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Showing 81 to 100 of 570 Records

• 2001 (2) TMI 981
  
  Issues:
  - Relief on account of demand raised under section 201(1) for short deduction of tax on compensatory city allowance
  - Relief on account of interest under section 201(1A) of the Income-tax Act, 1961
  - Requirement of obtaining clearance from the high powered committee on dispute settlement before filing appeals
  - Merit of appeals filed by the Department
  - Tax deduction on compensatory city allowance (CCA) by the assessee-bank
  - Applicability of tax deduction on CCA based on jurisdictional High Court's decision
  - Impact of subsequent amendment in section 2(24) of the Act on tax deduction
  - Liability of the assessee-bank for short deduction of tax and interest under section 201(1A)
  
  Analysis:
  The Department filed appeals against the relief granted by the Commissioner of Income-tax (Appeals) on the demand raised under section 201(1) for short deduction of tax on compensatory city allowance (CCA) and interest under section 201(1A) of the Income-tax Act, 1961. However, the appeals faced a procedural hurdle as it was mandatory to obtain clearance from the high powered committee on dispute settlement before filing the appeals. The absence of such clearance rendered the appeals not maintainable, highlighting the importance of compliance with procedural requirements before initiating legal proceedings.
  
  The jurisdictional High Court's decision in the case of CIT v. R. R. Bajoria held that CCA did not form part of salary, impacting the tax deduction obligations of the assessee-bank. The subsequent insertion of sub-clauses in section 2(24) of the Act mandated tax deduction on CCA with retrospective effect, leading to the demand raised by the Assessing Officer for short deduction of tax and interest. The first appellate authority allowed the appeals by the assessee-bank, emphasizing that the bank had complied with the law by collecting tax based on existing provisions, as evidenced in the annual returns.
  
  The Tribunal agreed with the Commissioner of Income-tax (Appeals) that the assessee was not required to deduct tax on CCA based on the jurisdictional High Court's decision during the relevant assessment years. The Tribunal also noted that the assessee-bank fulfilled its obligations under section 192 of the Act by collecting tax from employees' salaries as per the prevailing law, negating the existence of short deduction of tax. However, the Tribunal upheld the direction to recover the short deduction of tax arising from the retrospective amendment in section 2(24) from the concerned employees, while dismissing the grounds of appeal against the Department regarding interest levied under section 201(1A).
  
  In conclusion, the Tribunal found the order of the Commissioner of Income-tax (Appeals) to be in accordance with the law, leading to the dismissal of the appeals filed by the Department. The detailed analysis highlighted the significance of legal compliance, impact of judicial decisions on tax obligations, and the retrospective effect of legislative amendments on tax liabilities.

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• 2001 (2) TMI 980
  

  Whether the provisions contained under Section 152 C.P.C. may or may not strictly apply to any particular proceeding?

  Whether on the facts of the present case and the principles it could be said that there was any clerical or arithmetical error or accidental slip on the part of the Court or not?

  Held that:- Allow the appeal. Looking to the prayers made by the respondent-husband for granting mandatory injunction the application for rectification of decree was totally misconceived and was only liable to be dismissed rather to incorporate terms and conditions of the agreement dated 26.7.1991 in respect of which no prayer was made in the application for modification nor in the original petition for dissolution of marriage more particularly when no accidental slip on the part of the Court was indicated in the application nor the same being substantiated. In view of the discussion allow this appeal and set aside the orders passed by the High Court and family court dated 11.11.1992 allowing the application for rectification/modification of the decree dated 7.3.1992.

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• 2001 (2) TMI 979
  

  Whether provisions of Order IX Rule 13 of the Code of Civil Procedure or the principles thereof are applicable in a case where objections under Section 33 of the Arbitration Act, 1940 are not filed and ex-parte decree is passed on the basis of the award filed before the Court by making the award rule of the Court?

  Held that:- Appeal allowed. The provisions of CPC are specifically made applicable and there is no reason to hold that Order IX Rule 13 would not be applicable in case where judgment is pronounced under Section 17 of the Act in absence of objection application tendered by the party objecting to the award. For all purposes such decree is ex-parte for the party objecting to the award. Under C.P.C. ex-parte decree has no technical meaning. Division Bench was right in arriving at the conclusion that this was a fit case for condoning the delay and setting aside the decree dated 28th April 1987.

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• 2001 (2) TMI 978
  
  Issues Involved:
  1. Petition for winding up under Sections 433 and 439 of the Companies Act, 1956.
  2. Outstanding dues and financial inability of the respondent-company.
  3. Appointment of provisional liquidator.
  4. Impleadment of employees' unions.
  5. Admission and publication of the winding-up petition.
  6. Financial status and management of the respondent-company.
  7. Final order for winding up.
  
  Issue-Wise Detailed Analysis:
  
  1. Petition for Winding Up:
  The petitioner filed a petition under Sections 433 and 439 of the Companies Act, 1956, seeking the winding up of the respondent-company. The basis of the petition was the non-payment of dues for civil works and interior construction services rendered by the petitioner to the respondent-company.
  
  2. Outstanding Dues and Financial Inability:
  The petitioner provided evidence of works assigned and completed through letters of intent and affirmations of satisfactory completion. Despite repeated requests and a statutory notice under Section 434 of the Companies Act, 1956, the respondent-company failed to pay the outstanding amount of Rs. 8,26,498.89 along with interest. The respondent-company acknowledged this debt in their written statement but did not make any further payments, indicating their inability to discharge financial liabilities.
  
  3. Appointment of Provisional Liquidator:
  During the pendency of the petition, the petitioner moved for the appointment of a provisional liquidator under Section 450 of the Companies Act, 1956. The court, upon concluding that there was no possibility of revival for the respondent-company, appointed a provisional liquidator to take custody of the company's assets. This decision was challenged but upheld in Company Appeal No. 24 of 2000.
  
  4. Impleadment of Employees' Unions:
  Three employees' unions filed an application under Order 1, Rule 10 of the Code of Civil Procedure to be impleaded, arguing that the winding-up petition would adversely affect over 1,200 employees. The court accepted their request, and the unions were added as respondents.
  
  5. Admission and Publication of the Winding-Up Petition:
  After hearing the parties, the court directed the publication of the admission of the winding-up petition in the Indian Express (Chandigarh edition), the Dainik Tribune, and the Official Gazette of Punjab. This was affirmed by the petitioner through an affidavit.
  
  6. Financial Status and Management of the Respondent-Company:
  The court noted several critical points indicating the respondent-company's dire financial situation:
  - Admission of a liability of Rs. 500 crores, including losses and debts.
  - No revival scheme proposed by the respondent-company.
  - Failed attempts to secure loans.
  - Non-payment to creditors and employees for extended periods.
  - Absence of substantive management, with allegations of mismanagement unrebutted.
  - No unencumbered assets available, with all properties mortgaged.
  - A report from the official liquidator detailing claims from 239 creditors amounting to over Rs. 283.01 crores.
  
  7. Final Order for Winding Up:
  Given the respondent-company's inability to pay its debts and the lack of any viable revival plan, the court concluded that the ingredients of Section 433(e) and (f) of the Companies Act, 1956, were satisfied. Consequently, the court ordered the winding up of Punjab Wireless Systems Limited. The official liquidator, previously appointed as the provisional liquidator, was confirmed as the liquidator to take over the company's assets and records. The order was to be published in the Indian Express, Dainik Tribune, and the Official Gazette of Punjab.
  
  The judgment comprehensively addressed the issues, detailing the financial incapacity and mismanagement of the respondent-company, leading to the inevitable conclusion of winding up.

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• 2001 (2) TMI 977
  
  Issues Involved:
  1. Legality of the application of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
  2. Validity of the competent authority's order and Tribunal's decision.
  3. Requirement of establishing a nexus between the property/assets and illegal activities of the detenue/convict.
  4. Acceptance of income-tax authorities' findings in proceedings under the Act.
  5. Scope of judicial review under Articles 226 and 227 of the Constitution of India.
  
  Detailed Analysis:
  
  1. Legality of the application of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976:
  The petitioner challenged the application of the Act, arguing that the conditions requisite for its application were non-existent and that there was no reason for proceeding against him under the Act. The petitioner contended that there was no connecting link or nexus between holding of the property or assets by him and the illegal activity of the detenue/convict.
  
  2. Validity of the competent authority's order and Tribunal's decision:
  The competent authority issued a notice under section 6(1) for forfeiture of properties, including a house, life insurance policy, and bank deposits, and held that these properties were illegally acquired. The Tribunal, by a majority view, upheld the competent authority's order, while the Chairman dissented. The petitioner argued that the income-tax authorities had accepted his stand that the constructions were made out of his own funds. However, the Tribunal noted that findings of income-tax authorities are not conclusive under section 21 of the Act.
  
  3. Requirement of establishing a nexus between the property/assets and illegal activities of the detenue/convict:
  The petitioner submitted that there must be a link or nexus between the holding of the property or assets by the person proceeded against and the illegal activity of the detenue/convict, which the authorities failed to establish. The respondent argued that there is no statutory requirement to establish such a nexus and that the burden of proof lies on the person affected to prove that the properties are not illegally acquired.
  
  4. Acceptance of income-tax authorities' findings in proceedings under the Act:
  The Tribunal held that findings of income-tax authorities do not have binding force in proceedings under the Act, as per section 21. The competent authority independently examined the petitioner's sources of investment and found them to be untenable, concluding that the properties were acquired from the earnings of smuggling activities.
  
  5. Scope of judicial review under Articles 226 and 227 of the Constitution of India:
  The Court emphasized that the scope for interference with factual findings is very limited under Articles 226 and 227. Interference is permissible only if the findings are perverse, based on irrelevant material, or arrived at without considering relevant material. The Court found that the competent authority and the Tribunal had made an elaborate analysis of the factual position and that the petitioner failed to discharge the burden of proof under section 8 of the Act.
  
  Conclusion:
  The writ petition was dismissed as it lacked merit. The Court upheld the competent authority's order and the Tribunal's majority view, concluding that the petitioner did not establish that the properties were not illegally acquired. The Court also clarified the legal position regarding the burden of proof and the scope of judicial review under the Constitution.

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• 2001 (2) TMI 974
  
  The Appellate Tribunal CEGAT, Kolkata rejected the Revenue's appeal regarding the classification of jute carpets. The Tribunal upheld the earlier decision in favor of the respondents, as there was no stay by the Supreme Court. The Revenue's appeal was rejected, and the Stay Petition was also disposed of.

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• 2001 (2) TMI 971
  

  Whether a decision regarding the venue of the arbitration proceedings could be assailed in appeal under section 34 of the Arbitration and Conciliation Act, 1996?

  Whether the decision of the Joint Arbitration Committee dated 15-7-1998 can be held to be an interim award?

  Held that:- Appeal dismissed. The ultimate arbitral award could be assailed on the grounds indicated in sub-section (2) of section 34 and an erroneous decision on the question of venue, which ultimately affected the procedure that has been followed in the arbitral proceeding could come within the sweep of section 34(2) and as such it cannot be said that an aggrieved party has no remedy at all.

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• 2001 (2) TMI 970
  
  Issues Involved:
  1. Validity and enforceability of the bank guarantee.
  2. Respondent's obligations under the counter guarantee.
  3. Impact of the memorandum of understanding and BIFR proceedings.
  4. Applicability of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
  5. Maintainability of the winding-up petition.
  
  Detailed Analysis:
  
  1. Validity and Enforceability of the Bank Guarantee:
  The petitioner, Syndicate Bank, issued an unconditional and irrevocable bank guarantee (No. 11 of 1980) for Rs. 33,65,200 at the request of the respondent, Vijay Tank and Vessels Ltd., in favor of Southern Petrochemical Industries Ltd. (SPIC). The guarantee was issued towards the faithful performance of contractual obligations by the respondent. SPIC invoked the bank guarantee on 24-12-1982. The Madras High Court decreed that the bank guarantee was unconditional and irrevocable, obligating the petitioner to pay the guaranteed amount. The Division Bench of the Madras High Court affirmed this judgment on 28-6-1999.
  
  2. Respondent's Obligations under the Counter Guarantee:
  The respondent issued a counter guarantee to the petitioner on 5-5-1980. Despite the respondent's contention that the guarantee had expired and that they were not a party to the suit by SPIC, the court noted that the respondent had undertaken on 13-1-1995 to pay the petitioner if the Madras High Court ruled in favor of SPIC. The memorandum of understanding dated 7-10-1993 also stipulated that the counter guarantees would continue until the suit was finally decided by the Madras High Court.
  
  3. Impact of the Memorandum of Understanding and BIFR Proceedings:
  The memorandum of understanding signed on 7-10-1993 between the respondent and its creditors, including the petitioner, provided for the release of securities held by the petitioner. However, it explicitly stated that the counter guarantees related to the bank guarantees would continue to subsist until the final decision of the Madras High Court. The BIFR proceedings concluded that the respondent was no longer a sick industry as of 31-3-1995, and the case was closed.
  
  4. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985:
  The respondent argued that the winding-up petition was not maintainable due to the ongoing implementation of the BIFR scheme. However, the court found that the BIFR proceedings had been closed and that the respondent was no longer a sick industry. Therefore, section 22 of the Act was not applicable.
  
  5. Maintainability of the Winding-Up Petition:
  The petitioner filed a suit (No. 4655 of 1998) to recover the proceeds of the bank guarantee. The court determined that there was a debt due and payable by the respondent to the petitioner and that the respondent had no bona fide defense in the winding-up proceedings. Consequently, the court directed the respondent to furnish security for the amount of Rs. 29.65 lakhs within 12 weeks, failing which the winding-up petition would be admitted and advertised.
  
  Order:
  1. The respondent must furnish security of Rs. 29.65 lakhs within 12 weeks, with 50% covered by an unconditional bank guarantee and the balance secured to the satisfaction of the Prothonotary and Senior Master.
  2. If the respondent fails to furnish the security, the winding-up petition will be admitted and advertised, with the petitioner required to deposit Rs. 2,000 for publication charges.
  
  Conclusion:
  The court upheld the enforceability of the unconditional and irrevocable bank guarantee, confirmed the respondent's obligations under the counter guarantee, and dismissed the applicability of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The winding-up petition was deemed maintainable, subject to the respondent furnishing the required security.

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• 2001 (2) TMI 969
  
  Issues Involved:
  1. Maintainability of the writ petition.
  2. Validity of the swap ratio in the scheme of amalgamation.
  3. Compliance with procedural requirements under the Banking Regulation Act.
  4. Allegations of proxy solicitation and coercion.
  5. Allegations of insider trading.
  6. Adequacy of notice and disclosure to shareholders.
  7. Appointment of chartered accountants for valuation.
  8. Request for probe into the merger.
  9. Conduct of the petitioner-association.
  
  Issue-wise Detailed Analysis:
  
  1. Maintainability of the Writ Petition:
  The writ petition was filed to postpone the extraordinary general meeting (EGM) and to inspect the auditor's report. However, the EGM was held on 19-1-2001 before the writ petition could be taken up for admission, rendering the main prayer infructuous. The petitioner association failed to establish that its President or office-bearers were shareholders of Bank of Madura Ltd. at the relevant time, which challenged the maintainability of the writ petition.
  
  2. Validity of the Swap Ratio in the Scheme of Amalgamation:
  The petitioner argued that the swap ratio of 2:1 was unfair. However, the valuation was conducted by Deloitte Haskins and Sells, considering various financial metrics. The court emphasized that the Reserve Bank of India (RBI) is the authority to determine the market value of shares under Section 44A of the Banking Regulation Act, and the court should not interfere in this matter.
  
  3. Compliance with Procedural Requirements under the Banking Regulation Act:
  The court noted that Section 44A of the Banking Regulation Act is a self-contained provision for the amalgamation of banking companies. The scheme must be approved by the shareholders and sanctioned by the RBI. The court held that the RBI is empowered to determine the market value of shares and to sanction the scheme, and thus, the court should not express any opinion on the valuation of shares.
  
  4. Allegations of Proxy Solicitation and Coercion:
  The petitioner alleged that proxies were solicited and shareholders were coerced. However, the court found no evidence to support these claims. The Chairman's report of the EGM did not indicate any protest from shareholders regarding coercion. The court held that such allegations should be examined by the RBI.
  
  5. Allegations of Insider Trading:
  The petitioner claimed heavy insider trading in the shares of Bank of Madura Ltd. However, the court found no material evidence to support this claim. The mere fact that the Bombay Stock Exchange called for certain particulars did not establish insider trading.
  
  6. Adequacy of Notice and Disclosure to Shareholders:
  The petitioner contended that the notice of the meeting was not published in newspapers with adequate circulation. The court rejected this claim, as evidence showed that the notice was published in 'The Hindu' and 'Daily Thanthi'. The petitioner also argued that shareholders were not furnished with the valuation report, but the court found that the notice included an explanatory statement and listed documents available for inspection.
  
  7. Appointment of Chartered Accountants for Valuation:
  The petitioner questioned the appointment of Deloitte Haskins and Sells, arguing they were the chartered accountants of ICICI Bank Ltd. The court held that it was appropriate to appoint the same chartered accountants for both banks to ensure a comprehensive evaluation, considering the confidential nature of banking transactions.
  
  8. Request for Probe into the Merger:
  The petitioner requested a probe into the merger. The court rejected this request, stating that it is for the shareholders to accept or oppose the scheme, and the requisite majority had approved the amalgamation. The court found no grounds to order a probe.
  
  9. Conduct of the Petitioner-Association:
  The court noted that the petitioner-association had issued misleading notices and telegrams suggesting that the matter was sub judice and contempt proceedings would be taken, even though the court had not issued any such orders. This conduct indicated an attempt to delay the RBI's consideration of the scheme.
  
  Conclusion:
  The court dismissed the writ petition at the admission stage, finding no prima facie case for interference. The court emphasized that the RBI is the appropriate authority to determine the market value of shares and to sanction the scheme of amalgamation. The petitioner's various allegations were rejected due to lack of evidence or relevance.

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• 2001 (2) TMI 968
  

  Notified person - Recovery of amount due - Held that:- Appeal dismissed. Whenever the Legislature wishes to do so it makes appropriate provisions in the Act in that behalf. Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 wherein after giving an overriding effect to the 1993 Act it is specifically provided that the said Act will be in addition to and not in derogation of a number of other Acts including the SICA. Similarly under section 32 of the SICA the applicability of the Foreign Exchange Regulation Act, and the Urban Land Ceiling Act is not excluded. It is clear that in the instant case there was no intention of the Legislature to permit the SICA to apply notwithstanding the fact that proceedings in respect of a company may be going on before the BIFR. The Special Court Act is to have an overriding effect notwithstanding any provision to the contrary in another Act.

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• 2001 (2) TMI 967
  
  Issues Involved:
  1. Sanction of the scheme of amalgamation under Sections 391 and 394 of the Companies Act, 1956.
  2. Compliance with statutory requirements.
  3. Objections raised by creditors, specifically Paramount Limited.
  4. Merits and fairness of the scheme of amalgamation.
  5. Financial condition of the transferor and transferee companies.
  6. Jurisdiction and discretion of the High Court in sanctioning the scheme.
  
  Detailed Analysis:
  
  1. Sanction of the Scheme of Amalgamation:
  The court was asked to sanction a scheme of amalgamation under Sections 391 and 394 of the Companies Act, 1956, involving the merger of Ion Exchange Speciality Chemicals Limited and Ion Exchange Environmental Services Limited with Ion Exchange (India) Limited. The transferor companies are wholly owned subsidiaries of the transferee company.
  
  2. Compliance with Statutory Requirements:
  The court confirmed that all statutory requirements were met. The board of directors of all companies involved passed resolutions approving the scheme, and necessary consents were obtained from shareholders and creditors. Notices were duly issued and published as required.
  
  3. Objections Raised by Creditors:
  Paramount Limited, a creditor, opposed the scheme, claiming unpaid dues of Rs. 35.45 lakhs from the transferee company. The court noted that the merits of this claim were not to be adjudicated in these proceedings. The court acknowledged the locus of the intervenors but emphasized that the scheme had unanimous approval from shareholders and no objections from secured creditors.
  
  4. Merits and Fairness of the Scheme:
  The court examined whether the scheme was fair, reasonable, and beneficial. The court emphasized that it is not its role to scrutinize the commercial merits of the scheme but to ensure it is not detrimental to creditors or public interest. The court noted that the scheme aimed to pool resources and reduce operational losses, which is a legitimate business objective.
  
  5. Financial Condition of the Transferor and Transferee Companies:
  The court reviewed the financial conditions of the companies involved. The transferee company had substantial net current assets, while the transferor companies had incurred losses. The court noted that the transferee company, as the holding company, was already responsible for the financial well-being of its subsidiaries. The amalgamation was seen as a means to consolidate resources and improve efficiency.
  
  6. Jurisdiction and Discretion of the High Court:
  The court reiterated its supervisory role in sanctioning schemes of amalgamation. It must ensure statutory compliance, fairness, and reasonableness of the scheme, without delving into commercial merits. The court cited several precedents emphasizing that the approval of a majority of shareholders and creditors is a significant but not conclusive factor.
  
  Conclusion:
  The court sanctioned the scheme of amalgamation, finding it compliant with statutory requirements, fair, reasonable, and beneficial from a business perspective. The objections raised by Paramount Limited were acknowledged but not deemed sufficient to reject the scheme. The court emphasized the importance of allowing corporate entities to restructure to meet business challenges efficiently. The petitions were made absolute in terms of the prayers sought, with no order as to costs.

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• 2001 (2) TMI 966
  
  Issues:
  1. Dispute over nominee status and entitlement to maturity amount.
  2. Allegation of deficiency in service by the bank.
  3. Appeal against the District Consumer Forum's order.
  
  Issue 1: Dispute over nominee status and entitlement to maturity amount:
  The case involved an appeal against a District Consumer Forum's judgment regarding the entitlement to a maturity amount deposited in a National Savings Scheme account. The deceased account holder had made nominees, but a dispute arose as the nomination was not noted on the passbook. The complainants sought the return of the amount along with interest and compensation. The opposite party contended that the complainant was not a consumer and that the nomination was not recorded on the passbook, thus no payment could be made based on the nomination.
  
  Issue 2: Allegation of deficiency in service by the bank:
  Both parties presented evidence before the District Consumer Forum. The Forum directed the opposite parties to pay the maturity amount along with interest and granted compensation and costs. The appeal challenged this decision, arguing that a succession certificate was required due to the absence of nomination in the passbook. However, it was noted that the nomination was made in the form but not recorded on the passbook due to an oversight by the bank clerk. The court emphasized that the complainants should not suffer for the clerk's mistake and held the bank responsible for the lost nomination form, deeming it a deficiency in service.
  
  Issue 3: Appeal against the District Consumer Forum's order:
  During the appeal hearing, the appellant's counsel reiterated the need for a succession certificate, while the opposite party's counsel highlighted the oversight in recording the nomination on the passbook. The court upheld the District Forum's decision, emphasizing that the complainants were entitled to the deposited amount as nominees, and the bank's failure to note the nomination did not absolve them of the payment obligation. Consequently, the appeal was dismissed, affirming the District Consumer Forum's judgment and imposing costs on the appellant.
  
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• 2001 (2) TMI 965
  
  Issues Involved:
  1. Appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
  2. Validity of the appointment of an arbitrator by the respondents after the filing of the petition under Section 11(6).
  3. Legal implications of the delay in appointing an arbitrator.
  
  Issue-Wise Detailed Analysis:
  
  1. Appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996:
  This case involves an application for the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, due to a dispute between the petitioners and respondents regarding the execution of a contract for the construction of a control room building for a 400 KV Sub-station. The contract, valued at Rs. 1,10,02,860, was to be completed within six months, but the petitioners claimed it could not be completed due to reasons attributable to the respondents. The contract contained an arbitration clause (Clause 56) that provided for arbitration by the General Manager of Delhi Electric Supply Undertaking or another appointed person if the General Manager was unable or unwilling to act.
  
  2. Validity of the appointment of an arbitrator by the respondents after the filing of the petition under Section 11(6):
  The primary contention revolves around the timing of the arbitrator's appointment. The petitioners invoked the arbitration clause on 15-5-1996 and reiterated their request on 30-12-1997, specifying the disputes and the claimed amount of Rs. 314 lakhs. When the respondents did not appoint an arbitrator, the petitioners filed the present petition under Section 11(6) on 13-4-1998. The respondents appointed Mr. S.R. Sethi as the sole arbitrator on 24-6-1998, after the filing of the petition. The petitioners argued that the appointment made after the filing of the petition was a nullity, as the respondents forfeited their right to appoint an arbitrator once the petition under Section 11(6) was filed.
  
  3. Legal implications of the delay in appointing an arbitrator:
  The respondents argued that there was no time limit in the arbitration agreement for appointing an arbitrator, and thus, their appointment after the filing of the petition was valid. However, the petitioners relied on precedents from the Bombay, Delhi, and Andhra Pradesh High Courts, which held that the right to appoint an arbitrator is forfeited if not exercised within a reasonable time (typically thirty days) from the demand for arbitration. The Supreme Court in Datar Switchgears Ltd. v. Tata Finance Ltd. clarified that while no specific time limit is prescribed under Section 11(6), the right to appoint an arbitrator continues until the first party moves the court under Section 11. Once an application under Section 11 is filed, any subsequent appointment by the opposite party is a nullity.
  
  Conclusion:
  The court concluded that the respondents forfeited their right to appoint an arbitrator by failing to do so before the filing of the petition under Section 11(6). The appointment made after the filing of the petition was deemed invalid. The Chief Justice or the designated person is to appoint an independent and impartial arbitrator, considering the provisions of Section 11(8). The petition was allowed with costs, emphasizing the importance of timely appointment of arbitrators to avoid unnecessary delays in arbitration proceedings.

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• 2001 (2) TMI 964
  
  Issues:
  Challenge to orders passed by BIFR and AAIFR, rejection of second reference application, legality of findings based on balance-sheet, jurisdictional error in impugned orders.
  
  Analysis:
  The petitioner challenged the orders passed by the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) under Article 227 of the Constitution of India. The petitioner, a company, filed a reference to the BIFR seeking a declaration as a sick industrial company based on its financial accounts for the year ending on 31-3-1998. The BIFR declared the petitioner as a sick industrial company, but this decision was overturned by the AAIFR in an appeal filed by a financial institution. Subsequently, the petitioner filed a second reference based on the accounts for the year ending on 31-3-1999, which was rejected by the BIFR and AAIFR. The petitioner contended that the rejection was faulty as it did not independently assess the second reference application. The court emphasized that each reference must stand on its own merits, and rejection of one year's reference does not preclude filing for the next year. The court clarified that the fate of the second reference does not affect the pending first reference. The court found no substance in the petitioner's arguments that the second reference should be heard with the first one. The court examined the legality of the findings based on the balance-sheet for the year ending on 31-3-1999 and concluded that the authorities correctly evaluated the petitioner's application. The court dismissed the writ petition, upholding the decisions of the BIFR and AAIFR. The court highlighted that it cannot re-examine factual scenarios beyond the first appellate stage and can only correct jurisdictional errors under Article 227. The court found no merit in the writ petition and dismissed it summarily.

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• 2001 (2) TMI 963
  
  Issues Involved:
  1. Non-compliance with the provisions of section 294(2) of the Companies Act, 1956.
  2. Whether non-compliance constitutes an offence punishable under section 629A of the Companies Act, 1956.
  3. Whether the offence is a continuing offence.
  4. Bar of limitation in filing the complaint.
  
  Issue-wise Detailed Analysis:
  
  1. Non-compliance with the provisions of section 294(2) of the Companies Act, 1956:
  The respondent filed a complaint alleging that the petitioners did not comply with the mandatory requirements of section 294(2) while appointing Medley Marketing Private Limited and P.V. Kuruvilla as sole selling agents. The agreements did not stipulate that the appointments would cease to be valid if not approved by the company in the first general meeting after the appointments, which is a mandatory requirement under section 294(2).
  
  2. Whether non-compliance constitutes an offence punishable under section 629A of the Companies Act, 1956:
  The petitioners contended that non-compliance with section 294(2) does not constitute an offence punishable under section 629A. They argued that the consequence of non-inclusion of the condition would only render the appointments invalid from the date of the first general meeting. They cited the Bombay High Court decision in Arantee Manufacturing Corporation v. Bright Bolts (P.) Ltd., which stated that appointments without the condition mentioned in section 294(2) are void ab initio. However, the respondent argued that the mandatory nature of section 294(2) attracts the penal provisions of section 629A, which penalizes contraventions for which no specific penalty is provided elsewhere in the Act. The court agreed with the respondent, stating that the language of section 294(2) is mandatory and that section 629A applies in this case.
  
  3. Whether the offence is a continuing offence:
  The petitioners argued that the offence is not a continuing offence and that the complaint is barred by limitation, as it was not filed within six months from the dates the agreements were signed. They relied on the decision in Chandra Spinning and Weaving Mills (P.) Ltd. v. Registrar of Companies, which held that contraventions under section 220(1)(a) are not continuing offences. However, the court found that the agreements were renewed multiple times, indicating that the non-compliance continued. Therefore, the court held that the offences are of a continuing nature.
  
  4. Bar of limitation in filing the complaint:
  The petitioners contended that the complaint is barred by limitation, as it was not filed within the prescribed period. They cited the Supreme Court decision in State of Himachal Pradesh v. Tara Dutt, which emphasized the need for a speaking order when condoning delays. The court noted that the question of limitation should be considered by the trial court, which has the discretion to condone delays under section 473 of the Criminal Procedure Code. The court directed the trial court to consider the limitation issue at the initial stage and to decide whether to take cognizance of the offence after giving both parties an opportunity to present their views.
  
  Conclusion:
  The petition was dismissed, with the court directing the trial court to consider the limitation issue before taking cognizance of the offences. The court also noted that the offence is compoundable, allowing the petitioners to seek compounding of the offence from the respondent.

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• 2001 (2) TMI 962
  
  Issues:
  1. Whether proceedings under section 11 of the Arbitration and Conciliation Act, 1996 can be stayed due to the respondent being declared a sick company under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
  
  Analysis:
  The judgment in the present case revolves around the question of whether proceedings under section 11 of the Arbitration and Conciliation Act, 1996 can be stayed when the respondent has been declared a sick company under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), and the revival scheme for the company is pending with the Board for Industrial and Financial Reconstruction (BIFR). The respondent argued that any action for money recovery against them should be stayed under SICA. The court referred to a previous case, Lloyd Insulations (India) Ltd. v. Cement Corpn. of India, where it was observed that proceedings for money recovery against a sick company should be stayed under SICA. However, the court distinguished the facts of the previous case, emphasizing that the nature of the proceedings must be considered to determine if it falls under money recovery.
  
  The court analyzed Section 22 of SICA, which provides for the suspension of legal proceedings and contracts in case of a sick company. The court highlighted that the key issue is whether the proceedings under section 11 of the Arbitration and Conciliation Act, 1996 can continue if a company has been declared sick under SICA. The court referred to the Supreme Court's decision in Agio Countertrade (P.) Ltd. v. Punjab Iron & Steel Co. Ltd., where it was held that proceedings for the appointment of arbitration under the 1996 Act are not covered by SICA. The court emphasized that even if an arbitrator is appointed under section 11, the proceedings can continue despite the respondent company being declared sick under SICA. Therefore, the court dismissed the respondent's application to discontinue the proceedings under section 11.
  
  In conclusion, the court ruled that the proceedings under section 11 of the Arbitration and Conciliation Act, 1996 can continue even if the respondent company has been declared a sick company under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The court relied on the interpretation provided by the Supreme Court in a similar case and emphasized that the appointment of an arbitrator under section 11 does not warrant a stay in proceedings, as they fall outside the scope of SICA.

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• 2001 (2) TMI 961
  
  Issues:
  1. Quashing of proceedings under sections 138 and 141 of the Negotiable Instruments Act, 1881.
  2. Requirement of specific averments in the complaint against directors for maintaining the complaint.
  3. Interpretation of section 141(1) regarding liability of persons in charge of company's affairs.
  4. Application of legal precedents in determining sufficiency of allegations in the complaint.
  
  Issue 1: Quashing of Proceedings under Sections 138 and 141:
  The judgment concerns petitions filed under section 482 of the Criminal Procedure Code seeking to quash proceedings initiated under sections 138 and 141 of the Negotiable Instruments Act, 1881. The petitioners, identified as A-9, A-7, A-8, and A-6, sought to challenge the validity of the proceedings based on specific grounds presented by their counsel.
  
  Issue 2: Requirement of Specific Averments Against Directors:
  The judgment emphasizes the importance of specific averments in a complaint against directors or partners of a company to maintain a complaint under sections 138 and 141 of the Act. It is highlighted that mere allegations without explicit mention of the directors being in charge of and responsible for the company's affairs may lead to the quashing of proceedings against such individuals.
  
  Issue 3: Interpretation of Section 141(1) Regarding Liability of Persons in Charge:
  Section 141(1) of the Act stipulates that individuals, apart from the company, can be held liable for offenses committed by the company if they were in charge of and responsible for the company's affairs at the time of the offense. The judgment clarifies that for proceedings to be valid against such individuals, the complaint must explicitly state their role as directors in charge of the company's conduct.
  
  Issue 4: Application of Legal Precedents in Determining Sufficiency of Allegations:
  The judgment references legal precedents, including the Supreme Court decision in K.P.G. Nair v. Jindal Menthol India Ltd., to underscore the necessity of specific averments in a complaint to establish the liability of directors under section 141(1). It distinguishes other cases cited by the respondent where specific allegations were present, unlike the current case where vague assertions were made.
  
  In conclusion, the judgment quashes the proceedings against the petitioners (A-9, A-7, A-8, and A-6) due to the lack of explicit averments in the complaint regarding their roles as directors responsible for the company's affairs at the time of the offense. The decision aligns with legal principles requiring precise allegations to uphold complaints against individuals under sections 138 and 141 of the Negotiable Instruments Act.

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• 2001 (2) TMI 959
  
  The petitioner sought to quash a demand raised by the respondent Board for electricity charges. The petitioner claimed to be a sick unit under SICA, but failed to provide necessary documents. The court found no merit in the petition and dismissed it, vacating all interim orders. No costs were awarded.

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• 2001 (2) TMI 957
  

  Whether the respondents have the necessary statutory authority for levying a fee of the nature which is impugned in this petition?

  Whether this fee is, as a matter of fact, a tax in the guise of fee and is so excessive as to lose the character of a fee as contended by the petitioners?

  Held that:- Appeal dismissed. Once the levy is in public interest and connected with the larger trade in which the contributories are involved then confining the services only to the contributories does not arise. Since the Amount collected under the impugned levy is being spent by the Board on various activities of the stock and securities market with which the petitioners are directly connected, the fact that the entire benefit of the levy does not accrue to contributories, i.e., the petitioners would not make the levy invalid.

  The fee is not being levied on the turnover as such but the fee is being levied on the brokers making their annual turnover as a measure of the levy which is a fee for regulating the activities of the securities market and for registration of the brokers and other intermediaries in the said market. Therefore, it is futile to contend that such levy would be either a tax or a fee on turnover. It is a settled principle in law that if the State has the authority to impose a levy then it has a wide discretion in choosing the measure of levy provided, of course, it withstands the test of reasonableness.Therefore, it would be futile to contend that the impugned fee merely because it is levied on the basis of the turnover of brokers would either amount to a turnover tax or a tax on income

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• 2001 (2) TMI 955
  

  Whether there is a closure of the company within the meaning of the Industrial Disputes Act, 1947 ?

  Whether the agreement dated 25-8-1965 is capable of enforcement ?

  Whether the workers are workmen or entitled to prefer any claim on the basis of the agreement dated 25-8-1965?

  Whether the transferor-company or the transferee-Corporation can assert that there has been closure and further that agreement is not capable of enforcement?

  Held that:- Here there has been no transfer for the undertaking from the company to the Corporation as found by the Tribunal and upheld by the High Court, because by order made by the company court, the scheme of arrangement was to close down the company and what was taken over by the Corporation was a separate arrangement. Therefore, in the eye of the law, what is to be held is that the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer and every workman who has been in service for more than ten (one ?) year in that undertaking immediately before such closure shall be entitled to notice and compensation in accordance with the provision of section 25F, as if the workman has been retrenched. In case where an undertaking is closed down by reason of financial difficulties as was the position in the present case, it cannot be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer. Therefore, if an application is made by the workmen or by the union on their behalf before a Labour Court under section 33C(2), it will be proper for the Labour Court to examine the claims under section 25FFF of the Industrial Disputes Act, of each of these workmen and award compensation accordingly, which shall be payable by the Union of India and to those proceedings, the erstwhile company and the Union of India shall be parties.

  Thus direct the Labour Court concerned on the filing of such applications to dispose of the same within a period of three months

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