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1993 (4) TMI 277
Whether the "cast iron castings" manufactured by the petitioner in that case are "cast iron" within the meaning of item 2(i) of the Third Schedule to the A.P. Act/item (iv)(i) of section 14 of the CST Act?
Held that:- Appeal dismissed. The cast iron castings manufactured by the appellants do not fall within the expression "cast iron" in entry 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act or within section 14(iv)(i) of the Central Sales Tax Act.
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1993 (4) TMI 270
Levy of sales tax on the cane supplies made from areas in Madras State - Held that:- Appeal allowed. The stipulation in the G.O. Ms. No. 2260 cannot also be relied upon by the State of Tamil Nadu for sustaining the levy. A tax can be levied only by a statutory provision. This is not a case where the State of Tamil Nadu is seeking to enforce any agreement between the parties. It was an assessment under the Madras Act. In such a case, the agreement, if any, incorporated in G.O. Ms. No. 2260 is not relevant. In this view of the matter, it is also not necessary to examine the submission of Sri Poti that the State of Tamil Nadu was not competent to impose such a condition under the Sugarcane (Control) Order, 1966.
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1993 (4) TMI 262
Issues Involved:
1. Restraint on the first respondent from granting approval to the third respondent's application under the EHTP Scheme.
2. Alleged violation of the court's interim order by the third respondent.
3. Definition and implication of a joint venture in the context of the case.
4. Lifting of the corporate veil and its relevance to the case.
Detailed Analysis:
1. Restraint on the first respondent from granting approval to the third respondent's application under the EHTP Scheme:
The petitioners sought a writ to restrain the first respondent from approving the third respondent's application to set up a unit under the Electronic Hardware Technology Park Scheme (EHTP Scheme). The petitioners argued that the approval violated an interim court order restraining the third respondent from entering into any joint venture or distributorship agreements with other parties in India. The court noted that the third respondent had applied under the EHTP Scheme to establish a subsidiary in India, which would be a wholly-owned entity, not a joint venture.
2. Alleged violation of the court's interim order by the third respondent:
The petitioners claimed that the third respondent's move to set up a subsidiary in India was in violation of the interim order dated October 15, 1992, which restrained the third respondent from entering into any joint venture or distributorship agreements. The court found that the interim order specifically prohibited joint ventures with third parties, not the establishment of a wholly-owned subsidiary. The court emphasized that the subsidiary would be entirely owned by the third respondent, with no involvement of any other party, thus not constituting a joint venture.
3. Definition and implication of a joint venture in the context of the case:
The court clarified that a joint venture involves the pooling of resources by two different entities. In this case, the proposed Indian subsidiary would be wholly owned by the third respondent, with no other entity involved, thus not meeting the criteria for a joint venture. The court stated, "By no stretch of imagination, can the setting up of the subsidiary company by the third respondent be construed as a joint venture."
4. Lifting of the corporate veil and its relevance to the case:
The court discussed the concept of lifting the corporate veil, referencing the Supreme Court's decision in State of U.P. v. Renusagar Power Co., which allows the corporate veil to be lifted when public interest demands. The court noted that in cases where a subsidiary is wholly owned and controlled by the parent company, the two entities can be treated as one. The court concluded that the subsidiary of the third respondent would not be considered a third party for the purpose of the interim order, and thus the approval for setting up the subsidiary did not violate the court's order.
Conclusion:
The court held that the approval granted by the Government of India for the third respondent to set up a wholly-owned subsidiary under the EHTP Scheme did not infringe the interim order dated October 15, 1992. The petitioners' claim that the subsidiary would constitute a joint venture was rejected, and the court emphasized the importance of the EHTP Scheme in promoting the electronic industry and boosting exports in the national interest. Consequently, the writ petition and the application were dismissed.
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1993 (4) TMI 259
Issues Involved:
1. Whether the appeals under section 483 of the Companies Act, 1956, are maintainable.
2. Whether the orders under appeal are merely procedural and whether they affect the rights of the parties.
Issue-wise Detailed Analysis:
1. Maintainability of Appeals under Section 483 of the Companies Act, 1956:
The primary question before the court was whether the appeals under section 483 of the Companies Act, 1956, are maintainable. The appellants contended that section 483 creates a broad appellate jurisdiction allowing appeals from any judicial order. This argument was supported by referring to the Supreme Court decision in *Shankarlal Aggarwala v. Shankarlal Poddar* [1965] 35 Comp. Cas. 1; AIR 1965 SC 507, where an order confirming the sale of assets was held to be appealable. The Supreme Court had observed that the essence of a judicial proceeding involves discretion exercised on objective considerations, thus making it a judicial decision. The appellants argued that orders refusing to admit documents in evidence or disallowing reference to notes during testimony are discretionary judicial orders and should be appealable.
2. Procedural Nature of Orders and Impact on Rights of Parties:
The court examined whether the orders under appeal were merely procedural and whether they affected the rights of the parties. Referring to the Supreme Court's decision in *Central Bank of India Ltd. v. Gokal Chand*, AIR 1967 SC 799, the court noted that not all interlocutory orders are appealable. The Supreme Court had held that orders which are merely procedural and do not affect the rights or liabilities of the parties are not appealable. The court emphasized that procedural orders, such as those regarding the summoning of witnesses, discovery, production and inspection of documents, and admissibility of documents, are steps towards final adjudication and do not affect any right or liability of the parties. Such orders can be challenged in an appeal against the final order if they materially affect the rights and liabilities of the parties.
The court also discussed the decision in *Vijaya Bank Employees Housing Co-operative Society Ltd. v. C. Srinivasa Raju*, ILR 1990 Kar 2451, where it was observed that an interlocutory order can be considered a 'case decided' if it adjudicates some right or obligation of the parties. However, the court distinguished this case on the ground that it dealt with the scope of section 115 of the Code of Civil Procedure.
In *Bant Singh Gill v. Shanti Devi*, AIR 1967 SC 1360, the Supreme Court held that an interlocutory order regarding the abatement of a suit was not immediately appealable and could be considered in an appeal from the final order. The court reiterated that the rights and liabilities of parties are normally decided by the final order, and interlocutory orders rarely affect these rights.
The court concluded that the appeals were not maintainable as the orders under appeal were procedural and did not affect the rights or liabilities of the parties. The court dismissed the appeals without expressing any opinion on the merits of the questions raised.
Conclusion:
The High Court of Karnataka dismissed the appeals, holding that the orders under appeal were procedural and did not affect the rights or liabilities of the parties, making the appeals non-maintainable under section 483 of the Companies Act, 1956. The court emphasized that procedural orders can be challenged in an appeal against the final order if they materially affect the rights and liabilities of the parties.
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1993 (4) TMI 248
Issues:
- Claim for price of goods sold and delivered
- Novation of contract and liability for payment
- Maintainability of winding-up petition when a civil suit is pending
Claim for price of goods sold and delivered:
The petitioner filed a winding-up petition against the respondent based on unpaid dues for coal supplied. The respondent had financial difficulties, leading to the closure of its factory. Despite assurances and promises to pay, no payment was made. The respondent neither paid for the coal nor returned it to the petitioner. The respondent's defense of novation of contract due to an offer to return the goods was rejected by the court. The court noted that the respondent's liability to pay remained, especially as the respondent failed to return the goods and the plea of novation was raised belatedly.
Novation of contract and liability for payment:
The respondent argued that an offer to return the goods and its acceptance constituted novation of the contract, absolving them of payment liability. However, the court found that the offer to return the goods was a concession to the respondent, which became unenforceable due to external factors beyond their control. The court emphasized that the respondent's repeated assurances to pay, even after failing to return the goods, indicated their continued liability. The court dismissed the novation defense raised by the respondent.
Maintainability of winding-up petition when a civil suit is pending:
The respondent contended that the winding-up petition was not maintainable as a civil suit had been filed for the recovery of the amount. Citing legal precedents, the court held that the pendency of a civil suit did not bar the continuation of winding-up proceedings. The court highlighted that a winding-up petition serves the interests of all stakeholders, and the mere filing of a civil suit does not automatically stay the winding-up process. The court relied on previous judgments to support the decision that the winding-up petition could proceed despite the existence of a civil suit.
In conclusion, the court admitted the winding-up petition, noting the respondent's inability to pay its debts, the prolonged closure of its factory, and the repeated acknowledgments of the debt by the respondent. A citation was ordered to be published, with a provision for avoiding publication if the respondent paid the amount within a specified period.
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1993 (4) TMI 247
Issues:
1. Maintainability of the petition under sections 512 and 518 read with sections 467 and 468 of the Companies Act, 1956.
2. Whether the court can issue directions against a debtor of a company for payment under section 468 of the Act.
3. Interpretation of the term "contributory" in the context of section 468 and its application to debtors of a company.
4. Comparison of provisions under the Companies Act, 1956, with the Indian Companies Act, 1913, regarding court's powers to direct payments to the liquidator.
5. Analysis of relevant case laws on the jurisdiction of the court to pass orders against debtors of a company for payment.
Analysis:
The judgment addressed the issue of the maintainability of a petition under sections 512 and 518 read with sections 467 and 468 of the Companies Act, 1956. The voluntary liquidator sought a decree against respondents for an outstanding loan amount. The respondents contended that the claim was time-barred and the petition was not maintainable. The court examined the powers of the liquidator in voluntary winding up under section 512, which authorizes the liquidator to institute or defend legal proceedings. However, the court noted that seeking directions against a debtor for payment through a petition may not be permissible under the Act.
The judgment delved into the interpretation of section 468 of the Act concerning the court's authority to require payments from individuals associated with the company. It highlighted that section 468 empowers the court to demand payments from specific categories of individuals, excluding debtors. The court emphasized that a debtor does not fall within the scope of persons against whom the court can issue directives for payment to the liquidator. The ruling cited precedents to support this interpretation, emphasizing that debt recovery from company debtors typically requires a separate legal action rather than a summary petition.
Furthermore, the judgment analyzed the term "contributory" in the context of section 468 and its alignment with the provisions of the Indian Companies Act, 1913. It referenced past cases to illustrate that the court's jurisdiction to direct payments to the liquidator is limited to certain categories of individuals specified in the law. The court's analysis underscored that the Act does not provide for summary proceedings against company debtors for debt recovery, necessitating the initiation of a formal lawsuit for such purposes.
Moreover, the judgment compared the provisions of the Companies Act, 1956, with the Indian Companies Act, 1913, regarding the court's powers to direct payments to the liquidator. It highlighted that the Act delineates specific categories of individuals from whom the court can demand payments for the benefit of the company. The court's scrutiny of past legal frameworks emphasized the limitations on the court's authority to order payments to the liquidator, particularly concerning debt recovery from company debtors.
In conclusion, the judgment determined that the petition seeking directions against the respondents, who were debtors of the company, was not maintainable under the Act. The court emphasized that the petition did not align with the statutory provisions governing the court's authority to issue directives for payments to the liquidator. It reiterated that the authorization for the liquidator to initiate legal proceedings had already been granted, making the petition redundant for the purpose of seeking debt recovery from company debtors. Consequently, the court ruled that the petition was not maintainable and should be rejected.
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1993 (4) TMI 240
Issues Involved:
1. Validity of Board Meetings and Resolutions
2. Appointment of Additional Directors
3. Transfer of Shares
4. Allegations of Fraud and Conspiracy
5. Requests for Injunctions and Interim Reliefs
Detailed Analysis:
1. Validity of Board Meetings and Resolutions:
The plaintiff challenged the validity of board meetings held on January 5, 1991, and January 23, 1991, alleging no notice was given, and the meetings were conducted clandestinely. The resolutions passed in these meetings were filed with the Registrar of Companies through Sundaram Clayton Limited, allegedly to suppress the fact of illegal share transfer from the plaintiff and his mother.
The court found that the plaintiff had participated in several subsequent board meetings without objecting to the presence of the newly appointed directors. The plaintiff's participation in these meetings and the lack of immediate challenge to the resolutions indicated acquiescence. The court held that the plaintiff could not claim equity in his favor due to his active participation in subsequent meetings.
2. Appointment of Additional Directors:
The plaintiff sought to restrain defendants Nos. 7 to 12 from exercising powers as directors, alleging their appointments were part of a fraudulent conspiracy. The court noted that the plaintiff had attended multiple board meetings where these directors were present and did not object to their appointments or presence.
The court emphasized the principle of corporate democracy, stating it is not for the court to interfere with the day-to-day management of a company unless the board's decisions are ultra vires the Act or the company's articles of association. The court found no prima facie evidence of fraud in the appointment of the additional directors and dismissed the applications for injunctions.
3. Transfer of Shares:
The plaintiff challenged the transfer of shares, claiming they were held in trust and not intended to be transferred. The court noted that the plaintiff had executed transfer deeds and sent them to RNG, acknowledging a loss of confidence from RNG. The court found no evidence to support the plaintiff's claim that the transfers were part of a conspiracy.
The court held that the plaintiff's participation in the board meetings and his acknowledgment of the transfer deeds indicated that the transfers were valid. The court dismissed the plaintiff's application for the restoration of powers vested in him.
4. Allegations of Fraud and Conspiracy:
The plaintiff alleged a conspiracy to divest him of his shares and management powers. The court found that the plaintiff's claims were not supported by the evidence. The court noted that the plaintiff had participated in the appointment of the additional directors and had not objected to their presence in subsequent meetings.
The court held that the allegations of fraud and conspiracy could only be established after a full trial and could not be presumed at the interlocutory stage. The court dismissed the applications for injunctions based on these allegations.
5. Requests for Injunctions and Interim Reliefs:
The plaintiff filed multiple applications seeking temporary injunctions to restrain the defendants from exercising their powers as directors and from interfering with the plaintiff's powers as joint managing director. The court found that the plaintiff had not made out a prima facie case for the grant of injunctions and that the balance of convenience was not in his favor.
The court emphasized that it is not for the court to manage the affairs of the company and that the board of directors is entitled to exercise its powers unless their decisions are ultra vires the Act or the company's articles of association. The court dismissed all the applications for injunctions and interim reliefs.
Conclusion:
The court dismissed all the applications filed by the plaintiff, holding that there was no prima facie evidence of fraud or conspiracy, and the plaintiff's participation in subsequent board meetings indicated acquiescence. The court emphasized the principle of corporate democracy and the board's authority to manage the company's affairs.
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1993 (4) TMI 239
Issues Involved:
1. Legality of the appointment of Defendant No. 2 as an additional director.
2. Validity of the notice period for convening the eighth and ninth annual general meetings.
3. Compliance with the provisions of Section 217(3) of the Companies Act.
4. Adequacy of the explanatory statement under Section 173 of the Companies Act.
5. Authority to convene the eighth annual general meeting beyond the statutory period.
Issue-wise Detailed Analysis:
1. Legality of the Appointment of Defendant No. 2 as Additional Director:
The plaintiffs argued that the appointment of Defendant No. 2, Santoshkumar Poddar, as an additional director was illegal because he had vacated the office on December 31, 1990, and his reappointment was made with the participation of his brother, Defendant No. 3, in violation of Section 300 of the Companies Act. The court held that the appointment of an additional director does not constitute a contract or arrangement under Section 300 and thus, Defendant No. 3's participation did not invalidate the appointment. Even if the appointment was irregular, Section 290 of the Act and Regulation 80 of Table 'A' validated the acts done by Defendant No. 2 as a director.
2. Validity of the Notice Period for Convening the Eighth and Ninth Annual General Meetings:
The plaintiffs contended that the notice for the meetings was not of 21 clear days as required by Section 171 of the Act, making the meetings and resolutions passed therein invalid. The court found that Section 171 is directory, not mandatory. The plaintiffs did not attend the meetings and did not demonstrate any prejudice due to the shorter notice. The court emphasized that the purpose of the notice period is to give shareholders a reasonable opportunity to participate, and minor deviations that cause no prejudice do not invalidate the proceedings.
3. Compliance with the Provisions of Section 217(3) of the Companies Act:
The plaintiffs argued that the directors' report did not provide sufficient information on reservations or qualifications in the auditors' report, as required by Section 217(3). The court found that the information provided was adequate and that the plaintiffs did not attend the meetings to raise any objections. Therefore, the resolutions adopting the accounts were valid.
4. Adequacy of the Explanatory Statement under Section 173 of the Companies Act:
The plaintiffs claimed that the explanatory statement for a resolution to authorize the board to make loans was misleading and insufficient. The court held that the explanatory statement was adequate and that the plaintiffs' apprehensions about misuse of funds were unfounded. The court noted that the plaintiffs did not attend the meetings to voice their concerns and that the resolutions were passed unanimously.
5. Authority to Convene the Eighth Annual General Meeting Beyond the Statutory Period:
The plaintiffs initially argued that the company had no authority to convene the eighth annual general meeting after the statutory period without an extension. The court found no prohibition in the Act against holding the meeting beyond the statutory period, noting that the only consequence would be a penalty. This contention was not pressed during the arguments.
Conclusion:
The court dismissed the appeals and the suits, finding no merit in the plaintiffs' contentions. The court held that the appointment of Defendant No. 2 was valid, the notice period was sufficient, the directors' report complied with statutory requirements, the explanatory statement was adequate, and the company had the authority to convene the meeting beyond the statutory period. The resolutions passed at the meetings were valid and enforceable. The plaintiffs' application for leave to appeal to the Supreme Court and for continuation of interim relief was also rejected.
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1993 (4) TMI 238
Issues Involved:
1. Validity of the board meeting and resolutions passed on January 5, 1991.
2. Validity of the board meeting and resolutions passed on January 23, 1991.
3. Legitimacy of the transfer of shares discussed in the January 5, 1991, meeting.
4. Powers and functions of the plaintiff as Joint Managing Director.
5. Allegations of clandestine meetings and suppression of facts.
6. Applicability and interpretation of various resolutions dated June 24, 1992, September 5, 1992, and September 13, 1992.
7. Compliance with corporate governance principles and the Companies Act.
8. Allegations of oppression of the minority by the majority.
Detailed Analysis:
1. Validity of the board meeting and resolutions passed on January 5, 1991:
The plaintiff challenged the validity of the board meeting held on January 5, 1991, alleging that no notice was given, which is mandatory under section 286 of the Companies Act. The plaintiff argued that the meeting was conducted clandestinely, and the resolutions passed therein were filed with the Registrar of Companies to suppress the facts from the plaintiff and his mother. The court observed that the plaintiff had participated in subsequent board meetings without questioning the presence of newly appointed directors, thus implicitly accepting their appointments.
2. Validity of the board meeting and resolutions passed on January 23, 1991:
Similar to the January 5, 1991, meeting, the plaintiff alleged that the extraordinary general meeting and board meeting held on January 23, 1991, were invalid due to lack of notice. The court noted that the plaintiff had not raised any objections regarding the presence of new directors in subsequent meetings, which undermined his claims of invalidity.
3. Legitimacy of the transfer of shares discussed in the January 5, 1991, meeting:
The plaintiff contested the transfer of shares discussed in the January 5, 1991, meeting, claiming that 24.32% of shares were held in trust for his brother, Anil Kumar Sonthalia. The court highlighted that the plaintiff had not provided sufficient evidence to support this claim, and the said Anil Kumar Sonthalia was not a party to the proceedings. Furthermore, the sixth defendant had been holding a majority of shares since 1986, and the plaintiff did not hold any shares in the first defendant company.
4. Powers and functions of the plaintiff as Joint Managing Director:
The plaintiff sought to maintain his powers as Joint Managing Director, which were allegedly stripped away through resolutions dated June 24, 1992, September 5, 1992, and September 13, 1992. The court emphasized that the board of directors is entitled to exercise all powers by virtue of section 291 of the Companies Act and the articles of association. It was not within the court's purview to restrict the board's powers unless the decisions were ultra vires the Act or the articles of association.
5. Allegations of clandestine meetings and suppression of facts:
The plaintiff accused the sixth defendant and other directors of conducting clandestine meetings and suppressing facts regarding the illegal share transfer. The court noted that the plaintiff had participated in several board meetings without raising any objections, which weakened his allegations.
6. Applicability and interpretation of various resolutions dated June 24, 1992, September 5, 1992, and September 13, 1992:
The plaintiff argued that the resolutions systematically eliminated his powers as Joint Managing Director. The court found that the resolutions were within the board's authority and that the plaintiff's powers were defined by these resolutions. The court upheld the validity of the resolutions, stating that the plaintiff must exercise his powers in accordance with them.
7. Compliance with corporate governance principles and the Companies Act:
The court stressed the importance of corporate democracy and the board's authority to manage the company's affairs. It was not the court's role to interfere with the board's decisions unless they were in violation of the Companies Act or the articles of association. The resolutions and appointments made by the board were found to be in compliance with corporate governance principles.
8. Allegations of oppression of the minority by the majority:
The plaintiff's claim of oppression by the majority was not substantiated with sufficient evidence. The court suggested that if the plaintiff believed he was being oppressed, he should approach the appropriate forum constituted under the Companies Act.
Conclusion:
The court dismissed Application No. 5998 of 1992 and upheld the validity of the resolutions dated September 5, 1992. The plaintiff was directed to exercise his powers in accordance with these resolutions. Application No. 841 of 1992 was ordered, and no further directions were necessary in Application No. 5129 of 1992. The court emphasized the need for the plaintiff and the sixth defendant to work together to preserve and develop the company, in line with the wishes of the late R.N. Goenka.
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1993 (4) TMI 221
Issues Involved:
1. Maintainability of the appeals by the appellant-bank.
2. Legality of the notice for the annual general meeting issued on the basis of unconfirmed minutes.
3. Validity of the special notices for removal of directors under sections 188 and 190 of the Companies Act.
4. Allegations of mala fide actions by the chairman-cum-managing director in collecting proxies.
5. Contempt of court by the appellant-bank for holding the meeting in breach of an injunction.
6. Legality and sustainability of the impugned orders.
7. Reliefs entitled to the appellant.
Detailed Analysis:
1. Maintainability of the Appeals:
The court held that the appellant-bank is an aggrieved party and the appeals are maintainable. The board of directors acts on behalf of the shareholders, and the company, through its chairman-cum-managing director, has the right to appeal to enforce the resolutions passed by the shareholders. The impugned orders were passed under Order 39, rules 1 and 2 of the Civil Procedure Code, making them appealable under Order 43, rule 1(r) of the Code.
2. Legality of the Notice for the Annual General Meeting:
The court found that the notice for the annual general meeting issued on September 16, 1992, was legal despite the contention that the minutes of the board meeting held on that date were not confirmed in the subsequent meeting on October 3, 1992. The court observed that there is no provision in the Companies Act requiring confirmation of the decisions of a previous meeting in a subsequent meeting. The minutes of the meeting are presumed valid under sections 193, 194, and 195 of the Companies Act.
3. Validity of the Special Notices for Removal of Directors:
The court held that section 284 of the Companies Act, which deals with the removal of directors, is an independent provision and not subject to section 188. The special notices issued by the shareholders were valid as section 284 allows any shareholder to move a resolution for the removal of a director without the need to comply with the provisions of section 188. The court relied on the decision in Gopal Vyas v. Sinclair Hotels and Transportation Ltd. [1990] 68 Comp Cas 516 and the observations in Palmer's Company Law.
4. Allegations of Mala Fide Actions by the Chairman-Cum-Managing Director:
The court found that the trial court's finding of mala fides against the chairman-cum-managing director was not sustainable. The allegations of collecting proxies through branch managers by promising loans were denied by the chairman in his affidavit. The court noted that findings on mala fides, fraud, and bad faith cannot generally be arrived at on mere affidavits and require a trial. The trial court's observations were therefore perverse.
5. Contempt of Court by the Appellant-Bank:
The court rejected the contention that the appellant-bank should not be heard for allegedly holding the annual general meeting in breach of an injunction issued by the Munsiff's Court at Holenarasipur. The court noted that the contempt proceedings must be taken in the same cause of action, and the alleged contempt in a different suit (O.S. No. 204 of 1992) does not affect the present appeals. The court also referred to the stay order on further proceedings in the said suit by the High Court.
6. Legality and Sustainability of the Impugned Orders:
The court found the impugned orders to be illegal and perverse. The trial court's findings regarding prima facie case, balance of convenience, and irreparable injury were not sustainable. The court emphasized that no injunction can be issued to restrain the holding of a general meeting to remove a director and appoint another. The democratic process of the company should not be set at naught by restoring ineligible directors to the board.
7. Reliefs Entitled to the Appellant:
The court allowed the appeals, setting aside the impugned orders passed on November 11, 1992, and November 16, 1992, in Original Suits Nos. 6835 of 1992 and 6843 of 1992 respectively. The applications for interim injunction filed under Order 39, rules 1 and 2 of the Civil Procedure Code were dismissed.
Order:
The Miscellaneous First Appeals Nos. 2385 of 1992 and 2386 of 1992 are allowed. The impugned orders passed on November 11, 1992, and November 16, 1992, by the trial court in Original Suits Nos. 6835 of 1992 and 6843 of 1992 respectively are set aside, and the applications for the interim injunction filed under Order 39, rules 1 and 2 of the Civil Procedure Code stand dismissed.
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1993 (4) TMI 220
Consumer - Definition of - Complainant, a shareholder in TIL, complained about non-receipt of dividend as complainant had not received dividend amounts due to change of address for over three years and said amounts were sent to Registrar of Companies under section 205A of Companies Act after lapse of three years - Opposite parties opposed said complaint on ground that complainant had not applied to TIL in accordance with provisions of section 205B and in Form II of rules made thereunder, and that remedy lay under Companies Act - Whether District Forum having not considered these objections before ordering refund, its order was liable to be set aside and matter remanded back for fresh consideration - Held, yes
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1993 (4) TMI 219
Issues Involved:
1. Whether the employee, whose wife has purchased the premises, can be ordered to restore possession to the company.
2. The nature of the offence under section 630 of the Companies Act, 1956.
3. The implications of the employee's wrongful withholding of the company's property.
4. The legal consequences of the employee's actions and the appropriate punishment.
Detailed Analysis:
1. Ownership and Restoration of Possession:
The court addressed whether an employee, whose wife subsequently purchased the premises, can still be ordered to restore possession to the company, which remains the tenant. It was held that the restoration of possession is a necessary relief under section 630 of the Companies Act, 1956, regardless of the change of ownership. The court found the argument that the accused cannot be ordered to restore possession because the flat now belongs to his wife to be fallacious. As long as the tenancy rights are alive, the company is entitled to an order for restoration of possession.
2. Nature of the Offence:
The court elaborated on the anatomy of the offence under section 630 of the Companies Act, stating that it is a continuing offence. The offence recurs for the period during which it continues, and the penalty should be in consonance with the number of times the offence is repeated. The court emphasized that the offence must be treated as recurring from month to month, and the accused is liable for a fine for every month starting from April 1, 1977, until the date of restoration of possession.
3. Wrongful Withholding of Property:
The court highlighted that the accused retained possession of the premises for over 16 years, depriving the company of its use. It was noted that the accused's actions were brazen and that awarding a fine of Rs. 1,000 in such a case would be irrational. The court pointed out that the accused's argument that he could not be ordered to restore possession because the flat now belongs to his wife was an attempt to take advantage of his own wrong, which is against accepted canons of criminal jurisprudence.
4. Legal Consequences and Punishment:
The court found that the accused wrongfully withheld the company's property and that the offence continues until the property is restored. The court ordered the accused to hand over vacant possession of the premises to the company by September 30, 1993. The court also imposed a fine of Rs. 1,000 per month from April 1, 1977, until the date of restoration of possession. In default of compliance, the accused would be liable to a sentence of two years' rigorous imprisonment.
The court emphasized that section 630 of the Companies Act is intended to provide speedy relief to a company when its property is wrongfully retained or withheld. The court also laid down guidelines to ensure the expeditious disposal of such cases and to prevent the misuse of legal proceedings to delay the restoration of possession.
Conclusion:
The appeal was allowed, the judgment and order of the trial court were set aside, and the accused was convicted under section 630 of the Companies Act. The accused was ordered to pay a fine and directed to restore possession of the premises to the company. In case of default, the accused would face rigorous imprisonment.
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1993 (4) TMI 218
Capital gains - Computation of -Assessment year 1974-75 - Assessee, a non-resident company, maintaining accounts in UK, sold certain shares of Rs. 10 at Rs. 22 per share in India - Cost of acquisition of such shares was Rs. 10 per share - Acquisition and transfer of these shares took place in India and purchase and sale prices were expressed in India - Assessee worked out capital gain by converting cost of acquisition of shares into pound sterling at the then prevailing exchange rate and also by converting sale price of shares into pound sterling at rate prevailing at the time of transfer - According to assessee, difference so arrived in pound sterling converted again into Indian rupee could only be treated as capital gain for purpose of assessment under Act - ITO, however, worked out capital gain by taking actual sale proceeds at rate of Rs. 22 and deducting therefrom cost of these shares at rate of Rs. 10 per share - Whether computation made by ITO was justified - Held, yes - Whether place where assessee resides and currency in which money is deposited in bank for purpose of purchase, etc., are relevant factors for determining income arising from transactions where cost of acquisition and consideration for transfer, etc., are all expressed in Indian rupee - Held, no
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1993 (4) TMI 199
Issues:
1. Stay of further proceedings in a company petition under the Companies Act, 1956.
2. Interpretation of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Effect of registration of a reference with the Board for Industrial and Financial Reconstruction.
4. Application of sections 15, 16, 17, and 22 of the Sick Industrial Companies Act.
5. Legal implications of pending inquiry before the Board on winding up proceedings.
6. Precedents related to the stay of proceedings based on the registration of a reference with the Board.
Analysis:
The judgment deals with an application for a stay of further proceedings in a company petition filed under the Companies Act, 1956. The respondent company, claiming to be a sick industrial company under the Sick Industrial Companies Act, sought a stay based on a reference made to the Board for Industrial and Financial Reconstruction. The petitioner contested the application, arguing that mere registration of the reference does not suspend legal proceedings unless an inquiry is initiated under the Act.
The court examined the provisions of the Sick Industrial Companies Act, emphasizing that the registration of a reference with the Board signifies the commencement of an inquiry. It highlighted the steps required to be taken by the Board under sections 15, 16, and 17 of the Act, leading to the preparation of schemes under section 18. The court clarified that the pendency of an inquiry before the Board, as indicated by the registration of the reference, warrants a stay of winding up proceedings under section 22 of the Act.
Citing relevant case laws, the judgment reinforced the importance of the Board's role in determining the status of a sick industrial company and the consequent impact on legal proceedings. It referred to a previous Division Bench decision that upheld the stay of proceedings based on the registration of a reference with the Board, aligning with the principles established by higher courts.
Ultimately, the court allowed the application for a stay of further proceedings in the company petition, directing the parties to seek the Board's consent to proceed or explore alternative legal remedies. The judgment underscored the mandatory nature of the provisions under the Sick Industrial Companies Act, emphasizing the need to respect the Board's jurisdiction in matters concerning sick industrial units.
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1993 (4) TMI 198
Issues:
Debt owed by respondent to petitioner, dispute over claim, validity of notice of demand, fabrication of documents, change in date on balance confirmation letter, transfer of assets and liabilities, existence of business operations, presumption of inability to pay debts, filing of suit affecting winding up proceedings, entitlement to interest on outstanding balance.
Debt Owed by Respondent to Petitioner:
The petitioner alleged that the respondent owed Rs. 3,15,165 which remained unpaid despite a notice of demand. The respondent disputed the claim, citing a dispute regarding the delivery of goods and the timing of the pharmaceutical manufacturing license. The court found the respondent's arguments without merit, noting inconsistencies in their defense and lack of evidence to support their claims.
Validity of Notice of Demand and Fabrication of Documents:
The respondent raised objections regarding the validity of the notice of demand and alleged fabrication of documents by the petitioner. However, the court dismissed these objections, deeming them mala fide and false based on the evidence presented, including the carbon copy of the disputed letter and lack of substantial proof from the respondent.
Transfer of Assets and Liabilities, Business Operations, and Presumption of Inability to Pay Debts:
The court examined an agreement transferring assets and liabilities from a partnership firm to the respondent-company. It also noted the respondent's cessation of business operations since July 11, 1986. Based on these factors and the respondent's failure to respond to the notice of demand, the court presumed the respondent's inability to pay its debts, favoring the petitioner.
Filing of Suit Affecting Winding Up Proceedings:
The respondent argued that the petitioner's filing of a separate suit for recovery should invalidate the winding-up petition. However, the court disagreed, citing precedent that such a suit could be a precautionary measure to prevent limitation issues. The court found no merit in the respondent's argument and proceeded with the winding-up petition.
Entitlement to Interest on Outstanding Balance:
The petitioner claimed interest on the outstanding balance, but the court found no evidence or agreement supporting this claim. Without sufficient proof, the court could not conclude that the petitioner was entitled to charge interest at the alleged rate.
In conclusion, the court admitted the petition, directing the publication of citations unless the respondent paid the principal amount due within a specified period. The court allowed the petitioner to pursue interest through the civil suit if the principal amount was paid, dismissing the petition accordingly.
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1993 (4) TMI 184
Issues Involved:
1. Repeated filing of applications for rectification of mistakes (ROM) under Section 129B(2) of the Customs Act, 1962.
2. Valuation of imported goods, specifically the Toyota Corona 1600 DLX Sedan.
3. The applicability of a 15% trade discount on the manufacturer's invoice.
4. Inclusion of freight, insurance, and landing charges in the valuation.
5. Whether the ROM application constitutes a review of the Tribunal's final order.
Detailed Analysis:
1. Repeated Filing of ROM Applications:
The appellants repeatedly filed ROM applications following the Tribunal's order dated 15-1-1985, which dismissed their appeals. The Tribunal had dismissed the ROM applications, citing that the appellants were attempting to review the order under the guise of rectification. The Tribunal emphasized that its power under Section 129B(2) of the Customs Act, 1962, did not extend to reviewing its own orders.
2. Valuation of Imported Goods:
The appellants imported a Toyota Corona 1600 DLX Sedan and presented the manufacturer's invoice at the time of assessment. The valuation was done by adding freight and insurance to the FOB value stated in the invoice. The appellants challenged this valuation, claiming a 15% discount should have been applied to the manufacturer's invoice, which was rejected by the Assistant Collector and subsequently upheld by the Collector and the Tribunal.
3. Applicability of a 15% Trade Discount:
The appellants argued that a 15% trade discount should be allowed from the catalogue price, citing a later decision in the case of Prem Kumar v. Collector of Customs, which supported their claim. However, the Tribunal maintained that the manufacturer's invoice did not indicate any discount, and thus, reliance on the invoice was appropriate. The Tribunal rejected the plea for revising the value of the car based on catalogue prices or other documents.
4. Inclusion of Freight, Insurance, and Landing Charges:
The appellants contended that freight and landing charges should not be included in the valuation as the car was personal baggage. They cited sections 12 and 14 of the Customs Act, 1962, and section 4 of the Central Excises & Salt Act, 1944. The Tribunal, however, upheld the inclusion of these charges, stating that the valuation should be assessed in terms of the provisions of the Customs Act.
5. ROM Application as a Review:
The Tribunal emphasized that the ROM application was essentially an attempt to review the final order passed on 15-1-1985. It held that the Tribunal's power under Section 129B(2) did not include reviewing its own orders or adopting a different interpretation. The Tribunal cited several judgments to support this view, including the Supreme Court's decision in the case of Collector of Customs, Bombay v. Swastic Woollens (P) Ltd., which stated that a Tribunal's decision could only be modified by the Supreme Court.
Separate Judgments:
President's Judgment:
The President held that the ROM application was an attempt to review the Tribunal's final order and was not maintainable. He emphasized that the Tribunal's power did not extend to reviewing its own orders and that the appropriate remedy was to file an appeal to the Supreme Court.
Member (Technical) P.C. Jain's Judgment:
Member (Technical) P.C. Jain disagreed with the President, arguing that the appellant's plea was based on the department's circular, which had not been considered by the Tribunal in its final order. He held that the appellant was entitled to a 15% trade discount based on the department's circular and the Tribunal's observations in Prem Kumar's case. He directed the authorities to reassess the duty accordingly.
Majority Decision:
Member (Technical) K.S. Venkataramani concurred with the President's view, stating that the ROM application was an attempt to review the final order on merits. He emphasized that the Tribunal had given a considered finding on the assessable value and that applying the ratio of a subsequent decision would amount to a review, which was not permissible.
Final Order:
In view of the majority decision, the application for rectification of mistake was dismissed.
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1993 (4) TMI 180
The Supreme Court of India held that the Officer conducting regular assessment proceedings should not be influenced by findings in summary proceedings under Section 132. The petitioner can approach the appropriate forum if aggrieved by orders regarding retention of account books. Special leave petitions were dismissed.
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1993 (4) TMI 179
Issues Involved:
1. Import of jumbo rolls of medical X-ray films under OGL.
2. Requirement of COB license under the Industrial Development Regulation Act, 1951.
3. Confiscation and penalty for violation of Import Policy.
4. Validity of interim orders and their impact on import.
5. Quantum of redemption fine and penalty.
Detailed Analysis:
1. Import of Jumbo Rolls of Medical X-ray Films Under OGL:
The appellants, a small-scale industrial unit, imported consignments of jumbo rolls of medical X-ray films and claimed clearance under OGL (Open General License) as per Appendix V, List-8, Part-I, Sl. No. 297 of A.M. 1988-91 Import Policy. The Department contended that the appellants were not actual users since they did not possess a COB (Carry-On-Business) license required under the Industrial Development Regulation Act, 1951, for slitting/confectioning photo-sensitive materials.
2. Requirement of COB License Under the Industrial Development Regulation Act, 1951:
The activity of slitting/confectioning of photo-sensitive materials was taken out of the purview of SSI (Small Scale Industries) and required a DGTD (Director General of Technical Development) license. The appellants argued that as an SSI unit, they were not required to obtain a COB license. The Department, however, did not allow clearance on this ground. The Calcutta High Court initially issued an interim order deeming the appellants as COB license holders, which was later varied to limit the benefit to slitting of photographic papers only.
3. Confiscation and Penalty for Violation of Import Policy:
Show Cause Notices were issued alleging violation of the Import Policy and proposing confiscation and penalty. The adjudicating authority confiscated the goods, allowing redemption on payment of a fine of Rs. 15 lakhs and imposed a penalty of Rs. 5 lakhs in each case. The appellants contended that they acted in conformity with the interim court orders and were actual users as per the Import Policy.
4. Validity of Interim Orders and Their Impact on Import:
The appellants opened Letters of Credit based on the interim order dated 12-1-1989, which allowed them to import the goods. The interim order was later modified on 13-7-1989, limiting the benefit to photographic papers only. The final order of the Calcutta High Court dated 26-6-1991 held that the appellants could not import without the necessary license and vacated all interim orders. The Tribunal found that the import was not in accordance with the law, but the interim order's existence was a factor to consider in determining the redemption fine.
5. Quantum of Redemption Fine and Penalty:
The Tribunal reduced the redemption fine from Rs. 15 lakhs to Rs. 8 lakhs and the penalty from Rs. 5 lakhs to Rs. 1 lakh in each case, considering the interim order's impact and the medical use of the goods. The Tribunal relied on the Supreme Court's decision in Jain Exports Pvt. Ltd. v. Union of India, which emphasized considering extenuating circumstances in determining fines.
Conclusion:
The Tribunal upheld the confiscation of goods and imposition of a penalty but reduced the quantum of redemption fine and penalty, taking into account the interim court orders and the appellants' bona fide actions. The appeals were disposed of accordingly, and the goods were ordered to be released upon payment of the revised redemption fine and penalty, along with applicable duties. The department's cross-objections were disposed of as they did not seek any variation of the impugned orders.
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1993 (4) TMI 178
Issues Involved:
1. Jurisdiction of the Bench to hear the appeal.
2. Eligibility for enhanced money credit under Notification No. 192/87.
3. Applicability of decisions on similar issues.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Bench to Hear the Appeal:
The primary issue is whether the appeal falls within the jurisdiction of the Regional Bench or the Special Bench. The appellant's counsel argued that no question of classification or valuation is involved, thus the appeal should be heard by the Regional Bench. Conversely, the Departmental Representative contended that the appeal involves a question of the rate of duty, necessitating it to be heard by the Special Bench.
The judgment references Section 351(2), which stipulates that appeals involving the determination of any question related to the rate of duty of excise or the value of goods for assessment purposes must be heard by a Special Bench. The majority decision in the case of Collector of Central Excise v. Kashmir Vanaspati (1987) held that appeals regarding exemption notifications fall within the jurisdiction of the Special Bench. However, the minority view argued that such appeals do not involve a question of the rate of duty for assessment purposes.
Ultimately, the judgment decided that the question of eligibility for the benefit of Notification No. 201/79 should be heard by a Special Bench, aligning with the majority view in the Kashmir Vanaspati case. However, the judgment also noted that the minority view, which focuses on the quantum of duty rather than the rate, represents the correct position. The matter was referred to the President of the Tribunal for constituting a Larger Bench to reconsider the jurisdiction issue.
2. Eligibility for Enhanced Money Credit under Notification No. 192/87:
The appellant, Tata Oil Mills Company Ltd., argued that they were entitled to enhanced money credit at the new rate of Rs. 640 per tonne for unutilized stock of Rice Bran Oil as of 1-3-1988, consistent with Notification No. 192/87. The lower authorities had disallowed the additional credit, holding that the rate of credit admissible would be the one prevailing on the date when the inputs were received.
The judgment examined the appellant's contention that the enhanced rate should apply when the balance quantity of inputs was utilized. However, it concluded that this plea was not acceptable, as the rate of money credit should be determined based on the date the inputs were received, not when they were utilized.
3. Applicability of Decisions on Similar Issues:
The judgment referenced several decisions on related issues where credit taken and utilized before the utilization of corresponding inputs could not be reversed by the department, even if subsequent notifications rescinded the credit or exempted the final products from duty. These cases include:
- Amrit Banaspati Co. Ltd. v. Union of India - 1990 (50) E.L.T. 69 (Punjab & Haryana)
- Dipak Vegetable Oil Industries Ltd. v. Union of India - 1991 (52) E.L.T. 222 (Guj.)
- Modern Mills Ltd. v. Union of India - 1991 (55) E.L.T. 148 (Kar.)
- Collector of Central Excise v. Wipro Information Technology - 1988 (33) E.L.T. 172 (Tribunal)
- Sarvottam Ispat (P) Ltd. v. Collector of Central Excise - 1989 (41) E.L.T. 181 (Tribunal)
The judgment concluded that subsequent developments, such as increased rates of money credit introduced by a notification after the receipt of goods, cannot be applied retroactively to the detriment of the manufacturer. The authorities' decision to disallow the enhanced credit was upheld, as the rate prevailing on the date of receipt of inputs was deemed applicable.
Final Order:
The judgment held that the question of eligibility for the benefit of Notification No. 201/79 falls within the jurisdiction of the Special Bench. The Registry was directed to fix a suitable date for hearing the appeal before the Special Bench. The matter was also referred to the President of the Tribunal for constituting a Larger Bench to reconsider the jurisdiction issue in matters relating to credit of duty.
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1993 (4) TMI 177
Issues Involved:
1. Whether the incidence of duty was passed on to any other person.
2. Whether the refund of Rs. 4,01,620/- should be allowed through credit in RG 23A Part II Account.
Summary:
Issue 1: Incidence of Duty Passed On
The Respondents, engaged in manufacturing A.D.V. tyres, paid duty under protest and subsequently filed for refunds. The Assistant Collector, upon re-examination, concluded that the incidence of duty had not been passed on to customers, allowing partial refunds. The Revenue appealed, arguing that the burden of proof u/s 11C of the Central Excises and Salt Act, 1944, was not met by the Respondents. The Tribunal upheld the concurrent findings of the Assistant Collector and Collector (Appeals) that the Respondents did not pass on the duty incidence, citing consistent pricing and market conditions as evidence. The Tribunal emphasized that rightful claimants should not be denied refunds based on conjectures and surmises, referencing the case of Dollar Co., Madras v. Govt. of India, 1986 (24) E.L.T. 245.
Issue 2: Refund Through Credit in RG 23A Part II Account
The Revenue contended that since the A.D.V. tyres became exempt during the relevant period, the Respondents were ineligible for Modvat credit on inputs used in their manufacture. The Tribunal agreed, noting that the Respondents had already reversed part of the credit and were willing to reverse the remaining amount. The Tribunal ordered the reversal of the Modvat credit amounting to Rs. 4,01,620/- u/r 57C of the Central Excises and Salt Act, 1944.
Conclusion:
Appeal No. E/5088/91-C was rejected, and Appeal No. E/5094/91-C was partly allowed regarding the refund through credit in RG 23A Part II Account, directing the Respondents to reverse the remaining Modvat credit. Both appeals were disposed of with consequential relief to the Respondents.
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