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• 1990 (2) TMI 326
  
  1. ISSUES PRESENTED and CONSIDERED

  The core legal questions considered by the Court were:

  (a) Whether the appellants were guilty of forming an unlawful assembly and criminal conspiracy to cause the death of the deceased, thereby attracting liability under Sections 120B, 302 read with 149, 307 read with 149, and 201 of the Indian Penal Code (I.P.C.);

  (b) Whether the evidence, particularly the testimony of the sole eyewitness (P.W. 1), was credible and sufficient to sustain convictions under the charged sections;

  (c) Whether the delay in lodging the First Information Report (FIR) and the conduct of the eyewitness cast doubt on the prosecution's case;

  (d) Whether the concurrent findings of the Trial Court and the High Court convicting the appellants were legally sustainable.

  2. ISSUE-WISE DETAILED ANALYSIS

  Issue (a): Guilt of the appellants under Sections 120B, 302 read with 149, 307 read with 149, and 201 I.P.C.

  The prosecution alleged that the appellants formed an unlawful assembly and conspired to murder the deceased, executed the murder, attempted to murder another witness (P.W. 1), and caused disappearance of evidence by disposing of the dead body in a river. The Trial Court convicted the appellants under Sections 148 (rioting armed with a deadly weapon), 302 read with 149 (murder by an unlawful assembly), and 201 (causing disappearance of evidence), sentencing them to rigorous imprisonment. However, the appellants were acquitted under Section 307 (attempt to murder) read with 149.

  The legal framework governing these offences requires proof beyond reasonable doubt of the formation of unlawful assembly, common object to commit the offence, participation in the act, and the actual commission of the crime. Section 149 imputes liability to every member of the unlawful assembly for offences committed in prosecution of the common object.

  The Court noted the factual matrix: the appellants were inter-related and hostile towards the deceased due to inheritance disputes. The attack was alleged to have been carried out with deadly weapons (axes and daggers), resulting in the death of the deceased and injuries to P.W. 1.

  Issue (b): Credibility and sufficiency of the sole eyewitness (P.W. 1)

  The pivotal evidence was the testimony of P.W. 1, the son-in-law of the deceased and sole eyewitness to the attack. The appellants challenged the reliability of P.W. 1's evidence on the ground of interest, artificiality, and suspicious conduct. The Court scrutinized P.W. 1's testimony and noted that after the attack, he did not immediately inform the villagers but went to his own village and only informed his mother-in-law. The FIR was lodged with a delay of approximately 15 hours.

  Legal precedents establish that a conviction can rest on the testimony of a sole witness if it is wholly trustworthy. However, the Court emphasized that the evidence must be free from suspicion and consistent with natural conduct expected from a witness. The delayed reporting and selective informing raised doubts about the veracity of P.W. 1's testimony.

  Issue (c): Effect of delay in lodging FIR and conduct of eyewitness on the prosecution case

  The Court recognized that delay in lodging FIR can be fatal if it causes suspicion about the authenticity of the prosecution story. The 15-hour delay, coupled with P.W. 1's failure to inform other villagers or authorities promptly, undermined the prosecution's case. The Court also considered that the possibility of false implication could not be ruled out, given the hostile relations between the parties.

  Issue (d): Sustainability of concurrent findings of guilt by the Trial Court and High Court

  The Court examined the judgments of the lower courts and found that both had placed significant reliance on the testimony of P.W. 1 without adequately addressing the suspicious circumstances surrounding his evidence. The Court found the conclusions of guilt to be unsustainable in light of the doubts cast on the prosecution's primary evidence.

  3. SIGNIFICANT HOLDINGS

  The Court held:

  "No doubt, plurality of witnesses is not necessary to establish a fact in issue and a conviction can be based on the testimony of a sole witness provided that evidence is wholly believable."

  However, the Court further stated:

  "In the present case as we have come to the conclusion that the evidence of the P.W. 1 is clouded with strong suspicion and as the first information report was lodged by a delay of 15 hours, the false implication of appellants in the present case cannot be completely ruled out."

  Consequently, the Court allowed the appeal, set aside the convictions and sentences recorded under Sections 148, 302 read with 149, and 201 I.P.C., and acquitted all the appellants.

  The core principles established include:

  - The indispensability of credible, trustworthy evidence even when based on the testimony of a sole eyewitness;

  - The critical importance of timely reporting of offences to corroborate the prosecution case;

  - The necessity for courts to carefully scrutinize the conduct of witnesses and the circumstances of the case to exclude the possibility of false implication;

  - The appellate Court's power to overturn concurrent findings of guilt when the evidence is found to be doubtful or insufficient.

  On the facts, the Court concluded that the prosecution failed to prove the appellants' guilt beyond reasonable doubt, resulting in their acquittal.

  ---

• 1990 (2) TMI 325
  
  ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this judgment are:

  1. Whether the State Government of Haryana had the authority to relax the eligibility criteria under Rule 22 for the promotion of the appellants from Class II to Class I posts in the Haryana Service of Engineers (Public Health Branch).

  2. Whether the relaxation granted by the State Government was valid and lawful.

  3. Whether the respondent, Vyas Dev, was entitled to any relief given that he was not promoted and claimed that his rights were adversely affected by the promotions of the appellants.

  ISSUE-WISE DETAILED ANALYSIS

  1. Authority to Relax Eligibility Criteria

  Relevant Legal Framework and Precedents: The promotions were governed by the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules, 1961. Rule 6(b) required a minimum of eight years of service in Class II for promotion to Class I. Rule 22 allowed the government to relax these rules if their application caused undue hardship.

  Court's Interpretation and Reasoning: The Court interpreted Rule 22 as allowing the State Government to relax the rules not only for individual cases but also to address broader situations where the rules caused undue hardship. The Court emphasized that Rule 22 was intended to mitigate hardships and could be applied to both individual and collective situations.

  Key Evidence and Findings: The appellants did not meet the eight-year service requirement but were promoted based on a relaxation granted by the government. The Selection Committee and Public Service Commission recommended this relaxation due to a lack of qualified candidates.

  Application of Law to Facts: The Court found that the relaxation was applied to meet a particular situation of insufficient qualified candidates for Class I posts, which was in the public interest.

  Treatment of Competing Arguments: The respondent argued that the relaxation was invalid as it was applied generally rather than individually. The Court rejected this argument, stating that the relaxation was necessary to address a specific situation affecting multiple individuals.

  Conclusions: The Court concluded that the State Government acted within its authority under Rule 22 to grant the relaxation, and the promotions were valid.

  2. Validity of the Relaxation Granted

  Relevant Legal Framework and Precedents: The Court referenced previous cases, including B.S. Bansal v. State of Punjab and Jit Singh v. State of Punjab, to analyze the scope of the power of relaxation.

  Court's Interpretation and Reasoning: The Court noted that Rule 22 should be interpreted liberally to fulfill its purpose of mitigating undue hardship. The relaxation was deemed necessary due to the unavailability of candidates meeting the eight-year requirement.

  Key Evidence and Findings: The relaxation was granted to address a shortage of qualified candidates, which was a pressing issue due to the formation of the new State of Haryana and the subsequent expansion of the Engineering Department.

  Application of Law to Facts: The relaxation was applied to a class of individuals rather than a single person, which was justified given the circumstances.

  Treatment of Competing Arguments: The Court dismissed concerns that the relaxation was arbitrary, emphasizing that it was a response to a specific administrative challenge.

  Conclusions: The relaxation was lawful and necessary to address the lack of qualified candidates for promotion.

  3. Entitlement of Vyas Dev to Relief

  Relevant Legal Framework and Precedents: The respondent's claim was based on the argument that his rights were violated due to the promotions.

  Court's Interpretation and Reasoning: The Court found that Vyas Dev was not entitled to relief as he was considered for promotion but found unsuitable.

  Key Evidence and Findings: The Selection Committee had considered Vyas Dev for promotion but did not find him suitable, and hence his claim for relief was unfounded.

  Application of Law to Facts: Since Vyas Dev was not adversely affected by the relaxation and his rights were not violated, he was not entitled to any relief.

  Treatment of Competing Arguments: The Court noted that the High Court had erred in granting relief to Vyas Dev, as his legal rights were not affected.

  Conclusions: The Court concluded that Vyas Dev was not entitled to any relief, and his petition should have been dismissed.

  SIGNIFICANT HOLDINGS

  Verbatim Quotes of Crucial Legal Reasoning: "The power of relaxation is generally contained in the Rules with a view to mitigate undue hardship or to meet a particular situation."

  Core Principles Established: The Court established that Rule 22 allows for both individual and general relaxations to address specific situations of hardship. The relaxation must be applied in a just and equitable manner to address particular circumstances.

  Final Determinations on Each Issue: The Court held that the State Government's relaxation of the rules was valid and lawful, the promotions of the appellants were upheld, and Vyas Dev was not entitled to any relief as his rights were not adversely affected.

  ---

• 1990 (2) TMI 324
  
  Issues:
  1. Applicability of section 52(2) of the Income Tax Act, 1961 regarding the valuation of properties sold by the assessee.
  2. Admissibility of affidavits filed by purchasers regarding additional consideration paid beyond the sale deed amount.
  
  Detailed Analysis:
  
  1. The case involved the applicability of section 52(2) of the Income Tax Act, 1961, concerning the valuation of properties sold by the assessee. The Income Tax Officer invoked this provision as the fair market value of the properties sold exceeded the consideration declared by the assessee by more than 15%. The Appellate Assistant Commissioner held that section 52(2) could not be applied without evidence of additional consideration received by the assessee. The Department appealed to the Tribunal, which considered affidavits from purchasers stating they paid more than the sale deed amount. The Tribunal remitted the matter to the Appellate Assistant Commissioner for further examination. The High Court held that the Tribunal had the power to consider the affidavits to determine the applicability of section 52(2) and directed a fresh consideration based on the evidence presented.
  
  2. The admissibility of the affidavits filed by purchasers regarding additional consideration paid beyond the sale deed amount was a crucial issue in the case. The affidavits were available during the initial assessment stages but were not presented to the assessing authority or the first appellate authority due to lack of coordination within the department. The Revenue relied on these affidavits before the Tribunal to establish the applicability of section 52(2) of the Act. The High Court emphasized that the Tribunal had the discretion to admit relevant evidence, even if not presented earlier, to ascertain the correct tax liability of the assessee. The Court cited previous decisions to support the Tribunal's authority to consider such evidence in the interest of justice and to determine the applicability of tax provisions accurately. Ultimately, the High Court upheld the Tribunal's decision to remit the matter for fresh consideration based on the affidavits, ruling in favor of the Revenue and awarding costs to them.

  ---

• 1990 (2) TMI 323
  
  Issues Involved:
  1. Validity of the order under section 263 passed by the Commissioner of Income Tax (CIT).
  2. Whether the Income Tax Officer (ITO) made proper inquiries before finalizing the assessment.
  3. The necessity of further inquiries by the CIT before setting aside the ITO's order.
  4. The impact of the CIT's order on the assessee and whether it caused prejudice.
  
  Issue-wise Detailed Analysis:
  
  1. Validity of the order under section 263 passed by the Commissioner of Income Tax (CIT):
  
  The CIT initiated action under section 263, noting that the ITO had accepted the assessee's trading results without proper scrutiny. The CIT observed that the net profit rate declared by the assessee was significantly lower than in previous years and that the ITO had not made necessary inquiries or examined the books of account. The CIT relied on precedents such as Rampyari Devi Saraogi v. CIT, Smt. Tara Devi Aggarwal v. CIT, and Gee Vee Enterprises v. Addl. CIT to support the proposition that an order is erroneous and prejudicial to the interests of the Revenue if proper inquiries are not made.
  
  2. Whether the Income Tax Officer (ITO) made proper inquiries before finalizing the assessment:
  
  The ITO finalized the assessment based on the audited copies of trading account, profit and loss account, and balance sheet filed by the assessee. The CIT found that the ITO had not made any inquiries into the reasons for the decline in the net profit rate, which was significantly lower than in previous years. The CIT noted that in earlier years, the assessee's trading results had not been accepted, and higher net profit rates had been applied. The CIT concluded that the ITO's failure to make proper inquiries rendered the assessment order erroneous and prejudicial to the interests of the Revenue.
  
  3. The necessity of further inquiries by the CIT before setting aside the ITO's order:
  
  The assessee argued that the CIT should have made further inquiries before setting aside the ITO's order. However, the Tribunal referred to the judgment in Gee Vee Enterprises, which stated that the CIT could regard an order as erroneous if the ITO failed to make inquiries that were called for in the circumstances of the case. The Tribunal noted that the CIT is not required to make further inquiries before canceling the assessment order if the ITO's failure to make necessary inquiries is evident from the record.
  
  4. The impact of the CIT's order on the assessee and whether it caused prejudice:
  
  The assessee contended that the CIT's order caused prejudice as it set aside the ITO's assessment without pointing out specific defects in the accounts. The Tribunal, however, held that the CIT's direction to the ITO to make a fresh assessment after allowing the assessee an opportunity to be heard did not cause any prejudice. The Tribunal emphasized that the CIT's action was justified as the ITO had failed to make necessary inquiries, and the assessee would have the opportunity to present its case during the fresh assessment.
  
  Conclusion:
  
  The Tribunal upheld the CIT's order under section 263, concluding that the ITO's failure to make proper inquiries rendered the assessment order erroneous and prejudicial to the interests of the Revenue. The Tribunal emphasized that the CIT's direction for a fresh assessment after allowing the assessee an opportunity to be heard was in accordance with the law and did not cause any prejudice to the assessee. The appeal filed by the assessee was rejected.

  ---

• 1990 (2) TMI 322
  
  The State of Uttar Pradesh appealed the High Court's decision to acquit the respondent of bribery charges. The respondent was accused of demanding a bribe from a student for expediting a certificate application. The High Court acquitted the respondent due to lack of corroborating evidence and inconsistencies in the prosecution's case. The Supreme Court upheld the High Court's decision, dismissing the appeal.

  ---

• 1990 (2) TMI 321
  
  Issues Involved:
  1. Whether the entire claim of the plaintiffs in the suit is barred by limitation based on the contentions made by the plaintiffs in the plaint itself.
  
  Detailed Analysis:
  
  Issue 1: Limitation of the Plaintiffs' Claim
  
  Contention of the Plaintiffs:
  - The plaintiffs filed a suit to recover Rs. 3,06,669.50 from the defendant-company for goods sold under four invoices dated February 24, 1983, March 3, 1983, March 6, 1983, and March 25, 1983. The total amount due was Rs. 2,28,642.50.
  - The plaintiffs claimed that the amounts were due after one month and that the defendants were liable to pay interest at 20% per annum as mutually agreed.
  - The defendants made part payments of Rs. 50,000 on March 14, 1983, leaving a balance of Rs. 1,78,642.50.
  - The plaintiffs argued that their suit was within the limitation period due to the defendants' acknowledgment of liability and consent terms in Appeal No. 837 of 1986.
  - The plaintiffs contended that the consent order dated October 10, 1986, extended the period for filing the suit and that the debt related back to the date of filing the petition on September 4, 1985, when it was within the limitation period.
  
  Contention of the Defendants:
  - The defendants did not file a written statement but raised the issue of limitation, arguing that the entire claim was barred by limitation based on the facts stated in the plaint.
  - The defendants contended that the consent terms or the order passed on consent terms could not be considered as an acknowledgment under Section 18 of the Limitation Act and that Section 15(3) of the Limitation Act had no application.
  
  Court's Analysis:
  - Section 15(3) of the Limitation Act: The court found that Section 15(3) had no application as it pertains to suits by receivers or liquidators, which was not the case here.
  - Acknowledgment under Section 18 of the Limitation Act: The court held that the consent terms confirming the original court's order could not be considered an acknowledgment of debt. The debts were time-barred by October 7, 1986, and the acknowledgment must be before the expiration of the prescribed period.
  - Waiver and Estoppel: The court rejected the plaintiffs' argument that the consent terms constituted a waiver of the limitation defense. The court emphasized that under Section 3 of the Limitation Act, it is the court's duty to consider whether the suit is barred by limitation, even if no such defense is raised by the defendants.
  - Relation Back Doctrine: The court dismissed the plaintiffs' argument that the consent order related back to the date of filing the petition under the Companies Act. The court noted that the debts were time-barred by the time the consent terms were agreed upon.
  - Section 14 of the Limitation Act: The court considered whether the plaintiffs were entitled to the exclusion of time under Section 14. The court concluded that the company petition for winding up did not relate to the same matter in issue as the suit for recovery of debts and that the court in the company petition was not unable to entertain it due to a defect of jurisdiction.
  
  Conclusion:
  - The court found that the suit filed by the plaintiffs was barred by limitation as the period of limitation could not be extended by the consent terms or any other reason. Consequently, the suit was dismissed.
  - The court ordered the refund of Rs. 60,000 deposited by the defendants as per the order in the company petition, along with any accrued amount, after a period of four weeks.
  
  Costs:
  - No costs were awarded to the defendants despite their success in getting the suit dismissed. Each party was ordered to bear their respective costs.

  ---

• 1990 (2) TMI 320
  
  Issues Involved:
  1. Maintainability of the suit.
  2. Valid cause of action or right to sue.
  3. Barred by law of limitation, adverse possession, and ouster.
  4. Barred under Section 34 of the Specific Relief Act.
  5. Partial partition.
  6. Defect of parties.
  7. Sufficiency of Court-fee paid.
  8. Existence of unity of title and possession between the parties.
  9. Nature of properties in village Ulatu.
  10. Nature of properties in Items Nos. III and IV of Schedule B.
  11. Entitlement of the plaintiff to a decree for partition.
  
  Issue-wise Detailed Analysis:
  
  1. Maintainability of the Suit:
  The court addressed the maintainability of the suit, particularly concerning the properties listed in Items Nos. (iii) and (iv) of Schedule B. It was contended that since these properties were allegedly self-acquired by defendant No. 2, the plaintiff was required to pay ad valorem court-fee on the market value of the properties. The court held that a simple suit for partition was not maintainable for these properties without the payment of the requisite court-fee.
  
  2. Valid Cause of Action or Right to Sue:
  The plaintiff claimed a 1/2 share in the properties based on a registered deed of Will and the assertion that the properties were acquired from joint family funds. The court found that the plaintiff had a valid cause of action for seeking partition of the properties mentioned in Items Nos. (i) and (ii) of Schedule B.
  
  3. Barred by Law of Limitation, Adverse Possession, and Ouster:
  The court examined whether the suit was barred by limitation, adverse possession, or ouster. It concluded that the plaintiff and defendant No. 1 continued to live jointly and constituted a joint family, which negated the claims of adverse possession and ouster.
  
  4. Barred Under Section 34 of the Specific Relief Act:
  The court considered the applicability of Section 34 of the Specific Relief Act, which pertains to declaratory suits. It found that the plaintiff's suit for partition was not barred under this provision.
  
  5. Partial Partition:
  The defendant No. 1 contended that the suit was bad for partial partition as it did not include all joint family properties. The court, however, focused on the properties specifically mentioned in the plaint and did not find the suit to be bad for partial partition.
  
  6. Defect of Parties:
  Defendant No. 2 argued that the suit was not maintainable due to a defect of parties. The court held that defendant No. 2 was a necessary party as her title to the properties was in question.
  
  7. Sufficiency of Court-Fee Paid:
  The court determined that ad valorem court-fee was payable on the market value of the properties listed in Items Nos. (iii) and (iv) of Schedule B, as the plaintiff sought to displace the title of defendant No. 2, who was not a coparcener.
  
  8. Existence of Unity of Title and Possession Between the Parties:
  The court found that there was unity of title and possession between the plaintiff and defendant No. 1 for the properties listed in Items Nos. (i) and (ii) of Schedule B, which were held to be joint family properties.
  
  9. Nature of Properties in Village Ulatu:
  The court held that the properties in village Ulatu, described in Schedule A of the written statement, were self-acquired by the plaintiff and not joint family properties.
  
  10. Nature of Properties in Items Nos. III and IV of Schedule B:
  The court found that the properties listed in Items Nos. (iii) and (iv) of Schedule B were acquired in the name of defendant No. 2 from joint family funds. However, the suit was barred under the Benami Transaction (Prohibition) Act, 1988, as the properties were held benami.
  
  11. Entitlement of the Plaintiff to a Decree for Partition:
  The court decreed that the plaintiff was entitled to a 1/2 share in the properties listed in Items Nos. (i) and (ii) of Schedule B. The suit for partition of properties in Items Nos. (iii) and (iv) was not maintainable due to the Benami Transaction (Prohibition) Act, 1988.
  
  Conclusion:
  The appeal was allowed in part. The plaintiff was entitled to partition in respect of a 1/2 share in Items Nos. (i) and (ii) of Schedule B. The suit regarding Items Nos. (iii) and (iv) was barred under the Benami Transaction (Prohibition) Act, 1988. No order as to costs was made.

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• 1990 (2) TMI 319
  
  Issues Involved:
  1. Scope of Section 33-B of the Industrial Disputes Act, 1947.
  2. Validity of the Government's notification transferring the case.
  3. Requirement of giving an opportunity to the management before transferring the case.
  4. Validity of the reasons given by the Government for transferring the case.
  5. Fairness and natural justice in administrative actions.
  
  Detailed Analysis:
  
  1. Scope of Section 33-B of the Industrial Disputes Act, 1947:
  The judgment clarifies that Section 33-B provides the appropriate Government with the power to withdraw any proceedings pending before a labour court or Tribunal and transfer it for disposal to another labour court or Tribunal. This power can be exercised either suo moto or on representations of the parties. However, the exercise of this power is discretionary, and once a decision is made to transfer a case, the requirement to provide reasons becomes mandatory. The authority must record reasons in support of its decision, as reasons are the life of the decision. Failure to provide reasons or providing irrelevant reasons would be fatal to the decision.
  
  2. Validity of the Government's Notification Transferring the Case:
  The Government of Bihar issued a notification transferring the case from the Labour Court, Dhanbad to the Labour Court, Patna. The management challenged this notification, arguing that it was issued without providing them an opportunity to present their views and that the reasons given for the transfer were not valid. The Supreme Court found that the Government's notification was issued without verifying the workman's representation from the management, which was a fatal flaw in the decision-making process.
  
  3. Requirement of Giving an Opportunity to the Management Before Transferring the Case:
  The judgment emphasizes that the power to transfer a pending case under Section 33-B is not a mere administrative power but a quasi-judicial power. The appropriate Government cannot transfer a case based on the allegations of one party without giving a reasonable opportunity to the other party to represent its point of view. This principle is grounded in the doctrine of natural justice, which requires fairness in administrative actions. The Supreme Court cited various High Court decisions and previous judgments to support this view, concluding that the denial of an opportunity to the management was a fatal flaw.
  
  4. Validity of the Reasons Given by the Government for Transferring the Case:
  The Government's reason for transferring the case was that the workman resided at Hajipur and found it inconvenient to attend the Labour Court at Dhanbad. However, the Supreme Court found that most of the factors did not support this reason. The workman and his family were still residing in a colony quarter at Dhanbad, and his children were studying in a nearby school. The workman did not produce any proof of residing near Patna, and he did not seriously dispute the documents annexed to the Special Leave petition. The Court concluded that the Government was misled by the workman's representation, and the reasons given for the transfer were not valid.
  
  5. Fairness and Natural Justice in Administrative Actions:
  The judgment underscores the importance of fairness and natural justice in administrative actions. The principles of natural justice, such as the duty to act fairly and the requirement to provide an opportunity to be heard, are fundamental in ensuring that statutory authorities arrive at just decisions. The Supreme Court referred to various landmark cases to illustrate that fairness is a fundamental principle of good administration, ensuring that State power is not abused but properly exercised. The Court reiterated that fairness does not necessarily require elaborate procedures but must ensure that justice is done and seen to be done.
  
  Conclusion:
  The Supreme Court allowed the appeal, quashing the notification dated August 8, 1988, by which the Government of Bihar transferred the case from the Labour Court, Dhanbad to the Labour Court, Patna. The Labour Court, Dhanbad was directed to proceed with the matter expeditiously. The judgment emphasized the necessity of fairness, the requirement to provide reasons, and the importance of giving an opportunity to all parties involved in administrative decisions.

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• 1990 (2) TMI 318
  
  Issues:
  1. Taxability of provisions for gratuity under s. 41(1) of the IT Act, 1961.
  2. Recomputation of capital for a new industrial undertaking.
  3. Deduction claim for provision of leave salary.
  4. Treatment of exchange fluctuation loss on loan instalments.
  5. Entitlement to deduction under s. 80G for donation to a charity trust.
  
  Analysis:
  
  1. Taxability of Gratuity Provisions:
  The Tribunal referred the question of law regarding the taxability of provisions for gratuity under s. 41(1) of the IT Act, 1961. The assessee had filed a return under the Amnesty Scheme, conceding to the taxability of gratuity provisions. Consequently, the Court decided in favor of the Revenue, affirming the taxability of the gratuity provisions.
  
  2. Recomputation of Capital for New Industrial Undertaking:
  The Tribunal was directed to recompute the capital of a new industrial undertaking, Malkapur Oil Mills, in accordance with the decision in Century Enka Ltd. vs. ITO. The Tribunal was instructed to apply the principles laid down in the case of Lohia Machines Ltd. vs. Union of India for the reexamination and decision of the case.
  
  3. Deduction Claim for Leave Salary Provision:
  The Tribunal was guided by the decision in CIT vs. Bharat General & Textile Industries Ltd. to answer the question of deduction claim for the provision of leave salary in the negative and in favor of the Revenue. The Tribunal was directed to verify the claim of the assessee regarding privilege leave in light of the Leave Rules.
  
  4. Treatment of Exchange Fluctuation Loss:
  The Tribunal held that the loss arising from exchange fluctuation on loan instalments for the purchase of machineries was a revenue expenditure, not a capital expense. The decision was based on the assessee's own case in earlier years and was answered in the negative and in favor of the Revenue.
  
  5. Deduction under s. 80G for Charity Donation:
  The Tribunal was guided by the decision in CIT vs. Upper Ganges Sugar Mills Ltd. to answer the question of entitlement to deduction under s. 80G for a donation to Viswamangal Charity Trust in the negative and in favor of the Revenue. No costs were awarded in the judgment.
  
  This judgment by the Calcutta High Court addressed various complex tax issues, providing detailed analyses and references to previous decisions to support the conclusions reached in each aspect of the case.

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• 1990 (2) TMI 317
  
  Issues:
  - Interpretation of Section 34 of the Arbitration Act regarding what constitutes a "step in the proceeding" disentitling a defendant from invoking arbitration.
  - Whether a request for production of original documents and seeking an adjournment for filing a written statement amounts to a step in the proceedings.
  - Reversal of trial court's decision to stay the suit based on the application filed by the defendants under Section 34 of the Arbitration Act.
  - Analysis of the principles laid down by the Supreme Court regarding abandonment of the right to arbitration and submission to the jurisdiction of the court.
  
  Interpretation of Section 34 of the Arbitration Act:
  The Supreme Court analyzed the concept of a "step in the proceeding" under Section 34 of the Arbitration Act in the context of abandoning the right to arbitration. The Court emphasized that not every action taken by a defendant in a suit would disentitle them from seeking arbitration. The step must be a conscious decision to submit to the court's jurisdiction for adjudication on the merits, indicating an unequivocal intention to abandon arbitration in favor of the court process. The Court highlighted the importance of examining the party's intention behind the step taken and ensuring that technical pleas do not deprive parties of their agreed right to arbitration.
  
  Request for Production of Documents and Adjournment as a Step in the Proceedings:
  The case involved a dispute where the defendants requested the plaintiff to produce original documents and sought an adjournment to file a written statement. The Trial Court initially stayed the suit under Section 34 of the Arbitration Act, considering the defendants' actions not to be a step in the proceedings. However, the Additional District Judge overturned this decision, viewing the defendants' request for an adjournment as a step in the proceedings, leading to the suit being reinstated. The High Court upheld this view, considering the defendants' actions as submitting to the court's jurisdiction for deciding the case on its merits.
  
  Reversal of Trial Court's Decision:
  The Trial Court's decision to stay the suit was reversed by the Additional District Judge, who deemed the defendants' request for an adjournment as a step in the proceedings. Consequently, the suit was allowed to proceed, with the High Court affirming this decision by considering the defendants' actions as indicating a submission to the court's jurisdiction for adjudication on the merits. This reversal highlighted the importance of analyzing the nature of the defendant's actions in determining whether they have abandoned their right to arbitration.
  
  Principles Regarding Abandonment of Right to Arbitration:
  The Supreme Court reiterated key principles concerning the abandonment of the right to arbitration and submission to the court's jurisdiction. Emphasizing that technicalities should not deprive parties of their agreed arbitration rights, the Court stressed the need to assess the party's intention behind the actions taken in the suit. In this case, the Court found that the defendants' request for document production and adjournment did not signify an abandonment of their right to arbitration, leading to the appeal being allowed and the original order of the Trial Court being reinstated, with no costs awarded in the circumstances.

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• 1990 (2) TMI 316
  
  Issues Involved:
  1. Acquittal of the respondent under Section 135 of the Customs Act.
  2. Validity of the sanction for prosecution under Section 137 of the Customs Act.
  3. Reasonable belief for issuing the search warrant under Section 105 of the Customs Act.
  4. Burden of proof under Section 123 of the Customs Act.
  5. Admissibility of statements recorded under Sections 107 and 108 of the Customs Act.
  
  Detailed Analysis:
  
  1. Acquittal of the Respondent under Section 135 of the Customs Act:
  The Union of India challenged the acquittal of the respondent, who was tried for offenses under Sections 11-C, 11-D, 11-E, and 11-F of the Customs Act, punishable under Section 135 of the same Act. The High Court reviewed the evidence and found that the trial court's conclusion that the seized goods were not smuggled was erroneous. The trial court failed to properly apply the burden of proof principles under the Customs Act. The High Court set aside the acquittal, convicted the respondent, and sentenced him to three months of rigorous imprisonment.
  
  2. Validity of the Sanction for Prosecution under Section 137 of the Customs Act:
  The respondent's counsel argued that the prosecution must fail due to lack of proper sanction. The sanction order (Exh. 14) issued by the Collector of Customs and Central Excise, Nagpur, was scrutinized. The High Court found that the sanction order demonstrated that the Collector had examined the records and adjudication proceedings, thereby showing application of mind. The sanction was deemed valid as it complied with Section 137 of the Customs Act.
  
  3. Reasonable Belief for Issuing the Search Warrant under Section 105 of the Customs Act:
  The trial court had held that the issuance of the search warrant under Section 105 was not proved due to the non-examination of the Assistant Collector who issued it. However, the High Court found that the search warrant (Exh. 8) indicated that there was reliable information leading to a reasonable belief that the goods liable to confiscation were secreted in the respondent's premises. The High Court cited various precedents to support that the officer's subjective belief need not be disclosed and is not subject to judicial review unless challenged in collateral proceedings.
  
  4. Burden of Proof under Section 123 of the Customs Act:
  The High Court emphasized that under Section 123 of the Customs Act, once the prosecution establishes a prima facie case that the goods are of foreign origin, the burden shifts to the respondent to prove that the goods are not smuggled. The respondent failed to provide any evidence or documents to show that the seized goods were legally imported. The High Court held that the trial court erred in not properly applying Section 123, leading to the wrongful acquittal of the respondent.
  
  5. Admissibility of Statements Recorded under Sections 107 and 108 of the Customs Act:
  The respondent's counsel argued that the statements recorded by the Customs officers were inadmissible. The High Court rejected this argument, stating that Customs officers are not police officers, and statements made to them are admissible under Sections 107 and 108 of the Customs Act. The High Court cited Supreme Court precedents affirming that statements made during inquiries by Customs officers are admissible as they are not considered to be made by an accused person under formal accusation.
  
  Conclusion:
  The High Court allowed the appeal, set aside the trial court's judgment, and convicted the respondent under Section 135 of the Customs Act. The respondent was sentenced to three months of rigorous imprisonment, with a two-month period granted for surrender. The judgment underscores the proper application of legal provisions under the Customs Act and the necessity of a valid sanction for prosecution, reasonable belief for search warrants, and the burden of proof in cases involving smuggled goods.

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• 1990 (2) TMI 315
  
  Issues:
  - Impleading legal representatives in a company appeal under civil Procedure Code and Companies Act.
  - Scope of impleading legal representatives in cases of oppression and mismanagement under Companies Act.
  - Appropriation of shares and impleading legal representatives based on company petition allegations.
  - Determining the necessity of impleading legal representatives in a company petition.
  - Interpretation of legislative intent in enacting section 398 of the Companies Act.
  
  Analysis:
  The judgment deals with a company appeal filed to bring on record the legal representatives of a deceased respondent in a main company petition under the civil Procedure Code and Companies Act. The contention arises regarding the impleading of legal representatives in a case filed under sections 397, 398, and 433 of the Companies Act for alleged acts of oppression. The court considers the argument that the legal representative of a deceased director cannot be impleaded in such proceedings, citing precedent from J.K. Investment Trust Ltd. v. Muir Mills Co. Ltd. The petitioner argues for impleading based on allegations in the company petition regarding share appropriation after the director's death.
  
  The court, after careful consideration, rules against impleading the legal representatives in this case. It emphasizes that the acts of oppression alleged against the deceased director cannot be attributed to his legal representatives, who are now ordinary shareholders with no management connection. The judgment highlights the distinction between the actions of a director and those of individual shareholders in the context of the petition. It concludes that no cause of action exists against the legal representatives, as the alleged acts were of the director, not the shareholders. The court also interprets the legislative intent behind section 398 of the Companies Act, emphasizing that the powers conferred are limited to the scope of the section and cannot be extended to implead legal representatives after a director's death.
  
  Ultimately, the court dismisses the application to bring on record the legal representatives of the deceased respondent, emphasizing that the legislative provisions do not allow for such impleadment in the present circumstances. The judgment underscores the importance of interpreting the statutory provisions within their intended scope and limitations, thereby denying the request to implead the legal representatives in this company petition.

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• 1990 (2) TMI 314
  
  Issues Involved:
  1. Legality of the Chief Rationing Officer's action in deducting the value of seized Channadal.
  2. Competency of a General Power of Attorney (G.P.A.) holder to plead in court on behalf of the petitioners.
  3. Applicability of Sections 32 and 33 of the Advocates Act, 1961 regarding non-lawyer representation in court.
  
  Issue-wise Detailed Analysis:
  
  1. Legality of the Chief Rationing Officer's Action:
  The petitioners sought a writ of mandamus to declare the action of the respondent, Chief Rationing Officer, Hyderabad, as illegal and arbitrary. The officer had deducted the value at the rate of Rs. 81.17 per quintal/bag for 2310 bags of Channadal seized from Kachigua Railway Station. The petitioners also demanded the respondent to pay Rs. 1,87,502.70 with interest at 18% per annum as per Section 6-C(II) of the Essential Commodities Act, along with compensation.
  
  2. Competency of a G.P.A. Holder to Plead in Court:
  The petitioners, represented by their G.P.A. holder, Kamal Mittal, filed WPMP No. 15954/89 to allow the G.P.A. to appear as a party in person "to plead" the case. The application was initially ordered by a single judge without opposition from the respondent. However, doubts arose regarding the competency of the G.P.A. to plead the case, especially since the G.P.A. had frequently appeared in other cases on behalf of various parties. The G.P.A. presented letters from the principals indicating that the Power of Attorney executed in 1987 was still valid and that the principals had resolved not to appoint any advocate in future litigation. The G.P.A. claimed that the principals had no confidence in advocates and relied on Section 119, C.P.C., Order 4 Rule 5, C.P.C., and Rule 32 of the Civil Rules of Practice.
  
  3. Applicability of Sections 32 and 33 of the Advocates Act, 1961:
  The court examined the provisions of Sections 32 and 33 of the Advocates Act, 1961. Section 33 restricts the right to practice in any court to enrolled advocates, while Section 32 allows the court to permit any person not enrolled as an advocate to appear in a particular case. The court noted that the G.P.A. was not a law graduate and that the principals were capable of securing legal services. The court cited various judgments and legal principles emphasizing that non-lawyers should not represent others in court to protect clients from incompetence and to maintain the integrity of the legal system. The court referred to the Full Bench decision in Thaamammal v. Kuppuswami Naidu, which distinguished between the rights to "appear," "plead," and "practice." The court concluded that the G.P.A.'s acts amounted to "practicing" the profession of law, which is prohibited under Section 33 of the Advocates Act.
  
  Conclusion:
  The court dismissed the WPMP, ruling that no special grounds warranted granting permission under Section 32 of the Advocates Act. The principals were given two months to appoint an advocate for conducting the case. The petition was dismissed.

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• 1990 (2) TMI 313
  
  Issues:
  1. Quashing of proceedings against the accused under the Insecticides Act 46 of 1968.
  2. Interpretation of Section 33 of the Act regarding liability of individuals in a company for offences committed.
  
  Analysis:
  1. The petition was filed to quash proceedings against the accused under the Insecticides Act 46 of 1968. The accused included a dealer, distributor, and directors of the manufacturing company, along with the chemist. The counsel for the petitioners did not press the petition for the dealer and distributor, A-1 and A-2.
  2. The main contention revolved around the liability of the directors (A-3 and A-4) and the chemist (A-5) of the manufacturing company. Section 33 of the Act was crucial in determining their liability. The court ruled that A-3 and A-4, being directors, could not be held responsible as there was no specific allegation against them regarding the conduct of the business of the company.
  3. However, the court held that the chemist (A-5) could be held liable under Section 33(2) of the Act. The allegation was that a pesticide sample was misbranded, and the chemist was responsible for the manufacturing process. The court emphasized that if it is proved during trial that the chemist was involved in the misbranding with consent or neglect, he could be held guilty. Reference was made to a previous judgment to distinguish the aspect of being responsible for business conduct from being liable for offences committed with consent or neglect.
  4. Ultimately, the court quashed the proceedings against A-3 and A-4, the directors, but dismissed the petition concerning A-1, A-2, and A-5, the chemist. The decision highlighted the importance of proving the chemist's involvement in the misbranding during the trial to establish liability under Section 33(2) of the Act.
  
  Conclusion:
  The judgment clarified the liability of individuals in a company under the Insecticides Act 46 of 1968, emphasizing the need to prove consent or neglect for holding them accountable for offences committed. The court's decision to quash proceedings against the directors while allowing the case against the chemist to proceed underscored the importance of evidence in establishing individual responsibility within a company for statutory violations.

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• 1990 (2) TMI 312
  
  Issues:
  Interpretation of "liquidated demand" in a summary suit under Order xxxvII of the Code of Civil Procedure based on a marine insurance claim for damages to cargo of dry dates. Examination of the surveyor's report as evidence of a "liquidated demand" and the binding nature of the report on the insurance company.
  
  Analysis:
  The petitioner filed a suit under Order xxxvII of the Code of Civil Procedure, claiming damages suffered to cargo of dry dates insured by them, based on a marine insurance claim against the respondent company. The petitioner argued that the claim was a "liquidated demand" and sought to benefit from recent amendments to the Code of Civil Procedure regarding summary suits. The concept of "liquidated demand" was discussed, citing Rifkin v. Safenovitz, which defined it as an amount susceptible of being made certain by mathematical calculations. The respondent in this case was the Oriental Insurance Company, which issued the Marine Insurance Policy covering the cargo of dry dates carried by a specific vessel.
  
  The damage to the cargo was allegedly caused by the vessel getting stranded due to cyclonic storms, diverting from its route and unloading the cargo at a different port. A surveyor appointed by the Insurance Company provided a report quantifying the damage in percentage terms, which the petitioner claimed could be converted into a specific amount through arithmetic calculations. The insurance company's counsel highlighted the provisions of the Insurance Act regarding licensing of surveyors and loss assessors, emphasizing the independence of surveyors from the insurer.
  
  The insurance policy contained clauses relevant to stranded vessels and claims arising from such situations. The policy specified conditions under which the insurer would be liable for losses, including those related to stranding, sinking, or burning of the vessel. The court referred to the Marine Insurance Act and Rules for Construction of Policy, particularly item 14, which addressed liability in cases of stranding. The surveyor's report attributed the damage to cyclonic storms and the subsequent unloading of the cargo at a different port, aligning with the provisions of the insurance policy and relevant legal frameworks.
  
  The court concluded that the surveyor's report, the provisions of the insurance policy, and the applicable legal provisions supported the petitioner's claim of a "liquidated demand." The rejection of the surveyor's report by the insurance company was deemed to be based on a misunderstanding of the policy clauses and legal principles. The court set aside the impugned order, allowing the revision petitions and remitting the matter back to the Commercial Sub Judge for further proceedings. The parties were instructed to appear before the Commercial Sub Judge for the next steps in the case, with no order as to costs.
  
  In summary, the judgment focused on interpreting the concept of "liquidated demand" in the context of a marine insurance claim for damages to cargo, emphasizing the role of the surveyor's report as evidence of quantifiable losses. The court's decision highlighted the importance of aligning the surveyor's assessment with the insurance policy provisions and relevant legal standards to determine a specific amount for the claim.

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• 1990 (2) TMI 311
  
  Issues Involved:
  
  1. Limitation Period
  2. Acknowledgement of Debt
  3. Waiver and Estoppel
  4. Applicability of Section 14 of the Limitation Act
  
  Summary:
  
  1. Limitation Period:
  The primary issue for determination was whether the plaintiffs' claim was barred by limitation. The plaintiffs contended that their suit was within limitation due to consent terms and orders in previous proceedings. However, the court found that the suit, filed on 5-12-1986, was barred by limitation, as the debts under the invoices dated between 22-2-1983 and 24-3-1983 became time-barred by April 1986. The court emphasized that under Section 3 of the Limitation Act, it is the duty of the court to consider whether a suit is barred by limitation, even if no such defense is taken by the defendants.
  
  2. Acknowledgement of Debt:
  The plaintiffs argued that the consent terms and subsequent consent order in the appeal constituted an acknowledgment of debt u/s 18 of the Limitation Act, which would extend the limitation period. The court held that the consent terms could not be considered an acknowledgment of debt, as they merely confirmed the original court's order and extended the time for depositing the amount and filing the suit. The court noted that for an acknowledgment to be valid under Section 18, it must be in writing and signed before the expiration of the prescribed period, which was not the case here.
  
  3. Waiver and Estoppel:
  The plaintiffs claimed that the defendants had waived their right to plead limitation and were estopped from doing so due to the consent terms. The court rejected this argument, stating that the consent terms did not constitute a waiver of the limitation defense. The court also cited legal precedents establishing that there can be no waiver of the limitation period, as the court has a duty to consider limitation issues regardless of the parties' actions.
  
  4. Applicability of Section 14 of the Limitation Act:
  The plaintiffs did not explicitly claim the benefit of Section 14 of the Limitation Act, which allows for the exclusion of time spent in prosecuting another civil proceeding. However, the court considered whether this section could apply. The court concluded that Section 14 was not applicable, as the previous company petition for winding up did not relate to the same matter in issue as the current suit for debt recovery. Additionally, the court found that the earlier proceedings were not dismissed due to a defect in jurisdiction or a similar cause.
  
  Conclusion:
  The court dismissed the suit as barred by limitation, with no costs awarded to the defendants. The amount of Rs. 20,000 deposited by the defendants was ordered to be refunded after four weeks, along with any accrued interest.

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• 1990 (2) TMI 310
  
  Issues Involved:
  
  1. Whether the Karnataka Power Corporation Ltd. (K.P.C.) should have entertained the tender of Mysore Construction Co. (M.C.C.) despite alleged non-fulfillment of preliminary requirements.
  2. Whether the requirements in paragraphs I and V of the Notification Inviting Tenders (N.I.T.) should be considered separately or together.
  3. Whether the K.P.C. acted arbitrarily or unfairly in awarding the contract to M.C.C.
  4. Whether the delayed submission of documents by M.C.C. affected their eligibility to tender.
  
  Summary:
  
  Issue 1: Entertaining the Tender of M.C.C.
  The petitioner argued that K.P.C. should not have entertained M.C.C.'s tender as M.C.C. did not fulfill certain preliminary requirements specified in the N.I.T. The High Court concluded that the pre-requisites for the supply of tender forms were only the three conditions set out in para I of the N.I.T. and that the details called for in para V could be supplied at any time. The Supreme Court agreed with the High Court's view that the K.P.C. had the discretion to assess the sufficiency of the certificates provided by M.C.C.
  
  Issue 2: Interpretation of Paragraphs I and V of N.I.T.
  The Supreme Court found it difficult to accept the view that only para I stipulates the pre-conditions and that all documents referred to in para V can be supplied at any time. The Court held that paragraphs I and V should be read together as they are meant to supplement each other. Some of the documents referred to in para V are intended to verify the fulfillment of the three prequalifying requirements of para I and should be supplied along with the application for tender forms.
  
  Issue 3: Arbitrary or Unfair Award of Contract
  The Division Bench of the High Court observed that it is not for the Court to reappraise the facts on merits if the authority awarding the contract was satisfied about the eligibility of the tenderer after consultancy through an independent agency. The Supreme Court agreed, stating that the K.P.C.'s decision should not be interfered with if it was based on a reasonable assessment of the certificates furnished by M.C.C.
  
  Issue 4: Delayed Submission of Documents
  The petitioner contended that M.C.C. should have been denied the right to tender due to the delayed submission of certain documents. The Supreme Court noted that the delay in submitting the details regarding "hollow cement blocks" was considered by K.P.C. to be of no importance in judging the pre-qualifying requirements. The Court also emphasized that the K.P.C. had consistently interpreted the standards prescribed by it in a particular manner and that this interpretation should not be interfered with by the Court.
  
  Conclusion:
  The Supreme Court dismissed the appeal, concluding that the K.P.C. did not act arbitrarily or unfairly in awarding the contract to M.C.C. and that the High Court was right in declining to interfere. The appeal was dismissed with no order as to costs.

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• 1990 (2) TMI 309
  
  Issues:
  1. Interpretation of lease agreement terms regarding the final price determination for settlement of properties.
  2. Maintainability of the suit in a representative capacity under Order 1, Rule 8 of the Code of Civil Procedure.
  
  Interpretation of Lease Agreement Terms:
  The case involved a dispute arising from a Housing Scheme where the appellant-Board settled residential plots to various groups, including low-income groups. The lease agreement mentioned that the final price for the property would be determined by the Administrative Officer of the Lessor within three years from the date of allotment, considering various factors like development charges and cost of amenities. The appellant made fresh demands after a decade, including excess compensation awarded for acquired lands. The High Court held that the Board could determine the additional demand for excess compensation separately but granted a decree for injunction for the entire demand as it was not split. The Supreme Court agreed with the High Court's decision, emphasizing the Board's delay in determining the final amount and allowing for a fresh additional demand for excess compensation.
  
  Maintainability of Suit in Representative Capacity:
  The appellant challenged the maintainability of the suit in a representative capacity under Order 1, Rule 8 of the Code of Civil Procedure. The argument was that since each allottee faced separate demands, the Rule did not apply, and only those served with demands should file separate suits. However, the Supreme Court clarified that Order 1, Rule 8 aims to prevent multiplicity of litigation by allowing suits where persons have a common interest or grievance. In this case, all allotments were under the same Scheme, and the impugned demand applied to all allottees, justifying the plaintiff's representative action. The Court highlighted that the Rule does not require the same cause of action and dismissed the appeal, affirming the trial court's decision to permit the suit in a representative capacity.
  
  In conclusion, the Supreme Court upheld the High Court's decision regarding the interpretation of lease agreement terms and the maintainability of the suit in a representative capacity under Order 1, Rule 8. The Court emphasized the importance of avoiding repeated litigation and clarified the applicability of the Rule to cases with a common interest among the parties involved.

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• 1990 (2) TMI 308
  
  Issues involved: Determination of the period of limitation for making a deposit to set aside the sale of immovable property sold in execution of a decree under Rule 89 of Order XXI of the Civil Procedure Code, 1908.
  
  Judgment Summary:
  
  The Supreme Court considered the sole question of whether the deposit to set aside a sale under Rule 89 should be made within 30 days from the date of sale as per Rule 92(2) or within 60 days as per Article 127 of the Limitation Act, 1963. The High Court held that Article 127 governed the limitation period for making the deposit, following precedents. The Court analyzed the relevant provisions of Rule 89 and Rule 92(2) and noted the amendment emphasizing the deposit requirement within 30 days. The Court highlighted the distinction between the periods prescribed for making a deposit and an application, emphasizing the legislative intent behind the amendment of Article 127.
  
  The Court emphasized that the legislative intent was to extend the period for making an application and not for the deposit, as evidenced by the amendment of Article 127. The Court rejected the argument that Article 127 should override Rule 92(2), viewing both provisions as prescribing time for different purposes. The Court held that the correct construction of Rule 92(2) leads to the conclusion that the time for making a deposit is 30 days, and Article 127 has no relevance to the deposit time. The Court disagreed with previous decisions holding otherwise and set aside the High Court's judgment on the question of limitation.
  
  In conclusion, the Supreme Court allowed the appeal, set aside the High Court's judgment on the limitation issue, and made no order as to costs.

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• 1990 (2) TMI 307
  
  Issues Involved
  1. Validity of the divisional seniority list prepared by the department.
  2. Interpretation and application of Article 371-D of the Constitution of India.
  3. Powers of the State Government under the Andhra Pradesh Public Employment (Organisation of Local Cadres and Regulation of Direct Recruitment) Order, 1975.
  4. Validity of G.O.Ms. No. 1648 dated November 20, 1982, and G.O.Ms. No. 1900 dated December 22, 1981.
  5. The role and authority of the President under the Presidential Order.
  
  Detailed Analysis
  
  1. Validity of the Divisional Seniority List Prepared by the Department
  The respondents contended that the divisional seniority list prepared by the department was invalid as the Adilabad division, comprising Adilabad and Karimnagar Districts, should not be treated as a separate zone. The Tribunal held that zonal seniority should be the criterion and not divisional seniority. The Supreme Court upheld this view, reiterating that for the purpose of promotion, zonal seniority must be maintained.
  
  2. Interpretation and Application of Article 371-D of the Constitution of India
  Article 371-D was introduced through the Constitution (Thirty-second Amendment) Act, 1973, to ensure equitable opportunities for people from different parts of Andhra Pradesh in public employment and education. The President, under this Article, can require the State Government to organize posts into local cadres for different parts of the State. The Supreme Court emphasized that any reorganization of local cadres must comply with the provisions of Article 371-D and the Presidential Order issued under it.
  
  3. Powers of the State Government under the Andhra Pradesh Public Employment (Organisation of Local Cadres and Regulation of Direct Recruitment) Order, 1975
  The State Government is empowered to organize local cadres within twelve months from the commencement of the Order. However, the Supreme Court clarified that once the State Government has organized the local cadres, it ceases to have the power to bifurcate or reorganize zones within those cadres. Any further reorganization must be done by the President under the proviso to Paragraph 3(1) of the Order.
  
  4. Validity of G.O.Ms. No. 1648 dated November 20, 1982, and G.O.Ms. No. 1900 dated December 22, 1981
  The Supreme Court found that the State Government's actions in issuing G.O.Ms. No. 1648 and G.O.Ms. No. 1900, which reorganized the zones and created separate divisions, were illegal and invalid. These orders contravened the Presidential Order and were not issued with the approval of the President as required. The Court held that the State Government had no inherent power to reorganize local cadres after the initial organization period had expired.
  
  5. The Role and Authority of the President under the Presidential Order
  The Supreme Court highlighted that the President alone has the authority to require the State Government to reorganize local cadres under the proviso to Paragraph 3(1) of the Order. The State Government must place necessary material before the President, who will then consider whether it is expedient to reorganize the cadres. The Court rejected the appellants' argument that the State Government had inherent power to organize local cadres, emphasizing that such power is exclusively vested in the President.
  
  Conclusion
  The Supreme Court upheld the Tribunal's decision, declaring the divisional seniority list invalid and emphasizing that zonal seniority must be maintained for promotions. The Court reiterated that any reorganization of local cadres must comply with Article 371-D and the Presidential Order, and the State Government had no inherent power to reorganize local cadres after the initial period. The appeal was dismissed without costs.

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