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2006 (9) TMI 588
Application seeking clarification - Rules for preparation of eligibility list of officers for promotion to the Engineering Service Class II by Notification - Promotion from the post of erstwhile Engineering Supervisor Telecom (re-designated as Junior Engineer) to the post of Assistant Engineer - Principle of seniority-cum-fitness - HELD THAT:- We direct that such of the applicants whose seniority had been determined by the competent authority, and who had been given benefit of seniority and promotion pursuant to the orders passed by Courts or Tribunals following the principles laid down by the Allahabad High Court in Parmanand Lal's case and approved by this Court, which orders have since attained finality, cannot be reverted with retrospective effect. The determination of their seniority and the consequent promotion having attained finality, the principles laid down in later judgments will not adversely affect their cases.
This Court has clearly clarified the position in its aforesaid judgment. The observations made by this Court while disposing of the appeal of Parmanand Lal are also pertinent. This Court clearly laid down the principle that the seniority fixed on the basis of the directions of this Court which had attained finality is not liable to be altered by virtue of a different interpretation being given for fixation of seniority by different benches of Tribunal. Consequently, the promotions already effected on the basis of seniority determined in accordance with the principles laid down in the judgment of the Allahabad High Court cannot be altered.
Having regard to the above observations and clarification we have no doubt that such of the applicants whose claim to seniority and consequent promotion on the basis of the principles laid down in the Allahabad High Court's judgment in Parmanand Lal's case have been upheld or recognized by Court or Tribunal by judgment and order which have attained finality will not be adversely affected by the contrary view now taken in the judgment. Since the rights of such applicants were determined in a duly constituted proceeding, which determination has attained finality, a subsequent judgment of a Court or Tribunal taking a contrary view will not adversely affect the applicants in whose cases the orders have attained finality. We order accordingly.
Before parting with this judgment we may observe that we have not laid down any principle or law having universal application. We have only clarified and given effect to an earlier judgment of this Court rendered in an extraordinary situation.
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2006 (9) TMI 587
Section 18 of the Industrial Disputes Act - deposit collectors working for 20 to 25 years - binding effect of the Award - writ petitioners being not parties to the said award - demand of the Commission Agents or as the case may be Deposit Collectors employed in the Banks listed in Annexure that they are entitled to the Pay scale and other service conditions admissible to regular clerical employees of these banks is justified - Violation of Principles of Natural Justice - HELD THAT:- From a perusal of Clause (d) of Sub-section (3) of Section 18 of the Industrial Disputes Act, it is, thus, evident that all workmen who are employed in the establishment or who subsequently become employed in that establishment would also be bound by an award made by an industrial tribunal. The management as also the workmen were parties to the said award. Hence, Respondents cannot be heard to say that the award was not binding on them only because they were not parties.
In an industrial dispute referred to by the Central Government which has an all-India implication, individual workman cannot be made parties to a reference. All of them are not expected to be heard. The Unions representing them were impleaded as parties. They were heard. Not only the said Unions were heard before the High Court, as noticed hereinbefore from a part of the judgment of the High Court, they had preferred appeals before this Court. Their contentions had been noticed by this Court. As the award was made in presence of the Unions, in our opinion, the contention of Respondents that the award was not binding on them cannot be accepted. The principles of natural justice were also not required to be complied with as the same would have been an empty formality. The court will not insist on compliance of the principles of natural justice in view of the binding nature of the award. Its application would be limited to a situation where the factual position or legal implication arising thereunder is disputed and not where it is not in dispute or cannot be disputed. If only one conclusion is possible, a writ would not issue only because there was a violation of the principle of natural justice.
Appellant Bank had no other option but to implement the award. If it did not, its action could be held to be penal. Reliance placed by Respondents on the letter of the Syndicate Bank dated 26.5.2001 is also misplaced. The said circular letter does not state that the principles of natural justice were required to be complied with. As on the date of issuance of the circular letter they had not received the necessary guidelines, a temporary measure was proposed to be taken therefore.
Thus, the impugned judgment cannot be sustained which is set aside accordingly. We direct that the recoveries may not be made from Respondents so as to avoid undue hardship to them.
The appeal is allowed.
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2006 (9) TMI 586
Issues Involved:
1. Validity of Nirmala's adoption.
2. Plaintiffs' entitlement to the properties.
3. Bar of limitation on the suit.
4. Balance of convenience and irreparable injury for granting injunction.
5. Conduct of the parties and its relevance to the injunction.
Issue-wise Detailed Analysis:
1. Validity of Nirmala's Adoption:
The purported adoption of Nirmala by Obalappa was a central issue. The plaintiffs claimed Nirmala was adopted by Obalappa, which was contested by the appellants. The court noted that proving a valid adoption required evidence of a giving and taking ceremony and performance of 'datta homam,' which was not established. Moreover, the court referred to legal texts indicating that the adoption of a daughter was invalid under Hindu law. Thus, prima facie, Nirmala was not a validly adopted daughter of Obalappa.
2. Plaintiffs' Entitlement to the Properties:
The plaintiffs sought partition of the properties based on Nirmala's alleged status as an adopted daughter. The court observed that even if Nirmala was not adopted, she could claim as the natural daughter of Kadarappa. However, her share would be limited to what Kadarappa was entitled to, which was 1/8th of the properties. The court emphasized that the extent of Kadarappa's property would depend on the 1954 partition deed.
3. Bar of Limitation on the Suit:
The appellants argued that the suit was barred by limitation. However, the court did not delve deeply into this issue at the stage of granting an injunction, focusing instead on the prima facie case and other factors relevant to interim relief.
4. Balance of Convenience and Irreparable Injury for Granting Injunction:
The court evaluated whether the plaintiffs had a prima facie case, the balance of convenience, and potential irreparable injury. It was noted that the trial court and High Court found in favor of the plaintiffs. However, the Supreme Court highlighted that the lower courts did not adequately consider the balance of convenience and irreparable injury to the appellants. The court also questioned whether the plaintiffs should furnish security in case the suit was dismissed.
5. Conduct of the Parties and Its Relevance to the Injunction:
The conduct of both parties was scrutinized. The court noted that the appellants had disposed of some properties in violation of a status quo order, which was relevant to the injunction. However, the plaintiffs' changing stands and the need for them to furnish security were also considered. The court emphasized that equitable relief like an injunction required fair and honest conduct from the party seeking it.
Conclusion:
The Supreme Court allowed the appeals to the extent of modifying the injunction orders. The appellants were permitted to sell certain flats and let out commercial properties, with conditions to protect the plaintiffs' potential interests. The trial court was directed to expedite the hearing and dispose of the suit within six months. The costs of the appeals were to abide by the result of the suit.
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2006 (9) TMI 585
Issues:
- Imposition of penalty for failure to utilize foreign exchange for import of goods
- Dispute over remittance of US $ 180000 by the appellant
- Legal position of a company as a distinct legal persona
- Liability of holding company for actions of subsidiary
- Interpretation of sections 8(3) and 8(4) of the FER Act, 1973
Analysis:
The judgment revolves around an appeal challenging an Adjudication Order imposing a penalty on the appellant for not utilizing foreign exchange for import, as per the FER Act, 1973. The appellant denied receiving the remittance of US $ 180000, supported by a letter from State Bank of India stating the remittance did not pertain to them. The argument focused on the distinct legal personality of a company post-registration, citing the landmark case of Saloman v. Saloman & Co. Ltd. which established that a company is a separate legal entity from its shareholders. The judgment emphasized that a holding company cannot be held liable for the actions of its subsidiary, as each entity maintains its legal independence. The court highlighted that if a subsidiary receives foreign exchange, it alone is responsible, not the holding company. Therefore, the adjudication order was deemed incorrect, and the appeal was allowed on its merits.
The judgment clarified the legal concept that a company, upon registration, assumes a distinct legal persona separate from its shareholders. This principle was reinforced by the case of T.R. Pratt (Bombay) Ltd. v. E.D. Sasson & Co. Ltd., emphasizing that a company is a separate entity regardless of share ownership. Additionally, the court distinguished between the citizenship of a company and its nationality, domicile, and residence, as established in State Trading Corpn. of India Ltd. v. CTO. The judgment highlighted that a company's residence is determined by its central management and control, emphasizing the importance of where the company conducts its real business. Furthermore, the judgment reiterated that legal obligations under the FER Act, 1973, fall on the entity that directly receives foreign exchange, in this case, the subsidiary company, absolving the holding company of liability for the subsidiary's actions.
In conclusion, the judgment quashed the adjudication order and allowed the appeal on its merits, emphasizing the legal independence of a company from its shareholders and the distinct liability of subsidiary companies for actions related to foreign exchange transactions. The court's decision was based on the clear legal framework that places responsibility on the entity directly involved in the transaction, in alignment with the established legal principles governing corporate entities and their obligations under the FER Act, 1973.
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2006 (9) TMI 584
The judgment by the Securities Appellate Tribunal, Mumbai, in 2006 (9) TMI 584 stated that an application for condonation of delay was rejected due to a delay of over 870 days with no satisfactory explanation provided. The appeal was not admitted.
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2006 (9) TMI 583
Issues Involved:
1. Enforceability of the right of pre-emption.
2. Requirement of registration for the compromise decree under Section 17(1) of the Registration Act.
3. Nature of the decree in Civil Suit No. 398 of 1980.
4. Applicability of the Transfer of Property Act in Haryana.
5. Legal precedents and their relevance to the case.
Detailed Analysis:
1. Enforceability of the Right of Pre-emption:
The plaintiff claimed a right of pre-emption based on a previous decree (Civil Suit No. 398 of 1980) that recognized his co-ownership of the property. The trial court and the lower appellate court upheld the plaintiff's right to enforce pre-emption, stating that the decree recognized the plaintiff's right and did not require registration under Section 17(1) of the Registration Act. The High Court also affirmed this view, holding that the decree was based on a family settlement and did not require registration.
2. Requirement of Registration for the Compromise Decree:
The contesting defendants argued that the decree in Civil Suit No. 398 of 1980 created new rights in the plaintiff, which required registration under Section 17(1) of the Registration Act. The courts, however, held that the decree was enforceable without registration as it was not a compromise decree but a decree on admission. They further noted that the decree was part of a family arrangement, which did not necessitate registration under Section 17(2)(vi) of the Registration Act.
3. Nature of the Decree in Civil Suit No. 398 of 1980:
The decree in Civil Suit No. 398 of 1980 was determined to be a decree on admission rather than a compromise decree. The court noted that the decree recognized a pre-existing right based on an arrangement with Sheo Ram, who admitted the plaintiff's claim in his written statement. The decree did not create any new rights but merely recognized existing ones, thus not requiring registration.
4. Applicability of the Transfer of Property Act in Haryana:
The case arose from Haryana, where the Transfer of Property Act was not fully applicable. Only Sections 54, 107, and 123 were applicable, dealing with the sale, lease, and gift of immovable property. The court noted the prospective application of Section 17(1A) of the Registration Act, which mandates registration of documents transferring immovable property created after the commencement of the section.
5. Legal Precedents and Their Relevance:
The court referred to several legal precedents, including Bhoop Singh v. Ram Singh Major and Ors., which discussed the requirement of registration for decrees creating new rights. However, the court distinguished this case from Bhoop Singh, noting that the decree in question did not create new rights but recognized pre-existing ones. The court also referred to historical legislative changes and judicial decisions that supported the view that decrees recognizing pre-existing rights do not require registration.
Conclusion:
The Supreme Court upheld the decisions of the lower courts, confirming that the decree in Civil Suit No. 398 of 1980 did not require registration and recognized the plaintiff's right to enforce pre-emption. The appeal was dismissed, and the judgments and decrees under appeal were confirmed. The court emphasized the need for legislative action to address potential avoidance of registration requirements.
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2006 (9) TMI 582
Issues Involved:
1. Cancellation of share allotment.
2. Allegations of oppression and mismanagement.
3. Validity of board and general meetings.
4. Limitation and delay in filing the petition.
5. Existence of a family settlement.
6. Mis-joinder of parties.
7. Doctrine of indoor management.
Detailed Analysis:
1. Cancellation of Share Allotment:
The petitioners sought the cancellation of 1500 shares allotted to M/S Complex Credit, claiming it was illegal and void. The respondents argued that the petition was time-barred, as it was filed in 2002 for an allotment made in 1998. The judgment concluded that the petition was not barred by limitation due to the equitable nature of proceedings under Sections 397/398 of the Companies Act, 1956.
2. Allegations of Oppression and Mismanagement:
The petitioners alleged that the allotment of shares to the 10th respondent reduced their shareholding from 51.53% to 43%, converting them from majority to minority shareholders. The judgment found that the respondents had manipulated records and fabricated minutes of board meetings, as evidenced by the discrepancies in the minutes and the absence of notices for meetings. The court held that the allotment of shares was not bona fide and aimed to convert the majority into a minority, constituting oppression.
3. Validity of Board and General Meetings:
The petitioners claimed they did not receive notices for the board meeting on 1.9.1998, the AGM on 30.9.1998, and the board meeting on 20.11.1998. The judgment found that the respondents admitted to not issuing notices for board meetings and that the presence of the 1st petitioner was falsely recorded in the minutes of the meeting on 1.9.1998, when he was abroad. The court declared the resolutions passed in these meetings null and void.
4. Limitation and Delay in Filing the Petition:
The respondents argued that the petition was time-barred. However, the court held that the Limitation Act does not apply to proceedings under Sections 397/398 before the Company Law Board and that the delay was justified due to attempts to resolve the disputes amicably within the family.
5. Existence of a Family Settlement:
The respondents claimed that the allotment of shares was part of a family settlement. The judgment found no evidence of such a settlement, as it was not mentioned in the initial reply filed by the respondents. The court concluded that the alleged family settlement was an afterthought and had no relevance to the case.
6. Mis-joinder of Parties:
The respondents argued that the 3rd petitioner was not a shareholder, having transferred his shares to the 2nd petitioner. The court found that the transfer was not registered in the company's records and that the shares continued to be in the name of the 2nd petitioner. Therefore, the petitioners' claim of holding 51.53% shares was established.
7. Doctrine of Indoor Management:
The 10th respondent invoked the doctrine of indoor management, claiming protection as a bona fide allottee of shares. The court held that this doctrine could not be invoked in cases of alleged oppression and that the 10th respondent was not an independent entity but connected to the respondents. The court ordered the cancellation of the 1500 shares allotted to the 10th respondent.
Conclusion:
The judgment declared the resolutions related to the reclassification of capital and the allotment of 1500 shares to the 10th respondent as null and void. The company was directed to rectify its register of members by canceling the 1500 shares within a month. The respondents were given the option to sell their shares to the petitioners at a fair value determined by an independent valuer if they chose to exit the company.
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2006 (9) TMI 581
Issues: Jurisdiction of the court in appointing an arbitrator, consideration of fraud allegations in arbitration, appointment of arbitrator, location of arbitration proceedings, timeline and expenses for arbitration proceedings.
In this judgment, the main issue was the jurisdiction of the court in appointing an arbitrator. The court noted the existence of an arbitration clause in the contract between the parties and the Respondent's previous attempt to seek arbitration through the Bombay High Court. The court, however, held that the Bombay High Court lacked jurisdiction in this matter, and the Petitioner's application under Section 11 of the Arbitration and Conciliation Act, 1996 was justified.
Another issue addressed was the consideration of fraud allegations in arbitration. The Respondent had raised fraud allegations in their counter affidavit. The court opined that the Arbitrator could examine whether the contract was vitiated by fraud and that the jurisdiction of the Arbitrator could also be determined by the Arbitral Tribunal. Consequently, the court saw no reason not to appoint an Arbitrator in accordance with the arbitration agreement of the parties under Section 11(6) of the Act.
Furthermore, the issue of appointing an arbitrator was resolved by the court. The Respondent, a company based in Bombay, and the Petitioner, a German company, had agreed that arbitration proceedings would take place in Bombay. Therefore, Justice S.N. Variava was appointed as the Arbitrator to resolve the disputes between the parties.
The court also addressed the timeline and expenses for the arbitration proceedings. The Arbitrator was directed to complete the arbitration within four months, and the fees and expenses for the proceedings were to be determined by the Arbitrator.
In conclusion, the court allowed the application based on the terms mentioned, including the appointment of the Arbitrator, the location of arbitration proceedings, and the timeline and expenses for the arbitration process.
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2006 (9) TMI 580
Issues Involved:
1. Credibility of the sole eyewitness.
2. Corroboration of the eyewitness testimony.
3. Admissibility of hearsay evidence.
4. Compliance with Section 235(2) of the Code of Criminal Procedure.
5. Appropriateness of the death penalty.
Detailed Analysis:
1. Credibility of the Sole Eyewitness:
The sole eyewitness in this case is Savitri Devi, P.W.15, the mother of the deceased. The appellant's counsel argued that P.W.15, being an interested witness, should not be relied upon without corroboration. However, the court rejected this contention, stating that close relatives are natural witnesses and are not necessarily biased. The court cited precedents from the Apex Court, emphasizing that close relatives are often the last to falsely implicate someone and that their testimony should not be dismissed solely on the basis of their relationship to the victim.
2. Corroboration of the Eyewitness Testimony:
The court noted that the testimony of P.W.15 was corroborated by other witnesses who arrived at the scene shortly after the incident and were informed by P.W.15 about the occurrence and the identity of the assailant. Witnesses P.Ws. 3, 4, 5, 6, 7, 10, and 11, who are family members and neighbors, confirmed that they heard the informant's cries and saw the deceased lying dead with injuries. Additionally, P.W.4, a brother of the deceased, witnessed the accused fleeing the scene with blood-stained hands and shirt, further corroborating P.W.15's account.
3. Admissibility of Hearsay Evidence:
The appellant's counsel argued that the evidence provided by the witnesses was hearsay and thus inadmissible under Section 60 of the Evidence Act. The court clarified that hearsay evidence is inadmissible only when it aims to establish the truth of the statement. It is admissible when it seeks to establish the fact that the statement was made. The court cited the Privy Council's decision in Subramaniam v. Public Prosecutor to support this distinction. The statements made by the witnesses were considered admissible for establishing the conduct of the informant and the factum of the statements made immediately after the occurrence.
4. Compliance with Section 235(2) of the Code of Criminal Procedure:
The court found that the trial court did not comply with the mandatory provision of Section 235(2) of the Code of Criminal Procedure, which requires the court to adjourn the matter after recording the conviction and allow both parties to present material on the question of sentence. The trial court had delivered the sentence on the same day as the conviction, which the court deemed a serious error. The court referred to the Apex Court's decision in Allauddin and Ors. v. State of Bihar, which mandates that the trial courts should give the accused an opportunity to present material on the sentence before pronouncing it.
5. Appropriateness of the Death Penalty:
The court agreed with the appellant's counsel that the case did not fall within the "rarest of rare cases" as defined by the Apex Court. The court noted that the lower court had not effectively provided the accused with an opportunity to be heard on the question of the sentence and had disregarded the principles laid down by the Apex Court regarding the imposition of the death penalty. Consequently, the court commuted the death sentence to life imprisonment.
Conclusion:
The court upheld the conviction of the accused under Section 302 of the Indian Penal Code but set aside the death sentence due to non-compliance with Section 235(2) of the Code of Criminal Procedure and the case not meeting the criteria for the "rarest of rare cases." The death sentence was commuted to life imprisonment, and the criminal appeal was dismissed with this modification.
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2006 (9) TMI 579
Issues involved: Appeal against order allowing appeal, validity of compromise decree, legality of compromise agreement, maintainability of appeal under Section 96 C.P.C.
The plaintiff filed a suit against the defendant seeking relief for injunction and declaration regarding a property transaction. A compromise was reached between the parties during the trial, leading to a decree in favor of the plaintiff. The defendant appealed against this decree, claiming the compromise was unlawful and obtained by impersonation. The Court below allowed the appeal, setting aside the decree and remanding the matter for fresh consideration. The High Court heard arguments on the legality of the compromise and the maintainability of the appeal under Section 96 C.P.C.
The Court analyzed the validity of the compromise agreement in light of Section 23 of the Contract Act, which prohibits agreements against public policy. It was observed that the plaintiff sought to transfer ownership of the disputed property without a registered instrument, which is impermissible under the Transfer of Property Act. The Court concluded that the compromise was not a lawful agreement and the trial court erred in deciding the suit based on this compromise.
Regarding the maintainability of the appeal under Section 96 C.P.C., the Court referred to the decision in Banwari Lai v. Smt. Chando Devi, which clarified that challenges to compromise petitions can be raised through applications under Order XXIII Rule 3 proviso or appeals under Section 96(1) C.P.C. The Court emphasized that the mere mention of a wrong section does not affect the jurisdiction of the Court to decide the appeal. Therefore, the Court dismissed the appeal, upholding the decision of the Court below to set aside the compromise decree and remand the matter for fresh consideration.
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2006 (9) TMI 578
Partition of ancestral property - Interpretation of the statutes - Right of Son in the property of her parents etc. - Sections 6 and 8 of The Hindu Succession Act, 1956 ("the Act") as amended by Hindu Succession (Amendment) Act, 2005 - right of a coparcener in the property - retrospective and retroactive statute - HELD THAT:- The Act indisputably would prevail over the old Hindu Law. We may notice that the Parliament, with a view to confer right upon the female heirs, even in relation to the joint family property, enacted Hindu Succession Act, 2005. Such a provision was enacted as far back in 1987 by the State of Andhra Pradesh. The succession having opened in 1989, evidently, the provisions of Amendment Act, 2005 would have no application. Sub-section (1) of Section 6 of the Act governs the law relating to succession on the death of a coparcener in the event the heirs are only male descendants. But, proviso appended to Sub-section (1) of Section 6 of the Act creates an exception. First son of Babu Lal, viz., Lal Chand, was, thus, a coparcener. Section 6 is exception to the general rules.
It was, therefore, obligatory on the part of the Plaintiffs-Respondents to show that apart from Lal Chand, Sohan Lal will also derive the benefit thereof. So far as the Second son Sohan Lal is concerned, no evidence has been brought on records to show that he was born prior to coming into force of Hindu Succession Act, 1956.
Thus, it was the half share in the property of Babu Ram, which would devolve upon all his heirs and legal representatives as at least one of his sons was born prior to coming into force of the Act.
Except to the aforementioned extent; in our opinion, the courts below are correct in applying the provisions of Section 6 of the Act and holding that Section 8 thereof will have no application. The appeal is allowed in part and to the aforementioned extent. The decree would be modified accordingly.
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2006 (9) TMI 577
Issues involved: Challenge to detention orders u/s 3(1)(i) of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
The judgment of the Madras High Court in the case involved the challenge to detention orders passed under Section 3(1)(i) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The petitioners contended that the detaining authority failed to consider the retraction letter before accepting the inculpatory statement, leading to the vitiation of the detention order. The Court examined the grounds of detention and found that the detaining authority did not record its opinion on the rejection of the retraction letter, as required by legal principles established in previous cases.
The Court referred to the Supreme Court decision in K. T. M. S. Mohd. case, emphasizing the importance of the detaining authority subjectively applying its mind to the retraction of an inculpatory statement before accepting it. Failure to do so could render the detention order invalid. Citing the precedent set in A. E. Peer Mohammed case, the Court reiterated that the detaining authority must consider and reject the retraction during the process of passing the detention order to avoid vitiation.
In another case, the Court highlighted the necessity for the detaining authority to provide a specific conclusion on the retracted statement, as mere reference to the retraction is insufficient. The Court observed that failure to record an opinion before accepting the inculpatory statement would vitiate the detention order, in line with legal principles established by previous judgments.
Upon verifying the detention order and grounds of detention, the Court found that the detaining authority did not independently apply his mind to the retraction letter, leading to the conclusion that the detention order should be quashed. Additionally, considering the duration of detention, the Court referred to a Supreme Court case where the order of detention was quashed due to the extended period of detention. Consequently, the Court ordered the release of the detenus forthwith, unless required in any other case or cause.
Given similar grounds raised in other petitions with detention dates in January 2006, the Court directed the release of those detenus as well, quashing the respective detention orders. In conclusion, all the habeas corpus petitions challenging the detention orders were allowed, leading to the release of the detenus unless required in any other case or cause.
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2006 (9) TMI 576
Issues Involved:
1. Maintainability of the petition under Section 237 of the Companies Act, 1956.
2. Locus standi of the petitioner.
3. Alleged fraudulent transfer of shares and removal from directorship.
4. Alleged illegal increase in paid-up share capital and removal of auditors.
5. Alleged embezzlement and misconduct by the directors.
6. Rectification of the register of members.
7. Appointment of an administrator/special officer and investigation into the affairs of the company.
Detailed Analysis:
Issue 1: Maintainability of the petition under Section 237 of the Companies Act, 1956
The petition under Section 237 was deemed not maintainable as the reliefs claimed were beyond the scope of this section. It was noted that the petitioner sought rectification of the register of members and an investigation into alleged fraud and mismanagement. The Board emphasized that Section 237 should not be used for personal grievances or to settle scores between parties. Proper remedies could have been availed under Sections 111, 397, or 398 of the Act. The petition was also found to be barred by limitation, as the alleged cause of action arose in 1987, and the petition was filed in 2003.
Issue 2: Locus standi of the petitioner
The respondents argued that the petitioner did not hold any shares in the company at the time of filing the petition and thus had no locus standi. The Board acknowledged that while a petitioner need not necessarily be a shareholder to file under Section 237, the petitioner's lack of shareholding and the significant delay in filing the petition weakened his position. The Board concluded that the petitioner had no locus standi to inspect or demand documents from the company.
Issue 3: Alleged fraudulent transfer of shares and removal from directorship
The petitioner alleged that the respondent-company, in collusion with its directors, fraudulently transferred shares and removed him from directorship without proper notice or compliance with the Companies Act. The Board found that the petitioner failed to substantiate these allegations with sufficient evidence. The Board also noted that the proper remedy for such grievances would have been under Sections 111, 397, or 398 of the Act, not Section 237.
Issue 4: Alleged illegal increase in paid-up share capital and removal of auditors
The petitioner's claims regarding the illegal increase in share capital and removal of auditors were found to be unsubstantiated. The Board emphasized that such matters should be addressed through other appropriate sections of the Companies Act, rather than seeking an investigation under Section 237.
Issue 5: Alleged embezzlement and misconduct by the directors
The petitioner accused the directors of embezzlement and misconduct, including fraudulent allocation of shares and falsification of minute books. The Board found no prima facie evidence to support these allegations. It was noted that the material placed before the Board did not justify an order for a deeper probe into the company's affairs.
Issue 6: Rectification of the register of members
The petitioner sought rectification of the register of members to include his and his father's names as rightful shareholders. The Board held that this relief could not be granted under Section 237 and should be pursued under Section 111 of the Companies Act. The petitioner's claims of wrongful deletion from the register were not substantiated with adequate evidence.
Issue 7: Appointment of an administrator/special officer and investigation into the affairs of the company
The petitioner requested the appointment of an administrator or special officer to take charge of the company's management and an investigation into the company's affairs. The Board ruled that such reliefs were beyond the scope of Section 237, which only allows for an investigation to be ordered, not the appointment of an administrator. The Board emphasized that an investigation should only be ordered when there are proper grounds and public interest is involved, which was not established in this case.
Conclusion:
The petition was dismissed on grounds of maintainability and lack of merit. The Board found that the petitioner failed to substantiate his allegations and that the proper remedies lay under other sections of the Companies Act. The discretionary power to order an investigation under Section 237 was not exercised, as the circumstances did not warrant such an action.
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2006 (9) TMI 575
Issues Involved:
1. Jurisdiction of the Additional Sessions Judge.
2. Sequence of handling the application for condonation of delay.
3. Retrospective application of procedural amendments.
4. Validity of administrative orders transferring cases.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Additional Sessions Judge:
The petitioners argued that the Additional Chief Metropolitan Magistrate did not consider the application for condonation of delay before issuing summons, and the subsequent condonation by the Sessions Court was improper due to lack of jurisdiction and procedural flaws. The court clarified that the amendment to Section 26(2) of the SEBI Act, which took effect on 29.10.2002, mandated that offences under the SEBI Act be tried by a Court of Session. This procedural change, supported by legislative provisions, allowed the transfer of cases to the Sessions Court, making the Additional Sessions Judge's jurisdiction valid. The court distinguished this case from A.S. Impex Ltd., where administrative orders without legislative backing were quashed.
2. Sequence of Handling the Application for Condonation of Delay:
The petitioners contended that the application for condonation of delay should have been disposed of before taking cognizance and issuing summons. The court referred to the Supreme Court decision in Sukhdev Raj v. State of Punjab, which established that delay could be condoned at any stage of the trial, even after cognizance had been taken. The court also cited Vanka Radha Manohari, emphasizing that Section 473 of the Code of Criminal Procedure allows for condonation of delay in the interest of justice, even without a proper explanation. The Additional Sessions Judge's decision to condone the delay was deemed appropriate and within jurisdiction.
3. Retrospective Application of Procedural Amendments:
The court examined whether the procedural amendment to Section 26(2) of the SEBI Act, which changed the trial forum from a Magistrate to a Sessions Court, could be applied retrospectively. Citing Hitendera Vishnu Thakur v. State of Maharashtra, the court noted that procedural laws, including those relating to forum and limitation, are presumed to be retrospective unless explicitly stated otherwise. Since the amendment was procedural, it applied retrospectively, validating the transfer of the case to the Sessions Court.
4. Validity of Administrative Orders Transferring Cases:
The petitioners argued that the administrative order transferring cases to the Sessions Court bypassed special legislation. The court distinguished this case from A.S. Impex Ltd., where administrative orders lacked legislative backing. Here, the administrative order was supported by the amended Section 26(2) of the SEBI Act. The court noted that the administrative orders were not challenged by the petitioners, and thus, the transfer of the case was valid.
Conclusion:
The court dismissed the revision petition, affirming the jurisdiction of the Additional Sessions Judge, the validity of the procedural amendments, and the appropriateness of the sequence in handling the application for condonation of delay. The administrative orders transferring the case to the Sessions Court were upheld, and the delay in filing the complaint was properly condoned in the interest of justice.
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2006 (9) TMI 574
Oppression and mismanagement - jurisdiction under Sections 397/398 - director removed from the board - family company - Whether the letter of the petitioner could have been treated as a letter of resignation - seeking declaration that the allotment of shares is bad in law - HELD THAT:- Admittedly, the company took over the business of partnership firms in which the petitioner was a partner and thereafter, he continued to be a whole time director of the company. Thus, the petitioner has a vested right to continue as a director. There is no mention about directorship nor the letter has been addressed either to the company or to the board of directors. There is not even a mention of "resignation". Therefore, by treating this letter as the letter of resignation and ousting the petitioner who was a partner in the earlier firm the business of which the company had taken over, and continued as a whole time director of the company, the respondents have acted highly oppressive to the petitioner.
It is seen that all the 598676 shares proposed to be allotted on the two occasions had been allotted only to the members belonging to the respondents' group and thus they have consolidated their position in the company. There is no evidence that for the first allotment, shares were offered to the petitioner and the respondents have admitted that in respect of the second allotment, no offer was made to the petitioners. Thus, the petitioners are justified in claiming that by the said allotments, not only the respondents have enriched themselves but also reduced the percentage holding of the petitioners.
Considering the fact that the petitioners' holding in the company is only around 10% and that the company is engaged in a profitable business, winding up of the company would be against the interest of the shareholders as well as the company. Therefore, since in terms of section 397 the acts complained of should be put an end to, I could direct the company to take back the 1st petitioner as a director and also direct the allottees of the shares to transfer such number of shares to the petitioners which would bring their share holding to the original percentage. However, I do not propose to do so. It is the understanding of the respondents that the desire of the petitioner in saying "good bye" amounted to resignation. He had actually desired to say "good bye" to the business association and partnership. It would mean that he did not desire to have any association with the respondents.
This being the case, his business association can be terminated by purchasing his shares in the company so that the respondents would have truly acted not only in spirit but also in terms of that letter. Even otherwise, since the relationship between the petitioners and the respondents has soured, in the interests of all concerned, the petitioners, being in minority, their shares could be purchased either by the company or the respondents as the case may be at the option of the respondents. This would not only put an end to the disputes but also would be in the long term interests of all concerned. By another order of even date, in respect of another company in which the same shareholders are parties, I have given the option to the respondents, who are in minority, to go out of the company.
Therefore, in terms of Section 402, I consider it appropriate that the final goodbye should be by way of exist of the petitioners as members of the company by directing the respondents/the company to purchase the shares held by the petitioners on a fair value to be determined by an independent valuer. such fair value will also take care of the allegation of the petitioners that the respondents have issued shares to themselves at par value when the fair value was much higher.
Accordingly, I order so. The parties will appear before me to suggest a mutually acceptable valuer to determine the fair value. The valuation of the shares shall be on the basis of the balance sheet, being the proximate to the date of the petition.
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2006 (9) TMI 573
Issues Involved:
1. Interpretation and application of Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC).
2. Conditions for setting aside an ex parte decree.
3. Discretionary power of the court in imposing terms for setting aside an ex parte decree.
4. Reasonableness and harshness of conditions imposed by the court.
Issue-wise Detailed Analysis:
1. Interpretation and application of Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC):
The core issue in this appeal revolves around the interpretation and application of Order IX Rule 13 CPC, which pertains to setting aside an ex parte decree against a defendant. The provision allows a court to set aside such a decree if the defendant can prove that the summons was not duly served or that they were prevented by sufficient cause from appearing in court. The provision also grants the court the discretion to impose terms, including costs or payment into court, when setting aside the decree.
2. Conditions for setting aside an ex parte decree:
The appellant contended that the Division Bench erred by not considering the court's power to direct the furnishing of security as a pre-condition for recalling a money decree passed ex parte. The Division Bench of the High Court had set aside the condition imposed by the learned Single Judge, which required the defendant to furnish security of Rs. 37 lakhs. The Division Bench opined that such a harsh condition could not be imposed, especially when the defendant was advised by their lawyer not to appear without the service of writ of summons.
3. Discretionary power of the court in imposing terms for setting aside an ex parte decree:
The Supreme Court acknowledged that the courts have wide discretion under Order IX Rule 13 CPC to set aside an ex parte decree upon satisfying itself of the existence of a "sufficient cause." The court noted that the discretionary power includes the imposition of terms such as costs or payment into court. However, these terms should be reasonable and not oppressive. The court referred to precedents where it was established that the imposition of conditions should be fair and not render the defendant unable to defend the suit.
4. Reasonableness and harshness of conditions imposed by the court:
The Supreme Court found that the learned Single Judge's direction to secure the entire sum of Rs. 37 lakhs was unreasonable and harsh. The court emphasized that while the power to impose conditions exists, such conditions should not be excessive or oppressive. The court cited various judgments to illustrate that the conditions imposed should be reasonable and should not prevent the defendant from defending the suit. The court concluded that the interest of justice would be served by directing the respondent to furnish security to the extent of Rs. 5 lakhs, rather than the entire amount.
Conclusion:
The Supreme Court allowed the appeal to the extent that the condition imposed by the learned Single Judge was modified. The respondent was directed to furnish security of Rs. 5 lakhs within 12 weeks. The court emphasized the need for reasonable conditions when setting aside an ex parte decree and highlighted the discretionary power of the courts in such matters. The court also provided a timeline for the respondent to file objections and for the trial court to consider the matter on merits. The appeal was allowed with no costs.
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2006 (9) TMI 572
Issues:
1. Dismissal of appeal by High Court due to delay in filing.
2. Application for condonation of delay under Section 5 of the Limitation Act, 1963.
3. Misplacement of application for condonation of delay.
4. Acceptance of explanation by the appellant in the interest of justice.
5. Payment of costs to the National Legal Services Authority.
6. Deposit of a sum of Rs. 20,000 by the appellant.
7. Request for expeditious disposal of the appeal by the High Court.
Analysis:
The Supreme Court addressed the issue of the dismissal of the appeal by the High Court due to a delay of 21 days in filing. The Division Bench highlighted that no application for condonation of delay under Section 5 of the Limitation Act, 1963 had been filed. However, the appellant claimed in Paragraph 8 of the application that an application for condonation of delay was filed but allegedly misplaced. Despite the general reluctance to interfere with the impugned order, the Court, in the interest of justice, accepted the appellant's explanation and decided to condone the delay in filing the appeal before the High Court, subject to putting the appellant on terms.
The Court further considered the issue of costs, with the Additional Solicitor General expressing no objection if the directed costs were paid to the National Legal Services Authority. Consequently, the Court allowed the appeal on the condition that the appellant deposits a sum of Rs. 20,000 before the Member Secretary of the National Legal Services Authority within two weeks. Additionally, the Court requested the High Court to expedite the disposal of the appeal, preferably within a period of three months from the date of receipt of the Court's order, emphasizing the importance of timely resolution in legal matters.
In conclusion, the Supreme Court allowed the appeal, subject to the specified condition, and urged the High Court to prioritize the expeditious disposal of the case. The judgment showcases the Court's consideration of the appellant's explanation, the payment of costs to the National Legal Services Authority, and the directive for timely resolution of the appeal, emphasizing the importance of justice and efficiency in the legal process.
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2006 (9) TMI 571
Issues:
Entitlement of daily wage workers to claim minimum pay scale and allowances for the post they are working in.
Analysis:
The case involved the question of whether daily wage workers are entitled to claim the minimum pay scale and applicable allowances for the post they are working in. The workers were appointed on daily wages without compliance with statutory rules, advertisement, or notification of vacancies. The respondents sought regularisation of their services before the Madhya Pradesh State Tribunal, praying for payment of pay scale for Assistant Grade Post Regular and direction for regularisation. The Tribunal directed payment of wages at the minimum of the pay scale of the post they were working in, based on a previous order. However, the appellant contended that as the respondents were not engaged on any vacant post, payment of salary on a regular scale of pay was impermissible in law, citing Recruitment Rules for Assistant Grade III posts.
The High Court dismissed the writ petition filed by the appellant, upholding the Tribunal's decision. The appellant argued that the respondents did not hold a post and therefore were not entitled to claim salary on a regular scale of pay. On the other hand, the respondents claimed entitlement to the same pay scale as Assistant Grade III holders based on the doctrine of equal pay for equal work. The Supreme Court emphasized that public employment offered by a State must comply with constitutional and statutory requirements, including appointments made in accordance with existing rules. Regularisation is not a mode of appointment, and recruitment through regularisation is not legally sanctioned.
The Court referred to precedents to establish that appointment must be made in terms of statutory rules, and regularisation does not confer permanency. It was highlighted that a person appointed by a State following Recruitment Rules enjoys a status, and a post must be created or sanctioned before filling it. The Court cited cases to emphasize that appointment made without authority or in violation of mandatory provisions is void and cannot confer permanent employee status. The judgment also defined the term "status" in legal context and clarified that workmen of a statutory canteen are considered workmen of the establishment only for specific purposes, not all.
In conclusion, the Supreme Court allowed the appeal on the condition that the State should expedite filling up vacant posts, and the cases of the respondents may be considered along with other eligible candidates. The Court suggested relaxing age bar for the respondents who had worked with the appellants. The judgment highlighted the importance of compliance with statutory rules in appointments and clarified that entitlement to pay scale is contingent upon holding a sanctioned post.
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2006 (9) TMI 570
Issues: Challenge to judgment and order of High Court based on violation of principles of natural justice and failure to issue notice before adverse adjudication in Civil Revision.
Analysis:
The primary issue in this case pertains to the violation of principles of natural justice and the failure to issue notice before an adverse adjudication in the Civil Revision. The appellant contended that the Civil Revision filed under Section 115 of the Code of Civil Procedure was allowed without issuing any notice, leading to a clear violation of the principles of natural justice. The review application highlighted the absence of notice before the disposal of the Civil Revision, emphasizing that the High Court did not consider this crucial aspect. The High Court's order was criticized for misinterpreting the provisions of Order VII Rule 11(d) of the CPC and for not issuing any notice before the adverse adjudication in the Civil Revision.
The judgment emphasized the importance of natural justice in ensuring fairness and reasonableness in legal proceedings. It cited precedents such as Cooper v. Wandsworth Board of Works and Mullooh v. Aberdeen to underscore the fundamental right of a person to be heard in their defense. The principles of natural justice were described as an essential element of fair adjudication deeply rooted in tradition and conscience. The purpose of adhering to these principles is to prevent any miscarriage of justice. Consequently, the Supreme Court set aside the orders of the learned Single Judge in the Civil Revision and the Review Application, remitting the matter back to the High Court for fresh consideration on merits after providing due notice to the appellant. The appeal was allowed on the grounds of the violation of natural justice, with no costs imposed.
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2006 (9) TMI 569
Advertisement for appointment of 225 posts of Live Stock Assistants in the Animal Husbandry Department - selection process completed - appointment letter sent to Respondent asked to join the post within fifteen days - failed to join - again requested Director to issue an appointment letter - State in its Counter Affidavit categorically raised a contention that the panel remained valid only for one year - HELD THAT:- It may or may not be that Respondent herein had actually received his appointment letter. It was, however, expected that he would make enquiries thereabout; particularly when on his own showing those who were below him in the selection list had already been permitted to join. Admittedly, he came to know thereabout in 1994. He allegedly filed a representation and although no reply thereto was given, he did not take any step soon thereafter. He filed another representation only in 1995. He filed the writ petition after a long period i.e. in 2001 when his purported representation filed in the year 1999 was rejected.
In the aforementioned situation, in our opinion, he did not have any legal right to be appointed. Life of a panel, it is well known, remains valid for a year. Once it lapses, unless an appropriate order is issued by the State, no appointment can be made out of the said panel. It may be true that the appointment letter was sent by ordinary post; but even in relation thereto a statutory presumption arises. It is also well known that postal delay by itself may not be a ground to take a sympathetic view In Maruti Udyod Ltd. v. Ram Lal and Others [2005 (1) TMI 671 - SUPREME COURT].
Thus, in our opinion, the High Court should not have allowed Respondent herein to join his services only on the basis of sympathy. It is now also well settled that in absence of any legal right, the Court should not issue a writ of or in the nature of mandamus on the basis of sympathy.
We, therefore, are of the opinion that the High Court committed a manifest error in allowing the writ petition of Respondent. It is set aside accordingly. The appeal is allowed. However, no recovery shall be made for the period he has actually worked.
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