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• 2009 (10) TMI 1005
  

  1. ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this judgment are:

  • Whether the appellant company qualifies as an "industrial company" under section 3(1)(e) and 3(1)(f) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
  • Whether the appellant company meets the definition of a "sick industrial company" under section 3(1)(o) of SICA.
  • Whether the appellant company had the status of an industrial company on critical dates, including 31-3-1999 and 14-11-2000, and at the time of the BIFR's decision.
  • Whether the appellant company was employing 50 or more workers in its factories during the relevant periods to qualify as a "factory" under section 3(c) of the Industries (Development and Regulation) Act, 1951 (IDR Act).

  2. ISSUE-WISE DETAILED ANALYSIS

  Issue 1: Qualification as an "Industrial Company"

  • Relevant legal framework and precedents: The definition of "industrial company" under section 3(1)(e) of SICA requires the company to own one or more industrial undertakings. Section 3(1)(f) defines "industrial undertaking" as pertaining to a scheduled industry carried on in one or more factories.
  • Court's interpretation and reasoning: The court examined whether the appellant company's units qualified as "factories" under section 3(c) of the IDR Act, which requires a manufacturing process with 50 or more workers.
  • Key evidence and findings: The appellant company failed to provide evidence that 50 or more workers were employed in any unit during the relevant periods. The units were closed, and the company did not meet the criteria for an industrial undertaking.
  • Application of law to facts: Since the appellant company did not maintain the required number of workers, it did not qualify as an industrial company under SICA.
  • Treatment of competing arguments: The appellant argued that temporary closure should not affect its status, but the court found no evidence of temporary closure or sufficient employment.
  • Conclusions: The appellant company did not qualify as an industrial company under SICA.

  Issue 2: Status as a "Sick Industrial Company"

  • Relevant legal framework and precedents: Section 3(1)(o) of SICA defines a "sick industrial company" as one with accumulated losses equal to or exceeding its net worth.
  • Court's interpretation and reasoning: The court considered whether the appellant company met the criteria for a sick industrial company on the relevant dates.
  • Key evidence and findings: The appellant company's accumulated losses exceeded its net worth, but it did not qualify as an industrial company, a prerequisite for being a sick industrial company.
  • Application of law to facts: Without the status of an industrial company, the appellant could not be deemed a sick industrial company under SICA.
  • Treatment of competing arguments: The appellant's arguments regarding its financial status were insufficient without qualifying as an industrial company.
  • Conclusions: The appellant company did not meet the criteria for a sick industrial company under SICA.

  Issue 3: Employment of Workers and Factory Status

  • Relevant legal framework and precedents: The definition of "factory" under section 3(c) of the IDR Act requires 50 or more workers.
  • Court's interpretation and reasoning: The court assessed whether the appellant company employed the required number of workers in its units.
  • Key evidence and findings: The appellant failed to provide evidence of employing 50 or more workers in any unit during the relevant periods.
  • Application of law to facts: The lack of evidence meant the appellant's units did not qualify as factories, affecting its status as an industrial company.
  • Treatment of competing arguments: The appellant's claims of temporary closure and employment were unsupported by evidence.
  • Conclusions: The appellant company did not employ the required number of workers to qualify its units as factories.

  3. SIGNIFICANT HOLDINGS

  Preserve verbatim quotes of crucial legal reasoning:

  • "The expression of two eventualities used in the definition clause of factory postulates that manufacturing process is on in the present context or manufacturing process is being carried on."
  • "The appellant company has failed to indicate the number of workers working in each of the units."

  Core principles established:

  • A company must qualify as an industrial company to be considered a sick industrial company under SICA.
  • The definition of a factory under the IDR Act requires evidence of employment of 50 or more workers.

  Final determinations on each issue:

  • The appellant company did not qualify as an industrial company under SICA.
  • The appellant company was not a sick industrial company as defined by SICA.
  • The appellant company failed to prove the employment of the required number of workers to qualify its units as factories.

  ---

• 2009 (10) TMI 1004
  

  1. ISSUES PRESENTED and CONSIDERED

  The legal judgment revolves around several core issues:

  • Whether the reappointment of Punjab National Bank (PNB) as the Operating Agency (OA) by the Board for Industrial and Financial Reconstruction (BIFR) was appropriate.
  • The legality and implications of the Memorandum of Understanding (MoU) between the appellant company and its workers' unions.
  • The rights and obligations concerning the sale of surplus assets of the appellant company to settle secured creditors' dues.
  • Whether the company is discriminating against unsecured creditors in the settlement of dues.

  2. ISSUE-WISE DETAILED ANALYSIS

  Reappointment of PNB as OA:

  • Relevant legal framework and precedents: Section 17 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) governs the appointment of an Operating Agency to aid in the rehabilitation of a sick industrial company.
  • Court's interpretation and reasoning: The court noted that PNB had previously expressed unwillingness to act as OA, which was not adequately considered by the BIFR. The appellant's preference for IDBI, due to its expertise in textile industries, was deemed reasonable.
  • Key evidence and findings: The appellant's relationship with PNB was strained, and IDBI was suggested as a more suitable OA.
  • Application of law to facts: The court emphasized the need for an effective OA to facilitate the company's rehabilitation and avoid further delays.
  • Treatment of competing arguments: The court balanced the appellant's preference and PNB's alleged willingness, ultimately favoring the appointment of IDBI.
  • Conclusions: The court directed the BIFR to appoint IDBI as the OA.

  Legality of the MoU with Workers:

  • Relevant legal framework and precedents: Labour laws and the jurisdiction of industrial tribunals govern disputes related to worker agreements and lockouts.
  • Court's interpretation and reasoning: The court refrained from making determinations on the legality of the MoU, citing that such matters fall within the domain of labor courts.
  • Key evidence and findings: The MoU was signed by a significant number of workers, and operations resumed based on this agreement.
  • Application of law to facts: The court recognized the MoU's role in the company's operational restart and deferred to the appropriate tribunal for disputes.
  • Treatment of competing arguments: The court acknowledged objections from the JKJMMP union but emphasized the broader interest of company revival.
  • Conclusions: The court left the matter of the MoU's legality to be addressed by labor courts.

  Sale of Surplus Assets:

  • Relevant legal framework and precedents: Section 18(2)(i) of SICA allows for the sale of assets for rehabilitation purposes.
  • Court's interpretation and reasoning: The court underscored the necessity of asset sales to facilitate the company's rehabilitation and settle secured creditors' dues.
  • Key evidence and findings: The company and LRPL agreed on the need to sell surplus assets to raise funds.
  • Application of law to facts: The court considered the prolonged rehabilitation process and the need for a transparent asset sale process.
  • Treatment of competing arguments: Despite union opposition, the court prioritized the company's revival and the equitable settlement of creditors.
  • Conclusions: The court permitted the sale of surplus assets through a transparent process, with proceeds to be used as per the sanctioned scheme.

  Discrimination Against Unsecured Creditors:

  • Relevant legal framework and precedents: SICA mandates equitable treatment of creditors during rehabilitation.
  • Court's interpretation and reasoning: The court emphasized non-discrimination in the settlement of unsecured creditors' dues.
  • Key evidence and findings: Allegations of preferential treatment to certain creditors were raised but not conclusively proven.
  • Application of law to facts: The court mandated that the sale proceeds be used equitably among creditors.
  • Treatment of competing arguments: The court addressed concerns from unsecured creditors and ensured fair treatment.
  • Conclusions: The court directed equitable distribution of sale proceeds among creditors.

  3. SIGNIFICANT HOLDINGS

  • Preserve verbatim quotes of crucial legal reasoning: "The basic objective of SICA is not to provide protection to the sick company against its lenders for an unlimited period of time but to revive the sick company as quickly as possible failing which it should be wound up."
  • Core principles established: The judgment reinforces the principles of timely rehabilitation, equitable treatment of creditors, and the necessity of effective operational management for sick companies.
  • Final determinations on each issue: The court directed the appointment of IDBI as OA, permitted the sale of surplus assets, and emphasized non-discrimination in creditor settlements.

  The judgment reflects a balanced approach to resolving the complexities of industrial rehabilitation, emphasizing the importance of effective management, equitable creditor treatment, and adherence to legal frameworks for reviving sick companies.

  ---

• 2009 (10) TMI 1003
  
  Issues:
  - Appeal against penalty imposed for contravention of provisions of PER Act, 1973
  - Allegations of making payments to persons outside India without RBI permission
  - Dispute regarding appellant's role in transactions on behalf of the firm
  - Legal interpretation of FERA, 1973 provisions
  - Burden of proof on the appellant regarding coercion in confessional statement
  - Corroboration of evidence in support of confessional statement
  - Consideration of penalty amount based on gravity of the offense
  
  Analysis:
  The judgment delivered by Km. Vijay Laxmi, Member of the Appellate Tribunal for Foreign Exchange, pertains to an appeal filed against a penalty imposed on the appellant for contravening the provisions of Section 9(1)(a) & 9(1)(d) of the PER Act, 1973. The appellant, a Manager of a firm, was charged with making payments to individuals in India and to a person in Saudi Arabia without RBI permission. The appellant denied the charges, claiming coercion in his confessional statement, which was later retracted. However, the tribunal found the charges proved based on the appellant's admissions and corroborating evidence, dismissing the appellant's defense of being merely an employee acting on instructions. The tribunal emphasized the importance of regulatory mechanisms under FERA, 1973 to prevent economic offenses.
  
  The judgment highlighted the burden of proof on the appellant to establish coercion in the confessional statement, citing legal precedents. Despite the retraction, the tribunal found the confessional statement corroborated by documentary and circumstantial evidence, leading to the conclusion that the appellant was responsible for the transactions. The tribunal rejected the appellant's argument of being a poor individual, emphasizing the gravity of economic offenses and the need to uphold penalties commensurate with the offense. Ultimately, the tribunal upheld the penalty imposed, directing the appellant to pay within a specified timeframe, failing which legal action would be taken for recovery.
  
  In conclusion, the judgment underscores the importance of abiding by regulatory provisions to prevent economic offenses, holding individuals accountable for their actions even in cases of retracted confessional statements. The tribunal's decision to uphold the penalty serves as a deterrent against financial misconduct, emphasizing the need for strict adherence to legal frameworks governing foreign exchange transactions.

  ---

• 2009 (10) TMI 1002
  
  Issues:
  - Appeal against Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act, 1973.
  - Non-compliance with pre-deposit of penalty amount.
  - Legal provisions under FERA, 1973 regarding pre-deposit of penalty amount.
  - Applicability of Supreme Court judgment in cases of non-compliance with statutory provisions.
  
  Analysis:
  
  The judgment pertains to an appeal filed against an Adjudication Order imposing a penalty for contravening the provisions of the Foreign Exchange Regulation Act, 1973. The appellant, Javer Chand T. Nahar, received an amount in Indian currency from a local person under instructions from a person resident outside India without the permission of the Reserve Bank of India, leading to the penalty of Rs. 6,000. The appellant sought dispensation from pre-deposit of the penalty amount, which was rejected by the tribunal due to lack of undue hardship. Despite multiple opportunities and notices, the appellant failed to comply with the tribunal's orders, indicating a lack of bonafide. The advocate representing the respondent argued for the dismissal of the appeal based on non-compliance with judicial orders as per Section 52(2) of the FER Act.
  
  The judgment delves into the legal provisions of FERA, 1973, specifically Section 52, which mandates the deposit of the penalty amount for filing an appeal unless dispensation is granted. The tribunal highlighted the necessity of complying with the statutory scheme and cited a Supreme Court judgment (Navin Chandra Chhotelal v. Central Board of Excise & Customs) to emphasize that failure to make the pre-deposit can lead to the rejection of the appeal. The tribunal reiterated that the Appellate Authority is empowered to dismiss appeals for non-compliance with the statutory provisions, preventing the hearing of the appeal on its merits.
  
  In conclusion, the tribunal found that the appellant had not adhered to the tribunal's orders despite ample opportunities, leading to a lack of equity in the appellant's favor. Citing the statutory scheme under FERA, the tribunal agreed with the respondent's advocate that the appeal should be dismissed due to non-compliance with the pre-deposit requirement. Consequently, the appeal was dismissed, and the record was directed to be consigned to the Record Room, closing the legal proceedings in this matter.

  ---

• 2009 (10) TMI 1001
  
  Issues:
  Violation of Section 9(1)(d) of FER Act, 1973 - Contravention of payment to persons in India on behalf of a person resident outside India without RBI permission.
  
  Analysis:
  The judgment by the Appellate Tribunal for Foreign Exchange in New Delhi pertains to an appeal against Adjudication No.49/94/AD(KNS) imposing a penalty on Manoranjan Bank for contravening Section 9(1)(d) of the FER Act, 1973. The appellant was penalized for making payments to various individuals in India on behalf of a person from Bangladesh without RBI permission. The appellant did not appear, and the report confirmed that notice was served through affixation. The investigation revealed that the bank made payments to Indian individuals under instructions from a person outside India, with details coded in documents seized during a search. The appellant initially admitted to these payments but later retracted the statement, claiming coercion and threat during its recording.
  
  The appellant argued that the statement was not voluntary and should not be considered against them. However, the burden of proof lay on the appellant to establish coercion or threat in obtaining the statement. Referring to legal precedents, the Tribunal emphasized the voluntary nature of statements crucial for validity. The retracted statement can be accepted if proven voluntary and corroborated by evidence. In this case, the documentary and circumstantial evidence supported the initial admission, indicating voluntariness. The Tribunal cited legal principles requiring subjective assessment of retraction before accepting an inculpatory statement as voluntary.
  
  Considering the evidence and circumstances, the Tribunal upheld the Adjudicating Officer's decision, finding the appellant guilty of the contravention. The penalty imposed was deemed appropriate in relation to the amount involved in the violation. The judgment affirmed the correctness of the findings and upheld the penalty. The appeal was dismissed for lacking merit, with the penalty already adjusted from the seized amount towards payment. The decision highlighted the importance of voluntary statements and the need for corroborating evidence to support retracted confessions in legal proceedings.

  ---

• 2009 (10) TMI 1000
  
  The Supreme Court of India dismissed the case. Citation: 2009 (10) TMI 1000 - SC Order. HON'BLE MR. JUSTICE S.H. KAPADIA AND HON'BLE MR. JUSTICE AFTAB ALAM presided over the case. Petitioner represented by Mr. H.P. Raval, ASG., Mr. Arijit Prasad, Mr. Rahul Kaushik, Mr. B.V. Balaram Das. Respondent represented by Mr. U.A. Rana, Ms. Mrinal Majumdar,

  ---

• 2009 (10) TMI 999
  
  Issues Involved:
  
  1. Subletting of the premises.
  2. Change of user of the premises.
  3. Jurisdiction and powers of the High Court under Article 227 of the Constitution of India.
  
  Detailed Analysis:
  
  1. Subletting of the Premises:
  
  The landlord filed an application for eviction on April 6, 1979, alleging that the tenant had sublet the premises to Mandovi Tours and Travels without permission, thus violating the Goa, Daman & Diu Buildings (Lease, Rent & Eviction) Control Act, 1968 (Act, 1968). The tenant denied subletting, claiming that he formed a partnership with his son, daughter-in-law, and Kunda Wagh to start a travel business due to his old age. The Additional Rent Controller found that the partnership was not genuine and was a cover for subletting. The Administrative Tribunal upheld this finding, noting the lack of evidence for the partnership's genuineness, such as the absence of books of accounts and bank accounts. The High Court, however, set aside these findings, leading to the present appeal.
  
  2. Change of User of the Premises:
  
  The landlord also alleged a change of user, claiming that the premises initially rented for a grocery business were now being used for a travel business. The tenant admitted to this change but argued it was within his rights as he retained possession and control over the premises. The Additional Rent Controller and the Administrative Tribunal found that the tenant had indeed changed the use of the premises, which was another ground for eviction.
  
  3. Jurisdiction and Powers of the High Court under Article 227 of the Constitution of India:
  
  The High Court allowed the writ petition under Article 227, setting aside the concurrent findings of the Additional Rent Controller and the Administrative Tribunal. The Supreme Court found that the High Court erred in its judgment by being too technical in its interpretation of the pleadings and evidence. The High Court failed to consider whether the partnership was genuine or a camouflage for subletting. The Supreme Court emphasized that the High Court's jurisdiction under Article 227 is supervisory and not appellate, and it should not interfere with concurrent findings of fact unless there is a clear misdirection in law or fact.
  
  Conclusion:
  
  The Supreme Court allowed the appeal, setting aside the High Court's judgment and reinstating the eviction order based on subletting and change of user. The Court emphasized that the landlord's pleadings and evidence were sufficient to establish a prima facie case of subletting, shifting the burden of proof to the tenant, who failed to rebut it. The Court also reiterated the limited scope of the High Court's jurisdiction under Article 227, which should be exercised sparingly and not as an appellate authority. The parties were ordered to bear their own costs.

  ---

• 2009 (10) TMI 998
  
  Issues Involved:
  1. Whether the act/offence committed prior to the coming into force of MCOCA can be taken into account for prosecution under Section 3(1) of the said Act?
  
  Detailed Analysis:
  
  Issue 1: Whether the act/offence committed prior to the coming into force of MCOCA can be taken into account for prosecution under Section 3(1) of the said Act?
  
  Background and Legal Provisions:
  The petitioner, extradited from Singapore to India in 1995, faced multiple FIRs before and after the Maharashtra Control of Organised Crime Act (MCOCA) was extended to Delhi in 2002. The petitioner challenged the constitutional validity of Section 3 of MCOCA, arguing that it violated Article 20(1) of the Constitution, which prohibits ex post facto criminal laws.
  
  Arguments by the Petitioner:
  The petitioner contended that acts constituting offences under the IPC before MCOCA's applicability to Delhi could not be prosecuted under Section 3 of MCOCA. The petitioner emphasized that "organized crime" was defined under Section 2(1)(e) of MCOCA and penal consequences were introduced for the first time under Section 3. Therefore, only acts committed after the enactment should be relevant for prosecution under MCOCA.
  
  Legal Precedents and Interpretations:
  The petitioner relied on Supreme Court judgments, including Rao Shiv Bahadur Singh v. The State of Vindhya Pradesh and Soni Devrajbhai Babubhai v. State of Gujarat, to argue that Article 20(1) prohibits convictions and penalties under ex post facto laws. The petitioner further argued that "continuing unlawful activity" as defined in Section 2(1)(d) should only consider acts after MCOCA's enforcement.
  
  Counterarguments by Respondents:
  The respondents, represented by counsels from the Union of India and the State of Maharashtra, argued that the challenge was misconceived. They cited judicial pronouncements upholding the constitutional validity of MCOCA's provisions. The respondents emphasized that the act of continuing unlawful activity was a new offence under MCOCA, and the statute's prospective nature did not violate Article 20(1).
  
  Judicial Findings:
  The court referred to the Bombay High Court's decision in Bharat Shantilal Shah v. The State of Maharashtra, which upheld the constitutional validity of MCOCA, including the definitions of "continuing unlawful activity" and "organized crime." The court noted that the Supreme Court had also upheld these provisions in State of Maharashtra v. Bharat Shanti Lal Shah.
  
  Conclusion:
  The court concluded that the petitioner's challenge lacked merit. It held that the provisions of Section 3 of MCOCA did not violate Article 20(1) as they did not retrospectively create offences. Instead, they addressed continuing unlawful activity, which could include acts committed before MCOCA's enforcement if they formed part of an ongoing criminal enterprise. The court dismissed the petition with costs.
  
  Key Judgments Referenced:
  - Rao Shiv Bahadur Singh v. The State of Vindhya Pradesh
  - Soni Devrajbhai Babubhai v. State of Gujarat
  - State of Maharashtra v. Bharat Shanti Lal Shah
  - Bharat Shantilal Shah v. The State of Maharashtra
  
  Final Judgment:
  The petition was dismissed with costs of Rs. 25,000, affirming the constitutionality of Section 3 of MCOCA and its applicability to continuing unlawful activities, including those initiated before the Act's enforcement.

  ---

• 2009 (10) TMI 996
  
  Issues Involved:
  1. Credibility of eyewitnesses (PW4 and PW5)
  2. Interference of the High Court in an appeal against acquittal
  3. Evaluation of evidence and natural human behavior
  4. Conduct of the initial investigation and further investigation
  5. Guilt of the accused under Sections 376, 302, 120B, and 201 of the IPC
  
  Detailed Analysis:
  
  1. Credibility of Eyewitnesses (PW4 and PW5):
  The trial court found significant issues with the credibility of PW4 (Ravi) and PW5 (Andy). PW4's evidence was disbelieved due to his silence for four years, the darkness at the crime scene, and his conduct before, during, and after the occurrence. The High Court, however, found that PW4's delay in coming forward was justified due to his young age and fear. Similarly, PW5's evidence was rejected by the trial court due to the delay in his statement and lack of corroboration. The High Court accepted PW5's evidence, explaining the delay by stating that he might have been absent from the village due to fear.
  
  2. Interference of the High Court in an Appeal Against Acquittal:
  The Supreme Court emphasized that interference in an appeal against acquittal should be made sparingly and only if the findings are perverse and not possible on the evidence. The presumption of innocence is further strengthened by an acquittal. The High Court's interference was questioned, especially since the trial court had provided plausible reasons for disbelieving the eyewitnesses.
  
  3. Evaluation of Evidence and Natural Human Behavior:
  The Supreme Court highlighted that the best check on the veracity of a witness is the test of normal human behavior. The conduct of PW4 and PW5 in not coming forth as witnesses for about four years was deemed unacceptable. The High Court's broad proposition that the response of a witness can vary was rejected, emphasizing that unnatural behavior is a strong circumstance in doubting the story.
  
  4. Conduct of the Initial Investigation and Further Investigation:
  The case saw two final reports with differing theories. The first report attributed the rape and murder to Sundaram (A4), while the second report implicated Rathinam (A1) after further investigation. The Supreme Court noted the uncertainty in the prosecution's case due to these differing theories and the fact that PW4 had been declared hostile in the sessions trial against Sundaram.
  
  5. Guilt of the Accused Under Sections 376, 302, 120B, and 201 of the IPC:
  The trial court acquitted all the accused due to the prosecution's failure to establish guilt beyond reasonable doubt. The High Court, however, convicted A1 Rathinam and sentenced him under Sections 376, 302, and 201 of the IPC, while maintaining the acquittal of A3 and A5. The Supreme Court found that the High Court had misread and wrongly assessed the evidence of PW4 and PW5, leading to the acquittal of Rathinam (A1).
  
  Conclusion:
  The Supreme Court allowed the appeals, set aside the judgment of the High Court, and ordered the acquittal of the appellant. The credibility of the eyewitnesses was found to be questionable, and the High Court's interference in the acquittal was deemed unjustified. The conduct of the initial and further investigations added to the uncertainty of the prosecution's case. The Supreme Court emphasized the importance of natural human behavior in evaluating witness testimony and upheld the trial court's findings.

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• 2009 (10) TMI 995
  
  Issues Involved:
  1. Disallowance of mobilization and demobilization expenses u/s 40(a)(i) due to non-deduction of tax at source u/s 195.
  2. Whether the matter should be referred to the Special Bench for reconsideration.
  
  Summary:
  
  1. Disallowance of Mobilization and Demobilization Expenses:
  The assessee appealed against the CIT(A)'s order confirming the disallowance of Rs. 10,404,298/- reimbursed to Van Oord ACZ Marine Contractors BV, Netherlands (VOAMC) for mobilization and demobilization expenses, invoking Section 40(a)(i) of the IT Act due to non-deduction of tax at source u/s 195. The assessee executed a dredging contract at Port Dahej and claimed these expenses as deductions. The AO disallowed the claim, referencing a similar disallowance in the previous AY 2003-04, which was upheld by the CIT(A) and the Tribunal.
  
  2. Tribunal's Previous Decision:
  The Tribunal, in its order dated 30.11.2007 for AY 2003-04, held that the assessee's failure to deduct tax at source u/s 195 necessitated the disallowance of payments to the non-resident recipient under Section 40(a)(i). The Tribunal emphasized that it is not for the payer to decide the taxability of payments made to non-residents, and in the absence of a certificate u/s 195(2), the payer must deduct tax at source.
  
  3. Assessee's Arguments:
  The assessee's AR argued that the Tribunal's previous decision did not consider various judicial precedents and requested a referral to the Special Bench. The AR cited multiple cases, including the Supreme Court's decision in Transmission Corporation of AP Ltd. v. CIT, which clarified that the obligation to deduct tax at source arises only when the payment is chargeable to tax in India in the hands of the non-resident. The AR also referenced decisions from various High Courts and Tribunals supporting the view that reimbursement of expenses without an income element does not attract TDS provisions.
  
  4. Tribunal's Consideration:
  The Tribunal acknowledged the AR's arguments but noted that the matter was already before the High Court, which had accepted the substantial question of law. Therefore, referring the matter to the Special Bench was deemed unnecessary.
  
  5. Conclusion:
  Respecting the Tribunal's previous decision in the assessee's own case for the preceding assessment year, the appeal was dismissed. The Tribunal upheld the disallowance of mobilization and demobilization expenses due to non-deduction of tax at source u/s 195, as per Section 40(a)(i).
  
  Decision:
  The appeal of the assessee is dismissed. Decision pronounced in the open Court on 30th October, 2009.

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• 2009 (10) TMI 994
  
  Issues Involved:
  1. Legality of the order dated 15/11/2007 passed u/s 34 of the Urban Land (Ceiling & Regulation) Act, 1976.
  2. Applicability of the doctrine of promissory estoppel.
  3. Reasonableness of the time taken to exercise revisional powers u/s 34 of the U.L.C. Act.
  4. Effect of the Urban Land (Ceiling & Regulation) Repeal Act, 1999 on the proceedings.
  
  Summary:
  
  1. Legality of the order dated 15/11/2007 passed u/s 34 of the Urban Land (Ceiling & Regulation) Act, 1976:
  The petitioner challenged the order dated 15/11/2007 passed by the Government of Maharashtra u/s 34 of the U.L.C. Act, which set aside the earlier order dated 19/2/1999 by the Competent Authority declaring that the U.L.C. Act was not applicable to the petitioner's land. The petitioner argued that the revisional powers were exercised after an unreasonable delay of eight years, which is not permissible.
  
  2. Applicability of the doctrine of promissory estoppel:
  The petitioner contended that the State Government's resolution dated 14/3/2007 proposing to repeal the U.L.C. Act for Maharashtra attracted the doctrine of promissory estoppel, preventing the State from invoking its revisional powers u/s 34 of the U.L.C. Act after such a long period.
  
  3. Reasonableness of the time taken to exercise revisional powers u/s 34 of the U.L.C. Act:
  The Court examined whether the State Government could exercise its revisional powers after an extraordinary delay of eight years. It referred to several judgments, including Pune Municipal Corporation v. State of Maharashtra and Ors. (2007) 5 SCC 211, which held that revisional powers must be exercised within a reasonable time, generally considered to be three years, unless there are allegations of fraud. The Court found no explanation for the delay and no allegations of fraud in this case, thus deeming the exercise of powers after eight years as improper and illegal.
  
  4. Effect of the Urban Land (Ceiling & Regulation) Repeal Act, 1999 on the proceedings:
  The petitioner argued that u/s 4 of the Repeal Act, all proceedings relating to any order made under the U.L.C. Act abate. The Court noted that the impugned order dated 15/11/2007 was a final order and not a pending proceeding, thus not covered by Section 4 of the Repeal Act. However, since the exercise of powers u/s 34 of the U.L.C. Act after eight years was found to be improper and illegal, the Court did not delve further into this aspect.
  
  Conclusion:
  The impugned order dated 15/11/2007 was quashed and set aside due to the unreasonable delay in exercising revisional powers. The petition was disposed of, keeping other questions open for future consideration.

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• 2009 (10) TMI 993
  
  Issues Involved:
  1. Constitutionality of Section 3 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961.
  2. Extraterritorial operation of the Act.
  3. Nexus between the provisions of the Act and the State's legislative competence.
  4. Binding nature of judicial precedents and the doctrine of territorial nexus.
  
  Detailed Analysis:
  
  Issue 1: Constitutionality of Section 3 of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961
  
  The Act aimed to prevent the concentration of wealth and ensure equitable distribution of agricultural land. Section 3 of the Act, which prohibits holding land in excess of the ceiling area and declares excess land as surplus, faced constitutional challenges. The Full Bench of the Bombay High Court in Vithalrao Udhaorao Uttarwar v. The State of Maharashtra upheld the constitutionality of the Act, but the issue of extraterritorial jurisdiction remained unresolved. The Full Bench in Shankarrao v. State of Maharashtra declared parts of Section 3(2) and its explanation as beyond the State Legislature's competence due to their extraterritorial nature.
  
  Issue 2: Extraterritorial Operation of the Act
  
  The Full Bench found that Section 3(2) of the Maharashtra Act had extraterritorial operation by considering land held in any part of India. This was deemed beyond the legislative competence of the State Legislature. The Supreme Court in Shrikant Bhalchandra Karulkar v. State of Gujarat upheld similar provisions in the Gujarat Agricultural Land Ceiling Act, 1960, but distinguished it from the Maharashtra Act, stating that the latter explicitly intended to legislate extraterritorially.
  
  Issue 3: Nexus Between the Provisions of the Act and the State's Legislative Competence
  
  The doctrine of territorial nexus was applied to determine the validity of the provisions. The Supreme Court in Shrikant Bhalchandra Karulkar emphasized that a State Legislature can enact laws with extraterritorial implications if there is a real and sufficient connection. However, the Maharashtra Act's provisions were found to lack such a nexus, as they intended to regulate land holdings beyond the State's territory.
  
  Issue 4: Binding Nature of Judicial Precedents and the Doctrine of Territorial Nexus
  
  The judgment discusses the importance of judicial precedents and the doctrine of territorial nexus. The Full Bench's decision in Shankarrao's case, which struck down parts of Section 3(2), was not overruled by the Supreme Court. Instead, the Supreme Court's observations in Shrikant Bhalchandra Karulkar reaffirmed the Full Bench's view that the Maharashtra Act's provisions were extraterritorial. The judgment also emphasizes the binding nature of precedents and the necessity of following the Supreme Court's decisions.
  
  Conclusion:
  
  The Full Bench's decision in Shankarrao's case, declaring parts of Section 3(2) of the Maharashtra Act as extraterritorial and beyond legislative competence, remains valid. The Supreme Court's judgment in Shrikant Bhalchandra Karulkar does not overrule this decision but distinguishes the Maharashtra Act from the Gujarat Act. The principles of judicial precedents and territorial nexus were upheld, reinforcing the need for laws to have a real and sufficient connection to the State's territory. The matter was referred back to the Single Judge for disposal in accordance with these principles.

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• 2009 (10) TMI 992
  
  Issues involved:
  The plaintiff filed a suit for permanent injunction restraining infringement of trademark, passing off, damages, and delivery of accounts against the defendant company manufacturing pharmaceutical products under a name similar to the plaintiff's trademark.
  
  Trademark Infringement Issue:
  The plaintiff, a telecom solutions company, claimed that the defendants' use of the trademark "Sasken" in their company name and trading style infringed on the plaintiff's registered trademark. The plaintiff provided evidence of the defendants' activities in Delhi, which could mislead the public and dilute the plaintiff's trademark rights. The court found the defendants guilty of trademark infringement under Section 29(4)(5) of the Trademarks Act, 1999.
  
  Passing Off Issue:
  The plaintiff also established a case for passing off, citing the likelihood of confusion among consumers due to the defendants' use of a similar name. The court referred to a previous case to support the plaintiff's claim for passing off. The court decreed in favor of the plaintiff, restraining the defendants from dealing in goods under the infringing trademark and passing off their business as that of the plaintiff.
  
  Damages and Punitive Damages Issue:
  The plaintiff sought damages for loss of reputation and goodwill, but the court, considering the dissimilarity of goods in respective businesses, did not grant compensatory damages. However, the court awarded Rs.2 lac as punitive damages to deter unlawful activities and cover the cost of the suit.
  
  Conclusion:
  The court decreed in favor of the plaintiff, granting permanent injunctions against the defendants for trademark infringement and passing off. The plaintiff was awarded punitive damages and the cost of the suit. The suit and any pending applications were disposed of accordingly.

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• 2009 (10) TMI 991
  
  Issues involved: Interpretation of provisions u/s 13(2) and 13(4) of The Securitization and Reconstruction of Financial assets and Enforcement of Security Interest Act, 2002 in a case involving a loan default and guarantor's liability.
  
  The judgment by the High Court of Allahabad, delivered by Justices V.M. Sahai and Y.C. Gupta, addressed the issue raised by the petitioner regarding a loan taken by respondent no. 4 for a colour lab, which was not repaid, leading the bank to pursue the guarantor, the petitioner. The court noted the lack of clarity in the bank's actions against the borrower and emphasized that mere issuance of notice u/s 13(2) of the Act is insufficient. The court highlighted that the bank should exhaust all remedies against the borrower before proceeding against the guarantor, emphasizing the sequence of actions required by law.
  
  The court granted time to all respondents to file necessary affidavits and directed the petitioner to serve respondent no. 4 within a specified period. Additionally, the court restrained the respondents from taking further action u/s 13(4) of the Act regarding the petitioner's property, as long as the court's orders were in place. However, if the bank had already taken possession of the property, it was ordered that the property should not be sold to any other party, and the petitioner should be allowed to remain in possession.
  
  In conclusion, the judgment provided clarity on the legal obligations of banks in cases of loan defaults and the rights of guarantors, emphasizing the importance of following due process u/s 13(2) and 13(4) of the Act before taking action against guarantors' properties.

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• 2009 (10) TMI 990
  
  Issues Involved:
  1. Dishonour of Cheques
  2. Legally Enforceable Liability
  3. Rebuttal of Presumptions
  4. Evidence and Burden of Proof
  5. Appeal Against Acquittal
  
  Summary:
  
  1. Dishonour of Cheques:
  The complainant's appeal is against the judgment dated 27.8.08 of the Learned J.M.F.C., Margao, acquitting the accused u/s 138 of the Negotiable Instruments Act, 1881. The complaint was filed for dishonour of two cheques (Cheque No. 162965 for Rs. 6,97,200/- and Cheque No. 0188869 for Rs. 4,98,000/-) due to insufficient funds.
  
  2. Legally Enforceable Liability:
  The accused contended that the complainant was engaged in money lending and had taken blank cheques as security, which were later misused. The accused denied any liability and claimed that the cheques were not issued for any legally enforceable debt.
  
  3. Rebuttal of Presumptions:
  The Learned Magistrate concluded that the accused successfully rebutted the presumptions in favor of the complainant u/s 138 and 139 of the Negotiable Instruments Act. The complainant failed to establish the accused's liability beyond reasonable doubt, as key witnesses were not examined.
  
  4. Evidence and Burden of Proof:
  The complainant did not comply with the accused's requests for details of the alleged payments. The accused did not lead any evidence but filed an additional written statement. The court noted the inconsistencies in the complainant's case and the lack of supporting evidence for the alleged payments.
  
  5. Appeal Against Acquittal:
  The appellate court emphasized that the accused need only rebut the presumption by preponderance of probability, not beyond reasonable doubt. The complainant's inconsistent testimony and failure to prove the consideration led to the conclusion that the acquittal could not be faulted. The appeal was dismissed with costs of Rs. 5,000/-.
  
  Conclusion:
  The court upheld the acquittal, finding that the accused had successfully rebutted the presumptions and the complainant failed to prove the existence of a legally enforceable debt. The appeal was dismissed with costs.

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• 2009 (10) TMI 989
  
  Issues Involved:
  The complainant seeks leave to appeal against the judgment in a case u/s 138 of the Negotiable Instrument Act 1881.
  
  Judgment Details:
  
  Issue 1: Allegation of stolen cheque and lack of proof of consideration
  The complainant alleged that the accused gave a cheque towards repayment of a loan, but the accused claimed the cheque was stolen. The Trial Court found the complainant's case unconvincing as he could not provide details of the property for which the loan was supposedly given, and key witnesses were not examined. The Court noted the dishonour of the cheque due to a court attachment, but neither party clarified the reason for the attachment.
  
  Issue 2: Presumption of debt based on cheque issuance
  The complainant argued that since the accused's defense was disproved, the presumption that the cheque was for a debt should apply. However, the accused contended that the lack of receipts for multiple alleged loan transactions made the complainant's story implausible. The accused also highlighted the complainant's failure to respond to the accusation of stealing the cheque, which could have led to adverse inferences.
  
  Issue 3: Burden of proof and presumption under the Negotiable Instruments Act
  Citing legal precedents, the Court emphasized that the burden of proof lies with the plaintiff to establish consideration for a negotiable instrument. The defendant can disprove consideration by raising a probable defense, shifting the burden back to the plaintiff. The Court noted that the accused successfully cast doubt on the existence of consideration in this case, especially due to the absence of a key witness and lack of supporting documentation.
  
  Conclusion:
  Based on the evidence and legal principles, the Court upheld the Trial Court's decision, stating that it was the only reasonable view considering the lack of proof of consideration and other inconsistencies in the complainant's case. The application for special leave to appeal was dismissed, affirming the Trial Court's findings.

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• 2009 (10) TMI 988
  
  Issues Involved:
  1. Authority to File Complaints
  2. Validity of Authority Letters
  3. Interpretation of "To Sue or Be Sued"
  
  Summary:
  
  1. Authority to File Complaints:
  The appellant, a Multi State Co-operative Society, filed complaints through Shashikant R. Sawaikar and Pramod Kavlekar, whose authority was questioned by the accused. The main issue was whether these individuals had sufficient authority to file the complaints and/or depose on behalf of the complainant. The court referred to the decision in *Shankar Finance & Investments v. State of A.P. and Ors.*, which stated that the requirement of Section 142 of the Negotiable Instruments Act is met if the complaint is in the name of the payee and in writing, and the representation of the payee is governed by general law.
  
  2. Validity of Authority Letters:
  The authority letters dated 25.8.2005 and 10.1.2008, issued by the Managing Directors of the complainant, were produced to support the authority of Sawaikar and Kavlekar. However, during cross-examination, it was revealed that there were no resolutions passed by the board of directors authorizing the Managing Directors to issue such letters. The trial court concluded that the complaints were not filed by properly authorized persons, leading to the dismissal of the complaints and acquittal of the accused.
  
  3. Interpretation of "To Sue or Be Sued":
  The appellant argued that the Managing Director had the power to appoint persons to sue or be sued on behalf of the society u/s 52 of the Multi State Co-operative Societies Act, 2002. However, the court held that the expression "to sue or be sued" generally refers to civil actions and not criminal prosecutions. The court cited various judgments, including *Province of Bombay v. Khushaldas S. Advani*, which interpreted "to sue" as the enforcement of a civil right by legal proceedings. The court concluded that the Managing Director did not have the authority to file criminal complaints and therefore could not delegate such authority.
  
  Conclusion:
  The appeals were dismissed as the complainant failed to provide proper authority for the individuals who filed the complaints. The court upheld the trial court's decision that the complaints were not maintainable due to the lack of proper authorization.

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• 2009 (10) TMI 987
  
  Issues Involved:
  1. Which policy of the Government is to be applied in cases of compassionate appointment: the policy at the time of the employee's death, the policy at the time of application, or the policy at the time of consideration?
  
  Issue-wise Detailed Analysis:
  
  1. Nature and Objective of Compassionate Appointment:
  Compassionate appointment is an exception to the general rule of public service appointments, which typically require merit-based selection through open competition. The purpose of compassionate appointment is to provide immediate relief to the family of a deceased employee who has died in harness, thereby helping them to tide over the sudden financial crisis. The Supreme Court has emphasized that such appointments should not be viewed as an alternative mode of recruitment but as a means to alleviate the destitution caused by the untimely death of the sole breadwinner. The appointment is governed by specific schemes or policies formulated by the employer, which must align with the constitutional mandates of Articles 14 and 16.
  
  2. Policy Applicable for Compassionate Appointment:
  The core question addressed was whether the policy prevailing at the time of the employee's death, the time of application, or the time of consideration should be applied. The court concluded that compassionate appointment is not a vested right but a benefit granted under specific schemes or policies. Therefore, the consideration for such appointments should be based on the policy prevailing at the time of consideration. The employer has the right to change policies based on various factors, and the appointment must be made in accordance with the current policy at the time of consideration.
  
  3. Legal Precedents and Principles:
  The court reviewed several precedents, including cases like Haryana State Electricity Board v. Hakim Singh, Director of Education (Secondary) v. Pushpendra Kumar, and State of Haryana v. Ankur Gupta, which underscored that compassionate appointments are exceptions to the general rule and must be carefully regulated to avoid undue interference with the rights of other eligible candidates. The court also referred to cases like P.T.R. Exports (Madras) Pvt. Ltd. v. Union of India and State of Tamil Nadu v. M/s Hind Stone, which established that benefits based on policies or schemes should be granted according to the policy in effect at the time of consideration.
  
  4. Evaluation of Claims for Compassionate Appointment:
  The court emphasized that the evaluation of claims for compassionate appointments should be governed by the policies in existence at the time of consideration, not by outdated policies. This ensures that the employer can adapt to changing circumstances and requirements. The court rejected the argument that applications should be considered based on the policy at the time of submission, as this could allow employers to manipulate the outcome by delaying the processing of applications.
  
  5. Specific Case Analysis:
  In the case at hand, the respondent's application for compassionate appointment was initially submitted under an old policy but was considered and rejected under a new policy that came into effect before the application was processed. The court held that the application should have been evaluated based on the new policy in effect at the time of consideration, affirming the employer's right to apply the current policy.
  
  6. Conclusion and Directions:
  The court concluded that:
  - Compassionate appointment is not a vested legal right but a benefit granted under specific policies.
  - Consideration for such appointments should be based on the policy prevailing at the time of consideration.
  - The decisions in T. Swamy Dass and Heeralal Baria, which suggested otherwise, were overruled.
  - Employers must process applications for compassionate appointments promptly to ensure fair treatment of families in distress.
  
  The reference was answered accordingly, and the matter was remanded to the Division Bench for a decision on the merits of the appeal.

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• 2009 (10) TMI 986
  
  The Supreme Court of India dismissed the special leave petition in the case. Citation: 2009 (10) TMI 986 - SC Order. Judges: Mr. Harjit Singh Bedi and Dr. B.S. Chauhan. Petitioner represented by Mr. Gopal Subramanyamn and others. Respondent represented by Mr. Harish N. Salve and others.

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• 2009 (10) TMI 985
  
  Issues involved: Appeal and cross objection arising from the order passed by the Commissioner of Income-tax (Appeals)-XV, Ahmedabad, regarding the addition of short-term capital gains u/s 2(14)(iii) of the Income Tax Act for Assessment Year 2005-06.
  
  Revenue's Appeal:
  The Revenue contended that the agricultural land sold by the assessee should be treated as short-term capital gains under section 2(14)(iii) of the Act, as it was not agricultural land but for industrial use. The Assessing Officer found that the assessee systematically planned the purchase and sale of the land as part of a business venture, indicating it was not a sale of capital assets. The assessee failed to provide complete details and evidence for the agricultural land. The Assessing Officer concluded that the income from the sale of land is taxable as business income, not exempt under section 2(14)(iii).
  
  Assessee's Cross Objection:
  The CIT(A) deleted the addition of short-term capital gains, stating that the land in question was agricultural and exempt from taxation under section 2(14)(iii). The 7/12 extracts confirmed the ownership of the land by the appellant, situated in a village with a population of less than ten thousand, qualifying it as agricultural land. The land was sold for industrial use, supported by a sanction letter for an Industrial Park. The addition made by the Assessing Officer was directed to be deleted.
  
  Judgment:
  After reviewing the submissions and evidence, it was confirmed that the land sold by the assessee was indeed agricultural land, not a capital asset u/s 2(14)(iii). The addition of short-term capital gains was rightly deleted by the CIT(A) and upheld. The Revenue's appeal was dismissed. The assessee's cross objection, being supportive of the CIT(A)'s order and with the Revenue's appeal dismissed, was deemed infructuous and also dismissed. The appeal of the Revenue and the cross objection of the assessee were both dismissed.

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