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1995 (5) TMI 299
The Supreme Court allowed the appeal in a case involving National Savings Certificates purchased with incorrect maturity value. The Court agreed with the dissenting opinion that the incorrect information on the certificates did not constitute a deficiency in service. The orders of lower forums were set aside, and the respondent's application was dismissed.
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1995 (5) TMI 298
Issues Involved:
1. Alleged contravention of section 8(3) read with section 8(4) of the Foreign Exchange Regulation Act, 1973.
2. Validity and specificity of the show-cause notice.
3. Justification for the higher price of imported Cinnarizine.
4. Misutilization of foreign exchange.
5. Relevance of the advance license and RBI notification.
Issue-wise Detailed Analysis:
1. Alleged Contravention of Section 8(3) Read with Section 8(4) of the Foreign Exchange Regulation Act, 1973:
The adjudication order imposed penalties on the appellants for contravening the provisions of section 8(3) read with section 8(4) of the Foreign Exchange Regulation Act, 1973. The appellants were accused of over-invoicing the import price of Cinnarizine, thereby misutilizing foreign exchange. The Tribunal noted that the appellants had entered into contracts with Janssen of Belgium for the supply of Cinnarizine at higher rates compared to other importers. However, the Tribunal found no evidence of a secret understanding or misutilization of foreign exchange, as the higher price was justified by the unique commercial advantages and conditions of their transactions with Janssen.
2. Validity and Specificity of the Show-Cause Notice:
The appellants contended that the show-cause notice was vague and lacked specific facts to substantiate the allegations. The Tribunal agreed, noting that the notice failed to provide clear details about the alleged contravention, particularly regarding the supposed failure to surrender foreign exchange. The notice did not specify the date when the appellants allegedly became aware that the foreign exchange could not be used for its intended purpose, nor did it clarify the basis for the charge of misutilization.
3. Justification for the Higher Price of Imported Cinnarizine:
The appellants argued that the higher price of Cinnarizine was justified by several factors, including the exclusive rights to export under Janssen's brand name "Stugeron," which was already registered in the USSR. The Tribunal acknowledged that these factors contributed to the higher price and distinguished the appellants' transactions from those of other importers. The Tribunal concluded that the higher price was a result of a legitimate commercial bargain and not indicative of over-invoicing or misutilization of foreign exchange.
4. Misutilization of Foreign Exchange:
The Tribunal examined whether the foreign exchange was utilized for the intended purpose. It was established that the foreign exchange was acquired for payment to Janssen for the specified quantities of Cinnarizine at the agreed price. The Tribunal found that the foreign exchange was released by the bank after due consideration and was remitted directly to the foreign buyer, with no evidence of misutilization or retention of funds abroad. The Tribunal concluded that the appellants had utilized the foreign exchange for the intended purpose.
5. Relevance of the Advance License and RBI Notification:
The Tribunal noted that the advance license granted to the appellants specified the quantity and value of drugs to be imported and exported. The license was approved by a committee comprising representatives from various government departments. The Tribunal found that the import and export of Cinnarizine were allowed based on the advance license, and the foreign exchange was released in accordance with the terms of the license. The Tribunal also considered the RBI notification, which provided a general exemption for fees related to the use of brand names for raw materials used in Parkinsonism diseases, relevant to the appellants' case.
Conclusion:
The Tribunal allowed the appeals, set aside the adjudication order, and directed the respondents to release the bank guarantees furnished by the appellants. The Tribunal found that the appellants had not contravened the provisions of section 8(3) read with section 8(4) of the Foreign Exchange Regulation Act, 1973, and that the higher price of Cinnarizine was justified by the unique commercial conditions of their transactions with Janssen.
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1995 (5) TMI 297
Issues:
1. Imposition of penalties under sections 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973.
2. Allegation of contravention related to the import of an electronic colour scanner.
3. Prima facie evidence in favor of the appellants.
4. Argument against pre-deposit of penalty amount.
5. Lack of inquiry by the Department to establish correct price.
6. Discrepancies in the Department's case and lack of evidence.
7. Interpretation of recovered documents and letters.
8. Lack of evidence to support the Department's case.
9. Rebuttal of Department's submissions.
10. Commercial nature of the relationship between the supplier and appellant.
11. Findings not based on evidence on record.
12. Setting aside the impugned order.
13. Absence of guilt for contravention.
14. Disposal of appeals and setting aside the impugned order.
The judgment involves appeals against penalties imposed for contravention of the Foreign Exchange Regulation Act. The appellants were penalized for importing an electronic colour scanner at a declared CIF value higher than the actual agreed price. The appellants argued against pre-deposit of the penalty, presenting evidence to support their case. The Department's case lacked inquiry to establish the correct price, with discrepancies in evidence and lack of proof of the alleged contravention. The recovered documents and letters did not support the Department's claims. The judgment found that the findings were not evidence-based and favored the appellants. The commercial nature of the relationship between the supplier and appellant was emphasized, leading to the setting aside of the impugned order. As the first appellant was not found guilty of contravention, the penalties were set aside for both appellants, resulting in the allowance of the appeals.
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1995 (5) TMI 296
Issues:
1. Whether the offence under Section 138 of the Negotiable Instruments Act involves moral turpitude?
Analysis:
The judgment of the Kerala High Court delves into the question of whether the offence under Section 138 of the Negotiable Instruments Act entails moral turpitude. The case involves an appellant who was a discharged employee of a bank due to his conviction under Section 138 for issuing a bounced cheque. The appellant contended that Section 138 does not constitute an offence involving moral turpitude. The court examined the appellant's argument and the bank's justification for dismissal based on the Bipartite Agreement and the Banking Regulation Act. The court highlighted the definitions of moral turpitude from various legal sources, emphasizing that not all offences necessarily involve moral turpitude.
The court discussed the nature of the offence under Section 138, emphasizing that the act of issuing a cheque without sufficient funds does not automatically equate to cheating under the Indian Penal Code. It clarified that the offence arises only when the cheque is dishonored and not when issued. The court analyzed the definitions of moral turpitude from legal dictionaries and jurisprudence, emphasizing the need for intentional wrongdoing and depravity for an act to involve moral turpitude. The court also referenced a previous judgment to support the principle that each case must be examined individually to determine if an offence involves moral turpitude.
In conclusion, the court held that the offence under Section 138 in this case did not reflect moral turpitude based on the specific facts and circumstances. The court dismissed the contention that the appellant should have raised an industrial dispute instead of approaching the High Court under Article 226 of the Constitution. The court exercised its jurisdiction under Article 226 and quashed the dismissal order, directing the reinstatement of the appellant with full benefits, without prejudice to any other actions the bank may pursue against him.
Overall, the judgment provides a detailed analysis of the concept of moral turpitude in the context of the offence under Section 138 of the Negotiable Instruments Act, emphasizing the need to consider the specific facts of each case to determine if an offence involves moral turpitude.
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1995 (5) TMI 295
Issues:
Review of judgment based on alleged error in observation regarding multiple inspection petitions, Jurisdiction of transferee court to hear review application, Applicability of Rule 5 of Order 47 of CPC, Maintainability of review application when appeal is available, Permissibility of review based on alleged error in judgment.
Analysis:
The case involved a review application seeking to challenge a judgment passed by a learned Judge in a revision application. The main contention of the petitioners was that the observation made by the Judge regarding two inspection petitions being on different points was a mistake apparent on the face of the record. The petitioners argued that the judgment should be reviewed based on this alleged error.
The petitioners further argued that the review matter was assigned to the current Court due to the unavailability of the original Judge who passed the judgment. They relied on legal precedents to support the argument that the transferee Court had the jurisdiction to hear and decide the review application in such circumstances.
In response, the opposite party contended that Rule 5 of Order 47 of the CPC would bar any other Judge from hearing the review application if the Judge who passed the original judgment was available. They cited a Division Bench decision of the Calcutta High Court to support their argument regarding the interpretation of the rule.
Moreover, the opposite party argued that since an appeal was available under Section 109 of the CPC and Article 133 of the Constitution, the review application was not maintainable. They referred to a Supreme Court decision to emphasize that a review should not be entertained when an appeal is the appropriate remedy.
Additionally, the opposite party contended that a review was not permissible on the ground that the decision was erroneous on merit. They cited a single Bench decision of the Court to support this argument.
After hearing both parties, the Court held that it had the jurisdiction to entertain the review application since the original Judge was no longer available due to superannuation. The Court rejected the review application, stating that the judgment in question was appealable, and the review was not maintainable based on the arguments presented by the parties. The Court found no merit in the review application and dismissed it, with no order as to costs.
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1995 (5) TMI 294
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... ... ..... . SEN, JJ. ORDER Appeal dismissed.
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1995 (5) TMI 293
The Supreme Court allowed the appeal, set aside the lower court's orders, and directed the Trial Judge to proceed afresh in a case involving criminal conspiracy and misappropriation of foodgrains and bags by government officials. The Court criticized the lower courts for basing their decisions on incomplete evidence and unauthorized documents. The Trial Judge was instructed to follow proper legal procedures without being influenced by the Supreme Court's comments on the case's merits.
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1995 (5) TMI 292
Issues:
1. Validity of the executing court's power to direct demolition of shops constructed by the judgment-debtor.
2. Legality of directing dispossessing tenants not parties to the decree.
Analysis:
Issue 1:
The petitioner, a judgment-debtor, had constructed shops on the property despite a decree declaring the respondent as the absolute owner. The executing court, under Order 21 Rule 101, is empowered to determine questions of right, title, or interest in the property during execution proceedings. The court is mandated to enforce the decree effectively, even if it lacks a mandatory injunction for demolition. The court's power includes removing obstructions or structures built without permission pending litigation. This ensures expeditious execution of possession orders to prevent delays or frustration of the decree. The executing court's authority to order demolition in such cases is crucial to uphold the decree holder's rights without resorting to separate suits, as multiplicity of proceedings is discouraged.
Issue 2:
Regarding the legality of dispossessing tenants not parties to the decree, the law establishes that tenants claiming title through the judgment debtor are bound by the decree and need not be individually impleaded in the suit. If tenants obstruct peaceful possession delivery, the bailiff is authorized to remove obstructions, including demolishing unauthorized constructions, to hand over vacant possession to the decree holder. The executing court's actions in directing the demolition of shops and delivery of possession were deemed lawful and in line with established legal principles. The High Court and the executing court did not err in their decisions, as confirmed by the Supreme Court's dismissal of the Special Leave Petition (S.L.P.).
In conclusion, the Supreme Court upheld the executing court's authority to order demolition of unauthorized constructions and delivery of possession, emphasizing the importance of expeditious execution of decrees and the enforcement of property rights without unnecessary delays or additional litigation.
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1995 (5) TMI 291
Issues Involved:
The issues involved in the judgment are the invocation of bank guarantees, arbitration clause, jurisdiction of the court to entertain appeals from injunction orders, and the validity of the injunction order.
Bank Guarantees Invocation:
The appellant entered into a contract with the respondent, which included bank guarantees payable on demand. Disputes arose regarding payments under the contract, leading to the appellant invoking the bank guarantees. The bank guarantees were unconditionally payable on demand, and the court held that the guarantees were properly invoked.
Arbitration Clause:
Arbitration proceedings were initiated by both parties, and the bank guarantees were kept alive during this process. The appellant refrained from realizing the bank guarantees while arbitration was ongoing. However, the court ruled that the arbitration proceedings did not preclude the appellant from invoking the bank guarantees, as they were unconditional and payable on demand.
Jurisdiction of the Court:
A petition was filed seeking an injunction to prevent the appellant from invoking the bank guarantees. The Single Judge of the Delhi High Court granted the injunction, which was upheld on appeal. The Supreme Court held that the High Court's order of injunction was not justified, as the bank guarantees were properly invoked and there was no irretrievable injustice to the respondent.
Validity of Injunction Order:
The court referred to previous judgments emphasizing that banks must honor guarantees unless there is fraud or irretrievable injustice. The court found no merit in the arguments presented to justify the injunction order. Consequently, the Supreme Court allowed the appeals, set aside the High Court's order, vacated the injunction, and directed the respondent to pay the costs of the appeals.
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1995 (5) TMI 290
Issues Involved:
1. Bar of jurisdiction under Section 28 of the Administrative Tribunals Act.
2. Propriety of entertaining the petition as public interest litigation.
3. Locus standi of the petitioners.
4. Validity of the appointments of the Vice-Chairman and Members of the State Administrative Tribunal (SAT).
5. Compliance with the direction for a High Powered Selection Committee.
6. Procedural fairness and allegations of fraud in the appointment process.
Issue-wise Detailed Analysis:
1. Bar of Jurisdiction under Section 28 of the Administrative Tribunals Act:
The High Court considered the preliminary objection regarding the bar of jurisdiction under Section 28 of the Act, which was not pressed before the Supreme Court. Therefore, this issue did not play a significant role in the final judgment.
2. Propriety of Entertaining the Petition as Public Interest Litigation:
The petitioners, who were police inspectors, challenged the constitution of the SAT and the appointments of its Vice-Chairman and Members. The High Court entertained their petition as public interest litigation. However, the Supreme Court found that the petitioners were motivated by personal benefits rather than public interest, aiming to paralyze the Tribunal's functioning for their gain. The Court concluded that this was a glaring case of abuse of the court process in the guise of public interest litigation.
3. Locus Standi of the Petitioners:
The petitioners' locus standi was questioned, but the High Court proceeded with the case. The Supreme Court, however, determined that the petitioners lacked a genuine public interest and were instead driven by personal motives to challenge the appointments, thereby lacking the proper standing to file the petition.
4. Validity of the Appointments of the Vice-Chairman and Members of the SAT:
The main contention was whether the appointments were made following the directions given by the Supreme Court in S.P. Sampath Kumar's case. The High Court quashed the appointments, deeming them arbitrary, discriminatory, and in violation of the prescribed procedure. The Supreme Court, however, found that the appointments were made after consultation with the Chief Justice of India and that there was no violation of any law in the process. The Court emphasized that the appellants were duly qualified and eligible, and their appointments were not fraudulent or vitiated.
5. Compliance with the Direction for a High Powered Selection Committee:
The Supreme Court examined whether the direction to set up a High Powered Selection Committee was mandatory or advisory. It concluded that the direction was advisory and not mandatory. The Court noted that the amendment to Section 6(7) of the Act, which required consultation with the Chief Justice of India, was in compliance with the Court's directive. The Court found that the Government had effectively complied with the order by appointing High Powered Selection Committees at both the Central and State levels.
6. Procedural Fairness and Allegations of Fraud in the Appointment Process:
The High Court had described the appointment process as "murky," "self-motivated," and "biased." The Supreme Court, however, found that the High Court had drawn unsustainable and unwarranted inferences based on suspicion. The Supreme Court observed that the High Court had inspected government files and drawn conclusions without giving the appellants an opportunity to explain, violating the principles of natural justice. The Supreme Court emphasized that the appointments were processed and approved by the Chief Justice of India and that there was no evidence of fraud or undue influence.
Conclusion:
The Supreme Court set aside the High Court's judgment, allowing the appellants to resume their offices unless they had retired. The Court directed that the appellants be treated as on duty until their retirement and be entitled to arrears of pay and allowances. The Supreme Court also imposed exemplary costs on the petitioners, directing them to pay Rs. 15,000 each, recoverable from their provident fund, gratuity, or other future monetary benefits.
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1995 (5) TMI 289
Issues Involved:
1. Legitimacy of the search and seizure operation.
2. Reliability of the panch witnesses (PW 2 and PW 5).
3. Credibility of the police witnesses (PW 1, PW 4, and PW 6).
4. Admissibility and reliability of the confessional statements of appellants A1 and A2.
5. Overall sufficiency of the evidence to sustain the conviction under TADA and the Arms Act.
Detailed Analysis:
Legitimacy of the Search and Seizure Operation:
The judgment scrutinizes the compliance with Section 100(4) of the Cr.P.C., which mandates the presence of independent and respectable inhabitants of the locality during a search. The court questions whether PW 2 and PW 5 meet these criteria, noting that they were not from the locality where the search was conducted. The court finds it suspicious that the police did not make a serious attempt to involve local independent witnesses before conducting the search.
Reliability of the Panch Witnesses (PW 2 and PW 5):
The court examines the testimonies of PW 2 and PW 5 and finds significant discrepancies. PW 2 admitted to having acted as a panch witness in previous police raids and was found by the Designated Court to be 'available' and 'amenable' to the police. PW 5, who was a friend and associate of PW 2, admitted to providing a fake address to the police and had a history of gambling. The court concludes that both witnesses' explanations for their presence at the scene were inconsistent and unconvincing, rendering their testimonies unreliable.
Credibility of the Police Witnesses (PW 1, PW 4, and PW 6):
While the court acknowledges that the evidence of police officers cannot be discarded merely because they belong to the police force, it emphasizes the need for strict scrutiny and corroboration. The court finds that the police officers' decision to involve PW 2 and PW 5, despite knowing their backgrounds, casts doubt on the fairness of the investigation. The court also notes that the police officers did not join any independent witnesses from the locality, further questioning the integrity of the operation.
Admissibility and Reliability of the Confessional Statements of Appellants A1 and A2:
The Designated Court had already disbelieved and ruled out the confessional statements of A1 and A2. The Supreme Court concurs with this assessment, noting discrepancies and procedural issues in the recording of these statements by PW 3, Hemant Karkare, Deputy Commissioner of Police.
Overall Sufficiency of the Evidence to Sustain the Conviction:
The court emphasizes that the quality of evidence required for a conviction under Section 5 of TADA, which carries stringent punishment, must be of a high order. Given the inconsistencies in the testimonies of PW 2 and PW 5, and the lack of independent corroboration for the police witnesses' statements, the court finds the evidence insufficient to sustain the conviction. The court concludes that the prosecution failed to prove the charges beyond a reasonable doubt.
Conclusion:
The Supreme Court sets aside the conviction and sentence of the appellants, granting them the benefit of doubt due to unreliable and insufficient evidence. The appellants are ordered to be released from custody forthwith if not required in any other case.
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1995 (5) TMI 288
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... ... ..... anohar, JJ. ORDER Appeal dismissed.
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1995 (5) TMI 287
Issues Involved:
1. Maintainability of the petition.
2. Unnecessary delay in registering the transfer of shares.
3. Authority of the liquidator to initiate proceedings.
4. Applicability of the Limitation Act.
5. Vesting of shares in Bank of Baroda.
6. Alleged illegality of the transaction.
7. Entitlement to relief claimed.
Issue-wise Detailed Analysis:
1. Maintainability of the petition:
The respondent-company challenged the maintainability on several grounds, including that BoB Fiscal is not the petitioner, the liquidator lacks authority, rights and obligations are vested in Bank of Baroda, and the petition is barred by limitation. The petitioner, A.V. Sampat, filed the petition as the voluntary liquidator of BoB Fiscal. The liquidator is empowered to initiate this action based on a resolution under Section 490(1) of the Companies Act, which includes taking necessary steps for beneficial winding up. The Company Law Board concluded that the petition is maintainable and does not suffer from any infirmity on account of limitation.
2. Unnecessary delay in registering the transfer of shares:
The shares were lodged from September 22, 1988, to October 4, 1988, but Dunlop delayed the registration by seeking various clarifications over nearly two years. Dunlop's piecemeal queries and the nature of these queries indicated unnecessary delay. The Company Law Board emphasized that under Section 22A of the Securities Contracts (Regulation) Act (SCRA), Dunlop should have decided within two months of lodgment. The delay was deemed unnecessary, and Dunlop was found to have violated the law by retaining the securities beyond the prescribed time-limits.
3. Authority of the liquidator to initiate proceedings:
The liquidator, A.V. Sampat, was found to be duly empowered to initiate this action based on the resolution passed at the extraordinary general meeting of BoB Fiscal. The resolution authorized the liquidator to take necessary steps for beneficial winding up, including registering the impugned shares. The objection regarding the lack of a resolution under Section 512 was considered an irregularity rather than an illegality.
4. Applicability of the Limitation Act:
The Company Law Board concluded that the Limitation Act does not apply to its proceedings, as it is not a court. The Supreme Court's decisions in Nitymmitd M. Joshi v. LIC and Town Municipal Council, Athani v. Presiding Officer, Labour Court, Hubtt, confirmed that Article 137 of the Limitation Act applies only to courts. Consequently, the petition was found to be maintainable without any limitation restrictions.
5. Vesting of shares in Bank of Baroda:
The vesting of shares in Bank of Baroda did not render the rectification illegal or impossible. The petitioners were not seeking registration in the name of Bank of Baroda but in the name of BoB Fiscal. The registration was to be done in the name of the transferee mentioned in the transfer deed, which was BoB Fiscal. The Company Law Board concluded that there was no doubt about the bona fides of BoB Fiscal regarding the transactions.
6. Alleged illegality of the transaction:
Dunlop's argument that the transaction might be illegal due to a Supreme Court decision was found to be untenable. The burden of proof lies on the party alleging that the transaction is surreptitious. In the absence of any proof, the transaction could not be branded as contrary to public policy. The Company Law Board concluded that the rectification would not be rendered illegal.
7. Entitlement to relief claimed:
The petitioner sought registration of shares in his name, but it was conceded that registration could only be made in the name of the transferee mentioned in the transfer deed, which was BoB Fiscal. The Company Law Board directed Dunlop to register the transfer of 7,42,400 equity shares in the name of BoB Fiscal within 30 days and to pay all dividends on these shares for the years 1988-89 and thereafter. The prayer for an enquiry by the Department of Company Affairs was deemed unnecessary.
Conclusion:
The petition was found to be maintainable, and Dunlop was directed to register the transfer of shares in the name of BoB Fiscal and pay the due dividends. The objections raised by Dunlop were overruled, and the Company Law Board emphasized the need for compliance with the statutory provisions regarding the transfer of securities.
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1995 (5) TMI 286
Issues Involved:
1. Validity of the sale of mortgaged assets by SIPCOT.
2. Compliance with the guidelines laid down by the Supreme Court in Mahesh Chandra case.
3. Adequacy of the sale price of the mortgaged assets.
4. Procedural fairness in the sale process.
Summary:
1. Validity of the Sale of Mortgaged Assets by SIPCOT:
The Supreme Court reviewed the actions of SIPCOT in selling the mortgaged assets of respondent No. 1. SIPCOT had taken possession of the unit due to continuous defaults by respondent No. 1 in repaying the loan. The sale was conducted through tenders followed by negotiations, resulting in the sale of the assets to respondent No. 2 for Rs. 38 lakhs. The Court found that SIPCOT had been accommodating in rescheduling the repayment and had acted within its rights to take possession and sell the assets after multiple defaults by respondent No. 1.
2. Compliance with the Guidelines Laid Down by the Supreme Court in Mahesh Chandra Case:
The High Court had set aside the sale, citing non-compliance with the guidelines in Mahesh Chandra v. Regional Manager, U.P. Financial Corporation, which emphasized the need for public auction or wide publicity in case of sale by tender. The Supreme Court clarified that while public auction is preferred, sale by tender is not ipso facto invalid if conducted with adequate publicity and efforts to secure the best price.
3. Adequacy of the Sale Price of the Mortgaged Assets:
The Supreme Court noted that the initial offer received was Rs. 14.86 lakhs, which was negotiated up to Rs. 38 lakhs by SIPCOT. The unit was valued at Rs. 36.44 lakhs, and no higher offers were received despite opportunities given to respondent No. 1 during the proceedings. The Court held that the sale price was not low, considering the circumstances and the failure of respondent No. 1 to secure a higher offer.
4. Procedural Fairness in the Sale Process:
The Court addressed the procedural fairness, noting that SIPCOT had given sufficient opportunities to respondent No. 1 to repay the loan and had acted reasonably in taking possession and selling the assets. The failure to give prior intimation to respondent No. 1 before accepting the offer of Rs. 38 lakhs was deemed inconsequential, as respondent No. 1 had ample opportunity to present a higher offer during the litigation.
Conclusion:
The Supreme Court allowed the appeal, setting aside the judgments of the Division Bench and the learned single Judge of the High Court. The writ petition filed by respondent No. 1 was dismissed, and the sale of the unit to respondent No. 2 for Rs. 38 lakhs was upheld. There was no order as to costs.
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1995 (5) TMI 285
Issues Involved:
1. Restraint on implementing the resolution passed at the extraordinary general meeting.
2. Compliance with Section 173 of the Companies Act regarding the explanatory statement.
3. Inspection of documents.
4. Amendments to the main petition.
Issue-wise Detailed Analysis:
1. Restraint on Implementing the Resolution Passed at the Extraordinary General Meeting:
The petitioners sought to restrain the respondent-company from implementing the resolution passed at the extraordinary general meeting held on June 20, 1994, which removed the petitioners as directors. They argued that the explanatory statement annexed with the notice did not fulfill the requirements of Section 173 of the Companies Act. The Company Law Board's interim order dated June 15, 1994, restraining the company from transacting the business relating to the removal of the petitioners, was set aside by the High Court of Bombay. However, the High Court allowed the petitioners to participate in board meetings without representing themselves as directors. The Division Bench upheld this decision but continued the interim order for two weeks. The petitioners argued that the extraordinary general meeting was vitiated by non-compliance with Section 173, as the explanatory statement did not set out all material facts. The respondents countered that the material facts were different from full particulars and that the explanatory statement did not suffer from want of particulars.
2. Compliance with Section 173 of the Companies Act Regarding the Explanatory Statement:
Section 173(2) mandates that a statement setting out all material facts concerning each item of business should be annexed to the notice convening the meeting. The petitioners contended that the explanatory statement did not disclose material particulars, such as the petitioners' offer to withdraw their letter to the State Bank of India and the fact that their personal guarantee to other financial institutions was still in force. The respondents argued that the explanatory statement was sufficient and that the petitioners' letter to the bank was anti-company. The Company Law Board noted that in a requisitioned meeting, the company acts only as a medium to convene the meeting and is not bound to attach an explanatory statement. The Board concluded that the notice calling for the meeting did not suffer from any legal infirmity.
3. Inspection of Documents:
The petitioners sought inspection of documents, arguing that the company had not complied with the Company Law Board's order dated June 15, 1994. The respondents contended that the petitioners had been given inspection of all documents they were entitled to as shareholders and that the petitioners, having been removed as directors, were not entitled to further inspection. The Company Law Board directed the company to offer the petitioners inspection of all documents they are entitled to as members and those relied on by the respondents in their replies, within one month from the date of receipt of the order.
4. Amendments to the Main Petition:
The petitioners sought to incorporate amendments to the main petition. The Company Law Board allowed the amendments except for the portion relating to the extraordinary general meeting held on June 20, 1994, as it had already been considered in this order. The respondents were directed to file their replies to the amended application by July 15, and rejoinders, if any, by August 15, 1995. The petitioners were also directed to file their replies on the maintainability of the petition by July 15, and rejoinders by August 15, 1995. The petition was scheduled for a final hearing from September 25 to September 27, 1995.
Conclusion:
The Company Law Board vacated the interim order restraining the implementation of the extraordinary general meeting resolution, directed the company to offer inspection of documents to the petitioners, and allowed amendments to the main petition except for the portion relating to the extraordinary general meeting. The petition was scheduled for a final hearing in September 1995.
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1995 (5) TMI 284
Issues Involved:
1. Licensing authority for the manufacture of potable alcohol.
2. Applicability of the Industries (Development and Regulation) Act, 1951.
3. Employment criteria for defining a factory/industrial undertaking.
4. Validity of tenders submitted by the appellant and respondents.
5. Jurisdiction and powers of the State Government versus the Central Government.
Detailed Analysis:
1. Licensing Authority for the Manufacture of Potable Alcohol:
The appellant, Ramnarayan Satyanarayan Agrawal Distilleries Pvt. Ltd., and the respondent, Associated Alcohols & Breweries Ltd., are both manufacturers of potable alcohol. The appellant was granted a license by the State Government of Madhya Pradesh to encourage competition. However, the respondent contested this on the grounds that only the Central Government has the authority to issue such licenses.
2. Applicability of the Industries (Development and Regulation) Act, 1951:
The appellant argued that the Act does not apply to their industrial unit as it employs less than fifty persons. The Court upheld this contention, stating that the appellant's business, employing only 22 workers, does not qualify as a factory or an industrial undertaking under Sections 3(c) and 3(d) of the Act. Therefore, the appellant is not required to obtain a license under Section 11 of the Act.
3. Employment Criteria for Defining a Factory/Industrial Undertaking:
The Court emphasized that a factory, as defined under Section 3(c) of the Act, must employ fifty or more workers with the aid of power or one hundred or more workers without the aid of power. Since the appellant employs only 22 workers, its establishment does not fall under this definition, and thus, it is not an industrial undertaking requiring a Central Government license.
4. Validity of Tenders Submitted by the Appellant and Respondents:
The appellant's tender for supplying country liquor was significantly lower than that of Castle Douglas Industries Limited, a concern of the Kedia Group. The Court noted that accepting the higher tender would result in a substantial loss to the Exchequer. The respondents initially attempted to challenge the appellant's tender through legal means but failed. The Court found that the respondents' actions were an attempt to perpetuate their monopoly and frustrate the appellant's efforts to secure the contract.
5. Jurisdiction and Powers of the State Government versus the Central Government:
The Court clarified that the production and manufacture of intoxicating liquors fall within the jurisdiction of the State under Entry 8, List II of the Constitution. The appellant, not being an industrial undertaking as defined by the Act, does not require a Central Government license for manufacturing potable alcohol. The Court referenced the case of State of Madhya Pradesh v. Nandlal Jaiswal, which supported the view that a factory employing less than fifty workers does not require a Central Government license.
Conclusion:
The Supreme Court allowed the appeal, stating that the appellant does not require a license under Section 11 of the Industries (Development and Regulation) Act to manufacture potable alcohol. The appellant's tender must be considered in accordance with the law. The Court awarded exemplary costs of Rs. 20,000 to the appellant, noting the respondents' unsuccessful attempts to use legal processes to maintain their monopoly. The appeal in Civil Appeal No. 5527 of 1995 was also disposed of in line with this judgment.
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1995 (5) TMI 283
Issues Involved:
1. Whether the suit property was in commercial use since before 1962.
2. Whether the suit property or any part thereof is an unauthorized construction.
3. Whether it was necessary to have served any of the plaintiffs in the two suits with notice under Section 343/344 of the DMC Act.
4. Whether the notice under Section 343/344 of DMC Act is invalid for not having been issued by the Commissioner.
5. Whether the plaintiffs have locus standi in filing the suits.
6. Whether provisions of Master Plan-2000 challenged by the plaintiffs are unconstitutional and hit by Article 14 of the Constitution.
7. Whether the plaintiffs are guilty of having made material concealment of facts and whether such conduct disentitles them from the discretionary relief of injunction.
8. Whether the power to demolish conferred by Sections 343 DMC Act is discretionary and whether the impugned action of demolition without exercising discretion is arbitrary.
9. Whether the building in suit is being treated by authorities with hostile discrimination.
10. Whether the plaintiffs can take protection behind the doctrine of Promissory Estoppel and Legitimate Expectations.
Detailed Analysis:
1. Commercial Use Since Before 1962:
The court found that the inspection report dated 29.1.1962, which the plaintiff bank heavily relied upon, was false, fabricated, and planted. The affidavits from MCD officials and the original records demonstrated that the suit property was not in commercial use in 1962. The property was a vacant plot until 1965, and it was not plausible that it had been developed and subjected to commercial use within a short period without any sanction.
2. Unauthorized Construction:
The court noted significant deviations from the sanctioned building plans. The permissible construction limits were exceeded on all floors, and an unauthorized staircase was constructed. The basement, which should not be used for commercial purposes, was being used as such, making the building non-compliant with the Building Bye-Laws.
3. Entitlement to Notice Under Sections 343/344 of DMC Act:
The court held that tenants or persons other than the owner are not entitled to notice under Sections 343/344 of the DMC Act. The right to notice is limited to the person at whose instance the unauthorized construction was commenced, carried on, or completed. However, tenants and builders, though not entitled to notice, can appeal as 'persons aggrieved' by the order of demolition.
4. Validity of Notice Issued by Commissioner:
The court found that the notices issued by the Zonal Engineer (Buildings) were valid as the Commissioner had delegated his powers under Section 491 of the DMC Act. The objection that the notices were not issued by the Commissioner himself was dismissed.
5. Locus Standi and Maintainability of Civil Suits:
The court referred to the Supreme Court's ruling in Shiv Kumar Chadha vs. MCD, which restricts the maintainability of civil suits in cases of demolition under Section 343 of the DMC Act. The plaintiffs, being a tenant and a builder, had the remedy of appeal available to them and should have pursued it. The suits were not maintainable as there was no jurisdictional error on the part of the Corporation.
6. Constitutionality of Master Plan-2000:
The court upheld the validity of the Master Plan-2000, stating that it was based on expert opinion and research aimed at the planned development of Delhi. The distinction between plots allowing 2-1/2 floors and those allowing 3-1/2 floors was based on intelligible classification with a nexus to the object sought to be achieved. The challenge under Article 14 of the Constitution was found to be without merit.
7. Material Concealment of Facts:
The court found that the plaintiff in suit No. 2581/94 had concealed material facts, including the pendency of an appeal by the owner and the completion certificate indicating the building was residential. The plaintiff also submitted a false inspection report. Such conduct disentitled the plaintiff from the relief of temporary injunction.
8. Discretionary Power to Demolish:
The court noted that the power to demolish under Section 343 of the DMC Act is not discretionary in cases of non-compoundable deviations. The municipal authorities are mandated to take action against unauthorized constructions to protect public safety and convenience.
9. Hostile Discrimination:
The court dismissed the claim of hostile discrimination, stating that equality before the law does not mean equality in the violation of law. The plaintiff could not claim discrimination merely because other violators were not proceeded against.
10. Promissory Estoppel and Legitimate Expectations:
The court rejected the plea of promissory estoppel and legitimate expectations based on the election manifesto of a political party. Such promises are not binding on the State and cannot override statutory provisions.
Conclusion:
The court rejected the prayers for ad interim injunction in both suits and vacated the interim order dated 19.11.94 in suit No. 2581/94. The plaintiffs were advised to seek remedies through the appellate tribunal as provided under the DMC Act. The court also suggested measures for handling similar cases in the future to prevent misuse of judicial processes by unscrupulous builders.
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1995 (5) TMI 282
Issues Involved:
1. Necessity of survey by an approved surveyor or loss assessor for claims under Rs. 20,000.
2. Interpretation of Section 64UM of the Insurance Act, 1938.
3. Validity of in-house assessment by insurance companies for claims under Rs. 20,000.
4. Alleged breach of Articles 14, 19(1)(g), and 21 of the Constitution.
Detailed Analysis:
1. Necessity of Survey by an Approved Surveyor or Loss Assessor for Claims Under Rs. 20,000:
The pivotal question was whether a survey by an approved surveyor or loss assessor is necessary for claims under Rs. 20,000. The petitioner, an association of surveyors, argued that all claims, irrespective of their value, must be surveyed by a licensed surveyor or loss assessor. The respondents contended that claims under Rs. 20,000 could be settled by the insurance company itself without reference to approved surveyors or loss assessors.
2. Interpretation of Section 64UM of the Insurance Act, 1938:
Section 64UM was interpreted to determine its applicability to claims below Rs. 20,000. Subsection (2) specifically mandates that claims equal to or exceeding Rs. 20,000 require a report from an approved surveyor or loss assessor. However, the section does not mention claims below Rs. 20,000, indicating that the legislature did not intend for all claims to be surveyed by approved surveyors. Subsection (6) allows insurers to employ any person (not disqualified) for claims under Rs. 20,000 if employing an approved surveyor would be disproportionate to the claim amount.
3. Validity of In-House Assessment by Insurance Companies for Claims Under Rs. 20,000:
The court found no merit in the petitioner's argument that subsection (6) restricts insurers from settling claims under Rs. 20,000 through in-house assessment. Subsection (6) applies only when the insurer decides not to settle the claim by itself. The insurer has the option to settle such claims through its own officers, who are not considered surveyors or loss assessors under subsections 1(D), (2), and (6). Subsection (9) empowers the Controller to direct that claims under Rs. 20,000 be reported upon by an approved surveyor if not already done so.
4. Alleged Breach of Articles 14, 19(1)(g), and 21 of the Constitution:
The petitioner claimed that in-house assessments violated Articles 14, 19(1)(g), and 21 of the Constitution. The court found no infringement of these articles. The policy of settling claims below Rs. 20,000 without a surveyor or loss assessor was deemed not arbitrary or violative of the equality clause. It was noted that this method saves unnecessary expenditure and time, and does not debar approved surveyors from surveying claims of Rs. 20,000 or more, thus not affecting their trade or business.
Conclusion:
The court concluded that the legislature did not intend for all claims to be surveyed by approved surveyors, especially small claims under Rs. 20,000. The in-house assessment by insurance companies for such claims is permissible and does not violate constitutional provisions. The petition was dismissed with no order as to costs.
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1995 (5) TMI 281
Issues Involved:
1. Rate of duty payable on consumption of electrical energy under the Madhya Pradesh Electricity Duty Act, 1949.
2. Constitutionality of the Madhya Pradesh Electricity Duty (Amendment and Validation) Act, 1984.
Issue-wise Detailed Analysis:
1. Rate of Duty Payable on Consumption of Electrical Energy:
The primary issue in this case is whether the duty payable on the consumption of electrical energy by M/s. Birla Ltd. under Section 3 of the Madhya Pradesh Electricity Duty Act, 1949 ("the 1949 Act") should be calculated under Item (1) or Item (2) of the Table to Section 3 of the 1949 Act. M/s. Birla Ltd. contended that the duty should be calculated under Item (2) because the premises where the electrical energy was consumed should be regarded as a factory due to the inclusive meaning of "factory" given in Explanation (c) to Section 3 of the 1949 Act. The Government of Madhya Pradesh, however, levied duty under Item (1) of the Table, which pertains to premises used for business, trade, or commercial purposes, including mines to which the Mines Act, 1952 applies.
The High Court of Madhya Pradesh had upheld the contention of M/s. Birla Ltd., ruling that the duty should be calculated under Item (2) of the Table. However, the Supreme Court, upon reviewing the relevant provisions and explanations of the 1949 Act, concluded that the premises of M/s. Birla Ltd. at the mines site, where lime-stone boulders are processed, falls under the description of premises covered by Item (1) due to the applicability of the Mines Act. The Court emphasized that when a premises falls within the description of premises covered by Item (1), the highest rate of duty is leviable, and any lower rate under another item is excluded. Therefore, the duty payable for electrical energy consumed in the premises of M/s. Birla Ltd. at the mines site should be at the rate specified in Item (1) of the Table to Section 3 of the 1949 Act.
2. Constitutionality of the Madhya Pradesh Electricity Duty (Amendment and Validation) Act, 1984:
The second issue pertains to the constitutionality of the Madhya Pradesh Electricity Duty (Amendment and Validation) Act, 1984 ("the Validation Act"), which amended certain provisions of the 1949 Act and validated the duty levied on the consumption of electrical energy in premises to which the Mines Act applied. M/s. Birla Ltd. challenged the constitutionality of the Validation Act, arguing that it retrospectively validated the levy of duty contrary to the High Court's judgment.
The Supreme Court noted that the Validation Act was enacted while the appeal against the High Court's judgment was pending. The Court referenced its decision in Govt. of A.P. v. H.M.T., where it had upheld the provisions of a Validation Act that retrospectively validated the levy of duty. However, since the Supreme Court found the High Court's judgment unsustainable and ruled that the duty should be calculated under Item (1) of the Table, it deemed it unnecessary to examine the constitutionality of the Validation Act further.
Conclusion:
The Supreme Court allowed the civil appeal, set aside the High Court's judgment, and ruled that the duty payable for electrical energy consumed in the premises of M/s. Birla Ltd. at the mines site should be at the rate specified in Item (1) of the Table to Section 3 of the 1949 Act. Consequently, the writ petition challenging the Validation Act was dismissed.
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1995 (5) TMI 280
The Supreme Court dismissed the appeal in the case. 1995 (5) TMI 280 - SC. Judges: Mr. B.P. Jeevan Reddy and Mr. Justice S.C. Sen.
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