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Showing 41 to 60 of 1471 Records
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2022 (1) TMI 1443
Validity of reassessment proceedings - scope of new provisions/substituted Sections - Scope of Sections 147 to 151 of the Income Tax Act, 1961 by way of the Finance Act, 2021 with effect from 1st April, 2021 - powers u/Section 3(1) of Relaxation Act - as argued notices in the present matters have been issued post 31st March, 2021 without following the procedure prescribed in the substituted Sections 147 to 151 w.e.f. 01st April, 2021 - HELD THAT:- Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void.
Consequently, the impugned reassessment notices issued under Section 148 of the Income Tax Act, 1961 are quashed and the present writ petitions are allowed. If the law permits the respondents/revenue to take further steps in the matter, they shall be at liberty to do so. Needless to state that if and when such steps are taken and if the petitioners have a grievance, they shall be at liberty to take their remedies in accordance with law.
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2022 (1) TMI 1442
Condonation of inordinate delay of 687 days of filing appeal - sufficient cause for delay or not - HELD THAT:- There is no dispute about the fact that generally the lis is not to be rejected on the technical ground of limitation but certainly if the filing of appeal suffers from inordinate delay, then the duty of the Court to consider the application to condone the delay before entering into the merit of the lis.
It requires to refer herein that the Law of limitation is enshrined in the legal maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time, as has been held in the judgment rendered by the Hon’ble Apex Court in Brijesh Kumar & Ors. Vrs. State of Haryana & Ors., [2015 (7) TMI 21 - SUPREME COURT].
Thus, it is evident that while considering the delay condonation application, the Court of Law is required to consider the sufficient cause for condonation of delay as also the approach of the litigant as to whether it is bona fide or not as because after expiry of the period of limitation, a right is accrued in favour of the other side and as such, it is necessary to look into the bona fide motive of the litigant and at the same time, due to inaction and laches on its part.
Thus, it is evident that the sufficient cause means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has “not acted deliberately” or “remained inactive”. However, the facts and circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the Court exercises discretion, it has to be exercised judiciously - It is, thus, evident that the ground of communication gap in communicating the impugned order has been made.
The order impugned has not been communicated but such ground cannot be said to be sufficient cause for condoning the inordinate delay, coupled with the fact of spread of Covid19 from 18.03.2020 to 25.02.2021 as admittedly, the order impugned was passed on 12.03.2019, the date when there was no spread of Covid-19, rather, the Pandemic Covid-19 has been surfaced only in the month of February-March, 2020 and as such, the ground of spread of Covid-19 from 18.03.2020 to 25.02.2021 cannot be construed to be a sufficient cause, rather, according to our considered view, such statement is misleading one, since one year ago from the time of spread of Covid-19, the impugned order was passed on 12.03.2019.
The grounds referred in the delay condonation application cannot be a sufficient cause to condone the inordinate delay of 687 days in filing the appeal.
Appeal dismissed.
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2022 (1) TMI 1441
Bogus purchases u/s 69C - HELD THAT:- We are afraid that the assessee’s claim of having made genuine purchases from the aforementioned party is not proved to the hilt. Backed by the aforesaid facts, we are of the considered view that the assessee’s claim of having made genuine purchases from the aforementioned party, viz. M/s Nidhi Printer cannot be accepted.
We find that the A.O had not doubted much the less dislodged the sales of the assessee company for the year under consideration - sales of the assessee company had been accepted by the department, we are of the considered view, that it can safely be concluded that the assessee had purchased the goods in question not from the aforementioned party, i.e M/s Nidhi Printer (supra), but at a discounted value from the open/grey market. We, thus, are of the considered view that in all fairness the disallowance of purchases claimed by the assessee to have been made from the aforementioned party can safely be restricted to 12.5% of the aggregate value of the impugned purchases in question. The Ground of appeal No. 1 is partly allowed in terms of our aforesaid observations.
Addition u/s 40A(2)(b) - salary paid by the assessee company to daughter of one of the director of the assessee company[Ms. Anita Podda] - HELD THAT:- It is only in a case where the expenditure claimed by the assessee qua the related parties is found by the AO to be excessive or unreasonable having regard to the fair market value of the goods, service or facilities, it is only there that the disallowance of that part of the expenditure as is considered by the A.O to be excessive or unreasonable is to be made by invoking the provisions of Sec. 40A(2)(a) of the Act.
In the case before us, we find that there is not even a whisper on the part of the A.O as to how the expenditure incurred on the salary paid director of the assessee company, a qualified MBA, was found by him to be either excessive or unreasonable having regard to the fair market value of the services which were rendered by her for the legitimate needs of the business of the assessee company. In sum and substance, the A.O had summarily scaled down the assessee’s claim of salary paid to Ms. Anita Poddar (supra) by an amount of Rs.6 lac, i.e, 50% of the total amount of salary paid, merely for the reason that the turnover of the assessee company was reduced to one half during the year under consideration.
The very basis for taking recourse to the provisions of Sec. 40A(2)(a) and disallowing the assessee’s claim for deduction of the salary paid to Ms. Anita Printer (supra) is absolutely misconceived, and thus, cannot be sustained in the eyes of law. We, thus, not being able to persuade ourselves to subscribe to the disallowance u/s 40A(2)(b) of Rs. 6 lac made by the A.O, therein, vacate the same. Accordingly, the order passed by the CIT(A) sustaining the said disallowance is set-aside. The Ground of appeal No. 2 is allowed.
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2022 (1) TMI 1440
Condonation of delay of 568 days in filing appeal - sufficient cause for delay or not - HELD THAT:- There is no dispute about the fact that generally the lis is not to be rejected on the technical ground of limitation but certainly if the filing of appeal suffers from inordinate delay, then the duty of the Court to consider the application to condone the delay before entering into the merit of the lis.
It is settled position of Law that when a litigant does not act with bona fide motive and at the same time, due to inaction and laches on its part, the period of limitation for filing the appeal expires, such lack of bona fide and gross inaction and negligence are the vital factors which should be taken into consideration while considering the question of condonation of delay.
Thus, it is evident that while considering the delay condonation application, the Court of Law is required to consider the sufficient cause for condonation of delay as also the approach of the litigant as to whether it is bona fide or not as because after expiry of the period of limitation, a right is accrued in favour of the other side and as such, it is necessary to look into the bona fide motive of the litigant and at the same time, due to inaction and laches on its part.
This Court further, is of the view that the bona fide approach of the Government would have been, if the delay condonation application would have made with the specific date about movement of file from one table to another but even then, it cannot be expected from the State authority to take time of 568 days in filing the appeal while it is known to everybody that the intra-court appeal is to be filed within the period of 30 days - when the State authorities are knowing about the period of limitation which is only for 30 days in preferring the appeal against the order passed by the learned Single Judge and even if, they are acting in a lethargic manner, the same cannot be said to be a bona fide approach on the part of the State.
This Court, therefore, is of the view that the explanation which has been furnished by the State appellant in the delay condonation application, cannot be said to be a sufficient cause to condone the inordinate delay.
The application for condonation of delay is dismissed.
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2022 (1) TMI 1439
Gross abuse of the process of law - disclosure of ingredients of the offence attributed against the accused/petitioner - compliance with mandatory provisions of law under section 202 of Cr.P.C. either by inquiring into the case himself or by directing an investigation to be made by a Police Officer or by such other person as he thinks fit before issuing summons under section 204 of the Cr.P.C.
HELD THAT:- The petitioner is admittedly residing outside the jurisdiction of the learned Magistrate 6th Court, Alipore who issued summons in this case without fulfilling the mandatory provision of section 202(1) of the Code of Cr.P.C. On a clear reading of the petition of complaint it is gathered that the petitioner was appointed by the company on 07.04.2014 and he worked till 26.09.2015, which is one year and five months. Annexure-I of the Offer letter for appointment dated 04.03.2014 discloses that the minimum tenure of service will be for one year. Therefore, discontinuation of service by the petitioner does not result in violation of his terms of service which is however inconsequential to the offence of cheating and breach of trust alleged - From the documents filed it is revealed that the resignation of the petitioner was accepted and Relieving letter dated 19.10.2015 and Experience Certificate dated 19.10.2015 have been issued by the Head, H.R. & ADMIN of the company at Kolkata.
Considering the allegations in the complaint as they were, to continue the criminal proceeding against the accused even for the offence under section 323 would be an abuse of the process of court and the law and that it was a fit case to exercise the powers under section 482 of the Cr.P.C., and to quash the impugned criminal proceeding. The facts and circumstances of the present case can be distinguished from the facts of the case cited by learned Advocate for the petitioner. In the referred case the complainant and one witness were examined as part of the inquiry under section 202 of the Cr.P.C. It is only after cognizance was taken and summons were issued that the question was raised about absence of a prima facie case, that ingredients of offence taken cognizance of were not satisfied and the impugned proceeding was an abuse of the process of court. In the instant case the provision under section 202 of Cr.P.C. have not been complied at all.
In the case under considering the learned Magistrate did not hold any inquiry under section 202 of Cr.P.C. though it is apparent from the complaint that the accused resided outside the jurisdiction of the court where the complaint has been lodged. Learned Magistrate on the other hand held an inquiry under section 200 of Cr.P.C. simpliciter and only examined the complainant and no other witness or document.
In the case of National Bank of Oman V. Barakara Abdul Aziz [2012 (12) TMI 965 - SUPREME COURT], Hon'ble Supreme Court while considering the amended provisions of sub-section (1) of section 202 Cr.P.C. observed that, "The duty of a Magistrate receiving a complaint is set out in Section 202 Cr.P.C. and there is an obligation on the Magistrate to find out if there is any matter which calls for investigation by a criminal court. The scope of enquiry under this section is restricted only to find out the truth or otherwise of the allegations made in the complaint in order to determine whether process has to be issued or not. Investigation under Section 202 Cr.P.C. is different from the investigation contemplated in Section 156 as it is only for holding the Magistrate to decide whether or not there is sufficient ground for him to proceed further. The scope of enquiry under section 202 Cr.P.C. is, therefore, limited to the ascertainment of truth or falsehood of the allegations made in the complaint.
The complaint is not quashed as the proceedings has remained inchoate without compliance of section 202 of Cr.P.C. laid down as a mandatory provision - the learned Magistrate has a committed an error of law by issuing summons against the accused petitioner under section 204 of Cr.P.C. without holding inquiry under section 202 of Cr.P.C. which is proscribed. Accordingly order dated 15.03.2016 issuing summons upon the petitioner/accused is found improper and is set aside.
The revisional application is allowed on its merit.
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2022 (1) TMI 1438
Rectification application u/s 254 - adjudication of appeal on merits as declaration under VSVS withdrawn - assessee/applicant decided not to proceed with the settlement under VSVS and no tax was paid as per Form-3, thus impliedly withdrew its declaration under VSVS - assessee submitted that the assessee wants to defend the appeal on merits, hence, the order [2021 (2) TMI 1381 - ITAT MUMBAI] vide which appeals of the assessee were dismissed as withdrawn and appeals of the Revenue were dismissed be recalled.
HELD THAT:- As the assessee had furnished copy of Form-3 issued under VSVS to substantiate that declaration filed by the assessee has been accepted by the Designated Authority. Subsequently, the assessee decided not to settle the claim under VSVS and contest the additions in appeal before the Tribunal, hence, the amount as specified in Form -3 was not paid. Under VSVS if the amount is not paid as per Form-3, then declaration made in Form-1 is treated as void and deemed never to have been made. Thus, in view of above, the order of Tribunal [supra] is recalled and the aforesaid appeals are restored to their original number for adjudication on merits.
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2022 (1) TMI 1437
Application for bail - Prolonged custody for more than 11 years - impact on fundamental rights - Offence punishable under Sections 302, 307, 147, 148, 149, 341, 323, 120-B and 427 of the IPC -Restrictions on granting bail under special legislations - Balancing the right to speedy trial with the gravity of the crime and societal impact - HELD THAT:- In the case of Supreme Court Legal Aid Committee [1994 (10) TMI 290 - SUPREME COURT], the Court had directed proviso for grant of bail that benefit of direction in clause (ii) and (iii) shall not be available to those persons who are in the opinion of the Trial Court for the reasons to be stated in writing likely to tamper with evidence or influence the prosecution witnesses.
In the case of Shaheen Welfare Association [1996 (2) TMI 597 - SUPREME COURT], it was cautioned that bail can be granted unless Court comes to conclusion that their antecedents are such that releasing them may be harmful to the lives of complainant, family members of complainant or witnesses. In the case of Hussainara Khatoon [1995 (8) TMI 345 - SUPREME COURT], it was observed that sympathy for under trials who are in jail for long terms on account of pendency of cases, has to be balanced having regard to impact of crime.
The Division Bench of this Court, in the case of NIA Vs. Areeb Majeed. [2021 (2) TMI 1380 - BOMBAY HIGH COURT] has observed that in cases under Special Acts, parameters for grant of bail are more stringent and they remain in custody. The courts are required to perform balancing act, so as to reach a golden mean in between the rights of an individual and those of society at large. The court has to look into those aspects while granting bail even on the ground that the under trial is in prolonged custody.
In the light of observations of Supreme Court and this Court as stated above, the Court has to perform balancing act. The sympathy for under trials who are in custody has to be balanced with gravity/magnitude of crime, likelihood of threat to witnesses. The analysis may be based on facts of each case.
It is required to be noted that the applicant is in custody for more than 11 years and 6 months. It is not clear as to when the trial would come to an end. The prosecution has so far examined 21 witnesses. There is proposed list of 62 more witnesses. The future picture is unclear as to how long it would take to conclude the trial. While the applicant had preferred previous application for bail, this Court thought it ft to expedite the trial instead of granting bail. The trial Court was directed to conclude the trial within a period of six months vide order dated 11th December, 2019. At that time 19 witnesses were examined. Two years down the line, two more witnesses were examined. 11 and half years is a long period. There is passage of about two years from the issuance of the said directions and apparently only two witnesses are examined. Even before the declaration of lock-down, there was no speed in the trial. The applicant cannot be incarcerated in custody for indefinite period.
Prolonged custody infringes Article-21 of the Constitution of India. Except apprehension, there is no material that the applicant would abscond or tamper with the evidence. Co-accused Sanjay Bhairu Waskar has been granted bail by this Court vide order dated 10th November, 2014. The said accused was involved in other cases. Apart from merits of the case, this Court had observed that, the said accused is in custody from 13th June, 2010, for a period of about 4 and half years. Hence, case for grant of bail is made out.
Hence, Criminal Bail Application is allowed.
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2022 (1) TMI 1436
Challenged the Grant of bail by the High Court - Non reason order - Allegations against the Accused-Respondents - Offences punishable Under Sections 147, 148, 452, 324, 307, 302, 504, 506 with Section 34 of the Indian Penal Code ('IPC') - Judicial reasoning and principles for granting bail - Appellant is the mother of the deceased Yameen - eyewitness to the attack on her sons - HELD THAT:- While we are conscious of the fact that it is not necessary for a Court to give elaborate reasons while granting bail particularly when the case is at the initial stage and the allegations of the offences by the Accused may not have been crystalised as such, an order de hors any reasoning whatsoever cannot result in grant of bail. If bail is granted in a casual manner, the prosecution or the informant has a right to assail the order before a higher forum.
As noted in Gurcharan Singh v. State [1977 (12) TMI 141 - SUPREME COURT] when bail has been granted to an Accused, the State may, if new circumstances have arisen following the grant of such bail, approach the High Court seeking cancellation of bail u/s 439(2) of the Code of Criminal Procedure. However, if no new circumstances have cropped up since the grant of bail, the State may prefer an appeal against the order granting bail, on the ground that the same is perverse or illegal or has been arrived at by ignoring material aspects which establish a prima-facie case against the Accused.
Thus, we do not think that these cases are fit cases for grant of bail to the Accused-Respondents, having regard to the seriousness of the allegations against them as well as the aforesaid reasons.
The Supreme Court set aside the High Court's orders granting bail to the Accused-Respondents, citing the seriousness of the allegations and the lack of proper judicial reasoning. The Accused-Respondents were directed to surrender before the concerned jail authorities within two weeks. The appeals were allowed, and the bail bonds of the Accused-Respondents were canceled.
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2022 (1) TMI 1435
Public Interest Litigation - constitution of special commission on environment for bringing the policy on sustainable development - framing of policy for protection of the environment on the principle of ‘one person one tree’ - Doctrine of separation of powers - HELD THAT:- It is a settled law that framing policies is the domain of the Government and it is not for this Court to direct framing of any policy.
Making a policy with respect to environmental protection and/or issuing Guidelines thereunder is purely a matter of policy decision of the Government and a very complex phenomenon. It is no longer res integra that a Court will not interfere in policy making as the policies are framed based on expert knowledge of the persons concerned in the respective fields. Courts are not equipped with the necessary expertise to substitute their own views and direct formulation of policies tailor-made to suit the requirements of the Petitioner in a given case. While exercising the power of judicial review, it must be kept in mind that Court cannot direct, advise or sermonise the executive in matters of policy framing, which is purely the domain of the executive under the doctrine of separation of powers.
Courts can certainly examine a policy or an action of the Executive, if it is unreasonable, unfair, arbitrary or unlawful or if it is unconstitutional, but cannot issue directions to frame a policy in a particular manner. There is a clear separation of power in the scheme of the Constitution of India and the duty to formulate policy is entrusted to the Executive. Predominant role of the Court is to expound and interpret the law and not to legislate.
The prayers relating to formulation of the policy relating to environmental protection and directing that it be made on the principle of ‘one person one tree’, as suggested by the Petitioners, cannot be allowed - there are no reason to entertain the present petition and direct the Government to frame a policy.
The writ petition is disposed off.
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2022 (1) TMI 1434
Oppression and Mismanagement - Illegal transactions and siphoning of funds - removal of Mr. Mukesh Bhandari from the post of Managing Director of the Appellant Company - seeking waiver of the eligibility criteria laid down under Section 244 of the Act was dismissed by NCLT - HELD THAT:- The Hon’ble Apex Court in Muncipal Corporation of the City of Ahmedabad’ Vs. ‘Ben Manilal [1983 (4) TMI 291 - SUPREME COURT] held that wrong reference to the power under which an action was taken by the Government would not per se vitiate the action, if the same could be justified under some other power whereby the Government could lawfully do that act.
Section 420(1) of the Companies Act, 2013 provides for ‘the Tribunal may, after giving the parties to any proceeding before it, a reasonable opportunity of being heard, pass such orders thereon as it thinks fit.’ - Even in the absence of Rule 11 this Appellate Tribunal, being essentially a judicial forum determining and deciding rights of parties concerned and granting appropriate relief, can, in exercise of its powers to meet ends of justice, or prevent abuse of its process, pass any such Interim Directions. Such Powers being inherent in the constitution of the Appellate Tribunal, Rule 11 can merely be said to be declaring the same to avoid ambiguity.
As long as the power is present, non-quoting or misquoting of the Section is not fatal. A harmonious construction thus requires that the direction should cover two different situations. If a particular action is valid under one Section, it cannot be rendered invalid, or that the Tribunal is not empowered to pass such a direction, if the wrong Section is quoted. The statute empowers the Tribunal from passing any Interim Order, it deems fit and in such a situation, keeping the affairs of the Company in mind, the Tribunal has rightly moulded the reliefs. Cases are known in which Courts have moulded the reliefs to meet a situation such as this. Quoting a wrong Section/sub-Section does not estop a Court from taking note of events, circumstances which happen during that time frame. Hence, the intent of the law maker and the nature and scope of the Legislation is to be kept in mind, as any departure from the same could result in fatal consequences.
Both the Company Petitions 93 & 94 of 2018 be decided by NCLT as expeditiously as practicable, but not later than three months from the date of receipt of a copy of this Order - Appeal disposed off.
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2022 (1) TMI 1433
Civil suit - limited jurisdiction exercised by High Court - It is the appellant’s case that due to the detention, the appellant was prevented from effectively contesting and participating in the civil suit - Whether the High Court was justified and correct in law and on facts in exercising powers under Article 227 of the Constitution of India to set aside the order allowing the application under Order IX Rule 13 of the Code of Civil Procedure, 1908 filed by Shailendra Garg, sole proprietor of M/s Garment Craft?
HELD THAT:- The impugned order is contrary to law and cannot be sustained for several reasons, but primarily for deviation from the limited jurisdiction exercised by the High Court under Article 227 of the Constitution of India. The High Court exercising supervisory jurisdiction does not act as a court of first appeal to reappreciate, reweigh the evidence or facts upon which the determination under challenge is based. Supervisory jurisdiction is not to correct every error of fact or even a legal flaw when the final finding is justified or can be supported. The High Court is not to substitute its own decision on facts and conclusion, for that of the inferior court or tribunal.
The jurisdiction exercised is in the nature of correctional jurisdiction to set right grave dereliction of duty or flagrant abuse, violation of fundamental principles of law or justice. The power under Article 227 is exercised sparingly in appropriate cases, like when there is no evidence at all to justify, or the finding is so perverse that no reasonable person can possibly come to such a conclusion that the court or tribunal has come to. It is axiomatic that such discretionary relief must be exercised to ensure there is no miscarriage of justice.
The factum that the counsel for the appellant had applied for the certified copy would show that the counsel for the appellant was aware that the ex-parte decree had been passed on the account of failure to lead defence evidence. This would not, however, be a good ground and reason to set aside and substitute the opinion formed by the trial court that the appellant being incarcerated was unable to lead evidence and another chance should be given to the appellant to lead defence evidence. The discretion exercised by the trial court in granting relief, did not suffer from an error apparent on the face of the record or was not a finding so perverse that it was unsupported by evidence to justify it.
The impugned order dated 4th July 2019 is set aside - the order dated 24th July 2018 passed by the Additional District Judge, (Central), Tis Hazari, Delhi, is restored allowing the application under Order IX Rule 13 of the Code and setting aside ex-parte decree and the judgment dated 8th November 2016 - Appeal allowed.
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2022 (1) TMI 1432
Murder - singular charge under Section 307/149 of IPC was framed for attempting to kill Bhanupratap Singh and Ajab Singh, instead of framing charges on two counts - HELD THAT:- The evidence which was led in the Trial of co-accused Dilip cannot be read in favor of the Appellant Surajbhan. Further, on 6-12-2018 and 16-4-2018, Bhanupratap Singh (P.W.1) and Ajab Singh (P.W.2) respectively, were being examined for co-accused Dilip only and not for the Appellant Surajbhan. Therefore, the Appellant Surajbhan would not get benefit of any word uttered by Bhanupratap Singh (P.W.1) and Ajab Singh (P.W.2) in their examination on 6-12- 2018 and 16-4-2018 respectively.
However, it is surprising, that although the Appellant Surajbhan Singh was being tried for offence under Section 302/149 of IPC for committing murder of Pahalwan and Darshan Singh, but the Trial Court, without giving any finding in respect of murder of Darshan Singh, convicted him only for the murder of Pahalwan - the Trial Court has passed an incomplete judgment.
Since, no appeal has been filed by the State in this regard, then whether this Court is helpless or can remand the matter for writing a judgment in respect of charge under Section 302/149 of IPC which was framed for murder of Darshan Singh as well as in respect of charge under Section 307/149 of IPC which was framed for making an attempt to kill Ajab Singh (P.W.2)? - HELD THAT:- Although no appeal has been filed by the State, but this Court is not reversing the judgment passed by the Trial Court. It is merely found that the judgment passed by the Trial Court is incomplete - In the present scenario, this Court cannot issue notice to the Appellant for enhancement of sentence as no sentence has been awarded by the Trial Court on above mentioned two charges. Further, this Court cannot remand the matter for re-trial, as no procedural lapse has been committed by the Trial Court, but only an incomplete judgment has been passed.
The appeal is continuation of Trial. An appeal thus is a rehearing of the main matter and the appellate court can reappraise, reappreciate and review the entire evidence—oral as well as documentary—and can come to its own conclusion. Therefore, this Court is of the considered opinion, that even in absence of any appeal by State, this Court in exercise of powers under Section 482 of Cr.P.C., can remand the matter for writing the judgment in respect of charge under Section 302/149 of IPC for murder of Darshan Singh and under Section 307/149 for making an attempt on the life of Ajab Singh (P.W.2) also, which was erroneously left by the Trial Court.
Appeal disposed off.
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2022 (1) TMI 1431
Approval of Resolution plan - the plan has no statement explaining how the Resolution Plan satisfies or intends to satisfy the requirements of engaging in the business of the FSP - HELD THAT:- The relationship between the customer and the Bank is the creditor and debtor and not a trustee. The Bank is not a trustee of money deposited by customers. In this case, the Corporate Debtor, i.e. DHFL, took a fixed deposit from their customers on the agreed interest on the amount invested in fixed deposits. Therefore, the relationship of the DHFL with the fixed deposit holders is that of a creditor and debtor and not of a trustee.
Hon'ble Supreme Court in the Committee of Creditors of Essar steel v Satish Kumar Gupta and others [2019 (11) TMI 731 - SUPREME COURT] has reinforced the position that the COC is the key decision-maker in the rehabilitation of Corporate Debtors. For the approval of the Resolution Plan, the Committee of Creditors is to take a business decision based on ground realities by a majority, which binds all the stakeholders, including dissentient creditors. The Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors.
It is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept the Resolution Plan, which may involve differential payment in different classes of creditors, together with negotiating with the prospective Resolution Applicant for better or different terms which may also involve differences in the distribution of amounts between the different classes of creditors.
Having participated in the CIRP, the Appellant's cannot challenge the action of the COC to approve the Resolution Plan, which is otherwise in compliance with the provisions of the IBC - By seeking payment outside the resolution process, the appellants who are also CoC members (other CoC members being banks, etc. are acting in a silo for obtaining funds at the outset, which is not only against the interest of all the stakeholders but also against a holistic resolution for maximisation of value & distribution of funds between different classes of creditors.
It is important to mention that the RBI Act and the NHB Act merely provides that the license of an HFC or NBFC may be cancelled if the deposit holders are not paid. Such a decision can be taken only after allowing the concerned HFC or NBFC to present its case. None of the legislation provides that FD holders are required to be paid in full. Therefore, it is not the case of the Appellant's that RBI is not empowered to act under the RBI Act or the FSP Rules. The Appellants acknowledges that statutory mandate made available to the RBI under the RBI Act and the FSP rules.
In the instant case, the RBI's exercise of its administrative discretion under Section 45-IE of the RBI Act superseded the board of DHFL and appointed Administrator. Accordingly, it decided to initiate the resolution proceedings concerning DHFL under the IBC and not the RBI Act - The RBI Act and the NHB Act merely provides that the license of an HFC or NBFC may be cancelled if the deposit holders are not paid. Such a decision can be taken only after allowing the concerned HFC or NBFC to present its case. None of the legislation provides that FD holders are required to be paid in full. Therefore, it is not the case of the Appellant's that RBI is not empowered to act under the RBI Act or the FSP Rules. It therefore, in the circumstances Section, 238 of the IB Code does not override any requirement of law governing the actions of the DHFL must be followed.
Thus, it is clear that NCLT or NCLAT have been endowed with limited jurisdiction as specified under the Code and cannot act as a court of equity or exercise plenary powers. Therefore, the fixed deposits of the Appellant's made from the lifetime earnings of the employees invested by the Provident Fund Trust with the Corporate Debtor, i.e. Financial Service Providers, is of no consequence. Accordingly, it can not be a condition authorising interference with the commercial wisdom of the CoC.
The impugned Order regarding the payment to the Appellants against their FD's as per the approved Resolution Plan with the requisite majority as required under law needs no interference, and both the appeals deserve to be dismissed - Appeal dismissed.
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2022 (1) TMI 1430
Challenge to Resolution Plan approved by the Adjudicating Authority - distribution mechanism under IBC - Appellants' main grievance is that the approved resolution plan has equated the Appellants who are fixed deposit holders (FD Holders) with other financial institutions/creditors and in contravention of the National Housing Bank Act (NHB Act) and Reserve Bank of India Act (RBI Act) have been given the biggest haircut under the Resolution Plan.
HELD THAT:- FD Holders have not filed any documents to show that amount deposited by the FD Holder was assets held in trust. Therefore, there is no legal justification whatsoever given by the Appellant/F.D. Holder to show that the money deposited by them was held in trust by DHFL and the amount held by DHFL were not assets of DHFL. Thus, Rule 10 of FSP Rules is inapplicable about the amount deposited by FD Holders.
It is well-established law that when two special statutes contain a non-obstante clause, the latter will prevail over the earlier statute. In case of any inconsistency between the provision of the Code and any other enactment, the provision of the Code will prevail. Therefore, provisions of the Insolvency and Bankruptcy Code enacted later will have overriding effect over the NHB Act and the RBI Act by the non-obstante clause.
In the case of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK & ANR. [2017 (9) TMI 58 - SUPREME COURT], the Hon'ble Supreme Court has held that in case of any inconsistency between the provisions of Code and any other law, the provisions of the Code shall prevail. Therefore, Insolvency & Bankruptcy Code which was enacted later, will override the NHB Act and RBI Act by the non-obstante clause of Section 238 of the Code.
It is clear that the relationship between the customer and the Bank is the creditor and debtor and not a trustee. The Bank is not a trustee of money deposited by customers. In this case, the Corporate Debtor, i.e. DHFL, took a fixed deposit from their customers on the agreed interest on the amount invested in fixed deposits. Therefore, the relationship of the DHFL with the fixed deposit holders is that of a creditor and debtor and not of a trustee. The money so deposited becomes a part of the DHFL's funds which is under a contractual obligation to pay the sum deposited by a customer to him and on maturity or as per the terms of the contract they were getting agreed rate of interest. Such a relationship between the DHFL & the fixed deposit holders is one of the creditor and debtor and not of a trustee."
Hon'ble Supreme Court in the COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT] has reinforced the position that the COC is the key decision-maker in the rehabilitation of Corporate Debtors. For the approval of the Resolution Plan, the Committee of Creditors is to take a business decision based on ground realities by a majority, which binds all the stakeholders, including dissenting creditors. The Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors.
Having participated in the CIRP, the Appellant's cannot challenge the action of the COC to approve the Resolution Plan, which is otherwise in compliance with the provisions of the IBC - Further, there is no rationale for treating the deposit holders as separate classes and providing them preferential treatment. IBC already contains various safeguards for the public deposit holders, including an Authorised Representative who can effectively represent that class of creditors.
It is important to mention that the RBI Act and the NHB Act merely provides that the license of an HFC or NBFC may be cancelled if the deposit holders are not paid. Such a decision can be taken only after allowing the concerned HFC or NBFC to present its case.
In the instant case, the RBI, in the exercise of its administrative discretion under Section 45-IE of the RBI Act, superseded the board of DHFL and appointed administrator. Accordingly, it decided to initiate the resolution proceedings with respect to DHFL under the IBC and not the RBI Act. Appellant's contention is mainly about the obligation of the administrator and the successor in the interest of the DHFL to ensure full repayment of deposit to have FD holders under the RBI and NHB act. It is further contended that there is no inconsistency between the provisions of the IBC and other provisions of law requiring repayment to deposit holders as per the terms and conditions of the deposit.
The RBI Act and the NHB Act merely provides that the license of an HFC or NBFC may be cancelled if the deposit holders are not paid. Such a decision can be taken only after allowing the concerned Housing Finance Company or NBFC to present its case. None of the legislation provides that FD holders are required to be paid in full. Therefore, it is not the case of the Appellant's that RBI is not empowered to act under the RBI Act or the FSP Rules.
Undisputedly the corporate debtor DHFL defaulted in making its payment obligations; therefore, RBI as a regulator itself stepped in and initiated insolvency proceedings of the erstwhile corporate debtor under the IBC read with FSP rules. It is a settled position of law that once a company is admitted into Insolvency, the IBC is a complete and exhaustive code that governs the entire process - The NHB and RBI Act operate in ordinary circumstances when a company is not undergoing Insolvency. As such, creditors of the Company under Insolvency cannot seek to enforce the NHB Act and RBI act provisions. In any event, it is amply clear that neither the provisions of the NHB Act nor the RBI act guarantees full repayment of deposits.
The impugned Order regarding the Payment to the Appellants against their FD's as per the approved resolution plan with the requisite majority as required under law needs no interference - appeal dismissed.
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2022 (1) TMI 1429
Claim filed by Operational Creditors belatedly, rejected - CIRP is now at the stage where the Resolution Plan has already been approved by the Committee of Creditors and the same has been filed before the Adjudicating Authority for approval - it was held by NCLAT that keeping in view the object of the ‘I&B Code’ which is Resolution of the Corporate Debtor in time bound manner to maximize value, if such requests of applicants like Appellant are accepted the purpose of ‘I&B Code’ would be defeated - HELD THAT:- There are no reason to interfere with the impugned order - appeal dismissed.
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2022 (1) TMI 1428
Maintainability of petition under Section 482 Cr.P.C. - Money Laundering - scheduled offence - scope of judicial review - registration of an ECIR by the officers of the Enforcement Directorate - HELD THAT:- The registration of an ECIR is an administrative act that is done by the officers of the Enforcement Directorate, for initiation of an investigation under the PML Act, which is a special statute and therefore, the same cannot be quashed, in exercise of the powers under Section 482 Cr.P.C., because, the registration of the ECIR is not under the Code.
The scope of Section 482 Cr.P.C. has been succinctly laid down by a Division Bench of this Court in K. RAJAMANICKAM AND ORS. VERSUS STATE OF TAMIL NADU AND ORS. [1991 (1) TMI 466 - MADRAS HIGH COURT] which says that The first part or the first clause, understood as above, conveys that the inherent power of the High Court can come into play when it is necessary to give effect to any order under the Code, if there is no express bar and if there is no other provision of the Act to ensure the implementation of the order. The second part or the clause will be available if in any proceeding of a Court, whether the High Court or a Court subordinate to it, any abuse of process is found or otherwise it is felt that to secure the ends of justice certain order of the High Court is necessary; it may act thus to prevent the abuse of process of any Court or otherwise to secure the ends of justice.
Thus, viewed from any angle, the registration of an ECIR by the officers of the Enforcement Directorate, cannot be a subject matter of judicial review under Section 482 Cr.P.C.
The objection raised by the Registry is upheld and this petition stands dismissed as not maintainable at the SR stage itself.
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2022 (1) TMI 1427
Seeking grant of bail - Money Laundering - embezzlement of more than Rs.18 crores and also of money laundering - misuse of liberty of jail in other cases or not - HELD THAT:- Keeping in view the gravity of the offence and the offence alleged is economic offence, which ultimately damages the national economy, the bail application of the applicant is deserved to be rejected.
The prayer for bail of the applicant is hereby rejected.
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2022 (1) TMI 1426
Refund of amounts collected from the petitioners as stamp duty on Bills of Entry filed for the goods imported - HELD THAT:- There is no escape for the State from the fact that it could not have insisted or compelled the writ-applicants to deposit an amount of Rs. 2,48,45,110/- towards the stamp duty - It appears from the materials on record, more particularly, from page-71 onward that all the delivery orders are in the nature of bill of entry.
The respondents nos. 1, 2 and 3 respectively are directed to refund the amount of Rs. 2,48,45,110=00 collected by way of stamp duty from the writ-applicants with 9% interest per annum for the period when the amount was collected till the actual refund of the same.
Application allowed.
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2022 (1) TMI 1425
Maintainability of appeal against Revision order u/s 263 - DR objected to the assessee’s filing the appeal directly to the Tribunal against the AO’s action giving effect to the 263 order passed by the Ld. Pr. CIT - according to Ld. CIT DR, the appeal of the assessee is invalid and the Tribunal does not have the jurisdiction to hear the appeal of the assessee even though revised Form No 36 has been filed by the assessee - HELD THAT:- We note that the assessee was the same who appeared on behalf of the appellant in the case of M/s. Good point Stockist Pvt. Ltd. (2021 (8) TMI 1411 - ITAT KOLKATA] and the facts of the present case are similar/identical in nature as that of M/s. Good point Stockist Pvt. Ltd. (supra) where the Tribunal was pleased to allow the assessee to withdraw the appeal and had given liberty to file fresh appeal against the action of the Ld. PCIT-4, Kolkata. The Tribunal was also pleased to condone the time consumed in prosecuting the appeal i.e. from the date of filing of the present appeal till receiving the copy of the Tribunal order and the period not to be taken into consideration for the purpose of calculating the limitation period. With the aforesaid same observation we allow the assessee to withdraw the appeal. Appeal of the assessee is allowed.
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2022 (1) TMI 1424
Addition under the head "capital gains" from sale of equity shares held by the assessee - FMV determination - value of leasehold interest in land - residual ownership rights were transferred in favour of person (who was the state subject i.e. resident of Jammu & Kashmir) - whether the value of leasehold interest in the land is to be included to determine the fair market value of each share on 1.4.1981? HELD THAT:- Assessee‟s were shareholders of M/s Jyoti (P) Ltd., who undisputedly owned the hotel building which stood on the land owned by Shri Vikramaditya Singh one of the shareholder, who had become the owner of the land by virtue of the partition of the family properties and the land falling to his share had in fact been leased out by him to the company, M/s Jyoti (P)Ltd.
We find force in the arguments of assessee that since in the state of Jammu and Kashmir no person other than the resident of the state can own the land, the title to the land stood in the name of Shri Vikramditya Singh and even the Hotel Building would have no independent value, if the land on which the building stood is not considered.
We find from deed of lease dt. 21.3.1973 that at the time when M/s Jyoti P. Ltd., had purchased the building by another deed of relinquishment on 21.3.1973, the Hotel Building was already existing on the land so leased and as such virtually it was a case where M/s Jyoti P. Ltd., had an absolute interest despite the fact it was only where the title of the land remained in the name of Shri Vikramaditya Singh. We find even the residual ownership rights were transferred in favour of Sh. Narendra Batra (who was the state subject i.e. resident of Jammu & Kashmir), who was a nominee of Bharat Hotels Ltd. on 16.1.1998 for a nominal value of Rs. 10 lacs when Perpetual Lease Deed was granted in favour of M/s Jyoti (P) Ltd.
We, therefore, find merit in the arguments of assessee that virtually Shri Vikramditya Singh had divested his rights title and interest in respect of the aforesaid land as early as from 21.3.1973 and for all practical purposes the land was considered to be the property of the company. Since under the state laws of Jammu and Kashmir any immovable property could not be owned by a person who is not a resident, only title of the property remained in the name of Shri Vikramaditya Singh. It is true that, lessee had only disclosed the value of the building in its Balance Sheet, despite the fact that it had also acquired and held lease hold rights. We find as on 1.4.1981 un-expired period of lease was 32 years as the lease granted was to expire only on 20.3.2013.
In order to determine the fair market value of each share as on 01.04.1981, it is necessary to adopt the aggregate of fair market value of the assets which would obviously include the value of leasehold interest in the land. In CWT vs. PN Sikand reported in [1977 (4) TMI 1 - SUPREME COURT] had held that an asset also consists of leasehold interest in a land and should be included in the valuation of such leasehold interest in the land. Similar view has also been taken in the decisions relied on by Ld. Sr. Counsel for the assessee in the case law compilation.
Thus we hold that while adopting the fair market value as on 01.04.1981, the value of leasehold interest in the land be also held to be included in the value of asset of M/s Jyoti Private Limited, so as to determine the fair market value of shares held by the sharesholders. The lease hold interest in the land is an asset of company and is capable of valuation. That the assessee had made no capital gain and the method of valuation adopted under the Wealth Tax Act is not applicable, while arriving at the fair market value of shares as on 01.04.1981 for the purpose of section 55(2)(b)(ii) of the Act. The various decision relied on by Ld. Special Counsel for the Revenue are distinguishable and not applicable to the present case. Accordingly, the order of the Ld. CIT(A) on this issue is upheld and the grounds raised by the Revenue on this issue of Capital Gain are dismissed.
Characterization of income - correct head of income - agricultural income or income from other sources - assessee could not substantiate its agricultural income and the assessee was not showing any agricultural income in the past years - CIT(A) deleted addition - HELD THAT:- The assessee before the Assessing Officer as well as the Ld. CIT(A) had filed the details of agriculture produce and the details of sale etc. It is also submitted before the Ld. CIT(A) that the apple and Cherry trees which were planted before three four years earlier had started giving fruits during the year and therefore the assessee has shown agricultural income from this year. Merely because the assessee had not shown agricultural income in the past, in our opinion, cannot be a ground for rejecting the claim of agricultural income during the impugned year especially when the assessee had filed the details of agricultural land and the receipts of the buyers who had purchased the apple and cherry. We, therefore, uphold the order of the ld. CIT(A) on this issue and the ground raised by the Revenue on this issue is dismissed.
Validity of reassessment proceedings - income declared by the assessee in the invalid return has escaped assessment in terms of section 147 - HELD THAT:- Since, such income has already been offered to tax and due taxes have already been paid, therefore, pre-requisite before the issuance of notice of escapement of income on 10.01.2001 being not satisfied, assumption of jurisdiction u/s 148 of the Act and consequent assessment order passed in our opinion is unsustainable in law especially when there was time available with the AO to complete the assessment u/s 143(3)/144 upto 31.03.2001. Further, the Assessing Officer in the order passed u/s 143/147 of the Act has brought to tax a sum by way of capital gain which was not the ground of reopening of the assessment. Therefore, we agree with the contention of the ld. Sr. Counsel for the assessee that such addition made in the assessment order is unsustainable in law in view of the decision of Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] and Jet Airways (I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY]
Reopening of the assessment in the case of Dr. Karan Singh and other two assessees - We find the proceedings u/s 148 of the Act was initiated after a period of four years from the end of the relevant assessment year. The entire basis on which the proceedings had been initiated u/s 147 of the Act in the case of the three assessees was on the basis of the findings recorded by the A.O. in the order of assessment dated 26.03.2002 in the case of Mr. M.K. Ajat Shatru Singh, such findings had ceased to remain valid findings when the learned CIT(A) had held that no gain had accrued to the assessees. Therefore, such reopening of assessment after the order of the Ld. CIT(A) holding that no gain had accrued to the assessees in our opinion makes the reassessment proceedings unsustainable in law since the foundation on which the structure was proposed did not exist.
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