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1989 (2) TMI 424
Issues Involved:
1. Contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973.
2. Contravention of section 4(1) and 4(2) of the Foreign Exchange Regulation Act, 1947.
3. Contravention of sections 8(1)(b) and 10(1) of the Foreign Exchange Regulation Act, 1947.
4. Contravention of sections 8(1) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.
Detailed Analysis:
Issue 1: Contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973
The appellants were accused of acquiring foreign exchange without the RBI's permission. The adjudicating authority found them guilty based on the value of import licenses. However, the appellants argued that the goods were imported from Hungary using a 'switch deal,' which did not involve acquiring foreign exchange. The Tribunal found no evidence of the appellants converting Indian currency into foreign exchange or acquiring foreign exchange. The Tribunal concluded that mere involvement in a 'switch deal' does not violate section 8(1) unless foreign exchange is actually acquired. The Tribunal emphasized that the charge must be substantiated with concrete evidence, which was lacking in this case.
Issue 2: Contravention of Section 4(1) and 4(2) of the Foreign Exchange Regulation Act, 1947
The appellants were accused of acquiring foreign exchange valuing Rs. 23,36,352 through unauthorized means. The Tribunal noted that the appellants were absolved of the charge under section 4(2) but were held guilty under section 4(1) for acquiring foreign exchange. The Tribunal found no evidence to support the claim that the appellants acquired foreign exchange. The Tribunal highlighted that the adjudicating authority's reliance on the value of import licenses was misplaced, as there was no proof of actual foreign exchange acquisition.
Issue 3: Contravention of Sections 8(1)(b) and 10(1) of the Foreign Exchange Regulation Act, 1947
The appellants were accused of acknowledging a debt of Rs. 50,000 towards royalty to a West German entity without RBI's permission. The Tribunal noted that the appellants were absolved of this charge by the adjudicating authority. The Tribunal found no evidence to support the claim that the appellants acknowledged or settled the debt without permission.
Issue 4: Contravention of Sections 8(1) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973
The appellants were accused of acquiring foreign exchange amounting to DM 454.80 from an unauthorized dealer and making payments to a person outside India without RBI's permission. The Tribunal noted that the appellants were absolved of this charge by the adjudicating authority. The Tribunal found no evidence to support the claim that the appellants acquired or made payments in foreign exchange without permission.
Conclusion:
The Tribunal concluded that the charges against the appellants were not substantiated with concrete evidence. The appellants were acquitted of all charges, and the penalties imposed were set aside. The Tribunal ordered the refund of any penalty amount already deposited.
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1989 (2) TMI 423
Issues Involved:
1. Validity of the discharge of Nathumal by the High Court.
2. Correctness of the charge framed against Dilip under Section 302 IPC.
3. Examination of the evidence and material on record.
4. Role of social welfare organizations in legal proceedings.
Issue-wise Detailed Analysis:
1. Validity of the discharge of Nathumal by the High Court:
The High Court dismissed the revision preferred by the State challenging the discharge of Nathumal, agreeing with the trial court that the allegations against him do not justify the framing of any charge. The Supreme Court concurred with the trial court's discretion, noting that while Nathumal had a moral obligation to protect Chanda, this alone was insufficient to frame a charge against him without more substantial evidence. Thus, his discharge was confirmed.
2. Correctness of the charge framed against Dilip under Section 302 IPC:
The trial court initially framed a charge under Section 302 IPC against Dilip, considering the evidence and circumstances, despite the police charge-sheeting him under Section 306 IPC. The High Court, however, found this charge misconceived and discharged Dilip, stating there was no sufficient ground even for a charge under Section 306 IPC. The Supreme Court, however, disagreed with the High Court's approach, emphasizing that the trial court's decision was based on substantial material, including the Chemical Analyser's report and post-mortem findings indicating non-accidental death. The Supreme Court restored the trial court's order, directing the trial against Dilip to proceed.
3. Examination of the evidence and material on record:
The Supreme Court scrutinized the material on record, including witness statements, the Chemical Analyser's report, and the post-mortem report. It noted that kerosene residue was found on Chanda's garments and she had contusions on her back, suggesting foul play. The statements of Chanda's brother, father, and maid servant highlighted a hostile atmosphere and demands for dowry. The High Court's reliance on the dying declaration was criticized as it failed to consider other significant evidence and circumstances.
4. Role of social welfare organizations in legal proceedings:
The Supreme Court acknowledged the role of "Stree Atyachaar Virodhi Parishad," a social welfare organization committed to preventing atrocities on women. The organization had preferred the appeals, spending its own resources. The Court appreciated the organization's objective and the assistance rendered, recognizing the importance of such entities in bringing attention to social issues and supporting legal proceedings.
Conclusion:
The Supreme Court allowed the criminal appeals against Dilip, setting aside the High Court's order and restoring the trial court's decision to frame a charge under Section 302 IPC. The appeals against Nathumal were dismissed, confirming his discharge. The Court directed the trial to proceed expeditiously, emphasizing the need for the criminal justice system to respond sensitively to cases involving dowry deaths and atrocities against women.
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1989 (2) TMI 422
Issues Involved
1. Whether the liability of the plaintiffs as sureties had been extinguished for the reasons set out in the plaint (C.S. No. 31 of 1974).
2. Whether the plaintiff is entitled to the declaration asked for (C.S. No. 33 of 1974).
3. Whether the plaintiff is entitled to claim return of the shares standing in the plaintiff's name (C.S. No. 33 of 1974).
Detailed Analysis
Issue 1: Whether the liability of the plaintiffs as sureties had been extinguished for the reasons set out in the plaint (C.S. No. 31 of 1974).
The court examined the relationship between the appellant bank and the respondents, who acted as sureties for Shree Bharathy Mills Limited. The respondents had provided various securities, including documents of title to immovable property, life insurance policies, and shares. The original agreement was altered without the respondents' knowledge when the appellant bank entered into new arrangements with the principal debtor on 7-1-1967 and 23-1-1967. The court found that the respondents were discharged from their liabilities due to the bank's negligence in losing Rs. 19-1/2 lakhs worth of goods and the subsequent fresh arrangement between the bank and the principal debtor, to which the respondents were neither parties nor were they informed. The court cited Section 62 of the Contract Act and relevant case law to conclude that the original contract need not be performed if a new contract is substituted. The court also noted that under Section 153 of the Contract Act, any variance made without the surety's consent discharges the surety.
Issue 2: Whether the plaintiff is entitled to the declaration asked for (C.S. No. 33 of 1974).
The court considered the claim that the appellant bank had no right to retain the shares pledged by the respondents after the overdraft account was settled. The respondents had sent Rs. 10,000/- specifically for the return of the shares, as instructed by the appellant's agent. The court found that the bank's refusal to return the shares and its claim of a lien over the shares for other liabilities of the partners was not supported by law. The court referred to Tannan's Banking Law and Practice and relevant case law, which state that a banker cannot set off a partnership account's credit balance against individual partners' liabilities. The court also noted that the bank failed to provide evidence that the partners owed money in any other capacity.
Issue 3: Whether the plaintiff is entitled to claim return of the shares standing in the plaintiff's name (C.S. No. 33 of 1974).
The court reiterated that the appellant bank had no legal right to retain the shares after the overdraft account was settled. The court found that the bank's agent had called upon the respondents to adjust the amounts due and take back the shares, and the respondents complied by sending Rs. 10,000/-. The court held that the bank's claim of a lien over the shares for other liabilities was not valid, as the credit and liability must exist in the same rights. The court dismissed the appellant's argument that there were no pleadings under O. VI, R. 4, C.P.C., finding that the plaints were elaborately pleaded and the bank's evidence was lacking.
Conclusion
The court agreed with the learned single judge's decision and dismissed both appeals with costs. The respondents were discharged from their liabilities as sureties due to the bank's negligence and the fresh arrangement with the principal debtor. The bank had no right to retain the shares pledged by the respondents after the overdraft account was settled. The appeals were dismissed, and the respondents were entitled to the return of their shares and other securities.
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1989 (2) TMI 421
Issues Involved:
1. Whether the sum of Rs. 9,000 received as interest from Bazpur Cooperative Sugar Factory Ltd. is covered under Section 14(3) of the Income Tax Act.
2. Whether the sum of Rs. 51,295 received as interest on advances is exempt under Section 14(3) of the Income Tax Act, 1922.
Detailed Analysis:
Issue 1: Rs. 9,000 Interest from Bazpur Cooperative Sugar Factory Ltd.
The first issue revolves around the sum of Rs. 9,000 received as interest from Bazpur Cooperative Sugar Factory Ltd. The High Court initially held that this amount represented interest received on a cash security of Rs. 2,00,000 furnished by the assessee for carrying on the sugar agency business, and thus, it could not be categorized as interest from securities or investments under Section 14(3)(iii) of the Income Tax Act.
The Supreme Court scrutinized the agency agreement, particularly clauses (1) and (20), which stipulated that the Rs. 2,00,000 security deposit would carry interest at the rate of 4.5% per annum. The Court concluded that this amount of Rs. 9,000 represented interest on the security deposit and should not be mixed with other sums received by the assessee in the course of its business.
The Court determined that the Rs. 2,00,000 security deposit was not an investment, and hence, the interest received did not fall within the purview of Section 14(3)(iii). Consequently, the High Court's decision to exempt this amount was reversed, and the Revenue's stance that this amount represents taxable income was accepted.
Conclusion for Issue 1: On the facts and circumstances of the case, and on a true interpretation of the agreement, the Tribunal did not err in holding that the sum of Rs. 9,000 received as interest from Bazpur Cooperative Sugar Factory Ltd. was not covered under Section 14(3) of the Income Tax Act.
Issue 2: Rs. 51,295 Interest on Advances
The second issue pertains to the sum of Rs. 51,295 received as interest on advances made by the assessee to various District Cooperative Development Federations. The High Court noted that these advances were made to facilitate the sugar business, as the District Cooperative Development Federations were unable to arrange the entire finances required for the business.
The High Court examined the terms of the agreements and found that the money provided by the assessee was necessary to run the business and generate profits. The Court emphasized that the provision of money by the assessee, the purpose for which the money was provided, and the stipulation for earning interest were relevant considerations. It was concluded that this funding constituted an investment, and the interest earned on it was covered under Section 14(3)(iii) of the Income Tax Act, 1922.
The Supreme Court agreed with the High Court's interpretation, noting that the legislative purpose of Section 14(3) was to provide incentives to the cooperative movement. The Court affirmed that the amount of Rs. 51,295 received as interest on advances was exempt under Section 14(3).
Conclusion for Issue 2: On the facts and circumstances of the case, and on a true and correct interpretation of the various clauses of the agreement, the sum of Rs. 51,295 received as interest on advances in the assessee's income from the sugar business was exempt under Section 14(3) of the Income Tax Act, 1922.
Final Disposition: The appeal was disposed of with no order for costs, as success was divided.
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1989 (2) TMI 420
The Supreme Court of India dismissed the appeal without interference with the Tribunal's order in the case. (Citation: 1989 (2) TMI 420 - SC)
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1989 (2) TMI 419
Issues Involved:
1. Non-accountal of raw materials (caps, glass shells, tungsten filaments).
2. Quantum of breakages and losses in manufacturing.
3. Discrepancies in stock positions and bank statements.
4. Alleged excess sales of bulbs on invoices.
5. Comparison of electricity consumption vis-a-vis production.
6. Allegation of clandestine removal of goods.
Issue-wise Detailed Analysis:
1. Non-accountal of raw materials:
The appellants were found to have purchased caps for bulbs without maintaining the required accounts. They contended that they were unaware of the requirement to maintain accounts for caps, as they only maintained accounts for glass shells, which were declared as the principal raw material. This was considered a technical omission without malafides. Additionally, the appellants did not account for 5460 kgs of glass shells, which were deemed unfit for use upon inspection. The Collector concluded that the appellants should have accounted for these shells and sought their destruction, indicating malafide intentions.
2. Quantum of breakages and losses in manufacturing:
The department alleged that the appellants had a higher quantum of losses (31% to 33%) than the acceptable norm (10%-20%). The appellants argued that as a small-scale unit, their losses were higher due to semi-automatic machines and transit losses. They provided evidence from similarly placed small-scale units showing losses ranging from 20% to 40%. The Collector allowed only 20% towards breakages and demanded duty on the rest. The Tribunal found that the evidence provided by the appellants remained unrebutted and that the Collector's findings were not legally proper and appeared arbitrary.
3. Discrepancies in stock positions and bank statements:
The appellants were found to have discrepancies between their stock positions in the accounts books and the statements furnished to the bank. The appellants explained that the bank statements included goods in process and raw materials for which payments had been made but were yet to be received. The Tribunal found that the Collector did not fully consider the explanations provided by the appellants.
4. Alleged excess sales of bulbs on invoices:
The department alleged that the appellants sold more bulbs on invoices than were shown on gate passes. The appellants explained that they had a duly paid godown from where goods were sold on an old invoice. This explanation was not considered by the Collector. The Tribunal found that the evidence provided by the appellants in the form of an invoice covering sales from the duly paid godown remained unrebutted.
5. Comparison of electricity consumption vis-a-vis production:
The department alleged suppression of production based on a fall in production vis-a-vis increased electricity consumption. The appellants explained that they had sub-let part of their factory to another unit, and the rent included electricity consumption. The Tribunal found that this explanation remained unrebutted and that the Collector did not critically consider this factor.
6. Allegation of clandestine removal of goods:
The Collector concluded that there was clandestine removal based on various factors, including the non-accountal of raw materials and higher percentage of losses. However, the Tribunal found that the Collector did not fully consider the explanations provided by the appellants and that the demand of duty was not sustainable. The Tribunal set aside the demand of duty but upheld the imposition of a penalty for non-accountal of raw materials and non-maintenance of prescribed records, reducing the penalty from Rs. 10,000 to Rs. 5,000.
Conclusion:
The Tribunal found that the Collector's conclusions were not legally proper and appeared arbitrary. The demand of duty was set aside, but the penalty for non-accountal of raw materials and non-maintenance of prescribed records was upheld, with a reduction in the amount. The appeal was disposed of in these terms.
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1989 (2) TMI 418
Issues Involved:
1. The inherent powers of the High Court under Section 482 Cr. P.C. to interfere with police investigation.
2. The power of the High Court to stay arrest during investigation.
3. The correctness of the decision in the case of Puttan Singh v. State of U.P.
Detailed Analysis:
1. The inherent powers of the High Court under Section 482 Cr. P.C. to interfere with police investigation:
The judgment extensively discusses the statutory function of the police to investigate cognizable offences without interference from the judiciary. It cites several precedents, including Emperor v. Nazir Ahmad, where it was held that the judiciary should not interfere with police investigations. The judgment reiterates that the inherent powers of the High Court under Section 482 Cr. P.C. are not to be exercised to quash investigations, as this would impede the statutory rights of the police. The judgment emphasizes that the judiciary and police functions are complementary, not overlapping, and interference is only justified in the rarest of rare cases. The High Court's inherent powers come into play only after a charge-sheet is filed in court.
2. The power of the High Court to stay arrest during investigation:
The judgment clarifies that under Section 482 Cr. P.C., the High Court does not have the inherent power to stay the arrest of an accused during an investigation. It references Section 41(1)(a) Cr. P.C., which confers power on a police officer to arrest a person involved in a cognizable offence. The judgment asserts that this statutory power cannot be interfered with by the High Court in the exercise of its inherent powers. If the High Court is convinced that the power of arrest will be exercised wrongly or mala fide, it can issue a writ of mandamus under Article 226 of the Constitution, but not under Section 482 Cr. P.C.
3. The correctness of the decision in the case of Puttan Singh v. State of U.P.:
The judgment affirms that the decision in Puttan Singh v. State of U.P. was correctly decided, stating that the police have statutory power under Section 156 Cr. P.C. to investigate cases without interference from the High Court in its inherent powers. The judgment concludes that the High Court has no jurisdiction to direct a police officer not to arrest an applicant during the pendency of an investigation if the first information report discloses the commission of a cognizable offence.
Conclusion:
(i) The answers to the questions referred to the Full Bench in the case of Prashant Gaur v. State of U.P. are not in accordance with the law laid down by the Supreme Court and the Privy Council.
(ii) The High Court has no inherent power under Section 482 Cr. P.C. to interfere with police investigations or to stay the arrest of an accused during investigation. The decision by the Full Bench in the case of Prashant Gaur v. State of U.P. does not lay down the correct law and is overruled.
(iii) The decision in the case of Puttan Singh v. State of U.P. was correctly decided.
The record of the cases is to be placed before the learned single Judge with the answers provided.
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1989 (2) TMI 417
Issues Involved:
1. Jurisdiction of the Magistrate to pass an order for the return of the seized taxi.
2. Applicability of Sections 451 and 457 of the Criminal Procedure Code (Cr.P.C.) in the context of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).
3. Provisions for the disposal and confiscation of properties or conveyances under the NDPS Act.
4. Judicial discretion in granting interim custody of the seized vehicle.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Magistrate to Pass an Order for the Return of the Seized Taxi:
The prosecution argued that the Magistrate lacked jurisdiction to order the return of the taxi since the case was to be tried by the Sessions Judge. The court noted that Sections 52(2) and 55 of the NDPS Act refer to the Magistrate before whom the persons arrested and articles seized shall be produced. Until the case is committed to the Sessions Court, the Magistrate is in charge of the seized property and has the authority to pass appropriate orders. The court held that the Magistrate had jurisdiction to pass interim orders regarding the custody of the vehicle.
2. Applicability of Sections 451 and 457 of the Criminal Procedure Code (Cr.P.C.) in the Context of the NDPS Act:
The prosecution contended that Sections 451 and 457 of the Cr.P.C. were not applicable due to the specific provisions of the NDPS Act. The court examined Sections 60 and 63 of the NDPS Act, which deal with the liability and procedure for confiscation of conveyances used in committing offenses under the Act. The court concluded that the provisions of the Cr.P.C. are not inconsistent with the NDPS Act and can be applied for interim custody of the vehicle. The court emphasized that the vehicle must be available at the time of the trial or at the end of the trial for confiscation purposes.
3. Provisions for the Disposal and Confiscation of Properties or Conveyances Under the NDPS Act:
The court reviewed Sections 60 and 63 of the NDPS Act, which outline the conditions under which conveyances used in committing offenses are liable to confiscation. The court noted that the Act allows for the sale or disposal of articles liable to speedy and natural decay or if their sale would benefit the owner. However, this proviso was not applicable in the present case, as the issue was about interim custody, not disposal or sale. The court held that the owner of the vehicle could seek interim custody subject to terms and conditions ensuring the vehicle's availability for confiscation if required.
4. Judicial Discretion in Granting Interim Custody of the Seized Vehicle:
The court observed that the Magistrate's order lacked a detailed discussion of the arguments and documents presented by both parties. The discretion to grant interim custody must be exercised judicially and not arbitrarily. The court found the Magistrate's order to be arbitrary and set it aside. The court granted liberty to the respondent to file a fresh application in the Sessions Court, where the case had been committed. The Sessions Judge was directed to decide the matter on its merits after hearing both parties and considering all relevant documents and affidavits.
Conclusion:
The impugned order of the Magistrate was set aside, and the respondent was given liberty to file a fresh application in the Sessions Court. The Sessions Judge was instructed to decide the matter on its merits, ensuring a judicial and thorough consideration of all arguments and evidence presented by both parties. The court emphasized the applicability of Sections 451 and 457 of the Cr.P.C. for interim custody, provided they are not inconsistent with the NDPS Act.
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1989 (2) TMI 416
Issues Involved:
1. Classification of Industrial Laminates (Electrical Insulators) under the new Central Excise Tariff.
2. Applicability of Tariff Heading 3920.31 vs. Heading 8546.00.
3. Interpretation of Chapter Notes and Section Notes in the new Tariff.
4. Determination of whether Industrial Laminates are raw materials or finished insulators.
5. Classification of Industrial Laminates with copper cladding.
Issue-wise Detailed Analysis:
1. Classification of Industrial Laminates (Electrical Insulators) under the new Central Excise Tariff:
The primary issue in the appeals is the classification of Industrial Laminates (Electrical Insulators) under the new Central Excise Tariff introduced w.e.f. 1-3-1986. The respondents claimed classification under Heading 8546.00 as "Electrical Insulators of any material" chargeable at 15% ad valorem. The Revenue argued for classification under Heading 3920.31, chargeable at 35% ad valorem, contending that these laminates are raw materials for insulators and not finished products.
2. Applicability of Tariff Heading 3920.31 vs. Heading 8546.00:
The Assistant Collectors classified the products under Heading 3920.31, which pertains to rigid plates, films, foils, and strips of plastics. The Collector (Appeals) overturned these decisions, classifying the products under Heading 8546.00 as "Electrical Insulators of any material." The Tribunal examined whether the products are indeed insulators or merely raw materials. The Tribunal referred to previous decisions and technical definitions, concluding that the laminates are insulators because they possess electrical insulating properties and require only minor fabrication to be used in electrical applications.
3. Interpretation of Chapter Notes and Section Notes in the new Tariff:
The Tribunal emphasized the importance of interpreting Tariff Headings in light of Section Notes and Chapter Notes, which are statutory and binding. Chapter Note 2(n) to Chapter 39 excludes articles of Section XVI (machines and mechanical or electrical appliances) from Chapter 39. Since Heading 8546 falls under Section XVI, the Tribunal concluded that if the laminates are electrical insulators, they should be classified under Heading 8546.00 and excluded from Chapter 39.
4. Determination of whether Industrial Laminates are raw materials or finished insulators:
The Tribunal examined the technical definitions and previous decisions, including the case of Bekalite Hylam Limited v. Collector of Central Excise, Hyderabad, where it was held that rigid plastic laminated sheets made of electrically insulating materials are insulators. The Tribunal rejected the Revenue's argument that these laminates are merely raw materials, noting that minor fabrication does not change their classification as insulators.
5. Classification of Industrial Laminates with copper cladding:
For Industrial Laminates with copper cladding, the Assistant Collector classified them under Tariff Heading 7413.90 as "other articles of copper." The Collector (Appeals) classified them under Heading 74.06 as "copper foils." The Tribunal referred to the definition of copper foil in Chapter Note l(viii) of Chapter 74 and concluded that the copper cladded laminates should be classified under Heading 74.06, aligning with the Collector (Appeals).
Conclusion:
The Tribunal upheld the Collector (Appeals)'s decisions, classifying the Industrial Laminates (Electrical Insulators) under Heading 8546.00 and the copper cladded laminates under Heading 74.06. The Tribunal emphasized that the classification should be based on the functional character of the products and the statutory Chapter and Section Notes, rejecting the Revenue's arguments for classification under Heading 3920.31. The Tribunal's decision reflects a detailed examination of technical definitions, previous case law, and the new Tariff's interpretative rules.
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1989 (2) TMI 415
Issues Involved:
1. Parting with possession of the roof by installing an advertisement board.
2. Material alteration to the premises.
3. Default in payment of rent.
Detailed Analysis:
1. Parting with Possession of the Roof by Installing an Advertisement Board:
The primary issue was whether the tenant-appellant had parted with possession of the roof by allowing an advertising board to be installed. The trial court initially found that the appellant had parted with possession by fixing the board on the roof and decreed eviction. However, the District Judge on appeal held that the appellant had not parted with possession, as the board was used for the appellant's own advertising business. The High Court, on further appeal, reversed this finding, holding that the installation of the board amounted to parting with possession under Section 13(1)(e) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950. The High Court relied on Exhibit 6 and the tenant's admission that he received rent for the board, concluding that the appellant had parted with possession of the roof to Paramount Services.
2. Material Alteration to the Premises:
The trial court initially held that the appellant had caused material alteration by fixing the advertisement board with iron angles. However, upon remand, the District Judge found no material alteration, noting that the board was fixed temporarily and did not cause any substantial damage to the premises. The High Court did not address this issue further, as it focused on the parting with possession ground.
3. Default in Payment of Rent:
The trial court initially decreed eviction on the ground of default in payment of rent. However, it was later found that this was the first default, and under the Act, a decree for eviction could not be passed on this ground. The District Judge affirmed that there was no default for six months, and the High Court did not find it necessary to address this issue further due to its finding on parting with possession.
Conclusion:
The Supreme Court found that the High Court's decision was based on an incorrect interpretation of the evidence and the law. The tenant-appellant was carrying on his own advertising business and had not parted with possession of the roof. The Supreme Court emphasized that for parting with possession to be established, there must be a complete exclusion of the tenant from the legal possession of the premises. The evidence showed that the tenant was using the roof for his benefit and had not assigned, sub-let, or otherwise parted with possession. Consequently, the Supreme Court set aside the eviction order and allowed the appeal, concluding that no grounds for eviction under Section 13(1)(e) of the Act were established.
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1989 (2) TMI 414
Issues Involved:
1. Partition of family properties.
2. Alleged partition in the family in 1914.
3. Admission of partition in earlier litigation.
4. Evidence supporting joint family status.
5. Self-acquired properties and their exclusion from partition.
Detailed Analysis:
1. Partition of Family Properties:
The appellant filed a suit for partition of properties, which was initially decreed by the trial court. However, the High Court reversed this decision and dismissed the suit. The appellant claimed joint family status till 1946 and sought a share in properties purchased by his deceased brother Ganpatrao, who was the 'Karta' of the family. The appellant also challenged certain alienations by Ganpatrao.
2. Alleged Partition in the Family in 1914:
The main defense was based on an alleged partition in 1914. In a previous suit (Special Suit No. 36 of 1947), the present defendants claimed that Shankarrao had been adopted by a stranger in 1907 and had resided in Gwalior. The trial court in that suit held that Shankarrao had been adopted and thus left the family. However, the High Court reversed this finding but dismissed the suit on procedural grounds, noting that it did not include all joint family properties and lacked Ganpatrao's consent for partition.
3. Admission of Partition in Earlier Litigation:
In the present suit, the High Court relied on Shankarrao's written statement in the 1947 suit, where he admitted to a partition in 1914. The High Court concluded that there was no binding finding on the alleged partition in the earlier litigation. The High Court held that the defense's claim of a 1914 partition was correct, reversing the trial court's decree.
4. Evidence Supporting Joint Family Status:
The appellant contended that the High Court erred in relying solely on the written statement from the earlier suit and failed to consider other evidence. The High Court found that Shankarrao's admission of the 1914 partition was not contradicted by his other statements. The High Court also noted that the respondents did not plead jointness in the earlier suit, thus not neutralizing Shankarrao's admission.
5. Self-Acquired Properties and Their Exclusion from Partition:
The High Court held that the presumption of jointness under Hindu Mitakshara law was rebutted by Shankarrao's admission of the 1914 partition. The High Court also examined other evidence, including money order receipts and letters, but found them insufficient to prove jointness. The High Court concluded that properties purchased by the two branches were self-acquired and not subject to partition. The High Court's dismissal of the suit was upheld, and the appellant's challenge to the transfers by the defendants failed.
Conclusion:
The Supreme Court agreed with the High Court's findings and dismissed the appeal with costs. The appellant's interest in self-acquired properties was protected by the High Court's observations, and there was no merit in the appellant's argument against the dismissal of the entire suit.
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1989 (2) TMI 413
Issues:
1. Appeal against the decree of the trial court for rendition of accounts and injunction.
2. Rejection of the petition under Order 9, Rule 13, C.P.C. to set aside the ex parte order.
3. Defendants' plea for remand to substantiate their contentions.
4. Plaintiff's claim of misappropriation and lack of rendering accounts by the first defendant.
5. First defendant's defense under Section 53A of the Transfer of Property Act.
6. Second defendant's possession and claim under Section 53A.
7. Requirement of proper pleading for invoking Section 53A.
8. Examination of possession evidence in cases of part performance.
9. Lack of pleading and evidence for performance under Section 53A.
10. Second defendant's entitlement to defense under Section 53A.
11. Necessity of assignment for claiming benefit under Section 53A.
12. Impact of power of attorney and minor daughter's property on the case.
Analysis:
The judgment pertains to an appeal against the trial court's decree for rendition of accounts and injunction. The defendants, who did not appear during trial, sought to set aside the ex parte order under Order 9, Rule 13, C.P.C., which was rejected. The defendants requested a remand to substantiate their contentions, but the plaintiff argued against it due to lack of proper pleadings. The plaintiff's suit alleged misappropriation by the first defendant, who possessed the property under a power of attorney. The first defendant claimed ownership under Section 53A of the Transfer of Property Act, citing agreements for sale and possession by the second defendant.
The court analyzed the applicability of Section 53A, emphasizing the need for written contracts and possession in part performance. The judgment highlighted that the first defendant's possession was through the power of attorney, not the alleged agreements for sale. Lack of pleading regarding performance under Section 53A weakened the defendants' case. The court also examined possession evidence, noting that the first defendant's admission of handing over possession to the second defendant undermined any defense under Section 53A for the first defendant.
Regarding the second defendant, the court found vague assertions on how possession was obtained, with no mention of assignment of agreements from the first defendant. The judgment emphasized that for a valid defense under Section 53A, the transferee must have an agreement in their favor, which was absent in this case. Additionally, the impact of the power of attorney and the minor daughter's property on the case was discussed, highlighting the first defendant's agency role and the legal constraints on selling the minor's property.
Ultimately, the court dismissed the appeal, citing the insufficiency of pleadings and evidence to support invoking Section 53A. The judgment underscored that lack of proper pleadings rendered any remand futile, as evidence could not salvage a case without a legal basis in the pleadings.
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1989 (2) TMI 412
Issues Involved:
Petition under Art. 226 for habeas corpus to quash detention order u/s 3(1)(iii) of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
Jurisdiction of the Court:
The Court considered jurisdiction based on the physical act of detention occurring in Tamil Nadu, conferring jurisdiction upon the Court. The argument that a second petition should not be allowed was dismissed as the new ground of absence of reply to a representation arose after the rejection of the earlier petition by the Karnataka High Court, allowing this Court to entertain the writ petition.
Right to Representation:
Detainee's right to make a representation under Art. 22(5) of the Constitution was discussed. The detainee had made specific requests for vital documents to support further representations, which were not supplied by the State Government, depriving him of the right to pray for revocation of the order. The delay in considering the case and non-supply of documents rendered the detention order null and void.
Contentions and Rejections:
The contention that the third representation was not sent to the proper authority was rejected, stating that any body of the Government has a duty to forward the representation. The argument that the plea of non-supply of documents was not taken in the additional affidavit was dismissed, as the earlier affidavit's points were considered in conjunction with the subsequent affidavit. Ultimately, the petition was allowed, the detention order was set aside, and the detenu was to be set at liberty forthwith unless required otherwise.
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1989 (2) TMI 411
Issues:
- Framing of charges under sections 22 & 29 of the NDPS Act read with Section 120-B IPC based on a co-accused's statement.
- Conscious possession of the drug by the accused.
- Interpretation of sections 21 and 22 of the NDPS Act regarding possession of morphine.
Analysis:
The judgment revolves around the criminal revision challenging the order of an Additional Sessions Judge directing the framing of charges against the petitioner and his co-accused under sections 22 & 29 of the NDPS Act read with Section 120-B IPC. The incident involved the discovery of morphine powder in a book being snatched by the accused. The defense argued against framing charges based solely on the co-accused's statement, emphasizing the lack of other evidence to prove conspiracy. It was contended that the charge of conspiracy should be quashed as a co-accused's statement cannot be a substantive piece of evidence for framing charges.
Furthermore, the defense argued against framing charges under sections 21 or 22 of the NDPS Act due to insufficient evidence of conscious possession by the petitioner. Reference was made to a legal precedent emphasizing the need for judicial consideration before framing charges affecting a person's liberty. The court noted that the accused were handling the book containing morphine, creating a presumption of possession under section 54 of the NDPS Act. This section places the onus on the accused to explain possession satisfactorily, and mere possession of the drug constitutes an offense under the Act.
The judgment clarified the distinction between sections 21 and 22 of the NDPS Act concerning the possession of morphine. Morphine, as a derivative of opium, falls under the definition of a "manufactured drug" under section 21, making possession of morphine an offense. On the other hand, section 22 pertains to "psychotropic substances," which do not include morphine as per the Act's Schedule. Therefore, the court partially allowed the criminal revision petition, quashing the framed charges and directing the framing of charges solely under section 21 of the NDPS Act against the petitioner and his co-accused.
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1989 (2) TMI 410
Issues Involved:
1. Validity of the arbitration agreement under Section 34 of the Arbitration Act, 1940.
2. Jurisdiction of the court to decide the validity of the contract containing the arbitration clause.
3. Whether the contract was void ab initio due to mutual mistake.
4. Alleged illegality of the contract under the Import and Export Control Act.
5. Arbitrability of the disputes under the charter party agreement.
Issue-wise Detailed Analysis:
1. Validity of the Arbitration Agreement under Section 34 of the Arbitration Act, 1940:
The court examined whether the arbitration agreement within the contract was valid and binding. Section 34 of the Arbitration Act allows the court to stay legal proceedings if there is a valid arbitration agreement. The court held that the arbitration agreement must be valid for the stay to be granted. If the contract containing the arbitration clause is found to be void, the arbitration clause itself would be unenforceable.
2. Jurisdiction of the Court to Decide the Validity of the Contract Containing the Arbitration Clause:
The court has the jurisdiction to decide the validity of the contract containing the arbitration clause. It was emphasized that the court must ascertain whether there is a binding arbitration agreement before granting a stay. The court can decide the validity of the contract even if it involves incidentally deciding the validity of the arbitration agreement. This was supported by precedents such as Heyman v. Darwins and Jawaharlal Burman v. Union of India.
3. Whether the Contract was Void Ab Initio Due to Mutual Mistake:
The appellant argued that the contract was void due to mutual mistake regarding the operational condition of the trawlers. The court referred to Section 20 of the Indian Contract Act, which states that an agreement is void if both parties are under a mistake as to a matter of fact essential to the agreement. The court found no mutual mistake that would render the contract void. The alleged deficiency in the refrigeration system did not make the trawlers essentially different from what was agreed upon.
4. Alleged Illegality of the Contract under the Import and Export Control Act:
The appellant contended that the contract was illegal as it violated the conditions of the import licence. The court examined the conditions of the licence and the permission granted by the Chief Controller of Imports and Exports. It was held that there was no violation of the licence conditions or the Import and Export Control Act. The modifications to the contract did not render it illegal.
5. Arbitrability of the Disputes under the Charter Party Agreement:
The court analyzed whether the disputes raised in the suit were arbitrable under the arbitration clause of the charter party agreement. The clause covered disputes regarding the construction, meaning, effect, or rights and liabilities under the agreement. The court concluded that the disputes, except for the question of the contract's ab initio invalidity or illegality, were arbitrable. The arbitrator has the jurisdiction to decide the scope of his jurisdiction and the disputes arising from the contract.
Conclusion:
The appeal was dismissed as the court found no merit in the appellant's arguments. The arbitration agreement was valid, the disputes were arbitrable, and there was no mutual mistake or illegality that would render the contract void. The parties were directed to proceed with arbitration, with the appointment of a retired Supreme Court Judge as the arbitrator, if agreed upon.
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1989 (2) TMI 409
Issues Involved:
1. Constitutional validity of the rule restricting admission to evening classes of the Three-Year LL.B. Degree Course to regular employees of Government/Semi-Government institutions.
2. Reasonableness of the classification under Article 14 of the Constitution.
3. Justification for excluding private sector employees from admission.
4. Reservation of 100% seats for a specific class in educational institutions.
5. Relief to the appellants.
Summary:
1. Constitutional Validity of the Rule:
The appellants challenged the rule restricting admission to evening classes of the Three-Year LL.B. Degree Course to regular employees of Government/Semi-Government institutions, arguing it violated Article 14 of the Constitution. The High Court dismissed their writ petitions, upholding the rule.
2. Reasonableness of the Classification:
The Supreme Court reiterated that Article 14 forbids class legislation but allows reasonable classification. The classification must be based on an intelligible differentia and have a rational nexus to the objective. The Court found the rule deviated from its objective of accommodating employees unable to attend morning classes. The classification excluding private sector employees did not satisfy the test of intelligible differentia and was deemed unreasonable.
3. Justification for Excluding Private Sector Employees:
The respondents justified the exclusion on grounds of preventing bogus employment certificates and ensuring public interest by educating Government/Semi-Government employees. The Court found these reasons insufficient to justify the exclusion, noting that both private and public employees were equally disadvantaged in attending morning classes. The exclusion was thus deemed unfair and unjust.
4. Reservation of 100% Seats:
The Court addressed the issue of reserving 100% seats in evening classes for regular employees. It held that such reservation at the cost of merit was impermissible. Citing precedents, the Court stated that reservation should not exceed 50% of the seats after accounting for other valid reservations. The remaining seats should be open to general candidates on a merit basis.
5. Relief to the Appellants:
The appellants, having been refused admission under the invalid rule, were entitled to relief. The Court directed the respondents to admit the appellants in the second semester of the LL.B. course, adding their seats to the normal intake. The judgment of the High Court was set aside, and the impugned rule was struck down as discriminatory and violative of Article 14.
Conclusion:
The appeals were allowed, the impugned rule was struck down, and the appellants were granted admission. The Court emphasized that the classification must be reasonable and serve a logical objective, ensuring fairness and equality as mandated by Article 14 of the Constitution.
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1989 (2) TMI 408
Issues: Determination of seniority of appellants in the cadre of Lower Division Clerks based on length of service vs. date of confirmation.
The judgment in question deals with the determination of seniority of the appellants in the cadre of Lower Division Clerks. The appellants were originally recruited in various capacities within the Lower Defence Installations and were later transferred to the Armed Forces Headquarters as LDCs. The issue arose when "The Armed Forces Headquarters Clerical Service Rules, 1968" came into force, which prescribed seniority based on the date of confirmation, contrary to the previous practice of determining seniority based on length of service. The appellants contended that their seniority should be based on length of service and not confirmation as per the new Rules. The learned single Judge initially ruled in favor of the appellants, emphasizing that the principle of seniority based on length of service was followed prior to the introduction of the Rules. The Judge highlighted that official memorandums supported the principle of length of service for determining seniority. However, the Union of India appealed the decision, leading to the Division Bench of the High Court reversing the ruling and holding that seniority should be determined based on confirmation as per the Rules.
The Supreme Court analyzed the case and found that the Division Bench's decision was erroneous. The Court emphasized that the Rules could not retrospectively affect the existing rights of officials appointed before the Rules came into force. Referring to past office memorandums, the Court reiterated that the guiding principle for seniority determination was length of service, as established prior to the introduction of the Rules. The Court cited precedents to support the argument that seniority regulations should not be altered to the detriment of officials retrospectively. Therefore, the Court allowed the appeals, overturning the Division Bench's decision and reinstating the single Judge's ruling that seniority should be determined based on length of service, not confirmation as per the Rules.
In conclusion, the Supreme Court's judgment clarified that the seniority of the appellants in the cadre of Lower Division Clerks should be determined based on length of service rather than confirmation as prescribed by "The Armed Forces Headquarters Clerical Service Rules, 1968." The Court emphasized the importance of respecting the established principles of seniority and ensuring that regulations do not unfairly disadvantage officials retrospectively.
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1989 (2) TMI 407
Issues Involved:
1. Legality of the High Court's order setting aside the Magistrate's order.
2. Procedure for taking cognizance of an offense by the Magistrate.
3. The role and discretion of the Magistrate upon receiving a police report.
Summary:
Legality of the High Court's Order:
The appeal challenges the Karnataka High Court's order u/s 482 CrPC, which set aside the Second Additional Chief Metropolitan Magistrate's directive to register a calendar case against the second respondent u/s 408 and 420 IPC and issue summons u/s 204 CrPC. The High Court held that the Magistrate had not followed the procedure laid down by the Code for taking cognizance and issuing process after the police had sent a 'B' report.
Procedure for Taking Cognizance:
The High Court stated that upon receiving a 'B' report, the Magistrate should have issued notice to the appellant to ascertain if he disputed the report and, if so, complied with Sec. 200 CrPC by examining the appellant and his witnesses on oath before deciding whether to register a case and issue process. The High Court referred to the precedent in K. Sham Rao v. A.R. Diwakar, [1979] 2 Karnataka Law Journal 441.
Role and Discretion of the Magistrate:
The Supreme Court clarified that a Magistrate has several courses of action upon receiving a complaint. The Magistrate can take cognizance of the offense immediately, record statements u/s 200 CrPC, and decide to issue process u/s 204 CrPC or dismiss the complaint u/s 203 CrPC. Alternatively, the Magistrate can postpone the issue of process and direct an investigation u/s 202 CrPC or order a police investigation u/s 156(3) CrPC. Upon receiving the police report, the Magistrate can take cognizance of the offense u/s 190(1)(b) CrPC, irrespective of the police's conclusion, and issue process.
The Supreme Court emphasized that the Magistrate is not bound by the police's opinion and can independently assess the facts from the investigation. The Court cited Abhinandan Jha & Ors. v. Dinesh Misra, [1967] 3 SCR 668, and H.S. Bains v. State, [1981] 1 SCR 935, to support this view. The Magistrate can take cognizance of an offense even if the police report suggests no case against the accused.
Conclusion:
The Supreme Court held that the High Court erred in its view that the Magistrate was not entitled to direct the registration of a case and issue summons without following Sec. 200 and 202 CrPC. The appeal was allowed, the High Court's order was set aside, and the Magistrate's order was restored, directing the case against the second respondent to proceed in accordance with the law.
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1989 (2) TMI 406
Issues involved: Interpretation of deduction under section 35(1)(iv) of the Income-tax Act, 1961 for expenditure on purchase of buses.
Summary:
The case involved the assessee, Smith Kline and French (India) Ltd., now ESKAYLE LIMITED, seeking a deduction under section 35(1)(iv) of the Income-tax Act, 1961 for the amount spent on purchasing buses. The question was whether the expenditure on buses for transporting research personnel qualified for the deduction under section 35(1)(iv).
The assessee claimed that the purchase of buses was a capital expenditure incurred to facilitate research, as the buses were used solely for transporting research personnel. The Income Tax Officer (ITO) disagreed, viewing it as a normal conveyance expense for employees. However, the Commissioner (Appeals) and the Tribunal sided with the assessee, considering the buses as facilities for the prosecution of scientific research.
The Tribunal relied on the definition of 'scientific research' in section 43(4)(i) and the Explanation under section 43(4)(ii) of the Act to support their decision. The Tribunal rejected the revenue's contention that only expenditures strictly intended for research prosecution could qualify for the deduction.
In the final judgment, the High Court upheld the decisions of the Commissioner (Appeals) and the Tribunal, concluding that the buses provided were indeed facilities for the prosecution of scientific research, thus entitling the assessee to the benefit of section 35(1)(iv). The question was answered in the affirmative, against the revenue.
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1989 (2) TMI 405
Issues:
1. Allowability of legal expenses as revenue expenditure for assessment years 1965-66 to 1969-70.
2. Deduction of royalty liability in assessment year 1965-66.
3. Tax treatment of book credit representing royalty receivable for assessment years 1965-66, 1967-68, and 1968-69.
Analysis:
1. The first issue revolved around the allowability of legal expenses totaling specific amounts for the assessment years 1965-66 to 1969-70 as revenue expenditure. The Income Tax Officer (ITO) disallowed these expenses as capital expenditure, but the Appellate Assistant Commissioner (AAC) and the Tribunal disagreed, allowing them as revenue expenditure. The Tribunal found that the expenses were incurred solely to protect a coal mining lease, which was a capital asset. The High Court upheld the Tribunal's decision, stating that the legal expenses were rightfully treated as revenue expenditure.
2. Regarding the second issue, the deduction of royalty liability amounting to a specific sum in the assessment year 1965-66 was contested. The Tribunal determined that the liability arose in that year as the assessee had given an undertaking to pay the royalty within the relevant accounting period. The High Court concurred with the Tribunal's finding, emphasizing that the liability for royalty payment crystallized during the specific accounting year, thus allowing the deduction for that year.
3. The final issue concerned the tax treatment of book credit representing royalty receivable for the assessment years 1965-66, 1967-68, and 1968-69. The High Court referred to a previous judgment in the assessee's case, where it was concluded that the book credit on account of royalty receivable was not considered as income for those assessment years. Consequently, the High Court answered this issue in favor of the assessee.
In conclusion, the High Court ruled in favor of the assessee for questions 2 and 3, allowing the deduction of royalty liability and determining the non-taxability of book credit representing royalty receivable. However, for question 1, the court sided with the revenue, denying the allowability of legal expenses as revenue expenditure. No costs were awarded in this judgment.
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