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Showing 61 to 80 of 902 Records
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2009 (8) TMI 1246
Issues involved:
The judgment addresses seven questions of law raised by the revenue, focusing on the rejection of appeals for earlier assessment years, expenses incurred by the respondent-assessee, applicability of transfer pricing provisions, programming business losses, and the computation of deduction u/s. 80HHF.
Question (a) to (c):
The appeals filed by the revenue for earlier assessment years were rejected, leading to the conclusion that these questions are not substantial for adjudication by the Court.
Question (d):
The Tribunal allowed the claim of the assessee regarding expenses incurred, citing a previous judgment that transactions approved by RBI/FIPB cannot be considered non-arms length. The transfer pricing provisions were deemed inapplicable for the relevant assessment years, making this question not substantial.
Question (e) and (f):
Question (e) does not arise from the Tribunal's order, while it is undisputed that the assessee did not incur any loss in programming business, leading to findings that cannot be faulted.
Question (g):
The Court decided to admit the appeal on the question of whether the ITAT was correct in directing to reduce 90% of the "NET" commission received by the assessee from business profits for computation of deduction u/s. 80HHF.
This judgment highlights the consideration of various legal issues raised by the revenue, with specific focus on the rejection of appeals, expenses incurred by the assessee, transfer pricing provisions, programming business losses, and the computation of deduction u/s. 80HHF.
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2009 (8) TMI 1245
Issues Involved:
1. Rejection of inter-state sales to Haryana Roadways against Form D.
2. Legal sustainability of the Tribunal's order.
3. Denial of concessional tax rate benefit to the applicant company.
4. Justification of rejecting the applicant's claim in absence of Form C (not pressed).
Summary:
Issue A: Rejection of Inter-State Sales to Haryana Roadways Against Form D
The applicant sold goods to Haryana Roadways during the assessment years 1996-97 and 1997-98 and submitted Form D to claim a concessional tax rate u/s 8(1) of the Central Sales Tax Act. The assessing authority doubted whether Haryana Roadways was a State Government department and rejected the claim, which was upheld by the Tribunal. The Tribunal concluded that Haryana Roadways, being a State undertaking, was not authorized to issue Form D.
Issue B: Legal Sustainability of the Tribunal's Order
The applicant argued that the Tribunal's view was illegal, citing certificates from Haryana Roadways officers confirming it as a State Government department. The applicant contended that the genuineness of Form D should not be questioned and that any action should be taken against Haryana Roadways if the form was wrongly issued. The applicant relied on precedents where the genuineness of certificates was upheld, and the selling dealer was not obligated to verify the correctness of the declarations.
Issue C: Denial of Concessional Tax Rate Benefit
The applicant argued that Form D was issued by the Commercial Tax Officer, Haryana, and accepted in good faith. The genuineness of the form was not disputed. The court referred to previous judgments, emphasizing that the selling dealer should not be penalized for accepting genuine forms issued by the purchasing dealer. The court held that the denial of the concessional rate was unjustified and directed the Tribunal to pass an appropriate order.
Conclusion:
The court quashed the Tribunal's order dated 6.10.2006, answered questions A and C in favor of the applicant, and directed the Tribunal to pass an appropriate order u/s 58(4) of the U.P. Value Added Tax Act, thereby allowing the benefit of the concessional tax rate against Form D issued by Haryana Roadways.
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2009 (8) TMI 1244
Issues involved: Bail cancellation petition by Customs Department for NDPS case.
Summary:
The Customs Department filed a petition seeking cancellation of bail granted to accused No. 2 in an NDPS case. The accused were arrested for possession of Heroin, and bail was granted based on the prosecution's failure to produce evidence within the prescribed period. The defense argued that the delay in producing the quantitative analysis report should not have led to bail being granted. The defense contended that the accused should not have been enlarged on bail as the total quantity of narcotic substance seized was found to be a commercial quantity. The defense also highlighted that the prosecution failed to provide evidence regarding the quantity of drugs seized. The defense emphasized that bail was rightfully granted as the prosecution did not prove the case within the specified time frame. The judgment noted that the purpose of chemical examination and quantitative analysis is to determine the severity of punishment based on the quantity of drugs involved. It was observed that delays in these examinations could impact the outcome of the investigation. The judgment highlighted the importance of timely and thorough investigations in cases involving dangerous drugs like Heroin. Despite a significant seizure in the case, the delay in producing the necessary reports led to the accused being granted bail. The judgment concluded that due to the prosecution's default in producing essential evidence, the accused was rightly enlarged on bail. The court found no reason to interfere with the order and dismissed the petition.
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2009 (8) TMI 1243
The Appellate Tribunal ITAT Bangalore dismissed the revenue's appeal against the order of the CIT(A), Mangalore as approval from COD was not obtained. The revenue can file an application under section 254(2) if permission is obtained from COD. The appeal was dismissed on 13th August, 2009.
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2009 (8) TMI 1242
Constitutional validity of the Maharashtra Tax on Lotteries Act, 2006 - levy of sales tax on Lottery tickets - It is the contention of the petitioners that the legislature of State of Maharashtra has no legislative power to enact Laws relating to State Lotteries including Laws relating to taxation, and therefore, according to the petitioners, the State Act is beyond the legislative competence of the legislature of State of Maharashtra.
Held that:- Looking to the scheme of the Act, it is clear that Draw is used only as a measure of tax. What is said to be taxed is betting and gambling. From the preamble of the State Act it is clear that levy and collection of tax is on the lotteries (betting and gambling). The tax , as defined under the State legislation, means the tax levied and collected on lotteries. The Act does not levy tax on Draws or sale of tickets, the levy of tax is on betting and gambling which is offered within the State of Maharashtra by organising sale of tickets for participation in the lottery. The measure of levying of tax depends upon as to whether the lottery organised is relating to weekly draw, monthly draw or bumper draw. It is, thus, clear that levying of tax is not on the draw which takes outside the State. The draw is only a measure of tax and the tax is not imposed on the draw itself.
Merely because the term Scheme is not defined, the provisions under Section 3 of the Act do not become vague.
Whether the exercise of legislative power is colourable? - Held that:- Once we find that there is clear legislative competence in the State legislature to legislate, there is no exercise of power being colorable merely because earlier a particular type of tax was levied which was found to be not legal.
So far as the submission that the State Act has been enacted to make the business of selling of lottery tickets of the lotteries organised by the other States unviable is concerned, we find from the petition that there is no material placed in support of this submission, and therefore, it is not possible for us to examine this submission.
Petition dismissed.
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2009 (8) TMI 1241
Issues involved:
The issues involved in the judgment are the quashing of an order passed by the Special Committee u/s 16(d) of the Tamil Nadu General Sales Tax Act, 1959, based on allegations of incorrect assessment and violation of principles of natural justice.
Summary:
Assessment and Deductions:
The petitioner, a cement dealer, contested an assessment order under Section 12(2) of the Act, claiming that the assessing authority did not deduct a discount given by cement companies. The petitioner argued that the assessment was done incorrectly, not in line with the notification issued by the Commissioner of Commercial Taxes, and violated the principles of natural justice.
Contentions Raised:
In the petition before the Committee u/s 16(d), the petitioner contended that the assessing authority's reliance on alleged stock variation during inspection was unjust as they were compelled to sign a prepared statement without due consideration. The petitioner also challenged the penalty levied under Section 12(3)(b), stating there was no intent to evade tax and thus, the penalty was unwarranted.
Violation of Natural Justice:
The petitioner's counsel argued that the Committee failed to consider relevant factual details, leading to a violation of natural justice. Citing previous court orders and a clarification by the Commissioner of commercial taxes, the petitioner emphasized that the penalty should only be imposed in cases of intentional concealment of turnover.
Committee's Findings and Court Decision:
The Committee found no violation of principles of natural justice or the Act and Rules. However, the Court deemed this finding without reasons as a violation of natural justice, citing the necessity for recording reasons in administrative decisions. Consequently, the Court set aside the impugned order and remanded the matter for fresh consideration by the assessing authority.
In conclusion, the Court directed the assessing authority to reevaluate the petitioner's case, considering all facts and legal aspects, and pass appropriate orders in accordance with the law.
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2009 (8) TMI 1240
Issues Involved:
1. Condonation of delay in filing the application for bringing Legal Representatives on record.
Summary:
Condonation of Delay:
The present civil application was filed for condonation of delay in filing an application to bring the Legal Representatives of the deceased appellant on record, who died on 30th October 1999. The delay in filing the application was 2945 days. The applicants claimed that they were unaware of the pendency of the second appeal due to their circumstances, including the illiteracy of applicant no.1 and the minority of applicants 2 and 3 at the time. They only became aware of the appeal on 15th November 2004 through a letter from their advocate. Subsequently, they faced several challenges, including the accident and memory loss of applicant Anil, which further delayed their actions.
The applicants argued that the delay was unintentional and beyond their control, and cited several judgments to support a liberal interpretation of "sufficient cause" u/s 5 of the Indian Limitation Act, 1963. They emphasized that the delay did not benefit them and that substantial justice should be prioritized over technicalities.
The respondents opposed the application, arguing that the delay was excessive and the explanations provided were vague and insufficient. They contended that the applicants had ample time and opportunity to take necessary steps but failed to do so.
The court, after careful consideration of the averments and the judgments cited, concluded that the explanations provided by the applicants were not convincing and lacked sufficient cause. The court noted that the applicants had not taken any steps from 26.11.2004 to 6.1.2005 and that the medical certificate provided did not adequately support the claim of memory loss. The court also highlighted that the younger brother of applicant Anil could have pursued the matter.
Ultimately, the court held that the delay of 2945 days was not justified and did not disclose sufficient cause to warrant a liberal approach for condonation. The application for condonation of delay was rejected, and the rule was discharged.
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2009 (8) TMI 1239
Issues Involved:
1. Whether the complaint filed by the respondent-complainant was malicious and an abuse of the process of law.
2. Whether the SDJM applied judicial mind while taking cognizance of the complaint.
3. Whether the High Court erred in dismissing the petition u/s 482 CrPC without assigning reasons.
Summary:
Issue 1: Malicious Complaint and Abuse of Process of Law
The Supreme Court observed that the complaint filed by the respondent-complainant, who was one of the guarantors, was lodged with a "completely malicious intent to simply harass the appellants." The complaint was filed almost ten months after the FIR lodged by the bank against the borrower and guarantors for cheating and misappropriation of hypothecated goods. The Court noted that the complaint did not make any concrete allegations against the appellants suggesting the commission of any offence. The Court concluded that the complaint was "nothing but a clear abuse of the judicial process to harass the appellants."
Issue 2: Application of Judicial Mind by SDJM
The Supreme Court criticized the SDJM for setting the criminal law in motion without examining the allegations and averments made in the complaint. The SDJM took cognizance of the case without considering the allegations on merits and without scrutinizing the contents of the complaint and the material documents available on record. The Court emphasized that the SDJM should have dismissed the complaint after realizing that it was a counterblast to the FIR lodged by the bank.
Issue 3: High Court's Error in Dismissing Petition u/s 482 CrPC
The Supreme Court held that the High Court committed a "manifest error" in disposing of the petition filed by the appellants u/s 482 CrPC without even adverting to the basic facts. The Court noted that the High Court should have exercised its jurisdiction to prevent the abuse of the process of law, especially when the allegations made in the complaint were "so absurd and inherently improbable." The Court emphasized that the High Court's refusal to exercise its jurisdiction resulted in injustice, as the criminal proceedings were maliciously instituted with an ulterior motive.
Conclusion:
The Supreme Court set aside the impugned order of the High Court and quashed the criminal proceedings arising out of Complaint Case No. 916 (c) of 2003. The appeal was allowed, emphasizing that the criminal law should not be set into motion to harass public servants who were merely discharging their duties.
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2009 (8) TMI 1238
Issues Involved:
1. Disallowance of repair and maintenance expenses as capital expenditure.
2. Non-entertainment of additional grounds of appeal regarding depreciation on plant and machinery.
3. Non-entertainment of additional grounds of appeal regarding deduction for subsidy received.
4. Disallowance of provision for doubtful debts.
5. Disallowance of expenses incurred on an abandoned LPG project.
6. Disallowance of depreciation for the Nylon-6 Plant on the amount received and treated towards repairs.
7. Deletion of pre-commencement-stage income as not assessable under the head "income from other sources."
8. Deletion of addition of excise duty component attributable to finished goods while computing valuation of closing stock.
Detailed Analysis:
1. Disallowance of Repair and Maintenance Expenses as Capital Expenditure:
The assessee argued that the entire expenditure on repairs and maintenance is of revenue nature and fully allowable. The AO disallowed 5% of the total expenditure, considering it as capital expenditure. The CIT(A) reduced this to 1%, recognizing that some items were replacements or new purchases with enduring benefits. The Tribunal upheld the CIT(A)'s decision, noting the lack of detailed bills and vouchers from the assessee.
2. Non-entertainment of Additional Grounds of Appeal Regarding Depreciation on Plant and Machinery:
The AO disallowed the depreciation claimed by the assessee on the Ammonia-IV Plant, considering it to be at the pre-commencement stage. The CIT(A) upheld this, distinguishing from the Ashima Syntex Ltd. case, where machines installed worked immediately. The Tribunal, however, allowed the claim, citing that user of machinery in test production is still user for business purposes, supported by the decision of the Madras High Court in V. Ramakrishna and Sons Ltd.
3. Non-entertainment of Additional Grounds of Appeal Regarding Deduction for Subsidy Received:
The assessee's claim for deduction of the subsidy recovered by the government was not entertained by the CIT(A). The Tribunal did not provide a detailed analysis of this issue in the provided text.
4. Disallowance of Provision for Doubtful Debts:
The AO rejected the claim for deduction of provision for doubtful debts as the debts were not actually written off. The CIT(A) upheld this, directing the AO to allow the amount when actually written off. The Tribunal, following its earlier decision in the assessee's own case, upheld the CIT(A)'s decision.
5. Disallowance of Expenses Incurred on an Abandoned LPG Project:
The AO disallowed the claim of expenditure on the abandoned LPG project as it was not linked to the existing business. The CIT(A) upheld this, noting it was an entirely new project. The Tribunal restored the issue to the AO for fresh consideration, following its decision in the assessee's case for the AY 1996-97.
6. Disallowance of Depreciation for the Nylon-6 Plant on the Amount Received and Treated Towards Repairs:
The AO reduced the entire amount received from the insurance company from the WDV of the plant and machinery, disallowing 25% of the depreciation claimed. The CIT(A) upheld this, and the Tribunal, following its earlier decision, rejected the assessee's ground.
7. Deletion of Pre-commencement-stage Income as Not Assessable Under the Head "Income from Other Sources":
The AO treated the amount from trial run production as revenue receipt and assessed it under "Income from other sources." The CIT(A) deleted this addition, relying on the Supreme Court's decision in Bokaro Steel Ltd., which held that such receipts reduce the costs of assets and are of a capital nature. The Tribunal upheld the CIT(A)'s decision.
8. Deletion of Addition of Excise Duty Component Attributable to Finished Goods While Computing Valuation of Closing Stock:
The AO included excise duty in the valuation of finished goods lying in the factory. The CIT(A) deleted this addition, relying on a decision of the Madras High Court. The Tribunal vacated the CIT(A)'s findings and restored the matter to the AO to re-adjudicate in light of sec. 145A of the Act, which mandates adjustments for tax, duty, cess, or fee in the valuation of purchase, sale, and inventory.
Conclusion:
Both appeals are partly allowed for statistical purposes, with directions for re-adjudication on specific issues. The Tribunal's decision incorporates various judicial precedents and statutory provisions, ensuring a comprehensive resolution of the disputed matters.
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2009 (8) TMI 1237
Issues involved: Determination of whether the business of coating and lamination of Alluminium Foil for pharmaceutical packaging constitutes a manufacturing activity for the purpose of claiming benefit under Section 80-IB of the Income Tax Act.
Summary:
The case involved a dispute regarding the classification of the process of coating and lamination of Alluminium Foil for pharmaceutical packaging as a manufacturing activity for tax benefits under Section 80-IB of the Income Tax Act. The Assessing Officer initially rejected the claim, but the CIT(A) and the Income Tax Appellate Tribunal later upheld the claim. The key question was whether the conversion process resulted in the creation of a new and distinct product. The CIT(A) described the process as producing a new end product different from the original aluminum foil, similar to a previous Supreme Court ruling. The respondent provided a detailed chart outlining the process involved in producing Blister Foil and pharmaceutical foil from raw aluminum foil. The process included steps like shellac wash, VMCH coating, and slitting to meet the specific requirements of the pharmaceutical industry. The court found that the process, involving specialized machinery, was essential for pharmaceutical packaging and resulted in a product distinct from plain aluminum foil. Consequently, the court affirmed the lower authorities' decision, concluding that the activity qualified as a manufacturing process for tax benefits under Section 80-IB.
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2009 (8) TMI 1236
Issues:
1. Allowability of expenditure on food and gifts amounting to Rs. 5,76,249.
2. Allowability of service charges to the extent of Rs. 41,80,949.
Expenditure on Food and Gifts:
The assessee claimed expenses on food and gifts as business expenses, which were initially disallowed by the Assessing Officer but later allowed by the CIT Appeal and ITAT. The court found that providing food, beverages, and occasional gifts as part of business promotion is a common practice in the manufacturing industry where customer representatives visit the premises for inspection. The court concluded that these expenses were rightly allowed as business expenditure since they were incurred in the ordinary course of business.
Service Charges:
Regarding the payment of Rs. 41,80,949 for liaison services, the court noted that such services are essential for activities like obtaining pre-information for tenders, competitor analysis, inspections, payments, and other formalities in government supplies. The court observed that the payment to commission agents for liaison services is necessary for enhancing business activities. The assessee provided documentary evidence, including bills and agreements with the agents, which were found to be in order by the Assessing Officer. Consequently, the court held that no legal question arose in this matter and dismissed the case.
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2009 (8) TMI 1235
Issues Involved:
1. Validity of the revised return filed by the assessee.
2. Interpretation of "intimation" under s. 143(1) and "assessment" under s. 143(3).
3. Applicability of the Supreme Court decision in the case of Sun Engineering Works (P) Ltd.
Summary:
1. Validity of the Revised Return Filed by the Assessee:
The assessee company, engaged in the manufacture and sale of pig iron, filed a return of income on 30th Oct., 2004, declaring a total income of Rs. 20,79,53,900. The return was processed u/s 143(1) on 22nd March, 2005. The AO issued a notice u/s 148 on 2nd Dec., 2005, proposing to reassess the income. The assessee filed a revised return u/s 139(5) on 6th Jan., 2006, claiming deductions under s. 80-IB and adjusting unabsorbed depreciation. The AO completed the assessment accepting the revised return. The CIT, however, observed that the AO erroneously allowed the deduction under s. 80-IB, stating that reassessment proceedings u/s 148 are meant to bring to tax "income which had escaped assessment" and not for making new claims.
2. Interpretation of "Intimation" under s. 143(1) and "Assessment" under s. 143(3):
The CIT argued that the original return processed u/s 143(1) should be considered as an assessment, thereby disallowing the revised return filed by the assessee. The CIT relied on the decision of the jurisdictional High Court in CIT v. Anderson Marine & Sons (P) Ltd., which equated an intimation u/s 143(1) to an assessment u/s 143(3). However, the assessee contended that an intimation u/s 143(1) cannot be equated to an assessment u/s 143(3), citing various decisions, including the Supreme Court judgment in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd., which clarified that an intimation under s. 143(1) is not an assessment.
3. Applicability of the Supreme Court Decision in the Case of Sun Engineering Works (P) Ltd.:
The CIT relied on the Supreme Court decision in CIT v. Sun Engineering Works (P) Ltd., which stated that reassessment proceedings u/s 148 are meant to bring to tax any income that escaped assessment, and new claims for deductions cannot be made. The assessee argued that the revised return was filed within the statutory period allowed u/s 139(5), and thus the case does not fall within the ratio laid down in Sun Engineering Works (P) Ltd. The Tribunal agreed with the assessee, stating that the revised return was justified and the acceptance of the claim in the revised return during the reassessment process cannot be deemed erroneous.
Conclusion:
The Tribunal set aside the order of the revisional authority, allowing the appeal filed by the assessee, and held that the revised return filed within the period specified u/s 139(5) was valid. The distinction between "intimation" and "assessment" was upheld, and the ratio of the Supreme Court decision in Sun Engineering Works (P) Ltd. was deemed inapplicable to the facts of this case.
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2009 (8) TMI 1234
Issues Involved:
1. Validity of ad hoc appointments and their regularization.
2. Seniority dispute between ad hoc stenographers and regularly selected stenographers.
3. Competency of the Central Board of Direct Taxes (CBDT) and the Chief Commissioner of Income Tax, Kanpur in regularizing ad hoc stenographers.
4. Limitation and timeliness of the Original Applications filed before the Central Administrative Tribunal.
Issue-wise Detailed Analysis:
1. Validity of Ad Hoc Appointments and Their Regularization:
The petitioners argued that their appointments in the Income Tax Department were regular due to the acute shortage of stenographers in 1977-78 and subsequent permission from the CBDT to recruit on an ad hoc basis. They claimed regularization based on their confirmation orders dated 11.6.1982 and 17.4.1984, and the inability of the Staff Selection Commission (SSC) to provide candidates. However, the respondents contended that the appointments were explicitly ad hoc, as per the appointment letters, and subject to termination upon availability of SSC-selected candidates. The Court noted that the SSC was functioning since 1976 and had conducted examinations in 1977 and 1978, thus refuting the petitioners' claim of SSC's inactivity until 1982. The Court held that the ad hoc appointments could not be deemed regular without passing the Special Qualifying Examination (SQE), as mandated by the Department of Personnel and Training.
2. Seniority Dispute Between Ad Hoc Stenographers and Regularly Selected Stenographers:
The petitioners claimed seniority over the regularly selected stenographers based on their earlier ad hoc appointments. The respondents argued that the ad hoc appointments were temporary and did not confer seniority over those selected through SSC. The Court emphasized that seniority could not be granted to ad hoc employees who did not pass the SQE. The Court cited the Supreme Court's ruling in State of Punjab v. Jagdeep Singh, which held that appointments beyond the authority's competence do not confer valid status. Consequently, the Court ruled that the ad hoc stenographers could not be placed above the regularly selected stenographers in the seniority list.
3. Competency of CBDT and Chief Commissioner of Income Tax, Kanpur in Regularizing Ad Hoc Stenographers:
The petitioners argued that their regularization was approved by the CBDT and the Chief Commissioner of Income Tax, Kanpur. The respondents countered that these authorities were not competent to regularize ad hoc appointments without following the prescribed rules. The Court found no evidence of any rule empowering these authorities to regularize ad hoc appointments without the SSC's involvement or the SQE. The Court concluded that the CBDT's decision to regularize the ad hoc stenographers was not legally justified and quashed the orders dated 22.9.1998 and 13.10.1998.
4. Limitation and Timeliness of the Original Applications Filed Before the Central Administrative Tribunal:
The petitioners argued that the Original Applications (OAs) were barred by limitation, as the cause of action arose in 1982 and 1984. The respondents contended that the cause of action arose from the orders dated 22.9.1998 and 13.10.1998, which were challenged within the permissible time frame. The Court observed that no plea of limitation was raised before the Tribunal, and the OAs were filed within time from the date the cause of action arose. The Court held that the OAs were not time-barred and the Tribunal was empowered to condone any delay under Section 21(3) of the Central Administrative Tribunal Act, 1985.
Conclusion:
The Court dismissed Civil Misc. Writ Petition Nos. 29117 of 2007 and 38755 of 2007, upholding the Tribunal's decision that the ad hoc stenographers could not claim seniority over regularly selected stenographers. Civil Misc. Writ Petition No. 25550 of 2006 was allowed, quashing the Tribunal's order dated 8.2.2006 and the CBDT's decision dated 22.9.1998, along with the consequential orders. The Court directed that the petitioners in Civil Misc. Writ Petition No. 25550 of 2006 be shown senior to the respondents and entitled to all consequential benefits. No orders as to costs were issued, and any interim stay orders were vacated.
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2009 (8) TMI 1233
Issues Involved:
1. Legality of appointing multiple surveyors by the insurance company.
2. Justification for awarding 6% interest per annum from 01.03.2001 instead of 18% from the date of the fire accident.
Issue-wise Detailed Analysis:
1. Legality of Appointing Multiple Surveyors:
The appellant, a registered partnership firm trading in cotton, suffered a loss due to an accidental fire on 24.08.1999. The cotton stocks were insured under seven policies issued by the respondent insurance company. The insurance company appointed several surveyors to assess the loss, which led to varying estimates. The appellant claimed that the insurance company's action of appointing multiple surveyors until it received a favorable report was illegal and undermined the confidence in the insurance process.
The Supreme Court examined Section 64-UM of the Insurance Act, 1938, which mandates that no claim exceeding Rs. 20,000 can be settled without a report from a licensed surveyor. The proviso to sub-section (2) allows the insurer to settle a claim for an amount different from that assessed by the surveyor. Sub-section (3) empowers the Insurance Regulatory and Development Authority (IRDA) to call for an independent report from another surveyor. Sub-section (4) allows the Authority to issue directions regarding the settlement of the claim based on the independent report.
The Court noted that while the insurer cannot appoint multiple surveyors just as a matter of course, it can do so if there are valid reasons for not accepting the initial surveyor's report. In this case, the insurance company provided valid reasons for appointing a second surveyor, such as discrepancies in the joint survey report and the need for verification of the books of accounts. The Court concluded that the insurance company's actions were justified and in accordance with the provisions of the Insurance Act.
2. Justification for Awarding 6% Interest per Annum:
The appellant contended that the National Consumer Disputes Redressal Commission (NCDRC) erred in awarding interest at 6% per annum from 01.03.2001 instead of 18% from the date of the fire accident. The appellant argued that the insurance company's delay in settling the claim constituted a deficiency in service.
The Supreme Court referred to previous judgments, including Secretary, Irrigation Deptt., Govt. of Orissa v. G.C. Roy and Ghaziabad Development Authority v. Balbir Singh, which held that interest could be awarded as compensation for the deprivation of money. The Court emphasized that the award of interest must be justified by the facts and circumstances of each case and should reflect the relationship between the amount awarded and the delay or harassment caused.
In this case, the Court observed that the insurance company had valid reasons for appointing multiple surveyors and had eventually settled the claim based on the Chartered Accountant's report. However, the insurer should have made the payment promptly once the settlement was reached. The Court directed the insurance company to pay the assessed amount of Rs. 1,05,00,817 with interest at 9% per annum from the date of the Chartered Accountant's assessment.
Conclusion:
The Supreme Court upheld the insurance company's right to appoint multiple surveyors if justified by valid reasons and provided clarity on the application of Section 64-UM of the Insurance Act, 1938. The Court also emphasized the need for timely payment of settled claims and awarded interest at 9% per annum as compensation for the delay in payment. The appeal was partly allowed, with no order as to costs.
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2009 (8) TMI 1232
Issues Involved:
1. Validity of the award dated 1st August 2007.
2. Applicability of Clause 6(b)(ii) of the insurance policy.
3. Allegation of economic coercion in the settlement agreement.
4. Legal position regarding the limitation period u/s 28 of the Contract Act.
Summary:
1. Validity of the Award:
The petitioner raised objections u/s 34 against the award dated 1st August 2007, which allowed the respondent's claim of Rs. 51.96 lakhs with 9% interest per annum and the cost of arbitration.
2. Applicability of Clause 6(b)(ii):
The main objection was that the award was contrary to the contract, specifically Clause 6(b)(ii) of the policy, which barred claims after 12 months from the date of payment of claims on merits. The Arbitrator did not address this clause in his award.
3. Allegation of Economic Coercion:
The respondent claimed that the settlement was signed under economic coercion. Initially, the respondent accepted the surveyor's assessment and received payments in September 2001 and January 2002. However, in April 2004, the respondent alleged coercion and raised a further claim of Rs. 51.96 lakhs, invoking the arbitration clause.
4. Legal Position Regarding Limitation Period u/s 28 of the Contract Act:
The respondent argued that the 12-month period in the policy was contrary to the law of limitation and void u/s 28 of the Contract Act. The Supreme Court in National Insurance Company Ltd. vs. Sujir Ganesh Nayak & Company AIR 1997 SC 2049 and Himachal Pradesh State Conference Company Ltd. vs. Union of India Insurance Company Ltd. (2009) 2 SCC 252 upheld that such clauses extinguishing the right itself if not exercised within a specified time are not hit by Section 28.
Conclusion:
In light of the Supreme Court's position, Clause 6(b)(ii) was binding. The respondent's claim raised after 12 months of the final settlement was not entertainable. The award of the Arbitrator was set aside on this ground.
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2009 (8) TMI 1231
Issues Involved:
1. Last seen evidence of the deceased with the accused.
2. Motive of the accused to commit the crime.
3. Recovery of the deceased's belongings from the accused.
4. Abscondence of the accused.
5. Pointing out the place of murder by the accused.
6. False defenses taken by the accused.
7. Association of the accused with each other.
8. Suspicious conduct of the accused.
9. Testimonies of witnesses and their credibility.
10. Procedural aspects and legal standards applied.
Detailed Analysis:
1. Last Seen Evidence:
The prosecution established that the deceased was last seen alive in the company of Sharda Jain and Rajinder Singh. Sumitra Gupta (PW-18) and Prabhu Yadav (PW-17) testified that the deceased left his residence to go to Sharda Jain's house. Om Parkash Chauhan (PW-11), the driver of Sharda Jain, confirmed that the deceased and Sharda Jain were together in her car. Sharda Jain admitted in her Section 313 Cr.P.C. examination that the deceased was with her until the afternoon of 24.08.2002. The deceased was not seen alive by anyone after that afternoon, establishing that he was last seen with Sharda Jain and Rajinder Singh.
2. Motive:
The prosecution attempted to establish Sharda Jain's motive through the testimony of Mahender Pal Gupta (PW-8), who claimed that Sharda Jain was unhappy with the deceased's relationship with another woman, Memwati Berwala. However, the court found that the prosecution failed to conclusively prove the motive, as the evidence provided was not sufficiently corroborated.
3. Recovery of Belongings:
The wristwatch of the deceased was recovered at the instance of Raj Kumar. The testimony of police officials and the entries in the Malkhana register confirmed that the watch was deposited on 28.08.2002, three days before the body was found. The court held that the recovery of the wristwatch was credible and indicated Raj Kumar's involvement in the conspiracy.
4. Abscondence:
Roshan Singh was found to be absconding, as evidenced by his car being unclaimed at the Malkhana and his arrest in Hoshangabad, M.P. The court held that his abscondence was indicative of guilt.
5. Pointing Out the Place of Murder:
Sharda Jain and Raj Kumar pointed out the place of the murder (Spot A). The court held that Sharda Jain's knowledge of Spot A, corroborated by her presence in the vicinity and the mud on her car's tyre, indicated her involvement in the murder. However, the court found no independent evidence that Raj Kumar knew of Spot A before it was pointed out.
6. False Defenses:
Rajinder Singh's false defense that he did not know Sharda Jain and had never visited her residence was rejected. The court held that his false defense could be taken as an additional link in the chain of circumstances against him.
7. Association of Accused:
The court found no evidence to establish that Roshan Singh was closely associated with Rajinder Singh, Pushpender, and Nirvikar. The prosecution's claim that the disclosure statements of Raj Kumar and Roshan Singh provided clues to the investigating agency was rejected as inadmissible under Section 27 of the Evidence Act.
8. Suspicious Conduct:
Sharda Jain's attempt to contact her driver, Om Parkash Chauhan, in the late hours of the night of 24.08.2002, was found to be suspicious and indicative of her involvement in the crime.
9. Witness Testimonies:
The testimonies of key witnesses like Om Parkash Chauhan (PW-11) and Sumitra Gupta (PW-18) were found credible and unshaken during cross-examination. However, the testimony of Mahender Pal Gupta (PW-8) was found unreliable due to inconsistencies and lack of corroboration.
10. Procedural Aspects:
The court noted that the call records (Ex.PW-34/A and Ex.PW-62/A) were not proved in the manner required by law, as no certificate under Section 65B of the Evidence Act was provided. However, the court held that the absence of motive did not dislodge the prosecution's case, as the chain of circumstances was complete enough to infer the guilt of the accused.
Conclusion:
The appeals of Sharda Jain, Raj Kumar, Roshan Singh, and Rajinder Singh were dismissed, confirming their convictions. The appeals of Pushpender, Nirvikar, Rakesh Kumar, Sripal Singh Raghav, and Satender Kumar were allowed, and they were acquitted of all charges.
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2009 (8) TMI 1230
Issues Involved:
1. Quashing of the notice dated 24-2-2006 for the assessment year 1999-2000 (U.P./Central).
2. Restraining the respondent from proceeding with reassessment under section 21 of the U.P. Trade Tax Act for the assessment year 1999-2000 (U.P./Central).
Summary:
Issue 1: Quashing of the Notice Dated 24-2-2006
The petitioners, registered dealers under the U.P. Trade Tax Act and CST Act, sought to quash the notice dated 24-2-2006 for the assessment year 1999-2000. They disclosed interstate sales against Form-C, which were initially accepted by the assessing authority. However, an investigation in 2004 revealed that several Form-C submitted by the petitioners were unverifiable and allegedly fictitious. Consequently, the respondent initiated proceedings u/s 21 of the Act, issuing a show cause notice to the petitioners. The petitioners contended that their books of account and statutory forms were scrutinized and accepted during the original assessment, and there was no material to believe that any turnover had escaped assessment. The court found that the proceedings u/s 21 of the Act were justified as the investigation revealed fraudulent use of Form-C, leading to a significant evasion of tax. The court upheld the notices for reassessment under the CST Act but quashed the notices for reassessment under the U.P. Act due to a lack of material evidence.
Issue 2: Restraining the Respondent from Proceeding with Reassessment
The petitioners argued that the reassessment proceedings u/s 21 of the U.P. Trade Tax Act were initiated without sufficient grounds and that the onus was on the department to prove that the exemption allowed was wrong. The respondents contended that the notices contained sufficient information and relevant particulars for initiating proceedings u/s 21 of the Act. The court held that the existence of reasons to believe, rather than the sufficiency of those reasons, was the key consideration. The court found that there were reasonable grounds for the assessing authority to believe that turnover had escaped assessment, justifying the initiation of proceedings u/s 21 of the Act. However, the court quashed the notices for reassessment under the U.P. Act due to a lack of material evidence but upheld the notices under the CST Act.
Conclusion:
The writ petitions were partly allowed. The notices for reassessment dated 24-2-2006 issued by respondent no.3 for the assessment year 1999-2000 with regard to U.P. were quashed, while the notices issued for reassessment under the CST Act were upheld. The court clarified that the respondents should not be influenced by the observations made in the judgment and should independently exercise their authority to pass appropriate orders u/s 21 of the U.P. Act in accordance with the law.
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2009 (8) TMI 1229
Medical Negligence - death of Anuradha by Doctors' rash and negligent act amounting to culpable homicide by advising, prescribing and treating the deceased with steroid drugs - Offence punishable u/s 304 A - Whether the treatment of Anuradha was in accordance with the medical protocol - Kunal and Anuradha came on a vacation to Calcutta on 1st April, 1998, principally to attend a wedding in the family. Anuradha supposedly, after eating some Chinese food in some restaurant, developed fever and skin rash on or about 25.4.1998. Respondent No. 1, Dr. Sukumar Mukherjee, indisputably is a very reputed Physician. Anuradha and Kunal were advised to consult him. She was diagnosed to be suffering from `Anglo-Neurotic Oedema with allergic vasculitis'. Respondent No. 1 prescribed Depomedrol stat (immediately) injection 80 mg. on a twice daily schedule(B.I.D) for 3 days to be followed by other oral steroids. One injection was given by him. She, however, breathed her last on 28th May, 1998.
Deceased (Anuradha), it is conceded, was suffering from TEN. She had been positively diagnosed to be suffering from the said disease on 12th May, 1998. TEN is a spectrum of symptoms. The treatment protocol for TEN has undergone considerable change throughout the world.
HELD THAT:- In our opinion, the answer must be rendered in the negative. Those who support use and administration of steroid do so with note of caution. They in no uncertain terms state that the same should be used at a preliminary stage. Respondents do not spell out as to what would be the preliminary stage. The preliminary stage must have started with the onset of the disease. She had been suffering from skin rash from 3rd week of April, 1998. It increased with the passage of time. The cause of such eruption was not ascertained. In fact what caused the onset of disease was not known. It may be from Chinese food or it may even be from use of vitamin.
No doctor posed unto themselves a basic question why despite use of steroid, condition of the patient was going from bad to worse. It is agreed across the board and at least during trial, that supportive treatment should have been given. The medicine was propagated which did not exist. The medical literatures were not consulted. Even for pulse therapy Depomedrol could not have been used and only Solumedrol could have been used. Kunal in his evidence explained the difference between the two. Dr. Mukherjee in his deposition indirectly accepted the same. Each of those pro-steroid group spoke of a single injection.
Nobody suggested on the face of the voluminous medical literature and authoritative opinions of the experts that two injections daily could be prescribed by any prudent physician. A great deed of confusion was sought to be created between one kind of steroid and another. Vague questions were asked from the experts to show that steroids may be used but Dr. Pasricha stated that only a quick acting steroid should be used. Depomedrol is not a quick acting steroid.
As noticed hereinbefore, precautions as also the course of actions suggested by the authors have not been undertaken by the respondents. It is to be noted that the learned authors' expertise in the field is neither in doubt nor in dispute, particularly when both parties have extensively relied thereupon.
Even the suspected offending drug was not withdrawn at later stages. This drug is considered to be a real risk for the patient suffering from TEN. The medicine has also been administered having regard to the physical condition of the patient. They were required to be given only as a part of the total program. We may also place on record that there has been a cleavage of opinion in regard to mortality rate. Whereas according to the one group of experts in TEN patients when properly treated and in particular given supportive treatment, the mortality rate is 0-10%' the respondents contend that that in fact the mortality rate is quite high being 30-70%.
We would assume that the mortality rate is very high. If that be so, we feel that the doctors should have been more careful. They should have treated the patient upon exercise of more care and caution. For the said purpose, if they had not been able to diagnose the disease properly or identify the proper drug they would have undertaken some research. It is clear that they did not have any expertise in the field and therefore they ought not to have behaved as experts
We are, therefore, of the opinion that the universally accepted medicated treatment protocol had also not been followed.
It is also to be noted at this juncture, that there may well be a difference of opinion on the course of action to be adopted while treating a patient of TEN, but the treatment line followed by Dr. Mukherjee which entailed administration of 80 mg of Depomedrol injection twice is not supported by any school of thought. The treatment line, in this case, does not flow from any considered affinity to a particular school of thought, but out of sheer ignorance of basic hazards relating to use of steroids as also lack of judgment.
RIGHT OF THE PATIENT TO BE INFORMED - The patients by and large are ignorant about the disease or side or adverse affect of a medicine. Ordinarily the patients are to be informed about the admitted risk, if any. If some medicine has some adverse affect or some reaction is anticipated, he should be informed thereabout. It was not done in the instant case.
CONTRIBUTORY NEGLIGENCE - To conclude, it will be pertinent to note that even if we agree that there was interference by Kunal Saha during the treatment, it in no way diminishes the primary responsibility and default in duty on part of the defendants. In spite of a possibility of him playing an over-anxious role during the medical proceedings, the breach of duty to take basic standard of medical care on the part of defendants is not diluted. To that extent, contributory negligence is not pertinent. It may, however, have some role to play for the purpose of damages.
NON-JOINDER OF NECESSARY PARTIES - We must bear in mind that negligence is attributed when existing facilities are not availed of. Medical negligence cannot be attributed for not rendering a facility which was not available.
In our opinion, if hospitals knowingly fail to provide some amenities that are fundamental for the patients, it would certainly amount to medical malpractice. As it has been held in Smt. Savita Garg [2004 (10) TMI 637 - SUPREME COURT], that a hospital not having basic facilities like oxygen cylinders would not be excusable. Therein this Court has opined that even the so-called humanitarian approach of the hospital authorities in no way can be considered to be a factor in denying the compensation for mental agony suffered by the parents. The aforementioned principle applies to this case also in so far as it answers the contentions raised before us that the three senior doctors did not charge any professional fees.
In any event, keeping in view of the said decision, we are of the firm opinion that notices to a large number of persons and withdrawal of cases against some of them by itself cannot be considered to be a relevant factor for dismissal of these appeals.
CIVIL LIABILITY UNDER TORT LAW AS ALSO UNDER CONSUMER PROTECTION ACT - It is noteworthy that standard of proof as also culpability requirements u/s 304A of IPC stands on an altogether different footing. On comparison of the provisions of Penal Code with the thresholds under the Tort Law or the Consumer Protection Act, a foundational principle that the attributes of care and negligence are not similar under civil and Criminal branches of Medical Negligence law is borne out. An act which may constitute negligence or even rashness under torts may not amount to same u/s 304A.
INDIVIDUAL LIABILITY OF THE DOCTORS - . After taking over the treatment of the patient and detecting TEN, Dr. Halder ought to have necessarily verified the previous prescription that has been given to the patient. On 12th May, 1998 although `depomedrol' was stopped, Dr. Halder did not take any remedial measures against the excessive amount of `depomedrol' that was already stuck in the patient's body and added more fuel to the fire by prescribing a quick acting steroid `Prednisolone' at 40mg three times daily, which is an excessive dose, considering the fact that a huge amount of "Depomedrol" has been already accumulated in the body.
After coming to know that the patient is suffering from TEN, Dr. Abani Roy Chowdhury ought to have ensured that supportive therapy had been given. He had treated the patient along with Dr. Halder and failed to provide any supportive therapy or advise for providing IV fluids or other supplements that is a necessity for the patient who was critically ill.
So far as the judgment of the Commission is concerned, it was clearly wrong in opining that there was no negligence on the part of the hospital or the doctors. We are, however, of the opinion, keeping in view the fact that Dr. Kaushik Nandy has done whatever was possible to be done and his line of treatment meets with the treatment protocol of one of the experts, viz. Prof. Jean Claude Roujeau although there may be otherwise difference of opinion, that he cannot be held to be guilty of negligence.
CONCLUSION - We remit the case back to the Commission only for the purpose of determination of quantum of compensation. The principles of determining compensation are well-known. We may place on record a few of them.
Loss of wife to a husband may always be truly compensated by way of mandatory compensation. How one would do it has been baffling the court for a long time. For compensating a husband for loss of his wife, therefore, courts consider the loss of income to the family. It may not be difficult to do when she had been earning. Even otherwise a wife's contribution to the family in terms of money can always be worked out. Every housewife makes contribution to his family. It is capable of being measured on monetary terms although emotional aspect of it cannot be. It depends upon her educational qualification, her own upbringing, status, husband's income, etc.
This Court, we may notice, has laid down certain norms for grant of compensation for the death of members of family including the loss of child in some of its decisions. [See Lata Wadhwa v. State of Bihar [2001 (8) TMI 1444 - SUPREME COURT] and R.K. Malik and Anr. v. Kiran Pal and Ors.[2009 (5) TMI 1006 - SUPREME COURT]]
The Commission must, therefore, while arriving at the adequate compensation bear in mind all these relevant facts and circumstances.
The jurisprudential concept of negligence differs in civil and criminal law. What may be negligence in civil law may not necessarily be negligence in criminal law. For negligence to amount to an offence the element of mens rea must be shown to exist. For an act to amount to criminal negligence, the degree of negligence should be much high degree. A negligence which is not of such a high degree may provide a ground for action in civil law but cannot form the basis for prosecution. To prosecute a medical professional for negligence under criminal law it must be shown that the accused did something or failed to do something which in the given facts and circumstances no medical professional in his ordinary senses and prudence would have done or failed to do.
In the instant case, negligent action has been noticed with respect to more than one respondent. A cumulative incidence, therefore, has led to the death of the patient. It is to be noted that doctrine of cumulative effect is not available in criminal law. The complexities involved in the instant case as also differing nature of negligence exercised by various actors, make it very difficult to distil individual extent of negligence with respect to each of the respondent. In such a scenario finding of medical negligence u/s 304A cannot be objectively determined.
In view of our discussions made hereinbefore, we are of the opinion that for the death of Anuradha although Dr. Mukherjee, Dr. Halder, Dr. Abani Roy Chowdhury, AMRI, Dr. B. Prasad were negligent, the extent thereof and keeping in view our observations made hereinbefore, it cannot be said that they should be held guilty for commission of an offence u/s 304A of the IPC. We furthermore in a case of this nature do not intend to exercise our discretionary jurisdiction under Article 136 of the Constitution of India having regard to the fact that a judgment of acquittal has been recorded by the Calcutta High Court.
Further the statement made by the High Court that the transfer certificate was forged by the patient party is absolutely erroneous, as Dr. Anil Kumar Gupta deposed before the trial court that he saw the transfer certificate at AMRI's office and the words "for better treatment" were written by Dr. Balaram Prasad in his presence and these words were written by Dr. Prasad, who told it would be easier for them to transport the patient.
In a case of this nature, Kunal would have expected sympathy and not a spate of irresponsible accusation from the High Court.
For the reasons aforementioned, the criminal appeals are dismissed. As regards the civil appeal, the matter is remitted to the National Commission for determining the compensation with a request to dispose of the matter as expeditiously as possible and preferably within a period of six months from the date of receipt of a copy of this judgment. civil Appeal is disposed of accordingly.
We, keeping in view the stand taken and conduct of AMRI and Dr. Mukherjee, direct that costs of ₹ 5,00,000/- and ₹ 1,00,000/- would payable by AMRI and Dr. Mukherjee respectively.
We further direct that if any foreign experts are to be examined it shall be done only through video conferencing and at the cost of respondents.
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2009 (8) TMI 1228
Issues Involved:
1. Whether the Petitioners continued to be shareholders in the Respondent No. 1 Company as on the date of the Petition.
2. Whether the Respondents are the shareholders and Directors, and from what date they continued to be shareholders and Directors of the Respondent No. 1 Company.
3. When did the Petitioners approach this Bench for relief.
4. Whether this Bench has any powers under Section 397/398 to go into the issues relating to fraud, forgery, and fabrication of records.
5. Whether there are any violations under FERA.
6. Whether the Company Petition is maintainable under Section 399 of the Companies Act, 1956.
7. What relief should be granted.
Analysis:
Issue 1: Whether the Petitioners continued to be shareholders in the Respondent No. 1 Company as on the date of the Petition.
The Petitioners were initially subscribers to the Memorandum of Articles of Association and first Directors of the Company, which was incorporated on 09.12.1993. However, the Petitioners transferred their shareholding to Respondent No.2 and Respondent No.4 on 05.04.1999 and resigned as Directors, evidenced by Form No.32 filed with the Registrar of Companies. The Advocate Commissioner's report confirmed that the Petitioners ceased to be shareholders from 05.04.1999. Consequently, the Petitioners were not shareholders or Directors at the time of filing the petition.
Issue 2: Whether the Respondents are the shareholders and Directors, and from what date they continued to be shareholders and Directors of the Respondent No. 1 Company.
Respondent Nos.2 and 4 were inducted as partners in the firm and later became shareholders and Directors of the Company. The Petitioners transferred their shares and resigned, making Respondent Nos.2 and 4 shareholders and Directors from 05.04.1999. Respondent No.3 was later co-opted as a Director and allotted shares, as evidenced by Board Minutes and Annual Returns.
Issue 3: When did the Petitioners approach this Bench for relief.
The Petitioners approached the Bench in 2006, alleging oppression and mismanagement. However, they had not raised any issues regarding their status as shareholders or Directors since their exit in 1999, indicating a significant delay in seeking relief.
Issue 4: Whether this Bench has any powers under Section 397/398 to go into the issues relating to fraud, forgery, and fabrication of records.
The Bench does not have the power to adjudicate issues of fraud, forgery, and fabrication of records under Sections 397/398, as these are summary proceedings. Such issues require detailed investigation and can only be resolved by a Civil Court through oral and documentary evidence.
Issue 5: Whether there are any violations under FERA.
The Petitioners alleged that the transfer of shares violated FERA, as the Petitioner No.2 was abroad, and no RBI approval was obtained. However, the Petitioners did not provide evidence of informing the RBI about the change in status or seeking permission to hold shares. The general exemption under FERA for non-repatriation category transfers applies, and the allegations of FERA violations were found to be unfounded.
Issue 6: Whether the Company Petition is maintainable under Section 399 of the Companies Act, 1956.
The Petitioners failed to prove their shareholding in the Company as required under Section 399. They did not provide share certificates or evidence of their names in the Register of Members. The Advocate Commissioner's report and Annual Returns confirmed that the Petitioners were not shareholders since 1999. Therefore, the petition is not maintainable.
Issue 7: What relief should be granted.
Given that the Petitioners are not shareholders as per Section 399 and the allegations of fraud and forgery cannot be adjudicated in this forum, the Company Petition is dismissed as not maintainable. All interim orders stand vacated, and no costs are awarded.
Conclusion:
The Company Petition is dismissed as not maintainable under Section 399 of the Companies Act, 1956. The Petitioners failed to prove their shareholding and the Bench lacks jurisdiction to adjudicate issues of fraud and forgery. All interim orders are vacated, and no costs are awarded.
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2009 (8) TMI 1227
Annual Report and audited accounts revealed that they were "grossly inaccurate and/or lacking in several material particulars" and "do not reflect a true and fair view of the Company's affairs - Violation of the provisions of the Companies Act, 1956 (Act) - Provisions of the Listing Agreement with the Bombay Stock Exchange (BSE) and the Company's own Code of Business Conduct and Ethics" - constituted "unjust and unlawful acts - likely to "cause irreparable harm and injury not only to the Plaintiff but also to over one lakh other shareholders of the Defendant No.1 company"- Application Seeking rejection of the plaint under Order 6 Rule 11 r/w Section 151 CPC - The plaintiff H.B. Stockholdings Limited (HBSL) claims to hold 24.8% of expanded issued and paid-up capital of DCM Shriram Industries Limited (DSIL), Defendant No. 1 and thereby being its single largest shareholder.
Implied or express bar u/s 9, CPC - Whether there is any implied or express bar to the maintainability of the suit? - Section 9 of the CPC, states that the civil court shall have jurisdiction to try all suits of a civil nature "excepting suits of which their cognizance is either expressly or impliedly barred.
HELD THAT:- For the purpose of examining the above question, the court is accepting as correct the averments in the plaint as originally filed. For the sake of completeness, although the application for amendment has not yet been allowed, this court has also kept in purview the plaint as sought to be amended. The amendments, if allowed, would add to the prayers in the suit to seek a declaration that the resolutions passed at the AGM/Poll held on 25th September 2008/26th September 2008 would be null, void and non est. The amendment does not seek to delete the mandatory injunction originally sought directing the appointment of an independent Chartered Accountant to carry out a fresh audit of the books of account of DSIL. Further the prayer of removal of the auditor (Defendant No.14) as auditor of DSIL and directing the appointment of another auditor in place thereof also remains. In effect, the suit even after the proposed amendments continues to be one seeking the relief of declaration and consequential injunction.
Emphasizing that the powers of the Court were wide, given the object that is sought to be achieved by the exercise of such power u/s 397 and 398, it was explained that Clauses (a) to (g) of Section 402 "indicate the widest amplitude of the court's power".
The wide nature of the powers under the Act has been explained recently by the Supreme Court in Kamal Kumar Dutta v. Ruby General Hospital Limited [2006 (8) TMI 313 - SUPREME COURT]. It was observed in the context of Sections 397 and 398 that "the Act is a complete code". Likewise, the ld Single Judge in Anil Gupta v. J.K. Gupta [2001 (11) TMI 913 - HIGH COURT OF PUNJAB AND HARYANA] held that the jurisdiction of the civil court was impliedly barred in relation to the question of oppression or mismanagement. The aggrieved persons could certainly approach the CLB. Notice was taken of the judgment of the Supreme Court in Ammonia Supplies Corporation (P) Limited v. Modern Plastic Containers Pvt. Limited AIR [1998 (9) TMI 427 - SUPREME COURT.
Applying the ratio of Ammonia Supplies Corporation (P) Limited to the instant case (supra), it requires to be noticed that the claim made in the suit does not contain any aspect which cannot be adjudicated by the CLB. U/s 402 (g), the power of the CLB would include the passing of an order which may provide for "any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made." the power of the CLB would include the passing of an order which may provide for "any other matter for which in the opinion of the Tribunal it is just and equitable that provision should be made." U/s 398 (1), the scope of the power of the CLB is to determine whether "the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company".
A perusal of the application filed on 28th February 2008 would show that the very averments made in the plaint, i.e out about the investments in DSIL and in DHL and other facts set out in the plaint have been included in the application before the CLB. It is not, therefore, possible to accept the plea of the learned Senior counsel for the plaintiff that what constitute the subject matter of the suit is different and distinct from what is being presently agitated before the CLB.
Likewise u/s 397, it is called upon to adjudicate on whether the affairs are being conducted "in a manner oppressive to any member or members". Further, both u/s's 397(2) and 398 (2), the CLB may "with a view to bringing to an end the matters complained of, make such order as it thinks fit." The inevitable conclusion is that the jurisdiction of the civil court is impliedly barred.
A perusal of the application filed on 28th February 2008 would show that the very averments made in the plaint, i.e out about the investments in DSIL and in DHL and other facts set out in the plaint have been included in the application before the CLB. It is not, therefore, possible to accept the plea of the learned Senior counsel for the Plaintiff that what constitute the subject matter of the suit is different and distinct from what is being presently agitated before the CLB.
To this Court, it appears that the facts of the present case are different inasmuch as the plaintiff here has already approached two other fora namely the CLB with a petition u/s 397 and 398 as well as the SEBI and SAT. This is, therefore, not a case where the plaintiff first sought remedy before a civil court.
Here the Doctrine of election would apply. If the plaintiff chooses to enforce its right first before the CLB, can it then be permitted to also approach the civil court particularly when CLB refuses interim relief? Such a question was never considered in CDS Financial Services (Mauritius) Limited. This Court is therefore unable to accept the arguments of Mr. Haksar that notwithstanding the availability of a remedy before the CLB, this Court should entertain the present suit.
Having carefully examined the plaint as well as the averments made in the petition before the CLB, as further sought to be amended by the subsequent application, it appears to this Court that the grounds on which the relief is being sought for are more or less similar to what has been sought in the CLB. In the considered view of this Court, therefore, the answer to the question first posed is that there is an implied bar to this Court entertaining the present suit.
Although the learned Senior counsel for the Plaintiff may be right in his contention that the suit is itself not barred u/s 41 (h) SRA, the fact remains that the suit is reduced to one seeking a bare declaration if the consequential prayers for injunction are barred since they have already been sought in other earlier proceedings before the CLB and SAT. Such a suit for a bare declaration (which in any event is not the form of prayer even after the proposed amendments) would be barred expressly by Section 34 SRA.
For the above reasons, the application is allowed. The plaint is rejected. Consequently, the suit is dismissed with costs. The other pending applications are also dismissed.
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