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1984 (10) TMI 211
Whether the charges of corrupt practice were established?
Held that:- The High Court clearly overlooked the fact that disturbing the election meeting by itself did not constitute undue influence. For establishing the link between the disturbance of the meeting and the returned candidate the evidence is wholly oral in character and has to be scrutinised with greater rigour. Merely on the statement of some of the witnesses who were essentially Akali Party workers or supporters a charge of corrupt practice could not have been taken as proved. The approach of the learned trial judge to the matter is contrary to law as settled by decisions of this Court relating to corrupt practice and proof thereof.
PW.12 was a supporter of the Akali Party as stated by him though he also indicated that he had accompanied the appellant in the course of canvassing for votes to Bagicha Singh’s house. A sum total view of the evidence, in our opinion, falls short of the legal requirement for finding corrupt practice. Here again, we are of the view that the High Court went wrong in accepting the case of the election petitioners that the appellant had committed corrupt practice for procuring the votes of Bagicha Singh, members of his family and his friends by getting the over-hanging electric wires removed. After all, if there be any scope for doubt, it must resolve in favour of the appellant who was facing a quasi-criminal charge.
The appeal has to succeed. We accordingly reverse the decision of the High Court and uphold the election of the appellant. The finding of the High Court that he was guilty of corrupt practice under ss. 123(1) and (2) stands vacated.
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1984 (10) TMI 210
Issues involved: Interpretation of transactions involving replacement of parts during warranty period and pre-delivery charges under the M.P. General Sales Tax Act.
Replacement of parts during warranty period: The reference made by the President of the Board of Revenue questioned whether amounts reimbursed by the manufacturing company for replacement of parts during the warranty period constitute transactions of sale u/s the M.P. General Sales Tax Act. The assessee, a dealer of automobiles, argued that the replacement of spare parts during the warranty period, reimbursed by the manufacturer, does not amount to a sale but is part of the sale price of the vehicle. Citing a Supreme Court decision, the assessee contended that tax had already been charged on the sale price of the vehicle, and therefore, the reimbursement should not be taxed. The High Court agreed, stating that the dealer merely passes on parts from the manufacturer to the customer, and the transaction does not fall within the definition of "sale" under the Act.
Pre-delivery charges: The dispute also involved pre-delivery expenditure incurred by the dealer on damaged parts during transit, which was reimbursed by the manufacturer. The revenue contended that these charges constitute a sale of parts to the manufacturer and are therefore taxable. However, the High Court disagreed, stating that the dealer's role is to deliver vehicles in a salable condition on behalf of the manufacturer, and any reimbursement for pre-delivery charges does not amount to a sale. The Court held that both the replacement of parts during the warranty period and pre-delivery charges transactions do not fall within the definition of "sale" under the Act and are not liable to tax.
Conclusion: The High Court ruled that transactions involving reimbursement for parts supplied during the warranty period and pre-delivery charges do not constitute sales under the M.P. General Sales Tax Act and are not subject to tax. The Court directed the parties to bear their own costs in the matter.
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1984 (10) TMI 209
The High Court of Orissa held that clubbing together multiple cases for recovery of dues is illegal. The writ petition was allowed, and the sale proclamation for a consolidated amount of Rs. 4,09,718.52 was quashed. The authorities can proceed for recovery of dues in this case according to the law. No costs were awarded.
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1984 (10) TMI 208
The petition was filed against the order of the Assistant Sugar Commissioner enhancing the sugarcane purchase tax. The High Court found that the petitioners were not given a reasonable opportunity to be heard. The court quashed the order and remanded the case back to the Assistant Sugar Commissioner for a fresh decision after affording a reasonable opportunity of being heard to the petitioner.
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1984 (10) TMI 207
Issues Involved:
1. Whether "sugar-candy" should be considered as "sugar" and thereby be exempt from sales tax.
2. The maintainability of the writ petition under Article 226 of the Constitution.
Issue-wise Detailed Analysis:
1. Whether "sugar-candy" should be considered as "sugar" and thereby be exempt from sales tax:
The petitioner, a dealer in sugar-candy, argued that "sugar-candy" should be exempt from sales tax as it falls under the definition of "sugar" as per entry No. 37 of List A (List of goods exempted from Orissa sales tax). Entry No. 37 defines "sugar" as per item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944, which includes any form of sugar with more than ninety percent sucrose content. The petitioner supported this contention with several judicial decisions, including the Supreme Court's ruling in State of Gujarat v. Sakarwala Brothers and the Orissa High Court's decision in State of Orissa v. Satyabadi Sahu & Sons, which held that "sugar-candy" falls within the definition of "sugar" and thus is tax-free.
Opposite parties contended that "sugar" and "sugar-candy" are treated as separate items under different lists in the Sales Tax Act, with "sugar" being tax-free and "sugar-candy" taxable at 4%. They argued that the legislative intent was to treat these items differently, supported by recent decisions from the Andhra Pradesh High Court (Surana and Company v. State of A.P.) and the Madras High Court (Nemichand Parasmal and Company v. Deputy Commercial Tax Officer), which held that "sugar-candy" is a distinct commodity from "sugar" and thus taxable.
The court noted that during the relevant period, "sugar-candy" was included in List C (List of goods subject to sales tax) and was taxable. It acknowledged the petitioner's argument that "sugar" includes "sugar-candy" based on the definition in the Central Excises and Salt Act, 1944. However, it emphasized that the legislative intent, as evidenced by the separate listing of "sugar-candy" in List C, was to treat it as a distinct taxable commodity. The court referred to the Supreme Court's decision in State of Tamil Nadu v. Pyare Lal Malhotra, which clarified that each specified item in a tax list is considered a separate taxable commodity, even if made from the same substance.
The court concluded that "sugar-candy" is commercially a different product from "sugar" and thus subject to sales tax. The legislative competence to classify and tax "sugar-candy" separately from "sugar" was upheld.
2. The maintainability of the writ petition under Article 226 of the Constitution:
The opposite parties argued that the writ petition under Article 226 of the Constitution was not maintainable as an alternative remedy was available under the statute. The court did not explicitly address this issue in detail but proceeded to analyze the main contention regarding the taxability of "sugar-candy."
Conclusion:
The court held that "sugar-candy" is liable to sales tax under entry No. 86 of List C during the relevant period. The writ petition was dismissed, and no order as to costs was made. The decision was concurred by both judges.
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1984 (10) TMI 206
Issues Involved:
1. Jurisdiction of the Sales Tax Officer under Section 46A of the Gujarat Sales Tax Act, 1969.
2. Obligation to make a draft assessment order.
3. Interpretation of Section 46A(1) and (2) of the Act.
4. Legislative intent behind Section 46A.
5. Constitutional validity and principles of statutory interpretation.
Detailed Analysis:
1. Jurisdiction of the Sales Tax Officer under Section 46A:
The primary issue revolves around whether the Sales Tax Officer had jurisdiction to make a final assessment order without first issuing a draft assessment order as mandated by Section 46A of the Gujarat Sales Tax Act, 1969. The petitioner contended that the Sales Tax Officer acted beyond his jurisdiction by not adhering to the statutory requirement of issuing a draft order when the tax liability exceeded Rs. 25,000 and the penalty exceeded Rs. 7,500.
2. Obligation to Make a Draft Assessment Order:
The petitioner argued that the Sales Tax Officer was under an obligation to issue a draft assessment order before finalizing the assessment, as the tax liability imposed exceeded the statutory thresholds. The Sales Tax Officer, however, contended that this obligation arises only when a return is filed by the dealer, indicating a self-assessed tax liability.
3. Interpretation of Section 46A(1) and (2):
The Court examined the language and intent of Section 46A(1) and (2), which mandate that a draft order must be issued if the proposed assessment or penalty exceeds specified amounts. The Court found that the legislative intent was to ensure that any significant increase in tax or penalty liability should be subject to review by a higher authority to prevent arbitrary or careless assessments.
4. Legislative Intent Behind Section 46A:
The Court referred to the report of the study group established by the State Government, which recommended the insertion of Section 46A to minimize arbitrary increases in tax burden and to enhance the quality of assessments. The Court emphasized that the purpose of this provision was to curb arbitrary assessments and reduce the number of appeals arising from such assessments.
5. Constitutional Validity and Principles of Statutory Interpretation:
The Court discussed the principles of statutory interpretation, particularly the need to interpret machinery provisions in a manner that makes them workable. The Court rejected the State Government's narrow interpretation that the obligation to issue a draft order arises only when a return is filed. Instead, the Court held that the obligation exists whenever the assessed liability exceeds the statutory thresholds, regardless of whether a return was filed.
Conclusion:
The Court concluded that the Sales Tax Officer exceeded his jurisdiction by making a final assessment order without first issuing a draft assessment order, as required by Section 46A. The petition was allowed, the impugned assessment order dated 25th May 1984 was quashed, and the matter was remitted to the Sales Tax Officer to pass a fresh draft assessment order and issue notice to the petitioner as contemplated under Section 46A. Rule was made absolute with no order as to costs.
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1984 (10) TMI 205
The High Court of Kerala held that sprayers are considered agricultural implements and are exempt from sales tax. Zinc sulphate is classified as a chemical fertilizer under the Fertilizer (Control) Order. All revision cases were dismissed with no costs awarded.
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1984 (10) TMI 204
Issues:
1. Whether "cashew and its kernel" in item 88 of the Second Schedule are two different commodities or one commodity.
Detailed Analysis:
The judgment delivered by the Karnataka High Court pertains to a revision petition under section 23(1) of the Karnataka Sales Tax Act, 1957, challenging the levy of purchase tax on the turnover of raw cashewnuts for a specific assessment year. The petitioner, a company dealing in various commodities including cashewnuts, contested the tax imposed on the purchase of raw cashewnuts under section 6 of the Act. The assessing authority had determined the value of the purchased cashew and imposed tax on it, which was upheld by the appellate authorities. The Karnataka Appellate Tribunal partially allowed the appeal, confirming the tax on the purchase of raw cashewnuts but modifying the tax on the sale of cashew kernels. The core issue in question was whether "cashew and its kernel" should be considered as two distinct commodities or one commodity for tax purposes.
The judgment delves into the legislative history and amendments related to the classification of "cashew and its kernel" under the Sales Tax Act. It highlights the changes brought about by various amendment Acts, including the insertion of explanation VI to the Second Schedule, which exempts tax on the kernel pressed out of cashew if tax has been paid on the cashew itself. The court examines the provisions of section 6 of the Act, which outline the conditions for the levy of purchase tax, emphasizing that the goods purchased must be used in manufacturing or disposed of in a certain manner.
The arguments presented by both parties are scrutinized by the court. The petitioner's counsel contended that cashew and its kernel should be treated as one commodity, citing the legislative intent behind the amendments and the placement of both items under the same heading in the schedule. Conversely, the Government Advocate argued that the conversion of raw cashew into edible kernel results in a different commercial commodity, justifying the levy of tax on the purchase of raw cashewnuts.
The court references previous judgments, including one by the Supreme Court, which established that cashewnuts and kernels are commercially distinct commodities. While the petitioner relied on a decision from the Andhra Pradesh High Court, the Karnataka High Court disagreed with that interpretation, emphasizing the Supreme Court's definitive stance on the matter. The court also dismisses the argument that the placement of cashew and its kernel under the same entry implies they are one commodity, citing precedents that clarify such categorizations.
Ultimately, the court concludes that the legislative intent behind the amendments and the application of section 6 of the Act warrant the imposition of tax on the purchase turnover of raw cashewnuts. The exemption clause in explanation VI is interpreted as a concession to exempt tax on the kernel, not indicative of treating both items as a single commodity. As all conditions for the levy of tax under section 6 are met, the court upholds the tax on the purchase turnover of cashew, dismissing the petition with no costs awarded.
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1984 (10) TMI 203
Issues:
Interpretation of provisions under the Essential Commodities Act and the Income Tax Act regarding the confiscation of rice from a miller, determination of whether the confiscated rice value can be claimed as a business loss under sections 28(1) or 37(1) of the Income Tax Act.
Analysis:
The case involved a firm operating a rice mill that failed to deliver the required levy rice under the Essential Commodities Act, resulting in the confiscation of rice valued at Rs. 43,974. The firm claimed this amount as a business loss under the Income Tax Act. The court was tasked with determining whether the confiscated rice value could be treated as a business loss under section 28(1) or as an expense under section 37(1) of the Income Tax Act.
The firm's counsel argued that the confiscation order was not a penalty but a measure to ensure compliance with the levy order. They cited precedents to support their contention that the confiscation was not punitive in nature. However, the court rejected this argument, emphasizing that the confiscation order was justified and affirmed in appeal and revision, indicating the firm's failure to comply with the levy order.
The counsel also attempted to draw distinctions between judgments in rem and in personam to support the claim that the loss should be allowed as a business loss. However, the court referenced Supreme Court decisions that rejected such distinctions in tax cases, emphasizing the principle of public policy that expenses paid as penalties for law breaches cannot be considered business losses.
Furthermore, the court examined previous cases involving losses incurred due to violations of agreements or laws in the context of business. It highlighted that losses resulting from infractions of the law are not permitted to be deducted as business losses, aligning with the principle established in previous Supreme Court rulings.
Ultimately, the court held that the loss suffered by the firm due to the confiscation of rice resulted from a violation of the law, and therefore, it could not be treated as a business loss under section 28 of the Income Tax Act. The judgment favored the Revenue, denying the firm's claim for the confiscated rice value as a business loss or expense under the Act.
In conclusion, the court refused oral leave to appeal to the Supreme Court, stating that no substantial question of law arose in the case warranting further consideration. The decision was based on the firm's failure to deliver levy rice as required by law, leading to the confiscation of rice, which was deemed a consequence of a legal violation rather than a business loss.
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1984 (10) TMI 202
Whether there is rationality in the belief of the legislature that capacity to pay the tax increases, by and large, with an increase of receipts?
Held that:- Appeal dismissed. As the contentions put forward by the petitioners that the impugned enactment is devoid of legislative competence inasmuch as it imposes not a tax on sales but a tax on income, that the adoption of a slab system for determining tax liability is alien to the concept of sales tax and that the levy of additional tax under the impugned enactment violates articles 14 and 19 of the Constitution are all totally devoid of merit. We do not also see any substance in the plea raised in the writ petitions that the provisions of the impugned Act are violative of article 301 of the Constitution.
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1984 (10) TMI 194
Issues Involved:
1. Whether the claim was barred by limitation.
2. The material date for computing the limitation period.
3. The jurisdiction and restrictions imposed by the District Judge.
Issue-wise Detailed Analysis:
1. Whether the claim was barred by limitation
The claimant sought Rs. 1,17,948.49, which was initially denied by the joint official liquidator as time-barred. The District Judge, however, ruled that the claim was not barred by limitation, relying on precedents from Jwala Prasad v. Jwala Bank Ltd. and S. Abdul Muthalibu v. K. M. Mohammed Abdul Khader. The District Judge interpreted that the limitation period should be computed from the date of the winding-up petition, which was within three years of the loan advance. The High Court, however, disagreed, stating the correct view in law is that the claim must be within time at the date of the winding-up order. The court cited Halsbury's Laws of England and other legal texts to conclude that a debt time-barred at the date of the winding-up order cannot be entertained.
2. The material date for computing the limitation period
The High Court clarified that the material date for computing the limitation is the date of the winding-up order, not the date of the application for winding up. The court referred to multiple decisions, including J. A. Dixit v. Official Liquidator and Chandbali Steamer Service Co. Ltd., In re, to support this view. It was emphasized that the statute of limitations is suspended from the date of the winding-up order, not the date of the petition. The court found the District Judge's reliance on Jwala Prasad's case to be a misinterpretation, as the correct interpretation is that the claim must be within time at the date of the winding-up order.
3. The jurisdiction and restrictions imposed by the District Judge
The District Judge had allowed the claim subject to the condition that the claimant would not be found guilty of misconduct in the company's affairs. The High Court found that since the claim was barred by limitation, the restrictions imposed by the District Judge were irrelevant. The cross-objection filed by the claimant, challenging these restrictions, was dismissed as it became moot once the claim was found to be time-barred.
Conclusion:
The High Court allowed the appeal, setting aside the judgment and decree of the District Judge dated September 8, 1977. The cross-objection was dismissed, and the parties were directed to bear their own costs. The court concluded that the claim was barred by time, and the material date for computing limitation is the date of the winding-up order, not the date of the petition.
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1984 (10) TMI 193
Issues Involved:
1. Prosecution under various sections of the Companies Act.
2. Applicability and interpretation of Section 633(1) and Section 633(2) of the Companies Act.
3. Validity of the Registrar's actions in light of Company Law Board circulars.
4. Specific allegations of misfeasance and breach of duty by the petitioners.
Issue-wise Detailed Analysis:
1. Prosecution under Various Sections of the Companies Act:
The petitioners sought relief under Section 633(2) of the Companies Act to prevent prosecution by the Registrar of Companies. The Registrar initiated three criminal cases against the petitioners under Sections 209(5), 211, and 217 of the Companies Act. The court noted that once prosecution has commenced, objections to its propriety must be entertained by the court hearing the criminal case, as per Section 633(1).
2. Applicability and Interpretation of Section 633(1) and Section 633(2) of the Companies Act:
The court emphasized that Section 633(1) is explicit in stating that only the court hearing the criminal case can entertain objections once prosecution has started. However, Section 633(2) applies when there are apprehensions of prosecution but no proceedings have been initiated yet. The petitioners argued that their rights under Section 633(2) should not be nullified by the Registrar's actions, which were contrary to the Company Law Board's circular.
3. Validity of the Registrar's Actions in Light of Company Law Board Circulars:
The petitioners contended that the Registrar's prosecutions defied the Company Law Board's circular, which advises against starting prosecution after an application for relief under Section 633 has been filed. The court acknowledged that while the circulars are not statutory, they should be respected by the Registrar, who is subordinate to the Company Law Board. The Registrar should have awaited the outcome of the Section 633(2) petition or requested an expedited decision instead of filing complaints.
4. Specific Allegations of Misfeasance and Breach of Duty by the Petitioners:
- Prosecution under Section 217:
- Non-realization of Government Investments: The petitioners demonstrated bona fide efforts to recover Rs. 3,500 from government departments, which were delayed by bureaucratic red tape. The court found no criminal liability.
- Amounts Due from Ex-employees: The Rs. 400 owed by ex-employees was deemed too minor to warrant prosecution, and the court directed the Registrar to drop any such prosecution.
- Prosecution under Section 209(5):
- Fixed Assets Register: The petitioners maintained a register, albeit not in a prescribed form. The court suggested that the Registrar could have directed improvements rather than prosecuting. The petitioners agreed to update the register with acquisition dates and asset locations.
- Prosecution under Section 211:
- Interest Earnings from Fixed Deposits: The court noted that the interest was from member deposits for land plots, which are under litigation. The court refrained from expressing an opinion on whether this activity was within the club's permissible objects.
- Excess Subscription from Members: The court found no misappropriation or mala fides in the club's practice of collecting 13 months' subscription.
- Excess Realizations from "Tambola": Credited to the building reserve account with no evidence of misappropriation.
- Diwali Mela Bazaar Realizations: Used for the employees' dispensary fund, with no exception taken by the court.
- Complimentary Air India Tickets: Used by two office-bearers for personal benefit, the court did not interfere in the prosecution on this score.
- Misappropriation of Mineral Water Stock: A criminal case against staff members was already pending, showing the managing committee's vigilance.
- Water Cooler and Bottle Cooler: The court accepted the petitioners' explanation that the amount was debited to the capital account.
- Fire Loss in Green Room: The court accepted the explanation that repairs were accounted for in the same year.
- General Allegation of Untrue Accounts: The court found the allegations vague and not substantiated by specific instances.
The court concluded that the complaint under Section 211 could proceed subject to the observations made.
Conclusion:
The petition was disposed of with the court directing the Registrar to drop certain prosecutions while allowing others to proceed, emphasizing the need for adherence to Company Law Board circulars and the proper application of Sections 633(1) and 633(2) of the Companies Act.
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1984 (10) TMI 192
Issues:
- Validity of petition admission
- Payment of outstanding amount
- Dispute over interest claim
- Company's financial viability
- Legal implications of the case
Validity of petition admission:
The petitioner filed a winding-up petition after a compromise agreement, which required monthly payments. The company failed to make payments, leading to the petition's revival. The company argued that the notice became invalid due to partial payments. The court cited a Bombay High Court case where payments made under a compromise did not affect the petition's admission. The court emphasized that preferential treatment between creditors is determined at the time of winding-up, not admission.
Payment of outstanding amount:
The company paid a partial amount but failed to make further payments as per the compromise. The court held that the company's inability to pay its debts, despite partial payments, indicated financial distress. The court referenced a Supreme Court case emphasizing that a winding-up petition is not a debt recovery method. The company's financial situation, including an injunction on its bank account, indicated insolvency.
Dispute over interest claim:
The company disputed the interest claim, citing financial difficulties due to external factors like cyclones. However, the court noted that the company's inability to function and pay debts outweighed these arguments. The court highlighted that the company's manufacturing activities had ceased since January 1984, impacting its financial stability.
Company's financial viability:
The company claimed to be viable, citing export success and product reception. However, the court found that the company's inability to operate, coupled with financial constraints and injunctions, indicated insolvency. The court emphasized that the company's inability to function rendered it incapable of meeting financial obligations.
Legal implications of the case:
The court analyzed legal precedents to determine the validity of the petition admission. It referenced cases highlighting the court's discretion in admitting petitions based on the company's financial status and debt repayment capabilities. The court concluded that the petitioner's claim was just, and the company's financial instability warranted the petition's admission. The court ordered an advertisement and set a future date for the case, with the respondent intending to challenge the decision through further legal action.
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1984 (10) TMI 171
Issues Involved:
1. Petition under Section 155 of the Companies Act, 1956
2. Dispute over the transfer of 40 shares
3. Rejection of transfer by the Board of Directors
4. Pending litigation and its impact on the transfer
5. Laches and delay in seeking relief
6. Legality of the transfer and the company's refusal
7. Jurisdiction of the court under Section 155
8. Application by Madhava Murthy to implead himself in the proceedings
Issue-wise Detailed Analysis:
1. Petition under Section 155 of the Companies Act, 1956
The petitioners filed under Section 155 of the Companies Act, 1956, seeking an order to direct the respondent company to recognize the transfer of 40 shares and make the necessary alterations in the register of members. The court noted that Section 155 provides a remedy for rectification of the register when there is a default or unnecessary delay in entering the fact of any person having become or ceased to be a member.
2. Dispute over the transfer of 40 shares
The shares were originally held by M.L. Manjunatha Setty, who transferred 40 of his 50 shares to the petitioners via share transfer forms dated September 7, 1968. The petitioners argued that the company had failed to register this transfer, despite the transferor's request, and that this constituted a continuing default under Section 150 of the Act.
3. Rejection of transfer by the Board of Directors
The Board of Directors of the respondent company unanimously rejected the transfer applications in November 1968, citing that the conduct of Manjunatha Setty was prejudicial to the interests of the company. The petitioners contended that this rejection was not based on any valid grounds permissible under the law or the articles of association, and thus was mala fide, motivated, and illegal.
4. Pending litigation and its impact on the transfer
There was ongoing litigation involving the estate of Manjunatha Setty, including a partition suit in the City Civil Court, Bangalore. The respondent company argued that this pending litigation created a cloud over the title of the shares, and thus the petitioners lacked the locus standi to maintain the petition. The court, however, found that the pending litigation did not bar the registration of the transfer, as there was no interim order restraining it.
5. Laches and delay in seeking relief
The respondent company argued that the petition was belated and that the petitioners were guilty of laches. The court, however, found the petitioners' explanation for the delay reasonable, given the ongoing litigation and family disputes. The court emphasized that the default by the company was a continuing cause of action, allowing the petitioners to seek rectification at any time.
6. Legality of the transfer and the company's refusal
The court found that the company had no legal or tenable reason to refuse the transfer, as the instruments of transfer were not disputed, and the reason for refusal was capricious. The court noted that under Sections 108 and 110 of the Act, both the transferor and transferee could seek registration of the transfer, and the rights of the transferee did not depend on the conduct of the transferor.
7. Jurisdiction of the court under Section 155
The court emphasized its wide powers under Section 155 to rectify the register of members, including the authority to decide questions of title and other ancillary issues. The court cited precedents to support its jurisdiction to grant relief even if there were pending disputes over the title of the shares.
8. Application by Madhava Murthy to implead himself in the proceedings
Madhava Murthy, the son of Manjunatha Setty's first wife, sought to implead himself in the proceedings, claiming a share in the estate. The court rejected his application, noting that he was not a necessary or proper party to the petition, as his dispute was with the petitioners and was already being litigated in a separate suit.
Conclusion:
1. Petitioners are entitled to maintain this petition.
2. Respondent company cannot dispute the legality of the transfer of 40 shares in 1968.
3. Refusal to register the transfer in 1968 was unjustified and mala fide and, therefore, non est in law.
4. O.S. No. 405 of 1980 pending in the City Civil Court of Bangalore is not a bar for registering the transfer in question.
5. Respondent company is precluded from raising the question of qualification of petitioners to be members of the company in the light of its willingness to transmit the shares in question to the petitioners as heirs of late Manjunatha Setty as expressed in the memo filed in court on April 11, 1984.
The court directed the respondent company to register the transfer of shares within 30 days, subject to the final decree in the pending civil suit. The petitioners were granted future benefits of the shares, and no exemplary costs were awarded to encourage reconciliation within the family.
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1984 (10) TMI 170
Issues Involved:
1. Directions for release of funds to pay wages of watch and ward staff.
2. Continuation of the school run by the company.
3. Jurisdiction of the winding-up court to direct secured creditors to contribute towards expenses.
4. Application of the proviso to Section 529(2) of the Companies Act.
5. Interim orders for payment to employees.
Detailed Analysis:
1. Directions for Release of Funds to Pay Wages of Watch and Ward Staff:
The official liquidator requested directions against nine respondents to release sufficient funds to pay wages of the watch and ward staff working at New Swadeshi Mills and Manjushri Textiles. The staff included a watchman, head jamadar, and security officer with monthly consolidated salaries of Rs. 350, Rs. 400, and Rs. 450, respectively, from the date of the provisional liquidation order. The respondents were four nationalized banks and four financial institutions.
2. Continuation of the School Run by the Company:
The official liquidator also sought directions regarding whether the school previously run by the company should continue operations. However, the judgment does not provide a detailed analysis of this issue, focusing primarily on the financial aspects related to the liquidation process.
3. Jurisdiction of the Winding-Up Court to Direct Secured Creditors to Contribute Towards Expenses:
The primary legal contention was whether the winding-up court had the jurisdiction to direct secured creditors, who stand outside the winding-up process, to contribute towards the financial requirements of the liquidator. The secured creditors argued that they were not subject to the winding-up proceedings and could not be compelled to make any contributions without their consent.
4. Application of the Proviso to Section 529(2) of the Companies Act:
The court examined Section 529(2) of the Companies Act, particularly its proviso, which states that if a secured creditor proceeds to realize his security instead of relinquishing it and proving his debt, he shall be liable to pay the expenses incurred by the liquidator for the preservation of the security before its realization. The court concluded that the provisional liquidator or liquidator must spend significant amounts to preserve the security, benefiting the secured creditors. Consequently, the secured creditors must contribute towards these expenses.
5. Interim Orders for Payment to Employees:
The court had previously issued two interim orders directing the secured creditors to release funds for paying the watch and ward staff. The first interim order, dated August 9, 1984, directed the financial institutions and secured creditors to release sufficient funds to pay Rs. 150 per head to the unpaid watchmen. The second interim order, dated August 17, 1984, directed further payments of Rs. 100 per head. These amounts were paid to the employees on an ad hoc basis, subject to final adjustment of claims.
In the current judgment, the court decided to pass a third interim order due to the upcoming Diwali festival and the urgent need to pay the employees who had not received their wages. The court ordered the secured creditors to deposit their respective contributions to cover the wage bill from July to October 1984, as well as unpaid wages from June 22, 1984, to June 30, 1984. The four banks were directed to contribute 50% of the total amount, with each bank contributing 12.5%. Similarly, the four financial institutions were directed to contribute 12.5% each. The official liquidator was instructed to calculate the required contributions and the net amount payable to the employees, considering previous ad hoc payments. The secured creditors were to deposit their contributions by October 19, 1984, and the liquidator was to distribute the collected amount to the employees by October 21, 1984.
The court rejected the request for a stay of the interim order, emphasizing the urgency of the situation and the need to provide relief to the unpaid employees.
Conclusion:
The court overruled the objections of the secured creditors and held that, under the proviso to Section 529(2) of the Companies Act, the winding-up court had the jurisdiction to direct secured creditors to contribute towards the expenses incurred by the liquidator for the preservation of the security. The interim order for payment to the employees was deemed necessary and urgent, with the final decision on the application adjourned to November 6, 1984.
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1984 (10) TMI 153
Issues:
Interpretation of Exemption Notification No. 89/79 regarding capital investment in plant and machinery for entitlement to exemption. Application of the term "industrial unit" in the context of the factory setup. Consideration of relevant legal precedents in determining eligibility for exemption.
Analysis:
The judgment revolves around the interpretation of Exemption Notification No. 89/79, focusing on the capital investment in plant and machinery as a criterion for claiming exemption. Initially, the Assistant Collector rejected the appellants' claim, citing that the total value of all plant and machinery exceeded the specified limit of Rs. 10 lakhs. The Appellate Collector of Customs and Central Excise, Madras, further elaborated that the appellants' machine shop within the factory could not be considered a separate unit since it was part of the larger manufacturing setup. The Appellate Collector equated the term "industrial unit" with the entire factory, emphasizing that the total capital investment of the factory should be considered for exemption eligibility, not just a portion of it. Consequently, the appellants appealed this decision before the Tribunal for reconsideration.
During the proceedings, the appellants' representative relied on a Bombay High Court decision to support their argument. The High Court's interpretation highlighted that the terms "factory" and "industrial unit" must carry distinct meanings within the notification, implying that an industrial unit should represent a separable part dedicated to industrial activities within a complex whole. This interpretation was crucial in determining the scope of the exemption criteria based on the investment in plant and machinery within a specific unit rather than the entire factory setup.
In line with the Bombay High Court's decision, the Tribunal, in a separate case, emphasized the importance of considering only the investment related to a specific unit for exemption eligibility, rather than the overall investment in the factory. However, the Tribunal noted a lack of essential facts in the previous orders from the Assistant Collector and the Appellate Collector, hindering a definitive decision on the applicability of the High Court's ruling. Consequently, the Tribunal remanded the matter back to the Assistant Collector of Central Excise, Coimbatore, for a detailed reevaluation. The Assistant Collector was instructed to reassess the appellants' claim in light of the legal precedents discussed and issue a fresh decision after providing the appellants with a fair hearing opportunity. Ultimately, the appeal was allowed for remand, emphasizing the need for a comprehensive review at the lower levels to determine the appellants' entitlement to exemption under Notification No. 89/79.
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1984 (10) TMI 151
The case involves the assessment of stamping foils at a rate of 40% under a specific notification. The appellants were not present, but their representative pointed out previous decisions supporting their case. The respondent agreed that the case was covered by those decisions. The appeal was allowed in favor of the appellants.
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1984 (10) TMI 147
The appeal involved the classification of Cut and Calendered Steel Fabric for Customs duty. The goods were reclassified under heading No. 73.27/28 based on a previous decision. The appeal was allowed, granting relief to the appellants within 3 months. (Case: 1984 (10) TMI 147 - CEGAT, NEW DELHI)
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1984 (10) TMI 146
The case involved the classification of stainless steel 'flats' imported by the appellants. The question was whether they should be assessed as stainless steel strips under Item 73.15(2)-CTA or under Tariff Item No. 73.15(1). The Tribunal ruled in favor of the appellants, stating that the goods should be assessed under Item 73.15(1) based on expert opinions and previous decisions. The appeal was allowed with consequential relief granted to the appellants.
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1984 (10) TMI 145
Issues:
1. Whether the Central Excise Duty demanded from the appellants is time-barred.
2. Whether the penalty imposed on the appellants is justified.
Analysis:
1. The appellants were manufacturing various goods and availing exemption up to a certain value under a specific notification. The proceedings against them began after a surprise visit by the Anti-Evasion Staff, revealing non-maintenance of production or clearance records. A Show Cause Notice was issued, and subsequently, Central Excise duty was demanded along with a penalty. The appellants denied the allegations, but the Additional Collector upheld the demand and penalty. The appellants did not contest the classification of goods during the appeal.
2. The appellants argued that the demand and penalty should be limited to a shorter period preceding the Show Cause Notice, citing Section 11A of the Central Excises and Salt Act, 1944. They had previously filed a declaration claiming exemption, indicating the manufacturing process. The Tribunal noted that the Department was aware of the production process, and there was no suppression of facts or fraud. Therefore, the demand was restricted to six months before the Show Cause Notice, not the usual five-year period. Regarding the penalty, the Tribunal found no justification for its imposition, considering the circumstances. The retrospective amendment in Rule 9(2) of the Central Excise Rules was deemed inapplicable for past penalties. Consequently, the demand beyond the specified period was set aside, and the penalty was also annulled.
In conclusion, the Tribunal partially allowed the appeal, limiting the duty demand and setting aside the penalty based on the lack of grounds for penalty imposition and the Department's awareness of the manufacturing process.
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