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Showing 401 to 420 of 682 Records
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2007 (2) TMI 327
Issues:
Conviction and sentence under section 220(3) of the Companies Act 1956, maintainability of revision case against the order of conviction and sentence, availability of appeal under section 374 of the Code of Criminal Procedure, powers of the High Court under section 397 for revision, restrictions on revision powers under sections 397 to 401, applicability of judgments on revisional jurisdiction, interpretation of the provisions of the Code of Criminal Procedure regarding revisional powers.
Conviction and Sentence:
The petitioners were convicted under section 220(3) of the Companies Act 1956 and sentenced to pay a fine of Rs. 5,000 each, with a default simple imprisonment term of one month. The revision was filed against this order of conviction and sentence by the accused-petitioners.
Maintainability of Revision Case:
A preliminary objection was raised by the counsel for the respondent regarding the maintainability of the revision case, citing section 374 of the Code of Criminal Procedure which provides for an appeal against conviction and sentence. The question arose whether the remedy of revision could be availed by the accused-petitioners when they had the option of appeal under section 374.
Availability of Appeal under Section 374:
Section 374 of the Code of Criminal Procedure allows for an appeal to the High Court in cases where a sentence of imprisonment for more than seven years has been passed. The trial court's imposition of a fine of Rs. 5,000 on the petitioners made them eligible for an appeal under section 374, thus making the revision maintainable.
Powers of High Court under Section 397 for Revision:
Section 397 of the Code of Criminal Procedure empowers the High Court to call for and examine records to ensure correctness, legality, or propriety of findings, sentences, or orders. It allows the court to suspend execution of sentences and release the accused on bail pending examination of records.
Restrictions on Revision Powers under Sections 397 to 401:
Sections 397 to 405 of the Code of Criminal Procedure outline the powers of the High Court for superintendence to prevent miscarriage of justice. The court can direct further inquiry into dismissed complaints or discharged cases under section 398, with limitations on converting acquittals into convictions.
Judgments on Revisional Jurisdiction:
Various judgments were cited by both parties to support their arguments on the revisional jurisdiction of the High Court. The court analyzed these judgments to determine whether the accused-petitioners could invoke the revisional jurisdiction under section 397 despite having the option of appeal.
Interpretation of Provisions of the Code of Criminal Procedure:
The court examined the provisions of the Code of Criminal Procedure, including sections 395 to 401, to understand the scope of revisional powers of the High Court. It considered precedents and interpretations from previous judgments to decide on the maintainability of the revision case.
In conclusion, the court dismissed the criminal revision case based on the interpretation of the Code of Criminal Procedure and relevant precedents, emphasizing that when an appeal is available, the revisional jurisdiction cannot be invoked by a party who could have filed an appeal but chose not to do so.
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2007 (2) TMI 326
Whether for registration of transfer of shares effected under a scheme of arrangement or compromise or amalgamation sanctioned by a competent court under sections 391 and 394 of the Companies Act, it is necessary to execute a further instrument of transfer as contemplated by section 108 of the said Act?
Held that:- Appeal dismissed. The questions raised in the appeal have been rendered academic having regard of the fact that the appellant-company has since registered the shares in question in the name of the respondent No. 1-company.
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2007 (2) TMI 325
Issues Involved:
1. Whether remission of stamp duty for registering the document is permissible in the transfer of property between the parent and its subsidiary company.
Issue-wise Detailed Analysis:
1. Whether remission of stamp duty for registering the document is permissible in the transfer of property between the parent and its subsidiary company:
Arguments by the Petitioner:
The petitioner argued that they are exempted from paying the stamp duty based on a notification issued by the State of Tamil Nadu. The petitioner contended that the transfer of property between the parent company and its wholly-owned subsidiary companies should be exempt from stamp duty as per Notification No. 1224. The petitioner's counsel emphasized that the notification allows remission of stamp duty when the transferor holds at least 90% of the issued share capital of the transferee company. The petitioner challenged the demand for stamp duty as illegal and sought to quash the impugned order.
Arguments by the Respondent:
The respondents argued that the notification is not applicable to the petitioner's transaction. They contended that the transferor company did not hold more than 90% of the issued share capital of the transferee companies, thus making the petitioner ineligible for the stamp duty exemption. The respondents emphasized that the deed of transfer executed by the petitioner did not meet the conditions stipulated in the notification, leading to a significant loss of revenue due to incorrect remission of stamp duty.
Court's Analysis:
The court examined the relevant facts and the nature of the notification. It noted that the transferor company, M/s. Kothari Industrial Corporation Ltd., transferred its tea estates to its wholly-owned subsidiary companies, M/s. Waterfall Estate (East) (P.) Ltd. and M/s. Waterfall Estate (West) (P.) Ltd. The documents were registered, and the petitioner claimed remission of stamp duty based on the notification.
The court analyzed the notification, which states that the remission of stamp duty applies when at least 90% of the issued share capital of the transferee company is in the beneficial ownership of the transferor company. The court emphasized that the notification must be construed strictly as it is a fiscal measure intended to secure revenue for the State.
The court referred to various legal principles and precedents, highlighting that the real and true meaning of the instrument must be ascertained to determine the applicability of stamp duty. The court noted that the issued share capital should not be confused with subscribed share capital, and the notification clearly specifies issued share capital as the criterion for exemption.
Findings:
The court found that the petitioner did not meet the condition of holding at least 90% of the issued share capital of the transferee companies. The Inspector General of Registration, in the impugned order, noted that the transferor company held less than 90% of the issued share capital in both transactions. Therefore, the court concluded that the petitioner was not entitled to stamp duty remission under the notification.
Conclusion:
The court upheld the impugned order, stating that there was no irregularity or illegality in the decision. The writ petitions were dismissed, and the petitioner was held liable to pay the stamp duty. The court emphasized that the provisions of the Stamp Act and the notification must be interpreted strictly to protect revenue interests, and there was no scope for any interpretation that would favor the petitioner's claim for exemption. The court dismissed the writ petitions with no costs.
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2007 (2) TMI 324
Issues:
Petition for winding up due to company's refusal to refund advance for unexecuted purchase order.
Analysis:
1. The petitioner issued three purchase orders for counter weight plates, paying Rs. 15,50,000 as advance. Company failed to supply goods for one order, leading to a balance refundable amount of Rs. 3,28,044.
2. Company claimed loss of Rs. 4,66,092 due to petitioner not lifting goods, seeking payment of Rs. 1,38,048. Petitioner denied receiving letters from company regarding losses and asserted only sales tax declaration forms were requested.
3. Company relied on alleged letters dated 31-7-2004 and 18-1-2005 to justify losses incurred. Petitioner argued the letters were not credible as they were sent months after initial communication and lacked seriousness in pursuing damages claim.
4. Court found company's defense baseless, ruling in favor of petitioner for the principal sum claimed of Rs. 3,28,044. An interest rate of eight per cent per annum was awarded from the date of statutory notice. The petition was to be advertised in two newspapers and returnable in court after four weeks.
5. If the company cleared the payment along with interest within three weeks, the petition would be permanently stayed. The judgment aimed to resolve the dispute over the refundable amount and ensure timely resolution through legal proceedings.
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2007 (2) TMI 323
Issues involved: Prosecutions u/s Companies Act, 1956 for failure to file annual returns and balance sheets; Invocation of powers u/s 482 CrPC to quash proceedings.
Summary:
The petitioners, accused in six prosecutions under the Companies Act, 1956 for failure to file annual returns and balance sheets, sought quashing of proceedings u/s 482 CrPC. They argued that they attempted to avail of the 'Simplified Exit Scheme, 2005' but were unsuccessful. The first contention was that the complaint filed before the scheme's deadline was legally unsustainable. However, the court held that the scheme was intended for defunct companies who successfully availed it, which the petitioners did not. Thus, the complaint initiation was deemed valid. The second contention was regarding payment under section 611(2) of the Act, which the petitioners claimed exceeded the maximum payable amount. The court clarified that such payments do not absolve liability for prosecution under other sections of the Act. The court dismissed both contentions and refused to quash the prosecutions based on these grounds.
In conclusion, the court dismissed the Criminal Miscellaneous petitions, stating that the prosecutions could not be quashed based on the reasons presented by the petitioners.
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2007 (2) TMI 322
Issues Involved:
1. Whether the petitioner is a creditor of the company within the meaning of section 439(b) of the Indian Companies Act.
2. Whether the petitioner is a debtor of the company.
3. Whether it is just and equitable to order winding up of the company.
4. Whether the company petition is maintainable in view of the various suits pending in the Civil Courts.
5. Whether the company petition is maintainable in view of OS No. 616/83 on the file of the court of the 1st Addl. Judge, City Civil Court, Hyderabad, for dissolution and rendition of accounts of the firm, Progressive Engineering Company.
6. Whether the company petition is liable to be dismissed without enquiry.
7. Whether the petitioner has any locus standi to file the company petition and the same is bona fide.
8. Whether the petitioners are creditors within the meaning of section 433(e) read with section 434(1)(a) of the Indian Companies Act and within the meaning of section 439(1)(b).
9. Whether the respondent-company is indebted to the petitioners in a sum exceeding Rs. 500 as on the date of the petition and, if so, what is the amount due.
10. Whether the petitioners made demand requiring the respondent to pay the sum due and has served the said demand of the company at its registered office.
11. Whether the respondent admits the liability.
12. Whether the petitioners have issued the statutory notice of 21 days.
13. Whether the respondent-company has complied with the said notice as per law.
14. Whether the company petition is not maintainable without adding the partners of the petitioner-firm as parties to the company petition.
15. Whether the petitioners have no locus standi to file the company petition.
16. Whether the amount alleged to be due to the petitioners is admitted by the company and whether the company is not able to meet the said liability.
17. Whether CP No. 11 of 1983 is not maintainable in view of the suits filed by the respondent against the said firm claiming Rs. 4,36,000 from the said firms and other legal proceedings pending in the lower Courts.
18. Whether the petitioners are in fact put up by the petitioner in CP No. 6 of 1983 on the file of this court for his benefit.
19. Whether the company petition is bad and not maintainable on the ground that no leave of the court under section 439(8) of the Companies Act was sought and obtained.
20. Whether the present petition is bad in view of the pendency of the suit OS No. 1065 of 1984 on the file of the II Additional Judge, City Civil Court, Hyderabad.
21. Whether the respondent-company is liable to be wound up under sections 433(e) and 434(1)(a) and section 439(1)(b) of the Indian Companies Act.
22. To what relief.
Issue-wise Detailed Analysis:
Issue 1: Whether the petitioner is a creditor of the company within the meaning of section 439(b) of the Indian Companies Act?
The petitioner claimed that he was a creditor of the firm PEC, which was transferred to the respondent-company, and was owed Rs. 1,74,928. The Company Judge did not specifically address this issue in the judgment, but the petitioner's claim was based on the balance sheet as on 31-3-1981.
Issue 2: Whether the petitioner is a debtor of the company?
This issue was not explicitly addressed in the judgment.
Issue 3: Whether it is just and equitable to order winding up of the company?
The Company Judge found that there was a lack of probity and mismanagement in the conduct of the company's affairs. The conversion of the partnership into a private limited company was deemed illegal, unauthorized, and mala fide. The Judge concluded that it was just and equitable to dissolve the partnership, citing the loss of mutual faith and confidence among partners and the partnership being at will.
Issue 4: Whether the company petition is maintainable in view of the various suits pending in the Civil Courts?
The Company Judge held that the pendency of other suits did not bar the dissolution of the partnership.
Issue 5: Whether the company petition is maintainable in view of OS No. 616/83 on the file of the court of the 1st Addl. Judge, City Civil Court, Hyderabad, a suit for dissolution and rendition of accounts of the firm, Progressive Engineering Company?
The Company Judge determined that the pendency of OS No. 616/83 did not preclude ordering the dissolution of the partnership.
Issue 6: Whether the company petition is liable to be dismissed without enquiry?
This issue was not explicitly addressed in the judgment.
Issue 7: Whether the petitioner has any locus standi to file the company petition and the same is bona fide?
The Company Judge found that the petitioner had established beyond doubt the lack of probity and mismanagement, thus affirming the petitioner's locus standi.
Issue 8: Whether the petitioners are creditors within the meaning of section 433(e) read with section 434(1)(a) of the Indian Companies Act and within the meaning of section 439(1)(b)?
This issue was not explicitly addressed in the judgment.
Issue 9: Whether the respondent-company is indebted to the petitioners in a sum exceeding Rs. 500 as on the date of the petition and, if so, what is the amount due?
This issue was not explicitly addressed in the judgment.
Issue 10: Whether the petitioners made demand requiring the respondent to pay the sum due and has served the said demand of the company at its registered office?
This issue was not explicitly addressed in the judgment.
Issue 11: Whether the respondent admits the liability?
This issue was not explicitly addressed in the judgment.
Issue 12: Whether the petitioners have issued the statutory notice of 21 days?
This issue was not explicitly addressed in the judgment.
Issue 13: Whether the respondent-company has complied with the said notice as per law?
This issue was not explicitly addressed in the judgment.
Issue 14: Whether the company petition is not maintainable without adding the partners of the petitioner-firm as parties to the company petition?
This issue was not explicitly addressed in the judgment.
Issue 15: Whether the petitioners have no locus standi to file the company petition?
This issue was not explicitly addressed in the judgment.
Issue 16: Whether the amount alleged to be due to the petitioners is admitted by the company and whether the company is not able to meet the said liability?
This issue was not explicitly addressed in the judgment.
Issue 17: Whether CP No. 11 of 1983 is not maintainable in view of the suits filed by the respondent against the said firm claiming Rs. 4,36,000 from the said firms and other legal proceedings pending in the lower Courts?
This issue was not explicitly addressed in the judgment.
Issue 18: Whether the petitioners are in fact put up by the petitioner in CP No. 6 of 1983 on the file of this court for his benefit?
This issue was not explicitly addressed in the judgment.
Issue 19: Whether the company petition is bad and not maintainable on the ground that no leave of the court under section 439(8) of the Companies Act was sought and obtained?
This issue was not explicitly addressed in the judgment.
Issue 20: Whether the present petition is bad in view of the pendency of the suit OS No. 1065 of 1984 on the file of the II Additional Judge, City Civil Court, Hyderabad?
This issue was not explicitly addressed in the judgment.
Issue 21: Whether the respondent-company is liable to be wound up under sections 433(e) and 434(1)(a) and section 439(1)(b) of the Indian Companies Act?
The Company Judge found that winding up the company was not necessary as the company was doing well and the business was flourishing. Instead, the Judge ordered the dissolution of the partnership.
Issue 22: To what relief?
The Company Judge ordered the dissolution of the partnership instead of winding up the company, finding it just and equitable under section 44(g) of the Indian Partnership Act.
Conclusion:
The appeal was allowed, and the order of the Company Judge dissolving the partnership was set aside. The Court held that the Company Judge could not have ordered the dissolution of the partnership in a winding-up petition, especially when a suit for dissolution had been dismissed for default and the matter was concluded between the parties. The Court emphasized that the relief sought in the dismissed suit could not be granted in the winding-up petition.
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2007 (2) TMI 321
Issues Involved:
The legality and validity of notices issued by the appellant-Bank under the SARFAESI Act. Compliance with section 13(3A) of the SARFAESI Act.
Legality and Validity of Notices under SARFAESI Act:
The appellant had sanctioned financial assistance to the respondent for setting up a new unit. Due to default in repayment, the appellant filed a recovery application before DRT and also took possession of secured assets u/s 13(4) of the SARFAESI Act. The Writ Petition challenged the notices issued under sections 13(2) and 13(4) as contrary to the SARFAESI Act. The Single Judge held the notices illegal based on a previous case. However, the High Court ruled that withdrawal of the application before DRT is not mandatory u/s the SARFAESI Act, citing a Supreme Court decision. The appellant was allowed to proceed under the SARFAESI Act without withdrawing the DRT application.
Compliance with Section 13(3A) of the SARFAESI Act:
The respondent claimed non-compliance with section 13(3A) of the SARFAESI Act. The respondent argued that the possession notice u/s 13(4) was issued before communicating the reasons for non-acceptance of objections raised. The High Court explained that section 13(3A) requires the secured creditor to consider objections raised by the borrower and communicate reasons for non-acceptance within a week. The Court emphasized the importance of transparency and fair play in implementing the SARFAESI Act. It was concluded that the appellant had substantially complied with section 13(3A) requirements. The Court dismissed the Writ Petition, allowing the appellant to proceed under the SARFAESI Act, with the borrower retaining the right to approach the DRT under section 17 if desired.
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2007 (2) TMI 320
Issues Involved:
1. Cause of action and territorial jurisdiction.
2. Jurisdiction of civil court vs. Company Law Board.
3. Allegations of fraud and mismanagement.
4. Applicability of specific legal provisions and precedents.
Summary:
1. Cause of Action and Territorial Jurisdiction:
The revision petitioner/first defendant filed an application u/s Order 7, Rule 11 of the CPC to reject the plaint on the grounds of no cause of action and lack of territorial jurisdiction. The respondent/plaintiff argued that the entire cause of action occurred in Chennai, making the suit maintainable in the City Civil Court, Chennai. The trial court found that there was a cause of action for the plaintiff to file the suit in Chennai, as the plaintiff was removed from the directorship by a resolution passed in Chennai.
2. Jurisdiction of Civil Court vs. Company Law Board:
The revision petitioner contended that the civil court has no jurisdiction due to the provisions of sections 111, 397, and 398 of the Companies Act, 1956, which provide remedies for issues like mismanagement and oppression. The petitioner argued that the Company Law Board and the High Court have exclusive jurisdiction over such matters. However, the respondent/plaintiff maintained that civil courts have jurisdiction to try all suits of civil nature unless expressly barred, as per section 9 of the CPC. The trial court held that the civil court has jurisdiction in this case.
3. Allegations of Fraud and Mismanagement:
The respondent/plaintiff alleged fraudulent removal from the board of directors, fraudulent filing of Form 32, and unauthorized transfer of shares by the first defendant. The plaintiff sought a declaration that the resolutions passed in the annual general meeting were illegal, void, and inoperative. The trial court found that these allegations of fraud, misrepresentation, and suppression of material facts require adjudication by a civil court.
4. Applicability of Specific Legal Provisions and Precedents:
The revision petitioner cited various judgments to support their contention that the civil court's jurisdiction is ousted. However, the trial court noted that many of these decisions were from other High Courts and earlier in time compared to the Supreme Court judgments cited by the respondent/plaintiff. The Supreme Court judgments emphasized that civil courts have jurisdiction unless expressly barred and that issues involving fraud and misrepresentation require civil court adjudication.
Conclusion:
The High Court dismissed the revision petition, affirming the trial court's decision that the civil court has jurisdiction to adjudicate the issues raised in the plaint. The allegations of fraud, misrepresentation, and suppression of material facts necessitate a trial in the civil court. Consequently, the connected miscellaneous petition was also dismissed, with no costs.
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2007 (2) TMI 319
Issues Involved:
1. Whether the petition for winding up of the respondent-company under section 433(e) of the Companies Act, 1956 is maintainable.
2. Whether the bills of exchange in question are accommodation bills without consideration.
3. Whether the petitioner-bank is a "holder" or "holder in due course" under the Negotiable Instruments Act, 1881.
4. Whether the respondent-company has a bona fide and substantial defense against the petitioner-bank's claim.
5. Whether the pending arbitration between the respondent-company and RR Group affects the petitioner-bank's claim.
6. Whether the respondent-company's conduct indicates a bona fide dispute or an attempt to evade liability.
Detailed Analysis:
1. Maintainability of the Petition for Winding Up:
The petitioner-bank filed the petition under section 433(e) of the Companies Act, 1956, seeking winding up of the respondent-company due to its inability to pay debts. It was argued that winding up petitions should not be used as a means to recover debt unless the debt is undisputed and the defense is not bona fide. The court noted that if the debt is undisputed and the defense is not genuine, the creditor is entitled to a winding up order.
2. Nature of the Bills of Exchange:
The respondent-company contended that the bills of exchange were merely accommodation bills issued to enable the RR Group to raise finance from the petitioner-bank and were without consideration. The court observed that the company did not dispute the signatures on the bills of exchange and acknowledged that the company was a party to the transaction, thus making it liable as an acceptor. The court found no merit in the company's contention that the bills were without consideration.
3. Status of the Petitioner-Bank as "Holder" or "Holder in Due Course":
The petitioner-bank argued that it was a "holder in due course" under the Negotiable Instruments Act, 1881, and thus entitled to recover the amount from the respondent-company. The court examined the definitions under sections 8 and 9 of the N.I. Act and concluded that the petitioner-bank, being in possession of the bills of exchange, was indeed a holder in due course and entitled to enforce the payment.
4. Bona Fide and Substantial Defense:
The court evaluated whether the respondent-company had a bona fide and substantial defense. The respondent's defense was primarily that the bills were accommodation bills and no goods were actually supplied. The court found this defense to be frivolous and an afterthought, noting that the company had acknowledged its liability by issuing cheques, which were dishonored. The court concluded that the company's defense was not bona fide.
5. Impact of Pending Arbitration:
The respondent-company argued that the dispute between it and the RR Group was pending arbitration, which should affect the petitioner-bank's claim. The court held that the arbitration dispute was irrelevant to the bank's claim as the bank was not a party to the arbitration. The bank, as a holder in due course, was entitled to recover its dues from the acceptor of the bills of exchange.
6. Respondent-Company's Conduct:
The court scrutinized the conduct of the respondent-company, noting that it had asked the petitioner-bank not to present the cheques for encashment and had assured payment. The court found that the company's conduct indicated an attempt to evade liability and dispose of its properties, supporting the petitioner's claim for interim relief.
Conclusion:
The court admitted the petition, ordered it to be advertised, and granted interim relief by restraining the respondent-company from disposing of its properties. The operation of the order was stayed for two weeks to allow the respondent-company to seek further legal recourse.
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2007 (2) TMI 318
Issues:
Indictment in two separate prosecutions under the Companies Act for failure to submit balance sheet and annual returns, request for cross-examination of complainant, interpretation of section 621(1A) of the Companies Act.
Analysis:
The petitioners in this case faced indictment in two separate prosecutions under the Companies Act, both filed by the same complainant, the Assistant Registrar of Companies, Kerala. The prosecutions were related to the failure to submit the balance sheet and annual returns. The complainant did not testify personally, but a witness, PW1, was examined on his behalf. The accused claimed they were not in possession of the original documents, which were with the Kerala Financial Corporation. When PW1 was examined, the complainant wanted him to be confronted with certain documents, but PW1 expressed ignorance about them. The petitioners sought the court's permission to cross-examine the complainant to confront PW1 with the copies of the documents in their possession. However, the learned Magistrate did not grant this permission, leading to the filing of petitions challenging these orders.
The counsel for the petitioners argued that without the opportunity to cross-examine the complainant and confront him with the relevant documents, there would be a failure of justice. They believed that the complainant, who was the intended recipient of the documents, would not deny receiving them. In light of these circumstances, it was contended that invoking powers under section 311 of the Code of Criminal Procedure, 1973, to make the complainant available for cross-examination was necessary for a fair trial. The court agreed that in the given facts and circumstances, it was appropriate to allow the petitioners to cross-examine the complainant.
On the other hand, the counsel for the respondent relied on section 621(1A) of the Companies Act, which states that the personal attendance of the complainant may not ordinarily be insisted upon. However, the provision allows for the court to require such attendance in suitable cases during the trial. It was argued that this provision did not justify the Magistrate's decision to deny the petitioners the opportunity to cross-examine the complainant and confront him with the documents.
Ultimately, the Court allowed the Criminal Miscellaneous Petitions, setting aside the impugned orders. The learned Magistrate was directed to summon the complainant and provide the petitioners with the chance to cross-examine him and confront him with the relevant documents. This decision aimed to ensure a fair trial and uphold the principles of natural justice in the proceedings related to the alleged violations of the Companies Act.
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2007 (2) TMI 317
Issues:
Petition for writ of certiorarified mandamus regarding sale notice and duty payment obligations in liquidation scenario.
Analysis:
The petitioner filed a writ petition seeking a writ of certiorarified mandamus to challenge a sale notice issued by the first respondent regarding the removal of goods from a bonded warehouse without settling customs duty, central excise duty, and interest payable by the second respondent. The petitioner argued that the second respondent, a company in liquidation, had imported capital goods with duty exemption but failed to fulfill export obligations, leading to duty payment obligations. The official liquidator, appointed after the company went into liquidation, proposed to sell the goods without incorporating the duty payment requirement in the sale notice. The petitioner relied on legal precedents and contended that the sale should be subject to duty payment. However, the court found that the company court, under the Companies Act, has wide powers to pass orders in the interest of justice and oversee the sale of company assets. The court emphasized that the petitioner's request could be addressed before the company court, which has authority over such matters post liquidation. Citing the inherent powers of the court to prevent abuse of process, the court dismissed the writ petition, suggesting the petitioner seek relief through the company court. The connected miscellaneous petitions were also dismissed, and no costs were awarded.
This judgment delves into the legal intricacies surrounding duty payment obligations in the context of a company in liquidation and the powers of the company court in overseeing the sale of company assets. The court highlighted the broad authority of the company court under the Companies Act to ensure justice and prevent misuse of the legal process. The decision underscores the importance of addressing such matters within the jurisdiction of the company court post liquidation, rather than through a writ petition. The judgment provides a comprehensive analysis of the legal framework governing liquidation scenarios and duty payment obligations, emphasizing the role of the company court in resolving disputes related to the sale of company assets and duty payment requirements.
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2007 (2) TMI 316
Banking matters - Procedure to recover loan - default in making payment of the only one instalment - Held that:- Appeal allowed. We are inclined to accept Mr. Salve’s suggestion and accordingly direct that upon deposit of a sum of Rs. 50,000 only, the bank shall forthwith release to the writ petitioner or her agent the truck bearing registration No. UP-78-AN-1951 which had been seized from the writ petitioner’s possession. The writ petitioner assisted by her agent, will sit with the bank officials for the purpose of reconciling the accounts and in the event it is found that the writ petitioner had not been given credit for certain payments made by her, such payments are to be taken into account and the balance principal amount will then be paid by the writ petitioner respondent to the bank in six equal monthly instalments, the last instalment being for any broken amount, if any.
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2007 (2) TMI 315
Issues:
Petition under sections 391 to 394 of the Companies Act, 1956 for sanctioning the Scheme of Amalgamation between petitioner Company and Transferor-company.
Analysis:
The petitioner company, Aksh Optifibre Limited, sought approval for the Scheme of Amalgamation with Aksh Broadband Limited under sections 391 to 394 of the Companies Act, 1956. The petitioner company was incorporated as a Public Limited Company and shifted its registered office to Rajasthan. The authorized capital, objects, and financial details of the petitioner company were presented in the petition. The Board of Directors approved the amalgamation scheme, and separate meetings were held for equity shareholders, unsecured creditors, and secured creditors to vote on the scheme. The majority of each class approved the scheme, and the transferor company was to file a petition before the Delhi High Court for sanctioning. Notices were issued, and responses from the Regional Director highlighted key aspects such as employee transfer, share capital increase, and pending winding-up petitions against the transferor company. The Bombay Stock Exchange's approval was also noted.
The court considered the principles laid down in Miheer H. Mafatlal v. Mafatlal Industries Ltd. and Hindustan Lever v. State of Maharashtra to assess the scheme. It emphasized compliance with statutory procedures, requisite majority vote, fairness, absence of coercion, and commercial reasonableness. The court reviewed the objections raised by the Regional Director regarding pending winding-up petitions against the transferor company. Photostat copies of orders disposing of two petitions were submitted. The court reiterated that it should ensure compliance with statutes, fair representation, absence of oppression, and reasonableness of the arrangement. The majority's bona fide actions and the scheme's fairness were crucial. The court lacked jurisdiction to review commercial wisdom once these criteria were met. The court found the scheme just, fair, and reasonable, not prejudicial to creditors, and in the shareholders' interest, leading to the sanctioning of the Scheme of Amalgamation.
The court scrutinized the Scheme of Amalgamation, finding it reasonable, lawful, and beneficial to shareholders. Consequently, the petition was allowed, and the Scheme of Amalgamation was sanctioned as per the prayer clauses. Costs were awarded to the Official Liquidator, to be paid by the petitioner within a specified timeframe.
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2007 (2) TMI 314
Issues:
Convening, holding, and conducting meetings of preference and equity shareholders to consider a scheme of arrangement proposed by the company under section 391 of the Companies Act, 1956.
Analysis:
The applicant, Multimetals Limited, filed an application under section 391 of the Companies Act, 1956 seeking directions on convening meetings of preference and equity shareholders to consider a proposed scheme of arrangement. The applicant company was incorporated on 2-8-1962 and had its authorized, issued, subscribed, and paid-up capital detailed in the application. The company's main objects were outlined in the Memorandum of Association, and its latest audited annual accounts were submitted. The company had faced financial challenges in the past, being declared a Sick Industrial Company, but had successfully implemented a revival scheme. To further strengthen its financial position, the company proposed converting preference shares into equity shares, which was approved by the Board of Directors. No pending proceedings under sections 235 to 251 of the Companies Act existed against the company.
The Court, after hearing the applicant's counsel and reviewing the application, ordered the meetings of preference and equity shareholders to be convened and held on specific dates at the company's registered office. The Court directed that advertisements be published at least 21 days before the meetings in specified newspapers, providing details of the scheme of arrangement and proxy forms. Notices, along with necessary documents, were to be sent to shareholders via prepaid post. The applicant's advocates were required to file necessary forms in Court within a specified time for settlement by the Registrar.
The Court appointed a Chairman for the meetings, specifying the remuneration to be paid by the applicant company. The Chairman was tasked with issuing advertisements and sending out meeting notices. The quorum for the meetings was to be as per the provisions of the Companies Act, 1956, with provisions for proxy voting. The value of each shareholder would be determined according to the company's books, with the Chairman having authority in case of disputes. The Chairman was required to report the meeting results to the Court within seven days, verified by affidavit, concluding the disposal of the application.
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2007 (2) TMI 313
Issues Involved:
1. Protection of tenant under the Tamil Nadu Buildings (Lease and Rent Control) Act.
2. Rights of the bank under the SARFAESI Act.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India.
4. Validity of unregistered lease deeds.
5. Conflict between SARFAESI Act and State Rent Control laws.
Issue-wise Detailed Analysis:
1. Protection of tenant under the Tamil Nadu Buildings (Lease and Rent Control) Act:
The petitioner argued that as a tenant in possession of the property under a lease deed, they are protected by the Tamil Nadu Buildings (Lease and Rent Control) Act and cannot be evicted without following the due process outlined in the Act. The petitioner claimed that the lease was initially established in 1986 and renewed in 2003, with rent payments acknowledged by the respondent bank.
2. Rights of the bank under the SARFAESI Act:
The respondent bank invoked the SARFAESI Act to take symbolic possession of the property due to the borrower's failure to repay the loan. The bank argued that under Section 13(4) of the SARFAESI Act, they are entitled to take physical possession of the secured assets, and any transfer of such assets after taking possession shall vest in the transferee all rights as if the transfer was made by the owner. The bank also cited the Supreme Court's ruling in Transcore v. Union of India, which affirmed the bank's right to take possession under the SARFAESI Act.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India:
The respondent contended that the petitioner's remedy lies in approaching the Debt Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act, as held in Mardia Chemicals Ltd. v. Union of India. The High Court's extraordinary jurisdiction under Article 226 should not be invoked in this matter.
4. Validity of unregistered lease deeds:
The respondent challenged the validity of the unregistered lease deeds relied upon by the petitioner, alleging they were sham documents created to defeat the bank's legitimate claim. The bank referenced the Delhi High Court's ruling in Sanjeev Bansal v. Oman International Bank SAOG, which stated that unregistered leases exceeding three years are not protected under Section 65A of the Transfer of Property Act.
5. Conflict between SARFAESI Act and State Rent Control laws:
The court noted that the SARFAESI Act has an overriding effect over other laws, including State Rent Control laws, as held in S. Shameem v. City Police Commissioner. The provisions of the SARFAESI Act effectively nullify the rights of tenants under State Rent Control laws when the secured creditor takes possession under Section 13(4).
Conclusion:
The court dismissed the writ petition, emphasizing that the petitioner should seek remedy through the DRT. The court affirmed that the SARFAESI Act overrides conflicting State laws, and any tenancy created after the mortgage notice under Section 13(13) is null and void. If the petitioner files an application before the DRT within two weeks, the DRT should consider it on its merits without raising objections on the ground of limitation.
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2007 (2) TMI 312
Issues involved:
Interpretation of a writing as a promise to pay within the meaning of section 25(3) of the Contract Act, 1872; acknowledgment of debt vs. promise to discharge debt; authority of the accountant to confirm accounts on behalf of the company.
Analysis:
The judgment revolves around the interpretation of a letter sent by the petitioner to the company, requesting confirmation of a debt owed. The company's defense against a winding-up petition was based on the contention that the writing and endorsement on the letter did not constitute a promise to pay under section 25(3) of the Contract Act, 1872, and that the accountant who confirmed the debt had no authority to do so. The company argued that the word "payable" in the endorsement did not imply a promise to discharge the debt, but merely acknowledged it.
The court delved into legal precedents to determine the significance of the word "payable" in such contexts. Referring to past judgments, the court highlighted that a mere acknowledgment of debt could also amount to a promise to pay under section 25(3) of the Contract Act, 1872. In a similar case cited, a confirmation of accounts was deemed a promise to pay, emphasizing the importance of the language used in such communications.
In the present case, the court noted that the company's accountant had confirmed a lower amount than claimed by the petitioner, indicating a conscious admission of the debt and an implicit promise to pay the confirmed sum. The court dismissed the company's argument regarding the accountant's authority, stating that it is customary for accountants to confirm accounts on behalf of companies. The court emphasized that any issues regarding the accountant's actions should be addressed separately by the company without prejudicing the petitioner.
Ultimately, the court found the company's defense to be unsubstantiated, and admitted the winding-up petition for the principal sum confirmed by the accountant. The court ordered the company to pay the amount with interest within a specified period to avoid further legal action. The judgment highlighted the importance of clear communication in financial dealings and upheld the legal principles governing promises to pay debts.
This detailed analysis of the judgment showcases the court's thorough examination of the legal issues involved and the application of relevant legal principles to reach a decision in the matter.
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2007 (2) TMI 311
Whether for purposes of section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirement of the said section and it is not necessary to specifically state in the complaint that the person accused was incharge of, or responsible for, the conduct of the business of the company?
Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary?
Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be incharge of the company and responsible to the company for conduct of its business could be proceeded against?
Held that:- Appeal dismissed. The High Court has gone into the matter at some length. The High Court found that the resolution by itself did not constitute an offence even assuming that the same bore the signature of Respondent No. 1 (although the genuineness thereof was disputed).
Thus on a plain reading of the averments made in the complaint petition, we are satisfied that the statutory requirements as contemplated under section 141 of the Act were not satisfied.
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2007 (2) TMI 310
Direction should be issued that the appellant is not liable to pay any interest or any penalty - Held that:- Appeal dismissed. We do not see as to how in a case of this nature such a direction can be issued. Appellant herein knew the actual state of affairs. It at all material times was aware of the extent of its entitlement thereto, which was confined to the benefits under the 1989 Scheme. However, despite such knowledge if it had not recovered any tax, it must thank itself therefor.
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2007 (2) TMI 309
Appeal filed by the appellant under section 24(1) of the Karnataka Sales Tax Act, 1957 dismissed - Held that:- Appeal partly allowed. Revisional authority has elaborately discussed the legal and factual position to conclude that the claim made by the assessee-appellant was untenable and not sustainable. In fact, the High Court has also analysed the position in great detail as noted above. We concur with the view expressed by the High Court about the non-acceptability of the claim and levy of tax and penalty. However, so far as the question of quantum of penalty is concerned, it is to be noted that the legitimate amount which was to be collected by the Revenue was not deposited by the assessee- appellant because of the claim at concessional rate of tax. Considering the quantum of tax involved and the period for which the amount was withheld, we are of the view that levy of penalty of rupees five lakhs would suffice. The amount shall be deposited within a period of one month from today if not already done.
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2007 (2) TMI 308
Whether mounting of the body of the auto rickshaw on the chassis thereof would amount to "manufacture" within the meaning of section 2(e-1) of the U. P. Sales Tax Act, 1948?
Held that:- Appeal dismissed. The Tribunal also opined that by mounting auto rickshaw body on the chassis a new product comes into being. However, it had proceeded to hold that both chassis and auto rickshaw being under the same entry no tax would be payable. The Tribunal was not correct in that behalf as it failed to take into consideration the fact that if two articles were purchased by the assessee and the articles it sold were different commodities, purchase tax would be payable therefor as the terms and conditions laid down in form III-A had not been satisfied.
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