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2013 (2) TMI 946
ISSUES PRESENTED and CONSIDEREDThe core legal issues considered by the Court pertain to the approval of a Scheme of Amalgamation between KDJ Holidayscapes Limited and Two-Up Financial Services Limited under Sections 391 to 394 of the Companies Act, 1956. The specific issues include: 1. Whether the Scheme of Amalgamation is fair, reasonable, and not prejudicial to the interests of shareholders and the public. 2. Compliance with statutory requirements, including the change of name and alteration of the object clause of the Memorandum of Association, under the Companies Act, 1956. 3. Confirmation of the dissolution of the Transferor Company following the amalgamation. ISSUE-WISE DETAILED ANALYSIS 1. Fairness and Reasonableness of the Scheme The Court examined whether the Scheme was fair and reasonable and not contrary to public policy. The legal framework under Sections 391 to 394 of the Companies Act, 1956, governs the amalgamation of companies, requiring the Court's sanction for such schemes. The Court noted that no objections were raised against the Scheme, and the Regional Director's affidavit confirmed that the Scheme was not prejudicial to the shareholders or the public interest. The Official Liquidator's report further supported that the Transferor Company's affairs were conducted properly. Thus, the Court concluded that the Scheme was fair and reasonable. 2. Compliance with Statutory Requirements The Court considered the statutory compliance related to the change of name and alteration of the object clause: - Change of Name: Clause 19 of the Scheme proposed changing the name of the Amalgamated Company to 'KDJ Holidayscapes & Resorts Limited.' The Court required compliance with Sections 21/23 of the Companies Act, 1956, regarding filing necessary forms with the Registrar of Companies. The Petitioners undertook to comply with these provisions, and the Court accepted this undertaking. - Alteration of Object Clause: Clause 20 of the Scheme involved changes to the object clause of the Memorandum of Association. Compliance with Section 40 read with Section 18 of the Companies Act, 1956, was necessary. The Petitioners agreed to file the amended Memorandum of Association along with Form No. 21 with the Registrar of Companies, and the Court accepted this undertaking. The Regional Director and the Official Liquidator were satisfied with these undertakings, ensuring compliance with the statutory requirements. 3. Dissolution of the Transferor Company The Official Liquidator's report confirmed that the Transferor Company's affairs were conducted appropriately, and there were no objections to its dissolution. Consequently, the Court ordered the dissolution of the Transferor Company as part of the Scheme's implementation. SIGNIFICANT HOLDINGS The Court made several significant determinations: - The Scheme of Amalgamation is fair, reasonable, and not contrary to public policy, satisfying the requirements under Sections 391 to 394 of the Companies Act, 1956. - The Petitioners' undertakings to comply with statutory requirements concerning the change of name and alteration of the object clause were accepted, ensuring compliance with the Companies Act, 1956. - The dissolution of the Transferor Company was confirmed, as the Official Liquidator's report indicated proper conduct of the company's affairs. - The Court directed the Petitioners to lodge a copy of the order and the Scheme with the concerned authorities for stamp duty adjudication and to file the necessary documents with the Registrar of Companies electronically and physically. - Costs were imposed on the Petitioners to be paid to the Regional Director and the Official Liquidator within a specified timeframe.
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2013 (2) TMI 945
1. ISSUES PRESENTED and CONSIDERED The core legal questions considered in this judgment are: - Whether the winding-up petition filed by the petitioner is barred by limitation under the Limitation Act, 1963.
- Whether the respondent company's debt is bona fide disputed, thus affecting the applicability of Section 433 of the Companies Act, 1956.
- Whether the financial status of the respondent company should influence the decision to wind it up.
- Whether the acknowledgment of debt by the respondent affects the limitation period for filing the winding-up petition.
- Whether the procedural defects in filing the winding-up petition affect its validity.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Limitation Period for Winding-Up Petition - Legal Framework and Precedents: The Limitation Act, 1963, specifically Articles 14 and 15, and Section 18 regarding acknowledgment of debt, are relevant. The Companies Act, 1956, Section 433, addresses the inability to pay debts.
- Court's Interpretation and Reasoning: The court analyzed whether the petition was filed within the three-year limitation period from the last acknowledgment of debt. The court considered the acknowledgment of debt by the respondent in August 1998 as extending the limitation period.
- Key Evidence and Findings: The respondent acknowledged its debt in writing on August 31, 1998, and promised to pay in installments, which extended the limitation period.
- Application of Law to Facts: The court found that the petition was filed within the limitation period for the last installment due in February 1999, but not for earlier installments.
- Treatment of Competing Arguments: The respondent argued that the petition was time-barred, while the petitioner contended that the acknowledgment extended the limitation period.
- Conclusions: The court concluded that the petition was timely for the February 1999 installment but time-barred for earlier claims.
Issue 2: Bona Fide Dispute of Debt - Legal Framework and Precedents: Section 433 of the Companies Act, 1956, and relevant case law on bona fide disputes.
- Court's Interpretation and Reasoning: The court examined the respondent's claim of a bona fide dispute regarding the quality and timeliness of goods supplied.
- Key Evidence and Findings: The respondent raised quality issues only after receiving a legal notice, suggesting a lack of bona fide dispute.
- Application of Law to Facts: The court found the respondent's dispute to be an afterthought and not bona fide.
- Treatment of Competing Arguments: The petitioner argued that the dispute was a pretext to avoid payment, while the respondent claimed genuine issues with the goods.
- Conclusions: The court rejected the respondent's claim of a bona fide dispute.
Issue 3: Financial Status of Respondent Company - Legal Framework and Precedents: Case law on the financial status of companies as a factor in winding-up decisions.
- Court's Interpretation and Reasoning: The court considered the respondent's financial health and its ability to pay debts.
- Key Evidence and Findings: The respondent was a running, profitable company with sound financial status.
- Application of Law to Facts: The court found that the respondent's financial status weighed against winding up the company.
- Treatment of Competing Arguments: The petitioner focused on the debt, while the respondent highlighted its profitability and employment contributions.
- Conclusions: The court favored not winding up the company due to its financial health.
Issue 4: Acknowledgment of Debt and Limitation - Legal Framework and Precedents: Section 18 of the Limitation Act, 1963, regarding acknowledgment of debt.
- Court's Interpretation and Reasoning: Acknowledgment of debt in writing before the expiry of the limitation period extends the period.
- Key Evidence and Findings: The respondent's acknowledgment in August 1998 extended the limitation period for the February 1999 installment.
- Application of Law to Facts: The court applied Section 18 to extend the limitation period for the last installment.
- Treatment of Competing Arguments: The petitioner argued for extension, while the respondent contested it.
- Conclusions: The court upheld the extension of the limitation period for the February 1999 installment.
Issue 5: Procedural Defects in Filing - Legal Framework and Precedents: Rules regarding the filing of petitions and procedural compliance.
- Court's Interpretation and Reasoning: Procedural defects do not affect the substantive rights if corrected timely.
- Key Evidence and Findings: The petition was re-filed after correcting procedural defects.
- Application of Law to Facts: The court found the procedural defects to be non-substantive.
- Treatment of Competing Arguments: The respondent argued the defects affected validity, while the petitioner corrected them.
- Conclusions: The court ruled that the procedural defects did not invalidate the petition.
3. SIGNIFICANT HOLDINGS - Verbatim Quotes of Crucial Legal Reasoning: "The acknowledgment of its debt by the respondent-company in communications one after the other clearly establishes that the extensions were sought by the respondent-company as it was in financial crisis and unable to pay the due amount."
- Core Principles Established: Acknowledgment of debt extends the limitation period; procedural defects, if corrected, do not invalidate petitions; financial health of a company is a significant factor in winding-up decisions.
- Final Determinations on Each Issue: The winding-up petition was partly time-barred but valid for the February 1999 installment; the debt was not bona fide disputed; the company's financial status weighed against winding up; procedural defects were non-substantive.
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2013 (2) TMI 944
1. ISSUES PRESENTED and CONSIDERED The core legal issues considered in this judgment are: - Whether the petitioning creditor is entitled to the claimed amount for unpaid episodes of a television serial.
- Whether the company's counterclaim for damages related to an alleged fraudulent overvaluation of film rights can offset the petitioning creditor's claim.
- The appropriate legal remedy and procedural steps to resolve the dispute between the petitioning creditor and the company.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to Payment for Unpaid Episodes - Relevant Legal Framework and Precedents: The court considered the contractual obligation of the company to pay for the episodes produced by the petitioning creditor, as outlined in the agreement between the parties.
- Court's Interpretation and Reasoning: The court noted that the company admitted to the unpaid amount for episodes 217 to 317 and did not present a defense against this claim.
- Key Evidence and Findings: The petitioning creditor provided a chart indicating the telecast dates and invoices for the unpaid episodes, which the company did not dispute.
- Application of Law to Facts: The court found that the petitioning creditor was entitled to payment for the unpaid episodes as the company had acknowledged the debt in its reply to the statutory notice.
- Treatment of Competing Arguments: The company attempted to offset the claim with a counterclaim for damages, which the court found to be unliquidated and not a valid defense against the petitioning creditor's acknowledged claim.
- Conclusions: The court concluded that the petitioning creditor is entitled to the claimed amount for the unpaid episodes.
Issue 2: Company's Counterclaim for Damages - Relevant Legal Framework and Precedents: The court considered the nature of the counterclaim as unliquidated damages, which cannot be used to offset a liquidated claim.
- Court's Interpretation and Reasoning: The court reasoned that the company's counterclaim was a separate issue and did not provide a defense to the petitioning creditor's claim for unpaid episodes.
- Key Evidence and Findings: The company alleged overvaluation of film rights and claimed damages, but this was not directly related to the petitioning creditor's claim.
- Application of Law to Facts: The court found that the counterclaim could be pursued separately but did not affect the current proceedings regarding unpaid episodes.
- Treatment of Competing Arguments: The court acknowledged the company's right to pursue its counterclaim but emphasized that it must be addressed in separate proceedings.
- Conclusions: The counterclaim for damages does not offset the petitioning creditor's claim and should be pursued independently.
Issue 3: Legal Remedy and Procedural Steps - Relevant Legal Framework and Precedents: The court considered the procedural aspects of admitting the petition and the requirement for security deposit.
- Court's Interpretation and Reasoning: The court ordered the company to furnish security for the petitioning creditor's claim to stay the petition, allowing for further proceedings on the counterclaim.
- Key Evidence and Findings: The court noted the company's admission of the debt and the need for security to protect the petitioning creditor's interests.
- Application of Law to Facts: The court applied procedural rules to ensure that the petitioning creditor's claim is secured while allowing the company to pursue its counterclaim.
- Treatment of Competing Arguments: The court balanced the interests of both parties by requiring a security deposit and outlining steps for future proceedings.
- Conclusions: The company must provide security for the petitioning creditor's claim, and further proceedings will depend on the outcome of related claims.
3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "Since the company's counterclaim is by way of an unliquidated sum in damages, and the company has no defence to the petitioner's claim herein, the company is permitted to furnish security to the extent of the petitioner's claim of Rs.1,41,38,347/- within a fortnight from date whereupon this petition will remain permanently stayed."
- Core Principles Established: The court established that unliquidated counterclaims cannot offset liquidated claims in the context of admitted debts. Security deposits can be used to protect creditor interests while allowing for separate adjudication of counterclaims.
- Final Determinations on Each Issue: The petitioning creditor is entitled to the claimed amount for unpaid episodes. The company's counterclaim is separate and must be pursued independently. The company is required to furnish security to stay the petition.
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2013 (2) TMI 943
Issues Involved:
1. Applicability of Section 446 of the Companies Act in voluntary winding up.
2. Validity of the sale of the company's property by GIDC.
3. Rights of the company in liquidation concerning the property.
4. Financial liabilities and entitlements of the company and GIDC.
5. Equitable relief and compensation for the parties involved.
Detailed Analysis:
1. Applicability of Section 446 of the Companies Act in Voluntary Winding Up:
The court examined whether Section 446 of the Companies Act, which restricts proceedings against a company without the court's leave, applies to voluntary winding up. It was argued that Section 446 might not apply as no court order initiated the winding up. However, the court concluded that Section 446 does apply to voluntary winding up, as the provision aims to safeguard the company's assets and ensure equitable distribution among creditors. The court referenced the Supreme Court's interpretation in the case of The Neptune Assurance Co. Ltd. to support this view, emphasizing that the objectives of Section 446 are to protect the company's assets from being dissipated through litigation.
2. Validity of the Sale of the Company's Property by GIDC:
The sale of the company's property by GIDC to respondent No.3 was contested. The court found that the sale was executed without the leave of the Company Court, violating Section 446. However, it noted that GIDC acted in bona fide, following the dismissal of the company's legal actions to prevent the sale. The court acknowledged that the sale was conducted in good faith and not with the intent to undermine the company's interests.
3. Rights of the Company in Liquidation Concerning the Property:
The court explored the nature of the company's rights in the property, which was initially held under a license agreement with GIDC. It was argued that the company had no vested interest in the property post-termination of the license. However, the court determined that the license agreement was part of a broader regulatory framework, granting the company certain rights, including the potential to convert the license into a lease upon full payment. Thus, the company retained a salable interest in the property, which should have been protected during the winding-up process.
4. Financial Liabilities and Entitlements of the Company and GIDC:
The court assessed the financial obligations between the company and GIDC. It was established that the company owed GIDC Rs. 7,51,289/- as of the eviction notice date, with interest accruing until the possession was taken over. The court ruled that GIDC should deduct this amount from the Rs. 16,48,600/- received from the sale and return the balance to the company's liquidator. This decision aimed to ensure that the company's creditors could access the remaining funds for distribution.
5. Equitable Relief and Compensation for the Parties Involved:
Considering the bona fide actions of GIDC and the subsequent investments made by respondent No.3, the court opted not to annul the sale or return the property to the company. Instead, it ordered GIDC to pay the net sale proceeds to the liquidator, with interest at 8% per annum from the date of possession until payment. This approach balanced the interests of all parties, ensuring the company's creditors received their due share while acknowledging the legitimate actions of GIDC and respondent No.3. Additionally, the court imposed a cost of Rs. 5,000/- on GIDC, payable to the liquidator, for the procedural lapses in handling the property sale.
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2013 (2) TMI 942
Issues Involved:
1. Entitlement to fees under the agreement dated 11.08.2008.
2. Alleged non-payment and winding-up petition under Sections 433, 434, and 439 of the Companies Act, 1956.
3. Dispute over the introduction of TATA Capital Ltd. as an investor.
4. Validity of the invoice and acknowledgment of debt.
5. Determination of a bona fide dispute over the debt.
6. Commercial solvency of the respondent company.
Detailed Analysis:
1. Entitlement to Fees Under the Agreement Dated 11.08.2008:
The petitioner claimed entitlement to fees under an agreement dated 11.08.2008, which provided for success fees of 3% of the gross consideration received by the respondent company from selected investors. The petitioner's role was defined as a financial advisor tasked with raising private equity finance through six phases, including transaction strategy, preparation of information memorandum, and completion of the transaction. The court noted that the agreement stipulated that success fees would be payable upon the signing of a definitive agreement and actual receipt of investment.
2. Alleged Non-Payment and Winding-Up Petition Under Sections 433, 434, and 439 of the Companies Act, 1956:
The petitioner filed a winding-up petition under Sections 433, 434, and 439, alleging non-payment of fees for services rendered. The petitioner issued a statutory notice on 03.11.2010, which the respondent company replied to, denying liability and contesting the claim. The court examined whether the alleged debt was an admitted debt or a bona fide disputed debt, which is crucial for the maintainability of a winding-up petition.
3. Dispute Over the Introduction of TATA Capital Ltd. as an Investor:
The petitioner claimed to have introduced TATA Capital Ltd. to the respondent company, leading to an investment of Rs. 25 Crores. The respondent company disputed this, asserting that TATA Capital Ltd. was already known to them and had previously advanced a short-term loan. The court found no conclusive evidence that the petitioner completed the phases of work as per the agreement or that the investment was a direct result of the petitioner's efforts.
4. Validity of the Invoice and Acknowledgment of Debt:
The petitioner presented an invoice dated 21.12.2009 for Rs. 75 Lacs, claiming it was for services rendered in raising funds from TATA Capital Ltd. and Aureous India Advisors Limited. The respondent company challenged the validity of this invoice, arguing inconsistencies and lack of evidence of actual receipt of funds from the alleged investors. The court noted that the invoice was for sanction, not actual receipt, and the email acknowledgment cited by the petitioner predated the invoice.
5. Determination of a Bona Fide Dispute Over the Debt:
The court examined whether there was a bona fide dispute over the claimed debt. It referred to established legal principles that a petition for winding up should not be used to enforce a disputed debt. The court found that the respondent company raised substantial grounds for disputing the debt, including the nature of the finance (equity vs. debt) and the petitioner's role in securing it. The court concluded that the dispute was bona fide and substantial, warranting dismissal of the petition.
6. Commercial Solvency of the Respondent Company:
The respondent company argued that it was a profit-making entity and a going concern, as evidenced by its financial statements. The court considered the company's commercial solvency as a factor, noting that winding-up petitions should not be used as a tool to pressure solvent companies into paying disputed debts. The court found no evidence that the respondent company was unable to pay its debts or had lost its financial substratum.
Conclusion:
The court dismissed the petition, concluding that the alleged debt was a bona fide disputed debt and not an admitted debt. The petitioner failed to demonstrate entitlement to fees under the agreement or that the respondent company received private equity finance as claimed. The court emphasized that winding-up proceedings should not be used to enforce disputed debts and that the respondent company remained a solvent and going concern.
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2013 (2) TMI 941
Issues:
1. Alleged excessive and discriminatory deposit structure imposed by the opposite party for membership upon subsidiaries of Regional Stock Exchanges (RSEs).
2. Discriminatory conditions imposed on subsidiaries of RSEs in comparison to other corporate members.
3. Abuse of dominant position by the opposite party in the securities market.
4. Praying for an investigation under section 26(1) to scrutinize the conduct of the opposite party under section 4 of the Act.
Analysis:
Issue 1: Alleged Excessive and Discriminatory Deposit Structure
The informant, a subsidiary of a Regional Stock Exchange (RSE), alleged that the opposite party, a national level stock exchange, imposed an excessive and discriminatory deposit structure for membership. The informant highlighted that the deposit amount required for membership was significantly higher for RSE subsidiaries compared to other corporate members. Additionally, stringent conditions were imposed on RSE subsidiaries, such as restrictions on trading in their own name/account and limitations on sub-broker trading. The informant contended that these conditions were discriminatory and requested an investigation by the Commission.
Issue 2: Discriminatory Conditions
The informant argued that the conditions imposed by the opposite party on RSE subsidiaries were discriminatory and constituted an abuse of dominant position in the securities market. The informant pointed out differences in treatment between RSE members and other corporate members, including restrictions on trading activities and sub-broker permissions. The informant claimed that these differential treatments were unjust and requested the Commission to scrutinize the conduct of the opposite party under section 4 of the Act.
Issue 3: Abuse of Dominant Position
The Commission assessed the informant's submissions and determined that the opposite party held a dominant position in the securities market. However, the Commission clarified that dominance itself is not prohibited under the Competition Act, 2002; rather, it is the abuse of dominance that is prohibited. The Commission acknowledged the differences in treatment between RSE members and other corporate members, emphasizing the regulatory framework set by SEBI to revive regional stock exchanges. The Commission highlighted the risk assessment criteria and risk management systems in place to ensure market integrity and investor protection.
Issue 4: Investigation and Conclusion
After thorough analysis, the Commission concluded that the conditions imposed by the opposite party on RSE members, including the informant, were necessary for investor protection. The Commission found that the transactions between the opposite party and RSE members were distinct from those with ordinary corporate members due to the unique structure and regulatory requirements of RSE subsidiaries. Consequently, the Commission determined that there was no prima facie case under section 4 of the Act. The case was closed under section 26(2) of the Act, and the decision was communicated to all concerned parties.
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2013 (2) TMI 940
Issues involved:
The issue involves the denial of the benefit of Second Higher Pay Scale to a Junior Engineer based on a criminal prosecution and subsequent acquittal.
Judgment Details:
Issue 1: Denial of Second Higher Pay Scale
The petitioner, a Junior Engineer, was denied the benefit of Second Higher Pay Scale due to a criminal prosecution under the Prevention of Corruption Act, which led to suspension. After being acquitted and reinstated, the petitioner sought the higher pay scale, which was rejected pending an appeal against the acquittal order. The petitioner argued that an appeal against acquittal does not constitute a continuation of the criminal case, thus the benefit should be granted.
Issue 2: Interpretation of Judicial Proceedings
The court analyzed the definition of "judicial proceeding" under Section 2(i) of the Criminal Procedure Code, emphasizing that evidence must be legally taken on oath for a proceeding to be considered judicial. It was clarified that an appeal or revision against an acquittal does not amount to a continuation of the trial, reinforcing the presumption of innocence. The court cited relevant case law to support this interpretation.
Issue 3: Applicability of Circular
The court discussed the applicability of a circular dated 30.6.1994, which outlined procedures for cases involving ad hoc promotions and employees facing criminal prosecution or departmental inquiries. It was noted that the circular did not restrict the grant of promotion based on acquittal in criminal cases. The court agreed with a previous decision that employees acquitted of charges should not be denied benefits based on pending appeals.
In conclusion, the court allowed the petition, directing the respondents to extend the benefit of Second Higher Pay Scale to the petitioner within 45 days, emphasizing that the acquittal should entitle the petitioner to the benefits he was found fit for previously.
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2013 (2) TMI 939
Issues involved: Challenge to order of Central Administrative Tribunal dismissing Original Application u/s Article 227 of the Constitution regarding outsourcing of services by Central Board of Direct Taxes.
Summary:
The petitioners, claiming to be daily wage workers, challenged the decision of the Central Board of Direct Taxes to outsource services like data entry, typing, cleaning, and security on a contract basis. The decision was based on the Department of Personnel & Training instruction and General Finance Rules permitting outsourcing for economy and efficiency. The petitioners feared discontinuation of their services and filed Original Application No.746/2011 before the Tribunal, which was dismissed. The Tribunal held that the decision to outsource was a policy decision in line with GFR-178 and not open to challenge solely on the grounds of potential retrospective enforcement affecting employment. As no specific removal order was issued to the petitioners, the application was deemed premature. The petitioners failed to provide appointment orders, and the respondents confirmed no such orders were issued. The nature of the petitioners' relationship with the respondents regarding service terms was unclear, and the respondents were within their rights to outsource services for economy and efficiency. The petition was dismissed, and the interim order in favor of the petitioners was vacated.
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2013 (2) TMI 938
Issues Involved:
1. Deduction of various professional and legal expenses u/s 48(i) of the Income Tax Act.
2. Charging of interest u/s 234C.
3. Determination of whether the transaction was a family settlement exempt from capital gains tax.
Summary of Judgment:
Issue 1: Deduction of Various Professional and Legal Expenses u/s 48(i)
The assessee claimed deductions for various expenses incurred in connection with the transfer of shares, which were partly allowed by the CIT(A). The Tribunal examined the allowability of these expenses under section 48(i) of the Income Tax Act, which permits deduction of expenditure incurred wholly and exclusively in connection with the transfer of a capital asset.
- Payment to M/s. S.R. Halbe & Associates: The Tribunal upheld the CIT(A)'s decision to allow the deduction of Rs. 3,13,200/- for reimbursement of travel, lodging, and boarding expenses, as these were incidental to the proceedings before the CLB and directly connected with the transfer of shares.
- Payment to M/s. Churu Trading Co. Pvt. Ltd. and Rabo India Securities Pvt. Ltd.: The Tribunal allowed the deduction of Rs. 8.5 crores paid to M/s. Churu Trading Co. Pvt. Ltd., recognizing their role in strategizing to enhance the value of shares before their transfer. However, the payment of Rs. 2,50,000/- to Rabo India Securities Pvt. Ltd. was not allowed, as their involvement was limited and not directly connected to the transfer of shares.
- Payment to Mrs. Bina Gupta, Advocate: The Tribunal allowed the deduction of Rs. 8,75,000/- for services rendered in connection with the transfer of shares but disallowed Rs. 6,65,000/- incurred in the initial stages of the CLB proceedings, as these were not directly related to the transfer.
- Payment to Mr. Sudipto Sarkar, Advocate: The Tribunal allowed the deduction of Rs. 1,50,000/- as his services were directly connected with the transfer of shares.
- Payment to Mr. Dayal Saran, Advocate: The Tribunal upheld the CIT(A)'s decision to allow the deduction of Rs. 5,00,000/- for consultation services directly related to the transfer of shares.
Issue 2: Charging of Interest u/s 234C
The Tribunal dismissed the assessee's appeal against the charging of interest u/s 234C, citing the mandatory nature of interest under sections 234A, 234B, and 234C as upheld by the Supreme Court in the case of Karanvir Singh Gossal vs. CIT. The Tribunal found no sufficient cause for the delay in paying advance tax.
Issue 3: Determination of Family Settlement
The Tribunal dismissed the assessee's claim that the transaction was a family settlement exempt from capital gains tax. The Tribunal noted that the assessee had voluntarily declared the capital gain and paid taxes, and the final order of the CLB was not for a family settlement but for resolving a business dispute between two groups.
Conclusion:
- Revenue's Appeals (ITA Nos. 405, 404, 406, 407 & 466/Agr/2011): Dismissed.
- Assessee's Appeals (ITA Nos. 348 & 349/Agr/2011): Partly allowed.
(Order pronounced in the open Court)
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2013 (2) TMI 937
The Supreme Court of India in 2013 (2) TMI 937 - SC Order, with judges Mr. H.L. Gokhale and Mr. Madan B. Lokur, JJ., condoned delay, admitted appeal, and scheduled it to be heard with Civil Appeal Nos. 5926-5927 of 2011.
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2013 (2) TMI 936
Issues Involved:
1. Unauthorized work as Invigilator.
2. Prevention of reporting the incident.
3. Procedural fairness in the departmental inquiry.
Summary:
1. Unauthorized Work as Invigilator:
The Appellant, a Junior Assistant in the Tamil Nadu Public Service Commission (TNPSC), was sanctioned unearned leave from 12.2.1990 to 25.2.1990. During this period, he allegedly worked as an Invigilator at an examination center. The charges included that he "had gone to the examination hall unauthorisedly on the pretext of assisting the Chief Invigilator while he was on Unearned Leave on Private Affairs" and "acted as Invigilator while he was on leave." The Appellant denied these charges, presenting an appointment letter as proof of his authorization.
2. Prevention of Reporting the Incident:
During the examination, six candidates were mistakenly given afternoon question papers in the morning session. The Chief Invigilator, Syed Abdul Kareem, was prevented from reporting the incident by the Appellant, as per the charge. The Chief Invigilator's statements to the Controller of Examinations and the Inspector, Crime Investigation Department, indicated that the Appellant had asked him not to report the mix-up to avoid repercussions on TNPSC staff.
3. Procedural Fairness in the Departmental Inquiry:
The departmental inquiry under Rule 17(b) of the Tamil Nadu Civil Services (Classification, Control and Appeal) Rules found the Appellant guilty of the charges. The Appellant contended that he was not given a fair opportunity to defend himself, as the statements of the Chief Invigilator were not initially provided to him, and his request to cross-examine witnesses was denied. The Enquiry Officer's report relied heavily on the Chief Invigilator's statements without corroborating evidence.
Judgment:
The Supreme Court held that the inquiry was not conducted in accordance with the principles of natural justice. The Appellant had no role in handling or distributing the question papers, and the Chief Invigilator had admitted to appointing substitute invigilators, including the Appellant. The Court found that the High Court erred in upholding the punishment as the findings were not supported by tangible evidence.
Conclusion:
The appeal was allowed, and the orders of punishment and the appellate order were quashed. The Appellant was entitled to all consequential benefits, including arrears of salary and retiral benefits. The TNPSC was directed to pay the due amounts within four months.
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2013 (2) TMI 935
Issues Involved:
1. Freedom of Speech vs. Right to Fair Trial
2. Prejudicial Impact of Media Publications on Court Proceedings
3. Balancing Public Interest and Individual Rights
Summary:
1. Freedom of Speech vs. Right to Fair Trial:
The judgment discusses the fundamental right to freedom of speech u/s Article 19(1)(a) of the Constitution of India and its limitations u/s Article 19(2). It highlights the need to balance this right with the right to a fair trial, emphasizing that no right is absolute. The court refers to various legal scholars and precedents to underline that freedom of speech must be reconciled with the impartial administration of justice.
2. Prejudicial Impact of Media Publications on Court Proceedings:
The court examines the impact of media publications on the impartiality of court proceedings. It categorizes prejudicial publications into those affecting the court's impartiality and those impairing the court's ability to determine true facts. The judgment cites several cases where publications about the character of the accused or alleged confessions were held to cause prejudice, thereby constituting contempt of court. The court stresses that publications must be scrutinized to determine if they pose a real and substantial danger of prejudice to ongoing trials.
3. Balancing Public Interest and Individual Rights:
The judgment discusses the need to balance the public's right to be informed against the individual's right to a fair trial. It references the case of Attorney General v. Times Newspapers Ltd., where the House of Lords emphasized that public interest in matters of national concern could outweigh private interests. The court notes that public figures, especially those involved in state affairs, are subject to higher scrutiny and public gaze.
Case-Specific Details:
The respondents, including a former Chief Minister, sought to injunct the appellant from telecasting a program related to their conviction in a recruitment scam. The trial court granted an ad-interim injunction, reasoning that media coverage could prejudice the respondents' appeal and applications for suspension of sentence. However, the High Court found that the trial court did not adequately demonstrate a substantial risk of prejudice. The High Court reviewed the transcript and excerpts of the proposed telecast and found no prima facie derogatory content or discussion on the merits of the case. Consequently, the High Court set aside the trial court's order, allowing the appeal and emphasizing that the application for interim injunction should be decided afresh without prejudice from the observations made.
Conclusion:
The appeal is allowed, and the impugned order dated February 22, 2013, is set aside. The application for interim injunction will be decided by the learned Single Judge uninfluenced by the High Court's observations. No costs are awarded.
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2013 (2) TMI 934
Issues involved: The judgment deals with the denial of deduction under section 80IB in respect of various types of income by the Assessing Officer, which was upheld by the CIT(A), for the assessment year 2008-2009.
1. Denial of deduction under section 80IB:
The only issue in the appeal was the upholding of the Assessing Officer's action in denying deduction under section 80IB for income from interest, job work charges, sale of scrap, and sundry balance written off totaling Rs.3,02,483.
2. Interest income on fixed deposit:
The Tribunal found that interest income earned on a fixed deposit in a bank kept as security with the Electricity Board cannot be considered as derived from the business activity. Citing the case of Pandiyan Chemicals, it was held that such interest income should be assessed as income from other sources, not eligible for deduction under section 80IB.
3. Income from job work, sale of scrap, and sundry balance written off:
Regarding income from job work, sale of scrap, and sundry balance written off, the Tribunal referred to relevant case laws such as Sadhu Forging Ltd. and Impel Forge & Allied Industries Ltd. The Tribunal directed the Assessing Officer to allow deduction under section 80IB for job work charges and sale of scrap, amounting to Rs.1,09,800. Additionally, it held that sundry balance written off should also be eligible for deduction under section 80IB as it forms part of the business income under section 41(1) of the Act.
Conclusion:
The Tribunal allowed the appeal in part, directing the Assessing Officer to allow deduction under section 80IB for job work charges, sale of scrap, and sundry balances written off, but not for the interest income.
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2013 (2) TMI 933
Issues involved: Interpretation of tax law u/s 2(24), 2(47), and 2(14) of the Income Tax Act regarding taxation of amount received by a society for granting the right to develop property.
Summary:
Issue 1: Taxability of amount received by society for granting developer rights
The High Court of Bombay heard an appeal by the Revenue for the Assessment Year 1997-98. The main question raised was whether the Tribunal was correct in holding that the amount received by the society cannot be taxed in the hands of the assessee society. The Revenue sought to tax the society for the amount received on transfer of Transferable Development Rights (TDR). The Tribunal found that the amount received on the transfer of TDR was actually received by the members of the Respondent Society. These members had offered the amounts received by them to tax in their individual returns. The Tribunal also noted that the individual members who received amounts from the developers and offered them for tax had their orders placed before the Tribunal. Since the decision was based on a factual finding that was not challenged by the Revenue as being perverse, the High Court saw no reason to entertain the proposed question of law.
Therefore, the appeal was dismissed with no order as to costs.
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2013 (2) TMI 932
Issues involved:
The judgment involves the refusal of the High Court to grant leave against the judgment of acquittal by the State of Rajasthan, based on the prosecution's case under Section 363, 366, 376, and 323 of the Indian Penal Code against the accused.
Details of the Judgment:
Issue 1: Allegation of Rape and Acquittal
The prosecution was initiated based on a first information report alleging that the victim, Kirti Chauhan, was subjected to sexual intercourse against her consent by the accused. Despite charges under various sections of the Indian Penal Code, the trial court acquitted the accused due to inconsistencies in the victim's testimony, lack of supporting evidence, and contradictions in the statements of witnesses.
Issue 2: Appeal and Refusal of Leave
The State of Rajasthan appealed the acquittal, seeking leave from the High Court. However, the High Court declined to grant leave, stating that the acquittal was based on a proper appreciation of the evidence available on record, leading to the State's further appeal to the Supreme Court.
Issue 3: Legal Position on Sole Testimony of Prosecutrix
The appellant argued that the trial court erred in acquitting the accused solely based on the victim's testimony, emphasizing that conviction can be based on the sole testimony of the prosecutrix if found credible. Citing legal precedent, the appellant contended that no corroboration is required for such testimony.
Judgment and Conclusion
The Supreme Court upheld the trial court's decision, stating that the victim's testimony was unreliable and lacked corroboration. Noting contradictions in her statements and the absence of supporting evidence, the Court found it unsafe to base the conviction solely on her testimony. Consequently, the appeal was dismissed, affirming the High Court's refusal to grant leave against the judgment of acquittal.
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2013 (2) TMI 931
Issues Involved:
The appeal against the order of the High Court of Delhi setting aside the Additional District Judge's order and allowing the revision filed by the Respondent.
Brief Facts:
The Appellant, a proprietorship concern in interior decoration and construction work, and the Respondent, a partnership firm dealing in building materials, had transactions where the Appellant allegedly owed Rs. 4,35,250.18 to the Respondent. Despite demands and legal notices, the outstanding amount was not paid, leading to a suit for recovery. The Respondent filed applications under Order VII Rule 14 and Order XVIII Rule 17 of the Code of Civil Procedure, seeking to place documents on record and recall a witness for additional evidence, which were dismissed by the Additional District Judge, Delhi.
Consideration of Applications:
The main point for consideration was whether the Plaintiff had a case for allowing the applications under Order XVIII Rule 17 and Order VII Rule 14 of the Code of Civil Procedure. The trial Court dismissed the applications, but the High Court set aside this decision, allowing the Plaintiff to file bills and recall a witness, subject to payment of costs.
Legal Provisions and Precedents:
The judgment referred to relevant provisions of the Code of Civil Procedure, including Order VII Rule 14, Order XVIII Rule 17, and Section 151. It also cited the case of Vadiraj Naggappa Vernekar v. Sharadchandra Prabhakar Gogate and K.K. Velusamy v. N. Palanisamy to establish principles regarding recalling witnesses and additional evidence.
Decision and Analysis:
The Supreme Court analyzed the facts and legal principles, emphasizing that the power to recall witnesses should be sparingly exercised and not to fill gaps in evidence. Despite the High Court's decision, the Supreme Court found that the Plaintiff's applications were belated and aimed at overcoming deficiencies in its case. Therefore, the impugned order was set aside, and the trial Court's order was restored, allowing the appeal with no costs.
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2013 (2) TMI 930
Seeking to modify the punishment of removal from service - illegal gratification - demoted from the post of A.S.I. to Head Constable - Appellant and Jagdish Prasad Tiwari were dismissed from service - Doctrine of Equality - HELD THAT:- We have gone through the inquiry report placed before us in respect of the appellant as well as Constable Arjun Pathak. The inquiry clearly reveals the role of Arjun Pathak. It was Arjun Pathak who had demanded and received the money, though the tacit approval of the appellant was proved in the inquiry. The charge levelled against Arjun Pathak was more serious than the one charged against the appellant. Both appellants and other two persons as well as Arjun Pathak were involved in the same incident. After having found that Arjun Pathak had a more serious role and, in fact, it was he who had demanded and received the money, he was inflicted comparatively a lighter punishment. At the same time, appellant who had played a passive role was inflicted with a more serious punishment of dismissal from service which, in our view, cannot be sustained.
We are of the view the Doctrine of Equality also applies to the facts of the present case. We have indicated that the action of the Disciplinary Authority imposing a comparatively lighter punishment to the co-delinquent Arjun Pathak and at the same time, harsher punishment to the appellant cannot be permitted in law, since they were all involved in the same incident. Consequently, we are inclined to allow the appeal by setting aside the punishment of dismissal from service imposed on the appellant and order that he be reinstated in service forthwith. Appellant is, therefore, to be re-instated from the date on which Arjun Pathak was re-instated and be given all consequent benefits as was given to Arjun Pathak.
Ordered accordingly. However, there will be no order as to costs.
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2013 (2) TMI 929
Issues Involved:
1. Deliberate acts of omission and commission with culpable intention of State functionaries to abuse NRHM funds.
2. Irregularities in purchases of medicines, equipment, and other material relating to NRHM.
3. Omission of the State to take prompt corrective measures even after being fully acquainted with the irregularities being committed in the utilization of NRHM funds.
Summary:
Issue 1: Deliberate Acts of Omission and Commission with Culpable Intention
The Court directed the CBI to conduct a preliminary enquiry into the execution and implementation of the National Rural Health Mission (NRHM) funds in Uttar Pradesh due to allegations of gross abuse and misappropriation by State functionaries. The CBI's investigation revealed a conspiracy to award contracts to M/s. Surgicoin Medequip Pvt. Ltd. for supplying O.T. Modular fitted with ACs. Accused individuals, including Dr. Pradeep Shukla, Babu Singh Kushwaha, Devendra Mohan, and Ravindra Rai, were implicated in demanding and accepting bribes to facilitate these contracts. The Court found sufficient evidence to support the allegations of conspiracy and corruption, leading to significant financial losses to the State exchequer.
Issue 2: Irregularities in Purchases
The charge-sheets detailed various irregularities in the procurement process, including the manipulation of tender processes, acceptance of exorbitant rates without market surveys, and the use of forged documents. Specific instances included the preparation of tailored specifications to benefit M/s. Surgicoin Medequip Pvt. Ltd., and the publication of tenders in limited newspapers to restrict competition. Witnesses corroborated these findings, highlighting the inflated costs and the lack of transparency in the procurement process.
Issue 3: Omission of the State to Take Prompt Corrective Measures
The Court noted that despite the detection of large-scale irregularities, no corrective action was taken by the State. The investigation revealed that the State Health Mission, responsible for overseeing the NRHM implementation, failed to convene regular meetings and exercise proper oversight. The Court criticized the selective investigation by the CBI, which did not fully explore the roles of all individuals involved in the NRHM's administration and implementation.
Conclusion:
The Court dismissed the applications u/s 482 Cr.P.C. filed by the accused, finding that the charge-sheets contained sufficient evidence to proceed with the trial. The Court emphasized the need for a thorough investigation and prompt trial to address the misuse of NRHM funds. Additionally, the Court directed the State Government to consider constituting special courts to handle cases involving large-scale misappropriation of government funds.
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2013 (2) TMI 928
Issues involved: Interpretation of whether investigating officer should register FIR before investigation.
Judgment Summary:
Issue 1: Registration of FIR before investigation
The judgment discusses conflicting views on whether investigating officer must register FIR before starting investigation. The case involved instances where investigating officer seized money without registering FIR first. The Single Judge disagreed with the view that registration of FIR is a condition precedent to investigation and referred the matter to a Division Bench for consideration. The judgment emphasized the importance of following proper protocol in trap cases, including recording complaint, sending FIR to court, and conducting scientific tests to corroborate allegations of bribery.
Issue 2: Protocol in trap cases
The judgment outlined the standard protocol in trap cases, involving recording complaints, using panch witnesses, conducting color tests with phenolphthalein powder, and ensuring proper handling of tainted currency notes. It highlighted the role of panch witnesses in corroborating the version of demand and acceptance of bribe money. The judgment emphasized the necessity of following established procedures to prevent misuse of investigative powers and maintain integrity in public administration.
Issue 3: Timing of FIR registration
The judgment clarified that the timing of FIR registration depends on the circumstances of each case. While immediate registration is essential in cases of offenses committed in the presence of a police officer, in other situations, FIR should be registered promptly to prevent manipulation of facts. The judgment concluded that conducting investigations through surprise raids without FIR in trap cases is inappropriate and emphasized the need for proper education of investigating officers on legal requirements.
In conclusion, the judgment remitted the matter to the Single Judge for further proceedings in accordance with the law and directed the Home Secretary and Director General of Police to comply with the observations regarding investigation protocols.
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2013 (2) TMI 927
Issues involved:
The issues involved in this judgment are the validity of initiation of reassessment proceedings u/s 148 and the challenge against the action of the Assessing Officer (AO) to reopen the proceedings under section 148.
Validity of initiation of reassessment proceedings:
The appellant challenged the initiation of reassessment proceedings, arguing that the AO's reasons for reopening the assessment were based on issues that had already been addressed during the original assessment. The appellant contended that the AO's actions amounted to a change of opinion rather than a valid reason to believe that income had escaped assessment. The appellant cited relevant case laws such as CIT vs Kelvinator of India Ltd. and ACIT vs ICICI Securities Primary Dealership Ltd. to support their argument. The appellant emphasized that the AO's attempt to reassess the issues without new material was unjustified and illegal. The Appellate Tribunal agreed with the appellant, quashing the reassessment proceedings initiated by the AO.
Challenge against the action of the AO:
The appellant further argued that even on the second issue regarding the differential of tax deducted at source, the AO's attempt to reopen the assessment was not valid. The appellant referenced the case of CIT vs Bombay Gas Co. Ltd. to support their contention that the reassessment based on TDS differentials was not justified. The Appellate Tribunal concurred with the appellant's arguments, holding that without a foundation of cogent material showing prima facie escapement of income, the reassessment proceedings could not be sustained. The Tribunal emphasized that issues already examined during the regular assessment could not be reopened without new material. Consequently, the reassessment proceedings were quashed, and the appeal filed by the assessee was allowed.
This judgment highlights the importance of having valid reasons to initiate reassessment proceedings and the limitations on the AO's ability to reopen assessments based on issues already addressed during the original assessment. The Tribunal's decision underscores the need for new material demonstrating income escapement to justify reassessment actions.
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