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1992 (3) TMI 369
Issues Involved:
1. Whether the terms 1 and 7 of the Guarantee Bond override the provisions of sections 133, 134, 139, and 141 of the Contract Act?
2. Whether an acknowledgment or execution of the promissory note by the principal debtor will save the limitation against the sureties-defendant Nos. 2 and 3, though they are neither the parties to the execution nor given their consent?
3. Whether the period of limitation would start running only upon the demand being made to the principal debtor as well as guarantors, thereby extending the statutory provisions of limitation of 3 years?
Issue-wise Detailed Analysis:
1. Override of Guarantee Bond Terms Over Contract Act Provisions:
The court examined terms 1 and 7 of the Guarantee Bond against sections 133, 134, 139, and 141 of the Indian Contract Act. Term 1 stated that the guaranteed amount would be payable upon notice served to the guarantors. Term 7 allowed the creditor to vary the terms of the contract with the principal debtor without discharging the guarantors. The court found that these terms could not override statutory provisions. Sections 133 and 135 prevent a creditor from varying the contract terms or giving time to the principal debtor without the surety's consent. The court cited precedents, including the case of State Bank of India vs. Machine Well Industries, which held that statutory rights of a surety cannot be abridged by contractual provisions unless explicitly allowed by law.
2. Acknowledgment and Limitation Against Sureties:
The court addressed whether the principal debtor's acknowledgment of debt would extend the limitation period against the sureties. The principal debtor executed a promissory note on 6-10-1974, but the sureties were not parties to this acknowledgment. The court referenced several cases, including Federal Bank of India Ltd. vs. Som Dev Grover, which held that an acknowledgment by the principal debtor does not extend the limitation period against the surety unless explicitly stated in the surety's contract. The court concluded that the original contract ceased to exist under section 62 of the Indian Contract Act due to the new agreement between the creditor and the principal debtor, which the sureties did not consent to.
3. Period of Limitation and Demand:
The court considered whether the limitation period would start only upon the demand being made to the principal debtor and guarantors. The appellant argued that the cause of action arose only when the demand for payment was made. However, the court referred to Article 21 and 35 of the Limitation Act, which state that the limitation period begins from the date of the loan or promissory note, not from the date of demand. The court emphasized that extending the limitation period based on the demand would render the statutory provisions redundant. The court cited V. E. A. Annamalai Chettiar vs. S. V. VS. Veerappa Chettiar, which differentiated between deposits and loans, emphasizing that the limitation period for loans begins from the date of execution.
Conclusion:
The court dismissed the appeal, holding that the terms of the Guarantee Bond could not override statutory provisions, the acknowledgment by the principal debtor did not extend the limitation period against the sureties, and the limitation period began from the date of the loan or promissory note, not from the date of demand. The respondents/sureties were discharged from their liabilities, and the suit against them was barred by limitation.
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1992 (3) TMI 368
Issues:
Challenge to the new policy of auction-cum-tender for settlement of liquor shops for the year 1991-92.
Validity of the change in policy by the State Government.
Application of promissory estoppel and Article 14 of the Constitution.
Return of National Saving Certificates taken as security under the earlier policy.
Analysis:
Challenge to the new policy of auction-cum-tender for settlement of liquor shops for the year 1991-92:
The appellants challenged the new policy on three grounds. Firstly, they argued that the Excise Act and Rules do not provide for revoking or curtailing a license except as per specific provisions. They contended that the five-year license granted to them could not be made ineffective by the new auction-cum-tender policy. Secondly, they invoked the principle of promissory estoppel, claiming that the government was estopped from changing the policy. Lastly, they alleged that the exercise of power was arbitrary, irrational, and violated Article 14 of the Constitution. The High Court rejected these contentions, and the Supreme Court upheld this decision, agreeing with the reasoning provided by the High Court.
Validity of the change in policy by the State Government:
The State Government changed its policy from annual renewal to auction-cum-tender method for settlement of liquor shops for the year 1991-92. The appellants argued that this change was not a valid change in policy. However, the Supreme Court disagreed, stating that the government had the authority to change its policy under the terms of the license grant itself. The Court emphasized that the right to vend excisable articles is exclusively owned by the State Government. The change in policy was deemed to be in public interest to prevent monopolistic tendencies and enhance revenue, justifying the government's decision.
Application of promissory estoppel and Article 14 of the Constitution:
The appellants' reliance on promissory estoppel and Article 14 of the Constitution was dismissed by the Supreme Court. The Court found no merit in the argument that the appellants had altered their position based on a promise or that the change in policy was arbitrary or discriminatory. It was held that the government's decision to change the policy was a valid exercise of power in public interest, and there was no legal basis for invoking promissory estoppel or Article 14 of the Constitution.
Return of National Saving Certificates taken as security under the earlier policy:
The appellants requested the return of National Saving Certificates submitted as security under the previous policy. The Court deemed this request just and proper, directing the State Government to return the certificates to the licensees within two months. However, this directive did not apply to licensees involved in civil suits regarding the security amounts, as their cases would be governed by the outcome of those proceedings.
In conclusion, the Supreme Court dismissed the appeal, upholding the validity of the State Government's change in policy and rejecting the appellants' arguments based on promissory estoppel and Article 14 of the Constitution. The Court also ordered the return of National Saving Certificates to the licensees as requested.
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1992 (3) TMI 367
Issues Involved:
1. Age of superannuation for the transferred employee.
2. Interpretation of Section 45 of the Banking Regulation Act, 1949.
3. Validity of the High Court's interpretation of the amalgamation scheme.
Detailed Analysis:
1. Age of Superannuation for the Transferred Employee:
The primary issue in this case is the age of superannuation for respondent No. 1, a former employee of Lakshmi Commercial Bank, who claimed entitlement to continue in service until the age of 60 years, as opposed to 58 years, which is the age of superannuation in Canara Bank. The High Court had ruled in favor of respondent No. 1, quashing the Reserve Bank's letter and declaring that he is entitled to continue in service until the age of 60 years. This judgment was challenged by the appellant, Canara Bank.
2. Interpretation of Section 45 of the Banking Regulation Act, 1949:
The relevant legal provisions are contained in Section 45 of the Banking Regulation Act, 1949, which deals with the power of the Reserve Bank to apply to the Central Government for suspension of business by a banking company and to prepare a scheme of reconstitution or amalgamation. Specifically, Sub-section (5) of Section 45, along with its provisos, is crucial. The scheme may contain provisions for the continuance of the services of all employees of the banking company in the transferee bank at the same remuneration and on the same terms and conditions of service which they were getting immediately before the date of the order of moratorium. However, the proviso mandates that within three years, the transferee bank must align the terms and conditions of service to those applicable to its own employees of corresponding rank or status, subject to equivalent qualifications and experience.
The Supreme Court clarified that the scheme does not automatically incorporate the provisions of Sub-section (5) unless specifically included. The right of the employees is to claim parity with the employees of the transferee bank of corresponding rank or status after three years from the date of the scheme's sanction.
3. Validity of the High Court's Interpretation of the Amalgamation Scheme:
The High Court had interpreted Clause (i) of Sub-section (5) of Section 45 and Clause 10 of the amalgamation scheme as conferring a vested right on the transferred employees, which could not be adversely affected by the amalgamation. The Supreme Court disagreed with this interpretation, stating that the High Court misconstrued the provisions. The Court emphasized that the right of the employees is provided in the proviso to Clause (i), which mandates parity with the transferee bank's employees after three years, rather than an unalterable continuation of the previous terms and conditions.
The Supreme Court concluded that respondent No. 1, upon amalgamation, became an employee of Canara Bank and was subject to its terms and conditions, including the age of superannuation, which is 58 years. The High Court's judgment was set aside, and the writ petition filed by respondent No. 1 was dismissed.
Conclusion:
The appeal was allowed, and the Supreme Court held that respondent No. 1 could not claim the age of superannuation of 60 years as applicable in Lakshmi Commercial Bank. Instead, he was bound by the age of superannuation of 58 years as applicable in Canara Bank. The High Court's judgment was set aside, and no costs were awarded.
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1992 (3) TMI 366
Issues Involved:
1. Maintainability of the petition under Section 482 Cr.P.C.
2. Validity of non-bailable warrants issued against the petitioner.
3. Applicability of Section 160 Cr.P.C. for requiring the petitioner's attendance.
4. Applicability of Section 73 Cr.P.C. for issuing warrants.
5. Discretion of the Special Judge in requiring attestation of power of attorney.
Issue-wise Detailed Analysis:
1. Maintainability of the petition under Section 482 Cr.P.C.:
The Additional Solicitor General raised a preliminary objection regarding the maintainability of the petition, arguing that the High Court cannot interfere with the investigation under Section 482 Cr.P.C. The petitioner contended that he was not seeking interference with the investigation but challenging the issuance of non-bailable warrants based on incorrect facts. The court held that while it cannot interfere with the investigation, it can scrutinize the orders of a Magistrate under Section 482 Cr.P.C. to determine the validity of issuing non-bailable warrants.
2. Validity of non-bailable warrants issued against the petitioner:
The court examined whether the non-bailable warrants issued on March 14, 1990, and April 25, 1990, were justified. The court noted that these warrants were issued based on the petitioner's Delhi address, despite knowing he resided in Dubai. The court found that the issuance of these warrants was not warranted by the facts of the case and held them to be without jurisdiction.
3. Applicability of Section 160 Cr.P.C. for requiring the petitioner's attendance:
The petitioner argued that the notices issued under Section 160 Cr.P.C. were not applicable as he was residing in Dubai. Section 160 Cr.P.C. allows a police officer to require the attendance of a person within the limits of his station or adjoining station. The court agreed that the petitioner, residing in Dubai, was outside the jurisdiction of the Investigating Officer, rendering the notices under Section 160 Cr.P.C. inapplicable.
4. Applicability of Section 73 Cr.P.C. for issuing warrants:
Section 73 Cr.P.C. allows a Magistrate to issue warrants for the arrest of a person accused of a non-bailable offense and evading arrest. The court found that the petitioner was required only for interrogation and not as an accused evading arrest. Therefore, the conditions for issuing warrants under Section 73 Cr.P.C. were not met. The court referenced the Full Bench judgment of the Madras High Court in K.T.M.S. Abdul Cader v. Union of India, distinguishing it based on the facts of the present case.
5. Discretion of the Special Judge in requiring attestation of power of attorney:
The Special Judge required the power of attorney filed by the petitioner's advocates to be attested by a Notary or the Consulate General of India, Dubai, due to discrepancies in the signatures. The court found no fault in the Special Judge's exercise of discretion, given the peculiar circumstances of the case, and upheld the order.
Conclusion:
The petition was partly allowed. The non-bailable warrants issued on March 14, 1990, and April 25, 1990, were held to be without jurisdiction and thus invalid. The Investigating Officer was free to proceed with the investigation within the bounds of the law. The orders dated June 5, 1990, and June 7, 1990, regarding the attestation of the power of attorney were upheld.
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1992 (3) TMI 365
Issues:
1. Time-barred complaint under Section 138 of the Negotiable Instruments Act, 1881.
2. Interpretation of the number of times a cheque can be presented to the bank under Section 138.
3. Legal implications of presenting a cheque multiple times within the validity period.
4. Applicability of the principle of autrefois acquit or autrefois convict in cheque bounce cases.
5. Interpretation of Section 138 of the Act in favor of the accused as a penal provision.
Analysis:
Issue 1: Time-barred complaint under Section 138
The petitioner argued that the complaint was time-barred as it was presented beyond one month from the date when the cause of action arose under Section 138. The causes of action were considered to arise on the dates when the cheques were returned after presentation. The petitioner contended that no fresh cause of action could arise on the second presentation of cheques.
Issue 2: Interpretation of the number of times a cheque can be presented
The petitioner relied on a Division Bench judgment and contended that no second cause of action could arise on the same cheque. However, a different view was expressed by another Division Bench. The court analyzed the provisions of Section 138 and observed that there was no explicit limitation on the number of times a cheque could be presented within the validity period.
Issue 3: Legal implications of presenting a cheque multiple times
The court rejected the notion that presenting a cheque multiple times could lead to repeated prosecutions and convictions of the drawer. It emphasized that the statute did not restrict the number of times a cheque could be presented within the validity period.
Issue 4: Principle of autrefois acquit or autrefois convict
The court discussed the applicability of the principle of autrefois acquit or autrefois convict, stating that if a complaint is filed within the stipulated period after the cause of action arises, the same cheque cannot be presented again for a fresh cause of action.
Issue 5: Interpretation of Section 138 in favor of the accused
The court referred to previous judgments emphasizing the need to interpret Section 138 liberally in favor of the accused, considering it as a penal provision. It highlighted that the legislature's intent was clear in allowing presentation of cheques within a specified period without imposing restrictions on the number of presentations.
In conclusion, the court dismissed the petitions, stating that the remaining contentions involved questions of fact that needed to be established through evidence. The court upheld the legal principles regarding the presentation of cheques and the interpretation of Section 138 in favor of the accused as a penal provision.
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1992 (3) TMI 364
Issues:
- Application for leave under section 446 of the Companies Act, 1956 to prosecute two original suits against a company under winding-up.
Analysis:
The applicants sought leave under section 446 of the Companies Act, 1956, to continue prosecuting two original suits filed against the respondent company, which was ordered to be wound up with an official liquidator appointed. The applicants claimed to be secured creditors of the respondent company, entitled to realize the mortgage debt and other securities. The applicants argued that they were outside the scope of the winding-up proceedings and should be allowed to pursue their claims independently. The court considered the wide scope of section 446, emphasizing its objective to bring company assets under the control of the winding-up court to avoid costly litigation and ensure efficient resolution of disputes. The court noted that defending the suits in a distant court would be more expensive and inconvenient, concluding that transferring the suits to the court where winding-up proceedings were ongoing would be more appropriate to avoid wasteful expenditure.
The court granted the applicants leave under section 446 to continue prosecuting the suits but ordered the transfer of the suits from the original court in Andhra Pradesh to the court where the winding-up proceedings were taking place. The court also stayed the operation of the transfer order for four weeks upon the request of the applicants' counsel. The court expedited the issuance of copies of the judgment for necessary action.
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1992 (3) TMI 363
Issues Involved:
1. Applicability of the Punjab Excise Act to Ayurvedic preparations.
2. Overlapping legislation and legislative competence.
3. Reasonableness of restrictions under Article 19(1)(g) of the Constitution.
4. Validity of the Notifications dated 3rd March 1987 and 5th March 1987.
5. Procedural compliance with rule-making provisions.
6. Alleged discriminatory treatment in the Notification dated 5th March 1987.
Issue-wise Detailed Analysis:
1. Applicability of the Punjab Excise Act to Ayurvedic preparations:
The petitioners argued that the Punjab Excise Act should not apply to Ayurvedic preparations, asserting that other legislation such as the Drugs Control and Cosmetic Act, 1940, and the Medicinal and Toilet Preparations (Excise Duty) Act, 1955, cover the entire field. The court held that the Excise Act and the ISP Rules are intended to regulate and control liquor, including Ayurvedic medicines containing more than 25% proof alcohol, to safeguard public health. The court found that the provisions of the Excise Act and ISP Rules operate in different spheres from other legislation and are intended for different purposes.
2. Overlapping legislation and legislative competence:
The court examined various Acts, including the Drugs and Cosmetics Act, 1940, and the Medicinal and Toilet Preparations (Excise Duty) Act, 1955, and concluded that these Acts do not cover the entire field of legislation related to Ayurvedic preparations. The court emphasized that overlapping legislation is permissible and that the provisions of the Excise Act and ISP Rules continue to apply in addition to other laws. The court also noted that the Excise Act, as extended to Delhi, is a Central Act, and thus, the question of legislative competence does not arise in the Union Territory of Delhi.
3. Reasonableness of restrictions under Article 19(1)(g) of the Constitution:
The petitioners contended that the ISP Rules impose unreasonable restrictions on their right to carry on business. The court referred to the Supreme Court's decision in Southern Pharmaceuticals & Chemicals v. State of Kerala, which upheld similar restrictions as reasonable. The court held that the ISP Rules constitute reasonable restrictions within the meaning of Article 19(6) of the Constitution, as they aim to prevent the misuse of Ayurvedic medicines containing high alcohol content as intoxicating beverages.
4. Validity of the Notifications dated 3rd March 1987 and 5th March 1987:
The court upheld the validity of the Notifications dated 3rd March 1987 and 5th March 1987. The first Notification deleted clause (ii) of Rule 24, making the ISP Rules applicable to Ayurvedic and Unani preparations. The second Notification exempted 19 intoxicating spirituous preparations from the ISP Rules. The court found that the Notifications were issued in accordance with the powers conferred by the Excise Act and the ISP Rules.
5. Procedural compliance with rule-making provisions:
The petitioners argued that the Notification dated 3rd March 1987 was not published in accordance with the provisions of Section 58 of the Punjab Excise Act, which requires previous publication. The court held that the Notification was issued before the date when the rules were to come into force, thereby complying with the requirement of prior publication. The court also noted that the Punjab General Clauses Act, which requires draft publication of rules, is not in force in Delhi.
6. Alleged discriminatory treatment in the Notification dated 5th March 1987:
The petitioners contended that the Notification dated 5th March 1987, which exempted 19 preparations from the ISP Rules, was discriminatory and violated Article 14 of the Constitution. The court found no merit in this contention, stating that the Excise Commissioner has the authority to exempt intoxicating spirituous preparations that are incapable of being misused for potable purposes. The court held that the selection of the 19 preparations was valid and not discriminatory.
Conclusion:
The court dismissed the writ petitions, upholding the applicability of the Punjab Excise Act and the ISP Rules to Ayurvedic preparations containing more than 25% proof alcohol. The court found that the restrictions imposed by the ISP Rules are reasonable and necessary to prevent the misuse of such preparations as intoxicating beverages. The court also upheld the validity of the Notifications dated 3rd March 1987 and 5th March 1987, and found no procedural irregularities or discriminatory treatment in their issuance.
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1992 (3) TMI 362
Issues Involved:
The issues involved in the judgment are the maintainability of the writ petition without exhausting the alternative remedy of appeal and the cancellation of a retail dealer's kerosene oil license without providing an opportunity for a hearing.
Maintainability of Writ Petition:
The petitioner, a retail dealer in kerosene oil, had his license cancelled by the licensing authority without being given an opportunity to be heard. The court acknowledged that the impugned order was appealable, but chose not to reject the petition on the ground of alternative remedy due to the petition being entertained and an interim order passed.
Cancellation of License without Hearing:
The petitioner contended in the writ petition that he was not afforded a hearing before the cancellation of his license. The court noted that the U. P. Kerosene Control Order, 1962, explicitly requires that a licensee must be given a reasonable opportunity to submit an explanation before cancellation. As no such opportunity was provided and the State did not file a counter-affidavit to refute this claim, the court allowed the writ petition and set aside the order of cancellation.
Conclusion:
The judgment allowed the petition, setting aside the cancellation of the license. It was emphasized that the order would not prevent the licensing authority from taking further action in accordance with the law.
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1992 (3) TMI 361
Issues Involved:
1. Confirmation of the CIT (Appeals) of disallowance of a sum of Rs. 5,20,055 representing unvouched commission paid by the assessee.
Issue-wise Detailed Analysis:
1. Confirmation of the CIT (Appeals) of disallowance of a sum of Rs. 5,20,055 representing unvouched commission paid by the assessee:
The assessee, engaged in the manufacture of printing inks, appealed against the disallowance of Rs. 5,20,055 as secret commission. Historically, the assessee had claimed deductions for secret commissions since the assessment year 1959-60, with partial disallowances ranging from 7.27% to 24.08% by the Assessing Officer (AO). In the years 1972-73 and 1973-74, the entire claim was disallowed, but only 14% was sustained by the Tribunal. For the current year, the AO scrutinized the nature of the commission more thoroughly. The assessee claimed that the commission was paid to petty employees of printing presses to maintain their patronage. Payments were made through Senior Sales Officers via internal vouchers, but the recipients' names were not recorded. The AO disallowed the entire amount, deeming it against public policy and unverifiable.
Upon appeal, the CIT (Appeals) upheld the AO's decision, stating that past records could guide but not bind future decisions. The CIT (Appeals) noted that secret commissions to private parties were also against public policy and that the claimed amount was excessive, being over 33% of the profits. The assessee's argument that the payments were for business purposes and not to public servants was rejected.
The assessee contended that the practice of paying secret commissions was established and accepted by the department historically. They referenced past Tribunal decisions and the Bombay High Court's ruling in CIT v. Goodlass Nerolac Paints Ltd. (1991) 188 ITR 1, where secret commissions were allowed based on commercial expediency. The learned counsel for the assessee suggested that the disallowance should be limited to 20% as per past practice.
The departmental representative argued that the burden of proof lay on the assessee to establish that the expenditure was wholly and exclusively for business purposes. He cited the earlier Bombay High Court decision in Goodlass Nerolac Paints Ltd. v. CIT (1982) 137 ITR 58, emphasizing that the names and addresses of recipients were not disclosed, thus failing to meet the burden of proof.
The Tribunal considered both sides' submissions and noted that the question of payment of commission should be determined as a question of fact, considering all circumstances. The Tribunal referenced confirmations from salesmen, internal vouchers, and the past history of partial disallowances. They concluded that the quantum of secret commission had become excessive and that the CIT(Appeals) rightly observed this. The Tribunal decided to disallow 50% of the claimed secret commission, directing accordingly.
Conclusion:
The appeal was allowed in part, with the Tribunal directing a 50% disallowance of the claimed secret commission.
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1992 (3) TMI 360
Issues Involved:
1. Permissibility of prosecuting Directors and Managers under Section 17(1) of the Prevention of Food Adulteration Act, 1954.
2. Validity and effect of nominations made under Section 17(2) of the Act.
3. Determination of the competent Local (Health) Authority for receiving and acknowledging nominations.
Issue-wise Detailed Analysis:
1. Permissibility of Prosecuting Directors and Managers under Section 17(1):
The primary issue addressed is whether it is permissible to launch a prosecution under Section 17(1) of the Prevention of Food Adulteration Act, 1954, against the Directors and Managers of public limited companies, despite the companies having made nominations under Section 17(2). Section 17(1) stipulates that if an offence under the Act is committed by a company, the nominated person or, if no person is nominated, every person in charge of the company at the time of the offence can be prosecuted. The proviso to this section offers a defense, allowing the accused to prove that the offence was committed without their knowledge and despite due diligence.
2. Validity and Effect of Nominations under Section 17(2):
The companies argued that they had made valid nominations as required by Section 17(2), which should limit prosecution to the nominated individuals and the companies themselves, unless it can be shown that the offence was committed with the consent, connivance, or negligence of other Directors, Managers, or Officers. The court emphasized that if a valid nomination exists, only the nominated person can be proceeded against under Section 17(1)(a)(i). However, if the nomination is invalid, prosecution can extend to all persons in charge of the company at the time of the offence under Section 17(1)(a)(ii).
3. Determination of the Competent Local (Health) Authority:
The court examined whether the nominations were properly communicated to and acknowledged by the competent Local (Health) Authority. For Lipton India Limited, the nomination of H. Dayani was questioned due to alterations in the nomination form and whether it was acknowledged by the appropriate authority. For Hindustan Lever Limited, the nomination of Dr. Nirmal Sen was also scrutinized for proper acknowledgment. The court directed the trial magistrate to investigate whether the nominations were received and acknowledged by the competent Local (Health) Authority.
Conclusion:
The Supreme Court allowed the appeals, setting aside the orders of the learned Magistrate and the High Court. The matters were remanded to the trial magistrate to determine the validity of the nominations and whether they were acknowledged by the competent Local (Health) Authority. If the nominations were valid and acknowledged by the competent authority, the proceedings against the Directors, other than the nominated persons, should be dropped. If not, the prosecution should proceed against all accused persons, including the Directors, nominated persons, and the companies.
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1992 (3) TMI 359
Issues Involved:
1. Validity of the nationalization scheme for the Saharanpur-Shahdara-Delhi route.
2. Legality of permits granted to private operators on nationalized routes.
3. Effect of the delay in approving the draft scheme.
4. Applicability of Section 100(4) of the Motor Vehicles Act, 1988.
Summary:
1. Validity of the Nationalization Scheme:
The Supreme Court upheld the nationalization of the Saharanpur-Shahdara-Delhi route, stating that the approved scheme dated September 29, 1959, continues to be valid. The U.P. State Road Transport Corporation has the exclusive right to ply vehicles on this route, and the scheme operates to the total exclusion of every private operator except the 50 operators whose objections were upheld by the High Court and merged in the judgment of this court in Jeevan Nath Bahl's case.
2. Legality of Permits Granted to Private Operators:
The court held that the grant of permits to private operators under Section 80 of the Motor Vehicles Act on the nationalized routes is illegal and without jurisdiction. The court emphasized that no private operator has the right to apply for and obtain permits to ply stage carriages on the approved or notified routes or areas or portions thereof.
3. Effect of the Delay in Approving the Draft Scheme:
The court noted that the delay in approving the draft scheme dated February 26, 1959, was an abuse of the process of law, creating a monopoly in favor of the 50 existing operators. The fresh draft scheme dated February 13, 1986, had not lapsed and would continue to be in operation, confined only to the 50 operators. The court also highlighted that the 50 operators had been running their stage carriages by abusing the process of the court and forfeited their right to a hearing of their objections.
4. Applicability of Section 100(4) of the Motor Vehicles Act, 1988:
The court held that the draft scheme dated February 13, 1986, did not lapse under Section 100(4) of the Act. The High Court and the hearing authority had wrongly concluded that the draft scheme stood lapsed. The court clarified that the draft scheme published under Section 68-C of the repealed Act would stand lapsed only if it was not approved within one year from the date when the Act came into force, i.e., July 1, 1989.
Conclusion:
The appeals were allowed, and the grant of permits to private operators on the nationalized routes was quashed. The hearing authority was directed to lodge the objections of the 50 operators, and the competent authority was instructed to approve the draft scheme of 1986 within 30 days and publish it in the gazette. The permits granted to the 50 operators or any others would stand canceled from that date, and no permits would be renewed. The U.P. State Transport Corporation was directed to obtain the required additional permits and provide transport service immediately upon the publication of the approved draft scheme.
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1992 (3) TMI 358
Issues:
1. Determination of whether the document in question is a mortgage by conditional sale or a sale with an option to repurchase.
2. Analysis of the legal relationship between the parties based on the terms of the document.
3. Examination of the clauses in the document to ascertain the intention of the parties.
4. Comparison with precedent cases to establish the nature of the transaction.
5. Interpretation of possession, ownership rights, and repayment clauses in the document.
6. Evaluation of the absence of foreclosure rights for the transferee in determining the nature of the transaction.
Analysis:
The civil appeal before the Supreme Court involved a dispute regarding the nature of a document dated 11th December, 1950, whether it constituted a mortgage by conditional sale or a sale with an option to repurchase. The appellant initiated a suit for redemption of properties mortgaged under the said document. The trial judge initially held it to be a mortgage by conditional sale, passing a preliminary decree for redemption. However, the District Court confirmed this finding on appeal. Subsequently, the High Court set aside the lower courts' decisions, deeming the document a sale with an option to repurchase, leading to the dismissal of the suit.
The primary contention revolved around the interpretation of the document's clauses to discern the true intention of the parties. The appellant argued that the document reflected a debtor-creditor relationship, citing clauses related to repayment, possession, and rights of the parties. Reference was made to legal provisions under the Transfer of Property Act, specifically Section 58(c), to support the claim of a mortgage by conditional sale. Additionally, reliance was placed on a precedent case to strengthen the argument that similar clauses indicated a mortgage arrangement.
Conversely, the respondents contended that the document represented a sale with an option to repurchase, emphasizing the absence of a debtor-creditor relationship and highlighting clauses related to possession, ownership rights, and repayment terms. The High Court favored this interpretation, emphasizing the clauses granting ownership rights to the transferee and the lack of foreclosure rights, which aligned with a sale transaction rather than a mortgage.
The Supreme Court analyzed the document meticulously, considering the nuances between a mortgage by conditional sale and a sale with an option to repurchase. The Court emphasized the importance of the document's terms over its nomenclature and referred to specific clauses regarding possession, repayment, and transfer of rights to determine the transaction's true nature. Drawing distinctions from precedent cases, the Court concluded that the document in question aligned more closely with a sale with an option to repurchase, as evidenced by the ownership rights granted to the transferee and the absence of foreclosure rights typically associated with a mortgage by conditional sale.
Ultimately, the Supreme Court upheld the High Court's decision, dismissing the civil appeal and affirming the nature of the transaction as a sale with an option to repurchase. No costs were awarded in the matter, concluding the legal proceedings on this issue.
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1992 (3) TMI 357
Issues Involved:
1. Maintainability of eviction petition before the expiry of the lease period.
2. Interpretation of Section 21(1) of the Karnataka Rent Control Act, 1961.
3. Applicability of the Supreme Court decision in Dhanpal Chettiar's case.
Issue-Wise Detailed Analysis:
1. Maintainability of Eviction Petition Before Expiry of Lease Period:
The primary issue was whether a landlord could seek eviction of a tenant holding leasehold premises under a term lease before the expiry of the lease period when there is no forfeiture clause in the lease deed. The landlord issued a quit notice and filed an eviction petition under Section 21(1)(h) of the Karnataka Rent Control Act, 1961, claiming a bona fide requirement for the premises. The tenant contested the landlord's right to seek possession before the lease expired.
2. Interpretation of Section 21(1) of the Karnataka Rent Control Act, 1961:
The Court analyzed Section 21(1) of the Act, which imposes a general ban on the recovery of possession by the landlord. The provision states, "Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any Court or other authority in favour of the landlord against the tenant." The Court emphasized that this clause does not enlarge the landlord's rights but restricts them, allowing eviction only on specific grounds enumerated in clauses (a) to (p) of the proviso to Section 21(1).
The Court noted that the main part of Section 21(1) bars the enforcement of the landlord's right to recover possession from the tenant, providing absolute protection to the tenant against eviction. This protection can only be lifted if any of the grounds specified in clauses (a) to (p) are met. Therefore, a landlord cannot evict a tenant before the lease period expires unless a specific ground under the Act is established.
3. Applicability of the Supreme Court Decision in Dhanpal Chettiar's Case:
The Court examined the Supreme Court's decision in Dhanpal Chettiar v. Yesodai Animal, which dealt with the necessity of a quit notice under Section 106 of the Transfer of Property Act. The Supreme Court had held that issuing such a notice was unnecessary under the Rent Control Acts, as the landlord must prove grounds for eviction under the Act. The Court clarified that this decision did not imply that the entire contractual relationship is substituted by the statutory relationship under the Rent Control Act for all purposes.
The Court concluded that the decision in Dhanpal Chettiar's case was primarily concerned with the procedural aspect of issuing a quit notice and did not address the substantive right of a landlord to evict a tenant before the expiry of a term lease. Therefore, the principle from Dhanpal Chettiar's case could not be applied to justify eviction before the lease period expired.
Conclusion:
The Court overruled the decision in Bharath Petroleum Corporation's case, which had allowed landlords to initiate eviction proceedings under Section 21(1) even during the subsistence of a term lease. The Court held that the landlord's right to recover possession is restricted by the lease period, and eviction can only be sought on specific grounds enumerated in the Act after the lease period expires. The Court directed the Munsiff Court, Udupi, to decide the pending eviction proceedings in light of this judgment, thereby providing clarity on the legal position regarding eviction before the expiry of a term lease.
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1992 (3) TMI 356
Issues Involved:
1. Whether the second respondent is a necessary or proper party to be joined as defendant u/r 10 of Order I of the CPC.
2. Whether the plaintiff, as dominus litis, can be compelled to join the second respondent as a defendant.
3. Whether the addition of the second respondent would enlarge the issue in the suit.
Summary:
1. Necessary or Proper Party:
The primary issue is whether the second respondent, Hindustan Petroleum Corporation Limited, is a necessary or proper party to be joined as a defendant u/r 10 of Order I of the CPC in the suit instituted by the appellant against the first respondent, the Municipal Corporation of Greater Bombay. The appellant challenged the notice issued by the Municipal Corporation for the demolition of alleged unauthorized constructions. The second respondent sought to be impleaded, claiming they had material evidence regarding the unauthorized constructions. The Court directed the appellant to add the second respondent as a defendant, which was upheld by the High Court.
2. Plaintiff as Dominus Litis:
The appellant argued that as dominus litis, they cannot be forced to join the second respondent as a defendant, citing the decision in Razia Begum v. Anwar Begum. The Court acknowledged that while the plaintiff is dominus litis and not bound to sue every possible adverse claimant, the Court has the discretion to add parties at any stage if their presence is necessary for a complete adjudication of the issues involved.
3. Enlargement of Issues:
The appellant contended that adding the second respondent would enlarge the issue in the suit. The Court noted that the second respondent is not a necessary party in the sense that an effective order cannot be passed without their presence. However, the second respondent could be considered a proper party if their presence is necessary for a complete adjudication of the controversy. The Court emphasized that the addition of parties should not introduce new causes of action or widen the issues beyond what is necessary for resolving the dispute at hand.
Conclusion:
The Supreme Court concluded that the second respondent is neither a necessary nor a proper party to be added as a defendant in the present suit. The subject matter of the suit is the notice issued by the Municipal Corporation, and the second respondent's interest in supporting the Municipal Corporation does not constitute a legal interest in the subject matter. The addition of the second respondent would cause serious prejudice to the appellant and introduce issues not germane to the suit. Consequently, the appeal was allowed, and the impugned judgment was set aside. No order as to costs.
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1992 (3) TMI 355
Issues Involved:
1. Meaning and scope of "Banker's lien."
2. Bank's right to retain deposits under a general lien.
3. Attachment of Fixed Deposit Receipts (FDRs) by a decree-holder.
4. Discharge of Bank guarantee and its implications on lien.
Detailed Analysis:
1. Meaning and Scope of "Banker's Lien":
The primary issue addressed is the definition and application of "Banker's lien" in legal and banking contexts. The court delved into established legal principles and definitions from authoritative texts to elucidate the concept. According to Halsbury's Laws of England, lien is "a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied." Chalmers on Bills of Exchange and Chitty on Contract further describe a banker's lien as an "implied pledge" and a "general lien over all forms of commercial paper deposited by or on behalf of a customer in the ordinary course of banking business." The court emphasized that such a lien is judicially recognized and forms part of the law merchant, allowing banks to retain securities or negotiable instruments deposited by customers until any outstanding debts are cleared.
2. Bank's Right to Retain Deposits Under a General Lien:
The court examined the specific case of the appellant Bank's right to retain two FDRs deposited by the Judgment-debtor. The Judgment-debtor had deposited the FDRs as security for a Bank guarantee, with the covering letters explicitly stating that the deposits would remain with the Bank "so long as any amount on any account is due to the Bank." The court concluded that these letters created a general lien in favor of the Bank, allowing it to retain the FDRs against any outstanding liabilities of the Judgment-debtor. The court rejected the High Court's reasoning that the Bank's lien was limited to the Bank guarantee, emphasizing that the general lien persisted even after the discharge of the Bank guarantee.
3. Attachment of Fixed Deposit Receipts (FDRs) by a Decree-Holder:
The decree-holder sought to attach a portion of the FDRs deposited as security for the Bank guarantee. The High Court initially allowed this attachment, but the appellant Bank objected, arguing that it had a general lien over the FDRs. The Supreme Court clarified that while a banker's lien does not bar attachment, the Bank's right to retain the FDRs under its general lien must be considered. The court cited Halsbury's Laws of England and Order 21 Rule 46(a) of the Civil Procedure Code, noting that deposits payable at a future date are still liable to attachment, but the Bank's lien must be accounted for.
4. Discharge of Bank Guarantee and Its Implications on Lien:
The court addressed the implications of discharging the Bank guarantee on the Bank's lien. It emphasized that a Bank guarantee is an autonomous contract imposing an absolute obligation on the Bank to fulfill its terms. Once the guarantee is discharged, the Bank's obligation ends, but this does not affect the general lien created by the covering letters. The court rejected the High Court's view that the Bank's lien was limited to the Bank guarantee, reaffirming that the general lien persisted beyond the discharge of the guarantee.
Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order directing the Bank to deposit Rs. 35,000. The court held that the appellant Bank had a general lien over the two FDRs and could retain them against any outstanding liabilities of the Judgment-debtor. The High Court was directed to reconsider the Bank's objections and determine if any amount remained for attachment by the decree-holder. The appeal was allowed with no order as to costs.
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1992 (3) TMI 354
Issues Involved:
1. Whether the taxpayer, Victory Partnership, was engaged in a trade.
2. Whether the taxpayer incurred capital expenditure of $14 million or $3 1/4 million.
3. Whether the tax avoidance scheme was effective in generating the claimed first-year allowance.
Detailed Analysis:
1. Whether the taxpayer, Victory Partnership, was engaged in a trade:
The Court examined whether Victory Partnership's activities constituted a trade. The taxpayer claimed that Victory Partnership was involved in the trade of producing and distributing films, thus entitling it to capital allowances. The Court of Appeal had referred the matter back to the commissioners to determine if the activities were genuinely trading or merely a device for fiscal advantage.
The Court concluded that Victory Partnership was indeed engaged in the trade of producing and exploiting the film "Escape to Victory." The production and exploitation of a film were considered trading activities, and the expenditure of capital for these purposes was deemed a trading purpose.
2. Whether the taxpayer incurred capital expenditure of $14 million or $3 1/4 million:
The central issue was whether Victory Partnership incurred capital expenditure of $14 million, as claimed, or only $3 1/4 million. The taxpayer argued that the entire $14 million should be considered for the first-year allowance. However, the Court found that the true financial consequence of the scheme was the expenditure of only $3 1/4 million by Victory Partnership.
The Court held that the expenditure of $3 1/4 million was real and not merely a device to obtain a fiscal advantage. The remaining $10 3/4 million was provided by Lorimar Productions Inc. (LPI) and was not a liability of Victory Partnership. The Court emphasized that the non-recourse nature of the borrowing ensured that Victory Partnership was not liable for the cost exceeding $3 1/4 million.
3. Whether the tax avoidance scheme was effective in generating the claimed first-year allowance:
The Court scrutinized the tax avoidance scheme, which involved a series of complex, interdependent transactions designed to create an artificial tax benefit. The scheme included self-cancelling transactions where money was transferred from LPI to Victory Partnership and then immediately back to LPI, leaving no real financial effect.
The Court applied the principles established in previous cases, such as Ramsay and Burmah Oil, which require analyzing the entire series of transactions to ascertain their true nature and effect. The Court found that the scheme was a tax avoidance device and that the taxpayer's claimed first-year allowance of $14 million was inconsistent with the actual expenditure of $3 1/4 million.
The Court concluded that the taxpayer was entitled to a first-year allowance only for the $3 1/4 million genuinely expended. The scheme's artificial steps were disregarded for fiscal purposes, and the true financial consequence was the expenditure of $3 1/4 million by Victory Partnership.
Conclusion:
The appeal was allowed, and the case was referred back to the commissioners to determine the tax assessment based on a first-year allowance of $3 1/4 million. The taxpayer was ordered to pay the costs in this House and in the courts below.
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1992 (3) TMI 353
Issues:
Detention under the National Security Act, 1980; Right to make representation to State and Central Government; Obligation of State Government to forward representation to Central Government.
Analysis:
The judgment involves a case where a detenu was detained under the National Security Act, 1980, by the District Magistrate of Bulandshahar, Uttar Pradesh. The detenu submitted a representation against his detention through the jail authorities, but the representation was addressed ambiguously to "The Home Secretary" without specifying whether it was intended for the State Government or the Central Government. The State Government rejected the representation, leading to a petition challenging the detention under Article 32 of the Constitution of India.
The District Magistrate, in response, admitted receiving copies of the representation through the jail authorities, with one copy retained in the office, six copies forwarded to the Government of U.P., and one copy communicated to the Advisory Board under the National Security Act. The detenu's counsel argued that even though no representation was sent to the Central Government directly by the detenu, the State Government should have forwarded a copy to the Central Government as per the interpretation of relevant sections of the Act.
The Supreme Court, in its analysis, noted that the detenu was informed of his right to make representations to both the State and Central Government. Despite the detenu providing multiple copies of the representation to the Superintendent Jail, the representation was only sent to the State Government and not to the Central Government. The Court held that the Superintendent Jail had a legal obligation to forward one copy of the representation to the Central Government since the detenu had given sufficient copies for onward submission as per the grounds of detention. Due to the failure to forward the representation to the Central Government, the detenu was denied the opportunity to make an effective representation, leading to the quashing of the detention order.
In conclusion, the Supreme Court allowed the writ petition and quashed the detention order dated July 23, 1991, emphasizing the importance of fulfilling the detenu's right to make representations to both the State and Central Government in cases of detention under the National Security Act, 1980.
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1992 (3) TMI 352
Issues Involved:
1. Legitimacy of the order of adjudication passed by the third respondent.
2. Confiscation of non-declared goods and cellulose acetate cuttings under the Customs Act, 1962.
3. Valuation method for non-declared goods.
4. Authority to order mutilation under Section 24 of the Customs Act, 1962.
5. Imposition of personal penalty and redemption fine.
Detailed Analysis:
1. Legitimacy of the Order of Adjudication:
The petitioner challenges the adjudication order dated 27.12.1991. The Court had previously set aside a similar adjudication order in W.P. No. 15619 of 1991, remanding the matter for fresh adjudication. Despite this, the petitioner alleges that the new order is arbitrary and lacks details on how the assessable value was determined.
2. Confiscation of Non-Declared Goods and Cellulose Acetate Cuttings:
The petitioner filed a bill of entry for 13.8 metric tonnes of cellulose acetate cuttings. Upon examination, it was found that the consignment included non-declared goods concealed among the declared ones. The adjudicating authority ordered the confiscation of these non-declared goods under Sections 111(m) and (1) of the Customs Act, 1962, and the cellulose acetate cuttings under Section 119 of the same Act. An option to redeem the goods on payment of a fine was provided under Section 125.
3. Valuation Method for Non-Declared Goods:
The adjudicating authority fixed the value of the non-declared goods after market enquiries. The petitioner contested the valuation method, arguing that the items should be valued separately due to their different kinds and qualities. The authority refused to revise the value as the petitioner did not provide evidence to rebut the department's valuation.
4. Authority to Order Mutilation under Section 24 of the Customs Act, 1962:
The petitioner requested the release of goods after mutilation, which the adjudicating officer denied, citing a lack of power under Section 24 and the absence of relevant rules framed by the Central Government. The Court examined Section 24, which allows the Central Government to make rules for mutilation but does not directly empower adjudicating authorities to order mutilation. The Court concluded that without such rules, the adjudicating authority cannot order mutilation, as it would result in inconsistent decisions without guidelines.
5. Imposition of Personal Penalty and Redemption Fine:
The petitioner argued that the impugned order lacked particulars on the market value and how it was determined, similar to the earlier quashed order. The Court noted that the adjudicating authority did not provide the petitioner with the details necessary to rebut the market value information collected by the department. Consequently, the Court set aside the impugned order regarding the personal penalty and redemption fine, remanding the matter for reconsideration with proper opportunity given to the petitioner.
Conclusion:
The writ petition was allowed to the extent that the impugned order's imposition of personal penalty and redemption fine was set aside. The matter was remitted back to the adjudicating authority for fresh consideration within six weeks, with an opportunity for the petitioner to present their case. No costs were awarded.
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1992 (3) TMI 351
Issues Involved:
1. Waiver of pre-deposit of penalty.
2. Denial of cross-examination.
3. Admissibility of inculpatory statements.
4. Financial hardship of the petitioners.
Issue-wise Detailed Analysis:
1. Waiver of Pre-deposit of Penalty:
The petitioners sought waiver of the pre-deposit of penalties of Rs. 10 lakhs each under Section 112(a) & (b) of the Customs Act, 1962. The Tribunal considered whether the impugned order was prima facie sustainable in law. The Tribunal noted the magnitude and gravity of the evidence against the petitioners, including the seizure of 2250 gold biscuits weighing 262.125 Kgs valued at more than Rs. 8.74 crores. The Tribunal directed each petitioner to make a pre-deposit of Rs. 2 lakhs on or before 29th May 1992, subject to which the pre-deposit of the balance amount would be dispensed with pending appeal.
2. Denial of Cross-examination:
The petitioners contended that the denial of the right to cross-examine the individuals who had given inculpatory statements against them violated the principles of natural justice. The Tribunal examined the principles of natural justice, emphasizing that they are flexible and vary from case to case. The Tribunal referred to several judgments, including those of the Supreme Court and High Courts, which held that the right to cross-examination is not an absolute right in quasi-judicial proceedings and depends on the facts and circumstances of each case. The Tribunal concluded that prima facie there was no infirmity in the impugned order on the ground of denial of cross-examination.
3. Admissibility of Inculpatory Statements:
The petitioners argued that the inculpatory statements were not voluntary and should not be relied upon. The Tribunal noted that the inculpatory statements given by the co-accused were subsequently retracted. The Tribunal referred to the judgments which held that retracted statements could still be admissible and relied upon, provided they were corroborated by other evidence. The Tribunal found that the inculpatory statements were corroborated by other evidence, including the recovery of contraband gold and other circumstances. Therefore, the Tribunal held that the statements were prima facie admissible.
4. Financial Hardship of the Petitioners:
One of the petitioners, Shri Abubucker, pleaded financial hardship, stating that he was unable to make the pre-deposit of the penalty despite being an Income Tax assessee and owning a house and a medical shop. He offered to make a pre-deposit of Rs. 50,000. The Tribunal considered the financial hardship plea but directed each petitioner to make a pre-deposit of Rs. 2 lakhs, considering the gravity of the offense and the value of the contraband gold involved.
Conclusion:
The Tribunal concluded that prima facie there was no infirmity in the impugned order on the grounds of violation of natural justice or the admissibility of inculpatory statements. The petitioners were directed to make a pre-deposit of Rs. 2 lakhs each by 29th May 1992, failing which appropriate orders would be passed.
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1992 (3) TMI 350
The High Court of Kerala quashed order Ext.P15, directed the Tribunal to hear the appeal on merits, and ordered that the seized gold not be minted pending appeal. The delay in filing the appeal was condoned due to circumstances beyond the petitioner's control. The original petition was disposed of accordingly.
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