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2007 (7) TMI 721
Disallowance of interest u/s. 36(1)(iii) - purchase of shares was mainly for acquiring controlling rights in another company - CIT(A) deleted addition - HELD THAT:- Revenue fairly admits that similar question has been considered by this Court in the case of the very assessee in C.I.T. v. Akalu Holdings Pvt. Ltd. and the appeal was not admitted by the order. Following our earlier order in the aforesaid appeal, no case is made out for admission of this appeal.
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2007 (7) TMI 720
The Delhi High Court dismissed the revenue's appeal against an order of the Income Tax Appellate Tribunal regarding additional evidence in a case for the assessment year 1991-92. The Tribunal found no error in allowing the additional evidence under rule 46A of the Income Tax Rules. The High Court held that no substantial question of law arose and dismissed the appeal.
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2007 (7) TMI 719
Issues involved: Challenge to order passed by a learned Single Judge of the Rajasthan High Court under Section 482 of the Code of Criminal Procedure, 1973 and refusal to recall the said order.
Background: Complainant's elder sister lodged a complaint alleging dowry demands, torture, and rape. FIR lodged under Sections 498A, 406 IPC. Another complaint lodged for offense under Section 376 read with Section 120B IPC. Appellants arrested, bail application rejected. Discrepancy in complainant's statements led to application under Section 311 of the Code.
Arguments: Appellants argued that High Court's orders lacked reasons for setting aside the trial court's decision under Section 311. They contended that no notice was issued before the order, and the recall application was erroneously rejected. Respondent No. 1 argued that the High Court's order was justified, even without prior notice to the appellants.
Section 311 of the Code: Provides discretionary authority to summon witnesses or examine persons essential to the case. The section aims to prevent failure of justice due to missing evidence. Court's duty to examine necessary witnesses for a just decision. The section applies to all proceedings and empowers the Court to summon witnesses at any stage.
Discretionary Power: Section 311 is discretionary but imposes an obligation on the Court to summon essential witnesses. Best available evidence should be presented. Court can draw adverse inferences if crucial evidence is not provided. The Court's role is to ensure justice by examining relevant witnesses.
Cross-Examination: Right to cross-examine a witness called by the Court arises under the Evidence Act. The Court should allow cross-examination to ensure fairness. Highlighted in Jagat Rai v. State of Maharashtra 1968CriLJ231.
Judgment: Appellants were not heard before the order was passed. High Court set aside the order due to lack of notice and non-impleadment of the appellants. The respondent's petition will be heard on merits. Appellants to be impleaded if not already done. No opinion expressed on the case's merits. Appeal allowed.
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2007 (7) TMI 718
Issues Involved:1. Maintainability of writ appeal against interlocutory orders u/s 2(1) of the M.P. Uchcha Nyayalaya (Khand Nyaypeeth Ko Appeal) Adhiniyam, 2005. Summary:Issue 1: Maintainability of writ appeal against interlocutory orders u/s 2(1) of the Act1. The preliminary objection raised by the respondents was that the writ appeal against the order dated 12-1-2007 is not maintainable due to the proviso to Sub-section (1) of Section 2 of the M.P. Uchcha Nyayalaya (Khand Nyaypeeth Ko Appeal) Adhiniyam, 2005. The Division Bench referred the question of whether the proviso absolutely bars an appeal to the Division Bench or if such an order can be appealed based on the nature, tenor, effect, and impact of the order passed by the learned Single Judge. 3. In W.A. No. 69/2007, the Division Bench held that the refusal of an interim order for staying the order of removal u/s 41-A of the Act caused serious injustice to the appellant and thus, the impugned order was not an interlocutory order and could be challenged in a writ appeal. 4. In W.A. No. 671/2007, another Division Bench opined that the order materially affects the final decision in the main case and has a vital impact, hence the appeal against the said order is maintainable. 5. Conversely, in W.A. No. 1318/2006, the Division Bench held that an appeal against an interim order passed by the learned Single Judge is not maintainable as the bar created by the proviso to Section 2(1) of the Act would come into play. 8. Mr. R.P. Agrawal argued that the term 'order' under Article 226 is of wide amplitude and includes orders with characteristics of finality. The proviso to Section 2(1) should not be interpreted in absolute terms as it would annihilate the normative purpose of the main provision. 9. Mr. V.S. Shroti contended that the bar under the proviso should be treated as absolute, reflecting the legislative intent to exclude appeals against interlocutory orders. 10-20. The court examined various precedents and principles of statutory interpretation, emphasizing that an interlocutory order with the semblance of finality or affecting the rights of the parties can be treated as an order for all practical purposes. 21-28. The court reviewed the concept of interlocutory orders under the Letters Patent, noting that orders affecting the merits of the case or determining rights and liabilities could be considered judgments and thus appealable. 29-32. The court concluded that the decisions in Nav Nirman (Milan) Deria and Tejpal Singh correctly interpreted the law, while the decision in Arvind Kumar Jain did not and was overruled. 33. The court summarized its conclusions, stating that the proviso to Section 2(1) does not create an absolute bar to appeals, and the maintainability of an appeal depends on the nature, tenor, effect, and impact of the order. The guidelines from various Supreme Court cases should be considered, and the facts of each case must be scrutinized. 34. The matter was directed to be placed before the Division Bench for adjudication.
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2007 (7) TMI 717
Issues Involved:
1. Applicability of Part III of Kerala Service Rules (KSR) to KSRTC employees.
2. Competence of KSRTC to fix a different cut-off date for implementing the Fifth Pay Commission recommendations.
3. Validity of the State Government's direction u/s 34 of the Road Transport Corporation Act, 1950.
Summary:
1. Applicability of Part III of KSR to KSRTC Employees:
The Kerala State Road Transport Corporation (KSRTC) was established under the Road Transport Corporation Act, 1950. Upon its formation, employees from the State Transport Department were absorbed into KSRTC with the same terms and conditions of service as per the Kerala Service Rules (KSR). On 27.3.1984, the Government of Kerala authorized KSRTC to pay pension to its employees as per KSR. The High Court held that the adoption of Part III of KSR by KSRTC was an exercise of legislation by reference, obligating KSRTC to implement the Fifth Pay Commission recommendations simultaneously with the State Government. However, the Supreme Court found that the adoption of Part III of KSR did not automatically bind KSRTC to implement all enhancements in pension and other benefits given by the State Government to its employees.
2. Competence of KSRTC to Fix a Different Cut-off Date:
The High Court ruled that KSRTC did not have the competence to fix a different cut-off date for implementing the Fifth Pay Commission recommendations. The Supreme Court disagreed, stating that KSRTC, being an autonomous corporation, could regulate the service of its employees and consider its financial health in deciding whether to adopt the recommendations and from what date. The Court emphasized that KSRTC's decision would be subject to any direction issued by the State Government u/s 34 of the Act.
3. Validity of the State Government's Direction u/s 34:
The Supreme Court examined whether the communication dated 16.5.1995 from the State Government, advising KSRTC to defer the implementation of the Fifth Pay Commission recommendations due to financial constraints, constituted a direction u/s 34 of the Act. The Court concluded that this communication was indeed a direction u/s 34, as it was issued in compliance with a High Court directive for the Government to take a policy decision. The Court held that KSRTC was bound to implement this direction in the absence of any regulation to the contrary.
Conclusion:
The Supreme Court allowed the appeals, setting aside the High Court's decision, and held that KSRTC was justified in deferring the implementation of the Fifth Pay Commission recommendations due to its precarious financial position. The writ petitions filed by the employees were dismissed.
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2007 (7) TMI 716
Issues involved: Petitioner convicted u/s 138 of N.I. Act seeks to quash sentence citing subsequent settlement.
Summary:
1. The petitioner was convicted and sentenced u/s 138 of the N.I. Act, with the sentence being imprisonment till rising of court and a compensation amount of Rs.75,000. The petitioner now seeks to quash the sentence based on a subsequent settlement with the complainant, invoking the jurisdiction u/s 482 Cr.P.C.
2. The petitioner and the complainant confirm that the entire compensation amount has been paid, as per the decision in Girish v. Muthoot Capital Services. The only remaining aspect is the substantive sentence of imprisonment. The court clarifies that not all post-revision compositions can be accepted under Section 482 Cr.P.C., citing Sabu George v. Home Secretary as an exceptional case.
3. The court emphasizes that the power u/s 482 Cr.P.C. cannot be invoked in this case based on the Sabu George precedent. It is the responsibility of the petitioner and the complainant to demonstrate to the Magistrate that the compensation has been fully paid, as per the original direction. If this is confirmed, there will be no need for executing the default sentence.
4. The Criminal Miscellaneous Case is dismissed, with the petitioner being liable only for the substantive sentence if the compensation has been discharged. The court directs to hand over the order.
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2007 (7) TMI 715
Issues Involved:
1. Demand for punitive charges by Railway Authorities for alleged overloading of wagons.
2. Challenge to paragraph 1744 of the Indian Railways Commercial Manual.
3. Territorial jurisdiction of the Delhi High Court to entertain the petitions.
Detailed Analysis:
1. Demand for Punitive Charges:
The petitioners contested the Railway Authorities' demands for punitive charges related to the alleged overloading of wagons. They argued that such demands should be made before the delivery of goods to allow them to challenge any weighment made by the Railways. The demands in these cases were raised post-delivery of goods. The petitioners relied on Sections 73 and 79 of the Railways Act, 1989, to support their position.
2. Challenge to Paragraph 1744 of the Indian Railways Commercial Manual:
The petitioners challenged paragraph 1744 of the Indian Railways Commercial Manual, claiming it violated Section 79 of the Railways Act, 1989, as it effectively negates the statutory right of re-weighment. This manual was formulated by the Railway Board under the Indian Railway Board Act, 1905. The petitioners sought the quashing of both the punitive charges and paragraph 1744 of the Manual.
3. Territorial Jurisdiction:
The respondents objected to the maintainability of the petitions on the grounds that the Delhi High Court lacked territorial jurisdiction. They argued that the punitive charges were raised by the Chief Station Manager, South East Central Railway, Mandhar, Chhattisgarh, and that no part of the cause of action arose in Delhi. The petitioners' registered office is in Nagpur, Maharashtra, and their integrated steel plant is in Mandhar, Chhattisgarh. The booking, re-weighment, and delivery of goods occurred outside Delhi.
The respondents cited Supreme Court decisions, including Union of India v. Adani Exports Ltd. and Kusum Ingots and Alloys Ltd. v. Union of India, to argue that the mere framing of a legislation or executive order in Delhi does not confer jurisdiction unless the cause of action arises within the territorial limits of the court.
Analysis of Jurisdiction:
The court examined the jurisdictional argument by referring to Article 226 of the Constitution. Article 226(1) empowers High Courts to issue writs to any person or authority within its territorial jurisdiction, while Article 226(2) extends this jurisdiction to cases where the cause of action arises within its territory. The court noted that Article 226(2) was introduced to address the inconvenience highlighted in earlier decisions, allowing High Courts to entertain writs even if the cause of action partly arises within their jurisdiction.
The court distinguished between the two clauses, emphasizing that Article 226(1) provides jurisdiction based on the location of the authority, while Article 226(2) extends jurisdiction based on the cause of action. The court referred to several Supreme Court decisions, including Navinchandra N. Majithia v. State of Maharashtra, to support this interpretation.
Conclusion:
The court concluded that it had territorial jurisdiction to entertain the petitions under Article 226(1) because the Railway Board, which issued paragraph 1744 of the Indian Railways Commercial Manual, is located in Delhi. The challenge to the punitive demands was intrinsically linked to the validity of paragraph 1744, thus bringing the case within the jurisdiction of the Delhi High Court. The court also noted that the doctrine of forum non conveniens could not override the statutory or constitutional provisions conferring jurisdiction. The petitions were therefore maintainable before the Delhi High Court.
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2007 (7) TMI 714
Issues Involved:
1. Maintainability of pre-detention writ petition.
2. Non-application of mind by the Detaining Authority.
3. Suppression of vital and relevant documents.
4. Malafide intent behind the detention order.
5. Delay in launching prosecution against the petitioner.
Issue-wise Detailed Analysis:
1. Maintainability of Pre-detention Writ Petition:
The petitioner challenged the maintainability of the pre-detention writ petition under Article 226 of the Constitution of India. The court referred to the Supreme Court's judgment in *Alka Subhash Gadia* which allows for judicial review of detention orders at the pre-execution stage under limited grounds. The court held that the present writ petition is maintainable as it challenges the detention order on grounds of it being passed for a wrong purpose and on vague, extraneous, and irrelevant grounds.
2. Non-application of Mind by the Detaining Authority:
The petitioner argued that the detention order was issued under Section 3(1)(i) of the COFEPOSA Act to prevent future smuggling, whereas the material on record suggested a case of abetting smuggling or dealing in smuggled goods. The court noted that the arrest memo and show cause notice indicated allegations of diversion of duty-free goods into the local market, not smuggling. This discrepancy suggested non-application of mind by the Detaining Authority.
3. Suppression of Vital and Relevant Documents:
The petitioner contended that vital documents, including statements recorded by CBI, the search and seizure report, and the show cause notice by the Development Commissioner, were not placed before the Detaining Authority. The court agreed, stating that the failure to present these documents, which were crucial for the Detaining Authority's decision, rendered the detention order invalid. The absence of a detailed counter affidavit from the respondents further supported this conclusion.
4. Malafide Intent Behind the Detention Order:
The petitioner alleged that the detention order was motivated by revenge due to a complaint filed against DRI officers for demanding bribes. The court found merit in this argument, noting that the detention orders against the petitioner's father and brother had already been quashed on similar grounds. The court observed that the delay in launching prosecution against the petitioner and the suppression of relevant documents indicated that the detention order was issued for extraneous reasons and with malafide intent.
5. Delay in Launching Prosecution Against the Petitioner:
The court noted the significant delay in prosecuting the petitioner despite the passage of time since the alleged offenses. The respondents failed to provide a satisfactory explanation for this delay, which further suggested that the detention order was not based on genuine grounds but was instead punitive and retaliatory in nature.
Conclusion:
The court concluded that the detention order dated 28.12.2005 was invalid due to non-application of mind, suppression of vital documents, and malafide intent. The writ petition was allowed, and the detention order was quashed.
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2007 (7) TMI 713
Issues Involved:
1. Whether the Rajasthan Public Service Commission (RPSC) correctly applied the principles of horizontal reservation for women candidates.
2. Whether the selection list dated 30.12.2001 should be set aside and whether the appellants should be granted relief.
Summary:
Issue 1: Application of Horizontal Reservation for Women Candidates
The appellants contended that RPSC incorrectly applied the principles of horizontal reservation for women candidates, treating it as vertical reservation. According to Rule 9(3) of the Rajasthan Judicial Service Rules, 1955, "Reservation for women candidates shall be 20% category-wise in the direct recruitment." The Supreme Court referred to the principles laid down in *Indra Sawhney vs. Union of India* and *Anil Kumar Gupta vs. State of U.P.*, explaining that horizontal reservations cut across vertical reservations and should be adjusted proportionately within each category.
The Court found that RPSC had selected women candidates in excess of their quota by treating the 20% reservation for women as vertical instead of horizontal. For instance, out of 59 general category posts, 11 were earmarked for women. RPSC selected 11 women on merit and then added another 11 under the reservation quota, resulting in 22 women being selected, which was impermissible. Similarly, for 24 OBC posts, RPSC selected 19 candidates including 3 women on merit and then added 5 more women, resulting in 8 women being selected instead of the required 5.
Issue 2: Relief and Setting Aside the Selection List
The appellants argued that the selection list dated 30.12.2001 was bad in law due to the excess selection of women candidates. The Supreme Court acknowledged the grievance but noted that the selected candidates had been serving as Judicial Officers for more than five years, and there had been subsequent selections and appointments in 2005. The Court decided not to disturb the entire selection list or the appointments already made.
However, the Court found that three appellants'Rajesh Kumar Daria, Mohan Lal Soni, and Sunil Kumar Gupta'would have been selected if horizontal reservation had been correctly applied. Therefore, the Court directed that:
1. Sunil Kumar Gupta and Mohan Lal Soni shall be deemed to have been selected in the 2001 selection list, and necessary letters of appointment shall be issued to them. Their seniority will be counted from the date of actual appointment.
2. Rajesh Kumar Daria, who was appointed in the 2005 selection, should be given his position in the 2001 selection list as the last candidate. His retrospective seniority will not entitle him to monetary benefits but will count for promotions and pensionary benefits.
The appeals were allowed in part, and the order of the High Court was set aside insofar as the said three appellants.
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2007 (7) TMI 712
Issues Involved:
1. Maintainability of the petition seeking enforcement of fundamental rights by a company.
2. Interpretation of the definition of telecommunication service.
3. Does the TRAI Act suffer from the vice of excessive delegation?
4. Virus of Rules 9 and 10 of the Cable Television Networks (Regulation) Act, 1995.
5. Disconnection of TV channel signals.
6. Restrictions on disconnection.
Detailed Analysis:
1. Maintainability of the Petition Seeking Enforcement of Fundamental Rights by a Company:
The court addressed the threshold challenge to the maintainability of the petitions seeking enforcement of Fundamental Rights under Article 19 by companies. The argument presented was that the petitions lacked the necessary pleadings to establish that the petitioners were Indian citizens, as they were foreign companies. The court reiterated that only Indian citizens are entitled to claim Fundamental Rights under Article 19, as established in previous cases such as The State Trading Corporation of India v. The Commercial Tax Officer and Benett Coleman and Co. v. Union of India. The court concluded that the petitions were not maintainable since the petitioners failed to demonstrate their status as Indian citizens.
2. Interpretation of the Definition of Telecommunication Service:
The court examined whether broadcasting activities fall within the purview of the Telecom Regulatory Authority of India (TRAI) Act. The definition of "telecommunication service" under Section 2(1)(k) of the TRAI Act was compared with Section 3(1AA) of the Indian Telegraph Act. The court noted that broadcasting services were intentionally excluded from the definition in the TRAI Act, anticipating separate legislation for broadcasting. The proviso to Section 2(1)(k) allows the Central Government to notify broadcasting services as telecommunication services, indicating a temporary measure until specific broadcasting legislation is enacted.
3. Does the TRAI Act Suffer from the Vice of Excessive Delegation?
The court evaluated whether Section 11(2) of the TRAI Act, which empowers TRAI to determine and prescribe rates for telecommunication services, constituted excessive delegation. The court found that the TRAI Act provides adequate safeguards, including the establishment of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and the requirement for TRAI's rules and regulations to be laid before Parliament. The court concluded that the TRAI Act does not suffer from the vice of excessive delegation, as it delineates the legislative policy and provides mechanisms for oversight.
4. Virus of Rules 9 and 10 of the Cable Television Networks (Regulation) Act, 1995:
The petitioners challenged the virus of Rules 9 and 10 of the Cable Television Networks (Regulation) Act, 1995, arguing that they exceeded the scope of the Act. The court noted that the CTN Act and Rules contemplate broadcasting activities and that the challenge to the virus was not specifically raised in the writ petitions. The court found that TRAI is competent to prescribe conditions and tariffs under the TRAI Act, and the challenge to the virus of the CTN Rules was not maintainable.
5. Disconnection of TV Channel Signals:
The court addressed the validity of Regulation 4 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, which requires broadcasters to give three weeks' notice before disconnecting TV channel signals. The court found that the regulation protects the fundamental right of viewers and ensures that disputes can be raised before an independent forum. The court upheld the regulation, stating that it does not suffer from any legal vice and is reasonable in protecting viewers' interests.
6. Restrictions on Disconnection:
The court examined the restrictions on disconnection of TV channel signals, particularly the requirement for notice and the conditions under which disconnection can occur. The court found that the regulations are designed to protect viewers' interests and ensure fair treatment of distributors. The court rejected the petitioners' contention that the regulations were unreasonable, emphasizing the importance of protecting the fundamental rights of viewers.
Conclusion:
The court dismissed the writ petitions, finding no merit in the challenges raised by the petitioners. The court upheld the validity of the TRAI Act, the definition of telecommunication services, the regulations on disconnection of TV channel signals, and the competence of TRAI to prescribe tariffs and conditions. The petitions were dismissed on the grounds of maintainability and lack of substantive evidence to support the claims.
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2007 (7) TMI 711
Issues involved: Recovery of money, loan transaction exceeding Rs. 20,000, compliance with Section 269-SS of the Income Tax Act, 1961, validity of loan transaction, applicability of Sections 271-D and 273-B of the Act.
Recovery of Money: The respondent filed suits for recovery of money from the petitioner, alleging a loan transaction of Rs. 50,000 with agreed repayment terms. The trial court decreed the suit in favor of the respondent, ordering repayment with interest.
Loan Transaction exceeding Rs. 20,000: The petitioner contended that the loan transaction exceeding Rs. 20,000 was contrary to Section 269-SS of the Income Tax Act, 1961, making it illegal and unenforceable. The petitioner argued that this non-compliance disentitled the respondent from recovering the loan amount.
Compliance with Section 269-SS: Section 269-SS of the Act mandates certain requirements for loan transactions to counteract tax evasion. The court noted that while the section imposes penalties for non-compliance, it does not render all transactions above Rs. 20,000 as illegal. The purpose is to curb black money, and penalties can be waived for genuine reasons under Section 273-B.
Validity of Loan Transaction: The court emphasized that not all cash transactions exceeding Rs. 20,000 are automatically void. Citing legal provisions and precedents, it highlighted the importance of proving reasonable cause for non-compliance and the discretionary power to waive penalties.
Applicability of Sections 271-D and 273-B: Section 271-D imposes penalties for contravention of Section 269-SS, while Section 273-B provides for exceptions and discretionary powers in case of genuine transactions. The court stressed that penalties can be mitigated based on bonafide reasons, ensuring that transactions are not declared illegal solely due to technical non-compliance.
Conclusion: The court rejected the petitioner's contentions, upholding the trial court's decision on the recovery of money. It found no legal infirmity in the judgments, emphasizing the importance of proving reasonable cause for non-compliance with tax provisions. The revision petitions were deemed without merit and were consequently rejected.
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2007 (7) TMI 710
Issues Involved:
1. Whether the independent flats in a multi-storied building are to be assessed as one unit or separate units for the purposes of Land and Building Tax?
2. Whether the Circular dated 15-4-1991 issued by the Director, Land & Building Tax, directing that the flats in multi-storied buildings on each floor must be treated as one unit is legal?
Summary:
Issue 1: Assessment of Independent Flats in Multi-Storied Buildings
The court examined whether independent flats in a multi-storied building should be assessed as one unit or separate units for Land and Building Tax purposes. The definition of 'building' under Section 2(3) of the Rajasthan Lands & Buildings Tax Act, 1964 (LBT Act) includes a house or part thereof. The court referred to a circular dated 24-4-1974 issued by the Government of Rajasthan, which clarified that different portions of a building occupied by different persons form different units for the purpose of land and building tax. The court also cited precedents, including the Supreme Court's decision in TATA Engineering & Locomotive Co. Ltd. vs. Gram Panchayat, Pimpri Waghere, which supported the view that separate flats in a multi-storied building are separate houses for legal purposes. The court concluded that each flat in a multi-storied building constitutes a separate house or building under Section 2(3) of the LBT Act and must be taxed as such.
Issue 2: Legality of the Circular Dated 15-4-1991
The court addressed the legality of the Circular dated 15-4-1991 issued by the Director, Land & Building Tax, which directed that flats in multi-storied buildings on each floor must be treated as one unit. The court found that this circular was inconsistent with the legislative intent and the definitions provided in the LBT Act. The court noted that the legislative intention was clear that each building or part thereof should be assessed separately as a unit. The court upheld the Rajasthan Taxation Tribunal's decision to set aside the Circular dated 15-4-1991 and the orders of the Revisional Authority and the Assessing Authority, remanding the matter back to the Assessing Authority for fresh assessment by treating each flat as an independent unit.
Conclusion:
The court dismissed the writ petition filed by the State Government and the authorities of the Land & Building Tax Department, agreeing with the Rajasthan Taxation Tribunal's view that each flat in a multi-storied building should be treated as a separate unit for the purposes of Land and Building Tax. The court found no merit in the petition and dismissed it with no order as to costs.
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2007 (7) TMI 709
The Supreme Court dismissed the appeal, stating that Section 11A of the Central Excise Act, 1944 is not applicable in the case due to the possibility of varying classification for subsequent periods based on Tribunal findings.
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2007 (7) TMI 708
Issues Involved:
1. Existence of a binding contract.
2. Validity of invoking Section 9 of the Arbitration and Conciliation Act, 1996.
3. Refund of the earnest money deposit.
Summary:
Existence of a Binding Contract:
The petitioners invoked Section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) based on an initialled draft of a Memorandum of Understanding (MOU). The petitioners claimed that their offer was accepted on 7th August 2005, and subsequent communications and actions indicated a binding contract. However, the court noted that there was no signed MOU executed between the parties. The initialled draft MOU was subject to further approval and signature by the society's members. The court found it difficult to accept the petitioners' contention of a valid contract, as the MOU required circulation among members for final approval, and substantive issues were still being raised by the society members. Therefore, the court concluded that there was no binding contract executed between the parties.
Validity of Invoking Section 9 of the Arbitration and Conciliation Act, 1996:
The court observed that there was no agreement for arbitration in the correspondences or the draft MOU. The petitioners' reliance on Firm Ashok Traders and Anr. v. Gurumukh Das Saluja and Ors. was deemed inapplicable as there was no concluded contract or arbitration agreement in the present case. The court held that in the absence of a binding contract, the petitioners were not entitled to invoke Section 9 of the Arbitration Act. The court also noted that the petitioners had already filed an application u/s 11 of the Arbitration Act for the appointment of an arbitrator, but at this stage, there was no binding contract or arbitration clause to invoke Section 9.
Refund of the Earnest Money Deposit:
The petitioners had deposited Rs. 2 crores with the respondents-society, which was contended to be earnest money and security. The court noted that the amount was deposited in the respondent's account and was agreed to be adjusted or refunded if the parties could not proceed with the agreement. Since the draft MOU was not settled or approved, the respondents refunded the amount. The court found no reason to accept the petitioners' claim that the amount was consideration paid based on the MOU.
Conclusion:
The court dismissed the petition, stating that there was no binding agreement between the parties and no arbitration clause to invoke Section 9 of the Arbitration Act. The interim orders were vacated, and no order as to costs was made.
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2007 (7) TMI 707
Issues Involved:
1. Maintainability of the petition for enforcement of a foreign arbitration award.
2. Existence and validity of the arbitration agreement.
3. Jurisdiction and authority of the Arbitral Tribunal.
4. Enforceability of the foreign arbitration award in India.
Summary:
Issue 1: Maintainability of the petition for enforcement of a foreign arbitration award
The petitioners invoked Part II and specifically Sections 45 to 48 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act-1996") to enforce foreign awards dated 29th August 2005 and 9th October 2006 made in Singapore. The petition was initially objected to by the respondents for lack of original or certified copies of the arbitration agreement. The petitioners later filed an affidavit with certified hard copies of emails, which the court accepted as sufficient compliance with Section 65B of the Evidence Act.
Issue 2: Existence and validity of the arbitration agreement
The respondents contended that there was no concluded contract or agreement between the parties, and thus no valid arbitration agreement. However, the Tribunal had already determined the existence of a valid arbitration agreement, and the respondents did not appeal this decision. The court held that the respondents could not re-agitate this issue in the present petition.
Issue 3: Jurisdiction and authority of the Arbitral Tribunal
The Tribunal addressed preliminary issues regarding its jurisdiction and the validity of the arbitration agreement, concluding affirmatively on all points. The Tribunal's decisions were not appealed by the respondents, making the awards final and unappealable under Singapore law. The court found no grounds to challenge the Tribunal's jurisdiction or authority.
Issue 4: Enforceability of the foreign arbitration award in India
The court found that the foreign award was not contrary to public policy in India and was enforceable under Indian law. The award was deemed binding as it was not set aside or suspended by any appellate court in Singapore. The court rejected the respondents' objections and allowed the petition, declaring the arbitration award enforceable as a decree of the court.
Conclusion:
The petition was allowed, and the arbitration award dated 9th October 2006 was declared enforceable as a decree of the court. No costs were awarded.
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2007 (7) TMI 706
Issues involved: Challenge to order by revenue u/s 143(1)(a) of the Income-tax Act for disallowing deduction in investment deposit account.
Summary:
The High Court of Punjab and Haryana heard the revenue's challenge against the order passed by the Income-tax Appellate Tribunal related to the assessment year 1990-91. The main issue was whether the Tribunal was correct in holding that the adjustment made by the Assessing Officer under section 143(1)(a) was not sustainable. The Assessing Officer had disallowed the deduction claimed by the assessee for an investment deposit account of Rs. 63,400 due to non-filing of the audit report with the return. The assessee's application for rectification under section 154 was also rejected. However, the Tribunal accepted the assessee's explanation that the audit report was prepared before the return filing but could not be submitted due to the auditors' mistake. The Tribunal ruled in favor of the assessee, stating that the adjustment made by the Assessing Officer was not valid.
The assessee's counsel referred to a Full Bench judgment in CIT v. Punjab Financial Corpn. [2002] 254 ITR 61, which clarified that the Assessing Officer has discretion to consider audit reports even if not filed with the return, granting deduction benefits to the assessee as per the Act. The revenue's counsel failed to distinguish the present case from the settled precedent. Consequently, the Court disposed of the reference, as the issue had already been addressed against the revenue by the Full Bench judgment.
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2007 (7) TMI 705
Issues Involved:
1. Refusal to grant interim stay by the High Court.
2. Striking out portions of written statements and affidavit evidence.
3. Amendment of the plaint.
Summary:
1. Refusal to Grant Interim Stay by the High Court:
The Supreme Court addressed the refusal of the High Court to grant an interim stay on the trial court's orders. The High Court had admitted the petitions under Article 227 of the Constitution of India but declined to stay the suit or the operation of the orders. The Supreme Court acknowledged that while it is not typical to interfere with interim orders of the High Court, there are exceptional cases where intervention is warranted. The Court emphasized that granting a stay would not influence the High Court's independent judgment on the merits of the case.
2. Striking Out Portions of Written Statements and Affidavit Evidence:
The trial court had struck out specific paragraphs from the written statements of defendants 11, 12, and 13, and portions of the plaintiff's chief-examination affidavit. The Supreme Court found it justified to stay the operation of these orders to avoid inconvenience and potential confusion in the trial. The Court noted that if the High Court later accepts the challenge to these orders, it would prevent the need to recall witnesses and re-examine them on the struck-out aspects. The Court clarified that the relevance and admissibility of evidence would ultimately be determined based on the High Court's decision and the trial court's final judgment.
3. Amendment of the Plaint:
The plaintiff's application to amend the plaint was dismissed by the trial court, and the High Court refused to stay this order. The Supreme Court saw no reason to stay the operation of the order refusing the amendment, as the amendment would only come into effect if the High Court found it justified. The Court highlighted that the trial should proceed without impediment and that the High Court should expedite the disposal of the writ petitions.
Conclusion:
The Supreme Court modified the High Court's orders slightly, allowing the trial to continue while staying the operation of the orders striking out portions of the written statements and affidavit evidence. The Court directed the High Court to dispose of the writ petitions promptly and emphasized that the trial court should consider the admissibility of evidence based on the High Court's eventual decision. The parties were directed to bear their respective costs.
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2007 (7) TMI 704
Issues:
The judgment deals with the issue of whether the Assessee had commenced business activity during the relevant previous year for the assessment year 1998-99.
Details of the Judgment:
1. The Assessee, as per its Memorandum and Articles of Association, was established to engage in the business of manufacturing footwear and trading of goods.
2. The Assessing Officer disallowed certain expenses claimed by the Assessee in the profit and loss account, stating that the Assessee had not commenced any business activity during the relevant previous year.
3. The Commissioner of Income Tax (Appeals) allowed the Assessee's appeal, holding that the business had commenced during the relevant previous year, directing the Assessing Officer to allow the expenses claimed.
4. The Revenue appealed to the Income Tax Appellate Tribunal, which overturned the Commissioner's decision, leading the Assessee to approach the High Court under Section 260-A of the Income Tax Act, 1961.
5. The Assessee argued that various factors indicated the commencement of business activity, such as obtaining a completion certificate, electric connection, excise license, registration with various departments, purchase of raw materials, and registration with the Provident Fund Commissioner.
6. The Tribunal considered all facts and found that the only business activity conducted by the Assessee was a single transaction of purchasing and selling footwear for the purpose of registration with the Sales Tax department, not as part of its trading activity.
7. Regarding manufacturing activity, it was noted that the Assessee was granted an excise license, employed labor, and registered with the Provident Fund Commissioner only at the end of the relevant previous year, with no substantive steps taken to indicate the commencement of business.
8. Referring to a Supreme Court case, it was highlighted that being "set up" precedes "commencement," requiring the unit to be ready to discharge its intended function, which was not the case for the Assessee based on the available facts.
9. The Tribunal, considering the peculiar facts of the case, concluded that the Assessee was not ready to commence business activity, and while the view may be debatable, it was not unreasonable based on the circumstances.
10. The High Court held that no substantial question of law arose for consideration, as the Tribunal's view, though debatable, did not warrant interference, leading to the dismissal of the appeal.
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2007 (7) TMI 703
Issues involved: Alleged unauthorized banking transactions, receipt of deposits without proper license, petition for police protection, agreement for settlement of disputes, permission to oversee transactions.
Unauthorized Banking Transactions: Petitioners alleged that respondents 5 to 7 were receiving deposits without proper license, promising high interest rates. A society was formed to secure the interests of depositors. The 6th respondent was functioning under S.N.D.P. Yogam, and respondents 6 and 7 were following rules set by the 5th respondent. Lack of action post allegations led to loss of public faith.
Petition for Police Protection: A writ petition was filed seeking police protection due to threats faced by respondents 6 and 7. The court directed police to ensure safety of the petitioners and their family members, maintaining law and order.
Settlement Agreement: An agreement (Ext.P8) was reached for amicable settlement and repayment of amounts by respondents 6 and 7. Petitioners were allowed to oversee transactions at the Sangham Office to build confidence among depositors.
Counter Affidavits: The 5th respondent denied involvement in deposit transactions, stating they were solely between respondents 6 and 7. Respondents 6 and 7 admitted receiving deposits but faced difficulties in immediate repayment. They agreed to the terms of Ext.P8 and allowed petitioners to visit the office for implementation.
Court Decision: Parties agreed that petitioners representing depositors could visit the 6th respondent's office as per Ext.P8 agreement every Saturday afternoon, without causing law and order issues. Police would intervene only if necessary. The writ petition was disposed of accordingly.
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2007 (7) TMI 702
Issues Involved:
1. Misappropriation of funds.
2. Unlawful increase in monthly rent and lease deposit.
3. Unlawful increase in sale consideration of property.
4. Non-payment of salaries, statutory liabilities, and electricity bills.
5. Unauthorized payments towards commission and interest on loans.
6. Failure to discharge loans from bankers and financial institutions.
7. Financial irregularities and unauthorized expenses.
8. Non-disclosure of the true financial position.
9. Unlawful surrendering of transplantation license and closing of dialysis department.
Issue-wise Detailed Analysis:
1. Misappropriation of Funds:
The petitioners alleged that the second respondent unlawfully withdrew huge funds from the company through IOUs, self-cheques, and loans to discharge personal borrowings, violating Section 295 of the Companies Act. The special audit report indicated that the second respondent owed Rs. 1.73 crore to the company as of 31.07.2003. The second respondent contended that all transactions were for company expenses and duly authorized by the board. The court noted the pending civil suit filed by the company for recovery of these amounts and observed that the second respondent had ceased to be a director, making some of the petitioners' claims redundant.
2. Unlawful Increase in Monthly Rent and Lease Deposit:
The petitioners claimed that the second respondent unlawfully increased the monthly rent from Rs. 40,000 to Rs. 4 lakh and paid a lease deposit of Rs. 100 lakh without board approval. The second respondent argued that the registered lease deed was not acted upon, and the increased rent was approved by the board. The court found that the company had been paying higher rent than stipulated in the registered lease deed for years, indicating that the registered lease was not followed. The court did not find grounds to direct the respondents to return the excess rent or lease deposit.
3. Unlawful Increase in Sale Consideration of Property:
The petitioners alleged that the second respondent increased the sale consideration of a property from Rs. 145 lakh to Rs. 430 lakh to adjust her excessive withdrawals. The court noted that the balance sheets and board approvals indicated the payment of Rs. 430 lakh was fair and acknowledged by other directors. The court found no merit in the petitioners' claim for the return of Rs. 285 lakh.
4. Non-payment of Salaries, Statutory Liabilities, and Electricity Bills:
The petitioners claimed that the second respondent failed to pay salaries, statutory liabilities, and electricity bills, resulting in disconnection of power and other issues. The court observed that these were past and concluded acts, not amenable to the jurisdiction of Section 397/398 of the Companies Act.
5. Unauthorized Payments Towards Commission and Interest on Loans:
The petitioners alleged unauthorized payments towards commission and interest on loans. The second respondent contended that all payments were for company purposes and approved by the board. The court noted the lack of primary records to substantiate the petitioners' claims and drew adverse inference against the petitioners for non-production of evidence.
6. Failure to Discharge Loans from Bankers and Financial Institutions:
The petitioners claimed that the second respondent's mismanagement led to the company's loans becoming non-performing assets. The court observed that the company had already initiated proceedings for recovery of amounts and noted the lack of corroborative evidence to support the petitioners' claims.
7. Financial Irregularities and Unauthorized Expenses:
The petitioners alleged various financial irregularities and unauthorized expenses by the second respondent. The court found that the board had approved many transactions and noted the pending civil suits addressing these issues. The court did not find sufficient grounds for relief under Section 397/398.
8. Non-disclosure of the True Financial Position:
The petitioners claimed that the second respondent failed to disclose the true financial position of the company. The court observed that the balance sheets and board approvals indicated transparency in financial matters and found no merit in the petitioners' claims.
9. Unlawful Surrendering of Transplantation License and Closing of Dialysis Department:
The petitioners alleged that the second respondent unlawfully surrendered the company's transplantation license and closed the dialysis department. The second respondent argued that these actions were taken to protect the hospital's image due to unethical practices by the petitioners. The court found these to be past acts and not within the jurisdiction of Section 397/398.
Conclusion:
The court concluded that the petitioners failed to make out a case under Section 397/398 and were not entitled to any relief. The court noted the lack of corroborative evidence and the pending civil suits addressing many of the issues raised. The petition was dismissed with no order as to costs.
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