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2010 (10) TMI 1179
Issues Involved
1. Allegations of oppression and mismanagement under sections 397, 398, 399, and 402 of the Companies Act, 1956.
2. Validity of share allotments and Board resolutions.
3. Status and removal of directorship.
4. Implementation of family settlement.
5. Sale and disposal of company assets.
6. Conduct of company meetings and notice requirements.
7. Financial mismanagement and unauthorized transactions.
8. Legal standing and procedural issues.
Detailed Analysis
1. Allegations of Oppression and Mismanagement
The petitioner alleged oppression and mismanagement by the respondents, particularly focusing on the unilateral reduction of her shareholding and unauthorized decisions made by the managing director (R-2). The petitioner argued that her shareholding was reduced from 15% to 2% due to the unauthorized increase in paid-up capital in 2005 and 2009. She contended that these actions were oppressive and prejudicial to her interests as a minority shareholder.
2. Validity of Share Allotments and Board Resolutions
The petitioner challenged the allotment of 35,600 equity shares on 30th November 2005 and 13,200 shares on 30th March 2009, alleging these were done without proper notice and approval. She sought to set aside these allotments and the corresponding Board resolutions. The respondents argued that the shares were allotted over several years (2000-2002) and not on the dates claimed by the petitioner. They contended that the petition was barred by limitation under Article 137 of the Limitation Act, citing relevant case law.
3. Status and Removal of Directorship
The petitioner claimed she was a director of the company since 1978 but discovered in 2009 that she was no longer listed as such. She argued that her removal was without her knowledge and highly oppressive. The respondents countered that the petitioner had not participated in the company's affairs for years and was aware of the meetings and decisions. They argued that her removal was justified and legally executed.
4. Implementation of Family Settlement
The petitioner sought the implementation of a family settlement dated 3rd March 2009, which stipulated the division of shares among family members. The respondents argued that the settlement could not be implemented as the legal heirs of a deceased family member were not parties to it. They contended that the petitioner had failed to produce any document showing that these heirs had relinquished their rights.
5. Sale and Disposal of Company Assets
The petitioner alleged that R-2 sold a portion of the company's land without proper authorization and notice to shareholders. She claimed that the sale of 3,000 sq. yards of land in 2001-02 and the establishment of a Maruti Service Station in 2008 were done without her knowledge. The respondents argued that these actions were necessary to cover the company's losses and were done with the knowledge and consent of the other directors and shareholders.
6. Conduct of Company Meetings and Notice Requirements
The petitioner contended that no proper notices were given for Board meetings and shareholders' meetings, and that decisions were made without her participation. The respondents argued that the petitioner was aware of the meetings and decisions, and that she had refused to invest further in the company. They contended that the petitioner was trying to coerce the company into accepting her terms by filing the petition.
7. Financial Mismanagement and Unauthorized Transactions
The petitioner alleged financial mismanagement, including unauthorized sale of assets, non-disclosure of rental income, and improper handling of company funds. She claimed that R-2 was usurping control of the company and acting in a manner prejudicial to her interests. The respondents countered that all actions were taken in the best interest of the company and with the consent of the majority of the shareholders.
8. Legal Standing and Procedural Issues
The respondents argued that the petition was not maintainable as the petitioner had not impleaded all necessary parties, including the legal heirs of a deceased shareholder. They contended that the petitioner did not meet the eligibility criteria under sections 397 and 398 of the Companies Act, as she constituted only 1/12th of the total number of shareholders. They also argued that the petition was barred by limitation and should be dismissed on these grounds.
Conclusion
The judgment addressed multiple complex issues, including allegations of oppression and mismanagement, validity of share allotments, directorship status, implementation of family settlement, sale of company assets, conduct of meetings, financial mismanagement, and procedural issues. The respondents provided counterarguments to each of the petitioner's claims, emphasizing the legality of their actions and the petitioner's awareness and involvement in the company's affairs. The judgment highlighted the need for equitable relief while considering the interests of all parties involved.
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2010 (10) TMI 1178
Income accruing/arising in India - Attribution of income accruing or arising whether directly or indirectly through or from any business connection in India - PE in India or not? - CIT(A) attributing only 15% of the revenue as income accruing/arising in India within the meaning of Section 9(1) of the Act and Article 7 of the Indo-Spain DTAA - HELD THAT:- As it relates to the attribution of income arising to assessee in India, the issue is covered by the order of Tribunal in the case of Amadeas Global Travel Distribution S.A.[2007 (11) TMI 330 - ITAT DELHI-B] held that majority of the functions are performed outside India. Even the majority of the assets i.e. host computer which is having very large capacity which processes information of all the participants is situated outside India. The risk in this regard entirely rests with the appellant and that is in Spain, outside India. However, it is equally important to note that but for the presence of the assessee in India and the configuration and connectivity being provided in India, the income would not have generated. Thus the initial cause of generation of income is in India also. On the basis of above facts we can reasonably attribute 15 per cent of the revenue accruing to the assessee in respect of bookings made in India as income accruing or arising in India and chargeable u/s. 5(2) r/w s.9(1)(i).
Therefore, we found that the appeals of the department are covered by the aforementioned observations of the Tribunal. Respectfully following the same, we found no merit in departmental appeals and they are dismissed.
CIT(A) has correctly held that assessee has PE in India and his findings in this regard are in accordance with the aforementioned order - We dismiss the cross-objections filed by the assessee.
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2010 (10) TMI 1177
Suit for specific performance - agreement of sale - refund of the earnest money - In present case, The appellant was the owner of the suit property. An agreement of sale was entered between defendant represented by her husband and attorney holder Kartar Singh, as vendor, and plaintiff represented by his attorney holder Paramjit Singh, as purchaser. The agreement of sale was signed by the attorney holder of the vendor and attorney holder of the purchaser and witnessed by Hari Singh (Property Dealer) and Balraj Singh. The agreement also contained an endorsement by Kartar Singh acknowledging the receipt of ₹ 10000/- as earnest money in addition to another sum of ₹ 1500/-.The plaintiff prayed for specific performance of the agreement of sale or in the alternative, if he was found not entitled to specific performance, then for a decree of recovery of ₹ 21,500/- (that is ₹ 11500/- paid to defendant’s attorney holder and ₹ 10000/- as liquidated damages) with costs.
HELD THAT:- In this case, the evidence clearly showed that defendant’s attorney holder Kartar Singh had entrusted the work of securing the clearances to the property dealer Balraj Singh, who was acting on behalf of plaintiff. This was within the knowledge of Paramjit Singh, who was the attorney holder of plaintiff at the relevant point of time. Balraj Singh also admitted in his evidence that he was to get the NOC and ULC clearance. Balraj Singh sent a telegram to Kartar Singh at the instance of plaintiff, asking him to come to Chandigarh on 7.6.1979 and execute the sale deed. Therefore, Balraj Singh had either secured the certificates necessary for the sale or had deliberately called Kartar Singh to come over to Chandigarh, even though the plaintiff was not ready and the clearances had not been secured, to create evidence that plaintiff was ready. In neither case, the defendant could be faulted. Be that as it may. The material on record shows that the respondent-plaintiff committed breach. Therefore, the earnest money stood forfeited and respondent is not entitled for refund of the earnest money.
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2010 (10) TMI 1176
Exemption u/s 011 - income from the business undertaking - charitable or religious purpose - In present case, the assessee Trust holds the property in Trust. the commercial activity is being carried on by the assessee by using the building as marriage halls, auditoriums etc. The assessee has filed its returns claiming that the income derived therein is being used towards its objectives which are charitable in nature and filed its return claiming that the Income derived from the property held in Trust by the assessee is eligible for exemption u/s 011. However, the AO for the assessment has rejected the exemption sought for by the assessee by holding that in as much as the assessee was carrying on a commercial activity which is not incidental to the object of the Trust as required u/s 011, the exemption cannot be granted. It was also held that the assessee has not complied with the provisions contained u/s 011(4)(A) by not maintaining separate books of accounts in respect of its income assessable under the said business.
HELD THAT:- The factual question of the actual income that is to be exempted has not been gone into by taking into consideration of the separate heads of accounts. A perusal of Section 011(4)(A) of the Act would clearly show that the said provision is an exception to Section 011(1), 011(2), 011(3) and 011(3)(A).Therefore, the assessee will have to satisfy the authorities that such an exemption is to be granted by providing substantial materials to show that income derived from the business has been utilised towards the fulfillment of the objectives of the trust. Equally a duty is cast upon the AO concerned to look into the records and give a factual finding, determining the actual income available for exemption. However in view of our reasoning that a business income if utilized towards the achievement of the object of the assesse trust the same would be incidental to the achievement of the object. Accordingly, the substantial questions of law raised are answered in favour of the revenue.
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2010 (10) TMI 1175
Issues involved: Appeal against order u/s.143(3) of the Income Tax Act, 1961 for AY 2006-07 - Disallowance of interest paid on housing loan and payment for building repair fund in computation of short term capital gains.
Issue 1: Disallowance of interest paid on housing loan
The assessee claimed deduction of &8377; 1,92,820/- as payment of interest for housing loan in the computation of short term capital gains. The Assessing Officer disallowed this amount, stating it cannot be treated as the cost of acquisition of the property. The CIT (A) upheld this decision, noting that the expenses cannot be included in the cost of acquisition. The Tribunal confirmed this, stating that unless the amounts form part of the cost of acquisition, they cannot be considered for computing capital gains. The expenditure was not incurred in connection with the cost of acquisition and did not qualify as a cost of improvement. Therefore, the appeal on this issue was dismissed.
Issue 2: Disallowance of payment made for building repair fund
The assessee also claimed &8377; 47,000/- as payment made on account of building repair fund in the computation of short term capital gains. The Assessing Officer disallowed this amount as well. The CIT (A) upheld this decision, stating that the expenses cannot be included in the cost of acquisition. The Tribunal confirmed this decision, emphasizing that the expenditure did not qualify as a cost of improvement and was not incurred in making any additions or alterations to the capital asset. As there were no specific provisions enabling deduction for these amounts, they could not be considered for computing income. Therefore, the appeal on this issue was also dismissed.
The Tribunal, after hearing the arguments and examining the material on record, upheld the decisions of the lower authorities. It was emphasized that for expenses to be included in the cost of acquisition or improvement, they must meet the criteria specified in the relevant sections of the Income Tax Act. Since the expenses in question did not fulfill these criteria, they could not be allowed as deductions. The appeal filed by the assessee was dismissed, and the impugned order was confirmed.
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2010 (10) TMI 1174
Issues involved: Condonation of delay in re-filing the appeal, withdrawal of appeal with liberty to re-file, settlement efforts by Committee On Disputes (COD), approval for re-filing the appeal.
Condonation of delay in re-filing the appeal:
The application for condonation of delay in re-filing the appeal was considered by the Court. After hearing the learned counsel for the appellant and reviewing the averments in the application, the delay was condoned, and the application was disposed of.
Withdrawal of appeal with liberty to re-file:
The appellant, Container Corporation of India Ltd., had initially preferred an appeal (ITA No.477/2010). The Court allowed the appellant to withdraw the appeal with liberty to re-file, based on the submission that the Corporation had approached the Committee On Disputes (COD) for permission to prefer the appeal. The Court emphasized that the revenue could oppose the prayer for condonation of delay depending on the time taken for approval or settlement efforts.
Settlement efforts by Committee On Disputes (COD):
The appellant's counsel mentioned that the Committee was still working towards a settlement, indicating ongoing efforts in that direction. The Court permitted the withdrawal of the appeal with the liberty to file a fresh appeal after obtaining approval in positive terms. The counsel for the Revenue also acknowledged that if an appeal is filed after obtaining due approval, the Revenue would not oppose the application for condonation of delay.
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2010 (10) TMI 1173
Validity Of Selection process for the posts of Civil Judge (Junior Division) - Advertisement inviting applications from eligible candidates - non-selection of the candidate - basic knowledge of the appellant in computer operation was tested at the time of his interview by an expert - introduced a new selection criterion during the midstream of the selection - HELD THAT:- When the list of successful candidates in the written examination was published in such notification itself, it was also made clear that the knowledge of the candidates with regard to basic knowledge of computer operation would be tested at the time of interview for which knowledge of Microsoft Operating System and Microsoft Office Operation would be essential. In the call letter also which was sent to the appellant at the time of calling him for interview, the aforesaid criteria was reiterated and spelt out. Therefore, no minimum benchmark or a new procedure was ever introduced during the midstream of the selection process.
All the candidates knew the requirements of the selection process and were also fully aware that they must possess the basic knowledge of computer operation meaning thereby Microsoft Operating System and Microsoft Office Operation. Knowing the said criteria, the appellant also appeared in the interview, faced the questions from the expert of computer application and has taken a chance and opportunity therein without any protest at any stage and now cannot turn back to state that the aforesaid procedure adopted was wrong and without jurisdiction.
Now, while deciding the submission of the counsel appearing for the appellant that judging the suitability of the candidate by laying down the benchmark of basic knowledge of computer operation being sufficient or insufficient is vague, we are of the opinion that possessing of basic knowledge of computer operation is one of the criteria for selection and in order to judge such knowledge, an expert on the subject was available at the time when the candidate was facing the Interview Board. In order to ascertain the candidate's knowledge of computer operation, he put questions and thereafter he gave remarks that the candidate has sufficient knowledge or that he does not have sufficient knowledge.
We are of the considered opinion that requirement of having basic knowledge of computer operation should not be diluted. We also deem fit not to comment over the standard applied by the expert in judging the said knowledge as the same is his subjective satisfaction. However directions can be recommended to make the procedure more transparent. The directions in respect of same have already been given by the High Court we do not think proper to prescribe the directions for the same separately.
The aforesaid procedure for testing the knowledge may not be foolproof but at the same time it cannot be said that the same was not reasonable or that it was arbitrary. Therefore, after giving very thoughtful consideration to the issues, we are of the opinion that the appellant has failed to make out any case before us for interference with the orders passed by the High Court. We find no merit in this appeal and the same is dismissed.
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2010 (10) TMI 1172
Issues Involved:
1. Impleadment of appellants as parties to the civil suit.
2. Validity and enforceability of agreements.
3. Privity of contract between appellants and respondents.
4. Necessity of appellants as parties to the suit.
5. Maintainability of the appeal.
Summary:
1. Impleadment of Appellants as Parties to the Civil Suit:
The appellants were impleaded as parties to the civil suit by the order dated 23 March 2010 in A. No. 6722/2009 in C.S. No. 257/2005. Respondents 1 and 2 contended that the appellants, by developing the property originally constructed by the third respondent, acted contrary to the vested rights under the Technical Services Agreement dated 26 October 1988 and subsequent agreements. The learned single Judge found that impleading the appellants would enable the Court to decide the matter effectively.
2. Validity and Enforceability of Agreements:
Respondents 1 and 2 sought a declaration that the Technical Services Agreement, Project Consultancy Agreement, and Royalty Agreement dated 26 October 1988, along with subsequent agreements, are valid, legal, and subsisting, and binding on respondents 3 to 7 and their assigns. The agreements included provisions for maintaining full ownership of the hotel and disclosing the agreements to any financial institutions involved.
3. Privity of Contract Between Appellants and Respondents:
The appellants contended that they were not bound by the agreements executed between respondents 1 and 2 and respondents 3 and 4, and thus no relief could be claimed against them. They argued that the agreements did not contain provisions binding subsequent purchasers of the hotel unit. The appellants maintained that they purchased the property from a secured creditor free of all encumbrances.
4. Necessity of Appellants as Parties to the Suit:
The Court found that the appellants, having purchased the property from respondents 5 and 6 under the SARFAESI Act, 2002, stepped into the shoes of respondents 3 to 9. The appellants were deemed necessary parties to the suit as their presence was essential for a final adjudication of the lis. The Court emphasized that the appellants were aware of the agreements and the injunction order, and their participation would enable the Court to adjudicate the issue comprehensively.
5. Maintainability of the Appeal:
The learned senior counsel for respondents 1 and 2 argued that the appeal against the order in O.A. No. 6722/2009 was not maintainable as the order was not a judgment within the meaning of Clause 15 of the Letters Patent. However, since the appeal was admitted earlier, the Court did not consider this issue and left the question of law open for future proceedings.
Conclusion:
The Letters Patent Appeal was dismissed, and the appellants were deemed necessary parties to the suit. The Court found no error or illegality in the order warranting interference under Clause 15 of the Letters Patent. Consequently, M.P. No. 1/2010 was also dismissed.
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2010 (10) TMI 1171
Issues Involved:
1. Distinctiveness of the Appellants' mark or packaging.
2. Deceptive similarity between the marks NETROMYCIN and NETMICIN.
3. Possibility of confusion among consumers.
4. Essential features comparison of the marks.
5. Adverse effect on consumers due to chemical composition.
6. Commonality of suffixes in pharmaceutical products.
7. Interim injunction and statutory rights of the Respondents.
Summary:
1. Distinctiveness of the Appellants' Mark or Packaging:
The learned Single Judge held that the Appellants failed to prove the distinctiveness of their mark or packaging.
2. Deceptive Similarity Between the Marks:
The learned Single Judge concluded that the two marks, NETROMYCIN and NETMICIN, are not deceptively similar. The Appellants argued that the true test is to compare the marks as a whole, citing Supreme Court cases like Cadila Health Care Ltd. Vs. Cadila Pharmaceuticals Ltd. and Corn Products Refining Co. Vs. Shangrila Food Products Ltd. They contended that the learned Judge erred by making a microscopic examination rather than considering the overall similarity.
3. Possibility of Confusion Among Consumers:
The learned Single Judge found no possibility of confusion, noting that the Respondents' goods were purchased in bulk by hospitals and not sold over the counter, whereas the Appellants' goods were sold over the counter. The Appellants argued that this factor should not be considered, referencing the Supreme Court's decision in the Cadila case, which stated that physicians and pharmacists are not immune from mistaking one mark for another.
4. Essential Features Comparison of the Marks:
The learned Single Judge held that the essential features of the Appellants' mark are different from those of the Respondents. The Appellants contended that the similarity of the word marks should be given more weight than the differences in packaging, citing cases like M/s. Girnar Tea Vs. Brooke Bond (India) Ltd.
5. Adverse Effect on Consumers Due to Chemical Composition:
The learned Single Judge noted that there would not be any adverse effect on consumers since the chemicals used in both products are common. The Appellants argued that the similarity in the marks could still lead to confusion, regardless of the chemical composition.
6. Commonality of Suffixes in Pharmaceutical Products:
The learned Single Judge observed that many medicines and pharmaceutical products in the market end with the letters Mycin, Micin, and Cin. The Appellants contended that this argument is irrelevant given the distinctiveness of their mark and the Respondents' mark, both of which are registered.
7. Interim Injunction and Statutory Rights of the Respondents:
The learned Single Judge's order rejecting the Notice of Motion was upheld, noting that the Respondents' trade mark NETMICIN is registered, giving them a statutory right to use it. The court found that both marks were derived from the generic drug name Netilmicin, and no single proprietor can claim absolute monopoly over such a name. The court also noted that the Respondents have been using their trade mark since January 2003 without any injunction.
Conclusion:
The appeal was dismissed, and the interim injunction was denied. The court emphasized that both trade marks are registered and have been used without interruption since 2003, ruling out the possibility of confusion due to the manner in which the drugs are administered and the commonality of the chemical composition. The complaint regarding the product insert was also dismissed as the Respondents had changed its contents. No order as to costs was made.
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2010 (10) TMI 1170
Issues involved: Challenge to orders passed by the Additional District and Sessions Judge regarding custody of currency notes under Section 124 of the Bombay Police Act and Section 132A of the Income Tax Act.
Summary:
The Income Tax Department filed petitions challenging orders passed by the Additional District and Sessions Judge regarding custody of currency notes under Section 124 of the Bombay Police Act and Section 132A of the Income Tax Act. The respondent was accused under Section 124 of the Bombay Police Act for carrying cash currency of Rs. 5,90,000. The Income Tax Department sought custody of the amount for tax assessment purposes, which was initially granted by the Magistrate and later made final. The respondent challenged these orders through Criminal Appeal and Revision Application. The Additional Sessions Judge set aside the Magistrate's orders, directing an inquiry under the Code of Criminal Procedure. The Income Tax Department argued that once the competent authority requisitioned the currency notes under Section 132A, releasing them to the respondent would not be appropriate. On the other hand, the respondent's counsel contended that since the respondent was acquitted, he should be entitled to custody of the articles.
The competent authority under Section 132A of the Income Tax Act can requisition assets believed to represent undisclosed income. The Magistrate correctly placed the currency notes at the disposal of the Income Tax Department for further processing, including assessment under Section 153. Referring to a previous judgment, it was emphasized that the court's power under Section 132A is distinct from that under the Code of Criminal Procedure, with the intention to protect the state's revenue. The High Court found no rival claims for the currency notes in this case and held that the Sessions Judge erred in interfering with the Magistrate's order. The impugned order was set aside, restoring the Magistrate's order. It was clarified that if the Income Tax Department ultimately does not require the currency notes, they should be returned to the respondent. The petitions were disposed of accordingly.
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2010 (10) TMI 1169
Issues Involved:
1. Assignment of Debt
2. Indebtedness of the Company
3. Factoring Facility and Security
4. Non-payment and Legal Proceedings
5. Financial Condition and Insolvency
6. Failure to File Affidavit and Accounts
7. Admission of Petition and Order
Summary:
1. Assignment of Debt:
The Petitioners, a Securitisation and Reconstruction Company registered u/s 3 of the SARFAESI Act, 2002, sought the winding up of Paper Prints (India) Private Limited ("the Company"). DBS Bank Limited assigned the debts due from the Company to the Petitioners via a Deed of Assignment dated 9th December 2009, entitling the Petitioners to receive the debts and file the petition.
2. Indebtedness of the Company:
The Company was indebted to the Petitioners for Rs. 2,46,05,783.27 as of 31st January 2009, with further interest at 14% per annum from 1st February 2009 till payment/realisation.
3. Factoring Facility and Security:
DBS granted a Factoring/Overdraft facility of Rs. 2,50,00,000 to the Company in July 2007, which was accepted and secured by a demand promissory note, a letter of continuity, a factoring agreement, postdated cheques, and personal guarantees from the promoters.
4. Non-payment and Legal Proceedings:
Despite efficient banking services from DBS, the Company failed to regularise its overdue account. DBS issued notices and eventually filed an Original Application before the Debt Recovery Tribunal for recovery of the amount. The Petitioners were substituted in place of DBS after the assignment.
5. Financial Condition and Insolvency:
The Petitioners argued that the Company was in severe financial crisis, facing continuous losses, and unable to pay its debts, indicating commercial insolvency. The Company was allegedly delaying proceedings at the Debt Recovery Tribunal to avoid a decree.
6. Failure to File Affidavit and Accounts:
The Company failed to file an Affidavit in reply for over four months. During court proceedings, the Company's representative could not confirm whether yearly accounts were filed with the Registrar of Companies since 2007. The Company's claim that only Rs. 20,00,000 was due was unsupported by evidence.
7. Admission of Petition and Order:
The Court found the Company unable to pay its debts and admitted the Company Petition, making it returnable on 25th November 2010. The Petitioners were ordered to advertise the Petition in specified newspapers and the Maharashtra Government Gazette, with a deposit of Rs. 10,000 towards publication charges.
Order:
(i) The Company Petition is admitted and made returnable on 25th November 2010.
(ii) The Petition shall be advertised in two local newspapers and the Maharashtra Government Gazette, with a deposit of Rs. 10,000 towards publication charges within two weeks, failing which the Petition shall stand dismissed for non-prosecution.
[ S.J. KATHAWALLA, J. ]
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2010 (10) TMI 1168
Issues involved:
The issues involved in this case are manipulation of stock prices, front running, synchronized trading, cross deals, violation of market mechanism, and penalty imposition.
Manipulation of Stock Prices:
The appellant, a stock broker, was charged with manipulating the price of a company's scrip by allowing clients to execute synchronized and cross deals, leading to artificial volumes in trading. The Securities and Exchange Board of India (SEBI) investigated the transactions from September 18, 2000, to March 13, 2001, and found irregularities in the trading activities of the appellant. The appellant was also accused of front running through the account of a relative. After a detailed enquiry and show cause notice, the whole time member held the appellant guilty of certain charges and suspended its registration certificate for a week. The appellant appealed against this order.
Synchronized Trading and Cross Deals:
The appellant executed multiple cross deals for related entities simultaneously, as per the instructions of the clients. These deals were settled through the exchange, and ownership was transferred. The Board found no evidence of a direct relationship between the broker and its clients beyond the broker-client association. The Tribunal noted that the transactions were not intended to manipulate the market, as they were in line with the circular of the Board dated September 14, 1999. Consequently, the charge of allowing clients to execute synchronized and cross deals was deemed baseless.
Front Running:
Front running, an irregular practice akin to insider trading, was observed in the appellant's actions. The appellant allowed his nephew to engage in front running by taking advantage of confidential information about pending orders from other clients. The nephew made a profit by buying shares at a lower rate and selling them to related entities at a higher rate based on insider knowledge. This practice was considered against market ethics and was found to be in violation of fair trading practices. The charge of front running against the appellant was upheld by the Tribunal.
Penalty Imposition and Conclusion:
The Tribunal expressed concern over the significant delay of nine years in issuing the final order, causing undue hardship to the appellant. Considering the circumstances, the Tribunal decided to reduce the penalty imposed on the appellant to a warning, emphasizing the importance of adhering to market regulations in the future. The impugned order was modified accordingly, and the appeal was disposed of with no costs awarded.
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2010 (10) TMI 1167
Issues Involved:
1. Legality of the termination of the Memorandum of Understanding (MOU) between MSM Discovery Private Ltd. (MSMD) and Viacom18.
2. Grant of interim relief by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to Viacom18 and denial of the same to MSMD.
3. Scope of powers of TDSAT under the Telecom Regulatory Authority of India Act, 1997 (TRAI Act).
4. Impact of termination on the contractual relationship between Star Den Media Services Private Ltd. (STAR DEN) and Television Eighteen India Ltd. (TV 18) and IBN 18 Broadcast Ltd. (IBN18).
5. Validity of the termination notice issued by TV 18 and IBN18 to STAR DEN.
6. Grant of interim relief by TDSAT to TV 18 and IBN18 and denial of the same to STAR DEN.
7. Applicability of the Specific Relief Act, 1963 (SRA) and Indian Contract Act, 1872 in the context of the disputes.
Detailed Analysis:
1. Legality of the Termination of the MOU between MSMD and Viacom18:
The MOU between MSMD and Viacom18 granted MSMD exclusive distribution rights for Viacom18 channels. Clause XX of the MOU stipulated a 90-day notice period for termination in case of a material breach. Viacom18 terminated the MOU without the required notice, citing MSMD's failure to place Viacom18's channels in prime slots. MSMD contended that the termination was illegal due to the absence of the 90-day notice. The TDSAT acknowledged the lack of notice but granted interim relief to Viacom18, restraining MSMD from representing Viacom18.
2. Grant of Interim Relief by TDSAT to Viacom18 and Denial to MSMD:
TDSAT granted interim relief to Viacom18, restraining MSMD from representing it post-termination. MSMD argued that the TDSAT's order was illegal as it granted relief despite acknowledging the termination's illegality. TDSAT reasoned that MSMD was seeking specific performance of a contract not enforceable under Section 41(e) of the SRA. The court upheld TDSAT's decision, noting that the losses suffered by Viacom18 due to MSMD's continued representation could be quantified and compensated.
3. Scope of Powers of TDSAT under the TRAI Act:
TDSAT's powers under Sections 14 and 15 of the TRAI Act include adjudicating disputes between service providers and granting interim relief. The court emphasized that TDSAT has the powers of a civil court and is guided by principles of natural justice. The court cited the Supreme Court's observations in Union of India v. Tata Teleservices, highlighting TDSAT's role as a specialized tribunal dealing with technical aspects of disputes.
4. Impact of Termination on Contractual Relationship between STAR DEN and TV 18 and IBN18:
STAR DEN had an agreement with TV 18 and IBN18 for exclusive distribution rights of their channels. The agreement allowed termination with a 30-day notice. TV 18 and IBN18 terminated the agreement, citing breaches by STAR DEN. STAR DEN contended the termination was invalid and sought interim relief to continue the contract. TDSAT denied interim relief to STAR DEN, restraining it from representing TV 18 and IBN18.
5. Validity of the Termination Notice Issued by TV 18 and IBN18 to STAR DEN:
TV 18 and IBN18 issued a termination notice to STAR DEN, citing breaches such as replacement of channels and non-payment of dues. STAR DEN argued the termination was invalid and sought to continue the contract. TDSAT found the termination notice valid and denied interim relief to STAR DEN, restraining it from representing TV 18 and IBN18.
6. Grant of Interim Relief by TDSAT to TV 18 and IBN18 and Denial to STAR DEN:
TDSAT granted interim relief to TV 18 and IBN18, restraining STAR DEN from representing them post-termination. STAR DEN argued that TDSAT should consider the broader impact on consumers and the industry. The court upheld TDSAT's decision, noting that the losses suffered by STAR DEN due to the termination could be quantified and compensated.
7. Applicability of the SRA and Indian Contract Act in the Context of the Disputes:
The court discussed the applicability of the SRA and Indian Contract Act in the context of the disputes. It noted that TDSAT had correctly applied the provisions of the SRA and Contract Act in deciding the interim relief. The court cited the Supreme Court's decision in Southern Roadways Ltd. v. S.M. Krishnan, emphasizing that an agent's authority terminates upon revocation of the agency, and the agent's remedy lies in claiming damages.
Conclusion:
The court upheld the TDSAT's orders granting interim relief to Viacom18 and TV 18 and IBN18, and denying the same to MSMD and STAR DEN. It found no material irregularity in TDSAT's decisions and emphasized that the losses suffered by the petitioners were quantifiable and compensatable. The court dismissed the writ petitions with costs.
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2010 (10) TMI 1166
Issues involved: Dispute over payment for coal supplied, rejection of coal due to quality issues, validity of winding-up petition.
Summary:
The appeal challenged an order permanently staying a winding-up petition against a company regarding payment for coal supplied. The petitioning creditor alleged delivering coal to the company, which was rejected due to alleged poor quality. The company contended that the coal was rejected and the matter was settled with the creditor's agent. The court directed the agent to file an affidavit. The petitioning creditor argued that the company failed to raise a genuine defense and should be ordered to pay. The court found disputes between the parties and concluded that a civil trial was necessary to determine the company's legal obligation. The court analyzed the role of the agent in the transaction and the quality of the coal supplied. It held that the company had a bona fide defense and dismissed the winding-up petition. The court referred to legal principles regarding winding-up orders and creditor's petitions. The judgment affirmed the lower court's decision, stating that the company's defense was substantial and not a mere delaying tactic. The appeal was dismissed, and parties were granted certified copies of the order.
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2010 (10) TMI 1165
Issues Involved:
1. Classification of de-oiled rice bran (DORB) under the Karnataka Value Added Tax Act, 2003.
2. Applicability of tax exemption for DORB as animal feed or feed supplement.
3. Validity of the Commissioner of Commercial Taxes' order versus the Advance Ruling Authority's order.
Summary:
Issue 1: Classification of DORB
The primary issue was whether DORB falls under the First Schedule or Third Schedule of the Karnataka Value Added Tax Act, 2003. The First Schedule exempts animal feed and feed supplements from tax, while the Third Schedule taxes "Husk and bran of cereals and pulses" at 4%. The assessee argued that DORB, used as poultry and cattle feed, should be classified under the First Schedule as an exempt commodity. The Commissioner of Commercial Taxes classified DORB under Entry 30 of the Third Schedule (up to 6-6-2005) and Entry 45 of the Third Schedule (from 7-6-2005 onwards), making it liable to tax at 4%.
Issue 2: Applicability of Tax Exemption
The assessee sought clarification from the Advance Ruling Authority, which initially classified DORB under Entry 45 of the Third Schedule, making it taxable. This was challenged, and the High Court remanded the case for reconsideration. Upon rehearing, the Authority classified DORB as an animal feed and feed supplement under Entry 8 of the First Schedule (from 1-4-2005 to 6-6-2005) and Entry 5 of the First Schedule (from 7-6-2005 onwards), thus exempting it from tax. The Commissioner later revised this decision, reinstating the tax liability.
Issue 3: Validity of Orders
The High Court examined the statutory provisions and relevant case law, including the Supreme Court's interpretation of "animal feed" and the nature of DORB as a processed commodity. The Court found that DORB, after undergoing a manufacturing process, is used as an animal feed or feed supplement and should be classified under the First Schedule. The Court noted that the Commissioner's reasoning was flawed, as it did not consider the processed nature of DORB and its use in animal feed.
Conclusion:
The High Court allowed the appeal, setting aside the Commissioner's order and restoring the Advance Ruling Authority's decision. The Court held that the assessee is entitled to the tax exemption under the First Schedule for DORB as an animal feed and feed supplement.
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2010 (10) TMI 1164
Issues involved:
The issues involved in the judgment are delay condonation, permission to appear in person, jurisdiction of Small Cause Court, arrears of rent, sub-letting, review petition, recall application, reconsideration application, scandalous allegations, transfer of property, fraud allegations, title dispute, summary trial procedure, res judicata, jurisdiction of civil court, maintainability of petition, limited jurisdiction of Small Cause Court, and consistency of orders.
Delay Condonation and Permission to Appear in Person:
The Supreme Court allowed the application for permission to appear in person and argue, after condoning the delay. The petitioner raised scandalous and unsubstantiated allegations against the former Chief Justice and advocates, leading to dismissal of the Review Petition and subsequent applications.
Jurisdiction of Small Cause Court and Arrears of Rent:
The Small Cause Court decreed the suit for ejectment, arrears of rent, and restoration of items against the defendants. The High Court upheld the decree, confirming jurisdiction to entertain the suit and validity of notice under Section 106 of TP Act regarding arrears of rent.
Sub-letting and Transfer of Property:
The defendants denied sub-letting and claimed reduction in rent due to plaintiffs' occupation of property. The petitioner challenged transfer of property without lawful possession, leading to refusal by the trial court to investigate alleged fraud involving property transfer.
Review Petition and Subsequent Applications:
The Review Petition and subsequent applications were dismissed by the High Court, with the Recall Application being termed as having no legal basis. The Reconsideration Application was also dismissed for not being maintainable in law.
Title Dispute and Summary Trial Procedure:
The Small Cause Court refused to frame an issue on title dispute, citing limited jurisdiction. The Supreme Court affirmed that the issue of title cannot be adjudicated by Small Cause Court and must be decided by a competent civil court.
Res Judicata and Consistency of Orders:
The finding on title by Small Cause Court does not operate as res judicata, necessitating adjudication by a competent civil court. The Supreme Court upheld the impugned judgment, stating that contradictory orders on the same subject matter are not permitted by law.
The petitions were dismissed for lacking merit, with the Supreme Court affirming the decisions of the lower courts and rejecting the petitioner's unsubstantiated allegations and challenges to the property transfer and title disputes.
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2010 (10) TMI 1163
Issues Involved:
1. Dismissal of the suit u/s Order VII, Rule 11 of the Civil Procedure Code.
2. Non-disclosure of cause of action in the plaint.
3. Allegations of fraud and collusion without material particulars.
4. Applicability of statutory provisions and case law to the averments in the plaint.
Summary:
1. Dismissal of the suit u/s Order VII, Rule 11 of the Civil Procedure Code:
The appeal arises from the judgment dated 03.04.2006, dismissing the suit under Order VII, Rule 11 of the Civil Procedure Code. The plaintiff sought a declaration that the Sale Deeds for land at Survey Nos. 436/1 and 436/2 were bogus and unauthorized, and prayed for cancellation of the documents and possession of the property. The defendants filed applications for dismissal of the suit, contending that the plaintiff, the real brother of defendant No. 1, had executed a Power of Attorney in favor of defendant No. 1, based on which the Sale Deeds were executed.
2. Non-disclosure of cause of action in the plaint:
The court emphasized that for considering a case under Order VII, Rule 11, only the averments in the plaint are to be considered. It was found that the plaint did not disclose a valid cause of action. The plaintiff admitted the execution of the Power of Attorney and the Sale Deeds. The court noted that the Power of Attorney expressly provided the power to sell the property, and there was no averment that it was canceled before the execution of the Sale Deeds. The court held that the absence of material facts and particulars regarding the alleged fraud or collusion meant the plaint did not disclose a cause of action.
3. Allegations of fraud and collusion without material particulars:
The court found that the plaintiff's allegations of fraud and collusion were not supported by material particulars. The plaint lacked details on how the transactions were fraudulent or collusive. The court referred to Order VI, Rules 2 and 4, which require pleadings to state material facts and particulars in cases of fraud or collusion. The court concluded that the mere use of the words "fraud" and "collusion" without details did not constitute a valid cause of action.
4. Applicability of statutory provisions and case law to the averments in the plaint:
The court referred to various precedents, including the Supreme Court's decision in ITC Ltd. v. Debts Recovery Appellate Tribunal, emphasizing that clever drafting to create an illusion of a cause of action is not permissible. The court reiterated that if the averments in the plaint are contrary to statutory law or case law, they cannot be considered as disclosing a cause of action. The court also noted that the absence of a prayer for the cancellation of the Power of Attorney further weakened the plaintiff's case.
Conclusion:
The court dismissed the appeal, upholding the Trial Court's order for rejection of the plaint under Order VII, Rule 11 of the Civil Procedure Code, as the plaint did not disclose any valid cause of action for the reliefs prayed. The appeal was dismissed with no order as to costs.
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2010 (10) TMI 1162
Issues involved: Appeal against order prohibiting trade recommendations, alleged manipulation of stock price, confirmation of ex-parte order, pending investigations.
Details of the judgment:
1. The appeal was directed against an order confirming an ex-parte ad-interim order prohibiting the Appellant from giving trade recommendations for listed companies. The Appellant, a registered stock broker, issued reports predicting the price of a particular scrip to be significantly higher after 18 months, leading to allegations of misleading investors. The Securities and Exchange Board of India (SEBI) found evidence of manipulation in the market and issued the ex-parte order pending investigations.
2. The Appellant claimed to provide comprehensive investment banking facilities and stock broking services, with a large retail network. SEBI's investigations into the manipulation of the scrip were ongoing, and the whole time member confirmed the ex-parte order based on the advanced stage of the investigation. The Appellant denied the charges and defended its research analysis reports. The Appellant appealed the order, seeking revocation of the interim direction.
3. The Tribunal heard arguments from both parties and noted that the investigations were still pending, with the Appellant out of the market for over 18 months. The technical aspects of the research analysis report required expert analysis, and the Tribunal refrained from making any comments that could prejudice either party. The Tribunal found that the equities of the case demanded vacating the interim order against the Appellant to allow the investigations to proceed in accordance with the law.
4. The Tribunal allowed the appeal, set aside the order confirming the ex-parte order, and directed SEBI to continue with the investigations. The Tribunal emphasized that its decision should not be construed as an opinion on the issues raised by the parties and ordered no costs to be awarded.
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2010 (10) TMI 1161
Issues involved: Appeal against deletion of addition u/s 2 (22) (e) of the Act, deletion of addition on expenses for domestic and foreign traveling, deletion of addition u/s 68 of the Act.
Issue 1: Addition u/s 2 (22) (e) of the Act
The revenue appealed against the deletion of an addition of Rs. 43,313 made by the AO u/s 2 (22) (e) of the Act. The AO observed that a company had given a loan to the assessee, a shareholder, which was to be treated as deemed dividend. The assessee contended that it was not a loan but an amount deposited in the imprest account for business expenses. The Ld. CIT(A) deleted the addition based on the board's resolution and relevant material. The ITAT upheld the decision, stating that the amount was for business expenses and not personal use, as evidenced by the details of expenses incurred.
Issue 2: Deletion of addition on expenses for domestic and foreign traveling
The revenue challenged the deletion of an addition of Rs. 2,05,599 on expenses for domestic and foreign traveling. The AO disallowed the amount, suspecting that certain expenses were for leisure trips rather than business purposes. The assessee explained that the expenses were incurred for business-related activities, such as attending exhibitions and workshops with artists. The Ld. CIT(A) accepted the explanation, noting that it was common practice in the art business to incur such expenses. The ITAT upheld the decision, finding no defects in the details submitted by the assessee.
Issue 3: Addition u/s 68 of the Act
The revenue contested the deletion of an addition of Rs. 25,93,000 u/s 68 of the Act. The AO made the addition based on loans from various parties, questioning the creditworthiness of the creditors. The assessee provided confirmations, bank details, and other documents to prove the genuineness of the transactions. The Ld. CIT(A) held that the assessee had fulfilled the onus of proving the transactions and criticized the AO for not collecting further evidence or cross-examining the creditors. The ITAT upheld the decision, stating that the creditors' lack of substantial taxable income did not make them non-creditworthy.
In conclusion, the ITAT dismissed the revenue's appeal in all three issues, upholding the decisions of the Ld. CIT(A) in deleting the additions.
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2010 (10) TMI 1160
Proceedings of the Competent Authority u/s 8, 9 and 10 of the ULC Act - Challenging the validity of G.O. Ms. No. 161, Revenue (UC-II) Department - HELD THAT:- According to the appellants, they are entitled to the benefits of G.O. Ms. No. 733 dated 31.10.1988 and they are entitled to the same benefits as any other holder of excess vacant lands is entitled to as they are in actual physical possession even as on date irrespective of whether the Act became applicable on 17.02.1976 or 29.09.1980. It is brought to our notice that the amendment made in G.O. Ms. No. 217 vide G.O. Ms. No. 733 dated 31.10.1988 is applicable only in the cases in which the possession of land had been taken over by the Government under Section 10(5) and 10(6) and according to the State Government, in this case, possession was taken after 31.10.1988 as pointed out by learned senior counsel for the respondents, the declarants cannot avail the said benefit since even, according to them, they were not in possession as on 31.10.1988. The benefit of G.O. Ms. No. 733 may be available if the declarants were in possession and up to 31.10.1988 and possession was taken by the Government subsequent thereto. As rightly observed by the High Court, G.O. Ms. No. 217 cannot be interpreted as entitling the declarants to claim benefit of exemption even in cases where they were not in possession as on 31.10.1988. The same was handed over to the Mandal Revenue Officer, Sherlingampally, even prior to that, the said land was allotted to Hyderabad Urban Development Authority vide G.O. Ms. No. 5013 dated 19.12.1980. Admittedly, the said Government Order was not challenged by the appellants. In those circumstances, the appellants cannot be allowed to take the benefit of G.O. Ms. No. 733 since this is not merely a case where the appellants were dispossessed but the property was transferred initially in favour of Hyderabad Urban Development Authority and later to APIIC for utilizing the same to set up IT Park Project. We are satisfied that the appellants are not entitled to claim benefits under G.O. Ms. No. 733. It is also clear from G.O. Ms. No. 455 and 456 dated 29.07.2002 that occupation/possession is sine qua non for the allotment of surplus lands.
Hence, We do not find any merit in the appeals filed by the appellants. Consequently, they are dismissed. No order as to costs.
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