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Showing 41 to 60 of 319 Records
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1987 (3) TMI 490
The High Court allowed the revision against the Tribunal's order for the assessment year 1977-78. The case involved tax imposition on foodgrain sales to unregistered dealers under the U.P. Sales Tax Act. The Tribunal was directed to determine if the goods had already been taxed before the purchases were made. If not, the case would be redecided.
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1987 (3) TMI 489
Issues Involved: Determination of whether a contract for the preparation of photo blocks constitutes a works contract or involves the sale of materials under the Kerala General Sales Tax Act for the assessment year 1976-77.
Summary:
The case involved a dispute regarding the taxability of the turnover of photo blocks supplied by the assessee, claiming they were not liable to be assessed under the Kerala General Sales Tax Act due to being works contracts rather than sales of materials. The Appellate Tribunal, relying on a Supreme Court decision, held that the contracts were indeed works contracts and granted the exemption claimed.
Questions of Law Raised:
1. Whether the transactions of making and supplying photo blocks constitute works contracts without any sale involved.
2. Whether the Tribunal's decision aligns with the Supreme Court precedent.
3. Whether the Tribunal's decision is distinguishable based on facts.
4. Whether the Tribunal's decision contradicts a previous decision of the High Court.
5. Whether the assessee can dispute taxability even after conceding the turnover.
6. Whether an assessee can claim tax exemption after collecting tax on a transaction.
Court's Analysis:
The Court considered the nature of the contract for preparing photo blocks, emphasizing the skill and labor involved in the process. It was noted that the degree of skill and labor in block-making exceeded that of a photographer, indicating a works contract rather than a simple sale of materials. The Court agreed with a similar decision by the Madhya Pradesh High Court, supporting the view that the occupation of a block-maker primarily involves skill and labor.
Conclusion:
The Court dismissed the tax revision case, affirming that the contracts for photo blocks were indeed works contracts, not subject to sales tax under the Kerala General Sales Tax Act. The plea of estoppel was rejected, emphasizing that fiscal law does not entertain equity considerations. The decision was made in favor of the assessee, and the petition was dismissed without costs.
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1987 (3) TMI 488
The Rajasthan High Court ruled that examination answer books are considered "exercise books" and are exempt from sales tax under the relevant entry in the Act. The decision was based on the interpretation that all kinds of exercise books are covered by the exemption, including those used during examinations. The Court dismissed the revision and no costs were awarded. (Citation: 1987 (3) TMI 488 - Rajasthan High Court)
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1987 (3) TMI 487
The High Court of Allahabad allowed the revision for the assessment year 1980-81 by the assessee against the Tribunal's order. The dispute was regarding purchases made by the assessee for ex-U.P. principals as an agent. The Tribunal's remand order was set aside, and the Tribunal was directed to dispose of the case itself without remanding it to the assessing authority. The petition was allowed.
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1987 (3) TMI 486
The High Court of Allahabad allowed the revision petition by the assessee against the Tribunal's order for the assessment year 1972-73. The Tribunal was directed to determine if the amount of Rs. 8,349.43 was refundable to the assessee and why adjustment could not be allowed under section 29 of the U.P. Sales Tax Act. The Tribunal's order was set aside, and the case was sent back for further review.
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1987 (3) TMI 485
Issues Involved:
1. Legality of the assessment of Orissa sales tax on inter-State sales.
2. Appropriateness of the conditional stay granted by the Commissioner.
3. Jurisdiction of the High Court in granting stay during the pendency of an appeal.
Issue-wise Detailed Analysis:
1. Legality of the assessment of Orissa sales tax on inter-State sales:
The petitioner argued that the entire turnover comprised inter-State sales for which C forms had been supplied by Paradeep Phosphates, thus making the turnover non-taxable under Orissa sales tax. The Commissioner, while noting the petitioner's contentions, found some merit in them, yet directed the petitioner to pay Rs. 50,000 as a condition for stay. The High Court acknowledged that the petitioner's turnover was not liable to Orissa sales tax, emphasizing that "no part of the turnover of the petitioner was exigible to Orissa sales tax." This raised the question of the jurisdiction of the assessing officer in levying Orissa sales tax on inter-State sales, which had already been included in Central sales tax returns and paid in Maharashtra.
2. Appropriateness of the conditional stay granted by the Commissioner:
The Commissioner granted a partial stay, directing the petitioner to pay Rs. 50,000 out of the assessed amount of Rs. 2,29,458. The petitioner contended that this was unjust, given the Commissioner's acknowledgment of the strength of the petitioner's case. The High Court expressed that the Commissioner's decision to require a payment of Rs. 50,000 was an "illegal exercise of jurisdiction," considering the petitioner's strong prima facie case. The judgment highlighted that "if the Commissioner was satisfied that Orissa sales tax was not leviable in respect of the transaction in question, there was no bar for granting relief of stay to the extent of full amount."
3. Jurisdiction of the High Court in granting stay during the pendency of an appeal:
The High Court discussed the principles guiding the jurisdiction in the matter of granting stay of tax realization. It was noted that the Supreme Court's decisions do not preclude the High Court from exercising its discretion in granting stay in appropriate cases. The judgment stressed that refusing to exercise jurisdiction would be "tantamount to abdicating our jurisdiction under articles 226 and 227 of the Constitution of India." The High Court, therefore, decided to grant stay until the disposal of the appeal, stating that "it will be inequitable to refuse stay in such case."
Separate Judgments:
Justice S.C. Mohapatra disagreed with Justice R.C. Patnaik, emphasizing procedural issues and the necessity of detailed records for exercising the power of superintendence under Article 227. He argued that the petitioner's grievance regarding the partial stay could be addressed in the pending appeal and cited the Supreme Court's guidelines on granting stay, which caution against routine stays in tax matters. Justice Mohapatra concluded that this was not a fit case for interference and dismissed the writ application.
Justice G.B. Patnaik, resolving the difference of opinion, sided with Justice R.C. Patnaik. He acknowledged the petitioner's strong prima facie case and the Commissioner's partial agreement with the petitioner's contentions. Justice Patnaik concluded that the petitioner should benefit from the difference of opinion between the two judges and modified the Commissioner's order, granting a full stay of the entire amount under demand until the final disposal of the appeal by the Assistant Commissioner.
Conclusion:
The writ application was allowed, and the High Court granted a full stay of the tax demand until the appeal's disposal, directing the Assistant Commissioner to resolve the appeal within two months.
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1987 (3) TMI 484
The High Court revised the Board of Revenue's order regarding the tax rate on aluminium paint used for electric poles. The court held that the paint is taxable at 10% under entry No. 63, not at the concessional rate of 3% as claimed by the assessee. The court found that the paint is not considered an accessory required for distribution of electric power. The revision was allowed, and the Board of Revenue's order was set aside.
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1987 (3) TMI 483
Issues: Interpretation of a notification under the Rajasthan Sales Tax Act regarding taxation of meals sold as a composite unit in a "thal."
The judgment by the Rajasthan High Court involved a revision by the department under the newly substituted section 15 of the Rajasthan Sales Tax Act, focusing on whether a "thal" containing an entire meal sold by the assessee as a composite unit falls within the scope of a specific notification dated 8th March, 1969. The primary question was whether the individual items constituting the meal needed to be separated for determining the tax liability of each item separately. The petitioner sold meals in "thals" for Rs. 1.80 per meal during the assessment periods of 1968-69 and 1969-70. The assessing authority concluded that the supply of meals in "thals" fell within the notification and should be taxed accordingly. The assessee appealed against this decision, which was dismissed by the appellate authority, leading to a revision before the Tribunal.
The Tribunal considered the meal served in a "thal" by the assessee, which included rice, dal, chapati, vegetable curry, pepper, and onions, charged at Rs. 1.80 per "thal." Since some of these items were individually exempt from tax, the Tribunal held that these exempt items had to be excluded while assessing the tax on the meals. Consequently, the Tribunal remanded the case to the assessing authority for a fresh assessment based on this consideration. Subsequently, a reference was made to the High Court to decide on the legal question raised by the department regarding the taxation of meals sold in "thals" under the notification dated 8th March, 1969.
The High Court analyzed the notification issued by the State Government under the Rajasthan Sales Tax Act, specifically focusing on the inclusion of "meals" in the list of taxable items for certain businesses. The Court interpreted that a "thal" of the kind supplied by the assessee containing a full meal fell within the scope of the notification. The Court emphasized that a meal typically comprises composite preparations consumed at a regular eating time, and the word "meals" in the notification should be understood in its ordinary sense. Referring to relevant case law, the Court concluded that the meal served in a "thal" by the assessee should be treated collectively as a meal under the notification, rather than taxing individual constituents separately.
In light of the above analysis, the High Court held that while the Tribunal was correct in recognizing the supply of items in a "thal" as a meal, it erred in suggesting that the constituents should be taxed individually. Therefore, the revision by the department was allowed, and the Tribunal's decision was set aside. The Court acknowledged the assistance provided by amicus curiae Mr. R.C. Ghiya before concluding the judgment without any order as to costs.
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1987 (3) TMI 482
Issues:
1. Assessment of castings subjected to annealing, machining, and polishing.
2. Classification of castings under tariff items 26AA and 68.
3. Applicability of duty from the date of the Assistant Collector's order.
Analysis:
1. The dispute in this case revolves around the assessment of castings that undergo processes like annealing, machining, and polishing. The Assistant Collector initially determined that these processes did not create articles distinct from the original castings. However, the lack of reasoning behind this decision led to an appeal against the order.
2. Upon appeal, it was argued that the castings were intermediate products intended for manufacturing identifiable machine parts. The Appellate Collector concluded that the castings fell under a specific entry, 26AA(v), and should be classified accordingly. He highlighted the failure of the Assistant Collector to assess whether the processes amounted to manufacturing. The Appellate Collector differentiated between the castings and the assembled wheel axle, stating that the former should be classified under item 26AA(v) while the assembled parts would attract duty under item 68.
3. The Appellate Collector correctly held that the castings are dutiable under 26AA(v) as they are produced to be used as machine parts after further processing. The judgment emphasized the distinction between the castings and the final machine parts, stating that both stages attract duty under different tariff items. Therefore, the duty liability for the castings was upheld based on their classification.
4. However, the Appellate Collector's decision to impose further duty on the wheel tub assembly under item 68 was deemed incorrect. The assembly of the tub wheels and axle rod should not attract additional duty as it does not create a new product but simply assembles existing components. The judgment highlighted the potential absurdity of continuously imposing duty on assembled parts, leading to an infinite cycle of taxation.
5. The argument raised by the appellants regarding the recovery of duty from the date of the Assistant Collector's order was rejected. The judgment clarified that duty recovery is governed by the date of the show cause notice and must adhere to the statutory limitations outlined in Section 11A of the Central Excises and Salt Act, 1944. The timing of duty recovery cannot be solely based on the date of the adjudicating authority's order.
6. Ultimately, the appeal was dismissed, affirming the duty liability for the castings under 26AA(v) but rejecting the imposition of additional duty on the wheel tub assembly under item 68. The judgment emphasized the importance of adhering to statutory provisions for duty recovery and classification of goods. The decision concluded with instructions for appropriate actions to be taken in line with the judgment.
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1987 (3) TMI 481
Whether any tax is payable on sales of dressed hides purchased by the applicant against form H but he held that the respondent-assessee shall be liable to tax under section 3-AAAA if it purchased dressed hides and skins against form III-A and sold the same in the course of export?
Held that:- If photostat copy of form H under the Central Sales Tax Act is furnished to the vendor it will be accepted by the competent authority and the vendor will not be held liable for payment of sales tax/purchase tax in respect of such transactions subject to the rider that the respondent will be held liable in case the purchases made by him do not satisfy the conditions and tests prescribed by sub-section (3) of section 5 of the Central Sales Tax Act and are not made in the course of export within the meaning of the said provision. So far as the past transactions are concerned the respondent will not be liable provided he satisfies the aforesaid tests and the transactions of last sales made to him are in the course of export within the deeming clause of sub-section (3) of section 5 of the Act.
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1987 (3) TMI 472
Whether groundnuts falling within the description of "nuts" in the Schedule in Class-I, item No. 4(t), are liable to be taxed under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970, in case the purpose of importer is to extract oil therefrom?
Held that:- Considering all the facts and circumstances as well as considering that nuts excluding betel nuts being one of the specified goods mentioned in the Schedule to the said Act clearly bring within its fold groundnut so groundnut imported into Calcutta metropolitan area is liable to the imposition of entry tax under the said Entry Tax Act. We, therefore, allow this appeal and set aside the judgment and order passed in Appeal from Original Order without any order as to costs. The writ petition giving rise to the appeal will stand dismissed.
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1987 (3) TMI 463
Issues:
Violation of Minimum Wages Act and Rules | Liability of directors in company offenses | Prosecution under section 22(c) of Minimum Wages Act | Application of Full Bench rulings | Cognizance under section 22A vs. section 22C | Fresh summons for directors after delay
Violation of Minimum Wages Act and Rules:
The case involved the alleged violation of the Minimum Wages Act and Rules by a company, M/s U.S. Dugal and Company, as identified during an inspection by the Labor Inspector. The company failed to maintain required registers, leading to the initiation of criminal proceedings against the petitioners, who were directors of the company. The Labor Inspector repeatedly requested the production of the necessary registers, but the company failed to comply, resulting in the filing of the case for violation of sections 18 and 19(4) of the Act.
Liability of directors in company offenses:
The main contention raised by the petitioners was that they, as directors, should not be prosecuted as they were not directly responsible for the day-to-day affairs of the company. However, the respondent argued, citing a Full Bench ruling, that in cases where a company commits an offense, all individuals associated with the company, including directors, are vicariously liable for the offense unless proven otherwise. The ruling emphasized that specific naming of directors in the complaint is not necessary for their prosecution in such cases.
Prosecution under section 22(c) of Minimum Wages Act:
The court noted that section 22(c) of the Minimum Wages Act is similar to section 10 of the Essential Commodities Act, and thus the Full Bench rulings regarding the liability of directors in company offenses are applicable in the present case. The petitioners, being directors, can be prosecuted along with the company for violations under the Minimum Wages Act, without the need to establish their individual roles or responsibilities in the complaint.
Application of Full Bench rulings:
The judgment referred to various Full Bench rulings, including cases under different Acts, to establish the principle of vicarious liability for directors in company offenses. The rulings emphasized that directors, managers, or partners can be held liable for offenses committed by the company, even without specific allegations of their involvement, unless they prove their lack of knowledge or due diligence to prevent the offense.
Cognizance under section 22A vs. section 22C:
The petitioners argued that cognizance had been taken under section 22A of the Act, making section 22C inapplicable. However, the court clarified that the focus should be on the offense and its elements during trial or framing of charges, rather than the specific section under which cognizance was taken. The issue regarding the application of sections 22A and 22C was left for consideration at the trial stage.
Fresh summons for directors after delay:
Lastly, the petitioners requested fresh summons to be issued to the directors, considering the delay of four years since the order of cognizance. The court found this request reasonable and directed the lower court to consider issuing fresh summons to the directors, who lived far away and might not have been promptly informed about the case.
In conclusion, the court dismissed the application under section 482 of the Criminal Procedure Code, finding no merit in the petitioners' arguments regarding the quashing of the criminal proceedings. The judgment reaffirmed the vicarious liability of directors in company offenses under the Minimum Wages Act, based on the principles established in relevant Full Bench rulings.
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1987 (3) TMI 462
Issues Involved:
1. Whether the respondent-company is indebted to the petitioner.
2. Whether the petitioner is entitled to proceed with the winding-up petition for the recovery of interest claimed.
3. Whether the debt claimed by the petitioner is bona fide disputed.
4. Whether the respondent-company is insolvent or unable to pay its debt.
Summary:
1. Indebtedness of the Respondent-Company:
The petitioner claimed that the respondent-company owed Rs. 2,22,289.29 with interest at 18% per annum from June 1, 1984, for advertising and publicity services rendered. The respondent-company acknowledged the principal amount but disputed the interest claim, stating that no agreement on interest existed.
2. Entitlement to Proceed with Winding-Up Petition:
The petitioner argued that they were entitled to recover both the principal and interest amounts u/s 433(e) read with section 434 of the Companies Act, 1956. The respondent-company contended that the interest claim was neither agreed upon nor determined and that the petitioner should seek remedy through a regular civil court.
3. Bona Fide Dispute of Debt:
The court examined the bona fide nature of the dispute. It was noted that the claim for interest was not mentioned in earlier correspondence and was raised for the first time in the notice u/s 434. The court referred to legal precedents, including Halsbury's Laws of England and Palmer's Company Law, which state that a winding-up petition is not a legitimate means of enforcing a debt that is bona fide disputed.
4. Insolvency or Inability to Pay Debt:
The respondent-company had paid more than Rs. 2,22,000 during the proceedings, indicating its solvency. The court emphasized that the machinery of winding-up should not be used as a debt-collecting agency or to exert improper pressure on a company. The court cited various judgments, including Amalgamated Commercial Traders (P.) Ltd. v. A.C.K. Krishnaswami, to support its view that a bona fide disputed debt does not constitute neglect to pay u/s 434(1)(a).
Conclusion:
The court held that the interest amount claimed by the petitioner was not established as a debt, was bona fide disputed, and the respondent-company was not insolvent. Consequently, the winding-up petition was dismissed with costs.
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1987 (3) TMI 461
Issues:
- Petitioner seeking the release of passport retained by authorities under the Foreign Exchange Regulation Act, 1973.
- Authorities claiming the passport as case property in connection with a pending prosecution.
- Interpretation of sections 34 and 38 of the Foreign Exchange Regulation Act, 1973.
- Relevance of the passport issued in 1986 to the offenses allegedly committed in 1985.
- Decision on the return of the passport to the petitioner.
Analysis:
The petitioner filed a writ petition seeking the release of his passport, which was retained by the authorities under the Foreign Exchange Regulation Act, 1973, in connection with a pending prosecution. The respondents argued that the passport was case property relevant to the ongoing case against the petitioner. The authorities relied on sections 34 and 38 of the Act to justify the retention of the passport by the investigating officer.
The court examined the provisions of sections 34 and 38 of the Foreign Exchange Regulation Act, 1973, which empower investigating authorities to seize documents relevant to investigations. The petitioner had been issued show cause notices for alleged offenses dating back to 1985, while the passport in question was issued in 1986. The court agreed with the petitioner's counsel that the 1986 passport could not be relevant to offenses committed in 1985, as it did not exist at the time of those offenses.
The petitioner expressed readiness to provide a different passport relevant to the offenses of 1985 if required by the authorities. The court held that the 1986 passport, being unrelated to the offenses in question, should be returned to the petitioner. It directed the petitioner to follow the appropriate procedure to reclaim the passport from the court where it had been submitted in connection with the case. The court ruled in favor of the petitioner, ordering the return of the passport and leaving the parties to bear their own costs.
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1987 (3) TMI 443
Issues:
Petition for winding up under section 433 of the Companies Act, 1956 based on alleged debt owed by the respondent company to the petitioner.
Analysis:
The petitioner claimed that the respondent company owed him a total of Rs. 80,356.36, which included a loan amount, collateral security, and share money. The respondent company contested the claim, admitting only the loan amount of Rs. 29,356.36, subject to certain conditions agreed upon at a board meeting. The company argued that the collateral security had been returned, and the share money was not refundable. The dispute centered around the authenticity of the petitioner's signature on the minutes of the board meeting where the repayment agreement was allegedly made.
The petitioner testified that he was a director of the company and acknowledged the accuracy of certain documents but disputed the agreement reached at the board meeting regarding the repayment of his investment. On the other hand, a director of the company testified that the petitioner was aware of the resolution passed at the board meeting and confirmed the liability to repay the loan amount after the company commenced production. The court emphasized the importance of evidence in determining the immediate liability of the company to repay the debt.
The court examined the board resolutions dated June 4, 1986, which outlined the repayment terms agreed upon by the parties. Despite the petitioner's claim of objection to the agreement, the court found his assertion lacking corroborative evidence. The court concluded that the petition was not maintainable under section 433 as it sought to coerce payment of an amount not immediately due, in line with the Supreme Court precedent. The court advised the petitioner to pursue recovery through a civil suit if necessary and dismissed the petition while acknowledging the petitioner's right to seek legal recourse through appropriate channels.
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1987 (3) TMI 442
Issues Involved:
1. Whether the DDCA could enroll members beyond the figure of 1,500.
2. Whether the executive committee had the authority to increase the membership beyond 1,500.
3. Whether the petition is maintainable under section 155 of the Companies Act, 1956.
4. Whether the members enrolled beyond 1,500 were necessary parties to the petition.
5. Whether the petition was barred by principles of res judicata due to a previous settlement in Suit No. 1587 of 1982.
Issue-wise Detailed Analysis:
1. Whether the DDCA could enroll members beyond the figure of 1,500:
The petitioner argued that according to Article 2 of the Articles of Association of DDCA, the number of members was fixed at 1,500 and any enrollment beyond this figure was illegal. The respondents admitted that the membership exceeded 1,500 and was currently 3,200. They contended that the enrollment was valid under Article 2, which allowed the general committee to increase the number of members. However, the court held that Article 2 of the Articles of Association, which purported to allow the general committee to increase the number of members, was void to that extent. The court emphasized that under section 27(2) and section 31 of the Companies Act, any alteration in the number of members required a special resolution by the general body and compliance with statutory procedures.
2. Whether the executive committee had the authority to increase the membership beyond 1,500:
The court determined that the executive committee did not have the authority to increase the membership beyond 1,500. The increase in the number of members required a special resolution by the general body, as per section 31 and section 189 of the Companies Act. The court found that the purported power of the general committee to increase the membership under Article 2 of the Articles of Association was contrary to the statutory provisions and thus void.
3. Whether the petition is maintainable under section 155 of the Companies Act, 1956:
The court held that the petition was not maintainable under section 155 of the Companies Act. The court reasoned that the issue of membership beyond 1,500 had already been addressed in Suit No. 1587 of 1982, where a settlement was reached, and the petitioner did not seek leave to file fresh proceedings on the same issue. Applying the principles of res judicata, the court concluded that the present petition was barred. Additionally, the court noted that members whose names were sought to be removed were necessary parties to the petition, and their absence rendered the petition non-maintainable.
4. Whether the members enrolled beyond 1,500 were necessary parties to the petition:
The court emphasized that in a petition under section 155 of the Act, the members whose names were sought to be removed from the register were necessary parties. The court found that the petitioner had not impleaded all the affected members, nor had he complied with the provisions of Order 1, Rule 8 of the Code of Civil Procedure, which allows for representative suits. The court concluded that without the necessary parties, no relief could be granted to the petitioner.
5. Whether the petition was barred by principles of res judicata due to a previous settlement in Suit No. 1587 of 1982:
The court found that the issue of membership beyond 1,500 was already litigated in Suit No. 1587 of 1982, where a settlement was reached, and the petitioner was a party to that suit. The court held that the petitioner was bound by the settlement and could not re-litigate the same issue. The court applied the principles of res judicata, as contained in Order 23, Rule 1 of the Code of Civil Procedure, to bar the present petition.
Conclusion:
The court dismissed the petition, holding that the executive committee did not have the authority to increase the membership beyond 1,500 without a special resolution by the general body. The court also found the petition non-maintainable due to the absence of necessary parties and the principles of res judicata. The petition was dismissed without any order as to costs.
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1987 (3) TMI 441
Issues Involved:
1. Whether the claim by or against the company in liquidation, which is ordinarily enforceable by means of a suit, has to be initiated before the company court by means of a suit u/s 446(2)(a) of the Companies Act, or by means of an application u/s 446(2)(b)?
2. What is the article of the Limitation Act applicable if the claim is held to be enforceable by means of an application?
Summary:
Issue 1: Initiation of Claims by or Against the Company in Liquidation
The court examined whether claims by or against a company in liquidation, typically enforceable by a suit, must be initiated by a suit u/s 446(2)(a) or by an application u/s 446(2)(b) of the Companies Act. The court held that the liquidator has the option to file either a suit or an application for money claims or actionable claims. The court emphasized that "claims" in clause (b) generally refer to debts or money claims and not to property or title claims. The court noted that the amendment to section 446(2)(b) was intended to expedite the winding-up process by allowing claims to be made through applications rather than suits. The court concluded that the application filed by the official liquidator is maintainable.
Issue 2: Applicable Article of the Limitation Act
The court addressed the issue of the applicable article of the Limitation Act for claims enforceable by means of an application. It was determined that the application should be treated as a suit and governed by the article of the Limitation Act applicable to suits of that nature. The court stated that the relevant article must be determined based on the nature of the claim and the provision of law under which it is claimed. In this case, the relevant article was Article 18, which prescribes a period of three years from when the work is done. The court also noted the exclusion periods provided u/s 458A of the Companies Act for computing the limitation period.
Conclusion:
The court found that the application filed by the official liquidator was out of time. The claim for labor charges dated January 8, 1979, should have been filed on or before May 30, 1983, after excluding the periods u/s 458A. Since the application was filed on December 4, 1984, it was dismissed as barred by limitation. The costs of the application were ordered to come out of the estate.
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1987 (3) TMI 419
The High Court dismissed the application to stay a suit for recovery of Rs. 1,50,000 against the petitioner and another under section 446 of the Companies Act. The court ruled that the suit was not against the company and therefore not liable to be stayed. Civil Revisions were dismissed, and parties were directed to appear in the trial court on April 8, 1987.
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1987 (3) TMI 418
Issues Involved:
1. Wilful disobedience of court orders.
2. Use of corporate veil to evade compliance.
3. Validity of apology in contempt proceedings.
4. Appropriate punishment for contempt.
Issue-Wise Detailed Analysis:
1. Wilful Disobedience of Court Orders:
The petitioner filed a suit seeking a decree for specific performance of an agreement dated March 3, 1980, and obtained a temporary injunction on May 13, 1980, restraining the respondents from transferring the third and fourth floors of a building. Despite this, the respondents transferred these floors, violating the court's order. The court emphasized that every person against whom an order is made must obey it unless it is discharged, as highlighted in Hadkinson v. Hadkinson [1952] 2 All ER 567, 569 (CA). The respondents admitted to the transfer, constituting wilful disobedience.
2. Use of Corporate Veil to Evade Compliance:
The respondents argued that the transfer was made by M/s. Tower Height Builders Pvt. Ltd., a company they promoted. The court noted that a company is a distinct legal entity, but this doctrine has exceptions, particularly when the corporate personality is used to cloak fraud or improper conduct. The court referred to cases like Aron Salomon v. A. Salomon & Co. Ltd. [1897] AC 22 (HL) and Life Insurance Corporation of India v. Escorts Ltd. [1986] 59 Comp. Cas. 548 (SC), which allow lifting the corporate veil in cases of fraud or improper conduct. The court found that the corporate veil was used to wilfully disobey the court's orders, necessitating its lifting to identify the true contemnors.
3. Validity of Apology in Contempt Proceedings:
The respondents tendered an unconditional apology after the conclusion of arguments. The court held that an apology made at such a late stage lacks value and is often a device to escape punishment. The court cited E. T. Sen v. Edatata Narayanan, AIR 1969 Delhi 201, 211 [FB], stating that an apology must be offered at the earliest opportunity and indicate genuine remorse. The court rejected the respondents' apology as it was not bona fide and did not purge the contempt.
4. Appropriate Punishment for Contempt:
The court emphasized that the purpose of punishment in contempt proceedings is to vindicate public interest and ensure compliance with court orders. The respondents' conduct was deemed a serious and flagrant disobedience of the court's orders. Despite considering severe punishment, the court took into account the respondents' personal circumstances, including health issues and family responsibilities. Consequently, the court ordered the respondents to be detained in civil prison for 15 days, with the petitioner directed to deposit Rs. 3,000 for their expenses.
Conclusion:
The court found the respondents guilty of wilful disobedience of its orders and using the corporate veil to evade compliance. The late apology was rejected as insincere. The respondents were sentenced to 15 days in civil prison to meet the ends of justice, balancing the severity of the contempt with their personal circumstances.
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1987 (3) TMI 417
The court ruled that the petitioners can continue as directors until removed according to section 284, rejecting the argument based on section 255(2) of the Companies Act. The respondents were directed not to interfere with the petitioners' directorship.
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9911796707
