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2008 (3) TMI 752
The Delhi High Court issued an order for case ITA No.249/2003 and ITA No.58/2002 to be heard on 29th August 2008. Counsel for the Assessee accepted notice and requested time for instructions.
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2008 (3) TMI 751
The Bombay High Court dismissed the appeal as the tax incidence was less than Rs. 4 lakhs. The issue of law was kept open for consideration in an appropriate case. Refund of court fees as per rules.
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2008 (3) TMI 750
Issues Involved:
1. Maintainability of the company petition u/s 397, 398, 399, 402, and 403 of the Companies Act, 1956.
2. Validity of consents obtained from members for filing the petition.
3. Compliance with Section 399 requirements.
Summary:
Issue 1: Maintainability of the Company Petition
The Chamber filed an application questioning the maintainability of the company petition for not meeting the requirements of Section 399 of the Companies Act, 1956. The petitioners needed the consent of not less than one-fifth of the total number of members to apply u/s 397 and 398. As per the Chamber, the total number of members was 1809, but 388 members admitted after 30.09.2006 were under challenge, reducing the count to 1421. Therefore, 284 consents were required, but the petitioners had only 242 valid consents out of the 318 obtained, failing to meet the requirement.
Issue 2: Validity of Consents
The Chamber argued that 76 consents were invalid due to multiple consents by the same persons, non-members signing, variance in signatures, unsigned consents, and consents by members admitted after 30.09.2006. The petitioners contended that the consents were proper and in consonance with statutory provisions. However, the Board found discrepancies, including 4 members admitted after 30.09.2006, 21 non-members, multiple consents by 4 members, and 2 unsigned consents, reducing the valid consents to 286. Additionally, 23 members denied giving consent, and 21 signatures varied from specimen signatures, further reducing valid consents to 242.
Issue 3: Compliance with Section 399 Requirements
The Board emphasized that Section 399 stipulates minimum qualifications for members to apply u/s 397/398, requiring one-fifth of the total members' consent. The petitioners failed to meet this requirement with only 242 valid consents. The Board scrutinized the consent letters and found that many consents were obtained without members applying their minds or understanding the petition's contents, rendering them invalid. The Supreme Court's decision in J.P. Srivastava & Sons (P) Ltd. v. Gwalior Sugar Co. Ltd. was cited, confirming that the requirement of consent letters is directory, not mandatory. However, the petitioners still failed to meet the numerical requirement of Section 399.
Conclusion:
The company petition was dismissed for not meeting the requirements of Section 399 of the Companies Act, 1956. All interim orders were vacated, and the connected company application was disposed of.
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2008 (3) TMI 749
Issues involved: Interpretation of Sections 13(2)(b), (d), and (h) of the Income Tax Act, 1961 regarding treatment of post-dated cheques as income or investment.
Interpretation of Section 13(2)(b): The Revenue challenged the treatment of a post-dated cheque received by the Assessee as falling foul of Section 13(2)(b) of the Income Tax Act, 1961. The Tribunal held that since the cheque was not available for the use of the drawer at the time of receipt, Section 13(2)(b) did not apply. The Court agreed with this interpretation, stating that the cheque being post-dated did not constitute an amount available for immediate use, thus rejecting the Revenue's contention.
Interpretation of Section 13(2)(d): The Revenue also argued that the Assessee's services were available to the drawer of the cheque, invoking Section 13(2)(d) of the Act. However, the Tribunal found no evidence of such service being provided. Consequently, the Court concurred with the Tribunal's decision, affirming that Section 13(2)(d) did not apply in this case due to the absence of service provided by the Assessee to the drawer of the cheque.
Interpretation of Section 13(2)(h): Regarding Section 13(2)(h) of the Act, the Revenue contended that the cheque amount could be considered an investment made by the Assessee without receiving any compensation. The Court rejected this argument, deeming it too broad. The Court reasoned that accepting the Revenue's stance would categorize any post-dated cheque as an investment, which was not the legislative intent. Therefore, the Tribunal's decision to dismiss the Revenue's claim under Section 13(2)(h) was upheld by the Court.
Conclusion: The Court found no error in the Tribunal's decision, stating that there was no substantial question of law arising from the case. Consequently, the appeal by the Revenue was dismissed.
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2008 (3) TMI 748
Issues involved: Reference against cancellation of penalty u/s 271(1)(c) of IT Act for asst. yr. 1990-91.
Summary:
1. The Tribunal cancelled the penalty levied on the assessee under s. 271(1)(c) of the IT Act for the assessment year 1990-91. The respondent, an advocate and power of attorney holder, failed to establish that the seized cash belonged to another person, leading to penalty proceedings for concealment of income initiated by the Assessing Officer (AO). The AO limited the penalty to the minimum amount despite the concealment being evident. The Tribunal's decision was based on the assumption that the assessee returned the income and paid tax before the due date for filing the return.
2. The High Court heard arguments from both parties' senior counsels. The Revenue's counsel highlighted the incorrect assumption by the Tribunal regarding the due date for filing the return. The assessee had ample time to declare the income and pay tax after the search. The High Court noted that the assessee could have avoided penalty by disclosing the income during the search and paying tax accordingly. The court also emphasized that the decisions cited by the assessee's counsel were not directly applicable to the case at hand, as they did not address the scope of Expln. 5 to s. 271(1)(c) of the Act.
3. Expln. 5 to s. 271(1)(c) of the Act deals with penalties arising from search operations. It presumes concealment of income if the assessee fails to disclose income and offer payment during the search. In this case, the assessee not only failed to disclose the income during the search but also provided an unproven explanation regarding ownership. The High Court concluded that concealment was established beyond doubt u/s Expln. 5, making the assessee liable for penalty. The court upheld the minimum penalty imposed by the AO and ruled in favor of the Revenue, reversing the Tribunal's decision.
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2008 (3) TMI 747
Issues involved: Challenge to judgment u/s 138 of Negotiable Instruments Act.
Details of the judgment:
1. Background: The appellant lodged a complaint u/s 138 of the Negotiable Instruments Act against the respondent for dishonoring a cheque. The trial court convicted the accused, but the first appellate court set aside the conviction.
2. Contentions: The appellant argued that the Assistant Area Manager had the authority to file the complaint, citing relevant legal precedents. The respondent contended that only the Regional Manager had the authority to delegate such powers.
3. Legal Analysis: The court examined the delegation of powers as per the company's Memorandum and Articles of Association. It was found that only the Regional Manager had the authority to delegate powers, not the Assistant Area Manager.
4. Delegation Principle: The court discussed the legal principle that an agent cannot further delegate powers without explicit authority. As the Regional Manager had not been authorized to delegate to the Assistant Area Manager, the complaint was deemed improperly filed.
5. Decision: The court upheld the first appellate court's decision, ruling that the complaint was not legally maintainable due to improper filing. The criminal appeal was dismissed, confirming the judgment of the trial court.
In conclusion, the judgment highlights the importance of proper delegation of powers within a company and the legal consequences of unauthorized delegation in the context of filing complaints u/s 138 of the Negotiable Instruments Act.
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2008 (3) TMI 746
The Supreme Court of India issued an order for an interim stay on the abatement of proceedings related to the petitioner. The Income Tax Settlement Commission can proceed with the matter independently.
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2008 (3) TMI 745
Dishonour of Cheque - discharge of legally enforceable debt or not - insufficiency of funds - rebuttal of presumption - offences u/s 138 of the Negotiable Instruments Act, 1881 ('NI Act') - Prayer for sending the cheque for examination to a handwriting expert - determination of the time when the signature was appended - HELD THAT:- This Court is unable to accept the contention of the petitioner that if the signatures on the cheques are shown to be much prior to the date of filling up of the material particulars that would probablise the defense of the Petitioner. That the signature on the cheques is that of the petitioner is not disputed. The Petitioner has even in his cross-examination in fact admitted the fact that the cheques were issued by him and were handed over to the complainant along with a covering letter. For the reasons explained it matters little if the name of the payee, date and amount are filled up at a subsequent point in time, subject of course to what is stated in the proviso to Section 118 NI Act.
It is also not possible to agree with the contention that the determination of the time when the signature was appended will somehow explain the fact that the Petitioner has discharged the entire liability even before the cheque was presented for payment. Here two factors need to be noticed. The first is that although the Petitioner claims that he has closed his account in 2001 itself and that these blank cheques were handed over to the complainant prior to that, he did not write to the complainant informing the complainant that the account had been closed. Secondly, although he claimed that he has discharged the liability, admittedly this is only an oral assertion of the Petitioner and no receipts evidencing the payment of ₹ 8 lakhs have been produced in the court.
It is pointed out by learned Counsel for the Respondent No. 2 that at the stage of framing of charge, the Petitioner had claimed before the trial court that he had with him the receipts evidencing repayment. However, till date no such receipt has been produced. The burden will be on the accused to show that in fact he has discharged the liability even prior to the presentation of the cheques for payment. That cannot be proved by the report of a handwriting expert.
Section 139 NI Act which raises a rebuttable presumption in this behalf, would require some other positive evidence to be led by the accused to show that he has repaid the amount to the complainant. In other words, merely because there is a CFSL report that shows that the handwriting, the ink and the time of filling the material particulars is different from that of the signatures, that by itself will not go to prove that the accused has discharged his liability towards the complainant even before the date of the presentation of the cheques. For these reasons, there is no merit in the prayer of the petitioner for sending the cheques to the CFSL for the opinion of the handwriting expert.
An extensive reference was made to the judgment of this Court in BPDL Investments (Pvt.) Ltd.[2006 (2) TMI 691 - DELHI HIGH COURT] which arose in the context of a summary suit in which an application for leave to defense was being considered. It was submitted in that case that two undated cheques had been issued by the defendant in favor of the plaintiff and before it was presented the date was filled up by the plaintiff and that this constituted a material alteration.
Following the decision of the Andhra Pradesh High Court in Allampati Subba Reddy v. Neelapareddi [1965 (9) TMI 72 - ANDHRA PRADESH HIGH COURT], this Court held that there was no consent of the defendant to the alteration of the date and therefore in terms of Section 87 of the NI Act it was a material alteration. In the first place, this was not a case arising under Section 138 NI Act at all. Moreover, while adverting to Section 87 of the Act, the Court did not notice that the said Section was subject to Sections 20, 49, 86 and 125 NI Act. These provisions permit the holder in due course of a negotiable instrument to fill up the material particulars without the said instrument being rendered void.
Therefore, this Court finds no infirmity in the order of the learned MM declining to refer to the cheques for the opinion of the handwriting expert. The petitions are accordingly dismissed but in the circumstances with no order as to costs. The pending applications are disposed of.
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2008 (3) TMI 744
Issues:
1. Whether an assessment can be reopened u/s 15 of HPGST Act without new information?
2. Is maize exempt from purchase tax u/s 5(A) of HPGST Act?
Judgment:
The reference was made by the Financial Commissioner (Appeals) to the Government of Himachal Pradesh regarding the issues at hand. The Applicant, Dhani Ram and Sons, a registered dealer, had submitted returns for 1990-91 and 1991-92 which were accepted initially. However, notices were later issued for reassessment under Section 15, resulting in the levying of purchase tax on maize purchased by the Applicant. The Applicant appealed against this decision but was unsuccessful, leading to the current reference.
Issue (i):
The Financial Commissioner (Appeals) noted that the Assessing Authority had no new information for reassessing the tax liability. The basis for reassessment was the existence of a notification from 10th March, 1988, which was not considered during the original assessment. The Court held that ignorance of a notification does not constitute new information for reassessment. Ignorance of the law is not an excuse, and the Assessing Authority should have been aware of such notifications. Therefore, the action of reopening the assessment was deemed unlawful.
Issue (ii):
Regarding the exemption of maize from purchase tax under Section 5-A of HPGST Act, it was found that maize purchased by the Applicant was included in Schedule-B of the Act. As per item No. 26 of Group-D in Schedule-B, agriculture and horticulture produce sold by a person or family member and grown by themselves are exempt from tax. Since the maize was purchased from agriculturists and fell under Schedule-B, it was not subject to tax under Section 5-A. Thus, the second issue was resolved in favor of the Applicant.
The reference was ultimately disposed of in light of the above determinations.
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2008 (3) TMI 743
Issues involved:
The judgment involves the interpretation of a guarantee agreement and the applicability of Section 130 of the Indian Contract Act, 1872.
Interpretation of Guarantee Agreement:
The appellant, a guarantor, contested liability for a loan advanced by the bank to the defendants, claiming revocation of the guarantee before the loan disbursement. The agreement of guarantee stated it was continuous and not affected by account status. The High Court upheld the bank's claim based on the agreement's terms.
Applicability of Section 130 of the Act:
The appellant argued reliance on Section 130, which allows revocation of a continuing guarantee for future transactions by notice. However, the court found the agreement lawful and binding, emphasizing the appellant's waiver of rights under the Act by entering into the guarantee agreement.
Precedents and Legal Principles:
Citing legal precedents, the court affirmed that parties can waive statutory benefits unless against public policy. The appellant's agreement to a continuing guarantee precluded invoking Section 130 post-revocation. The court rejected the appellant's claim and upheld the High Court's decision, dismissing the appeal.
Conclusion:
The Supreme Court dismissed the appeal, emphasizing the binding nature of the guarantee agreement over statutory provisions. The appellant's attempt to revoke the guarantee after agreeing to its continuity was deemed invalid, leading to the affirmation of liability to pay the loan amount to the bank. No other grounds were raised, and no costs were awarded in the case.
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2008 (3) TMI 742
Issues Involved:
1. Termination of Arbitrator's mandate u/s 14 of the Arbitration and Conciliation Act, 1996.
2. Validity of the arbitration agreement and jurisdiction of the Arbitrator.
3. Waiver of the right to object to the continuation of arbitral proceedings.
Summary:
1. Termination of Arbitrator's mandate u/s 14 of the Arbitration and Conciliation Act, 1996:
The petitioners sought relief u/s 14 of the Arbitration and Conciliation Act, 1996, requesting the court to declare that Mr. S.N. Variava had become de jure unable to perform his functions and that his mandate as an Arbitrator had terminated. The petitioners argued that the Arbitrator's mandate had expired as no award was made within the stipulated period of four months from the date of service of the arbitration agreement.
2. Validity of the arbitration agreement and jurisdiction of the Arbitrator:
The petitioners and the second respondent were partners in Hetali Construction Company, and the first respondent, a company, invoked arbitration based on an agreement dated 28th April 2000. The first respondent filed an application u/s 11 of the Act, leading to the appointment of Mr. Justice V.D. Tulzapurkar as the sole Arbitrator. The petitioners challenged this appointment through a Writ Petition under Article 226 of the Constitution, which was dismissed by the Division Bench, directing the petitioners to raise all contentious issues before the Arbitral Tribunal. The Supreme Court later appointed Mr. Justice S.N. Variava as the sole Arbitrator after the demise of Mr. Justice V.D. Tulzapurkar.
3. Waiver of the right to object to the continuation of arbitral proceedings:
The petitioners did not object to the time schedule fixed by the new Arbitrator, Mr. Justice S.N. Variava, during the initial meetings. The learned Arbitrator noted that the petitioners had waived their right to enforce the four-month time limit by not raising their objections at the earliest opportunity. Section 4 of the Act, which deals with the waiver of the right to object, was cited to support this conclusion. The court emphasized that parties must act with honesty, fairness, and transparency, and the petitioners' conduct indicated a waiver of their right to object to the continuation of the arbitral proceedings beyond the stipulated time.
Conclusion:
The court dismissed the petition, holding that the petitioners had waived their right to object to the continuation of the arbitral proceedings by their conduct. The court emphasized the importance of promoting honesty and transparency in arbitration and upheld the Arbitrator's decision to proceed with the arbitration despite the expiration of the four-month period.
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2008 (3) TMI 741
Suit on Mutual Wills - Caveatable interest within the meaning of the Indian Succession Act, 1925 - (1925 Act) vis-a-vis the Rules framed by the Calcutta High Court in the year 1940 - Whether RSL has a caveatable interest in the proceeding in respect of the probate of the Will of MPB dated 13th July, 1982 - Application of sec. 92 CPC - Dictionary meaning of both the terms "caveat" and "interest". Legal Thesaurus Regular Edition by Wlliam C. Burton defines "interest" as under: Interest (Ownership), noun Assets, belongings, claim, dominion, droit, holding lawful possession, part, participation, percentage of ownership, portion, possession, property, proprietorship, right, right of ownership, rightful possession , seisin, share, stake, title.
"Caveat" has been defined in Random House Webster's Dictionary of the Law as under: caveat, n. 1, a warning or caution; admonition. In certain legal contexts, a formal notice of interest in a matter or property; for example, a notice to a court or public officer to suspend a certain proceeding until the notifier is given a hearing ; a caveat filed against the probate of a will.
The Rules framed by the Calcutta High Court provide for determination of the issue of caveatable interest as a preliminary issue. We do not see any reason as to why the High Court, in exercise of its powers conferred upon it under Section 122 of the Code of Civil Procedure, could not frame such Rules. After coming into force of the Constitution such Rules can also be framed by the High Court in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India.
The Court having regard to its general power as also the power under Order XIV Rule 1 of the Code of Civil Procedure can decide the matter by framing preliminary issues in regard to the maintainability or otherwise of the application. It is a rule of procedure and not of substance. A court is entitled to dismiss a lis at the threshold if it is found not maintainable. The Court even in absence of any rule must take the precaution of not indulging in wasteful expenditure of its time at the instance of the litigants who have no case at all. We do not, therefore, find any legal infirmity in the Rules.
As Agnates KKB, BKB, YB and GPB also claimed caveatable interest as agnates. Entry 2 of Class II of the Schedule appended to the Hindu Succession Act in this case would not bring them into the picture, as agnates will acquire an interest only when there is no heir of either Class I or Class II. When there exists Class II heirs, the appellants would not have any real interest in the property. The property upon the death of Smt. Laxmi Devi Newar and Smt. Radha Devi Mohatta would pass on to their legal heirs. Appellants being not the heirs of MPB or PDB have no caveatable interest.
We may notice the affidavit of Shri KKB in opposition to the grant of probate, as a caveator. In the said affidavit, apart from the genuineness of the 1999 Will, the power of the testatrix to execute the same has also been questioned.
The said affidavit also reiterates the contents of the plaint. No contention, however, has been raised that they have a caveatable interest keeping in view the spiritual life of MPB and the testatrix as a member of the family or otherwise. Similar affidavits have been filed by B.K. Birla, Yashovardhan Birla, Smt. Laxmi Devi Newar and Smt. Radha Devi Mohatta. The sisters are also supporting the Birla family. The claim of acquiring caveatable interest on the said basis, thus, is wholly unacceptable.
PRE-EMPTION : FUTURE DOMAIN DOCTRINE - KKB, BKB and GPB claimed caveatable interest as co-owners of 1/5th share in Kumaon Orchards, two other co-owners being PB and S.K. Birla. S.K. Birla does not claim any caveatable interest in the estate of PDB. Even a person claiming an interest in the property of the testator by reason of an agreement for sale would not have a caveatable interest on the premise that such an agreement would be binding both upon the executor as also upon the heirs of the deceased (in the event, probate is not granted). The same principle would apply herein. Right of pre-emption, if any, is not affected by grant of probate. A right of pre-emption would arise only when a voluntary transfer is made for consideration in favour of a stranger and not prior thereto.
'Will' has been defined in Section 2(h) to mean "the legal declaration of the intention of a testator with respect to his property which he desires to be carried into effect after his death." Will takes effect after the death of testator. Rights and obligations of an executor of a Will arise only then. No right is created in the executor during the life time of the testator. Appointment of a testator and appointment of a trustee stand completely on different footings.
Validity of 1982 Will - We may assume that the 1982 Will was valid. As MPB could never become an executor, BKB's appointment does not confer on him a caveatable interest. An appointment of an executor ordinarily is the function of a court in terms of Section 301 of the 1925 Act. We, however, need not go into the question as to whether his appointment was legal or not. But, we may only notice that even in the deed of appointment, there is nothing to show that the necessary ingredients for appointment of B.K. Birla by the surviving executors had been made out as it was not stated that the original executor had seized to hold office.
The office of executor under the 1982 Will does not carry any remuneration therewith. The power to appoint an executor was dependent upon any executor ceasing to be one. The condition precedent has not been fulfilled. In the instant case, MPB had never become the executor, hence, the question of his "ceasing to be an executor" does not arise.
Appellants are not the legatees of the said Will. They are not the beneficiaries thereunder. They being merely executors, in our opinion, would not clothe them with a right to lodge a caveat as by reason thereof they did not derive any caveatable interest in the estate of PDB.
APPOINTMENT OF YB AS AN EXECUTOR IN PLACE OF MPB - So far as the case of YB is concerned, his appointment as an executor has been upheld by the High Court. It was, however, opined that by reason thereof, he did not acquire any caveatable interest. RSL has filed an appeal against that part of the judgment whereby his appointment as an executor of the Will of MPB of 1992 in place of PDB has been upheld.
We are furthermore of the opinion that only because YB has a right to maintain a suit for purported enforcement of the Mutual Wills, the same by itself cannot confer upon him a caveatable interest.
The affidavit of assets annexed by the Birlas to their petition for grant of probate in respect of 1982 Will of MPD and the affidavit of assets annexed by them to the petition for grant of probate of 1982 Will of PDB show that the assets held by the former mentioned in the petition for probate of his Will of 1982 are also shown as assets of PDB.
APPLICATION OF SECTION 92 CPC - A suit contemplated under Section 92 of the Code of Civil Procedure cannot be equated with a probate. In a suit under Section 92 of the Code of Civil Procedure, the title of the donor may be disputed. Such a question as of necessity must be gone into by the court which, however, is a forbidden domain for the Probate Court. Reliance has been placed on Sirajul Haq Khan and Ors. v. The Sunni Central Board of Waqf, U.P. and Ors.[1958 (9) TMI 80 - SUPREME COURT] wherein this Court was of the opinion that a person ascertaining that the property in dispute was not a wakf property was entitled to be heard. In a suit of that nature the title in the property or lack of it would be germane.
We have already held that GPB has caveatable interests as executor of MPB in respect of his Will of 1982. We, therefore, see no reason as to why RSL would not have a caveatable interest being a beneficiary under the 1999 Will in the proceedings for grant of probate of the Will of MPB dated 13th July, 1982. If the grounds taken in the appeal are to be upheld, the same ex facie would destroy the case of the appellants in the other cases.
We have noticed hereinbefore the averments made in the plaint of Civil Suit. Filing of the said suit, in our opinion, does not bar considering the caveatable interest and as we have not been called upon to decide the maintainability of the said suit at this stage, we do not make any observation thereupon. We have noticed the averments made in the plaint at some length only for the purpose of arriving at a finding on the question as to whether the plaintiffs therein have acquired any caveatable interest by reason thereof or not.
In our opinion, the High Court was right in opining that a caveatable interest may arise only after suit for enforcement of mutual Will is decreed and not prior thereto.
Before parting with this case we may notice some disturbing features. Each party for good or bad reasons has been opposing one or the other application filed by the other. It is stated that respondent No. 1 is opposing the application for substitution of heirs and legal representatives of Mrs. Laxmi Devi Newar, sister of MPB. We do not know on what premise such a stand is being taken. Counsel for both the parties put the blame on the other side for causing delay in disposal of the matters.
Therefore, are of the opinion that the probate proceedings should be taken up for hearing by the High Court as expeditiously as possible. We would request the High Court to consider this aspect of the matter.
Probate proceedings may also be taken up for hearing one after the other.
Probate proceeding of RSL in respect of Will of PDB executed in the year 1999 should be taken up first. The hearing of the probate proceeding of Will of MPB of 1982 may be taken up immediately thereafter. Judgments may be delivered, if possible, at the same time. The suit filed by the executors of the two 1982 Wills being Civil Suit may be taken up for hearing only after the disposal of the probate proceedings, if necessary.
CONCLUSION - Thus, Civil Appeal arising out of SLP filed by RSL challenging appointment of YB is allowed and all other appeals are dismissed with costs.
Who would be the beneficiaries of the case? - We think that benefit should go to Legal Services Authority. We direct the appellants in the appeal filed by Birlas should deposit a sum of ₹ 2,50,000/- (Rupees Two lac fifty thousand only) with the Member Secretary of West Bengal Legal Services Authority.
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2008 (3) TMI 740
Issues Involved:
1. Injunction on Schedule A Property
2. Injunction on Schedule B Property
3. Possession and Padlocking of Flat No. 201
4. Preliminary Decree and Revision Application
5. Legal Principles on Co-ownership and Injunction
Summary:
1. Injunction on Schedule A Property:
The plaintiffs filed an application for an injunction to restrain the respondents from handing over the allotted flats and from selling any flats in Schedule A property. It was averred that the plaintiffs and defendants were occupying undivided property and had specific undivided shares.
2. Injunction on Schedule B Property:
On 11.04.2005, the plaintiffs sought an injunction to restrain the respondents from transferring or letting out any portion of Schedule B property. An order of injunction was initially issued but later refused. The appeal against this refusal was dismissed for default but later restored.
3. Possession and Padlocking of Flat No. 201:
The appellants allegedly padlocked Flat No. 201, which was in the first respondent's possession. The first respondent filed an application stating obstruction by the plaintiffs. The Civil Judge directed the removal of the padlock and restrained the plaintiffs from obstructing the first respondent's peaceful enjoyment of the flat.
4. Preliminary Decree and Revision Application:
A preliminary decree was passed in the suit. The appellants' revision application against the order dated 21.11.2006 was dismissed by the High Court, which held that the Trial Court's prima facie finding on possession justified the interim mandatory injunction.
5. Legal Principles on Co-ownership and Injunction:
The Supreme Court upheld the principle that possession of one co-owner is possession of all, but noted that separate possession by mutual adjustment should be respected. The Court affirmed that injunctions could be granted u/s 151 CPC if not covered by Order 39, Rules 1 and 2. The Court rejected the appellants' reliance on cases concerning adverse possession and ouster, emphasizing that no co-sharer should act in breach of mutual agreements or take the law into their own hands.
Conclusion:
The Supreme Court found no illegality in the Civil Judge's order directing the removal of the padlock and upheld the High Court's dismissal of the revision application. The appeal was dismissed with costs, reinforcing the principle that no party should benefit from their own wrong.
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2008 (3) TMI 739
Issues Involved:
1. Maintainability of the Execution Application under Order XXI Rule 58.
2. Timing of objection to the auction sale.
3. Locus standi of the appellant to object to the sale.
4. Validity of the auction sale and its confirmation.
5. Impact of prior agreements on the attachment and sale of property.
Issue-wise Detailed Analysis:
1. Maintainability of the Execution Application under Order XXI Rule 58:
The appellant challenged the dismissal judgment of the Madras High Court, which held that the Execution Application under Order XXI Rule 58 was not maintainable. The appellant argued that the view of both lower courts that the Execution Application was untenable was incorrect. The High Court and Trial Court had concluded that objections raised after the auction were of no consequence, based on the language of Clause (a) of the proviso to Order XXI Rule 58, which was contested by the appellant.
2. Timing of Objection to the Auction Sale:
The High Court and Trial Court emphasized the stage at which objections could be raised, concluding that once the property was auctioned, objections were not tenable. However, the appellant argued that objections could still be raised after the auction but before the sale was confirmed. The Andhra Pradesh High Court in Magunta Mining Co. v. M. Kondaramireddy and Anr. held that objections could be adjudicated even after the sale but before its confirmation. The Supreme Court agreed with this view, stating that the term "sold" in Clause (a) of the proviso to Rule 58 should be interpreted to mean a complete sale, including confirmation.
3. Locus Standi of the Appellant to Object to the Sale:
The appellant contended that he had a substantial obligation regarding the property due to an Agreement of Sale, which gave him the locus standi to object to the auction sale. The second respondent had acknowledged the Agreement of Sale, and the appellant had filed a suit for specific performance before the maintenance suit by the first respondent. The Supreme Court agreed that the appellant had the locus standi to object, as his interest in the property was prior to the attachment and auction.
4. Validity of the Auction Sale and Its Confirmation:
The auction sale was conducted on 2.7.2003, but the sale was not confirmed. The appellant argued that the sale could not be considered complete without confirmation. The Supreme Court noted that the term "sold" in the proviso to Rule 58 should include the confirmation of the auction. The Patna High Court in Kewal Singh v. Umesh Mishra had a contrary view, but the Supreme Court preferred the interpretation of the Andhra Pradesh High Court, which considered the sale incomplete without confirmation.
5. Impact of Prior Agreements on the Attachment and Sale of Property:
The appellant's Agreement of Sale was prior to the maintenance suit and subsequent decree obtained by the first respondent. The Supreme Court held that the attachment could not be free from obligations under the contract of sale, as established in Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Anr. The auction purchaser could not acquire better rights than the judgment-debtor, and the sale was subject to the appellant's prior agreement.
Conclusion:
The Supreme Court concluded that the High Court and Trial Court erred in dismissing the appellant's Execution Application as not maintainable. The objections raised by the appellant were tenable, and the sale could not be considered complete without confirmation. The appellant had the locus standi to object due to his prior Agreement of Sale. The appeal was allowed, and the Executing Court was directed to adjudicate the objections raised by the appellant. No order as to costs was made.
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2008 (3) TMI 738
Issues Involved: Determination of pensionary benefits under Pension Rules 1980 based on a cut-off date fixed by the executive authority.
Summary:
The Supreme Court heard appeals by the State challenging a High Court decision directing payment of pensionary benefits to respondents based on a cut-off date set by the executive authority. The respondents, Lecturers in a private aided college, saw their superannuation age reduced from 60 to 58 years by a 1993 amendment to the Education Code, with entitlement to pension from 1st November 1992. The High Court found the cut-off date arbitrary and discriminatory, but the Supreme Court emphasized that executive authorities fix cut-off dates considering various factors like economic conditions. While acknowledging past decisions striking down cut-off dates, the Court noted a shift towards judicial restraint in interfering with such decisions unless blatantly discriminatory. The Court highlighted that the choice of a cut-off date, even without explicit reasons, should not be deemed arbitrary unless leading to capricious outcomes. Citing precedents, the Court stressed the need for judicial restraint in matters within the legislative or executive domain. Consequently, the Supreme Court set aside the High Court's order and allowed the appeals.
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2008 (3) TMI 737
Irregularities/illegalities in allotment of share - Certificate of registration expired and not been renewed - Unexplained delay of issue of show cause notice issued after a lapse of more than 8 years - Restraining from Accessing securities for a period of one month - violation of Clauses 1, 2 and 9 of the code of conduct prescribed in Schedule III to the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 - HELD THAT:- We cannot resist observing that there has been an inordinate delay in initiating action against the appellant. It is alleged to have committed the irregularities in the earlier part of the year 1996 and the show-cause notice was admittedly issued in June 2004. How could any one file a proper reply after a lapse of more than eight years. This long delay itself causes grave injustice to the delinquent and results in the violation of the principles of natural justice. Such delays defeat the very purpose of the proceedings.
What is contended by the learned Counsel for the Board is that investigations commenced only in May 2002 and were going on till the year 2003. This is no explanation for the delay. Why could they not commence earlier. Again when investigations continue for years together, the very purpose of issuing the directions under Section 11B may be lost as in the instant case. In view of the inordinate delay in initiating action against the appellant and that too, when its certificate of registration had already expired, the impugned order cannot be sustained.
Thus, we allow the appeal and set aside the impugned order leaving the parties to bear their own costs.
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2008 (3) TMI 736
High Court stayed the proceedings - Suit for specific performance of the contract - no deed of sale executed in terms of the agreement - Court quashed a proceeding under Section 145 of the Code of Criminal Procedure as the matter pending before it arose out of a civil proceedings - HELD THAT:- The High Court indisputably is a final court of fact. It may go into the correctness or otherwise of the findings arrived at by the learned Trial Judge. A fortiori it can set aside the findings of the court below that the Ex. A.15 is a forged document or its authenticity could not be proved by the respondent.
It is, however, well-settled that in a given case, civil proceedings and criminal proceedings can proceed simultaneously. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case. [See M.S. Sheriff v. State of Madras [1954 (3) TMI 76 - SUPREME COURT] and Iqbal Singh Marwah v. Meenakshi Marwah [2005 (3) TMI 750 - SUPREME COURT].
It is furthermore trite that Section 195(1)(b)(ii) of the Code of Criminal Procedure would not be attracted where a forged document has been filed. It was so held by a Constitution Bench of this Court in Iqbal Singh Marwah [2005 (3) TMI 750 - SUPREME COURT]
The impugned order, therefore, cannot be sustained which is set aside accordingly. Civil Appeal arising out of SLP (C) is allowed.
We, however, are of the opinion that the High Court should be requested to hear the appeal as early as possible and preferably within a period of three months from the date of receipt of a copy of this order. This, however, may not be taken to mean that we have entered into the merit of the matter.
It goes without saying that the respondent shall be at liberty to take recourse to such a remedy which is available to him in law. We have interfered with the impugned order only because in law simultaneous proceedings of a civil and a criminal case is permissible.
Hence, we are of the opinion that the interim order dated 24.05.2006 as modified by an order dated 17.07.2006 need not be interfered with particularly in view of the fact that according to the respondent it had made a payment of ₹ 35,47,000/- besides the disputed payment of ₹ 4,03,000/- and made deposits of ₹ 67,54,088/-.
Therefore, Civil Appeal arising out of SLP is dismissed.
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2008 (3) TMI 735
Issues Involved:
1. Allegations of oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956.
2. Validity and applicability of the arbitration agreement dated 24.11.2004.
3. Timing and maintainability of the application under Section 8 of the Arbitration and Conciliation Act, 1996.
4. Jurisdiction of the Company Law Board (CLB) versus arbitration.
Detailed Analysis:
1. Allegations of Oppression and Mismanagement:
The petitioner alleged acts of oppression and mismanagement against the respondents, including non-issue of general meeting notices, non-dispatch of balance sheets, depriving attendance at general meetings, non-issue of share certificates, and non-filing of statutory records. The petitioner sought relief under Sections 397 and 398 of the Companies Act, 1956, requesting directions for the respondents to buy back equity shares, file Form No. 32 for resignation of nominee directors, hand over operational and financial control of the sugar mill, or terminate the agreement dated 24.11.2004.
2. Validity and Applicability of the Arbitration Agreement:
The respondents contended that the agreement dated 24.11.2004 contained a valid arbitration clause (Clause 'H'), which mandated that all disputes be referred to arbitration. They argued that the petitioner had relied on the agreement in their pleadings but had deliberately concealed the arbitration clause, thus not approaching the court with "clean hands." The respondents cited the binding nature of the Memorandum of Association, which also supported arbitration for disputes concerning the company's affairs.
3. Timing and Maintainability of the Application under Section 8:
The respondents filed the application under Section 8 of the Arbitration and Conciliation Act on 17.7.2007, before submitting their written statement on 3.8.2007. They argued that the application was timely and in accordance with the proviso of Section 8, which requires the application to be made before submitting the first statement on the substance of the dispute. The petitioner's contention that the application was filed with an ulterior motive to avoid compliance with interim orders was dismissed as the application was filed prior to the written statement and without waiving jurisdiction objections.
4. Jurisdiction of the Company Law Board versus Arbitration:
The CLB examined whether the allegations of oppression and mismanagement could be adjudicated without reference to the arbitration agreement. It was noted that the reliefs sought in the petition were essentially for the implementation of the arbitration agreement dated 24.11.2004. The CLB held that the provisions of Sections 397 and 398 constitute a statutory right and are not subject to contractual agreements, but in this case, the allegations and reliefs were intrinsically linked to the arbitration agreement.
Conclusion:
The CLB concluded that the disputes and allegations in the petition were arbitrable and could not be adjudicated without reference to the arbitration agreement. The application under Section 8 of the Arbitration and Conciliation Act was found to be timely and maintainable. Consequently, the matter was referred to arbitration, and all interim orders were vacated. The Company Petition No. 13 of 2007 was disposed of in these terms, and all connected applications were also disposed of without any order as to costs.
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2008 (3) TMI 734
Nature of jurisdiction of the High Court u/s 482 of the Code - Registration of a crime and Investigation - Principles Of Natural Justice - Administrative control of the High Court - High court's master for the roster - Anonymous petition treated as Public interest Litigation or not - Whether the individual Judges ought to entertain communications and letters personally addressed to them and initiate action - Whether the contents of the petition submitted by the victim and as well as the allegations made in the anonymous complaint reveal any cause for issuing directions relieving the Investigating Officer of his statutory power and duty to investigate Crime No. 381 of 2005 under Section 376(g) of the Indian Penal Code? -
Ld Judge was of the view that the subsequent petition sent by Mini Varghese dated 27.10.2005 ought to have been treated as a separate petition praying for an order for proper investigation. The learned Judge was also of the view that the said petition was required to be clubbed with the anonymous petition.
HELD THAT:- The power has to be exercised sparingly, carefully and with caution only where such exercise is justified by the tests laid down in the Section itself. It is well settled that Section 482 does not confer any new power on the High Court but only saves the inherent power which the court possessed before the enactment of the Code. There are three circumstances under which the inherent jurisdiction may be exercised, namely (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice.
Can investigation be ordered by the High Court in exercise of its inherent jurisdiction under Section 482 of the Code based on such vague and indefinite allegations made in unsigned petition without even arriving at any prima facie conclusion that the contents thereof reveal commission of any cognizable offence - In our view, the High Court in exercise of its inherent jurisdiction cannot change the Investigating Officer in the midstream and appoint any agency of its own choice to investigate into a crime on whatsoever basis and more particularly on the basis of complaints or anonymous petitions addressed to a named Judge. Such communications cannot be converted into suo motu proceedings for setting the law in motion. Neither the accused nor the complainant or informant are entitled to choose their own investigating agency to investigate a crime in which they may be interested.
We find that the High Court has merely quoted certain allegations made against the appellant and others and proceeded on the basis of those allegations made in the anonymous petition without forming any prima facie opinion with regard to those allegations.
It is well settled that a public interest litigation can be entertained by the Constitutional Courts only at the instance of a bona fide litigant. The author of the letter in this case is anonymous, there is no way to verify his bonafides and in fact no effort was made by the Court to verify about the authenticity, truth or otherwise of the contents of the petition. It is not the case of the appellant that no Writ Petition under Article 226 of the Constitution of India can be entertained on the strength of a letter addressed by a bona fide litigant to the High Court. This Court in Sunil Batra (II) Vs. Delhi Administration [1978 (8) TMI 228 - SUPREME COURT] has accepted a letter written to the Supreme Court by one Sunil Batra, a prisoner from Tihar Jail, Delhi complaining of inhuman torture in the jail.
The law in this regard is summarized in Janata Dal Vs. H.S. Chowdhary [1992 (8) TMI 301 - SUPREME COURT] held that: It is clear that only a person acting bona fide and having sufficient interest in the proceeding of PIL will alone have a locus standi and can approach the Court to wipe out the tears of the poor and needy, suffering from violation of their fundamental rights, but not a person for personal gain or private profit or political motive or any oblique consideration. Similarly, a vexatious petition under the colour of PIL brought before the Court for vindicating any personal grievance, deserves rejection at the threshold.
How to verify the credentials, character or standing of the informant who does not disclose his identity? In the instant case, there is no whisper in the order passed by the High Court about any attempts made to verify the credentials, character or standing of the informant. Obviously, the High Court could not have verified the same since the petition received by it is an unsigned one. In our view, the Public Interest Litigant must disclose his identity so as to enable the court to decide that the informant is not a wayfarer or officious intervener without any interest or concern.
In such view of the matter the suo motu action initiated cannot be treated as the one in public interest litigation.
Administrative control of the High Court vests in the Chief Justice of the High Court alone and it is his prerogative to distribute business of the High Court both judicial and administrative; that the Chief justice is the master of the roster. He alone has the prerogative to constitute benches of the court and allocate cases to the benches so constituted; and the puisne judges can only do that work as is allotted to them by the Chief Justice or under his directions; that the puisne judges cannot pick and choose any case pending in the High Court and assign the same to himself or themselves for disposal without appropriate orders of the Chief Justice. State of Rajasthan Vs. Prakash Chand & Ors.[1997 (12) TMI 657 - SUPREME COURT].
In our view, the learned judge ought not to have entertained the anonymous petition, contents of which remain unverified and made it basis for setting the law in motion as against the appellant as he was not entrusted with the judicial duty of disposing of PIL matters.
Therefore, directions issued by the High Court constituting the Special Investigation Team to investigate into the allegations made in anonymous petition are set aside.
The individual judges ought not to entertain communications and letters personally addressed to them and initiate action on the judicial side based on such communication so as to avoid embarrassment; that all communications and petitions invoking the jurisdiction of the court must be addressed to the entire Court, that is to say, the Chief Justice and his companion Judges. The individual letters, if any, addressed to a particular judge are required to be placed before the Chief Justice for consideration as to the proposed action on such petitions. Each Judge cannot decide for himself as to what communication should be entertained for setting the law in motion be it in PIL or in any jurisdiction.
RELIEF - However, the fact remains that the Circle Inspector of Police, Chalakuddy having registered Crime No. 381 of 2005 made investigation in exercise of statutory power coupled with duty under the orders of learned Judicial First Class Magistrate, Chalakuddy. The learned Judge having entertained the petition/complaint from the victim ordered further investigation into the crime by the Special Investigation Team headed by the third respondent. The third respondent having completed the investigation arrived at certain conclusions but unnecessarily kept the matter pending on the ground that the paternity of the first child is to be verified with the accused and some other persons who were also found closely associated with the victim during the relevant period. This is beyond one’s imagination as to how and why such an inquiry is required to be made. The First Information Report, material gathered during the investigation, contents of the victim’s complaint and conclusions drawn by the Special Investigation Team themselves do not justify any such further enquiry.
Thus, we direct the third respondent to make available the material gathered during the course of investigation in Crime No. 381 of 2005 to the Circle Inspector of Police, Chalakuddy (Investigating Officer) within two weeks from the date of the receipt of copy of this order. Thereafter, the Investigating Officer shall submit appropriate report in accordance with the provisions of the Code within four weeks before the Magistrate who shall consider the report to be so filed judicially in accordance with law.
We make it clear that we have not expressed any opinion whatsoever on the merits of the case - Subject to the above directions the impugned order of the High Court is set aside - Appeal is accordingly allowed.
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2008 (3) TMI 733
Application under Order VI Rule 17 r/w Section 151 CPC for amendment of written statement - seeking permission of the Court to file a written agreement executed between the parties - Long delay in filing the application after closing of evidence and arguments - HELD THAT:- It is clear that unless the party takes prompt steps, mere action cannot be accepted and file a petition after the commencement of trial. As mentioned earlier, in the case on hand, the application itself came to be filed only after 18 years and till the death of her first son Sunit Gupta, Chartered Accountant, had not taken any step about the so-called agreement. Even after his death in the year 1998, the petition was filed only in 2004. The explanation offered by the defendant cannot be accepted since she did not mention anything when she was examined as witness.
As rightly referred to by the High Court in Union of India vs. Pramod Gupta (dead) by LRs and Others, [2005 (9) TMI 618 - SUPREME COURT], this Court cautioned that delay and laches on the part of the parties to the proceedings would also be a relevant factor for allowing or disallowing an application for amendment of the pleadings.
As observed, the suit filed in the year 1986 is for a right of passage between two portions of the same property dragged for a period of 21 years. In spite of long delay, if acceptable material/materials placed before the court show that the delay was beyond their control or diligence, it would be possible for the court to consider the same by compensating the other side by awarding cost. As pointed out earlier, when she gave evidence as D.W.1, there was no whisper about the written document/partition between the parties. On the other hand, she asserted that partition was oral. Now by filing the said application, she wants to retract what she pleaded in the written statement, undoubtedly it would deprive the claim of the plaintiff.
We are also satisfied that she failed to substantiate inordinate delay in filing the application that too after closing of evidence and arguments. All these aspects have been considered by the High Court. We do not find any ground for interference in the order of the High Court, on the other hand, we are in entire agreement with the same.
Therefore, the appeal fails and the same is dismissed. No costs. It is made clear that we have not expressed anything on the stand taken by both parties in the suit and it is for the trial Court to dispose of the same uninfluenced by any of the observation made above within a period of three months from the date of receipt of copy of this judgment.
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