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1991 (1) TMI 466
Issues Involved:
1. Scope of the High Court's power under Section 482 of the Code of Criminal Procedure, 1973.
2. Whether the High Court can issue directions to the appropriate Government under Section 432 of the Code to release a convict on parole.
3. Judicial precedents on the inherent powers of the High Court.
4. The distinction between judicial and executive functions in the context of parole and remission of sentences.
5. The applicability of judicial review to executive decisions under Articles 72 and 161 of the Constitution.
Detailed Analysis:
1. Scope of the High Court's power under Section 482 of the Code of Criminal Procedure, 1973:
Section 482 of the Code of Criminal Procedure, 1973, preserves the inherent powers of the High Court to make necessary orders to give effect to any order under the Code, prevent abuse of the process of any Court, or otherwise secure the ends of justice. The judgment clarifies that the inherent power of the High Court is confined to judicial proceedings and does not extend to executive actions. The inherent power cannot be invoked in respect of matters covered by specific provisions of the Code or if its exercise would be inconsistent with any specific provisions of the Code.
2. Whether the High Court can issue directions to the appropriate Government under Section 432 of the Code to release a convict on parole:
The judgment concludes that the High Court's inherent power under Section 482 does not extend to issuing directions to the appropriate Government under Section 432 of the Code for the release of a convict on parole. Parole is considered an administrative order, not a judicial or quasi-judicial one. The authority to grant parole lies exclusively with the executive, and the High Court cannot interfere with this executive function through its inherent powers.
3. Judicial precedents on the inherent powers of the High Court:
The judgment extensively reviews various judicial precedents, including decisions of the Supreme Court and High Courts, to elucidate the scope and limitations of the inherent powers of the High Court. Key cases discussed include T.H. Hussain v. M.P. Mondkar, Khushi Ram v. Hashim, R.P. Kapur v. State of Punjab, and State of West Bengal v. S.N. Basak. These cases collectively establish that the inherent power of the High Court is limited to preventing abuse of the process of the Court and securing the ends of justice within the judicial domain, and cannot be invoked to interfere with executive functions.
4. The distinction between judicial and executive functions in the context of parole and remission of sentences:
The judgment emphasizes the clear demarcation between judicial and executive functions. The power to grant parole or remit sentences is an executive function vested in the appropriate Government under Section 432 of the Code and Articles 72 and 161 of the Constitution. The judiciary's role is to adjudicate cases, while the executive's role is to execute sentences and exercise clemency powers. The High Court's inherent powers do not extend to supervising or interfering with these executive functions.
5. The applicability of judicial review to executive decisions under Articles 72 and 161 of the Constitution:
While the High Court's inherent powers under Section 482 do not extend to executive decisions, the judgment acknowledges that judicial review of executive actions under Articles 72 and 161 of the Constitution is permissible. However, such review is limited to examining whether the executive authority has acted within the limits of its power or exceeded it. The Court cannot review the merits of the executive decision but can ensure that the decision is not vitiated by mala fides, extraneous considerations, or lack of jurisdiction.
Conclusion:
The judgment concludes that the High Court's inherent powers under Section 482 of the Code are confined to judicial proceedings and do not extend to executive actions such as granting parole. Any challenge to executive decisions regarding parole must be made through judicial review under Article 226 of the Constitution, not through the inherent powers under Section 482. The reference is answered accordingly, and petitioners are given the option to convert their petitions into writ petitions under Article 226 or file fresh petitions.
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1991 (1) TMI 465
Issues Involved:
1. Alleged contravention of para 21 read with para 18 of the Drugs (Prices Control) Order, 1979.
2. Correctness of the High Court's construction of the provisions of the Drugs (Prices Control) Order, 1979.
3. Applicability of para 21 to formulations not specified in the Third Schedule.
4. Definition and classification of 'bulk drug' and 'formulation'.
5. Appropriate course of action considering the lapse of time and other defenses.
Issue-wise Detailed Analysis:
1. Alleged Contravention of Para 21 Read with Para 18 of the Drugs (Prices Control) Order, 1979:
The respondents were found guilty by the trial court for selling medicines at prices exceeding the maximum retail price fixed under the Drugs (Prices Control) Order, 1979, which is punishable under Section 7 of the Essential Commodities Act, 1955. The trial court convicted the respondents, sentencing the firm to a fine and the managing partner and pharmacist to imprisonment. However, the High Court acquitted the respondents, concluding that the alleged contravention was not established under the said provisions.
2. Correctness of the High Court's Construction of the Provisions of the Drugs (Prices Control) Order, 1979:
The High Court held that the medicines in question, Largactil and Hipnotex, were bulk drugs and not formulations, and thus, the prohibition in para 21 did not apply. The Supreme Court found this interpretation incorrect, emphasizing the need to correctly construe the provisions of the Order for future guidance. The Supreme Court held that the High Court's construction was a mis-reading of the material provisions of the Order.
3. Applicability of Para 21 to Formulations Not Specified in the Third Schedule:
The Supreme Court clarified that para 18 of the Order makes the provisions applicable to formulations not specified in the Third Schedule, except for paragraphs 10 to 14. Therefore, para 21, which controls the sale prices of formulations, applies to all formulations, including those not specified in the Third Schedule. The contrary view would render the price fixation exercise futile.
4. Definition and Classification of 'Bulk Drug' and 'Formulation':
The Supreme Court analyzed the definitions provided in para 2 of the Order. A 'bulk drug' is any substance used as such or as an ingredient in any formulation. A 'formulation' is defined as any medicine processed out of or containing one or more bulk drugs. Thus, the definitions are broad, and the medicines in question, Largactil and Hipnotex, fall within the definition of 'formulation'. The High Court's view that these medicines were merely bulk drugs and not formulations was incorrect.
5. Appropriate Course of Action Considering the Lapse of Time and Other Defenses:
The Supreme Court acknowledged the lapse of several years since the alleged offense and the fact that the High Court did not consider other defenses raised by the respondents. It was deemed inappropriate to send the case back to the High Court for further consideration, as it would prolong the trial. The Supreme Court decided not to interfere with the acquittal but clarified the correct interpretation of the provisions for future cases.
Conclusion:
The Supreme Court rejected the High Court's construction of the provisions of the Drugs (Prices Control) Order, 1979, holding that the allegations, if proved, would amount to a contravention of para 21 read with para 18, punishable under Section 7 of the Essential Commodities Act, 1955. However, due to the lapse of time and other considerations, the Supreme Court did not interfere with the acquittal of the respondents. The appeal was disposed of accordingly.
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1991 (1) TMI 464
Issues Involved:
1. Whether the offence of criminal breach of trust punishable under Section 406 of the Indian Penal Code is a continuing offence.
2. Whether the complaint regarding non-return of stridhan by the husband and other relations is barred by the limitation period prescribed under Section 468(2)(c) of the Code of Criminal Procedure.
3. Whether the complaint or summoning order of the trial court is vague due to lack of specific allegations.
Detailed Analysis:
Issue 1: Whether the offence of criminal breach of trust punishable under Section 406 of the Indian Penal Code is a continuing offence.
The primary question for decision was whether the offence under Section 406 of the Indian Penal Code constitutes a continuing offence. The court examined this issue in depth, referring to various precedents and legal principles. The judgment highlighted that the expression "continuing offence" is not defined in the Code of Criminal Procedure. However, the Supreme Court in State of Bihar v. Deokaran Kenshi explained that a continuing offence is one which is susceptible of continuance and is distinguishable from an offence committed once and for all. The court also referred to Bhagirath Kanoris v. State of M.P., where the Supreme Court provided illustrative cases to distinguish between continuing and non-continuing offences.
The court analyzed several cases, including Best v. Butler and Fitzgibbon, Verney v. Mark Fletcher & Sons Ltd., and The London County Council v. Worley, which dealt with continuing offences in different contexts. The court concluded that the offence of criminal breach of trust under Section 406 is a continuing offence, as the misappropriated property continues to be "stolen property" until it is restored to the rightful owner.
Issue 2: Whether the complaint regarding non-return of stridhan by the husband and other relations is barred by the limitation period prescribed under Section 468(2)(c) of the Code of Criminal Procedure.
The Division Bench addressed the issue of whether the non-return of stridhan constitutes a continuing offence, thereby affecting the limitation period for filing a complaint. It was held that the offence is indeed a continuing one, and each day the stridhan is not returned constitutes a fresh cause of action. Consequently, the limitation period does not start from the day the wife was allegedly turned out of the house but continues until the stridhan is returned. Therefore, the contention that the complaint was filed after the expiry of the limitation period was found to be untenable.
Issue 3: Whether the complaint or summoning order of the trial court is vague due to lack of specific allegations.
Regarding the merits of the petition, the court examined whether the complaint was vague due to the lack of specific allegations. It was found that the complaint explicitly mentioned the entrustment of the stridhan and the refusal of the husband to return it despite repeated requests. The court emphasized that the absence of names of the respectables who made the requests is inconsequential because the principle that "it is the quality of evidence and not the quantity that counts" applies. Hence, the complaint was not considered vague.
Conclusion:
The court concluded that the offence under Section 406 of the Indian Penal Code is a continuing offence. The non-return of stridhan by the husband and other relations continues to give a fresh cause of action until the stridhan is returned, and thus the complaint is not barred by the limitation period. Additionally, the complaint was found to be sufficiently specific and not vague. Consequently, the petition was dismissed, and the petitioner was directed to appear before the trial court.
Judgment Dated 21-3-1991 Passed By Hon'ble Single Judge:
The single judge reiterated the Division Bench's finding that the offence under Section 406 is a continuing offence. The contention that the complaint was filed after the limitation period was rejected, and the complaint's specificity was upheld. The petition was dismissed, and the petitioner was directed to appear before the trial court on 23-4-1991.
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1991 (1) TMI 463
Issues:
1. Validity of the proceedings initiated by the Presiding Officer, Special Court for Economic Offences in two criminal cases.
2. Compliance with Section 204 of the Criminal Procedure Code regarding the issue of summons.
Analysis:
1. The judgment involves two criminal petitions seeking to quash proceedings initiated by the Presiding Officer of the Special Court for Economic Offences in Bangalore. The respondent had filed complaints against the petitioners under Sections 85(a) and 85(g) of the Employees' State Insurance Act, 1948. The Presiding Officer had ordered the registration of the cases and issuance of summons to the petitioners based on the complaints. The petitioners challenged these orders through the criminal petitions.
2. The court scrutinized the order passed by the Presiding Officer and found that it was done in a printed proforma, with only the dates filled in and the Presiding Officer's initials. The court emphasized the importance of compliance with Section 204 of the Criminal Procedure Code, which mandates that the Magistrate should issue summons only if there are sufficient grounds for proceeding. The court noted that the Magistrate must apply their mind to the material before them to form an opinion on proceeding further. In this case, the use of a printed proforma indicated a lack of application of mind by the Presiding Officer, failing to meet the requirements of Section 204.
3. The court held that passing orders in a mechanical manner without proper consideration of the material before the Magistrate is unacceptable. Such orders do not fulfill the legal standards set by Section 204 of the Criminal Procedure Code. Consequently, the court allowed the criminal petitions, setting aside the orders to issue summons and remitting the cases back to the Special Court for Economic Offences in Bangalore. The court directed the Special Court to proceed in accordance with Section 204 of the Criminal Procedure Code and ensure proper application of mind before further action. Additionally, the court ordered the records of both cases to be sent to the lower court promptly.
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1991 (1) TMI 462
The Supreme Court of India dismissed the appeal in the case. Citation: 1991 (1) TMI 462 - SC. Judges: Mr. M.N. Venkatachaliah and Mr. P.B. Sawant.
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1991 (1) TMI 461
Issues Involved:
1. Legality of the Special General Meeting convened on 15-6-1990.
2. Validity of the resolutions passed during the Special General Meeting.
3. Allegations of contempt of court and violation of court orders.
4. Jurisdiction and powers of the High Court to issue mandatory injunctions and restore status quo ante.
5. Role and conduct of the parties involved in the alleged contempt.
Issue-wise Detailed Analysis:
1. Legality of the Special General Meeting convened on 15-6-1990:
The plaintiffs sought a declaration that the notice dated 28-5-1990 convening the Special General Meeting of the Indian Olympic Association (IOA) on 15-6-1990 was illegal, null, and void. They also sought an injunction to restrain the defendants from conducting the meeting. The trial judge directed that the resolution be put to vote by secret ballot and that the meeting be presided over by the President of IOA, B.S. Adityan. Despite this, the meeting allegedly ended in chaos without any proper voting, and the court's order was not followed.
2. Validity of the resolutions passed during the Special General Meeting:
The plaintiffs contended that the resolutions passed during the meeting, including the no-confidence motion against the Executive Council and the election of a new President, were invalid due to the non-compliance with the court's order. The trial judge found that the resolution purportedly passed by V.C. Shukla as the President of IOA would be of no legal consequence and directed the restoration of the office premises to B.S. Adityan.
3. Allegations of contempt of court and violation of court orders:
The plaintiffs alleged that V.C. Shukla and his supporters violated the court's order by not allowing the voting by secret ballot and by creating disturbances during the meeting. The trial judge observed that there was no intimation or information about the court's order at the meeting, but found that the contention of lack of knowledge could not be accepted. The court's power to punish for contempt and to ensure compliance with its orders was emphasized.
4. Jurisdiction and powers of the High Court to issue mandatory injunctions and restore status quo ante:
The court discussed its inherent powers under Section 151 of the Code of Civil Procedure and Articles 215 and 225 of the Constitution of India to issue orders to meet the ends of justice and to prevent abuse of the process of the court. The court can grant mandatory injunctions to restore the status quo ante if the violation of its orders causes serious injury or if the defendant has shown a desire to evade the jurisdiction of the court.
5. Role and conduct of the parties involved in the alleged contempt:
The court examined the conduct of V.C. Shukla and his supporters during the meeting. The trial judge found that the plaintiffs were entitled to seek the prayer that the resolution passed by V.C. Shukla would be of no legal consequence. The court also considered the balance of convenience and the public interest in the administration of justice and sports.
Conclusion:
The appeal was allowed, and the case was remitted back to the trial court for fresh hearing and disposal in accordance with the law. Pending the disposal of the application, a retired judge of the Supreme Court was appointed to administer the IOA to ensure that the interests of sports and justice were protected. The trial court was directed to dispose of the sub-application as quickly as possible, preferably within two months.
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1991 (1) TMI 460
Issues Involved:
1. Maintainability of revision petitions under Section 115 of the Code of Civil Procedure (C.P.C.) as amended by the U.P. Amendment Act, 1978.
2. Whether a writ lies against a civil court's decision, particularly an appellate order passed by the District Court or an order passed by it in exercise of its revisionary power.
Detailed Analysis:
Issue 1: Maintainability of Revision Petitions under Section 115, C.P.C. as Amended by U.P. Amendment Act, 1978
Provision and Interpretation:
Section 115, C.P.C., as amended by U.P. Amendment Act No. XXXI of 1978, provides that the High Court may call for the record of any case decided by a subordinate court in original suits or other proceedings of the value of twenty thousand rupees and above, while the District Court may do so in other cases. The Full Bench in Jupiter Chit Fund (Pvt.) Ltd. v. Dwarka Diesh established two principles:
1. Revision lies only to the District Judge for orders made in suits valued at less than twenty thousand rupees, and no revision lies to the High Court against the District Judge's orders.
2. No revision lies to the High Court against an order made by the District Judge in an appeal if the suit is valued at less than twenty thousand rupees.
Supreme Court Affirmation:
These principles were affirmed by the Supreme Court in Vishesh Kumar v. Shanti Prasad and Sri Vishnu Awatar v. Shiv Awatar, which held that Section 115, as amended, assigns mutually exclusive jurisdiction to the High Court and District Court.
Conflict with Qamaruddin's Case:
In Qamaruddin v. Rasul Baksh, the Supreme Court, without noticing the U.P. Amendment, held that an order made under O. 39 R. 1 and 2 is appealable to the District Judge and amenable to the revisional jurisdiction of the High Court under Section 115. This led to confusion regarding the state of law in U.P.
Resolution by Larger Bench:
The larger Bench concluded that the decision in Qamaruddin's case does not accurately state the law because it did not consider the U.P. Amendment Act and earlier decisions affirming the Full Bench's ruling. Therefore, the Full Bench decision in Jupiter Chit Fund (Pvt) Ltd. v. Dwarka Diesh, as affirmed by the Supreme Court, remains the correct interpretation.
Issue 2: Whether a Writ Lies Against a Civil Court's Decision
Supreme Court's View in Qamaruddin's Case:
The Supreme Court in Qamaruddin's case opined that ordinarily, an interlocutory order passed in a civil suit is not amenable to the extraordinary jurisdiction of the High Court under Article 226 of the Constitution, especially when the aggrieved party has not exhausted remedies under the C.P.C.
Exceptions to the Rule:
The larger Bench acknowledged that while interlocutory orders are generally not subject to writ jurisdiction, exceptions exist where:
- The order impugned violates fundamental principles of law.
- The order causes substantial injustice to the aggrieved party.
In such cases, the High Court's extraordinary jurisdiction under Article 226 can be invoked within the ambit of well-established principles.
Mandamus to Private Individuals:
The Bench reiterated that a writ of mandamus cannot be issued to a private individual unless under a statutory duty to perform a public duty, aligning with the Supreme Court's view in Qamaruddin's case.
Conclusion:
Answer to Question 1:
In the negative. The decision in Qamaruddin's case does not overrule the Full Bench decision in Jupiter Chit Fund (Pvt) Ltd. v. Dwarka Diesh, which has been affirmed by the Supreme Court.
Answer to Question 2:
In the affirmative, but limited to situations where the impugned order violates fundamental principles of law and causes substantial injustice. The general principle that interlocutory orders are not amenable to writ jurisdiction does not preclude the issuance of writs in such exceptional cases.
Final Order:
The papers are to be laid before the learned single Judge with this opinion and answer.
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1991 (1) TMI 459
... ...
... ... ..... . Sahai, JJ. ORDER Appeal dismissed.
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1991 (1) TMI 458
Issues Involved:
1. Allegation of pollution of the Bokaro river by Tata Iron & Steel Co.
2. Compliance with the Water (Prevention and Control of Pollution) Act, 1974.
3. Petitioner's personal interest versus public interest.
4. Legitimacy of the petition under Article 32 of the Constitution.
Issue-wise Detailed Analysis:
1. Allegation of Pollution of the Bokaro River by Tata Iron & Steel Co.:
The petitioner alleged that Tata Iron & Steel Co. was discharging sludge/slurry from its washeries into the Bokaro river, causing pollution. The petitioner claimed that this discharge was adversely affecting the fertility of agricultural land and making the river water unfit for drinking and irrigation purposes. The respondents, including the State Pollution Control Board, denied these allegations, asserting that effective steps had been taken to prevent such pollution. The court found no prima facie evidence to support the petitioner's claims, noting that the State Pollution Control Board had monitored and regulated the effluent discharge effectively.
2. Compliance with the Water (Prevention and Control of Pollution) Act, 1974:
The petitioner argued that the discharge of slurry violated the provisions of the Water (Prevention and Control of Pollution) Act, 1974. The respondents countered that Tata Iron & Steel Co. had obtained the necessary sanctions from the State Pollution Control Board under Sections 25 and 26 of the Act. The Board had imposed conditions for the construction of settling tanks and regular monitoring of effluent quality. The court noted that the Board had taken steps to ensure compliance with the Act, including inspections and directives for desludging the tanks. The court found that the respondents had adhered to the Act's provisions.
3. Petitioner's Personal Interest versus Public Interest:
The court examined the petitioner's motives and found that the petition was not filed in public interest but rather for personal gain. The petitioner had a history of purchasing slurry from Tata Iron & Steel Co. and had sought more slurry, which the company refused. The petitioner had also faced criminal charges for unauthorized removal of slurry. The court concluded that the petitioner's primary purpose was to serve his business interests rather than address any genuine public concern.
4. Legitimacy of the Petition under Article 32 of the Constitution:
The court emphasized that Article 32 is designed for the enforcement of Fundamental Rights and should be used for genuine public interest litigation. The court cited precedents to highlight that public interest litigation should not be used to settle personal grievances. The court found that the petition was an abuse of the process, aimed at furthering the petitioner's personal interests under the guise of public interest. Consequently, the court dismissed the petition, noting that it did not serve any public interest.
Conclusion:
The court dismissed the petition, concluding that it was filed for the petitioner's personal interest rather than any genuine public concern. The court directed the petitioner to pay Rs. 5,000 as costs to the respondents. The judgment underscored the importance of ensuring that public interest litigation is not misused for personal gain, thereby protecting the integrity of the judicial process.
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1991 (1) TMI 457
Issues Involved:
1. Section 80(2) of the Code of Civil Procedure
2. Amendment of the plaint under Order 6, Rule 17 and Section 151 of the Code
3. Locus standi of the plaintiff and jurisdiction of the Court
4. Addition of new defendants
5. Validity of the sale and transfer of shares
6. Jurisdiction and applicability of foreign bankruptcy laws
Detailed Analysis:
1. Section 80(2) of the Code of Civil Procedure:
The plaintiff's application under Section 80(2) of the Code of Civil Procedure was dismissed. The court noted that no urgent or immediate relief was sought against the Central Government, and the application did not specify any grounds for the court to exercise discretion under subsection (2) of Section 80.
2. Amendment of the plaint under Order 6, Rule 17 and Section 151 of the Code:
The plaintiff sought to amend the plaint to add additional defendants and a new relief. The court allowed the plaintiff to amend the plaint to add additional facts if a separate application is filed and if the amendments fall within the purview of Order 6, Rule 17 of the Code. However, the court declined the request to add the new relief as it was too vague and not necessary for determining the real question in controversy.
3. Locus standi of the plaintiff and jurisdiction of the Court:
The defendant challenged the locus standi of the plaintiff and the jurisdiction of the court, arguing that the plaintiff had been declared bankrupt in England and was not a discharged insolvent. The court held that under Section 20 of the Code, it had territorial jurisdiction to try the suit as P.N.B. carried on business in Delhi. The court also noted that the plaintiff had not been declared insolvent by any court in India under the Provincial Insolvency Act.
4. Addition of new defendants:
The plaintiff sought to add six new defendants, including the Reserve Bank of India and the Union of India. The court declined the request to add these defendants, noting that no relief was sought against them regarding the settlement, and their addition would result in misjoinder of causes of action and parties. The court also noted that there was no cause of action against the other defendants sought to be added, as the entire transaction took place outside India.
5. Validity of the sale and transfer of shares:
The plaintiff contended that the sale and transfer of shares of Jokai Tea Holdings Limited were against public interest and banking policy. The court declined to add the new relief sought by the plaintiff, noting that the relief was too vague and not necessary for determining the real question in controversy. The court also noted that the transaction was a commercial one and did not involve questions of public interest or banking policy.
6. Jurisdiction and applicability of foreign bankruptcy laws:
The defendant argued that the court lacked jurisdiction as the plaintiff had been declared bankrupt in England and had submitted to the jurisdiction of English courts. The court held that under Section 20 of the Code, it had territorial jurisdiction to try the suit. The court also noted that any agreement restricting recourse to Indian courts would be void under Section 28 of the Contract Act. The court found that the plaintiff had not been declared insolvent by any court in India and that no rule of international law ousted its jurisdiction.
Conclusion:
All three applications (I.As. Nos. 5403 of 1990, 11264 of 1990, and 10685 of 1990) were dismissed. The court held that it had territorial jurisdiction to try the suit and declined to add new defendants or grant the new relief sought by the plaintiff. The court also noted that the plaintiff had not been declared insolvent by any court in India and that any agreement restricting recourse to Indian courts would be void.
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1991 (1) TMI 456
Issues Involved:
1. Whether the partnership was "a person carrying on a trade".
2. Whether the film "belonged" to the partnership.
3. Whether the partnership incurred expenditure in the purchase of the film.
4. Whether the transactions were trading transactions or primarily tax avoidance schemes.
5. Whether the plant "belonged" to Victory Partnership.
6. Whether Victory Partnership had "incurred" the expense of purchasing 100% of the plant.
Detailed Analysis:
1. Whether the partnership was "a person carrying on a trade"
The commissioners concluded that neither Victory Partnership nor Outland Productions was trading, primarily because the transactions were entered into with fiscal motives as their paramount object. The judge disagreed, stating that the commissioners were wrong in holding that transactions entered into "with fiscal motives as their paramount object" are not trading transactions. The judge emphasized that the relevant question is whether Victory Partnership entered into the arrangements as commercial transactions, not the taxpayer company's motives.
2. Whether the film "belonged" to the partnership
The judge held that the plant "belonged" to Victory Partnership. The Crown did not appeal against this decision, and the Court of Appeal found no reason to disagree with the judge's conclusion.
3. Whether the partnership incurred expenditure in the purchase of the film
The judge held that despite the non-recourse loan from L.P.I., Victory Partnership had "incurred" the expense of purchasing 100% of the plant. The Crown appealed against this decision, but the Court of Appeal chose not to express a concluded view on this point as it was not necessary for the decision.
4. Whether the transactions were trading transactions or primarily tax avoidance schemes
The commissioners found that the transactions were so molded by fiscal considerations that they ceased to be commercial. The judge criticized this approach, stating that the commissioners should have concentrated on the terms of the deal made between Victory Partnership and L.P.I. and whether the transactions were on commercial terms with a view to profit. The judge found that the commissioners had misdirected themselves and held that on the primary facts found by the commissioners, there was only one possible conclusion in law: that they were trading transactions.
5. Whether the plant "belonged" to Victory Partnership
The judge held that the plant "belonged" to Victory Partnership, and the Crown did not appeal against this decision. The Court of Appeal also found no reason to disagree with the judge's conclusion.
6. Whether Victory Partnership had "incurred" the expense of purchasing 100% of the plant
The judge held that Victory Partnership had "incurred" the expense of purchasing 100% of the plant, despite the non-recourse loan from L.P.I. The Crown appealed against this decision, but the Court of Appeal chose not to express a concluded view on this point as it was not necessary for the decision.
Conclusion:
The Court of Appeal allowed the appeal and remitted the case to the commissioners to reconsider their decision in light of the judgments. The Court provided guidance on how the commissioners should approach the case, emphasizing that the ultimate question is whether the transaction was a trading transaction, considering both commercial features and fiscal advantages. The Court also highlighted that the subjective intentions of the parties, particularly the Victory Partnership, are relevant and may be decisive in determining the purpose of the transaction.
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1991 (1) TMI 455
Issues Involved:
1. Whether the sum of Rs. 76 lakhs paid as dividend should be included in the capital computation as on January 1, 1963, under the Companies (Profits) Surtax Act, 1964.
2. Distinction between 'reserve' and 'provision' for the purpose of capital computation under the Surtax Act.
Detailed Analysis:
Issue 1: Inclusion of Rs. 76 Lakhs in Capital Computation
The primary question was whether the Rs. 76 lakhs paid as dividend for the year 1962, following the General Meeting on May 31, 1963, should be included in the capital computation as on January 1, 1963, under the rules of the Second Schedule to the Companies (Profits) Surtax Act, 1964. The appellant argued that the Rs. 90 lakhs transferred to the dividend reserve should be considered as a reserve entering into capital computation. The assessing authority excluded this sum, but the Appellate Assistant Commissioner (AAC) found it to be a reserve created from amounts not allowed as deduction for computing the profits of that year. The Tribunal, however, held that only Rs. 14 lakhs should be treated as a reserve, as Rs. 76 lakhs was appropriated for dividend payment. The High Court answered the question in the negative and against the assessee, affirming that Rs. 76 lakhs was a provision and not a reserve.
Issue 2: Distinction Between 'Reserve' and 'Provision'
The court examined the definitions and treatment of 'reserve' and 'provision' under the Surtax Act and the Companies Act. Section 4 of the Surtax Act imposes a tax on the chargeable profits of a company, with statutory deductions as specified. Rule 1 of the Second Schedule outlines the computation of a company's capital, excluding amounts credited to reserves that have been allowed as deductions in computing income.
The court found that the Rs. 76 lakhs earmarked for dividend payment by the Directors' recommendation on May 3, 1963, and approved by the shareholders on May 31, 1963, could not be considered a reserve as on January 1, 1963. The court emphasized that the nature and substance of the company's accounts preparation should determine whether an amount is a reserve or a provision. The court concluded that the Rs. 76 lakhs appropriated for dividend payment was a provision, as it was set aside to meet a known liability, and only the remaining Rs. 14 lakhs was a reserve.
Supporting Precedents:
1. Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53: This case distinguished between 'provision' and 'reserve,' stating that provisions are made against anticipatory losses and contingencies, whereas reserves are appropriations of profits retained as part of the capital employed in the business.
2. CIT v. Mysore Electrical Industries Ltd. [1971] 80 ITR 566: The court held that the determination of directors to appropriate accounts to reserves must be related to the beginning of the new accounting year and treated as effective from that date.
3. Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559 (SC): The court clarified that if a retention or appropriation of a sum is not a provision, it does not automatically become a reserve. The true nature and character of the sum must be determined based on several factors, including the intention and purpose of the retention or appropriation.
4. Hyco Products (P.) Ltd. v. CIT: The court approved the Bombay High Court's decision, which held that the appropriation of dividend related back to the relevant assessment year, and the amount set aside for dividend payment was a provision, not a reserve.
Conclusion:
The Supreme Court held that the Rs. 76 lakhs appropriated for dividend payment was a provision and could not be included in the capital computation as on January 1, 1963. Only the remaining Rs. 14 lakhs was considered a reserve. The Tribunal and the High Court correctly applied the law, and the appeal was dismissed with parties bearing their own costs.
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1991 (1) TMI 454
Issues Involved:
1. Specific Performance of Agreement to Mortgage
2. Consideration for the Agreement
3. Non-joinder of Necessary Parties
4. Transferability of Interest in a Co-operative Housing Society
Summary:
1. Specific Performance of Agreement to Mortgage:
The appellant-plaintiff, State Bank of India, sought specific performance of an agreement to mortgage executed by the respondent-defendant, the wife of the debtor, Vallabhdas L. Thakkar. The trial court dismissed the suit, holding that the agreement was without consideration and that the interest in the flat in a co-operative housing society was incapable of being transferred or mortgaged. The High Court reversed this decision, stating that an agreement to create a mortgage is specifically enforceable when the lender has advanced the money, as per Section 14(3)(a)(i) of the Specific Relief Act.
2. Consideration for the Agreement:
The trial court held that the agreement was without consideration. However, the High Court found that the advances made to the principal debtor (the husband) constituted sufficient consideration for the wife to offer the security. The court cited Section 127 of the Contract Act, which states that anything done for the benefit of the principal debtor is sufficient consideration for the surety. The court also noted that forbearance to sue the principal debtor constituted valid consideration.
3. Non-joinder of Necessary Parties:
The trial court held that the suit was bad for non-joinder of the principal debtor. The High Court disagreed, stating that the suit was for specific performance of the agreement to mortgage and no relief was claimed against the husband. Therefore, the husband was neither a necessary nor a proper party to the suit.
4. Transferability of Interest in a Co-operative Housing Society:
The trial court held that the flat in a co-operative housing society could not be mortgaged. The High Court reversed this, citing the Supreme Court's judgment in Ramesh Shah v. H.J. Joshi, which held that the right to occupy a flat in a co-operative housing society is transferable and can be mortgaged.
Conclusion:
The High Court quashed and reversed the trial court's judgment, decreeing the suit in favor of the appellant-plaintiff. The respondent-defendant was directed to execute and register the legal mortgage within six months, failing which an officer of the court would execute it on her behalf. The suit and appeal were allowed with costs.
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1991 (1) TMI 453
The High Court of Allahabad quashed an order by the Divisional Level Committee canceling an eligibility certificate granted to the petitioners, stating that the Committee did not have the authority to do so. The power to cancel eligibility certificates now rests with the Commissioner of Sales Tax. The impugned order was deemed to be without jurisdiction and was quashed. The Commissioner of Sales Tax may re-examine the matter if necessary.
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1991 (1) TMI 452
Issues:
1. Interpretation of Section 29-A of the Hindu Succession Act regarding daughters' rights in coparcenary property.
2. Effect of a preliminary decree on daughters' entitlement to share in joint family property post-amendment.
3. Determination of when a partition can be said to have been effected under the amended provision.
Analysis:
The judgment by the Supreme Court dealt with the interpretation of Section 29-A of the Hindu Succession Act, focusing on daughters' rights in coparcenary property. The case involved an appeal against the High Court's decision allowing unmarried daughters to claim a share in the joint family property following an amendment to the Act. The Appellant had filed a suit for partition, which was contested by the father and brother. The trial court passed a preliminary decree declaring one-third share for each party. The High Court upheld this decree but directed provision for maintenance and marriage expenses of unmarried sisters. Subsequently, the daughters claimed their share post-amendment, leading to rejection by the trial court and a successful revision petition in the High Court.
The central issue revolved around the effect of the preliminary decree on daughters' entitlement post-amendment. The Appellant argued that the High Court erred in directing the trial court to allot shares to the daughters due to the pre-existing decree. However, the Court analyzed Section 29-A, emphasizing the removal of distinctions between daughters and sons in coparcenary rights. It noted that the amendment aimed to rectify social injustices and promote gender equality. The Court examined the legislative intent behind Clause (iv) of Section 29-A, which exempted certain cases from daughters' entitlement based on pre-existing partitions or marriages.
The Court clarified that a partition under the amended provision must be complete with the division of property by metes and bounds to deprive daughters of their rights. It distinguished between a preliminary decree, which only determines shares subject to change, and a final decree effecting irreversible partition. Emphasizing the legislative objective to benefit women, the Court held that unless a partition is finalized, daughters cannot be denied their statutory entitlement. The judgment underscored the importance of preventing misuse of legal loopholes to undermine the amendment's purpose and deprive women of their rights.
In conclusion, the Supreme Court upheld the High Court's decision, affirming the daughters' entitlement to a share in the joint family property. The Court dismissed the appeal, emphasizing the need to interpret the law liberally to uphold the legislative intent of gender equality and social justice.
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1991 (1) TMI 451
... ...
... ... ..... ip Singh, JJ. ORDER Appeal dismissed.
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1991 (1) TMI 450
Issues Involved:
1. Refusal to register the transfer of shares
2. Validity of the pledge and transfer of shares
3. Compliance with Section 176 of the Indian Contract Act
4. Applicability of the Securities Contracts (Regulation) Act, 1956
5. Authority of the company's chairman to issue consent for share transfer
Issue-wise Detailed Analysis:
1. Refusal to Register the Transfer of Shares:
The appellant sought the registration of 16,440 shares transferred by respondents Nos. 2 to 4, which the company refused. The appellant argued that the company's prior consent, given through a letter dated April 28, 1986, waived its rights to reject the transfer. The company cited disputes between the transferee and the chairman, and among family members, as reasons for refusal. The board also claimed the transfer forms were blank when handed over and that the consideration mentioned was not received. The refusal was deemed prejudicial to the company's interest, labeling the transferee as undesirable.
2. Validity of the Pledge and Transfer of Shares:
The appellant advanced a loan to respondent No. 2, who deposited the shares as security. The appellant claimed the shares were sold to him upon default in repayment. The company argued that the shares were given merely as security and that the transfer forms were blank. The court held that the physical delivery of shares along with blank transfer forms constituted a valid pledge, and the appellant had the authority to fill in the blanks and complete the transfer.
3. Compliance with Section 176 of the Indian Contract Act:
The company contended that the appellant did not give notice of default as required under Section 176, making the sale void. The appellant countered that the respondents had signed the transfer forms, indicating their awareness. The court found that the signing of transfer forms indicated compliance with the notice requirement.
4. Applicability of the Securities Contracts (Regulation) Act, 1956:
The company argued that the sale violated Sections 13 and 18 of the Securities Contracts (Regulation) Act, as the shares were not delivered on the same day as the contract. The court noted that the Act primarily regulates stock exchange transactions and does not apply to shares of a company not listed on any stock exchange. It ruled that the transfer of pledged shares, completed by filling in blank transfer forms, did not violate the Act.
5. Authority of the Company's Chairman to Issue Consent for Share Transfer:
The company challenged the authority of Shri F.M. Pochkhanwala, the chairman, to issue the consent letter. The court found that the letter was issued on behalf of the company, and no evidence was provided to dispute its validity. The company had the opportunity to challenge the letter but failed to do so effectively.
Conclusion:
The court concluded that the board of directors acted on extraneous considerations and not in the company's interest when refusing the transfer. The transfer of shares was deemed valid, and the company was directed to register the transfer within ten days. The appeals were allowed, and no costs were ordered.
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1991 (1) TMI 449
Issues Involved
1. Whether the appellant's copyright of the work "Sharp" is infringed by the respondent's work "Sharp Tools" registered under the Copyright Act.
2. Whether the registration of the respondent's work "Sharp Tools" should be canceled due to alleged infringement.
Detailed Analysis
Issue 1: Infringement of Appellant's Copyright by Respondent's Work
Contentions of the Appellant:
- The appellant, a manufacturer of electrical goods, claimed that the respondent's copyright registration for "Sharp Tools" was a colorable imitation of their trademark "Sharp," which has been in use since 1959.
- The appellant argued that the manner of depiction of "Sharp Tools" infringes their copyright in the artistic work "Sharp."
- The appellant relied on several Supreme Court decisions to support their contention that even if the goods are not similar, there could still be an infringement of copyright.
Contentions of the Respondent:
- The respondent, a manufacturer of engineering goods, argued that their trade name "Sharp Tools" is distinct and does not infringe upon the appellant's trade name "Sharp."
- The respondent emphasized that "Sharp" is a common dictionary word and that their design of "Sharp Tools" is different from the appellant's design.
- The respondent cited various legal precedents to argue that their work does not constitute an infringement of the appellant's copyright.
Court's Analysis:
- The court referred to the definition of "artistic works" and "author" under the Copyright Act, 1957, and noted that copyright law is concerned with preventing the copying of physical material, not ideas.
- The court examined whether the respondent's work "Sharp Tools" was a copy, colorable imitation, or reproduction of the appellant's work "Sharp."
- The court applied the "lay observer test" and other judicial tests to determine if the visual appearance of the two works would lead an ordinary person to believe that the respondent's work was a reproduction of the appellant's work.
Court's Findings:
- The court found that the appellant's work "Sharp" and the respondent's work "Sharp Tools" were visually distinct. The appellant's work had a semi-circular design with rays, while the respondent's work was plainly written without any design.
- The court concluded that there was no similarity between the two works that would lead an ordinary person to believe that the respondent's work was a copy of the appellant's work.
- The court held that the respondent did not commit an act of piracy and that the Copyright Board's decision was correct and unassailable.
Issue 2: Cancellation of Respondent's Registration
Appellant's Argument:
- The appellant sought the cancellation of the respondent's copyright registration for "Sharp Tools," arguing that it was wrongly obtained and infringed their copyright.
Court's Analysis and Conclusion:
- The court examined the relevant provisions of the Copyright Act, 1957, including definitions and terms related to copyright, infringement, and registration.
- The court reiterated that there can be no copyright in a word or words, but only in the artistic manner in which they are written.
- The court found that the respondent's work "Sharp Tools" was not a copy or imitation of the appellant's work "Sharp" and thus did not infringe the appellant's copyright.
- Consequently, the court dismissed the appeal and upheld the Copyright Board's decision, stating that there was no ground for canceling the respondent's registration.
Conclusion
The High Court dismissed the appellant's appeal, holding that the respondent's work "Sharp Tools" did not infringe the appellant's copyright in the artistic work "Sharp." The court found that the two works were visually distinct and that the respondent's registration was valid. The appeal was dismissed with no order as to costs.
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1991 (1) TMI 448
The Supreme Court set aside the impugned order and allowed the appellants to file an application to the Tribunal challenging a notification. The Tribunal must decide within six months. The High Court's interim orders will continue until then. The appellants can appeal to the High Court if the Tribunal finds it has no jurisdiction. No costs were awarded. Stay order in writ petition vacated.
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1991 (1) TMI 447
Issues Involved:
1. Withdrawal of references.
2. Condonation of delay in filing references.
3. Applicability of the Limitation Act, 1963.
4. Maintainability of references.
Summary:
1. Withdrawal of References:
The applicant-company sought permission to withdraw references in 35 cases involving shares, which was allowed as the company agreed to transfer the shares in the name of the transferee. Thus, the present order covers only the remaining 24 references.
2. Condonation of Delay in Filing References:
All 24 references were filed beyond the two-month period stipulated u/s 22A(4) of the Securities Contracts (Regulation) Act, 1956. The applicant-company filed separate applications for condonation of delay in only nine cases. The applicant-company argued that the large volume of share transfer applications made it physically impossible to complete scrutiny and reach a decision within the stipulated time. They sought condonation of delay u/r 40 of the Company Law Board (Bench) Rules, 1975, and invoked the inherent powers of the Company Law Board u/r 41 to meet the ends of justice.
3. Applicability of the Limitation Act, 1963:
The applicant-company contended that the provisions of the Limitation Act, 1963, are applicable to the proceedings before the Company Law Board. They argued that the Securities Contracts (Regulation) Act does not specifically exclude the application of sections 4 to 24 of the Limitation Act. They cited various judicial precedents to support their argument that the Company Law Board should be treated as a court for the purposes of Section 5 of the Limitation Act, which permits condonation of delay.
4. Maintainability of References:
The respondents argued that the Company Law Board is not a court, and therefore, the provisions of the Limitation Act are not applicable. They contended that the statutory period of two months for forming an opinion by the board of directors is mandatory and cannot be extended. The respondents also pointed out that the applicant-company did not adequately explain the delay for each day and did not file an application for condonation while making the reference.
Judgment:
The Company Law Board held that the provisions of the Limitation Act, 1963, are applicable only to proceedings before a court and not to quasi-judicial tribunals or executive authorities. The Company Law Board is not a court, and the Securities Contracts (Regulation) Act does not empower it to extend the prescribed period of limitation or condone the delay. Consequently, the 24 references made by the applicant-company were dismissed as they were not filed within the prescribed period of two months and were therefore not maintainable.
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