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2014 (12) TMI 1437
Declination to grant the benefit of delisting of respondent No. 4 - requirement to maintain 10 per cent benchmark for the public shareholding to remain as a listed company - HELD THAT:- Rule 19(2)(b) provides that at least 10% of each class or kind of securities must be offered to public for subscription through advertisement in newspaper during the time specified and the applications received pursuant to such offer should be allotted as per the conditions postulated. The proviso engrafts states that in case the company does not fulfil the conditions, it shall offer at least 25% of each of the securities to the public for subscription though advertisement in newspaper, etc. within the time stipulated. The opening words of sub-rule (2) of Rule 19 read “apart from complying with such other terms and conditions as may be laid down by a recognized stock exchange. an applicant company shall satisfy the stock exchange - on harmoniously interpreting the listing requirement i.e. the agreement with BSE with Rule 19(2) along with 2003 Guidelines, it is apparent and limpid that the condition for continuous listing would not have been followed by “Hella India”, if the public shareholding had fallen below 20%. Thus, it has to be held that offer of delisting would be successful and would not fail, if the public shareholding falls below 20%. The 10% limit would not apply in view of Rule 19(2) as the said Rule recognizes the terms and conditions laid down by recognized stock exchange and stipulates that the same must be satisfied for the company to claim continuous listing.
Conclusion - The specific terms of a listing agreement with a stock exchange can set a higher benchmark for public shareholding than general guidelines, and such terms must be adhered to for continuous listing. Hella India was required to maintain a 20% public shareholding for continuous listing, and the delisting process was valid under this condition.
Appeal dismissed.
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2014 (12) TMI 1436
Authority to manage and control bus shelters in Chennai - authority of the MTCL in allotting contract for erection and maintenance of bus shelters - HELD THAT:- Section 285-A has to be read in conjunction with Section 285. Section 285 empowers the Commissioner to construct or provide public landing places, halting places, cart-stand, etc. The Explanation includes a stand for carriages that includes motor vehicles within the definition of cart-stand. Section 285-A authorises the Commissioner to prohibit use of public place or sides of public street as cart-stand, etc. by any person within such distance which has to be determined by the standing committee. The proviso carries out an exception which stipulates that nothing contained in Section 285-A shall be deemed to authorise the Commissioner to prohibit the use of any place in the city by the State Government as a stand solely for motor vehicles belonging to the Transport Department of the State Government.
There remains no iota of doubt that the legislature has conferred power on the Corporation to take necessary action for public convenience and make provisions for the cart-stand which includes the motor vehicles. The exception carved out by a proviso to Section 285-A of the Act does not remotely suggest that the legislature has even conceived of any other body like MTCL, which is a State undertaking, to even construct the bus shelters. What has been engrafted in the proviso to Section 285-A of the Act is that the Corporation or its agent cannot prohibit the use of any place in the city to be used for motor vehicles belonging to Transport Department of the State Government as a stand - 285-A of the Act has to be read in juxtaposition with Section 285 of the Act and by no stretch of suggestion, it can be read to include bus shelters. The word "stand" has to be understood as per the common meaning given to it. That apart, the text, context and the pattern of use of words do suggest that it is meant for providing stand for the motor vehicles.
In the case at hand, as it is concluded that it is the Corporation who has the authority to deal with the bus shelters and not MTCL, the equity has to yield to law. It is submitted by the learned Counsel for the Appellants that they have spent huge amount in erecting the structures and also doing certain ancillary things in that regard and, therefore, appropriate extension should be granted. Such a prayer, needless to say, is in the realm of equity. It cannot be granted as that will violate the law. The contract between the MTCL and the Appellants cannot bind the Corporation. Had there been an irregularity in the contract or any lapse, then the question of invoking the principle of equity could have arisen but as it is perceptible, it is an agreement between two parties in respect of an act, which one of the parties is not entitled to enter into as it has no legal authority.
In the instant case, the Appellants entered into a compromise/settlement with the MTCL. They were fully aware of the fact that as per the High Court judgment, MTCL did not have the authority. On the basis of the judgment of the High Court, such a settlement could not have been entered into. Despite the same, a settlement was entered and the cases were disposed of.
Conclusion - The contracts entered into by the Appellants with the MTCL cannot be sustained and they are accordingly annulled. It is directed that the Corporation shall take over the management of the bus shelters forthwith and shall proceed to deal with them for all purposes by taking recourse to procedure of tender or auction which should be fair and transparent. This direction shall prevail all other directions issued by the High Court.
Appeal dismissed.
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2014 (12) TMI 1435
Jurisdiction of Committee appointed by the Court to negotiate settlements and manage the sale of assets related to the National Spot Exchange Limited (NSEL) case - HELD THAT:- A perusal of the records clearly indicates that the third party noticees have submitted themselves to the jurisdiction of this Court which in my view has been rightly done. In so far as the provisions of MPID Act are concerned, the proceedings filed by the NSEL against the parties to the said proceedings which are under the provisions of the said Act can be independently filed irrespective of filing of this suit. The said proceedings before MPID Court are not overlapping with this proceedings.
A perusal of the order passed by this Court dated 9th September 2014 and in particular paragraph 10 of the Minutes of Meeting dated 27th August 2014, makes it clear that this Court has already provided safeguards to all the parties. It is provided that as and when the Committee realizes funds and assets and finds the matter to be ripen for distribution of amounts amongst non defaulting members and parties entitled to the same, the Committee shall prepare a report to this Court. The parties would be at liberty to apply to this Court on such report for distribution of the amounts held by the Committee towards their dues. There is no substance in the submission made by the learned counsel for the third party noticees that no such direction can be issued by this Court or by the Committee.
A perusal of the records also indicates that the Committee has heard the parties from time to time before issuing any directions or taking steps in furtherance thereto. The report submitted by the Committee is thus accepted and taken on record and would form part of the proceedings to the suit. The Committee is directed to proceed further to take steps as already directed by the order dated 9th September 2014 including the steps to dispose of various commodities mentioned in paragraph 26 of the report. All further steps of the Committee will be subject to the directions issued in the order dated 9th September 2014.
Conclusion - There is no substance in the submission of the third party noticees that this Court has no jurisdiction to appoint such Committee or the Committee before which his clients have appeared itself has no jurisdiction.
Appal disposed off.
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2014 (12) TMI 1434
Preferential allotment of shares - preferential allottees acting in concert with Moryo Group have misused the stock exchange system to generate fictitious LTCG so as to convert their unaccounted income into accounted one with no payment of taxes as LTCG is tax exempt - HELD THAT:- The entire scheme employed in this case is necessary to find out the role of any other entity therein including the stock brokers involved in transactions as observed in this case, connection amongst the concerned entities and the ultimate owners of funds used for manipulating the price of the scrip.
While SEBI would investigate into the probable violations of the securities laws, the matter may also be referred to other law enforcement agencies such as Income Tax Department, Enforcement Directorate and Financial Intelligence Unit for necessary action at their end as may be deemed appropriate by them.
SEBI strives to safeguard the interests of a genuine investor in the Indian securities market. The acts of artificially increasing the price of scrip mislead investors and the fundamental tenets of market integrity get violated with impunity due for such acts.
As prima facie find that the acts and omissions of Moryo Group and allottees as described above is inimical to the interests of participants in the securities market. Therefore, allowing the entities that are prima facie found to be involved in such fraudulent, unfair and manipulative transactions to continue to operate in the market would shake the confidence of the investors in the securities market.
In this case it is noted that as on November 15, 2014 the allottees are still holding 4032070 shares of Moryo that were allotted to them in the aforesaid preferential allotment. The price of the scrip is still around ₹225 per share which is 9 times more than the allotment price.
Unless prevented they may use the stock exchange mechanism in the same manner as aforesaid for the purposes of their dubious plans as prima facie found in this case. In my view, the stock exchange system cannot be permitted to be used for any unlawful/forbidden activities.
A listed company in such a fraudulent scheme, plan, device and artifice as prima facie found in this case, as convinced that this is a fit case where, pending investigation, effective and expeditious preventive and remedial action is required to be taken by way of ad interim ex parte in order to protect the interests of investors and preserve the safety and integrity of the market.
In order to protect the interest of the investors and the integrity of the securities market, I, in exercise of the powers conferred upon me in terms of section 19 read with section 11(1), section 11 (4) (b) and section 11B of the SEBI Act, 1992, pending inquiry/investigation and passing of final order in the matter, hereby restrain the following persons/entities from buying, selling or dealing in the securities markets, either directly or indirectly.
The stock exchanges and the depositories are directed to ensure that all the above directions are strictly enforced.
The persons/entities against whom this Order is passed may file their objections, if any, within twenty one days from the date of this order and, if they so desire, avail themselves of an opportunity of personal hearing before the Securities and Exchange Board of India, on a date and time to be fixed on a specific request, received from the said persons.
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2014 (12) TMI 1433
Contravention of the provisions of Section 4 of Competition Act, 2002 - Locus of CCI to prefer an appeal - validity of search conducted at the office premises of the petitioners by Director General.
Whether CCI has locus to prefer the present appeal challenging the order of the learned Single Judge staying the investigation by the Director General? - HELD THAT:- CCI which is a body corporate in terms of Section 7(2) of the Act, having perpetual succession and a common seal with power to sue and be sued in its name, has a right of representation in any appeal before the tribunal as has been specifically mentioned under Section 53-S(3) and it even has a right of appeal under Section 53-T before the Supreme Court - since the investigation by the Director General forms part of the regulatory jurisdiction exercised by CCI, any order hampering the investigation process directly affects the statutory functioning of CCI. Under the circumstances, the right to assail an order staying the investigation cannot be confined only to the informant, but the CCI also being an equally aggrieved party, is entitled to do so - CCI has locus standi to present the appeal against the order of the learned Single Judge staying investigation by the Director General.
Scope of the powers of the Director General under the Competition Act, 2002, particularly concerning search and seizure operations - HELD THAT:- It is relevant to note that the learned Single Judge initially by order dated 04.04.2014 allowed the Director General to proceed with the investigation, however, granted stay only to the extent of passing a final order/report. The said order has been accepted and acted upon by both the parties. It appears that the whole grievance of the writ petitioner is only with regard to the manner in which the Director General has been proceeding with the investigation. The Director General who was directed to file his personal affidavit is not a party to the proceedings before the learned Single Judge and admittedly the matter is being contested by the CCI alone. Be that as it may, since the matter is still pending before the learned Single Judge and the counters are yet to be filed by the CCI and other respondents therein, it is always open to the CCI/appellant herein to file the necessary counter and seek for vacating the order dated 26.09.2014 including the direction that the Director General shall file his personal affidavit. Therefore, the interference at this stage is unwarranted.
Conclusion - The CCI has the locus standi to appeal against orders affecting its statutory functions. The Director General's investigative powers are subject to procedural safeguards. Since the matter is still pending before the learned Single Judge and the counters are yet to be filed by the CCI and other respondents therein, it is always open to the CCI/appellant herein to file the necessary counter and seek for vacating the order dated 26.09.2014 including the direction that the Director General shall file his personal affidavit.
Appeal disposed off.
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2014 (12) TMI 1432
Direction to the Official Liquidator to hand over the possession of the assets of the company back to the applicant RIICO - Rules 6 and 9 of the Companies (Court) Rules, 1959 - HELD THAT:- In recognition of the powers of the RIICO under Sections 29 of the 1985 Act over the assets mortgaged to it; taking into consideration that the winding up order of the M/s. CV Steel Limited passed on 19-7-2002 has been recalled by this court on 5-8-2010 and that the official liquidator has not been appointed as provisional official liquidator of the M/s. CV Steel Limited by the company court, the official liquidator is directed to hand back the assets of the M/s. CV Steel Limited to the RIICO as earlier obtained on 19-1-2007.
There are presently no occasion to issue any direction for recovery of expenses expanded on protection of assets of the M/s. CV Steel Limited while in possession of the official liquidator from the sale of the assets in question by RIICO in view of the fact that this court while passing the order dated 5-8-2010 recalling the winding up order dated 19-7-2002 on the application of the directors of the M/s. CV Steel Limited, had directed that the liability of the expenses expanded by the official liquidator for protection of assets of the company shall be of the directors of the company on whose behalf the winding up order was recalled.
Application disposed off.
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2014 (12) TMI 1431
Recalling of an order of winding up - Non-payment of security expenses by the non-applicants - whether the avoidance of obligations imposed by this Court on the non-applicants as a condition for the recall of winding up order is justified or a plain obstructionist approach to the administration of justice and falling within the scope of “contempt of court”?
HELD THAT:- There is an apparent breach of the directions of this Court passed on 5.8.2010 directing the non-applicants for payment of security expenses incurred on the protection of assets of the respondent Company to the Official Liquidator.
The reply of the non-applicants to the Official Liquidator's application under Rule 9 Company Court Rules shows that the non-applicants have not indicated what the stolen “material” from its two properties was/ is. They admittedly have no specific reference of the quantities allegedly stolen from site. In-fact the non-applicants require this Court to direct the Official Liquidator to provide complete list of inventory which was prepared by the Official Liquidator on 7.2.2007 when physical possession of E-368 and A-1113, RIICO Industrial Area, Bhiwadi (Alwar) was taken from RIICO. The non-applicants do not have copy of any inventory prepared by RIICO showing “material” on the properties in issue when possession was taken by RIICO in the year 2000.
It is also extremely odd that the alleged 'reprehensible state' of the properties of the company in liquidation purportedly found on the alleged visit of 1.6.2011 was never brought to the notice of this Court except over two years thereafter on the occasion of filing the reply to the application filed by the Official Liquidator for payment of security charges as directed by this Court under its order dated 5.8.2010. It is fundamental to a claim that one who alleges has to prove it. The issue of the Official Liquidator being responsible for the “loss” of the “material” of the company from its two sites is on the face of it sought to be generated on vague assertions without any semblance of specifics. And if indeed the Official Liquidator is found to be remiss, at any stage, in the discharge of his obligations, he will be called for his explanation. For that however, specifics have to be pleaded and proved. Not yet done.
In the circumstances obtaining, the non-applicants are in palpable non-compliance and consequent compounded contempt of the order of this Court passed on 5.8.2010 where-under while recalling the order of winding up at their instance this Court had directed that while the custody of the company property would remain in the hands of the Official Liquidator, the non-applicants as the propounder of the application for recalling the winding up order dated 19.7.2002 would be liable to pay the charges for the security of the assets of the respondent company by way of reimbursement to the Official Liquidator.
The application filed by the Official Liquidator under rule 9 of the Companies (Court) Rules, 1959 is therefore liable to be allowed. The non-applicants are therefore liable to pay the outstanding amount to the Official Liquidator along- with interest @ 12% p.a from the time the amounts in issue became due till the date of payment - Further as the non-applicants are prima-facie in contempt of the order dated 5.8.2010, issue notice to the non-applicants as to why they should not be punished for the contempt of the order of this Court passed on 5.7.2010.
List the matter on 19.12.2014. On that date the respondents to be present in person in Court.
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2014 (12) TMI 1430
Maintainability of the petition by Severn Trent as a creditor - parallel proceedings in a suit and under the Arbitration and Conciliation Act, 1996 - petition is barred by limitation or not - petition is maintainable by Severn Trent as creditor, whether any case has been made out for winding-up on the ground of the inability of Capital Controls India to pay its debts within the meaning of Section 434(1)(a) of the Companies Act, 1956 - premature publication, Severn Trent having published an advertisement about the filing of the petition before any order was made on it.
HELD THAT:- As of 2004, Capital Controls India was indebted to Severn Trent at least in the amount of $176,640.94. That amount is not in dispute. This debit is unequivocally admitted several times, including in the Affidavit in Reply. Were this a civil suit, on the basis of the statements in the Affidavit in Reply, Severn Trent could have moved to have judgment entered on admission in this amount of $176,640.94. There is no reason why, at least as regards the admission, a different consideration should obtain in a winding up proceeding. Capital Controls India’s indebtedness to Severn Trent is clear. It has, despite notice, failed and refused to pay this amount. The consequences must follow.
The claim by Severn Trent is larger than this amount, and includes interest, and though Capital Controls India alleges that it has a counter-claim, it has done nothing at all to establish or prove that counter-claim.
The company petition is admitted and is made returnable on 26th March 2015 - Service of the petition under Rule 28 of the Companies (Court) Rules, 1959 is waived.
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2014 (12) TMI 1429
Direction that records of reimbursement of medical bills of judges of the Supreme Court (whether serving or retired) be maintained separately for each judge so as to ensure that the summary of such expenses for each judge are available separately - HELD THAT:- The impugned order indicates that the CIC proceeded on the basis that “the citizens can always seek the copies of the medical bills of individual judges and find out the same information. Therefore, it is better that the public authority should maintain such records in a manner that it should be possible to find out the details of expenditure in each individual case. Or else, the CPIO would be constrained to make photocopies of all such bills and provide to the information seeker, an exercise both more cumbersome and expensive.” Clearly, this assumption is erroneous as medical records are not liable to be disclosed unless it is shown that the same is in larger public interest. In the present case, the CIC has completely overlooked this aspect of the matter.
Further, the extent of medical reimbursement to an individual is also, in one sense, personal information as it would disclose the extent of medical services availed by an individual. Thus, unless a larger public interest is shown to be served, there is no necessity for providing such information. Thus, clearly, a direction for maintaining records in a manner so as to provide such information is not warranted.
The basic financial data can be accessed to generate innumerable reports depending on the exigencies and requirements of an organization. A direction by the CIC to maintain such records to generate reports, merely because an individual information seeker has sought such information, is not warranted as the same would multiply with each information seeker seeking information in different form. A direction to maintain records in a particular manner must be occasioned by considerations of public interest, which is admittedly absent in this case.
The petition is allowed and the impugned order is set aside.
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2014 (12) TMI 1428
Delay in Filing the Appeal - onus to prove sufficient cause of delay - inordinate delay of more than 11 years & 10 months against the Adjudication Order - contraventions under the Foreign Exchange Regulation Act, 1973 - HELD THAT:- If the provisions of FEMA, 1999 are applicable in the present appeal, then onus lies on the applicant/appellant to prove sufficient cause. But, the applicant/appellant has miserably failed to prove the sufficient, cause in filing the present appeal regarding delay because no plausible evidence was adduced by the applicant/appellant. The present appeal has been filed after inordinate delay of more than 11 years & 10 months against the Adjudication Order, which period cannot be extended in any manner without establishing the sufficient cause. Hence, the application for condonation of delay is not maintainable as it be dismissed along with the present appeal.
The applicant/appellant has/miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay. There is no momentum of force in the submissions of Ld. Counsel for the applicant/appellants the judgments relied upon by the applicant are not applicable in the present case. There is modicum of merit in the submissions' of Ld. ALA for the respondent. Hence, the application for condonation of delay in filing the appeal as well as the appeal, arising out from the Adjudicating Order passed by the Special Director, Directorate of Enforcement, New Delhi is hereby dismissed
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2014 (12) TMI 1427
Prayer to grant them benefits flowing from the Government Resolution dated 17.10.1988 - entitlement to daily wage members for regularization or permanency in the services - HELD THAT:- The petition is squarely covered by the judgment of the Supreme Court in State of Gujarat and others Vs. PWD Employees Union [2013 (7) TMI 1228 - SUPREME COURT] where it was held that the appellants should be directed to grant the benefit of the scheme as contained in the Resolution dated 17th October, 1988 to all the daily wage members of the Forest and Environment Department working for more than five years, providing them the benefits.
The Review Petitions filed by the State Government against this judgment have now been dismissed by the Supreme Court STATE OF GUJARAT & ORS. VERSUS PWD EMPLOYEES UNION & ORS. [2014 (1) TMI 1948 - SC ORDER]. In the view of this, there remains no impediment at all on the part of the State Government in extending the benefits of the Government Resolution dated 17.10.1988 to the 33 members of the petitioner subject to their fulfilling the requisite conditions.
The respondents shall examine the cases of the 33 members of the petitioner individually and, if found eligible, shall extend the benefits of the Government Resolution dated 17.10.1988 to said 33 members of the petitioner as per the directions of the Supreme Court. The needful be done within a period of four months from the date of receipt of copy of this order.
Petition allowed.
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2014 (12) TMI 1426
Maintainability of petition - Oppression and mismanagement - bona fide purchasers or not - failure to disclose material facts/suppression of material facts - Invocation of jurisdiction of this Bench conferred upon it by virtue of the provisions contained in Sections 397, 398 and 399 read with Sections 402, 403 and 406 of the Indian Companies Act, 1956 - HELD THAT:- If the Petitioner was not a consenting party to the sale transaction, she should have refunded this amount immediately. To my mind, this clearly proves misconduct on the part of the Petitioner. The settled proposition that the law relating to oppression and mismanagement is basically based on equity, fairness and probity on the part of the shareholders of a Company whether such party is a Petitioner or Respondent in the petition filed under Section 397/398 of the Act, cannot be ignored. They are supposed to approach the CLB under the said provisions with all fairness and trustworthiness. It is, therefore, established that the Petitioner has not approached the CLB with clean hands.
For the reasons discussed hereinabove, the Petitioner having approached to the CLB with unclean hands is not entitled to any discretionary reliefs - the petition deserves to be dismissed on the said preliminary ground.
Time Limitation - HELD THAT:- There are no hesitation to hold that the instant petition filed under Section 397/398 of the Act is not hit by the law of limitation as, firstly, the provisions of Limitation Act are not applicable to a petition filed under Section 397/398 of the Act, secondly, the acts of oppression and mismanagement being continuing in nature, the cause of action continues until the alleged acts of oppression and mismanagement are brought to an end and in such case the question of limitation therefore becomes irrelevant. In the instant case the alleged acts of oppression according to the Petitioner's case pertain to the period 2010 and the petition being filed in 2012 cannot be said to be time barred nor does the petition suffer from delay and laches.
Whether the subject property has been grossly undervalued by the Respondent No. 2 or not? - HELD THAT:- There are no force in the contention of the petitioner that the Respondent No. 2 has agreed to sell the property at grossly undervalue for his sole benefit and to deprive the Petitioner from the right value of the shares in the Company. She further failed to substantiate her allegation that the Respondent No. 2 has gained wrongfully out of the impugned sale transaction. While rendering this finding, it is made clear that the validity of the agreement for sale is already under challenge before the Hon'ble High Court in the civil suit filed by the Respondent Nos. 4 to 8 for specific performance. Therefore, it is refrained from expressing any opinion with respect to the validity of the agreement for sale purportedly entered into between the Respondent Nos. 4 to 8 and the Respondent No. 2 on behalf of the Company. My finding is limited on the aspect that the Petitioner has failed to establish her version that the alleged value of shares determined between the Respondent No. 2 and the Respondent Nos. 4 to 8 for effecting sale of Company's shares was not just, proper and adequate. This point is decided accordingly.
There are no substance in the complaints made by the Petitioner saying that she was discriminated because she was not paid full consideration of her shares, whereas the other shareholders have been paid full consideration and that the Respondents have made an attempt to expropriate 8738 shares - the Respondent No. 2 has categorically stated that the proposed gift of 8738 shares has already been cancelled and the Petitioner is still owner of the 8738 shares and her name exists in the Register of Members, which is deposited with the Hon'ble High Court pursuant to the order passed by it in the pending civil suit seeking specific performance of the alleged agreement for sale in dispute with respect to these shares. In view of the statement made above, the Petitioner's grievances as to alleged expropriate of 8738 shares held by her comes to an end. With respect to 2039 shares held by her which is the subject matter of the civil suit, it is held that the Petitioner has already received the consideration - these complaints do not amounts to acts of oppression and mismanagement as defined in Section 397/398 of the Act.
As regards payment of the amount with respect to certain shares to Ms. Meena Khetani and Ms. Bindu Khetani, are concerned, the Respondent No. 2 in his pleadings and written submissions has clearly stated that the gift in favour of Ms. Meena Khetani and Ms. Bindu Khetani as per the alleged family arrangement could not take place owing to the pre-emption clause of the Articles of Association of the Company and as such the payments made to Ms. Meena Khetani and Ms. Bindu Khetani have been reversed as stated in the Affidavit of the Respondent No. 2 dated 17/07/2013. In view of the above, the entire complaint made by the Petitioner as to the alleged gifting of shares and making payment thereof to them - The contention of the Respondent No. 2's Counsel that the part payments were made in between January to July, 2010 and the agreement came to be negotiated in July, 2010 makes the document doubtful, is also meaningless. It is a common practice of the mark that some amount is paid as advance even at the early stage of negotiation with a purpose to block the deal and then final terms for sale transaction are settled.
Validity of the POA purportedly executed by the Company in favour of the Respondent No. 2 based on a Board Resolution dated 14/06/2011 - HELD THAT:- The Petitioner had received part payment and the Respondent No. 3 admittedly has received the entire amount with respect to her shareholding in the Respondent No. 1 Company. It has also been held hereinabove that the Petitioner and Respondent No. 3 both had given the consent to the impugned sale transaction. Therefore, even assuming that there is some irregularity in the circular resolution dated 12/06/2011 and/or Board Resolution dated 14/06/2011, it does not make the POA, which is a registered document, a void document. Even in absence of Circular/Board Resolution, it is well established that all the shareholders including the Petitioner and the Respondent No. 3 had granted authority to the Respondent No. 2 for the purpose of negotiations of the sale of subject property. Therefore, raising these technical issues with respect to the validity of the circular resolution, pursuant to which POA is executed, are without merits. It is therefore held that the POA is a valid and subsisting document and the aforesaid ground taken by the Petitioner as an act of oppression thus fails.
The Petitioner has failed to make out a case under section 397/398 of the Act - Petition dismissed.
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2014 (12) TMI 1425
Evasion of VAT - intent to evade - Framing of charges - whether omission on the part of the petitioner to furnish information at Information Collection Centre and transporting iron materials via an escape route with an intent to evade payment of Value Added Tax (VAT) constitute offence under Section 415 IPC punishable under Section 420 thereof? - HELD THAT:- When the allegations levelled against the petitioner are analysed in the light of ingredients of offence of cheating in view of the provisions of Section 415 IPC, it is difficult to concur with the orders passed by the Courts below whereby the petitioner has been charged for commission of offence punishable under Section 420 IPC by the trial Court and the revision petition against the order passed by the trial Court has been dismissed by the Additional Sessions Judge, Mansa. Perusal of the order passed by the revisional Court would evident that the Court has neither adverted to the allegations against the petitioner nor bothered to examine those allegations in the light of relevant provisions of IPC particularly the offence of cheating defined in Section 415 thereof.
The criminal proceedings against the petitioner are nothing short of abuse and misuse of process of law. It is added that ordinarily this Court would not interfere in the trial proceedings as the charge sheet has been framed and few witnesses have also been examined but the said fact in the circumstances obtaining in the instant case should not deter this Court from exercising its inherent power to prevent blatant abuse and misuse of process of law.
The criminal proceedings initiated against the petitioner and orders passed in those proceedings cannot be allowed to sustain and accordingly stand quashed - Petition allowed.
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2014 (12) TMI 1424
Dismissal of bail application of the petitioner filed under Section 167 (2) of Code of Criminal Procedure - possession of 60 jute bags containing poppy husk - HELD THAT:- If the investigation is not completed within a period of 180 days, extension of time up to one year can be granted on the report of the Public Prosecutor indicating the progress of the investigation and the specific reasons for the detention of the accused. In the present case the application for extension of time was filed by the Additional Public Prosecutor without the report of the Public Prosecutor. The report of the Public Prosecutor as per Section 36-A(4) is the essential requirement for granting extension of time. In the present case this report is not a part of the application and the reason given for extension of time is that the report of the Chemical Examiner has not been received and, therefore, the challan could not be presented.
In the case of JEEVAN SHARMA @ VICKY VERSUS STATE OF PUNJAB [2014 (1) TMI 1946 - PUNJAB AND HARYANA HIGH COURT], the reason for extension of time was being sought on the ground that the report of FSL, Mohali had not been received. Hon'ble the Supreme Court in the case of SANJAY KUMAR KEDIA VERSUS NARCOTICS CONTROL BUREAU [2007 (12) TMI 9 - SUPREME COURT] held that under Section 36-A (4) of the Act, extension could be given by the Court on the report of the Public Prosecutor indicating he progress of the investigation and the specific reasons for the detention of the accused beyond the said period of 180 days.
In the present case, no such report of the Public Prosecutor was attached with the application. Hence, the application for extension of time was wrongly allowed as the petitioner had a right to be released on bail as per Section 167(2) of the Criminal Procedure Code.
Order dated 10.11.2014 passed by Judge, Special Court, Jalandhar is set aside. The petitioner is enlarged on bail subject to the satisfaction of the Chief Judicial Magistrate/Illaqa Magistrate, Jalandhar - petition allowed.
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2014 (12) TMI 1423
Deduction u/s. 80IB(5) - manufacturing activity done by the assessee or not? - HELD THAT:- Assessee is engaged in the business of manufacturing of lubricating oil and antistatic conning oil as has been mentioned even in para 3 of the assessment order itself. The entire profit shown in the profit & loss account was claimed as deduction u/s. 80IB(5). Without going into much deliberation and the decision in Daman Plastic [2013 (2) TMI 934 - ITAT MUMBAI] Assessee is entitled for deduction u/s 80IB of the Act.
Even otherwise, a provision in the taxing statute granting incentives for promoting growth and development should be construed liberally. Our view is fortified by the decision in Bajaj Tempo Ltd. [1992 (4) TMI 4 - SUPREME COURT], Impel forge and allied Industries Ltd. [2008 (12) TMI 370 - PUNJAB & HARYANA HIGH COURT] and CIT vs. Sadhu Forging Ltd we are of the view, that the assessee is entitled for deduction u/s. 80IB. Even otherwise, a provision in the taxing statute granting incentives for promoting growth and development should be construed liberally. Our view is fortified by the decision in Bajaj Tempo Ltd. vs. CIT [1992 (4) TMI 4 - SUPREME COURT]
AO denied the deduction merely on the ground that the assessee was doing job work for the sister concern, therefore, ultimate product was produced by sister concern - Assessee claimed that identically for A.Ys. 2005-06 and 2006-07, the claim of the assessee was accepted. The assessee has produced emulsifier by using raw material like fatty acids, glycols, vegetable oils, caustic soda, and other additives, consequently, the 'end product' is 'commercially known differently', therefore, in our view, the new article/new product emerged/manufactured, consequently, the assessee is entitled for deduction u/s. 80IB of the Act. Our view is fortified by the decision and the ratio laid down in CIT vs. Vinbros & Company [2012 (9) TMI 802 - SC ORDER], CIT vs. Zainab Trading Pvt. Ltd. [2011 (2) TMI 109 - MADRAS HIGH COURT], CIT vs. Esquire Translam Industries [2010 (7) TMI 77 - MADRAS HIGH COURT], Titanor Components Ltd. [2013 (11) TMI 69 - DELHI HIGH COURT], CIT vs. Ambuja Ginning Pressing & Oil Company Pvt. Ltd. [2010 (11) TMI 380 - GUJARAT HIGH COURT] and Midas Polymer Compounds Pvt. Ltd. [2010 (12) TMI 414 - KERALA HIGH COURT]
Since, the 'end product' was 'commercially known differently', therefore, it can be said that it was manufacturing activity done by the assessee, therefore, in view of the discussion made hereinabove, we are of the view that assessee is entitled for deduction u/s. 80IB. Appeal of the assessee is allowed.
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2014 (12) TMI 1422
Levy of Entry tax on craft paper applying notification dated 15.01.2009 - Section 4(1) of the U.P. Tax on Entry of Goods into Local Areas Act, 2007 - HELD THAT:- The contention of learned counsel for the applicant is not acceptable for the reason that any goods of any description entering the local area is not subjected to entry tax, it is only the goods specified in the Schedule as notified by the State Government is leviable with entry tax. The goods as specified in the notification inter alia provides for paper for packing purpose.
A finding of fact has been recorded by the Tribunal that the dealer is manufacturer of laminated sheets using craft paper as raw material and not for packaging purposes.
The finding of fact stands concluded by the Tribunal. The Court is not inclined to interfere with the impugned order - Revision dismissed.
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2014 (12) TMI 1421
Imposition of penalty under Section 67(1) of the KVAT Act.
Petitioner points out that, the course and procedure pursued by the concerned respondent is per se wrong and illegal in all respects as the 3rd respondent has ventured into an exercise, whereby the classification dispute has been wrongly decided in a penalty proceedings, which cannot be a proper course.
HELD THAT:- After hearing both the sides and after going through the materials on record, this Court finds that there is considerable force in the submission made by the learned counsel for the petitioner.
This Court finds that the matter requires to be considered in the light of the ruling rendered by this Court as per the decision in M/S. CHAKKIATH BROTHERS VERSUS THE ASSISTANT COMMISSIONER, COMMERCIAL TAXES SPECIAL CIRCLE-1, ERNAKULAM [2014 (6) TMI 974 - KERALA HIGH COURT]. Accordingly, Exts. P7 to P9 orders are set aside and the matter is directed to be reconsidered by the 3rd respondent.
The writ petition is disposed of.
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2014 (12) TMI 1420
Non-payment of service tax - appellants had supplied labour but did not pay service tax under manpower recruitment or supply agency service - Extended period of limitation - HELD THAT:- As per the agreement the appellants were being paid for operating the mill @ Rs. 160/- PMT of the quantity of gods produced, It is thus evident that the payment was based on production as a result of operation of the mull. Under Section 65(68) of the Finance Act, 1994 manpower recruitment or supply agency means “any person engaged in providing any service directly or Indirectly in any manner tor recruitment or supply of manpower temporary or otherwise, in any manner” It is evident that the activity rendered by the appellants does not fall in the said definition inasmuch as they did not supply any manpower to any other person and merely engaged the manpower themselves to operate the mill and. got paid on the basis of production on per metric ton basis It also comes out that the activity done by them amounted to manufacture.
Extended period of limitation - extended period has been invoked on the ground that the appellants had never disclosed these facts and non-payment of service tax which came to notice of the department only at the time of audit and thus the appellants had intentionally not paid service tax with indent to evade the same - HELD THAT:- It is thus evident that mere son-payment of ‘service tax has been ipso fact equated with the Intention to evade which, as is too well settled to need citing of precedent, is legally unsustainable.
In the case of the Rameshchandra C. Patel CST, Ahmedabad [2011 (11) TMI 415 - CESTAT, AHMEDABAD] it was held that the Agreement between parties talking about products to be manufactured sad payments to be made. and silent about number of men or labour to be used or manner in which they have to be used or quantum of payment to be made to them would not be covered under manpower recruitment or supply agency service.
The requirement of pre-deposit is waived - appeal allowed.
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2014 (12) TMI 1419
Manipulative, fraudulent and unfair trade practices - Shares allotted on preferential basis - 46 allottees made a collective profit of ₹313.01 Crore on their total investment of ₹12.99 crore, a substantial return of approximately 2309 % on their investment in a period of 18 months (including the lock in period) - entire modus operandi of allotting preference shares at a premium, announcing a stock split and then bringing in connected entities to provide exit was a scheme devised to rake in ill-gotten gains
HELD THAT:- Preferential allotment was used as a tool for implementation of the dubious plan, device and artifice of Radford Group & Suspected Entities and preferential allottees.
The manipulation in the traded volume and price of the scrip by a group of connected entities has the potential to induce gullible and genuine investors to trade in the scrip and harm them. As such the acts and omissions of Radford Group & Suspected Entities and allottees are ‘fraudulent’ as defined under regulation 2(1)(c) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (‘PFUTP Regulations’) and are in contravention of the provisions of regulations 3(a), (b), (c) and (d) and 4(1), 4(2)(a), (b), (e) and (g) thereof and section 12A(a), (b) and (c) of the SEBI Act, 1992.
As directors of Radford during the relevant time (i.e. Prakash Bhawarlal Biyani, Manish Nareshchandra Shah, Rajesh Kumar Maheshwari and Nitin Shivratan Murarjka), being in control of the day to day affairs of Radford, had the knowledge of its acts and omissions. They were also under an obligation to ensure that acts and transactions of Radford were not in violation of any of the applicable provisions of SEBI Regulations or other applicable laws. Therefore, prima facie find that these directors were responsible for Radford 's acts and omissions in this case.
A detailed investigation of the entire scheme employed in this case is necessary to find out the role of any other entity therein including LTP contributors, Suspected entities, connection amongst the concerned entities and the ultimate owners of funds used for manipulating the price of the scrip. Therefore, while SEBI would investigate into the probable violations of the securities laws, the matter may also be referred to other law enforcement agencies such as Income Tax Department, Enforcement Directorate and Financial Intelligence Unit for necessary action at their end as may be deemed appropriate by them.
SEBI strives to safeguard the interests of a genuine investor in the Indian securities market. The acts of artificially increasing the price of scrip mislead investors and the fundamental tenets of market integrity get violated with impunity due for such acts. Under the facts and circumstances of this case, I prima facie find that the acts and omissions of Radford Group & Suspected Entities and allottees as described above is inimical to the interests of participants in the securities market. Therefore, allowing the entities that are prima facie found to be involved in such fraudulent, unfair and manipulative transactions to continue to operate in the market would shake the confidence of the investors in the securities market.
Considering these facts and the indulgence of a listed company in such a fraudulent scheme, plan, device and artifice as prima facie found in this case, this is a fit case where, pending investigation, effective and expeditious preventive and remedial action is required to be taken by way of ad interim ex -parte in order to protect the interests of investors and preserve the safety and integrity of the market.
In view of the foregoing, in order to protect the interest of the investors and the integrity of the securities market, in exercise of the powers conferred upon me in terms of section 19 read with section 11(1), section 11 (4) and section 11B of the SEBI Act, 1992, pending inquiry/investigation and passing of final order in the matter, hereby restrain the named persons/entities from accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner, till further directions.
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2014 (12) TMI 1418
Rejection of books of accounts - GP Estimation - AO estimated the G.P. at 12.34% on sales of dolomite and 10% G.P. on job work - On appeal, the CIT(A) adopted G.P. @ 10% in respect of sale of dolomite and @ 8% in respect of job work.
HELD THAT:- It is true that G.P. rate cannot be uniform in all the years and it varies from year to year depending on several factors such as local market condition, fluctuation in rates etc. It is also observed that the A.O. has not cited any comparable case while estimating G.P. in respect of sale of dolomite.
As regards the job work undertaken by the assessee, it is stated that this is the first year for the assessee to undertake this work and the AO failed to cite any comparable case while applying 10% G.P. on job work. It is seen that the ld. CIT(A) has sustained the addition of Rs. 3,82,023/- which appears to be on higher side particularly considering the facts and circumstances of the present case.
Nature of the business carried out by the assessee, we think it proper to restrict the addition on both counts.
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