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• 2005 (12) TMI 618
  
  ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this judgment include:

  • Whether the election petition lacked "material facts" and "particulars" and failed to disclose a cause of action, thereby warranting dismissal.
  • Whether the allegations of corrupt practice were supported by a valid and legal affidavit as required by the Representation of the People Act, 1951.
  • Whether the election petition was incomplete and improperly verified under the Code of Civil Procedure, 1908.

  ISSUE-WISE DETAILED ANALYSIS

  1. Lack of Material Facts and Particulars

  • Relevant Legal Framework and Precedents: The Representation of the People Act, 1951, particularly Sections 81, 83, and 123, requires that an election petition must contain a concise statement of material facts and full particulars of any corrupt practice alleged. The distinction between 'material facts' and 'particulars' is crucial, with material facts being the primary facts that establish a cause of action, while particulars provide details to support those facts.
  • Court's Interpretation and Reasoning: The Court emphasized that material facts are essential to disclose a complete cause of action. The High Court's dismissal of the petition was based on the absence of such facts, but the Supreme Court found that the High Court had erred by delving into the merits of the case rather than assessing the sufficiency of the pleadings.
  • Key Evidence and Findings: The allegations included the misuse of government officials in the election campaign and improper maintenance of election expenses. The Supreme Court noted that the petition contained sufficient material facts and particulars to warrant a trial.
  • Application of Law to Facts: The Supreme Court applied the legal standards for material facts and particulars, concluding that the petition did indeed disclose a cause of action and should not have been dismissed at the preliminary stage.
  • Treatment of Competing Arguments: The respondent argued that the petition was vague and lacked necessary details, but the Supreme Court found that the petition adequately set out the basis for the allegations.
  • Conclusions: The Supreme Court concluded that the High Court had prematurely dismissed the petition without proper consideration of the material facts and particulars.

  2. Validity of Affidavit and Verification

  • Relevant Legal Framework and Precedents: Section 83 of the Act requires that an election petition alleging corrupt practices be accompanied by an affidavit in the prescribed form. The affidavit must be properly verified as per the Code of Civil Procedure.
  • Court's Interpretation and Reasoning: The Supreme Court agreed with the High Court that defects in the affidavit or verification were curable and not fatal to the petition.
  • Key Evidence and Findings: The affidavit filed with the replication was in conformity with the legal requirements, and the High Court had allowed it to be placed on record.
  • Application of Law to Facts: The Court applied the principle that procedural defects in affidavits can be rectified, and such defects do not automatically invalidate an election petition.
  • Treatment of Competing Arguments: The respondent's objections regarding the affidavit were found to be insufficient to dismiss the petition.
  • Conclusions: The Supreme Court upheld the High Court's decision that the affidavit issue did not warrant dismissal of the petition.

  SIGNIFICANT HOLDINGS

  • Preserve Verbatim Quotes of Crucial Legal Reasoning: "The High Court, in our considered view, stepped into prohibited area of appreciating the evidence and by entering into merits of the case which would be permissible only at the stage of trial of the election petition and not at the stage of consideration whether the election petition was maintainable."
  • Core Principles Established: The judgment reinforces the principle that an election petition should not be dismissed at the threshold for lack of particulars if it sufficiently discloses a cause of action. Material facts must be distinct from particulars, and any procedural defects in affidavits can be remedied.
  • Final Determinations on Each Issue: The Supreme Court allowed the appeal, set aside the High Court's dismissal, and remitted the election petition back to the High Court for trial on merits.

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• 2005 (12) TMI 617
  
  Issues:
  1. Challenge to adjudication order imposing penalties for failure to repatriate export proceeds.
  2. Contention of reasonable steps taken by the appellants to realize outstanding export proceeds.
  3. Failure to produce evidence of efforts in certain export transactions.
  4. Interpretation of the legal provisions under FERA, 1973 regarding failure to repatriate export proceeds.
  5. Rebutting the presumption under section 18(3) of FERA, 1973.
  
  Detailed Analysis:
  
  Issue 1:
  The appellants challenged the adjudication order imposing penalties for their failure to repatriate export proceeds amounting to Rs. 68,09,253. The penalties were imposed under sections 18(2) and 18(3) read with section 68(1) of FERA, 1973. The appellants contended that they made reasonable efforts to realize the outstanding export proceeds but were unsuccessful. They argued that the adjudicating authority discharged them in some cases where RBI agreed to write off the export dues but imposed penalties in other cases. The appellants emphasized that failure to take legal proceedings or specific actions does not automatically amount to contravention of section 18(2) of the Act.
  
  Issue 2:
  The appellants, through their advocate, presented evidence of various steps taken to recover the outstanding export proceeds, including correspondence with foreign buyers, seeking assistance from the Indian Embassy, and approaching RBI for write-offs and extensions. They argued that the essence of the charge under section 18(2) is the lack of reasonable efforts to realize export value, not just late or non-realizations. The advocate referred to legal authorities to support the argument that the focus should be on the exporter's efforts rather than specific actions taken.
  
  Issue 3:
  The respondent contended that the appellants failed to provide evidence of efforts made to recover export proceeds in specific transactions totaling Rs. 60,09,253. The respondent highlighted the lack of documents demonstrating sincere and reasonable efforts towards realizing the export proceeds under these transactions. This lack of evidence was used to support the validity of the impugned order imposing penalties.
  
  Issue 4:
  The Member of the Appellate Tribunal analyzed the legal provisions under FERA, 1973 regarding the failure to repatriate export proceeds. It was emphasized that non-realization of export proceeds alone is not punishable; rather, the Act penalizes the failure of exporters to take all reasonable steps to realize the export proceeds. The reasonableness of efforts is judged based on business considerations and commercial prudence, with each case requiring a contextual assessment of what constitutes reasonable steps.
  
  Issue 5:
  The Member discussed the rebuttable nature of the presumption under section 18(3) of FERA, 1973. It was highlighted that the onus is on the respondent to prove the essential ingredient of the provision, which cannot be shifted to the exporter. In this case, the Member found that the appellants had made plausible efforts to recover export proceeds in certain transactions, leading to a reduction in the penalty amount imposed. The impugned order was deemed unsustainable in law for some transactions, and the penalty was proportionately reduced based on the efforts made by the appellants.
  
  In conclusion, the appeal was partly allowed, with the penalty amount being reduced to the recovered sum of Rs. 1,10,000 for certain transactions where the appellants had demonstrated reasonable efforts to recover the export proceeds.

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• 2005 (12) TMI 616
  
  Issues:
  Challenge to Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act, 1973.
  Validity of the requirement to make pre-deposit of penalty.
  Late filing of Bill of Entry as proof of import of goods.
  Interpretation of provisions of section 8(3) Foreign Exchange Regulation Act, 1973.
  
  Analysis:
  The appellant challenged Adjudication Order imposing a penalty for contravention of the Foreign Exchange Regulation Act, 1973. The appellant was penalized for not using the foreign exchange obtained for importing goods and failing to file proof thereof. The Tribunal initially directed the appellant to make a pre-deposit of 20% of the penalty amount, which was later set aside by the High Court for fresh disposal of the application for waiver of the pre-deposit.
  
  The appellant submitted additional papers, including a letter from the authorized banker stating that the Bill of Entry for the remittance in question was filed after some time. The appellant argued that they had imported goods using the foreign exchange and filed the Bill of Entry as proof, even though it was filed beyond the prescribed time. The respondent contended that the late filing of the Bill of Entry indicated negligence on the part of the appellant.
  
  The Tribunal analyzed the provisions of section 8(3) of the Foreign Exchange Regulation Act, 1973, and the Exchange Control Manual regarding the filing of proof of import of goods. It was observed that while there was no specific time limit mentioned for filing proof of import, the Act required the foreign exchange to be used for importing goods. The Exchange Control Manual only mentioned a reminder by the authorized banker after 3 months of non-filing. The Tribunal concluded that late filing of proof of import should not attract a penalty, as long as the foreign exchange was utilized for importing goods.
  
  Considering that the appellant had indeed imported goods using the foreign exchange and filed proof with the authorized banker, albeit late, the Tribunal found merit in the appeal. The adjudication order imposing the penalty was set aside and quashed, as it did not hold up under legal scrutiny. The appeal was allowed in favor of the appellant.

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• 2005 (12) TMI 615
  
  Issues:
  Challenge to Adjudication Order imposing penalty and confiscation under FER Act for contravention of sections 9(1)(b) and 9(1)(d) - Dispensation of pre-deposit - Evidentiary value of confessional statements - Retraction of confession - Legal scrutiny of confessional statement of co-accused - Contemporary evidence of foreign currency advancement.
  
  Analysis:
  The judgment deals with an appeal challenging an Adjudication Order imposing a penalty and confiscation under the Foreign Exchange Regulation (FER) Act for contravention of specific sections. The appellant contested the order, citing a delay of over 10 years in deciding on the dispensation of pre-deposit. The Tribunal deemed this lapse as grounds for dispensation and proceeded to evaluate the appeal on its merits.
  
  Two Show Cause Notices were issued to the appellant, alleging contravention of FER Act provisions based on various documents and statements from individuals. The appellant denied the allegations, leading to the adjudication proceedings and the subsequent impugned order. The admitted facts included the apprehension of an individual with Indian currency and documents, implicating the appellant in receiving and making payments on behalf of a person in Dubai.
  
  The appellant's counsel argued against the evidentiary value of confessional statements, contending that statements made under duress or threat should be disregarded. However, the Tribunal found insufficient evidence of duress or torture and referenced Supreme Court judgments emphasizing the voluntary nature of statements for admissibility.
  
  Regarding the retracted confession, the Tribunal referred to another Supreme Court ruling, highlighting that retracted confessions can be relied upon if found voluntary and true, especially when corroborated by other evidence. In this case, the confession was deemed corroborated by recovered documents, making it acceptable.
  
  The appellant's arguments against relying on co-accused confessions were dismissed, as the FER proceedings are not governed by the Indian Evidence Act. The Tribunal emphasized adherence to prescribed procedures and rejected the appellant's contentions, stating that the confessions were admissible.
  
  Lastly, the Tribunal addressed affidavits from individuals claiming to have advanced foreign currency to the appellant, noting their lack of contemporaneity and probative value. The impugned order was upheld, and the appeal was rejected, affirming the adjudication order and directing the appellant to deposit the penalty amount within a specified timeframe.

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• 2005 (12) TMI 614
  
  Issues:
  1. Penalty imposed under section 18(2) of FERA, 1973 for contravention of export regulations.
  2. Failure to realize export proceeds and adjustments made without RBI permission.
  3. Allegations of under-invoicing and delay in realization of export proceeds.
  4. Responsibility of partners and Power of Attorney holder in the appellant-firm.
  5. Contention regarding the reasonableness of steps taken for realization of export proceeds.
  6. Interpretation of sections 18(2) and 18(3) of FERA, 1973.
  7. Liability under section 68(1) of FERA, 1973 and quantum of penalties imposed.
  
  The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi involved appeals against penalties imposed for contravention of section 18(2) of FERA, 1973. The penalties were imposed on the appellant-firm and individuals for reducing unit prices of exported items without RBI permission and failure to realize export proceeds. The appellants were found guilty despite contentions of adjustments being for mutual dues and steps taken for realization. The tribunal noted the unauthorized adjustments and lack of evidence of receipt of payments, upholding the penalties. The tribunal emphasized the obligation under section 18(2) to repatriate full export value within the specified period and the presumption of non-compliance if payment is not received. The tribunal found the steps taken for realization inadequate, especially considering the close association of partners with foreign buyers. The responsibility of partners and a Power of Attorney holder was highlighted, with penalties upheld as proportionate to contraventions under sections 18(2) and 68(1) of FERA, 1973. The appellants were directed to deposit the penalty amount within 15 days, failing which recovery would be made by the respondent in accordance with the law.

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• 2005 (12) TMI 613
  
  Issues:
  Challenge to Adjudication Order imposing penalties for contravention of FER Act provisions regarding repatriation of export proceeds. Interpretation of RBI write-off and its impact on legal obligations. Consideration of efforts made by exporters in repatriation process. Determination of penalties based on the amount of export proceeds involved.
  
  Analysis:
  
  1. Challenge to Adjudication Order:
  The Appellate Tribunal reviewed appeals challenging an Adjudication Order imposing penalties for contravention of FER Act provisions related to repatriation of export proceeds. The penalties were imposed on multiple appellants for failing to take reasonable steps for repatriation of specific amounts.
  
  2. Interpretation of RBI Write-off:
  The appellants argued that the RBI's grant of write-off absolved them of legal obligations. They cited previous cases to support their contention. However, the Tribunal noted that despite the write-off, the exporters failed to show concrete efforts in repatriation, leading to contravention of FER Act provisions.
  
  3. Efforts in Repatriation Process:
  The Tribunal highlighted the importance of exporters making efforts to repatriate export proceeds, including engaging with buyers or pursuing legal action. The failure to demonstrate such efforts was considered a contravention of FER Act provisions, irrespective of the RBI's write-off.
  
  4. Determination of Penalties:
  The Tribunal analyzed the amounts involved in the export proceeds and differentiated between the write-off amount and the remaining balance. While the write-off amount was set aside due to RBI permission, the Tribunal upheld penalties for the remaining balance, emphasizing the substantial nature of the amount and the lack of efforts by the exporters.
  
  5. Conclusion and Decision:
  Based on the above analysis, the Tribunal partially allowed the appeals. The Tribunal sustained the guilt for the remaining balance of export proceeds but set aside penalties related to the write-off amount. The penalties were reduced to 10% of the total amount, considering the efforts made by the appellants. The pre-deposit made by the appellants was allowed to be appropriated towards the penalty amount, resulting in a partial allowance of the appeals.

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• 2005 (12) TMI 612
  
  Issues:
  - Appeal against penalty imposed for contravention of Foreign Exchange Regulation Act
  - Failure to repatriate export proceeds
  - Arguments regarding realization of export proceeds and sale of goods
  - Legal presumption against appellant for not taking reasonable steps for repatriation
  - Dismissal of the appeal and order for penalty payment
  
  Analysis:
  
  The judgment involves an appeal against a penalty imposed for contravention of the Foreign Exchange Regulation Act due to the failure to repatriate export proceeds. The appellant argued that part of the export proceeds was realized, while the remaining amount was not repatriated as the goods were not sold due to the foreign buyer not taking delivery. However, the respondent contended that despite repatriating a portion of the amount, a significant sum remained outstanding, justifying the penalty. The Tribunal noted that the language of the Act referred to the "export of goods" rather than the "sale of goods," emphasizing the responsibility to repatriate the price of goods sent abroad.
  
  Regarding goods sold by Singapore Customs during the export process, the Tribunal highlighted the need to prove the consumption and price of goods sold. The appellant failed to provide evidence on this matter, leading to the rejection of the argument that the sale by Singapore Customs absolved them of responsibility. The legal presumption under section 18(3) against the appellant for not taking reasonable steps for repatriation was discussed. While this presumption could be rebutted with sufficient evidence, the appellant failed to do so, leading to the application of the presumption and upholding the contravention under section 18(2).
  
  The Tribunal upheld the penalty of Rs. 2 lakhs against the appellant-company, considering it reasonable compared to the repatriated amount. With no compelling arguments presented, the appeal was dismissed, and the appellant was directed to deposit the remaining penalty within 15 days. Failure to comply would result in the respondent recovering the outstanding amount in accordance with the law. The judgment concluded by dismissing the appeal and instructing the appellant to fulfill the penalty payment obligation within the specified timeframe.

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• 2005 (12) TMI 611
  
  Issues Involved:
  1. Application under Section 91 Cr.P.C. for production of documents.
  2. Allegation of withholding evidence by the prosecution.
  3. Relevance and necessity of the documents for the defense.
  4. Interpretation of Sections 91, 172, and 173 of the Criminal Procedure Code.
  5. Rights of the accused under Article 21 of the Constitution of India.
  
  Issue-Wise Detailed Analysis:
  
  1. Application under Section 91 Cr.P.C. for production of documents:
  The petitioner, accused of an offense under Section 376(g) IPC, filed an application under Section 91 of the Criminal Procedure Code (Cr.P.C.) to seek the production of certain documents from the police, which were not included in the charge sheet. These documents included a report lodged by the prosecutrix's father, a complaint by the prosecutrix at Mahila Thana, and items recovered at the petitioner's instance such as photos, love letters, STD bill slips, and a ledger book. The Additional Sessions Judge dismissed this application, leading to the present petition.
  
  2. Allegation of withholding evidence by the prosecution:
  The petitioner argued that the prosecution had withheld documents that could potentially demonstrate the fabrication of the case against him. It was contended that these documents were crucial for confronting the prosecutrix's father during cross-examination and were necessary for a fair trial. The defense claimed that the investigating agency must disclose all facts discovered during the investigation to the Trial Court and cannot present a one-sided story.
  
  3. Relevance and necessity of the documents for the defense:
  The Court emphasized that justice and liberty are interrelated and essential for the protection of individuals and democracy. The accused is presumed innocent until proven guilty, and the State must prove the guilt. The Court noted that the documents sought by the petitioner were necessary or desirable for the trial and should have been produced by the prosecution. The right to defend, which flows from the fundamental right to "life" and "personal liberty" under Article 21 of the Constitution, is substantive and not illusory. The defense must be built from the beginning of the trial, and withholding evidence until the defense stage is unjust.
  
  4. Interpretation of Sections 91, 172, and 173 of the Criminal Procedure Code:
  - Section 172 Cr.P.C.: Requires police to maintain a case diary and allows the Court to use these diaries to aid in inquiry or trial. Although the accused cannot call for these diaries, they can be used to contradict a witness or refresh memory.
  - Section 173 Cr.P.C.: Mandates the police to submit the charge sheet and all relevant documents to the Magistrate. Sub-section (6) allows withholding parts of statements that are not relevant or disclosure of which is not essential for justice or is against public interest. However, this power must be exercised with reason and within limits.
  - Section 91 Cr.P.C.: Empowers the Court to summon documents or things necessary or desirable for any investigation, inquiry, or trial. This section is not subject to Sections 172 and 173, allowing the Court to call for documents even if withheld by the prosecution.
  
  The Court held that Section 91 should be interpreted purposively to enable the Court to discover the truth and do complete justice. The prosecution cannot withhold evidence that weakens its case against the accused and must present all relevant information to the Court.
  
  5. Rights of the accused under Article 21 of the Constitution of India:
  The Court reiterated that the right to defend is part of the fundamental right to "life" and "personal liberty" under Article 21. Denying the accused access to necessary documents prevents the construction of a proper defense and violates the right to a fair trial. The Court must ensure that justice is done and appears to be done, maintaining public faith in the judiciary.
  
  Conclusion:
  The petition was allowed, and the impugned order dated 22.8.05 was quashed. The Additional Sessions Judge (Fast Track) No. 1, Jaipur City, Jaipur, was directed to call for the report lodged by the prosecutrix's father, the complaint at Mahila Thana, and the documents recovered at the instance of the accused. Copies of these documents were to be provided to the petitioner within three weeks of receiving a certified copy of the order.

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• 2005 (12) TMI 610
  
  Issues:
  Challenging E-auction scheme for coal supply, varying High Court judgments on scheme's validity, transfer petitions for consolidation of cases, compliance with interim orders, modification of payment terms for coal supply.
  
  Analysis:
  1. The petitions challenge the new E-auction scheme introduced by Coal India Ltd. and its subsidiaries, affecting industrial undertakings with coal linkages. High Courts passed interim orders for coal supply at notified prices, leading to petitions for special leave to appeal. The Supreme Court directed coal supply at notified prices with indemnity bonds and financial statements submission by petitioners.
  
  2. Conflicting judgments by Gauhati High Court and M.P. High Court on the E-auction scheme's validity prompted transfer petitions by the Union of India to consolidate cases in the Supreme Court for resolution and avoidance of prolonged litigation.
  
  3. Compliance issues with the Supreme Court's interim order were raised by Coal India Ltd. and its subsidiaries, advocating modification of payment terms for coal supply to mitigate financial risks. Petitioners resisted changes, emphasizing compliance and financial stability.
  
  4. After considering arguments, the Supreme Court directed petitioners to pay a portion of the enhanced price for coal supply, with security for the remaining amount pending the resolution of challenges to the E-auction scheme. The Court balanced interests, ensuring refunds if petitioners succeed in their challenge.
  
  5. The Court set a payment structure for petitioners, requiring partial payment of enhanced prices and security, with undertakings for refunds if challenges succeed. Compliance with payment terms was mandated for coal supply, with non-compliance leading to supply cessation.
  
  6. Transfer petitions for case consolidation were allowed, and a timeline was set for final disposal of cases, with detailed written submissions and no adjournment requests accepted to expedite proceedings and ensure efficient resolution of the legal issues involved.

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• 2005 (12) TMI 609
  
  Issues:
  1. Validity of arbitration agreement in a money claim suit.
  2. Interpretation of Section 8 of the Arbitration and Conciliation Act, 1996.
  3. Application of Order 39 Rules 1 and 2 of the Code of Civil Procedure in arbitration matters.
  
  Issue 1: Validity of arbitration agreement in a money claim suit
  The Respondent filed a money claim suit against the Appellant, disputing the existence of an arbitration agreement in the transaction. The Appellant argued that the invoices contained an arbitration clause, making arbitration necessary for disputes. The civil court initially dismissed the Respondent's application for interim relief under Order 39 Rules 1 and 2, but on appeal, it was treated as an application under Section 8 of the 1996 Act. The civil court later held that a valid arbitration agreement existed under Section 7 of the 1996 Act, requiring arbitration under Sections 5 and 8. The High Court, however, ruled that the endorsement on the invoice did not constitute an arbitration agreement under the 1996 Act, allowing the appeal and granting interim relief.
  
  Issue 2: Interpretation of Section 8 of the Arbitration and Conciliation Act, 1996
  The Supreme Court clarified the purpose of Section 8, emphasizing that it does not aim to restrain arbitration proceedings before an arbitral tribunal. Section 8 is triggered when a judicial authority becomes aware of an arbitration agreement, and it does not involve restraining ongoing arbitration proceedings. In this case, the Respondent, as the Plaintiff, sought to restrain arbitral proceedings through an application under Order 39 Rules 1 and 2, which should have been dealt with accordingly. The Court noted that a proceeding under Section 8 should not result in an order restraining arbitration, as erroneously done in the impugned order.
  
  Issue 3: Application of Order 39 Rules 1 and 2 of the Code of Civil Procedure in arbitration matters
  The Supreme Court set aside the High Court's judgment and directed the Appellant to file an application under Section 8 of the 1996 Act for arbitration reference within two weeks. The Respondent could oppose this application on legal grounds. The civil court was instructed to hear and decide on the application within six weeks, ensuring no further steps were taken by the Bharat Merchants Chamber until the civil court's decision. The appeal was allowed with no order as to costs, aiming to rectify the misconceptions in the legal proceedings and ensure fair treatment for all parties involved.

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• 2005 (12) TMI 608
  
  Issues:
  1. Application under Order 23 Rule 1(3) C.P.C for withdrawal of suit and liberty to file a fresh suit.
  2. Granting leave to file a fresh suit on the same cause of action.
  3. Whether the Trial Court was right in partly allowing the Petition and declining to grant liberty to file a fresh suit.
  
  Analysis:
  1. The Plaintiff filed a Suit for Partition and Separate possession of properties, including one situated in Chennai, before the High Court, which was later transferred to the City Civil Court. During the part-heard stage, the Plaintiff sought to withdraw the Suit under Order 23 Rule 1(3) C.P.C, citing reasons related to the properties' location and jurisdiction issues.
  
  2. The Defendants opposed the withdrawal, arguing that the Plaintiff included the Chennai property in bad faith. The Trial Court allowed the withdrawal but refused to grant liberty to file a fresh suit, citing the belated stage of the application. The Plaintiff challenged this decision, contending that the Court should have either dismissed the Petition entirely or granted permission for a fresh suit.
  
  3. The key legal issue was whether the Trial Court erred in partially allowing the withdrawal of the Suit without granting leave to file a fresh suit on the same cause of action. The Plaintiff argued that the Court's decision violated Order 23 Rule 1(3) C.P.C by splitting the order and causing prejudice. The Third Respondent supported the Trial Court's decision, claiming the Plaintiff's actions were an abuse of process and that the refusal of leave was justified due to the Suit's stage.
  
  4. Legal precedents highlighted the indivisibility of applications under Order 23 Rule 1(3) C.P.C, emphasizing that if leave to file a fresh suit is denied, the pending suit should not be dismissed but retained for Trial. The Court should either reject the entire application or allow it in full, without dividing the withdrawal and liberty aspects. The Trial Court's partial allowance of the Petition was deemed incorrect, and the Plaintiff's Revision Petition was allowed, with directions for expedited Trial of the Suit.

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• 2005 (12) TMI 607
  

  Dishonour of Cheque - money lending business OR not - Prayer for discharge - complaint lodged u/s 138 of the NI Act - demand notice - rebuttal of presumption - non-application of the mind of the learned Magistrate - violation of provisions of Income Tax Act, Indian Contract Act and Money Lenders Act - HELD THAT:- In the instant matter admittedly there was a cheque in the hand of the complainant and he was holder of the cheque and the said cheque bears the signature of petitioner. The said cheque was presented by complainant to his bank and it was dishonoured. The complainant thereafter sent demand notice to the accused in view of provisions of NI Act and the accused received the notice, but did not make payment of the dishonoured cheque within 15 days from the date of receipt of the notice. Instead he sent a reply denying everything and even denied issue of cheque in favour of complainant and taking loan from him.

  The facts of denial of the matter and the allegations made by the accused can be considered by the Court of learned Magistrate only after full trial on the basis of both oral and documentary evidence to be adduced by both parties in the trial. After closure of complainant's evidence the accused would be examined u/s 313 of the Code, and thereafter, the accused would lead his evidence in support of his case and would try to rebut the presumption which is in favour of complainant u/s 139 of the NI Act.

  After considering evidence of both parties at the time of delivery of judgment the learned Magistrate would reflect in his judgment and order whose case is believable, acceptable and has been proved. At this stage, there is no ground at all to quash the complaint case and to discharge the accused petitioner. The order of the learned CJM taking cognizance was perfect, proper and legal and it requires no interference. The order of the learned Judicial Magistrate, Is' Court dated 14.8.03 issuing process against the petitioner also was correct, legal and proper and the said order does not require any interference.

  There is no ground to accept the submission of accused petitioner. It has already been indicated above that learned Magistrate rightly issued process and rightly rejected prayer of the accused petitioner for discharging him. The alleged violation of provisions of Income Tax Act, Indian Contract Act and Money Lenders Act are not at all a bar for continuation of the present criminal proceeding u/s 138 of the NI Act in view of the materials disclosed in the petition of complaint read with demand notice. Here a cheque was dishonoured when presented by complainant for encashment and it was accompanied subsequently by demand notice to the accused petitioner who issued the cheque asking him to make payment of dishonoured cheque amount. In spite of receipt of demand notice the amount of the bounced cheque was not paid and naturally all the initial ingredients of initiation of a proceeding u/s 138 of the NT Act was complete. this Court in an earlier revisional application by order dated 8th July, 2004 directed the learned Magistrate to dispose of the criminal trial within 3 months from the date of communication of the order.

  It is evident that in spite of such direction the trial could not be completed and the accused petitioner by different methods is delaying the trial. First, after such order he filed an application for discharge and when it was rejected he moved this Court in this revisional application. Considering the entire matter and the facts and circumstances of the case and the position of law as it stands particularly in view of provisions of NI Act, I find that revisional application has no merit at all and it requires dismissal and it is accordingly dismissed.

  Thus, the application being C.R.A.N. No. 598/05 succeeds and is allowed. All the interim orders passed earlier stand vacated.

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• 2005 (12) TMI 606
  
  Issues:
  1. Whether an account maintained in the name of a firm can be considered as an account maintained by its Managing Partner and if the Managing Partner who issued the cheque can be considered as the drawer of the cheque.
  
  Analysis:
  The case involved a revision petition against the conviction under Section 138 of the N.I. Act. The accused, as the Managing Partner of a firm, issued a cheque for Rs. 90,000 which was dishonored due to insufficient funds. The complainant alleged that the accused borrowed the amount and issued the cheque to discharge the liability. The accused claimed he issued the cheque on behalf of the firm to another person and that the liability was already settled. The courts below found the accused guilty, leading to the appeal.
  
  The main contention raised was whether the petitioner, as the Managing Partner, could be held liable under Section 138 of the N.I. Act without the firm being prosecuted. The petitioner argued that since there was no allegation or proof that the firm committed an offense, the prosecution against him was not maintainable. However, the court held that the petitioner, as a partner in the firm, was the drawer of the cheque, and the firm's liability under Section 138 could not be disputed. The court emphasized that the petitioner's role as a Managing Partner made him competent to act on behalf of the firm, even without a specific averment in the complaint.
  
  Furthermore, the court addressed the issue of the firm's liability and clarified that even if the firm had no personal liability to the complainant, issuing a cheque to discharge any debt or liability falls under Section 138 of the N.I. Act. The court concluded that the firm had indeed committed an offense under Section 138.
  
  Regarding the sentence, the court modified and reduced the imprisonment term, considering the delay in settling the matter and the complainant's long wait for payment. The court imposed a lenient sentence of imprisonment till rising of the court, along with a compensation amount and default sentence. If the petitioner failed to appear before the Magistrate, necessary steps for execution of the sentence were directed to be taken.
  
  In conclusion, the revision petition was partially allowed, upholding the guilty verdict and conviction under Section 138 of the N.I. Act but modifying the sentence and reducing the imprisonment term while imposing a compensation amount.

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• 2005 (12) TMI 605
  
  Issues:
  Challenge against imposition of penalty for late filing of service tax returns.
  
  Analysis:
  The appeal was filed against the penalty imposed by the Commissioner (Appeals) for late filing of service tax returns. The appellants did not dispute the levy and recovery of service tax and interest. They argued that as petty tour operators, they were not aware of the requirement to file returns after depositing the tax collected from customers. They claimed ignorance of the need to submit ST-3 returns due to an exemption from service tax for tour operators from July 1998. The appellants highlighted their minimal tax liability per quarter, ranging from Rs. 422 to Rs. 487. They contended that the penalty of Rs. 100 per day for late filing was excessive, especially considering their lack of awareness and absence of prior notice from the department. They cited precedents where penalties were reduced for similar reasons and referred to a Ministry scheme offering penalty waivers for service providers registering belatedly due to ignorance.
  
  The Revenue argued that the delay in filing returns was solely due to the appellants' late collection of service tax from customers, emphasizing that the appellants had registered in December 1997 and should have been aware of the filing requirements. They supported upholding the lower authorities' decision on the penalty.
  
  After considering both parties' submissions, the Member (T) acknowledged the delay in filing returns, noting that the appellants had paid the service tax with interest. Recognizing the initial lack of awareness among assesses regarding service tax provisions and return filing procedures, the Member attributed the delay to ignorance and hesitation among petty assesses despite efforts by departmental officers to educate them. Consequently, the penalty for late filing of service tax returns was reduced to Rs. 2,000. The appeal was disposed of accordingly, with the order pronounced on 5th December 2005.

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• 2005 (12) TMI 604
  
  Issues Involved:
  1. Competence of the Trial Judge to dispose of the application for temporary injunction in the absence of the plaintiff.
  2. Legality of restraining the defendant from transferring property situated beyond the territorial limits of the Court.
  3. Validity of the injunction granted under Order 39 Rules 1 and 2 of the Code of Civil Procedure.
  4. Scope of granting injunction under Section 151 of the Code of Civil Procedure.
  
  Issue-wise Detailed Analysis:
  
  1. Competence of the Trial Judge to Dispose of the Application for Temporary Injunction in the Absence of the Plaintiff:
  
  The appellant argued that the Trial Judge should have dismissed the application for temporary injunction for default as the plaintiff was not present on the date of hearing. The appellant contended that the principles of Order 9 Rule 8 of the Code should apply by virtue of Section 141 of the Code of Civil Procedure. However, the Court held that the principles of Order 17 Rule 2 of the Code were applicable and that the affidavit filed by the plaintiff should be treated as evidence already on record. The Court concluded that the Trial Judge was competent to dispose of the application for temporary injunction on merit, even in the absence of the plaintiff, based on the affidavit and written objection provided by the defendant.
  
  2. Legality of Restraining the Defendant from Transferring Property Situated Beyond the Territorial Limits of the Court:
  
  The appellant argued that the Trial Judge erred in restraining the defendant from transferring property situated beyond the territorial limits of the Court. The Court referred to the decision in Balai Kumar Sarkar v. Bimal Chandra Sarkar and Ors., which held that a Court could attach property situated beyond its territorial limits by sending the order to the appropriate Court for implementation. Therefore, the Court found no substance in the appellant's contention and held that there was no bar in restraining the defendant from transferring property situated beyond the territorial limits of the Court.
  
  3. Validity of the Injunction Granted Under Order 39 Rules 1 and 2 of the Code of Civil Procedure:
  
  The appellant contended that the plaintiff failed to make out a case for attachment before judgment as provided in Order 38 of the Code, and thus, no order of attachment could be passed. The Court agreed that the plaintiff did not meet the requirements for attachment before judgment under Order 38. However, the plaintiff argued that the injunction was justified under Order 39 Rule 1(a) as the appellant was going to alienate the subject matter of the suit. The Court held that the property of the appellant was not the subject matter of the suit within the meaning of Order 39 Rule 1, as the suit was essentially for recovery of money and a declaration that the plaintiff was a secured creditor. Consequently, the Court found that the plaintiff was not entitled to the order of temporary injunction granted by the Trial Court.
  
  4. Scope of Granting Injunction Under Section 151 of the Code of Civil Procedure:
  
  The plaintiff argued that even if the case did not fall under Order 39, the Court could grant an injunction under Section 151 of the Code to protect the plaintiff's rights. The Court acknowledged that while it had inherent power to grant injunctions under Section 151, such power could not be exercised in situations where Order 39 explicitly prohibited the grant of injunctions. The Court noted that Order 39 Rule 1(b) allowed for injunctions only if the defendant intended to transfer property with the intent to defraud creditors, which was not alleged in this case. Therefore, the Court concluded that there was no scope for granting the injunction under Section 151 in the absence of any fraudulent intention by the defendant.
  
  Conclusion:
  
  The Court set aside the order of temporary injunction passed by the Trial Judge, finding that the injunction did not fall within the purview of Order 39 and could not be supported under Section 151 of the Code. The appeal was allowed, and the application for temporary injunction filed by the plaintiff was dismissed. There was no order as to costs.

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• 2005 (12) TMI 603
  
  ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this case were:

  • Whether the valuation of the shares of the target company was conducted in accordance with the parameters set out under Regulation 20(5) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997.
  • Whether the appellants, having accepted the consideration for their shares, could still seek an enhancement in the share price.
  • Whether the valuation reports provided by the Chartered Accountants were flawed or contained any errors that would justify a different valuation.
  • Whether the subsidiary status of Ace Glass Containers Ltd. should have been considered in the valuation of the target company's shares.

  ISSUE-WISE DETAILED ANALYSIS

  Valuation of Shares under Regulation 20(5)

  • Relevant Legal Framework and Precedents: Regulation 20(5) of the Takeover Code provides the framework for determining the offer price of shares that are infrequently traded. It requires consideration of negotiated prices, highest prices paid by acquirers, and other parameters such as return on net worth, book value, and earnings per share.
  • Court's Interpretation and Reasoning: The Tribunal emphasized that the valuation must broadly comply with the parameters set out in Regulation 20(5). It noted that SEBI had appointed an independent Chartered Accountant, Patni & Co., to ensure a fair valuation, which was the highest among the valuations considered.
  • Key Evidence and Findings: Three valuations were conducted: Deloitte at Rs. 43.02, Patni & Co. at Rs. 64.17, and Chadha & Co. at Rs. 60.04. SEBI accepted the highest valuation by Patni & Co.
  • Application of Law to Facts: The Tribunal found that the valuation process was consistent with Regulation 20(5) and that SEBI acted within its regulatory powers to ensure a fair and reasonable offer price.
  • Treatment of Competing Arguments: The appellants argued that the valuation was undervalued and that the subsidiary status of Ace Glass should have been considered. The Tribunal rejected these arguments, noting that Ace Glass was not a subsidiary under the Companies Act, and the valuation process was thorough and fair.
  • Conclusions: The Tribunal concluded that the valuation was conducted properly and in compliance with the regulatory framework.

  Acceptance of Consideration and Further Claims

  • Relevant Legal Framework and Precedents: The principle of "approbate and reprobate" suggests that a party cannot accept a benefit under a transaction and then challenge it.
  • Court's Interpretation and Reasoning: The Tribunal noted that the appellants accepted the consideration as "full and final settlement" and encashed the cheques, which precluded them from seeking further enhancement.
  • Key Evidence and Findings: The appellants tendered their shares "without prejudice," but the payment was made in full settlement, and they accepted it.
  • Application of Law to Facts: By accepting the payment, the appellants were deemed to have settled their claims, barring further legal challenges.
  • Treatment of Competing Arguments: The appellants contended that their acceptance was conditional, but the Tribunal found no legal basis to support this claim.
  • Conclusions: The Tribunal concluded that the appellants could not seek an enhancement after accepting the settlement.

  SIGNIFICANT HOLDINGS

  • Core Principles Established: The Tribunal reinforced the principle that once a settlement is accepted, further claims are generally barred. It also upheld the regulatory framework's integrity in ensuring fair valuation processes.
  • Final Determinations on Each Issue: The Tribunal dismissed the appeals, affirming that the valuation was conducted correctly and the appellants' acceptance of the settlement precluded further claims.
  • Verbatim Quotes of Crucial Legal Reasoning: The Tribunal emphasized, "The appeals are devoid of merit. Appeals stand dismissed. No order as to costs."

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• 2005 (12) TMI 602
  
  Issues:
  1. Need for sanction under Section 197 of Cr.P.C for public servants.
  2. Validity of taking cognizance after recording sworn statements.
  
  Analysis:
  
  1. The petitioners, who are public servants, argued that the complainant should have obtained sanction under Section 197 of the Cr.P.C before filing the complaint. However, the court rejected this argument, stating that the abusive behavior of the accused towards the complainant, an advocate, did not fall within the scope of their official duties. The court emphasized that the derogatory remarks made by the accused were not connected to the discharge of their official duties and could amount to an offense. Therefore, the complainant was not required to obtain sanction to prosecute the accused in this case.
  
  2. The court addressed the issue of taking cognizance after recording sworn statements. It clarified that the Magistrate is required to take cognizance of the offenses before proceeding to record sworn statements. In this case, the Magistrate had taken notice of the accusations in the complaint and decided to record sworn statements of the complainant and witnesses. The court held that the Magistrate had applied his mind and taken cognizance of the offenses before recording the sworn statements, as inferred from the facts and material on record. The court concluded that the order of issuing process could not be set aside on technical grounds, as there was no prejudice caused to the petitioners by the Magistrate not explicitly mentioning the cognizance in the order sheet before recording sworn statements.
  
  In the final decision, the court dismissed the criminal petition but granted the petitioners the liberty to argue for their discharge before the trial court if they chose to do so. The trial court was instructed to consider any such arguments in accordance with the law without being influenced by any observations made during the judgment.

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• 2005 (12) TMI 601
  
  Issues Involved:
  1. Whether the cheques were taken from the accused on 17-9-1998 and 15-4-1999 as security for the amounts lent and not on the dates mentioned on the cheques.
  2. Whether the drawer cannot be prosecuted under Section 138 of the Negotiable Instruments Act if the cheques were taken as security.
  3. Whether A-3 and A-4, who are not signatories to the cheques, are liable for prosecution under Section 138 of the Act.
  4. Whether the order of acquittal passed by the trial Court is sustainable in law.
  
  Issue-Wise Detailed Analysis:
  
  Points (1) and (2):
  The complainant alleged that the accused issued three cheques in discharge of a liability for Rs. 4.30 lakhs. The accused contended that the cheques were taken as security on the dates the amounts were lent (17-9-1998 and 15-4-1999) and not on the dates mentioned on the cheques (8-6-2000 and 9-6-2000). The court found that the complainant took the cheques as security, supported by letters and a bond executed on the same dates the amounts were lent. The court concluded that the cheques were not issued towards the discharge of any existing debt or liability but as security for future contingent liability, thus Section 138 of the Negotiable Instruments Act does not apply.
  
  Point No. 3:
  The complainant argued that the issuance of cheques and the amounts mentioned therein create a presumption of discharge of a legally enforceable debt. The court, however, relied on the decision in Shri Taher N. Khambati's case, which held that cheques taken as security do not attract Section 138. The court found that the accused successfully rebutted the presumption by showing that the cheques were taken as security and not for discharging any existing debt or liability. The court emphasized that Section 138 aims to punish those who issue cheques knowing they have insufficient funds, not to assist money lenders in harassing borrowers in financial distress.
  
  Point No. 4:
  A-3 and A-4, who were directors but not signatories to the cheques, were found not liable under Section 138. The court held that merely being directors does not make them liable unless it is shown they were in charge of the day-to-day affairs of the company. The trial court's decision to acquit A-3 and A-4 was upheld.
  
  Point No. 5:
  The court found the trial judge's reliance on the decision in Shri Taher N. Khambati's case appropriate and saw no perversity in the reasons for acquitting the accused. The trial court's order of acquittal was deemed sustainable in law.
  
  Point No. 6:
  The appeal was dismissed, affirming the trial court's judgment of acquittal.

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• 2005 (12) TMI 600
  
  Issues:
  Challenge to order denying exemption under Section 10(23C)(via) of the Income Tax Act for assessment years 1999-2000 to 2002-2003.
  
  Analysis:
  The petitioner, a Cooperative Society, challenged the order of the Chief Commissioner of Income Tax declaring it ineligible for exemption under Section 10(23C)(via) of the Income Tax Act. This section pertains to organizations existing solely for philanthropic purposes, not for profit. The petitioner argued that its objectives aimed to benefit society by providing medical facilities at reasonable charges. However, the Income Tax Commissioner found the charges comparable to other hospitals, leading to the rejection of the petitioner's application.
  
  The petitioner contended that it sought information on how the Commissioner reached his conclusion but failed to provide specifics on the charges in their hospital compared to others. Although the petitioner mentioned another hospital benefiting under the same section, it lacked details to support its claim of similarity in charges. The court emphasized that philanthropy must benefit citizens directly, not merely running a hospital without additional benefits. Without evidence of philanthropic activities benefiting citizens, the petitioner's claim was deemed insufficient.
  
  The Commissioner highlighted the fees for OPD and payments to Member-Directors, concluding that the hospital's charges were on par with similar hospitals in the region. The absence of schemes for free or discounted treatments for the financially weaker sections indicated no significant difference in the hospital's receipts compared to other private hospitals. Consequently, the court upheld the Commissioner's decision, rejecting the petitioner's claim for exemption under Section 10(23C)(via) of the Income Tax Act for the specified assessment years.

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• 2005 (12) TMI 599
  
  Issues Involved:
  1. Whether the cheque issued by the defendants and the hand letter are supported by consideration.
  2. Whether the defendants had obtained the loan from the plaintiff.
  3. Whether the defendants are liable to repay the loan amount to the plaintiff.
  4. Whether the court has jurisdiction to try the suit.
  5. To what relief the plaintiff is entitled.
  
  Issue-wise Detailed Analysis:
  
  1. Whether the cheque issued by the defendants and the hand letter are supported by consideration:
  The plaintiff argued that the cheque for Rs. 60,000 issued by the third defendant was towards repayment of a loan. The defendants contended that the cheque was issued in a different context related to a joint tender for Madras Fertilizers Limited and was not supported by consideration. The trial court wrongly placed the burden on the plaintiff to prove the passing of consideration under the cheque, despite the legal presumption under Section 118 of the Negotiable Instruments Act that a negotiable instrument is presumed to be for consideration. The appellate court found that the defendants failed to provide acceptable evidence to rebut this presumption, thus holding that the cheque was supported by consideration.
  
  2. Whether the defendants had obtained the loan from the plaintiff:
  The plaintiff's case was that defendants Nos. 2 and 3 borrowed Rs. 60,000. The defendants denied receiving any loan and claimed that the cheque was issued for a different purpose. The appellate court noted that the trial court failed to properly consider the admissions made by the third defendant regarding the issuance and purpose of the cheque. The appellate court found that the defendants' evidence was contradictory and unreliable, reinforcing the plaintiff's claim that the loan was indeed taken.
  
  3. Whether the defendants are liable to repay the loan amount to the plaintiff:
  The trial court dismissed the suit, believing the defendants' version that the cheque was not issued for repayment of a loan but for a joint tender. The appellate court, however, found that the defendants did not discharge their burden of proving that the cheque was not supported by consideration. The appellate court held that the legal presumption under Section 118 of the Negotiable Instruments Act remained unrebutted, thus establishing the defendants' liability to repay the loan.
  
  4. Whether the court has jurisdiction to try the suit:
  The third defendant contested the jurisdiction of the Mayiladuthurai court, arguing that the cause of action arose in Madras. However, the appellate court did not find merit in this argument, as the trial court had already framed issues and proceeded with the case. The appellate court did not specifically address this issue in detail, implying that the jurisdiction was deemed appropriate.
  
  5. To what relief the plaintiff is entitled:
  The appellate court set aside the trial court's judgment and decreed the suit in favor of the plaintiff. The appellate court concluded that the plaintiff was entitled to the repayment of Rs. 60,000 with costs, as the defendants failed to rebut the legal presumption of consideration under Section 118 of the Negotiable Instruments Act.
  
  Conclusion:
  The appellate court found that the trial court had misconstrued the oral and documentary evidence and failed to properly apply the legal presumption under Section 118 of the Negotiable Instruments Act. The appellate court decreed the suit in favor of the plaintiff, entitling them to the repayment of Rs. 60,000 with costs.

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