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1992 (8) TMI 312
Issues:
- Contravention of section 18(2) and section 18(2) read with section 68 of the Foreign Exchange Regulation Act, 1973
- Non-realization of export proceeds and imposition of penalties
Analysis:
1. The judgment pertains to appeals against an adjudication order imposing penalties on Bismi Tanning Co. and its Managing Partner for contravention of the Foreign Exchange Regulation Act. The penalties were imposed for non-realization of export proceeds in violation of section 18(2) and section 18(2) read with section 68 of the Act.
2. The case involved export bills pending realization, and the appellants failed to take action to secure the export proceeds within the prescribed period or the extended period by the RBI, leading to the contravention of section 18(2) of the Act.
3. The appellants cited financial difficulties as the reason for non-realization of export proceeds. Despite initiating legal proceedings in Germany and obtaining a decree for the amount, they could not execute it due to the inability to remit lawyer's fees, which was approved by the RBI. The appellants' explanations were scrutinized during the adjudication proceedings.
4. The Adjudicating Officer found the appellants guilty of contravention based on their failure to remit lawyer's fees, which directly impacted the non-realization of export proceeds. The RBI also highlighted the appellants' negligence in utilizing approved facilities for remittance.
5. The judgment delves into the interpretation of section 18(2) of the Act, emphasizing the obligation to take necessary steps to secure export proceeds. The Delhi High Court precedent in a similar case was referenced to establish the importance of fulfilling obligations without incurring excessive expenses.
6. Ultimately, the tribunal upheld the penalties imposed, dismissing the appeals due to the appellants' failure to demonstrate sufficient efforts to secure the export proceeds and remit necessary fees. The judgment reaffirmed the importance of fulfilling regulatory obligations under the Foreign Exchange Regulation Act.
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1992 (8) TMI 311
Issues involved: Challenge to detention order based on delay in dealing with representation and extraneous considerations in passing the order.
Delay in dealing with representation: The petitioner, wife of the detenu, challenged the detention order u/s 3 of the Tamil Nadu Prevention of Dangerous Activities Act, 1982, citing delay in dealing with the representation dated 11-5-1992. The representation was received by the State Government on 18-5-92 and rejected on 23-6-92, causing the detenu to claim the order should be quashed due to the delay. However, the Court found that the representation was promptly processed without any indifference or negligence, leading to the dismissal of this contention.
Extraneous considerations in passing detention order: The grounds of detention highlighted the detenu's involvement in illicit felling of sandalwood trees, causing ecological harm and leading to anti-social behavior among tribals. The Court noted the detenu's past involvement in similar activities and upheld the detention order based on the opinion of the District Forest Officer. The detenu's argument that extraneous considerations influenced the order was countered by the Court, stating that even if such considerations existed, Section 5A of the Act addressed them, thereby upholding the validity of the detention order.
Conclusion: The Court found no merit in the writ petition challenging the detention order and dismissed the same, upholding the legality of the detention based on the provisions of the Tamil Nadu Prevention of Dangerous Activities Act, 1982.
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1992 (8) TMI 310
Issues Involved:
1. Custody of the minor child.
2. Appointment of guardian.
3. Interim custody during pending proceedings.
4. Maintainability of appeal under Clause 15 of the Letters Patent.
5. Application of Section 10 of the Civil Procedure Code (CPC).
Detailed Analysis:
1. Custody of the Minor Child:
The main issue revolves around the custody of the minor child, Parthiv, born on 30th March 1991. The mother, Radhika, sought custody in the Family Court at Bombay, while the father, Konel, filed a petition in the Madras High Court for his appointment as the guardian and for interim custody. The Family Court at Bombay had already restrained Konel from removing the child from Radhika's custody. The High Court emphasized that the welfare of the child is paramount and concluded that the child, being just one year old, should remain with the mother. The court allowed the father visitation rights at the mother's residence in Bombay.
2. Appointment of Guardian:
Konel filed O.P. No. 694 of 1991 seeking to be appointed as the guardian of the minor. The court noted that the Hindu Minority and Guardianship Act defines a natural guardian and that the father is the natural guardian after the mother. However, since the child is below five years, the custody should ordinarily be with the mother. The court observed that the issue of guardianship and custody were substantially the same and should be adjudicated by the Family Court where the divorce proceedings were already pending.
3. Interim Custody During Pending Proceedings:
Konel also sought interim custody of the child during the pendency of the proceedings. The court denied this request, emphasizing that the welfare of the child necessitated that he remain with the mother. The court allowed Konel visitation rights but rejected his plea for interim custody, stating that the child's best interest required him to stay with the mother at such a young age.
4. Maintainability of Appeal Under Clause 15 of the Letters Patent:
Radhika appealed against the orders in Application No. 6404 of 1991 and Application No. 69 of 1992. The respondent's counsel questioned the maintainability of the appeal under Clause 15 of the Letters Patent, arguing that an order under Section 10 of the CPC is not a 'judgment' and thus not appealable. The court referred to the Supreme Court's judgment in Shah Babulal Khimji v. Jayaben, which clarified that an order staying or refusing to stay a suit under Section 10 of the CPC is appealable under Clause 15 of the Letters Patent. Consequently, the court held that the appeal was maintainable.
5. Application of Section 10 of the Civil Procedure Code (CPC):
Radhika sought a stay of the proceedings in the Madras High Court under Section 10 of the CPC, arguing that the issues in the Family Court at Bombay and the High Court were substantially the same. The court noted that Section 10 CPC aims to prevent parallel proceedings and held that the issues in both courts were indeed substantially the same. Therefore, the court stayed the proceedings in O.P. No. 694 of 1991 until the disposal of the suit in the Family Court at Bombay.
Conclusion:
The Madras High Court allowed the appeals, set aside the impugned orders, and stayed the proceedings in O.P. No. 694 of 1991 until the disposal of the suit in the Family Court at Bombay. The application for interim custody by Konel was dismissed, reaffirming that the child's welfare required him to remain with the mother. The court emphasized the paramount importance of the child's welfare and the necessity of avoiding parallel proceedings on the same issues.
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1992 (8) TMI 309
Issues:
1. Lien created by the decree-holder Bank on Term Deposit Receipt and Recurring Deposit Account released.
2. Validity of the lien on joint accounts of the non-applicant.
3. Rights of the surety and principal debtor in joint and several decree.
4. Bank's authority to keep lien on term deposits.
5. Mutual demand requirement for enforcing banker's lien.
Analysis:
1. The judgment concerns a civil revision application filed against the release of a lien by the decree-holder Bank on a Term Deposit Receipt and Recurring Deposit Account of the judgment-debtor. The lien was challenged by the non-applicant, leading to a legal dispute over the validity of the lien.
2. The Bank contended that the lien on joint accounts was proper under Section 171 of the Contract Act, asserting that the presumption is that the amount belongs to the non-applicant No. 2 only. However, the non-applicant argued that the Bank cannot create a lien on joint accounts and raised concerns about the lack of notice before imposing the lien.
3. The applicant argued that as the decree was passed jointly and severally against the non-applicants, the Bank had the liberty to execute the decree against any one of them. The liability of the surety was deemed co-extensive with that of the principal debtor, allowing the Bank to proceed with recovery against either party.
4. The judgment delves into the Bank's authority to keep a lien on term deposits, citing legal precedents to support the Bank's actions. The ruling emphasized the distinction between bailment and deposit, affirming the Bank's right to set off or liquidate debts using the banker's lien over the depositor's accounts.
5. The requirement of mutual demand between the banker and the customer for enforcing the banker's lien was highlighted. The absence of mutual understanding between the Bank and the non-applicant No. 2 was noted, questioning the validity of the unilateral action taken by the Bank without prior notice.
6. Ultimately, the court upheld the impugned order, deeming it legal and correct. The civil revision application was dismissed with costs, emphasizing the importance of maintaining legal procedures and fair practices in banking transactions to uphold customer confidence and trust in financial institutions.
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1992 (8) TMI 308
The High Court of Patna quashed an order initiating disciplinary proceedings against a petitioner due to significant delay in taking action after a previous court order. The court found that the allegations from 1972 had become stale by lapse of time, leading to the disciplinary proceeding being disallowed to continue. The impugned order was quashed. (Case citation: 1992 (8) TMI 308 - PATNA HIGH COURT)
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1992 (8) TMI 307
The Supreme Court of India dismissed the appeal in the case, as per the order by Mr. M.N. Venkatachaliah and Dr. A.S. Anand, JJ. (1992 (8) TMI 307 - SC).
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1992 (8) TMI 306
Issues Involved:
1. Exemption from property tax u/s 123(e) of the Coimbatore City Municipal Corporation Act.
2. Definition and interpretation of the term "rent" in the context of property tax exemption.
Summary:
Exemption from Property Tax u/s 123(e) of the Act:
The appellant, S.N.R. Sons Charitable Trust, Coimbatore, sought exemption from property tax for Sri Ramakrishna Hospital, which was initially granted by the Coimbatore Municipality u/s 83(1)(e) of the Tamil Nadu District Municipalities Act, 1920, and later u/s 123(e) of the Coimbatore City Municipal Corporation Act. The exemption was valid until 31.3.1982. However, the respondent refused to renew the exemption from 1.4.1982 and demanded arrears of property tax for three half years commencing from 1.4.1982. The appellant contended that the hospital was charitable and provided free services to a significant portion of patients, justifying the exemption.
Definition and Interpretation of "Rent":
The primary contention revolved around whether the charges collected from patients for services such as bed, linen, nursing, and para-medical services could be classified as "rent" under the proviso to Section 123(3) of the Act. The learned Judge initially dismissed the writ petition, interpreting "rent" in a broad sense to include any charges collected from persons using the property.
Upon appeal, the High Court scrutinized the bills issued by the hospital, which itemized charges for various services, and concluded that these charges could not be equated to "rent." The Court referred to the Supreme Court's decision in State of Punjab v. British India Corporation Ltd. [1964] 2 SCR 114, which distinguished between rent in its narrower sense (payment by tenant to landlord) and broader sense (any payment for use of land or buildings). The Court held that the charges collected by the hospital were for services rendered and not for the demise of property, thus not constituting "rent."
Conclusion:
The High Court allowed the writ appeal, setting aside the dismissal of W.P. No. 9701 of 1983. It ruled that the payments made by patients were not "rent" as contemplated under the Act, and the appellant was entitled to the exemption from property tax u/s 123(e). The Court also noted the lack of justification for denying the exemption from 1.4.1982 when it had been granted until 31.3.1982. The writ petition was allowed as prayed for by the appellant, with costs awarded.
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1992 (8) TMI 305
Issues:
Enforcement of private right to immovable property through writ jurisdiction in High Court.
Analysis:
The case involved a dispute over a house-property in Delhi, where the owner claimed that the appellants, two brothers, were trespassing and engaging in illegal activities beyond the area covered by a pending eviction suit. The owner sought relief through a writ petition under Article 226 of the Constitution directly in the High Court, alleging high-handedness and illegal trespass by the appellants. The High Court, despite knowing about the pending civil suit, issued a direction for the removal of grills for access to the backyard, stating that only relief related to access could be granted in the writ petition.
The appellants contested the allegations and challenged the maintainability of the writ petition. The High Court's decision was based on the argument that the police were allegedly supporting the appellants, leading the owner to file the writ petition. However, the Supreme Court held that the dispute between private individuals concerning property rights should be resolved through a regular suit, except in cases involving a violation of statutory duty by a statutory authority. The Court emphasized that the writ jurisdiction under Article 226 should not be used to decide disputes for which civil or criminal remedies are available under general law.
The Supreme Court concluded that the High Court erred in issuing the direction against the appellants through the writ petition. It was held that the writ jurisdiction is special and extraordinary, not intended to replace ordinary remedies like suits or applications. Therefore, the appeal was allowed, the impugned judgment was set aside, and the writ petition filed in the High Court was dismissed, with no order as to costs.
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1992 (8) TMI 304
Issues Involved:
1. Inclusion of the price of PVC straps in the sale price of wireless receiving sets.
2. Inclusion of handling charges in the sale price of transistor sets.
3. Deduction of sales tax from the sale price.
4. Limitation of time for the demands issued and confirmed.
Detailed Analysis:
1. Inclusion of the price of PVC straps in the sale price of wireless receiving sets:
The department contended that the price of PVC straps, which increased from Rs. 3 to Rs. 7 over the relevant period, should be included in the sale price of the wireless receiving sets. They argued that the respondents suppressed the actual price to evade duty. The respondents, however, argued that the PVC strap was merely an accessory and not essential to the wireless receiving set's marketability. They provided evidence that sets were sold without the straps and claimed the confidential circular mandating the purchase of straps was withdrawn promptly. The Tribunal agreed with the respondents, ruling that accessories not essential to the marketability of the main product should not be included in the sale price for duty assessment. The Tribunal cited various case laws supporting this view, including *International Tractors Co. of (Bomb.) India Ltd. v. UOI* and *Webel Telecommunications (P) Ltd. v. C.C.E., Calcutta*.
2. Inclusion of handling charges in the sale price of transistor sets:
The department argued that handling charges of 1% collected from dealers should be included in the sale price of the transistor sets. The respondents countered that these charges were not passed on to consumers but were a reduction in the dealers' margins. The lower appellate authority found in favor of the respondents, stating that handling charges were post-manufacturing expenses and should not be included in the sale price, referencing the Supreme Court's judgments in *Voltas Ltd.* and *Atic Industries Ltd.*. The Tribunal upheld this view, remanding the matter to the Assistant Collector to verify if handling charges were indeed not passed on to consumers.
3. Deduction of sales tax from the sale price:
The department contended that only Rs. 19.03, the sales tax payable for the bulk of sales, should be deducted from the sale price, not Rs. 19.39 as claimed by the respondents. The respondents explained they had two types of dealers with different sales tax liabilities. The Tribunal ruled that sales tax should be deducted on an actual basis, i.e., Rs. 19.03 for some consignments and Rs. 19.39 for others, as paid by the respondents.
4. Limitation of time for the demands issued and confirmed:
The respondents argued that the demands were partly time-barred, with only the last show cause notice alleging suppression. They claimed they believed in good faith that the value of straps was not includible, thus negating the suppression allegation. The Tribunal did not provide a specific finding on the limitation issue due to the absence of a lower appellate authority's finding. However, they noted that the matter of limitation was not the subject of the appeal.
Conclusion:
The Tribunal agreed with the lower appellate authority's finding that the respondents were entitled to a deduction at the rate of Rs. 24 per set if they were now asked to pay duty at that rate. This finding rendered other issues academic, as the duty demanded would collapse based on this deduction. Consequently, the appeal was rejected.
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1992 (8) TMI 303
Issues:
- Disallowance of MODVAT credit for Nitrogen gas used in or in relation to the final product MMA Monomer.
- Interpretation of Rule 57A of the Central Excise Rules regarding the eligibility of Nitrogen gas as an input for MODVAT credit.
Analysis:
1. The appeals challenged the disallowance of MODVAT credit by the Collector of Central Excise (Appeals) Bombay for Nitrogen gas used in the final product MMA Monomer. The Asstt. Collector disallowed the credit, stating that Nitrogen gas was used to create an inert atmosphere but did not participate in the chemical reaction. The appellants argued that the gas was essential for creating the inert atmosphere necessary for manufacturing MMA Monomer.
2. The appellants contended that Rule 57A of the Central Excise Rules permits MODVAT credit for items used "in relation" to the manufacture of the final product. They cited various decisions supporting the eligibility of inputs used indirectly in the manufacturing process. The authorities did not dispute the use of Nitrogen gas by the appellants in the manufacturing process.
3. The Tribunal noted that the appellants had declared Nitrogen gas as an input for MMA Monomer and that the gas was used to prevent evaporation of a key ingredient, HCL, essential for manufacturing MMA Monomer. The Tribunal emphasized that Nitrogen gas, though not directly involved in the product mix or chemical reaction, was crucial for maintaining the integrity of the manufacturing process.
4. The Tribunal found that the creation of an inert atmosphere by using Nitrogen gas was directly related to the manufacturing process of MMA Monomer. The authorities' failure to recognize the significance of Nitrogen gas in preventing polymerization of HCL and maintaining the manufacturing process indicated an erroneous interpretation of Rule 57A.
5. Consequently, the Tribunal held that Nitrogen gas was used in relation to the manufacture of MMA Monomer and was eligible for MODVAT credit under Rule 57A. The orders disallowing the credit and confirming the demand were set aside, and the appeals were allowed in favor of the appellants.
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1992 (8) TMI 302
Issues:
1. Application for restoration of petition under Section 125 of the Code of Criminal Procedure, 1973 was rejected by the Family Court.
2. Contention regarding the power of the Family Court to restore an application dismissed for default under Section 125 of the Code.
Analysis:
1. The appellant filed an application under Section 125 of the Code claiming maintenance as a legally married wife, citing neglect by the respondent. The application was transferred to the Family Court, where interim maintenance was allowed. However, the case was dismissed for default when the appellant failed to appear in court due to religious ceremonies. The application for restoration was rejected by the Family Court, leading to the appeal. The appellant argued that the Family Court had the power to restore the petition, while the respondent contended that the rejection was justified.
2. The Family Court relied on previous decisions to assert its power to restore the application, citing inherent powers. However, the appellant's counsel argued that the Family Court's approach was erroneous, emphasizing the appellant's long-standing grievances and the need for a justifiable reason for her absence. The Court delved into legal precedents to determine the extent of the Family Court's powers in restoring dismissed applications under Section 125 of the Code. It was established that while lower courts do not possess inherent powers, they can exercise ancillary or incidental powers for restoration, even in the absence of a specific provision in the Code.
3. Considering the purpose of Section 125 to provide maintenance to neglected individuals, the Court emphasized the need for a compassionate interpretation of the law, especially when dealing with vulnerable sections of society. In this case, the Court found that the appellant's reasons for non-appearance were not unreasonable, and her entitlement to maintenance was prima facie evident. The Court criticized a rigid approach towards non-appearance in maintenance cases, stressing the importance of expeditious disposal of such matters. Consequently, the Court set aside the Family Court's order and directed the expeditious resolution of the proceeding.
In conclusion, the High Court allowed the appeal, emphasizing the importance of a liberal attitude towards non-appearance in maintenance cases under Section 125 of the Code. The Court highlighted the need for expeditious disposal of such matters and directed the parties to appear before the Family Court for further proceedings without delay.
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1992 (8) TMI 301
Issues Involved:
1. Locus Standi of the petitioner.
2. Revisional and Inherent Powers of the High Court.
3. Public Interest Litigation (PIL) and its misuse.
4. Validity of FIR and investigation by CBI.
5. Suo Moto action by the High Court.
Summary:
1. Locus Standi of the petitioner:
The Court concluded that Mr. H.S. Chowdhary has no locus standi to file the petition under Article 51-A as a public interest litigant, to invoke the revisional jurisdiction of the High Court u/s 397 read with 401 of the CrPC, or to invoke the extraordinary jurisdiction of the High Court u/s 482 of the CrPC for quashing the FIR dated January 22, 1990, and all other proceedings arising therefrom. The Court emphasized that the initiation of the present proceedings by Mr. H.S. Chowdhary cannot come within the true meaning and scope of public interest litigation.
2. Revisional and Inherent Powers of the High Court:
The Court examined the suo moto power of the High Court in exercise of its powers u/s 190, 397, 401, and 482 of the CrPC. The Court held that the inherent powers conferred by Section 482 of the Code should not be exercised to stifle a legitimate prosecution and must be exercised sparingly to prevent abuse of process of any Court or otherwise to secure the ends of justice. The Court found that Justice M.K. Chawla's suo moto action to quash the FIR and related proceedings was not justified and overstepped his jurisdiction.
3. Public Interest Litigation (PIL) and its misuse:
The Court reiterated the importance of PIL in providing access to justice for disadvantaged groups but cautioned against its misuse by busybodies or meddlesome interlopers. The Court emphasized that only a person acting bona fide and having sufficient interest in the proceeding of PIL will have locus standi, and vexatious petitions under the guise of PIL should be rejected at the threshold.
4. Validity of FIR and investigation by CBI:
The Court found that the FIR dated January 22, 1990, registered by the CBI disclosed a cognizable offence and that the investigation by the CBI was legitimate. The Court noted that the FIR contained detailed allegations of illegal gratification paid to Indian public servants by Before, a Swedish company, and that the investigation was in compliance with the law.
5. Suo Moto action by the High Court:
The Court quashed the later part of the impugned order dated December 19, 1990, by Justice M.K. Chawla, which took suo moto cognizance u/s 397, 401 read with 482 of the CrPC and issued a show-cause notice to the CBI and the State. The Court held that the suo moto action was based on convoluted and strained reasoning and could not be sustained.
Conclusion:
The Supreme Court dismissed the criminal appeals and writ petition challenging the validity of the FIR and the investigation by the CBI, upheld the first part of the order by Justice M.K. Chawla dismissing the petition on the ground of locus standi, and quashed the suo moto cognizance and show-cause notice issued by Justice M.K. Chawla.
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1992 (8) TMI 300
Issues Involved:
1. Allegations of corrupt practices under Sections 123(2), 123(3), and 123(3-A) of the Representation of People Act, 1951.
2. Vagueness and lack of material particulars in the election petition.
3. Non-supply of integral documents referred to in the election petition.
Issue-wise Detailed Analysis:
1. Allegations of Corrupt Practices:
The appellant contended that the allegations of corrupt practices in paragraphs 1 to 20 of the election petition were irrelevant as they referred to events prior to April 23, 1991, the date on which the appellant was officially nominated as a candidate. According to the appellant, corrupt practices could only be attributed to a person after they were legally recognized as a candidate, as per the amended definition of 'candidate' in Section 79(b) of the Representation of People Act, 1951. The High Court, however, found these allegations relevant, stating that the appellant had been holding himself out as a candidate from April 16, 1991. The Supreme Court disagreed with the High Court's view, holding that the allegations in paragraphs 1 to 20, which pertain to a period before April 23, 1991, cannot amount to corrupt practices. However, the Supreme Court refrained from expressing an opinion on whether these allegations could be relevant for other purposes, leaving it to the High Court to decide at the appropriate time.
2. Vagueness and Lack of Material Particulars:
The appellant argued that the allegations in the election petition, even those relating to the period after April 23, 1991, were vague, lacked material particulars, and did not disclose a reasonable cause of action. The Supreme Court clarified the distinction between 'material facts' and 'full particulars', emphasizing that the failure to disclose a reasonable cause of action is distinct from the absence of full particulars. The Court noted that material facts are those relied upon by a party and necessary for formulating a complete cause of action. The High Court had found that there was a triable issue arising from the pleadings, and the Supreme Court upheld this view, rejecting the appellant's contention as insubstantial.
3. Non-supply of Integral Documents:
The appellant contended that the non-supply of certain documents, specifically notes made by Milind Ranade and a cassette recording of a speech, which were referred to in the election petition, warranted dismissal of the petition. The Supreme Court examined this contention in light of the principles laid down in previous cases. The Court distinguished between documents that form an integral part of the pleadings and those that are merely evidence supporting the allegations. It held that the non-supply of documents that are not integral to the pleadings does not entail dismissal of the petition. The Court found that the documents in question were covered by the latter category, where their purport and contents were set out in the election petition, and thus, their non-supply did not warrant dismissal.
Conclusion:
The Supreme Court held in favor of the appellant on the first issue, declaring that allegations in paragraphs 1 to 20 relating to the period before April 23, 1991, could not establish corrupt practices. The other two contentions regarding vagueness and non-supply of documents were rejected. The appeal was disposed of accordingly, with no order as to costs.
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1992 (8) TMI 299
Issues involved:
The issues involved in this case include the regularisation of service, authority to abolish posts, contractual appointments, and the right to regularisation after a certain period of service.
Regularisation of Service:
The respondent was appointed on various ad hoc bases, with the last appointment being on a contractual basis for six months. Despite the acceptance of her resignation, she requested to continue her services. The High Court directed her reinstatement and regularisation within three months. The Supreme Court, however, held that the respondent had no right to continue beyond the contractual period, and her services could not be regularised based on the length of service alone.
Authority to Abolish Posts:
The main contention revolved around whether the Director or the Board had the authority to abolish the post held by the respondent. The appellant argued that the Director had the power under Rule 16(viii) to create technical posts, while the respondent contended that Rule 11, conferring powers on the Board for creating research posts, applied. The Court decided to focus on the terms of appointment rather than delving into the authority to abolish posts.
Contractual Appointments:
The order dated 1.9.90 clearly stated the terms of the respondent's appointment, including a fixed pay for six months on a contractual basis. The appointment was ad hoc and terminable without notice. The Court emphasized that once the contractual period ended, the right to remain in the post ceased, and there was no basis for regularisation based on the nature of the appointment.
Right to Regularisation:
The respondent sought regularisation based on the length of service and cited a previous case for support. However, the Court distinguished the present case from the cited case, emphasizing that the absence of a rule for regularisation in the current scenario meant that the services could not be regularised based solely on the length of service. The Court set aside the High Court's judgment and directed the continuation of services until the end of the calendar year, leaving open the possibility of regularisation at the appellant's discretion.
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1992 (8) TMI 298
Issues Involved:
1. Validity of fixing a particular date for regularisation.
2. Validity of the requirement that the employee should have been sponsored by the Employment Exchange.
3. Validity of the requirement that the concerned posts should not be within the purview of S.S.S.B.
4. Equal pay for equal work.
5. Regularisation of work charged employees, daily-wagers, casual labourers, and those employed in temporary schemes.
Summary:
1. Validity of Fixing a Particular Date for Regularisation:
The High Court held that "fixing a date has no reasonable basis or intelligible differentia for the object to achieve" and declared the dates fixed for regularisation policies by the governments of Punjab and Haryana as discriminatory and violative of Articles 14 and 16 of the Constitution. However, the Supreme Court found no basis for holding that the fixation of dates was arbitrary, emphasizing that the orders were issued to meet specific situations and were not in the nature of statutes.
2. Validity of the Requirement that the Employee Should Have Been Sponsored by the Employment Exchange:
The High Court invalidated the requirement that only employees sponsored by the Employment Exchange should be regularised, considering it unjustified. The Supreme Court, however, upheld this condition, stating it was a reasonable and wholesome requirement designed to curb back door entries and irregular appointments.
3. Validity of the Requirement that the Concerned Posts Should Not Be Within the Purview of S.S.S.B.:
The High Court held that the imposition of this condition by the Government of Haryana was unreasonable and arbitrary, considering the historical context of the absence of the S.S.S.B. for a significant period. The Supreme Court did not alter or modify this direction, as the correctness of the factual statement was not questioned.
4. Equal Pay for Equal Work:
The High Court directed equal pay for equal work without discussing the specifics. The Supreme Court found this direction vague and lacking clarity on who would get what pay and on what basis, and thus set aside this direction.
5. Regularisation of Work Charged Employees, Daily-Wagers, Casual Labourers, and Those Employed in Temporary Schemes:
The High Court directed the regularisation of these categories of employees, considering their long-term service. The Supreme Court, however, found the direction for unconditional regularisation of all employees who had completed one year's service unsustainable, emphasizing the need for a vacancy and fulfillment of other conditions like qualifications and satisfactory service records. The Court highlighted the necessity for a practical and pragmatic approach in such matters and referred to the orders issued by the Governments of Punjab and Haryana, which provided for regularisation under specific conditions.
Conclusion:
The Supreme Court allowed the appeals, setting aside the High Court's directions for unconditional regularisation and equal pay for equal work. It emphasized the need for a balanced approach, ensuring fairness while considering the practical implications on administration and public exchequer. The Court also provided guidance on the regularisation of ad hoc/temporary employees and work-charged employees, urging the governments to frame appropriate schemes consistent with the principles enunciated.
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1992 (8) TMI 297
Issues Involved:
1. Maintainability of an application under Section 111(4) against a private limited company.
2. Authority of the board of directors to allot shares without offering them to existing members.
3. Scope of inquiry under Sections 111(4) and 111(7) to decide the bona fides of share allotments and order rectification of the register of members.
Analysis:
Issue 1: Maintainability of an Application under Section 111(4) against a Private Limited Company
The judgment first addresses whether an application under Section 111(4) of the Companies Act, 1956, is maintainable against a private limited company. The court notes that prior to the amendment by the Companies (Amendment) Act, 1988, Section 111 was not applicable to private limited companies unless they were subsidiaries of public limited companies. However, the amendment incorporated the provisions of Section 155 into Section 111, which did not exclude private limited companies. The court concludes that the provisions of Section 111, particularly Sub-sections (4) and (7), are applicable to private limited companies, making the application maintainable.
Issue 2: Authority of the Board of Directors to Allot Shares
The court then examines whether the board of directors of a private limited company can allot shares to any person, including themselves, without offering such shares to existing members, especially when there is an understanding to that effect at the time of incorporation. The articles of association of the company, particularly Articles 5 and 7, give discretionary power to the directors to allot shares. However, the court emphasizes that this power must be exercised bona fide and in the interest of the company. The court finds that there was an understanding among the original partners for equal capital participation, which was disclosed to the Reserve Bank of India and was part of the company's records. The directors, by allotting shares to themselves and outsiders without offering them to existing shareholders, breached their fiduciary duties, acted in bad faith, and violated the principles of equity and fair play.
Issue 3: Scope of Inquiry under Sections 111(4) and 111(7)
The court discusses the wide jurisdiction granted under Sub-section (7) of Section 111, which allows the Company Law Board to decide any question necessary or expedient in connection with the application for rectification. The court cites several precedents to support its view that it can examine the bona fides of the allotments made by the directors. The court concludes that the directors' actions in allotting shares to themselves and others without offering them to existing shareholders were not bona fide and lacked probity.
Conclusion:
The court declares the allotments of 1,660 shares to the respondents and three outsiders as invalid, resulting in a reduction of the company's capital. The court orders the company to offer these shares to the existing shareholders on a pro-rata basis. If any shareholder declines, the directors are free to allot the shares as they see fit. The company is directed to rectify the register of members accordingly, and there is no order as to costs.
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1992 (8) TMI 296
Issues Involved:
1. Validity of Reserve Bank of India's (RBI) decision rejecting the release of foreign exchange for LL.B. (Hons.) Course at the University of Leeds.
2. Discriminatory treatment and violation of Article 14 of the Constitution.
3. Statutory and mandatory nature of RBI guidelines.
4. Rational and proximate nexus between the object of Foreign Exchange Regulation Act (FERA) and RBI's policy.
Issue-wise Detailed Analysis:
1. Validity of Reserve Bank of India's (RBI) Decision:
The petitioners challenged the RBI's decision communicated on 13th January 1990, which rejected the release of foreign exchange for petitioner No. 2's LL.B. (Hons.) Course at the University of Leeds. The RBI's policy guidelines, as per the Book of Instructions, allowed foreign exchange release only for LL.B. courses at Cambridge and Oxford Universities. The petitioners sought to quash the RBI's communications dated 28th September 1989 and 13th January 1990, which denied their request based on these guidelines.
2. Discriminatory Treatment and Violation of Article 14:
The court found that the RBI's guidelines, which favored Cambridge and Oxford Universities over other UK universities, were discriminatory and violated Article 14 of the Constitution. The Bar Council of India recognized the LL.B. degree from the University of Leeds, treating it on par with degrees from Cambridge and Oxford. The RBI's preference for the latter two universities, without a cogent justification, was deemed arbitrary and discriminatory. The court noted that institutional preferences had been struck down by the Supreme Court in several decisions as arbitrary.
3. Statutory and Mandatory Nature of RBI Guidelines:
The court examined whether the guidelines in the Book of Instructions had any statutory force or mandatory effect. It concluded that the guidelines were meant for internal guidance and did not have statutory force. The guidelines were not rigid and had been deviated from in the past, indicating their non-mandatory nature. The court referenced several decisions to support the view that guidelines are not always mandatory and can be flexible.
4. Rational and Proximate Nexus Between the Object of FERA and RBI's Policy:
The court evaluated whether there was a rational and proximate nexus between the object of FERA and the RBI's policy of releasing foreign exchange only for Cambridge and Oxford Universities. The object of FERA was to conserve and properly utilize the country's limited foreign exchange resources. The court found that the RBI's policy did not have a rational connection with this objective, as it arbitrarily favored certain institutions without justifiable reasons. The policy was deemed to work against the best interests of the country by not allowing foreign exchange for studies at other reputable universities like Leeds.
Conclusion:
The court held that the RBI and the Union of India acted in a discriminatory and unreasonable manner by denying foreign exchange to petitioner No. 2 for his studies at the University of Leeds. The RBI's policy guidelines were declared ab initio bad and violative of Article 14 of the Constitution. The court quashed the RBI's communications dated 28th September 1989 and 13th January 1990 and directed the RBI and the Union of India to release foreign exchange to petitioner No. 2 for his LL.B. (Hons.) course at the University of Leeds by 30th September 1992. The petition was allowed.
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1992 (8) TMI 295
Issues Involved:
1. Maintainability of the petition under Sections 397 and 398 of the Companies Act, 1956.
2. Validity of the alleged board meetings and resolutions.
3. Legality of the transfer and allotment of shares.
4. Allegations of oppression and mismanagement.
5. Appointment of an independent chairman.
Detailed Analysis:
1. Maintainability of the Petition under Sections 397 and 398 of the Companies Act, 1956:
The petitioner filed petitions under Sections 397/398, 235/237, and 408 of the Companies Act, 1956, alleging oppression and mismanagement. The respondents argued that the petition was not maintainable as it sought rectification of the register of members, which should be pursued under a different provision. They also contended that since a similar suit was pending in the High Court, parallel proceedings could not be initiated. The Board held that the reliefs sought in the present petition were broader in scope than those in the High Court, and the petitioner was entitled to seek these reliefs. Therefore, the petition under Sections 397/398 was deemed maintainable.
2. Validity of the Alleged Board Meetings and Resolutions:
The petitioner challenged the validity of the board meetings allegedly held on September 14, 1990, and November 30, 1990, where crucial resolutions were passed. The petitioner claimed she did not receive notice of these meetings and was not present. The Board found that the minutes of the September 14, 1990, meeting were fabricated, as it was admitted that the petitioner was in Bombay on that date. Consequently, the resolutions passed at these meetings, including the amendment of the articles and the allotment of shares, were declared null and void.
3. Legality of the Transfer and Allotment of Shares:
The petitioner alleged that the allotment of 185 shares to respondent No. 2 and five shares to Rass Intratech Pvt. Ltd. was illegal and violated Article 16(b) of the company's articles of association, which required new shares to be offered to existing shareholders first. The Board found that the allotment of shares was indeed in violation of the articles and void ab initio, as the resolutions passed at the board meeting on September 14, 1990, were invalid. Additionally, the transfer of the petitioner's shares was found to be unauthorized, as the power of attorney given to Shri Chetan Seth did not empower him to transfer her shares, and there was no valid authorization for Shri N.K. Jain to sign on her behalf.
4. Allegations of Oppression and Mismanagement:
The petitioner alleged that respondent No. 2 had taken control of the company's books, fabricated documents, and illegally transferred her shares to reduce her status from majority to minority shareholder. The Board found these allegations substantiated, holding that the actions of respondent No. 2 constituted oppression and mismanagement. The Board noted that the petitioner and her daughters had contributed significantly to the company's funds, while respondent No. 2's financial interest was minimal.
5. Appointment of an Independent Chairman:
Given the findings of oppression and mismanagement, the Board directed the reconstitution of the board of directors and the appointment of an independent chairman to manage the company's affairs. Justice (Retired) M.L. Jain was appointed as the chairman, with instructions to call a meeting of the new board of directors and take possession of the company's books. An extraordinary general meeting was to be convened to elect a new board of directors based on the shareholding prior to September 14, 1990.
Conclusion:
The Board set aside the allotment of 190 shares and the transfer of the petitioner's shares, directing the reconstitution of the board and the appointment of an independent chairman. The petitions under Sections 235/237 and 408 were deemed unnecessary in light of these orders. The judgment emphasized the importance of adhering to the provisions of the Companies Act and the articles of association, ensuring fair treatment of shareholders, and preventing oppression and mismanagement.
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1992 (8) TMI 294
Issues:
1. Validity of resolutions removing the plaintiff as a director of the company.
2. Jurisdiction of the Civil Court to entertain the suit.
3. Granting of temporary injunction and its scope.
Analysis:
Issue 1: Validity of Resolutions Removing Plaintiff as Director
The plaintiff appealed against a temporary injunction restraining the defendants from implementing resolutions passed at the 4th Annual General Meeting removing the plaintiff from directorship. The defendants argued that the plaintiff's absence from five consecutive Board meetings led to the vacancy of the director's office under Section 283(1)(g) of the Companies Act. They contended that no resolution was required to remove the plaintiff. In response, the plaintiff highlighted his role as the chief promoter recognized by financial corporations and the conditions attached to loans, preventing reconstitution without consent. The court considered the interpretation of Section 283(1)(g) and the implications of the resolutions passed, ultimately allowing the appeal and setting aside the temporary injunction.
Issue 2: Jurisdiction of the Civil Court
The appellants challenged the lower court's jurisdiction on three grounds: lack of jurisdiction for the Civil Court, no need for temporary injunction post the alleged misconduct, and adverse impact on the company's operations due to the injunction. The respondent argued that the Civil Court had jurisdiction based on precedents like Avanthi Explosives case, emphasizing that the suit to challenge the plaintiff's disqualification as a director was maintainable. However, the appellants relied on V.N. Patil case, asserting that Civil Court jurisdiction must be explicitly conferred. The court examined the provisions of the Companies Act and concluded that the Civil Court lacked jurisdiction to entertain the dispute under Section 283, following the decision in V.N. Patil's case.
Issue 3: Granting of Temporary Injunction
The appellants raised concerns regarding the broad scope of the temporary injunction, hindering the company's business activities significantly. They cited the necessity for a clear right and extreme hardship for granting temporary mandatory injunctions, as established in previous case law. The court noted the adverse impact of the injunction on the company's operations and production, leading to the decision to allow the appeal and set aside the temporary injunction. Each party was directed to bear its own costs in the appeal, concluding the judgment.
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1992 (8) TMI 293
Issues:
Contempt of court proceedings for non-compliance with a court order; Implementation of an interim direction in a writ petition; Dispute over compliance with a decree modified by compromise; Applicability of contempt proceedings in relation to pending main case; Justification of mandatory directions in absence of full consideration of objections; Maintainability of a writ application for executing a decree under Article 226 of the Constitution.
Analysis:
The Supreme Court heard an appeal against a contempt proceeding initiated by the respondent No. 1 against the appellant-State and its officers for non-compliance with a court order dated March 19, 1990. The order directed the appellant to provide 50% of agreed timber to the respondent. The appellant argued that they were not required to immediately obey the order as the stay matter was pending. The Court noted that the direction was akin to a final order, allowing the writ petitioner to receive part of the decree. The Court emphasized the high stakes involved and the need for a final decision on the matter during the main writ petition hearing.
The Court highlighted that the contempt proceeding should not have been pursued until the stay matter was resolved. It stressed that the respondents in the pending case should not be disadvantaged by being forced to address the merits of the claim in a contempt proceeding. The Court held that the High Court should have addressed the stay matter first before considering contempt proceedings. It noted that the respondents had raised serious objections disputing the writ petitioner's claim, including the maintainability of the writ application under Article 226 of the Constitution.
The Court concluded that the orders passed in the contempt proceeding were premature and unjustified. It directed the High Court to first address the stay matter and then consider the contempt issue. The appeal was allowed, setting aside the impugned judgment. The respondent No. 1 was ordered to pay the appellant-State costs amounting to Rs. 5,000. The Court emphasized the need for a comprehensive consideration of all aspects before enforcing mandatory directions or contempt proceedings in such cases.
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