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Showing 341 to 360 of 1423 Records

2023 (4) TMI 1084

Review order - error apparent on the face of record or not - scope of review - Maintainability of petition - pre deposits for filing the appeal as provided in Section 129-E of the Customs Act, 1962 - HELD THAT:- On due consideration and submissions and on perusal of the documents filed on record as also the decision rendered by the Supreme Court, in the case of Chandra Shekhar Jha [2022 (3) TMI 606 - SUPREME COURT] also the Supreme Court has held that the provisions of the aforesaid Section are not discretionary and the appellant is bound by the aforesaid provision.

Taking note of the fact that in the order under review this Court has already referred to Section 129E of the Customs Act, there is no error apparent on the face of the order, which may call for the review of the same - Petition dismissed.
2023 (4) TMI 1083

Seeking grant of anticipatory bail - fraudulent transfer of shares - forged and alleged share certificates and share transfer forms are fabricated documents - forged signatures - HELD THAT:- Parameters for grant of anticipatory bail in a serious offence are required to be satisfied and further while granting such relief, the court must record the reasons therefor. Anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been enrobed in the crime and would not misuse his liberty.

The applicant no. 1 as per Status Reports did not provide the requisite original Share certificates and also gave evasive replies during investigation. It is also appearing as surfaced during investigation that the applicant no. 1 who is managing director of the accused no. 1 could not produce any proof regarding request of the applicant no. 2 made to the accused no. 1 for payment of Rs. 6,25,000/- to the complainant on her behalf and said amount was actually credited in the loan account of the complainant. The applicant no. 1 also could not produce Jumbo share certificates which were stated to be issued on 29.1.2018 in lieu of 62,500 shares of the complainant and stated to be bearing the signature of Gulshan Jhurani as Director of the accused no. 1. Gulshan Jhurani in his statement dated 30.07.2022 also stated that he did not sign the share certificate/Jumbo share certificate after 2012. It also came into investigation that original share transfer deed between the complainant and Roohi Reshi for transfer of share certificate no. 31269 for 300 shares was executed on 12.12.2017 whereas new certificate no. 31269 was issued on 13.12.2017.

The respondent/State prayed for custodial interrogation of the applicants on grounds that they have not provided requisite documents and gave evasive replies during investigation. It is also alleged that there are contradictions in replies given by the applicants as mentioned in Status Reports and also argued by the Additional Public Prosecutor and the learned Senior Counsel for the complainant. The issue which needs judicial assessment and consideration is that whether the applicants can be subjected to custodial interrogation merely the applicants as per investigating agency did not produce documents as sought by the investigating officer and gave evasive and contradictory replies during investigation. It was also surfaced during investigation that the complainant is having financial transactions with the accused no. 1 for the last 15-20 years.

The bail applications filed by the applicants were dismissed by the court of Additional Sessions Judge-02, Patiala House Courts, New Delhi, vide order dated 28.05.2022 wherein it was observed that none including the complainant has appeared before the court with truth and conduct of the applicants is also shrouded in suspicion and appears to be much more tainted and stained as compared to the complainant - It appears that the concerned court minutely examined material collected during investigation in manner as deciding case on merits after conclusion of trial which was not warranted at time of consideration of bail applications.

The Supreme Court in relation to power to grant anticipatory bail and power of investigating agency to investigate in P. Chidambaram also observed that the judicial discretion to be properly exercised after application of mind as to the nature and gravity of the accusation; possibility of applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. The custodial interrogation of the applicants is not warranted under given facts and circumstances of the present case and after evaluation of the available material against the applicants and particularly only to recover certain documents pertaining to the share transfer and contradictions in the replies given by the applicants during investigation. There is no direct and apparent apprehension that the applicants may flee or avoid further investigation. The applicants cannot be remanded to custodial interrogation in the absence of convincing material which warrants that certain documents and evidence pertaining to present FIR cannot be recovered without custodial interrogation of the applicants.

After considering all facts, the bail applications bearing no. 1696/2022 and 1697/2022 filed by the applicants Naresh Garg and Nirmala Aggarwal respectively are allowed, subject to conditions imposed.
2023 (4) TMI 1082

Opportunity to be heard to ICA Lenders not provided - requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 - Whether the ICA Lenders led by Bank of Baroda were entitled to be intervenor and be heard in the company petition filed by the Debenture Trustee and if they had a right to be heard, then whether the Impugned Order turning down the Intervention Application correct in law, and further Impugned Order-I which was passed without hearing the ICA Lenders liable to be set aside?

HELD THAT:- Section 71(10) of the Companies Act, 2013 uses the word ‘may’ in the context when the Tribunal has to pass order on the application of any or all of the debenture holders or debenture trustee. Further, sub-section 10 of section 71 also lays down that the Tribunal may pass orders ‘after hearing the parties concerned’ - the question of proceedings to be ‘in personam’ or ‘in rem’ is also made clear by the fact that in the Company that is facing financial stress and for which a resolution plan is under consideration, 23 debenture holders who are among those represented by the Debenture Trustee are also part of ICA Lenders, though a majority of the retail debenture holders are not signatories to the ICA.

The contention of the Respondent Debenture Trustee is that the requirement of sub-section 10 of Section 71 of the Companies Act, 2013 is that the Tribunal should pass an order only keeping in view its satisfaction and what is necessary to safeguard interest of the company or debenture holders. He has contended that the issue of public interest and financial condition of the company are not necessary factors to be look into by the Tribunal while passing the order - While considering the above argument of the Learned Counsel for the Respondent-Debenture Trustee, we note that the provision under section 71 (3) and section 71(10) of the Companies Act, 2013 stipulates that NCLT shall, before making any order, give a reasonable opportunity of being heard to the Company and ‘person concerned’ in the matter.

Rule 73(3) and Rule 73(4) of the NCLT Rules, 2016 which are applicable for an application under section 71(10) of the Companies, 2013 provide that Tribunal shall, before making any order under this rule, give an reasonable opportunity of being heard to Company or ‘any other person interested, in the matter. It is quite clear from a reading of sub-rule (3) and sub-rule (4) of Rule 73 that the company is an ‘important party’ because the company has to redeem the debentures and pay the interest on the principal amount. The Company’s financial condition and health would, therefore, also become relevant factors while hearing an application under section 71(10). The ICA Lenders, who have all signed the Inter Creditor Agreement, have also taken steps for financial rejuvenation and revitalization of the Company through a resolution plan - the ICA Lenders are also important parties insofar as financial resolution of the Company is concerned, and therefore they should be afforded an opportunity to be heard in the company petition as the redemption of NCDs shall have an impact on the financial condition of the Company and would deeply affect the implementation of the resolution plan, which is for resolution of the Company.

Thus, the NCLT has denied an opportunity to be heard to ICA Lenders on the ground that insofar as section 71(10) of the Companies Act, 2013 is concerned, they do not have a right to be heard - this is an incorrect reading of the requirement of hearing of ‘person concerned’ as is laid down in section 71(10) of the Companies Act, 2013 and ‘any other person interested in the matter’ as required in Rule 73(3) and 73(4) of the NCLT Rules, 2016 - in view of public interest as is stipulated in Rule 74(4) and the involvement of public money in the Company, though the public sector banks, public interest also demands that ICA Lenders be given opportunity of hearing - the Impugned Order-II dated 27.5.2021 is incorrect and is set aside.

The Impugned Order-I dated 21.6.2021 which was passed by the NCLT suffers from the infirmity that ICA Lenders were not afforded an opportunity to be heard while passing Impugned Order-I - the matter is remanded to the NCLT, Mumbai - Appeal allowed by way of remand.
2023 (4) TMI 1081

Admitting Section 7 application - Initiation of CIRP - default in payment of guaranteed amount by the Corporate Debtor - Whether application filed under section 7 by the Bank being barred by time ought not to have been admitted? - time limitation.

Whether default in payment of guaranteed amount by the Corporate Debtor is the same default as is committed by the Principal Borrower and the period of limitation for both the Principal Borrower and the Corporate Guarantor shall be same for the purposes of filing Section 7 application for the Bank? - Whether in the facts of the present case, the application filed by the Bank on 17.03.2020 was barred by limitation against the Corporate Guarantor? - Whether the order of the Adjudicating Authority admitting Section 7 application is unsustainable?

HELD THAT:- The scheme of I&B Code clearly indicate that both the Principal Borrower and the Guarantor become liable to pay the amount when the default is committed. When default is committed by the Principal Borrower the amount becomes due not only against the Principal Borrower but also against the Corporate Guarantor, which is the scheme of the I&B Code. When we read with as is delineated by Section 3(11) of the Code, debt becomes due both on Principal Borrower and the Guarantor, as noted above. The definition of default under Section 3(12) in addition to expression ‘due’ occurring in Section 3(11) uses two additional expressions i.e “payable” and “is not paid by the debtor or corporate debtor” - It is well settled that the loan agreement with the Principal Borrower and the Bank as well as Deed of Guarantee between the Bank and the Guarantor are two different transactions and the Guarantor’s liability has to be read from the Deed of Guarantee.

Although the Guarantor immediately become liable on any default committed by the Principal Borrower but for initiating any action against the Guarantor, a demand is to be made. Without there being any demand to the Guarantor, it cannot be accepted that period of limitation against the Guarantor shall commence. In the present case, Section 7 application filed by the Bank has been brought on the record as Annexure A-49. When we look into the Part IV of the application, the date of NPA i.e. 31.03.2017 has been mentioned in Part IV and total amount in default as on 31.12.2019 has been computed. The Application under Section 7 thus proceeds on date of NPA - default on the part of the Guarantor cannot be treated to be on 31.12.2016, when the Principal Borrower committed Default. It is also relevant to notice that the Corporate Debtor did not file any reply in Section 7 application despite giving opportunity by the Adjudicating Authority and right to reply was also forfeited - In the facts of the present case, where the Corporate Debtor did not file any reply and also did not file application for recall of order dated 23.11.2021 forfeiting right to file reply, the Adjudicating Authority did not commit any error in admitting Section 7 application.

The application filed by the Bank on 17.03.2020 was not barred by limitation - The order of the Adjudicating Authority admitting Section 7 application is sustainable.

Appeal dismissed.
2023 (4) TMI 1080

Maintainability of petition - initiation of CIRP - Default in payment of term loan - Financial Creditors - one time settlement scheme (credit facilities) - stand of the Appellant is that, the Term Loan, is repayable over 90 monthly instalments, beginning from April 2016 and entire Loan, will get Repaid, only in October 2023, hence, on 01.06.2019, the Sum in Default, cannot not be Rs.107.48 Crores, at all - on behalf of 1st Respondent / Bank, it is projected that when there is a clear Admission of Liability, and there was an undertaking, to discharge, the Loan Liability, under One Time Settlement, the Appellant, is not justified, in coming out with vexatious and frivolous issues - existence of debt due and payable or not?

HELD THAT:- The very fact that the Corporate Debtor, had admitted its Liability, cementing on the One Time Settlement dated 18.12.2021, the same unequivocally, points out the factum, of Financial Debt, (as per ingredients of Section 5 (8) of the I & B Code, 2016), which is due and liable to be paid by it, to the 1st Respondent / Bank / Financial Creditor, (as per Section 5 (7) of the Code) - The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of Non Performing Asset, on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the Default, took place before the Covid-19 Pandemic, is turned down, by this Tribunal.

Admittedly, the main CP (IB) / 279 (CHE) / 2021, preferred by the 1st Respondent / Bank / Financial Creditor, under Section 7 of the Code on 27.10.2021, before the Adjudicating Authority / Tribunal. The Corporate Debtor’s Loan Account, was declared as NPA, on 01.06.2019. As such, the main CP (IB) / 279 (CHE) / 2021, was filed well within the Limitation Period, by the 1st Respondent / Bank / Financial Creditor / Petitioner, and the point, is so answered.

In the present case, it cannot be lost sight of that the One Time Settlement, dated 18.12.2021, amounting to Rs.84.81 Crores was rejected, by the 1st Respondent / Bank on 18.12.2021 itself, whereby and whereunder the Corporate Debtor / Company, was requested to raise the OTS Sum, which is a clear cut pointer, about the Existence of Financial Debt and Default - in the instant case, the Corporate Debtor’s Financial Debt, with the 1st Respondent / Bank / Financial Creditor, is established by means of a Default, committed by the Corporate Debtor. The available material records projected on the side of the 1st Respondent / Bank, supports the case of the Bank that the Corporate Debtor, had committed Default, in respect of the Debt, due and payable.

Suffice it, for this Tribunal, to pertinently make a mention that as the Debt, due and payable by the Corporate Debtor, is not interdicted by any Law, and this Tribunal, on being subjectively satisfied as to the Default, committed by the Corporate Debtor, in respect of the Financial Debt, due and payable, then, the view arrived at, by the Adjudicating Authority/Tribunal, in holding that the Financial Debt of the Corporate Debtor, was proved by the 1st Respondent / Bank / Financial Creditor, is free from any Legal Flaws.

Appeal dismissed.
2023 (4) TMI 1079

Jurisdiction for deciding on the eviction vested with the Small Causes Court or the NCLT where liquidation was underway - Appellant was a ‘tenant’ or a ‘licensee’ or an ‘illegal occupant’ - putting the premises under lock and key of the Liquidator once a status-quo order has been passed by the Small Causes Court, Mumbai - HELD THAT:- Once a property was part of the liquidation state of the Corporate Debtor under liquidation, the provisions of IBC were applicable regarding the assets which were in the ownership of the Corporate Debtor and Section-238 of the IBC prohibited the applicability of any other law which was inconsistent with the IBC.

In the matter of Embassy Properties Developments [2019 (12) TMI 188 - SUPREME COURT], the Hon’ble Supreme Court has held that “if asset owned by a third party in possession of the Corporate Debtor held under contractual arrangements, is specifically kept out of the definition of the term “assets” Further, in a situation where a contractual arrangement is ongoing, the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). These judgements are distinguished on the basis of the fact that no contractual arrangement existed between the Appellant and the Corporate Debtor after 02.07.2020, when the extended Leaves and Licence Agreement expired and therefore the ratio in these judgements cannot provide support to the case of the Appellant.

The residuary jurisdiction is relevant during the CIRP when the insolvency resolution of the corporate debtor is taking place, whereas in the present case the liquidation of the corporate debtor is being considered and the liquidator has taken recourse to its powers under section 33(5) to get control and custody of the asset of the corporate debtor.

The NCLT order notes the contention of the Liquidator that Respondent No. 1 had obtained status-quo order from the Small Causes Court, Mumbai by suppressing facts and without making the Liquidator as a necessary party. We therefore, are of the opinion that the ‘status- quo’ order was obtained from the Small Causes Court by the Appellant without placing full and complete facts regarding its occupation and possession of the said premises and without impleading the Liquidator as a necessary party - the NCLT possesses the correct jurisdiction in considering an application for vacation of the premises in question and that the NCLT was correct in passing the Impugned Order which would be necessary to put the premises in question with the Liquidator and pending the final disposed of I.A. No. 1635 of 2020 - The Impugned Order does not need any intervention.

The NCLT possesses the correct jurisdiction for considering an application for vacation of the premises in question in the circumstances of the present case, and the NCLT was correct in passing the Impugned Order which would be necessary to place the custody of the premises in question with the Liquidator pending the final disposal of I.A. No. 1635 of 2020 so that the liquidation process is completed timely and in accordance with legal provisions - Appeal dismissed.
2023 (4) TMI 1078

Seeking grant of Regular Bail - Money Laundering - pecuniary advantage/illegal gratification was obtained by the accused out of the funds received from UAE Red Crescent meant for flood victims in Kerala though Life Mission Project - reception of bribe in foreign currency and rooting of the sam e through the diplomatic channel - case of petitioner is that the entire case is built up as a political hit by the Enforcement Directorate to falsely implicate the petitioner and by extension, the executive head of the State and his family members - bail sought also on medical grounds (Section 45 of PMLA).

HELD THAT:- Since this Court is considering bail plea at the instance of the petitioner in the instant crime on scrutiny of the relevant materials in the present case, this Court cannot consider the said aspect without going into niceties of the facts of the two cases in detail. Therefore, I leave the said question to be decided at an appropriate stage after referring all the materials in both these crimes meticulously. As of now, for the just disposal of the bail application, I am inclined to accept the argument tendered by the learned ASGI that a portion of the bribe being converted into foreign currency and taken to diplomatic channel to the foreign country, emanated from the predicate offence as pointed out by the learned ASGI, and the said aspect is a matter within the ambit of PML Act for which detailed investigation shall go on.

Whether the petitioner is liable to be released on bail by resorting to proviso to Section 45(1) of PML Act? - HELD THAT:- It is interesting to note that the Act doesn't define the term either `sick' or `infirm'. The term `sick' as per the Oxford English dictionary means, “affected by illness; unwell, ailing”. Similarly, the term `infirm' means “not physically strong or healthy; weak; feeble, especially through old age”. Therefore, the `sick' or `infirm' condition of a person has to be inferred from the materials available in each individual case. However, it is pertinent to note that the statute provides release of an accused on bail, who are covered by the proviso reading the same disjunctively and the statute used the word `may'. Thus it has to be held that release of a person covered by the proviso to Section 45(1) of PML Act is not mandatory and the same is the discretion of the court.

Three judgements of Supreme Court referred - STATE THRU DY. COMMISSIONER OF POLICE SPL. BRANCH DELHI VERSUS JASPAL SINGH GILL [1984 (6) TMI 264 - SUPREME COURT], DIRECTORATE OF ENFORCEMENT VERSUS SHRI ASHOK KUMAR JAIN AND VICE-VERSA [1998 (1) TMI 529 - SUPREME COURT] and State of U.P. v. Gayatri Prasad Prajapati [2020 (10) TMI 1281 - Supreme Court] - Reading the ratio of the above decisions, if the jail authorities or the prosecution agency could arrange proper and adequate treatment, even a sick person need not be released on bail.

No doubt, crime No.ECIR/KCZO/31/2020 arose out of predicate offence registered by the Vigilance and Anti-corruption Bureau and CBI and the present crime arose out of predicate offence in OR.No.7/2020, registered by the Customs (Preventive) Commissionerate of Cochin and Crime No.2/2020, registered by NIA and, therefore, as I have already pointed out, there is no reason to hold at this stage that registration of this crime is bad in law.

In the instant case, the petitioner could not be held as a person who would flee from trial. However, his propensity to tamper with the evidence and to influence witnesses could be foreseeable, since the petitioner is a person having very much influence in the ruling party of Kerala, particularly with the Chief Minister of Kerala. It is apposite to refer that even after his initial arrest and subsequent release on bail, the petitioner was reinstated in service w.e.f 6.1.2022 and he continued the same till his retirement holding pivotal post in the State of Kerala, ignoring his involvement in serious crimes. That is to say, his involvement in serious crimes prior to this crime, in no way affected his official stature because of his authority in the State Government. - Since it has been discussed that the petitioner is not cooperating with the treatment offered, I am not inclined to release him on medical ground since his sickness would be addressed by the prosecution agency/jail authorities by providing adequate treatment. Similarly, his chance of propensity to tamper with evidence or influencing witnesses, is very much there, since the petitioner is a person having very much influence in the ruling party of Kerala, particularly with the Chief Minister of Kerala.

In this matter, the investigation is at the initial stage. Many accused are yet to be arrested including Smt.Swapna Prabha Suresh. Why the prosecution is delaying the arrest of Swapna Prabha Suresh is also a matter of serious concern, though she had an active role in the present crime - Bail application dismissed.
2023 (4) TMI 1077

Levy of Service tax - Auctioneer’s Service - Business Support Services - Goods Transport Agency Service - suppression of facts or not - extended period of limitation.

Auctioneer’s Service - marketing and other services rendered for selling agricultural produce of its farmer members - HELD THAT:- A numerous judicial decisions have already gone into the differences between Auction and Tender. The Tribunal in M/S. THE SALEM STARCH & SAGO MANUFACTURERS SERVICE INDUSTRIAL CO-OPERATIVE SOCIETY LTD. VERSUS CCE & ST, SALEM [2018 (3) TMI 192 - CESTAT CHENNAI], has analysed the differences between “auction” and “tender” and held that in the traditional method of auctioneering, apart from the auction process per se the auctioneer also provides a gamut of other related services like providing a facility, advertising or illustrating the goods in auction, engage in pre-auction estimates, short term storage services, etc. - while both sale by tender and sale by auction may have a common intendment of selling the goods, the modalities and the processes involved in each are very different and demand do not sustain.

Further, Learned Advocate has drawn our attention to M/s. Attur Agricultural Producers Co-operative Marketing Society Ltd. Vs. CCE, Salem, [2019 (8) TMI 262 - CESTAT CHENNAI] wherein it has been held This is not service rendered to anybody at all. It is true that, in turn, the appellant has been borrowing money from their bank but it does not mean that the appellant is supporting service of the bank. They are borrowing money from the bank on their account and in turn lending it to their members. In view of the above, we find that demands on both these counts are not sustainable and need to be set aside.

The facts in these two appeals are identical. The marketing and other services rendered by the appellant to their farmer members in selling their agricultural produce through tender process would not be coming under “Auctioneer’s Service under Section 65 (105)(zzzr) of the Finance Act, 1994 - demand do not sustain.

Business Support Services - appellants are taking loans from M/s. Salem District Central Co-operative Finance Bank and utilizing this money in providing jewel loans to their farmer members - HELD THAT:- The services rendered by the appellant are relatable only to its members and not to the bank and the charges collected for appraising jewels before sanctioning of loans are in the nature of cost incurred by the appellant for sanctioning of loans. As such, there is no BSS rendered in the instant case. As such, the demands raised under the impugned orders demanding service tax under “Auctioneer Service” and BAS are not maintainable.

GTA Services - Non-payment of service tax on transport of goods by road - appellants have undertaken the work of lifting and delivering of goods to the ration shops under the Public Distribution System - period from April, 2006 to March, 2011 - HELD THAT:- Reportedly the appellant has undertaken transportation of not only food grains and pulses but also sugar and other articles. The exemption for transport of food grains and pulses is available only with effect from 29th February, 2010. There is a finding in the Order-in-Original that the appellant has failed to give any evidence in order to claim exemption under Notification No. 32/2004-ST which provides for 75% abatement if the transporter has certified as to non-availment of cenvat benefit and also the benefit of Notification No. 34/2004-ST where freight paid on individual consignment upto Rs. 750/- and multi-consignment freight upto Rs. 1500/- exempted from payment of tax. The appellants have failed to submit consignment notes, freight vouchers, ledger account details etc. in order to substantiate their claim for these exemptions.

Appellant has relied upon the decision rendered in the case of M/s. Mutual Industries Ltd. Vs. Commissioner of CST, Vapi [2016 (1) TMI 889 - CESTAT MUMBAI], wherein it was held that denial of benefit of 75% exemption under GTA services for want of endorsement on the consignment note to the effect of non-availment of Cenvat credit is not maintainable - Considering this decision, it is held that the appellant is eligible for the benefit of Notification No. 32/2004-ST dated 03.12.2004 in computation of the demand of service tax payable for GTA service rendered - demand of service tax in respect of GTA Service provided is confirmed for the normal period which needs to be computed after according the benefit of Notification No. 32/2004-ST dated 03.12.2004.

Extended period of limitation - Suppression of facts or not - HELD THAT:- The appellants have put forth that no malafide can be attributed to evade payment of service tax and non-payment of service tax was due to the bonafide belief and there was no deliberate intention for not paying tax and it is the responsibility of the Revenue to discharge the burden that the appellants have deliberately omitted to pay tax. GTA service was introduced w.e.f. January 2005 and the understanding was that individual truck owners engaged would not fall under GTA service - The appellants had mostly undertaken carrying food and other items as part of PDS. So it cannot be said that appellant has wilfully suppressed any facts and so demand in respect of GTA invoking extended period cannot be sustained. As such, penalties imposed under Sections 77 & 78 of the Finance Act, 1994 are not warranted.

Thus, the demands confirmed against the appellant under “Auctioneer’s Service” and “Business Support Service” are not justified. Consequently, demand of interest and imposition of penalties are also set aside - However, demand of service tax in respect of GTA Service provided is confirmed for the normal period which needs to be computed after according the benefit of Notification No. 32/2004-ST dated 03.12.2004.

Appeal allowed in part and part matter on remand.
2023 (4) TMI 1076

Non-payment of Service Tax on commissions paid by the Appellant for external commercial borrowings - alleged mis-match of freight charges reflected in ST-3 vis-à-vis the books of account of the Appellant - HELD THAT:- CBIC has vide Instruction No.1083/04/2022- CX9 dated 23.05.2022 has laid down the guidelines (SOP) for NCLT cases - it was held in the Circular that A timeline of 90 days from the insolvency commencement date is available for filing of claims. However, it has been observed that there is an inordinate delay in filing of claims by Customs and GST authorities. This leads to their claims not being admitted and extinguished once a resolution plan is approved. It is also observed that the authorities then litigate on the rejection of each claims, despite the settled position that no claims can be raised once the plan is approved and no demands can be raised on the Resolution Application who has taken over the company through such a resolution plan.

It is found that from the date of approval of the Resolution Plan by the NCLT, the Appeal filed by the Appellant has abated and this Tribunal has become functus officio in the matters relating to this Appeal. Further it is also settled that the impugned Order-in-Appeal has got merged in the order of the NCLT approving the Resolution Plan. The Appeal stands abated as per Rule 22 of the CESTAT Procedure Rules, 1982 w.e.f. the date of approval of the Resolution Plan by the NCLT, i.e., 24.02.2023.

Appeal disposed off.
2023 (4) TMI 1075

Levy of Service tax - amount booked as ‘contractual adjustments’ towards contractor’s failure to lift and sell the prescribed quantity of material from the mines during the currency of contract - Forfeiture of earnest money deposit on account of contractors failure to honor the terms of the contract like delayed/non-payment, further sale of material at more than the prescribed ceiling rate, execution of contract fraudulently by giving incorrect information - Amount booked as other receipts which included aforesaid two amount.

HELD THAT:- The impugned order has observed that the appellant has received the amount as consideration for the failure on the part of the contractors to honor the terms of the contract or violating the conditions of the contract. Accordingly, the amount have been held to be taxable under clause (e) of section 66E of the Finance Act.

In M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [2020 (12) TMI 912 - CESTAT NEW DELHI], the Tribunal held that liquidated damages recovered on account of breach or non-performance of contract are not consideration in view of any service but are in the nature of deterrent imposed so that such a breach or non-performance is not repeated.

The Circular dated 28.02.2023 issued by the Central Board of Indirect Tax and Customs also provides that service tax cannot be levied on the amount collected for the said purpose - thus demand on contractual agreement do not sustain.

Alleged short-payment of tax to the extent of dead rent/surface rent paid by the appellant to the State Government - reverse charge mechanism - HELD THAT:- For the purpose of levying service tax, the taxable event is construed as the time when the service is provided or agreed to be provided. Thus, in order to determine whether levy of tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided. In the present case, the agreement between the appellant and State Government for grant of mining rights was executed on 02.01.2016 and on this date, the transactions involving assignment of right to use natural resource was not taxable - prior to 01.04.2016, barring a few exceptions, all services provided by the Government were covered under the negative list and accordingly, not subjected to service tax.

With effect from 01.04.2016, however, section 66D(a)(iv) of the Finance Act was amended and 'all services provided by the government to a business entity were excluded from the negative list of services. Thus, services rendered by the government to a business entity became chargeable to service tax with effect from 01.04.2016 - In the present case, the appellant received services in relation to assignment of right to use natural resources from the State Government by virtue of the agreement dated 02.01.2016 and, therefore, the provisions of service tax, as were in force prior to 01.04.2016, would be applicable. Grant of natural resources was not excluded from the scope of negative list prior to 01.04.2016 and so no tax implication can be fastened on the appellant for such period - demand do not sustain.

Consideration regarding the fee paid to the Directors by the joint venture company - HELD THAT:- In this connection, it needs to be noted that the amount was only ‘held’ by the appellant on behalf of the joint venture/Directors and cannot be treated as income against provision of any service. Even otherwise, the transaction pertaining to this amount is between the joint venture company and the Directors and the appellant has no role to play.

Whether the appellant provided any services to the State Government against the area development charges? - HELD THAT:- For a service to be taxable, it is necessary that there should exists a service provider and service recipient relationship between the two parties. On a careful perusal of order dated 30.12.1996 issued by the State Government, it is apparent that the appellant was made entitled to 30% of the area development charges received by the State Government. These charges were paid to the appellant for meeting its administrative expenses, especially since the appellant is operating as a public sector undertaking of the State Government. There is no mention of any service which would be performed by the appellant in exchange of such amount. Thus, allocation of area development charges by the State Government can be regarded as income of the appellant, but it cannot be treated as consideration towards a service.

It is, therefore, not possible to sustain the impugned order dated 27.03.2019 passed by the Principal Commissioner - Appeal allowed.
2023 (4) TMI 1074

Refund of Service Tax paid on input services - appellant performs the role of intermediary for the overseas service receiver - place of provision of services - export of services or not - HELD THAT:- The relationship between the appellant and the overseas entities are that of Principal to Principal, and there is no otherwise relationship namely joint venture, partnership or agencies. It is not the case of revenue that the appellant had failed to export the taxable output service or failed to receive the payment for such services in convertible foreign exchange. Thus, the condition of Rule 6A (1) ibid have been fulfilled by the appellant for consideration of the disputed services as export of service for the purpose of grant of benefit of refund provided under the Rule 5 ibid read with notification issued thereunder. Further, it is also found that the concept of ‘intermediary’ appearing in the Rule 2(f) of the POPS Rules, 2012 has been dealt with by the CBIC under the GST regime.

The concept of ‘intermediary’ appearing in the Rule 2(f) of the POPS Rules, 2012 has been dealt with by the CBIC under the GST regime by Circular No. 159/15/2021-GST dated 20.09.2021 - though the said circular was issued under the GST regime but for the purpose of consideration of such phrase under the service tax regime, it should apply mutatis mutandis - the said circular has been issued on the basis of representations received, citing ambiguity caused in interpretation of the term ‘Intermediary services’, and after examination of the difficulties faced by the trade and industry, the said circular was issued, with a view to ensure uniformity in the implementation of the provision of the law across field formations.

In an identical case, this Tribunal in the case of M/S. BLACK ROCK SERVICES INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CGST, COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX GURGAON, HARYANA [2022 (8) TMI 874 - CESTAT CHANDIGARH] has defined the true meaning and purpose of the phrase intermediary holding that the appellant therein cannot be considered as an intermediary and accordingly, allowed the benefit of refund provided under Rule 5 ibid. - Rather, the contract referred in the case is the sub-contracting agreement for the services being provided by the appellant to overseas entity as the main contractor and thus, under no stretch of imagination, it can be held that the appellant is an agent or intermediary, engaged for facilitating business of overseas entity.

There are no merit in the impugned order, in so far as it has upheld the rejection of refund benefit to the appellant. Therefore, by setting aside impugned order, the appeal is allowed in favour of the appellant.
2023 (4) TMI 1073

CENVAT Credit - capital goods - M.S. Plates - MS Sheets/Aluminium Coil - Joist/Square/joist Challen/HR Plates/Shapes & Sections/MS Channels - Angels - Welding electrodes CRSS Patti/HRSS Plates/HR Coil/Sheets etc. - period 15.05.2006 to 31.03.2010 - HELD THAT:- A consistent view has been taken that benefit of Cenvat credit is to be given in respect of the goods like angles, joists, beams, bars, plates, which go into fabrication of structures embedded to earth, which are to be treated inputs for capital goods.

In the judgment of M/S VANDANA GLOBAL LIMITED AND OTHERS VERSUS COMMISSIONER, CENTRAL EXCISE AND CUSTOMS, CENTRAL EXCISE [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT], the Chhattisgarh High Court has examined the term ‘capital’ goods defined in Cenvat Credit Rules, 2004. Finally, the benefit of Cenvat Credit has been extended to the assessee for using the goods as inputs.

The respondent-assessee has a right to claim Cenvat Credit in the items in question. The impugned order has been rightly passed after appreciating the facts in the right perspective and no ground is made out to interfere in the same. No substantial question of law arises in the present appeal.

Appeal dismissed.
2023 (4) TMI 1072

Method of Valuation - be assessed under Section 4A or under Section 4 of the CEA 1944 - table top wet grinders - institutional consumers or industrial consumers? - 1000 Table top wet grinders cleared to TNCSC in December 2012 without payment of any duty was proper - invocation of extended period of limitation - HELD THAT:- As per the ‘Explanation’ to the Rule 3 prior to its amendment, ‘Institutional consumer’ means institutional consumer like Transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution. This rule has subsequently been amended. As per the amendment brought to Rule 3 by G.S.R.359(E) Notification Dated 06/06/2013, published in the Gazette of India on 06/06/203, the definition of ‘industrial consumers’ or ‘industrial consumers’ has been made adding clauses (bb) and (bc) to Rule 2 and omitting the explanation given in Rule 3. Since the period covered by the impugned order is from December 2012 to December 2015, the law as it stood pre and post amendment will be both relevant in deciding the matter.

Pre-amendment period of Rule 2 and 3 - HELD THAT:- Sub section 4 of Section 4A states that where the manufacturer removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Hence the appellant has correctly applied Section 4A of CEA 1944 for clearance of the impugned goods during this period.

Post-amendment (notification dated 06/06/2013) - HELD THAT:- The amended Rule 2 and 3 of LMPCR, 2011, was not made a part of the show cause notice, for the relevant period and the appellants were not required to meet that legal challenge. This being so the demand by quantifying the duty based on the value of goods determined under Section 4 of CEA 1944, for the post amendment period must also fail - The demand for duty on the impugned goods quantified under section 4 of CEA 1944 for the entire period covered by the impugned order is not legal and proper. With duty not payable the penalty imposed, on the foundation of the incorrect valuation of goods, is also not legally sustainable. Hence the demand for duty quantified under section 4 of CEA 1944 and the penalty imposed in this regard are set aside.

Whether the 1000 Table top wet grinders cleared to TNCSC in December 2012 without payment of any duty was proper? - HELD THAT:- The duty was payable on the 1000 Table top wet grinders cleared to TNCSC in December 2012, is not in dispute. The valuation for the same would also be as per section 4A of CEA 1944. Hence the appropriation of the amounts paid during investigation is hence correct and is upheld.

Extended period of limitation - HELD THAT:- Having found that no differential duty, as was quantified in the impugned order, is payable for the entire period, the question, whether the invocation of extended period for issue of show cause notice will be attracted in the present case, loses relevance. It is however noticed that the appellant during the hearing, in pursuance of their submissions against invocation of extended period, has relied on audit report Gr.3/November 2012/CBE II Division Coimbatore II-B Range wherein, purportedly as per Advisory Note VII, by the Central Excise Department they were advised to follow Sec. 4A price for the branded goods for future clearance. It is found that this important matter, involving a critical document that would be fatal to the departments allegation of suppression of facts, was not agitated by the appellants before the Lower Authority. It does not find mention in the impugned order nor was it a point in the appeal filed by them before this Authority. Suddenly, it is found that the document (copy) being introduced at the end of oral submissions through the ‘Synopsis’ submitted by the appellant.

No petition was filed by the Learned Counsel to accept the document at the appellate stage as per the relevant provisions of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982. Moreover, it is found that the so-called audit report is neither addressed to anyone nor is it issued under the letter head of the Central Excise Department or signed by any authority. It has also not been authenticated by the Learned Counsel or the appellant, making the whole thing very suspicious and unreliable. Advocates / consultants / departmental representatives all represent their respective parties to help the Tribunal in the administration of justice. They owe a duty to their parties and can, following the proper procedure, place before the appellate forum all that can be fairly, reasonably and legally submitted on behalf of the parties and not more. We sincerely hope that we do not come across another such occasion in future.

Appeal allowed as per law, except for the amounts confirmed in the impugned order relating to 1000 table top wet grinders cleared to TNCSC in December 2012 - appeal allowed in part.
2023 (4) TMI 1071

Levy of Excise duty - intermediate excisable goods (Sugar syrup) which emerges during the process of manufacture of biscuits - demand on the ground that final product i.e. biscuits are exempted from Central Excise Duty - HELD THAT:- The department has not come up with any evidence to prove that the ‘Sugar Solution’ arising at the intermediate stage in the course of manufacturing of biscuits is marketable. In the absence of any such evidence and considering the fact that the condition in which ‘sugar solution’ emerges has very short life and thus not marketable in the condition in which it emerges during process of manufacture.

This issue has been settled by this tribunal in catena of decisions - reliance can be placed in the case of M/S DISHA FOODS PVT LTD, M/S ANAND FOOD PRODUCTS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, HYDERABAD - II [2019 (7) TMI 1462 - CESTAT HYDERABAD] where it was held that There are no sufficient evidence to show that the sugar syrup manufactured by appellant is a marketable commodity.

In the case of M/S. LUCKY BISCUIT COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE, PATNA [2017 (7) TMI 235 - CESTAT KOLKATA] it was held that CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical.

Since, the facts of the matter at hand are similar to one which have been cited, the same is followed and it is held that the impugned Order-In-Appeal is not sustainable - appeal allowed.
2023 (4) TMI 1070

100% Export Oriented Unit for the manufacture of Ultra fine magnet wire 45-52 AWG - Non-fulfilment of Export Obligation (condition of value addition) - short fall in the value addition by 45% during the period covering financial years 1994-95 to 1998-99 - recovery of Customs Duty [condition no. 6(iv) of Notification No. 53/92-Cus dated 04.06.1997] and Excise Duty [condition no. (c)(d) of notification no. 1/95-CE dated 04.01.1995] - whether the respondent assessee has violated the condition of above notifications - HELD THAT:- N/N. 53/97-Cus dated 03.06.1997 provides exemption to the capital goods imported for the purpose of manufacture of articles for export by 100% exported oriented unit - It can be seen that the 100% EOU has to fulfill the export obligation and conditions as mentioned in the export-import policy for the relevant period.

The appendix which have been provided to Rule 97 does not have specific entry ‘Ultrafine Magnetic Wires’ as a electronic item however, the same is to be governed by norms which have been prescribed for the computer software-hardware - It can be seen from the Appendix-1 for the exim policy 2002-2007 that electronic hardware does not have any minimum value addition norms, it need to be only a positive value addition.

Since it is an admitted fact that the respondent assessee had achieved value addition norms of about 25% and if we go by the minimum percentage of value addition prescribed in the exim policy, it is found that there has not been any substantial violation of value addition norms by the respondent’s 100% EOU. Thus there are no violation of the conditions of the exemption notification.

To decide whether there has been any violation of relevant exim policy by any Export Oriented Unit, the most appropriate authority to decide the violation of the policy are the officers of the Ministry of Commerce and Industry and as can be seen from the above orders, they have categorically found that there has been no violation on the part of the respondent assessee of any provisions of the import-export policy and it has very categorically been provided that no statutory requirement of achieving any minimum value addition and therefore as a corollary no violation of any provisions of the exim policy.

For demanding the forgone customs duty under the notification no. 53/97-Cus dated 03.06.1997 there need to be violation of the conditions of the import-export policy of the relevant period. Since the relevant authorities implementing the import export policy provisions have categorically found that there has not been any violation of the conditions therefore, no conditions of the exemption notification no. 53/97-Cus dated 03.06.1997 and notification no. 1/95-CE dated 04.01.1995 has been violated by the respondent assessee - relevant period taken for judging export performance was very short i.e. 18 months only which they were to achieve the entire export obligation in 5 years. The fact is also noted that the Export Oriented Unit was continuously engaged in the export of their final product hence, no conditions of the exemption notification as well as exim policy has been violated by them and therefore, there are no short coming in the impugned order-in-original under challenge.

Appeal dismissed.
2023 (4) TMI 1069

Extended period of limitation - determination of value after claiming abatement of 35%, even after the same was revised by Notification dated 24.12.2008 - appellant has pleaded that the error in computing the assessable value was bonafide error for which extended period of limitation cannot be invoked - HELD THAT:- In the case of ZENITH COMPUTERS LTD. VERSUS UNION OF INDIA [2003 (12) TMI 62 - HIGH COURT OF JUDICATURE AT BOMBAY], Hon’ble Bombay High Court has held that the period of limitation prescribed under the Rule 6 has nothing to do with the contract regarding the export but it essentially refers to the date of actual export and admittedly, the applications were filed beyond the period of sixty days from the date of each of the exports.

In the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. PETER & MILLER PACKERS [2015 (3) TMI 737 - MADRAS HIGH COURT], Hon’ble Madras High Court has held that The element of mens rea is one of the components that will be relevant for the purpose of invoking proviso to Section 11A of the Central Excise Act. In the present case, merely pleading ignorance of law, the assessee cannot wriggle out of the duty liability for the larger period. The Tribunal has been kind enough to remand the matter for de novo adjudication on a claim of Modvat credit and that has been allowed. However, the fact remains that duty liability has to be worked out for the larger period if the ingredients of Section 11A has been made out.

In view of the above decisions of Hon’ble Bombay High Court and of Hon’ble Madras High Court, we do not find any merits in this appeal.

Appeal dismissed.
2023 (4) TMI 1068

Adjustment of Excess Excise duty paid - whether adjustment of duty excess paid during the period of provisional assessment is permitted at the time of finalisation of assessment in terms of rule 7 of the Central Excise Rules when the appellants had neither take the refund of said excess nor had ever availed Cenvat Credit of duty liability discharged?

HELD THAT:- The Larger Bench of this Tribunal in the case of HINDUSTAN ZINC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2015 (11) TMI 953 - CESTAT NEW DELHI (LB)] has decided this issue - It was held that If on finalisation of assessment, assessee required to pay shortfall duty during a particular period and denied excess payment made during another period of same financial year, entire purpose of keeping assessment provisional would become a futile exercise. In that case, it becomes a case of short paid/assessed duty for that period and ending with recovery of same. Further, adjustment of excess paid duty against short payment not to be denied on taking of Cenvat credit by sister unit inasmuch as it is assessee’s total duty liability after adjustment of short paid duty with excess paid duty which would be available as credit to other unit.

The Tribunal, Mumbai Bench in the case of M/S MERCEDES-BENZ INDIA PVT. LTD. VERSUS CCE, PUNE-II [2016 (10) TMI 79 - CESTAT MUMBAI] also held that Adjustment of excess duty paid is allowable at the time of finalization of provisional assessment even when goods supplied to sister unit, who availed Cenvat Credit.

The Tribunal, Mumbai Bench in another case of CENTURY RAYON VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE-I [2014 (12) TMI 157 - CESTAT MUMBAI] has held Adjustment of excess duty paid against short duty paid is allowable at the time of finalization of provisional assessment if the assessee is able to establish that such excess payment has not been passed on but borne by the assessee.

In the present case, Unit II is not even the sister concern. Appellant admittedly has not taken Cenvat Credit. These admissions when are read with above discussed settled legal position, it stands clear that the adjustment of excess duty paid is liable at the time of finalisation of the provisional assessment. No Cenvat Credit ever been taken, admittedly, by the appellant. The question of any unjust enrichment of the appellant does not at all arise. In view of these observations, it is held that the Adjudicating Authorities below have wrongly denied the adjustment of excess duty of the amount of Rs. 2,17,328/- paid by the appellant to the amount of duty confirmed.

Appeal allowed.
2023 (4) TMI 1067

Detention of goods alongwith vehicle - failure to produce any document and failure to explain the manner in which the goods were being transported from Delhi to Haryana - case of tax evasion - levy of tax with penalty - HELD THAT:- The arguments raised by the appellant lack any merit. Admittedly, the goods i.e. kabuli chana kept in 330 bags was being transported by the appellant from Delhi to Kundli, District Sonepat i.e. in the State of Haryana. It has come on record that when the goods were brought from Delhi to State of Haryana, no original Form DVAT-33 which was required to be statutorily issued had been shown by the driver. When the authorized representative of the appellant had appeared before the Detaining Authority, even at that time only photocopy of Form DVAT-33 had been shown which was not found to be complete as neither the serial number of the vehicle in which the goods were transported, signatures of the consignor and consignee nor the goods receipts accompanying the transaction showing the destination of the goods to be delivered were shown. As such, the stand taken by the appellant that the goods were being sent for storage purposes only had not at all been substantiated.

It is revealed from the impugned order as passed by the Tribunal that it was only before the First Appellate Authority that some documents issued by one M/s Dhingra Cold Storage were tried to be shown by the appellant though at stage, such document could not be taken into consideration as Section 33 (3) of the Act, 2003 specifically bars acceptance of the same in appeal proceedings.

The Tribunal after considering all facts and circumstances had passed a well reasoned order which for the reasons mentioned, calls for no interference - Appeal dismissed.
2023 (4) TMI 1066

Smuggling of huge quantity of contraband - failure to prove that the truck was not being used for any illegal activities - vicarious liability of owner of the truck - HELD THAT:- The basic facts of the case as have been noticed above are not in dispute. The Appellant who is the registered owner of the truck was not arrested from the spot. A case was set up by the prosecution that Joginder Singh and Gurmail Singh were driver and cleaner of the truck. Even they were not arrested from the spot. Their identity was established on the basis of the information furnished to the police party by Ram Sarup (PW-6) and Naresh Kumar (PW-10). However, when appeared in Court, they were declared hostile. Joginder Singh and Gurmail Singh were acquitted. The Appellant is owner of the truck. He was not arrested from the spot. Section 25 of the NDPS Act provides that if an owner of a vehicle knowingly permits it to be used for commission of any offence punishable under the NDPS Act, he shall be punished accordingly.

In the case in hand, the prosecution has failed to produce any material on record to show that the vehicle in question, if was used for any illegal activity, was used with the knowledge and consent of the Appellant. Even presumption as provided for under Section 35 of the NDPS Act will not be available for the reason that the prosecution had failed to discharge initial burden on it to prove the foundational facts. In the absence thereof, the onus will not shift on the accused.

The issue was considered by this Court in BHOLA SINGH VERSUS STATE OF PUNJAB [2011 (2) TMI 1350 - SUPREME COURT]. It was opined that unless the vehicle is used with the knowledge and consent of the owner thereof, which is sine qua non for applicability of Section 25 of the NDPS Act, conviction thereunder cannot be legally sustained.

The case sought to be set up by the prosecution was that the driver and the cleaner of the truck made extra judicial confession before Balwan Singh s/o Chatar Singh. Ram Mehar who is the author of the FIR appeared as PW-8. In his statement also, nothing was stated against the Appellant. He also referred to the statement of Balwan Singh s/o Chatar Singh recorded during investigation, who was not produced in evidence.

The appellant in his statement recorded under Section 313 CrPC denied all the suggestions. In the entire evidence led by the prosecution, no material was produced against the Appellant to discharge initial burden to prove the foundational facts that the offence was committed with the knowledge and consent of the Appellant. It is a case in which he was not with the vehicle nor was he arrested from the spot when the accident occurred or when truck and contraband were taken into custody - The Trial Court had put entire burden of defence on the Appellant being the registered owner of the vehicle. The Court held that the driver and cleaner of the vehicle being poor will not take risk of smuggling such huge quantity of contraband without the connivance of the owner and it was for the appellant to clear his stand.

In the case in hand, the primary error committed by the Courts below while convicting the Appellant is that the onus is sought to be shifted on him to prove his innocence without the foundational facts having been proved by the prosecution. Hence, the conviction of the Appellant cannot be legally sustained.

Appeal allowed.
2023 (4) TMI 1065

Execution of decree - Period of limitation of 12 years - execution application was filed after 12 years from the date of the decree - whether the date on which the compromise decree dated 26.04.1960 was entered into in Civil First Appeal No.11/1959 or the date when the final decree was passed by the Civil Court in Suit No. 30 A/87 i.e. 31.03.1994, will be considered for establishing the period of limitation under the Limitation Act, 1963 for instituting execution proceedings?

HELD THAT:- The facts of the instant appeal reveal that the cause of action to execute the compromise decree arose when the premises were taken away from the possession of the Decree holders (Respondents Nos.1 to 4). The dispossession of the Respondents was confirmed vide final decree passed by the Civil Court in Suit No.30 A/87 when rights in favor of third person, namely, Mr. Malik Ram, were finally determined. Hence in our considered view, the cause of action would arise only on 31.03.1994. The prerequisite for enforceability of clause 6 is the dispossession of the defendants, de facto or de jure.

The limitation period would commence only with the decree becoming enforceable and thus is capable of being executed. In the instant case, the relevant date from which the period of limitation will begin only with effect from 31.03.1994. The period of twelve years is computable from the said date, hence the Execution Application made on 17.07.1995 is within Limitation.

It is also noted that during the pendency of this appeal, the opportunity for compromise was given to the parties. But, no compromise could be arrived at - the Courts below rightly held that the Execution Application is within Limitation.

Appeal dismissed.