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2008 (5) TMI 723
Doctrine of promissory Estoppel - discontinuation of old concessations - Investment subsidy - `Tourism' was declared to be an `Industry' - concession on electricity tariff limited to five years - whether the said Government Order dated 26.9.2000 is reasonable having been given retrospective effect and retroactive operation?
HELD THAT:- The wide range of concessions as noticed hereinbefore, inter alia, covered electricity and water charges. It is not a case where some exemptions or concessions were to be given for a specific period or as a one time measure. No time limit was fixed for applicability in respect of the policy decisions. It was not based on any formula or criteria to evaluate the realization of the object of grant of such concession over a period. It was an open ended offer. It must, therefore, be held that the Government was satisfied that the need was to grant concession if not permanently, at least for a long time.
It is now a well settled principle of law that the Doctrine of promissory estoppel applies to the State. It is also not in dispute that all administrative orders ordinarily are to be considered prospective in nature. When a policy decision is required to be given a retrospective operation, it must be stated so expressly or by necessary implication.
The law which emerges from the discussion is that the doctrine of promissory estoppel would not be applicable as no foundational fact therefore has been laid down in a case of this nature. The State, however, would be entitled to alter, amend or rescind its policy decision. Such a policy decision, if taken in public interest, should be given effect to. In our constitutional scheme, however, the statute and/or any direction issued thereunder must be presumed to be prospective unless the retrospectivity is indicated either expressly or by necessary implication. It is a principle of rule of law. A presumption can be raised that a statute or statutory rules has prospective operation only.
The State of Kerala in this case did not grant any concession by itself. The Central Government took a larger policy of treating the tourism as an industry. A wide range of concessions were to be granted by way of one time measure; some of them, however, had a recurring effect. So far as grant of benefits which were to be recurring in nature, the State exercises its statutory power in the case of grant of exemption from payment of building tax wherefor it amended the statute. It issued directions which were binding upon the Board having regard to the provisions contained in Section 78A of the 1948 Act. The Board was bound thereby. The Board, having regard to its financial constraints, could have brought its financial stringency to the notice of the State. It did so. But the State could not have taken a unilateral decision to take away the accrued or vested right. The Board's order dated 11.10.1999 in law could not have been given effect to. The Board itself kept the said notification in abeyance by reason of order dated 8.11.1999.
Appellants, indisputably, continued to derive the benefits in terms of the original order. They obtained certificates of classification. It is on the aforementioned context, the question as regards construction of the impugned notification dated 26.9.2000 arises. Ex facie, the said policy decision could not be given a retrospective effect or retroactive operation. The State was not exercising the power under any statute to grant or withdraw the concession. It was exercising its statutory power of issuing direction.
It is, therefore, a statutory authority. The 1948 Act does not authorize the State to issue a direction with retrospective effect. The Board, therefore, could only give prospective effect to such directions in absence of any clear indication contained therein. By reason of withdrawal of concession with retrospective effect, the accrued right of the appellants had been affected.
Thus, the impugned GO dated 26.9.2000 must be held to have a prospective operation and not a retrospective operation. That view would save it from being vulnerable to the challenge of being hit by Article 14 of the Constitution of India - We, however, are not in a position to accept the contention that the Bills could not have been issued having regard to Sub-section (2) of Section 56 of the Act. Appellants herein have incurred liabilities.
The liability to pay electricity charges is a statutory liability. The Act provides for its consequences. Unless, therefore, the 2003 Act specifically introduced, the bar of limitation as regards the liability of the consumer incurred prior to coming into force of the said Act. In our opinion, having regard to Section 6 of the General Clauses Act, the liability continues.
We, therefore, are of the opinion that the High Court was not correct in its view to the aforementioned extent. The judgment of the High Court is, thus, set aside to the aforementioned extent. The appeals are allowed with costs.
Grant of installments - interest on the delayed payment under the tariff - In all other cases, the High Court directed that 18% interest would be payable following the decision of the Court in Kerala State Electricity Board through its Special Officer (Revenue) and Anr. v. M.R.F. Ltd.[1995 (12) TMI 381 - SUPREME COURT]. The same principle would apply in this case also but the bill having been raised only in 2003, the question of charging any interest thereupon from a retrospective date would not arise.
This appeal is, thus, dismissed. However, there shall be no order as to costs.
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2008 (5) TMI 722
Issues Involved:
1. Applicability of the rule of perpetuity to a member of the Sikh Judicial Commission.
2. Validity of the Government of India's power under Section 72 of the Punjab Reorganisation Act to issue notifications.
3. Jurisdiction of the Central Government versus State Government in relation to the Sikh Gurdwaras Act, 1925.
4. Tenure of the members of the Sikh Judicial Commission.
5. Validity of the notification dated 12.01.1999 on grounds of mala fide.
Issue-wise Detailed Analysis:
1. Applicability of the Rule of Perpetuity:
The primary issue was whether the rule of perpetuity applied to members of the Sikh Judicial Commission constituted under the Sikh Gurdwaras Act, 1925. The court held that perpetuity in office is neither contemplated under the Act nor permitted by the constitutional scheme. The court emphasized that the tenure of public office should not be indefinite, aligning with the constitutional principles of equality before law and equal protection of law as laid down in Articles 14 and 16 of the Constitution of India. The court concluded that the members of the Commission do not hold office in perpetuity and that the Commission must be reconstituted from time to time.
2. Validity of the Government of India's Power under Section 72:
The court examined whether the Government of India had the authority under Section 72 of the Punjab Reorganisation Act to issue a notification substituting "State Government" with "Government of the State of Punjab" in various sections of the Sikh Gurdwaras Act. The court upheld the validity of the notification, stating that the Central Government, with the consent of the State of Haryana, merely nominated the State of Punjab to carry out the provisions of the Act. This action did not amount to delegation or sub-delegation of power but was a statutory function performed by the Central Government.
3. Jurisdiction of the Central Government versus State Government:
The court addressed the contention that the Central Government was the only competent authority to exercise jurisdiction over the Sikh Gurdwaras Act due to its inter-state nature. The court clarified that the Central Government's notification did not delegate its power but rather nominated the State of Punjab to perform certain functions. This nomination was within the Central Government's statutory powers and did not violate constitutional provisions.
4. Tenure of the Members of the Sikh Judicial Commission:
The court analyzed the tenure of the members of the Sikh Judicial Commission, noting that the Act did not specify a fixed period for holding office. However, the court emphasized that the Commission must be constituted from time to time, and the members cannot hold office indefinitely. The court highlighted that the power to appoint includes the power to remove, and the Commission's tenure should align with the constitutional principles of non-perpetuity in public office.
5. Validity of the Notification Dated 12.01.1999 on Grounds of Mala Fide:
The court considered the challenge to the notification dated 12.01.1999 on grounds of mala fide. The court found that the factual foundation for alleging mala fide actions by the Chief Minister of Punjab was not established. Moreover, the appellant had been reappointed as Chairman of the Commission by a subsequent notification, which used the term "Reconstitution of the Commission." The court held that the appellant could not challenge the notification on grounds of mala fide after benefiting from it and being reappointed.
Conclusion:
The Supreme Court dismissed Civil Appeal Nos. 7024 of 2002 and 8171-8172 of 2003, while allowing Civil Appeal arising out of SLP (C) No. 20803 of 2002 and Civil Appeal Nos. 5546 of 2003, 8169-8170 of 2003, and 3162-3165 of 2004. The court emphasized the need for periodic reconstitution of the Sikh Judicial Commission and upheld the Central Government's statutory powers in nominating the State of Punjab to perform functions under the Sikh Gurdwaras Act.
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2008 (5) TMI 721
The Supreme Court dismissed the appeal based on a previous decision in the case of Crane Betel Nut Powder Works v. Commissioner of Customs & Central Excise.
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2008 (5) TMI 720
Issues Involved:
1. Whether the complainant can file a supplementary list of witnesses.
2. Whether the Magistrate has the discretion to summon additional witnesses from a supplementary list under Section 244(2) and Section 246(6) of the Cr.P.C.
Summary:
Issue 1: Filing of Supplementary List of Witnesses
The appeal challenges the order of the Patna High Court, which quashed the S.D.J.M.'s decision allowing the complainant to examine five additional witnesses from a supplementary list. The complaint was initially filed u/s 323, 406, 498A of the IPC and u/s 3 & 4 of the Prevention of Dowry Act. The S.D.J.M. had allowed the examination of these witnesses, considering the nature of the case involving continuous offences of torturing a married woman and demanding dowry. However, the High Court quashed this order, stating that the names of these witnesses were not provided as required u/s 204(2) Cr.P.C., and thus a supplementary list u/s 244(2) Cr.P.C. could not be furnished.
Issue 2: Magistrate's Discretion to Summon Additional Witnesses
The Supreme Court examined whether the Magistrate has the discretion to summon additional witnesses from a supplementary list. The Court referred to various High Court decisions, which generally held that the Magistrate's discretion is not fettered by the provisions of Cr.P.C. The Court noted that u/s 244(1) Cr.P.C., the Magistrate shall take all such evidence as may be produced in support of the prosecution. Similarly, u/s 246(6) Cr.P.C., the evidence of any remaining witnesses for the prosecution shall be taken. The Court emphasized that the Magistrate has the discretion to summon witnesses if it advances the cause of justice, provided this discretion is used judiciously and not to harass the accused.
Conclusion:
The Supreme Court concluded that the view taken by the Patna High Court cannot be sustained. The appeal was allowed, and the order of the High Court dated 13.12.2006 was set aside. The S.D.J.M., Bhagalpur, was directed to examine the remaining witnesses from the supplementary list provided by the complainant and proceed according to law.
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2008 (5) TMI 719
Issues involved:
The issues involved in this case are the applicability of Section 52 of the Transfer of Property Act, 1882, the effect of lis pendens on subsequent sale of property, and the requirement of the plaintiff to prove readiness and willingness to perform the contract.
Applicability of Section 52 of the Transfer of Property Act:
The trial court did not consider Section 52 of the Transfer of Property Act, but the learned Single Judge found that the subsequent purchase made by the appellant was bona fide and without notice of the original contract. The question was whether the principle of lis pendens would affect the subsequent sale of the property. The Full Bench of the Allahabad High Court discussed the scope of Section 52 and emphasized the necessity for final adjudication to prevent endless litigation. The principle of lis pendens aims to ensure that the rights of parties in litigation are protected and that subsequent sales do not prejudice ongoing legal proceedings.
Effect of Lis Pendens on Subsequent Sale:
In this case, the suit for specific performance was filed before the second sale of the property, making the principle of lis pendens applicable. The subsequent purchaser, although acting in good faith, was subject to the ongoing litigation and could not override the rights established by the initial agreement. The principle of lis pendens serves the public policy of bringing certainty to legal disputes and preventing endless litigation.
Requirement of Plaintiff to Prove Readiness and Willingness:
The plaintiff in a suit for specific performance must demonstrate readiness and willingness to perform their part of the contract. The appellant argued that the plaintiff did not prove this requirement, but the learned Single Judge found that the plaintiff had indeed shown readiness and willingness to fulfill the contract. The appellant's plea regarding this issue was considered and dismissed, as the plaintiff had met the necessary requirements. The Division Bench upheld the decision, emphasizing the applicability of lis pendens in this case.
In conclusion, the Supreme Court dismissed the appeal, affirming the decision of the Division Bench. The principle of lis pendens was deemed applicable, and the subsequent purchaser could not override the rights established by the initial agreement. The plaintiff's readiness and willingness to perform the contract were found to be adequately demonstrated, leading to the dismissal of the appeal.
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2008 (5) TMI 718
Issues involved: Determination of whether the property in question is a debottar property.
Summary:
The property in question was initially owned by Badal Das and Balaram Das, who transferred it to Amar Chandra Dhara, a sebait of a deity, through a registered deed of sale. Amar Chandra Dhara then sold parts of the property to the appellants. Legal disputes arose regarding the nature of the property, with the appellants claiming it was not a debottar property. The Civil Judge ruled in favor of Amar Chandra Dhara, stating that the property was purchased with his own funds. However, the Additional District Judge reversed this decision, concluding that the property was purchased in the name of the deity. The High Court upheld this decision, leading to the current appeal.
The appellants argued that the deed of sale did not complete the dedication to the deity, allowing Amar Chandra Dhara to alienate the property. The respondents contended that the deed clearly indicated the property was purchased for the deity's benefit. The court emphasized that the power of alienation is inherent in property transactions and does not necessarily negate debottar status. The court also highlighted the importance of ascertaining the true intention behind such transactions.
References to legal precedents such as Maharanee Brojosoondery Debea v. Ranee Luchmee Koonwaree and S. Shanmugam Pillai v. K. Shanmugam Pillai were made to support the arguments presented. The court stressed the need for clear evidence of endowment in debottar cases and the importance of factual considerations in determining dedication status.
Ultimately, the court found no merit in the appeal, upholding the lower court's decision that the property was indeed a debottar one. The appellants failed to provide sufficient evidence to challenge this finding. The court dismissed the appeal with costs and directed the compensation from land acquisition to be used for the deity's maintenance.
This judgment serves as a reminder of the complexities involved in determining the nature of debottar properties and the significance of factual evidence in such cases.
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2008 (5) TMI 717
Issues involved: Interpretation of Notification Nos. 3/2007 and 6/2002 regarding benefit extension to goods manufactured and cleared to another unit without following Chapter X procedure.
Issue 1: Benefit extension under Notification Nos. 3/2007 and 6/2002
The dispute revolved around whether the benefit of Notification Nos. 3/2007 and 6/2002 could be extended to goods manufactured and cleared to another unit without following the Chapter X procedure as specified in the said Notifications. The Appellate Tribunal noted that the appellate Commissioner had already extended the benefit to the appellant, emphasizing that the notifications exempted 'goods' and not 'parts', and that the chapter specified was 'any chapter'. It was highlighted that the use of goods in the manufacture of Power Driven Pumps was not contested, and a previous Tribunal decision was cited to support the position that if the benefit of a notification is available, it cannot be denied solely on the grounds of non-compliance with the Chapter X procedure.
Issue 2: Non-following of Chapter X procedure
The Tribunal observed that the Revenue did not dispute that the goods were entitled to the benefit if the Chapter X procedure was followed, and there was also no disagreement that the goods were cleared to the other unit and utilized in the production of power driven pumps. It was reasoned that the mere non-compliance with the Chapter X procedure should not automatically lead to the denial of the benefit of the Notification. The Tribunal emphasized that the Chapter X procedure is primarily required to establish the receipt and utilization of goods by the recipient unit for the specified purpose in the notifications. However, if this purpose can be achieved through other means, the technical grounds of non-compliance with the procedure should not result in the denial of the substantive benefit available to the assessee. The Tribunal referred to previous decisions to support this stance and concluded that there was no flaw in the view taken by the Commissioner (Appeals), thereby rejecting the appeal filed by the Revenue.
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2008 (5) TMI 716
Ingenuine preferential allotment of shares - Disgorgement of ill-gotten gains - whether any finding has been recorded at any stage of the proceedings that the appellant has made no illegal gains? - HELD THAT:- We are of the considered opinion that the enquiry officer has not undertaken any exercise to find out the ill-gotten gains, if any, made by the appellant and the enquiry was only to find out the wrongful acts allegedly committed by the appellant. It is true that the enquiry report has been accepted by the Board as contended on behalf of the appellant and that is why a penalty has been levied debarring it from opening fresh demat accounts till the end of December 2007.
Mere acceptance of the enquiry report by the Board does not, in our view, advance the case of the appellant. Further, on receipt of the enquiry report another show cause notice was issued to the appellant on May 4, 2007 enclosing the enquiry report. We have perused that show cause notice as well and find that there is nothing therein to suggest that the appellant had made ill-gotten gains or anything about disgorgement. Thus, we have no hesitation in holding that the question regarding illegal gains, if any, made by the appellant has not been examined at all at any stage of the proceedings.
Disgorgement - It is a common term in developed markets across the world though it is new to the securities market in India. Black’s Law Dictionary defines disgorgement as “The act of giving up something (such as profits illegally obtained) on demand or by legal compulsion.” Disgorgement of illgotten gains may be ordered against one who has violated the securities laws/regulations but it is not every violator who could be asked to disgorge. Only such wrongdoers who have made gains as a result of their illegal act(s) could be asked to do so.
The least that was required of the Board was to have called upon the appellant to show cause why it should not be ordered to disgorge the amount determined in the impugned order. Not having done so, the principles of natural justice have been flagrantly violated. The impugned order, therefore, deserves to be set aside on this ground alone. We also cannot approve the observations made by the Board in the impugned order which have been reproduced in the earlier part of our order and are of the view that action for disgorgement should have been initiated only after the appropriate proceedings against the entities had concluded and their guilt established. We are satisfied that the case of the appellant is no different from the case of the other entities against whom appropriate proceedings are still pending and whose appeals came up for hearing before us on 22.11.2007.
We cannot resist expressing our anguish over the irrational manner in which the Board proceeded to pass the impugned order only against the two depositories and their participants. Why we say so is that by its ex-parte order dated April 27, 2006 which is to be read as a part of the impugned order, the Board itself had found that the financiers of the key operators were the ultimate beneficiaries of the IPO scam and it went on to identify 82 financiers and even computed the illegal gains made by some of them in that order and yet issued no directions to them to disgorge the illegal gains made by them. Instead, the two depositories and their participants against whom enquiries are pending have been ordered to disgorge the entire amount of illegal gains without even recording a finding that they made any such gains. If the illegal gains were made by financiers it was they who ought to have been directed to disgorge the amount.
One is left guessing why the Board did not issue such directions to them. It did not even initiate disgorgement proceedings against them for reasons better known to the Board. It appears that after identifying the financiers who were the ultimate beneficiaries of the scam, the Board turned a nelson’s eye towards them and chose to proceed against the depositories and their participants and that too, exparte which, to say the least, was most unfair. What is really amazing is that the Board has noticed the correct position in law in para 30 of the impugned order but did not follow the same and ordered disgorgement against those entities against whom no findings of ill-gotten gains have been made, leaving out those against whom such findings had been recorded in the ex-parte order of April 27, 2006. We need not say anything more and leave the matter at that.
In view of what has been said above and for the reasons stated in our order dated 22.11.2007 passed in Appeal no. 147 of 2006, we allow the appeal and set aside the impugned order leaving it open to the Board to initiate further proceedings in accordance with law.
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2008 (5) TMI 715
Issues involved: Determination of entitlement to exemption under Service Tax Notification No. 20/2003 for services rendered in relation to maintenance of hardware and software of MICR Cheque Processing Solution.
Summary:
The appeal was filed against Order-in-Original No. 65/2006 passed by the Commissioner of Service Tax, Bangalore. The issue revolved around whether the services provided by the appellant qualified for exemption under Service Tax Notification No. 20/2003. The appellant had a contract with the Reserve Bank of India for maintenance of the MICR Cheque Processing Solution. The Department contended that the services did not qualify for exemption as they were not related to a computer or computer system. The lower authority relied on a Board's clarification regarding ATM machines to deny the exemption. The appellant challenged this decision, providing detailed information about the system and its components, including photographs and contractual agreements.
Upon review, the Tribunal found that the entire MICR Cheque Processing Solution, including the mainframe system, imaging hardware, software, and document processor with stacker modules, should be considered a computer system during the relevant period. The Tribunal disagreed with the lower authority's classification and held that the appellant was entitled to the benefit of the exemption Notification. Consequently, the appeal was allowed with consequential relief.
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2008 (5) TMI 714
Issues involved: Interpretation of Section 25-N(6) of the Industrial Disputes Act, 1947 regarding the authority's power to make a reference after rejecting a review application.
Summary:
The appeal challenged the Bombay High Court's judgment upholding the view that the appropriate Government/specified authority can make a reference for adjudication under Section 25-N(6) of the Act even after rejecting a review application. The appellant company sought to retrench workmen at its Borivli unit, leading to a legal battle with workers unions over the review and reference process. The Single Judge and Division Bench held that a rejected review application does not bar a reference, contrary to the appellant's argument.
The appellant contended that the provision's language is clear, using the term "or" which should not be substituted with "and." On the other hand, respondents argued that the reference provides additional protection and urgency, citing precedents like Orissa Textile & Steel Ltd. case.
The Court analyzed Section 25-N(6) and relevant case laws to determine the authority's power to review and refer matters for adjudication. It emphasized that the word "or" in the provision signifies two distinct options available to the appropriate Government or specified authority. The Court clarified that the review and reference processes serve different purposes and are not cumulative but alternative.
Ultimately, the Court held that the appeal should be allowed based on the clear and unambiguous language of the statute, emphasizing that when statutory language is precise, Courts must interpret it in its natural sense. The judgment highlighted the importance of adhering to the plain meaning of the law, rather than speculating on its spirit or intent.
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2008 (5) TMI 713
Issues Involved:
1. Legality of the Rs. 70,00,000/- extorted by the Directorate of Revenue Intelligence (DRI).
2. Legality of the search and seizure operations conducted by the DRI.
3. Validity of the self-inculpatory statements obtained under duress.
4. Non-issuance of a show-cause notice by the DRI.
5. Legality of retaining the Rs. 70,00,000/- without any demand being raised.
6. Requirement for the petitioner to furnish a bank guarantee.
Detailed Analysis:
1. Legality of the Rs. 70,00,000/- Extorted by the DRI:
The petitioner alleged that the DRI extorted Rs. 70,00,000/- illegally and under duress. The petitioner claimed that due to threats of arrest and coercion, the Managing Partner agreed to tender a draft of Rs. 70,00,000/-. The court noted that the DRI had not issued any show-cause notice or raised any demand against the petitioner, making the retention of the amount unjustifiable. The court directed the DRI to refund the amount of Rs. 70,00,000/- within a month, with the petitioner furnishing a bank guarantee to secure the interest of the DRI.
2. Legality of the Search and Seizure Operations Conducted by the DRI:
The petitioner's premises were searched based on intelligence reports, and various items were seized. The DRI claimed that the searches were conducted due to misuse of export incentives by exporting semi-finished leather as finished leather. The court observed that the goods were cleared by the Customs Department after rigorous testing and found matching with the declarations. The court questioned the necessity of the DRI's actions when the goods had already been cleared by Customs.
3. Validity of the Self-Inculpatory Statements Obtained Under Duress:
The petitioner retracted the self-inculpatory statements made under duress. The DRI denied the allegations of coercion and claimed that the statements were made voluntarily. The court did not delve deeply into the validity of the statements but emphasized the lack of any formal demand or adjudication process initiated by the DRI.
4. Non-Issuance of a Show-Cause Notice by the DRI:
The DRI admitted that no show-cause notice had been issued to the petitioner, as investigations were still ongoing. The court found this lack of formal communication problematic, as it left the petitioner without a clear understanding of the allegations or the opportunity to respond formally. The court highlighted that the DRI should have associated the Customs Department before taking any steps against the petitioner.
5. Legality of Retaining the Rs. 70,00,000/- Without Any Demand Being Raised:
The court found the DRI's retention of the Rs. 70,00,000/- without any formal demand or adjudication process to be unfair and arbitrary. The court referenced a previous judgment (M/s Bhagwati International) where it was held that in the absence of a demand, the retention of deposited amounts was unjustifiable. The court ordered the refund of the amount with the petitioner providing a bank guarantee to protect the revenue's interest.
6. Requirement for the Petitioner to Furnish a Bank Guarantee:
The court initially directed the petitioner to furnish a bank guarantee of Rs. 70,00,000/- to secure the DRI's interest. However, upon further consideration, the court found that in the absence of any demand, the requirement for a bank guarantee was not legally justified. The court ordered the release of the bank guarantee but kept the petitioner's property as security to meet any future demand.
Conclusion:
The court concluded that the DRI's actions were arbitrary and unjustified in the absence of a formal demand or show-cause notice. The court ordered the refund of Rs. 70,00,000/- to the petitioner and released the bank guarantee, securing the petitioner's property as a precautionary measure. The court emphasized the need for the DRI to finalize its investigation expeditiously within one year and clarified that the observations made should not prejudice the parties' rights. The writ petition was disposed of accordingly.
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2008 (5) TMI 712
Issues involved: Challenge to the constitutional validity of Section 245HA of the Income Tax Act, 1961 regarding abatement of applications before the Settlement Commission due to failure to pass orders under Section 245D(4) by a specified date.
Summary:
Constitutional Validity Challenge:
A group of writ petitions challenged the constitutional validity of Section 245HA of the Income Tax Act, 1961, which deals with the abatement of applications before the Settlement Commission in case of failure to pass orders under Section 245D(4) by a specified date. The petitioners sought relief against the abatement of their applications due to non-compliance with the said provision.
Interim Relief Granted:
The High Court granted ad-interim relief to the petitioners, preventing the Settlement Commission from treating their settlement applications as abated under Section 245HA. Additionally, Assessing Officers were restrained from taking up matters where the petitioners' applications were pending before the Settlement Commission before the specified date.
Supreme Court Interim Order:
The attention was drawn to an interim order of the Hon'ble Supreme Court in a related case, providing a stay on the abatement of proceedings pending before the second respondent. The petitioners agreed to abide by the outcome of the Supreme Court decision on the same issue, indicating their willingness to intervene in the matter before the Supreme Court.
Disposal of Petitions:
Considering the similarity of the issues with those before the Supreme Court, the High Court disposed of the petitions with a direction for both petitioners and respondents to abide by the outcome of the Supreme Court decision. It was decided that assessing and appellate authorities under the Income Tax Act should not take up matters pending before the Settlement Commission until the Supreme Court resolves the issue.
Revival of Petitions:
The High Court granted liberty to revive the petitions if necessary, upon filing a note before the Registry, and directed the Registry to place a copy of the order in each petition for reference.
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2008 (5) TMI 711
Issues Involved:
1. Validity of the Letter of Intent (LOI) issued to Respondent No. 2.
2. Compliance with pre-qualification criteria and evaluation criteria in the bidding process.
3. Allegations of arbitrary and discriminatory actions by Respondent No. 1.
4. Eligibility of Respondent No. 2 to participate in the tender process.
5. Transparency and legality of the tender process.
Detailed Analysis:
1. Validity of the Letter of Intent (LOI) Issued to Respondent No. 2:
The petitioner challenged the LOI dated 23.6.2007 issued to Respondent No. 2 for the Crowborough Hotel project. The petitioner argued that Respondent No. 2 did not meet the eligibility criteria and that the tender process was flawed. However, the court found that the bidding process was conducted transparently, and Respondent No. 2 was the highest bidder, quoting Rs. 98.99 crores compared to the petitioner's Rs. 90.61 crores. The court concluded that the decision to award the LOI to Respondent No. 2 was justified and did not warrant interference.
2. Compliance with Pre-qualification Criteria and Evaluation Criteria in the Bidding Process:
The petitioner contended that the respondent did not clearly define the financial criteria in the bid documents, violating the principles of transparency. The court noted that the Evaluation Committee initially decided to assess financial criteria on a "point based scale" and later fixed specific turnover and net worth criteria. However, these criteria were not included in the EOI. The court held that the absence of specific criteria in the EOI did not constitute a deviation from the tender terms, as the sliding criteria were for internal assessment. The court emphasized that the petitioner did not challenge the EOI at the relevant time and could not do so after participating in the process.
3. Allegations of Arbitrary and Discriminatory Actions by Respondent No. 1:
The petitioner alleged that the respondent arbitrarily changed the financial criteria to favor Respondent No. 2. The court examined the minutes of the Evaluation Committee meetings and found that the criteria were amended to adopt the sliding scale based on the consultant's recommendation. The court concluded that the changes were made transparently and were not arbitrary or discriminatory. The court also noted that the petitioner failed to demonstrate any substantial prejudice due to the adoption of the sliding criteria.
4. Eligibility of Respondent No. 2 to Participate in the Tender Process:
The petitioner argued that Respondent No. 2, a coal dealer with no experience in the hotel industry, did not meet the eligibility criteria. The court found that Respondent No. 2 had a valid management contract with T.K. International Ltd., a reputed hotel industry, which satisfied the requirement for a consortium. The court also noted that the petitioner did not submit a solvency certificate in the name of Centre Point Group Enterprise and lacked a valid management contract with ITC Welcomgroup. Thus, the court held that Respondent No. 2 was eligible to participate in the tender process.
5. Transparency and Legality of the Tender Process:
The court emphasized that judicial review in contractual matters focuses on the decision-making process rather than the merits of the decision. The court found that the tender process was conducted transparently, with the aim of maximizing revenue for the state. The court noted that the petitioner failed to demonstrate any overwhelming public interest that would require judicial intervention. The court concluded that the tender process did not suffer from illegality, procedural impropriety, or arbitrariness.
Conclusion:
The court dismissed the writ petition, holding that the petitioner lacked the locus standi to challenge the tender process and failed to demonstrate any substantial prejudice or public interest that warranted judicial intervention. The court vacated the interim order and directed the parties to bear their respective costs.
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2008 (5) TMI 710
Issues:
The judgment involves the issue of penalty u/s 271(1)(c) of the Income Tax Act, 1961 based on a voluntary disclosure made in response to notice u/s 148 to avoid litigation.
Summary:
The assessee filed a return of income for the assessment year 1998-99, declaring income from house property and salary earned as a partner in a firm. Subsequently, it was discovered that the assessee had acquired a property which was undeclared. The legal heir filed a return in response to a notice u/s 148, declaring the undisclosed income related to the property. Penalty proceedings were initiated u/s 271(1)(c) for concealing the investment in the property. The legal heirs stated that they were unaware of the source of investment and chose to surrender the amount voluntarily. The Assessing Officer imposed a penalty, which was upheld by the Commissioner of Income Tax (Appeals) but later deleted by the Tribunal, citing the voluntary disclosure made in good faith to avoid litigation.
The Tribunal found that the legal heir's disclosure was bona fide and voluntary, considering the circumstances where the assessee had passed away, and the legal heir had no knowledge of the investment sources. The Tribunal emphasized that the disclosure was not to avoid legal consequences but to prevent prolonged litigation with the Revenue. The Court upheld the Tribunal's decision, stating that the deletion of the penalty under Section 271(1)(c) was justified as the disclosure was made in good faith by the legal heir to avoid litigation. The Court found no error in the Tribunal's order and dismissed the appeal, stating that no substantial question of law arose for determination.
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2008 (5) TMI 709
Passenger died in Train Accident - fault on the part of the Railways or Contributory negligence - 'accidental falling of a passenger from a train carrying passengers' Section 123(c) of the Railways Act - Principle of strict liability - Section 124A - Claim for compensation - Claims Tribunal disallowed the claim, but the appeal against the said decision was allowed by the Kerala High Court and compensation from the date of the petition till the date of payment was granted.
HELD THAT:- We are of the opinion that it will not legally make any difference whether the deceased was actually inside the train when she fell down or whether she was only trying to get into the train when she fell down. In our opinion in either case it amounts to an 'accidental falling of a passenger from a train carrying passengers'. Hence, it is an 'untoward incident' as defined in Section 123(c) of the Railways Act.
If we adopt a restrictive meaning to the expression 'accidental falling of a passenger from a train carrying passengers' in Section 123(c) of the Railways Act, we will be depriving a large number of railway passengers from getting compensation in railway accidents. It is well known that in our country there are crores of people who travel by railway trains since everybody cannot afford traveling by air or in a private car. By giving a restrictive and narrow meaning to the expression we will be depriving a large number of victims of train accidents (particularly poor and middle class people) from getting compensation under the Railways Act.
Hence, in our opinion, the expression 'accidental falling of a passenger from a train carrying passengers' includes accidents when a bona fide passenger i.e. a passenger traveling with a valid ticket or pass is trying to enter into a railway train and falls down during the process. In other words, a purposive, and not literal, interpretation should be given to the expression.
The accident in which Smt. Abja died is clearly not covered by the proviso to 124A. The accident did not occur because of any of the reasons mentioned in clauses (a) to (e) of the proviso to Section 124A. Hence, in our opinion, the present case is clearly covered by the main body of Section 124A of the Railways Act, and not its proviso.
Section 124A lays down strict liability or no fault liability in case of railway accidents. Hence, if a case comes within the purview of Section 124A it is wholly irrelevant as to who was at fault.
Rylands v. Fletcher (supra) in fact created a new legal principle (the principle of strict liability in the case of hazardous activities), though professing to be based on analogies drawn from existing law. The judgment is noteworthy because it is an outstanding example of a creative generalization. As Wigmore writes, this epoch making judgment owes much of its strength to 'the broad scope of the principle announced, the strength of conviction of its expounder, and the clarity of his exposition'.
The Principle of strict liability states that the undertakers of these activities have to compensate for the damage caused by them irrespective of any fault on their part. As Fleming says "permission to conduct such activity is in effect made conditional on its absorbing the cost of the accidents it causes, as an appropriate item of its overheads". Thus in cases where the principle of strict liability applies, the defendant has to pay damages for injury caused to the plaintiff, even though the defendant may not have been at any fault.
However, apart from the principle of strict liability in Section 124A of the Railways Act and other statutes, we can and should develop the law of strict liability de hors statutory provisions in view of the Constitution Bench decision of this Court in M.C. Mehta's case [1986 (12) TMI 378 - SUPREME COURT]. In our opinion, we have to develop new principles for fixing liability in cases like the present one.
Therefore, we are of the opinion that the submission of ld Counsel for the appellant there was no fault on the part of the Railways, or that there was contributory negligence, is based on a total misconception and hence has to be rejected.
Thus, there is no force in this appeal which is accordingly dismissed. There shall be no order as to costs.
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2008 (5) TMI 708
Decree of eviction - `Change of user' in the suit premises - Clause 9 of the unregistered Tenancy Agreement between the parties - violation of provisions of Section 108(o) of the Transfer of Property Act - whether the expression `change of user' would cover a situation wherein the property is let out for a particular named officer and for none else and despite this condition, the same is given to some one else, or would it cover and be limited to the cases where property is leased out for a residential or non- residential purpose or for a particular business and despite such express conditions, the property is used for the purpose other than the specified - Section 49 of the Registration Act, an unregistered document can also be admitted into evidence for a collateral fact/collateral purpose or not?.
HELD THAT:- We have noted that under the proviso to Section 49 of the Registration Act, an unregistered document can also be admitted into evidence for a collateral fact/collateral purpose.
In the case of Bajaj Auto Limited vs. Behari Lal Kohli [1989 (8) TMI 344 - SUPREME COURT], this Court observed that if a document is inadmissible for non-registration, all its terms are inadmissible including the one dealing with landlord's permission to his tenant to sub-let. It was also held in that decision that if a decree purporting to create a lease is inadmissible in evidence for want of registration, none of the terms of the lease can be admitted in evidence and that to use a document for the purpose of proving an important clause in the lease is not using it as a collateral purpose.
In our view, the clause 9 in the lease agreement in question cannot be called a collateral purpose. As noted earlier, it is the case of the appellant that the suit premises was let out only for the particular named officer of the respondent and accordingly, after the same was vacated by the said officer, the respondent was not entitled to allot it to any other employee and was therefore, liable to be evicted which, in our view, was an important term forming part of the lease agreement.
Therefore, Clause 9 of the Lease Agreement in this case, cannot be looked into even for collateral purposes to come to a conclusion that the respondent was liable to be evicted because of violation of Clause 9 of the Lease Agreement. That being the position, we are unable to hold that Clause 9 of the Lease Agreement, which is admittedly unregistered, can be looked into for the purpose of evicting the respondent from the suit premises only because the respondent was not entitled to induct any other person other than the named officer in the same.
Violation of provisions of Section 108(o) - In our view, the High Court was justified in coming to a conclusion that since this was not a case of `Change of User' within the meaning of Section 108(o) of the Transfer of Property Act, it could not be held that the appellant had violated the provisions of Section 108(o) of the Transfer of Property Act. Section 108(o) requires the lessee to use the property as a man of ordinary prudence would use his property and not to use it for a purpose different to that for which it was leased.
We are of the view that although the premises was leased out exclusively for the named officer of the respondent, the fact that it was subsequently used for the residence of some other officer of the respondent would not constitute `change of user' so as to be hit by Section 108(o) of the Transfer of Property Act.
We are unable to agree with this contention of Mr. Mukherjee for the simple reason that for a decree to be passed under the Act, the landlord has to plead and prove one of the grounds mentioned in Section 13 of the Act. Even if we accept that the appellant had made out a case under Section 13(1b) of the Act to the extent that the respondent was liable to be evicted u/s 108(o) of the Transfer of Property Act, in view of our findings made on that aspect, the appellant is not entitled to a decree of eviction under the Act.
We are, therefore, of the view that Clause 9 of the Agreement, which requires the respondent to use the suit premises only for its particular named officer, cannot be looked into even for collateral purposes and that the decision of this court in Smt. Juthika Mullick's case[1995 (10) TMI 249 - SUPREME COURT] would not be of any help to the appellant because in that case, the lease deed was registered.
Secondly, we are of the view that although the suit premises was leased out exclusively for the named officer of the respondent, the fact that the respondent sought to use it for some other officer would not constitute "Change of User" within the meaning of Section 108(o) of the Transfer of Property Act and, therefore, the respondent cannot be evicted for violation of the provisions of Section 108(o) of the Transfer of Property Act.
W do not find any merit in this appeal and the appeal is therefore dismissed - Since the appeals have been dismissed, all the interlocutory applications, if any, now pending before this Court have become infructuous and accordingly, they are disposed of as infructuous.
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2008 (5) TMI 707
Issues involved:
The judgment involves issues related to a criminal writ petition seeking action against a bank for alleged abetment of suicide, observations made by the High Court affecting an ongoing investigation, clarification of impugned observations, legal procedures for loan recovery by financial institutions, RBI guidelines on engagement of recovery agents, and the direction for expeditious investigation and payment of costs.
Details of the judgment:
Issue 1: Alleged abetment of suicide by bank recovery agents
The respondent filed a criminal writ petition seeking action against the bank for alleged abetment of suicide by her son due to harassment by the bank's recovery agents during repossession of his motorcycle. The High Court directed the Investigating Officer to conclude the investigation and take necessary action against those found guilty of abetting the deceased's suicide.
Issue 2: Impugned observations by the High Court
The appellant bank challenged the observations made by the High Court, requesting clarification or deletion of certain paragraphs. The High Court declined to expunge the observations but clarified that they should not influence ongoing proceedings against the bank or its employees. The court noted that the observations were based on alleged facts and should not impact the investigation.
Issue 3: Legal procedures for loan recovery
The judgment highlighted that financial institutions must adhere to legal procedures for loan recovery as per the SARFAESI Act, SIER Rules, and RBI Guidelines. The Guidelines emphasize fair practices, prohibition of harassment, and proper conduct during loan recovery processes to avoid disputes and litigations.
Issue 4: RBI guidelines on engagement of recovery agents
RBI expressed concern over litigations against banks for engaging recovery agents who violate guidelines. Banks are responsible for their agents' actions and must ensure compliance with guidelines to avoid reputational risks and penalties. Non-compliance may lead to bans on engaging recovery agents and other supervisory actions.
Issue 5: Direction for expeditious investigation and costs
The judgment directed an expeditious investigation into the matter, with a deadline of three months for completion. The appellant bank was directed to pay costs of litigation to the respondents and the Deputy Commissioner of Police was instructed to submit the investigation report to the High Court. The matter was to be listed before the High Court after the report submission.
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2008 (5) TMI 706
Issues involved: Appeal against dismissal of writ petition on grounds of delay and laches by High Court of Judicature at Patna.
Summary:
The Supreme Court granted leave to appeal against the order of the Division Bench of the High Court of Judicature at Patna, which dismissed the writ petition on the basis of delay and laches. The Supreme Court held that the High Court erred in rejecting the writ petition and appeal on these grounds. The appellant had moved the writ petition against the decision of the State Government after 4 years, but the delay was sufficiently explained as the appellant had filed a representation/review of the decision. The High Court should have considered this explanation and not dismissed the writ petition. The Supreme Court set aside the orders of the Division Bench and the Single Judge, and restored the writ petition to be decided on merits, giving an opportunity for the parties to present their case. The appeal was allowed with no order as to costs.
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2008 (5) TMI 705
Issues Involved:
1. Refund of amounts by first charge holder Secured Creditors.
2. Distribution of funds among workers.
3. Consideration of second charge Secured Creditors for ratio determination.
4. Inclusion of interest in the debts due on the date of winding up.
Summary:
1. Refund of amounts by first charge holder Secured Creditors:
The Official Liquidator filed a report seeking a direction for the first charge holder Secured Creditors of the Company in liquidation to refund amounts already disbursed to them as per the order dated 29.08.2004 in Company Application No.302 of 2003. The amounts to be refunded were specified for ICICI Bank Limited, IDBI Bank Limited, IFCI Bank Limited, IIBI Bank Limited, and ICICI Debenture Trustee, totaling Rs. 2,82,59,800/-.
2. Distribution of funds among workers:
The Official Liquidator also sought permission to distribute Rs. 7,02,59,800/- among the workers of the Company as per their respective entitlements, after receiving the amount of Rs. 2,82,59,800/- from the Secured Creditors. The Court had previously directed the Official Liquidator to distribute Rs. 5 Crores each to ICICI Bank Limited for the first charge holder Secured Creditors and to the ex-workers of the Company on an adhoc basis.
3. Consideration of second charge Secured Creditors for ratio determination:
The Court examined whether the dues of the Secured Creditors having second charge should be considered for determining the ratio between the Secured Creditors and workers. The Court referred to its earlier decision in the case of IDBI V/s. Official Liquidator of M/s. Rustom Mills & Industries Limited, which held that all Secured Creditors, including those with second charge, should be considered for pari passu charge as per Section 529 read with Section 529-A of the Companies Act, 1956. The Court also agreed with the Delhi High Court's view that Secured Creditors having second charge should not be excluded while determining the ratio.
4. Inclusion of interest in the debts due on the date of winding up:
The Court addressed whether only the principal amount or the debts due on the date of winding up, including interest, should be considered. The Court held that the dues outstanding as on the date of winding up, which may include interest, are required to be taken into consideration.
Conclusion:
The Court concluded that the prayers made by the Official Liquidator for refund of amounts by the Secured Creditors could not be granted at this stage. The Court directed the Secured Creditors to submit proof of debt, if not already submitted, and for the Chartered Accountant to verify the claims and work out the final ratio between the Secured Creditors and workers. The Official Liquidator was instructed to file a report for appropriate relief, including further disbursement, after receiving the Chartered Accountant's verification. The report was disposed of with these directions and observations.
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2008 (5) TMI 704
Issues Involved:
1. Validity of the assessment order due to the non-issuance of notice under Section 143(2) within the stipulated time.
2. Binding nature of the Gauhati High Court's decision on the Mumbai Benches of ITAT.
3. Interpretation and applicability of Section 143(2) and its proviso in the context of block assessment under Section 158BC.
Issue-wise Detailed Analysis:
1. Validity of the Assessment Order Due to Non-Issuance of Notice Under Section 143(2) Within the Stipulated Time:
The assessee contended that the assessment order should be declared null and void because the notice under Section 143(2) was not issued within 12 months from the date of filing the return, as required by the proviso to Section 143(2). The search was conducted on 24/8/2000, and the return for the block period was filed on 23/2/01. However, the notice under Section 143(2) was issued on 12/4/02, beyond the 12-month period. This contention was supported by the Gauhati High Court's decision in Smt. Bandana Gogoi v. CIT, which held that non-issuance of notice within the stipulated time renders the assessment void. The Tribunal referred to multiple cases where this principle was upheld, emphasizing the mandatory nature of the time limit for issuing a notice under Section 143(2).
2. Binding Nature of the Gauhati High Court's Decision on the Mumbai Benches of ITAT:
The revenue argued that the Gauhati High Court's decision is not binding on the Mumbai Benches of ITAT, citing decisions from the Bombay High Court which suggest that decisions of non-jurisdictional High Courts are not binding. However, the Tribunal noted that the principle of judicial discipline requires following the decisions of higher judicial authorities, even if they are from non-jurisdictional High Courts, unless there is a contrary decision from the jurisdictional High Court or the Supreme Court. The Tribunal cited the consistent application of the Gauhati High Court's decision across various ITAT benches in India, including Mumbai, Delhi, Pune, Hyderabad, and Chandigarh, emphasizing the importance of maintaining judicial consistency.
3. Interpretation and Applicability of Section 143(2) and Its Proviso in the Context of Block Assessment Under Section 158BC:
The Tribunal examined the procedural requirements under Section 158BC(b), which mandates the application of Section 143(2) for block assessments. The Gauhati High Court had held that the issuance of a notice under Section 143(2) within the prescribed time is mandatory for the validity of the assessment. The Tribunal agreed with this interpretation, stating that the rule regarding limitation requires strict compliance. The Tribunal also rejected the revenue's argument that the procedural formalities prescribed for block assessments are not mandatory, emphasizing that the time limit for issuing a notice under Section 143(2) is a crucial procedural requirement.
The Tribunal further clarified that the decision of the Supreme Court in Dr. Pratap Singh v. Director of Enforcement, which dealt with procedural formalities under the Customs Act, does not directly apply to the issue at hand. The Tribunal concluded that the Gauhati High Court's decision is directly applicable and must be followed.
Conclusion:
The Tribunal held that the notice under Section 143(2) issued by the Assessing Officer was time-barred, rendering the assessment void ab initio. Consequently, the block assessment was set aside, and the appeal of the assessee was allowed while the revenue's appeal was dismissed. The Tribunal emphasized the importance of adhering to judicial discipline and consistency by following the decisions of higher judicial authorities, even from non-jurisdictional High Courts.
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