|
Advanced Search Options
Case Laws
Showing 1 to 20 of 432 Records
-
1998 (6) TMI 593
Issues:
1. Appeal against penalty imposed for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.
2. Plea for waiver from pre-deposit of penalty based on financial hardship and prima facie case.
3. Allegation of acquiring foreign exchange without permission and contravention of section 8(1) of the Act.
4. Dispute regarding application of section 8(1) to the facts of the case.
5. Examination of facts related to the appellant's trips to Singapore and acquisition of foreign exchange.
6. Dispute regarding statements of passengers supporting the appellant's actions.
7. Appellant's statement regarding financing of trips and denial of contravention of section 8(1).
8. Analysis of appellant's role in the alleged contravention and partnership in the alleged racket.
9. Lack of evidence to establish contravention of section 8(1) against the appellant.
10. Decision to set aside the impugned order based on the above analysis.
Analysis:
1. The appeal before the Appellate Tribunal pertains to a penalty imposed on the appellant for contravening section 8(1) of the Foreign Exchange Regulation Act, 1973. The appellant sought a waiver from pre-deposit of the penalty based on financial hardship and a prima facie case.
2. The appellant was accused of acquiring foreign exchange without permission, amounting to US $42,900, from individuals other than authorized dealers, thereby violating section 8(1) of the Act. The appellant contested the application of this provision to the facts of the case.
3. The Tribunal examined the appellant's trips to Singapore, where he acted as a group leader, facilitating passengers in acquiring Foreign Travel Scheme (FTS) allowances and purchasing goods using those funds. The Adjudicating Officer's findings were based on the appellant's own admissions during the trips.
4. Discrepancies arose regarding the statements of passengers supporting the appellant's actions. The appellant denied certain allegations and claimed that the Enforcement Officer did not verify the facts with the passengers involved.
5. The appellant stated that the trips were financed by a third party, Jagan Nath, and he acted as an agent and air-ticketing agent. He argued that he did not contravene section 8(1) as he did not directly acquire foreign exchange and the goods were imported in the passengers' names.
6. The Tribunal found that the appellant's role was more of a facilitator for the passengers and financiers, rather than a direct acquirer of foreign exchange. The Tribunal highlighted the lack of evidence showing the appellant's direct involvement in acquiring foreign exchange.
7. The Adjudicating Officer's observation of the appellant being a willing partner in a racket was challenged, with the appellant's counsel arguing that the goods were imported in the passengers' names, absolving the appellant of direct acquisition of foreign exchange.
8. The Tribunal concluded that the impugned order lacked sufficient evidence to establish the appellant's contravention of section 8(1) and set aside the penalty imposed on the appellant.
9. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order based on the lack of evidence connecting the appellant to the contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.
-
1998 (6) TMI 592
Issues Involved:
1. Bar of limitation for initiating proceedings under Section 14B of the Act.
2. Binding nature of guidelines issued by the Central Provident Fund Commissioner.
3. Discriminatory nature of guidelines issued by the Central Provident Fund Commissioner.
4. Arbitrariness and non-application of mind in the impugned orders.
Issue-wise Detailed Analysis:
Re: (a) Bar of Limitation
The appellants argued that the proceedings under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 should be quashed due to unreasonable delay and lack of statutory limitation. The court held that there is no statutory period of limitation prescribed under Section 14B for initiating action for recovery of damages. The court emphasized that the amounts involved are deductions from employees' wages, and employers, as trustees, are accountable for these amounts at any time. The court cited several decisions supporting the view that delay alone does not vitiate the proceedings unless there is proof of irretrievable prejudice to the employer. The court concluded that mere delay cannot lead to an inference of prejudice, and the intention of the legislature not to prescribe any period of limitation for such proceedings is evident from the absence of any amendment to this effect.
Re: (b) Binding Nature of Guidelines
The appellants contended that the guidelines issued by the Central Provident Fund Commissioner for imposing damages should be binding on the respondents. The court disagreed, stating that these guidelines are merely administrative and cannot curb the discretion vested in the Regional Provident Fund Commissioners. The court referred to decisions from various High Courts which held that the Central Provident Fund Commissioner cannot issue instructions that interfere with the quasi-judicial functions of the Regional Provident Fund Commissioners. Thus, the court held that the guidelines do not have the force of law and are not binding on the respondents.
Re: (c) Discriminatory Nature of Guidelines
The appellants argued that the guidelines issued by the Central Provident Fund Commissioner are discriminatory and violate Article 14 of the Constitution. The court rejected this argument, reiterating that the guidelines are not binding and do not have the force of law. Therefore, the question of discrimination does not arise.
Re: (d) Arbitrariness and Non-application of Mind
The appellants claimed that the respondents arbitrarily levied penalties without considering relevant factors like strikes and financial constraints. The court found this submission without merit. It noted that the impugned orders were passed after considering all relevant factors, including the financial difficulties faced by the employers. The court cited the Supreme Court's decision in Organo Chemical Industries v. Union of India, which held that financial difficulties cannot be grounds for relieving the employer of its statutory obligations. The court also observed that the appellants were habitual defaulters who likely utilized the deducted amounts for their business interests. Thus, the court concluded that the impugned orders were not arbitrary or a result of non-application of mind.
Conclusion:
The appeals and writ petitions were dismissed, affirming the orders passed by the Regional Provident Fund Commissioners. The court upheld the validity of the proceedings under Section 14B of the Act, rejected the binding nature of the guidelines issued by the Central Provident Fund Commissioner, and found no arbitrariness or non-application of mind in the impugned orders.
-
1998 (6) TMI 591
Issues: Interpretation of limitation period in Section 138 of the Negotiable Instruments Act - Calculation of period based on British calendar month or lunar month.
Analysis:
1. The case involves a dispute between the accused and the complainant regarding the presentation of a cheque for collection, which was returned due to insufficient funds. The accused argued that the cheque was presented after the expiration of the limitation period, barring criminal prosecution under Section 138 of the Negotiable Instruments Act.
2. The accused contended that the limitation period should commence from the date the cheque was drawn, excluding the date of the instrument, as per Section 9 of the General Clauses Act. The accused relied on previous judgments to support this interpretation, emphasizing that the period of limitation starts from the date mentioned in the cheque or instrument.
3. The court analyzed the provisions of Section 138 of the Act, emphasizing that the limitation period indeed begins from the date of the instrument, as established by previous Supreme Court and High Court judgments. The court cited relevant precedents to support the view that the majority opinion of judges has settled the interpretation that the limitation period commences from the date the instrument bears.
4. Another crucial aspect of the case was the calculation of the six-month limitation period prescribed in Section 138 (proviso (a)) of the Act. The court deliberated on whether the term "month" should be construed as a British calendar month or a lunar month. The court referred to Section 3(35) of the General Clauses Act, which defines a month as per the British calendar.
5. The court examined various judicial interpretations on the definition of a month in different statutes, noting the conflicting views on whether a month should be considered as a period of 30 days or a calendar month. Ultimately, the court aligned with the interpretation that a month, as per the Act, refers to a British calendar month, in agreement with decisions from the High Courts of Calcutta and Andhra Pradesh.
6. Based on the above analysis, the court concluded that the cheque in question was presented after the expiration of the limitation period, as calculated based on the British calendar month. Consequently, the court quashed the magistrate's order and dismissed the proceedings in the criminal case, ruling in favor of the accused.
This detailed analysis highlights the key legal arguments, interpretations of relevant statutes, and judicial precedents considered by the court in delivering the judgment on the interpretation of the limitation period in Section 138 of the Negotiable Instruments Act.
-
1998 (6) TMI 590
Issues involved:
- Unreasonable delay in considering the detenu's representation leading to illegal detention.
Detailed analysis:
The appellant, the wife of a person detained under the Tamil Nadu Prevention of Dangerous Activities Act, challenged the detention order due to unreasonable delay in considering the detenu's representation. The detenu had submitted a representation on 7.10.97, which was finally rejected by the Government on 10.11.97. The State Government failed to provide a satisfactory explanation for the delay in processing the representation. Despite being given an opportunity to respond, the Government did not file a counter affidavit to justify the delay. The Court noted that while the delay itself may not be fatal, unexplained delay becomes unreasonable. The Government's indifference and failure to promptly address the detenu's representation led to the illegal detention. Consequently, the Court allowed the appeal, quashed the detention order, and directed the detenu's immediate release unless required in connection with another case.
-
1998 (6) TMI 589
Issues:
Complaint filed for offence under Section 500 read with Section 34, I.P.C. - Petition for quashing proceedings - Maintainability of complaint - Defamation allegations against Kerala Police - Cognizance by Court - Application challenging order rejecting plea to drop proceedings - Complainant's status as aggrieved person - Interpretation of Section 199, Cr.P.C. - Application of Explanation 2 to Section 499, I.P.C. - Defamation against a company or association - Determining defamation against Kerala Police - Precedents on defamation against a group - Defamatory statements in the complaint - Requirement of specific allegations for defamation - Lack of clarity in complaint - Necessity of producing defamatory material - Validity of taking cognizance without clear allegations - Prejudice to accused in absence of clear allegations - Preventing abuse of court process - Quashing proceedings in the interest of justice.
Analysis:
The judgment dealt with a complaint alleging defamation under Section 500 read with Section 34, I.P.C. against the petitioner, who sought to quash the proceedings. The petitioner, President of a company, was accused of broadcasting defamatory imputations against the Kerala Police without verifying their truth. The Court considered the maintainability of the complaint, focusing on whether the complainant was personally aggrieved by the alleged defamation. It analyzed Section 199, Cr.P.C., which mandates complaints by aggrieved persons for offences under Chapter XXI, I.P.C. The Court also examined Explanation 2 to Section 499, I.P.C., regarding defamation against a company or association, in this case, the Kerala Police.
The judgment delved into the definition of a definite and determinable body to establish defamation against the Kerala Police, citing precedents where defamation against a group was found not maintainable without individual accusations. The Court emphasized the need for specific allegations in the complaint to support a charge of defamation. It highlighted the lack of clarity in the complaint's defamatory statements and the necessity of producing the broadcasted material as evidence. The judgment underscored that the absence of clear allegations could prejudice the accused's defense and that the cause of action must be based on the complaint's allegations, not evidence during trial.
Furthermore, the Court considered the potential harassment to the petitioner in facing a criminal trial based on vague allegations and concluded that there was no likelihood of conviction. It invoked the duty to prevent the abuse of the court process and quashed the proceedings in the interest of justice. The judgment also noted the acquittal of another accused, further supporting the decision to quash the complaint. Ultimately, the Court held that the complaint was not maintainable due to the lack of clarity in allegations and the potential prejudice to the accused, leading to the quashing of the proceedings.
-
1998 (6) TMI 588
Issues:
1. Taxability of capital receipt in respect of mesne profits as a capital receipt under the Income-tax Act, 1961.
Detailed Analysis:
1. The Tribunal referred a question regarding the taxability of a capital receipt in respect of mesne profits under section 256(1) of the Income-tax Act, 1961. The case involved a lease deed granting land to a lessee who later assigned the rights to the assessee-firm. Disputes arose, leading to a civil suit where mesne profits were awarded to the assessee-firm.
2. The Assessing Officer treated the mesne profits as a revenue receipt, which was upheld by the appellate authority. However, the Tribunal analyzed the situation, considering the lease right as part of the land and buildings, and the connection of income derived from the property. The Tribunal directed the Assessing Officer to assess capital gains for the relevant period.
3. The crucial question was whether there was a transfer of a capital asset and if any capital gains arose. The Tribunal's finding suggested a civil suit resulted in Voltas Ltd. being liable to pay mesne profits. However, the High Court determined that there was no transfer of a capital asset as the ownership of the building remained with the lessor, and only the right to use and possession was transferred.
4. The High Court disagreed with the Tribunal's finding of a transfer of the capital asset, emphasizing that the lease of the building did not constitute a transfer of ownership. They cited a previous court decision to support their conclusion that mesne profits are not considered income or a revenue receipt for tax purposes.
5. Ultimately, the High Court ruled in favor of the assessee, stating that there was no transfer of a capital asset within the meaning of the Income-tax Act, and therefore, no capital gains were liable to tax. This decision was supported by a previous court ruling, reinforcing the non-taxable nature of mesne profits.
In conclusion, the High Court's judgment clarified the tax treatment of mesne profits as a capital receipt, emphasizing the absence of a transfer of a capital asset in this specific case, leading to the decision in favor of the assessee against the revenue authorities.
-
1998 (6) TMI 587
Issues Involved:
1. Whether the proceedings under Section 138 of the Negotiable Instruments Act can be quashed due to the pendency of winding-up petitions under Sections 536(2) and 441(2) of the Companies Act.
2. Whether the undertakings given by the petitioners to pay amounts can be quashed.
3. Whether the presentation of a winding-up petition creates a legal disability to make payments, thus preventing the commission of an offence under Section 138 of the Negotiable Instruments Act.
4. Whether there is a conflict between Section 138 of the Negotiable Instruments Act and Sections 536(2) and 441(2) of the Companies Act.
Detailed Analysis:
1. Quashing of Proceedings under Section 138 of the Negotiable Instruments Act:
The petitioners argued that payments made after the commencement of winding-up proceedings would be void under Section 536(2) of the Companies Act, and hence, they were justified in refusing to make such payments. The court examined whether the presentation of a winding-up petition creates a legal disability to make payments, thus preventing the commission of an offence under Section 138 of the Negotiable Instruments Act. The court held that Section 536(2) does not lay down any bar or prohibition preventing the company from making payments or even disposing of property. The court concluded that there would be a failure under Section 138 if the company or its directors do not make payment only on the ground that a petition for winding up has been presented. The court dismissed the petitions, stating that the offence under Section 138 is deemed committed on dishonour and non-payment within 15 days of receipt of notice of demand.
2. Quashing of Undertakings:
The court noted that the petitioners had given undertakings to the magistrates in some proceedings under Section 138 of the Negotiable Instruments Act, agreeing to pay the disputed amounts in installments. The court observed that the petitioners did not consider themselves restrained by law from making payments at the time of giving these undertakings. The court found that the non-payment within 15 days from receipt of notice was not due to any legal disability but due to other reasons such as inability to pay or lack of funds. Therefore, the court did not quash the undertakings given by the petitioners.
3. Legal Disability to Make Payments:
The court examined whether the presentation of a winding-up petition creates a legal disability to make payments. The court held that merely on the presentation of a petition for winding up, the affairs of a company do not come to an absolute standstill. The court stated that the company can carry on its business and make necessary payments for its commercial survival. The court concluded that there is no absolute prohibition or bar preventing the company or its directors from making payments or even making dispositions for the purpose of running the business of the company in the ordinary course. Therefore, the court held that there would be a failure to make payment under Section 138 if the company or its directors do not make payment merely on the ground that a petition for winding up has been presented.
4. Conflict Between Section 138 of the Negotiable Instruments Act and Sections 536(2) and 441(2) of the Companies Act:
The petitioners argued that there is a conflict between Section 138 of the Negotiable Instruments Act and Sections 536(2) and 441(2) of the Companies Act, and that the provisions of the Companies Act should prevail. The court rejected this argument, stating that there is no conflict between the two provisions. The court held that the two provisions operate in separate fields. The court noted that the offence under Section 138 is complete on the 15th day after receipt of the notice by virtue of non-payment, and a subsequent order of winding up has no effect on the offence which has already been committed. The court concluded that the commission of the offence is not dependent upon the winding up of the company but is dependent upon dishonour and non-payment of the amount within 15 days of the receipt of the notice.
Conclusion:
The court dismissed all the criminal writ petitions and vacated the interim stay granted in these petitions. The court directed the accused in various cases to appear before the respective magistrates on specified dates. The court held that the presentation of a winding-up petition does not create a legal disability to make payments, and there is no conflict between Section 138 of the Negotiable Instruments Act and Sections 536(2) and 441(2) of the Companies Act.
-
1998 (6) TMI 586
Issues Involved:
1. Maintainability of the reference under Section 388B of the Companies Act, 1956.
2. Allegations of fraud, misfeasance, persistent negligence, and breach of trust against the respondent.
3. The impact of parallel criminal proceedings on the maintainability of the reference.
4. The issue of limitation and delay in filing the reference.
5. The role and actions of the Union of India as a shareholder and applicant in the reference.
Issue-wise Detailed Analysis:
1. Maintainability of the Reference:
The respondent challenged the maintainability of the reference on the grounds that the subject matter was already part of several criminal proceedings initiated by the Union of India. The respondent argued that parallel proceedings on the same charges could prejudice his defense in the criminal trials. Additionally, the respondent contended that the reference was barred by limitation due to inordinate delay in filing.
2. Allegations of Fraud, Misfeasance, Persistent Negligence, and Breach of Trust:
The Union of India alleged that the respondent, in his capacity as director/managing director of Maruti Udyog Limited, committed various offenses resulting in five FIRs. These included:
- Cars Diversion Case: Allegations of delivering cars at pre-budget prices to certain customers, causing financial losses to the company.
- Hydraulics Case: Allegations of causing the company to make advances and purchases from Hydraulics Ltd. at inflated prices, benefiting Hydraulics unduly.
- Dealership at Ghaziabad: Allegations of appointing a dealer in Ghaziabad in reversal of a board policy, purportedly in exchange for personal benefits.
- Transport Case: Allegations of awarding a transportation contract to Delhi-Ahmedabad Roadways, causing a loss to the company.
- Subros Case: Allegations of awarding a contract for air-conditioners to Subros Ltd. and advancing funds without proper justification.
3. Impact of Parallel Criminal Proceedings:
The respondent argued that the reference should not proceed as it would force him to disclose his defense in the criminal proceedings prematurely. The Union of India, however, maintained that the reference was necessary to determine the respondent's fitness to hold office.
4. Issue of Limitation and Delay:
The respondent contended that the reference was barred by the laws of limitation, as the alleged incidents occurred between 1983-84 and 1991-92, and the reference was filed in December 1996. The Union of India argued that the Limitation Act did not apply to proceedings before the Company Law Board, which is a quasi-judicial authority. However, the Board acknowledged that delay and laches could be considered in such proceedings.
5. Role and Actions of the Union of India:
The Union of India, holding a significant shareholding in the company, argued that it acted in the public interest by initiating the reference. The respondent countered that the Union of India, being actively involved in the company's management, should have taken timely action if it had concerns about his conduct. The Board noted the lack of explanation from the Union of India for the delay in initiating the reference.
Conclusion:
The Company Law Board dismissed the reference on the grounds of gross and inordinate delay. The Board found no plausible explanation for the delay in forming an opinion and making the reference, given that the Union of India was actively involved in the company's management and aware of the allegations for years. The Board did not consider the other preliminary objections or the merits of the case due to the decision to dismiss the reference. The reference was dismissed without any order as to costs.
-
1998 (6) TMI 585
Issues:
1. Entitlement to investment allowance on plant and machinery in the hotel business.
2. Classification of a hotel as an industrial undertaking for investment allowance under section 32A of the Income-tax Act.
Issue 1: Entitlement to Investment Allowance
The primary issue in this case revolved around the entitlement of the assessee, engaged in the hotel business, to claim investment allowance on the plant and machinery used in the course of their operations. The Income-tax Appellate Tribunal had to determine whether the assessee could avail investment allowance on the building housing the kitchen, store room, and equipment used in producing food materials. The Tribunal relied on a previous order where it was established that there is indeed production of food materials in a hotel. Consequently, the Tribunal concluded that the conditions of section 32A(2)(b)(iii) were met, thereby granting the investment allowance to the assessee for the relevant assets.
Issue 2: Classification of Hotel as an Industrial Undertaking
The crux of the matter lay in whether a hotel could be classified as an industrial undertaking for the purposes of claiming investment allowance under section 32A of the Income-tax Act. The Tribunal deliberated on the term 'industrial undertaking,' emphasizing that if there is an organization of labor and capital for the production and distribution of goods and services to satisfy human needs, it could be considered an industrial activity. The Tribunal concluded that the organized activities in a hotel, such as food production, could be viewed as industrial activities, meeting the criteria for an industrial undertaking. However, the Revenue contested this classification, citing precedents where courts had ruled against considering hotels as industrial companies due to the nature of their operations not aligning with traditional manufacturing or processing activities.
In a comprehensive analysis, the High Court referred to past judgments, notably the case of Casino (Pvt.) Ltd., where the court had discussed whether food preparation in a hotel constituted manufacturing or processing of goods. The court highlighted that in common parlance, the activity of preparing food in a hotel did not align with the traditional understanding of manufacturing or processing. Subsequently, the court had ruled against considering hotels as industrial companies eligible for concessional tax rates based on similar reasoning in subsequent cases.
Considering the precedents and the interpretations of relevant provisions, the High Court ruled in favor of the Revenue, denying the assessee's claim for investment allowance on the grounds that a hotel did not qualify as an industrial undertaking engaged in the production of goods. The court's decision was based on the established jurisprudence that hotels, despite engaging in food production, did not meet the criteria of industrial activities for the purposes of investment allowances under the Income-tax Act.
-
1998 (6) TMI 584
Issues Involved: Departmental appeal against levy of penalty u/s 272A(2)(c) for delay in filing Form No. 26C.
Summary:
1. Issue 1 - Levy of Penalty: The Department filed an appeal against the cancellation of penalty of Rs. 67,900 u/s 272A(2)(c) by CIT(A)-XV, Mumbai, due to alleged delay in filing Form No. 26C. The assessee, a private limited company engaged in construction works, explained the delay was due to the director's illness and subsequent disruption in business operations. The AO levied the penalty despite the explanation provided by the assessee.
2. Issue 2 - Legal Grounds: The appeal challenged the deletion of the penalty by CIT(A) based on legal grounds. The argument revolved around the prescribed time limit for filing Form No. 26C, with reference to the amendment in s. 206 by Finance Act (No. 2), 1999. The insertion of specific words in s. 206 clarified the time limit for filing the form, which was absent in r. 37 prior to the amendment. The Tribunal analyzed the legislative intent behind the amendment and concluded that the penalty could not be sustained based on the legal interpretation.
3. Judgment: The Tribunal dismissed the Revenue's appeal, upholding the decision of CIT(A) to cancel the penalty. The Tribunal agreed with the legal interpretation that the absence of a specific time limit for filing Form No. 26C before the amendment in s. 206 precluded the imposition of penalty. The decision was supported by previous rulings and the Tribunal's own judgment, affirming that the penalty provisions should be strictly construed in favor of the assessee when there is ambiguity in the law.
4. Conclusion: The Tribunal's decision affirmed the cancellation of the penalty, emphasizing the importance of legal clarity and strict interpretation of penalty provisions in tax matters. The judgment provided a comprehensive analysis of the legal grounds and legislative intent behind the penalty provisions, ultimately ruling in favor of the assessee based on the absence of a prescribed time limit before the relevant amendment.
-
1998 (6) TMI 583
Issues Involved:
1. Maintainability of the petition under Section 248/250 of the Companies Act, 1956.
2. Powers of the Company Law Board to grant interim relief pending consideration of the petition on the merits.
3. Scope of inherent powers of the Company Law Board under regulation 44 of the Company Law Board Regulations.
4. Specific provisions under Sections 248 and 250(1) regarding interim relief.
5. Legal precedents and their applicability to the current case.
6. Practical considerations for granting limited interim relief.
Issue-wise Analysis:
1. Maintainability of the Petition:
The applicant, Bakhtawar Construction Company Limited, initially filed a petition under Section 248/250 of the Companies Act, 1956, which was dismissed as not maintainable. The High Court of Bombay remitted the case back to the Company Law Board for consideration on the merits and directed it to consider the application for interim relief.
2. Powers of the Company Law Board to Grant Interim Relief:
The core issue was whether Sections 248 or 250(1) conferred any powers on the Company Law Board to grant interim relief pending the petition's consideration. The respondents argued that neither section provided such powers, and restrictions on shares could only be imposed after an order of investigation. The applicant contended that in the absence of specific prohibition, the Board should have the inherent power to grant interim relief to meet the ends of justice.
3. Scope of Inherent Powers under Regulation 44:
The applicant relied on regulation 44 of the Company Law Board Regulations, which preserves inherent powers to make orders necessary to meet the ends of justice. However, the Board noted that these inherent powers relate to procedural matters, not substantive powers affecting the rights of third parties not present before the Board.
4. Specific Provisions under Sections 248 and 250(1):
The Board found that there was no specific provision in Sections 248 or 250(1) for granting interim relief during the pendency of proceedings. Section 250(2) allows restrictions on shares only after the Board concludes that there are good reasons to find out relevant facts, which can only be determined after the proceedings are completed.
5. Legal Precedents and Their Applicability:
The applicant cited Supreme Court rulings in ITO v. Mohamad Kunhi and Gujarat Maritime Board v. Haji Daud Haji Harun Abu to argue that incidental and ancillary powers should be inferred. However, the Board concluded that these rulings did not apply to the Company Law Board's powers under Sections 248 or 250. The precedent set in Gammon India Ltd., In re, was also distinguished as it was decided when the Board functioned as a delegatee of the Central Government, not as a quasi-judicial body.
6. Practical Considerations for Granting Limited Interim Relief:
Despite the legal position, the Board considered the practical aspect of the applicant's limited prayer to restrain the transfer of shares in the promoters' quota until the petition's disposal. The Board decided to grant this limited relief, noting that it would not cause hardship to the respondents and would be pragmatic given the circumstances. The restraint order was limited to the shares impugned in the petition and additional affidavit, approximately 10,88,440 shares, subject to verification.
Conclusion:
The respondents were directed to file their replies by July 15, 1998, and the petitioners their rejoinder by August 15, 1998. The petition was scheduled for hearing on September 14, 15, and 16, 1998.
-
1998 (6) TMI 582
Issues Involved:
1. Whether the proceedings under sections 397 and 398 of the Companies Act, 1956, should be stayed pending arbitration.
2. Whether the arbitration agreement dated August 6, 1996, is applicable and enforceable in this context.
3. Whether the applicant has already submitted the first statement on the substance of the dispute, thus barring the application under Section 8 of the Arbitration and Conciliation Act, 1996.
4. The applicability of Section 5 of the Arbitration and Conciliation Act, 1996, in preventing judicial intervention.
Detailed Analysis:
Issue 1: Stay of Proceedings Pending Arbitration
The application by respondent No. 2 seeks to stay the proceedings under sections 397 and 398 of the Companies Act, 1956, initiated by the petitioner, pending arbitration. The petitioner alleges oppression and mismanagement in the affairs of the company. The key contention is whether the disputes raised in the main petition are substantially the same as those covered by the arbitration agreement dated August 6, 1996.
Issue 2: Applicability and Enforceability of the Arbitration Agreement
Respondent No. 2 argues that the arbitration clause in the agreement dated August 6, 1996, appoints Shri Amitav Kothari as the sole arbitrator to adjudicate the disputes. However, petitioner No. 1 contends that the agreement is not an arbitration agreement, and Amitav Kothari was intended to function only as a stakeholder or escrow agent. Petitioner No. 1 also asserts that the other parties to the agreement have not sought to enforce the arbitration clause, and the subject matter is not suitable for arbitration.
Issue 3: Submission of First Statement on the Substance of the Dispute
Petitioner No. 1 argues that respondent No. 2 has already submitted the first statement on the substance of the dispute through affidavits and other proceedings, thus barring the application under Section 8 of the Arbitration Act. Respondent No. 2 had raised preliminary objections and contested the merits of the case in various affidavits and interlocutory applications, which, according to the petitioner, constitutes a first statement on the substance of the dispute.
Issue 4: Applicability of Section 5 of the Arbitration and Conciliation Act, 1996
Respondent No. 2 relies on Section 5 of the Arbitration Act, which restricts judicial intervention in matters covered by an arbitration agreement. However, the court clarifies that Section 5 does not entirely bar judicial intervention but limits it to the extent provided within Part I of the Act. Section 8 specifically allows judicial authority to refer parties to arbitration if an application is made before submitting the first statement on the substance of the dispute.
Judgment Analysis:
The court, after considering the arguments and written notes submitted by both parties, concludes that respondent No. 2 had ample knowledge of the arbitration agreement from the outset and had engaged in proceedings without raising the arbitration issue for thirteen months. The court finds that respondent No. 2 has indeed submitted the first statement on the substance of the dispute through various affidavits and objections, thus making the current application under Section 8 unsustainable.
The court dismisses the application, stating that the proceedings under sections 397 and 398 of the Companies Act, 1956, cannot be stayed pending arbitration as the application was made long after the initiation of the main proceedings and after engaging on the merits of the case.
Conclusion:
The application to stay the proceedings pending arbitration is dismissed. The court directs that the main petition will be heard on the merits on specified dates, with respondents required to file their replies and rejoinders within stipulated timelines. No orders as to costs are made.
-
1998 (6) TMI 581
Issues Involved:
1. Allegations of oppression and mismanagement.
2. Diversion of company funds.
3. Proposed increase in share capital.
4. Alleged fictitious liabilities and payments.
5. Adequacy of profits and dividend payments.
6. Appointment of Managing Director.
7. Issuance of right shares.
Detailed Analysis:
1. Allegations of Oppression and Mismanagement:
The petitioners, holding about 11% shares, alleged oppression and mismanagement under sections 397/398/402 and 403 of the Companies Act, 1956. They cited various instances of alleged siphoning of funds and oppressive conduct by the second respondent, the Chairman of the company. The petitioners sought relief including the supersession of the Board of Directors and the appointment of their nominees on the Board.
2. Diversion of Company Funds:
The petitioners alleged that the second respondent diverted funds for personal gain through various means, such as:
- Opening benami firms in the names of clerks and using these firms to siphon funds.
- Paying commissions to employees unnecessarily.
- Not making actual salary payments to employees while showing full payments in the books.
- Selling used oil, scrap, and spare parts without accounting for the proceeds.
The respondents denied these allegations, providing explanations for each. For instance, they stated that the firm Shri Ram Das Trailers was not a benami but a legitimate business, and commissions were paid as part of an incentive scheme during market slackness.
3. Proposed Increase in Share Capital:
The petitioners contended that the proposed increase in share capital was not bona fide and aimed at reducing their shareholding below 10%, thereby disqualifying them from filing petitions under section 397/398. The respondents justified the increase, stating it was for modernisation and working capital needs, as advised by their bankers.
4. Alleged Fictitious Liabilities and Payments:
The petitioners claimed that the company showed fictitious debts and made payments against these non-existent debts, citing an example of a payment to one Shri D. Ashok Kumar. The respondents clarified that these were legitimate liabilities, such as unsettled advances for vehicle repairs and deposits from shareholders and the public.
5. Adequacy of Profits and Dividend Payments:
The petitioners argued that the profits did not commensurate with the turnover, suggesting siphoning of funds. They also complained about inadequate dividends. The respondents explained that the profit margins were fixed by the manufacturer, and the dividend rates were decided by the Board based on various factors. The court found no evidence of fund siphoning based on the audited accounts.
6. Appointment of Managing Director:
The petitioners alleged that the second respondent manipulated the appointment of his son-in-law as Managing Director to consolidate control. The respondents countered that the appointment was in accordance with the Articles of Association and approved by the general body. The court found no grounds to interfere with the appointment.
7. Issuance of Right Shares:
The petitioners opposed the right issue, claiming it was unnecessary and aimed at diluting their shareholding. The respondents produced evidence of the need for additional funds for modernisation and working capital. The court found the issuance of right shares justified and noted that all shareholders, including the petitioners, had subscribed to the shares. The restraint order on the right issue was vacated, with liberty given to the petitioners to apply for a refund if desired.
Conclusion:
The court dismissed the petition, finding that the petitioners had not substantiated their allegations with sufficient evidence. The explanations provided by the respondents were deemed convincing. The court suggested that the respondents consider purchasing the petitioners' shares at a reasonable price to avoid future litigation, given the family relationship between the parties. No order as to costs was made.
-
1998 (6) TMI 580
Issues Involved:
1. Whether the word 'ENERJASE' is deceptively similar to the word 'ENERJEX'.
2. Whether the plaintiff is entitled to a permanent injunction against the defendant for trademark infringement.
3. Whether the plaintiff is entitled to a permanent injunction against the defendant for passing off.
4. The scope of the appellate court's power in reversing the discretionary order of the trial court.
Issue-wise Detailed Analysis:
1. Whether the word 'ENERJASE' is deceptively similar to the word 'ENERJEX':
The primary issue was whether 'ENERJASE' was phonetically similar to 'ENERJEX' and likely to cause confusion. The court examined the phonetic, visual, and overall structural similarities between the two trademarks. It was noted that 'ENERJEX' is an allopathic medicinal syrup, while 'ENERJASE' is an Ayurvedic capsule for stress relief. The court concluded that the products and their packaging were entirely different, and thus, there was no likelihood of confusion. The court also emphasized that 'ENERJ' is an abbreviation of 'energy,' a generic term common in the trade, and no one could claim exclusive rights to its use.
2. Whether the plaintiff is entitled to a permanent injunction against the defendant for trademark infringement:
The court referred to various sections of the Trade and Merchandise Marks Act, 1958, including Sections 2(v), 2(d), 2(k), 11, 28, and 29. It was established that for a trademark infringement action, the plaintiff must prove that the defendant's mark is identical or deceptively similar to the plaintiff's registered trademark. The court held that the plaintiff failed to establish a prima facie case of infringement as the suffixes 'JEX' and 'JASE' were phonetically dissimilar and the visual impressions of the products were different. The court also noted that the term 'ENERJ' is generic and common to the trade.
3. Whether the plaintiff is entitled to a permanent injunction against the defendant for passing off:
The court distinguished between infringement and passing off, noting that passing off involves selling goods in a manner that misleads the public into believing they are the plaintiff's goods. The court found no evidence that the defendant's product 'ENERJASE' was being passed off as the plaintiff's product 'ENERJEX'. The court emphasized that the products were different in form, packaging, and target consumers, and thus, there was no likelihood of deception or confusion.
4. The scope of the appellate court's power in reversing the discretionary order of the trial court:
The court cited precedents, including Beach Estates v. Likhami Holdings Limited and Wander Ltd. v. Antrox India (P) Ltd., to highlight the limited scope of appellate courts in interfering with discretionary orders of the trial court. The appellate court can only reverse such orders if the discretion was exercised arbitrarily, capriciously, or perversely. The court held that the trial court had exercised its discretion reasonably and judicially in refusing the interim relief sought by the plaintiff.
Conclusion:
The court concluded that there was no phonetic or visual resemblance between 'ENERJEX' and 'ENERJASE', and the term 'ENERJ' was generic and common to the trade. The plaintiff failed to establish a prima facie case of trademark infringement or passing off. The trial court's discretionary order vacating the interim injunction was upheld, and the appeals were dismissed. The balance of convenience favored the defendant, and there was no order as to costs.
-
1998 (6) TMI 579
Issues Involved:
1. Passing-off action and trans-border reputation.
2. Prima facie case for granting interim injunction.
3. Balance of convenience and irreparable loss.
4. Delay and laches in seeking relief.
5. Applicability of the Trade and Merchandise Marks Act, 1958.
Issue-wise Detailed Analysis:
1. Passing-off Action and Trans-border Reputation:
The plaintiff, Caesar Park Hotels and Resorts Inc. (CPHR), sought a permanent injunction against the defendant, Westinn Hospitality Services Limited (WHSL), to restrain them from using the name "Westinn," claiming it was deceptively similar to their service mark "Westin." The plaintiff argued that despite not having a physical presence in India, their mark "Westin" had acquired trans-border reputation and goodwill through international advertisements and services provided to Indian clients. Citing various precedents, the court recognized that even without a business presence in India, a company could maintain a passing-off action based on trans-border reputation. The court referred to cases such as *Sheraton Corporation of America v. Sheraton Motels Ltd.* and *N. R. Dongre v. Whirlpool Corporation* to support this view.
2. Prima Facie Case for Granting Interim Injunction:
The plaintiff argued that they had established a prima facie case for an interim injunction by demonstrating their worldwide reputation and the potential for confusion due to the defendant's use of a similar name. The court found that the plaintiff had indeed established a prima facie case, noting that the plaintiff's service mark "Westin" had been advertised in international magazines available in India and that there was a regular flow of Indian travelers to Westin Hotels worldwide. The court concluded that the plaintiff had acquired trans-border reputation and goodwill in India.
3. Balance of Convenience and Irreparable Loss:
The court assessed the balance of convenience and potential irreparable loss to both parties. It was determined that the balance of convenience favored the plaintiff, as the continued use of "Westinn" by the defendant could lead to confusion and damage the plaintiff's reputation. The court held that if the injunction was not granted, the plaintiff would suffer irreparable harm, whereas the defendant's inconvenience was not a sufficient ground to deny the injunction.
4. Delay and Laches in Seeking Relief:
The defendant argued that the plaintiff had delayed seeking relief, as the defendant had been using the name "Westinn" since 1989. However, the court found that the significant advertisements and use of "Westinn" by the defendant only began in 1995, after entering into a franchise agreement with Days Inn of America. The plaintiff promptly sent a cease and desist notice upon discovering this, and the court concluded that there were no laches on the plaintiff's part in approaching the court.
5. Applicability of the Trade and Merchandise Marks Act, 1958:
The learned single judge initially dismissed the plaintiff's applications, holding that the Trade and Merchandise Marks Act, 1958, was inapplicable to service marks. However, the appellate court found this reasoning flawed, emphasizing that the principles of passing-off and trans-border reputation were sufficient grounds for granting an injunction, irrespective of the Act's applicability to service marks.
Conclusion:
The appellate court allowed the appeals, set aside the order of the learned single judge, and granted the interim injunctions as prayed for by the plaintiff. The court recognized the plaintiff's trans-border reputation and the potential for confusion due to the defendant's use of a similar name, thereby justifying the grant of interim relief to prevent irreparable harm to the plaintiff's goodwill and reputation. The court also stayed the operation of its order for four weeks to allow the defendant to seek appropriate remedies.
-
1998 (6) TMI 578
Issues Involved:
1. Application for ad-interim injunction regarding an extraordinary General Meeting.
2. Application for ad-interim injunction to restrain the disposal of fixed assets.
3. Application to vacate the injunction granted earlier.
4. Allegations and counter-allegations regarding the respondent company's financial status and debt repayment capability.
5. Legal provisions under the Companies Act, 1956 relevant to the winding-up process and property disposition.
Detailed Analysis:
1. Application for ad-interim injunction regarding an extraordinary General Meeting:
The applicant sought an ad-interim injunction related to item No. 1 of the Notice dated 31-3-1998 for the extraordinary General Meeting scheduled on 20-5-1998. The applicant argued that the respondent company, M/s. Aruna Sugars and Enterprises Limited, was unable to pay its debts amounting to Rs. 53,58,457/- as of 15-2-1997, despite a statutory notice. The applicant contended that any disposition of property during the pendency of the winding-up petition would be void under Section 536(2) of the Companies Act, 1956.
2. Application for ad-interim injunction to restrain the disposal of fixed assets:
The applicant also sought an ad-interim injunction to restrain the respondent company from disposing of its fixed assets and divisions. The Vacation Court initially granted this injunction, which was later extended until 18-6-1998.
3. Application to vacate the injunction granted earlier:
The respondent company filed an application to vacate the ad-interim injunction, denying the allegations made by the applicant. The respondent treated their affidavit filed in C.A. No. 732/1998 as the counter for the applications C.A. Nos. 730 and 731 of 1998.
4. Allegations and counter-allegations regarding the respondent company's financial status and debt repayment capability:
The applicant argued that the respondent company's inability to pay its debts justified the winding-up petition. The respondent disputed the debt amount claimed by the applicant, admitting only Rs. 35 lakhs. The respondent also contended that their assets exceeded their liabilities, challenging the presumption of insolvency. The Court noted that these matters should be addressed during the main inquiry in the Company Petition No. 380/1997.
5. Legal provisions under the Companies Act, 1956 relevant to the winding-up process and property disposition:
The applicant relied on Sections 441(2), 456(2), and 536(2) of the Companies Act, 1956, arguing that the respondent company's property and effects were deemed to be in the custody of the Court from the date of filing the winding-up petition. Section 536(2) was particularly emphasized, which states that any disposition of property after the commencement of winding-up proceedings is void unless the Court orders otherwise.
The Court considered various precedents, including the Kerala High Court ruling in Travancore Rayons Ltd. v. Registrar of Companies and the Supreme Court decision in Hindustan Overseas Private Limited v. R. P. Jhunjhunwala. These cases highlighted that the Court has the discretion to validate genuine and proper transactions made in the ordinary course of business, provided they do not harm the creditors' interests.
Conclusion:
The Court concluded that the respondent company's transfer of Quality-Inn-Aruna to its subsidiary, M/s. Aruna Foods Limited, was bona fide and part of restructuring proposals. The respondent assured that the transfer would not harm the creditors' interests and provided an affidavit to that effect. The Court emphasized that the Companies Act aims to balance the interests of the company and its creditors. Therefore, the ad-interim injunction was vacated, and the respondent's application to vacate the injunction was allowed. The applications C.A. Nos. 730 and 731/1998 were dismissed, and C.A. No. 732/1998 was allowed without costs.
-
1998 (6) TMI 577
Issues Involved:
1. Collusion and fraudulent manipulation of duplicate share certificates.
2. Falsification and fabrication of transfer instruments.
3. Non-compliance with mandatory provisions of Section 108 of the Companies Act, 1956.
4. Non-cancellation of adhesive stamps as per Section 2(14) of the Indian Stamp Act, 1899.
5. Non-compliance with the Articles of Association regarding share transfer.
6. Validity of the agreement dated November 16, 1995.
Issue-Wise Detailed Analysis:
1. Collusion and Fraudulent Manipulation of Duplicate Share Certificates:
The petitioners alleged that the company, in collusion with its managing director and the transferees, fraudulently manipulated the issue of duplicate share certificates. The Company Law Board (CLB) noted that the petitioners had issued a notice asking for duplicate shares on October 27, 1995, followed by an agreement for sale on November 16, 1995, and a letter to the company on November 18, 1995, requesting the transfer of shares. The petitioners also handed over blank transfer forms and received the sale consideration. Given these facts, the CLB found no substantial evidence of fraudulent manipulation and considered the company's actions reasonable within the context of a closely held private company.
2. Falsification and Fabrication of Transfer Instruments:
The petitioners contended that the instruments of transfer were falsified and fabricated. The CLB examined the instruments of transfer, which bore the endorsement of the competent authority as of November 28, 1995, and were executed on January 10, 1996. The transfer deeds were duly signed by the petitioners and the transferees, with adhesive stamps properly canceled. The CLB found the transfer deeds to be prima facie duly executed and compliant with legal requirements, dismissing the petitioners' claims of falsification and fabrication.
3. Non-Compliance with Mandatory Provisions of Section 108 of the Companies Act, 1956:
The petitioners argued that the mandatory provisions of Section 108 were not complied with. The CLB referred to various legal precedents and concluded that the instruments of transfer were duly executed, stamped, and canceled in accordance with the provisions of the Act and the Indian Stamp Act, 1899. The CLB found that the company had complied with the mandatory provisions of Section 108, thus rejecting the petitioners' claims.
4. Non-Cancellation of Adhesive Stamps as per Section 2(14) of the Indian Stamp Act, 1899:
The petitioners claimed that the adhesive stamps on the instruments of transfer were not canceled in accordance with Section 2(14) of the Indian Stamp Act, 1899. The CLB examined the instruments of transfer and found that the adhesive stamps were duly canceled. The CLB noted that the transfer deeds were properly executed and the adhesive stamps were appropriately canceled, thereby dismissing the petitioners' claims.
5. Non-Compliance with the Articles of Association Regarding Share Transfer:
The petitioners argued that the company failed to comply with the formalities specified in the Articles of Association before effecting the transfer of shares. The CLB examined Articles 5 to 8 of the company's Articles of Association, which outline the procedure for share transfer. The CLB found that Article 5 allows a member to transfer shares to another member at a fair value, as agreed upon by the transferor. The petitioners had entered into an agreement with the respondent for the transfer of shares at a mutually agreed price, which constituted the fair value. The CLB concluded that the company had complied with the relevant Articles of Association, dismissing the petitioners' claims of non-compliance.
6. Validity of the Agreement Dated November 16, 1995:
The petitioners claimed that the agreement dated November 16, 1995, had become infructuous due to a breach of its terms and lapse of time. The CLB noted that the petitioners had received the sale consideration and handed over the blank transfer forms, indicating their intent to sell the shares. The CLB found that the agreement had been duly performed by the parties involved, and any disputes regarding the agreement's validity should be resolved in a civil suit, not in summary proceedings by the CLB.
Conclusion:
The CLB concluded that the petitioners had not made out a case for rectification of the register of members in relation to the impugned shares. The petitions were dismissed, and the CLB held that the transfer of shares was valid, legal, and duly supported by consideration. The contentious issues raised by the petitioners regarding fraudulent manipulation, fabrication, and non-compliance with legal provisions were not substantiated, leading to the dismissal of the petitions.
-
1998 (6) TMI 576
Issues Involved:
1. Whether the proceedings under Section 138 of the Negotiable Instruments Act should be quashed.
2. Whether undertakings given by the petitioners to the Metropolitan Magistrate Courts to pay amounts should be quashed.
3. Interpretation of Section 536(2) read with Section 441(2) of the Companies Act in relation to Section 138 of the Negotiable Instruments Act.
4. Whether the presentation of a winding-up petition creates a legal bar to payment under Section 138 of the Negotiable Instruments Act.
5. The effect of a subsequent winding-up order on the proceedings under Section 138 of the Negotiable Instruments Act.
Detailed Analysis:
1. Quashing of Proceedings under Section 138 of the Negotiable Instruments Act:
The petitioners argued that the proceedings under Section 138 of the Negotiable Instruments Act should be quashed because, under Section 536(2) of the Companies Act, any disposition of property after the commencement of winding up is void. They claimed that making payments would be void under Section 536(2), thus there was no "failure to make payment" under Section 138. The court held that Section 536(2) does not create an immediate bar on making payments upon the mere presentation of a winding-up petition. The transactions become void only upon the passing of a winding-up order or the appointment of a Provisional Liquidator. Therefore, there was no legal disability preventing the company from making payments within the 15-day notice period under Section 138.
2. Quashing of Undertakings Given to Metropolitan Magistrate Courts:
The petitioners also sought to quash undertakings given to the courts to pay the amounts due. The court noted that the companies had made payments to some creditors even after the presentation of winding-up petitions, indicating that they did not consider themselves legally barred from making payments. The court found no basis to quash the undertakings, as the companies had voluntarily given these undertakings and had made payments despite the pending winding-up petitions.
3. Interpretation of Section 536(2) and Section 441(2) of the Companies Act:
The court examined the interpretation of Section 536(2) read with Section 441(2) of the Companies Act. It concluded that these sections do not create an immediate bar on making payments upon the presentation of a winding-up petition. The dispositions of property become void only upon the passing of a winding-up order or the appointment of a Provisional Liquidator. The court emphasized that the company could continue its business and make necessary payments for its survival during the pendency of the winding-up petition.
4. Legal Bar to Payment under Section 138 of the Negotiable Instruments Act:
The court held that there was no legal bar preventing the company from making payments under Section 138 of the Negotiable Instruments Act merely because a winding-up petition had been presented. The court noted that the company and its directors could have applied to the court for an order protecting such payments even after a winding-up order was passed. The failure to make payment within the 15-day notice period under Section 138 constituted a "failure to make payment," and the offence was deemed committed.
5. Effect of Subsequent Winding-Up Order on Section 138 Proceedings:
The court rejected the argument that a subsequent winding-up order would absolve the company or its directors from the offence under Section 138. The court held that the offence was complete on the 15th day after receipt of the notice due to non-payment. A subsequent winding-up order or the appointment of a Provisional Liquidator would not affect the proceedings under Section 138, as the offence was already deemed committed before such an order was passed.
Conclusion:
The court dismissed all the criminal writ petitions, holding that the proceedings under Section 138 of the Negotiable Instruments Act could not be quashed merely because of the presentation of winding-up petitions. The court emphasized that the companies and their directors were not legally barred from making payments during the pendency of the winding-up petitions and that the offence under Section 138 was deemed committed due to non-payment within the 15-day notice period. The court directed the accused to appear before the respective Metropolitan Magistrate Courts on specified dates.
-
1998 (6) TMI 575
Issues Involved:
1. Allegations of oppression and mismanagement u/s 397/398 of the Companies Act.
2. Application for interim reliefs.
3. Application for referring the matter to arbitration under the Arbitration and Conciliation Act, 1996.
Summary:
1. Allegations of Oppression and Mismanagement u/s 397/398 of the Companies Act:
The petitioners filed a petition u/s 397/398 of the Companies Act alleging acts of oppression and mismanagement in the affairs of Chennai Power Corporation Ltd. They sought interim reliefs and the respondents filed an application under the Arbitration and Conciliation Act, 1996, seeking to refer the matter to arbitration based on an agreement containing an arbitration clause.
2. Application for Interim Reliefs:
The respondents argued that the disputes in the petition are private disputes between two shareholders' groups and not related to the affairs of the company to invoke u/s 397/398. They contended that the disputes arose from an agreement dated October 14, 1996, which included an arbitration clause under the rules of the London Court of International Arbitration. They cited Section 45 of the Arbitration and Conciliation Act, 1996, which mandates referring the parties to arbitration if there is an arbitration agreement.
3. Application for Referring the Matter to Arbitration:
The petitioners argued that the Company Law Board (CLB) has exclusive jurisdiction in matters of oppression and mismanagement and that these issues cannot be referred to arbitration. They contended that the supplemental agreement dated July 7, 1997, which does not contain an arbitration clause, has resulted in the novation of the principal agreement. They also argued that the reliefs sought under Section 397/398 cannot be granted by an arbitrator.
Judgment:
The CLB examined whether the arbitration clause in the principal agreement still exists and whether the disputes arising from the supplemental agreement can be subject to arbitration. The CLB concluded that the supplemental agreement is an amendment to the principal agreement and not a substitution. Therefore, the arbitration clause in the principal agreement still applies. The CLB held that the disputes in the petition arise out of and in connection with the agreements and that the arbitration clause covers these disputes.
The CLB referred to Section 45 of the Arbitration and Conciliation Act, 1996, which mandates referring the parties to arbitration if there is an arbitration agreement, unless it is null and void, inoperative, or incapable of being performed. The CLB found that the arbitration agreement is valid and enforceable. Consequently, the CLB referred the parties to the London Court of International Arbitration in accordance with the arbitration clause in the principal agreement dated October 14, 1996.
Conclusion:
The CLB disposed of the application by referring the parties to arbitration and no order as to costs was made.
-
1998 (6) TMI 574
Issues Involved:
1. Entitlement to deduction under section 80HHC of the Income-tax Act, 1961 for exports done through export houses.
2. Determination of the real exporter between the assessee and the export house.
3. Application of section 80HHC benefits during the assessment year 1983-84.
4. Impact of agreements and privity of contract on the entitlement to export benefits.
Detailed Analysis:
1. Entitlement to Deduction under Section 80HHC for Exports Done Through Export Houses:
The primary issue was whether the assessee is entitled to deduction under section 80HHC of the Income-tax Act, 1961, for exports not done directly by the assessee but through an export house. The Tribunal held that the assessees, being the processors of frozen sea foods, were the real exporters and thus entitled to the benefits under section 80HHC, even though the export houses also claimed these benefits.
2. Determination of the Real Exporter:
The Tribunal's opinion was that the real exporters were the assessees, despite the export houses having contracts with foreign buyers and receiving the benefits under section 80HHC. The Tribunal relied on the agreement terms, which indicated that the assessees completed all export formalities and shipped goods "on account of the export houses." However, the High Court referred to the Supreme Court's decision in Mineral & Metal Trading Corpn. v. R.C. Mishra [1993] 201 ITR 851, which established that the entity with the privity of contract with the foreign buyer is the real exporter.
3. Application of Section 80HHC Benefits During the Assessment Year 1983-84:
During the relevant assessment year 1983-84, section 80HHC did not specifically provide for supporting manufacturers to claim benefits. The scheme of the Act was clear that benefits could only be availed by one party, either the export house or the processor, but not both simultaneously. The High Court noted that the benefits under section 80HHC were intended for the real exporters to encourage exports, and during the relevant period, only the export houses were entitled to claim these benefits.
4. Impact of Agreements and Privity of Contract on Entitlement to Export Benefits:
The High Court scrutinized the agreements between the assessees and the export houses, noting that the foreign buyers had no privity of contract with the assessees. The export houses had independent agreements with the foreign buyers and were the entities entitled to receive foreign exchange. The Court emphasized that merely preparing shipping documents "on account of the export houses" did not make the assessees the real exporters. The High Court also referenced Mod. Serajuddin v. State of Orissa [1975] 36 STC 136, where it was held that the canalizing agency (export house) was the real exporter.
Conclusion:
The High Court concluded that the assessees were not entitled to the benefits under section 80HHC as the real exporters were the export houses. The Court answered the questions referred to it in the negative, against the assessees and in favor of the revenue, applying the ratio of the Supreme Court decision in Mineral & Metal Trading Corpn. v. R.C. Mishra. The Court emphasized that the benefits of section 80HHC could only be claimed by the entity with privity of contract with the foreign buyers, which in this case were the export houses.
........
|
9911796707
