SOCIO CULTURAL AND EDUCATIONAL TRUST [2010 (3) TMI 854 - KARNATAKA HIGH COURT] and the decision of the Income-tax Appellate Tribunal, Pune "A" Bench in the case of MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RESEARCH (MAEER) VERSUS COMMISSIONER OF INCOME TAX [2009 (9) TMI 952 - ITAT PUNE], it is found that the first ground pointed out by the Commissioner of Income-tax to cancel the registration granted to the assessee under section 12A on the accepting capitation fees is not sustainable in law - As extensively discussed in the decision rendered by the Income-tax Appellate Tribunal, Pune Bench, the Commissioner of Income-tax is not to conduct investigation into the sources of donations received by it. Regarding the genesis and character of the money available in the hands of donors to pay capitation fees have to be examined in the hands of those donors. The assessee has nothing to do with the legality or illegality of the sources in the hands of those donors. The capitation fees could be unexplained in the hands of the persons making the donations - As far as, the assessee-trust is concerned, the violation is that of Anti Capitation Fees Act which is not a violation under the provisions of the Income-tax Act. Therefore enquiries should be made against the assessee through a process permitted under the Tamilnadu Prohibition of Capitation Fees Act. The Income-tax Act cannot be punitive against the assessee on that ground.
Diversion of trust funds for own benefit and for purposes other than the objects for which the trust has been formed and registered - Application of funds - HELD THAT:- There is no case made out by the Revenue against the assessee. As per the details furnished by the assessee-trust, the assessee has spent its entire receipts for the purposes of creating infrastructure facilities to run its educational institutions. The assessee has almost spent its entire collection of donations to construct buildings and other facilities. Such expenditure incurred by the assessee-trust have exceeded the collections made by the assessee-trust by way of the alleged capitation fees, donations, corpus donations and also fees collected from the students. Therefore, there is no de facto case against the assessee that the income has not been applied for educational activities.
Diversion of funds - seizure of cash in the course of search at the registered office of the assessee-trust - HELD THAT:- The reply furnished by the assessee-trust is convincing that the total cash as on the day of search was more than Rs. 90 lakhs ; Rs. 10 lakhs and above alone were found in the office of the registered trust. The registered office of the trust is the residence of the trustees. Therefore, it is very premature to hold that the cash found in the registered office/residential houses amounted to diversion of funds. It is only a holding of funds and not application or diversion of funds. All the balance cash remained with different educational institutions. Therefore, the cash found and seized in the course of search is not a ground to make an allegation that the trustees have diverted the funds of the assessee-trust for activities other than charitable activities - It is established that those funds have not been flown out of the funds of the assessee-trust. The payments were made by Dr. Velayuthan Nair personally. In such circumstances, there is no force in the argument of the Revenue that the amount of Rs. 3 lakhs paid by Dr. Velayuthan Nair for his daughter's medical seat, was from the funds of the trust.
Diversion of funds - Payment of huge amount of deposits to Dr.Velayuthan Nair for taking out his hospital property on lease - HELD THAT:- Regarding the functional and legal character of the deposits, there is no case against the assessee. The case could only be in respect of quantum of deposits which according to the Commissioner of Income-tax is highly disproportionate, to the annual rent paid by the assessee-trust. In this context, it is to be seen that the total amount spent by the trust for constructing buildings and facility were about Rs. 90 crores much more than the donations and fees collected by it. It shows that even the lease deposits made by the assessee-trust in the hands of Dr. Velayuthan Nair have been de facto applied for improving the infrastructure facilities of the assessee-trust. Therefore, it becomes application of funds for educational purposes in the hands of the assessee-trust through the medium of the trustee.
Thus, the Commissioner of Income-tax are directed to vacate his order cancelling the registration of the assessee-trust and restore the registration granted under section 12AA.
This appeal filed by the assessee is allowed.
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2010 (12) TMI 1073
Whether the director/managing director of the company is an employee within the meaning of section 2(9) of the Employees' State Insurance Act, 1948 (for short "the Act") ?
Whether the remuneration paid to the director/managing director of the company is wages in terms of section 2(22) of the Act ?
Whether the director/managing director of the company is the principal employer or the company is the principal employer ?
Held that:- The question posed in the beginning is answered in affirmative in favour of the appellant-Corporation and it is held that (i) The director/managing director of the company, who is working for remuneration is an employee under section 2(9) of the Act (ii) The director/managing director of the company, who is not the owner or the sole occupier of the factory is not the "principal employer" (iii) the salary paid to the director/managing director of the company, who is working in the factory, is wages under section 2(22) of the Act. Appeal allowed.
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2010 (12) TMI 1072
Issues Involved:
1. Applicability of the Gujarat pattern for calculating VRS compensation.
2. Estoppel and cessation of the employer-employee relationship post-VRS payment.
3. Validity of claims raised post-liquidation notice.
4. Comparison of benefits under different VRS schemes.
5. Internal notes and their relevance in legal claims.
Issue-wise Detailed Analysis:
1. Applicability of the Gujarat Pattern for Calculating VRS Compensation:
The appellants, former employees of IRCC, claimed that their retirement benefits were not calculated as per the Office Memorandum dated 5-5-2000, which was modeled on the Gujarat pattern. They argued that ex gratia compensation should be calculated on a 26-day month instead of a 30-day month. The Liquidator rejected this claim, stating that the Gujarat pattern was not adopted by IRCC. The Court noted that the Office Memorandum allowed enterprises to adopt different VRS schemes based on their financial status. IRCC, a loss-making enterprise, had opted for a scheme different from the Gujarat pattern, which was approved by the Ministry of Surface Transport. The Court held that the appellants were not entitled to compensation based on the 26-day month as the approved scheme provided a different calculation method.
2. Estoppel and Cessation of the Employer-Employee Relationship Post-VRS Payment:
The appellants had applied for VRS on 30-6-2000, their applications were accepted on 3-7-2000, and they received payments on 30-9-2000 without any protest. The Court applied the principle of estoppel, stating that the appellants ceased to be employees of IRCC once they accepted the VRS payments. The Supreme Court in A.K. Bindal v. Union of India emphasized that VRS is a package deal meant to bring about a complete cessation of the jural relationship between the employer and the employee. The Court reiterated that once the VRS payment is accepted, the employee cannot agitate for past rights or claims.
3. Validity of Claims Raised Post-Liquidation Notice:
The appellants raised their claims only after the advertisement by the liquidator on 18-6-2004. The Court noted that the appellants had accepted the VRS payments in 2000 and raised no objections until the liquidation notice. This delay and the acceptance of payments without protest further supported the application of estoppel against the appellants.
4. Comparison of Benefits Under Different VRS Schemes:
The Court examined the various VRS schemes mentioned in the Office Memorandum dated 5-5-2000. Paragraph 2 dealt with financially sound enterprises, Paragraph 3 with marginal profit or loss-making enterprises, and Paragraph 5 with sick and unviable units like IRCC. IRCC had adopted a scheme that provided benefits distinct from those in Paragraph 5, including an enhanced ex gratia payment from 45 days to 60 days of emoluments for each completed year of service. The Court concluded that the appellants received benefits higher than those stipulated in Paragraph 5, and thus their claim for additional compensation was unfounded.
5. Internal Notes and Their Relevance in Legal Claims:
The appellants relied on an internal note dated 4-12-2002 from the personnel department. The Court dismissed the relevance of this note, explaining that it was an internal view of the Deputy Manager (Personnel) and not an official position. The liquidator and the Officer on Special Duty did not accept this view, and it was alleged that the note was motivated by personal financial gain. The Court held that such internal notes could not form the basis for legal claims.
Conclusion:
The Court found no merit in the appeals and dismissed them. The appellants' claims were rejected based on the applicability of the approved VRS scheme, the principle of estoppel, and the fact that the benefits received were higher than those stipulated in the relevant Office Memorandum.
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2010 (12) TMI 1071
Issues:
1. Second motion petition under sections 391-394 of the Companies Act, 1956 for scheme of amalgamation.
2. Dispensing with meeting of shareholders, creditors, and preference shareholders.
3. Official Liquidator's report and absence of objections.
4. Regional Director's objection regarding amendment in Memorandum of Association.
5. Legal precedent and decision regarding objection overruled.
6. Approval and sanction of the scheme of amalgamation.
Analysis:
1. The judgment pertains to a second motion petition under sections 391-394 of the Companies Act, 1956, filed by three companies for a scheme of amalgamation. The petitioners, two transferor-companies and one transferee-company, sought approval for the proposed scheme enclosed with the petition.
2. The court had previously dispensed with the requirement of conducting meetings of shareholders, unsecured creditors, and preference shareholders of the involved companies. It was noted that there had been no significant changes in the creditors and shareholding patterns of the companies, which were all group entities.
3. The Official Liquidator reported no complaints against the proposed scheme and affirmed that the affairs of the transferor-companies had not been conducted prejudicially. Additionally, no objections were received by the petitioners regarding the scheme.
4. The Regional Director raised an objection concerning an amendment in the Memorandum of Association of the transferee-company as outlined in the scheme. The objection was based on the prescribed procedures under the Act for such amendments.
5. The court referred to a previous decision and legal precedent to address the Regional Director's objection. It cited a case where it was held that section 391 of the Act provides a streamlined process for such corporate actions to avoid unnecessary procedures. The court overruled the objection, stating that the proposed amendment was in line with the nature of the scheme and had already been approved by the shareholders.
6. Ultimately, the court allowed the petition, approving and sanctioning the scheme of amalgamation while clarifying that the order did not grant any exemption from stamp duty payment, if applicable. The judgment concluded the matter, disposing of the petition.
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2010 (12) TMI 1070
Issues:
1. Quashing of fine imposition orders by the trial court under SEBI Act.
2. Conviction under SEBI Act for violation of regulations.
3. Applicability of amended provisions of SEBI Act to offenses committed prior to 2002.
4. Jurisdiction of Sessions Court to try cases under amended SEBI Act.
5. Power of Sessions Court to impose penalties exceeding those of Magistrate's Court.
Analysis:
1. The petitioners sought to quash the fine imposition orders by the trial court under SEBI Act. The petitioners were convicted for violating SEBI regulations and were sentenced to rigorous imprisonment and fines. The judgment was delivered by the Additional Sessions Judge due to the amended provisions of SEBI Act in 2002, transferring jurisdiction to Sessions Court for such cases.
2. The counsel for the petitioners argued that since the offense occurred before 2002, the un-amended provisions of Cr. P.C. should apply, questioning the legality of the fine imposed by the Sessions Judge. The petitioners cited legal precedents to support their argument, emphasizing the prohibition of convictions or penalties under 'ex post facto' laws.
3. Referring to the legal precedents cited by the petitioners, the Court clarified that trial by the Sessions Court after the amendment of SEBI Act was constitutional. The Court highlighted that the Sessions Judge had the jurisdiction to entertain complaints under the amended Act, even for offenses committed prior to the amendment.
4. The Court addressed the question of whether the Sessions Court could impose penalties exceeding those of a Magistrate's Court. It was established that the Sessions Judge had the authority to impose sentences according to the law, not bound by the powers of a Magistrate. Even if a Magistrate's power to impose a penalty was limited, a higher penalty could be imposed by the Sessions Court if deemed necessary.
5. Ultimately, the Court dismissed the petition, finding no merit in the arguments presented. The judgment upheld the legality of the trial conducted by the Sessions Court and the imposition of fines in accordance with the un-amended provisions of the SEBI Act. The decision affirmed the authority of the Sessions Court to exercise its sentencing powers independently.
This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Court's reasoning in addressing each aspect of the case.
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2010 (12) TMI 1069
Whether the courts below adopted the right perspective while deciding that the civil court has no jurisdiction to entertain the suit?
Held that:- The correspondence addressed to defendant No. 1 had made a prayer seeking issuance of duplicate share certificates. Section 113 laid down the period of limitation for issuance of such certificates. The company also sought for certain other details from the plaintiff which as per the plaintiff included the registered folio numbers as also affidavit and the indemnity bond which have been furnished by the plaintiff to the defendant company. It was thus now in the domain of the Company Law Board to make the necessary rectification in the register of members. As is evident from the averments made in the plaint and the prayer clause of the plaint, these prayers of the plaintiff could have been answered only by the Company Law Board. There is no perversity in the findings in the impugned judgment. No interference is called for. Substantial question of law is answered accordingly. Appeal dismissed.
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2010 (12) TMI 1068
Whether the proposed scheme is opposed to the interest of the company or public interest, as to whether the material facts relating to the company have been disclosed and the company is not facing any investigation under sections 235 to 251 of the Act?
Held that:- There shall be an order approving the scheme of arrangement, as provided in the scheme of arrangement annexed as annexure A to the company petition with effect from April 1, 2009, as the procedure laid down under sections 391 and 394 of the Act has been duly complied with. However, the said approval is subject to sanction of the scheme of arrangement by the High Court of Karnataka with respect to the transferor companies. It is also made clear that the approval of the scheme shall be without prejudice to the right of the objector in proceeding for winding up petition filed by it, in respect of which no opinion is expressed by this court. This petition is allowed.
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2010 (12) TMI 1067
Whether the petitioner, who has been arrayed as A3 in a private complaint given under section 138 read with section 141 of the Negotiable Instruments Act, 1881, was in charge of and was responsible for the conduct of the business of the company?
Held that:- When there is no liability against the petitioner as a director of a company, no purpose would be served to allow the proceedings to continue even at the stage of arguments. The petitioner is an aged lady, who resides at New Delhi. The records would show that non-bailable warrant was issued for her non-appearance. Therefore, I am satisfied that the continuance of the proceedings is only harassment to the petitioner who cannot be fastened with liability under section 141 of the Act. It is also pertinent to note that the respondent-complainant can proceed against the company and the director who was actually in charge of and responsible for the conduct of the business of the company.
Therefore, no prejudice or loss would be caused to the complainant if the proceedings are quashed as far as the petitioner is concerned. Otherwise, the continuance of which will be an abuse of process of court even if it is for one more day. Appeal allowed.
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2010 (12) TMI 1066
Whether the new sovereign had waived his rights to ignore the rights given under the laws of the former sovereign?
Held that:- There is also no dispute about the proposition that under sections 391 to 394 of the Companies Act, 1956, the court has ample power and jurisdiction to supervise the scheme as sanctioned under the Companies Act, 1956. However, such power in jurisdiction must be exercised keeping in mind the essential perquisites of the said sections. The court will have to act within the parameters laid down in these sections. Every grievance raised by the affected party cannot be raised nor can it be entertained by the court while exercising the powers thereunder. The applicants fail to satisfy the court that the issues raised by them squarely fall within the parameters of section 392 of the Act. Even otherwise, it is accepted for the sake of argument that it falls within such parameters, once IPCL is already dissolved, the appropriate court is the Bombay High Court to consider and decide such issues, in view of the provisions of section 2(11) read with sections 10 and 392 of the Companies Act, 1956 and hence, in any case, all these issues which are raised by the applicants cannot be and should not be allowed by this court, in their favour.
Considering the foregoing discussion and taking overall view of the matter and keeping in mind the statutory provisions and the judicial precedents, the court is of the firm view that both these applications deserve to be rejected both on the ground of jurisdiction as well as on merits.
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2010 (12) TMI 1065
Whether such tea undertaking can be restarted?
Held that:- In considering the case under section 16E(1) the Central Government is to consider the ability of the applicant shareholder before me, Gopinath Das holding 75.6 per cent. shares in the company, to restart the tea estate by himself or with other contributors, creditors and so on. This consideration must be with reasons.After such consideration is complete and report prepared the Tea Board may apply to this court by way of a fresh application for orders for formal handing over of the tea estate to any person or body of persons selected by it for running the estate.
The winding up order will remain but all steps in winding up are to remain suspended till further orders. No sale of any asset of the company in liquidation is to be made or any steps taken for such sale till further orders of this court. No disbursement to any creditor or contributor should be made till further orders of this court.
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2010 (12) TMI 1064
Whether the company through Shri Bhailalbhai Patel has got any prima facie evidence of the involvement of the petitioning creditor in the matter of siphoning off the fund of the company during the period of May, 2007?
Held that:- The petition, at the instance of the petitioning creditor appears to have been instituted mala fide at the behest of Shri Ushakant Patel and Dipen Patel with a view to circumvent the orders of the apex court, this court as well as the Company Law Board. It might also be instituted mala fide with a view to frustrate the various proceedings pending either before the apex court, this court and the Company Law Board. The object of the petition might be to upset and disturb the working and the growth of the company, at the instance of the directors who are alleged to have siphoned off huge monies of the company under the umbrella of the orders that may be passed in the present petition.
Apart from this, the company is undoubtedly making profits and in fact, the profits have increased manifold since January, 2007 when the day-to-day management and control came in the hands of Shri Bhailalbhai Patel.The petition, therefore, filed by the present petitioning creditor, who is alleged to be prima facie involved in siphoning off of the funds of the company, in collusion and connivance with the former management and also alleged to have drained the company of its finances, is, therefore, liable to be dismissed. Accordingly, the petition is dismissed. Notice discharged without any order as to costs.
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