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1998 (2) TMI 620
In the case before the Patna High Court, the petitioner, an Income Tax assessee, sought to quash his criminal prosecution under sections 276C and 276CC of the Income Tax Act, 1961. The prosecution was based on allegations of non-compliance with notices under sections 148 and 142(1) and failure to file a return for the assessment year 1988-89, resulting in an estimated income of Rs. 8,15,000. The complaint was filed with the sanction of the Commissioner.
The petitioner argued that the basis for the prosecution, the assessment for 1988-89, had been set aside by the Commissioner (Appeals), as evidenced by Annexure-7. The assessment had been remitted back to the Assessing Officer, but no fresh assessment had been completed. The petitioner relied on the precedent set in Bhola Nath Keshari v. State of Bihar [1997] 227 ITR 823 (Patna), arguing that continuing the prosecution was an "abuse of the process of the court."
The court agreed with the petitioner, noting that the assessment had been set aside and no new assessment had been conducted. Consequently, the application was allowed, and the criminal prosecution, including the order taking cognizance, was set aside.
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1998 (2) TMI 619
Issues:
Eviction based on subletting without proof of consideration.
Analysis:
The case involved a long legal battle starting in 1965 when the respondent, a landlord, filed for eviction of the petitioner due to subletting. The Rent Controller allowed the eviction in 1974, but the Rent Control Tribunal overturned it in 1978. The matter went to the High Court, which remanded it back to the Tribunal. The Tribunal upheld the subletting finding in 1997. The petitioner's subsequent appeals were dismissed, leading to the case reaching the Supreme Court.
The main contention was the lack of proof of consideration in the subletting arrangement. The Court explained that subletting occurs when a tenant gives exclusive possession to another person without involving the landlord. Direct evidence of the agreement or payment of consideration is challenging to establish. The law allows courts to infer subletting based on exclusive possession, even without direct proof of monetary payment.
The Court cited precedents to support its stance. In one case, it was held that exclusive possession implies a transaction for monetary consideration. Another case highlighted that direct evidence of payment is not always necessary to prove subletting. The Court distinguished cases where living arrangements within family members did not constitute subletting.
Additionally, a case was referenced where the quality of occupation determined whether subletting occurred. In another case, the absence of monetary consideration led to a finding of no subletting. The Court emphasized that the presence of consideration is not a mandatory requirement in every subletting case.
Ultimately, the Rent Controller and the Tribunal had found the petitioner guilty of subletting, a decision upheld by the High Court. The Supreme Court, finding no merit in the petitioner's arguments, dismissed the Special Leave Petition. However, considering the circumstances, the Court granted the petitioner time to vacate the premises to avoid further legal battles.
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1998 (2) TMI 618
Issues:
- Application for permission to withdraw a suit with liberty to institute a fresh suit.
- Interpretation of Order 23 Rule 1(3) CPC regarding formal defects in a suit.
- Consideration of whether the filing of a second suit on the same cause of action precludes the court from granting permission to withdraw the first suit.
- Application of the principle of res judicata in the context of seeking permission to withdraw a suit and file a fresh suit.
Analysis:
The judgment delivered by Justice V. Rajagopala Reddy of the Andhra Pradesh High Court concerns an application for permission to withdraw a suit with liberty to institute a fresh suit. The case revolved around the interpretation of Order 23 Rule 1(3) of the Civil Procedure Code (CPC) regarding formal defects in a suit. The petitioner had filed a suit without issuing a statutory notice, which rendered the suit defective and liable to be dismissed. The petitioner sought to withdraw the suit and filed a fresh suit on the same cause of action before obtaining permission to do so.
The primary issue before the Court was whether the filing of the second suit on the same cause of action precluded the Court from granting permission under Order 23 Rule 1(3) CPC to withdraw the first suit. The Court below had held that the provision could not be applied in this case as the petitioner had already instituted a fresh suit without withdrawing the earlier suit and without obtaining permission to file a fresh suit. However, the petitioner argued that the defective nature of the earlier suit, which lacked a statutory notice, fell within the ambit of Order 23 Rule 1(3) CPC, allowing the Court to grant permission to withdraw the suit with liberty to file a fresh suit.
Justice V. Rajagopala Reddy analyzed the provisions of Order 23 Rule 1(3) CPC, which permit the Court to grant permission to withdraw a suit if it must fail due to a formal defect, providing the liberty to institute a fresh suit. The Court emphasized that the key consideration was whether the suit must fail due to a formal defect, such as the lack of a statutory notice in the present case. The Court cited precedents, including a decision from the Kerala High Court, to support the view that the filing of a fresh suit before obtaining permission to withdraw the first suit should be considered an irregularity that is curable once permission is granted.
Ultimately, Justice V. Rajagopala Reddy held that the petitioner was entitled to withdraw the first suit with liberty to institute a fresh suit on the same cause of action. The Court concluded that the suit already filed for the same cause of action did not obstruct the invocation of Order 23 Rule 1(3) CPC. Consequently, the Civil Revision Petition was allowed, the order of the Court below was set aside, and the petitioner was granted permission to withdraw the initial suit.
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1998 (2) TMI 617
Issues:
Challenge to the order passed by the S.D.J.M. in G.R. Case No. 867 of 1997 under Sections 420/120B, I.P.C., rejection of petitions under Section 205 of the Code of Criminal Procedure, 1973, complainant's locus standi, discretionary power of the court in granting exemption from personal appearance, interpretation of Section 205 of the Code.
Analysis:
The petitioners filed two petitions under Section 482 of the Code challenging the legality of the order passed by the S.D.J.M. in G.R. Case No. 867 of 1997. The case involved allegations of cheating in a mining dealing, leading to cognizance of offences under Sections 420/120B, I.P.C. against the petitioners. The petitioners sought exemption from personal appearance under Section 205 of the Code, citing old age, illness, and distant residence as grounds. However, the S.D.J.M. rejected their petitions, leading to the petitioners challenging the order in the High Court.
The petitioners argued that the S.D.J.M. did not judiciously consider their request for exemption from personal appearance and rejected it on flimsy grounds. They also raised the issue of complainant's locus standi based on previous judgments. On the other hand, the complainant and the Addl. Standing Counsel supported the S.D.J.M.'s decision, emphasizing the importance of the accused's presence in a criminal trial.
The High Court examined various precedents and principles related to Section 205 of the Code, highlighting that personal appearance of the accused is the norm, and exemption is an exception to be granted judiciously based on the facts and circumstances of each case. The Court emphasized the need for a liberal interpretation of the law unless contrary to the interest of justice.
The Court found that the S.D.J.M.'s decision to reject the petitions for exemption was reasonable, considering the nature of the case and the petitioners' activities in different offices. The Court also noted that the petitioners could seek exemption from personal appearance at a later stage under Section 317 of the Code. The contention that once petitions under Section 317 were filed, Section 205 could not be invoked was deemed irrelevant in this case as the former petitions were rejected as premature.
Ultimately, the High Court dismissed the criminal misc. cases, upholding the S.D.J.M.'s order. However, it directed the petitioners to surrender in the lower court within six weeks and apply for bail, ensuring that the non-bailable warrant of arrests would remain stayed during this period.
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1998 (2) TMI 616
The High Court of Calcutta dismissed the appeal against an order questioning the validity of a Hearing Officer's decision on the valuation of premises. The Court held that the Hearing Officer's order was not reasoned, which is required by law. An unreasoned order is considered a nullity, and both the appeal and application were dismissed.
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1998 (2) TMI 615
Issues Involved:
1. Validity of the consent terms agreed upon by the parties.
2. Whether the consent terms should be modified or recalled.
3. Whether the amount of Rs. 50 lakhs deposited should be paid to the petitioner.
Detailed Analysis:
1. Validity of the Consent Terms:
The petition was filed under Section 397/398 of the Companies Act, 1956, concerning Indo Saudi Travels Private Limited. During the proceedings, the parties agreed to a settlement where the petitioner would sell her group's shares to respondent No. 2 or his nominees or to the company for Rs. 2.3 crores. This agreement was reached on July 8, 1997, in the presence of the Company Law Board (CLB) and was documented and signed by both parties and their counsel. However, respondent No. 2 later sought to incorporate additional terms into the consent order, arguing that the Rs. 2.3 crores was agreed upon under the impression that certain dues payable by the petitioner to the company and respondents would be adjusted against this amount.
2. Modification or Recall of Consent Terms:
Respondent No. 2 filed applications (C.A. No. 196 of 1997 and C.A. No. 202 of 1997) seeking to modify the consent terms, arguing that the terms were not binding as they did not reflect the complete understanding between the parties. He contended that the payment of Rs. 2.3 crores without adjustment of dues was unconscionable and not in the interest of the company. He further argued that the parties were not ad idem (in agreement) when the consent terms were signed and that the compromise should not be imposed on an unwilling party.
The petitioner opposed these applications, stating that the consent terms were agreed upon after detailed discussions and should stand as they are. The petitioner argued that the CLB does not have the power to review its own orders unless both parties agree to the modification, which was not the case here. The petitioner cited various legal precedents to support this argument, including S. C. Nandy v. G. M. Bhattacharjee, AIR 1951 Cal 507 and B.G. Maikap v. Janaki Dei, AIR 1980 Orissa 108.
The CLB considered the arguments and found that the consent terms were agreed upon willingly by both parties and that there was no indication of any additional understanding at the time of agreement. The CLB concluded that it did not have the power to review its own order unless both parties agreed to the modification. Therefore, the applications for modification or recall of the consent terms were dismissed.
3. Payment of Rs. 50 Lakhs Deposited:
The respondent-company had deposited Rs. 50 lakhs in the name of the petitioner to establish bona fides for an amicable settlement. The CLB noted that this amount was deposited without prejudice to the contentions of both parties and that it was not recorded as being towards the first installment of the Rs. 2.3 crores. The CLB decided not to order the payment of this amount to the petitioner, especially since the Bombay High Court had undertaken that the company would not make any payment to the petitioner in terms of the compromise. Thus, any payment to the petitioner in terms of the consent by the company became a subject matter of the suit in the Bombay High Court, and both parties would have to abide by the decision of the Bombay High Court.
Conclusion:
The CLB dismissed all applications and directed that the consent terms, as recorded in the order dated August 14, 1997, be acted upon. The parties were bound by the consent terms, subject to any order passed by the Bombay High Court. The CLB also noted that it did not have the power to review its own orders unless both parties agreed to the modification. The request for payment of the Rs. 50 lakhs deposited by the respondent-company was also denied, considering the undertaking recorded by the Bombay High Court.
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1998 (2) TMI 614
Issues:
Whether a party to a suit has the right to get a Commissioner examined with regard to his report.
Analysis:
In this case, a controversy arose regarding the examination of a Commissioner's report in a suit pending before the Trial Court. The petitioners sought permission to cross-examine the Commissioner after objections were filed against the report. The key issue was whether a party has the right to examine the Commissioner as per Order XXVI, Rules 9 & 10. Rule 10 allows the report and evidence taken by the Commissioner to be evidence in the suit. However, the Court or any party may examine the Commissioner personally in open Court regarding the matters in the report or the investigation process. If a party objects to the report and requests the Commissioner's examination, the Court must allow it for the report to become part of the evidence.
The judgment referred to a Calcutta High Court case where it was established that if a party requests the examination of the Commissioner, the Court must allow it. Conversely, if no party objects or requests examination, the report can be part of the record without examination. Another judgment from the same Court emphasized that if the Commissioner is not examined, the report still forms part of the record. Therefore, the Court concluded that if an application is made for the examination of the Commissioner, the Court must allow it. Only in the absence of such a request can the report be considered part of the evidence without examination.
In conclusion, the High Court set aside the Trial Court's order and allowed the revision petition. The Trial Court was directed to summon the Commissioner for examination by the concerned parties. This decision clarified that if a party requests the examination of the Commissioner, it is imperative for the Court to conduct the examination for the report to be considered as part of the evidence in the suit.
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1998 (2) TMI 613
Issues Involved:
1. Application for de-pauperizing the plaintiff under Order XXXIII, Rule 9 of the Code of Civil Procedure, 1908.
2. Plaintiff's financial status and means to pay court fees.
3. Allegations of improper conduct and fraud by the plaintiff.
Issue-wise Detailed Analysis:
1. Application for de-pauperizing the plaintiff under Order XXXIII, Rule 9 of the Code of Civil Procedure, 1908:
The defendants filed a Notice of Motion under Order XXXIII, Rule 9 of the Code of Civil Procedure, 1908, seeking to de-pauperize the plaintiff and compel him to pay the court fees required at the time of filing the suit. The plaintiff had initially been granted permission to sue as an indigent person under Order XXXIII, Rule 1, which was later converted into a suit by the Prothonotary and Senior Master.
2. Plaintiff's financial status and means to pay court fees:
The plaintiff claimed he had no sufficient means to pay the court fees, stating he received only Rs. 400 per month from the Cancer Patients' Aid Society and had no other income or property. However, during cross-examination, it was revealed that the plaintiff earned additional income from private tuitions and had shares worth approximately Rs. 12,000. The plaintiff admitted to having a Savings Bank Account and a share in his father's immovable property and gold, which he had not disclosed initially. The court found these admissions contradicted the plaintiff's earlier statements and demonstrated that he had sufficient means to pay the court fees.
3. Allegations of improper conduct and fraud by the plaintiff:
The defendants argued that the plaintiff had committed fraud by suppressing material facts about his financial status and assets, thus misleading the court to gain an exemption from paying court fees. The court agreed with the defendants, noting that the plaintiff's conduct was improper as he failed to disclose his true financial situation and assets, including his share in immovable property, gold, and shares. The court emphasized that the plaintiff's actions amounted to playing fraud on the court and causing loss to the Exchequer.
Conclusion:
The court found that the plaintiff had indeed suppressed material facts and misrepresented his financial status to obtain permission to sue as an indigent person. Consequently, the court ordered that the plaintiff be de-pauperized under Order XXXIII, Rule 9 of the Code of Civil Procedure, 1908, and directed him to pay the court fees within two weeks. The Notice of Motion was made absolute, and the matter was adjourned with no order as to costs.
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1998 (2) TMI 612
Issues Involved:
1. Legitimacy of the addition of Rs. 1,47,91,840 to the undisclosed income of the assessee.
2. Justification for the assessing officer's reliance on a single piece of paper for determining unaccounted income.
3. Validity of deductions claimed by the assessee for payments made to previous organizers and land costs.
4. Determination of profit from unaccounted receipts and its taxation under Chapter XIV-B.
Issue-wise Detailed Analysis:
1. Legitimacy of the addition of Rs. 1,47,91,840 to the undisclosed income of the assessee:
The assessing officer computed the undisclosed income of the assessee at Rs. 1,47,91,840 based on a piece of paper found during a search operation. This paper indicated unaccounted income from the sale of a flat in Hare Krishna Apartment. The assessee had initially disclosed Rs. 17 lakhs as concealed income. The Tribunal found that the assessing officer's addition was primarily based on presumptions and assumptions derived from a single piece of paper, which was not justified under Section 158BC.
2. Justification for the assessing officer's reliance on a single piece of paper for determining unaccounted income:
The Tribunal noted that the entire controversy revolved around one piece of paper found during the search, reflecting unaccounted income of Rs. 2.30 lakhs. The assessing officer extrapolated this to estimate the total unaccounted income for the entire project. The Tribunal held that such an extrapolation was not justified, especially since the paper pertained to only one flat and not the entire project.
3. Validity of deductions claimed by the assessee for payments made to previous organizers and land costs:
The assessee claimed deductions for payments made to previous organizers (Rs. 38 lakhs), land costs (Rs. 21.91 lakhs), and construction costs (Rs. 158 lakhs). The Tribunal found that these costs were supported by evidence and should be allowed as deductions. The assessing officer's failure to allow these deductions was not justified, as these expenses were necessary for the project and were substantiated by the assessee.
4. Determination of profit from unaccounted receipts and its taxation under Chapter XIV-B:
The Tribunal emphasized that under Chapter XIV-B, only the undisclosed income, not the undisclosed receipts, should be taxed. The Tribunal referred to precedents, including the Mumbai Tribunal's decision in Sunder Agencies v. Dy. CIT and the Calcutta High Court's decision in CIT v. S.M. Orner, to support this view. The Tribunal concluded that the profit from unaccounted receipts should be reasonably estimated. The assessee's offer of 8% profit on the total receipts was considered fair and reasonable. Consequently, the Tribunal directed the deletion of the addition of Rs. 1,47,91,840, as the profit earned would be less than the Rs. 17 lakhs already disclosed by the assessee.
Conclusion:
The Tribunal allowed the appeal, concluding that the assessing officer's addition of Rs. 1,47,91,840 was not justified. The profit from unaccounted receipts should be reasonably estimated, and the deductions claimed by the assessee for payments made to previous organizers and land costs should be allowed. The assessee's disclosed income of Rs. 17 lakhs was deemed sufficient and reasonable.
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1998 (2) TMI 611
Issues Involved:
1. Whether the CIT(Appeals) erred in directing the Assessing Officer to rectify the mistake and allow necessary relief under section 80HHC.
2. Whether there was a mistake apparent from the record in the order passed by the Assessing Officer under section 143(3).
3. Whether the audit report in Form No. 10CCAC should have been filed along with the return or could be submitted later.
4. Whether the CIT(Appeals) was correct in allowing the application under section 154 for rectification.
Detailed Analysis:
Issue 1: Direction to Rectify Mistake and Allow Relief Under Section 80HHC
The CIT(Appeals) initially denied the assessee's claim for deduction under section 80HHC due to the non-filing of the audit report in Form No. 10CCAC along with the return or during the assessment proceedings. However, upon the assessee's application for rectification under section 154, the CIT(Appeals) allowed the claim, noting that the audit report was subsequently filed and that the failure to file it initially was a procedural formality. The CIT(Appeals) directed the Assessing Officer to rectify the mistake and allow the necessary relief.
Issue 2: Mistake Apparent from Record in Order Under Section 143(3)
The Assessing Officer completed the assessment under section 143(3) and denied the deduction under section 80HHC due to the absence of the audit report. The CIT(Appeals) found that the assessee had made a footnote in the return indicating that the audit report would be submitted if required. The CIT(Appeals) held that the Assessing Officer should have provided an opportunity to the assessee to file the audit report once the income was computed as a positive figure. The failure to provide this opportunity was deemed a mistake apparent from the record.
Issue 3: Filing of Audit Report in Form No. 10CCAC
The Department argued that the audit report should have been filed at least before the assessment was made, citing the jurisdictional High Court's judgment in CIT v. Shivanand Electronics. However, the assessee contended that the requirement to file the audit report was a procedural formality and not mandatory. The Tribunal agreed with the assessee, noting that the audit report could not have been filed initially due to the nil income computation. The Tribunal emphasized that the law does not expect compliance with impossible conditions.
Issue 4: Allowing Application Under Section 154 for Rectification
The Tribunal upheld the CIT(Appeals)'s decision to allow the rectification application under section 154. The Tribunal noted that beneficial circulars from the Board, such as Circular No. 689 and Circular No. 669, permit the consideration of evidence submitted after the assessment. These circulars support the rectification of assessments to allow deductions if the required documents are subsequently furnished. The Tribunal emphasized that these circulars are binding on the Assessing Officer and should be given due effect.
Conclusion
The Tribunal dismissed the revenue's appeal, upholding the CIT(Appeals)'s order to rectify the assessment and allow the deduction under section 80HHC. The Tribunal concluded that the failure to provide the assessee an opportunity to file the audit report was a mistake apparent from the record, and the subsequent submission of the audit report warranted rectification under section 154. The Tribunal directed the Assessing Officer to consider the claim for deduction under section 80HHC as per law.
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1998 (2) TMI 610
Issues:
1. Maintainability of the revision petition under Article 227 of the Constitution of India.
2. Dismissal of three applications by the Debts Recovery Tribunal.
3. Interpretation of Sections 17, 18, 19, 20, and 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
4. Availability of statutory remedy of appeal before the Appellate Tribunal.
5. Scope of revisional jurisdiction under Section 115 of the Code of Civil Procedure.
Issue 1: Maintainability of the revision petition under Article 227 of the Constitution of India
The petitioner filed a revision petition under Article 227 seeking to set aside the order of the Debts Recovery Tribunal. The respondent-Bank raised a preliminary objection regarding the maintainability of the revision petition, arguing that an equally efficacious remedy is available under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Sections 17, 18, 19, 20, and 21 of the Act were examined to determine the jurisdiction and powers of the Tribunal and the Appellate Tribunal. The Court held that the Act provides for a remedy of appeal before the Appellate Tribunal against orders passed by the Tribunal, and the remedy under Article 227 is not intended to supersede the statutory appeal process. Therefore, the petitioner was directed to pursue the statutory remedy of appeal before the Appellate Tribunal.
Issue 2: Dismissal of three applications by the Debts Recovery Tribunal
The petitioner had filed three applications before the Debts Recovery Tribunal, seeking various reliefs related to the case. These applications included requests for summoning bank officials, production of account opening documents, and examination of documents by a Handwriting Expert. However, the Tribunal dismissed all three applications on 16th June 1997. This dismissal led to the filing of the revision petition under Article 227 challenging the Tribunal's decision regarding these applications.
Issue 3: Interpretation of Sections 17, 18, 19, 20, and 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993
The Court analyzed Sections 17, 18, 19, 20, and 21 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 to understand the jurisdiction, powers, and procedures outlined in the Act. These sections delineate the jurisdiction of the Tribunal, the bar on other authorities to exercise jurisdiction, the application process before the Tribunal, the right of appeal to the Appellate Tribunal, and the deposit requirement for filing an appeal. The Court emphasized that the Act provides a comprehensive framework for debt recovery matters, including avenues for appeal and deposit requirements for appeals.
Issue 4: Availability of statutory remedy of appeal before the Appellate Tribunal
The Court clarified that the statutory remedy of appeal before the Appellate Tribunal is the appropriate course of action for challenging orders of the Tribunal under the Act. The petitioner was advised to pursue the appeal process provided for in the Act rather than seeking recourse through a revision petition under Article 227 of the Constitution. The Court highlighted the importance of adhering to the statutory appeal mechanism for seeking relief in matters governed by the Act.
Issue 5: Scope of revisional jurisdiction under Section 115 of the Code of Civil Procedure
The petitioner's counsel argued that the Court's revisional jurisdiction under Section 115 of the Code of Civil Procedure could be invoked to interfere with the Tribunal's order. However, the Court rejected this argument, emphasizing that the statutory remedy of appeal before the Appellate Tribunal, as provided in Section 20 of the Act, should be pursued instead of seeking revision under Section 115 of the Code of Civil Procedure. The Court dismissed the revision petition, stating that the statutory appeal process is the appropriate route for obtaining relief in matters falling under the Act.
In conclusion, the Court dismissed the revision petition, emphasizing the availability of the statutory remedy of appeal before the Appellate Tribunal for challenging orders of the Debts Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The Court's decision was based on a thorough analysis of the relevant provisions of the Act and the limitations of seeking revision under Article 227 or Section 115 of the Code of Civil Procedure in such cases.
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1998 (2) TMI 609
The Supreme Court dismissed the Special Leave Petition due to the respondents not being able to be served despite efforts made by the Central Agency to obtain a fresh address. The Registry had been requesting a new address since January 4, 1997, as Show Cause Notices were returned with "Incomplete Address" remarks. The Central Agency claimed they had used the address provided by the respondents in the High Court, but no further action was taken despite the Registry's letters.
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1998 (2) TMI 608
Issues:
1. Entitlement to produce secondary evidence under Section 65 of the Evidence Act.
2. Requirement of notice under Section 65 of the Evidence Act for producing secondary evidence.
3. Obligation under Section 66 of the Evidence Act regarding secondary evidence.
4. Definition of secondary evidence under Section 63 of the Evidence Act.
Analysis:
The judgment pertains to a revision petition under Section 115 of the Code of Civil Procedure, challenging an order permitting the plaintiff to cross-examine a witness with a copy of an assessment order under Section 65 of the Evidence Act. The petitioner argued that the plaintiff was not entitled to produce secondary evidence without a notice to produce the original document. However, the respondent contended that since the document related to the witness, who was supposed to have the original, the lower court's order was valid.
The court analyzed the provisions of the Evidence Act regarding secondary evidence. It noted that under Section 65, secondary evidence can be given when the original is in the possession of the person against whom the document is sought to be proved. In this case, as the document was related to the witness, it was presumed to be in his possession, allowing the plaintiff to produce secondary evidence. However, the court highlighted the requirement under Section 66 that notice must be given to the party in possession of the original document before producing secondary evidence. Since no such notice was issued in this case, the court found the lower court's decision flawed.
Furthermore, the court emphasized the need to establish that the document in question falls within the definition of secondary evidence as per Section 63 of the Evidence Act. It pointed out that there was no evidence to show that the photostat copy was made from the original assessment order. Due to these legal deficiencies, the court concluded that the lower court had erred in permitting the production of the photostat copy as secondary evidence.
Consequently, the court allowed the revision petition, setting aside the lower court's order dated 1-12-1997. Each party was directed to bear their own costs in the matter.
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1998 (2) TMI 607
Issues Involved:
1. Classification of "Chassis with Cowl" under the Central Excise Tariff.
2. Application of Rule 9(2) and Section 11A of the Central Excise Act, 1944.
3. Admissibility of technical evidence and expert opinions.
4. Allegations of suppression of facts and intent to evade duty.
5. Predominant use and interpretative rules for classification.
Issue-wise Detailed Analysis:
1. Classification of "Chassis with Cowl" under the Central Excise Tariff:
The primary issue was whether the product "Chassis with Cowl" should be classified under sub-heading 8706.40 (chassis fitted with engine for vehicles for the transport of goods) or sub-heading 8706.30 (chassis fitted with engine for vehicles principally designed for the transport of persons). The department initially classified the product under sub-heading 8706.30, attracting a higher duty rate of 35% ad valorem, arguing that the chassis were used for passenger vehicles. However, the assessee contended that the chassis were designed for goods transport and should be classified under sub-heading 8706.40, attracting a duty rate of 20% ad valorem. The Tribunal found that the chassis were predominantly used for goods transport (54% of total production) and accepted the assessee's classification under 8706.40, applying Interpretative Rule 3(c) which states that when goods cannot be classified by reference to specific or essential character, they should be classified under the heading which occurs last in numerical order.
2. Application of Rule 9(2) and Section 11A of the Central Excise Act, 1944:
The department invoked Rule 9(2) and Section 11A, alleging suppression of facts with intent to evade duty. The assessee argued that these provisions could not be invoked as the goods were cleared after due approval of the classification list and price list, and there was no clandestine removal. The Tribunal agreed with the assessee, noting that the classification list was approved after due enquiry, and there was no evidence of deliberate suppression or intent to evade duty. The Tribunal also referenced Supreme Court rulings in Sanjana's case and J.K. Steel Ltd. case to support this conclusion.
3. Admissibility of technical evidence and expert opinions:
The Tribunal considered various technical opinions and expert reports, including those from the Automotive Research Association of India (ARAI), Vehicle Research and Development Establishment (VRDE), and Victoria Jubilee Technical Institute (VJTI). These reports indicated that the chassis design was suitable for both goods and passenger vehicles and that progressive springs and shock absorbers were used in both types of vehicles. The Tribunal found that the technical evidence supported the assessee's claim that the chassis were not principally designed for passenger transport. The Tribunal also noted that the department did not produce any counter-evidence to challenge the technical opinions.
4. Allegations of suppression of facts and intent to evade duty:
The department alleged that the assessee had prior knowledge of the end-use of the chassis for passenger vehicles and suppressed this fact to evade duty. The Tribunal found that while there was some knowledge of the end-use, this did not constitute suppression with intent to evade duty. The design changes were made before the new tariff was introduced, and there was no evidence of deliberate intent to evade duty. The Tribunal also noted that the department had full knowledge of the use of the chassis for passenger vehicles, as evidenced by correspondence and approvals from the department.
5. Predominant use and interpretative rules for classification:
The Tribunal applied Interpretative Rule 3(c) to classify the chassis under sub-heading 8706.40, noting that the predominant use was for goods transport. The Tribunal also referenced the judgment in Customs and Excise Commissioners v. Mechanical Services Ltd., which supports the application of Interpretative Rule 3(c) when goods are capable of multiple uses. The Tribunal concluded that the predominant use and technical evidence supported the classification under sub-heading 8706.40.
Conclusion:
The Tribunal upheld the classification of "Chassis with Cowl" under sub-heading 8706.40, rejected the department's appeal, and accepted the assessee's appeal. The Tribunal found that the department did not provide sufficient evidence to support the classification under sub-heading 8706.30 and that the assessee's classification was supported by technical evidence and predominant use. The Tribunal also found no grounds for invoking Rule 9(2) or Section 11A, as there was no suppression of facts or intent to evade duty.
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1998 (2) TMI 606
Issues:
1. Setting aside an ex parte decree based on irregularities in the service of summons.
Analysis:
The appellant filed an application under Order 9, Rule 13, C.P.C., contending that the summons of the suit were not served upon him properly, and he had no knowledge of the proceedings. The trial Court rejected the application, finding no sufficient cause for the defendant's absence during the hearing. The appellant argued that the trial Court's order was illegal and contrary to the provisions of Order 5, Rule 20, C.P.C., as it did not record its satisfaction for applying substituted service. On the other hand, the respondent argued that the summons were issued thrice and returned unserved due to incomplete address, justifying the substituted service. The High Court noted that the trial Court failed to comply with the mandatory provisions of Order 5, Rule 20 by not recording its satisfaction and not ordering the affixture of the summons in a conspicuous place in the Court-house. The Court emphasized that both the service and the order directing substituted service must be in accordance with the law. Consequently, the High Court allowed the appeal, directing the trial Court to restore the suit and dispose of it within six months from the date of appearance of the parties.
The High Court analyzed Order 5, Rule 20(1) of the Civil Procedure Code, which requires the Court to be satisfied that the defendant is avoiding service or that the summons cannot be served in the ordinary way before ordering substituted service. The Court found that the trial Court failed to record its satisfaction before allowing service by publication in a newspaper. Additionally, the trial Court did not order the affixture of the summons in a conspicuous place in the Court-house, as mandated by law. The High Court highlighted that compliance with procedural requirements is essential for valid service and upheld that the trial Court erred in rejecting the application to set aside the ex parte decree. The High Court's decision was based on the principle that both the service itself and the order directing substituted service must adhere to legal provisions to be considered valid. Consequently, the High Court directed the trial Court to expedite the proceedings and dispose of the suit within six months from the appearance of the parties.
In conclusion, the High Court's judgment focused on the procedural irregularities in the service of summons and the subsequent order for substituted service. The Court emphasized the importance of complying with the requirements of Order 5, Rule 20, C.P.C., regarding recording satisfaction and affixing summons in the Court-house for valid substituted service. The High Court allowed the appeal, setting aside the trial Court's decision and instructing the trial Court to expedite the suit proceedings within a specified timeframe. The judgment underscored the significance of procedural adherence in legal proceedings to ensure fairness and justice for all parties involved.
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1998 (2) TMI 605
Issues Involved:
1. Oppression and mismanagement under Section 397/398 of the Companies Act, 1956.
2. Validity of share allotments and compliance with Section 81(1A) of the Companies Act.
3. Non-receipt of notices for general meetings and non-filing of annual returns.
4. Denial of inspection of company records.
5. Allegations of benami/fictitious share allotments.
6. Appointment of auditors and general meeting quorum issues.
7. Allegations of improper management and misconduct by company officials.
8. Entitlement to buy-back shares from Rajasthan State Mineral Development Corporation (RSMDC).
9. Conduct of the petitioners and their relationship with respondent No. 3.
10. Request for investigation into the affairs of the company.
11. Appointment of the petitioner as a permanent director.
Issue-wise Detailed Analysis:
1. Oppression and Mismanagement under Section 397/398:
The petitioners alleged oppression and mismanagement by the company, including non-receipt of notices for general meetings, non-filing of annual returns, and denial of inspection of records. The Company Law Board (CLB) emphasized that for a petition under Section 397 to be maintainable, it must demonstrate that the company's affairs are being conducted in a manner oppressive to any member and that the facts justify a winding-up order on just and equitable grounds. The petitioners failed to establish this primary condition, leading to the conclusion that the petition under Section 397 was not maintainable.
2. Validity of Share Allotments and Compliance with Section 81(1A):
The petitioners challenged the validity of share allotments made after the company became public, arguing that they were made without the approval of shareholders by special resolution as required under Section 81(1A). The CLB found that the petitioners were inconsistent in their challenge, selectively targeting certain allotments while accepting others. The issue of compliance with Section 81(1A) was already the subject of a civil suit, and the CLB deferred to the civil court's jurisdiction on this matter.
3. Non-receipt of Notices for General Meetings and Non-filing of Annual Returns:
The petitioners claimed they had not received notices for general meetings and that the company had not filed annual returns regularly. The respondents provided evidence of regular despatch of notices and filing of annual returns, including postal certificates and despatch registers. The CLB found that the petitioners' allegations were not substantiated and noted that these issues did not constitute acts of oppression.
4. Denial of Inspection of Company Records:
The petitioners alleged that their requests for inspection of the register of members were denied. The respondents argued that the petitioners had sent their requests to the wrong address. The CLB found that the petitioners had not followed proper procedures and that their allegations were part of a broader attempt to challenge the company's management.
5. Allegations of Benami/Fictitious Share Allotments:
The petitioners claimed that shares were allotted to benami/fictitious persons. The respondents provided the complete list of shareholders and statutory registers, which were inspected by the petitioners. The CLB found that the petitioners failed to provide conclusive evidence to support their allegations, and the statutory records were deemed accurate.
6. Appointment of Auditors and General Meeting Quorum Issues:
The petitioners questioned the validity of general meetings held without the presence of RSMDC representatives and the appointment of auditors without special resolution. The CLB verified the articles of association and found no requirement for RSMDC representatives at general meetings. The notice for the appointment of auditors indicated compliance with Section 224A, and the resolution was passed as a special resolution. The CLB dismissed these allegations.
7. Allegations of Improper Management and Misconduct:
The petitioners alleged that the company's affairs were managed by an RSMDC official in his personal capacity and that there were adverse observations by the Director of Mines and Geology and the auditors. The CLB found no evidence to support these allegations and noted that the issues raised had been addressed and resolved to the satisfaction of the relevant authorities.
8. Entitlement to Buy-back Shares from RSMDC:
The petitioners sought to buy back shares from RSMDC proportionately. The CLB deferred to the civil court's jurisdiction on this matter, noting that the interpretation of the joint sector agreement and the entitlement to shares were already the subject of civil litigation.
9. Conduct of the Petitioners and Relationship with Respondent No. 3:
The CLB observed that the petitioners appeared to be acting in collusion with respondent No. 3, who had a strained relationship with the company's management. The petitioners' selective challenges to share allotments and their focus on respondent No. 3's interests indicated a lack of genuine concern for the company's affairs.
10. Request for Investigation into the Affairs of the Company:
The petitioners sought an investigation into the company's affairs. The CLB found that the petitioners had not provided full and complete details of allegations of misappropriation, misapplication of funds, or other improper conduct. The CLB emphasized that a prima facie case must be established before ordering an investigation and rejected the petitioners' request.
11. Appointment of the Petitioner as a Permanent Director:
The petitioners requested the appointment of one of them as a permanent director. The CLB noted the petitioners' lack of interest in the company's affairs and their apparent alignment with respondent No. 3. The CLB concluded that appointing the petitioner as a permanent director would likely escalate disputes and be detrimental to the company's interests.
Conclusion:
The CLB dismissed the petition, finding that the petitioners failed to establish a case for oppression and mismanagement under Section 397/398. The CLB also vacated all interim orders and directed that the money deposited by the petitioners, respondents Nos. 2 and 3 with RSMDC for the repurchase of shares be reimbursed with interest upon the civil court's decision on the entitlement to shares. The CLB emphasized the importance of maintaining the company's stability and protecting its interests.
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1998 (2) TMI 604
Issues:
- Conviction under Section 5 of TADA
- Power of Supreme Court to enhance sentence
- Scope of Section 377(3) of CrPC
- Applicability of Article 142 of the Constitution
Analysis:
The judgment by the Supreme Court involved the issue of confirming the conviction of the accused under Section 5 of the Terrorist and Disruptive Activities (Prevention) Act, 1987 (TADA). The Court found the sentence of 5 years awarded by the trial court inadequate and issued notice to the accused for enhancing the sentence. The accused filed detailed submissions, and arguments were heard from senior counsel and the Additional Solicitor General representing the Central Bureau of Investigation.
Regarding the power of the Supreme Court to enhance sentences, the Court clarified that it has broad powers under Article 142 of the Constitution, which are not restricted by the provisions of the Criminal Procedure Code or any other statute. The Court cited previous decisions to support the view that its powers under Article 142 are extensive and aimed at ensuring proper administration of justice.
The scope of Section 377(3) of the Criminal Procedure Code was also discussed. The Court emphasized that this provision allows the High Court to enhance sentences on appeals filed by the Government against inadequacy of sentences. The accused do not have the right to re-canvas the finding of the Court at this stage, as it has already been extensively evaluated.
In considering the appropriate sentence, the Court noted that the minimum sentence prescribed by TADA was inadequate in this case. After evaluating the circumstances and seriousness of the offense, the Court decided to enhance the sentence from 5 years to 10 years for all four accused individuals. The Court concluded by disposing of all appeals in this matter.
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1998 (2) TMI 603
Issues:
- Appeal under Section 39 of the Arbitration Act against the order modifying the award by the District Judge.
- Application under Section 5 of the Limitation Act for condonation of delay in filing the appeal.
Analysis:
The plaintiff filed an appeal under Section 39 of the Arbitration Act against the order modifying the award by the District Judge. However, the officer reported that the appeal was 79 days beyond the limitation period. Subsequently, the appellant filed an application under Section 5 of the Limitation Act seeking condonation of the delay. The appellant argued that the delay was not deliberate but caused due to the complex procedure involving obtaining sanction from the State Government. The appellant cited relevant case law to support the argument that substantial justice should prevail despite the delay.
The respondent vehemently opposed the application for condonation of delay, arguing that the appellant failed to provide a reasonable explanation for the delay. The respondent relied on a previous case where similar arguments were dismissed by the court. The respondent highlighted the importance of proving sufficient cause for the delay, especially in cases involving government departments. The court emphasized that the government must establish an overall cause for the delay and cannot escape accountability simply because it is a government entity.
The court, after considering the arguments from both sides, dismissed the application for condonation of delay. The court held that the appellant failed to provide material particulars explaining the cause of the delay adequately. The court concluded that the appeal was hopelessly barred by time and, therefore, dismissed the appeal. The judgment underscores the importance of providing specific and justifiable reasons for seeking condonation of delay, especially in cases involving government entities.
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1998 (2) TMI 602
Issues:
Winding up petition under sections 433, 434, and 439 of the Companies Act, 1956 - Dispute over payment between petitioner and respondent - Interpretation of agreement dated 26.7.1995 - Jurisdiction of Company Court in deciding winding up petitions - Allegation of mala fide filing of winding up petition.
Detailed Analysis:
1. The petitioner, ITC Agro Tech Limited, filed a winding-up petition against Asha Agro Industries Limited under sections 433, 434, and 439 of the Companies Act, 1956, citing an outstanding debt owed by the respondent company. The debt arose from an agreement for the supply of refined edible oils, with a credit balance of &8377; 1,15,92,052.86 in favor of the petitioner as of 20.6.1992. Despite a settlement agreement in 1993 and a subsequent agreement in 1995 for payment of &8377; 65 lakhs in 48 monthly installments, the respondent failed to make payments as agreed, leading to the filing of the winding-up petition.
2. The respondent argued that the petitioner should have pursued a civil suit instead of a winding-up petition based on clause 5 of the 1995 agreement, which restricted disputes to be resolved through civil courts only. The petitioner contended that since the respondent had not denied defaulting on payments and had only paid &8377; 5 lakhs out of the agreed &8377; 65 lakhs, there was no genuine dispute warranting a civil suit. The petitioner relied on legal precedents to support the argument that the jurisdiction of the Company Court in deciding winding-up petitions cannot be ousted by a private agreement between the parties.
3. The Court, after considering the arguments of both parties, found merit in the petitioner's position. It noted that the respondent had agreed to pay &8377; 65 lakhs in installments and had defaulted after paying only &8377; 5 lakhs. The Court opined that the clause in the agreement regarding disputes did not apply in this case as there was no genuine dispute over the outstanding payments. The Court also emphasized that the right to file a winding-up petition statutorily conferred cannot be nullified by a private agreement. Additionally, the Court rejected the allegation of mala fide filing of the petition, stating that the ultimate aim of a winding-up order is to protect the interests of the company, shareholders, and creditors.
4. The Court decided to admit and advertise the petition but gave the respondent an opportunity to demonstrate good faith by making partial payments. It ordered the respondent to deposit &8377; 5 lakhs by a specified date, followed by two additional payments of &8377; 15 lakhs each on later dates. Failure to make any of these payments would result in the publication of a notice under the Companies (Court) Rules. The Court adjourned the case for further orders to verify compliance with the payment schedule.
5. In conclusion, the Court upheld the admissibility of the winding-up petition, emphasizing the statutory authority of the Company Court in such matters and providing the respondent with a chance to showcase its commitment to settling the outstanding debt to avoid further legal actions.
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1998 (2) TMI 601
Issues Involved:
1. Applicability of the Haryana Urban (Control of Rent & Eviction) Act, 1973.
2. Jurisdiction of the civil court after the expiry of the ten-year exemption period.
3. Interpretation of Section 13(1) of the Act.
4. Legislative intent and purpose of the exemption period.
Detailed Analysis:
1. Applicability of the Haryana Urban (Control of Rent & Eviction) Act, 1973:
The primary issue in these appeals is whether the Haryana Urban (Control of Rent & Eviction) Act, 1973 barred the lower courts from passing decrees directing the appellants to deliver possession of the properties to the respondents. The Act, which came into force on April 25, 1973, aims to control the increase of rent and the eviction of tenants from certain buildings and rented land within urban areas. Section 1(3) of the Act states, "Nothing in this Act shall apply to any building the construction of which is completed on or after the commencement of this Act for a period of ten years from the date of its completion." The buildings in question were constructed shortly before the commencement of the tenancies in 1977, and the suits for possession were filed within the ten-year exemption period.
2. Jurisdiction of the Civil Court After the Expiry of the Ten-Year Exemption Period:
The appellants argued that the court lost its jurisdiction to pass decrees after the ten-year exemption period ended, making any decree passed thereafter a nullity. They relied on Section 13(1) of the Act, which states, "A tenant in possession of a building or a rented land shall not be evicted therefrom except in accordance with the provisions of this Section." The appellants contended that the specific procedure prescribed in the Act must be followed for eviction, and any civil court decree would be unenforceable.
3. Interpretation of Section 13(1) of the Act:
The respondents countered that the suits were instituted to enforce legal rights that had already accrued under the law applicable at the time of filing. They argued that the court's jurisdiction to determine such rights could not be deprived by the expiration of the ten-year exemption period. The respondents emphasized that the Act does not contain any provision expressly extinguishing the right of the plaintiff or preventing the execution of a decree passed in a validly instituted suit. They argued that the legislative intent was to encourage new constructions by providing a temporary exemption from rent control, not to create a judicial vacuum or make the exemption period futile.
4. Legislative Intent and Purpose of the Exemption Period:
The court examined the legislative intent behind the exemption period, noting that it aimed to encourage the construction of new buildings by providing a temporary relief from rent control restrictions. The court referred to several precedents, including the cases of *Firms Amar Nath Basheshar Dass v. Tek Chand*, *Shri Ram Saroop Rai v. Smt. Lilavati*, and *Mohinder Kumar v. State of Haryana*, which supported the view that suits instituted during the exemption period could be continued and decrees executed even after the period ended. The court emphasized that the exemption was intended to incentivize new constructions and that depriving landlords of their right to possession after the exemption period would defeat this purpose.
Conclusion:
The court concluded that there is no provision in the Act taking away the jurisdiction of a civil court to dispose of a suit validly instituted during the exemption period. Section 13(1) does not expressly refer to the execution of a decree for possession, and the legislative intent was to encourage new constructions by providing a temporary exemption from rent control. The court held that the rights of the parties crystallized on the date of the suit's institution, and the execution of a decree cannot be stopped by the provisions of Section 13. Consequently, the appeals were dismissed, and the decrees for possession were upheld.
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