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• 2009 (12) TMI 1073
  
  In the case before the ITAT Delhi, the appeal filed by the assessee against the order of the CIT (A), New Delhi was dismissed for non-prosecution. The Tribunal noted that a notice for the hearing scheduled on December 3, 2009, was sent to the assessee, but no appearance or request for adjournment was made by the assessee on the hearing date. Citing precedents, including CIT vs. B.N. Bhattachargee and Estate of late Tukojirao Holkar vs. CWT, the Tribunal emphasized that merely filing an appeal is insufficient; it must be actively pursued. The Tribunal exercised its inherent powers under Rule 19 of the Appellate Tribunal Rules, 1963, to dismiss the appeal as unadmitted due to the assessee's absence. However, it was clarified that the order might be recalled if the assessee provides a satisfactory explanation for non-appearance. The dismissal was pronounced in open court on the same day.

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• 2009 (12) TMI 1072
  
  ISSUES PRESENTED and CONSIDERED

  The Tribunal considered two primary issues:

  1. Whether the notice issued under Section 143(2) of the Income Tax Act, 1961, was valid despite not being addressed to the "Principal Officer" but directly to the company.

  2. Whether the addition of Rs. 1,50,00,000/- under Section 68 of the Income Tax Act, 1961, on account of the amount received by way of share capital was sustainable.

  ISSUE-WISE DETAILED ANALYSIS

  Issue 1: Validity of Notice under Section 143(2)

  Relevant Legal Framework and Precedents: Section 282(1) of the Income Tax Act allows a notice to be served on a company either directly or through the Principal Officer. The Tribunal referenced this provision to determine the validity of the notice.

  Court's Interpretation and Reasoning: The Tribunal noted that the notice was served on the company itself, which is within the provisions of Section 282(1). The fact that the notice was received and complied with by the company further supported its validity.

  Conclusion: The Tribunal dismissed the objection to the notice's validity, finding it compliant with statutory requirements.

  Issue 2: Addition of Rs. 1,50,00,000/- under Section 68

  Relevant Legal Framework and Precedents: Section 68 of the Income Tax Act requires the assessee to prove the identity, genuineness, and creditworthiness of the creditors. The Tribunal considered various precedents, including the decisions in CIT vs. Stellar Investment, CIT vs. Orissa Corporation Ltd., and CIT vs. Lovely Exports (Pvt.) Ltd., to evaluate the burden of proof on the assessee.

  Court's Interpretation and Reasoning: The Tribunal found that the assessee failed to establish the identity of the share applicants. Summons issued to the applicants were returned unserved with remarks indicating "no such person at the address." The assessee could not produce the shareholders for verification.

  The Tribunal distinguished the present case from precedents where the identity of creditors was established but not pursued further by the Revenue. Here, the Revenue had attempted to verify the identity and creditworthiness of the shareholders but was obstructed by the lack of cooperation from the assessee.

  Key Evidence and Findings: The Tribunal noted that the share capital was introduced at a significant premium, which was not justified by the company's financial position or business prospects. The investigation revealed that some shareholders were mere entry providers, admitting to providing entries for cash.

  Application of Law to Facts: The Tribunal applied the principles from relevant case law, emphasizing the stricter burden of proof on private placements compared to public issues. The Tribunal concluded that the assessee failed to prove the genuineness of the transactions and the identity of the shareholders.

  Treatment of Competing Arguments: The assessee relied on precedents where the burden shifted to the Revenue after providing initial evidence. However, the Tribunal found that the facts differed significantly, as the assessee could not substantiate the identity of the shareholders or justify the share premium.

  Conclusion: The Tribunal upheld the addition under Section 68, concluding that the assessee did not discharge its burden to prove the genuineness and identity of the share capital received.

  SIGNIFICANT HOLDINGS

  Core Principles Established: The Tribunal reinforced the principle that in cases of private placement of shares, the burden of proof lies heavily on the assessee to establish the identity, genuineness, and creditworthiness of the shareholders. The Tribunal emphasized that mere paper documentation is insufficient without substantiation through verifiable evidence.

  Final Determinations on Each Issue: The Tribunal dismissed the appeal, finding the notice under Section 143(2) valid and the addition under Section 68 justified due to the failure of the assessee to prove the genuineness of the share capital transactions.

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• 2009 (12) TMI 1071
  

  1. ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this judgment are:

  • Whether the appellant contravened sections 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973 (FERA) by receiving and making payments without the involvement of an authorized dealer and without the permission of the Reserve Bank of India.
  • Whether the confessional statements made by the appellant and co-noticee were voluntary or obtained under coercion, and the impact of these statements on the findings of the case.
  • Whether the penalty imposed on the appellant was excessive and whether it should be upheld or modified.

  2. ISSUE-WISE DETAILED ANALYSIS

  Issue 1: Contravention of Sections 9(1)(b) and 9(1)(d) of FERA

  • Relevant Legal Framework and Precedents: Sections 9(1)(b) and 9(1)(d) of FERA restrict receiving and making payments on behalf of persons resident outside India without using an authorized dealer and without RBI's permission. The statutory framework aims to regulate foreign exchange transactions.
  • Court's Interpretation and Reasoning: The court noted that the appellant admitted to receiving and making payments as instructed by a person resident outside India. The statutory scheme prohibits such transactions without compliance with the prescribed conditions.
  • Key Evidence and Findings: The appellant's confessional statement, corroborated by circumstantial evidence, indicated involvement in the transactions. The statement was not retracted promptly, suggesting voluntariness.
  • Application of Law to Facts: The court applied the statutory provisions to the appellant's actions, concluding that the transactions violated FERA as they bypassed authorized channels.
  • Treatment of Competing Arguments: The appellant argued that the statements were coerced and that the money was legally possessed. However, the court found no evidence supporting coercion and deemed the statements voluntary.
  • Conclusions: The court concluded that the appellant violated sections 9(1)(b) and 9(1)(d) of FERA, justifying the penalty imposed.

  Issue 2: Voluntariness of Confessional Statements

  • Relevant Legal Framework and Precedents: The burden of proving coercion in confessional statements lies with the maker, as established in precedents such as KTMS Mohd. v. Union of India and K.I. Pavunny v. Asstt. Collector.
  • Court's Interpretation and Reasoning: The court emphasized that the appellant failed to provide evidence of coercion. The absence of immediate retraction further weakened the appellant's claim.
  • Key Evidence and Findings: The appellant's delayed retraction and lack of corroborative evidence led the court to accept the confessions as voluntary.
  • Application of Law to Facts: The court applied the legal principles regarding the burden of proof for coercion and found the appellant's assertions unsubstantiated.
  • Treatment of Competing Arguments: The appellant's claim of coercion was countered by the court's reliance on the absence of evidence and the timing of the retraction.
  • Conclusions: The court concluded that the confessional statements were voluntary and reliable, supporting the findings of contravention.

  Issue 3: Quantum of Penalty

  • Relevant Legal Framework and Precedents: The penalty must be commensurate with the gravity of the offense under FERA.
  • Court's Interpretation and Reasoning: The court found the penalty appropriate given the amount involved and the nature of the contravention.
  • Key Evidence and Findings: The court noted the appellant's full payment of the penalty and the absence of mitigating factors.
  • Application of Law to Facts: The court applied principles of proportionality and deterrence in affirming the penalty.
  • Treatment of Competing Arguments: The appellant's argument of excessive penalty was dismissed as the court found it proportionate.
  • Conclusions: The court upheld the penalty, finding it justified and proportionate to the offense.

  3. SIGNIFICANT HOLDINGS

  • Preserve Verbatim Quotes of Crucial Legal Reasoning: "The bald assertion of threat and coercion is difficult to believe. The bald assertion cannot be taken too seriously unless a little evidence is produced leading to probability of threat and coercion whereafter the burden of proving other way round can be shifted to Directorate of Enforcement."
  • Core Principles Established: The burden of proving coercion in confessional statements lies with the appellant; transactions bypassing authorized channels violate FERA; penalties must reflect the gravity of the offense.
  • Final Determinations on Each Issue: The appellant was found guilty of contravening sections 9(1)(b) and 9(1)(d) of FERA. The confessional statements were deemed voluntary and reliable. The penalty imposed was upheld as appropriate and proportionate.

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• 2009 (12) TMI 1070
  

  1. ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this judgment are:

  • Whether the petitioner-Board qualifies for exemption under Section 10(23C)(iv) and (v) of the Income Tax Act, 1961.
  • Whether the activities of the petitioner-Board can be classified as charitable under Section 2(15) of the Income Tax Act, 1961.
  • Whether the petitioner-Board's activities fall under the category of "advancement of any other object of general public utility."
  • Whether there was any jurisdictional error or procedural irregularity in the order passed by the Chief Commissioner of Income Tax.

  2. ISSUE-WISE DETAILED ANALYSIS

  Issue 1: Exemption under Section 10(23C)(iv) and (v) of the Income Tax Act, 1961

  • Relevant legal framework and precedents: The exemption under Section 10(23C)(iv) and (v) pertains to income derived from property held under trust for charitable or religious purposes.
  • Court's interpretation and reasoning: The court examined whether the petitioner-Board's activities align with the statutory definition of charitable purposes.
  • Key evidence and findings: The Board's annual report for the financial year 2005-06 admitted that it performs regulatory functions. The Board's surplus income was accumulated rather than utilized for charitable purposes.
  • Application of law to facts: The court determined that the Board's activities were primarily regulatory, thus not qualifying as charitable.
  • Treatment of competing arguments: The petitioner argued that its activities were charitable or at least for the advancement of general public utility. However, the court found these claims unsubstantiated.
  • Conclusions: The Board does not qualify for the exemption under the specified sections of the Income Tax Act.

  Issue 2: Classification of Activities as Charitable under Section 2(15)

  • Relevant legal framework and precedents: Section 2(15) defines "charitable purpose" to include relief of the poor, education, medical relief, and advancement of any other object of general public utility.
  • Court's interpretation and reasoning: The court considered whether the Board's regulatory functions could be seen as charitable.
  • Key evidence and findings: The Board's primary functions, as outlined in the Water and Air Acts, are regulatory, involving consent/permission for economic activities and imposing penalties.
  • Application of law to facts: The court found that regulatory functions do not constitute charitable activities.
  • Treatment of competing arguments: The petitioner hypothetically argued for its functions as charitable, but the court dismissed these arguments based on the Board's own admissions and statutory duties.
  • Conclusions: The Board's activities do not fall within the definition of charitable purposes under Section 2(15).

  Issue 3: Advancement of General Public Utility

  • Relevant legal framework and precedents: The phrase "advancement of any other object of general public utility" is part of the definition of charitable purpose.
  • Court's interpretation and reasoning: The court assessed whether the Board's regulatory duties could be considered as advancing public utility.
  • Key evidence and findings: The Board's activities were found to be regulatory in nature, focusing on pollution control and environmental protection.
  • Application of law to facts: Regulatory functions were not seen as aligning with the advancement of general public utility.
  • Treatment of competing arguments: The court rejected the argument that regulatory functions equate to public utility advancement, emphasizing the Board's role in regulation rather than charity.
  • Conclusions: The Board's activities do not qualify as advancing any other object of general public utility.

  Issue 4: Jurisdictional Error or Procedural Irregularity

  • Relevant legal framework and precedents: The court reviewed the procedural aspects of the Chief Commissioner's order.
  • Court's interpretation and reasoning: The court examined whether the order was legally sound and procedurally correct.
  • Key evidence and findings: The court found no jurisdictional error or procedural irregularity in the Chief Commissioner's order.
  • Application of law to facts: The order was found to be in conformity with the law.
  • Treatment of competing arguments: The petitioner did not successfully demonstrate any procedural flaws.
  • Conclusions: The order was upheld as legally valid and procedurally correct.

  3. SIGNIFICANT HOLDINGS

  • Verbatim quotes of crucial legal reasoning: "The Board is primarily discharging regulatory functions as per Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of pollution) Act, 1981. These activities cannot be termed as charitable functions."
  • Core principles established: Regulatory functions do not qualify as charitable activities or advancement of general public utility under the Income Tax Act.
  • Final determinations on each issue: The Board does not qualify for exemption under Section 10(23C), its activities are not charitable, do not advance public utility, and the Chief Commissioner's order was upheld as correct.

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• 2009 (12) TMI 1069
  
  The Supreme Court set aside the impugned order of the Securities Appellate Tribunal and remitted the case for de novo consideration in accordance with law on merits. The appellant's appeal against the order of suspension by the Securities and Exchange Board of India was dismissed by SAT only on the ground that the appellant had suffered the punishment. The Court found merit in the appellant's contention that the appeal should be decided on merits due to the stigma imposed by SEBI's order.

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• 2009 (12) TMI 1068
  
  Issues:
  - Maintainability of the writ petition challenging SEBI clearance for an IPO
  - Ownership of 'Dainik Bhaskar' and its relevance to SEBI clearance
  - Allegations of incorrect or misleading information provided to SEBI
  - Jurisdiction of the High Court in entertaining the petition
  - Applicability of SEBI Act for addressing grievances against SEBI decisions
  
  Analysis:
  The writ petition filed as a Public Interest Litigation sought various reliefs against SEBI and a company (respondent no. 6) regarding the issuance of securities and the ownership of 'Dainik Bhaskar.' A preliminary objection was raised on the maintainability of the petition by respondent no. 7, arguing that the petitioners lacked standing as aggrieved parties and that SEBI had already cleared the public issue after scrutiny by regulatory bodies. The petitioners contended that SEBI's clearance was conditional and not fully complied with by the company, preventing the IPO from opening. Additionally, doubts were raised regarding the ownership of 'Dainik Bhaskar' by respondent no. 6, questioning the accuracy of information provided to SEBI.
  
  The respondent defended SEBI's clearance process, emphasizing that all necessary information was disclosed, and risk factors were addressed as per SEBI's directives. The respondent argued that the petitioners should have approached SEBI directly if they believed any information was misrepresented, rather than seeking a writ from the High Court. The Court acknowledged both parties' arguments but sided with the respondent, stating that the petitioners should address their grievances with SEBI through appropriate channels, such as filing an appeal under the Securities & Exchange Board of India Act, 1992.
  
  The Court concluded that the writ petition challenging SEBI's clearance could not be entertained directly and advised the petitioners to approach SEBI with their concerns. Given the imminent opening of the IPO, the Court declined to entertain the petition but granted the petitioners the liberty to pursue their grievances with SEBI or file an appeal under the Act. The Court highlighted that SEBI should consider the issues raised if approached by the petitioners, indicating that the appropriate forum for addressing SEBI-related matters is through the regulatory authority rather than the High Court.
  
  In summary, the High Court dismissed the writ petition, directing the petitioners to address their concerns regarding SEBI's clearance and the IPO process directly with SEBI or through the appeal process under the Securities & Exchange Board of India Act, 1992. The judgment emphasized the importance of utilizing the statutory remedies available under the Act for challenging regulatory decisions, rather than seeking immediate relief through writ jurisdiction in the High Court.

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• 2009 (12) TMI 1067
  
  Issues:
  Violation of provisions of section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973.
  
  Analysis:
  The appeal was filed against an Adjudication Order imposing a penalty for contravention of the Foreign Exchange Regulation Act. The appellant purchased foreign exchange without permission and sold it at unauthorized rates. The appellant claimed his statement was coerced and he did not earn from the transactions. The statutory scheme prohibits dealing in foreign exchange without authorization. The appellant admitted to facilitating transactions for friends involving foreign exchange. The person buying the foreign exchange admitted to dealing without an RBI license. The appellant retracted his statement, but failed to prove coercion. Legal precedents state retracted confessions can be valid if proven voluntary and corroborated. The appellant's assertion of coercion lacked evidence. The tribunal found the appellant guilty of contravening the Act and upheld the penalty as appropriate given the gravity of the offense. The appeal was dismissed, and the penalty was confirmed.
  
  This judgment highlights the importance of adhering to foreign exchange regulations and the consequences of contravening such laws. The burden of proof lies with the accused to establish coercion in statements. The tribunal emphasized the need for corroborative evidence to support retracted confessions. The decision underscores the seriousness of unauthorized foreign exchange dealings and the need for penalties to reflect the gravity of such offenses.

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• 2009 (12) TMI 1066
  
  Issues:
  Violation of provisions of section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973; Retraction of confessional statement by the appellant; Opportunity for cross-examination of witnesses denied; Quantum of penalty imposed.
  
  Analysis:
  The appeal was filed against an Adjudication Order imposing a penalty for contravention of sections 8(1) and 8(2) of the FER Act. The appellant did not appear, but written submissions were considered. The appellant was found with US $4,500 and Indian currency of Rs. 20,000. The appellant claimed financial constraints and denied conscious possession of the foreign exchange, alleging false implication. The appellant's confessional statement was retracted, citing coercion. However, lack of evidence supporting coercion led to dismissal of this claim.
  
  The statements of witnesses corroborated the appellant's involvement in foreign exchange transactions. The appellant's retracted statement was considered valid, and the denial of cross-examination was justified based on legal principles. The appellant's involvement in the sale and purchase of foreign exchange was confirmed, despite his denial in response to the show-cause notice. The appellant failed to explain the source of the foreign exchange, and his selective acceptance of statements was not permissible.
  
  The tribunal found the appellant guilty of contravening sections 8(1) and 8(2) of the FER Act. The penalty imposed was deemed appropriate and proportional to the gravity of the offense. The tribunal upheld the impugned order, dismissing the appeal for lack of merit. The pre-deposited amount was to be appropriated towards the penalty, concluding the judgment.

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• 2009 (12) TMI 1065
  
  Issues Involved:
  1. Validity and enforceability of the Personal Guarantee executed by the defendant.
  2. Defendant's liability as a guarantor.
  3. Compliance with procedural requirements under the Code of Civil Procedure (CPC).
  4. Applicability of the Bombay Stamp Act.
  5. Timeliness of the Summons for Judgment.
  6. Coextensive liability of the guarantor and principal debtor.
  
  Detailed Analysis:
  
  1. Validity and Enforceability of the Personal Guarantee:
  The plaintiff filed a Summary Suit under Order 37 of the CPC for a decree against the defendant for Rs. 12,01,00,654, with interest on the principal sum of Rs. 8,60,00,000. The core of the dispute revolves around the Personal Guarantee executed on 15.03.2003 by the defendant, which guaranteed repayment of the amounts advanced by the plaintiffs to the company. The Guarantee was clear in its terms, stating that the defendant would make payments without delay, demur, or protest upon the plaintiff's first demand, even if the company defaulted.
  
  2. Defendant's Liability as a Guarantor:
  The court found that the defendant's liability as a guarantor was joint and several with that of the company. The defendant admitted the lending to the company and the execution of the Guarantee document. The company defaulted in payment, and the defendant failed to make the payment despite the demand. The Guarantee explicitly stated that the defendant would be treated as the principal debtor in relation to the plaintiff, allowing the plaintiff to enforce the Guarantee without first proceeding against the company.
  
  3. Compliance with Procedural Requirements under the CPC:
  The defendant raised a technical objection under Order 29 Rule 1 of the CPC, arguing that the suit was not signed and verified by a competent person. However, the court noted that Mr. Nitin Lokhande, Vice President, Legal of the plaintiff, was a principal officer and conversant with the case facts. An additional affidavit was filed to remove any technical objections. The court referenced the Supreme Court's observation in United Bank of India v. Naresh Kumar and Ors., stating that such technical defects are curable and do not go to the root of the matter.
  
  4. Applicability of the Bombay Stamp Act:
  The defendant contended that the documents were not adequately stamped under the Bombay Stamp Act. The court found no merit in this argument, noting that the suit was based on the Guarantee, which was adequately stamped when executed. The court emphasized that the Stamp Act is intended to secure revenue for the state and should not be used to raise technical objections to dismiss the suit.
  
  5. Timeliness of the Summons for Judgment:
  The plaintiff initially took a Summons for Judgment No. 518 of 2006, which was withdrawn with liberty to file afresh. The amended plaint was allowed, and the present Summons for Judgment was filed on 6th January 2009. The court held that the delay in filing the summons for judgment was not fatal, referencing Bankey Bihari B. Agarwal and Ors. v. Bhagwanji Meghji and Ors., which allowed for some leniency in such cases, especially when the plaintiff is a financial institution and the defendant's liability is not in serious dispute.
  
  6. Coextensive Liability of the Guarantor and Principal Debtor:
  The court reiterated the legal position that the liability of the guarantor and the principal debtor is coextensive and not in the alternative, as established by a series of cases, including Industrial Investment Bank of India Limited v. Biswanath Jhunjhunwala. The creditor is not required to exhaust remedies against the principal debtor before proceeding against the guarantor. The court cited multiple authoritative texts and precedents to support this view, including Pollock & Mulla on Indian Contract and Specific Relief Act, Chitty on Contracts, and Halsbury's Laws of England.
  
  Conclusion:
  The court found the defendant's defenses unsustainable and decreed the suit in favor of the plaintiff for Rs. 12,01,00,654 with further interest on the principal sum of Rs. 8,60,00,000 at 12% per annum from the date of filing the suit until payment or realization. No order as to costs was made.

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• 2009 (12) TMI 1064
  
  Issues Involved:
  1. Whether the writ petition challenging the Lok Adalat award is maintainable.
  2. Who can file a writ petition challenging the Lok Adalat award.
  3. Grounds for challenging the Lok Adalat award.
  
  Summary:
  
  Issue 1: Whether the writ petition challenging the Lok Adalat award is maintainable.
  
  Under Section 21(1) of the Legal Services Authorities Act, 1987, an award of Lok Adalat shall be deemed to be a decree of a Civil Court and is final and binding on all parties. No appeal shall lie against the award. However, a writ petition may be entertained if the award was passed without a compromise or settlement as envisaged u/s 20(3) and (5) of the Act, or if obtained by impersonation, misrepresentation, or fraud. The High Court can issue writs under Article 226(1) of the Constitution of India against such awards.
  
  Issue 2: Who can file a writ petition challenging the Lok Adalat award.
  
  Parties to the compromise or settlement can challenge the award on grounds of illegality, fraud, or impropriety. Ordinarily, a third party cannot challenge the award in a writ petition and must seek redressal through a separate suit or proceeding. However, in extraordinary cases where a third party is meted with injustice due to fraud or misrepresentation, a writ petition may be maintained within a reasonable period, provided there is prima facie evidence of such fraud or misrepresentation.
  
  Issue 3: Grounds for challenging the Lok Adalat award.
  
  The Lok Adalat cannot pass an award unless there is a compromise and settlement u/s 20(3) and (5) of the Act. The Supreme Court in State of Punjab v. Ganpat Raj and State of Punjab v. Jalour Singh clarified that Lok Adalats have no adjudicatory functions and can only pass awards based on mutual settlements. If no compromise is reached, the Lok Adalat cannot pass an award. Challenges to Lok Adalat awards under Article 226 or 227 of the Constitution are limited to cases where there is no valid compromise or settlement.
  
  Findings and reasons therefore:
  
  The petitioners, who were not parties to the original suit or the Lok Adalat award, challenged the award after five years. The Court found that the partnership deed dated 01.4.2003, claimed by the petitioners, was executed on stamp papers purchased in 2001, raising doubts about its authenticity. The respondents provided certificates from the District Registrar and Assistant Commercial Tax Officer confirming that the third respondent firm continued with respondents 1, 2, and 4 as partners from 01.4.2003 to 31.3.2004, and the petitioners were not involved. The Court concluded that the award passed by Lok Adalat on 07.2.2004 was based on a valid compromise among the original partners and dismissed the writ petition as misconceived, emphasizing that entertaining such petitions would defeat the purpose of the Act and the Lok Adalat system. The writ petition was dismissed with costs.

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• 2009 (12) TMI 1063
  
  Issues involved: Application for anticipatory bail rejected multiple times by High Court, allegations of committing offences under Section 420, 467, 468, 120B IPC, abuse of criminal process, denial of anticipatory bail based on challan presentation, interpretation of Section 438 Cr.P.C.
  
  Issue 1: Application for Anticipatory Bail Rejection
  
  The appellant's application for anticipatory bail was rejected by the High Court of Rajasthan, Jaipur Bench for the third time. The FIR against the appellant was registered under Section 420, 467, 468, 120B IPC based on a complaint by Karan/Karani Singh regarding the sale of flats. The appellant alleged that the investigation was biased as the investigating officer was a close relative of the complainant, leading to an abuse of the criminal process.
  
  Issue 2: Allegations and Circumstances
  
  During the hearing, it was highlighted that the complainant, a property dealer, and the appellant had commercial transactions and a civil litigation pending between them. The appellant claimed that the criminal complaint was a tactic to pressure him in the civil case. Despite filing complaints and applications, the appellant's requests for anticipatory bail were repeatedly denied by the Sessions Judge and the High Court.
  
  Issue 3: Denial of Anticipatory Bail Based on Challan Presentation
  
  The High Court rejected the appellant's third application for anticipatory bail solely on the ground that the challan had been presented, without considering the merits of the case. The Supreme Court criticized this approach, emphasizing that the High Court should have assessed the case independently and not solely based on the challan presentation.
  
  Issue 4: Interpretation of Section 438 Cr.P.C.
  
  The Supreme Court referred to the introduction of anticipatory bail provisions and the principles laid down in the Gurbaksh Singh Sibbia case. It highlighted that anticipatory bail can be granted at any time before arrest and that the court must assess the need for such relief. The Court criticized the High Court for not considering the facts and circumstances of the case and granted anticipatory bail to the appellant, emphasizing the importance of personal liberty and fair procedures.
  
  Conclusion:
  
  The Supreme Court set aside the High Court's order, allowed the appeal, and granted anticipatory bail to the appellant in the case pending under Section 420 and 120B IPC. The appellant was directed to cooperate with the investigation when required. The judgment emphasized the need for a fair assessment of anticipatory bail applications based on individual circumstances and the principles of personal liberty.

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• 2009 (12) TMI 1062
  
  Issues Involved: Appeal against deletion of penalty amount u/s 271(1)(c) of the IT Act, 1961 based on the AO's order dated 31.01.2008 giving effect to the ITAT's order, presently under consideration in proceedings u/s 263 of the IT Act, 1961.
  
  The appeal was filed by the revenue against the order of the CIT (A) - XIX dated 31.12.2003 for the assessment year 1998-99. The only effective ground raised was regarding the deletion of the penalty amount of Rs 36,76,918/- by the CIT (A) based on the AO's order dated 31.01.2008 giving effect to the ITAT's order, which was under consideration in proceedings u/s 263 of the IT Act, 1961.
  
  The assessee, engaged in investment and Quality Management activity of Piramal Group companies, claimed Rs 1,39,33,952/- as interest on a loan from M/s Morarjee Mills Ltd used for purchasing shares of M/s Struth International Ltd (Mauritius). The claim was disallowed by the Assessing Officer, leading to penalty proceedings u/s 271(1)(c) of the Act.
  
  During the hearing, the assessee's Counsel pointed out that the Assessing Officer, while implementing the ITAT's order, allowed the interest claim in favor of the assessee. The CIT (A) deleted the penalty citing the Assessing Officer's allowance of the claim in the order dated 31.01.2008.
  
  After considering arguments from both sides and reviewing the records, it was noted that the very basis for imposing the penalty was accepted by the Assessing Officer while implementing the ITAT order. Therefore, the imposition of the penalty was deemed unsustainable. The order of the CIT (A) was found to be without any flaw, and the revenue's ground was dismissed. Consequently, the appeal of the revenue was also dismissed.
  
  The judgment was pronounced in the Open Court on the 4th day of December 2009.

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• 2009 (12) TMI 1061
  
  Issues Involved:
  1. Legality of the action taken under Section 29 of the State Financial Corporations Act, 1951.
  2. Obligation of the financial corporation to act fairly and within a reasonable time.
  3. Legality of charging compound penal interest.
  4. Judicial review of the corporation's actions and the High Court's intervention in contractual terms.
  
  Issue-wise Detailed Analysis:
  
  1. Legality of the action taken under Section 29 of the State Financial Corporations Act, 1951:
  The Supreme Court examined whether the Punjab and Haryana High Court was correct in quashing the action taken by the Appellant-corporation under Section 29 of the State Financial Corporations Act, 1951. The Respondent had defaulted on the repayment of a term loan, leading the Appellant-corporation to take possession of the unit and issue multiple notices for payment. The High Court had declared the action unfair and unreasonable, but the Supreme Court found that the Respondent had failed to discharge its repayment obligations and did not respond to notices or avail concessions offered by the corporation. Therefore, the Supreme Court held that the Appellant-corporation acted reasonably and fairly, and the High Court's decision to nullify the notice was incorrect.
  
  2. Obligation of the financial corporation to act fairly and within a reasonable time:
  The High Court had formulated the question of whether the corporation, after invoking Section 29, could retain the property indefinitely while continuing to charge interest and penal interest without limit. It concluded that the corporation must act fairly and within a reasonable time. However, the Supreme Court noted that the corporation had indeed acted fairly by issuing multiple notices and offering concessions to the Respondent. The Supreme Court emphasized that the corporation's primary duty is to recover loans to provide financial assistance to others, and it cannot be expected to flounder public money for promoting private interests.
  
  3. Legality of charging compound penal interest:
  The High Court referred to the judgment in Central Bank of India v. Ravindra and held that the corporation could not compound penal interest. The Supreme Court, however, found that the High Court was not called upon to examine the legality of the terms of the loan agreement, which the Respondent had not challenged. The Supreme Court noted that the terms of the agreement, which included the rate of interest and compounding, were binding on the parties.
  
  4. Judicial review of the corporation's actions and the High Court's intervention in contractual terms:
  The Supreme Court reiterated that judicial review of the corporation's actions is limited to cases of statutory violation or actions that are arbitrary, unreasonable, or unfair. The High Court had erred in altering the terms of the loan agreement suo motu and directing the corporation to make fresh calculations and allow the Respondent to pay the recalculated amount by selling the mortgaged property. The Supreme Court emphasized that the courts should not interfere with the corporation's decisions unless there is evidence of mala fide actions or statutory violations.
  
  Conclusion:
  The Supreme Court allowed the appeal, set aside the impugned order of the High Court, and dismissed the writ petition filed by the Respondent. The Supreme Court found that the Appellant-corporation had acted reasonably and fairly, and the High Court's intervention in the contractual terms and its direction for reviewing pending cases were legally unsustainable.

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• 2009 (12) TMI 1060
  
  Issues involved:
  The judgment involves the issue of setting aside the original judgment of the learned Additional Sessions Judge, Jaunpur, which found the appellants guilty under Section 324/149 IPC and entitled to be released on probation, and remanding the case for fresh order of conviction. The High Court's exercise of revisional jurisdiction at the instance of a private complainant, challenging the acquittal under Section 308 IPC and release on probation, is also a key issue.
  
  Facts and Judgment Details:
  The appellants were accused of forming an unlawful assembly with the common object of causing injuries to individuals. The trial court found them guilty under Sections 148, 324/149, and 429/149 IPC, but decided to release them on probation of good conduct. The High Court, in a revision application, upheld the guilt of the appellants but set aside the acquittal under Section 308 IPC and the conviction under Section 324/149 IPC. The matter was remitted back to the Court of Additional Sessions Judge for fresh order of conviction and sentence.
  
  Principles of Revisional Jurisdiction:
  The High Court's revisional jurisdiction, when invoked by a private complainant against an order of acquittal, must be exercised cautiously and only in exceptional cases where public justice demands interference. The court must avoid converting acquittal into conviction indirectly and ensure that the interests of justice are served without miscarriage.
  
  Analysis and Conclusion:
  The Supreme Court found that the High Court's exercise of revisional jurisdiction resulted in material illegality and miscarriage of justice to the appellants. The High Court's decision to remand the case for fresh order of conviction under Section 308 IPC and imposition of punishment was deemed improper. As a result, the appeal was allowed, setting aside the High Court's judgment and restoring the original judgment of the Additional Sessions Judge convicting the appellants under Sections 148, 342/149, and 427/149 IPC and directing their release on probation for two years.

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• 2009 (12) TMI 1059
  
  The Bombay High Court allowed the Plaintiff to withdraw and dismiss the suits based on Consent Terms reached during Arbitral proceedings. No costs were awarded, and court fees will be refunded. Notices of Motion in both suits were disposed of, and interim orders were vacated.

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• 2009 (12) TMI 1058
  
  Issues involved: Interpretation of deduction u/s 54 for multiple residential houses, applicability of legal precedents.
  
  Issue 1: Interpretation of deduction u/s 54 for multiple residential houses
  
  The appeal was filed by the revenue challenging the CIT (A) order allowing deduction u/s 54 for the purchase of two residential houses. The AO restricted the exemption to one house only, leading to a dispute. The CIT (A) relied on a Bangalore ITAT decision to support the assessee's claim for deduction on both houses. The revenue contended, based on a Special bench decision, that exemption should be granted for one house only. The AR cited a Karnataka High Court judgment supporting deduction for two houses. The Tribunal held that the assessee is entitled to exemption u/s 54 for one residential house only, based on the Special Bench decision, despite factual agreement on the two properties' purchase.
  
  Issue 2: Applicability of legal precedents
  
  The AR relied on the Karnataka High Court judgment in CIT vs. D. Anand Basapa to support the claim for deduction on two residential houses. However, the Tribunal differentiated the facts of the present case from the cited judgment, emphasizing the unity of the two properties in the Karnataka High Court case. The Tribunal highlighted the importance of considering the context and true principle of legal decisions, as cautioned by the Supreme Court, in determining the applicability of precedents. Ultimately, the Tribunal allowed the revenue's appeal, emphasizing the relevance of the Special Bench decision in granting exemption for one residential house only.
  
  This summary provides a detailed overview of the issues involved in the legal judgment, focusing on the interpretation of deduction u/s 54 for multiple residential houses and the applicability of legal precedents in deciding the case.

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• 2009 (12) TMI 1057
  
  Issues Involved:
  1. Validity of the Will dated 21.12.1995 vs. Will dated 04.02.1997.
  2. Impleadment of Shri Chetan Dayal as respondent.
  3. Res judicata and jurisdiction of the Chandigarh Court.
  4. Limitation period for filing the probate petition.
  
  Summary:
  
  1. Validity of the Will dated 21.12.1995 vs. Will dated 04.02.1997:
  The petitioner sought letters of administration u/s 278 of the Indian Succession Act for the estate of the deceased, relying on a Will dated 21.12.1995. The respondent contested this, asserting that a subsequent Will dated 04.02.1997 was the last and valid Will. The Chandigarh Courts had previously decreed that the Will dated 04.02.1997 was the last and valid Will.
  
  2. Impleadment of Shri Chetan Dayal as respondent:
  An application under Order 1 Rule 10 r/w Section 151 CPC was filed to implead Shri Chetan Dayal, a beneficiary under the Will dated 04.02.1997. The court allowed this application, noting that the validity of either Will would affect the applicant's rights in the estate, and he had a caveatable interest as per the tests laid down in Krishna Kumar Birla v. Rajendra Singh Lodha (2008) 4 SCC 300.
  
  3. Res judicata and jurisdiction of the Chandigarh Court:
  The petitioner argued that the Chandigarh Court was not competent to decide the validity of the Will, citing Supreme Court decisions in Chiranjilal Shrilal Goenka v. Jasjit Singh and Ors. (1993) 2 SCC 507 and T. Venkata Narayana and Ors. v. Venkata Subbamma (Smt) (dead) and Ors. (1996) 4 SCC 457. The court acknowledged that only a probate court has exclusive jurisdiction to decide on the validity of a Will, thus the question of res judicata could not be determined at this stage.
  
  4. Limitation period for filing the probate petition:
  The court examined whether the petition was time-barred under Article 137 of the Limitation Act, 1963. The right to apply accrued in 1999 when the petitioner became aware of the dispute over the Will. The petitioner did not approach the court within the prescribed three-year period, making the petition time-barred. The court referenced Kunvarjeet Singh Khandpur v. Kirandeep Kaur (2008) 8 SCC 463, which held that Article 137 applies to applications for probate or letters of administration.
  
  Conclusion:
  The court held that the probate petition was not maintainable as it was time-barred. Consequently, Probate case No. 5/2009 was dismissed.

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• 2009 (12) TMI 1056
  
  Issues involved:
  The issue involves the Securities and Exchange Board of India (SEBI) declining to exempt M/s. Futuristic Garments Pvt. Ltd. from the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 in relation to its proposed acquisition of 47 lac equity shares of Surya Pharmaceutical Ltd. through preferential allotment of optionally convertible share warrants.
  
  Details of the Judgment:
  
  1. The target company, in order to comply with the conditions imposed by the Industrial Development Bank of India (IDBI) for financial assistance, decided to issue 47 lac optionally convertible share warrants to the acquirer, one of its promoters. This issuance would increase the stake of promoters in the target company to 51% upon conversion of warrants into equity shares within 18 months. The target company sought exemption from the takeover code regulations before the warrants were issued, which was declined by SEBI.
  
  2. The appellate authority found the reasons provided by SEBI for declining the exemption to be untenable. However, it was determined that the request for exemption under Regulation 3(1)(l) of the takeover code was premature as the warrants were yet to be issued, and the acquirer had the option to convert them within 18 months. Until conversion, the acquirer did not hold voting rights, and the takeover code would only be triggered upon conversion. Therefore, the appeal was disposed of with the possibility for the target company or acquirer to apply for exemption post-conversion, which would be considered by SEBI in accordance with the law.
  
  This judgment highlights the importance of timing and conditions for triggering takeover regulations, emphasizing the need for proper issuance and conversion of securities before seeking exemptions.

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• 2009 (12) TMI 1055
  
  Issues Involved:
  1. Issuance of process in Summary Criminal Case No. 2972 of 2004.
  2. Alleged misuse of a blank cheque.
  3. Legal principles regarding the issuance and use of blank cheques.
  4. Abuse of process of law.
  
  Summary:
  
  1. Issuance of Process in Summary Criminal Case No. 2972 of 2004:
  The petition challenges the issuance of process in Summary Criminal Case No. 2972 of 2004, confirmed by the Additional Sessions Judge-2, Jalgaon, in Criminal Revision Application No. 142 of 2006. The respondents filed a criminal case against the petitioners for an offence punishable u/s 138 of the Negotiable Instruments Act, alleging that a cheque for Rs. 50,90,622/- issued by the petitioners was dishonoured.
  
  2. Alleged Misuse of a Blank Cheque:
  The petitioners argued that the cheque in question was a blank cheque issued in good faith, as confirmed by a letter dated January 7, 2003, and that it was misused by the respondents. They contended that the amount on the cheque was falsely inflated to Rs. 50,90,622/-, whereas the actual outstanding amount was much lower, as evidenced by various letters and documents.
  
  3. Legal Principles Regarding the Issuance and Use of Blank Cheques:
  The court considered several legal precedents and principles, including:
  - Natural Sugar and Allied Industries Ltd. v. Razzak s/o. Hazi Gaffar: At the stage of issuance of process, it is not permissible to go into the allegations of the complaint.
  - State of Madhya Pradesh v. Awadh Kishore Gupta: The High Court should exercise caution in quashing proceedings and should not stifle legitimate prosecution.
  - Purushottam s/o. Maniklal Gandhi v. Manohar K. Deshmukh: It is open for a holder to fill up blanks in a cheque, but misuse of a blank cheque can be considered a breach of trust.
  - Section 20 of the Negotiable Instruments Act: The holder of a blank cheque is not entitled to recover more than the amount intended by the drawer.
  
  4. Abuse of Process of Law:
  The court found that the petitioners had presented sufficient evidence to suggest that the blank cheque was misused and that the complaint was an abuse of the process of law. The court emphasized that criminal prosecutions under Section 138 of the Negotiable Instruments Act should not be used as a pressure tactic for recovery of money.
  
  Conclusion:
  The court concluded that the continuation of the prosecution under Section 138 of the Negotiable Instruments Act would be an abuse of the process of law. Therefore, the order of issuance of process was quashed and set aside, and the writ petition was allowed. Rule made absolute accordingly.

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• 2009 (12) TMI 1054
  
  Issues involved:
  The judgment involves the legality of a raid conducted by officers of the Central Excise Department on the factory premises of three companies engaged in manufacturing TMT bars and rods, and alloy steel. The main issue is whether the officers had the required "reason to believe" as mandated by the law before conducting the raid.
  
  Details of the Judgment:
  
  Issue 1: Reason to Believe
  The petitioners challenged the raid conducted by the officers, alleging that the officers did not record the necessary "reason to believe" as required by the Customs Act. The respondents contended that the raid was justified as the officer had reason to believe that certain goods liable for confiscation were with the petitioners.
  
  Relevant Legal Precedents:
  The petitioners cited a judgment of the Apex Court in the case of State of Rajasthan vs. Rehman, emphasizing the importance of having a reason to believe before conducting a search or seizure. Another judgment, Durga Prasad vs. H.R. Gomes, highlighted the necessity of fulfilling the preliminary conditions, including having a reason to believe, before exercising the power of search.
  
  Analysis:
  The court examined the search warrant produced by the respondents and found that it lacked any mention of the reason to believe that goods liable for confiscation were present on the premises. The court acknowledged that it cannot question the officer's belief but emphasized that the lack of recorded reasons rendered the raid illegal.
  
  Decision:
  The court allowed all three writ petitions, quashing the Panchanama and consequential proceedings against the petitioners due to the absence of a recorded reason to believe by the officer. The court distinguished a previous Division Bench decision and held that the petitioners had the right to challenge the initiation of proceedings on jurisdictional grounds, as established by legal precedents.
  
  In conclusion, the judgment highlights the significance of complying with legal requirements, such as recording the "reason to believe," before conducting raids or searches, and upholds the right of petitioners to challenge actions taken without jurisdiction.

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