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Showing 301 to 320 of 1740 Records
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2019 (9) TMI 1446
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- Admitting to refund the entire principal amount along with interest, required to be paid till the said date by the Corporate Debtor to the Petitioner, Ld. Counsel for the petitioner points out to the calculation sheet as enclosed at Page-73 of the petition wherein principal amount has been remitted by the Financial Creditor in a sum of ₹ 32,28,784/- is pointed out and it is further stated by Ld. Counsel for the petitioner that all the six payments made by the Financial Creditor to the Corporate Debtor are having valid receipts issued by the Corporate Debtor.
The documents as annexed along with the petition clearly show that the Corporate Debtor is not in a position to refund the money which has been collected by the Corporate Debtor from the Financial Creditor, leave alone with interest which is being claimed as compensation. Further, the possession has not been given by the Corporate Debtor and in the circumstances, the default is in existence and the petition stands admitted.
CIR process is initiated against the Corporate Debtor - petition/Application is disposed off.
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2019 (9) TMI 1445
Permission for withdrawal of application - compromise arrived before constitution of CoC - Section 12A of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Admittedly in the present case the compromise was arrived at between the corporate debtor and the petitioner financial creditor before the Constitution of Committee of Creditors. Accordingly, inherent power of the Tribunal can be used in allowing the withdrawal in appropriate cases as per the precedent laid down by Honble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [2019 (1) TMI 1508 - SUPREME COURT].
Once the Code is triggered after admission of the application the proceedings becomes a collective proceeding and proceeding in rem. Therefore, inherent power is to be used by the Adjudicating Authority after hearing the parties and considering all relevant factors of each case - In the present case the application has been wrongly filed under Section 12A of the Code as meetings of CoC has not yet commenced and therefore applicability of Section 12A does not arise.
It is seen that petitioner has 14.92%, whereas the other financial creditor has 85.08% of the financial debt of the corporate debtor. Therefore, the present application cannot be allowed at the back of the financial creditor who holds 85.08% of the financial debt, as it will cause prejudice to such financial creditor. That apart once the application is allowed it may amount to preferential payment of 100% debt of the petitioner, whereas the other financial creditor may be exposed to substantial haircut - this is not a fit case to use inherent power at this stage of the proceeding and at the back of the other financial creditor holding 85.08% of the financial debt.
Application dismissed.
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2019 (9) TMI 1444
Input Tax Credit - civil and railway allied works in connection with the laying of private Railway Siding - signaling & telecommunication system, mechanical and structural works in relation to Railway Siding - execution of P-Way, Civil, overhead electrification, general electrical and signaling & telecommunication works for the proposed block station yard in relation to private Railway Siding - HELD THAT:- The instant contract consists of transfer of property in goods, coupled with supply of services which leads to the inevitable conclusion that this is a case of Works contract, covered under the definition of “Works contract” defined under Section 2(119) of the CGST Act, 2017 supra. Works contract, covers in its ambit only certain works performed on immovable property. The details of works as enumerated above and as forthcoming from the contract, goes to show that the said project of Private Railway siding awarded to the Contractor by the Appellant is not as simple or movable. The work consists of an entire system comprising of a variety of different structures which are installed after a lot of prior work which involves Civil work, Civil engineering, Ground work, supply, Foundation work, Fabrication, Erection of Building Steel Structures, sheds, Block cabin, Railway allied works, Signaling & telecommunication works, Construction of Railway Staff quarters, Station building etc.. The magnitude of project covers a large area, tailored specifically to fit the dimensions and orientation of the needs of the project. In no case it appears to be prudent or for that matter viable to move these items from one place to the other. Thus, the project of construction of Private Railway siding fulfills the conditions of it being an immovable property.
Works contract, covers in its ambit only certain works performed on immovable property, we in affirmation with the findings of the AAR and more so with no visible intention to dismantle the said project of construction of private Railway siding, these being intended to be used for a fairly long period of time and on the basis of the scope of work itself as forthcoming from the documents supra issued by the Appellant M/s. NMDC, we come to the considered conclusion that the said project of private Railway siding, consists of civil structures with foundations and are immovable in nature.
Whether credit of the taxes paid on various items will be eligible if the said laying of private railway siding satisfies the definition of “plant and machinery” and that the rail network, signaling system and other telecom network established can be regarded as an apparatus or an equipment. The test of immovable property is not relevant for plant and machinery as Section 17(5)(c) and (d) exclude plant and machinery from immovable property. Since, plant and machinery are excluded from immovable property, construction and other activity in relation to plant and machinery shall be eligible for Input Tax Credit unless otherwise restricted. The restriction of ITC is only on the telecom towers, pipelines which are not treated as plant and machinery by virtue of explanation to Sec. 17(5)(c) and (d).
Input Tax Credit provisions restrict ITC credit of works contract services for works to be performed on immovable property and also restrict the credit of construction related activity of immovable property even when construction activity do not fall into the scope of works contract. However, works contract and construction activity is eligible for Input Tax Credit if done in respect of plant and machinery - Section 17(5)(c) and (d) would not apply if the expenditure is in relation to a Plant & Machinery.
Plant and machinery has been specifically defined as any equipment, apparatus attached to earth by foundation or structural support used for supply of goods or services. Plant and machinery to specifically exclude telecom towers, pipelines etc. As per the definition of works contract, the works contract inter alia include construction of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract - Construction activity will not qualify as works contract if there is no transfer of property in goods involved i.e. the contractor is supplying service only without any supply of goods. Works contract may or may not be a construction.
In the present case the project of laying a private railway siding consisting of a variety of different structures which are installed after a lot of prior work which involves Civil work, Civil engineering, Ground work, supply, Foundation work, Fabrication, Erection of Building Steel Structures, sheds, Block cabin, Railway allied works, Signaling & telecommunication works, Construction of Railway Staff quarters, Station building etc. will render such nexus tenuous.
There is no merit in the appeal filed by the Appellant M/s. NMDC against the Advance Ruling Order passed by the AAR, Chhattisgarh and accordingly the said order is upheld.
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2019 (9) TMI 1443
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- It is on record that the Corporate Debtor has availed unsecured loan from the financial creditor and it is also confirmed by the responding director. It is also on record that the company is not doing any business and it is unable to pay its debts. The responding director has also prayed only for time to settle the matter with the Financial Creditor. Therefore, it is proved that the Corporate Debtor is unable to pay its debts and has failed to make the payments to the Financial Creditor.
In the instant Petition, the Petitioner has proved its case by placing documentary evidence viz., copy of the ledger Account of Corporate Debtor as maintained by Vantage Vinimay Private Limited for the Financial Year 2013-14, 2014-15, 2015-16 and 2016-17 are enclosed as Annexure 7, copy of the Ledger Account of the Corporate Debtor as maintained by the Financial Creditor for the year 2017-18, 2018-19 are enclosed as Annexure 8, and Letter of confirmation issued by the Corporate Debtor to the Vantage Vinimay Private Limited confirming the outstanding balance dated 01.04.2016 is enclosed as Annexure 9, which prove that a default has occurred for which the present Corporate Debtor was liable to pay. In their counter affidavit, the Respondents have not denied the facts regarding the existence of 'financial debt' and 'default' committed by the Corporate Debtor.
In the present case, this Adjudicating Authority is satisfied with the submissions put forth by the Petitioner/Financial Creditor regarding existence of 'financial debt' and occurrence of 'default'. Further, the Financial Creditor has fulfilled all the requirements as contemplated under IB Code in the present Company Petition and has also proposed the name of IRP after obtaining his written consent in Form-2 - In view of the above, this Adjudicating Authority is inclined to admit the petition.
Petition admitted - moratorium declared.
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2019 (9) TMI 1442
Validity of Revised Resolution Plan - change in the amount of the financial debt owed to a Financial Creditor - HELD THAT:- The contentions of the Applicants that they are not aware of change of the claim of Canara Bank with respect to first charge of term loan in question is baseless and not tenable. The Resolution Applicant has rightly taken into consideration of the term loan of Canara Bank in question, while distributing the earmarked amount for Financial Creditors. The reliance placed by the Applicants on the amendment IBC Act, 2019 issued vide the Gazette Notification dated 06.08.2019 is misconceived and the same is liable to be rejected. It is to be held that the opinion expressed by the Resolution Professional, concurring the contention of the dissent Financial Creditors (the Applicants herein) that giving priority to Canara Bank, on term loan in question, is not correct and the same is uncalled for. Moreover, the Resolution Professional has finally certified that the Resolution Plan in question, is in accordance with extant provisions of the Code and the Rules made thereunder, as per the Compliance Certificate Form-H dated 31.07.2019. Ultimately the CoC has discussed the objections raised by the Applicants with regard to the additional claim allowed in respect of Canara Bank. Therefore, the reliance placed by the Applicants on the observation made by the Resolution Professional is not tenable and the same is baseless.
The Applicants herein are well aware of the change with respect to the impugned claim of term loan and it was given proper opportunity to raise its' objection. It is also not in dispute that the Resolution Plan, in question was approved with a requisite majority as per law. As per law the minimum requirement is 66% of the voting power, whereas the Resolution Plan got a majority of 75.4%. Therefore, the Application is liable to be rejected.
Application dismissed.
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2019 (9) TMI 1441
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Debt or not - Privity of Contract - HELD THAT:- It is well settled position of Law that a person who commits a breach of contract neither incurs any pecuniary liability nor the other party to the contract who complaints of the breach will have any sum 'due and payable' to him from the other party by virtue of such breach.
Further, no material has been placed on record by the Applicant to show that the Share pledge Agreement was against any disbursal of Loan to the Corporate Debtor. In other words, there is no privity of Contract between the Applicant and the Corporate Debtor in respect of any funds flowing from the Applicant to the Corporate Debtor in connection with the issuance of NCD's by IBTPL.
All the explanatory items will be applicable only if the elements of the basic exhaustive definition are present, namely, (i) disbursal of debt and (ii) consideration of the time value of money. Both these elements are absent in the instant case. Admittedly, there has been no disbursal of any debt by the Applicant to the Corporate Debtor against consideration for time value of money - Thus the Applicant's case cannot fall within the definition of 'Financial Debt' as stipulated under section 5(8) which provides that a 'Financial Debt' "means a debt along with interest, if any, which is disbursed against the consideration for the time value of money".
With regards to the claim submitted by the Applicant herein, the RP has considered the same in the light of the supporting documents submitted by the Applicant as well as the records of the Corporate Debtor available before him. Since, the records of the Corporate Debtor did not reveal any amount due and payable to the Applicant, the RP has rejected the claim of the Applicant. This Adjudicating Authority observes that the RP was not hasty in rejecting the claim of the Applicant herein and the decision was taken after careful verification from records of assets and liabilities maintained by the Corporate Debtor.
Application dismissed.
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2019 (9) TMI 1440
Approval of Resolution Plan - section 31 of the Insolvency & Bankruptcy Code, 2016 - Resolution Plan challenged on the ground that it is arbitrary and discriminatory as it provides for 'nil' payment to Operational Creditors - grievance of the Applicant is that the Resolution Plan of RPIF provides for liquidation value as 'NIL' and therefore, the Operational Creditors in the said plan are not being given anything - HELD THAT:- This Bench holds that section 53 of the I&B Code is applicable to resolution mechanism, and the Operational Creditors being placed below the financial creditors is not arbitrary or unreasonable. The value being paid to operational creditors is determined pursuant to and in accordance with the recent amendment in section 30(2)(b) of the I&B Code which provides that the RP shall examine each Resolution Plan received to confirm that the plan provides for the payment of debts of operational creditors in such manner which shall not be less than the amount to be paid to the operational creditor in the event of liquidation of the Corporate Debtor under section 53 of the I&B Code. By insertion of this sub-section, simply a mechanism is provided, which is in nature of a helping guideline for the RP as how to ascertain the minimum quantum of the claim of the operational creditor. Therefore, this Bench makes it clear that the provisions incorporated in Chapter III of the I&B Code containing liquidation process from section 33 to Section 54 is a "Code" in itself, enforceable independently and by no means over reaching to the provisions of Chapter II of the I&B Code.
If the creditors are allowed to claim their remaining dues from the guarantors after the approval of resolution plan, and the guarantors pay off the remaining debt of the Corporate Debtor, the guarantors would step into the shoes of the creditor of the Corporate Debtor. Thereafter, they would be entitled to exercise their right of subrogation against the Corporate Debtor which is then under the control and management of the Resolution Applicant. Hence, the Resolution Applicant will then pay the debt of the guarantor under its right of subrogation. Hence, in effect, the Resolution Applicant would pay the full amount of creditors, therefore, there was no idea left for filing the resolution plan and taking over the debtor company by settling the dues of the creditors. This vicious circle is a never ending process and it was definitely not intended by the legislators while framing the I&B Code - The RP of the Corporate Debtor has clarified that the Resolution Plan of Royal Partners Investment Fund Limited has been approved by a majority of 73.17% of Creditors and considering the fact that this issue of guarantee is very well placed before the CoC while approving the resolution plan, this Bench is not inclined to interfere with the commercial wisdom exercised by CoC qua the issue of guarantee.
Application dismissed.
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2019 (9) TMI 1439
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- On perusal of the documents submitted by the financial creditor, it is clear that debt amounting to ₹ 1,88,07,500/- is due and payable by the Corporate Debtor to the Applicant. The debt is admitted by the Corporate Debtor in its Account Confirmation dated 20.07.2016 for the period 01.04.2015 to 31.03.2016 reflecting an outstanding amount of ₹ 1,50,00,000/- against the name of the Applicant as well as recording the entries for interest paid and TDS payable on the interest paid. As per the terms of the Hundies dated 19.12.2013 and 07.10.2010 it was agreed between the parties that the loan shall be repaid on Demand. The Applicant demanded repayment of the entire amount of ₹ 1,88,07,500/- including interest payable by the Corporate Debtor on or before 08.06.2019 vide its notice dated 04.06.2019. The said amount of ₹ 1,88,07,500/- is admittedly not repaid. The outstanding amount that is admittedly in default is more than ₹ 1,00,000/-.
The application filed by the financial creditor is on proper form 1, as prescribed under the Adjudicating Authority Rules and application is complete - application admitted - moratorium declared.
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2019 (9) TMI 1438
Approval of Scheme of Amalgamation - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- Direction regarding convening and holding of various meetings issued - direction regarding issuance of various notices, also issued.
Application allowed - scheme approved.
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2019 (9) TMI 1437
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - Financial Creditor or not - existence of debt and dispute or not - HELD THAT:- The contention of the Corporate Debtor regarding filing of the present petition by the single Financial Creditor, though the Financial Facilities were made available by the three Banks is an untenable ground for rejection of the instant Petition, as Section 7 of IBC, 2016 provides for independent right to every Financial Creditor either by itself or jointly to file an Application for initiation of CIRP against the Corporate Debtor. Thus the said contention of Corporate Debtor is not maintainable.
With regard to the contention of the Corporate Debtor regarding claim of the entire amount of Consortium by the present Financial Creditor, it has been clarified by the petitioner/Financial Creditor that the claim made in the instant petition is only with respect to the financial debt owed by the Corporate Debtor to the Petitioner bank and not to other members of the consortium as reflected in page no.1033 (Volume - IV) of the petition - In the instant Petition, the Petitioner has proved its case by placing documentary evidence viz., Copies of Facility Agreements and sanction letters, date and details of all disbursements of the facilities etc., and copies of entries in Bankers Book in accordance with the Bankers Books Evidence Act, 1891 which proves that a default has occurred for which the present Corporate Debtor was liable to pay.
In the present case, this Adjudicating Authority is satisfied with the submissions put forth by the Petitioner/Financial Creditor. Further, the Financial Creditor has fulfilled all the requirements as contemplated under IB Code in the present Company Petition and has also proposed the name of IRP after obtaining his written consent in Form-2 - this Adjudicating Authority is inclined to admit the petition.
The instant petition is hereby admitted and this Adjudicating Authority Orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed as per the time line stipulated in section 12 of the IB Code, 2016 - Application admitted - moratorium declared.
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2019 (9) TMI 1436
Liquidation of Corporate Debtor - It is stated in the application that CIRP expired on 06.07.2019 after expiry of the extension of 90 days granted by this Adjudicating Authority - HELD THAT:- This Adjudicating Authority is of the considered view to pass an order of Liquidation in respect of the Corporate Debtor Company i.e. M/s. Osak Pharmaceuticals Private Limited and hereby appoints the Resolution Professional as 'Liquidator' under Section 34(1) of the IB Code.
Application disposed off.
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2019 (9) TMI 1435
Initiation of Liquidation Process - Section 33(1)(a) of Insolvency and Bankruptcy Code, 2016 (IBC) read with Section 60(5) of the said Act - HELD THAT:- This Petition has been initiated by the CD itself under Section 10 of IBC, 2016 and IRP proposal made by CD itself, However, it is also brought to the notice of this Tribunal by way of the minutes of the 4th CoC meeting held on 25.09.2018, that the IRP proposed by the CD and appointed had not acted as required of him under IBC and CIRP Regulations as framed by Insolvency and Bankruptcy Board of India (IBBI) which had resulted in an impasse being created even after the expiry of more than 130 days as in the meanwhile even EOI was not called for. In the circumstances, this Tribunal was compelled to pass an order dated 24.10.2018 in relation to the conduct of the said IRP and the said order to be communicated to IBBI for taking necessary action against him.
The CD and its management prima facie from the averments in these Applications seem to have carefully and in a premeditated manner seem to have arranged the affairs and assets of the CD in such a manner so as to secrete away the assets from the grasp and benefit of the general body of creditors which this Tribunal cannot permit and the provisions of IBC being misused more particularly when the Petition has been filed under Section 10 of IBC by the CD itself emphasized at the cost of repetition. However, in this connection we are not coming to any conclusion unless a detailed enquiry is con ducted in relation to these Applications. At the same time, it will not detract this Tribunal from initiating the process of liquidation of the CD, as these Applications can survive even after the order of liquidation, as may be passed by this Tribunal and as envisaged under the provisions of IBC. In the circumstances, all the above pending Applications shall survive this order of liquidation and continue to be proceeded with by this Tribunal and the liquidator named herein will be required to diligently proceed with these Applications in order to attain finality and conclusion.
In terms of section 178 of the Income Tax Act, 1961, the Liquidator shall give necessary intimation to the Income Tax Department. In relation to other fiscal and regulatory authorities which govern the Corporate Debtor, the Liquidator shall also duly intimate about the order of liquidation - order of Moratorium passed under Section 14 of the IBC shall cease to have its effect and a fresh Moratorium under section 33(5) of the IBC shall commence.
Application disposed off.
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2019 (9) TMI 1434
Condonation of the delay in filing claim - main contention of the Learned Counsel for Applicant that Resolution Professional simply rejected the claim of Applicant on the ground that the same was filed before him beyond the time prescribed under Regulation 12 (2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - section 60 (5) of the Insolvency and Bankruptcy Code, 2016 read with rule 11 of NCLT Rules - HELD THAT:- It is an undisputed fact that Applicant filed separate petition against the Corporate Debtor under Section 9 of IBC. When the said petition was pending, the petition filed by Financial Creditors against the Corporate Debtor was admitted on 09.11.2018 and CIRP commenced from 09.11.2018. The Applicant had withdrawn the petition filed against Corporate Debtor under Section 9 of IBC, 2016 on the ground, CIRP already started against the Corporate Debtor and Applicant made the claim before the IRP/RP.
It is true, claim was made beyond 90 days. However, Applicant already moved the Tribunal by filing a petition under Section 9 of IBC, 2016 against the Corporate Debtor for initiating CIRP when this matter was pending. Even after commencement of CIRP against the Corporate Debtor, the case of Applicant is that it was not aware of initiation of CIRP against Respondent No. 1 / Corporate Debtor. The Applicant allegedly came to know in March 2019 that CIRP started against the Corporate Debtor - therefore, it had withdrawn the Petition and made a claim before the Resolution Professional.
The crucial time which is to be taken is the date on which the Applicant filed the claim before the Resolution Professional. The claim was made on 15.04.2019 as per the Resolution Professional. By then, the Resolution Plan was not approved by the CoC and CIRP was pending. When such is the case, the Resolution Professional ought to have considered the claim without rejecting the claim on the ground that it was filed beyond 90 days - In this case, the Applicant already moved the Tribunal under Section 9 of IBC to initiate CIRP against the Corporate Debtor. Secondly, the Applicant had withdrawn the Petition since CIRP started against Corporate Debtor. In this case the Applicant made the claim on 14.05.2019 before the Resolution Professional when CIRP process was pending. No resolution plan was approved by then. So, on these grounds, delay in filing the claim can be condoned and direction can be given to the Resolution Professional to consider the claim on its merits and take a decision.
Application disposed off.
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2019 (9) TMI 1433
Approval of the scheme of arrangement - Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Petitioner Companies, it is seen from the records, have filed an affidavit dated 11.02.2019 in relation to the compliance of the order dated 18.01.2019 passed by this Tribunal and a perusal of the same discloses that the petitioners have effected the paper publication as directed by this Tribunal in 'Business Standard' in English edition and in 'Business Standard' in Hindi edition on 06.02.2019. Further, it has also been stated by the Learned Counsel for the Petitioner Companies that notices have been issued to the Regional Director on 29.01.2019 by hand, to the Registrar of Companies on 29.01.2019 by hand, to the Income Tax Department on 29.01.2019 by hand, to the Official Liquidator on 29.01.2019 by hand, to the Department of Non-Banking Supervision Reserve Bank of India and proof of the same acknowledgements made by the respective offices have also been enclosed.
In the rejoinder filed by the petitioners, it is stated that Share Valuation has been carried out in accordance with the available share valuation method. Further provisions of Rule 11UA prescribe the method for valuation of unquoted equity shares for purpose of Section 50 CA and Section 56(2)(x) and cannot be applied in other sections/other places - the observations of Income Tax Department stands adequately explained. In addition, it is clarified that there shall be no limitation on the power of the Income tax Department for recovery of pending Income Tax dues, including imposition of penalties etc. as provided in law.
The Petitioner Companies have complied with proviso to Section 230 (7)/Section 232(3) by filing the certificates issued by the Statutory Auditors of the Transferor Company and Transferee Company on the accounting treatment as proposed in the Scheme - In view of absence of any other objections having been placed on record before this Tribunal from any other party and all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the scheme of amalgamation annexed as Annexure - 1 with the Company Petition along with the prayers made therein.
Application disposed off.
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2019 (9) TMI 1432
Smuggling - fake Indian currency notes - It is the specific contention of the petitioners that the allegations contained in the said FIR are baseless/false and it was purposely done - HELD THAT:- The petitioners were the superintendent, Jangipur Customs Preventive Unit and accompanied by the staff of Jangipur Customs Preventive Unit. The said letter it also reveals that the area in question was infested with and well known for FICN smuggling and illegal transportation of contraband goods. The materials placed on record as well as from the submissions made by Learned Counsel appearing for the parties it appears that the alleged incident took place while the petitioners were discharging their officials duties and they were stopped the vehicle of the complainant as alleged in discharge of their official duties.
It is settled principle of law that the accused persons are not debarred from producing relevant documents which can be legally looked into without any formal proof, in support of the stand that the acts complained of were committed in exercise of their jurisdiction as public servants in discharge of official duties. If the alleged acts are done or connected in discharge of the official duty then the public servant is entitled to get protection in view of Section 155 of the Customs Act and a public servant can be prosecuted only with the sanction under Section 197 of the Code of Criminal Procedure. In the case at hand it was alleged that the amount was taken away from the possession of the de facto complainant by the accused persons by using force and that was subsequently recovered from their possession.
In the instant case from annexure-P/8 annexed to the application filed by the petitioners it appears that the sanctioning authority declined to accord sanction for prosecution of the present petitioners. The ground to decline sanction was that the petitioners are entitled to get protection under Section 155 of the Customs Act, 1962. From annexure P/8 it further appears that the sanctioning authority applied his mind to the facts of the case and refused to accord sanction. The question of necessity of sanction depends upon the facts and circumstance of each case - The protective umbrella provided to a public servant under Section 197 of the Code of Criminal Procedure does not entend to every act or omission done by the public servant in service but restricts its scope of operation to only those acts or omission which are done by a public servant in discharge of his official duty. A Public servant cannot be prosecuted without sanction if the public servant is alleged to have committed an offence during discharge of his official duty.
From the materials placed on record it appears that the acts of the petitioners/accused persons were alleged to have been committed in discharge of their official duties which they were required to do as per the order issued by Customs Authority to find out fake Indian currency Notes. Mandate engrafted in sub- section (i) of Section 197 of the Code of Criminal Procedure debarring a Court from taking cognizance of an offence except with a previous sanction is a prohibition imposed by the statute from taking cognizance - In the present case at hand the Authority refused to grant sanction for prosecution after considering the entire facts and circumstances of the case and relevant provisions of law. In the present case the offence alleged to have been committed by the public servants in discharge of their official duties and sanction to prosecute has been declined by the Appropriate Authority.
Revision application allowed.
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2019 (9) TMI 1431
Reopening of petition which was reserved for orders on 20.08.2019 posted for their hearing on the Company Application filed by the Applicants herein - HELD THAT:- As held by the Hon'ble Supreme Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [1991 (9) TMI 72 - SUPREME COURT], the principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the sub-ordinate authorities and that utmost regard should be paid by the Adjudicating Authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of higher appellate authorities which are binding on them.
The Applicants cannot be impleaded at this stage of the proceedings as they are neither the Financial Creditor nor the Corporate Debtor in the matter being adjudicated upon - application rejected.
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2019 (9) TMI 1430
Admissibility of settlement application - Section 127B of the Customs Act, 1962 - non-fulfilment of Export Obligation - goods imported under EPCG scheme - HELD THAT:- The Bench finds that the contention that the accepted amount of ₹ 17,63,545/- includes duty and interest is contrary to the facts as disclosed in their application.
Further, the Applicant has also submitted a working of their duty liability at page - 190 of the Application Paper Book, wherein they have stated that “After paying ₹ 17,63,545.00 (i.e. 50% of the proportionate duty payable),” which clearly indicates that ₹ 17,63,545/- was paid as duty. Further, at sub-para 12.1 (page 9-10 of the Application) under ‘Brief Facts’, it is stated that they have deposited ₹ 5 Lakh vide Challan No. 3210 dated 29-10-2018 towards duty during investigation and ₹ 12,63,545/- vide Challan No. 213 dated 19-8-2019 towards the balance amount. Scrutiny of the said challans (at page 35 & 36 of the Paper Book) also reveals that the payments were towards duty and not interest. Thus, the contention of the applicant that the accepted amount of ₹ 17,63,545/- was inclusive of interest is not factually correct.
The Bench finds that no interest has been paid on the accepted duty amount and the deficiency subsists. Under normal situation, nonpayment of interest would have attracted the bar of admissibility under Section 127B of the Act - It is seen that while the legal provision under first proviso to Section 127B refers to “..interest due under Section 28AA”; the interest in the impugned SCN has been demanded under provisions of the Notification No. 97/2004-Cus., dated 17-9-2004 (though erroneously typed as 2007 in the SCN) and the Bond dated 22-5-2007 - Thus, strictly legally speaking, since the interest in the instant case has not been demanded under Section 28AA, the bar of the clause (c) of the first proviso to Section 127B of the Act is technically not applicable. Therefore, the application survives, though the applicant had not paid the interest due on accepted duty liability.
Application allowed.
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2019 (9) TMI 1429
Process Amounting to manufacture or not - Demand of Central Excise Duty not paid - Doctor brand Laundry Soaps - period January, 2002 to February, 2006 - Confiscation - redemption fine - Penalty - extended period of limitation.
Whether in the manufacture of ‘laundry soap’ no process has been carried out with the aid of power or steam for heating because in that case no Excise Duty would be leviable in the manufacture of soap?
Appellant, ever since it started manufacturing “Laundry Soap”, has not been paying Central Excise duty because initially up to 1996 the levy of Central Excise duty was exempted under the Notification dated 1 March, 1994 and subsequently from 28 September, 1996 it was subjected to “nil” Central Excise Duty. With effect from 28 February, 2005, it was again subjected to 16% Central Excise Duty, but the levy of Central Excise Duty was exempted by Notification dated 24 February, 2005 that came into force on 28 February, 2005.
HELD THAT:- The definition of ‘power’ as contended in the Factories Act, in our considered opinion, cannot be taken aid of to determine the meaning of the expression ‘power’ under the Tariff Act or the Exemption Notification as the purpose of defining ‘power’ under the Factories Act is for an entirely different purpose and that the Finance Act does not deal with cognate subjects. That meaning of the expression ‘power’ has to be adopted which people understand in commercial sense. The objective of providing no levy of duty or granting exemption is to discourage manufacturers of soaps by taking aid of ‘electricity’ or of ‘steam’ for heating - The meaning of the expression ‘power’ as contained in dictionaries should also not be blindly applied to the meaning of the expression ‘power’ as contained in the Tariff Act and the exemption notification and an attempt should be made to find out a meaning which would achieve rather than frustrate the object-of granting exemption and that meaning should be preferred which does not lead to uncertainty or unintended results.
In the present case, ‘soaps’ were exempted from payment of Excise Duty if, in or in relation to the manufacture of such soap no process was carried out with, the aid of ‘power or of steam’ for heating. In common parlance, ‘power’ is understood as ‘electricity’. Thus, though power may have a wider dictionary meaning or connotation, but only that meaning should be given that would achieve the object of granting exemption. The object behind granting exemption from payment of excise duty to the manufacture of soaps in cases where in or in relation to the manufacture of soap no process is carried out with the aid of power is to discourage the manufacturers from using electricity in the manufacture of soap - In the instant case, there is no apparent conflict in the English and Hindi version of the Tariff Act and the Exemption Notification and, therefore, assistance can be taken of the Hindi version. The Hindi version removes all doubts since the word ‘vidyut’ has been used, which means ‘electricity’.
It is true that after the new Tariff Act came into force, the earlier circulars/guidelines/instructions/Tariff advices issued in the context of the erstwhile First Schedule to Central Excises and Salt Act, 1944, had been withdrawn by the Board by Circular dated 27 May, 1994, but the fact remains that the Board had clarified that the use of ‘gas’ for welding steel furniture parts or use of ‘gas’ for heating in the manufacture of coco powder cannot be treated as use of ‘power’. There is no reason why such a meaning to the expression ‘power’ should not be given in the new Central Excise Tariff - The Circular clarified that if ‘gas’ is used for welding steel furniture parts, steel furniture would not be subjected to levy of Central Excise duty. Under the Second Circular issued in relation; to confectionery, it has also been clarified by the Board that if ‘gas’ is used for heating purpose in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, it would not be treated as use of ‘power’.
It is, therefore, clear that only a restrictive meaning to the expression ‘power’ should be given which is not only in consonance with common parlance, but also in consonance with the Hindi version of the Tariff Act and the Exemption Notification as also the Circulars.
The position that emerges is that ‘power’ used in Chapter 34 of the Tariff Act and the Exemption Notification dated 24 February, 2015 would be restricted to ‘electricity’. The Appellant is engaged in the manufacture of ‘soap’ with the aid of gas and, therefore, no process has been carried on with the aid of ‘power. The manufacture of ‘soap’ by the Appellant, therefore, would be subjected to ‘NIL’ rate of duty upto 27 February, 2005 and thereafter also would be subjected to ‘NIL’ rate of duty because of the exemption Notification dated 24 February, 2005. The Commissioner has, however, confirmed the demand by order dated 15 November, 2006 holding that the Appellant has been manufacturing ‘soap’ with the aid of ‘power’.
Penalty - HELD THAT:- It is not possible to sustain the demand made in the impugned order. The imposition of penalty on the Appellant, the Factory Manager, the Authorized Signatory and the Managing Director are also not sustainable.
Extended period of limitation - HELD THAT:- It is not necessary to examine the contention of the Learned Counsel for the Appellant regarding invocation of the extended period of limitation under the proviso to Section 11A of the Central Excise Act, 1944.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 1428
Classification of goods - Industrial Solvents used in Paints/Rubber, etc. - intermediate goods or not - allegation that intermediate products, namely, second cut distillate and residue which were blended to obtain the solvent SL-2 and SL-11 are liable to excise duty under chapter sub-heading 2710.13 as ‘motor spirit’ - HELD THAT:- The Commissioner sent the samples to the HPCL laboratory for necessary test to ascertain whether the product in question specify the criteria of motor spirit as BIS 2796-2000 and hence is not suitable for use as fuel in the spark ignition engine. Since the said report dated 18-11-2005 did not furnish as to whether the goods in question could be used as motor spirit in admixture with other substance, the information was called for on the said issue. In its report dated 25-11-2005, it has been clarified that even with the additive, the samples cannot be considered as motor spirit. Even though the department has furnished invoice of GAIL and classification list of M/s. Atlas Petrochemicals, since they did not provide the necessary test results of the said product and established that as to why the impugned products of the respondent are comparable with the products of alleged other manufacturers, the Learned Commissioner has observed that the products manufactured by the said manufacturer cannot be comparable as there is no specific evidence to indicate that the impugned products of the assessee are also marketable as motor spirit. Consequently, the Commissioner has decided to issue in favour of the respondent.
In absence of any contrary report indicating that the impugned product would be used as fuel in spark ignition engine, the product cannot be classifiable under chapter sub-heading 2710.13 of Central Excise Tariff Act, 1985 - there are no discrepancies in the impugned order passed by the Learned Commissioner - appeal dismissed - decided against Revenue.
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2019 (9) TMI 1427
Reduction of share capital - Section 66 of the Companies Act, 2013 (Act) read with Rule 2 of the National Company Law Tribunal (Procedure for Reduction of Share Capital) Rules, 2016 - HELD THAT:- The proposal for reduction of share capital involves exit of only the identified shareholders on the ground that the capital reduction will give an opportunity to the identified shareholders to exit at a fair valuation, as the shares held by them are otherwise not marketable or tradeable, since the shares of BTL were delisted in 1999-2000. It is also stated that BTL has adequate reserves/funds to carry out the proposed capital reduction and such capital reduction will also enable BTL to save administrative and other costs associated with servicing a very small percentage of its shareholding held by a large number of shareholders dispersed across the country and overseas.
The provision regarding purchase of its own shares by a company is contained in Section 68 of the Act. The petition presently under consideration is filed under Section 66 of the Act for confirmation of reduction of share capital. Therefore, the satisfaction of the conditions provided for under Section 68 of the Act are irrelevant in the present proceeding. We may also add here that Section 66(6) of the Act provides that nothing in Section 66 shall apply to 'buy back' of its own securities by a company under Section 68 of the Act and therefore, the Sections are regarded as independent. The contention raised is not accepted.
It has been pleaded by the authorized representative/counsel of the intervention applicants that passing of resolution through postal ballot and e-voting without conducting personal/physical voting is violative of the rights of the identified shareholders to avoid free exchange of views and ideas amongst the identified shareholders. The Learned Senior Counsel for BTL has referred to Section 110 of the Act in which some types of business are not to be undertaken by postal ballot. It is pleaded that the present business is not covered by the exceptions and that holding of Extraordinary General Meeting at one location is burdensome for the shareholders since they find it difficult to travel long distance for attending the meeting and therefore, postal ballot helps increase voter participation. The plea raised is therefore, not accepted.
The prejudice is caused to the identified shareholders by the proposal in the explanatory statement that the dividend distribution tax of ₹ 33.55 per share will be further reduced from the value per share of ₹ 196.8 given by the valuer and the fairness opinion. The prejudice is a concerted attempt to force a class of shareholders to divest themselves of their holdings at a rate far below what is reasonable, fair and just and connotes a form of discrimination.
In the present case, we have found no patent unfairness in the valuation report dated 19.06.2018. We have however held that the deduction of DDT from the value per share as per the valuation report dated 19.06.2018, causes prejudice to the identified shareholders and is a concerted attempt to force a class of shareholders to divest themselves of their holdings at a rate far below what is reasonable, fair and just and connotes a form of discrimination. We note that 76.35% of the identified shareholders voting on the special resolution accepted even the reduced value of ₹ 163.25 per equity share after deduction of DDT from the value per share as per the valuation report dated 19.06.2018. We note that there are no objections to the scheme from the creditors - as per Section 66(3) of the Act, the Tribunal can make an order confirming the reduction of share capital on such terms and conditions as it deems fit.
As per Rule 6(2) of the Rules, the order confirming the reduction of share capital be issued by the Registrar in Form No. RSC-6.
Application disposed off.
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