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2008 (10) TMI 704
Issues Involved:
1. Validity of the impugned notices and orders.
2. Legality of the Circular Exhibit - L.
3. Correct calculation and payment of Entertainment Duty by the petitioner.
4. The nature of the exemption/concession granted under the Bombay Entertainment Duty Act, 1923.
5. Allegations of unjust enrichment against the petitioner.
6. Availability of alternate remedies for the petitioner.
Issue-wise Detailed Analysis:
1. Validity of the Impugned Notices and Orders:
The petitioner sought to set aside the impugned notices and orders, arguing they were issued without considering the exemption available to the petitioner from paying 75% of the Entertainment Duty. The court found that the petitioner was entitled to a 75% exemption for the fourth and fifth years, and the demand for the full 45% duty was incorrect. The impugned notices and orders were quashed.
2. Legality of the Circular Exhibit - L:
The petitioner challenged the Circular Exhibit - L, claiming it was ultra vires the Bombay Entertainment Duty Act, 1983. The court noted that the circular was issued to clarify the method of computing Entertainment Duty but did not have the authority to override the statutory provisions. The court found the circular inconsistent with the Act and set it aside.
3. Correct Calculation and Payment of Entertainment Duty by the Petitioner:
The petitioner argued that the correct method of calculating Entertainment Duty was based on the net price, not the gross price. The court agreed, stating that the petitioner was liable to pay only 25% of the 45% duty during the fourth and fifth years. The court emphasized that the calculation should be based on the net admission fee, and the petitioner had correctly paid the duty as per the provisions of the Act.
4. The Nature of the Exemption/Concession Granted Under the Bombay Entertainment Duty Act, 1923:
The court examined the legislative intent behind the exemption/concession granted to multiplex theatres. It was determined that the exemption was intended to benefit the proprietors/operators of multiplex theatres, not the patrons. The court held that the exemption allowed the petitioner to collect Entertainment Duty from patrons but only pay 25% of the collected duty to the government during the fourth and fifth years.
5. Allegations of Unjust Enrichment Against the Petitioner:
The respondents argued that the petitioner was unjustly enriched by retaining the collected Entertainment Duty. The court rejected this argument, stating that the petitioner was entitled to retain 75% of the collected duty as per the exemption. The court clarified that the petitioner was not liable to pay the full 45% duty and that the exemption was a retention benefit for the multiplex proprietors/operators.
6. Availability of Alternate Remedies for the Petitioner:
The respondents contended that the petitioner had an alternate remedy of appeal under Section 10A of the Bombay Entertainment Duty Act, 1923. The court, however, chose to entertain the writ petition, considering the broader implications and the need to clarify the legal position regarding the exemption and calculation of Entertainment Duty.
Conclusion:
The court concluded that the petitioner was entitled to the exemption from paying 75% of the Entertainment Duty during the fourth and fifth years. The impugned notices and orders demanding the full 45% duty were quashed. The Circular Exhibit - L was found to be inconsistent with the Act and set aside. The court emphasized that the exemption was a retention benefit for the multiplex proprietors/operators, and the petitioner had correctly paid the duty as per the statutory provisions.
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2008 (10) TMI 703
Issues involved:
The judgment addresses various issues including the distinctiveness of SARs and stock options, the assessability of SARs redemption under the head of 'salary', the assessment of an amount as salary income from a person other than the employer, the taxation of receipts under 'income from other sources', and the correct assessment of the receipt under 'capital gains'.
Issue (A):
The Tribunal's correctness in holding SARs and stock options as distinct despite Notification No. 323/2001 dated 11.10.2001, and the variance in tax consequences of SARs and stock options, was questioned.
The Tribunal's decision was challenged based on the interpretation of the Notification and the tax implications of SARs and stock options. The appellant contested the Tribunal's view on the distinctiveness of SARs and stock options and the resulting tax consequences.
Issue (B):
The correctness of the Tribunal in assessing the impugned receipt from SARs redemption under the head of 'salary' was disputed.
The appellant raised concerns regarding the classification of the receipt from SARs redemption as 'salary'. The issue revolved around the proper categorization of such receipts for tax assessment purposes.
Issue (C):
The question of whether an amount can be assessed as salary income when received from a person other than the employer was examined.
The judgment delved into the legal aspect of assessing an amount as salary income when the source is someone other than the individual's employer. This issue required a thorough analysis of the relevant laws and precedents.
Issue (D):
The Tribunal's direction to tax the impugned receipt under 'income from other sources' in the absence of an employer-employee relationship was challenged.
The appellant contested the Tribunal's decision to tax the receipt under 'income from other sources' instead of 'salary' due to the lack of an employer-employee relationship. The judgment compared this decision with relevant case laws for a comprehensive evaluation.
Issue (E):
The rejection of the argument that the impugned receipt should be assessed under 'capital gains' was examined.
The appellant's argument for assessing the receipt under 'capital gains' was rejected by the Tribunal. This issue involved a detailed analysis of the nature of the receipt and its appropriate classification for tax purposes.
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2008 (10) TMI 702
Issues involved: Approval of reassessment notice u/s 148, nature of stock options granted, employer-employee relationship for stock options, applicability of previous court decisions, dismissal of additional ground, taxability of stock options as capital gains, imposition of interest u/s 234A, 234B, and 234C, validity of Tribunal's order.
For the first issue, the Tribunal's approval of the reassessment notice u/s 148 was challenged. The substantial question of law was whether the Tribunal erred in approving the notice issued u/s 147 of the Act. The Respondent did not appear despite being served.
Regarding the nature of stock options granted, the Tribunal considered whether the stock options were akin to stock appreciation rights as adjudicated in a previous case. The question was whether the Tribunal correctly held that the stock options granted were similar to stock appreciation rights.
The issue of an employer-employee relationship for stock options was also raised. The Tribunal had to determine if an employer-employee relationship existed between the parties, leading to the stock options being assessable as perquisites u/s 17(2)(iii) of the Act.
The Tribunal's decision on the applicability of a previous court decision was questioned. It was debated whether the Tribunal misdirected itself in distinguishing a decision of the Apex Court and deeming it not applicable to the present case.
The dismissal of an additional ground by the Tribunal was also contested. The question arose as to whether the Tribunal's decision to not address the additional ground separately was justifiable, considering its conclusions on other issues.
The taxability of stock options as capital gains was another issue. The Tribunal had to decide if the Appellant acquired any capital asset upon the grant of stock options and if the impugned sum was exigible to tax as capital gains.
Furthermore, the imposition of interest u/s 234A, 234B, and 234C of the Act was challenged. It was argued whether the Tribunal erred in approving the imposition of interest under these sections.
Lastly, the overall validity of the Tribunal's order was questioned. It was contended that the order was perverse, contrary to evidence, and founded on irrelevant considerations, leading to conclusions that were allegedly vitiated and plagued by infirmities.
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2008 (10) TMI 701
The High Court of Bombay ruled that excise duty is not payable on a sugar plant manufactured using duty paid parts and accessories if the marketability test is not fulfilled. The decision is based on a previous judgment by the Apex Court in the case of Triveni Engineering & Industries Limited. The appeal was rejected as no question of law arose.
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2008 (10) TMI 700
Rejection of application to recall the witnesses for cross examination - Section 311 of the Code of Criminal Procedure, 1973 - HELD THAT:- The object of Section 311 is to bring on record evidence not only from the point of view of the accused and the prosecution but also from the point of view of the orderly society. If a witness called by Court gives evidence against the complainant he should be allowed an opportunity to cross-examine. The right to cross-examine a witness who is called by a Court arises not under the provision of Section 311, but under the Evidence Act which gives a party the right to cross- examine a witness who is not his own witness. Since a witness summoned by the Court could not be termed a witness of any particular party, the Court should give the right of cross-examination to the complainant.
The factual scenario in Mishri Lal's case [2005 (5) TMI 697 - SUPREME COURT] has great similarity with the facts of the present case. The High Court's view for accepting the prayer in terms of Section 311 of the Code does not have any legal foundation. In the facts of the case, the High Court ought not to have accepted the prayer made by the accused persons in terms of Section 311 of the Code. Thus, we set aside the impugned order of the High Court.
The appeal is allowed accordingly.
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2008 (10) TMI 699
Issues Involved:
1. Legality and validity of the conviction under sections 20(B) and 29 read with section 8[C] of the NDPS Act.
2. Adequacy of the sentence imposed by the trial court.
3. Compliance with mandatory provisions of the NDPS Act regarding search, seizure, and procedural requirements.
4. Reliability of the confessional statement under section 67 of the NDPS Act.
5. Procedural propriety in framing charges and conducting the trial.
Detailed Analysis:
Legality and Validity of the Conviction:
The appellant challenged the conviction on several grounds, including the lack of direct evidence connecting him to the contraband and the reliance solely on his confessional statement under section 67 of the NDPS Act. It was argued that no contraband was seized from his possession, and the prosecution failed to arrest other involved individuals or investigate the accused's claims. The court noted that the confessional statement was never retracted and contained personal information only the accused could provide. The court upheld the conviction, stating that the confessional statement was sufficient to establish the accused's involvement.
Adequacy of the Sentence:
The State appealed for an enhancement of the sentence, arguing that the large quantity of Charas seized warranted a harsher penalty. The trial court had imposed the minimum sentence of 10 years RI and a fine of Rs. 1 lakh. The court found that the trial judge had exercised discretion appropriately, considering the circumstances and the statutory requirements. The sentence was deemed neither too lenient nor too harsh, and the appeal for enhancement was dismissed.
Compliance with Mandatory Provisions:
The appellant contended that the mandatory provisions of the NDPS Act regarding search, seizure, and procedural requirements were not complied with. Specifically, it was argued that the information received was not properly documented, and the seizure process was flawed. The court found that the NCB officers had complied with the statutory requirements, including forwarding the secret information to the superior officer within the stipulated time. The court also noted that the procedural steps taken at the NCB office due to darkness at the seizure site were justified.
Reliability of the Confessional Statement:
The court extensively discussed the admissibility and reliability of the confessional statement recorded under section 67 of the NDPS Act. Citing the case of Kanhaiyalal v/s. Union of India, the court held that such statements could be treated as confessional statements and relied upon for conviction. The court found no evidence of coercion, threat, or inducement in recording the statement, and thus, it was deemed voluntary and reliable.
Procedural Propriety in Framing Charges:
The appellant argued that the trial court did not follow proper procedure in framing charges, as it did not record pre-charge evidence. The court noted that the trial judge had passed a detailed order rejecting this contention and that the order had attained finality as it was not challenged. The court found no procedural irregularity that adversely affected the accused's defense.
Conclusion:
The High Court dismissed both the appeals, upholding the conviction and the sentence imposed by the trial court. The court found that the prosecution had proven its case beyond reasonable doubt, and the trial judge had exercised discretion appropriately in sentencing. The procedural and statutory requirements under the NDPS Act were deemed to have been complied with, and the confessional statement was found to be voluntary and reliable.
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2008 (10) TMI 698
Issues Involved:
1. Maintainability of Letters Patent Appeal (LPA) in light of Section 100A of the Code of Civil Procedure (CPC) as amended by Amendment Act, 2002.
2. Applicability of Section 100A to appeals arising under special enactments like the Indian Succession Act.
3. Retrospective application of Section 100A to pending cases.
4. Interpretation of Section 10 of the Delhi High Court Act, 1966 in conjunction with Section 100A of the CPC.
5. Examination of relevant case law and precedents.
Detailed Analysis:
1. Maintainability of Letters Patent Appeal (LPA) in light of Section 100A of the Code of Civil Procedure (CPC) as amended by Amendment Act, 2002:
The central issue is whether an LPA is maintainable against the judgment of a single Judge of the High Court in the context of Section 100A of the CPC, which states, "Notwithstanding anything contained in any Letters Patent for any High Court or in any other instrument having the force of law or in any other law for the time being in force, where any appeal from an original or appellate decree or order is heard and decided by a single Judge of a High Court, no further appeal shall lie from the judgment and decree of such single Judge."
2. Applicability of Section 100A to appeals arising under special enactments like the Indian Succession Act:
The judgment discusses the applicability of Section 100A to appeals under special enactments. It was argued that Section 10 of the Delhi High Court Act, 1966, provides an independent source of appeal, and amendments in the CPC cannot regulate appeals arising out of other local or special enactments unless expressly excluded by a special statute. However, the court concluded that Section 100A of the CPC, with its non-obstante clause, clearly intends to bar further appeals, including those under special enactments like the Indian Succession Act.
3. Retrospective application of Section 100A to pending cases:
The appellant argued that the right of appeal is substantive and vested on the date of institution of the suit, and Section 100A, as amended in 2002, should not apply retrospectively to pending cases. The court, however, held that the necessary intendment of Section 100A is that no further appeal should be maintainable where any appeal from an original or appellate decree or order is heard and decided after July 1, 2002, by a single Judge of a High Court. This interpretation aligns with the legislative intent to minimize delays in litigation.
4. Interpretation of Section 10 of the Delhi High Court Act, 1966 in conjunction with Section 100A of the CPC:
Section 10(1) of the Delhi High Court Act, 1966, provides for an LPA against the judgment of a single Judge in exercise of original jurisdiction. However, Section 15 of the same Act contains a saving clause, stating that the provisions of the Act are subject to any provision made by the legislature or other authority. The court interpreted that the non-obstante clause in Section 100A of the CPC takes precedence, effectively barring LPAs against judgments rendered by a single Judge in an appeal arising from an original or appellate decree or order.
5. Examination of relevant case law and precedents:
The judgment extensively reviews past decisions, including:
- National Sewing Thread Co. v. James Chadwick and Bros.: Held that an LPA is maintainable unless expressly excluded.
- Union of India v. Mohindra Supply Co.: Held that legislative provisions can restrict the right of appeal under the Letters Patent.
- Subal Paul v. Malina Paul: Discussed the maintainability of LPAs under special statutes and emphasized that Section 104 of the CPC does not bar further appeals if provided by another statute.
- P.S. Sathappan v. Andhra Bank Ltd.: Clarified that the legislature can exclude LPAs, and the specific exclusion in Section 100A bars further appeals.
- Kamal Kumar Dutta v. Ruby General Hospital Ltd.: Affirmed that Section 100A bars LPAs against decisions of single Judges in appeals arising under special statutes.
Conclusion:
The court concluded that after the insertion of Section 100A in the CPC, no LPA is maintainable against the judgment rendered by a single Judge in a first appeal arising out of a special enactment like the Indian Succession Act. The appeal was dismissed as not maintainable.
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2008 (10) TMI 697
Issues Involved:
1. Interim injunction restraining arbitration proceedings.
2. Stay of the arbitration clause.
3. Application under Section 45 of the Arbitration and Conciliation Act, 1996.
4. Vacating the interim injunction.
Detailed Analysis:
Interim Injunction Restraining Arbitration Proceedings:
The plaintiffs sought an interim order of injunction to restrain defendants 6 and 10 from proceeding with arbitration. The court granted an ad interim ex parte injunction on 7.3.2008, restraining the defendants from proceeding with the arbitration.
Stay of the Arbitration Clause:
The plaintiffs also filed an application for a stay of the arbitration clause, arguing that the arbitration agreement was null and void, inoperative, and incapable of being performed. The court examined the arbitration clause and the context of the Joint Venture Agreement, noting the plaintiffs' acceptance of the Joint Venture Agreement but their opposition to the arbitration clause.
Application under Section 45 of the Arbitration and Conciliation Act, 1996:
Defendants 6 and 10 filed an application under Section 45 to refer the parties to international commercial arbitration. The court analyzed the scope of the enquiry under Section 45, referencing the divergent views in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. and another (2005) 7 SCC 234. The court concluded that the arbitration agreement was not null and void, as the plaintiffs did not plead any specific facts rendering the agreement null and void under the parameters of the Contract Act, 1872.
The court also determined that the arbitration agreement was not incapable of being performed, as the arbitration itself was not impossible to perform, even if the Joint Venture Agreement was presumed to be incapable of being performed.
Vacating the Interim Injunction:
Defendants 6 and 10 sought to vacate the interim injunction granted in O.A. No. 277 of 2008. The court examined whether the arbitration agreement had become inoperative. The court found that the defendants had engaged in multiple litigations, including civil suits, company petitions, and criminal complaints, which made the arbitration agreement inoperative. The court cited the principle that arbitration is intended to be an alternative dispute resolution mechanism, not an additional one, and that the defendants' actions had rendered the arbitration agreement a "dead letter."
The court also noted that some defendants were not parties to the Joint Venture Agreement or the arbitration agreement, making the arbitration tribunal's jurisdiction over those individuals questionable.
Conclusion:
The court dismissed the application under Section 45 (A. No. 2670 of 2008), allowed the application for injunction (O.A. No. 277 of 2008), and the application for stay of the arbitration clause (A. No. 1236 of 2008). The application to vacate the injunction (A. No. 2671 of 2008) was dismissed. The court concluded that the arbitration agreement had become inoperative due to the conduct of defendants 6 and 10, who had engaged in extensive litigation in various forums, thereby abandoning the arbitration agreement.
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2008 (10) TMI 696
Interpretation of statute - Rule 3, Sub-rule (5) of Order 37 of the Code of Civil Procedure - Jurisdiction - Summary trial - Recovery for payment - correctness of directing appellant to deposit 55% of the admitted amount as a condition precedent for grant of leave to defend the suit - HELD THAT:- It is now well established as a principle of law that even if a wrong order is passed by a Court having jurisdiction to pass an order in such cases, the revisional Court will not interfere with such an order unless a jurisdictional error is pointed out and established by the person who questions such order.
In the instant case, the High Court did not lack jurisdiction to pass an order with regard to the subject matter of dispute, though the order itself may be incorrect. There is, therefore, little scope for this Court to interfere with the directions given to the appellant herein to deposit in Court 55% of the admitted dues as a pre-condition to grant of leave to defend a suit. The judgment of the High Court impugned in this appeal does not warrant any interference since the trial Court had exercised its jurisdiction under the second proviso to Sub-rule (5) of Rule 3 of Order 37 of the Code. The earlier concept of granting unconditional leave when a triable issue is raised on behalf of the defendant, has been supplemented by the addition of a mandate, which has been imposed on the defendant, to deposit any amount as admitted before leave to defend the suit can be granted. The question as to whether leave to defend a suit can be granted or not is within the discretionary powers of the High Court and it does not appear to us that such discretion has been exercised erroneously or with any irregularity which warrants interference by this Court.
Appeal is, therefore, dismissed.
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2008 (10) TMI 695
Issues involved: Application for possession of land and building u/s 446 of the Companies Act, 1956.
The Applicant sought direction for possession of land and building from the Official Liquidator, claiming ownership post dissolution of partnership firm. The lease agreement with the partnership firm was terminated, and the Company (in liquidation) failed to pay rent, leading to the Applicant's request for possession. Civil suits for possession and mense profit are pending. The Respondent Bank's dues were cleared during the proceedings, and no other creditors exist.
The Official Liquidator reported the Bank's charge on movable assets and dues settlement by the Applicant. The lease agreement expired in 1987, with no rent paid since the Company's incorporation. The Applicant filed a Civil Suit seeking possession, which is subjudice. The Court directed the Official Liquidator to verify the Ex-Director's statement of affairs.
The Official Liquidator confirmed the Company had no land and the Bank's dues were settled. The Bank verified no outstanding amounts against the Company. The Court, after reviewing documents and declarations, found the Applicant's claim justified as the property did not belong to the Company. The Official Liquidator was directed to hand over possession to the Applicant, who agreed to withdraw the pending suit.
In conclusion, the Court directed the Official Liquidator to transfer possession to the Applicant after verifying ownership. The Applicant waived arrears of rent and agreed to withdraw the pending suit. The application was disposed of without costs.
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2008 (10) TMI 694
Issues Involved:
1. Acquisition of non-performing assets by ARCIL.
2. Revival and rehabilitation schemes for the sick company.
3. Legal actions and proceedings by BIFR and AAIFR.
4. Rights and actions of secured creditors under SARFAESI Act.
5. Role of the Official Liquidator and company court in winding up proceedings.
6. Protection of workmen's dues under Section 529A of the Companies Act.
7. Harmonization of SARFAESI Act and Companies Act provisions.
8. Confirmation and procedure of sale of assets by ARCIL.
Issue-wise Detailed Analysis:
1. Acquisition of non-performing assets by ARCIL:
The Asset Reconstruction Company (India) Ltd. (ARCIL) acquired non-performing assets from ICICI Bank and IFCI Ltd., stepping into the shoes of the secured creditors of M/s BPL Display Devices Ltd. This acquisition was formalized through Deeds of Assignment dated 30th June 2007 and 12th September 2008.
2. Revival and rehabilitation schemes for the sick company:
M/s Uptron Colour Picture Tube Ltd. (UCPTL) was declared a sick industrial company in 1993, and a Draft Rehabilitation Scheme was prepared. Despite several efforts and schemes, including capital expenditure and contributions from incoming promoters, the company failed to settle dues with secured creditors and workers, leading to the conclusion that it was not possible to revive the company.
3. Legal actions and proceedings by BIFR and AAIFR:
The BIFR, after multiple reviews and extensions, declared the rehabilitation scheme failed and issued directions for the secured creditors to take legal action. Ultimately, BIFR opined that the company should be wound up and forwarded this opinion to the High Court. The AAIFR dismissed appeals against BIFR's orders as infructuous.
4. Rights and actions of secured creditors under SARFAESI Act:
ARCIL, representing secured creditors, issued a notice under Section 13(2) of the SARFAESI Act for payment of outstanding amounts. ARCIL obtained consents from secured creditors holding 93.76% of the secured debt to invoke SARFAESI Act provisions and took possession of the company's assets under Section 13(4) of the Act.
5. Role of the Official Liquidator and company court in winding up proceedings:
The Official Liquidator is responsible for taking over the company's books, records, and uncharged assets. The court appointed the Official Liquidator as provisional liquidator and limited his powers to scrutinizing the statement of affairs and inviting claims from stakeholders. The court emphasized the need for the Official Liquidator to be involved in the sale process to protect the interests of workmen and other stakeholders.
6. Protection of workmen's dues under Section 529A of the Companies Act:
Workmen's dues have a pari passu charge with the security of secured creditors. The court directed that workmen's dues be estimated and deposited by ARCIL before any appropriation or disbursement of sale proceeds. The Official Liquidator was tasked with inviting claims and ensuring workmen's dues are paid in priority as per Section 529A.
7. Harmonization of SARFAESI Act and Companies Act provisions:
The court noted that while SARFAESI Act allows secured creditors to enforce security interest without court intervention, it must be harmonized with the Companies Act to protect workmen's dues and other stakeholders. The company court must be informed of the sale process to ensure statutory duties are fulfilled.
8. Confirmation and procedure of sale of assets by ARCIL:
The court allowed ARCIL to remain outside the winding-up proceedings and to realize securities by selling the company's assets under SARFAESI Act, subject to conditions such as filing details of charged assets, valuation reports, and obtaining court approval for sale confirmation. The sale proceeds must be kept in a separate account, and expenses incurred by ARCIL and the Official Liquidator should be deducted before any disbursement.
Conclusion:
The court appointed the Official Liquidator as provisional liquidator and allowed ARCIL to sell the company's assets under the SARFAESI Act, subject to conditions ensuring protection of workmen's dues and other stakeholders' interests. The matter was listed for further proceedings on 1st December 2008.
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2008 (10) TMI 693
Issues Involved:
1. Allegations of oppression and mismanagement.
2. Acquisition and sale of properties.
3. Non-rendition and falsification of accounts.
4. Misappropriation of funds from Kuwait operations.
5. Non-compliance with statutory obligations.
6. Preliminary objections on laches, forum shopping, and suppression of facts.
Issue-wise Detailed Analysis:
1. Allegations of Oppression and Mismanagement:
The petitioners, holding 50% of the issued and paid-up capital, alleged oppression and mismanagement by respondents 2 to 5. They invoked the jurisdiction of the Company Law Board (CLB) under Sections 397, 398, and 402 of the Companies Act, 1956, seeking reliefs such as orders for the management of the company, supersession of the current board, surcharge for misappropriation, and restoration of immovable properties.
2. Acquisition and Sale of Properties:
The properties in question were intended to be acquired by the company but were fraudulently registered in the name of the second respondent. The properties were later sold by the second respondent during the pendency of the CLB proceedings, which the petitioners claimed was against the interests of the company and its shareholders. The CLB found that the sale was irregular and oppressive, and thus set it aside, ordering the restoration of 1.60 acres of the land to the company.
3. Non-rendition and Falsification of Accounts:
The petitioners accused the respondents of not maintaining proper accounts, failing to convene general and board meetings, and manipulating financial statements. The CLB noted that the accounts for the years 1993 to 2003 were adopted at various annual general meetings, and the petitioners were aware of this. Thus, the petitioners' claims on this issue were found to be ill-founded.
4. Misappropriation of Funds from Kuwait Operations:
The second respondent was responsible for Kuwait operations, which were not accounted for properly. The CLB held that the second respondent must render accounts for the Kuwait operations from 6-9-1991 to 5-11-1993 and directed the statutory auditor to quantify the amounts to be credited to the company's account.
5. Non-compliance with Statutory Obligations:
The petitioners alleged non-compliance with statutory obligations, including the failure to hold annual general meetings and file annual returns. The CLB found that the accounts were adopted at annual general meetings, and the petitioners failed to raise these issues in a timely manner. Therefore, the claims were not upheld.
6. Preliminary Objections on Laches, Forum Shopping, and Suppression of Facts:
The respondents raised preliminary objections, claiming the petitioners were guilty of laches, forum shopping, and suppression of material facts. The CLB found that the petitioners had withdrawn all suits before invoking the CLB's jurisdiction, and thus, the plea of forum shopping or suppression of material facts did not survive. The petitioners were not found guilty of laches as no prejudice was shown to have been suffered by the respondents.
Conclusion:
The CLB ordered the restoration of 1.60 acres of land to the company, directed the second respondent to render accounts for Kuwait operations, and suggested voluntary winding up of the company after meeting all liabilities. The petition was disposed of with no order as to costs, and the interim orders were vacated.
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2008 (10) TMI 692
Scam involving the appointment of Panchayat Secretaries - irregularities in the selection process - Allegations against Former Minister of the State for taking bribe - Whether there can be more than one FIR in relation to the same incident or different incidents arising from the same occurrence? - FIR lodged by the Vigilance Department of the State for Commission of offences u/s 420, 467, 468, 120B of the IPC and Sections 13(1)(d)(e) and 13(2) of the Prevention of Corruption Act, 1988 - State Government to handover the investigation to the Central Bureau of Investigation (CBI).
HELD THAT:- Lodging of a FIR by CBI is governed by a manual. It may hold a preliminary inquiry. A prima facie case may be held to have been established only on completion of a preliminary enquiry.
A bare perusal of the FIR lodged at the instance of the Vigilance Officer shows that the same was general in nature. One of the several allegations contained therein referred to was that irregularities have been committed in the matter of recruitment of Panchayat Secretaries. No detail, however, was furnished. All the persons involved were not named. What types of irregularities have been committed were not stated.
In an ordinary case, we might have accepted the submission of Mr. Rao that the High Court should not direct CBI to investigate into a particular offence. The offence, however, is not ordinary in nature. It involved investigation into the allegations of commission of fraud in a systematic manner. It had a wide ramification as a former Minister of the State is said to be involved.
The second FIR lodged by the CBI, however, was on a wider canvass. It was lodged after holding a detailed preliminary inquiry. CBI collected a large number of materials. It had also recorded the statements of a large number of persons. Whereas the first FIR dated 14.06.2002, thus, contained the misdeeds of individuals, the second one depicts a crime committed in course of selection process of Panchayat Secretaries involving a large number of officers.
It may be true that in both the FIRs Kahlon was named. He was considered to be the prime accused. But, it is one thing to say that he acted in his individual capacity and it is another thing to say that he conspired with a large number of persons to facilitate commission of crime by him as a result whereof all of them had made unlawful gains.
Instant case, in our opinion, stands on a better footing vis-à-vis Ram Lal Narang [1979 (1) TMI 241 - SUPREME COURT], in the sense that whereas the first FIR did not make any allegation as regards existence of a conspiracy, the second FIR did. The canvass of two FIRs is absolutely different. The numbers of accused in both the FIRs are also different.
The second FIR, in our opinion, would be maintainable not only because there were different versions but when new discovery is made on factual foundations.
If lodging of the second FIR is legally permissible, only because the same has been done at the instance of the High Court could not lead this Court to arrive at a conclusion that its direction in that behalf was wholly without jurisdiction. It will bear repetition to state that law as it stands permits the High Court and this Court to direct investigation made by the CBI. As, it is also recognised by the Central Government, as would appear from the provisions of the CBI Manual referred to hereinbefore.
We must, however, not lose sight of the fact that before the High Court it was the State Government who stated that it would like to get the scam investigated by the CBI. The direction was issued only in view of the said offer and not dehors the same.
Therefore, we do not find any merit in these appeals.
In view of the fact that a chargesheet has been filed on the basis of the first FIR and it is stated that two witnesses had also been examined, we would direct the ld Trial Judge to segregate that portion of the trial which has any bearing with the scam relating to the appointment of the Panchayat Secretaries.
Appellants, in the other appeals, who had been cited as witnesses therein should not be allowed to be examined except with their consent. All the materials collected by the investigating officer pertaining to the said scam shall be transferred to the Court of Sub-Judge dealing with the CBI matters forthwith so as to enable it to hear that part of the case either independently or together with the chargesheet which may be submitted by the CBI before it. These directions are issued for doing complete justice to the parties and in terms of the decision of this Court in Divine Retreat Centre v. State of Kerala and Ors.[2008 (3) TMI 734 - SUPREME COURT], whereupon Mr. Rao himself placed strong reliance.
As the investigation is complete, the CBI may file chargesheet before a court having appropriate jurisdiction.
Appeals are dismissed with directions.
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2008 (10) TMI 691
Issues Involved:
1. Jurisdiction of the Vice-Chancellor to order re-verification/re-valuation of answer scripts.
2. Validity of the Executive Council's decision to cancel the re-verification results.
3. Legality of the High Court's judgment upholding the Vice-Chancellor's actions.
Summary:
1. Jurisdiction of the Vice-Chancellor to order re-verification/re-valuation of answer scripts:
The Division Bench of the High Court held that the Vice-Chancellor of the University had no jurisdiction u/s 12(2) of the N.T.R. University of Health Sciences Act to order re-verification of the answer scripts of the students. However, the Supreme Court found that a conjoint and meaningful reading of Section 12(2) with Section 12(3) of the Act indicates that the Vice-Chancellor has the power to take appropriate action relating to the affairs of the University, including the conduct of examinations. The Vice-Chancellor is the principal executive and academic officer of the University, entrusted with the responsibility of overall administration. The Supreme Court concluded that the Vice-Chancellor's power includes the authority to order re-evaluation of answer scripts if the situation demands, even in the absence of a specific provision.
2. Validity of the Executive Council's decision to cancel the re-verification results:
The Supreme Court noted that the Vice-Chancellor had exercised his power to order re-verification of answer scripts under pressure and coercion from the students and their parents, not independently on merits. The re-verification process was confined to 436 students who had applied for re-totalling, not re-valuation. The methodology adopted by the Committee for re-valuation was questionable, as they completed re-verification of 1082 answer scripts in two days, indicating that it was not properly done. The Executive Council's decision to cancel the result of the students based on re-verification and giving an opportunity to the failed students to re-appear in the examination was approved by the Vice-Chancellor himself. Therefore, the Supreme Court upheld the Executive Council's decision to cancel the re-verification results.
3. Legality of the High Court's judgment upholding the Vice-Chancellor's actions:
The learned single Judge of the High Court had allowed the writ petitions filed by the students, holding that the Vice-Chancellor had the power u/s 12(2) of the Act to appoint a committee for re-verification of the answer scripts. However, the Division Bench of the High Court set aside this judgment, concluding that the Vice-Chancellor had no jurisdiction to order re-verification. The Supreme Court disagreed with the Division Bench's finding regarding the Vice-Chancellor's power but upheld the ultimate conclusion of the Division Bench to cancel the re-verification results due to the improper exercise of power by the Vice-Chancellor.
Conclusion:
The Supreme Court directed NTR University of Health Sciences to hold a supplementary examination for all students who had not yet cleared the first year MBBS examination held in September/October 2006. The appeals were disposed of with no order as to costs.
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2008 (10) TMI 690
Jurisdiction of High Court - whether FIR and the consequential proceedings alleging Compoundable or non-compoundable offences could be quashed by the High Court in exercise of its jurisdiction u/s 482 of Code of Criminal Procedure on the basis of the settlement arrived at between the Parties? - HELD THAT:- The ultimate exercise of discretion u/s 482 CrPC or under Article 226 of the Constitution is with the Court which has to exercise such jurisdiction in the facts of each case. It has been explained that the said power is in no way limited by the provisions of Section 320 CrPC. We are unable to disagree with such statement of law. In any event, in this case, we are only required to consider whether the High Court had exercised its jurisdiction u/s 482 Cr.P.C. legally and correctly.
In our view, the High Court's refusal to exercise its jurisdiction under Article 226 of the Constitution for quashing the criminal proceedings cannot be supported. The FiIR, which had been lodged by the complainant indicates a dispute between the complainant and the accused which is of a private nature. It is no doubt true that the FIR was the basis of the investigation by the Police authorities, but the dispute between the parties remained one of a personal nature.
Once the complainant decided not to pursue the matter further, the High Court could have taken a more pragmatic view of the matter. We do not suggest that while exercising its powers under Article 226 of the Constitution the High Court could not have refused to quash the FIR, but what we do say is that the matter could have been considered by the High Court with greater pragmatism in the facts of the case.
We, accordingly, allow the appeal and set aside the order of the High Court and quash the criminal proceedings pending before the ld Additional Chief Metropolitan Magistrate.
Markandey Katju, J. - I respectfully agree with my ld brother Hon'ble Kabir J. that the criminal proceedings deserve to be quashed, the question may have to be decided in some subsequent decision or decisions (preferably by a larger Bench) as to which non-compoundable cases can be quashed u/s 482 Cr.P.C. or Article 226 of the Constitution on the basis that the parties have entered into a compromise.
There can be no doubt that a case u/s 302 IPC or other serious offences like those u/s 395, 307 or 304B cannot be compounded and hence proceedings in those provisions cannot be quashed by the High Court in exercise of its power u/s 482 Cr.P.C. or in writ jurisdiction on the basis of compromise. Where a line is to be drawn will have to be decided in some later decisions of this Court, preferably by a larger bench (so as to make it more authoritative). Some guidelines will have to be evolved in this connection and the matter cannot be left at the sole unguided discretion of Judges, otherwise there may be conflicting decisions and judicial anarchy. A judicial discretion has to be exercised on some objective guiding principles and criteria, and not on the whims and fancies of individual Judges. Discretion, after all, cannot be the Chancellor's foot.
Shri B.B. Singh, ld Counsel for the respondent has rightly expressed his concern that the decision in B.S. Joshi's case [2003 (3) TMI 721 - SUPREME COURT] should not be understood to have meant that Judges can quash any kind of criminal case merely because there has been a compromise between the parties. After all, a crime is an offence against society, and not merely against a private individual.
Therefore, Appeal is to be allowed and the criminal proceedings in question are to be quashed.
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2008 (10) TMI 689
Issues involved: Appeal u/s 10F of the Companies Act against an order passed by the Company Law Board lacking reasons for injunction.
Summary:
The High Court of Calcutta, in a case u/s 10F of the Companies Act, addressed an appeal against an order of the Company Law Board (the Board) dated 15.10.2008, which imposed an injunction without providing reasons. The Court noted that the Board failed to justify the injunction order, as observed in a previous decision. The Court found the appeal maintainable due to the lack of reasons in the impugned order. Consequently, the injunction order was set aside, and the Board was directed to proceed with the application without granting adjournments. The timeline for exchanging affidavits was modified, and parties were instructed to maintain the status quo until the application's disposal. The appellant was allowed to conduct Board Meetings without appointing a new Director until the application's resolution. The appeal and stay application were disposed of, with each party bearing its own costs. The Court clarified that the contents of a supplementary affidavit were not admitted by the appellants due to lack of opportunity for a response. All parties were required to act as per a signed copy of the order.
This judgment highlights the importance of providing reasons for legal decisions, especially when imposing injunctions, to ensure transparency and procedural fairness.
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2008 (10) TMI 688
Issues Involved:
1. Validity of execution process due to the death of Defendant No. 3.
2. Compliance with Rule 53 and 54 of Schedule II of the Income Tax Act, 1961 regarding the reserve price and EMD.
3. Non-service of notice and participation of the decree-holder in the auction without court leave.
4. Right to redeem the mortgage.
Summary:
Issue 1: Validity of Execution Process Due to Death of Defendant No. 3
The Defendants argued that the execution process was null and void as Defendant No. 3 had expired and his legal heirs were not brought on record. The Recovery Officer dismissed this objection, stating that the Bank could proceed against other Defendants. The Debt Recovery Tribunal (DRT) and the Appellate Tribunal upheld this decision, noting that the demise of Defendant No. 3 did not invalidate the proceedings.
Issue 2: Compliance with Rule 53 and 54 of Schedule II of the Income Tax Act, 1961
The Defendants contended that the reserve price and EMD were incorrectly stated in the public notice, violating Rule 53 and 54. The Recovery Officer corrected the EMD error through a corrigendum and found no prejudice caused. The DRT and Appellate Tribunal confirmed that the sale process was in compliance with the rules, and the objections were dismissed.
Issue 3: Non-service of Notice and Participation of Decree-holder in Auction Without Court Leave
The Defendants claimed that Form No. 17 was not served and the Bank participated in the auction without court leave. The Court observed that these objections were not raised before the Recovery Officer and other authorities. The Court held that the Petitioners could not raise these issues for the first time in the writ petition. The Court found that the sale process, including the publication of notice and correction of errors, was conducted properly and confirmed by the Tribunal.
Issue 4: Right to Redeem the Mortgage
The Petitioners argued that they had a right to redeem the mortgage and the sale could not be confirmed in favor of the Bank. The Court noted that the Petitioners did not justify the delay in approaching the forum and failed to deposit the decreetal amount as required under Rule 61. The Court held that the Petitioners' conduct lacked bona fide and dismissed their application. The Court also referenced Supreme Court judgments, stating that once the sale is confirmed, an absolute right vests in the auction purchaser, and the Petitioners' right to redeem the mortgage was extinguished.
Conclusion:
The High Court dismissed the writ petition, upholding the orders of the Recovery Officer, DRT, and Appellate Tribunal. The Court found no merit in the Petitioners' objections and confirmed the sale of the mortgaged property to the Bank. The Petitioners were directed to bear their own costs.
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2008 (10) TMI 687
Issues involved: Challenge to judgment allowing Criminal Revision Petition against order framing charges under Sections 420, 406 read with Section 34 IPC.
Background: Appellant-company entered agreements with respondents for lease of vehicles, alleging non-payment of lease rent, illegal sale of vehicles, criminal breach of trust, and cheating. Charges framed by Judicial Magistrate, challenged in Criminal Revision Petition.
High Court's Decision: High Court found framing of charge not sustainable, noting absence of criminal intention and remedial actions taken by respondents. Emphasized lack of mental evil design for fraud, civil dispute nature, and retrieval of agreement.
Appellant's Argument: Appellant's counsel argued High Court's conclusions indefensible, highlighting no requirement for unimpeachable offence for conviction. Stressed on re-possession rights, personal guarantees, and intention to prevent re-possession.
Respondents' Submission: Respondents' counsel justified High Court's decision, citing background facts, lack of criminal intent, partial payment, permission to sell vehicles, and encashment of bank guarantee. Argued against fraud due to absence of seminal intent and civil dispute nature.
Legal Principles: Citing legal precedents, the Supreme Court emphasized the need for a prima facie case to frame charges, not requiring certainty of conviction at that stage. Referred to Sections 227, 239, and 245 dealing with discharge from criminal charges.
Court's Decision: Court held High Court erred in interfering with framing of charges, stating strong suspicion of offence and accused involvement is adequate for charge framing. Set aside High Court's order, allowing the appeal.
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2008 (10) TMI 686
Tenders invited by the Bharat Heavy Electricals Ltd. ('BHEL') for levelling and grading - material required for execution of the contract is earth, morrow gravel and mixture of these or any other material - Huge quantity of these materials was supplied - The Deputy Director of Mines and Geology raised demand notice directing the appellant to pay a higher sum being the balance of seigniorage fee after giving credit to the fees already paid - filling material was partly gravel and partly ordinary clay in respect of which seigniorage fee is liable to be paid - appellant in each case requested the authority to withdraw the demands while agreeing to pay the seigniorage fee under protest - principles of natural justice - It was also submitted that seigniorage fee on the total quantity of earth materials supplied by the company was levied in utter disregard of the analyst report of the material and without any authority to do so - Government could not have ignored the test and analyst report of the Department of Civil Engineering and Soil Mechanics Division of Andhra Pradesh University which was a relevant piece of evidence.
HELD THAT:- In the instant case the expression "earth" is missing. The actual clause reads as follows:
''The material used for constructing embankment by earth filling shall be earth, morrum, gravel and mixture of these or any other material approved by the engineers. The materials shall be free from lumps, clouds, boulders or rock pieces roots and vegetations, harmful salts and chemicals, organic material, silt, fine sand expansive clays in order to provide stable embankment. Further, in the said specification, it is clearly mentioned that the material for embankment shall be as obtained from a particular source with the preference given to material becoming available from nearby road excavation under the same contract or any other excavation under the same contract.''
It is noticed the High Court has relied on certain records which purportedly contain the inspection notes of the sites from where the appellants had excavated the material. It is to be noted that for the first time before the High Court these records were produced. Since there was no reference to the so called inspection notes at any point of time the question of the appellant pleading prejudice because of non-supply of the same does not arise. The High Court observed that since the appellant had not demanded for the inspection notes during hearing of the revision there was no question of any prejudice. The approach is clearly wrong.
In the earlier round of proceedings the respondents had categorically admitted that the appellants utilized earth only as filling material. In the additional counter-affidavit filed by the Joint Secretary of Mines, in the present case it was explained that in the counter affidavit filed on behalf of the respondents, the then Assistant Director made a statement that the excavated material is earth which is also liable to levy seigniorage fee. This was a mistake.
By the time the counter-affidavit was filed, the Department had no precise knowledge of the locations where excavation was going on or the nature of the soil which was being excavated. It was much later, pursuant to a meeting between the various contractors and the concerned officials during which it was decided that the locations should be disclosed to the Department. Then the Deputy Director and Assistant Director inspected the areas and opined that the excavated material was not simply earth but gravel and clay. The High Court found the explanation to be convincing.
What the High Court seems to have overlooked is that there was a specific admission in the earlier cases. It is also not borne out from the records as to when the so called inspection notes of the Deputy Director and the Assistant Director were made and what was the nature of their report. The High Court's observation that the counter affidavit earlier was on account of inadvertence is without any basis. The observations of the High Court that there was no question of sending the samples to the Department of Civil Engineering are also unsustainable.
As a matter of fact it is not a case that the appellants themselves had sent the samples. In fact, the samples were sent by the Department apart from the samples being sent by the appellants. The High Court's observations that they were rightly ignored by Government do not stand to reason. The report was available on record and was not by an ordinary authority, and was by the Department of Andhra Pradesh University.
The High Court did not accept the view expressed by a ld Single Judge while disposing of writ petition filed by one of the sub contractors M/s Gayatri Projects Ltd. Though that order was not challenged by the Department, the Division Bench thought that the decision was not proper. In any event, that question is of no relevance in the present case. The High Court rightly observed that since the amendments referred to, were introduced after the expiry of the contract period they were really of non consequence.
The basic principles of natural justice seem to have been disregarded by the State Government while revising the order. It acted on materials which were not supplied to the appellants. Additionally the High Court for the first time made reference to the report/inspection notes which was not even referred to by the State Government while exercising revisional power.
The expressions "natural justice" and "legal justice" do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice.
Principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice.
We, therefore, set aside the impugned order of the High Court. The matter is remitted to the State Government to re-consider the matter after supplying to the appellants copies of reports/inspection notes on which the Department case rests. It shall also consider the effect of the concession made by the Department in the earlier rounds of proceedings before the High Court.
The appeals are allowed but without any order as to costs.
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2008 (10) TMI 685
The Appellate Tribunal CESTAT Mumbai dismissed appeals for non-compliance with pre-deposit order under Section 129E of the Customs Act, 1962 (Order No. S/454-455/08/CSTB/C-I dt. 28.7.2008).
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