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Case Laws
Showing 41 to 53 of 53 Records
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1954 (4) TMI 33
The Madras High Court dismissed the revision petitions with costs of Rs. 250 in T.R.C. No. 63 of 1953. The case involved a cooperative society acting as an intermediary for purchasing brass from Madras Gillanders Arbuthnot and Co. There was no element of sale between the society and its members.
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1954 (4) TMI 32
Issues:
Interpretation of Article 286 of the Constitution in relation to sales tax liability on inter-State sales of matches by manufacturers and dealers in the State of Madras after the Constitution of India came into force in 1950.
Analysis:
The judgment by the Madras High Court dealt with two petitions concerning the liability of manufacturers and dealers in matches in the State of Madras for sales tax on inter-State sales after the Constitution of India came into force in 1950. The assessees claimed a rebate under Section 7 of the Madras General Sales Tax Act, contending that the sales were not subject to tax in Madras under the Act. The central issue was whether the turnover from these sales was liable to sales tax under the Madras Act, particularly in light of Article 286 of the Constitution. Article 286(1)(a) prohibited States from imposing tax on sales outside the State, with an Explanation defining the circumstances for a sale to be deemed to have taken place within a State. The President's Order under Article 286(2) allowed States to tax inter-State sales until March 31, 1951.
The court determined that the turnover in question constituted inter-State trade under Article 286(2) and was therefore subject to sales tax under the Madras Act. The assessees argued that the sales fell within the Explanation to Article 286(1)(a), contending that the goods were delivered for consumption in States outside Madras. However, the court found that the necessary proof to support this claim was lacking, as the assessees failed to establish that the goods were delivered for consumption in other States. The court declined to remand the case for further inquiry on this point, citing precedents that discussed the inter-State character of sales under Article 286(1)(a).
Additionally, the court highlighted that the Madras General Sales Tax Act was adapted in accordance with Article 286 after the Constitution came into force, with Section 22 mirroring the language and provisions of Article 286. The court concluded that neither the bans imposed by Article 286(1)(a) nor Article 286(2), nor the provisions of Section 22 of the Madras General Sales Tax Act, applied to the levy of sales tax on the disputed turnover. Consequently, the court dismissed the petitions and ordered costs to be paid by the assessees.
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1954 (4) TMI 31
Issues:
Validity of the Pepsu General Sales Tax Ordinance, 2006 Bk.
Interpretation of the Covenant entered into by the Rulers of former Covenanting States.
Sovereignty of the Rulers in relation to their former States.
Effect of the Supplementary Covenant on the Original Covenant.
Authority to amend or alter the Original Covenant.
Validity of the Ordinance under the Constitution of India.
Analysis:
The judgment concerns a petition under Article 226 challenging the validity of the Pepsu General Sales Tax Ordinance, 2006 Bk. The petitioner argues that the Ordinance, promulgated under the Covenant entered into by the Rulers, is no longer valid as its six-month period expired. However, the court examines the history of the Covenant, noting that the Constitution of India adopted in 1950 saved existing laws, including the Ordinance in question, making it valid under Article 372 of the Constitution. The court concludes that the petitioner's contention lacks validity based on this analysis (Pirthi Singh and Others v. State of Pepsu and Others).
The judgment delves into the interpretation of the Covenant entered into by the Rulers of the former Covenanting States. It highlights that the Covenant resulted in a complete surrender of sovereignty by the Rulers to the new State, vesting all power and authority in the new State as provided by the Covenant. The court emphasizes that sovereignty is indivisible, and the Rulers ceded their sovereignty fully to the new State, leaving no room for shared sovereignty or retention of sovereignty by the former Rulers.
The court analyzes the effect of the Supplementary Covenant on the Original Covenant. It opines that the Supplementary Covenant could not alter the powers granted under the Original Covenant, particularly the authority to make Ordinances. Despite differing views in previous cases, the court, following precedent, holds that the Supplementary Covenant validly amended the Original Covenant, thereby upholding the validity of the Ordinance until the enforcement of the Constitution of India in the State.
Regarding the authority to amend or alter the Original Covenant, the judgment discusses conflicting opinions from previous cases. While some opinions suggested that the Rulers retained the power to modify the Covenant, the court asserts that once sovereignty was surrendered, the former Sovereigns could not regain that sovereignty at will. The court aligns with the view that the Supplementary Covenant validly amended the Original Covenant, settling the matter conclusively.
In conclusion, the court dismisses the petition challenging the Ordinance's validity, citing the precedent and legal reasoning discussed. The judgment affirms the continued validity of the Ordinance under the Constitution of India, emphasizing the comprehensive surrender of sovereignty by the former Rulers to the new State under the Covenant.
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1954 (4) TMI 30
Issues Involved:
1. Constitutional validity of the Madras General Sales Tax Amendment Act (XXV of 1947).
2. Taxability of turnover from works contracts.
3. Taxability of food-grains supplied to workmen.
Detailed Analysis:
1. Constitutional Validity of the Madras General Sales Tax Amendment Act (XXV of 1947):
The primary issue was whether the inclusion of "works contracts" within the ambit of the Madras General Sales Tax Act by the Amendment Act of 1947 was constitutionally valid. The court examined the legislative competence of the Provincial Legislature under the Government of India Act, 1935, specifically under Section 100, sub-section (3), and item 48 in List II of the 7th Schedule. The court noted that the corresponding item in the Constitution of India is item 54, which pertains to "taxes on the sale or purchase of goods other than newspapers."
The court emphasized that the term "sale of goods" had a well-defined legal meaning, both in England under the Sale of Goods Act, 1893, and in India under the Sale of Goods Act, 1930. The court concluded that the legislative power to tax sales of goods did not extend to taxing works contracts, which do not involve a transfer of property in goods as understood in law.
2. Taxability of Turnover from Works Contracts:
The court examined whether the turnover from works contracts executed by the assessees could be subjected to sales tax. The court analyzed the nature of building contracts, which involve labor, work, and materials, and concluded that such contracts are entire and indivisible. The property in the materials used in the construction does not pass to the owner by virtue of a sale but because they are fixed in pursuance of the contract to build. The court cited various legal precedents to support the view that building contracts do not constitute contracts of sale of goods.
The court held that the legislative power to tax sales of goods did not extend to taxing works contracts under the guise of an inclusive definition of sale. Therefore, the imposition of sales tax on the turnover from works contracts was deemed ultra vires of the Provincial Legislature's powers.
3. Taxability of Food-Grains Supplied to Workmen:
The court considered whether the supply of food-grains to workmen by the assessees could be subjected to sales tax. The court referred to the definition of "dealer" in the Madras General Sales Tax Act, which means any person who carries on the business of buying or selling goods. The court emphasized that "business" in this context must be understood in a commercial sense, involving activities designed to earn profit.
The court found that the assessees supplied food-grains to the workmen for their convenience and welfare, without any profit motive. As such, this activity did not constitute carrying on the business of selling goods. The court concluded that the assessees were not liable to pay sales tax on the value of the food-grains supplied to the workmen.
Conclusion:
The court allowed the revision petition, holding that the levy of sales tax on the turnover from works contracts and the supply of food-grains to workmen was not justified in law. The court directed that these items be deleted from the turnover of the assessees and awarded costs to the assessees.
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1954 (4) TMI 29
Provision relating to the payment of annual contribution contained in it is a tax and not a fee and so it was beyond the legislative competence of the Madras State Legislature to enact such a provision - That on the facts of the present case the imposition under a. 76(1) of the Act, although it is a tax, does not come within the latter part of art. 27 because the object of the contribution under the section is not the fostering or preservation of the Hindu religion or any denomination under it but the proper administration of religious trusts and institutions wherever they exist.
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1954 (4) TMI 28
Issues:
- Appeal under section 202 of the Companies Act against the order allowing amendment of the petition for winding up.
- Applicability of the Code of Civil Procedure to proceedings under the Companies Act.
- Principles governing the amendment of pleadings under Order VI, rule 17, of the Civil Procedure Code.
- Justification for allowing the amendment of the petition for winding up.
- Joinder of the company as a respondent under Order I, rule 10, of the Civil Procedure Code.
- Preliminary objection regarding the tenability of an appeal against the order allowing amendment or joinder of parties under section 202 of the Companies Act.
Analysis:
The judgment pertains to an appeal under section 202 of the Companies Act, concerning the allowance of an amendment to a petition for winding up. The case involved three shareholders of a private limited company, where the respondents filed a petition for winding up, leading to the appointment of a provisional liquidator. The appellant No. 2 raised objections regarding the procedure and his involvement in the petition, leading to subsequent appeals and stays in the proceedings. The lower court eventually allowed the respondents to amend the petition for winding up, which was challenged in the appeal.
The judgment delves into the applicability of the Code of Civil Procedure to proceedings under the Companies Act, emphasizing that the procedural rules of the Code are to be followed in civil jurisdiction cases, including those under the Companies Act. The principles governing the amendment of pleadings under Order VI, rule 17, of the Civil Procedure Code are discussed, citing relevant case law to support the argument that amendments should be allowed with readiness, especially if not made at a late stage of the proceedings.
The court justified the allowance of the amendment to the petition for winding up based on the allegations of deadlock in the company's operations and mismanagement by the managing director. The court rejected contentions that the amendment was made mala fide or to protract the proceedings, emphasizing the need for particulars of allegations and the absence of a new case against the appellant No. 2.
Regarding the joinder of the company as a respondent, the court invoked Order I, rule 10, of the Civil Procedure Code, allowing the addition of necessary parties at any stage of the proceedings to ensure a comprehensive adjudication of the issues involved in the suit. The court dismissed the appeal against the order allowing the amendment and joinder, upholding the lower court's discretion in exercising its powers.
Lastly, a preliminary objection was raised regarding the tenability of an appeal against the order allowing amendment or joinder of parties under section 202 of the Companies Act. While the court did not delve into this issue, it dismissed the appeal on its merits, affirming the lower court's decision and ordering costs to be paid by the appellant.
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1954 (4) TMI 26
Issues Involved:
1. Valuation of the suit for court fee and jurisdiction.
2. Maintainability of the suit without the secretary as a co-plaintiff.
Detailed Analysis:
1. Valuation of the Suit for Court Fee and Jurisdiction:
The primary argument presented by the petitioner is that the suit, in essence, is one for the recovery of the office of the president, which is intimately connected with the right to possession of the properties of the bank. The petitioner posits that the suit should be valued under section 7(iv)(c) of the Court-fees Act based on the market value of the properties of the institution. The petitioner relied on the judgment in Karupanna Nadar v. Karuppa Nadar, where the court held that a suit for the recovery of the office of managership of an institution was effectively a suit for the possession of the properties managed by that office.
However, the court distinguished the present case from Karupanna Nadar v. Karuppa Nadar, noting that the bank is an incorporated company that owns the properties, and the directors merely have custody and management of the bank's affairs. The subject matter of the suit is the office of the president, which is unrelated to anything that can be stated in definite money terms. The court referenced the decision in Vasireddi Veeramma v. Butchayya, which categorized suits for declarations regarding offices as unrelated to definite money terms. The court concluded that the suit was properly valued and within the jurisdiction of the District Munsif.
2. Maintainability of the Suit Without the Secretary as a Co-Plaintiff:
The petitioner contended that under the articles of association, the company could only sue through its president and secretary, and since the secretary was not a co-plaintiff, the suit was not maintainable. The court examined Article 48 of the articles of association, which provided that the Nidhi shall sue in the name of the president and the secretary. However, the court noted that the secretary had been impleaded as the sixth defendant because he refused to join as a plaintiff.
The court referenced the Federal Court's decision in Satya Charan v. Rameshwar Prasad, which dealt with a similar situation where some directors were plaintiffs and others were defendants. The court held that if a majority of the directors support the suit, it is maintainable even if the secretary is not a co-plaintiff. The court emphasized that the objection raised by the petitioner does not go to the root of the suit, as the second plaintiff, who claims to be the validly appointed president, can independently seek the reliefs claimed.
The court further reasoned that if the articles had merely allowed the company to sue in the name of the directors, the suit would still be maintainable with the majority of the directors as plaintiffs. The court concluded that the suit was properly instituted by the company through its president, with the secretary as a defendant, and the objection raised by the petitioner lacked substance.
Conclusion:
The court upheld the decision of the District Munsif of Tiruchirapalli on the preliminary issues, finding the suit properly valued and within jurisdiction, and maintainable without the secretary as a co-plaintiff. The civil revision petition was dismissed with costs.
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1954 (4) TMI 25
Issues: Proper procedure for liquidator appointment, discretion of trial judge, relevance of creditors' wishes, control of company by shareholder, consideration of creditors' wishes, retrial order
In this case, the Privy Council considered the proper procedure for the appointment of a liquidator and the discretion of the trial judge in ordering a compulsory winding up. The Court emphasized the importance of allowing the liquidator to lead evidence and considered the relevance of creditors' wishes in the winding up process. The Court highlighted that even if a company is controlled by one shareholder, a voluntary winding up can still be conducted with due regard to the interests of the creditors. The judgment referenced the case of In re Medical Battery Co. to illustrate circumstances where a liquidator may be disqualified from acting impartially. The Court directed a retrial of the petition, emphasizing the need to consider all evidence available and the wishes of the creditors. The Court declined to give direction on whether creditors' wishes should be ascertained through a meeting under the Ordinance, leaving it to the judge overseeing the retrial. The appeal was allowed, orders of the Court of Appeal and the trial judge were set aside, and the respondent was directed to pay the costs of the appeal and the hearing in the West African Court of Appeal, with costs of the hearing before Gregg J. to be determined after the retrial.
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1954 (4) TMI 24
Issues Involved:
1. Injunction to restrain the defendant from acting upon and communicating resolutions.
2. Legality of the rejection of proxies.
3. Prima facie case for granting an interim injunction.
4. Voting rights and splitting of votes by shareholders.
Issue-wise Detailed Analysis:
1. Injunction to restrain the defendant from acting upon and communicating resolutions:
The plaintiff sought an injunction to prevent the defendant, Fort Gloster Jute Manufacturing Company Limited, from acting upon and communicating resolutions passed in a meeting held on March 16, 1954. The controversy centered around the transfer of shares and the managing agency of the company. The plaintiff challenged the resolution's validity, alleging fraudulent rejection of proxies by the chairman and directors in collusion with the scrutineers.
2. Legality of the rejection of proxies:
The plaintiff argued that the rejection of proxies was improper and illegal, contending that votes of a shareholder could not be split between different proxies. The company countered that the rejection was justified, as the proxies were issued in respect of different parcels of shares. The court noted that the chairman's decision on the admission or rejection of votes, if made in good faith, is prima facie final and conclusive, as per Article 90 of the company's articles of association.
3. Prima facie case for granting an interim injunction:
The court emphasized that for an interlocutory injunction, there must be a prima facie case on both facts and law. The court found that the plaintiff failed to establish a prima facie case against the defendants on the disputed proxies. The court highlighted the principle that the chairman's decision at company meetings should stand until proven wrong at trial, citing relevant case law to support this principle.
4. Voting rights and splitting of votes by shareholders:
The plaintiff contended that a shareholder could not split votes between different proxies, while the company argued that each share carries a right to vote, and there is no legal prohibition against splitting votes. The court reviewed authorities and concluded that proxies have the right to vote and that each share's voting right is distinct. The court rejected the argument that splitting votes was against common sense, noting that the right to vote is attached to each share, not the shareholder's personality.
Conclusion:
The court dismissed the application for an interlocutory injunction, holding that the plaintiff failed to establish a prima facie case. The court found that the chairman's decision should stand prima facie until proven otherwise and that there was no legal basis to prevent the splitting of votes by shareholders. The application was dismissed with costs, and the motion was certified for two counsel.
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1954 (4) TMI 4
The Supreme Court allowed the appeal and answered the referred question in the affirmative. Each party must bear their own costs in this Court and in the High Court. (Case Citation: 1954 (4) TMI 4 - SC)
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1954 (4) TMI 3
Whether on the facts of this case, income, profits and gains in respect of sales made to the Government of India was received in British India within the meaning of Section 4(1)(a) of the Act?
Held that:- It can scarcely be suggested with any semblance of reasonable plausibility that cheques drawn in Delhi and actually received by post in Aundh would in the normal course of business be posted in some place outside British India. This Posting in Delhi, in law, amounted to payment in Delhi. In this view of the matter the referred question should, with respect, have been answered by the High Court in the affirmative. We, therefore, allow the appeal and answer the question accordingly. Appeal allowed.
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1954 (4) TMI 2
Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business ?
Whether the remuneration received from the Mills is on account of service or is the remuneration for business ?
Held that:- All the factors taken into consideration along with the fixity of tenure, the nature of remuneration and the assignability of their rights, are sufficient to enable us to come to the conclusion that the activities of the appellants as the agents of the company constituted a business and the remuneration which the appellants received from the company under the terms of the agency agreement was income, profits or gains from business. Appeals dismissed.
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1954 (4) TMI 1
Whether the learned High Court Judges erred in importing any question of capacity in which the income is held by Ratilal, into the application of Section 16(1)(c)?
Held that:- The provision in the settlement deed giving the income back to Ratilal, even if it be taken as a retransfer of the income, cannot be treated as such retransfer to the original settlor, viz., the Hindu undivided family. Hence the last portion of clause (c) of Section 16(1) does not come into operation. It follows accordingly that the contention on behalf of the appellant that what was intended under the terms of the trust deed as the individual income of the respondent Ratilal becomes the joint family income by a process of successive application of the fictions enacted in the last portion of clause (c) of Section 16(1), and the two provisos thereto, cannot be accepted. This is enough, to dispose of the appeal. Appeal dismissed.
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