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1992 (1) TMI 364
Issues:
1. Appointment of a single arbitrator by the civil court.
2. Delay in arbitration proceedings by the panel of 3 arbitrators.
3. Participation of the petitioner-State in the arbitration proceedings before the sole arbitrator.
4. Validity of the final award made by the sole arbitrator.
Analysis:
1. The respondent-contractor executed works based on an agreement with an arbitration clause involving a panel of 3 arbitrators. A dispute arose, leading to the respondent applying to the civil court for a single arbitrator appointment. The court, against the objections of the petitioner-State, removed the panel and appointed a retired Chief Engineer as the sole arbitrator. The High Court upheld this decision, leading to the petitioner challenging it further.
2. The parties' counsels argued over the delay caused by the panel of 3 arbitrators and the propriety of appointing a single arbitrator. The petitioner contended that a panel should have been appointed as per the agreement's provisions, with the specific incumbents mentioned. The court found it unnecessary to determine if the arbitrators had delayed unduly, deciding to entrust the arbitration matter to the mentioned incumbents instead.
3. The respondent raised an objection regarding the petitioner's participation in the arbitration proceedings before the sole arbitrator, highlighting a final award had been made. The petitioner explained that the objection was unfounded, as they had promptly filed a special leave petition due to the arbitrator's insistence on proceeding. The objection was rejected, and special leave was granted.
4. After closely examining the matter, the court directed the trial court to refer the dispute to the mentioned incumbents for arbitration, emphasizing cooperation for an expedited conclusion. The previous orders were set aside, rendering the award made by the sole arbitrator invalid. The appeal was allowed with no costs imposed, ensuring a fresh arbitration process with the designated officials.
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1992 (1) TMI 363
Issues:
1. Jurisdiction of the Court to entertain the petition for recording the petitioner's statement at Chandigarh.
2. Validity of the summons issued by the respondent-authorities.
3. Allegations of harassment, false implication, and torture against the petitioner.
4. Right of the petitioner to be represented by an Advocate during the recording of his statement.
5. Medical condition of the petitioner and the difficulty in undertaking a journey to Bombay.
Analysis:
1. Jurisdiction of the Court:
The petitioner sought an order to record his statement at Chandigarh, citing his permanent residency there. The respondent-authorities argued that the Court lacked jurisdiction as the investigation was ongoing in Bombay. The Court acknowledged the petitioner's residency and jurisdiction, emphasizing the need to prevent harassment and inconvenience to citizens. Ultimately, the Court ruled that as the petitioner was summoned from Chandigarh, it had the authority to intervene to protect the petitioner from unnecessary hardship.
2. Validity of Summons:
The petitioner contested the validity of the summons, claiming they were vague and issued with mala fide intentions to extract a confessional statement. The respondents asserted that the petitioner was named in statements related to gold smuggling and had a history of involvement in such activities. The Court noted the petitioner's medical condition and the impracticality of traveling to Bombay. It criticized the respondents for not arranging travel expenses or providing assurances. The Court found the summons unreasonable and directed the petitioner to be examined at Jalandhar, with the option to do so in Chandigarh for convenience.
3. Allegations of Harassment and False Implication:
The petitioner alleged harassment, false implication, and torture by the Directorate of Revenue Intelligence (DRI). The respondents denied the allegations, stating the petitioner had been involved in previous smuggling cases. The Court considered the petitioner's medical certificates and previous detention, expressing concern over potential harassment due to unreasonable summoning practices. It emphasized the need to protect citizens from undue hardship and directed the authorities to ensure the petitioner's well-being during the investigation.
4. Right to Legal Representation:
The petitioner requested the assistance of an Advocate during the recording of his statement, which the respondents opposed, citing lack of office in Chandigarh. The Court recognized the petitioner's right to legal representation and allowed the presence of an Advocate during the statement recording. However, the Advocate was instructed not to interfere with the process.
5. Medical Condition and Travel Difficulty:
The petitioner's medical condition, including cervical spine issues and hypertension, made traveling to Bombay challenging. The Court accepted the medical evidence and highlighted the petitioner's inability to undertake a long journey. It criticized the lack of consideration by the authorities for the petitioner's health and financial burden. The Court directed the authorities to bear the petitioner's travel expenses and accommodate his medical needs during the investigation.
In conclusion, the Court upheld the petitioner's request to have his statement recorded at a location convenient for him, ensuring legal representation and addressing concerns of harassment and inconvenience during the investigation process.
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1992 (1) TMI 362
Issues Involved:
1. Validity of the termination order.
2. Entitlement to regular appointment and salary in the regular pay scale.
3. Determination of whether the respondent Council is an instrumentality of the State under Article 12 of the Constitution.
4. Maintainability of the writ petition.
Issue-wise Detailed Analysis:
1. Validity of the Termination Order:
The petitioner argued that his termination was unjustified as he was initially appointed following a regular selection process and was promised a regular appointment. He contended that he was forced to resign earlier with the assurance of future absorption, and upon reappointment, he was not issued a formal appointment letter and was paid daily wages instead of a regular salary. The petitioner claimed that his services were verbally terminated without proper procedure, which he challenged as a violation of his rights.
2. Entitlement to Regular Appointment and Salary in the Regular Pay Scale:
The petitioner asserted that he had a legitimate expectation of being appointed on a permanent basis and receiving a regular pay scale after being selected by a duly constituted selection committee. He highlighted the discriminatory treatment by pointing out that another individual, who was appointed later, was given a regular pay scale while he was not. This, he argued, violated his fundamental rights under Articles 14 and 16 of the Constitution.
3. Determination of Whether the Respondent Council is an Instrumentality of the State under Article 12 of the Constitution:
The respondents contended that the Council, being a registered company, was neither a State entity nor an instrumentality of the State. They argued that the Council was not created by the Government and did not perform any sovereign or public functions. They emphasized that the Council's activities were not controlled by the Government, and the financial assistance from the Government was not the sole source of its funding. The Court examined the Council's Memorandum and Articles of Association, noting the limited control exercised by the Government, which was primarily to ensure proper utilization of funds. The Court concluded that the Council did not meet the criteria established by the Supreme Court for being considered an instrumentality of the State.
4. Maintainability of the Writ Petition:
The respondents raised a preliminary objection regarding the maintainability of the writ petition, arguing that the Council was not a State or an instrumentality of the State, and therefore, no writ could be issued for the petitioner's re-employment or enforcement of fundamental rights. The Court agreed with this objection, noting that the Council's creation, functioning, and control did not qualify it as an "other authority" under Article 12 of the Constitution. Consequently, the Court dismissed the writ petition on this ground without addressing the merits of the petitioner's claims.
Conclusion:
The Court upheld the preliminary objection raised by the respondents, concluding that the respondent Council was not an instrumentality of the State under Article 12 of the Constitution. Therefore, the writ petition was dismissed, and the petitioner's claims regarding the validity of his termination, entitlement to regular appointment, and salary were not adjudicated on their merits.
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1992 (1) TMI 361
Issues Involved:
1. Motive for the murder.
2. Ocular testimony.
3. Medical evidence.
4. Plea of alibi.
5. Legal principles regarding appeals against acquittal.
Detailed Analysis:
1. Motive for the Murder:
The appellants had a strong motive to kill the deceased Saroj, who had testified against them in a kidnapping and rape case. Saroj had initially lodged a false report under duress but later revealed the truth. The High Court found that the appellants had a motive to prevent Saroj from testifying further, as her testimony was crucial in the ongoing trial against them.
2. Ocular Testimony:
The prosecution relied heavily on the testimony of PWs 5 and 6, the parents of the deceased, who were present during the incident. Both witnesses identified the appellants as the assailants. The High Court found their testimony credible despite the defense's argument that they were interested parties. The Court noted that the incident occurred inside the house at night, making it unlikely for independent witnesses to be present. The spontaneous declaration by PW-6 to PWs 1 and 2 immediately after the incident was considered res gestae and was admitted as evidence.
3. Medical Evidence:
The medical evidence corroborated the ocular testimony. PW-17, who conducted the autopsy, found a gunshot wound on Saroj's chest, consistent with the account given by PWs 5 and 6. The ballistic expert, PW-19, confirmed that the holes in Saroj's clothing were gunshot holes, indicating that the shot was fired from close range.
4. Plea of Alibi:
The defense argued that the appellants were in Bhopal at the time of the incident, supported by testimonies from DW-1, an advocate, and DW-3, the proprietor of a lodge. However, the High Court found these testimonies unreliable and rejected the plea of alibi. The Court noted that the defense's claim of political rivalry and false implication was not substantiated by evidence.
5. Legal Principles Regarding Appeals Against Acquittal:
The appeal was filed under Section 379 of the CrPC and Section 2(a) of the Supreme Court (Enlargement of Criminal Appellate Jurisdiction) Act of 1970. The Supreme Court reiterated that it has the jurisdiction to interfere in cases where the High Court has reversed an acquittal. The Court emphasized that it would not interfere with an acquittal merely because it could take a different view. However, if the Trial Court's view is not reasonably sustainable, the Appellate Court can interfere. The Supreme Court found that the High Court's judgment did not suffer from any illegality or manifest error and affirmed the conviction.
Conclusion:
The Supreme Court affirmed the High Court's judgment, finding that the prosecution had satisfactorily proved the guilt of the appellants beyond any shadow of doubt. The appeal was dismissed, and the High Court's conviction and life imprisonment sentences were upheld.
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1992 (1) TMI 360
Issues:
1. Quashing of complaints under Section 138 of the Negotiable Instruments Act, 1881.
2. Dispute regarding the date of issuance of post-dated cheques.
3. Interpretation of Section 138 of the Act regarding the presentation timeframe.
4. Analysis of conflicting judgments from different High Courts.
Analysis:
1. The judgment addresses the quashing of complaints under Section 138 of the Negotiable Instruments Act, 1881, brought by the respondent against the petitioner. The petitioner sought to quash the complaints and the summoning order issued by the Judicial Magistrate, I Class, Karnal. The disputes arose from post-dated cheques issued as part of a compromise agreement between the parties.
2. A crucial issue in the case was the dispute over the date of issuance of the post-dated cheques. The petitioner claimed the cheques were issued on March 12, 1990, while the respondent asserted they were issued on March 5, 1990. The compromise deed stipulated the issuance of post-dated cheques simultaneously with the transfer of shares, regardless of the exact date of issuance.
3. The judgment delves into the interpretation of Section 138 of the Act concerning the presentation timeframe of cheques. The court emphasized that the cheque must be presented within six months from the date it is drawn, regardless of the date written on the cheque. The legislative intent behind this provision was highlighted, emphasizing strict construction of the penal provision and the need to fulfill all conditions for the offense to be committed.
4. The judgment references conflicting views from different High Courts on the issue of post-dated cheques and their treatment under Section 138 of the Act. While the Madras High Court emphasized that such cheques fall outside the purview of Section 138 if presented after six months, the Kerala High Court took a different stance, considering post-dated cheques as drawn on the date they bear. The judgment aligns with the Madras High Court's interpretation, emphasizing the date of making a cheque and the presumption under Section 118 regarding the date it carries.
5. Ultimately, the court concluded that since the disputed cheques were presented to the bank after six months from the date of making, no criminal offense under Section 138 of the Act was established. Consequently, the court accepted the criminal miscellaneous petitions, quashing the complaints and summoning orders issued against the petitioner.
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1992 (1) TMI 359
Issues:
- Dispute over ownership of land purchased through sale deeds.
- Applicability of Benami Transactions (Prohibition) Act, 1988.
- Interpretation of Section 4 of the Benami Act.
- Effect of legislative changes on pending appeals.
Analysis:
1. The plaintiff filed a suit claiming sole ownership of land purchased through sale deeds, alleging the defendants were benamidars. The trial court dismissed the suit, but the first appellate court decreed it in favor of the plaintiff. The High Court upheld the decree, leading the defendants to file a special leave petition before the Supreme Court challenging the judgment.
2. During the pendency of the special leave petition, the Benami Transactions (Prohibition) Act, 1988 came into force. The defendants sought to raise additional grounds based on this Act. The Supreme Court deemed the application to raise additional grounds allowed and permitted the defendants to argue based on the Benami Act.
3. The defendants contended that the suit was not maintainable under Section 49 of the U.P. Consolidation of Holdings Act, as the plaintiff did not raise the benami issue during consolidation proceedings. The Supreme Court held that the defendants could not raise this objection as it was not part of the pleadings.
4. The crucial issue was the interpretation of the Benami Act. The Court referred to a previous case and noted that the Act's provisions were prospective, applying to future suits. The Act prohibited suits or claims related to benami properties, and the Court held that the plaintiff could not obtain a decree under the Act.
5. The Court rejected the plaintiff's argument that the Act's provisions were not applicable as no appeal was pending when the Act came into force. The Court clarified that the special leave petition was a continuation of the appeal process, and since the defendants had challenged the High Court's judgment, the Act applied, leading to the dismissal of the suit.
6. Consequently, the Supreme Court allowed the appeal, set aside the High Court's judgment, and dismissed the suit due to the legislative changes during the appeal. No costs were awarded due to the circumstances of the case.
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1992 (1) TMI 358
Issues Involved:
1. Alleged wrong availment of exemption under Notification No. 175/86-CE.
2. Whether Noticee No. 1, 2, and 3 are separate entities or dummy units.
3. Applicability of extended period of limitation due to alleged suppression of facts.
Detailed Analysis:
1. Alleged Wrong Availment of Exemption:
The primary issue revolves around the alleged wrongful availment of exemption under Notification No. 175/86-CE dated 1.3.1986 by Noticee No. 1, 2, and 3. It was alleged that these three units were essentially one and the same entity, and the total value of their products, when clubbed together, disqualified them from the exemption. The case argued that Noticee No. 2 and 3 were dummies created by Noticee No. 1, orchestrated by Shri Ashok Agrawal (Noticee No. 4), to avoid central excise duty.
2. Whether Noticee No. 1, 2, and 3 are Separate Entities or Dummy Units:
Upon examining the evidence, it was found that Noticee No. 1, 2, and 3 are independent entities. Each unit was registered with the District Industries Centre, Hoshangabad, as a Small Scale Industry and was separately assessed for Income Tax, Sales Tax, and Central Sales Tax. They were also allotted raw material quotas by the M.P. Laghu Udyog Nigam and filed separate declarations and returns with the Central Excise Department. There was no substantial documentary evidence, continuous conduct, or irrefutable statements to conclude that these units were not distinct but merely created to circumvent the law.
3. Applicability of Extended Period of Limitation:
The judgment highlighted that there was no proof that Noticee No. 2 and 3 were dummy concerns or camouflaged for Noticee No. 1. The units possessed the necessary machinery for manufacturing coolers and functioned independently. Previous inspections by Central Excise Officers in 1988 and 1989 confirmed the independent existence and manufacturing activities of these units. The panchnama drawn on 26.6.1989, which was not relied upon in the show cause notice, indicated that Noticee No. 1 had the necessary machinery for manufacturing coolers.
The judgment referenced several case laws, such as the Appellate Tribunal's ruling in the case of AROMA Apparels, Bombay, and Jagjivan Das & Co., Thane, which supported the notion that mere suspicion or circumstantial evidence like common premises, telephone, or brand name usage does not conclusively establish that one unit is a dummy for another.
Conclusion:
The judgment concluded that Noticee No. 1, 2, and 3 are separate and independent entities, and their clearances cannot be clubbed for charging Central Excise Duty. The charge that Noticee No. 2 and 3 are dummy concerns of Noticee No. 1 failed. It was also established that the manufacturing activities of these units were known to the Central Excise Department, and there was no suppression of facts. Therefore, the extended period of limitation was not applicable, and the demand for duty was time-barred.
Order:
The show cause notice bearing F. No. V (CH. 48) 15-1/90/Adj. I dated 1.6.1990 was set aside, affirming that Noticee No. 1, 2, and 3 are separate and independent entities, and the clearances of their products cannot be clubbed for charging Central Excise Duty.
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1992 (1) TMI 357
... ...
... ... ..... R Appeal dismissed.
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1992 (1) TMI 356
Issues:
Partition of the plaint B schedule property, Property ownership dispute, Remand order justification
Analysis:
Issue 1: Partition of the plaint B schedule property
The suit involved a partition of the B schedule property. The plaintiffs claimed joint possession and enjoyment of the property with the defendants. The dispute arose when certain defendants allegedly sold timber trees without consent, leading to a petition and subsequent attempts to cut and sell trees. The trial court initially held that there was no evidence to show the 13th defendant held the property on behalf of the tarwad, thus ruling out partition. However, the appellate court set aside this finding and remanded the matter for fresh disposal, allowing the parties to amend the plaint.
Issue 2: Property ownership dispute
The core contention revolved around whether the property in question belonged to the tarwad of the plaintiffs and defendants or if the leasehold right obtained by certain defendants was valid. The trial court concluded that there was insufficient evidence to support the claim that the property belonged to the tarwad. The appellate court, however, noted that while the plaint did not specifically state the property as tarwad, the basis of the suit implied it. The supporting defendants explicitly mentioned the property as belonging to the Marumakkathaya family. The court emphasized that all parties had led evidence on this issue, and a specific issue on the property's nature was framed. The appellate court found no justification for the remand, citing Supreme Court precedents on the importance of parties fully presenting their cases during trial.
Issue 3: Remand order justification
The appellate court's decision to remand the case was challenged on the grounds that the trial court had already considered the evidence and framed relevant issues. The higher court criticized the remand order, stating that the lower appellate court failed to provide a decision on the merits of the case. It directed the lower appellate court to adjudicate on the case's substance without the need for further amendments to the plaint. The judgment highlighted the duty of the first appellate court to reach conclusions based on the evidence presented during the trial and emphasized that a remand should not be ordered merely due to perceived inadequacies in evidence presentation.
In conclusion, the judgment allowed the appeal, set aside the remand order, and directed the lower appellate court to decide the case on its merits. The parties were instructed to bear their respective costs, and a date for appearance before the lower court was specified. The judgment underscored the importance of fully presenting evidence during trial and the duty of the appellate court to render decisions based on the available evidence.
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1992 (1) TMI 355
Issues Involved:
1. Applicability of Section 43B to sales-tax liability.
2. Applicability of Section 43B to provident fund and ESI contributions.
3. Disallowance of expenses on presentation of articles.
Issue-wise Detailed Analysis:
1. Applicability of Section 43B to Sales-tax Liability:
The appellant company, engaged in the manufacture and sale of fluorescent tubes and lamps and sale of industrial gases, faced scrutiny regarding a sum of Rs. 29.95 lakhs payable as sales-tax, provident fund, and ESI contributions. The Assessing Officer (AO) did not invoke Section 43B for the outstanding sales-tax liability of Rs. 26,84,153 but did for provident fund and ESI contributions, adding Rs. 3,11,638 to the income. Upon appeal, the CIT(A) issued a show-cause notice proposing to enhance the income by disallowing the sales-tax amount under Section 43B, ultimately enhancing the income by Rs. 25,43,152.
The appellant argued that the sales-tax amount was collected in a fiduciary capacity and not claimed as a deduction in the profit and loss account, thus Section 43B should not apply. However, the CIT(A) rejected this, holding that the sales-tax collected formed part of the trading receipt and since it was unpaid at the close of the year, the deduction was not permissible.
The Tribunal upheld the CIT(A)'s decision, referencing Supreme Court rulings in *Chowringhee Sales Bureau (P.) Ltd. v. CIT* and *Sinclair Murray & Co. (P.) Ltd. v. CIT*, which held that sales-tax collections are trading receipts. The Tribunal also noted that the entries in the books of account do not determine the true nature of the receipt, citing *Sutlej Cotton Mills Ltd. v. CIT* and *CIT v. British Paints India Ltd.*. Thus, the sales-tax collections were deemed trading receipts, and Section 43B was applicable, disallowing the unpaid amount as a deduction.
2. Applicability of Section 43B to Provident Fund and ESI Contributions:
For the provident fund and ESI contributions, the CIT(A) partially accepted the appellant's contentions, disallowing only the employer's contribution of Rs. 1,70,634 under Section 43B. The Tribunal noted that Explanation 2 to Section 43B, which defines "any sum payable," applies only to clause (a) and not to clause (b) concerning employer contributions to provident funds. Citing *Srikakollu Subba Rao & Co. v. Union of India*, the Tribunal held that since the unpaid contributions had not become due under the statute by the end of the previous year and were paid within the permissible time, Section 43B could not be invoked. Consequently, the addition of Rs. 1,70,634 was deleted.
3. Disallowance of Expenses on Presentation of Articles:
The AO disallowed Rs. 59,359 for presentation articles under Rule 6B, which the CIT(A) partially upheld, allowing only Rs. 20,000 due to lack of verification. The Tribunal confirmed the disallowance, citing the absence of evidence to support that the expenditure was incurred for business purposes.
Conclusion:
The Tribunal upheld the CIT(A)'s enhancement of income by Rs. 25,43,152 under Section 43B for unpaid sales-tax but deleted the addition of Rs. 1,70,634 for provident fund contributions. The disallowance of Rs. 39,359 for presentation articles was also confirmed due to insufficient evidence.
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1992 (1) TMI 354
Issues Involved:
1. Whether the judgment of the Full Bench in R. Tamilarasan v. Director of Handlooms and Textiles can be characterized as per incuriam or obiter dicta.
2. The binding nature of Full Bench decisions on Division Benches and single Judges.
3. The principles of precedents and exceptions to the rule of precedents.
4. The concept and application of per incuriam.
5. The concept and application of obiter dicta.
Summary:
I. Binding Nature of Full Bench Decisions:
The judgment emphasizes that Full Benches are constituted to decide specific questions and their decisions are binding on single Judges and Division Benches until reversed by a higher court. This principle ensures judicial consistency and avoids confusion in subordinate courts.
II. Principles of Precedents:
The judgment reiterates that judicial decorum and legal propriety require that Division Benches should not overrule decisions of other Division Benches or Full Benches. Instead, they should refer the matter to a larger Bench if they disagree. This is crucial for maintaining certainty and consistency in the law.
III. Per Incuriam:
A judgment is considered per incuriam if it is rendered in ignorance of a binding authority or a statute/rule having the force of law. The judgment clarifies that a decision is not per incuriam merely because it is based on a wrong understanding of the law or a binding precedent, or because the reasoning is considered wrong by a subsequent Bench.
IV. Obiter Dicta:
The term "obiter dicta" refers to statements made by a judge that are not essential to the decision and therefore not binding as precedent. The judgment explains that the binding part of a decision is the ratio decidendi, which is the principle or reason underlying the decision.
V. Analysis of Tamilarasan's Case:
The Full Bench in Tamilarasan considered whether a writ petition would lie against a Co-operative Society under Article 226 of the Constitution. The judgment concluded that a Co-operative Society is not a statutory body and therefore not amenable to writ jurisdiction. This conclusion was based on the principle that a society governed by statutory provisions is not created by a statute.
VI. Critique of Division Bench in A. Natarajan:
The Division Bench in A. Natarajan wrongly characterized the Full Bench decision in Tamilarasan as per incuriam and obiter dicta. The Division Bench failed to recognize that the Full Bench had considered the relevant statutory provisions and had not acted in ignorance of any binding authority. The Division Bench should have referred the matter to a larger Bench instead of overruling the Full Bench decision.
Conclusion:
The High Court concluded that the judgment of the Full Bench in Tamilarasan v. Director of Handlooms and Textiles is neither per incuriam nor obiter dicta. It is a valid precedent binding on Division Benches, single Judges, and subordinate courts. The Division Bench in A. Natarajan erred in its characterization of the Full Bench decision and should have followed the proper procedure of referring the matter to a larger Bench.
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1992 (1) TMI 353
Issues Involved:
1. Availability of remedy under Section 29 of the State Financial Corporations Act to Karnataka State Financial Corporation (KSFC).
2. Right of the official liquidator to realize workmen's dues under Sections 529 and 529A of the Companies Act.
3. Validity of KSFC's possession and sale of the company's assets post winding-up petition.
4. Enforcement of security by KSFC amidst multiple secured creditors.
5. Maintainability of the application under Section 446 read with Section 537 of the Companies Act without debt determination.
Issue-wise Detailed Analysis:
1. Availability of Remedy under Section 29 of the State Financial Corporations Act to KSFC:
The court examined whether KSFC could invoke Section 29 of the State Financial Corporations Act after the company entered liquidation. It was determined that a company does not cease to be an industrial concern under the State Financial Corporations Act merely because it is in liquidation. The court noted that KSFC had taken possession of the company's assets before the winding-up order, which was undisputed. Therefore, KSFC retained the right to enforce its security under Section 29.
2. Right of the Official Liquidator to Realize Workmen's Dues under Sections 529 and 529A of the Companies Act:
The court discussed the amendments to Sections 529 and 529A, which introduced a pari passu charge on secured creditors' securities for workmen's dues. The liquidator is entitled to enforce this charge. However, the court clarified that these provisions do not prevent a secured creditor from standing outside the winding-up process to realize their security, provided they account for workmen's dues. KSFC's undertaking to pay workmen's dues allowed it to proceed with the sale of assets.
3. Validity of KSFC's Possession and Sale of the Company's Assets Post Winding-up Petition:
The court acknowledged that KSFC had taken possession of the company's assets before the winding-up order. Under Section 537 of the Companies Act, any attachment or sale without court leave post-winding-up petition is void. However, since KSFC had possession before the winding-up order and was allowed to proceed with the sale by the company court, the sale was deemed valid.
4. Enforcement of Security by KSFC Amidst Multiple Secured Creditors:
The court addressed the concern that KSFC, as one of the multiple secured creditors, could not enforce its security independently. It was established that a secured creditor could stand outside the winding-up process to realize their security, even if there are other secured creditors. The court found no violation of Section 531 of the Companies Act by KSFC acting alone, as it had taken possession lawfully and agreed to pay workmen's dues.
5. Maintainability of the Application under Section 446 read with Section 537 of the Companies Act without Debt Determination:
The court examined the maintainability of KSFC's application under Sections 446 and 537. It concluded that the company court has broad jurisdiction under Section 446(2)(b) to entertain claims for and against the company, including those by secured creditors. The determination of debts was not a prerequisite for the application's maintainability, as the court's jurisdiction encompasses a wide range of matters concerning the company in liquidation.
Conclusion:
The court dismissed the appeal, affirming the company court's order allowing KSFC to stand outside the winding-up proceedings and sell the company's assets under Section 29 of the State Financial Corporations Act, subject to the payment of workmen's dues. This decision was found to be in accordance with the amended Sections 529 and 529A of the Companies Act and relevant provisions of the State Financial Corporations Act. The appeal was dismissed without costs.
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1992 (1) TMI 351
Issues:
1. Challenge to levy of Central Sales Tax on certain transactions.
2. Applicability of remedy of direct appeal to the Sales Tax Appellate Tribunal.
3. Impleading various States regarding the refund of taxes paid under local sales tax enactments.
4. Pending assessment orders for six assessment years.
Analysis:
1. The petitioner company challenged the levy of Central Sales Tax on specific transactions following an order by the Deputy Commissioner of Sales Tax. The petitioner approached the Supreme Court after a notice was issued by the Deputy Commissioner. The Court allowed an amendment to the writ petition to challenge the Deputy Commissioner's order. However, the Court suggested that the petitioner should file a direct appeal to the Sales Tax Appellate Tribunal as the primary issue hinges on factual considerations, especially since there was already a stay order preventing tax collection. The Court adjourned the writ petition for six months and directed the petitioner to file an appeal to the Tribunal within a month, emphasizing the need for expeditious disposal of the appeal.
2. The petitioner involved various States, claiming that if the Central Sales tax levy is upheld, taxes paid under local sales tax enactments should be refunded. The Court issued notices to the concerned States. The State of Kerala argued that the petitioner cannot seek relief against assessment orders in other States unless those orders are challenged and set aside. The petitioner's counsel contended that there are precedents allowing claims for refunds if transactions are deemed inter-State sales. The Court refrained from expressing an opinion on this matter, leaving it to the petitioner to decide whether to challenge assessment orders immediately or after the Tribunal's decision.
3. The petitioner highlighted six assessment years from 1978-79 to 1983-84 in the writ petition. The Deputy Commissioner had revised orders for three years, while assessment orders were pending for the remaining three years. The Court permitted the petitioner to file appeals for the pending years within a month, with applications for condonation of delay. These appeals were to be kept pending until the Tribunal decided on the first three years' appeals. The first appellate authority was directed to dispose of the pending appeals within one month of the Tribunal's decision.
4. The Court adjourned the writ petition for six months, scheduling it for the 3rd week of July 1992.
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1992 (1) TMI 350
The Supreme Court judgment involved two appeals for permanent injunction related to possession of agricultural land. The High Court reversed the Trial Court's decision based on evidence of surrender of possession. The appeals were dismissed, with no costs awarded.
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1992 (1) TMI 349
The Supreme Court of India granted special leave in a case where a child died after falling into an uncovered sewerage tank in Madras. The High Court dismissed the writ petition seeking compensation, citing difficulty in determining negligence. The Supreme Court directed the State of Tamil Nadu to pay the appellant Rs. 50,000 with 12% interest from January 1, 1990, within six weeks. The State can recover the amount from responsible parties through legal proceedings. The appeal was allowed with no costs.
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1992 (1) TMI 348
Issues involved:
The appeal challenges the constitutionality of Rule 5 of the Orissa Insurance Co-operative Society Ltd. Service Rules, impugning it as void under Article 14 of the Constitution of India.
Details of the Judgment:
Issue 1: Constitutionality of Rule 5
The appellant's service was terminated under Rule 5 without conducting an inquiry or giving an opportunity, based on charges that were subsequently dropped. The appellant argued that Rule 5 is ultra vires of Article 14. The respondent contended that Rule 5 provides guidelines for termination, with objective consideration by the Board of Directors. The Court held that Rule 5 is not arbitrary or void, as it allows for a policy decision based on the need for the employee's service.
Issue 2: Termination of Service
The Board of Management did not abolish the appellant's post but terminated his service due to loss of confidence. The Court found the termination illegal as Rule 8 for misconduct was available but not utilized. The Court directed the respondent to pay compensation of Rs. 1,00,000 to the appellant instead of reinstatement, considering the circumstances since 1973.
Conclusion:
The Court allowed the appeal, directing the respondent to pay compensation to the appellant. It emphasized the need for the respondent to revise its rules in line with constitutional principles. The intervention application was dismissed, and the appeal was allowed without costs.
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1992 (1) TMI 347
The Allahabad High Court ruled that trucks carrying goods cannot be detained or security insisted upon for their release. The petitioner can unload the goods at Mohan Nagar Check Post Godown without providing security for the trucks. The order does not cover the release of the goods themselves.
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1992 (1) TMI 346
Issues Involved:
1. Whether the activities of the detenu were prejudicial to the maintenance of "public order" or merely to "law and order."
2. Whether the detention order exceeding three months was valid under the proviso to Section 3(2) of the Maharashtra Prevention of Dangerous Activities of Slumlords, Bootleggers, and Drug Offenders Act, 1981.
Issue-Wise Detailed Analysis:
1. Public Order vs. Law and Order:
The appellant argued that the detenu's activities were prejudicial only to the maintenance of "law and order" and not to "public order." The Court noted the distinction between "public order" and "law and order," citing various precedents. It emphasized that the degree and extent of the reach of the act upon society determine whether an act affects "public order" or "law and order." The Court referred to several judgments, including *Ram Manohar Lohia v. State of Bihar*, *Arun Ghosh v. State of West Bengal*, and *Kanu Biswas v. State of West Bengal*, to illustrate the difference between the two concepts.
The Court found that the detenu's activities, such as attempting to run over police personnel, causing injury to a pedestrian, and creating a fear psychosis among witnesses, were not merely "bootlegging" but had a broader impact on public tranquility and the even tempo of society. The activities created a feeling of insecurity among the general public and law enforcement agencies, thereby disturbing "public order." The Court concluded that the detenu's actions fell within the scope of the deeming provision of Section 2(a) of the Act, which defines activities prejudicial to the maintenance of "public order."
2. Validity of Detention Order Exceeding Three Months:
The appellant argued that the detention order was invalid because it exceeded three months, contrary to the proviso to Section 3(2) of the Act. The Court clarified that Section 3(1) allows the State Government to make an order of detention if it is satisfied that it is necessary to prevent a person from acting in a manner prejudicial to the maintenance of "public order." Section 3(2) deals with the delegation of powers by the State Government to the District Magistrate or the Commissioner of Police, specifying that the period of delegation should not exceed three months in the first instance.
The Court explained that the proviso to Section 3(2) pertains to the period of delegation of powers and not to the period of detention of the detenu. The maximum period of detention is prescribed under Section 13 of the Act, which allows detention for a period confirmed under Section 12. Therefore, the Court found the argument regarding the invalidity of the detention order due to its duration to be without merit.
Conclusion:
The Court dismissed the appeal and the writ petition, affirming the validity of the detention order. It held that the detenu's activities were prejudicial to the maintenance of "public order" and that the detention order did not suffer from any infirmity regarding its duration. The judgments of the Division Bench of the Bombay High Court were upheld.
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1992 (1) TMI 345
Issues:
1. Interpretation of provisions of section 36(2) of the Income-tax Act, 1961 regarding allowance of bad debts.
2. Determination of whether debiting of 'profit and loss account' and crediting 'provisions for doubtful debts account' amounts to writing off the debts as irrecoverable.
Detailed Analysis:
Issue 1:
The Tribunal referred two questions of law regarding the allowance of bad debts under section 36(2) of the Income-tax Act, 1961. The assessee, a company, claimed bad debts of a specific amount in its profit and loss account, which was not allowed by the Income-tax Officer initially. The Commissioner (Appeals) also upheld the disallowance, stating that the conditions of section 36(2) were not satisfied. However, the Tribunal observed that as per accounting principles, writing off denotes charging the amount in the profit and loss account, and if this principle was applied, the assessee had indeed written off the debts. The Tribunal allowed the claim based on this reasoning, citing relevant case law and judgments.
Issue 2:
The crux of the issue is whether debiting the 'profit and loss account' and crediting 'provisions for doubtful debts account' constitutes writing off bad debts as irrecoverable. The revenue contended that actual writing off in the books of account is necessary to claim the benefit of section 36(2). On the other hand, the respondent argued that by debiting the profit and loss account, the assessee had indicated the bad debt as irrecoverable, thereby complying with the section. The respondent emphasized that the amount no longer formed part of the asset and had been treated as a provision for bad and doubtful debt. The Court held that the Tribunal's view aligned with accounting practices and declined to interfere, ultimately ruling in favor of the assessee on both questions.
In conclusion, the High Court of Calcutta upheld the Tribunal's decision, emphasizing the importance of complying with the terms and conditions of section 36 for claiming deductions on bad and irrecoverable debts. The judgment highlighted the significance of accounting practices in determining the writing off of bad debts and affirmed the Tribunal's reasonable interpretation of the matter.
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1992 (1) TMI 344
Issues:
1. Challenge to assessment proceedings based on limitation under Section 21 of the U.P. Sales Tax Act.
2. Dispute regarding the calculation of the period for re-assessment from the date of receipt of remand order.
3. Disagreement on the factual aspects of the case between the petitioner and the respondents.
4. Jurisdiction of the High Court to interfere in assessment proceedings based on limitation.
Analysis:
The petitioner sought a writ of prohibition against the Sales Tax Officer to halt assessment proceedings for the year 1973-74 due to a notice issued in 1986 following a remand order from the Sales Tax Tribunal. The petitioner argued that the assessment proceedings were time-barred under Section 21 of the U.P. Sales Tax Act, which allows one year for re-assessment after a case is remanded. The petitioner contended that the period should start from the date the Assessing Authority received the remand order, claiming the authority had knowledge of the order before a notice was issued in 1982. However, the respondents disputed this, stating the certified copy of the remand order was received in 1986, making the notice timely. The High Court noted factual disputes and the Supreme Court's stance that issues of limitation should be raised before the Assessing Authority, not in writ proceedings. The Court declined to intervene, emphasizing the petitioner's right to raise objections during the assessment proceedings before the Assessing Authority. The writ petition was dismissed without delving into the merits of the case, and a stay order was discharged.
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