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• 1995 (2) TMI 461
  
  Issues Involved:
  1. Applicability of Section 111 of the Companies Act, 1956, to letters of allotment.
  2. Time-barred nature of the petition under Section 111(3).
  3. Forfeiture of letters of allotment.
  4. Non-furnishing of details like contract note and broker's name.
  5. Maintainability of the petition under Section 111(4).
  
  Detailed Analysis:
  
  1. Applicability of Section 111 to Letters of Allotment:
  The respondents argued that Section 111 applies only to shares and debentures, not to letters of allotment. However, the judgment clarified that the subject matter of refusal under Section 111(1) includes "the right to any shares or interest of a member in or debentures of the company." The court noted that a share or debenture certificate is evidence of the entitlement to such shares or debentures, and a letter of allotment serves as alternative evidence. Therefore, the objection that letters of allotment do not fall under Section 111 was dismissed. The court emphasized that the evidence of shares/debentures is tangible, whereas the shares/debentures themselves are intangible, thus falling under the purview of Section 111.
  
  2. Time-Barred Nature of the Petition:
  The respondents contended that the petition was time-barred as it was filed more than four months after the lodgment of the transfer documents, contrary to Section 111(3). The petitioners argued that the petition was filed under Section 111(4), which does not prescribe a time limit. The court examined the legislative intent and judicial interpretations, noting that Section 111(4) is a reproduction of the erstwhile Section 155(1) with the addition of "including a refusal under Sub-section (1)." The court concluded that the remedies under sections 111(2) and 111(4) are alternate remedies, and the petition is maintainable under Section 111(4) without being time-barred.
  
  3. Forfeiture of Letters of Allotment:
  The respondents claimed that the letters of allotment were forfeited due to non-compliance with the terms of the allotment. The petitioners argued that the forfeiture was done retrospectively and after the transfer was effected. The court did not delve into the merits of the forfeiture issue in this order, as it required a detailed examination of facts, which would be addressed in subsequent hearings.
  
  4. Non-Furnishing of Details:
  The respondents argued that the petitioners did not furnish essential details like the contract note and broker's name. The court considered these objections as matters of merit rather than preliminary objections affecting the maintainability of the petition. Hence, these issues were not discussed in this order.
  
  5. Maintainability under Section 111(4):
  The primary contention was whether the petition could be entertained under Section 111(4). The respondents argued that Section 111(4) should not apply to transfer cases without first exhausting the remedies under Section 111(2) and (3). The court, however, observed that Section 111(4) includes the words "including a refusal under Sub-section (1)," indicating that transfer cases could be considered under this sub-section. The court emphasized that the intention of the Legislature was to provide alternate remedies under sections 111(2) and 111(4). Therefore, the petition was held to be maintainable under Section 111(4).
  
  Conclusion:
  The court concluded that the petition is maintainable under Section 111(4) of the Companies Act, 1956. The main petition was scheduled for hearing on April 10, 1995. The judgment clarified the applicability of Section 111 to letters of allotment, the alternate remedies available under sections 111(2) and 111(4), and deferred the examination of the merits of forfeiture and non-furnishing of details to subsequent hearings.

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• 1995 (2) TMI 460
  
  Issues Involved:
  1. Cause of action for rejection of plaint.
  2. Ownership and classification of properties post-merger.
  3. Implications of declarations made to tax authorities.
  4. Application of the law of primogeniture and Hindu Succession Act.
  5. Relevance of the 26th Amendment of the Constitution.
  
  Detailed Analysis:
  
  1. Cause of Action for Rejection of Plaint:
  The primary issue raised by Lt. Col. Bhawani Singh (defendant No. 1) was that the plaint should be rejected as it did not disclose any cause of action. The defendant argued that Maharaja Man Singh was the absolute owner of the properties, and upon his death, these properties became the absolute properties of defendant No. 1 due to the law of primogeniture. The court emphasized that to determine the cause of action, it must look only at the averments made in the plaint. The plaintiff claimed that the properties formed the corpus of a Hindu Undivided Family (HUF) and were held by the Maharaja on behalf of the family members.
  
  2. Ownership and Classification of Properties Post-Merger:
  The plaintiff argued that after the merger of Jaipur State with the Government of India, the properties held by Maharaja Sawai Man Singh should be considered HUF properties. The defendant contested this, stating that the merger did not change the status of these properties from individual to HUF. The court referred to Supreme Court decisions which established that properties of a sovereign ruler do not automatically become HUF properties upon merger. The properties held by a monarch devolved by the rule of primogeniture and remained sovereign estates.
  
  3. Implications of Declarations Made to Tax Authorities:
  The plaintiff contended that defendant No. 1 had declared the properties as HUF properties in Estate Duty, Income Tax, and Wealth-tax proceedings, thereby benefiting from this status. The court noted that while deciding on the application under Order 7, Rule 11, it must consider the averments in the plaint and not the defense. The court acknowledged that whether these declarations were made under wrong legal advice or with full knowledge and intention are matters requiring evidence and cannot be dismissed at this stage.
  
  4. Application of the Law of Primogeniture and Hindu Succession Act:
  The court discussed the principle of primogeniture, which grants the eldest son the right to succeed to the Gaddi and the private properties of the ruler. The plaintiff's argument that the properties should be considered HUF properties was countered by the defendant's reliance on the law of primogeniture. The court referred to Supreme Court rulings which held that the rule of primogeniture and the sovereign nature of the properties meant they did not become joint family properties upon succession.
  
  5. Relevance of the 26th Amendment of the Constitution:
  The plaintiff's counsel argued that the 26th Amendment, which abolished privy purses and the recognition of rulers, should affect the status of the properties. The court dismissed this argument, noting that the 26th Amendment was not retrospective and could not alter the succession that took place in 1970. The court reiterated that the properties remained governed by the rule of primogeniture and the Hindu Succession Act's exemption for properties descending by covenant.
  
  Conclusion:
  The court concluded that the plaint did disclose a cause of action that required adjudication. The declarations made by defendant No. 1 to tax authorities and the subsequent actions based on those declarations provided a basis for the plaintiff's claims. The application to reject the plaint was dismissed, allowing the case to proceed to trial where the issues of ownership, intention, and the classification of properties would be examined in detail.

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• 1995 (2) TMI 459
  
  Issues Involved:
  1. Invocation of bank guarantees.
  2. Maintainability of the writ application.
  3. Alleged breach of contract by the parties.
  4. Authority of the respondent to invoke bank guarantees.
  5. Applicability of the doctrine of legitimate expectation.
  6. Jurisdiction of the writ court in contractual matters.
  7. Arbitration clause and its impact on the writ petition.
  
  Issue-wise Detailed Analysis:
  
  1. Invocation of Bank Guarantees:
  The petitioners contended that the bank guarantees could only be enforced by the respondent No. 2 in case of the petitioners' failure to comply with the terms and conditions, which was not the case here. They argued that the breach was committed by respondent No. 5, making the invocation of the bank guarantees illegal. The court noted that the bank guarantees were performance guarantees, and since there was no failure on the part of the petitioners, the demand by respondent No. 2 was illegal. However, the court emphasized that the right to enforce bank guarantees arises out of a contract and does not involve any public law element, making a writ petition inappropriate for this matter.
  
  2. Maintainability of the Writ Application:
  The respondent No. 2 argued that the writ application was not maintainable as it sought to enforce a commercial contract without raising any constitutional issue. The court supported this view, citing that writ jurisdiction under Article 226 of the Constitution is not typically invoked for enforcing contractual obligations unless there is a public law element involved.
  
  3. Alleged Breach of Contract by the Parties:
  The petitioners claimed that respondent No. 5 breached the contract by backing out, which led to the frustration of the contract. The court acknowledged the disputes between the parties but highlighted that such contractual disputes should be resolved through arbitration or civil suits rather than writ petitions.
  
  4. Authority of the Respondent to Invoke Bank Guarantees:
  The petitioners challenged the authority of respondent No. 2 to invoke the bank guarantees, arguing that the power to enforce such guarantees lies only with the Central Government as per the Shipping Development Fund Committee (Abolition) Act, 1986. However, the court found that the Central Government had delegated its powers to respondent No. 2 through various notifications, making the invocation of the bank guarantees by respondent No. 2 valid.
  
  5. Applicability of the Doctrine of Legitimate Expectation:
  The petitioners invoked the doctrine of legitimate expectation, arguing that the Central Government had indicated possibilities of settling their claims. The court dismissed this argument, stating that the doctrine of legitimate expectation does not apply in contractual disputes and does not create enforceable rights, but only checks arbitrariness on the part of the State.
  
  6. Jurisdiction of the Writ Court in Contractual Matters:
  The court reiterated that it does not exercise its jurisdiction under Article 226 of the Constitution for contractual matters unless there is a public law element. The court cited various precedents to support this view, emphasizing that contractual disputes should be resolved through arbitration or civil suits.
  
  7. Arbitration Clause and Its Impact on the Writ Petition:
  The court noted that the petitioners had already invoked the arbitration clause contained in the tripartite agreement and filed an application under Section 20 of the Arbitration Act, which was allowed. The court held that when an arbitration clause exists, a writ petition is generally not maintainable, and the parties should resolve their disputes through arbitration.
  
  Conclusion:
  The writ application was dismissed, with the court emphasizing that contractual disputes should be resolved through arbitration or civil suits rather than writ petitions. The court found that the invocation of the bank guarantees by respondent No. 2 was valid and that the doctrine of legitimate expectation did not apply in this case. The court also highlighted the limited jurisdiction of writ courts in contractual matters and the importance of adhering to arbitration clauses.

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• 1995 (2) TMI 458
  
  Issues:
  1. Whether the demand for an enhanced rate of interest by the respondent is justified in law.
  
  Analysis:
  The judgment involves several writ petitions challenging the respondent's demand for an increased rate of interest. The key issue revolves around the validity of the enhanced interest rates of 18% and 18.75% imposed by the respondent, which were higher than the initially agreed rates of 12.5% and 13.5%. The court consolidated the cases due to the common legal question. The petitioners argued that they were not obligated to pay the additional interest and that the 'deeds of modification' were signed under duress. However, the court rejected this argument, emphasizing that the petitioners were aware of the terms and conditions when signing the agreements.
  
  In the leading case of M/s. Gunjan Cement Pvt. Ltd. v. Rajasthan State Industrial Development & Investment Corporation Ltd., the petitioner, a private limited company, sought a term loan of Rs. 90,00 lacs for setting up a cement plant. The loan agreement specified the interest rates based on the refinance rates from financial institutions. The petitioner voluntarily agreed to a modification increasing the interest rates, which the court upheld as a valid contractual amendment. The court highlighted that the loan agreement did not fix a constant interest rate but linked it to the refinance rates, subject to minimum thresholds during different loan periods.
  
  Regarding the discrimination claim, the court noted that other borrowers not subjected to increased interest rates had not signed similar modification agreements. Therefore, the argument of discrimination was dismissed. The court emphasized that parties are bound by the terms of their agreements, and the respondent had the right to unilaterally adjust the interest rates based on the contractual provisions. The court also highlighted that the interest rate revision was in response to economic conditions and aligned with RBI announcements.
  
  Ultimately, the court held that unless the 'deed of modification' was invalidated by a competent court due to duress or coercion, it remained binding. As the petitioners failed to demonstrate any legal grounds for interference, their petitions were dismissed. The judgment reinforced the principle of upholding contractual obligations and rejected claims of coercion or discrimination in the modification of interest rates.

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• 1995 (2) TMI 457
  
  Issues:
  1. Whether the High Court was justified in directing the appellant to refund the earnest money deposited by the respondents following an enhancement in the cost of land allotted to them.
  
  Analysis:
  The judgment in question revolves around the issue of whether the High Court was correct in directing the appellant to refund the earnest money deposited by the respondents after an increase in the cost of land allotted to them. The appellant had proposed to allot land to multiple Co-operative Group Housing Societies at a fixed cost per square meter. Subsequently, the cost was enhanced, leading some societies to challenge the increase. The High Court upheld the enhancement, prompting the appellant to forfeit a portion of the earnest money deposited by the respondents. This action was contested, leading to the current appeals.
  
  The appellant argued that the respondents had accepted the allotment conditions, including the possibility of a rate increase, and thus the direction to refund the earnest money was not in line with the law. The appellant relied on the concept of earnest money and relevant rules to support their position. The respondents, on the other hand, contended that there was no acceptance of the revised offer mentioning the increased premium rate, hence the forfeiture of earnest money was unjustified.
  
  The Supreme Court delved into the legal principles surrounding earnest money, emphasizing its role as a guarantee for contract fulfillment and the conditions under which it can be forfeited. The Court analyzed the sequence of communications between the parties and concluded that the respondents had indeed accepted the offer containing the enhanced premium rate. As a result, the respondents were held liable for forfeiture of the earnest money, albeit at a fixed sum rather than a percentage of the total premium.
  
  Ultimately, the Court allowed the appeals by modifying the High Court's order. It was ruled that the amount to be refunded to the respondents would exclude the earnest money deposited by them. The appellant was directed to refund the remaining amount within a specified timeframe, failing which the respondents would be entitled to interest. No costs were awarded in the circumstances of the cases.

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• 1995 (2) TMI 456
  
  Issues Involved:
  1. Issuance of a writ of mandamus for dealership.
  2. Legality and validity of the dealership granted to another individual.
  3. Allegations of arbitrary and unfair decision-making by the Oil Selection Board.
  4. Relevance of marks awarded under various categories.
  5. Application of the doctrine of promissory estoppel.
  6. Procedural fairness and adherence to norms by the Oil Selection Board.
  7. Judicial review under Article 226 of the Constitution of India.
  8. Conduct and equity considerations regarding the petitioner.
  
  Detailed Analysis:
  
  1. Issuance of a Writ of Mandamus for Dealership
  The petitioner sought a writ of mandamus directing the respondents to show cause why he should not be awarded the retail outlet dealership at Santipur adjacent to National Highway 34 in the District of Nadia. The petitioner had applied for the dealership following an advertisement issued by respondent No. 1 and had attended interviews but was not selected.
  
  2. Legality and Validity of the Dealership Granted to Another Individual
  The petitioner challenged the legality of the dealership granted to Gobinda Gopal Pal, arguing that his name was initially empanelled but later struck off. The respondents countered that the Oil Selection Board had considered all applications in accordance with the law and found Gobinda Gopal Pal to be the most suitable candidate.
  
  3. Allegations of Arbitrary and Unfair Decision-Making by the Oil Selection Board
  The petitioner contended that the Oil Selection Board's decision was arbitrary and unfair, alleging that the marks awarded to him were miscalculated and that irrelevant factors were considered. The respondents maintained that the Board's decision was final and binding, and the selection process was conducted fairly.
  
  4. Relevance of Marks Awarded Under Various Categories
  The petitioner argued that marks awarded for "full-time working dealer" and "general assessment & extra-curricular activities" were irrelevant and not mentioned in the advertisement. The court noted that while these contentions might have some substance, it was not necessary to pronounce judgment on this issue as the petitioner was not entitled to equitable relief due to his conduct.
  
  5. Application of the Doctrine of Promissory Estoppel
  The petitioner failed to establish the foundational facts for invoking the doctrine of promissory estoppel. The court found no evidence that the Oil Selection Board had promised the dealership to the petitioner, especially given that many candidates scored higher marks.
  
  6. Procedural Fairness and Adherence to Norms by the Oil Selection Board
  The court examined the procedural fairness of the Oil Selection Board's decision-making process. The Board had considered various factors, including field reports and financial positions, in addition to interview marks. The court found no procedural impropriety that would warrant interference.
  
  7. Judicial Review Under Article 226 of the Constitution of India
  The court acknowledged its power under Article 226 to review decisions involving the grant of contracts or distribution of largess by the State. However, it emphasized that judicial review is warranted only if the decision is arbitrary, irrational, or unfair. In this case, the court found no such grounds for interference.
  
  8. Conduct and Equity Considerations Regarding the Petitioner
  The court highlighted the petitioner's conduct, noting that he had set up a person as a Bargadar against respondent No. 6, which was found to be false by a revenue officer. This conduct disentitled the petitioner from invoking the court's equity jurisdiction. Additionally, the petitioner had participated in the interview process with full knowledge, thereby estopping him from questioning its efficacy.
  
  Conclusion
  The court dismissed the application, stating that the petitioner was not entitled to any equitable relief due to his conduct and the facts of the case. The decision of the Oil Selection Board was found to be fair and in accordance with established procedures, and the court declined to exercise its extraordinary constitutional writ jurisdiction in favor of the petitioner.

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• 1995 (2) TMI 455
  
  Issues Involved:
  1. Validity of the detention order served while the petitioner was already in judicial custody.
  2. Non-supply and illegibility of relevant documents to the detenu.
  3. Delay in passing the detention order.
  4. Delay in disposing of the petitioner's representation.
  5. Subjective satisfaction of the detaining authority.
  
  Detailed Analysis:
  
  1. Validity of the Detention Order Served While the Petitioner Was Already in Judicial Custody:
  The petitioner argued that the detention order served on him while he was already in judicial custody amounted to "double detention." The Court, however, found that the detaining authority had compelling reasons to believe that the petitioner might be released on bail and could indulge in activities prejudicial to the smuggling of foreign exchange. The Court cited various precedents, including Vijay Kumar Vs. State of J. & K., to support the legitimacy of preventive detention even when the individual is in judicial custody, provided there is a likelihood of imminent release.
  
  2. Non-Supply and Illegibility of Relevant Documents to the Detenu:
  The petitioner contended that certain relevant documents were not supplied to him, and some of the supplied documents were illegible, which hindered his ability to make an effective representation. The Court found that the petitioner's argument was contradictory, as he simultaneously claimed that irrelevant documents were considered by the detaining authority. The Court held that non-supply of irrelevant or innocuous documents does not vitiate the detention order. The Court also noted that the documents supplied were sufficient for the petitioner to make an effective representation, and thus, there was no violation of the petitioner's rights under Article 22(5) of the Constitution.
  
  3. Delay in Passing the Detention Order:
  The petitioner argued that there was an unexplained delay of eight months between the alleged recovery of Rs. 50 lakhs on 12.9.93 and the passing of the detention order on 2.5.94. The Court found that the delay was justified due to the voluminous nature of documents and the number of persons involved in the investigation. The Court cited Ram Dass Chauhan Vs. The Administrator, Union Territory of Delhi and Others and other cases to support its decision that the delay did not invalidate the detention order.
  
  4. Delay in Disposing of the Petitioner's Representation:
  The petitioner claimed that there was an undue delay of 49 days in disposing of his representation. The Court examined the timeline and found that the representation made on 30.5.94 was considered and rejected by the Central Government on 17.6.94. Further representations were also promptly addressed. The Court concluded that there was no undue delay in considering the representations, citing Smt. Gurmeet Kaur Vs. Union of India & Ors. to support its findings.
  
  5. Subjective Satisfaction of the Detaining Authority:
  The petitioner argued that the detaining authority did not apply its mind and relied on irrelevant documents. The Court found that the detaining authority had sufficient proximate and cogent material to arrive at its subjective satisfaction. The Court noted that while voluminous documents were before the detaining authority, it relied only on relevant documents to form its subjective satisfaction, as required by law. The Court cited Mst. L.M.S. Ummu Saleema Vs. B.B. Gujaral & Another to emphasize that not all documents referenced need to be supplied, only those relied upon for the detention.
  
  Conclusion:
  The High Court dismissed the writ petition, holding that the detention order was valid and justified. The Court found no merit in the arguments regarding the non-supply of documents, delay in passing the detention order, and delay in disposing of the representation. The subjective satisfaction of the detaining authority was deemed to be based on relevant and cogent material, thereby upholding the detention order.

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• 1995 (2) TMI 454
  
  Issues:
  1. Priority of charges between Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) and Sales Tax Department.
  2. Interpretation of Section 11AAAA of the Rajasthan Sales Tax Act, 1954.
  3. Effect of Section 46(B) of the State Financial Corporations Act, 1951.
  4. Validity of the petition seeking reliefs against the respondents.
  
  Analysis:
  1. The petitioner argued that the loan agreement between RIICO and the respondent-Company gives RIICO a first charge on the assets, overriding any claim by the Sales Tax Department. However, the court clarified that Section 29(4) of the Act of 1951 does not create a first charge but provides a procedure for recovering costs and expenses from the sale of mortgaged property. The court held that RIICO does not have a first charge on the borrower's property as alleged by the petitioner.
  
  2. Section 11AAAA of the Rajasthan Sales Tax Act establishes that tax dues are the first charge on a dealer's property. The court noted that this provision, starting with a non obstante clause, prioritizes debts due to the Sales Tax Department over other dues. The court emphasized that the agreement between RIICO and the borrower, though statutory, cannot override Section 11AAAA, as it is not a statutory provision of law. Therefore, the Sales Tax Department has the authority to attach and auction the property for debt recovery.
  
  3. Section 46(B) of the Act of 1951 states that its provisions will have effect despite any inconsistency with other laws. The court clarified that since Section 29(4) does not create a first charge on assets, Section 46(B) does not override Section 11AAAA of the Rajasthan Sales Tax Act. The court emphasized that the agreement between RIICO and the borrower does not have the same legal standing as statutory provisions.
  
  4. The court dismissed the petition seeking various reliefs against the respondents, stating that the Sales Tax Department's actions were in accordance with the law. The court highlighted a Supreme Court decision supporting the precedence of the statutory charge created by Section 11AAAA over other charges on the property. The court concluded that the petition lacked merit and dismissed it at the admission stage.
  
  Overall, the judgment clarified the priority of charges, upheld the validity of Section 11AAAA, and emphasized that statutory provisions take precedence over agreements between parties.

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• 1995 (2) TMI 453
  
  Issues:
  1. Violation of principles of natural justice in not furnishing a copy of the Inquiry Officer's Report before dismissal.
  2. Failure of the Inquiry Officer to conduct a proper inquiry by recording witness statements.
  3. Allegations of non-cooperation and procrastination by the first respondent during the inquiry process.
  4. Interpretation of Regulation 68 of the Cooperative Federal Authority (Business) Regulations, 1976.
  5. Delay in disciplinary proceedings and the seriousness of the charges against the first respondent.
  
  Analysis:
  1. The judgment pertains to an appeal against a High Court decision allowing a writ petition filed by the first respondent, who was dismissed from service due to alleged irregularities and misappropriation. The High Court based its decision on the failure to provide a copy of the Inquiry Officer's Report before dismissal, citing a violation of natural justice principles. The Supreme Court set aside the High Court's judgment and remitted the matter for reconsideration, emphasizing the need to address all grounds raised by the first respondent.
  
  2. The Supreme Court highlighted the failure of the Inquiry Officer to conduct a proper inquiry by not recording witness statements, even though the first respondent did not cooperate during the investigation. The Court noted that the High Court's decision was solely based on this procedural lapse, without considering the overall non-cooperation and procrastination exhibited by the first respondent throughout the disciplinary process.
  
  3. The appellant argued that the first respondent consistently displayed non-cooperation and procrastination, failing to respond to charges, file explanations, or participate in the inquiry process. Despite multiple opportunities given to the first respondent, he did not engage with the proceedings, leading the authorities to conclude that the charges against him were proven. The appellant contended that the High Court's decision was untenable, considering the first respondent's lack of cooperation.
  
  4. The interpretation of Regulation 68 of the Cooperative Federal Authority (Business) Regulations, 1976 was a crucial aspect of the case. The appellant argued that the regulation did not mandate the recording of witness statements if the respondent did not provide a reply or explanation to the charges. The first respondent's counsel, however, contended that the lack of cooperation was due to the authorities' refusal to grant access to relevant documents, challenging the charge of non-cooperation.
  
  5. Addressing the delay in the disciplinary proceedings, the Supreme Court acknowledged the seriousness of the charges against the first respondent and refused to dismiss the case solely based on the elapsed time. The Court emphasized that the appellant could not be solely blamed for the delay and directed the High Court to reconsider the writ petition, taking into account all aspects of the case and ensuring expeditious resolution due to the prolonged nature of the proceedings.

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• 1995 (2) TMI 452
  
  The Supreme Court allowed the landlord's appeal against the High Court's order of remand in a rent control case, stating that the High Court erred in declaring Section 4 of the A.P. Rent Control Act unconstitutional without a decision by a larger bench. The Court directed the Rent Controller to determine fair rent without reference to Section 4. The appeal was allowed with no costs.

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• 1995 (2) TMI 451
  
  Issues Involved:
  1. Constitutionality of Section 178 of the Delhi Municipal Corporation Act, 1957.
  2. Alleged discrimination between goods manufactured within and outside the Union Territory of Delhi.
  3. Applicability of Articles 301 and 302 of the Constitution of India.
  
  Summary:
  
  1. Constitutionality of Section 178 of the Delhi Municipal Corporation Act, 1957:
  The appellant challenged Section 178 of the Delhi Municipal Corporation Act, 1957, which levies terminal tax on goods carried by railway or road into the Union Territory of Delhi. The appellant argued that this section impedes the movement of goods and restricts trade, commerce, and intercourse, thus violating Article 301 of the Constitution of India. The High Court dismissed the writ petition, holding that while Section 178 contravenes Article 301, it is saved by Article 302.
  
  2. Alleged discrimination between goods manufactured within and outside the Union Territory of Delhi:
  The appellant contended that Section 178 discriminates against goods manufactured outside Delhi, as only these goods are subject to terminal tax. The respondents argued that there were no specific, clear, and unambiguous allegations or proof to support this claim. The Supreme Court reiterated that the burden of proving discrimination lies on the person challenging the statute and that there is a presumption in favor of the statute's constitutionality.
  
  3. Applicability of Articles 301 and 302 of the Constitution of India:
  The Supreme Court referred to several precedents, emphasizing that a tax law does not necessarily impede the freedom of trade, commerce, and intercourse guaranteed by Article 301. The Court noted that the impugned tax law, enacted by Parliament, is presumed to be in public interest, a presumption not offset by any contrary material. Consequently, Section 178 is saved by Article 302, which allows Parliament to impose restrictions on trade, commerce, or intercourse in the public interest.
  
  Conclusion:
  The Supreme Court found no sufficient or specific pleadings to prove that Section 178 violates Article 301 or is discriminatory. The appeal was dismissed, upholding the High Court's decision that Section 178 is saved by Article 302. There was no order as to costs.

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• 1995 (2) TMI 450
  
  Issues Involved: Interpretation of insurance policy terms regarding additional sum payable in case of death due to accident, relevance of circulars issued by the insurance corporation, and determination of further payment to the appellant.
  
  Interpretation of Insurance Policy Terms: The appellant, widow of the deceased policyholder, claimed an additional sum equal to the sum assured due to the death of the policyholder in an accident. The respondent insurance corporation contended that no further amount was payable under the policy terms. The court noted that under normal circumstances, a policy lapses unless three premiums are paid, but the corporation had relaxed this condition through a circular. The circular specified that if death occurs after two premiums have been paid within three months of the due date of the next unpaid premium, the full sum assured along with bonuses would be paid. The appellant argued that the term "full sum assured" should include more than the basic sum assured of Rs. 1 lakh, while the respondent argued otherwise based on a subsequent circular clarifying the payment terms.
  
  Relevance of Circulars: The court considered the interpretations presented by both parties and decided to favor the policyholder to advance the purpose for which the policy was taken and to align with the objective of ensuring lives assured. However, a subsequent circular issued by the corporation clarified that no Double Accident Benefit (DAB) is payable under certain plans, even if the claim is considered for the full sum assured. This circular was not brought to the notice of the lower commissions during the proceedings.
  
  Determination of Further Payment: Despite the subsequent circular, considering the circumstances of the case including the policyholder's untimely death and the impact on his family, the court deemed it just to order a further payment of Rs. 50,000 to the appellant on an ex gratia basis. The court directed the respondent to make this payment within a month, ruling in favor of the appellant and allowing the appeal without any costs.

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• 1995 (2) TMI 449
  
  Issues Involved:
  1. Validity of reservation policy for Scheduled Castes and Backward Classes in promotions.
  2. Operation of the roster system and its implications on reservation percentages.
  
  Summary:
  
  Issue 1: Validity of Reservation Policy for Scheduled Castes and Backward Classes in Promotions
  
  The petitioners, members of the general category, challenged the reservation policy that provided 16% reservation for Scheduled Castes and Backward Classes in promotions within the Punjab Service of Engineers (Class I) in the Irrigation Department. They argued that once the prescribed percentage of reservation is achieved, the reservation policy should become inoperative. The Supreme Court rejected this contention, stating that the roster points reserved for backward classes must be filled by members of those classes, and general category candidates cannot be considered for these reserved posts. The Court emphasized that the percentage of reservation must be strictly followed as per Article 16(4) of the Constitution of India, which allows the State to make provisions for reservations if a backward class is not adequately represented in the services.
  
  Issue 2: Operation of the Roster System and Its Implications on Reservation Percentages
  
  The petitioners contended that the roster system should cease to operate once the prescribed percentage of reservation is achieved. The Supreme Court found merit in this argument, stating that the roster should operate only until the quota provided under the instructions is reached. Once the prescribed percentage of posts is filled, the roster should not continue to operate. The Court clarified that the expressions "posts" and "vacancies" should be understood in their plain meanings, and the percentage of reservation should be worked out in relation to the number of posts in the cadre. The Court also noted that the concept of "running account" should not result in excessive reservation and should be interpreted to ensure that the percentage of reservation is maintained without exceeding the prescribed limits.
  
  The Court concluded that once the total cadre has full representation of the Scheduled Castes/Tribes and Backward Classes as per the reservation policy, any vacancies arising thereafter should be filled from the category to which the post belonged in the roster. This ensures that the balance between the reserved and general categories is maintained. The Court directed that this interpretation of the roster system would be operative prospectively.
  
  Disposition:
  The writ petition was disposed of in the above terms with no costs.

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• 1995 (2) TMI 448
  
  Issues:
  The judgment involves the interpretation of the Maharashtra Regional and Town Planning Act, 1966 regarding the acquisition of land for planned development, specifically focusing on the time limit for making a declaration under Section 126 and the determination of compensation.
  
  Interpretation of Time Limit for Declaration under Section 126:
  The court analyzed the legislative intent behind Section 126(4) of the Act, which empowers the State Government to make a fresh declaration for acquiring land if the initial declaration is not made within the prescribed time limit. The court emphasized that the crucial date for determining compensation is the date of the fresh declaration published in the Official Gazette, relieving the landowner from hardship due to price fluctuations. The judgment clarified that the State Government has the authority to issue a fresh declaration even after the expiry of the initial three-year period.
  
  Applicability of Central Act Provisions and Compensation Determination:
  The court rejected the argument that the notification under Section 125 would lapse if the award is not made within two years, citing the specific provisions of the Maharashtra Act and the absence of incorporation of Section 11-A of the Central Act. It distinguished between procedural and substantive provisions, stating that while compensation determination aligns with the Central Act, the time limit for making an award is governed by the Maharashtra Act. The judgment highlighted that failure to make the award within the specified period does not invalidate the notification under Section 125.
  
  Application of Amendment Act and High Court Decision:
  The judgment endorsed the applicability of the Amendment Act to both pending and future proceedings, disagreeing with the High Court's stance that it only applied to pending cases. Consequently, most appeals were allowed, except for one which was dismissed. The High Court's orders and judgments were set aside, affirming the validity of the notifications and declarations under scrutiny, allowing the authorities to proceed further in compliance with the law.

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• 1995 (2) TMI 447
  
  The Supreme Court dismissed the appeal in the case as per the order by Justices B.P. Jeevan Reddy and K.S. Paripoornan. The citation for the case is 1995 (2) TMI 447 - SC.

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• 1995 (2) TMI 446
  
  Issues Involved:
  1. Whether the operations carried out on the imported CKD machines amounted to manufacture.
  2. Whether the demand for duty is time-barred.
  3. Whether the penalties imposed on the appellant company and its Managing Director and General Manager are sustainable.
  
  Issue 1: Whether the operations carried out on the imported CKD machines amounted to manufacture.
  
  The appellants imported 4 milling machines (2 Nos. HB 630 and 2 Nos. VA 50) in CKD condition under an approved Phased Manufacturing Programme (PMP) and sold them after assembly. The Department alleged that operations such as scraping, machining, and interfacing CNC controls amounted to manufacture, thus attracting excise duty. The appellants contended that these operations were merely assembly processes and did not result in the manufacture of a new product. The Tribunal held that the processes did not amount to manufacture as no new product with a different name, character, or use emerged. The Tribunal cited the cases of T.I. Cycles and BPL, concluding that assembly of parts does not constitute manufacture u/s 2(f) of the Central Excise Act, 1944. Consequently, the duty demand of Rs. 14,69,880/- was set aside.
  
  Issue 2: Whether the demand for duty is time-barred.
  
  The show cause notice was issued in October 1986 for the period August 1984 to January 1986. The Department invoked the extended period of limitation alleging suppression of facts by the appellants. The appellants argued that they had disclosed all relevant facts to the Department, including their bona fide belief based on the opinion of their Excise Consultant and the Assistant Collector's clarification. The Tribunal found that the appellants had indeed disclosed all necessary information and thus could not be held guilty of suppression. Therefore, the demand was held to be time-barred.
  
  Issue 3: Whether the penalties imposed on the appellant company and its Managing Director and General Manager are sustainable.
  
  Penalties of Rs. 5 lakhs on the appellant company, Rs. 10,000/- on the Managing Director, and Rs. 5,000/- on the General Manager were imposed. The appellants argued that no specific role was attributed to the Managing Director and General Manager in the alleged evasion of duty. The Tribunal agreed, citing the necessity of establishing a definite role in the alleged offense for imposing penalties. As such, the penalties on the Managing Director and General Manager were set aside.
  
  Conclusion:
  
  The Tribunal set aside the impugned order, allowing the appeals with consequential relief to the appellants. The operations carried out did not amount to manufacture, the demand was time-barred, and the penalties on the Managing Director and General Manager were not sustainable.

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• 1995 (2) TMI 445
  
  Issues involved: Appeal against judgment u/s 6(1) of TADA and Section 25 of Arms Act based on recovery of pistol and cartridges without valid license, discrepancies in witness depositions, lack of independent witness corroboration, and fairness of investigation process.
  
  Issue 1 - Recovery of Pistol and Cartridges:
  The appellant was tried u/s 6(1) of TADA and Section 25 of Arms Act based on the recovery of a country-made pistol and live cartridges from his person without a valid license. The police party intercepted the accused on a village road and recovered the items, leading to the initiation of the case.
  
  Issue 2 - Discrepancies in Witness Depositions:
  Discrepancies arose in the witness depositions regarding the location of recovery of the pistol and the number of cartridges found on the accused. While PW-2 stated the pistol was recovered from the right side, PW-3 mentioned the left side, and there was a discrepancy in the number of cartridges recovered. The judge, however, deemed these discrepancies immaterial and upheld the police personnel's depositions.
  
  Issue 3 - Lack of Independent Witness Corroboration:
  The defense contended that no independent witnesses were examined to corroborate the prosecution's case, despite the presence of villagers during the apprehension of the accused. The defense argued that the rule of prudence necessitates corroboration by independent witnesses to enhance the prosecution's credibility.
  
  Issue 4 - Fairness of Investigation Process:
  A disturbing feature noted was that the head constable who arrested the accused also initiated the case, conducted the investigation, and examined witnesses under Section 161 of Cr.P.C. This raised concerns about the fairness and impartiality of the investigation process, as the complainant should not have been involved in the investigation.
  
  Judgment:
  After considering the discrepancies in witness depositions, lack of independent witness corroboration, and the fairness of the investigation process, the Supreme Court allowed the appeal and set aside the conviction and sentence imposed on the appellant.

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• 1995 (2) TMI 444
  
  Issues Involved:
  1. Competence of the Original Authority to confirm the demand.
  2. Merits of the demand.
  3. Limitation period for raising the demand.
  4. Application of the law of estoppel.
  
  Issue-wise Detailed Analysis:
  
  1. Competence of the Original Authority to Confirm the Demand:
  The appellants argued that the Original Authority was not competent to issue the demand notice as it was not covered under Section 28 of the Customs Act, 1962, which deals with the demand of duty and not interest. Section 28 also stipulates a time limit of six months, but the demand notice was issued after about two years. The appellants contended that there was no other section in the Customs Act authorizing the Original Authority to demand interest and that the demand was not raised in terms of the bond executed by the appellant.
  
  The judgment clarified that Section 61(3) of the Customs Act, 1962, as it stood prior to its amendment, stipulated that the importer shall pay interest on the amount of duty from the expiry of seven days from the date on which the Bill of Entry is returned to the importer for warehousing the goods under Section 59A until the date of clearance from the warehouse. The judgment stated that the Customs Authority was reasonable in giving the importer an opportunity to explain why the interest should not be recovered. It was noted that Section 142 of the Customs Act provided for the recovery of any amount due under the terms of any bond executed under the Act.
  
  2. Merits of the Demand:
  The appellants argued that the Custom House had made the correct interpretation of Section 61(3) in Public Notice No. 211/91, which stated that interest should be charged from the date the Bond Department returned the Bill of Entry to the importer. This practice was changed by Public Notice No. 109/93, which stated that interest is chargeable from the date on which the Bill of Entry is returned to the importer by the Licence Section for depositing duty and executing the bond.
  
  The judgment noted that there was confusion and doubt as to the meaning of the words in Section 61(3), which left room for more than one interpretation. It was observed that if there is any doubt in the construction of any statutory provisions in a taxing statute, the benefit of doubt should go to the assessee. The judgment acknowledged that the Public Notice No. 211/91 made an interpretation of Section 61(3) that was favorable to the assessee, and this interpretation was later clarified by Public Notice No. 109/93.
  
  3. Limitation Period for Raising the Demand:
  The appellants contended that the demands were hit by limitation as the provisions of the Limitation Act are applicable only in court proceedings and not in any proceedings before Customs Authorities. They argued that a reasonable time limit should be adopted, citing judicial pronouncements that in the absence of a specific time limit, a reasonable period should be read into it. They suggested that the reasonable time limit for demand notice under Section 61(3) should be six months, as provided under Section 28 of the Customs Act, 1962.
  
  The judgment referenced the CEGAT's decision in the case of M/s. Kirloskar Pneumatic Co. Ltd., which held that the limitation prescribed under Section 28 is not applicable to demands related to interest. However, it was noted that this would apply only if the demands are enforceable in terms of the bond or by resorting to Section 142. Since the bonds had lapsed, the judgment concluded that the demands were time-barred, taking the reasonable time limit as six months.
  
  4. Application of the Law of Estoppel:
  The appellants argued that the law of estoppel should apply against the Government Department. They cited Supreme Court judgments which held that the doctrine of promissory estoppel is applicable against the Government, and the Government cannot go back on its representations if the other party has acted upon them.
  
  The judgment agreed with the appellants, stating that the law of estoppel applies in cases where the Department has conveyed some sort of direction and assurance to the assessee, which has been complied with by the assessee. The judgment noted that the Public Notice No. 211/91 had given a clear understanding that interest would be levied from the date the Bond Department returned the Bill of Entry to the importer. This instruction was modified only on 29-9-1993. Therefore, from 23-12-1991 to 29-9-1993, the Department should be bound by the said Public Notice No. 211/91. The judgment concluded that the Orders-in-Original should be quashed on the grounds of estoppel and limitation.
  
  Conclusion:
  The judgment quashed the 11 Orders-in-Original and allowed the appeals, citing the grounds of estoppel and limitation.

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• 1995 (2) TMI 443
  
  Issues Involved:
  1. Levy of octroi duty on goods imported from outside the State of Rajasthan.
  2. Legislative competence of the State Government to impose octroi duty on such goods.
  3. Violation of constitutional guarantees under Articles 14, 19(1)(g), 265, 300A, 301, and 304 of the Constitution of India.
  4. Refund of octroi duty collected.
  
  Detailed Analysis:
  
  1. Levy of Octroi Duty on Goods Imported from Outside the State of Rajasthan:
  The primary issue involves whether octroi duty is leviable on goods such as Soda Ash and Nitric Acid, which are imported from other states and not manufactured or produced in Rajasthan. The petitioners argued that since these goods are not produced within Rajasthan, they should not be subject to octroi duty. However, the court referred to the Rajasthan Municipalities Act, 1959, and the Rajasthan Municipalities (Octroi) Rules, 1960, which allow for the imposition of octroi on goods brought within municipal limits for consumption, use, or sale. The court concluded that the imposition of octroi duty on such goods falls within the legislative competence of the State under Entry 52 of List II of the VII Schedule of the Constitution of India.
  
  2. Legislative Competence of the State Government to Impose Octroi Duty:
  The petitioners contended that the State Legislature lacks the power to legislate for the levy of tax on goods not manufactured or produced within the state, invoking Articles 301 and 304 of the Constitution. The court, however, clarified that Article 304(b) of the Constitution allows the State to impose reasonable restrictions on trade, commerce, and intercourse, provided it is in the public interest. The court held that the provisions of Article 304(b) are wide enough to include goods not manufactured or produced in the State and cover such goods, thereby upholding the legislative competence of the State to impose octroi duty on imported goods.
  
  3. Violation of Constitutional Guarantees:
  The petitioners argued that the imposition of octroi duty violates their fundamental rights under Articles 14, 19(1)(g), 265, 300A, 301, and 304 of the Constitution. The court referred to previous judgments, including Western India Theaters v. Municipal Corporation of the City of Poona and Automobile Transport v. State of Rajasthan, which established that taxation under authorized heads of the State list does not amount to a violation of Article 301 if it does not directly affect the free flow or movement of goods and is meant for bona fide revenue collection. The court concluded that the octroi duty imposed does not infringe upon the freedom of trade and commerce and is a reasonable restriction in the public interest.
  
  4. Refund of Octroi Duty Collected:
  The petitioners sought a refund of Rs. 1,74,365.37 collected as octroi duty, arguing that it was collected illegally. The court, however, found no merit in this claim, as the imposition of octroi duty was deemed constitutional and within the legislative competence of the State. Consequently, the court dismissed the petitions, denying the refund request.
  
  Conclusion:
  The court dismissed the writ petitions, upholding the imposition of octroi duty on goods imported from outside the State of Rajasthan. It affirmed the legislative competence of the State to impose such a duty and ruled that it does not violate constitutional guarantees. The petitioners' request for a refund was also denied. The judgment aligns with previous rulings that support the State's power to levy taxes for revenue collection without infringing on the freedom of trade and commerce.

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• 1995 (2) TMI 442
  
  Issues Involved:
  1. Liability of auction purchaser for old electricity dues.
  2. Application of Section 24 of the Electricity Act.
  3. Statutory obligations of the Electricity Board.
  4. Contractual obligations between the consumer and the Board.
  
  Issue 1: Liability of Auction Purchaser for Old Electricity Dues

  The main issue is whether the auction purchaser is liable to meet the liability of old consumer for electricity dues to the premises which is purchased by him in the auction sale from Bihar State Financial Corporation u/s 29(1) of the Bihar State Financial Corporation Act, 1951.

  In Civil Appeal No. 1418 of 1995 (Isha Marbles), the appellant purchased mortgaged assets in an auction but was asked to discharge the liabilities of the previous consumer, which was challenged and dismissed by the High Court. Similarly, in Civil Appeal No. 1420 of 1995 (Waxpol Industries), the High Court allowed the writ petition on the ground that the present occupants are free from any encumbrance or liability towards the payment of outstanding electricity dues, as Neo Chemicals and Waxpol Industries are distinct legal entities. The High Court ruled that unless there is a clause that the auction purchaser shall also bear the liability of the Electricity Board, the latter cannot insist on clearing dues of the erstwhile owner for providing a new connection.

  Issue 2: Application of Section 24 of the Electricity Act

  Section 24 of the Electricity Act allows the Board to disconnect supply if dues are not paid. The High Court in Suman Packaging case held that Section 24 cannot apply where a transferee, who had no connection with the original consumer, purchases the property bona fide and in good faith. The Board is under statutory obligation to supply electrical energy subject to fulfillment of conditions under Clause VI of Schedule 1 of the Electricity Act.

  Issue 3: Statutory Obligations of the Electricity Board

  The Board, being a 'State' within the meaning of Article 12 of the Constitution, must act fairly and reasonably. The High Court emphasized that a purchaser like the writ petitioner cannot be expected to inquire about outstanding dues from the previous consumer. The Board's circular dated 19.1.72 stated that in cases of genuine purchase, it would neither be legal nor proper to insist on the realization of arrears for giving re-connection.

  Issue 4: Contractual Obligations Between the Consumer and the Board

  The relationship between the Board and the consumer is purely contractual. The Board cannot enforce a contractual liability against a third party like the auction purchaser. The High Court in Suman Packaging ruled that the auction purchaser does not intend to obtain the continuance of supply of electrical energy on the basis of the old agreement and is ready to enter into a new contract.

  Conclusion:

  The Supreme Court upheld the High Court's judgments in Waxpol Industries, Suman Packaging, Abhay Kumar, and North East Fertilizers cases, holding that the auction purchasers are not liable for the electricity dues of the previous owners. However, the judgment in Isha Marbles was set aside, and the appeal allowed with costs.

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