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1987 (12) TMI 340
Issues:
1. Proper valuation of relief sought in a suit under the Karnataka Court Fees and Suits Valuation Act, 1958.
Comprehensive Analysis:
The judgment involves a Civil Revision Petition (C.R.P.) filed by the plaintiffs challenging a finding by the Additional Civil Judge regarding the proper Court fee paid. The trial Court held that the Court fee paid was not proper and directed the plaintiffs to pay a deficit Court fee. The plaintiffs sought declarations that a decree passed against them was illegal and null, and they should be restrained from executing the decree. The plaintiffs argued that the reliefs sought fell under Section 24(d) of the Act, citing various decisions to support their claim. However, the Court analyzed the substance of the relief sought, emphasizing that the plaintiffs were essentially seeking the cancellation of the decree obtained against them. The Court highlighted that the Act is a fiscal statute to be strictly construed, and the relief of cancellation of a decree falls under Section 38 of the Act.
Moreover, the Court emphasized that plaintiffs must value the relief correctly and cannot understate it deliberately. Citing the Supreme Court and previous High Court decisions, the Court stressed the importance of genuine efforts in estimating the claim value. In this case, the plaintiffs were found to have deliberately undervalued the relief, attempting to categorize it as a declaration rather than a cancellation of the decree. The Court noted that the plaintiffs' valuation lacked bona fides since the decree sought to be canceled was for a substantial amount, making the valuation of Rs. 1000 unreasonable. The judgment highlighted the necessity for plaintiffs to make a fair estimate of the relief sought.
Furthermore, the Court distinguished previous decisions cited by the plaintiffs, emphasizing that those cases involved different circumstances and reliefs. The Court discussed cases where the relief sought was for a declaration, permanent injunction, or restraining orders, clarifying that those situations did not align with the present case involving the cancellation of a money decree. Ultimately, the Court dismissed the revision petition, upholding the lower Court's finding that the relief sought by the plaintiffs fell under Section 38 of the Act, and the valuation was incorrect under Section 24(d).
In conclusion, the judgment provides a detailed analysis of the proper valuation of relief sought in a suit under the Karnataka Court Fees and Suits Valuation Act, emphasizing the need for genuine estimation and adherence to the specific provisions of the Act based on the nature of the relief sought.
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1987 (12) TMI 339
Issues:
1. Power of State Government to regulate transport, possession, and consumption of Ayurvedic preparations under U.P. Excise Act, 1910.
2. Validity of notifications issued by State Government regarding Ayurvedic preparations.
3. Interpretation of Article 47 of the Constitution in relation to prohibition of intoxicating drinks and drugs.
Analysis:
1. The case involved questions concerning the authority of the State Government to control the transport, possession, and consumption of Ayurvedic preparations under the U.P. Excise Act, 1910. The appellants, a manufacturer, and a wholesale dealer of Ayurvedic preparations challenged notifications issued by the State Government, which declared these preparations as 'liquor' and imposed regulations on their sale and possession in a district where prohibition was in effect.
2. The State Government issued several notifications, including the removal of exemptions under the U.P. Excise Act for Ayurvedic preparations, declaring them as 'liquor' for regulatory purposes, and publishing rules to prevent misuse. The Excise Commissioner also set limits on the possession of specific Ayurvedic preparations. The High Court dismissed the writ petition challenging the validity of these notifications, leading to an appeal before the Supreme Court.
3. The petitioners relied on a previous Supreme Court decision in the State of Bombay v. F.N. Balsara, which dealt with restrictions on medicinal and toilet preparations containing alcohol under the Bombay Prohibition Act. The Supreme Court in the Balsara case had invalidated certain provisions of the Act, emphasizing that medicinal preparations should be excluded from prohibition measures unless there is a clear risk of misuse by addicts.
4. The Supreme Court, in the present case, disagreed with the interpretation in the Balsara case. The Court highlighted Article 47 of the Constitution, which outlines the State's duty to improve public health and enforce prohibition of intoxicating drinks and harmful drugs. The Court opined that medicinal preparations with high alcohol content should not be automatically excluded from prohibition measures, as they could still be misused as alcoholic beverages, potentially leading to addiction issues.
5. The Court expressed that waiting for misuse before taking action is not prudent, and regulating the legitimate use of medicinal preparations containing alcohol is within the State's purview to prevent addiction problems. The Court emphasized that Article 47 does not mandate the exclusion of medicinal preparations from prohibition, especially when they contain significant alcohol content. The Court concluded that allowing unrestricted consumption of such preparations would undermine the objective of prohibition and authorized the regulation of their possession and consumption under the Excise Act.
6. Consequently, the Supreme Court referred the case to a Constitution Bench for further consideration and directed the papers to be placed before the Chief Justice for necessary actions. The judgment signifies the importance of balancing public health concerns and regulatory measures in the context of prohibition laws and the interpretation of constitutional directives regarding intoxicating substances.
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1987 (12) TMI 338
Issues Involved:
1. Age qualification of the 1st respondent.
2. Disqualification under Section 9-A of the Representation of the People Act, 1951.
3. Disqualification under Article 191(1)(a) of the Constitution for holding an office of profit.
Issue-wise Detailed Analysis:
1. Age Qualification of the 1st Respondent:
The primary issue was whether the 1st respondent had completed the age of 25 years on the last date for filing nominations. The High Court examined the evidence, including the Electoral Roll and the High School Leaving Certificate, which indicated that the 1st respondent was above 25 years of age. Witnesses P.W.2 Aripulla, P.W.3 Sirajul Islam, and P.W.6 Habibar Rahman corroborated this. The High Court concluded that the 1st respondent had indeed completed the age of 25 years on the date of scrutiny. The Supreme Court agreed with this finding, stating, "We are of the view that the High Court was right in upholding that the 1st respondent was more than 25 years of age on the date of scrutiny and he was eligible to be a member of the Legislative Assembly."
2. Disqualification under Section 9-A of the Representation of the People Act, 1951:
The second issue was whether the 1st respondent was disqualified due to a subsisting contract with the Government of Assam. Section 9-A disqualifies a person if there is a subsisting contract for the supply of goods to or for the execution of any works undertaken by the Government. The 1st respondent had a lease to collect tolls at a public ferry, which he claimed was terminated before the date of scrutiny. The High Court found that the contract was terminated on 21.11.1985, before the scrutiny date. The Supreme Court further analyzed whether the lease to collect tolls constituted a contract for the execution of any works. It concluded that the lease did not fall under Section 9-A, as the contract was not for the execution of any works undertaken by the Government. The Court stated, "The word 'works' in the expression in 'execution of any works' appearing in Section 9-A of the Act is used in the sense of 'projects', 'schemes', 'plants', such as building works, irrigation works, defense works etc." Thus, the 1st respondent was not disqualified under Section 9-A.
3. Disqualification under Article 191(1)(a) of the Constitution for Holding an Office of Profit:
The third issue was whether the 1st respondent held an office of profit under the State Government by virtue of being a lessee of the right to collect tolls. The appellant argued that the 1st respondent held an office of profit. The Supreme Court rejected this argument, stating, "An 'office' means a public or private employment with certain duties to be performed." The Court found that the 1st respondent's lease to collect tolls was a business contract, not an office of profit. The Court elaborated, "A lessee of tolls under the Ferries Act is only a contractor who under the lease acquires the right to collect whatever toll is paid by persons who use the ferry against payment to Government in advance whatever amount he had agreed to pay at the time of auction." Therefore, the 1st respondent was not holding an office of profit.
Conclusion:
The Supreme Court upheld the High Court's decision, finding that the 1st respondent was eligible to contest the election as he had completed the age of 25 years, was not disqualified under Section 9-A of the Representation of the People Act, and did not hold an office of profit under Article 191(1)(a) of the Constitution. Consequently, the rejection of his nomination papers was improper, and the election of the appellant was rightly set aside. The appeal was dismissed, with each party bearing its own costs.
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1987 (12) TMI 337
Issues Involved:
1. Bail application for an offence under The Narcotic Drugs and Psychotropic Substances Act, 1985.
2. Involvement of the petitioner in the offence.
3. Admissibility of statements made before the Central Excise Officer.
4. Powers and status of the Central Excise Officer under the Narcotic Drugs and Psychotropic Substances Act, 1985.
5. Applicability of Chapter XII of the Criminal Procedure Code to investigations by Central Excise Officers.
Issue-wise Detailed Analysis:
1. Bail Application for an Offence under The Narcotic Drugs and Psychotropic Substances Act, 1985:
The petitioner applied for bail in connection with an offence involving 985 grams of brown sugar valued at Rs. 59,100/-. The bail application was initially rejected by the Chief Metropolitan Magistrate and subsequently by the Sessions Judge. The petitioner contended that there was no material evidence to connect him with the offence and that the statements recorded were inadmissible.
2. Involvement of the Petitioner in the Offence:
The petitioner's involvement was based on the statements of co-accused Nos. 1 and 2, who claimed that the petitioner supplied the brown sugar a week before its seizure and demanded payment for it. The petitioner himself admitted to buying and supplying the brown sugar in his statement recorded in Hindi.
3. Admissibility of Statements Made Before the Central Excise Officer:
The petitioner argued that statements made before the Central Excise Officer were inadmissible under Sections 25 and 26 of the Evidence Act, which prohibit confessions made to police officers or while in police custody from being used as evidence unless made in the presence of a Magistrate. The petitioner contended that Central Excise Officers, being invested with the powers of a police officer under Section 53 of the Narcotic Drugs and Psychotropic Substances Act, should be considered police officers.
4. Powers and Status of the Central Excise Officer under the Narcotic Drugs and Psychotropic Substances Act, 1985:
The court examined whether Central Excise Officers, empowered under Section 53 of the Act, are considered police officers. The court noted that while these officers have investigative powers similar to those of a police officer, they do not possess all attributes of a police officer, such as the power to file a charge-sheet under Section 173 of the Criminal Procedure Code. The court referenced the Supreme Court decision in Balkishan A. Devidayal v. State of Maharashtra, which established that an officer must possess all powers of a police officer, including the ability to initiate prosecution, to be considered a police officer for the purposes of Section 25 of the Evidence Act.
5. Applicability of Chapter XII of the Criminal Procedure Code to Investigations by Central Excise Officers:
The court held that Chapter XII of the Criminal Procedure Code, which deals with police investigations, does not fully apply to investigations conducted by Central Excise Officers under the Narcotic Drugs and Psychotropic Substances Act. The court referred to Section 51 of the Act, which states that the provisions of the Criminal Procedure Code apply only insofar as they are not inconsistent with the Act. The court concluded that Central Excise Officers are not required to follow procedures such as recording an FIR or filing a charge-sheet, which are specific to police officers under Chapter XII of the Criminal Procedure Code.
Conclusion:
The court found that the Central Excise Officers are not police officers for the purposes of Sections 25 and 26 of the Evidence Act. Therefore, the statements made before them are admissible in evidence. The court also determined that there was sufficient material to suggest the petitioner's involvement in the offence. Consequently, the bail application was dismissed.
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1987 (12) TMI 336
Issues:
1. Rejection of account books based on survey findings.
2. Validity of grounds for rejection of account books.
3. Disparity in consumption of electricity as a ground for rejection.
Analysis:
Issue 1: Rejection of account books based on survey findings
The applicant, M/s. Shyam Rice Mills, challenged the appellate order by the Sales Tax Tribunal through a revision under Section 11(1) of the U.P. Sales Tax Act. The assessment year in question was 1980-81, during which the applicant was engaged in the business of purchasing paddy, hulling rice, and selling the same. The rejection of the account books was primarily based on a survey conducted on January 4, 1981, which revealed discrepancies in cash balance, unrecorded paddy stock, and disproportionate electricity consumption.
Issue 2: Validity of grounds for rejection of account books
The Court considered the grounds for rejection of the account books, including discrepancies in cash balance, unrecorded paddy stock, and disproportionate electricity consumption. The applicant's counsel argued that the reasons provided by the tax authorities were not substantial enough to warrant the rejection of the account books. The Court analyzed each ground and found that the discrepancies, such as the cash difference and unrecorded stock, were minimal and did not justify the rejection of the accounts. Additionally, the absence of immediate entries in the account books after stock arrival was deemed insufficient to question the regularity of maintaining accounts, citing relevant legal precedents.
Issue 3: Disparity in consumption of electricity as a ground for rejection
Regarding the disparity in electricity consumption, the Court referred to previous decisions that highlighted excess electricity consumption as a factor for suspicion but not sole grounds for rejecting account books. In this case, despite the anomaly in electricity usage compared to rice production, no other discrepancies were found in the accounts. Consequently, the Court held that the disparity in electricity consumption alone was not substantial enough to justify the rejection of the account books.
In conclusion, the Court ruled in favor of the applicant, stating that there was insufficient valid material for the Sales Tax Authorities to reject the account books. As a result, the revision was allowed with costs, and the second question regarding the estimate of rice and rice bran sales was deemed academic and not addressed on merits.
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1987 (12) TMI 335
Issues:
Eviction based on subletting without consent and bona fide requirement of additional accommodation.
Analysis:
1. The appellant sought eviction of the respondent on grounds of unauthorized subletting and bona fide requirement of additional accommodation. The Trial Court and Appellate Court both found in favor of the appellant based on these grounds. The Trial Court appointed an Advocate-Commissioner to inspect the premises, who reported inadequate accommodation for the appellant's family, supporting the appellant's claim. The Trial Court also found evidence of subletting by the respondent to his brother, leading to a decree for eviction.
2. The High Court, in the Second Appeal, reversed the lower courts' findings, terming them as perverse. However, the Supreme Court criticized the High Court's reasoning, highlighting that the Trial Court had considered the full extent of accommodation available before decreeing eviction. The Supreme Court also noted the High Court's oversight of the small size of rooms in the appellant's possession, making the accommodation insufficient for the family members, including unmarried sons and a daughter.
3. Regarding subletting, the Supreme Court found that the respondent had indeed sublet the premises to his brother without consent, as he had permanently shifted his residence elsewhere. The High Court's distinction between subletting and licensing based on the relationship between the respondent and his brother was deemed unjustified. The Supreme Court upheld the lower courts' findings on subletting.
4. The respondent argued that the appellant had another house, rendering him ineligible for eviction under Section 13(ff). However, the Supreme Court clarified that the appellant's possession of another house, not lying vacant and situated more than three miles away, did not negate the bona fide requirement of additional accommodation. The Court rejected the request for remand to assess alternate accommodation, as the issue was considered during trial, and upheld the eviction decree.
5. In conclusion, the Supreme Court allowed the appeal, restoring the judgments of the Trial Court and the Appellate Court. The respondent was granted time until 30th June 1988 to vacate the premises, subject to conditions of filing an undertaking to pay rent and vacate the premises without inducting others. No costs were awarded in the matter.
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1987 (12) TMI 334
Issues Involved:
1. Whether the scheme for investment falls under the category of 'prize chit' as defined under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978.
2. Whether the High Court was correct in quashing the orders made by the Registrar of Firms, Societies, and Chits.
Issue-wise Detailed Analysis:
1. Whether the scheme for investment falls under the category of 'prize chit' as defined under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978:
The primary question in this appeal is whether the scheme of the company, which involves collecting money from members and awarding prizes through a draw, constitutes a 'prize chit' under Section 2(e) of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. The Act's purpose, as elucidated in its Statement of Objects and Reasons, is to ban schemes that are prejudicial to public interest and adversely affect fiscal and monetary policies. The definition of 'prize chit' under Section 2(e) includes any scheme where money is collected from individuals and used to award prizes and refund the balance with or without premium after a specified period.
The Court emphasized that the definition of 'prize chit' is broad and includes schemes where individuals forego a portion of their contributions in the hope of winning prizes. The scheme in question involves members depositing Rs. 220, out of which Rs. 92 is deducted by the company for prizes and overheads. The remaining amount is deposited in a bank, and members receive a Reinvestment Deposit Plan Receipt (RDP) for Rs. 220, which they can encash after 66 months. The scheme also includes monthly draws for prizes.
The Court noted that the scheme's apparent tenor might not reveal its exploitative nature, but it indeed involves members parting with Rs. 92 in the hope of winning prizes. This aligns with the definition of 'prize chit' under the Act. The Court concluded that the scheme is primarily for the benefit of the promoter at the cost of the subscribers, and thus, falls within the scope of Section 2(e) of the Act.
2. Whether the High Court was correct in quashing the orders made by the Registrar of Firms, Societies, and Chits:
The High Court had quashed the Registrar's orders, holding that the scheme could not be considered a 'prize chit' as the members were not paying contributions or subscriptions to the company but were depositing money to obtain an RDP from a nationalized bank. The High Court believed that the payment for the RDP with the hope of winning prizes was insufficient to attract the definition of 'prize chit.'
The Supreme Court found the High Court's conclusion erroneous both in fact and law. It noted that the company undisputedly deducts Rs. 92 from each member's payment of Rs. 220, which is used for giving prizes and meeting overhead charges. The fact that members receive Rs. 220 from the bank after the maturity period does not change the nature of the transaction. The company collects Rs. 220 from each member, deducts Rs. 92, and uses it for prizes, making the scheme a 'prize chit' as defined under the Act.
The Supreme Court emphasized that the Act aims to protect people from exploitation and bans schemes where individuals part with their money in the hope of winning prizes. The Court concluded that the scheme in question is a 'prize chit' and upheld the Registrar's action.
Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's judgment, and upheld the Registrar's action. It emphasized that the Act was intended to ban all kinds of prize chits where individuals risk their money for the chance of winning prizes. The Court also directed the Registrar to ensure that members are not denied their contributions or prizes if the prize chit is allowed to run for the full term.
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1987 (12) TMI 333
Issues Involved:
1. Legality of the arrest and compliance with Section 50 of the Code of Criminal Procedure.
2. Jurisdiction of the Magistrate to stay his own order of granting bail.
3. Validity of the bail granted to the accused by the Magistrate.
4. Prosecution's application for stay of the bail order.
5. Accused's application to vacate the stay order.
6. State's challenge to the bail order.
Detailed Analysis:
1. Legality of the Arrest and Compliance with Section 50 of the Code of Criminal Procedure:
The accused were arrested on 26th October 1987, with one kilogram of suspected heroin being seized. The accused contended that their arrest was illegal as the grounds of arrest were not communicated to them, citing judgments from 1975 and 1976 Criminal Law Journal. The Magistrate observed that Section 50 of the Code of Criminal Procedure is mandatory and found non-compliance, leading to the granting of bail. However, the High Court noted that the police orally communicated the reasons for arrest and provided the panchnama within 24 hours. The High Court held that the provisions of Section 50 were fully complied with, and the plea of non-communication was unreasonable given the circumstances.
2. Jurisdiction of the Magistrate to Stay His Own Order of Granting Bail:
The prosecution applied for a stay of the bail order, which the Magistrate granted. The accused challenged this stay, arguing that the Magistrate had no jurisdiction to stay his own order. The High Court acknowledged that there is no provision in the Code of Criminal Procedure allowing a Magistrate to stay his own order, but also noted that there is no explicit prohibition. The court found the issue academic since the State had already filed a revision application, and the High Court had stayed the bail order.
3. Validity of the Bail Granted to the Accused by the Magistrate:
The High Court found the Magistrate's order granting bail improper and unjust, noting the seriousness of the charges and the fact that the accused were caught red-handed. The Magistrate's decision was based solely on the alleged non-compliance with Section 50, which the High Court found to be an incorrect interpretation. The High Court emphasized that the communication referred to in Section 50 does not necessarily have to be in writing and that the oral communication by the police was sufficient.
4. Prosecution's Application for Stay of the Bail Order:
The prosecution argued that releasing the accused on bail would hinder the investigation, as they had not been in custody for even 24 hours. The Magistrate granted a stay of the bail order until 3rd November 1987. The High Court found that the Magistrate's stay was not supported by any provision in the Code of Criminal Procedure but did not rule on the jurisdiction issue due to the subsequent High Court stay.
5. Accused's Application to Vacate the Stay Order:
The accused filed an application to vacate the stay order, which the Magistrate rejected, stating he had no power to vacate an order under challenge. The High Court did not find it necessary to address this issue separately, as the stay was already in place by the High Court's order.
6. State's Challenge to the Bail Order:
The State challenged the bail order, arguing that the accused were nabbed red-handed and that the reasons for arrest were communicated orally. The High Court agreed with the State, finding the Magistrate's order granting bail improper and based on an incorrect interpretation of Section 50. The High Court quashed the bail order, emphasizing the seriousness of the charges and the need for further investigation.
Conclusion:
The High Court quashed the Magistrate's order granting bail, finding it improper and illegal. The court held that the provisions of Section 50 of the Code of Criminal Procedure were fully complied with and that the accused's plea of non-communication was unreasonable. The High Court also noted that the Magistrate's stay of his own order was not supported by any provision in the Code of Criminal Procedure but did not rule on the jurisdiction issue due to the subsequent High Court stay. The accused were advised to move the Magistrate for any further applications regarding their custody.
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1987 (12) TMI 332
Issues Involved:
1. Interpretation of the phrase "in writing and signed by the parties" in Order XXIII, Rule 3 of the Code of Civil Procedure, 1908.
2. Validity of a compromise not reduced to writing and signed by the parties.
3. Whether the compromise reached during court proceedings requires written documentation to be enforceable.
Issue-wise Detailed Analysis:
1. Interpretation of the phrase "in writing and signed by the parties" in Order XXIII, Rule 3 of the Code of Civil Procedure, 1908:
The core issue revolves around the interpretation of the words "in writing and signed by the parties" added to Order XXIII, Rule 3 by the Code of Civil Procedure (Amendment) Act, 1976. The primary question is whether a settlement reached in court must be documented in writing to be enforceable. The court emphasized that the amendment aims to avoid false and frivolous claims of settlement to delay proceedings. Hence, any lawful agreement or compromise must be in writing and signed by the parties to be valid under Rule 3.
2. Validity of a compromise not reduced to writing and signed by the parties:
The court examined whether the compromise reached between the parties during the appeal hearing, which was not reduced to writing and signed, could be enforced. The respondent initially accepted the compromise but later attempted to resile from it, arguing that it was not signed and was detrimental to his interests. The court concluded that the absence of a written and signed agreement rendered the compromise unenforceable under the amended Rule 3.
3. Whether the compromise reached during court proceedings requires written documentation to be enforceable:
The court analyzed the two parts of Order XXIII, Rule 3. The first part pertains to a lawful agreement or compromise in writing and signed by the parties, while the second part involves the defendant satisfying the plaintiff's claim without necessarily having a written agreement. The court clarified that the requirement for a written and signed agreement applies to compromises reached both outside and during court proceedings. The court rejected the view that the first part applies only to out-of-court settlements, stating that the language of Rule 3 does not support such a restricted interpretation.
Conclusion:
The court held that the compromise reached during the appeal hearing, which was not reduced to writing and signed by the parties, could not be enforced. Consequently, the High Court's direction to hear the appeal on merits was upheld. The appeal was dismissed, and the High Court was instructed to decide the appeal on its merits, with no order as to costs. The judgment underscores the mandatory nature of the requirement for written and signed agreements in compromises under Order XXIII, Rule 3 of the Code of Civil Procedure, 1908.
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1987 (12) TMI 331
Issues Involved:
1. Addition of Rs. 3,40,472 on account of alleged unexplained investment in the construction of Babyland Hostel.
2. Validity of the valuation report by the Department Valuer versus the assessee's valuation report.
3. Acceptance of the cost of construction as disclosed by the assessee.
Summary of Judgment:
Issue 1: Addition of Rs. 3,40,472 on Account of Alleged Unexplained Investment
The Income Tax Officer (ITO) made an addition of Rs. 3,40,472 to the assessee's income, citing unexplained investment in the construction of Babyland Hostel. This was based on a valuation report by the Department Valuer, which estimated the cost of construction at Rs. 6,68,200, significantly higher than the Rs. 3,27,728 declared by the assessee. The ITO issued a notice u/s 274 r/w s. 271(10(c)) for concealment of income by furnishing inaccurate particulars.
Issue 2: Validity of the Valuation Report by the Department Valuer
The assessee contested the ITO's reliance on the Department Valuer's report, arguing that proper books of accounts were maintained and supported by vouchers and bills. The CIT (A) noted that the ITO had not rejected the books of accounts nor found any specific defects. The assessee's valuer, using Public Works Department (PWD) rates, estimated the cost at Rs. 2,84,022, closely matching the declared amount. The CIT (A) found the Department Valuer's comparison with a luxurious bungalow inappropriate and reduced the estimated cost to Rs. 500 per sq. meter from Rs. 790 per sq. meter.
Issue 3: Acceptance of the Cost of Construction as Disclosed by the Assessee
The Tribunal observed that the assessee maintained proper books of accounts, which were fully supported by vouchers and bills. The CIT (A) had given findings in favor of the assessee but still sustained certain additions without a clear basis. The Tribunal noted that the income tax authorities ignored the books of accounts without identifying any major defects. Referring to similar cases, the Tribunal directed the ITO to accept the assessee's declared cost of construction at Rs. 3,27,728 and modify the assessment accordingly.
Conclusion:
The Tribunal partly allowed the assessee's appeal, directing the ITO to accept the disclosed cost of construction and delete the addition sustained by the CIT (A). The Revenue's appeal was dismissed.
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1987 (12) TMI 330
Issues Involved:
1. Legality of the revised policy for allotment of industrial sites.
2. Right to take possession of bigger plots.
3. Validity of the premium rate for allotment.
4. Application of Rule 8 of the Chandigarh Lease Hold of Sites and Building Rules, 1973.
5. Doctrine of promissory estoppel.
6. Allegation of arbitrariness and violation of Article 14 of the Constitution.
Detailed Analysis:
1. Legality of the Revised Policy for Allotment of Industrial Sites:
The revised policy of the Chandigarh administration for allotment of industrial sites for printing presses was challenged. Initially, 43 larger sites in Industrial Area Phase-II were earmarked, but due to the high number of applicants, the administration revised the policy to allot smaller sites in Industrial Area Phase-I. The High Court found nothing illegal in the revised policy, and the Supreme Court upheld this view, stating that the administration's action was bona fide and there was no evidence to suggest enough plots were available in Phase-II to accommodate all applicants.
2. Right to Take Possession of Bigger Plots:
The appellants contended they had a right to the bigger plots as lots were drawn in their favor. However, the Supreme Court held that no such right existed as there was no official communication of allotment as required under Rule 8(3) of the Chandigarh Lease Hold of Sites and Building Rules, 1973. The intimation of allotment must be sent by registered letter with particulars of the site, which was not done in this case.
3. Validity of the Premium Rate for Allotment:
The High Court directed that the premium rate should be Rs. 15 per square yard, not Rs. 35 per square yard, as initially demanded by the administration. The Supreme Court upheld this direction, noting that the appellants were not responsible for the delay in allotment, which was due to the administration's change in policy. There was no evidence that the administration incurred more expenditure for forming new sites in Phase-I.
4. Application of Rule 8 of the Chandigarh Lease Hold of Sites and Building Rules, 1973:
Rule 8 outlines the procedure for allotment, requiring an application with 10% of the premium as earnest money. The Supreme Court clarified that the use of "shall" in Rule 8(3) does not create a mandatory obligation to allot a site to every applicant. The right of an applicant is only to have their application considered, not to be allotted a site automatically.
5. Doctrine of Promissory Estoppel:
The appellants argued that the administration was estopped from revising the policy after taking steps like demanding 25% of the premium and drawing lots. The Supreme Court rejected this plea, stating that there was no specific assurance or representation made by the authorities promising to allot the sites applied for. Even if such an assurance was made, it would not give rise to promissory estoppel as the authorities cannot make promises contrary to statutory rules.
6. Allegation of Arbitrariness and Violation of Article 14 of the Constitution:
The appellants claimed the revised policy was arbitrary and violated Article 14. The Supreme Court reiterated that Article 14 forbids class legislation but allows reasonable classification. The appellants formed a separate class of applicants for industrial sites for printing presses and were considered together. The administration's action was not arbitrary as it was based on the availability of sites and was intended to accommodate as many applicants as possible.
Conclusion:
Both appeals were dismissed, with the Supreme Court affirming the High Court's judgment. The revised policy was found to be legal, the appellants had no right to the bigger plots, the premium rate was correctly directed to be Rs. 15 per square yard, and the administration's actions were not arbitrary or discriminatory.
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1987 (12) TMI 329
Issues Involved:
1. Whether the Institute of Constitutional and Parliamentary Studies (ICPS) is 'State' within the meaning of Article 12 of the Constitution.
2. Consequences of setting aside the dismissal order and the reliefs to which the appellant is entitled.
Summary:
1. Whether ICPS is 'State' within the meaning of Article 12 of the Constitution:
The main issue for consideration was whether ICPS is 'State' within the meaning of Article 12 of the Constitution. The Supreme Court examined the constitution of ICPS, its purpose, funding, and functioning. ICPS is a society registered under the Societies Registration Act, 21 of 1860, with significant involvement from government officials and funding primarily from the Central Government. However, the Court emphasized that the mere presence of government officials and funding does not automatically render an organization as 'State'. The Court referred to several precedents, including *Rajasthan State Electricity Board v. Mohan Lal*, *Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi*, and *Ajay Hasia v. Khalid Mujib Sehravardi*, to determine the criteria for an organization to be considered 'State'. The Court concluded that ICPS, despite its substantial government funding and involvement, does not qualify as 'State' under Article 12 because it does not perform governmental functions or obligations and operates as a voluntary organization.
2. Consequences of setting aside the dismissal order and the reliefs to which the appellant is entitled:
The Court noted that Dr. Anand Prakash, representing ICPS, conceded to giving the appellant a fresh opportunity to meet the charges against him. Consequently, the dismissal order dated 17th November 1982 was set aside, and the proceedings were restored to the stage of enquiry. The appellant was deemed to have been restored to service, and his suspension, which had merged into dismissal, was vacated. The appellant was entitled to salary for the past period, subject to proving that he had not earned any other income during that time. The enquiry was to be completed within four months, with the appellant given reasonable opportunity to defend himself. The Court made no order as to costs.
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1987 (12) TMI 328
Issues Involved:
1. Passing off action regarding the use of the trademark "STAYFREE".
2. Likelihood of deception or confusion caused by the use of the mark "STAYFREE".
3. The descriptive versus distinctive nature of the trademark "STAYFREE".
4. Preliminary objections raised by the defendants regarding the maintainability of the suit and ownership of the trademark.
Detailed Analysis:
1. Passing Off Action:
The plaintiffs, a corporation organized under the laws of New Jersey, USA, and a company incorporated under the Companies Act, 1956, brought a passing off action claiming that their trademark "STAYFREE" had acquired a wide reputation and goodwill in India. They alleged that the defendants used the mark "STAYFREE" in respect of sanitary napkins and copied their packaging, which included the legend "No Belts, No Pins, No Strings". The plaintiffs sought a temporary injunction to restrain the defendants from using the mark "STAYFREE".
2. Likelihood of Deception or Confusion:
The defendants opposed the application for a temporary injunction on four points:
1. Their trademark is "Comfit Always" and not "STAYFREE".
2. The word "STAYFREE" is a common descriptive word for the product.
3. The word "STAYFREE" is a common dictionary word existing before the plaintiffs.
4. There is no likelihood of confusion or deception.
The learned single Judge dismissed the application for a temporary injunction, concluding that there was no likelihood of deception or confusion. The Judge noted that both packings were quite distinctive and that the word "STAYFREE" gives a message to the user. The plaintiffs did not object to the color scheme or the legend "No Belts, No Pins, No Strings" used by the defendants but only to the use of the word "STAYFREE".
The court emphasized that the marks must be compared as a whole and that the totality of the proposed trademark should be considered to determine if it is likely to cause deception or confusion. The court also noted that the ultimate customers were literate and semi-literate ladies and that the defendants' trademark "COMFIT ALWAYS" was prominent on their packings. The court found that the plaintiffs' and defendants' packings were different in terms of getup, color scheme, and essential features.
3. Descriptive vs. Distinctive Nature:
The defendants argued that the word "STAYFREE" is descriptive and not distinctive, claiming that it is a common English word and cannot be exclusively appropriated by the plaintiffs. The plaintiffs, on the other hand, argued that "STAYFREE" is not an ordinary English word and claimed exclusive rights to its use. The court noted that whether "STAYFREE" is a coined word or a dictionary word would be considered during the trial of the suit.
4. Preliminary Objections:
The defendants raised several preliminary objections, including the maintainability of the suit, the plaintiffs not being the owners of the trademark "STAYFREE", and the absence of a valid license in favor of plaintiff No. 2. They also argued that the plaintiffs' trademark is "Johnsons and Johnsons" and not "STAYFREE". The court did not express an opinion on these preliminary objections, as the main issue was the likelihood of confusion or deception.
Conclusion:
The court confirmed the order of the learned single Judge and dismissed the appeal, leaving the parties to bear their own costs. The court found no likelihood of confusion or deception and noted that the balance tilted in favor of the defendants. The court did not decide on the descriptive versus distinctive nature of the trademark "STAYFREE" or the preliminary objections raised by the defendants, leaving these issues to be decided during the trial of the suit.
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1987 (12) TMI 327
Issues involved: Challenge to the constitutional validity of Section 4 of the East Punjab Urban Rent Restriction Act, 1949.
Summary:
The appellant filed a Writ Petition before the High Court challenging the constitutional validity of Section 4 of the Act, which determines fair rent based on 1938 rates. The High Court dismissed the petition due to lack of essential facts. The appellant contended that pegging rent to 1938 rates was unreasonable given the rise in prices. However, the Court noted that each state legislature has the authority to determine fair rent methods, and legislative wisdom is not a ground for challenging validity. Article 14 does not allow comparison between laws of different states. The Court also highlighted that the Act was passed in 1949 and pegging rent to 1938 rates was not per se unreasonable. The challenge to Section 4 was rejected, and the appeal was dismissed.
In conclusion, the Court upheld the constitutionality of Section 4 of the Act, ruling that the method of determining fair rent based on 1938 rates was not arbitrary or violative of constitutional rights. The appeal was dismissed, and no costs were awarded.
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1987 (12) TMI 326
Issues:
1. Whether a tenant of a mortgagee can continue as a tenant after redemption of the mortgage decree until evicted in accordance with the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
2. Whether the tenancy created in favor of the appellant can be considered an act of ordinary prudence under Section 76A of the Transfer of Property Act.
Analysis:
Issue 1:
The case involved the redemption of a mortgage where the mortgagor sought vacant possession of the shop from the mortgagees, including the tenant-appellant. The tenant argued that the tenancy could not be terminated as per the Rajasthan Rent Control Act. The executing court initially held that the tenancy could not continue after the mortgage redemption, dismissing the tenant's application. However, the Civil Appeal No. 13 of 1970 allowed the appeal, emphasizing that the tenant's interest subsists post-redemption until eviction under the Rent Control Act.
The respondent filed a second appeal, which the High Court allowed, granting one year for possession delivery. The Supreme Court considered similar issues in Mahabir Gope v. Harbans Narain Singh, emphasizing that a mortgagee cannot create interests beyond their tenure, and leases must end at redemption unless a new relationship is established. The Court also cited Harihar Prasad Singh v. Munshi Nath Prasad, highlighting that leases by mortgagees must align with prudent property management.
The Court affirmed the High Court's decision, stating that the tenant's lease did not survive mortgage redemption. The Full Bench of the Rajasthan High Court's decision was also supported, denying tenant protection under the Rent Act post-redemption. The Court concluded that the tenant's lease was not a prudent act and upheld the High Court's judgment for possession recovery by the mortgagor-landlord.
Issue 2:
The second issue revolved around whether the tenancy created by the mortgagee was an act of ordinary prudence under Section 76A of the Transfer of Property Act. The Court referred to various precedents such as Asa Ram v. Mst. Ram Kali, emphasizing that leases by mortgagees must align with prudent property management practices to be binding post-redemption. The Court also cited Om Parkash Garg v. Ganga Sahai, where a lease was deemed imprudent and terminated upon mortgage redemption.
The Court concluded that the lease by the mortgagee was not an act of prudent management, leading to its termination post-mortgage redemption. The decision aligned with previous rulings and upheld the High Court's judgment for possession recovery by the mortgagor-landlord. The appeal was dismissed, with no order as to costs.
In summary, the Supreme Court affirmed that the tenant's lease did not survive mortgage redemption and that the lease was not an act of prudent management, leading to the dismissal of the appeal and granting possession recovery to the mortgagor-landlord.
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1987 (12) TMI 325
The Supreme Court dismissed the appeal from the High Court of Delhi as there was no substantial question of law. The respondent was confirmed as the owner of the premises, and the appellants were found to be in unauthorized occupation. The Civil Court had jurisdiction for eviction. The appellants were given time until 30.6.88 to vacate the premises and had to comply with specific conditions.
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1987 (12) TMI 324
Issues Involved:
1. Nature of the transaction: Loan vs. Sale.
2. Valuation of the property.
3. Possession of the property post-transaction.
Detailed Analysis:
1. Nature of the Transaction: Loan vs. Sale
The primary issue was whether the transaction effected by the deed of sale dated February 28, 1968, was in substance a loan transaction or an outright sale. The plaintiff contended that the transaction was a secured loan, with the sale deed being an ostensible document and the defendant agreeing to execute a reconveyance agreement. The defendant, however, denied this and claimed the transaction was an outright sale for Rs. 9,000, with no agreement for reconveyance.
Both the Trial Court and the High Court examined the surrounding circumstances and evidence, ultimately concluding that the transaction was an outright sale. The courts noted that the plaintiff, a man of considerable property and worldly wisdom, would not have executed and registered the sale deed if it was merely a security for a loan, especially when the defendant failed to execute the reconveyance agreement or even turn up at the registration office.
2. Valuation of the Property
The plaintiff argued that the consideration of Rs. 9,000 was too low, indicating that the transaction could not have been a sale. The Trial Court, after considering various instances of sales, concluded that the valuation of the property at Rs. 9,000 was not too low at the time of the transaction. The plaintiff's claim that the property was worth Rs. 50,000 was deemed unreliable, particularly when there was concrete evidence of sale instances, including sales by the plaintiff himself.
The High Court did not find any substantial argument regarding the valuation being too low and upheld the Trial Court's conclusion. The evidence provided by Gora Chand Ghosh, an advocate and the plaintiff's nephew, was also dismissed due to his lack of expertise in property valuation and his familial connection to the plaintiff.
3. Possession of the Property Post-Transaction
The courts also considered the issue of possession of the property after the execution of the sale deed. Both the Trial Court and the High Court concluded that the defendant had been in possession of the property post-transaction. This conclusion was based on the evidence presented, and the courts found no fault in the manner the evidence was appreciated.
Conclusion
The Supreme Court dismissed the appeal, agreeing with the concurrent findings of the Trial Court and the High Court. The transaction was deemed an outright sale, the valuation of Rs. 9,000 was justified, and the defendant was found to be in possession of the property post-transaction. The appeal was dismissed with costs.
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1987 (12) TMI 323
The Supreme Court dismissed the petition challenging an unreasoned award, citing that the matter was not pressed before the High Court and the arbitrator was appointed by the court. The Court declined to refer the matter to the Constitution Bench and modified the award by deleting interest from the commencement of reference to the date of the award. The special leave petition was dismissed.
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1987 (12) TMI 322
Issues Involved:
1. Determination of the date on which the industrial unit was set up.
2. Eligibility for sales tax exemption under G.O. Ms. No. 606, Revenue (S), dated April 9, 1981.
Issue-Wise Detailed Analysis:
1. Determination of the Date on Which the Industrial Unit Was Set Up:
The core issue revolves around establishing whether the respondent's industrial unit was set up on or after December 17, 1976. The respondent company, incorporated on October 11, 1973, was granted permission to set up an industrial unit for manufacturing plywood in a scheduled area. The company installed a pilot plant in 1976 and produced and sold plywood during that period. However, the main industrial unit, equipped with imported and indigenous machinery worth Rs. 87,85,492.94, was installed during the year 1977-78, and regular production commenced on December 1, 1977, as certified by the Director of Industries.
The Government Pleader argued that the unit commenced production before December 17, 1976, citing sales of plywood from the pilot plant. However, the court emphasized that the pilot plant, used for test production on an experimental basis, cannot be equated with the regular industrial unit intended for commercial production. The court referred to the Supreme Court's interpretation of "set up" in Commissioner of Wealth-tax v. Ramaraju Surgical Cotton Mills Ltd., stating that a unit is "set up" when it is ready to discharge its intended function, not merely when preliminary operations begin.
The court concluded that the industrial unit was set up after December 17, 1976, as the substantial machinery was purchased and erected in 1977-78, and high-tension electricity was connected on September 1, 1977. The certification by the Director of Industries further corroborated that regular production started on December 1, 1977.
2. Eligibility for Sales Tax Exemption Under G.O. Ms. No. 606, Revenue (S), Dated April 9, 1981:
The eligibility for sales tax exemption hinges on whether the industrial unit was set up on or after December 17, 1976. G.O. Ms. No. 606 exempts sales of products from industrial units set up in scheduled areas from sales tax for five years from the date of regular production. The court highlighted that the Government Order consists of two parts: the setting up of the industrial unit and its commencement of regular production.
The court noted that the respondent's industrial unit, set up with substantial machinery and certified to have commenced regular production on December 1, 1977, met the criteria outlined in the Government Order. The pilot plant's operations prior to this date did not constitute regular production by the industrial unit intended for commercial purposes.
Therefore, the court upheld the Sales Tax Appellate Tribunal's decision, affirming that the respondent's industrial unit was entitled to the sales tax exemption for five years from December 1, 1977, as provided in G.O. Ms. No. 606.
Conclusion:
The court dismissed the tax revision cases filed by the State, holding that the respondent's industrial unit was set up after December 17, 1976, and was therefore eligible for sales tax exemption under G.O. Ms. No. 606, Revenue (S), dated April 9, 1981. The court emphasized that the pilot plant used for experimental production did not qualify as the industrial unit intended for regular production. The respondent's substantial investment in machinery and the certification of regular production commencing on December 1, 1977, were pivotal in establishing eligibility for the exemption.
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1987 (12) TMI 321
Issues:
Plaintiff filed a suit for rebate under section 13(8) of the Orissa Sales Tax Act, 1947, which was not allowed by the defendants. The defendants contended that the suit is barred under section 22 of the Orissa Sales Tax Act, 1947 and is barred by limitation.
Detailed Analysis:
1. The central issue in this case was whether the non-payment of the rebate admissible under section 13(8) of the Orissa Sales Tax Act, 1947 is cognizable by a civil court. Section 22 of the Orissa Act explicitly bars questioning assessment orders in court, except under specific provisions. The court analyzed the provision and concluded that the refusal to allow rebate falls under the statutory machinery provided by the Act and is not cognizable by a civil court. The court emphasized that the jurisdiction of the civil court is not completely barred but is excluded when statutory remedies are available.
2. Section 13(8) of the Orissa Act provides for a rebate on tax payable by a dealer if paid on or before the due date. The court highlighted that the Sales Tax Officer is responsible for allowing the rebate, and it is a quasi-judicial act since it involves determining if the conditions for rebate are met. The court explained that the statutory machinery under the Act, including provisions for revision and appeal, governs the allowance of rebate, making it non-justiciable in a civil court.
3. The court addressed the argument regarding the application for rebate under section 13(8) and the applicability of section 14 of the Orissa Act. It concluded that section 13(8) creates a right to claim rebate from the tax paid, and the legislature did not intend for dealers to seek this benefit through civil litigation. The court emphasized that if the statutory machinery is not utilized, section 22 of the Orissa Act would apply, barring civil court jurisdiction.
4. The judgment discussed the principles laid down in previous decisions regarding the jurisdiction of civil courts in matters where statutory remedies are available. It emphasized that unless necessary averments are made in pleadings to show that statutory remedies are inadequate, civil courts cannot entertain suits where statutory machinery exists. The court emphasized that in this case, there was adequate statutory machinery available, making the suit non-maintainable in civil court under section 22 of the Orissa Act.
5. Ultimately, the court allowed the appeal, stating that the parties should bear their own costs. The judgment reaffirmed that the statutory remedies provided under the Orissa Sales Tax Act, 1947 govern matters related to rebate claims, and civil courts do not have jurisdiction over such issues due to the specific bar under section 22 of the Act.
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