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2010 (4) TMI 1202
Issues involved: Interpretation of provisions u/s. 54F of the Income Tax Act for claiming exemption on long term capital gains.
Facts:
The assessee earned income from various sources including capital gains from the sale of shares. The assessee purchased a residential house using a housing loan and claimed exemption u/s. 54F of the Act. The Assessing Officer restricted the exemption amount based on his interpretation that the investment in the new house should be out of the capital gains earned from the sale of shares.
Arguments before CIT(A):
The assessee argued that the Act does not mandate that the purchase of the new asset must be made out of the capital gain on the transfer of the old asset. The assessee contended that the Assessing Officer cannot impose his own interpretation inconsistent with the Act.
CIT(A) Decision:
The CIT(A) upheld the Assessing Officer's decision, stating that the assessee did not satisfy all conditions u/s. 54F as the capital gain from the sale of shares was not invested in the acquisition of the new residential house.
Appellate Tribunal Decision:
The Tribunal considered various decisions and held that the source of funds for purchasing the new house is irrelevant as long as the assessee complies with the time frame for investment specified in the Act. The Tribunal set aside the CIT(A)'s order and allowed the assessee's appeal for deduction u/s. 54F.
Conclusion:
The Appellate Tribunal allowed the assessee's appeal, emphasizing that the requirement for claiming exemption u/s. 54F is the purchase of a residential house within the specified period, irrespective of the source of funds used for the investment. The Tribunal's decision was based on the interpretation that the law does not necessitate the use of the same funds from the sale of assets for purchasing the new house.
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2010 (4) TMI 1201
The Supreme Court condoned delay, admitted the Civil appeal, and expedited the hearing. (Case citation: 2010 (4) TMI 1201 - SC)
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2010 (4) TMI 1200
The Supreme Court issued an order in 2010 (4) TMI 1200, with Justices S.H. Kapadia and Swatanter Kumar. Notice was issued, and the case was tagged with C.A. No. D5147 of 2010.
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2010 (4) TMI 1199
Addition towards Unexplained investment and interest - No opportunity of cross-examination - Whether the Tribunal was justified in holding that the investment in question reflected in parcha No. 56 could not be brought to assessment in the hands of assessee in the manner in which the Department had brought them to assessee in their hands? - HELD THAT:- Admittedly, the parcha was found from the possession of Sri D.P. Kanodia and, therefore, at the most a presumption can be raised against him. Sri D.P. Kanodia, at no stage, in the statement admitted that these entries relate to the unexplained investment made by the assessees and the interest mentioned therein had been accrued to them. No opportunity of cross-examination to Sri D.P. Kanodia was given to the assessees. The entries in the parcha, therefore, remained uncorroborated. Moreover, the entries against Sri S.P.Kanodia and Smt. Premlata Kanodia were found scored out. What is the reason for scoring out such entries is not explained and, therefore, in the absence of corroborative evidence, the Tribunal has rightly held that no adverse inference can be drawn from the entries of parcha No. 56 against the assessees. The finding of the Tribunal is finding of fact based on the material on record, which cannot be said to be perverse, which requires any interference.
Thus, the questions referred hereinabove are answered in affirmative against the Revenue and in favour of the assessees.
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2010 (4) TMI 1198
Issues Involved:
1. Whether the Tribunal was right in law to exclude the excise duty at the time of valuation of closing stock of finished goods at the end of the accounting period.
Analysis of Judgment:
1. Tribunal's Exclusion of Excise Duty in Valuation of Closing Stock:
The High Court admitted the appeal by formulating the substantial question of law: "Whether on the facts and in the circumstances of the case, the Tribunal was right in law to exclude the excise duty at the time of valuation of closing stock of finished goods at the end of the accounting period?"
The assessment year in question was 1997-98. The respondent assessee, in their annual report, noted that they had not accounted for the liability for excise duty on finished goods, stating it would become due upon the sale and clearance from the factory premises.
The Assessing Officer (AO) issued a show-cause notice questioning why the excise duty of Rs. 20,17,000 on finished goods should not be included in the inventory value. The assessee argued that adding the duty would necessitate a corresponding liability provision, ultimately having no impact on profitability.
The AO held that since the goods were manufactured and ready for dispatch, the excise duty liability had accrued and should be part of the closing stock valuation, referencing the Supreme Court judgment in CIT v. British Paints India Ltd. and ICAI accounting practices. The AO added the excise duty amount to the returned income of the assessee.
2. CIT(A) and Tribunal's Decisions:
The CIT(A) allowed the appeal, following the Madras High Court judgment in CIT v. English Electric Co. of India Ltd. The Revenue's appeal to the Tribunal failed, with the Tribunal referring to section 145A of the Act and concluding that tax, duty, cess, or fee prior to assessment year 1999-2000 could not be added to the closing stock valuation. The Tribunal also cited decisions in ITO v. Food Specialities Ltd. and CIT v. Dynavision Ltd.
3. Revenue's Arguments:
The Revenue argued that excise duty liability arises upon the manufacture of goods, and thus must be included in the closing stock valuation to reflect the correct taxable income. They emphasized the Supreme Court's stance in British Paints India Ltd. that excluding such costs results in a distorted picture of the business's true state.
4. Respondent Assessee's Arguments:
The respondent assessees contended that excise duty liability does not arise until the removal of goods from the factory, referencing section 4 of the Excise Act. They argued that no liability is incurred until the transaction value is determined, citing the judgment in Asstt. Collector of CE v. National Tobacco Co. of India Ltd.
5. Court's Analysis and Conclusion:
The Court examined the provisions of sections 3 and 4 of the Excise Act, noting that excise duty is levied on the manufacture of goods but is not a manufacturing cost. The duty becomes payable only upon removal of goods from the factory, and thus cannot be included in the closing stock valuation.
The Court held that the Tribunal was justified in excluding excise duty from the closing stock valuation, as the duty is a post-manufacturing cost. The Court emphasized that the purpose of valuing closing stock is to balance the cost of unsold goods, not to include unrealized profits or anticipated costs.
The Court also noted that section 145A of the Act, introduced with effect from 1-4-1999, could not be applied retrospectively to the assessment year 1997-98. Even if applicable, the section requires that tax, duty, etc., should be actually paid or due and payable under the law.
In conclusion, the Court dismissed the appeal, affirming that the Tribunal was correct in excluding excise duty from the closing stock valuation.
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2010 (4) TMI 1197
Issues involved: Appeal against conviction under Section 324 IPC and permission to compound the offence.
Conviction under Section 324 IPC:
The appeal was filed against the judgment confirming the appellant's conviction under Section 324 IPC and the imposed sentence. The incident occurred on July 23, 1986, and the appellant was convicted by the Sessions Court. The High Court rejected the application seeking permission to compound the offence under Section 324 IPC. However, considering the settlement between the parties and the nature of the offence committed before the amendment in 2005, the Supreme Court allowed the appeal. The Court granted permission to compound the offence, leading to the acquittal of the appellant as per Section 320(8) of the Code of Criminal Procedure.
Permission to compound the offence:
After the settlement between the parties, the complainant and injured parties expressed their willingness to compound the offence under Section 324 IPC. The Court noted that although the offence became non-compoundable after the 2005 amendment, since the incident occurred in 1986, it was compoundable with the Court's permission at that time. Considering the circumstances and the parties' willingness, the Court granted permission for compounding the offence, leading to the acquittal of the appellant.
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2010 (4) TMI 1196
The Gujarat High Court dismissed the appeal for the Assessment Year 1995-96 regarding the exclusion of excise duty when valuing closing stock, based on a previous decision in Tax Appeal No. 852 of 2007.
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2010 (4) TMI 1195
Issues:
1. Delay in re-filing the appeal.
2. Disallowance of training expenses by the Assessing Officer.
3. Disagreement between the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding the treatment of training expenses.
4. Decision of the Income Tax Appellate Tribunal on the treatment of training expenses.
5. Whether the entire training expenses should have been allowed as revenue expenditure.
1. Delay in re-filing the appeal:
The High Court, in CM 3841/2010, condoned the delay in re-filing the appeal for reasons stated in the applications and based on the submissions made on behalf of the appellant. The delay was thus considered and disposed of.
2. Disallowance of training expenses by the Assessing Officer:
The Assessing Officer disallowed a portion of the training expenses claimed by the assessee, amounting to Rs. 20,96,127, for the assessment year 1998-99. The reason provided was that the benefit of these expenses was spread over five years, leading to the disallowance of 4/5th of the expenditure for subsequent years.
3. Disagreement between the Assessing Officer and the Commissioner of Income Tax (Appeals) regarding the treatment of training expenses:
The Commissioner of Income Tax (Appeals) disagreed with the Assessing Officer's decision and deleted the disallowance of training expenses. The Commissioner held that the entire expenditure should be allowed as revenue expenditure, as the assessee followed the mercantile system of accounting.
4. Decision of the Income Tax Appellate Tribunal on the treatment of training expenses:
The Income Tax Appellate Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) regarding the treatment of training expenses. The Tribunal agreed that since the Assessing Officer had accepted the expenditure as revenue expenditure, there was no basis for disallowing a portion of it.
5. Whether the entire training expenses should have been allowed as revenue expenditure:
The High Court, after considering the arguments and findings of the Tribunal, dismissed the appeal. It was noted that no perversity was pointed out, and no substantial question of law arose for consideration. Therefore, the Tribunal's decision to allow the entire training expenses as revenue expenditure was upheld, and the appeal was dismissed accordingly.
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2010 (4) TMI 1194
Issues Involved:
1. Maintainability of the company petition.
2. Entitlement to shareholding and rectification of the register.
3. Doctrine of election and estoppel.
4. Allegations of oppression and mismanagement.
5. Limitation and delay in filing the petition.
6. Parallel proceedings and forum shopping.
Detailed Analysis:
1. Maintainability of the Company Petition:
The petition was filed under sections 111A, 235(2), 250(3), 397, and 398 of the Companies Act, 1956, alleging oppression and mismanagement. The applicant/respondent argued that the petitioner did not have the requisite qualification under section 399 to maintain the petition. The respondent claimed that the petitioner-company did not hold any shares and was not an existing shareholder. The Board held that the petitioner made a prima facie case under section 111A(4)(b) and allowed the parties to amend pleadings or file additional affidavits. The High Court of Bombay restored the Company Application No. 255/2008 to be heard along with the Company Petition No. 48/2008, emphasizing the need for a fresh consideration on its merits.
2. Entitlement to Shareholding and Rectification of the Register:
The petitioner-company claimed to have contributed Rs. 3.59 crore towards the promoters' contribution, which the respondent-company treated as a loan. The petitioner sought a declaration of being a 99.99% equity shareholder. The Board noted that the petitioner was treated as a promoter and had legitimate expectations of being a shareholder. The Board held that section 111A, read with section 111, allows for rectification of the register, and the petitioner made a prima facie case for entitlement to shares. The doctrine of legitimate expectation was applied, recognizing the petitioner as having been treated as a member.
3. Doctrine of Election and Estoppel:
The respondent argued that the petitioner had elected to be a creditor by issuing legal notices and filing a winding-up petition, thereby waiving the right to claim shareholding. The Board found that the petitioner had sought either the allotment of shares or a refund of the money, indicating no waiver of rights. The Board held that the doctrine of election did not bar the petitioner from pursuing the section 397/398 petition, as the winding-up petition was a remedy sought in commercial expediency.
4. Allegations of Oppression and Mismanagement:
The petitioner alleged that the respondent-company's conduct amounted to oppression and mismanagement. The Board noted that the petitioner-company had been treated as a shareholder till the project appraisal stage and that the respondent's conduct lacked credibility and bona fides. The Board emphasized that the provisions of sections 397 and 398 provide a remedy to address such grievances without resorting to winding up, which would be prejudicial to the members.
5. Limitation and Delay in Filing the Petition:
The respondent argued that the petition was barred by limitation due to the delay in filing. The Board held that the Limitation Act does not apply to proceedings before the CLB but acknowledged that delay and laches could be considered. The Board found that the delay was not due to gross negligence or inaction and that the petitioner lacked "requisite knowledge" of the right of recourse. The petition was not dismissed on the grounds of limitation.
6. Parallel Proceedings and Forum Shopping:
The respondent accused the petitioner of forum shopping by pursuing parallel proceedings before different forums. The Board held that parallel proceedings are permissible unless they constitute an abuse of process. The Board stayed the proceedings before the CLB for six months to allow the parties to reconcile the sums claimed and settle the matter. The interim orders were to continue until further orders.
Conclusion:
The Board concluded that the petitioner-company made a prima facie case for entitlement to shares and that the composite petition under sections 397/398 was maintainable. The proceedings before the CLB were stayed for six months to facilitate a settlement, with interim orders continuing to operate. The application challenging the maintainability was disposed of in these terms.
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2010 (4) TMI 1193
Issues involved: Interference with an interim order passed by the Company Law Board, expeditious disposal of the main petition, service of notice to unserved respondent, failure to file counter affidavits.
In the first case (SLP(C) No. 17522/2008), the Supreme Court dismissed the special leave petition challenging an interim order passed by the Company Law Board on 24th November, 2006, stating that no grounds were made out for interference at that late stage. However, considering the importance of the issue involved, the Court requested the Company Law Board to expedite the disposal of the main petition (C.P. No. 114/2006) without being influenced by any previous observations made by the High Court in the impugned order.
In the second case (SLP(C) No. 161/2009), the Court noted that respondent No. 7 remained unserved and ordered for a fresh notice to be issued to them. Additionally, the Court highlighted the failure to file counter affidavits by respondent Nos. 2, 4, 5, 6, and 8 despite the opportunity provided. The office was directed to rectify missing orders in the file related to the previous case (SLP(C) No. 17522/2008) and ensure all relevant documents are in place.
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2010 (4) TMI 1192
Issues Involved:
The judgment involves the issue of deleting the addition of Rs. 14 lakh by holding that the deposits were made out of available cash balance of Rs. 11.49 lakhs.
Facts of the Case:
The Assessing Officer (AO) received information that a sum of Rs. 14 lakhs was deposited by the assessee in his bank account. The AO initiated proceedings u/s 147 of the Income Tax Act. The assessee claimed that the cash deposits were made from the cash available with him. The AO examined the statement of affairs over multiple years and concluded that the deposits were not explainable, as the cash in hand exceeded the declared income for those years. Consequently, the AO treated the amount of Rs. 14,00,000 as an unexplained cash credit.
Arguments Before CIT(A):
Before the Commissioner of Income Tax (Appeals) [CIT(A)], the assessee argued that the AO had accepted the existence of cash of Rs. 11,49,879. The CIT(A) observed that the AO had acknowledged the opening cash balance and deleted the addition made by the AO.
Arguments Before ITAT:
Before the Income Tax Appellate Tribunal (ITAT), the Senior Departmental Representative (Sr.DR) contended that the CIT(A) erred in accepting the existence of cash with the assessee. The Authorized Representative (AR) supported the CIT(A) order, stating that the cash in hand was declared in the return of income and wealth tax.
Decision by ITAT:
The ITAT noted that the AO found it difficult to accept that the deposits were made from the declared income. The ITAT disagreed with the CIT(A) that the AO had acknowledged the cash balance. The ITAT decided to send the matter back to the AO to re-examine the contentions of the assessee regarding the availability of cash, income admitted, and family expenses. The AO was directed to provide the assessee with a reasonable opportunity to be heard.
Conclusion:
The ITAT allowed the appeal filed by the assessee for statistical purposes, ordering a re-examination by the AO regarding the availability of cash and related contentions.
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2010 (4) TMI 1191
The judgment by Appellate Tribunal CESTAT CHENNAI reduced the fine for confiscation of prohibited goods to Rs. 2,50,000, penalty on partnership firm to Rs. 75,000, and penalty on individuals to Rs. 50,000 each. The appeals were partly allowed.
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2010 (4) TMI 1190
Issues involved: The judgment involves the following issues: 1. Addition u/s 153A without incriminating material, 2. Lack of reasonable opportunity in assessment process, 3. Jurisdiction of assessment u/s 153A for a specific assessment year.
Issue 1: Addition u/s 153A without incriminating material
The assessee contended that no addition can be made u/s 153A without any incriminating material found during search. However, the counsel for the assessee decided not to press this ground, leading to its dismissal.
Issue 2: Lack of reasonable opportunity in assessment process
The assessee argued that no reasonable opportunity of hearing was allowed in the assessment process, which rendered the assessment orders illegal and unsustainable. The counsel highlighted the hasty manner in which the assessment was completed, pointing out the lack of proper application of mind by the Assessing Officer and inadequate opportunity for the assessee to present their case. The Tribunal, after careful consideration, found merit in the contention that the assessment was done hastily and remitted the issue back to the Assessing Officer for fresh consideration with proper opportunity for the assessee to be heard.
Issue 3: Jurisdiction of assessment u/s 153A for a specific assessment year
In a separate appeal, the issue raised was the jurisdiction of assessment u/s 153A for a particular assessment year. The Tribunal noted that as per the provisions of section 153A, the Assessing Officer is mandated to assess six assessment years preceding the assessment year relevant to the previous year in which the search is conducted. Since the search was conducted on a specific date, it was determined that the assessment for the particular assessment year in question was without jurisdiction. The Tribunal agreed with the assessee's contention and held that the assessment u/s 153A was unsustainable due to lack of jurisdiction. Consequently, the appeal filed by the assessee was allowed.
Conclusion: The appeals by the assessee were partly allowed for statistical purposes, and one appeal was allowed due to the lack of jurisdiction in the assessment process.
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2010 (4) TMI 1189
Issues:
- Restoration of company name under S.560(6) of the Companies Act, 1956.
- Default in statutory compliances leading to striking off the company's name from the Register of Companies.
- Lack of show cause notice and opportunity of being heard before the action.
- Discrepancy in the registered office address possibly affecting receipt of notices.
- Petitioner's claim of active operations and maintenance of requisite documentation.
- Petitioner's assertion of ignorance regarding non-filing of returns by secretarial staff.
- Objection-free revival of the petitioner company by the respondent.
- Interpretation of S.560(6) for revival within the 20-year limitation period.
- Precedents emphasizing revival opportunities for companies struck off.
- Consideration of facts indicating lack of notice satisfaction for striking off proceedings.
- Granting of petition for restoration subject to compliance with outstanding requirements.
- Permission for penal action against the petitioner company for alleged non-compliance.
Detailed Analysis:
1. The petition sought restoration of the petitioner company's name under S.560(6) of the Companies Act, 1956, after it was struck off the Register for defaults in filing annual returns and balance sheets.
2. The Registrar of Companies initiated strike-off proceedings following prescribed procedures under S.560, including issuing necessary notices and publishing the company's name in the Official Gazette.
3. The petitioner contended that the company remained active and compliant, submitting evidence of audited accounts, income tax returns, and director appointment/resignation filings for the relevant period.
4. Allegations were made that the company did not receive a show cause notice or an opportunity to be heard before its name was struck off, raising procedural fairness concerns.
5. A discrepancy in the registered office address was highlighted, potentially affecting the receipt of official communications and leading to lapses in compliance.
6. The petitioner claimed ignorance regarding the non-filing of returns by the secretarial staff, attributing the oversight to the staff's failure to disclose the lapse to the directors until later.
7. The respondent did not object to the company's revival, subject to the petitioner fulfilling all outstanding statutory requirements and payment of applicable fees.
8. Precedents were cited, emphasizing the purpose of S.560(6) to provide companies, members, and creditors with a chance to revive within the 20-year limitation period in the interest of justice.
9. Considering the facts and procedural lapses, the court found that the conditions for initiating strike-off proceedings were not entirely met, and the company's functioning status supported its restoration.
10. The petition was allowed, contingent upon the petitioner completing all necessary formalities, including late fee payments, to have the company's name, directors, and members restored to the Register as if not struck off.
11. The respondent was granted liberty to pursue penal action against the petitioner for alleged non-compliance with S.162 of the Companies Act, 1956.
12. The judgment concluded with the disposal of the petition, affirming the restoration of the petitioner company's name to the Register with specified conditions and permissions for further actions.
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2010 (4) TMI 1188
Writ petitions challenging the orders - grant of regular permits to private operators - claim of STUs in gross violation of 1990 scheme as modified in the year 1997 and the provisions of Chapter VI of the Act - HELD THAT:- The power to cancel the Scheme or modify the Scheme rests with the State Government u/s 102 of the Act and the RTA and the Tribunal have committed a grave error in tampering with the Scheme as well as disturbing the ratio fixed by the Scheme by granting regular permits to the private sector from the quota earmarked for STUs. Once a scheme is approved and published, private operators have no right to claim regular permits to operate their vehicles in the notified area, route or portion thereof upsetting the ratio fixed. Since the scheme makes provision for partial exclusion, the private operators are not completely excluded, they may get regular permits on the notified route or portion thereof in accordance with the terms and conditions laid down in the scheme and within the quota earmarked for them.
In our view same is the situation in respect of a case where an STU inspite of grant of permit does not operate the service or surrenders the permit granted or not utilizing the permit. In such a situation it should be deemed that no application for permit has been made by the STU and it is open to the RTA to grant temporary permit if there is a temporary need. By granting regular permits to the private operators RTA will be upsetting the ratio fixed under the scheme which is legally impermissible.
A writ Court seldom interferes with the orders passed by such authorities exercising quasi-judicial functions, unless there is serious procedural illegality or irregularity or they have acted in excess of their jurisdiction. If there is any dispute on the proper implementation of the ratio or inclusion or exclusion of any route or area in the Scheme, the RTA can always examine the same, if it is moved. The direction given by the High Court to the RTA to grant regular permits to the private operators, is therefore, patently illegal.
We therefore, allow all these Civil Appeals as follows-
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2010 (4) TMI 1187
The Supreme Court condoned delay, admitted appeals, and expedited the hearing in the case. (Citation: 2010 (4) TMI 1187 - SC Order)
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2010 (4) TMI 1186
Issues Involved:
1. Whether the respondent company is liable to be wound up u/s 433(e) of the Companies Act, 1956.
2. Whether the petitioner bank's initiation of proceedings before the Debt Recovery Tribunal (DRT) precludes it from seeking winding up of the respondent company.
3. Whether the respondent company's defense against the winding up petition is bona fide.
Issue-wise Comprehensive Details:
1. Liability for Winding Up u/s 433(e):
The petitioner, Indian Overseas Bank, sought the winding up of M/s. Sanghi Polyesters Limited u/s 433(e), 434(a), and 439(b) of the Companies Act, 1956, due to the respondent's failure to repay Rs. 2468.45 lakhs under various credit facilities. Despite a statutory notice u/s 434, the respondent neither replied nor paid the amount, indicating an inability to pay debts within the meaning of Section 434 of the Companies Act.
2. Proceedings Before Debt Recovery Tribunal:
The respondent argued that the petitioner bank's filing of a recovery application before the DRT precludes it from invoking Section 434 of the Companies Act. The respondent cited several judgments, including Kitti Steels Limited Vs. Sanghi Industries Limited and Kapil N.Mehta vs. Shree Laxmi Motors Limited, to support that winding up should not be used as a pressure tactic and that the court has discretion to refuse winding up if other remedies are available.
3. Bona Fide Defense:
The respondent contended that the petitioner bank did not provide need-based finance and charged higher interest rates, leading to financial difficulties. The respondent also highlighted that it is a running industry with thousands of employees, and winding up would affect their livelihood. The court noted that the petitioner bank did not disclose the filing of the O.A before the DRT in the petition and failed to provide details about the securities offered by the respondent company.
Judgment:
The court dismissed the petition at the admission stage, citing suppression of material facts by the petitioner bank and the absence of particulars regarding the worth of the property offered as security. The court emphasized that winding up proceedings should not be used as an alternative to debt recovery and should be pursued with absolute candor. The petition was dismissed with no costs.
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2010 (4) TMI 1185
Restoration of name of companies in the register maintained by ROC - Strike of name of company due to non filing of returns - HELD THAT:- A petition for restoration of the name of a company to the Register of Companies un/s 560(6) of the Companies Act, 1956 can only be made by the company, a member or a creditor. A creditor is entitled to maintain a petition for restoration only if he was a creditor at the time the name of the company was struck off from the Register of Companies.
Here, the arbitration award in favour of the petitioner was rendered on 14th March, 2007, i.e. before the date of the Gazette Notification notifying that the name of H.N. Explosives Pvt. Ltd. has been struck off the Register of Companies. It is clear that the amount claimed by the petitioner was against an incorporated company, which was a legal entity recognized under the Companies Act, 1956, and the arbitration award in question was also rendered against such a company. When H.N. Explosives Pvt. Ltd. was struck off from the Register of Companies by the respondent, it ceased to exist.
Although, the liability of persons falling within the ambit of the first proviso to Section 560(5), who were directors, managers, officers exercising any power of management and members of the erstwhile company can nevertheless be enforced; however, in this case, the liability in terms of the award is that of the company itself and not of any individual mentioned in Section 560(5). Consequently, under the circumstances, the petitioner, in whose favour the award has been rendered, is left without a remedy to effect recovery against the erstwhile company H.N. Explosives Pvt. Ltd.
Seeing that this petition was moved well within the stipulated period of limitation for initiation of proceedings under S.560, Companies Act, 1956, which is twenty years from the date of publication of the notice striking off the name of the company from the Register, this is a fit case for the exercise of the powers of this Court under S.560(6) of the Companies Act, 1956.
The name of the company H.N.Explosives Pvt. Ltd., its directors and members stands restored to the Register maintained by the Registrar of Companies, as if the name of the said company had not been struck off, in accordance with S.560(6) of the Companies Act, 1956.
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2010 (4) TMI 1184
Admissibility of an unregistered sale deed in evidence - oral agreement to sell the suit property - The plaintiff in the suit claimed for the reliefs of directing the defendants to execute a fresh sale deed with regard to the suit property in pursuance of an oral agreement for sale on or before the date that may be fixed by the court and failing which execution of the sale deed by the court. She also prayed for grant of permanent injunction restraining the defendants from disturbing with her peaceful possession and enjoyment of the suit property.
HELD THAT:- We are of the opinion that having regard to the proviso to Section 49 of the Registration Act, 1908 (for short,1908 Act'), the trial court erred in not admitting the unregistered sale deed dated 27.02.2006 in evidence and the High Court ought to have corrected the said error by setting aside the order of the trial court.
Recently in the case of K.B. Saha and Sons Private Limited v. Development Consultant Limited [2008 (5) TMI 708 - SUPREME COURT], This Court culled out the following principles:-
"1. A document required to be registered, if unregistered is not admissible into evidence u/s 49 of the Registration Act.
2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the proviso to Section 49 of the Registration Act.
3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.
5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose."
To the aforesaid principles, one more principle may be added, namely, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance.
The main provision in Section 49 provides that any document which is required to be registered, if not registered, shall not affect any immovable property comprised therein nor such document shall be received as evidence of any transaction affecting such property. Proviso, however, would show that an unregistered document affecting immovable property and required by 1908 Act or the Transfer of Property Act, 1882 to be registered may be received as an evidence to the contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by registered instrument. By virtue of proviso, therefore, an unregistered sale deed of an immovable property of the value of ₹ 100/- and more could be admitted in evidence as evidence of a contract in a suit for specific performance of the contract. Such an unregistered sale deed can also be admitted in evidence as an evidence of any collateral transaction not required to be effected by registered document. When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of 1908 Act.
If any issue with regard to the admissibility of unregistered sale deed dated 27.2.2006 in evidence has been struck by the trial court, obviously, such issue would be decided in accordance with law. Suffice, however, to say that looking to the nature of the suit, which happens to be a suit for specific performance, the trial court was not justified in refusing to admit the unregistered sale deed dated 27.2.2006 tendered by the plaintiff in evidence.
The argument of the respondents with regard to Section 3(b) of 1963 Act is noted to be rejected. We fail to understand how the said provision helps the respondents as the said provision provides that nothing in 1963 Act shall be deemed to affect the operation of 1908 Act, on documents. By admission of an unregistered sale deed in evidence in a suit for specific performance as evidence of contract, none of the provisions of 1908 Act is affected; rather court acts in consonance with proviso appended to Section 49 of 1908 Act.
The result is that appeal is allowed, The trial court shall mark the unregistered sale deed dated 27.2.2006 tendered by the plaintiff in her evidence and proceed with the suit accordingly.
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2010 (4) TMI 1183
Issues involved: Determination of joint family status, ownership of suit property, consideration of joint family business, validity of sale deed, rights of the parties.
Ownership of Suit Property:
The plaintiffs claimed a 2/3rd share in the suit property, alleging it was purchased from joint family funds. The trial court found in favor of the plaintiffs, decreeing the suit. The defendants contended that the property was self-acquired by defendant No. 2 and had no joint family connection. The appeal against the trial court's decision was dismissed, leading to this second appeal.
Joint Family Status:
The question arose whether the plaintiffs and defendant No. 2 constituted a joint Hindu family. Despite the absence of the father, it was argued that the mother and two sons could form a joint family. The court found that even in the father's absence, the remaining members could constitute a joint Hindu family, especially since the father had not formally separated from the family.
Joint Family Business:
Evidence suggested that the property was acquired from the earnings of a joint family business run by the plaintiffs and defendant No. 2. The defendants admitted in a previous suit that the shop was a joint family business. The court concluded that the property was jointly acquired, and each member had an equal share in it. The appellant's lack of good faith in the purchase further supported this finding.
Validity of Sale Deed:
The court dismissed the appellant's claim of being a bona fide purchaser due to lack of good faith and knowledge of the property's ownership status. While the property was not deemed joint family property, it was confirmed as jointly acquired property, leading to the dismissal of the appeal and upholding of the lower court's judgment and decree.
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