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Showing 1 to 20 of 1967 Records
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2014 (1) TMI 1972
Seeking grant of bail - recovery of Dextropropoxyphene and Diphenoxylate - manufactured drugs as defined in Section 2 (xi) of the NDPS Act or not - trial for an offence under the NDPS Act, in possession of 'manufactured drugs' which fall in the definition of 'manufactured drug' in terms of Section 2 (xi) of the NDPS Act and has been notified as such by notifications dated 14.11.1985 and 29.1.1993 as 'manufactured drugs', but contain an exception as regards the percentage of dosage in the drug - overlap between the NDPS Act and the D&C Act regarding the prosecution of drug-related offenses - HELD THAT:- State and the quantity of such substance required for reasonable inventory to be held by a manufacturer, shall specify, by order, the limit of the quantity of such substance which may be manufactured by the manufacturer in the State. In terms of Rule 65A of the NDPS Rules, no person is to sell, purchase, consume or use of psychotropic substance except in accordance with the 1945 Rules. Schedule I of the NDPS Rules referred to in Rule 64 provides for various narcotic drugs and psychotropic substances. The provisions of the NDPS Act and the NDPS Rules as also the D&C Act and the 1945 Rules show that there is overlapping of drugs of various types.
The drug Dextropropoxyphene Hcl was found in the case of Ravinder Singh alias Rinku v. State of Punjab (CRM No. M-1379 of 2013). At serial No.87 of the notification dated 14.11.1985, the drug (+)-4-dimethylamino-1, 2-diphenyl-3-methyl-2-butanon propionate (the international non-proprietary name of which is Dextropropoxyphene), and its salts, preparations, admixtures, extracts and other substances containing any of these drugs, except preparations for oral use containing not more than 135 milligrammes of Dextropropoxyphene base per dosage unit or with a concentration of not more than 2.5 per cent in undivided preparations, provided that such preparations do not contain any substances controlled under the Convention of Psychotropic Substances, 1971. Therefore, in terms of notification dated 14.11.1985, Dextropropoxyphene is a drug, which has been notified as a manufactured drug though with a certain exception in terms of Section 2 (xi) (b) of the NDPS Act and is also a drug in Schedule 'H' of the 1945 Rules.
The manufactured drugs of which there has been a contravention in the present cases have been sold, purchased, distributed, stored, transported, carried etc. in a bulk form and mostly these are without proper licences or authorizations. In respect of such drugs which are carried in bulk form, the notification dated 18.11.2009 would apply and the question that these drugs contain an exception would not be applicable as the exceptions would apply when the drugs are for medicinal or therapeutic use - the question of exceptions being provided in respect of drugs at serial No.16, 35, 36, 37, 48, 58, 70, 76, 83 and 87 of the notification dated 14.11.1985 is inconsequential when these drugs are carried in a bulk form and the entire quantity of the bulk is to be taken into consideration and not per dosage specially when these are carried in violation of the D&C Act and the 1945 Rules that is to say are sold, purchased, distributed, stored, transported, carried etc. without a valid licence or kept without a valid authorization.
The procedure provided for trial and prosecution of offences under the NDPS Act would not in any manner be hit by Article 14 of the Constitution; besides, even if it covers only a class of cases which are mentioned in the NDPS it would not be bad and the fact that in such cases the prosecution chooses as to which cases are to be tried under the special procedure would not affect the validity of the NDPS Act and the mere availability of two procedure does not vitiate one of them that is the special procedure under the NDPS Act. Besides, it is for the State to decide as to in which of the two enactments that is, the NDPS Act or the D&C Act is the prosecution to be launched. It may also appropriately be noticed that the provisions of Section 80 of the NDPS Act envisage that application of the D&C Act is not barred.
In terms of the above Rule 26, it is on the prescription of a Medical Practitioner that a person may possess such quantity of manufactured drugs which may be sold by a licensed chemist for medicinal purposes, as have been at one time supplied for use in accordance with the provisions of the Punjab NDPS Rules 2012. The said Punjab NDPS Rules, 2012 further provide for grant of licence to a chemist and a dealer in terms of Rule 27, sale of manufactured drugs by a licensed chemist in terms of Rule 28, sale of manufactured drugs by a licensed dealer in terms of Rule 29, grant of licence to a manufacturer in terms of Rule 30 - The alarming aspect is the misuse of manufactured drugs by drug addicts and drug traffickers which evidently is not for medicinal or therapeutic purposes. Therefore, to curb this menace it is obligatory to enforce the stringent provisions of the NDPS Act for violation of the NDPS Act and NDPS Rules.
Conclusion - The individuals found in possession of bulk quantities of manufactured drugs, intended for non-therapeutic use, can be prosecuted under the NDPS Act.
The cases shall be sent back to the learned Single Judge for disposal.
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2014 (1) TMI 1971
Rejection of books of accounts - estimating the Net Profit rate of the assessee at 5% of Gross Turnover - HELD THAT:- Assessee was regular assessee for the last so many years who had been following the same system of accounting which has been accepted by the department in the earlier years by way of scrutiny assessment u/s 143(3) relied upon by the CIT(A) was not assailed by the Revenue.
Similarly the factum that the net profit had increased qua the earlier years also was not assailed. It is seen that no effort was made in the absence of any discussion in the Assessment order to assail the finding arrived at that no comparative case in support of the conclusion of the AO that a higher percentage of profit should have been earned was referred to by the AO or confronted to the assessee.
Nor has the department considered it necessary to place any such material before the Bench to upset the finding under challenge. Accordingly in the light of the above-mentioned facts and circumstances where past history has been taken into consideration, we find ourselves unable to come to a contrary finding in the absence of any argument by the department. Decided against revenue.
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2014 (1) TMI 1970
Determination of Net profit - CIT(A) erred on facts and in law in allowing only part relief to the appellant and applying a N.P. rate of 6.5% - HELD THAT:- When we compare the gross profit of the present year with average of preceding three years’ gross profit rate including the present year, we find that such average rate comes to 14.51% as against 13.70% declared by the assessee in the present year. This goes to show that the gross profit rate in the present year is lower by 0.81% as compared to this average rate of gross profit for the three years period including present year.
We also feel that in any case, the addition in the present year cannot exceed 0.81% of the gross receipts. But at the same time, we also feel that since the turnover in the present year is almost three times, the addition of 0.81% is not justified.
In our considered opinion, if the net profit rate of 5% is confirmed in the present year, it will amount to addition of 0.57% of the gross receipts as against the maximum possible addition of 0.81% on the basis of average gross profit rate of the three years period including present year.
Thus, net profit is determined at 5% of the gross receipts. Appeal of the assessee is partly allowed.
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2014 (1) TMI 1969
Parties to company application - applicants, as equity shareholders whose shares were pledged - order ratifying the assignment of rights, title, and interests in the pledged shares and debts of the company, should be recalled due to the applicants not being heard - HELD THAT:- What appears to be not in dispute is that the applicants were not debtor of the IDBI but they had pledged their 1344 equity shares with IDBI in the month of March 1985 as security against loan advanced by IDBI to the company. There appears to be also no dispute that after IDBI recovered Rs. 19 lacs out of total dues of the company, the IDBI executed deed of assignment on 25.8.2007 transferring all rights in debt of the company with underlying security and rights in pledged shares in favour of respondent No.2 for consideration of Rs. 15 lacs.
The pledged goods are not debt but are security and creditor is under obligation to preserve such security till his dues are repaid by the borrower. As held by the Hon'ble Supreme Court in ICICI Bank Ltd. [2010 (9) TMI 236 - SUPREME COURT], the debt is an asset in the hands of the bank as a secured creditor and the bank can always transfer its assets and such transfer in no way affects any rights or interest of the borrower. However, Hon'ble supreme Court has clearly distinguished between the rights to transfer debt and the assignment of obligation for promisor and held that assignment of the obligation for the promisor owed to the promisee is not possible without novation of the contract with the promisor.
The Company Court would not have jurisdiction to entertain any such application for ratification of any act or agreement between two independent parties. If the creditor of the company assigns his rights in the debts of the company in favour of any other party by any agreement, the assignee steps into the shoes of the creditor of the company and such assignee thereafter will be at liberty to move application before the Company Court to substitute him in place of creditor and to recognize him as creditor of the company in the winding up proceedings.
The Company Court has inherent powers under Rule 9 of the Rules to pass necessary orders to do complete justice to the parties by recalling its order if it finds that there was total lack of jurisdiction to deal with particular application whereon the order was made and it was not properly apprised of the correct facts or correct position of law by party in whose favour the order is passed. Present is not the case where the applicants are seeking review under the guise of seeking modification/ clarification or recalling of the order.
Conclusion - This Court is of the view that to do complete justice in the matter, the order dated 25.8.2008 passed in the application needs to be recalled.
Application allowed.
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2014 (1) TMI 1968
Inability to pay debts - alleged mismanagement leading to substantial financial losses - Section 439(8) of the Companies Act, 1956, read with Rule 97 of the Companies (Court) Rules, 1959 - HELD THAT:- It is evident from the material on record that the first respondent is unable to pay its debts and therefore the present petition having duly been advertised, there is due compliance of the requirement in law. Accordingly the petition is allowed. The Official Liquidator is appointed as the liquidator in winding up. The first respondent-company is ordered to be wound up.
The petitioners shall deposit a sum of Rs. 50,000/- towards the expenses involved, in favour of the Official Liquidator.
Petition allowed.
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2014 (1) TMI 1967
The Supreme Court of India granted leave in the case, as per the citation 2013 (11) TMI 1759 - SC. Justices Anil R. Dave and M.Y. Eqbal were presiding. Mr. Ajay Vohra and Ms. Kavita Jha represented the petitioner(s), while Mr. R.P. Bhatt, Ms. Sadhna Sandhu, Mrs. Gargi Khanna, and Mrs. Anil Katiyar represented the respondent(s).
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2014 (1) TMI 1965
Winding up of company - inability to pay its debts as per Section 433(e) of the Companies Act, 1956 - respondent contends that the main ground on which the petitioner proceeds is that, the cash flow was insufficient to meet its annual debt repayment obligation and therefore, had become insolvent - HELD THAT:- During the pendency of this petition, it is not shown that the respondent has made any further attempt or effort to make any further payment. Therefore, the statement of objections though appear to be persuasive, is not justified by the conduct of the respondent during the pendency of this petition. By that very fact, it would emanate that the petitioner’s case of the respondent being no longer able to pay its debts, is made out.
Conclusion - The respondent was unable to pay its debts. Winding up is ordered.
Consequently, the petition is allowed.
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2014 (1) TMI 1964
Delay in filing an appeal u/s 35 of the Foreign Exchange Management Act, 1999 (FEMA) - HELD THAT:- As under the special law i.e., FEMA, a separate period for preferring an appeal and for condonation is provided u/s 35 of FEMA, which therefore, automatically excludes application of Sections 4 to 24 of the Act and, therefore, Section 5 of the Act is not applicable and the petitioner/appellant cannot seek condonation of delay of more than 60 days by virtue of the proviso u/s 35 of the Act.
In the decision of the Supreme Court in Thirumalai Chemicals Limited's [2011 (4) TMI 489 - SUPREME COURT] their lordships have already held that the procedure for filing an appeal being not a substantive right, but is a procedural right, amended provisions may impair such a procedural right and it cannot be said that Section 6 of the General Clauses Act, saves the right to file appeal within a specified period of limitation. The language of Section 35 shows the express intention of legislature to exclude Section 5 of the Act. It was, accordingly, held that the said section 5 of the Act was not applicable.
Condonation filed by the petitioner cannot be sustained and the same is liable to be dismissed.
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2014 (1) TMI 1963
Claim of appellant to be owners of property - winding up of company - HELD THAT:- Given the facts and circumstances and the sequence of events, the claim of the applicants is not in dispute, given the other documents in support of their claim. The Official Liquidator would also endorse that the applicants may be entitled for delivery of possession.
Accordingly, the application is allowed.
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2014 (1) TMI 1962
Proceedings initiated to by the Bank under RDB Act to recover its dues - Jurisdiction of the Tribunals constituted under the Recovery of Debts Due to Banks and Financial Institutions Act,1993 and the Company Court (High Court) exercising jurisdiction under the Companies Act, 1956 - RDB Act,1993 Vs. Companies Act,1956 - sale agreements constituted a fraudulent preference under Section 531 of the Companies Act, 1956 or not - HELD THAT:- The Company is being wound up under the orders of the Company Court in C.P.No.23 of 2003. The appellants are third party agreement holders with respect to three grounds of property situate in Mugappair belonging to the Directors of the company in winding up. A creditor of the Company viz., State Bank of India, Ambattur Industrial Estate Branch, in O.A.No.269 of 2007 initiated recovery proceedings before D.R.T.-III, Chennai and attached the property to realise its dues.
In JAGADISH SINGH Vs. HEERALAL AND OTHERS [2014 (3) TMI 73 - SUPREME COUR] the Hon'ble Apex Court referring to Section 17 of the SARFAESI Act held that any person, whether a borrower, guarantor or person affected by auction sale has to approach the Debts Recovery Tribunal and not a Civil Court. The said decision also brings out the exclusive jurisdiction of the Debts Recovery Tribunal to exercise jurisdiction over matters covered under section 17 of RDB Act.
Considering the exclusive jurisdiction of the Debts Recovery Tribunal constituted under the RDB Act, the order passed by the Company Court transferring Appeal Nos.1 and 2 of 2013 from D.R.T-III to itself under the provisions of the Companies Act,1956 is without jurisdiction is clear from the provisions of the RDB Act, 1993 and the General enactment, namely, Companies Act, 1956. Thus, the consequential orders passed in the impugned order, dated 5.11.2013 permitting the Official Liquidator to take steps for selling the property is also without jurisdiction.
The orders of the Company Court in C.A.No.160 2013 in C.P.No.23 of 2003 and in Transfer C.A.Nos.1108 and 1109 of 2013 permitting the Official Liquidator to proceed further with the sale of the property are set aside - Appeal disposed off.
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2014 (1) TMI 1961
Petition for winding up the respondent company - Entitlement to a fixed amount of commission in respect of a particular property - issuance of notice under Sections 434 and 433(e) of the Companies Act, 1956 - HELD THAT:- The document produced by the respondent – Company is a bogus document. The original agreement is available with the petitioner and that he would seek to produce the same to demonstrate that the respondent has willfully fabricated and tampered with the document in claiming that the amount fixed for the charges is limited to a sum of Rs. 1,00,00,000/- and the fact that there is an admitted circumstance of the respondent having paid Rs. 1,00,71,000/- to the petitioner, if the agreement was only for Rs. 1,00,00,000/-, is a circumstance to denote that the respondent is not above board and seeks that there be an adjudication insofar as the amount is concerned.
The matter requires to be adjudicated and it is appropriate if the petitioner should approach the Civil Court in this regard. The petitioner does not make up a ground for winding up the respondent, in view of the vehement and serious dispute between the parties - Petition disposed off by way of remand.
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2014 (1) TMI 1960
Amendment of the pleadings - seeking declaration that the purported allotment of 6000 shares in favour of respondent at the meeting of the Board allegedly held on 24-9-1990 is void, illegal and inoperative - HELD THAT:- It is found that challenge to the allotment of 6000 shares to the respondents was on the ground of malafides and for collateral purpose, namely, to benefit the respondents at the cost of other share holders. The appellants specifically contended that exercise of power by respondent Nos.2 to 5 in the company petition for allotment of 6000 shares is vitiated by fraud. In other words, they played fraud on the appellants allotting the shares behind their back, prejudicially affecting their rights. In short, it was contended that allotment of six thousand shares in favour of the respondents was not for the benefit of the Company but it was for fraudulent and malafide purpose of controlling the Company. The allotment of share was also challenged on the ground that it was for an improper motive and against the interest of the Company.
From bare perusal of the grounds sought to be introduced by the appellants, it is clear that the additional grounds do not travel beyond the purported allotment of 6000 shares. By way of amendment, it was contended that the entire allotment of shares was oppressive. Thereby, in other words, the appellants have endeavoured to introduce a legal ground to challenge the said allotment contending that the entire allotment of shares was oppressive and hence liable to be set aside - It is true that by way of amendment they have added the prayer/relief under Sections 397 and 398 of the Act but that by itself cannot be a ground for rejecting the application. By way of an amendment, the appellants have not deviated from original challenge to the improper allotment of 6000 shares. Moreover, there is no legal bar in filing a composite petition before CLB under Sections 111, 397 and 398 of the Act.
The basic ground of challenge that there is no legal infirmity in the order of the CLB also deserves to be rejected outright on the ground that the CLB overlooked the mandate of the order passed in terms of minutes of the order. The order in terms of the minutes is an order in invitum which is binding on both parties which agreed before this Court for allowing/permitting the parties to file further pleadings and documents as they may choose - The appellants are directed to carry out amendment within two weeks from the date of receipt of this order. It is open to the respondents to file Written Statement/reply if they so desire within six weeks from today. Once the amendment is carried out, it is open to the appellants to move the CLB for hearing of the company petition.
Parties through their counsel are directed to appear before the Chairman or before the appropriate Bench of CLB, as the case may be, on 24.02.2014.
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2014 (1) TMI 1959
Winding up of company - non-compliance of the provisions of Section 454 of the Companies Act, 1956 - non-submission of books of accounts and records of the company in liquidation - Liability of ex-directors under Section 543 of the Companies Act, 1956 - HELD THAT:- The evidence was tendered in the course of these proceedings. The Official Liquidator has not chosen to substantiate the claim by producing material other than the Annual Report of the year 1993-94 notwithstanding the specific contention raised in the statement of objections of the respondent no.1. The affidavit in evidence made by the company-paid-assistant attached to the office of the Official Liquidator merely reiterates that the respondents are liable to pay a sum of Rs. 5.86 crore along with interest to the Official Liquidator.
As rightly pointed out by the respondents, particularly respondent no.1, the application is incomplete and inconsistent. Since the basis is on a truncated report of the year 1993-94. it does not establish the acts of misfeasance committed by each of the respondents and as to how the loss had occasioned. It is evident that apart from the partial statement of accounts and balance sheets for the year 1993-94 without reference to any subsequent statement of account and Balance Sheet, even inspite of the respondents having highlighted the same, would render the application vague and general in nature and can hardly be sustained for if the application were to be allowed, as prayed for, it would result in penal consequence visiting the respondents and therefore, it is required of the applicant to establish the allegations beyond reasonable doubt.
Given the circumstance that almost all the respondents had ceased to be directors of the company, much prior to the date of the winding up and that the company was ultimately wound up, because it had stopped functioning after the fire accident in its factory premises, destroying all its assets, including its records and whatever the assets and records remained having been taken over by the KSFC and the Income-tax Department, it was incumbent on the Official Liquidator to have substantiated the application with better particulars - Application dismissed.
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2014 (1) TMI 1958
Misappropriation of fund, allocated to different districts of the State of U.P. by the Central Government under the 'Mahatma Gandhi National Rural Employment Guarantee Act, 2005' - mal-practices under the Scheme - HELD THAT:- It appears that while launching the Scheme under MGNREGA, effective measures have not been provided to check proliferation, abuse and misappropriation of fund under the Scheme making the entire society corrupt to some extent. Needless to say that in absence of an effective supervisory method with punitive action in the event of misappropriation and abuse of fund under the Scheme, the temptation to involve in corrupt practices at the lowest rug of elected representative and the bureaucracy or the government officials seems to become a routine feature - Keeping in view prima facie pervasive corruption, it shall be appropriate that the Central Bureau of Investigation should be provided necessary infrastructure and constitute a wing for regular monitor of Government fund under the MGNREGA Scheme or other alike Schemes without awaiting any permission from the Central and State Governments at par with FBI of the United States of America.
The spade under which the corruption is flourishing in this country requires not only immediate attention but effective tools and for that the independent agency like CBI must be given all forms of assistance with required infrastructure. The Government of India as well as the State Government must ensure to provide necessary assistance to CBI for effective and quick investigation of criminal cases assigned to it.
It shall be appropriate that not only the Government of India but the State of U.P should strengthen its machinery and constitute multi-member 'State Quality Monitor' at State and District level to monitor the utilisation of fund under MGNREGA regularly. The members of State Quality Monitor must not be persons who have been assigned duty to allocate fund under MGNREGA or ensure its utility in a particular manner. The making of 'State Quality Monitor', an independent body may to some extent check the proliferation of fund under MGNREGA. In the meantime, it shall be appropriate for the Government of India to formulate appropriate rules and regulations or issue appropriate order in pursuance to statutory mandate to check the abuse of fund under the Scheme.
A writ in the nature of mandamus is issued directing the Central Bureau of Investigation to investigate the abuse and misappropriation of fund as well as the abuse of power under Mahatma Gandhi National Rural Guarantee Scheme with regard to seven districts of State of U.P, namely Balrampur, Gonda, Mahoba, Sonbhadra, Sant Kabir Nagar, Mirzapur and Kushinagar in the years 2007 to 2010 with appropriate action and prosecution in accordance with law - A further writ in the nature of mandamus is issued directing the Central Bureau of Investigation to hold a preliminary enquiry under Chapter IX of CBI Manual with regard to other districts of the State of U.P for the aforesaid three years relating to abuse, misuse or misappropriation of fund provided by the Government of India under Mahatma Gandhi National Rural Guarantee Scheme with follow-up regular enquiry, if required.
Petition allowed.
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2014 (1) TMI 1957
Venturing of capital funds or collective investment scheme [‘CIS’) w/o obtaining a certificate of registration from the Securities and Exchange Board of India - HELD THAT:- There was violation of Regulations in his case as well, on account of payment having not been made within the period stipulated in the Regulations. As noted earlier, in view of the prohibition contained in Regulation 69, the company could not have raised money under its existing Scheme, after coming into force of the Regulations. It has come in the deposition of DW8 Dinesh Gupta that he invested money in the company in the month of December, 2000 whereas according to DW9 Hari Om Gupta, he had reinvested Rs. 20,000/- in the company on 7.5.2001. In view of the prohibition contained in Regulation 69 of SEBI CIS Regulations, the company could not have raised money from them, after the Regulations came to be notified on 15.10.1999.
Vicarious liability of the appellants - As far as the appellant, Ajay Vohra, is concerned, the learned counsel for the appellants did not dispute during the course of arguments that he was a person in-charge of and responsible to the Company for conduct of its business.Even otherwise, not only has, Mr. Ajay Vohra, been corresponding with SEBI, he also signed the balance sheet, profit & loss account, schedule of deposits, schedule of fixed assets, schedule of cash and bank, notes on account forming part of the balance sheet, etc. of the Company for the year 1997-1998. Even when he came in the witness box, Mr. Ajay Vohra did not claim that he was not the person incharge of and responsible to the company for conduct of its business. This would clearly show that he was a person in-charge of and responsible to the Company for conduct of its business.
Appellant, Sunita Bhagat is concerned, admittedly she was a Director of the appellant Company and was also was a person in-charge of and responsible to the Company for conduct of its business. No evidence has been led by her to prove that the contravention of sub-section (1B) of Section 12 of the Act was committed without her knowledge or that she had exercised all due diligence to prevent the commission of the aforesaid offence by the Company.
Appellant P.C. Thakur the Accountant of the company, he was a director in the company in the year 1999. He resigned from the company only on 20.2.2000 but His name appeared in the list of directors sent by the company to SEBI vide its letter dated 28.5.1998. meaning thereby that he became director prior to the aforesaid date. The fact that Mr. P.C. Thakur was getting remuneration from the company and was also authorized to operate its bank accounts clearly shows that he was also a person incharge and responsible to the company for conduct of its business, during the period he was its director.
Mr. Rajan Rai signing the annual return of the company that he was also the person in charge and responsible to the company for conduct of its business.
Thus, as no evidence has been led by any of the appellants to prove that offence punishable under section 24 of the Act was committed by the company without their knowledge or that they had exercised all due diligence to prevent commission of the said offence. Therefore, being the persons in charge of and responsible to the company for conduct of its business at the time the offence punishable under Section 24 of the Act committed by the company, the appellants have rightly been convicted under Section 24 of the Act read with section 27 thereof.
We find no reason to interfere with the conviction of the appellants under Section 24 of the Act read with Section 27 thereof.
As when admittedly all the investors have not been paid and there is no documentary evidence of even a substantial number of them having been paid, I find no good ground for reducing the substantive sentences awarded to the appellants or the fine imposed on them. The appeals are, therefore, dismissed.
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2014 (1) TMI 1956
Venturing of capital funds or collective investment scheme (‘CIS’) without certificate of registration from SEBI obtained - vicarious liability of the Directors of the Company - HELD THAT:- As rightly pointed out by the learned counsel for SEBI, the purpose of submitting wind up and repayment report to SEBI is to enable SEBI to verify whether the Company had actually complied with the provisions of the Regulations or not. For this purpose SEBI was entitled to call for the record of the Company to satisfy itself that the payment as alleged in the report had actually been made to the investors. Admittedly, no documentary evidence of payment even of the principal amount to the investors was furnished by the Company to SEBI. As noted in its letter dated 14.7.2008, SEBI could appoint an independent auditor for verification of claims of repayment at the cost of the Company. In fact, even the report submitted to SEBI did not conform to the Regulations since it was not signed by one of the Directors, namely, Mr. Ashwani Berry.
Since the Company contravened the provisions of Regulations 73 & 74 of SEBI CIS Regulations, it was rightly convicted under Section 24 of the Act for contravention of the said Regulations.
Coming to the vicarious liability of the Directors of the Company - Appellant Shalender Kaushik was one of the subscribers to its Memorandum and Articles of Association. In view of the above-referred bio datas, there can be no dispute that the appellants, S.P. Kalia, Brijinder Makkar & Manoj Kapur were in-charge of and responsible to the Company for conduct of its business. No evidence has been led by them to prove that contravention of sub- section (1B) of Section 12 and CIS Regulations of SEBI was committed without their knowledge or that they had exercised all due diligence to prevent the commission of the said offence by the Company. Therefore, they have rightly been convicted under Section 24 read with Section 27(1) of the Act.
Appellant, Smt. Sudha Mittal, as per the bio data furnished to SEBI she was a housewife - mere being a Director of the Company does not render a person liable to conviction with the aid of Section 27 of the Act unless it is shown that such a person was also in-charge of and responsible to the Company for conduct of its business or it is proved that the offence was committed with the consent or connivance or was attributable to any neglect on the part of such a person. No such consent, connivance or neglect on the part of Smt. Sudha Mittal, however, came out during the course of her deposition and no evidence in this regard was produced by SEBI. For the reasons stated hereinabove, the appellant, Smt. Sudha Mittal is given benefit of doubt and is hereby acquitted.
For Shalender Kaushik, is concerned, admittedly, he has never been a Director of the Company and there is no evidence to show that he was in-charge of and responsible to the Company for conduct of its business. Sub-section (2) of Section 27 would not apply to him. He cannot be said to be a person in-charge of and responsible to the Company for conduct of its business only because he had subscribed to its memorandum and articles of association. In fact, the learned counsel for SEBI fairly conceded during the course of arguments that the charge against him could not be established during the course of trial. Mr. Shalender Kaushik is, therefore, liable to be acquitted.
Sentence awarded to the appellants though it was submitted by the appellants, during the course of arguments that the principal amount stands paid to all the investors - Section 24 has since been amended so as to enhance the maximum substantive sentence to ten (10) years, and to prescribe a fine up to Rs. 25.00 crore. The amendment clearly indicates the seriousness, which the Legislature attaches to such contraventions. The purpose obviously is to deter persons such as the appellants from trapping the gullible investors, by promising them returns which are unrealistic and can never be given. Any unwarranted leniency towards such persons will be highly misplaced, besides being detrimental to the larger interest of the society.
In the facts & circumstances of the case, find no good ground for reducing either the substantive sentence awarded to the individual appellants, or to reduce the fine imposed upon the aforesaid three appellants.
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2014 (1) TMI 1955
Prayer for winding up of the respondent company as the respondent has failed and neglected to pay the amounts due and payable to the petitioner bank - Section 433(e) of the Companies Act, 1956 - HELD THAT:- There is not dispute that the remedy under Section 433(e) of the Companies Act, 1956 is a discretionary remedy and a winding up order need not follow in every case where a company suffers temporary inability to pay its liabilities. The Courts in several cases have accommodated companies which are in distress or which are going through financial crisis by providing reasonable time to enable them to pay their dues. However, a creditor of a company is ex debito justitiae entitled to maintain a petition for winding up of the company, if such company is unable to pay its debts and the discretion vested with the court is to be exercised judicially. In the facts of the present case, the issue to be addressed is whether the respondent is entitled to any further time to pay its admitted dues before the petition is admitted.
The respondent owes more than Rs. 15 crores to the petitioner and initial payment of Rs. 1 crore was in the given facts most reasonable. However the respondent has even failed to pay the initial amount of Rs. 1 crore for almost a year despite undertaking to do so on more than one occasion. The record of this case bears out that the respondent has been granted several opportunities to arrive at an amicable settlement to pay its dues to the petitioner bank. However, despite the opportunities granted, the respondent has failed to arrive at an amicable settlement. On 25.10.2012, the respondent had once again undertaken to pay a sum of Rs. 27 lacs in three installments. Admittedly, the respondent has failed to make even this payment to the petitioner.
Given the fact that the respondent has not placed any concrete scheme for repayment of dues by the respondent to its creditors, the respondent is not entitled to any further extension of time and there is no reason to defer the admission of the present petition.
The present petition is admitted.
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2014 (1) TMI 1954
Jurisdiction of respondent No. 1-Competition Commission of India, to investigate the action of the petitioner inasmuch as the Patent Act itself provides adequate mechanism to balance the rights of patentee and other stakeholders - Section 3(5)(i) of the Competition Act, 2002 - HELD THAT:- This Court is prima facie of the view that a substantial question of jurisdiction of respondent No. 1 to entertain respondent No. 2’s petition arises in the present proceedings.
Upon a perusal of the impugned order dated 12th November, 2013, this Court is also prima facie of the view that the Commission has entered into an adjudicatory and determinative process by recording detailed and substantial reasoning at the Section 26(1) stage itself. In fact, by virtue of the impugned order, this Court is prima facie of the view that the petitioner’s remedy under Section 26(7) has been rendered illusory.
This Court is also prima facie of the view that by virtue of the impugned order an investigation has been ordered into consent terms which had been approved by this Court by order dated 19th March, 2013 in CS(OS) 442/2013 - Consequently, till the next date of hearing while the petitioner may give information as called upon by the Director General of Competition Commission of India, no final order/report shall be passed either by the Competition Commission of India or by its Director General.
List the matter before Joint Registrar on 26th May, 2014 for completion of pleadings.
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2014 (1) TMI 1953
Denial of grant of a Scheduled Caste Certificate on the basis that he was a 'Thandan' which was a notified Scheduled Caste - It is common ground that the Respondent was appointed as an Assistant Executive Engineer under a special recruitment scheme for SC/ST candidates.
Whether the Appellants could have reopened for examination the caste status of the Respondent- V.K. Mahanudevan no matter judgment of the High Court in O.P. No. 9216 of 1986 had declared him to be a 'Thandan' belonging to a Scheduled Caste community? - HELD THAT:- It is trite that law favours finality to binding judicial decisions pronounced by Courts that are competent to deal with the subject matter. Public interest is against individuals being vexed twice over with the same kind of litigation. The binding character of judgments pronounced by the Courts of competent jurisdiction has always been treated as an essential part of the rule of law which is the basis of the administration of justice in this country - The binding character of judgments pronounced by courts of competent jurisdiction is itself an essential part of the rule of law, and the rule of law obviously is the basis of the administration of justice on which the Constitution lays so much emphasis.
In Mathura Prasad v. Dossibai [1970 (2) TMI 139 - SUPREME COURT], this Court held that for the application of the rule of res-judicata, the Court is not concerned with the correctness or otherwise of the earlier judgment. The matter in issue if one purely of fact decided in the earlier proceedings by a competent Court must in any subsequent litigation between the same parties be recorded as finally decided and cannot be re-opened. That is true even in regard to mixed questions of law and fact determined in the earlier proceeding between the same parties which cannot be revised or reopened in a subsequent proceeding between the same parties.
The order passed by the High Court in O.P. No. 9216 of 1986 which had attained finality did not permit a fresh enquiry into the caste status of writ-Petitioner. Inasmuch as the High Court quashed the said proceedings and the order passed by the State Government pursuant thereto, it committed no error to warrant interference.
Whether the Respondent- V.K. Mahanudevan can claim protection against ouster from service and, if so, what is the effect of the change in law relevant to the caste status of the Respondent? - HELD THAT:- The Thandans regardless whether they were Ezhuvas/Thiyyas known as Thandans belonging to the Malabar area, were by reason of the above pronouncement of this Court held entitled to the benefit of being treated as scheduled caste by the Presidential Order, any enquiry into their being Thandans who were scheduled caste having been forbidden by this Court as legally impermissible. The distinction which the State Government sought to make between Ezhuva/Thiyyas known as Thandans like the Respondent on one hand and Thandans who fell in the scheduled caste category, on the other, thus stood abolished by reason of the above pronouncement. No such argument could be countenanced against the Respondent especially when it is not the case of the Appellants that the Respondent is not an Ezhuva from Malabar area of the State of Kerala.
In the instant case there is no evidence of lack of bona fide by the Respondent. The protection available under the decision of Milind's case [2000 (11) TMI 1232 - SUPREME COURT] could, therefore, be admissible even to the Respondent. It follows that even if on a true and correct construction of the expression 'Thandan' appearing in The Constitution (Scheduled Castes) Order 2007 did not include 'Ezhuvas' and 'Thiyyas' known as 'Thandan' and assuming that the two were different at all relevant points of time, the fact that the position was not clear till the Amendment Act of 2007 made a clear distinction between the two would entitle all those appointed to serve the State upto the date of the Amending Act came into force to continue in service.
The order passed by the High Court takes a fair view of the matter and does not suffer from any illegality or irregularity of any kind - appeal dismissed.
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2014 (1) TMI 1952
Challenge to Arbitral Award - dismissal of appeals filed by the petitioner on the ground of limitation - section 34 of the Arbitration and Conciliation Act, 1996 - whether the bye-law as amended will cover references already pending and would also apply to those references where the cause of action arose before 29-8- 1998? - HELD THAT:- Unamended bye-law 274 A (3) provided that party dissatisfied may appeal to the appeal bench against an award within 15 days of the date of the receipt of such an award. By virtue of amendment the period of 15 days for filing the appeal came to be substituted by 30 days. Bye-laws provided an option to a party dissatisfied with the award to file an appeal before the appeal bench constituted by Bombay Stock Exchange before filing an Arbitration Petition under section 34 of the Arbitration and Conciliation Act, 1996 directly in the appropriate Court.
It is not in dispute that on the date when the petitioner had invoked arbitration agreement and had filed a claim before the learned sole Arbitrator the petitioner had a vested right to file an appeal before the appeal bench and after showing sufficient cause to seek condonation of delay. The appeal bench had power to condone delay by exercising such powers under section 5 of the Limitation Act,1963 read with Regulation 15.23 (iv).
The Supreme court in the case of GARIKAPATI VS SUBBIAH CHOUDHARY [1957 (2) TMI 54 - SUPREME COURT] has held that the right of appeal is not mere matter of procedure but, is a substantive right which is vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when adverse judgment is pronounced, such a right has to be governed by law prevailing on the date of institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal. This vested right of appeal can be taken away only by subsequent enactment if it so provides expressly or by necessary intendment and not otherwise.
The rights and remedies accrued to the petitioner and subsequent rights and/or remedy for filing proceedings before the superior Courts or appellate forum would continue and cannot be divested by amendment unless it is shown clearly intended by amendment to make it applicable with retrospective effect. The petitioner has already having filed proceedings before the learned Arbitrator, the right of filing an appeal against the impugned award if any and a right to file an application for condonation of delay on showing sufficient cause on the date of filing the original proceedings would be continued - A perusal of the amendment to Bye law 252,274 A and regulation 15.23 does not indicate that the said amendment was to be made applicable with retrospective effect and the rights and remedies which were already vested on the date of filing the claim before the learned Arbitrator were taken away with retrospective effect.
Since the option to file an appeal before the appeal bench which was the mechanism conferred under the Bye-laws before filing a petition under section 34 of the Arbitration and Conciliation Act, 1996, the petitioner had a vested right to impugn the arbitral award rendered by the sole Arbitrator along with an application for condonation of delay in the event of delay by showing sufficient cause. The day on which the impugned award was rendered by the learned sole arbitrator, there was no amendment to Bye-law 252 (3) 274 A and Regulation 15.23 (iv) described aforesaid.
The right to file an appeal includes right to file application for condonation of delay and which right is parallel to right of appeal and is also a substantive right provided sufficient cause is shown by the petitioner. Thus, sufficient cause having been shown the appeal bench had power to condone such a delay in view of section 6(e) of the General Clauses Act, 1897. In view of such existing right vested in the petitioner on the date of filing original proceedings by the petitioner before the learned sole Arbitrator such amendment cannot affect the legal proceedings or remedy in respect of which any such right or privilege which the petitioner had existing when the original proceedings filed by the petitioner were filed.
The appellate bench was not right in taking the view that there was no power vested in the appellate bench to condone the delay under bye law 274 (A). The appellate bench has failed to exercise its power to condone the delay once the petitioner had shown sufficient cause for delay in filing the appeal by 3 days. The impugned award rendered by the appeal bench thus deserves to be set aside.
The impugned awards passed by the appeal bench (Exhibit C to the petition) are set aside. The appeals filed by the petitioner along with the application for condonation of delay are restored to file. The appeal bench is directed to hear the application for condonation of delay by exercising powers of condonation of delay on its own merits expeditiously - Arbitration petitions are allowed.
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