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1995 (7) TMI 364
Issues:
1. Recall of impugned order due to lack of effective opportunity for appellant.
2. Consideration of Advocate's affidavit and want of proper opportunity.
3. Application of inherent jurisdiction for rehearing the appeal.
4. Applicability of rulings from Calcutta High Court and Kerala High Court.
5. Dismissal of reference application.
Analysis:
1. The primary issue in this case revolves around the recall of the impugned order by the Tribunal due to the alleged lack of effective opportunity provided to the appellant. The appellant's Counsel contended that there was a bona fide mistake in noting the adjournment date, leading to the appeal being disposed of without proper representation. The Counsel relied on the principle that such a mistake should not deprive the party of a fair hearing, citing precedents to support their argument.
2. The Advocate for the appellant filed an Affidavit confirming his presence on the date the appeal was initially scheduled for hearing. However, due to a discrepancy in the adjournment date noted by the Counsel and the Tribunal's record, the appeal was disposed of in the absence of the Advocate. The learned DR acknowledged the situation and suggested that the Tribunal should reconsider the case after re-hearing to ensure justice is served.
3. The Tribunal, after considering the submissions, noted the Advocate's Affidavit and the genuine mistake made in noting the adjournment date. Citing the inherent jurisdiction of the Tribunal to ensure a fair hearing, the Tribunal decided that the appeal should be reheard to prevent any harm or irreparable injury to the party. The Tribunal referred to relevant judgments, emphasizing the importance of providing a reasonable opportunity to be heard before passing orders on the appeal.
4. The Tribunal drew guidance from the Divisional Bench of the Calcutta High Court and the Kerala High Court's rulings, which highlighted the Tribunal's power to set aside ex parte orders in the interest of justice. These judgments underscored the significance of affording a fair opportunity to the parties involved and the Tribunal's authority to rectify any procedural shortcomings to ensure a just outcome.
5. Consequently, the Tribunal ordered the recall of the impugned order and directed the appeal to be listed for re-hearing on merits. The new hearing date was set for a specific date to rectify the procedural lapse and ensure the appellant receives a fair chance to present their case. Additionally, the reference application was dismissed in light of the Tribunal's decision on the petition, concluding the legal proceedings in this matter.
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1995 (7) TMI 357
Jurisdiction of High Court - Held that:- No bar created by a statute can bar the exercise of jurisdiction under article 226 of the Constitution conferred upon the High Court. But, at the same time while exercising the powers under article 226 of the Constitution, the High Court should keep in mind the legislative intention indicated by sub-section (7) and should respect it. Only in exceptional cases should the court interfere and not as a matter of course.
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1995 (7) TMI 351
Issues Involved:
1. Compulsory winding up of Business Forms Ltd.
2. Outstanding dues and acknowledgment of debt.
3. Dispute over the validity of bills and payments.
4. Claim for interest and sales tax declaration forms.
5. Allegation of fabricated documents and unauthorized signatory.
Detailed Analysis:
1. Compulsory Winding Up of Business Forms Ltd.:
This application was made by Ashoka Agencies for the compulsory winding up of Business Forms Ltd. The petitioner claimed that a total sum of Rs. 24,32,416.01 remained due and payable by the company as of March 31, 1992. The company acknowledged and admitted its liability in a communication dated September 21, 1992, promising to make the payment. Subsequent supplies and payments were made, but a balance of Rs. 17,38,647.95 remained unpaid.
2. Outstanding Dues and Acknowledgment of Debt:
The petitioner argued that the company had accepted and acknowledged the debt of Rs. 24,32,416.01 as of March 31, 1992, through a letter dated September 21, 1992. The company disputed this, claiming the letter was fabricated and that no such acknowledgment was made. The court found the acknowledgment valid, interpreting the language "payable by us" as a promise to pay.
3. Dispute Over the Validity of Bills and Payments:
The company contested the validity of the bills raised by the petitioner, stating they bore no nexus to the transactions. The petitioner provided detailed invoices and evidence of acceptance by the company. The court noted that the company had made payments and accepted supplies without objection, thus validating the petitioner's claims. The court also highlighted that the company did not provide evidence to support their claims of fabricated documents.
4. Claim for Interest and Sales Tax Declaration Forms:
The petitioner claimed interest at 24% per annum and additional amounts due to the non-supply of sales tax declaration forms. The court did not find any written agreement for the interest rate claimed by the petitioner and allowed interest at 12% per annum. The court directed the company to supply the sales tax declaration forms within one month or pay an additional sum of Rs. 1,20,934.
5. Allegation of Fabricated Documents and Unauthorized Signatory:
The company alleged that the acknowledgment letter dated September 21, 1992, was fabricated and signed by an unauthorized person. The petitioner countered this by showing that the signatory, Mr. Pravesh Kumar, was the business manager and authorized signatory at the relevant time. The court accepted the petitioner's evidence and rejected the company's allegations.
Conclusion:
The court concluded that the company had no bona fide defense to the petitioner's claim for the principal amount. The petition for winding up was admitted, with directions for advertisement and conditions for staying the winding-up proceedings if the company made the required payments and supplied the sales tax declaration forms within the specified period. The petition was allowed, and the company was directed to act on a signed copy of the dictated order.
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1995 (7) TMI 344
The Revenue's application for condonation of delay in an appeal was accepted by the Appellate Tribunal CEGAT, New Delhi. The Tribunal upheld the classification of step and repeat machines under Heading 84.40 of the CTA, 1975 based on previous decisions. The appeal was disposed of accordingly.
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1995 (7) TMI 337
Whether the respondent is entitled to the benefit of exemption from sales tax under the Industrial Policy Resolution of 1986 as well as of 1989?
Whether the process undertaken by the respondent, applying which he obtains cotton from waste cotton, can be called "manufacturing" activity?
Held that:- Appeal allowed. A reading of the Industrial Policy Resolution (I.P.R.) of 1986 as well as of 1989 clearly shows that several concessions at substantial cost to public exchequer were provided only with a view to accelerate the pace of industrialisation in the State. The High Court seems to have proceeded on the assumption that the I.P.R. by itself is enough to provide the exemption from the sales tax. But where the provisions of the Sales Tax Act are also amended providing for exemption, then the court has to see whether they are the same as the I.P.R. or are they different-and if different, what is the effect of such difference. It is, therefore, necessary to ascertain the relevant provisions in the Sales Tax Act, Rules and notifications, if any, issued thereunder before expressing a final opinion in the matter.
The dealers and assessees normally contend that the process undertaken by them does not involve manufacture, that no new goods have come into existence and that, therefore, no tax or duty is leviable. But here the respondent is adopting a converse position because it is beneficial to him under the I.P.R. Thus the proper course would be to remit the matter to the High Court for a decision afresh in the light of the observations made herein.
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1995 (7) TMI 331
Issues:
1. Whether transferring major shares of a company amounts to subletting under a lease deed.
2. Whether the provisions of the Companies Act, 1956, protect the company's right to transfer shares.
3. Whether the corporate veil can be lifted to prevent subletting in this case.
Analysis:
1. The main issue in this case is whether transferring major shares of a company constitutes subletting under a lease deed. The applicant argues that such transfer would amount to subletting, as it involves circumventing the lease agreement by allowing third parties to occupy the demised premises. The respondent, on the other hand, contends that inviting others to purchase shares or selling shares retained by the company is a legitimate right under the Companies Act and does not amount to subletting.
2. The respondent relies on Section 34 of the Companies Act, 1956, which establishes that a company is a separate legal entity from its shareholders. The respondent argues that changes in shareholding do not affect the ownership of leasehold rights and should not be considered as subletting. The applicant, however, asserts that the corporate veil should not be used to evade the terms of the lease agreement and that the true nature of the transaction should be examined.
3. The applicant invokes the concept of lifting the corporate veil to prevent subletting. Referring to legal precedents, the applicant argues that the corporate veil should be lifted when it is used to wilfully disobey court orders or evade contractual obligations. However, the court finds that in this case, the respondent's actions of inviting share subscriptions or selling shares do not amount to subletting under the lease deed, and therefore, the application for injunction is dismissed.
In conclusion, the court rules in favor of the respondent, stating that the applicant has not demonstrated a prima facie case or balance of convenience to warrant granting an injunction. The court emphasizes that the respondent's actions of transferring or selling shares do not constitute subletting under the lease agreement, as the company's rights to manage its shareholding are protected under the Companies Act.
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1995 (7) TMI 328
Issues Involved:
1. Maintainability of the special appeal under Chapter VIII, rule 5 of the Allahabad High Court Rules, 1952.
2. Whether the Company Law Board can be treated as a court.
Summary:
1. Maintainability of the Special Appeal:
A preliminary objection was raised regarding the maintainability of the special appeal against the judgment of a learned single judge, who decided the first appeal u/s 10F of the Companies Act, 1956, against an order passed by the Company Law Board. The respondents argued that such a special appeal is not maintainable under Chapter VIII, rule 5 of the Allahabad High Court Rules, 1952. Rule 5 specifies that a special appeal shall lie to the court from a judgment in respect of a decree or order made by a court subject to the superintendence of the court, but not from orders passed in the exercise of appellate jurisdiction or in the exercise of jurisdiction under articles 226 or 227 of the Constitution, with certain exceptions.
2. Whether the Company Law Board is a Court:
The court examined whether the Company Law Board (CLB) can be treated as a court. The judgment detailed various precedents and legal definitions to distinguish between a court and a tribunal. The CLB, constituted u/s 10E of the Companies Act, possesses some trappings of a court, such as the power to summon witnesses, enforce attendance, and accept evidence. However, it was concluded that the CLB is a tribunal and not a court. The court noted that the CLB functions in a quasi-judicial manner, performing duties under the Act and other statutes, but it does not possess the inherent judicial power of the State like ordinary civil courts.
Conclusion:
The court held that the special appeal filed by the appellant is maintainable, as the Company Law Board is a tribunal and not a court within the meaning of Rule 5 of Chapter VIII of the Allahabad High Court Rules, 1952. The judgment emphasized that all courts are tribunals, but not all tribunals are courts, and the CLB falls into the latter category. The special appeal was thus allowed to proceed.
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1995 (7) TMI 318
Issues Involved:
1. Rectification of the register of shares under Section 155 of the Companies Act, 1956.
2. Jurisdiction of the court to entertain the petition under Section 155.
3. Validity of the decree passed by the Division Bench and its enforcement.
4. Appointment of a receiver to manage the company's affairs and implement court directions.
Analysis:
1. Rectification of the Register of Shares under Section 155 of the Companies Act, 1956:
The petitioner sought to rectify the register of shares of the first respondent-company to include his name as a joint holder of shares registered in the names of respondents Nos. 2 and 3. The company court dismissed the petition, stating that the petitioner did not apply for registration as transferee in the manner specified by the statute. The court emphasized that proceedings under Section 155 cannot overlook statutory prescriptions regarding the mode of transfer. Additionally, the agreement set up by the petitioner was disputed and pending in a separate civil suit, making it undesirable to pronounce on the question of title at this stage.
2. Jurisdiction of the Court to Entertain the Petition under Section 155:
Respondents Nos. 1 and 2 contended that the judgment in M.F.A. No. 547 of 1981 could not be implemented as the court lacked jurisdiction. They argued that a decree passed by a court without jurisdiction is a nullity and can be challenged whenever and wherever it is sought to be enforced, citing Kiran Singh v. Chaman Paswan, AIR 1954 SC 340. The court, however, held that the Division Bench had considered all aspects and the Supreme Court had dismissed the special leave petition, making the judgment final. The exclusion of civil court jurisdiction cannot be assumed unless explicitly stated by statute. The court concluded that the Division Bench had jurisdiction to entertain the petition, and the respondents could not re-agitate the issue.
3. Validity of the Decree Passed by the Division Bench and Its Enforcement:
The court emphasized that the executing court can only go behind a decree if there was a lack of inherent jurisdiction, not merely erroneous exercise of jurisdiction. The respondents' challenge based on jurisdiction was not sustained as the Division Bench's judgment had become final after the Supreme Court dismissed the special leave petition. The court cited several precedents, including Sunder Dass v. Ram Parkash, AIR 1977 SC 1201, affirming that a decree's validity can only be challenged if the court lacked inherent jurisdiction. The court reiterated that even a wrong decision on jurisdiction does not render a decree a nullity.
4. Appointment of a Receiver to Manage the Company's Affairs and Implement Court Directions:
A company application was filed for the appointment of a receiver to take over the company's assets and manage its affairs to implement the court's directions. The court noted that the decree had been executed in part by appointing a receiver, indicating partial compliance with the judgment. The respondents' participation in the proceedings and the appointment of a receiver further weakened their contention regarding the nullity of the judgment.
Conclusion:
The court overruled the objections raised by respondents Nos. 1 and 2, affirming the validity and enforceability of the Division Bench's judgment. The court held that the decree could not be challenged on jurisdictional grounds at the execution stage, as the issue had been conclusively decided and confirmed by the Supreme Court. The appointment of a receiver was upheld, and the respondents were directed to comply with the court's orders.
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1995 (7) TMI 317
Issues Involved:
1. Validity of the BIFR's decision to appoint DAIL for the revival of ACL.
2. Determination of the "promoter" of ACL.
3. Compliance with procedural requirements under SICA, especially regarding tax concessions.
4. Legality of the transfer of shares under the sanctioned scheme.
5. Preferential rights of promoters in the revival scheme.
6. Validity and enforceability of directions given to the Central Government under the sanctioned scheme.
Detailed Analysis:
1. Validity of the BIFR's Decision to Appoint DAIL for the Revival of ACL:
The High Court upheld the decision of the Appellate Authority, which confirmed the BIFR's order sanctioning the scheme proposed by DAIL. The court noted that the BIFR had examined various schemes and found DAIL's proposal to be in accordance with the principles of the Act. The Appellate Authority also found that DAIL's scheme was feasible and that banks, financial institutions, and the Government of Andhra Pradesh had agreed to provide the necessary reliefs and concessions. The court emphasized that its jurisdiction was limited to judicial review and not to sit in appeal against the Appellate Authority's order.
2. Determination of the "Promoter" of ACL:
The court held that Bennett, Coleman and Co. Ltd. (BCCL) could not be considered the promoter of ACL, as it had not taken any steps preceding the incorporation of ACL. The court noted that the original promoters were Mr. D.L.N. Raju and Associates and the KCP group. BCCL, despite having substantial shareholding and controlling interest, was not the promoter. The court also rejected Dr. Jain's claim to be the promoter, as his agreement with BCCL was conditional and not approved by the financial institutions.
3. Compliance with Procedural Requirements under SICA, Especially Regarding Tax Concessions:
The court addressed the issue of whether the scheme was circulated to the Central Board of Direct Taxes (CBDT) as required under section 19 of SICA. The court referred to a letter from the Director of Income-tax (Recovery), which confirmed that the tax concessions granted by the BIFR were in order. The court rejected BCCL's contention that the scheme was invalid due to non-circulation to the CBDT, noting that the necessary approvals were obtained post-sanction.
4. Legality of the Transfer of Shares under the Sanctioned Scheme:
The court upheld the legality of the transfer of shares to DAIL, referencing the Supreme Court's decision in Kamani's case, which allowed for the transfer of shares in a sick industrial company under a sanctioned scheme. The court rejected BCCL's argument that the BIFR had no power to transfer ownership of the company, noting that the SICA provided for such measures under section 18.
5. Preferential Rights of Promoters in the Revival Scheme:
The court held that there is no principle of law that gives promoters a preferential right for the revival of a company after the stage under sub-section (2) of section 16 is crossed. The court noted that the BIFR may consider giving the promoter a right if their scheme is similar to others and if the promoter was not responsible for the company's sickness. However, in this case, both BCCL and Dr. Jain were found lacking in financial resources and managerial capability.
6. Validity and Enforceability of Directions Given to the Central Government under the Sanctioned Scheme:
The court held that the BIFR could not issue directions that the Central Government did not have the authority to comply with under any law. Specifically, the court found that the direction to extend the period of limitation for ACL for filing recovery suits against debtors by three years was beyond the BIFR's powers. The court noted that such directions must be within the framework of the Act and cannot nullify provisions of other laws like the Limitation Act.
Conclusion:
The High Court dismissed the petitions challenging the BIFR's and Appellate Authority's orders, upholding the scheme sanctioned in favor of DAIL. The court found no merit in the objections raised by BCCL and Dr. Jain, emphasizing the need for expeditious revival of the sick industrial company in the larger public interest. The court also directed that costs be paid to the Indian Council of Legal Aid and Advice.
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1995 (7) TMI 316
The petitioners sought higher pay scale and allowances like security officers at a bank, but the court dismissed the petition. The petitioners were employees of a company, not the bank, and the bank was only advancing funds to pay their salaries. The court ruled that the petitioners had no legal right to demand equal pay or regularization from the bank. The petition was dismissed with no costs.
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1995 (7) TMI 315
Issues Involved:
1. Validity of the memorandum of understanding dated 14-2-1995.
2. Requirement of notice for the adjourned meeting.
3. Plaintiffs' equitable expectations and their positions in the company.
Issue-wise Detailed Analysis:
1. Validity of the memorandum of understanding dated 14-2-1995:
The plaintiffs argued that the memorandum of understanding entered into with the defendants on 14-2-1995 was not a concluded contract. They contended that it was merely an arrangement still under negotiation and could not be used to amend the articles of association. They emphasized that since time was the essence of the contract and the time schedule was not adhered to, the move to amend the articles should not be allowed. The court agreed with the plaintiffs that the memorandum was not a concluded contract, citing the principle that a contract must settle everything necessary to be settled and leave nothing to be settled by agreement between the parties. Since the price was yet to be negotiated, the memorandum did not result in a concluded contract. However, the court noted that the plaintiffs themselves extended the period and asked for another valuer, distinguishing this case from the precedents cited by the plaintiffs. The court concluded that the memorandum, whether a concluded contract or not, did not affect the merits of the controversy as nobody sought to take away the plaintiffs' holdings or remove them from their positions. The changes proposed were aimed at the smooth functioning of the management and did not affect the plaintiffs' legitimate expectations.
2. Requirement of notice for the adjourned meeting:
The plaintiffs contended that a notice of the adjourned meeting scheduled for 19-7-1995 was required in terms of the regulations contained in Table A in the First Schedule to the Companies Act, 1956. The court acknowledged that no fresh notice was issued after 9-5-1995, which seemed to be envisaged by the regulations in Table A. However, the court pointed out that the articles of association of the company indicated that Table A did not apply. Therefore, the objection regarding notice was dismissed.
3. Plaintiffs' equitable expectations and their positions in the company:
The plaintiffs argued that having worked for the company from its inception and being assured of their positions in the articles of association and the tripartite agreement, their equitable expectations should not be frustrated by the proposed amendments/deletions of the articles. The court noted that the plaintiffs' holdings and positions in the company would remain unaffected by the proposed changes. The proposed amendments were intended to protect the interests of the majority shareholders and ensure the smooth functioning of the management. The court emphasized that the matter was ultimately left to the shareholders to decide in the meeting whether to adopt or reject the proposals. Consequently, an injunction could not be granted to restrain the holding of the meeting as it was the only way for the shareholders to decide the matter.
Conclusion:
The court dismissed the application for an interim injunction, allowing the extraordinary general meeting to proceed as scheduled. The proposed amendments to the articles of association were left to the wisdom of the shareholders to either adopt or reject.
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1995 (7) TMI 314
Issues:
- Challenge to orders of the Foreign Exchange Regulation Appellate Board
- Power of the Board to dispense with pre-deposit of penalty amount
- Judicial review of Board's orders
- Waiver of penalty amount by the Board
Analysis:
The judgment involves a challenge to the orders of the Foreign Exchange Regulation Appellate Board regarding the pre-deposit of penalty amounts in an appeal under the Foreign Exchange Regulation Act, 1973. The respondents, exporters of agricultural equipment, failed to realize export proceeds, leading to penalties imposed by the Special Director. The Board directed them to deposit specific amounts as a condition for hearing their appeal against the penalties. The petitioner, Union of India, challenged the subsequent orders of the Board extending time and reducing the deposit amount, alleging patent illegality. The key issue was whether the Board had the power to review its earlier order and dispense with the pre-deposit of penalty amounts.
The judgment delves into the legal provisions under Section 52 of the FERA, which empower the Board to dispense with the pre-deposit of penalty amounts if it would cause undue hardship to the appellant. The Court emphasized that such discretion must be exercised judiciously and in the interest of justice. The order to waive the pre-deposit is considered an interim procedural step, not a decision on the merits of the case. The Court highlighted that the Board can modify or alter interlocutory orders to prevent hardship and ensure the appellant's right to appeal is not lost due to uncontrollable circumstances. Therefore, the order under Section 52(2) is deemed interlocutory, aiding the final adjudication of the appeal.
Regarding the waiver of the penalty amount by the Board, the Court analyzed the circumstances presented by the respondents. The Board's decision to waive a portion of the penalty was based on the respondents' financial constraints and efforts to raise funds. The Court found the Board's decision reasonable, considering the deposit already made by the respondents and the potential undue hardship of further deposits. The Court dismissed the petition, concluding that the Board's actions were not arbitrary or perverse, and the petition lacked merit based on the detailed analysis of the legal provisions and circumstances surrounding the case.
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1995 (7) TMI 313
Issues:
The petition seeks a declaration regarding the validity of the arbitration agreement, appointment of arbitrators, and the legality of the award.
Arbitration Agreement and Appointment of Arbitrators:
The petitioner, a former clerk of the 6th Respondent, applied for membership in the Bombay Stock Exchange with the 6th Respondent's support. Disputes arose, leading to arbitration under the Exchange's Rules. The initial arbitrator, Mr. G.V. Desai, resigned and was replaced by Mr. Ashok Khandwalla. Subsequently, the 5th Respondent was appointed as an arbitrator. The petitioner challenged these appointments, claiming the arbitration agreement was not valid. However, a consent order and minutes showed the parties had appointed arbitrators and agreed to arbitration under the Exchange's Rules.
Time-Barred Claims and Arbitration Proceedings:
The petitioner argued that the claims and arbitration proceedings were time-barred, citing Bye-laws 254 and 261, which set time limits for making awards. Additionally, the petitioner contended that the Arbitration Act's provisions on limitation applied to the proceedings. However, the Court found that the governing body could extend the time for making the award, and section 37 did not apply to arbitration under the Exchange's Rules.
Applicability of Rules, Bye-laws, and Regulations:
The petitioner disputed the applicability of the Exchange's Rules, Bye-laws, and Regulations to the arbitration due to the absence of contract notes between the parties. However, Bye-laws 226(a) and 226(c) stipulated that all contracts made by a member with a non-member on the Exchange were subject to the Rules, Bye-laws, and Regulations, regardless of the presence of contract notes. These provisions confirmed that such contracts and dealings fell under the governance of the Exchange's Rules.
In conclusion, the Court dismissed the petition, upholding the validity of the arbitration agreement, the appointments of arbitrators, and the applicability of the Exchange's Rules, Bye-laws, and Regulations to the dispute.
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1995 (7) TMI 312
Issues:
1. Challenge to proceedings under the Foreign Exchange Regulation Act, 1973.
2. Failure of the first respondent to pass orders on the application to dispense with penalty deposit.
3. Legality of the direction issued by the third respondent to deposit the penalty amount.
4. Relief sought by the petitioner in light of pending appeal and inaction of the first respondent.
Analysis:
1. The petitioner challenged the proceedings under the Foreign Exchange Regulation Act, 1973, initiated by the second respondent, which resulted in the imposition of a penalty. The petitioner appealed to the first respondent against this order. However, the first respondent had not passed any orders on the petitioner's application to dispense with the penalty deposit, leaving the petitioner in a vulnerable position. The petitioner contended that without a stay order or dispensation of the penalty deposit, the second respondent could proceed with recovery actions. The petitioner sought relief through the writ petition due to the lack of action by the first respondent.
2. The legal counsel for the petitioner argued that the first respondent's failure to exercise the power vested under the statute, as per the second proviso to section 52(2) of the Act, by not passing any orders on the application for dispensation of the penalty deposit, left the petitioner with no choice but to approach the court for relief. On the other hand, the counsel for the second respondent highlighted that in the absence of a stay order or dispensation of the penalty deposit by the first respondent, the second respondent was within their rights to pursue recovery of the penalty amount. The legal provision under section 52(2) clearly empowered the appellate authority to dispense with the penalty deposit, a power that had not been exercised in this case.
3. The direction issued by the third respondent to deposit the penalty amount was challenged by the petitioner in the writ petition. The court noted that without an order of stay from the appellate authority, the third respondent was justified in issuing the direction for depositing the penalty amount. While the court found no illegality in the third respondent's action, it acknowledged the petitioner's predicament due to the pending appeal and the first respondent's inaction in deciding on the application for dispensation of the penalty deposit.
4. In light of the pending appeal and the delay in the first respondent's decision on the penalty deposit dispensation application, the court deemed it necessary to grant relief to the petitioner in the interest of justice. The court directed the first respondent to dispose of the appeal within three months and ordered the third respondent not to initiate any recovery proceedings against the petitioner until the appeal was resolved. This decision aimed to provide the petitioner with protection against immediate penalty recovery actions while awaiting the appellate authority's decision, ensuring a fair opportunity for the petitioner to present their case.
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1995 (7) TMI 284
Oppression and mismanagement - Whether the valuation made by Shri M. Vatsaraj on 30-9-1993 was proper and correct?
Held that:- This appeal is disposed of subject to the direction to the respondents as agreed to by them that they will pay to the appellants an additional amount of ₹ 66 lakhs in the manner provided by the consent terms of February, 1993 and as laid down by the consent order dated 5-3-1993, within a period of eight weeks from today. The amount of ₹ 11 lakhs already deposited by the respondent will also enure for the benefit of the appellants. On payment of this additional amount of ₹ 66 lakhs the directions contained in the judgment under appeal shall become operative and shall be carried out by all concerned.
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1995 (7) TMI 282
Whether it was necessary for the ITO to obtain the leave of the liquidation court when he wanted to reassess the company in liquidation for escaped income in respect of past years?
Held that:- Appeal allowed. The Special Court has no jurisdiction to sit in appeal over the assessment of the tax liability of a notified person by the authority or Tribunal or Court authorised to perform that function by the statute under which the tax is levied. The Special Court has, therefore, no jurisdiction to determine whether or not any assessment of the tax liability of a notified person by the appropriate authority is bona fide or reasonable or justified or enforceable.
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1995 (7) TMI 261
Issues Involved:
1. Whether the Cochin Stock Exchange Ltd. is amenable to writ jurisdiction under Article 226 of the Constitution of India.
2. Whether the Cochin Stock Exchange Ltd. is an authority under Article 12 of the Constitution of India.
3. Whether the termination of services and arbitration proceedings are purely contractual and thus not subject to writ jurisdiction.
Issue-Wise Detailed Analysis:
1. Whether the Cochin Stock Exchange Ltd. is amenable to writ jurisdiction under Article 226 of the Constitution of India:
The primary question addressed was whether the Cochin Stock Exchange Ltd., a company registered under the Companies Act, 1956, falls within the ambit of Article 226, which allows for the issuance of writs. The petitioners argued that the Exchange is under the control of the Central Government and performs public duties, making it an 'other authority'. They cited various provisions of the Memorandum of Association and the Securities Contracts (Regulation) Act, 1956, to substantiate their claim of deep and pervasive control by the Central Government. However, the court found that these provisions are regulatory in nature and do not confer the status of an authority under Article 12. The court concluded that the regulatory measures alone are insufficient to make the Exchange amenable to writ jurisdiction under Article 226.
2. Whether the Cochin Stock Exchange Ltd. is an authority under Article 12 of the Constitution of India:
The court examined whether the Cochin Stock Exchange Ltd. qualifies as an authority under Article 12, which would make it subject to writ jurisdiction. The petitioners cited several Supreme Court decisions to argue that the Exchange performs public functions and is under significant governmental control. However, the court found that the control exercised by the Central Government is only regulatory and not pervasive. The court referred to various tests laid down by the Supreme Court, such as financial assistance, control of management and policies, and public functions, and concluded that the Exchange does not meet these criteria. Therefore, the Cochin Stock Exchange Ltd. is not an authority under Article 12.
3. Whether the termination of services and arbitration proceedings are purely contractual and thus not subject to writ jurisdiction:
The court also addressed the specific cases of the petitioners, one involving the termination of services and the other involving arbitration proceedings. The court held that both matters are purely contractual in nature. The termination of services was found to be in accordance with the terms of the contract, and the arbitration proceedings were based on contractual obligations. The court emphasized that the extraordinary jurisdiction under Article 226 is not the proper forum for resolving contractual disputes. Consequently, the writ petitions were dismissed on these grounds as well.
Conclusion:
The court dismissed both the writ appeal and the original petition, concluding that the Cochin Stock Exchange Ltd. is not amenable to writ jurisdiction under Article 226 and does not qualify as an authority under Article 12. The court also held that the issues raised were purely contractual and not suitable for adjudication under the extraordinary jurisdiction of Article 226.
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1995 (7) TMI 260
Issues Involved:
1. Jurisdiction under Sections 391 to 394 of the Companies Act, 1956.
2. Validity and fairness of the Scheme of Arrangement.
3. Objections raised by minority shareholders.
4. Role of the Court in sanctioning the Scheme of Arrangement.
Detailed Analysis of the Judgment:
1. Jurisdiction under Sections 391 to 394 of the Companies Act, 1956:
The objectors contended that the court's power under Sections 391 to 394 of the Companies Act, 1956, could only be exercised for companies liable to be wound up and not for solvent companies. They relied on the judgment in *Seksaria Cotton Mills Ltd. v. A.E. Naik*, which held that Section 391 applies to companies being wound up or in financial distress. However, the petitioners cited various cases, including *Sm. Bhagwantiv. New Bank of India Ltd.*, *Bank of India Ltd v. Ahmedabad Mfg. & Calico Printing Co. Ltd.*, and *Telesound India Ltd., In re*, which dissented from the *Seksaria* judgment, arguing that the term "liable to be wound up" includes all companies subject to winding-up provisions, regardless of their financial condition.
The court agreed with the petitioners, stating that the expression "liable to be wound up" means any company that can be wound up under the Act, not necessarily one in financial distress. The court emphasized that the provisions of Sections 391 to 394 are applicable to all companies, whether solvent or not, as long as they fall within the purview of the Act's winding-up provisions.
2. Validity and Fairness of the Scheme of Arrangement:
The scheme involved the transfer of three tea estates from Rossell Industries Ltd. to Rossell Tea Ltd. in exchange for shares allotted to the shareholders of Rossell Industries Ltd. The scheme was approved by 99.18% of the shareholders of Rossell Industries Ltd. and 100% of the shareholders of Rossell Tea Ltd. The objectors argued that the transfer was virtually a gift and not beneficial to Rossell Industries Ltd. However, the court noted that the transfer was for consideration, as the shareholders of Rossell Industries Ltd. would receive shares in Rossell Tea Ltd.
The court highlighted that the vast majority of shareholders approved the scheme, and the objections were raised by an insignificant minority (0.1171% of the total shareholding). The court referenced the case *Hindusthan General Electric Corpn. Ltd., In re*, which held that the onus of proving unreasonableness or unfairness lies on the objectors, which they failed to discharge.
3. Objections Raised by Minority Shareholders:
The objectors claimed that the scheme was unfair and not in the best interest of Rossell Industries Ltd. They argued that the transfer of profitable tea gardens would ruin the company's financial position. However, the court found no merit in these objections, noting that the transfer was for consideration and that the shareholders of Rossell Industries Ltd. would benefit from the shares allotted to them.
The court also dismissed allegations of fraud and improper conduct, citing the lack of specific particulars. The court referenced *Union of India v. P.K. More* and *Wallingford v. Director, Mutual Society & the Official Liquidator*, which held that general allegations of fraud without specific details are insufficient.
4. Role of the Court in Sanctioning the Scheme of Arrangement:
The court emphasized its role in ensuring that the scheme is fair, reasonable, and in the best interest of the shareholders and creditors. The court noted that the scheme had been approved by the statutory majority and that the objections raised were not substantial enough to warrant rejection.
The court referenced the case *[1961] (1) Chancery Division 289*, which held that a scheme must be patently unfair to be rejected. The court found that the scheme was not unfair or unreasonable and that the decision of the majority of shareholders should be respected.
Conclusion:
The court sanctioned the Scheme of Arrangement, finding that it was fair, reasonable, and in the best interest of the shareholders. The objections raised by the minority shareholders were dismissed as lacking merit and specific particulars. The court ordered the parties to act on a signed xerox copy of the judgment on the usual undertaking.
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1995 (7) TMI 240
Issues Involved:
1. Eligibility of Freon Solvent/Freon T.F. Solvent for Modvat credit.
2. Eligibility of Stropping paste Aluminium Oxide Polishing Powder for Modvat credit.
3. Eligibility of Trichloroethylene for Modvat credit.
4. Eligibility of Teflon Coated Glass Cloth for Modvat credit.
Detailed Analysis:
1. Eligibility of Freon Solvent/Freon T.F. Solvent for Modvat Credit:
The Department argued that Freon Solvent/Freon T.F. Solvent should not be eligible for Modvat credit. However, the respondent contended that Freon Solvent is an anti-rust or anti-corrosion preparation used in the manufacture of blades. The initial judgment by the Vice President held that Freon Solvent is an input having regard to its functional use in relation to the end product. However, the Member (T) observed that the Assistant Collector had unauthorisedly included the plea regarding Freon Solvent in the appeal. Consequently, it was decided that the Tribunal need not pronounce on the admissibility of Modvat credit for Freon Solvent/Freon T.F. Solvent.
2. Eligibility of Stropping Paste Aluminium Oxide Polishing Powder for Modvat Credit:
The Department contended that Stropping paste, being an aid for polishing, should not be eligible for Modvat credit. The respondent argued that Stropping paste is used for polishing and sharpening the blade, which is essential for the product's marketability. The Vice President agreed, stating that Stropping paste is necessary to bring about the desired finishing on the blades, impacting the quality of the blades produced. The Member (T) concurred, noting that the use of Stropping paste has a bearing on the quality of the blades and is not excluded from the Modvat Scheme. Therefore, it was concluded that Stropping paste qualifies for Modvat credit.
3. Eligibility of Trichloroethylene for Modvat Credit:
The Department argued that Trichloroethylene, used for cleaning the lids of canisters, is not an input for Modvat credit. The respondent contended that Trichloroethylene is used to ensure the blades remain 100% free from dust or impurities, preventing rust and maintaining quality. The Vice President initially held that Trichloroethylene is an input due to its functional use in relation to the end product. However, the Member (T) disagreed, stating that Trichloroethylene is used for maintenance of equipment rather than in the manufacturing process. The third Member (J) ultimately concurred with the Vice President, citing Supreme Court rulings that anything required to make goods marketable must form part of the manufacture and that inputs used in the integrated process of manufacture should be treated as raw materials. Therefore, Trichloroethylene was deemed eligible for Modvat credit.
4. Eligibility of Teflon Coated Glass Cloth for Modvat Credit:
The Department argued that Teflon Coated Glass Cloth, used to get smooth surfaces and scratch-free blades, should not be eligible for Modvat credit. The respondent claimed it is essential to prevent distortion and impart a scratch-free surface finish during the manufacturing process. The Vice President, however, did not consider Teflon Coated Glass Cloth as an input. The Member (T) agreed, noting that its use is more in the nature of making the machinery functional rather than being an input in the manufacturing process. Therefore, it was concluded that Teflon Coated Glass Cloth does not qualify for Modvat credit.
Final Judgment:
The majority decision concluded that:
- Freon Solvent/Freon T.F. Solvent's eligibility for Modvat credit need not be decided by the Tribunal.
- Stropping paste Aluminium Oxide Polishing Powder is eligible for Modvat credit.
- Trichloroethylene is eligible for Modvat credit.
- Teflon Coated Glass Cloth is not eligible for Modvat credit.
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1995 (7) TMI 231
The appeal was remanded on a question of law regarding the filing of a declaration under Notification No. 140/83. The appellant claimed to have filed a declaration with the Assistant Collector, supported by a carbon copy bearing the official seal. The Tribunal found discrepancies in the Collector's rejection and ordered a remand for factual verification of the declaration's authenticity. The impugned order was set aside for proper investigation and disposal in accordance with the law.
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