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Case Laws
Showing 321 to 340 of 740 Records
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2008 (4) TMI 509
Compromise and arrangement - whether vital aspect relating to the affairs of the company, which was under the scrutiny of the RBI had not been disclosed, even though under section 391(2), the company is required to disclose all the relevant factors?
Held that:- Non-disclosure of the action taken and initiated by the RBI as apparent from the letter dated January 18, 2005, amounted to non-disclosure of relevant facts required to be disclosed under section 391(1) read with section 393(1) of the Act, thus vitiating the bona fides of the company and thereby violating the procedural safeguards.
Unable to accept such ingenious submission made by learned counsel for the company and others supporting the scheme. Chapter III-B, which was inserted by way of amendment, has been obviously incorporated with a view to protect the depositors and to avoid exploitation by non-banking financial institutions. Section 45Q itself makes it very clear that the provisions of the Chapter III-B shall have effect notwithstanding anything inconsistent therewith in any other law. The Companies Act as well as the RBI Act are Central Acts. Chapter III-B, which was inserted by Act 55 of 1963 with effect from December 1, 1964, is obviously a later legislative provision.
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2008 (4) TMI 508
Whether the expression "other legal proceedings" occurring in section 446(1) of the Companies Act, 1956 includes criminal proceedings or not?
Held that:- The High Court by the impugned order has held that it does not, relying on a decision of B.S.I. Ltd. v. Gift Holdings (P.) Ltd. [2000 (2) TMI 719 - SUPREME COURT OF INDIA] . As the question involved in this appeal is also covered by the aforesaid decision relied on by the High Court appeal dismissed.
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2008 (4) TMI 507
Amalgamation - Held that:- Having regard to the facts and circumstances of the case there does not appear to be any legal impediment in sanctioning the proposed scheme of amalgamation. Consequently, sanction is hereby granted to the proposed scheme of amalgamation under sections 391 and 394 of the Companies Act, 1956 for amalgamation of the transferor company with the transferee company. The certified copy of this order shall be filed with the Registrar of Companies within five weeks. It is clarified that this order should not be construed as an order granting exemption from payment of stamp duty if payable in accordance with law in regard to increase in the share capital of the transferee company. Upon sanction becoming effective and from the appointed date, the transferor company shall stand dissolved without its formal winding up.
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2008 (4) TMI 506
Compromise and arrangement - Held that:- On hearing the appellant in person, we find no merit in the appeal. The appellant and his mother objected to the scheme. The scheme was permitted to be proceeded with only on the claim of the appellant being satisfied. Such satisfaction arose on account of receipt of consideration agreed to be paid for the sale of shares for rupees eight lakhs. Thus, the right and interest of the appellant and his mother arising from the holding of shares stood extinguished in terms of the arrangement arrived at on November 28, 1983 and the consideration deposited in pursuance thereto and paid thereafter except the amount detained towards the estate duty liability. The appellant and his mother had specifically agreed that the scheme would remain in operation.
As to whether the scheme has been properly implemented or not and what is the consequence thereof would be for the learned company judge to consider. However, the appellant has no role to play in the same and the only entitlement of the appellant left was about the claim of some interest on an unpaid amount of ₹ 50,000 detained for estate duty clearance in respect of shares inherited by the said two persons. The appellant is now claiming to raise stale issues to put impediments possibly arising from the appreciation of the real estate value of the plots which were agreed to be sold. Appeal dismissed.
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2008 (4) TMI 505
Oppression and mismanagement - whether appellant did not qualify to file the said petition in terms of section 399 of the Act as the appellant held less than 1/10 of the "issued share capital"?
Held that:- Whatever angle one looks at the expression ‘issued share capital’ of the Company it is very clear that the expression ‘issued share capital’ can only refer to the preference share capital as well as equity share capital of the Company and the appellant was required to hold one-tenth of the total of this issued share capital before he became eligible to maintain a petition under section 397/398 of the Act. The appellant at no time held more than 2.01 per cent of issued share capital. It did not have it when it became a member or shareholder. It did not have the requisite percentage on the date of filing of the petition. The appellant might be having 14.8 per cent of equity shares, but that is not the criterion to make an application. The petition was therefore rightly dismissed.
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2008 (4) TMI 504
Appointment of Directors - Held that:- There is no proof of payment of cash amount and plaintiffs have not disclosed any source where from they got this cash amount. The plaintiffs have not filed their books of accounts, income-tax returns or profit and loss account showing that they had these funds available with them, in cash, which they paid to the farmers. It is also not disclosed by the plaintiffs whether these payments were accounted for in the books of account or not. In absence of any document showing that plaintiffs had available with them huge funds to the tune of several crores of rupees, which plaintiffs allege to have paid in cash, without any proof to the farmers, the court cannot consider this averment of the plaintiffs. Even otherwise, the court cannot recognize the claim of the plaintiffs that the plaintiffs invested 61 per cent, of the sale consideration. This claim of the plaintiffs is made only in the air without any basis, since plaintiffs were not the shareholders of the company.
The shareholders of the company have every right to run the company, even without plaintiffs being there as directors. The court cannot interfere in the management of the company and cannot direct a company to induct non-shareholders as directors merely on the basis of allegations that those non-shareholders had invested money from undisclosed sources by undisclosed modes. Thus find no force in the application.
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2008 (4) TMI 503
Relief of injunction - restraining defendant No. 5, who is the purchaser of the company's property under a deed of conveyance dated December 13, 2007, from selling alienating, creating third party rights, developing or carrying out any construction or parting with the possession the properly purchased by it till the disposal of the suit
Held that:- Plaintiff is entitled to an injunction restraining the defendants from selling, transferring, alienating, developing or parting with the possession of the suit property. Accordingly, there shall be interim relief till the disposal of the suit.
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2008 (4) TMI 502
Winding up - petition filed under section 446 of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959 for the quashing of all Civil and Criminal proceedings pending in various Courts and absolving the petitioner from any civil or criminal liability in connection with the affairs of the Company, namely, Moulik Finance and Resorts Limited
Held that:- Reserve Bank of India had the power, jurisdiction and authority to file a criminal complaint against the alleged default/contravention made by the Company and its Directors. The submission of the counsel for the petitioner that the initiation of the criminal proceedings was wholly illegal and without any jurisdiction is wholly erroneous.
No petition can be filed under section 446 of the Companies Act. Section 446 is only an enabling provision and an interlocutory application could only be filed in a pending matter before the Court seeking leave of the Court to file a suit or other legal proceedings against the Company. If any suit or proceedings is required to be instituted or to be continued with, then leave of the Court is necessary. Section 446 of the Companies Act however does not prohibit taking actions against the Directors and officers or servants of the Company. This provision cannot be invoked for the quashing of the criminal complaint.
In view of the aforesaid, this Court is of the opinion that the proceedings initiated by the petitioner under section 446 read with section 633(2) of the Companies Act was not maintainable. Even otherwise, on merit the petitioners are not entitled for any relief whatsoever.
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2008 (4) TMI 501
Winding up – cognizance of the default committed by ex-directors under section 454(5) of the Companies Act, 1956 and to issue process against them - Held that:- The company has borrowed the amount from one Mr. Mohandas M. Adnani, who has stated in writing that the settlement was arrived at and he had not to recover any amount either from the company or any of its directors or officers. It is not in dispute that the amount has been transferred by the company (in liquidation) to the partnership firm and there is no corresponding entry to that effect that the partnership firm has repaid the said amount to the company. Thus, the company still remains as a creditor of the partnership firm in the eye of law and since the company is in liquidation, the official liquidator is entitled to recover the said amount from the partnership firm by resorting to the pro visions of section 477 of the Companies Act, 1956. The court is not convinced with the submissions of learned counsel appearing for respondents Nos. 1 and 3 that they have resigned as directors much before the date of winding up order and hence they are not liable for default, if any, committed by the company in liquidation.
However, looking to the documents produced before this court and considering the submissions made and facts found, the court holds that the statement of affairs is not filed in time nor it is found to be true and correct and hence the court holds all the three accused guilty for an offence under section 454(5) of the Act for their failure to file true and correct statement of affairs. But for the pendency of other criminal cases pending before the trial court in relation to the transaction of ₹ 50,00,000, the court would have considered the question of imprisonment for commission of default in complying with the requirement of section 454 of the Companies Act, 1956. The court, therefore, confines its order to the extent of imposition of fine of ₹ 10,000 on each of the accused which shall be paid by them to the official liquidator within 30 days from today. Failure to deposit this amount would render them liable to undergo the sentence of one month imprisonment with immediate effect.
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2008 (4) TMI 500
Whether even where no stay is prayed for by the Borrower, during pendency of the proceedings under section 17 before the Debt Recovery Tribunal, the Secured Creditor can proceed to auction the secured asset even before a declaration envisaged under section 17(4) of the SARFAESI Act as made by the Debt Recovery Tribunal?
Whether for granting any stay of auction, the Debt Recovery Tribunal can impose any condition relating to deposit?
Whether, even before finalisation of the proceedings under section 17 of the SARFAESI Act, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal has any incidental or ancillary power to pass any interim order relating to restoration of possession or restoration of management, subject to imposition of any reasonable condition as deemed fit and proper?
What is the scope of enquiry under section 17 of the SARFAESI Act and whether the merits of the contentions raised by the borrower can be decided while dealing with the question relating to validity of the action taken by the Bank under section 13 of the Act?
Held that:- The right of the Bank is not automatically suspended upon filing of an Application under section 17 of the Securitisation Act and the secured creditor can proceed to auction secured asset where no stay is granted by the Tribunal.
The Tribunal has power to impose the condition relating to deposit for grant of stay of auction.
The Tribunal has no power to pass any interim mandatory order relating to restoration of possession or restoration of management before the finalisation of the proceedings under section 17 of the Securitisation Act, and
All such grounds, which rendered the action of the Bank/Financial Institution illegal, can be raised in the proceedings under section 17 of the Securitisation Act before the Debt Recovery Tribunal. It is for the Debt Recovery Tribunal to decide in each case whether the action of the Bank/Financial Institution was in accordance with the provisions of the said Act and legally sustainable.
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2008 (4) TMI 499
Order by the MRTP Commission directing the appellants to refund to the respondent the excess amount charged from him for allotment of a plot within 6 months from the date of the order passed by the MRTP Commission
Held that:- Appeal allowed. Unable to sustain the order of the MRTP Commission, which was clearly in error in granting relief to the respondent. There is no dispute that the respondent had in fact filed an affidavit clearly accepting the amount shown as the price of the plot in question and he had also given an undertaking to abide by the terms and conditions of the allotment letter. It is, therefore, not open to the respondent to claim the rate prevailing in the year 1993. Accordingly, the impugned order of the MRTP Commission is set aside and the petition filed before the MRTP Commission by the respondent stands rejected.
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2008 (4) TMI 498
Compromise and arrangement - Held that:- Avoidance of capital gains can be no reason for not sanctioning a scheme which is otherwise lawful or valid.
There is no allegation of fraud or unreasonableness and the shareholders are astute businessman accomplished in the commercial field and it must be presumed that the terms of the scheme have been approved only if it benefits the companies and its shareholders. There is no allegation of the scheme being unfair or unreasonable. The current assets shall be transferred at book value and the specified assets are contingent in nature. The clause relating to the aforesaid has also been approved by the shareholders. Therefore, this objection also be rejected.
As regards the third objection no shareholder has filed any objection to the scheme and it is only at the meeting that four shareholders have voted against the scheme. Therefore, the third objection be rejected. The scheme cannot be faulted on a mere apprehension or speculation as to what might happen in future. The present is certain. No objection has been filed to the scheme after advertisements.
The fourth objection is not pressed, as the quarterly financial results were open for inspection as will be borne out from the explanatory statement.
The fifth objection cannot be sustained as North India Plantation Division was an undertaking of the transferor-company and has been shown as an asset of the transferor-company in its balance-sheet.
The sixth objection cannot be sustained in view of clause 10.3 of the scheme wherein the consideration has been mentioned and it is only if considered necessary for effective functioning of the transferee-company that additional assets may be transferred. Such transfer is also subject to terms and conditions agreed. This is contingent in nature and for the same provisions have been made and agreed by the shareholders.
The scheme has been approved by the majority shareholders and as no allegation of fraud, unreasonableness, unfairness or illegality has been made the scheme cannot be termed as vague, incomplete or uncertain. No investigation proceeding is pending and the scheme is one for arrangement and/or reconstruction.
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2008 (4) TMI 497
Amalgamation - Compromise and arrangement - Held that:- The issuance of shares directly to the company will not amount to outright sale and at the most will attract the provisions of the Income-tax Act. Therefore the first objection is not sustainable.
The second objection can also not been sustained as details of Estates A, B and C, the properties, book value and market value have been specified in the scheme. Particulars of the said will also appear from the valuation report which was open for inspection and no shareholder has complained against the valuation report or the details furnished.
The third objection cannot be sustained as the valuation report has been prepared by a chartered accountant whose credentials have not been challenged. The valuation report has also not been challenged by any of the shareholder and there is no allegation against the chartered accountant and/or the valuation made. The court is to ensure that there is no malice or unreasonableness and the same does not appear in the instant case.
The audited balance-sheet for March 31, 2006, was the only audited balance-sheet available and the same was also open for inspection, therefore, it cannot be said that the details of assets and liabilities were not known to the shareholders.
Upon sanctioning of the scheme the applicants are directed to file appropriate application under clause 40A of the listing agreement in case of increase beyond the permissible limit. The applicants are ready and willing to increase the authorised share capital of the transferee company. Scheme allowed.
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2008 (4) TMI 496
What is the correct amount that is due to the Plaintiff?
Whether the defendants are entitled to the benefit of the direction given by the Reserve Bank of India on sick units?
What is the correct rate of interest?
Held that:- Appeal allowed. In the light of the issues decided by the Civil Court in the various litigations which were allowed to become final and as the decree had already been executed inasmuch that the mortgaged property has been sold, the directions issued by the High Court are clearly not warranted. We are also of the opinion that there can be no objection to the revival of the respondent’s unit but that is a matter between the respondent and the Kerala Financial Corporation or other Governmental Agencies and cannot in any manner affect the legal rights that have accrued to the appellant as a consequence of a series of orders/judgments
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2008 (4) TMI 491
Whether the notice of hearing has been received by the respondent?
Whether he had been heard or not?
As to why was it necessary to retain the seized records for examination for another year, although the said record had already been in the custody of the appellants for a period of one year?
Held that:- The Additional Commissioner while granting sanction to retain the seized records has not only recorded reasons therefor, but the same were communicated. Thus, the condition prescribed by law to record reasons is fulfilled. The order which was received by the assessee a few days later was despatched the same day. The delay in no way has caused any prejudice to the assessee. Moreover, we are informed that the books of account/documents were returned to the assessee after the passing of the order by the Tribunal. To that extent, the appeal has become infructuous, but since the point involved is of recurring nature, we thought it appropriate to record a finding regarding the correctness or otherwise of the view taken by the High Court on merits.
In case the investigation or assessment is not complete then the respondent whose books of account have been returned, may not be asked to re-deposit the books of account with the assessing officer but as and when he is called upon to produce the books of account/documents which were returned to the assessee, the assessee shall be under an obligation to produce the documents before the authorities as and when asked to do so.
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2008 (4) TMI 489
Whether mosquito repellants and other items fall under entry 44(5) of Schedule III to the Kerala Value Added Tax Act, 2003?
Held that:- Kerala VAT Act is aligned with customs tariff which in turn is aligned with HSN and consequently each product in question was required to be seen in the context of HSN code and judgments based thereon. Thus keeping in mind the above controversy, set aside the impugned judgment and remit the matter to the High Court for fresh consideration in accordance with law.
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2008 (4) TMI 485
Liability to pay "purchase tax" under section 5A of the Kerala General Sales Tax Act, 1963
Whether the mentioned process amounts to consumption/use of red oil in the manufacture of sandalwood oil as contended on behalf of the respondent- department?
Held that:- Appeal allowed. As in tax matters courts have to keep in mind distinction between approach and principle. Courts have to go by the principle involved in the fiscal legislation. Keeping in mind the distinction between these two concepts, we are of the view that the High Court was not justified in making the observation which is underlying hereinabove. The decision of the Tribunal is objective. It is based on the correct formulation of the test of irreversibility involved in the process of manufacture and, therefore, the High Court was not justified in observing that the finding of the Tribunal was patently absurd and perverse.
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2008 (4) TMI 484
Whether the advance towards State advised price cannot be subjected to tax even though the other incentive subsidies were to be treated as part of purchase price? - Held that:- Appeal allowed. Appellants were justified in demanding purchase tax on the amount paid as SAP and the High Court's view is clearly unsustainable and is set aside. The observations relating to the agreed price which is above the lowest permissible rate cannot be read to mean that any ceiling is fixed by the agreed price. In the price fixed under the Control Order was the minimum price and it was the lowest permissible rate. The highest amongst the three prices relatable to the purchase is the price on the basis of which the purchase tax is to be levied.
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2008 (4) TMI 475
Principle of mutuality - addition of Rs. 2,55,182 - exemption in respect of interest income of Rs.2,55,182 and Rs.2,06,090 on bank deposits and FDRs - The Assessing Officer had observed that interest from the Banks and excess of receipts over the expenditure being interest was not income arising out of mutual activities/arrangements among the members of the club. - Held that: - The principle of mutuality could be applied only if the interest was earned for advances/facilities of loan given to the members of the club. The assessee had claimed exemption in respect of interest income where source of receipt was Bank and not the members of the club. In Chelmsford Club v. CIT (2000 -TMI - 5787 - SUPREME Court), the Apex Court held that there must be complete identity between the contributors and the participators. - It is not a case where the benefit of the interest income derived by the assessee is extended to its members. - Decided in favor of revenue
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2008 (4) TMI 473
Wealth Tax - Reassessment - Whether on the facts and in the circumstances of the case and in law, the hon'ble Income-tax Appellate Tribunal was justified in holding that the Assessing Officer was not justified in reopening the assessment on the basis of the valuation report obtained by him sub-sequent to the date of completion of assessment ? Held that - the wealth tax officer has in some circumstances, to complete the proceedings for assessment within the time limit set out under the Act. In these circumstances if the report is called for and the report is not received, the time for completing the assessment proceeding is not saved. If the WTO in such circumstance completes the order of assessment before the report is received he could not be precluded from considering the report as information for the purpose of issuing notice for reassessment under section 17(1). This would also be the position in a case where assessment is completed before the report is received irrespective of the issue of limitation for completing the assessment. From the reading of section 16A(4) and (5), it is clear that the report is submitted after giving an opportunity to the assessee who also was entitled to lead this evidence before the valuation officer, before he proceeds to value the property. Such a document will have to be treated as information giving rise to reason to believe that wealth has escaped assessment.
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9911796707
