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2021 (12) TMI 1524
Assignment of debt - amounts due and payable by the appellant Company to Dena Bank became due and payable by the appellant Company to RARE - contention of the respondent is that the provisions of LODR Regulations and the Companies Act are not inconsistent with the provisions of the SARFESI Act and therefore these provisions will have to be complied with - HELD THAT:- Section 9 provides that an asset reconstruction company can convert any part of a debt into shares of a borrower company. Before converting the debt into shares and allotting it to the asset reconstruction company, it became necessary for the borrower company, namely, the appellant Company to take recourse to certain provisions of the Companies Act, namely, Section 62 which provides for a provision for issuance of additional equity shares under certain circumstances through a resolution passed by the shareholders or by a special resolution by shareholders of the Company - without complying with the provisions Section 62 of the Companies Act, namely, without getting a resolution from the shareholders no further issue of the share capital can be issued by issuance of further shares to the asset reconstruction company.
The contention that Section 35 of the SARFESI Act overrides the provisions of the other acts and consequently Section 37 of the SARFESI Act is not applicable in the given case is patently misconceived. In the first instance, Section 35 of the SARFESI Act provides that the provisions of the SARFESI Act will have effect, if any other provision under any other Act or law is not inconsistent with the provisions of the SARFESI Act. Nothing has been pointed out as to which provision of LODR Regulations or the Companies Act is inconsistent with Section 9 of the SARFESI Act - The issuance of shares has to be done under the provisions of Section 62 of the Companies Act which procedure is required to be followed and which is not inconsistent with Section 9 of the SARFESI Act. Therefore, Section 35 of the SARFESI Act is not applicable in the instant case.
Under Section 28 of the LODR Regulations, in-principle approval is required to be taken from the Stock Exchange. Admittedly, the same was not done. Therefore, the application of the appellant Company to the Stock Exchange for listing of its shares was rightly rejected.
Conclusion - The appellant's failure to obtain in-principle approval from the Stock Exchange and shareholder approval under Section 62 of the Companies Act rendered the issuance of shares non-compliant. The Stock Exchange's decision to reject the application for listing the shares uupheld.
There are no error in the decision taken by the Stock Exchange for rejecting the application of the appellant for listing of its shares on the Stock Exchange platform. The appeal fails and is dismissed.
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2021 (12) TMI 1523
Price manipulation in the scrip - Order passed by the Whole Time Member directing the appellants to disgorge an amount towards wrongful gains alongwith interest at the rate of 12% per annum till the date of payment and further directing that the interest for the period 30th June, 2016 till the date of the impugned order dated 30th September, 2019 - several corporate announcements were made with a view to increase the price of the scrip of the Company so that the promoter and promoter group entities could reduce their holding at a profitable price
HELD THAT:- The contention that there was a clear direction in the earlier order of the Tribunal to calculate the acquisition price from the date when PK started selling the shares is wholly misconceived. The Tribunal in paragraph 16 of its order dated 30th June, 2016 had only made an observation and not a direction.
The contention that no interest is payable with effect from 12th March, 2007 and that only interest, if any payable after 45 days from the date of the order dated 30th September, 2019 appears to be attractive but said contention cannot be sustained.
In view of this decision of the Supreme Court in Dushyant Dalal [2017 (10) TMI 149 - SUPREME COURT] the contention of the appellant cannot be sustained.
For the reasons stated aforesaid the appeal is partly allowed. The WTM is directed to calculate the disgorgement amount taking the acquisition price as Rs.5.34/- per share as on 3rd October, 2006 and the sale price at Rs.18.98/- per share. The calculation shall be made by the WTM within four weeks from today alongwith interest.
We find that by an interim order of this Tribunal dated 25th October, 2019 the appellant was directed to deposit a sum of Rs.2 crore which has been deposited. The said amount shall be adjusted and the balance amount so calculated and intimated to the appellant shall be deposited within four weeks thereafter. Misc. application is disposed of accordingly.
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2021 (12) TMI 1522
Seeking grant of bail - Smuggling large quantities of narcotics and psychotropic drugs from the Indira Gandhi International Airport - HELD THAT:- What persuades to pass an order in favour of the appellant is the fact that despite the rigors of Section 37 of the said Act, in the present case though charge sheet was filed on 23.09.2018 even the charges have not been framed nor trial has commenced.
The manufacturer who sold the drugs to the appellant during the sunset clause himself has been granted bail.
Bail granted to the appellant on terms and conditions to the satisfaction of the trial Court - appeal allowed.
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2021 (12) TMI 1521
Revision u/s 263 - CIT passed the impugned order exparte - HELD THAT:- As noticed that the assessee could not furnish the relevant documents before the CIT on the date mentioned in the notice issued u/s 263 for the reason that the assessee was Corona Positive as per the report dt. 10/03/2021 while the time allowed vide notice dt. 04/03/2021 by the Ld. Pr. CIT was 11/03/2021.
We, therefore, set aside this case back to the file of the CIT to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2021 (12) TMI 1520
Recovery of unpaid dues - Validity of Regulation 9 of Rajasthan Real Estate Regulatory Authority Regulations, 2017 - ultra vires the provisions of the Rajasthan Real Estate (Regulation and Development) Act, 2016 or not - case of the bank is that it is not amenable to jurisdiction of RERA since RERA can issue directions only against a promoter, allottee or a real estate agent - HELD THAT:- The controversy at hand is substantially governed by the decision of Supreme Court in case of M/s Newtech Promoters and Developers Pvt. Ltd. [2021 (12) TMI 892 - SUPREME COURT]. It was a case in which the question was delegation of the authority in terms of Section 81 of the Act which is recalled provides that the authority may by general special order in writing be delegated to any member such powers and functions under the Act as it may deem necessary. When the Supreme Court has upheld the delegation of powers to adjudicate in single member of the authority in terms of Section 81 of the Act, recourse to Regulation 9 of the Regulations of 2017 would become academic. The resolution challenged by the petitioners passed by RERA delegating powers to decide complaints into single members, could as well have been passed in exercise of powers under Section 81. In fact the resolution itself does not refer to the source of power under Regulation 9 alone. Whether so stated or not, this resolution can always stress the source of the power under Section 81 of the Act since it is well settled that non-mentioning of the provisions or wrong reference to a statutory provision for exercise of power would not invalidate the exercise if powers can be traced to any statutory source. In fact the resolution itself refers section 81 of the Act as well as regulation 9 of the regulations.
Section 35 of the SARFAESI Act provids that the provisions under the said Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Similarly worded provision giving overriding effect to RERA Act is contained in Section 89. This Section as noted, provides that provisions of the said Act (i.e. RERA Act), shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The question would therefore arise which of the two provisions giving overriding effect to the statute would prevail.
In case of Bikram Chatterji [2019 (7) TMI 1233 - SUPREME COURT], the Supreme Court did apply RERA provisions to the transactions which were executed prior to introduction of the Act. This was however on the basis that there was large scale fraud committed by the promoters in connivance with the financial institutions - the Supreme Court having come to the conclusion that creation of security interest itself was fraudulent, the charge was invalid and therefore even if created before introduction of RERA Act, the same would not affect the right and interest of the allottees in terms of Section 11(4)(h) thereof. This would mean that in absence of fraud or collusion the Act cannot be applied retrospectively to the banks and financial institutions in whose favour security interests have been created prior to the enactment of the law.
Does RERA have the authority to issue any directions against a bank or financial institution which claims security interest over the properties which are subject matter of agreement between the allottee and the developers? - HELD THAT:- Clauses (a), (b) and (c) of sub-section (4) of Section 13 vest power in the secured creditor to take all steps as the borrower himself could take in relation to the secured asset. Clause (d) goes a step further and enables the bank to recover its dues directly from a debtor or the borrower who has acquired any of the secured assets. For all purposes thus the secured creditor steps in the shoes of the borrower in relation to the secured asset. This is thus a case of assignment of rights of the borrower in the secured creditor by operation of law. In other words the moment the bank takes recourse to any of the measures under sub-section (4) of Section 13, it triggers statutory assignment of right of the borrower in the secured creditor. Till this stage arises the bank or financial institutions in whose favour secured interest may have been created may not be in isolation in absence of the borrower be amenable to the jurisdiction of RERA. However the moment the bank or the financial institution takes recourse to any of the measures available in sub-section (4) of Section 13 of the SARFAESI Act, RERA authority would have jurisdiction to entertain the complaint filed by an aggrieved person.
Conclusion - (i) Regulation 9 of the Regulations of 2017 is not ultra vires the Act or is otherwise not invalid. (ii) The delegation of powers in the single member of RERA to decide complaints filed under the Act even otherwise flows from Section 81 of the Act and such delegation can be made in absence of Regulation 9 also. (iii) As held by the Supreme Court in the case of Bikram Chatterji in the event of conflict between RERA and SARFAESI Act the provisions contained in RERA would prevail. (iv) RERA would not apply in relation to the transaction between the borrower and the banks and financial institutions in cases where security interest has been created by mortgaging the property prior to the introduction of the Act unless and until it is found that the creation of such mortgage or such transaction is fraudulent or collusive. (iv) RERA authority has the jurisdiction to entertain a complaint by an aggrieved person against the bank as a secured creditor if the bank takes recourse to any of the provisions contained in Section 13(4) of the SARFAESI Act.
Petition disposed off.
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2021 (12) TMI 1519
Validity of Regulation 9 of Rajasthan Real Estate Regulatory Authority Regulations, 2017 - jurisdiction of RERA as being assignee of the promoter - orders passed by RERA are appealable before the Appellate Authority or not - interplay of RERA Act and SARFAESI Act - Applicability of decision in Bikram Chatterji [2019 (7) TMI 1233 - SUPREME COURT].
Validity of Regulation 9 of the Regulation of 2019 - HELD THAT:- The Allahabad High Court had occasion to consider somewhat similar issue of delegation of the authority of RERA into one Member to entertain complaints in case of M/S. K.D.P. BUILD WELL PVT LTD. VERSUS STATE OF U.P. AND 4 OTHERS [2020 (2) TMI 1736 - ALLAHABAD HIGH COURT]. It was held that the order passed by one member of RERA is legal and valid. This was seen in light of Section 81 of RERA Act. Once again in case of M/s Newtech Promoters and Developers Pvt. Ltd. the Division Bench of Allahabad High Court considered the validity of the powers exercised by single member of RERA. The Court referred to the provisions contained in the Act and regulations framed by the authority and upheld the power of the single member to entertain the complaints.
The decision of Allahabad High Court in the case of M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. VERSUS STATE OF U.P. AND 5 OTHERS [2021 (1) TMI 1346 - ALLAHABAD HIGH COURT] was challenged before the Supreme Court. Several questions were raised and answered. One of the questions was whether Section 81 of the Act authorizes the authority to delegate its power to single member to hear complaints instituted under Section 31. After referring to the statutory provisions and relying upon several decisions of the Supreme Court, the Supreme Court in the said decision upheld the delegation of power to decide the complaints by single members in terms of Section 81 of the Act.
The controversy at hand is substantially governed by the decision of Supreme Court in case of M/s Newtech Promoters and Developers Pvt. Ltd. [2021 (12) TMI 892 - SUPREME COURT]. It was a case in which the question was delegation of the authority in terms of Section 81 of the Act which we may recall provides that the authority may by general special order in writing be delegated to any member such powers and functions under the Act as it may deem necessary. When the Supreme Court has upheld the delegation of powers to adjudicate in single member of the authority in terms of Section 81 of the Act, recourse to Regulation 9 of the Regulations of 2017 would become academic. The resolution challenged by the petitioners passed by RERA delegating powers to decide complaints into single members, could as well have been passed in exercise of powers under Section 81. In fact the resolution itself does not refer to the source of power under Regulation 9 alone. Whether so stated or not, this resolution can always stress the source of the power under Section 81 of the Act since it is well settled that non-mentioning of the provisions or wrong reference to a statutory provision for exercise of power would not invalidate the exercise if powers can be traced to any statutory source.
Section 81 of RERA Act gives powers to the authority to delegate to any member powers and functions under the Act. Sub-section (1) of Section 85 enables the authority to frame regulations consistent with the Act and the Rules. Regulation 9 framed in exercise of such powers merely regulates the process of delegation of powers in single members of RERA. This regulation is thus not ultra vires the Act or invalid for any other reason.
Applicability of RERA while SARFAESI Act - HELD THAT:- Section 35 of the SARFAESI Act provides that the provisions under the said Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Similarly worded provision giving overriding effect to RERA Act is contained in Section 89. This Section as noted, provides that provisions of the said Act (i.e. RERA Act), shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The question would therefore arise which of the two provisions giving overriding effect to the statute would prevail.
In case of West Bengal Electricity Regulatory Commission Vs. CESC Ltd., [2002 (10) TMI 772 - SUPREME COURT], a three Judge Bench of the Supreme Court considered the similar conflict between the Electricity (Supply) Act, 1948 and Electricity Regulatory Commissions Act, 1998, both of which contained similar overriding provisions - it was held that 'in view of the Section 34 of the RDB Act, the said Act overrides the Companies Act, to the extent there is anything inconsistent between the Acts.'
The judicial trend would thus suggest that in the event of direct conflict between the two central statutes giving overriding effect to the Act, ordinarily the subsequent legislation would prevail.
Whether RERA would have jurisdiction in cases where the transactions between borrowers and the banks are completed before enactment of the Act? - HELD THAT:- As is well settled, a statutory provision creating rights or obligations is presumed to be prospective unless specifically or by necessary implications it has been given retrospective effect. Section 11 of RERA Act pertains to function and duties of the promoter. Sub-section (4) of Section 11 requires the promoter to perform several acts and obligations - This provision thus creates a new obligation and corresponding right in favour of the allottee. Such provisions cannot have retrospective effect. In any case as noted, enforcing any such obligation would be wholly unworkable. It would reopen closed transactions between the borrower and the lender. In our opinion therefore RERA Act would have no applicability to the secured creditors where such security interests have been created before introduction of the Act.
Applicability of decision in Bikram Chatterji [2019 (7) TMI 1233 - SUPREME COURT]] - HELD THAT:- In case of Bikram Chatterji, the Supreme Court did apply RERA provisions to the transactions which were executed prior to introduction of the Act - the Supreme Court having come to the conclusion that creation of security interest itself was fraudulent, the charge was invalid and therefore even if created before introduction of RERA Act, the same would not affect the right and interest of the allottees in terms of Section 11(4)(h) thereof. This would mean that in absence of fraud or collusion the Act cannot be applied retrospectively to the banks and financial institutions in whose favour security interests have been created prior to the enactment of the law.
Does RERA have the authority to issue any directions against a bank or financial institution which claims security interest over the properties which are subject matter of agreement between the allottee and the developers - HELD THAT:- Clauses (a), (b) and (c) of sub-section (4) of Section 13 vest power in the secured creditor to take all steps as the borrower himself could take in relation to the secured asset. Clause (d) goes a step further and enables the bank to recover its dues directly from a debtor or the borrower who has acquired any of the secured assets. For all purposes thus the secured creditor steps in the shoes of the borrower in relation to the secured asset. This is thus a case of assignment of rights of the borrower in the secured creditor by operation of law. In other words the moment the bank takes recourse to any of the measures under sub-section (4) of Section 13, it triggers statutory assignment of right of the borrower in the secured creditor. Till this stage arises the bank or financial institutions in whose favour secured interest may have been created may not be in isolation in absence of the borrower be amenable to the jurisdiction of RERA. However the moment the bank or the financial institution takes recourse to any of the measures available in sub-section (4) of Section 13 of the SARFAESI Act, RERA authority would have jurisdiction to entertain the complaint filed by an aggrieved person.
Conclusions - (i) Regulation 9 of the Regulations of 2017 is not ultra vires the Act or is otherwise not invalid. (ii) The delegation of powers in the single member of RERA to decide complaints filed under the Act even otherwise flows from Section 81 of the Act and such delegation can be made in absence of Regulation 9 also. (iii) As held by the Supreme Court in the case of Bikram Chatterji in the event of conflict between RERA and SARFAESI Act the provisions contained in RERA would prevail. (iv) RERA would not apply in relation to the transaction between the borrower and the banks and financial institutions in cases where security interest has been created by mortgaging the property prior to the introduction of the Act unless and until it is found that the creation of such mortgage or such transaction is fraudulent or collusive. (iv) RERA authority has the jurisdiction to entertain a complaint by an aggrieved person against the bank as a secured creditor if the bank takes recourse to any of the provisions contained in Section 13(4) of the SARFAESI Act.
Petition disposed off.
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2021 (12) TMI 1518
Anti-Competitive Conduct - abuse of dominant position - contravention of Section 3(3)(a) and Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002 - HELD THAT:- This ‘Tribunal’ bearing in mind the primordial fact that the Appellant has preferred the ‘instant Appeal’ being dissatisfied with the impugned order dated 24.09.2021, passed by the Respondent in suo moto case no. 6/2017, during the pendency of the ‘Appeal’, to prevent an aberration of justice and in furtherance of substantial cause of justice stays the impugned order dated 24.09.2021 in suo moto case no. 6/2017 subject to the payment of 10% of the penalty amount levied by the Respondent/CCI, by way of ‘Fixed Deposit Receipt’ to and in favour of the Registrar, NCLAT within three weeks from the date of passing of this order.
List the case ‘For Admission (After Notice)’ on 29th March, 2022.
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2021 (12) TMI 1517
Alleged contravention of Sections 3 and 4 of the Competition Act, 2002 - restricting market access and abuse of dominant position - Determination of whether the Opposite Parties qualify as an "enterprise" under the Competition Act, 2002.
Determination of whether the Opposite Parties qualify as an "enterprise" under the Competition Act, 2002 - HELD THAT:- The thrust of the definition of the term ‘enterprise’ is on the economic nature of the activities discharged by the entities concerned. It is immaterial whether such economic activities were undertaken for profit making/ commercial purposes or for philanthropic purposes. Thus, even non-commercial economic activities would be subject to the discipline of the Act as the Act does not distinguish economic activities based on commercial or non-commercial nature thereof. In ascertaining as to whether an entity qualifies to be an ‘enterprise’, the Commission examines this from a functional rather than a formal approach - In view of statutory framework defining ‘enterprise’ and keeping in view the nature of functions performed by OPs, OPs were prima facie held to be an ‘enterprise’ within the meaning of the term as defined in Section 2(h) of the Act.
Abuse of dominant position by undertakings in the relevant market - HELD THAT:- The Commission observed that WhatsApp message posted by the General Secretary of OP-1 on 30.10.2020, addressed to players/coaches/clubs/academies, appeared to restrict them from joining/playing the non-affiliated clubs/organizations and further stated consequences flowing from non-adherence thereof by way of suspension/non-acceptance of their entries in TT Tournament. Such conduct was prima facie noted as violating the provisions of Section 4(2)(c) of the Act - The Commission also noted that the impugned clauses of MoA of OP-3 prima facie appeared to be unfair being restrictive in nature and in contravention of the provisions of Section 4(2)(a)(i) of the Act. Impugned clauses were also noted as prima facie limiting or otherwise restricting the provisions of services or markets therefore, and thereby found to have contravened the provisions of Section 4(2)(b)(i) of the Act besides violating the provisions of Section 4(2)(c) thereof, as the restrictions also denied market access to players as well as organisers - the Commission directed the DG to cause an investigation to be made into the matter, as stated previously.
The Commission is of the considered opinion that the present case is fit for grant of interim injunction and accordingly OP-1 is hereby restrained from issuing any communication to players/parents/coaches/clubs, restricting or dissuading them, in any manner whatsoever, from joining or participating in tournaments organised by Associations/ Federations/ Confederations which are not purportedly ‘recognised’ by OP-1. OP-1 is further directed not to threaten players who want to participate in such events - The Secretary is directed to communicate to the Parties and the Office of the DG, accordingly.
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2021 (12) TMI 1516
Maintainability of petition - availability of the alternative efficacious remedy - absence of the statutory powers of Customs Excise and Service Tax Appellate Tribunal (CESTAT) - HELD THAT:- It is not required to enter into the merits of the matter as there is not even averments of the matter being covered by the exceptions for entertaining the writ petitions as provided in case of Whirlpool Corporation v. Registrar of Trade Marks Mumbai [1998 (10) TMI 510 - SUPREME COURT].
Because of the financial difficulties pressed into service, the Court is inclined to consider in wake of the absence of the statutory powers of Customs Excise and Service Tax Appellate Tribunal (CESTAT) of exercising the discretion in making payment of 7.5% of the duty provided statutorily for preferring the appeal against the order-in-original.
It is thus made clear that on the aspect of merits, this Court has chosen not to entertain this petition.
Notice for final disposal, returnable on 23/12/2021.
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2021 (12) TMI 1515
Winding up of the respondent-Company - failure to pay the debt of the petitioner under sections 433, 434 and 439 of the Companies Act, 1956 - HELD THAT:- It appears that after the order of admission, advertisement of the petition and appointment of provisional liquidator, no further orders are passed by the Court with regard to order of winding up of the company. In such circumstances and in view of the following observations of the Apex Court in case of Action Ispat and Power Pvt Ltd. vs. Shyam Metalics and Energy Ltd. [2020 (12) TMI 535 - SUPREME COURT], this petition is required to be transferred to the NCLT, Ahmedabad.
The Company Petition No. 10 of 2016 is accordingly transferred to the National Company Law Tribunal, Ahmedabad Bench. Registry to forward the papers to the Tribunal within a period of Eight weeks from today along with order. Tribunal to do the needful in accordance with law to proceed with the matter from the stage at which it is transferred.
The Official Liquidator Report does not survive and stands disposed of accordingly.
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2021 (12) TMI 1514
Assessment u/s 147 or 153C - documents found during a search - HELD THAT:- Incumbent upon the AO to proceed against the assessee in light of provisions of section 153C of the Act as provisions of section 153C of the Act covers the situation where an alleged incriminating document pertaining to an assessee is found during search at third party premises.
The provisions of section 153C of the Act are non-obstante provisions and the same specifically excludes the operation of Section 147 of the act. Therefore, in our considered opinion, the AO in the present case has grossly erred in invoking the provisions of section 147 instead of section 153C of the Act.
We are of the considered view that if the alleged action of the AO u/s 147 of the Act is permitted on the basis of documents found in the course of search of third parties premises, then provisions of section 153C of the Act would become redundant.
Considering the facts of the case in totality, in light of the relevant provisions of the Act, we have no hesitation in quashing the assessment order qua Ground No. 1.3 making all other grounds of appeal otiose.
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2021 (12) TMI 1513
Compliance with paragraph 6.4 of the Master Circular dated July 1, 2015 issued by the Reserve Bank on Prudential Norms on Income Recognition Assets Classification and Provisioning Pertaining to Advances and execute agreements assigning their respective debts in favour of Respondent No.7 - recovery of purported dues under the financial facilities granted by the Respondent Nos. 1 to 6 - HELD THAT:- The High Court was right in holding that there would be no obligation upon the bank/FI in terms of paragraph 6.4 (d)(ii) as was contended on behalf of the appellant. Thus the High Court was absolutely right and justified in rejecting the claim made on behalf of the appellant.
There are no reason to entertain this appeal, which is accordingly dismissed without any order as to costs.
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2021 (12) TMI 1512
Disqualification of a director under Section 164(2)(a) of the Companies Act, 2013 - non-filing of financial statements or annual returns for continuous period of three financial years by the defaulting companies on whose board, the petitioner is also a Director - HELD THAT:- This Court in Bhagavan Das Dhananjaya Das [2018 (8) TMI 436 - MADRAS HIGH COURT], allowed those writ petitions and set aside the orders passed by the Registrar of Companies, disqualifying the petitioners therein to hold the office of directorship of the companies under Section 164(2)(a) of the Companies Act, which came into effect from 01.04.2014.
Following the aforesaid decision, the writ petition stands allowed, in the terms as indicated in the judgment in MEETHELAVEETIL KAITHERI MURALIDHARAN, KAMAL ANEESMOHAMED, SATHISH KUMAR GOPAL, GOVINDASAMY BALASUBRAMANIAM, PAARI SENTHIL KUMAR, PAARI DHANALAKSHMI, VERSUS UNION OF INDIA, THE REGISTRAR OF COMPANIES TAMIL NADU, CHENNAI, [2020 (10) TMI 595 - MADRAS HIGH COURT].
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2021 (12) TMI 1511
Dishonour of Cheque - Appellant - State has vehemently submitted that in the present case the High Court has erred in quashing the criminal proceedings for the offences Under Section 13(2) read with Section 13(1)(d) of the Act and Section 420 read with Section 120B Indian Penal Code in exercise of powers Under Section 482 Code of Criminal Procedure - HELD THAT:- It is required to be noted that by the impugned judgment and order the High Court in exercise of its powers Under Section 482 Code of Criminal Procedure has quashed the criminal proceedings for the offences Under Section 13(2) read with Section 13(1)(d) of the Act and Section 420 read with Section 120B Indian Penal Code.
From the impugned judgment and order passed by the High Court, it appears that the High Court has entered into the merits of the allegations and has conducted the mini-trial by weighing the evidence in detail which, as such, as observed and held by this Court in a catena of decisions is wholly impermissible. As held by this Court in the case of State of Haryana And Ors. v. Ch. Bhajan Lal And Ors. [1990 (11) TMI 386 - SUPREME COURT], the powers Under Section 482 Code of Criminal Procedure could be exercised either to prevent an abuse of process of any court and/or otherwise to secure the ends of justice. In the said decision this Court had carved out the exceptions to the general Rule that normally in exercise of powers Under Section 482 Code of Criminal Procedure the criminal proceedings/FIR should not be quashed.
It is trite that the power of quashing should be exercised sparingly and with circumspection and in rare cases. As per settled proposition of law while examining an FIR/complaint quashing of which is sought, the court cannot embark upon any enquiry as to the reliability or genuineness of allegations made in the FIR/complaint. Quashing of a complaint/FIR should be an exception rather than any ordinary rule - As held by this Court the powers Under Section 482 Code of Criminal Procedure is very wide, but conferment of wide power requires the court to be more cautious. It casts an onerous and more diligent duty on the Court.
In the present case the allegations were with respect to allotment of 10 plots which were required to be allotted under the discretionary quota. It is not in dispute that at the relevant time the Respondents, Accused were connected with the Department concerned with regard to allotment of the plots directly or indirectly - it cannot be said that the criminal proceedings against the Respondents - Accused were in any way an abuse of process of law and/or the Court. The allegations against the Respondents - Accused are very serious including hatching a criminal conspiracy in allotment of 10 plots in the discretionary quota arbitrarily and to their own family members/relatives. There are specific allegations with respect to huge loss caused to the B.D.A. and the public exchequer, as according to the prosecution the plots were allotted at throw away prices. All these aspects are required to be considered at the stage of trial and not while considering the application Under Section 482 Code of Criminal Procedure.
While quashing the criminal proceedings the High Court has not at all adverted to itself the aforesaid aspects and has embarked upon an enquiry as to the reliability and genuineness of the evidence collected during the investigation as if the High Court was conducting the mini-trial. Therefore, as such the impugned judgment and order passed by the High Court quashing the criminal proceedings against the Respondents herein - original Accused Nos. 4, 5 and 3 - Smt. Pratima Mohanty, Shri Prakash Chandra Patra and Shri Rajendra Kumar Samal is unsustainable, both, in law and/or facts and the same deserves to be quashed and set aside.
Appeal allowed.
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2021 (12) TMI 1510
Reopening of assessment u/s 147 - jurisdictional error issue of the ITO, Ward, Kurukshetra to reopen the assessment - HELD THAT:- ITO, ward-3, Kurukshetra was duly informed by the assessee that he was in Spain from the period June 2004 to October 2008 and it was bought to the knowledge of the ITO, Kurukshetra that the status of the assessee during the assessment year under consideration was that of a NRI and, therefore, jurisdiction to reopen the assessment and frame the assessment u/s 147 of the Act lied with DCIT (International Taxation), Gurgaon. However, the ITO, Ward-3, Kurukshetra having no jurisdiction to reopen the assessment proceeded to issue notice u/s 148 of the Act and, thereby, reopened the assessment and continued with the assessment proceedings till the case was transferred by him to DCIT (International Taxation)Gurgaon on the directions of the JCIT, Kurukshetra.
The concerned AO, who was having jurisdiction to frame the assessment, apparently, did not record reasons of having belief of escapement of income and also did not issue any notice u/s 148 of the Income Tax Act and, therefore, the assessment framed by him without assuming a valid jurisdiction to reopen the assessee, was bad in law.
We hold that the notice issued u/s 148 of the Act for reopening of the assessment by the ITO, Kurukshetra was without jurisdiction, therefore, the reopening of the assessment was bad in law and the consequent assessment framed by the DCIT (International Taxation) is not sustainable in the eyes of law and the same is hereby quashed. Decided in favour of assessee.
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2021 (12) TMI 1509
Seeking rectification of order - Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 read with Rule of 154 of National Company Law Tribunal Rules, 2016 - Applicant submits that Clause 21 sub-clause XIII Page 17 of the order dated 05.10.2021 is inconsistent with the proposal made by the resolution applicant in its resolution plan at page number 44 at clause 4.14. as the same changes the proposition made in plan.
HELD THAT:- The instant application is allowed and clause 21 subclause XIII page 17 of the order is replaced with following clause:
'On the effective date and with effect from the appointed date, the entire shareholding of the erstwhile promoters and their family members, whether as equity share capital or preference share capital shall be fully cancelled and stand reduced to zero. All other public shareholders shall be paid Rs. 1/- for every 100 shares held in the company as proposed under the plan.'
The application is allowed and stand disposed of.
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2021 (12) TMI 1508
Requirement or justification to fix a time limit by the CMM for taking possession of the secured asset while exercising jurisdiction under Section 14 of the SARFAESI Act - order passed in a civil suit instituted by a third party in respect of the mortgaged property/secured asset would bind the secured creditor, if the said secured creditor was not a party to the Civil Suit or not.
Whether there is any requirement or justification to fix a time limit by the CMM for taking possession of the secured asset while exercising jurisdiction under Section 14 of the SARFAESI Act? - HELD THAT:- Keeping in mind the objective of the SARFAESI Act i.e., to enable the secured borrowers to take physical possession of the assets of the defaulting borrowers in an expeditious manner, there is no requirement or justification for the CMM to impose time limits for the receiver to take physical possession of the secured asset. This would also curtail unnecessary litigation wherein applications for extension are filed before the CMM and upon the said applications being either allowed or declined by the CMM, petitions are filed before this Court challenging the said decision of the CMM - This Court finds merit in the submissions made by the petitioner, that there is no requirement or rationale in providing a time limit in orders passed by the CMM under Section 14 of the SARFAESI Act, in respect of taking possession of the secured asset. In fact, setting of a time limit by the CMM for taking possession of a secured asset is contrary to the legislative intent - the impugned order dated 30th March, 2021 passed by the CMM, to the extent that it imposes a time limit of ninety days for the court receiver to take physical possession, is set aside.
In the context of proceedings initiated under the SARFAESI Act, whether an order passed in a civil suit instituted by a third party in respect of the mortgaged property/secured asset would bind the secured creditor, if the said secured creditor was not a party to the Civil Suit? - HELD THAT:- The Division Bench in Allahabad Bank in ALLAHABAD BANK VERSUS DISTRICT MAGISTRATE, LUDHIANA AND ORS. [2021 (9) TMI 1562 - PUNJAB AND HARYANA HIGH COURT] has, while analyzing the provisions of the SARFAESI Act, observed that if the secured creditor is not a party to a suit initiated by a third party against the borrower, any order passed in the said suit would not be applicable to the secured creditor.
The CMM, while exercising jurisdiction under Section 14 of the SARAFESI Act could not have taken cognizance of the aforesaid order passed in the civil suit. The scope of the proceedings before the CMM are entirely different from the proceedings in the civil suit. The scope of the proceedings before the CMM are under the provisions of the SARFAESI Act, which is a specialized law enacted to enable a secured creditor to obtain possession of the secured asset in an expeditious manner - in view of Section 34 of the SARFAESI Act, a civil court does not have jurisdiction to adjudicate the rights of a secured creditor or the enforcement of such rights by the secured creditor. Such rights can only be challenged by the borrower or any affected person before the DRT in terms of Section 17 of the SARFAESI Act. Further, in terms of Section 34, no injunction can be granted by any court in respect of any action taken in pursuance of any power under the SARFAESI Act. Therefore, the civil court, in the present case, did not have any jurisdiction to pass an injunction against the petitioner.
The impugned order dated 17th August, 2021, to the extent it holds that since the order dated 12th July, 2021 in the civil suit has been passed by a court which is senior in hierarchy of courts to the CMM, it would be against the judicial discipline to pass an order under Section 14 of the SARFAESI Act, is set aside.
There is no requirement or justification for the CMM to fix a time limit for taking possession of the secured asset while exercising jurisdiction under Section 14 of the SARFAESI Act - In the context of proceedings initiated under the SARFAESI Act, an order passed in a civil suit instituted by a third party in respect of the mortgaged property/secured asset would not bind the secured creditor, if the said secured creditor was not a party to the Civil Suit.
Appeal allowed.
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2021 (12) TMI 1507
Seeking waiver of requirement u/s 13B(2) of the Hindu Marriage Act, 1955 to make the motion for a decree of divorce after at least six months from the date of filing the petition for divorce by mutual consent Under Section 13B(1) of the said Act - HELD THAT:- It is well settled that a judgment is a precedent for the issue of law that is raised and decided. A judgment is not to be read in the manner of a statute and construed with pedantic rigidity. In Amardeep Singh v. Harveen Kaur [2017 (9) TMI 2031 - SUPREME COURT], this Court held that the statutory waiting period of at least six months mentioned in Section 13B(2) of the Hindu Marriage Act was not mandatory but directory and that it would be open to the Court to exercise its discretion to waive the requirement of Section 13B(2), having regard to the facts and circumstances of the case, if there was no possibility of reconciliation between the spouses, and the waiting period would serve no purpose except to prolong their agony.
In SONI KUMARI VERSUS DEEPAK KUMAR [2015 (9) TMI 1763 - SUPREME COURT], this Court exercised its power Under Article 142 of the Constitution of India to waive the statutory waiting period of six months, where the wife had received the entire compensation of Rs. 15 lacs in full and final settlement of her claims as per the settlement arrived at between the parties, and further granted a decree of divorce to the parties by mutual consent.
In this Case, the parties are both well-educated and highly placed government officers. They have been married for about 15 months. The marriage was a non-starter. Admittedly, the parties lived together only for three days, after which they have separated on account of irreconcilable differences. The parties have lived apart for the entire period of their marriage except three days. It is jointly stated by the parties that efforts at reconciliation have failed. The parties are unwilling to live together as husband and wife. Even after over 14 months of separation, the parties still want to go ahead with the divorce. No useful purpose would be served by making the parties wait, except to prolong their agony.
The impugned order dated 17th November, 2021 passed by the High Court and the impugned order dated 12th October, 2021 passed by the Family Court, Hissar are set aside - this Court deems it appropriate to exercise its power Under Article 142 of the Constitution of India, to grant the Appellant and the Respondent a decree of divorce by mutual consent Under Section 13B of the Hindu Marriage Act, 1955, waiving the statutory waiting period of six months Under Section 13(B)(2) of the said Act - appeal allowed.
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2021 (12) TMI 1506
Money Laundering - provisional attachment order - issuance of status quo order - HELD THAT:- The property was provisionally attached and the Adjudicating Authority has confirmed the order vide order dated 09.11.2018. When the matter was challenged before the Appellate Authority, the Appellate Authority vide order dated 21.12.2018 passed the following orders “As agreed, status quo shall be maintained by both the parties as of today” 12:00 O’clock. This order was passed on 21.12.2018. Prior to this date vide Annexure-4 and Annexure-5 dated 28.11.2018 and 14.12.2018, petitioner was informed that in compliance of provisions contained in Sub-section 4 of Section 8 of the Prevention of Money Laundering Act, constructive possession of the premises has been taken over by the Enforcement Directorate. This fact was not brought to the notice of the Appellate Authority.
The order dated 09.11.2018 which is challenged in this writ petition is already under challenge before the Appellate Authority and this Court cannot entertain the present writ petition, merely, because the Appellate Authority is not functioning, more particularly, when stay was obtained from the Appellate Authority without disclosing about the constructive possession being taken over. No question arises before this Court to entertain the present writ petition - Petition dismissed.
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2021 (12) TMI 1505
Validity of reopening of assessment u/s 147/148 - reasons to believe v/s suspect - bogus purchases of goods - HELD THAT:- Reasons were recorded based on the information received from DDIT Investigation wing Mumbai that search was carried out by the investigation wing, Mumbai in the case of Gautam Jain & others (Surat Diamond concerns) group of Mumbai. The group is indulged in providing bogus purchase bills / unsecured loans through various benami concerns.
We note that “unsecured loans” is not a subject matter or an issue in the case of assessee under consideration; therefore, it seems that assessing officer did not apply his mind while recording reasons. Thus, reasons were recorded based of suspicion and in a mechanical way without application of mind.
The provisions of section 147 require that the AO should have 'reason to believe' that any income chargeable to tax has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the AO has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment.
We note that in assessee`s case, the reasons recorded by the assessing officer are not “reason to believe” rather these are “reason to suspect”. Reasons must have a live link with the formation of the belief. This is supported by Circular No. 549 dated 31.10.1989 which clarified that the words “reason to believe” did not mean a change of opinion.
The Hon’ble Supreme Court in ITO vs. Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT] has lucidly explained the power of assessing officer to bring to tax income escaping assessment u/s. 147.
In the present case, the assessing officer assumed the jurisdiction u/s 147 of the Act solely on the basis of the information received from the Investigation Wing, Mumbai with reference to the search carried out by the Investigation Wing, Mumbai in the case of Shri Gautam Jain and Others.
The own satisfaction of the AO for the alleged escapement of income is the prerequisite condition for initiating the reassessment proceedings, which is absent in the present case. We note that “unsecured loans” is not the subject matter or issue in the case of assessee under consideration, hence reasons recorded are not as per the scheme of the provisions of section 147 of the Act. It is the condition precedent that before initiating the reassessment proceedings, the assessing officer has to carry out deep verification of the information and to apply his independent and judicious mind before issuing notice u/s 148 of the Act but, in the present case, without any effort to examine and to discuss the material received from the Investigation Wing, solely on such borrowed satisfaction, carried out the reassessment proceedings, which is bad in law.
We are of the considered view that the reasons recorded by the AO as set out earlier, are bad in law. Appeal of the assessee is allowed.
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