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2012 (9) TMI 1262
The Appellate Tribunal (CESTAT New Delhi) addressed a dispute concerning interpretation of Rule 4(7) of the Cenvat Credit Rules, 2004, which mandates payment of service tax indicated in invoices as a precondition for availing cenvat credit. The appellant had paid 95% of the service tax shown on the invoice issued by M/s. Mahaveera Build-Tech (P) Ltd., retaining 5% due to a dispute.The Tribunal acknowledged the Revenue's strict interpretation that non-payment of the entire tax amount justifies denial of cenvat credit under Rule 4(7). However, it emphasized that "Rule shall not be tyrant but shall be servant of law," referencing the Apex Court decision in Sambhaji v. Gangabai 2009 (240) ELT 161 (S.C.), allowing cenvat credit proportionate to the undisputed tax paid.Consequently, the matter was remanded to the Adjudicating Authority to re-examine whether the 5% retention was justified and whether denial of credit should apply strictly or be relaxed to prevent undue hardship. The appellant is entitled to a reasonable opportunity of hearing during readjudication. Both the stay application and appeal were disposed accordingly.
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2012 (9) TMI 1261
1. ISSUES PRESENTED and CONSIDERED The core legal issues addressed in this judgment include: - Whether the court has the authority under Sections 391 and 392 of the Companies Act, 1956, to stay criminal proceedings against a company and its directors after the sanctioning of a scheme of arrangement.
- The extent of the court's supervisory power under Section 392 in relation to the implementation and modification of a sanctioned scheme of arrangement.
- The appropriateness of granting relief to the applicant company, which has failed to fulfill its financial obligations under the sanctioned scheme.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Authority to Stay Criminal Proceedings - Relevant legal framework and precedents: Sections 391 and 392 of the Companies Act, 1956, govern the court's powers concerning schemes of arrangement. Section 391(6) allows the court to stay proceedings against the company until the scheme is sanctioned. Precedents include S.K. Gupta v. K.P. Jain, Divya Vasundhara Financiers (P.) Ltd., and Deepika Chit Fund (P.) Ltd.
- Court's interpretation and reasoning: The court determined that the power to stay proceedings under Section 391(6) is limited to the period before the scheme is sanctioned. After sanctioning, Section 391(6) does not apply.
- Key evidence and findings: The applications for stay were filed after the scheme was sanctioned, thus Section 391(6) could not be invoked.
- Application of law to facts: Since the scheme was already sanctioned, the court found it lacked the authority under Section 391(6) to stay criminal proceedings.
- Treatment of competing arguments: The applicant argued for a broad interpretation of the court's powers, but the court held that such powers under Section 391(6) were not applicable post-sanction.
- Conclusions: The court concluded it could not stay criminal proceedings against the company and its directors under Section 391(6) post-sanction.
Issue 2: Supervisory Power under Section 392 - Relevant legal framework and precedents: Section 392 provides the court with supervisory powers to ensure the proper implementation of a scheme. Precedents include S.K. Gupta and Deepika Chit Fund (P.) Ltd.
- Court's interpretation and reasoning: The court has broad supervisory powers under Section 392 to modify a scheme for its proper working. This includes the potential to stay criminal proceedings if necessary for the scheme's implementation.
- Key evidence and findings: The applicant company had not fulfilled its obligations under the scheme, raising concerns about its intentions and the misuse of court processes.
- Application of law to facts: The court considered the applicant's failure to repay debts and the potential misuse of the scheme to avoid liabilities.
- Treatment of competing arguments: Despite the applicant's reliance on precedents for a broad interpretation of Section 392, the court emphasized the need for discretion and the applicant's lack of compliance with the scheme.
- Conclusions: The court retained its supervisory role but exercised discretion in denying the stay of proceedings, given the applicant's conduct.
Issue 3: Appropriateness of Granting Relief - Relevant legal framework and precedents: The court's discretion under Sections 391 and 392, and principles of equity and fairness.
- Court's interpretation and reasoning: The court was cautious in exercising its discretion, considering the applicant's prolonged non-compliance with the scheme.
- Key evidence and findings: The applicant's failure to repay creditors and the absence of an outer time limit in the scheme were critical factors.
- Application of law to facts: The court weighed the applicant's non-compliance against the need for equitable relief.
- Treatment of competing arguments: The applicant's submission of an undertaking to repay debts was considered, but the court remained skeptical of its intentions.
- Conclusions: Relief was conditioned upon the applicant's undertaking to repay debts by a specified date, with potential contempt proceedings for non-compliance.
3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "The power of the widest amplitude has been conferred on the court under section 392(l)(a) and the width and the magnitude of the power can be gauged from the language employed in section 392(1)(a) which confers a sort of a supervisory role on the court during the period the scheme of compromise or arrangement is being implemented."
- Core principles established: The court's supervisory power under Section 392 is broad but must be exercised judiciously. The power to stay proceedings under Section 391(6) is limited to pre-sanction periods.
- Final determinations on each issue: The court denied the stay of criminal proceedings post-sanction under Section 391(6) but acknowledged its supervisory role under Section 392. Relief to the applicant was conditional upon fulfilling its undertaking to repay debts by 31st December 2012.
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2012 (9) TMI 1260
1. ISSUES PRESENTED and CONSIDERED The core legal questions considered in this judgment are: - Whether the lessees of land underneath disinvested hotels have the right to convert the leasehold into freehold under the Policy introduced by the Government.
- Whether the Land and Development Office (L&DO) is justified in refusing freehold conversion of such land and if this refusal constitutes discrimination against the lessees of disinvested hotels.
- Whether the lease agreements executed as part of the disinvestment process confer ownership rights that would make the lessees eligible for freehold conversion under the Policy.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Right to Convert Leasehold into Freehold - Relevant Legal Framework and Precedents: The legal framework revolves around the Policy/Scheme for conversion of leasehold rights into freehold as introduced by the Government. The policy specifies eligibility criteria for conversion, particularly focusing on whether ownership rights have been conferred under the lease.
- Court's Interpretation and Reasoning: The court examined whether the lease agreements executed as part of the disinvestment process confer ownership rights. It was determined that a lease, even if for 99 years, does not confer ownership rights, citing precedents such as Smt. Shanti Sharma v. Smt. Ved Prabha and others.
- Key Evidence and Findings: The court noted that the leases in question were not in the standard format prescribed in the L&DO Manual and did not involve payment of premium, which is typically associated with ownership rights.
- Application of Law to Facts: The court found that the leases executed under the disinvestment policy did not confer ownership rights, thus making them ineligible for freehold conversion under the policy.
- Treatment of Competing Arguments: The respondents argued that the leases conferred ownership rights due to the long term and rights to mortgage, construct, and transfer. However, the court rejected this argument, emphasizing that these rights do not equate to ownership.
- Conclusions: The court concluded that the lessees of disinvested hotels do not have a right to compel conversion of leasehold to freehold under the existing policy.
Issue 2: Justification for Refusal and Alleged Discrimination - Relevant Legal Framework and Precedents: The court considered the principles of non-discrimination and the discretion of the lessor (L&DO) in granting conversions.
- Court's Interpretation and Reasoning: The court held that the L&DO's refusal to convert the leasehold into freehold was not discriminatory. It found that the leases under disinvested hotels formed a separate class due to their unique terms and circumstances.
- Key Evidence and Findings: The court identified significant differences between standard leases eligible for conversion and those under disinvested hotels, such as the absence of premium payment and the format of the lease agreements.
- Application of Law to Facts: The court applied the principle that classification based on reasonable grounds does not constitute discrimination. It found that the differences in lease terms justified different treatment.
- Treatment of Competing Arguments: The respondents claimed discrimination, arguing that the policy did not explicitly exclude disinvested hotels. The court countered that the policy's intent and the differences in lease terms justified the exclusion.
- Conclusions: The court concluded that there was no arbitrariness or discrimination in the L&DO's refusal to allow freehold conversion for disinvested hotels.
3. SIGNIFICANT HOLDINGS - Verbatim Quotes of Crucial Legal Reasoning: "A lease, even if for 99 years, does not confer ownership rights on the lessee." "The appellant L&DO claims leases of lands under disinvested hotels to be forming a separate class/category since no ownership rights were conferred under the said leases."
- Core Principles Established: The judgment reinforces the principle that lease agreements, irrespective of their duration, do not equate to ownership unless explicitly stated. It also upholds the discretion of the lessor in policy implementation, provided there is no arbitrary discrimination.
- Final Determinations on Each Issue: The court determined that the lessees of disinvested hotels are not entitled to freehold conversion under the current policy and that the L&DO's refusal does not constitute discrimination.
In conclusion, the High Court upheld the L&DO's decision to deny freehold conversion to the lessees of disinvested hotels, emphasizing the distinct nature of these leases and the absence of ownership rights. The judgment underscores the importance of adhering to policy criteria and the discretion afforded to governmental agencies in matters of public property management.
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2012 (9) TMI 1259
1. ISSUES PRESENTED and CONSIDERED The core legal issues considered in this judgment are: - Whether the winding up petition filed by the respondent is maintainable given the pendency of a civil suit on the same cause of action.
- Whether the appellant's defense against the dishonoured cheques is bona fide and sufficient to prevent the admission of the winding up petition.
- Whether the simultaneous pursuit of a civil suit and a winding up petition by the respondent is permissible under the law.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of the Winding Up Petition - Relevant legal framework and precedents: The court considered precedents from various cases, including Euro Containers v. Morepen Laboratories Ltd., Rediffusion-Dentsu, Young & Rubicam (P.) Ltd. v. Solidaire India Ltd., and Hind Overseas (P.) Ltd. v. Raghunath Prasad Jhunjhunwalla, which discuss the circumstances under which a winding up petition may be dismissed due to the pendency of a civil suit.
- Court's interpretation and reasoning: The court determined that the mere pendency of a civil suit on the same cause of action does not automatically render a winding up petition non-maintainable. The court emphasized that a winding up petition serves the interests of all stakeholders, not just the petitioner.
- Key evidence and findings: The court noted that the property was conveyed to the appellant upon receipt of consideration, and the dishonoured cheques were an admitted fact.
- Application of law to facts: The court applied the principle that a bona fide dispute must exist to prevent the admission of a winding up petition. In this case, the court found no such bona fide dispute.
- Treatment of competing arguments: The appellant argued that the civil suit should take precedence, but the court found that the reliefs sought in the suit and the winding up petition were distinct.
- Conclusions: The court concluded that the winding up petition was maintainable despite the pending civil suit.
Issue 2: Bona Fide Defense Against Dishonoured Cheques - Relevant legal framework and precedents: The court referenced the principle that a company must demonstrate a bona fide defense to resist a winding up petition.
- Court's interpretation and reasoning: The court found that the appellant's defense, which involved claims of financial arrangements with a third party, was not credible or bona fide.
- Key evidence and findings: The court highlighted the appellant's inability to provide security for the claim and the lack of assets as significant factors.
- Application of law to facts: The court determined that the appellant's defense lacked substance and was not sufficient to prevent the admission of the winding up petition.
- Treatment of competing arguments: The appellant's claim of financial arrangements was rejected as unsubstantiated.
- Conclusions: The court concluded that the appellant's defense was not bona fide, justifying the admission of the winding up petition.
Issue 3: Simultaneous Pursuit of Civil Suit and Winding Up Petition - Relevant legal framework and precedents: The court referred to the principle that distinct reliefs can be sought in different proceedings even if based on the same cause of action.
- Court's interpretation and reasoning: The court reasoned that the reliefs in the civil suit (cancellation of conveyance) and the winding up petition (presumption of insolvency) were distinct.
- Key evidence and findings: The court noted that the respondent's actions were consistent with seeking remedies for different legal issues.
- Application of law to facts: The court applied the principle that pursuing different legal remedies simultaneously is permissible when the reliefs are distinct.
- Treatment of competing arguments: The appellant's argument that the simultaneous pursuit was improper was dismissed.
- Conclusions: The court concluded that the respondent was within its rights to pursue both the civil suit and the winding up petition.
3. SIGNIFICANT HOLDINGS Verbatim Quotes of Crucial Legal Reasoning: - "A winding up petition should not be received when court is satisfied that the dispute raised by the company is bona fide and there is every likelihood that such claim could be effectively resisted by the company."
- "Mere pendency of a civil suit on the self-same cause of action, in our view, would not ipso facto make a winding up petition not maintainable."
Core Principles Established: - The pendency of a civil suit does not automatically preclude the admission of a winding up petition if the reliefs sought are distinct.
- A bona fide defense must be substantiated to prevent the admission of a winding up petition.
- Simultaneous pursuit of different legal remedies is permissible when the reliefs are distinct.
Final Determinations on Each Issue: - The winding up petition is maintainable despite the pending civil suit.
- The appellant's defense against the dishonoured cheques was not bona fide.
- The respondent was entitled to pursue both the civil suit and the winding up petition.
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2012 (9) TMI 1258
In the case cited as 2012 (9) TMI 1258 - DELHI HIGH COURT, presided over by HON'BLE MR. JUSTICE RAJIV SHAKDHER, the petitioner challenged an order dated 21.03.2012 by the Directorate General of Foreign Trade (DG). The petitioner, represented by Mr. O.P. Gehlaut, contended that the notice for a hearing on 08.02.2012 was sent to an incorrect address, and that the appeal was incorrectly deemed time-barred. The original order dated 29.03.2004 was allegedly sent to the wrong address and only received by the petitioner on 26.05.2004, with the appeal being filed on 02.07.2004 and received by the DG on 05.07.2004, thus within the permissible time frame.
The court issued a notice and, due to the unavailability of the respondent's counsel, Mr. S.K. Dubey, listed the matter for 06.09.2012. The court set aside the impugned order and directed the respondent to re-hear the appeal and issue a speaking order, with a written notice to the petitioner at the correct address: 5C, Vulcan Insurance Building, Veer Nariman Road, Mumbai 4000 020. The writ petition was disposed of accordingly.
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2012 (9) TMI 1257
Issues:
Appeal against dismissal of applications related to sale of properties under liquidation, Incorporation of Mettur Textiles Mill Quarters Residents Welfare Society post advertisement for sale, Allegations of belated intervention by the society, Contradictions in the number of society members, Challenge to the auction process and sale confirmation, Legal validity of the Company Court's sale confirmation, Applicability of legal precedents on auction sales, Dismissal of appeals and hope for expedited adjudication process.
Analysis:
The judgment pertains to appeals challenging the dismissal of applications by the Mettur Textiles Mill Quarters Residents Welfare Society regarding the sale of properties under liquidation. The society was formed after an advertisement for sale, leading to allegations of belated intervention. The Company Court had confirmed the sale to the second respondent for Rs. 12.50 Crores. The Official Liquidator reported on the auction process, stating the bidding and sale confirmation details, emphasizing the ongoing adjudication process for the creditors.
The court noted the society's incorporation after the sale process had commenced and highlighted contradictions in the number of society members presented by the appellant. The court rejected the society's claim to participate in the auction, citing lack of bona fides due to the timing of intervention. The court emphasized the need for finality in Company Court proceedings and upheld the sale confirmation unless there was gross illegality or irregularity.
Legal precedents were discussed, emphasizing the Company Court's role in ensuring reasonable prices and proper valuation in auction sales. The court differentiated the present case from past judgments involving irregularities in auction conduct. The court reaffirmed the Company Court's valuation consideration and dismissed the appeals, urging expedited adjudication for the benefit of creditors and workers. No costs were awarded, and related motions were closed.
In conclusion, the judgment upheld the Company Court's sale confirmation process, emphasizing proper valuation and lack of irregularities. The court dismissed the appeals, stressing the importance of expedited adjudication for the benefit of creditors and workers. The legal precedents cited highlighted the Company Court's custodial role in auction sales and the need for proper valuation processes.
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2012 (9) TMI 1256
Issues Involved:
1. Validity of the order directing the petitioner to change its name under Section 22(1)(b) of the Companies Act, 1956.
2. Allegations of fraud and unauthorized issuance of 'No Objection Certificate' by a former director.
3. Jurisdiction and authority of the Registrar of Companies in registering company names.
4. Applicability of the principle of Ejusdem Generis and statutory interpretation.
5. Distinction between proceedings under Section 22 of the Companies Act and civil suits for injunction.
Issue-wise Detailed Analysis:
1. Validity of the Order Under Section 22(1)(b):
The petitioner challenged the order directing it to change its name, arguing that the name "Surya" is generic and widely used, thus not leading to confusion. The court examined whether the petitioner's name was identical or too similar to an existing company, Surya Elevators Private Limited. It was determined that the names were indeed too similar, leading to potential confusion. The court upheld the order, noting that the Registrar's approval of the petitioner's name was due to inadvertence, as it closely resembled the name of an already registered company.
2. Fraud and Unauthorized Issuance of 'No Objection Certificate':
The court found that Mr. C. Surendranadha Reddy, a former director of the third respondent, issued a 'No Objection Certificate' without the consent of the other directors, contrary to resolutions passed by the board. This action was deemed fraudulent, as it violated the fiduciary duties and prior agreements not to use the brand name "Surya" without unanimous board consent. The court emphasized that fraud vitiates all proceedings, including the registration of the petitioner-company.
3. Jurisdiction and Authority of the Registrar of Companies:
The court noted that the Registrar of Companies registered the petitioner-company based on the 'No Objection Certificate' issued by Mr. C. Surendranadha Reddy. The court held that the Registrar acted inadvertently or negligently, as the certificate was issued without proper authorization. The court highlighted that the Registrar would not have registered the petitioner under the disputed name had the fraud been known.
4. Principle of Ejusdem Generis and Statutory Interpretation:
The court applied the principle of Ejusdem Generis, interpreting the term "otherwise" in the context of "inadvertence" under Section 22 of the Companies Act. The court concluded that the registration was a result of negligence or carelessness, aligning with the statutory provision that prohibits registration of companies with names identical to or too similar to existing ones.
5. Distinction Between Section 22 Proceedings and Civil Suits:
The court clarified that proceedings under Section 22 of the Companies Act and civil suits for injunction operate in different legal fields. The former addresses the rectification of company names due to inadvertence or similarity, while the latter deals with passing-off actions to prevent confusion among consumers. The court dismissed the argument that the pending civil suit should preclude proceedings under Section 22, affirming that both remedies are independent and can be pursued concurrently.
In conclusion, the court dismissed the writ petition, upholding the order for the petitioner to change its name. The decision was based on findings of fraud, unauthorized actions by a former director, and the Registrar's inadvertent approval of a name too similar to an existing company, thereby affirming the statutory provisions under the Companies Act.
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2012 (9) TMI 1255
Issues Involved:
1. Legality and jurisdiction of the orders passed by BIFR and AAIFR.
2. The validity of share transfer refusal by the petitioner company.
3. The role and implications of proceedings before the Company Law Board (CLB) and BIFR.
4. The impact of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on the proceedings.
Issue-wise Analysis:
1. Legality and Jurisdiction of Orders by BIFR and AAIFR:
The petitioner challenged the orders dated 08.06.2010 by BIFR and 22.07.2010 by AAIFR, claiming they were beyond jurisdiction and authority. The court examined the scope of BIFR's order, which merely granted consent for implementing CLB's order dated 15.05.2008. The court clarified that BIFR's role was not to adjudicate the merits of the share transfer but to permit its execution under Section 22(1) of SICA. The court rejected the petitioner's contention that BIFR had overstepped its jurisdiction, affirming that the orders were within legal bounds and jurisdiction.
2. Validity of Share Transfer Refusal:
The petitioner company refused the transfer of 3,582,422 shares lodged by respondent no.3, citing various objections. The CLB, in its order dated 15.05.2008, found the petitioner's objections to be a "camouflage" with the intent to deprive respondent no.3 of its rightful entitlement to the shares. The CLB concluded that the shares were pledged as security for inter-corporate deposits, and respondent no.3 had rightfully appropriated them due to the petitioner's default. The court upheld CLB's findings, noting that the petitioner had not disputed the authenticity of the share transfer deeds.
3. Role and Implications of Proceedings Before CLB and BIFR:
The CLB's order dated 15.05.2008, which was not challenged further by the petitioner, had attained finality. It directed respondent no.3 to seek BIFR's consent for executing the share transfer due to the pendency of proceedings under SICA. BIFR's order dated 08.06.2010 granted this consent, allowing the transfer to proceed. The court emphasized that BIFR's order was a procedural step to facilitate the execution of CLB's final decision, not a re-evaluation of the merits.
4. Impact of SICA on the Proceedings:
Section 22 of SICA prohibits proceedings against a sick industrial company without BIFR's consent. The court noted that the enforcement of security by respondent no.3 occurred before the petitioner's reference to BIFR and the winding-up order. Therefore, the petitioner's argument that the share transfer was invalid due to SICA proceedings was unfounded. The court highlighted that BIFR's consent was a necessary procedural requirement under SICA, which was duly fulfilled.
Conclusion:
The court concluded that the orders by BIFR and AAIFR were legally sound and within their jurisdiction. The petitioner's refusal to transfer shares was unjustified, and the CLB's order, which had attained finality, was correctly implemented by BIFR. The petition was dismissed, affirming the legality of the share transfer in favor of respondent no.3.
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2012 (9) TMI 1254
Issues Involved:
1. The scope of inquiry by the court under Section 391 of the Companies Act, 1956, regarding convening a meeting for a proposed revival scheme of a company in liquidation.
2. The assessment of the bona fides and legitimacy of the revival proposal after a significant lapse of time.
3. The consideration of workers' interests and the potential impact of the revival scheme on them.
4. The evaluation of the financial viability and credibility of the sponsor proposing the revival scheme.
5. The implications of real estate market conditions on the revival proposal.
Issue-wise Detailed Analysis:
1. Scope of Inquiry under Section 391 of the Companies Act, 1956:
The court's inquiry under Section 391 is to determine whether it is permissible to convene a meeting of shareholders to deliberate on a proposed revival scheme. The court must assess if the proposal is genuine and serves the company's and stakeholders' interests. The court noted that the application for convening a meeting and the approval of the revival scheme are distinct stages. At the stage of convening a meeting, the court should not delve into the merits of the scheme but should ensure that the proposal is not frivolous or intended to thwart the liquidation process.
2. Assessment of Bona Fides and Legitimacy of the Revival Proposal:
The court observed that the revival proposal came after a gap of 20 years, which raises questions about its bona fides. The appellants, who were part of the former management, did not object to the sale of the company's movable assets during the liquidation process. The timing of the proposal, coinciding with a boom in real estate prices, suggests that the revival scheme may be driven by the appellants' interest in the appreciating value of the company's land rather than a genuine intent to revive the company.
3. Consideration of Workers' Interests:
The court emphasized that the interests of the workers, who have been waiting for their dues for over two decades, are paramount. The revival proposal's promise of reemployment for the workers appears unrealistic, as most of them have reached retirement age. The court noted that the payment of workers' dues should be prioritized over speculative revival plans that do not guarantee tangible benefits to the workers.
4. Evaluation of Financial Viability and Credibility of the Sponsor:
The court scrutinized the financial credibility of the sponsor, M/s Dharnidhar Cotex Pvt. Ltd., and found it lacking. The sponsor's recent incorporation and inability to demonstrate substantial financial backing cast doubt on its capacity to support the revival scheme. The court highlighted the importance of establishing the sponsor's creditworthiness and the source of funds for the revival, which was not adequately addressed by the appellants.
5. Implications of Real Estate Market Conditions:
The court acknowledged that the rising real estate prices could influence the appellants' motivation to propose a revival scheme. The court was wary of the possibility that the revival proposal was a strategic move to capitalize on the increased land value rather than a sincere effort to restart the company's operations. The court underscored that the sale of land at current market rates could significantly help in settling the company's liabilities, including workers' dues.
Conclusion:
The court concluded that the revival proposal lacked credibility and was not in the best interest of the stakeholders, particularly the workers. The proposal appeared to be motivated by the appellants' interest in the appreciating land value rather than a genuine intent to revive the company. The court dismissed the appeal, affirming the decision of the learned Company Judge to reject the application for convening a meeting under Section 391 of the Companies Act, 1956.
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2012 (9) TMI 1253
Issues:
1. Scheme of Amalgamation under Sections 391-394 of the Companies Act, 1956.
2. Approval of the proposed Scheme by the Board of Directors.
3. Consent of Equity Shareholders, Secured Creditors, and Unsecured Creditors.
4. Dispensation of meetings for Equity Shareholders and Creditors.
5. Variation of rights of Secured and Unsecured Creditors.
6. Jurisdiction of the Courts for Transferor Companies No. 3 and 4.
Analysis:
1. The judgment pertains to a first motion joint application for a Scheme of Amalgamation among multiple companies under Sections 391-394 of the Companies Act, 1956. The application involves Vodafone Digilink Limit, Vodafone South Limited, Vodafone East Limited, Vodafone Cellular Limited, and Vodafone Mobile Services Limited, along with their respective shareholders. The registered offices of the companies are within the jurisdiction of the Delhi High Court.
2. Details regarding the incorporation dates and capital structure of the Applicant Companies have been provided in the application. Additionally, the Memorandum, Articles of Association, and the latest audited Annual Accounts for the relevant companies have been enclosed.
3. The Scheme has been approved by the Board of Directors of both the Applicant and Non-Applicant Companies. The status of Equity Shareholders, Secured, and Unsecured Creditors, along with their consents for the proposed Scheme, has been clearly outlined in the application.
4. The judgment discusses the dispensation of meetings for Equity Shareholders and Creditors based on the written consents received. The need for convening meetings for various categories of shareholders and creditors has been waived due to unanimous consents obtained.
5. Regarding the variation of rights of Secured and Unsecured Creditors, it is highlighted that the Scheme does not alter the rights of these creditors. The Applicant/Transferee Company is set to assume the liabilities of the Transferor Companies and undertake their discharge as per the Scheme's provisions.
6. Lastly, the judgment mentions the jurisdiction of the High Courts at Calcutta and Madras for Transferor Companies No. 3 and 4, respectively. The first motion applications filed by these companies were allowed by the respective courts, dispensing with the need for convening meetings of Equity Shareholders and Creditors.
This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed overview of the legal proceedings and decisions made by the Delhi High Court in this matter.
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2012 (9) TMI 1252
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to reopen assessment under Section 147 of the Act.
3. Legality of reopening an assessment on issues already decided by the Commissioner (Appeals) and Tribunal.
4. Applicability of block assessment under Chapter XIV-B versus regular assessment.
Issue-Wise Detailed Analysis:
1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 4th February 2002, issued by the respondent under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 1999-2000. The petitioner argued that the issues raised in the notice had already been decided in their favor by the Commissioner (Appeals) and confirmed by the Tribunal. The court noted that reopening the assessment on the same issues is unjustified and without authority of law, as these issues had already been scrutinized and decided by the appellate authorities.
2. Jurisdiction of the Assessing Officer to Reopen Assessment Under Section 147 of the Act:
The court examined whether the Assessing Officer had the jurisdiction to reopen the assessment under Section 147 of the Act. It was found that the reasons recorded for reopening the assessment were essentially a reiteration of the assessment order under Section 158BC. The court observed that the Assessing Officer was well aware that the Commissioner (Appeals) had deleted the addition of Rs. 55,00,866/- on merits. Hence, reopening the assessment on the same grounds was without jurisdiction.
3. Legality of Reopening an Assessment on Issues Already Decided by the Commissioner (Appeals) and Tribunal:
The court noted that the issue of gold ornaments valued at Rs. 55,00,866/- had already been examined and decided by the Commissioner (Appeals) and the Tribunal. The Commissioner (Appeals) had found that the petitioner had discharged the onus of proving the genuineness of the transactions and had deleted the addition. This decision was upheld by the Tribunal. The court held that reopening the assessment on the same grounds would amount to the Assessing Officer sitting in appeal over the order of the Commissioner (Appeals), which is not permissible.
4. Applicability of Block Assessment Under Chapter XIV-B Versus Regular Assessment:
The court referred to the leading decisions in N.R. Paper & Board Ltd. v. Dy. CIT and Cargo Clearing Agency (Gujarat) v. Jt. CIT, which clarified that the assessment of undisclosed income under Chapter XIV-B is distinct from regular assessments under Chapter XIV. The court emphasized that once an assessment has been framed under Chapter XIV-B for undisclosed income, there is no question of reopening such assessment under Section 148 of the Act. The court concluded that the reopening of the assessment in relation to an issue that was already subject matter of block assessment is without jurisdiction.
Conclusion:
The court quashed and set aside the impugned notice dated 4th February 2002, issued under Section 148 of the Act, declaring it unsustainable and without jurisdiction. The petition was allowed, and the rule was made absolute with no order as to costs.
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2012 (9) TMI 1251
Issues:
Assessment Year 1990-1991 - Benefit of Section 43B of the Income Tax Act, 1961 - Requirement of producing a certificate of a Chartered Accountant as per Section 288 of the Act.
Analysis:
The Supreme Court heard arguments from both sides and granted leave in a civil appeal related to the Assessment Year 1990-1991. The appellant, a Public Sector Company, claimed entitlement to the benefit of Section 43B of the Income Tax Act, 1961. The main issue in this case revolved around the appellant's failure to produce a certificate of a Chartered Accountant, as required by the Explanation to Section 288 of the Act. Despite the appellant's claim of payment adjustment on a specific date, the certificate had not been submitted. The Court emphasized that the appellant was obligated to provide this certificate to substantiate the payment claimed under Section 43B.
In light of the above circumstances, the Court directed the appellant to produce the certificate before the Assessing Officer within four weeks. The Assessing Officer was instructed to consider the certificate and make a decision in accordance with the law. Consequently, the civil appeal filed by the appellant was disposed of with no order as to costs. The judgment highlights the importance of complying with procedural requirements, such as producing necessary certificates, to substantiate claims under relevant tax provisions, ensuring transparency and adherence to statutory provisions in tax assessments.
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2012 (9) TMI 1250
Issues:
1. Interpretation of Section 80-P (2) (d) of the Income Tax Act for deductions on interest earned from surplus funds.
2. Tax treatment of interest income arising from investments made in post office and commercial banks by a cooperative society.
Analysis:
Issue 1: The first issue revolves around the interpretation of Section 80-P (2) (d) of the Income Tax Act regarding the eligibility of deductions on interest earned from surplus funds. The Income Tax Appellate Tribunal upheld the deductions of interest earned from post office/banks under Section 80-P (2) (d) of the Act based on a previous decision by the Allahabad High Court. However, the Supreme Court's decision in Totgar's Co-operative Sale Society Ltd v. Income Tax Officer clarified that interest income arising on surplus investments in short-term deposits and securities, not required for immediate business purposes, should be taxed as "Income from other sources" under Section 56 of the Act. The court emphasized that such interest income does not fall under the category of "profits and gains of business" as defined in Section 80-P (2) of the Act.
Issue 2: The second issue pertains to the tax treatment of interest income derived from investments made in post office and commercial banks by a cooperative society. The respondent-assessee argued that the interest earned on surplus funds invested in post office/banks aligns with the society's objective of providing loans to members and arranging funds for activities, making it eligible for deduction under Section 80-P. However, the court differentiated this case from Totgar's Cooperative Sale Society Ltd, highlighting that the investment in securities was not a primary objective of the cooperative cane development union. Consequently, the interest earned from such investments was categorized as income from other sources and deemed chargeable to tax under Section 56 of the Act.
In conclusion, the Income Tax Appeal was allowed, deciding the substantial questions of law in favor of the revenue department and against the respondent-assessee. The judgment clarified the tax treatment of interest income from surplus investments and emphasized the distinction between income derived from business activities and other sources, providing a comprehensive analysis of the application of relevant provisions under the Income Tax Act.
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2012 (9) TMI 1249
Issues Involved:
1. Power of the High Court in an appeal against acquittal.
2. Evidentiary value of related witnesses.
3. Effect of only one surviving accused.
4. Delay in disposal of appeal.
Summary:
1. Power of the High Court in an appeal against acquittal:
The High Court allowed the State's appeal and convicted the remaining accused, setting aside the trial court's acquittal. The Supreme Court reiterated that the appellate court is entitled to re-appreciate evidence and come to an independent conclusion if the trial court's decision is perverse or unreasonable, resulting in a miscarriage of justice. The High Court analyzed the evidence, including eyewitness testimonies, medical evidence, and the Forensic Science Laboratory (FSL) report, and concluded that the prosecution had established the case against the accused.
2. Evidentiary value of related witnesses:
The Supreme Court held that the testimony of related witnesses cannot be discarded merely due to their relationship with the deceased. The Court emphasized that if the statements of such witnesses are credible, reliable, and corroborated by other evidence, they should be accepted. In this case, the testimonies of Nathu Ram (PW-1), Prayag Singh (PW-3), and Mukut Singh (PW-6) were found to be honest and truthful. The trial judge erred in discarding their testimonies, and the High Court was justified in relying on their evidence.
3. Effect of only one surviving accused:
The Supreme Court rejected the argument that the sole surviving accused, Shyam Babu, should be exonerated because the other co-accused had died. The Court noted that the evidence showed Shyam Babu's active participation in the gruesome incident, which resulted in the deaths of five persons and injuries to one person. The conviction under Sections 148, 307, and 302 read with Section 149 of the Indian Penal Code was upheld.
4. Delay in disposal of appeal:
The Supreme Court dismissed the contention that the delay of 25 years in disposing of the appeal by the High Court should result in the exoneration of the appellant. The Court reiterated that the Limitation Act, 1963, does not apply to criminal proceedings unless expressly provided. The delay in the High Court's decision does not warrant exoneration, especially in a case involving multiple murders and injuries.
Conclusion:
The Supreme Court upheld the High Court's decision, agreeing with its reasoning and rejecting the trial court's acquittal. The appeal was dismissed, and the conviction and sentence of the sole surviving accused, Shyam Babu, were affirmed.
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2012 (9) TMI 1248
Issues involved: Appeal filed by Revenue challenging deletion of addition on account of deferment of sales tax.
Summary:
The appeal was filed by the Revenue against the order of the ld.CIT(A)-XI, Ahmedabad dated 15.06.2010. The main issue was the addition of Rs.2,44,70,672/- on account of deferment of sales tax. The assessee-company was involved in manufacturing and trading of various products including starch, tapioca, chemicals, maize grain, and allied products. The AO noted that the assessee had shown a sales tax liability of Rs.14,54,26,795/- under "sales tax deferment" and that Rs.2,44,70,672/- of this liability remained unpaid. The AO invoked section 43B of the Act to tax this amount. The ld.CIT(A) decided in favor of the appellant based on a previous Tribunal decision in the appellant's own case for an earlier assessment year. The Tribunal, following past decisions, dismissed the Revenue's appeal, upholding the deletion of the addition on account of sales tax deferment.
In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the decision to delete the addition related to the deferment of sales tax.
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2012 (9) TMI 1247
Issues involved:
1. Validity of the first information report (FIR) under TADA without prior approval u/s 20-A(1).
2. Effect of approval by the Additional Chief Secretary, Home Department.
3. Consequence of non-compliance with Section 20-A(1) of TADA.
4. Applicability of Section 465 of the Code of Criminal Procedure to cure defects.
5. Impact of the Designated Court's cognizance and trial decisions.
6. Validity of convictions under other penal provisions in the absence of TADA compliance.
Summary:
Issue 1: Validity of FIR under TADA without prior approval u/s 20-A(1):
The accused contended that the FIR under TADA was registered without the required prior approval of the District Superintendent of Police as mandated by Section 20-A(1) of TADA. The prosecution claimed that such approval was granted by Deputy Commissioner A.R. Suroliya, who is of equivalent rank. However, the court found the evidence regarding the approval on 9th June 1994 unconvincing and rejected the prosecution's story of prior approval.
Issue 2: Effect of approval by the Additional Chief Secretary, Home Department:
The prosecution also relied on an approval dated 15th June 1994 by the Additional Chief Secretary, Home Department. The court held that while this approval was indeed given, it did not satisfy the statutory requirement of prior approval by the District Superintendent of Police as required by Section 20-A(1) of TADA.
Issue 3: Consequence of non-compliance with Section 20-A(1) of TADA:
The court emphasized that non-compliance with Section 20-A(1) of TADA, which mandates prior approval by the District Superintendent of Police, is not a mere procedural lapse but a substantive requirement. The absence of such approval vitiates the entire prosecution under TADA.
Issue 4: Applicability of Section 465 of the Code of Criminal Procedure to cure defects:
The State argued that the defect of non-compliance with Section 20-A(1) could be cured under Section 465 of the Code of Criminal Procedure. The court rejected this argument, stating that the omission to grant prior approval is not a curable defect under Section 465, as it goes to the root of the matter.
Issue 5: Impact of the Designated Court's cognizance and trial decisions:
The State contended that the Designated Court's decision to take cognizance and try the case rendered prior defects irrelevant. The court rejected this, stating that the Designated Court's decision to proceed with the trial does not prevent the accused from challenging the trial's validity based on non-compliance with statutory requirements.
Issue 6: Validity of convictions under other penal provisions in the absence of TADA compliance:
The court noted that while the Designated Court can try and convict under other penal laws if connected with TADA offences, the convictions under the Arms Act and Explosive Substances Act in this case were based on confessions recorded under TADA. Since the TADA convictions were vitiated due to non-compliance with Section 20-A(1), the confessions could not be used to support convictions under other laws. Consequently, those convictions were also set aside.
Conclusion:
The Supreme Court allowed the appeals of the convicted accused, setting aside their convictions and sentences. The appeals by the State against acquittals and for inadequacy of sentences were dismissed. The court emphasized the importance of adhering to statutory safeguards to prevent misuse of TADA, underscoring that strict compliance with procedural requirements is essential to uphold the rule of law.
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2012 (9) TMI 1246
Issues Involved:
1. Rejection of Books of Accounts and Enhancement of Sales Turnover.
2. Adoption of Higher Gross Profit (GP) Rate.
3. Disallowance u/s 40A(3).
4. Disallowance u/s 43B.
5. Disallowance u/s 40(a)(ia).
6. Capital vs. Revenue Expenditure.
Summary:
Issue 1: Rejection of Books of Accounts and Enhancement of Sales Turnover
The AO rejected the books of accounts u/s 145, citing unverifiable purchases and sales, and enhanced the sales turnover from Rs. 330.79 Crores to Rs. 360 Crores. This was based on the assumption that purchases from certain parties were not genuine, drawing parallels from the case of M/s. Swapnil Distributors Pvt. Ltd. However, the CIT(A) found this approach inconsistent and contradictory, noting that the Special Auditors appointed u/s 142(2A) confirmed the genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision, finding no material evidence to justify the enhancement of the sales turnover.
Issue 2: Adoption of Higher Gross Profit (GP) Rate
The AO adopted a GP rate of 15% compared to the 12.97% declared by the assessee, arguing it was lower than comparable cases. The CIT(A) and the Tribunal found no justification for this increase, noting that the AO failed to provide evidence of unverifiable expenses or suppression of sales. The Tribunal emphasized that the GP rate in the assessee's line of business ranged from 12% to 20%, and the declared GP rate of 12.97% was within this range.
Issue 3: Disallowance u/s 40A(3)
The CIT(A) upheld the AO's disallowance of Rs. 3,20,001/- u/s 40A(3) for cash payments exceeding the prescribed limit. The Tribunal also upheld this disallowance, as the assessee did not seriously contest it.
Issue 4: Disallowance u/s 43B
The CIT(A) upheld the disallowance of Rs. 2,30,963/- u/s 43B. The Tribunal did not find any serious contention from the assessee on this issue and upheld the disallowance.
Issue 5: Disallowance u/s 40(a)(ia)
The CIT(A) confirmed the disallowance of Rs. 1,09,337/- u/s 40(a)(ia). The Tribunal, however, restored this issue to the AO for fresh adjudication in light of the Visakhapatnam Special Bench decision in the case of Merilyn Shipping and Transport, considering that the payments were made before the end of the accounting year.
Issue 6: Capital vs. Revenue Expenditure
The CIT(A) confirmed an addition of Rs. 14,96,149/- on the ground that the expenditure was capital in nature. The Tribunal upheld this decision as the assessee did not seriously contest it.
Conclusion:
The Tribunal dismissed the revenue's appeals and partly allowed the assessee's appeal and cross-objections for statistical purposes. The key findings were the rejection of the AO's enhancement of sales turnover and GP rate, and the remand of the disallowance u/s 40(a)(ia) for fresh adjudication.
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2012 (9) TMI 1245
Issues Involved:
1. Whether the income from the purchase and sale of shares should be treated as 'short term capital gain' or 'business income'.
2. Application of the principle of consistency in assessment years.
Summary:
Issue 1: Treatment of Income from Shares
The Revenue contended that the assessee's income from the purchase and sale of shares should be treated as 'business income' due to the large scale and high frequency of transactions, and the short holding period. The Assessing Officer (AO) had reclassified the income from 'short term capital gain' to 'business income' for the assessment years 2005-2006 and 2006-2007. The CIT (A) directed the AO to accept the assessee's claim of short term capital gain, noting that the AO had accepted similar claims in previous years (2004-2005) and allowed set off u/s 74 and exemption u/s 54F. The CIT (A) relied on the decision of the Hon'ble jurisdictional High Court in the case of Gopal Purohit, which upheld the assessee's right to maintain separate portfolios for investment and business activities in shares.
Issue 2: Principle of Consistency
The learned DR argued that each assessment year is a separate unit and the principle of res judicata does not apply in taxation matters. However, the CIT (A) and the Tribunal emphasized the principle of consistency, stating that the AO cannot take a divergent view for different assessment years when the facts and circumstances are identical. The Tribunal noted that the AO had accepted the assessee's claims of short term and long term capital gains in some years while treating them as business income in others, despite similar transaction patterns. The Tribunal upheld the CIT (A)'s decision, citing the Hon'ble jurisdictional High Court's ruling in Gopal Purohit, which mandates uniformity in treatment and consistency when facts and circumstances are identical.
Conclusion:
The Tribunal dismissed the Revenue's appeals, affirming the CIT (A)'s orders that directed the AO to treat the income from the purchase and sale of shares as 'short term capital gain' rather than 'business income'. The Tribunal reinforced the principle of consistency in tax assessments, aligning with the precedent set by the Hon'ble jurisdictional High Court in Gopal Purohit.
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2012 (9) TMI 1244
Issues Involved:
1. Clarification/Modification of Interim Order
2. Applicability of Chhattisgarh High Court Rules
3. Reference to Larger Bench
4. Jurisdiction and Scope of Reference Jurisdiction
Summary:
1. Clarification/Modification of Interim Order:
In a pending writ petition, an interim order was passed on 09.08.2005. Respondent No. 5 filed an application on 14.03.2012 seeking clarification/modification of this order. The writ petitioner filed a reply on 16.04.2012. The Division Bench directed the Registry to place the matter before the appropriate Bench as per Rule 40 of the Chhattisgarh High Court Rules (C.H. Rules).
2. Applicability of Chhattisgarh High Court Rules:
The Full Bench considered Rule 2(2), 3, 4, and 35 of the C.H. Rules. Rule 2(2) and Rule 4 incorporate the provisions of the Madhya Pradesh High Court Rules (M.P. Rules) into the C.H. Rules by the principle of "legislation by incorporation." This ensures that any ambiguity in the C.H. Rules can be resolved by referring to the M.P. Rules.
3. Reference to Larger Bench:
The Division Bench recommended referring the matter to a larger Bench under Rule 35 of the C.H. Rules. Rule 35 allows a Division Bench to refer a matter to the Chief Justice for it to be placed before a Full Bench if it involves reconsideration of a decision by two or more Judges. The Chief Justice constituted the Full Bench on 26.07.2012.
4. Jurisdiction and Scope of Reference Jurisdiction:
The Full Bench emphasized that it could only answer specific stated questions referred to it and not decide the entire matter unless explicitly referred. The referring Judges did not formulate any specific questions under Rule 35, thus the Full Bench declined to answer the reference. The Full Bench cited several precedents, including Kesho Nath Khurana vs Union of India and Kerala State Science and Technology Museum vs Rambal Co., which establish that a larger Bench cannot adjudicate issues beyond the specific questions referred.
The Full Bench concluded that without specific questions formulated by the referring Judges, it could not proceed to answer the reference. The matter was thus declined for consideration, adhering to judicial discipline and the limits of advisory reference jurisdiction. The assistance rendered by the amicus curiae and other counsels was duly acknowledged.
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2012 (9) TMI 1243
Issues Involved:
1. Alleged deliberate and shoddy investigation by police authorities.
2. Request for further investigation.
3. Inquiry into the nexus of ASI Satbir with criminals.
4. Ensuring rule of law by police officers.
5. Constitutionality of Sections 225 and 301(2) of Cr. P.C.
6. Conducting prosecution by a pleader of the petitioner's choice.
7. Providing police protection to the petitioner and his family.
Summary:
1. Alleged Deliberate and Shoddy Investigation by Police Authorities:
The petitioner claimed that the investigation into his brother Dharamvir's murder was deliberately mishandled by the police, who falsely registered an FIR describing the incident as an accident. The petitioner alleged that his signature was forged and that the police omitted critical evidence, including the nexus between ASI Satbir and the accused.
2. Request for Further Investigation:
The petitioner sought a writ of certiorari to set aside the orders dated 7.1.2012 by the learned ASJ, which declined further investigation. The court noted that the trial court is empowered under Section 311, Cr. P.C. to summon material witnesses at any stage of the trial, ensuring a just decision.
3. Inquiry into the Nexus of ASI Satbir with Criminals:
The petitioner requested a writ of mandamus for an inquiry into ASI Satbir's alleged nexus with criminals and the forging of records in FIR No. 198/2011. The court did not grant this request, citing the ongoing trial and the powers vested in the trial court to ensure a fair investigation.
4. Ensuring Rule of Law by Police Officers:
The petitioner sought a direction to ensure compliance with the law by police officers. The court found this request vague and general, thus not granting it.
5. Constitutionality of Sections 225 and 301(2) of Cr. P.C.:
The petitioner challenged the constitutionality of Sections 225 and 301(2), Cr. P.C., arguing it violated Article 14 of the Constitution. The court upheld the constitutionality, noting that the Public Prosecutor's role is to ensure a fair trial, and the differentiation between the rights of the accused and the complainant is reasonable and based on intelligible differentia.
6. Conducting Prosecution by a Pleader of the Petitioner's Choice:
The petitioner sought to conduct the prosecution through a pleader of his choice. The court reiterated that Section 302, Cr. P.C. applies only to trials by a Magistrate, and the prosecution before a Court of Session must be conducted by a Public Prosecutor, as per Section 225, Cr. P.C.
7. Providing Police Protection to the Petitioner and His Family:
The petitioner requested police protection, citing threats. The court noted that specific allegations of threats were not made in the petition and advised that such a request could be made to the concerned court if any threat exists.
Conclusion:
The court dismissed the petition, finding no merit in the claims, but granted liberty to the petitioner to approach the trial court for specific reliefs as warranted.
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