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2012 (7) TMI 1116
Issues involved: Appeal against the order of CIT(A) LTU, Chennai deleting the disallowance of social and community welfare expenses by the Revenue.
The judgment pertains to an appeal filed by the Revenue against the order of the CIT(A) LTU, Chennai dated 21.11.2008, specifically challenging the deletion of the disallowance of social and community welfare expenses. The primary contention raised by the Revenue in the appeal was the deletion of these expenses by the CIT(A).
The issue at hand revolves around the expenditure incurred by the assessee on social and community welfare activities. The Tribunal referred to a previous case from the assessment year 1997-98 where a similar issue was addressed. The Tribunal, in line with its decision in the case of DCIT Vs. Madras Refineries Ltd., allowed the expenditure as business expenditure u/s.37 of the Income Tax Act, emphasizing the necessity of such expenses for the smooth functioning of the business.
In the present case, the assessment order revealed that the assessee had incurred various expenses related to social and community welfare activities, including expenses for a Rural Health Centre, Manali School, Sports development, rehabilitation expenses, and expenses in the CBR unit. The Tribunal noted that these expenses were essential for the welfare of the neighbourhood residents affected by the polluting refinery industry, thereby justifying their allowance as business expenditure.
The Tribunal, in alignment with the decision of the coordinate Bench in the assessee's own case, upheld the allowability of the social and community welfare expenses. It emphasized the importance of these expenses in fulfilling the duty towards society and those adversely impacted by the refinery industry. Consequently, the appeal of the Revenue was dismissed for lacking merit.
The judgment was pronounced in an open court during a hearing on Wednesday, the 25th day of July, 2012, in Chennai.
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2012 (7) TMI 1115
Offences punishable u/s 20(b) (ii) (C) of the Narcotic Drugs and Psychotropic Substances Act, 1985 'NDPS Act') for having been found in unlawful possession of 3.5KGs of charas - HELD THAT:- Admittedly, the samples were drawn after breaking small pieces from 08 of the polythene bags which were allegedly kept in a green coloured bag by the appellant in his right hand. IO prepared two samples of 25 grams each after taking a small quantity from each of the slabs. Though the settled law is that if it is not practicable to send the entire quantity then sufficient quantity by way of samples from each of the packets of pieces recovered should be sent for chemical examination. Otherwise, result thereon, may be doubted.
For example, if the 08 packets were allegedly recovered from the appellant and only two packets were having contraband substance and rest 6 packets did not have any contraband; though all may be of the same colour, when we mix the substances of all 8 packets into one or two; then definitely, the result would be of the total quantity and not of the two pieces. The process adopted by the prosecution creates suspicion. In such a situation, as per settled law, the benefit thereof should go in favour of the accused. It does not matter the quantity. Proper procedure has to be followed, without that the results would be negative.
In view of above discussion, instant appeal is allowed. Consequently, impugned judgment dated 18.10.2005 and order on sentence dated 21.10.2005 are hereby set aside. Appellant is acquitted from the charges.
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2012 (7) TMI 1114
Dishonor of Cheque u/s 138 r/w section 142 of the Negotiable Instruments Act, 1881 (Act) - legally enforceable debt or not - issuance of a cheque for repayment of a time barred debt would amount to a written promise to pay the said debt within the meaning of Section 25(3) of the Indian Contract Act, 1872 or not - HELD THAT:- A "Cheque" means "a draft signed by the maker or drawer drawn on a bank, payable on demand and unlimited in negotiability." Therefore, it goes without saying that a cheque is not a promise. It is nothing but an instrument which enables a person in whose favour the same has been drawn to draw money mentioned therein from the concerned bank. Therefore, a cheque cannot be equated with a promise.
It has been pointed out that the respondent/complainant cannot take umbrage u/s 25(3) of the Indian Contract Act, 1872 and further issuance of cheque in question on 01.02.2011 is not a promise. Therefore, viewing from any angle, on the date of issuance of the cheque in question that is, on 01.02.2011, all the debts mentioned in the complaint have become time barred and the cheque in question has not been issued in respect of enforceable debt or other liability. Under the said circumstances, the complaint in question under section 138 r/w section 142 of the Act, is not legally maintainable and this Court by invoking inherent powers can very well quash the entire proceeding in C.C.
In the instant case, it has already been pointed out that at the time of issuance of cheque that is, on 01.02.2011, the debts alleged to have been received by the petitioners have become time barred. Therefore, viewing from any angle, the contention put forth on the side of the petitioners is really having subsisting force.
The learned counsel appearing for the respondent has drawn the attention of the Court to the decision reported in A.R.M. Nizmathullah V. Vaduganathan [2007 (8) TMI 808 - MADRAS HIGH COURT], held that "the cheque in question has been issued in view of the fact that the debtor has acknowledged his liability. Under the said circumstances, he should not be entitled to claim that the debt has become barred by limitation."
It has already been pointed out that for invoking Section 25(3) of the Indian Contract Act, 1872 there must be a separate and distinct promise. Unless a separate and distinct promise, novation of contract does not arise. In the instant case, no such distinct or separate promise has been in existence in writing between the parties and therefore, viewing from any angle, the contention put forth on the side of the respondent/complainant does not hold good.
In fine, this petition is allowed and the proceeding in C.C pending on the file of the Judicial Magistrate Court, Musiri is quashed. Connected Miscellaneous Petitions are closed.
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2012 (7) TMI 1113
Issues Involved:
1. Whether transport subsidy received by the assessees is to be considered as capital receipt or revenue receipt.
2. Whether power subsidy received by the assessee is of capital or revenue nature.
3. Whether pioneer state subsidy received by the assessee is of capital or revenue nature.
4. Disallowance of depreciation claimed due to the application of section 115JA of the IT Act.
5. Charging of interest u/s 234B and 234C before adjustment of MAT credit available u/s 115JA.
Summary:
1. Transport Subsidy:
The primary issue was whether the transport subsidy received by the assessees should be considered as a capital receipt or a revenue receipt. The learned DR argued that the transport subsidy, given under the Transport Subsidy Scheme, 1971, should be considered as a revenue receipt based on the precedents set by the Supreme Court in cases such as Sahney Steel & Press Works Ltd. v. CIT and CIT v. Rajaram Maize Products Ltd. The subsidy was given to assist the assessee in carrying out business operations after commencement of production, making it a revenue receipt. The learned CIT(A), however, considered the subsidy as a capital receipt, emphasizing the purpose of promoting industrial development in backward areas. The Tribunal, after considering various precedents and the purpose of the subsidy, concluded that the transport subsidy should be treated as a revenue receipt and taxable in the hands of the assessee.
2. Power Subsidy:
The power subsidy received by the assessee was also considered in a similar light to the transport subsidy. It was given to reduce the power cost after the commencement of business and was not for establishing a new business or substantially increasing production capacity. Thus, the power subsidy was deemed a revenue receipt and taxable accordingly.
3. Pioneer State Subsidy:
The pioneer state subsidy was provided for establishing new industries or for expansion, modernization, and diversification of existing industries. Since this subsidy was aimed at fresh investment and establishing new industries, it was considered a capital receipt and not taxable as revenue.
4. Disallowance of Depreciation:
The assessee's cross-objection regarding the disallowance of depreciation due to the application of section 115JA of the IT Act was not pressed and thus dismissed for non-prosecution.
5. Charging of Interest u/s 234B and 234C:
The Tribunal, relying on the Supreme Court's decision in CIT v. Kwality Biscuits Ltd., held that interest under sections 234B and 234C cannot be levied while determining income under section 115JB. Thus, the cross-objection of the assessee on this ground was allowed.
Conclusion:
The Tribunal concluded that the transport and power subsidies are revenue receipts and taxable, while the pioneer state subsidy is a capital receipt and not taxable. The appeals were disposed of accordingly, with the revenue's appeals partly allowed and the assessee's cross-objections partly allowed.
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2012 (7) TMI 1112
Issues involved:
The appeal challenges the order passed u/s 263 of the Income Tax Act, 1961 regarding the disallowance of belated TDS payment.
Summary:
Issue 1: Validity of Notice u/s 263
The CIT issued a notice u/s 263 based on belated TDS payment. The assessee argued that the notice was void as per the decision of the Hon'ble Calcutta High Court, which held that section 40(a)(ia) has retrospective operation even if TDS is paid before the due date. The AO's order was in line with this decision, and the Tribunal also supported this view in a previous case.
Issue 2: Merits of Disallowance u/s 40(a)(ia)
The CIT sought to disallow the belated TDS payment under section 40(a)(ia). However, the Tribunal, citing the Calcutta High Court's decision, ruled that payments made before the due date of filing the return are not subject to disallowance under this section. The Tribunal favored following the High Court's judgment over a conflicting decision by the Mumbai Special Bench.
Decision:
The Tribunal found no error in the AO's order and canceled the CIT's order u/s 263. The appeal was allowed in favor of the assessee. The order was pronounced on 13-07-2012.
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2012 (7) TMI 1111
Issues Involved: Challenge to Tribunal orders regarding penalty for tax evasion and input tax credit on suppressed purchases.
Summary:
1. The assessee, engaged in hardware business, challenged penalty orders for tax evasion. Inspection revealed sales and purchase suppression, leading to penalty imposition u/s 67 of Kerala VAT Act. Appellate authorities modified penalties but upheld suppression findings. Assessee's request for input tax credit on suppressed purchases was rejected. Tribunal reduced penalty to 1.5 times tax evaded.
2. Alleged Unaccounted Sales: Tribunal found estimated unaccounted sales based on parallel accounts. No actual sales reflection noted.
3. Purchase Suppression: Tribunal confirmed purchase suppression despite appellant's contentions. Repetition in estimation denied. Apportionment between 4% and 12.5% items allowed by first Appellate Authority.
4. Input Tax Credit: Assessee sought credit for suppressed purchases with evidence of tax collection. Court cited precedent denying credit for unrecorded purchases.
5. Penalty Imposition: Tribunal upheld penalty at 1.5 times tax evaded. Court modified penalty to actual tax amount due to circumstances of the case.
Conclusion: Court declined to address questions of law as they were factual issues. Confirmed lower authorities' findings on suppression and penalty, but modified penalty amount. Input tax credit denied based on unrecorded purchases.
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2012 (7) TMI 1110
Unexplained Cash Credits u/s 68 - The assessee claimed benefits u/s 80HHC for export sale. The AO declared those sales as bogus and therefore, denied such benefits - HELD THAT- Decision made by the tribunal is upheld, where it was observed that when the assessee had already offered sales realisation and such income is accepted by the AO to be the income of the assessee, addition of the same amount once again u/s 68 would tantamount to double taxation of the same income.
CIT not only deleted addition u/s 68, but also directed that the assessee shall be entitled to deduction u/s 80HHC for such disputed amount also. Tribunal didn't address that issue. However, assessee clarified that the assessee does not claim any deduction u/s 80HHC to the extent of such disputed amount. He further submitted that diminution of his eligibility for deduction u/s 80HHC would have no bearing on the assessee's ultimate tax liability. Thus, all tax appeal dismissed, subject to clarification given by Assessee - Decision in Favour of Assessee.
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2012 (7) TMI 1109
Issues Involved:
1. Allegations of oppression and mismanagement u/s 397-398 of the Companies Act, 1956.
2. Reduction of petitioner's shareholding.
3. Issuance of additional shares without proper notice.
4. Alleged illegal appointment of directors.
5. Continuous acts of oppression and mismanagement.
6. Allegations of limitation and non-joinder of necessary parties.
7. Conduct of the petitioners and respondents.
Summary:
1. Allegations of oppression and mismanagement u/s 397-398 of the Companies Act, 1956:
The petitioner alleged oppression and mismanagement by the respondents in the R-1-company, Metallurgical Laboratories (P.) Ltd., claiming her shareholding was reduced from 28.43% to 17.53% due to the respondents allotting 1,592 shares to themselves. The petitioner contended that contradictory reasons were given for the capital increase and no proper notice was given to other members or directors.
2. Reduction of petitioner's shareholding:
The petitioner's shareholding was reduced due to the respondents allegedly allotting shares to themselves without proper notice or resolution. The petitioner argued that the respondents acted dishonestly and with malafides, and the share capital increase was intended to convert majority shareholders into minority shareholders.
3. Issuance of additional shares without proper notice:
The petitioner contended that no notice of the meeting on 8th July 2008 was issued to the director, Mrs. Suhasini Kurkure, and the letter conveying the minutes was sent late, giving unreasonably short time for the petitioner to exercise her rights. The respondents allotted the shares to themselves without waiting for the petitioner's response, which was a pre-planned act.
4. Alleged illegal appointment of directors:
The petitioner argued that the appointment of Mr. Aseem R Wagle as director was illegal due to lack of quorum in the meetings held on 8th August 2007 and 14th August 2007. The respondents failed to provide any records showing Mrs. Suhasini Kurkure's attendance at these meetings, making the appointment and subsequent acts by Mr. Aseem R Wagle illegal.
5. Continuous acts of oppression and mismanagement:
The petitioner alleged that the respondents continued their acts of oppression and mismanagement by removing company files, data, and computers without informing anyone, and failing to prepare and present annual accounts and directors' reports for several years. The petitioner also argued that the acts of oppression and mismanagement were continuous and ongoing.
6. Allegations of limitation and non-joinder of necessary parties:
The respondents argued that the petition was barred by limitation as the petitioner learned about the share issuance in August 2009 but did not take action until February 2011. The respondents also contended that the petition was not maintainable due to non-joinder of necessary parties, as two separate petitions were filed by different petitioners alleging the same causes without joining each other.
7. Conduct of the petitioners and respondents:
The respondents argued that the petitioner's conduct was prejudicial to the company's interests, pointing out that the petitioner and Mrs. Suhasini Kurkure had filed independent petitions and taken contradictory stands. The respondents also highlighted the petitioner's alleged anti-company activities and involvement in various litigations against the company and its directors.
Conclusion:
The Board found that the petitioner failed to controvert the respondents' contentions and that the petition was not maintainable due to non-joinder of necessary parties and the petitioner's prejudicial conduct. However, to do substantial justice, the Board allowed the petitioner to move out of the R-1 company on receipt of fair value for her shares, amounting to 28.43%, based on a valuation report as of 31st March 2011. The respondents were required to buy her shares at the ascertained price within four weeks of receiving the valuation report. The petition was disposed of in these terms, with all interim orders vacated and no orders as to cost.
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2012 (7) TMI 1108
Maintainability of plaint - maintainability of the application questioned on the ground that once the court is seized of an application filed by him under Order VII Rule 11 CPC - The trial Court allowed the application of the appellant/defendant No.1 filed under Order VII Rule 11 CPC on the ground that the plaint was barred under the provisions of Order IX Rules 8 & 9 CPC and Order XXIII Rule 1 (3) & 4 (b) of CPC. The said order of the trial Court was set aside by the first appellate Court on the ground that the trial Court had taken the pleas from the written statement of the defendant which is not permissible under Order VII Rule 11 CPC and the High Court in the second appeal confirmed the judgment of the first appellate Court.
The trial Court, suit which was dismissed for default had been restored by the trial Court even at the time of filing of the application by the defendant under Order VII Rule 11 CPC and it is also brought to our notice that the said proceedings are going on. In view of the same, the provisions of Order IX Rules 8 and 9 CPC are not applicable to the said suit. Even otherwise, the relief sought in the suit (which was earlier dismissed for default) and in the present suit are with regard to different properties. For the same reasons, the provisions of Order XXIII Rule 1 (3) & 4 (b) of CPC are not applicable.
HELD THAT:- the High Court is fully justified in confirming the decision of the appellate Court remitting the matter to the trial Court for consideration of all the issues. In view of the fact that the suit is pending from 2002, we direct the trial Court to decide the suit in its entirety considering all the issues, after affording adequate opportunity to both the parties, and dispose of the same within a period of six months from the date of receipt of copy of this judgment.
The civil appeal is dismissed with the above direction. No order as to costs.
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2012 (7) TMI 1107
Remand in favour of the investigating agency, without seeking any specific prayer challenging the remand orders - HELD THAT:- When the accused appellant in the instant matter had already been enlarged on bail by the High Court, it was all the more essential and judicial duty of the Judicial Magistrate to ensure and ascertain as to why the appellant was required to be taken into police custody/police remand for conducting further investigation specially when revival of the investigation was done not even at the instance of the complainant but by a third person, namely, Sri Parmar whose locus-standi for revival of the investigation is itself not clear. We find sufficient force in the submission advanced on behalf of the appellants that the plea for grant of police remand should be an exception and not the rule and the investigating agency ought to advance strong reasons seeking police remand for further investigation specially in a matter where the alleged accused had been enlarged on bail and the dispute had practically come to an end when the complainant had arrived at a compromise with the accused persons and subsequently withdrew the complaint; yet the investigation was revived at the instance of a stranger, namely, Randhirsing Deepsing Parmar who admittedly is a third party unconnected with the dispute and is alleged to have demanded money from the appellants by taking undue interest in the matter and getting the investigation revived without the consent of the complainant who herself had entered into a compromise with the appellant and had not sought revival of the complaint.
Be that as it may, the fact remains that the learned Magistrate as also the High Court appears to have adopted a casual or a mechanical approach permitting police remand of the appellants without scrutinizing the reasons ignoring the fact that the appellants had already been enlarged on bail by the High Court and the dispute with the complainant Surjaben who had lodged the complaint had already been settled. Thus, the existing facts and circumstance prima facie were clearly not so grave or extraordinary justifying police remand which could have been overlooked by the High Court even though it was for three days only as it was bound to have ramification not only affecting the liberty of the person who was already granted bail but also the magistrate nullifying the order of the High Court granting bail even if it was for a period of three days only.
We are of the considered opinion that the High Court as also the Judicial Magistrate were not legally justified in permitting the police remand of the appellants even for three days in the wake of the existing facts and features of the matter narrated hereinbefore. Consequently, we set aside the impugned order passed by the High Court as also the order dated 31.3.2011 passed by the Principal Civil Judge and Judicial Magistrate First Class, Valod permitting police remand of the appellants and thus allow this appeal.
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2012 (7) TMI 1106
Issues involved: Four appeals filed by the assessee against separate orders of CIT(A) for assessment years 2001-02, 2002-03, 2003-04, and 2004-05.
Addition on account of share capital and unexplained loans:
The main additions in this case pertain to share capital and loans received by the assessee. The assessee argued that the share capital and loans were received from its holding company through proper banking channels, supported by audited balance sheets, tax residency certificate, and incorporation particulars. It was contended that no addition under section 68 of the Act was justified as the onus had been discharged during the assessment proceedings. The assessee also highlighted that the same amount was taxed substantively in another individual's hands, emphasizing that the nature of the amount and the explanation remained consistent. The Tribunal acknowledged the similarity in facts and circumstances with another case and set aside the issues for fresh consideration by the Assessing Officer.
Disallowances on ad hoc basis:
The assessee contended that disallowances were made on an ad hoc basis without proper consideration of the explanations provided and previous ITAT judgments. Given the Tribunal's decision to remand the main issues for fresh assessment, it was deemed appropriate to also send the remaining grounds back to the Assessing Officer for reconsideration in light of the assessee's explanations and the ITAT order.
Conclusion:
The Tribunal allowed all the appeals filed by the assessee for statistical purposes, directing a fresh assessment by the Assessing Officer on the main issues of share capital and loans, as well as a reevaluation of the remaining grounds considering the explanations provided by the assessee and previous judicial decisions.
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2012 (7) TMI 1105
Release of wheat - illegal storage of subsidized food grains - Quashing of confiscation proceedings - Essential Commodities Act, 1955 - No legal owner or claimant of confiscated goods - black marketing - In the present case, The SDO and other officers from the local police raided the premises of the said flour mill (respondent) and found off loading of wheat from Truck. It was found that the grains bags had the seal of Food Corporation of India, (FCI). The seized material made it apparent that there had been diversion of FCI grains for the purpose of black marketing.
HELD THAT:- We are at pains to observe that the High Court has dealt with the issue in most casual and caviler manner without any application of mind showing complete disregard of the legislature enacting the provisions for general welfare. In the subsequent order dealing with the ownership of the wheat the High Court has only taken note of the fact that as the respondents herein were prepared to furnish adequate/sufficient security to the satisfaction of the court below for release of the wheat in question, the wheat could have been released by the CJM, there was no justification for the High Court to issue directions for release of such material merely because applicant could furnish the security. The High Court has totally ignored the fact that any order passed under Section 6-A is appealable under Section 6-C of the EC Act. Therefore, to consider such an application for release of the goods was totally unwarranted at least at that stage.
Learned counsel for the parties are not in a position to reveal the status of the criminal proceedings initiated against the respondents. In such a fact-situation, as has been suggested by learned counsel for the parties we set aside the aforesaid judgments and orders dated 15.3.2011 and 29.4.2011 and remand the case back to the High Court to consider afresh after examining all factual and legal issues involved in the case. Till the disposal of the case afresh, interim order passed by this Court on 31.10.2011 shall remain operative.
The appeals stand disposed of accordingly.
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2012 (7) TMI 1104
Issues involved:
Petition filed to challenge priority of realization of dues, quash order, exercise rights under SARFAESI Act, and disregard attachment orders.
Summary:
Priority of Dues:
The petitioner-Bank filed a petition challenging the priority of respondent no.5's dues over its own. The petitioner contended that its dues have priority over the respondent-State's dues, citing a Division Bench decision in support. The petitioner had initiated auction proceedings for a mortgaged property of respondent no.2, but respondent no.5's attachment notice interfered with the process, leading to the present petition.
Change in Firm Constitution:
It was revealed that respondent no.2 had changed the constitution of the firm without informing the prescribed authority, as required under the Value Added Tax Act. This change in the firm's structure was not intimated when the loan was applied for, raising questions about compliance with legal provisions.
First Charge by Respondent-Department:
Respondent no.5-Department issued a notice for assessment of VAT and CST against respondent no.2, which went unanswered. An ex-parte order was passed demanding payment, leading to proceedings under the Bombay Land Revenue Code. The respondent-Department registered its first charge on the property under Section 48 of the VAT Act. The court found no illegality in the respondent-Department's decision, concluding that the first charge over the property rightfully belonged to the department.
In light of the facts and provisions of the VAT Act, the court upheld the respondent-Department's first charge on the property, dismissing the petition and discharging the notice.
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2012 (7) TMI 1103
The Supreme Court of India granted leave for the appeals to be heard on the SLP Paper Books. Additional documents may be filed by the parties. Tag with Civil Appeal No. 3345 of 2012.
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2012 (7) TMI 1102
Issues Involved:1. Relaxation or modification of the condition directing the petitioner to furnish a bank guarantee for the sum lying in the current accounts. 2. Permission for M/s. Oriental Bank of Commerce to honor the Foreign Letters of Credit (FLCs). Issue 1: Relaxation or Modification of Bank Guarantee ConditionBackground: The petitioners, M/s. Indira Televisions Limited, M/s. Janani Infrastructure Limited, and M/s. Jagati Publications Limited, sought to vary the common order dated 23.05.2012, which directed the respondents to defreeze the petitioners' current accounts on furnishing a bank guarantee for the sum lying in the said accounts. The petitioners argued that banks were insisting on a 100% cash margin for providing the bank guarantee due to the nature of the CBI's orders. Judgment: The court acknowledged the peculiar circumstances and relaxed the conditions as follows: "On condition of the petitioner furnishing bank guarantee for half of the amount lying in the current accounts and on further condition of furnishing security by depositing the title deeds of any immovable property or properties of the petitioners worth more than Rs. 5.00 crores (i.e., other than the properties in respect of which orders have already been passed earlier on 23.05.2012) to the satisfaction of the Principal Special Judge for CBI Cases, Hyderabad, the respondents shall defreeze the petitioners' current accounts." Outcome: Crl.M.P.Nos.4843, 4844, and 4845 of 2012 were ordered accordingly. Issue 2: Permission for M/s. Oriental Bank of Commerce to Honor Foreign Letters of CreditBackground: M/s. Oriental Bank of Commerce sought clarification on the common order dated 23.05.2012, permitting the bank to appropriate fully discharged FDRs kept on lien to the tune of Rs. 51,78,13,551/- for honoring all outstanding FLCs issued prior to the freezing order by the CBI. Judgment: The court noted that the bank had not followed the earlier orders in letter and spirit, particularly the obligation to intimate the CBI and the court before appropriating the amount by encashing the FDRs. However, recognizing the bank's international commitments, the court permitted the bank to appropriate the FDRs kept in lien, including the already encashed FDRs, to the tune of Rs. 51,78,13,551/-, subject to the exchange rate of the US dollar. The remaining unused portion of the FDRs under lien amounting to Rs. 47.84 crores with accrued interest would remain frozen. Outcome: Crl.M.P.No.5058 of 2012 was ordered accordingly. Additional Orders:Crl.M.P.No.5197 of 2012: The court reiterated its earlier directions that all revenue received through various heads should be deposited in the current accounts only, without any diversion of funds. The petitioners were directed to strictly comply with these conditions, and the 19 collection and payment accounts of the petitioners were defreezed. Outcome: Crl.M.P.No.5197 of 2012 was ordered accordingly.
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2012 (7) TMI 1101
Issues Involved:
1. Grant of bail u/s 439 of Cr.P.C.
2. Compliance with interim bail conditions.
3. Gravity and implications of the offence.
4. Comparison with other bail judgments.
5. Tampering with evidence and fleeing from law.
Summary:
1. Grant of Bail u/s 439 of Cr.P.C.:
The petitioner filed a bail application u/s 439 of Cr.P.C. after repeated rejections by lower courts. The High Court initially granted interim bail on 27.1.2012, requiring the petitioner to furnish a Personal Bond of Rs. 1,00,000/- with two sureties and to dispose of his property in Gurgaon via public auction.
2. Compliance with Interim Bail Conditions:
The petitioner failed to comply with the interim bail conditions. Despite being directed to advertise the sale of his property in widely circulated newspapers, he only advertised in 'Business Standard', which has limited circulation. He also did not procure a firm offer for the property sale.
3. Gravity and Implications of the Offence:
The petitioner and his co-accused father allegedly cheated around 1500 investors of approximately Rs. 30 crores by promising lucrative returns. The court noted that this act showed a deliberate and sophisticated scheme to defraud the public, which warranted serious consideration against granting bail.
4. Comparison with Other Bail Judgments:
The petitioner cited the cases of Sanjay Chandra Vs. CBI and Suresh Kalmadi Vs. CBI to argue for bail. However, the court distinguished these cases, noting that they involved public exchequer losses rather than direct public fraud. The court emphasized that granting bail in such cases would send a wrong signal and encourage similar fraudulent activities.
5. Tampering with Evidence and Fleeing from Law:
While the court did not delve deeply into the potential for tampering with evidence or fleeing, it highlighted the petitioner's lack of bona fides and misleading actions as significant factors against granting bail.
Conclusion:
The court concluded that the gravity and implications of the offence dissuaded it from extending bail. The petitioner was directed to surrender before the learned ACMM, New Delhi. The court allowed the petitioner to file a new bail application after the examination of material witnesses.
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2012 (7) TMI 1100
The Supreme Court of India in 2012 (7) TMI 1100 case, with judges Mr. A. K. Patnaik and Mr. Jagdish Singh Khehar, JJ., granted leave after condoning delay. Petitioner represented by Mr. R.F. Nariman, SG., Respondent represented by Mr. S. Ganesh, Sr.Adv.
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2012 (7) TMI 1099
Issues involved: Appeal against cancellation of penalty u/s.271(1)(c) by Ld. CIT (A) -1, Thane.
Summary:
Issue 1: Surrender of undisclosed income during search action
The appellant, an individual engaged in money lending, surrendered undisclosed income during a search action u/s.132(4), including unaccounted transactions and investments. The income was declared in the return filed later, and assessment was completed by the AO. Penalty proceedings u/s.271(1)(c) were initiated by the AO, but the appellant claimed immunity under Explanation 5 to sec.271(1)(c). The AO imposed a penalty of &8377; 52,94,190/-, denying the claimed immunity.
Issue 2: Appeal before Ld. CIT (A) and Tribunal
The penalty imposed by the AO was challenged before the Ld. CIT (A), who allowed the claim for immunity under Explanation 5. The Ld. CIT (A) relied on legal provisions and previous court decisions to cancel the penalty. The revenue appealed to the Tribunal, where the Ld. DR supported the AO's penalty, while the Ld. Counsel for the assessee relied on the Ld. CIT (A)'s order.
Issue 3: Tribunal's decision
The Tribunal observed that the undisclosed income was surrendered during the search, declared in the return, and accepted by the AO during assessment. The AO imposed the penalty by denying the immunity under Explanation 5 due to lack of specific details in the statement recorded u/s.132(4). The Tribunal referred to previous court decisions, including the Hon'ble Gujarat High Court and Allahabad High Court, which emphasized substantial compliance with the provisions of Explanation 5. The Tribunal upheld the Ld. CIT (A)'s decision to cancel the penalty, citing the benefit of immunity under Explanation 5 to sec.271(1)(c).
In conclusion, the Tribunal dismissed the revenue's appeal, affirming the cancellation of the penalty imposed by the AO u/s.271(1)(c) by the Ld. CIT (A).
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2012 (7) TMI 1098
Issues Involved:
1. Maintainability of the petition under Section 48 of the Arbitration and Conciliation Act, 1996.
2. Whether the foreign award has been "invoked" or "enforced" under the Act.
Summary:
1. Maintainability of the Petition under Section 48 of the Act:
The petitioners, Hindustan Petroleum Corporation Limited (HPCL) and Bongaigaon Refinery & Petrochemicals Limited (BRPL), along with Union of India and the Directorate General of Hydrocarbons (DGH), sought a declaration under Section 48 of the Arbitration and Conciliation Act, 1996, that the partial award dated 31.03.2005 and the demand letter dated 22.08.2005 are unenforceable against them. The respondents raised a preliminary objection regarding the maintainability of the petition, arguing that Section 48 does not provide for a challenge to a foreign award unless enforcement is sought.
2. Invocation vs. Enforcement of the Foreign Award:
The respondents contended that a petition under Section 48 is only maintainable when the party in whose favor the award is made seeks its enforcement. They argued that the term "invoked" in Section 48 means the formal application for enforcement under Section 47. The petitioners countered that the demand letter dated 22.08.2005 amounted to invoking the award, and thus, they had the right to challenge it under Section 48. The court noted that Section 46 allows a foreign award to be relied upon by way of defense, set-off, or otherwise, and such reliance is considered enforcement under the Act. However, it concluded that an independent proceeding under Section 48 is not maintainable unless the foreign award is sought to be enforced in legal proceedings.
Conclusion:
The court dismissed the petitions as not maintainable at this stage, holding that the respondent, Videocon Industries Ltd., had not initiated any enforcement proceedings in respect of the foreign award. The petitions were dismissed while allowing the preliminary objection of the respondents, with parties left to bear their respective costs.
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2012 (7) TMI 1097
Grant of lease of iron-ore mines to the public sector undertakings - legality of the decision of the State Government seeking to withdraw its recommendations for mining leases, and the subsequent decision of the Central Government to reject those very recommendations - Whether the Notifications dated December 21, 1962 (1962 Notification) and February 28, 1969 (1969 Notification) issued by the State of Bihar and the Notification dated October 27, 2006 (2006 Notification) issued by the State of Jharkhand are legal and valid? - Memorandum of understanding (MOU) was arrived at between the Government of Jharkhand and Monnet, for the establishment of an integrated steel plant - Jharkhand Government vide its letter dated 6.8.2004 recommended the proposal of Monnet to Union of India Under Section 5 (1) and 11 (5) of the Mines and Minerals (Development and Regulation) Act, 1957 ("MMDR Act") - 58 applications were received, seeking grant of the mining leases over an area of 3566.54 hectares in Ghatkhuri reserved forest - letter also stated that priority was being given to Monnet in terms of Section 11 (3) of the Act on the basis of its technical mineral based industry and financial capacity - Government of India, summarily rejected the same.
ORDER - R.M. Lodha - HELD THAT:- We may record that the Government of Jharkhand had issued one more notification subsequently, dated 27.10.2006, by which it was decided that the areas described in the 1962 and 1969 notifications will not be given to anyone, except to the public sector undertakings or joint venture projects of the State.
No fundamental right in mining - The Appellants have applied for mining leases in a land belonging to Government of Jharkhand (erstwhile Bihar) and it is for iron-ore which is a mineral included in the First Schedule to the 1957 Act in respect of which no mining lease can be granted without the prior approval of the Central Government. It goes without saying that no person can claim any right in any land belonging to Government or in any mines in any land belonging to Government except under 1957 Act and 1960 Rules.
No person has any fundamental right to claim that he should be granted mining lease or prospecting licence or permitted reconnaissance operation in any land belonging to the Government. It is apt to quote the following statement of O. Chinnappa Reddy, J. in M/s. Hind Stone [1981 (2) TMI 239 - SUPREME COURT].
State Government's ownership in mines and minerals within its territory and the power of reservation - The admitted position is that the State Government (erstwhile Bihar and now Jharkhand) is the owner of the subject area. Mines and minerals within its territory vest in it absolutely. As a matter of fact it is because of this position that the Appellants made their application for grant of mining lease to the State Government.
The State Government had full power to recall the recommendation made to the Central Government for some good reason. Once 1962 and 1969 Notifications issued by the erstwhile State of Bihar and 2006 Notification issued by the State of Jharkhand have been found by me to be valid and legal, the submissions of Mr. Ranjit Kumar pale in insignificance and are not enough to invalidate the action of the State Government in recalling the recommendation made in favour of Monnet. The valid reservation of subject mining area for exploitation in public sector disentitles Monnet -as well as other Appellants -to any relief.
It is well settled that no one has legal or vested right to the grant or renewal of a mining lease. Monnet cannot claim a legal or vested right for grant of the mining lease. It is true that by the MOU entered into between the State Government and Monnet certain commitments were made by the State Government but firstly, such MOU is not a contract as contemplated under Article 299(1) of the Constitution of India and secondly, in grant of mining lease of a property of the State, the State Government has a discretion to grant or refuse to grant any mining lease. Obviously, the State Government is required to exercise its discretion, subject to the requirement of law. In view of the fact that area is reserved for exploitation of mineral in public sector, it cannot be said that the discretion exercised by the State Government suffers from any legal flaw.
The recommendation in favour of Monnet to the Central Government was simply a proposal with certain pre-conditions. For withdrawal of such proposal by the State Government, in my view, no notice was legally required to be given. Moreover, no prejudice has been caused to it by not giving any notice before recalling the recommendation as it had no legal or vested right to the grant of mining lease. The area is not available for grant of mining lease in the private sector. For all these reasons, I do not find that the case of Monnet stands differently from the other Appellants.
Therefore, there is no merit in these appeals and they are dismissed.
H.L. Gokhale, J. - HELD THAT:- In M.A. Tulloch and Company [1963 (8) TMI 42 - SUPREME COURT], the Constitution Bench was concerned with legality of certain demands of fee under the Orissa Mining Areas Development Fund Act, 1952, and the same question arose as to whether the provisions of the Orissa Act were hit by the MMDR Act, 1957 in view of Entry No. 54 of the Union List. The validity of the state act was canvassed under Entry No. 23 of the State List and was accepted as not hit by the provisions of the MMDR Act, 1957. The Court held the Orissa Act and the demand of fee to be valid.
In Baijnath Kadio [1969 (8) TMI 82 - SUPREME COURT], this Court was concerned with the validity of second proviso of Section 10 of the Bihar Land Reforms Act, 1964 for being in conflict with the provisions concerning miner minerals under the MMDR Act, 1957. The Court followed the propositions in Hingir-Rampur Coal Company [1960 (11) TMI 115 - SUPREME COURT] and M.A. Tulloch Company and found that the field was not open to the State Legislature, since it was covered under the Central Act.
As can be seen from these three judgments, if there is a declaration by the Parliament, to the extent of that declaration, the Regulation of mines and minerals development will be outside the scope of the State Legislation as provided under Entry No. 54 of the Centre List. Presently, we are not concerned with the conflict of any of the provisions under the MMDR Act, either with any State Legislation or with any Executive Order under a State Legislation issued by the State Government. The submission of the Appellant is that the Jharkhand Government was not competent at all to issue the notifications of 1962 and 1969 reserving the mine areas for public undertaking. The answer of the State Government is that it is acting under the very MMDR Act, and the notifications are within the four corners of its powers as permitted by the Central Legislation.
All these issues raised by the Appellants have already been decided by a bench of three Judges of this Court in Amritlal Nathubhai Shah v. Union of India [1976 (8) TMI 175 - SUPREME COURT]. In that matter also the Government of Gujarat had issued similar notifications dated 31.12.1963 and 26.2.1964 reserving the lands in certain talukas for exploitation of bauxite in public sector. The applications filed by the Appellant for grant of mining lease for bauxite were rejected by the State Government. The revision application filed by the Appellant to the Central Government was also rejected by its order which stated that the State Government was the owner of the minerals within its territory and the minerals vest in it, and also that the State Government had the inherent right to reserve any particular area for exploitation in the public sector. The Gujarat High Court had accepted this view.
In view of the discussion as above, the judgment in Amritlal (supra) cannot be said to be stating anything contrary to the propositions in Hingir-Rampur Coal Company, M.A. Tulloch and Company and Baijnath Kadio (supra), but is a binding precedent. The notifications impugned by the Appellants in the present group of appeals were fully protected under the provisions of MMDR Act, and also as explained in Amritlal (supra).
Desueutde - The submissions with respect to the two notifications suffering on account of Desuetude has also no merit, as the law requires that there must be a considerable period of neglect, and it is necessary to show that there is a contrary practice of a considerable time. The Appellants have not been able to show anything to that effect. The authorities of the State of Jharkhand have acted the moment the notifications were brought to their notice, and they have acted in accordance therewith. This certainly cannot amount to deusteude.
Promissory Estoppel and Legitimate Expectations - In the instant case it was only a proposal, and it was very much made clear that it was to be approved by the Central Government, prior whereto it could not be construed as containing a promise. Besides, equity cannot be used against a statutory provision or notification.
What the Appellants are seeking is in a way some kind of a specific performance when there is no concluded contract between the parties. An MOU is not a contract, and not in any case within the meaning of Article 299 of the Constitution of India.
Mines and minerals are a part of the wealth of a nation. Article 39(c) mandates that state should see to it that operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. The public interest is very much writ large in the provisions of MMDR Act and in the declaration Under Section 2 thereof. The ownership of the mines vests in the State of Jharkhand in view of the declaration under the provisions of Bihar Land Reforms Act, 1950 which act is protected by placing it in the Ninth Schedule added by the First Amendment to the Constitution.
What is being submitted by the Appellants is that the State Government cannot issue such notifications for the reasons which the Appellants have canvassed. We, however, do not find any error in the letter of withdrawal dated 13.9.2005 issued by the State of Jharkhand, and the letter of rejection dated 6.3.2006 issued by the Union of India for the reasons stated therein. In our view, the State of Jharkhand was fully justified in declining the grant of leases to the private sector operators, and in reserving the areas for the public sector undertakings on the basis of notifications of 1962, 1969 and 2006. All that the State Government has done is to act in furtherance of the policy of the statute and it cannot be faulted for the same.
Therefore, we do not find any merit in these appeals and they are all dismissed. The interim orders passed therein will stand vacated.
Iron is a mineral necessary for industrial development. In view of the pendency of these appeals, and the stay orders sought by the Appellants therein, grant of lease of iron-ore mines to the public sector undertakings could not be made for over six years. The State of Jharkhand and the people at large have thereby suffered. In view thereof we would have been justified in imposing costs on the Appellants. However, considering that important questions of law were raised in these appeals, we refrain from doing the same. The parties will therefore, bear their own costs.
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