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1991 (8) TMI 350
Issues:
Validity of provisions of Section 3 of the Rajasthan Land Tax Act, 1985 concerning taxation on land containing minerals.
Severability of the legislation to uphold the validity of the tax based on dead rent.
Prospective declaration of invalidity of the tax levies.
Analysis:
Issue 1: Validity of provisions of Section 3 of the Rajasthan Land Tax Act, 1985
The Supreme Court considered the validity of the provisions of Section 3 of the Rajasthan Land Tax Act, 1985, which imposed a tax on landholders based on the annual value of land containing minerals. The Court referred to previous decisions in India Cement Ltd. v. State of Tamil Nadu and Orissa Cement Ltd. v. State of Orissa, where similar levies were challenged and deemed unconstitutional. The Court held that the State Legislature lacked the competence to levy a tax on mineral-bearing lands based on royalty derived from the land. The Court found no distinguishing features in the present case and upheld the earlier decisions, declaring the levy ultra vires.
Issue 2: Severability of the legislation
The Court examined the argument for severing the valid and invalid portions of the legislation to uphold the tax based on dead rent. The counsel for the respondent contended that the legislation could be read to impose the tax based on dead rent instead of royalty. However, the Court found that dead rent was defined as a guaranteed amount of royalty payable to the government, making it equivalent to royalty under the Act. The Court concluded that the legislation's integrated scheme based on royalty and dead rent could not be mechanically severed, leading to the dismissal of the appeals and the declaration of the tax as unconstitutional.
Issue 3: Prospective declaration of invalidity
The Court addressed the issue of the retrospective effect of the declaration of invalidity of the tax levies. Following precedents, the Court ruled that the declaration of unconstitutionality would only apply prospectively from the date of the judgment. Any tax collected under the statute before the judgment need not be refunded, and the impugned tax would not be enforceable from the date of the judgment. The Court directed that any remaining tax to be paid for earlier periods must be paid by the assessee, ensuring a prospective application of the declaration.
In conclusion, the Supreme Court declared the tax levies under the Rajasthan Land Tax Act, 1985 as unconstitutional, upheld the previous decisions on similar levies, dismissed the appeals, and directed a prospective application of the declaration of invalidity.
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1991 (8) TMI 349
Issues Involved:
1. Validity and enforcement of the bank guarantee.
2. Rights and obligations of the parties under the bank guarantee.
3. Court's justification in restraining the bank from honoring the guarantee.
4. Allegations of fraud or suppression of material facts.
Detailed Analysis:
1. Validity and Enforcement of the Bank Guarantee:
The General Electric Technical Services Company (GETSCO) entered into a contract with Indian Airlines, which included constructing and fabricating an aircraft testing center/engine repair center in Delhi. GETSCO subcontracted the work to M/s. Punj Sons (P) Ltd (respondent-1), who was required to provide performance bonds and a bank guarantee to secure a mobilization advance. Respondent-1 provided a bank guarantee of Rs. 1,86,00,000 through Hongkong & Shanghai Bank (the Bank, respondent-2). Later, a composite bank guarantee was furnished for Rs. 2,12,25,000, splitting the amount into two parts valid until 30 June 1988 and 30 June 1989, respectively.
2. Rights and Obligations of the Parties under the Bank Guarantee:
Respondent-1 failed to complete the project within the stipulated time. Consequently, GETSCO terminated respondent-1's right to continue the project and sought to encash the bank guarantee. The terms of the bank guarantee specified that the Bank would pay GETSCO the guaranteed amount without any demur upon demand, stating that the amount was due by way of loss or damage caused by respondent-1's breach of the contract terms. The Bank's liability was to remain intact irrespective of the recovery of the mobilization advance or the non-payment under the running bills.
3. Court's Justification in Restraining the Bank from Honoring the Guarantee:
The High Court restrained the Bank from paying under the guarantee, reasoning that GETSCO's failure to mention the mobilization advance in the encashment letter constituted suppression of material facts. The Supreme Court, however, found that the High Court misconstrued the terms of the bank guarantee and the inter-se rights of the parties. The Supreme Court emphasized that the Bank's obligation to honor the guarantee was independent of the underlying contract and that the Bank must pay when a demand is made, barring any fraud or special equities.
4. Allegations of Fraud or Suppression of Material Facts:
The Supreme Court noted that the law regarding bank guarantees is well-settled, requiring the Bank to honor its commitments unless there is a prima facie case of fraud or special equities preventing irretrievable injustice. The High Court's observation that GETSCO's omission to mention the mobilization advance would necessitate further inquiry by the Bank was deemed irrelevant. The Supreme Court clarified that the Bank's liability was not contingent upon the recovery of the mobilization advance or the outstanding amounts under the running bills.
Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and order. The Supreme Court reiterated that the Bank must honor its commitment under the bank guarantee, and the Court should not interfere in the absence of fraud or special equities. The appeal was allowed with costs, and the Special Leave Petition was dismissed accordingly.
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1991 (8) TMI 348
Issues Involved:
1. Whether the activities at the service station, including cleaning, washing, and oiling of vehicles, fall within the definition of 'manufacturing process' under Section 2(k) of the Factories Act, 1948.
2. Whether the activity of pumping petrol/diesel at the petrol pump falls within the definition of 'manufacturing process' under Section 2(k) of the Factories Act, 1948.
3. The requirement of obtaining a license under Section 6 of the Factories Act, 1948, for the activities carried out by the petitioner's establishment.
Issue-wise Detailed Analysis:
1. Definition of 'Manufacturing Process' for Service Station Activities:
The court examined whether the activities of washing, cleaning, and oiling vehicles at the service station constitute a 'manufacturing process' under Section 2(k) of the Factories Act, 1948. The petitioner argued that these activities do not alter or adapt the vehicle in a way that would classify them as a 'manufacturing process.' However, the court referred to the definition of 'manufacturing process' which includes "oiling, washing, cleaning" and determined that these activities, when performed with a view to making the vehicle fit for use, transport, or delivery, fall within the scope of 'manufacturing process.' The court supported this interpretation by referencing the Bombay High Court's decision in Gateway Auto Services, which held that each activity mentioned in the definition should be read independently and not necessarily in conjunction with the words "otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal."
2. Definition of 'Manufacturing Process' for Petrol Pump Activities:
The court considered whether the activity of pumping petrol/diesel at the petrol pump constitutes a 'manufacturing process.' The petitioner argued that pumping oil should be interpreted as pumping from beneath the earth and not merely lifting petrol/diesel from storage tanks to vehicles. The court agreed with this argument, distinguishing the casual act of pumping petrol/diesel for sale from principal or independent acts such as pumping oil from refineries or wells. The court endorsed the view of the Punjab and Haryana High Court in Bhag Singh's case, which held that selling petrol/diesel by a dealer does not fall within the definition of 'manufacturing process.'
3. Requirement of License under Section 6 of the Factories Act, 1948:
Given the court's findings, it was determined that the service station activities (cleaning, washing, oiling, lubricating, or repairing vehicles) are covered by the definition of 'manufacturing process.' Consequently, if the requisite number of workers are employed, the premises qualifies as a factory under Section 2(m) of the Factories Act, necessitating a license under Section 6. Conversely, the petrol pump activities do not require a license as they do not constitute a 'manufacturing process.'
Conclusion:
The court allowed the petition partly, setting aside the lower courts' view regarding the petrol pump but maintaining the conviction for the service station activities. The petitioner was rightly convicted and sentenced for running the service station without the required license, with the fine being deemed lenient and requiring no interference.
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1991 (8) TMI 347
Issues Involved:
1. Legality of removal of directors.
2. Right to inspect company records.
3. Preliminary objections by respondents.
4. Applicability of inherent powers of the court.
Issue-Wise Detailed Analysis:
1. Legality of Removal of Directors:
The petitioners, who were formerly directors of the Respondent Company, alleged that they were illegally removed from their positions through a resolution passed on November 22, 1988. They argued that their removal was based on flimsy grounds, specifically citing violations of Section 299 of the Companies Act, which led to their automatic cessation as directors under Section 283. The respondents contended that the petitioners had indeed ceased to be directors due to these violations, and thus, they were not entitled to inspect the company records. The court noted that the issue of whether the petitioners had ceased to be directors was central to the main petition and had not yet been decided.
2. Right to Inspect Company Records:
The petitioners claimed a statutory right under Section 209 of the Companies Act to inspect the books of accounts and other records of the Respondent Company. They argued that such inspection was necessary to support their company petition. The respondents countered that only current directors were entitled to such inspection under Section 209(4) of the Act and that the petitioners, being mere shareholders after their removal, did not have this right. The court, however, found that there was no prima facie evidence to suggest that the petitioners had ceased to be directors and thus allowed their application for inspection.
3. Preliminary Objections by Respondents:
The respondents raised two preliminary objections. First, they argued that the petitioners, having ceased to be directors, were not entitled to inspect the records. Second, they pointed out that the petitioners had previously filed Company Petition No. 4 of 1989, which was dismissed, and no inspection application was moved in that petition or the subsequent appeal. The court dismissed these objections, stating that the earlier petition was not dismissed on merit and that the failure to move an inspection application in the earlier petition did not preclude the petitioners from seeking inspection now.
4. Applicability of Inherent Powers of the Court:
The court emphasized the applicability of Rules 6 and 9 of the Companies (Court) Rules, 1959, which allow the court to use its inherent powers to ensure justice. The court held that there was nothing in the Act or the Rules prohibiting the inspection of records by a party in a pending case, even if the party was not a director. The court cited the case of Rajdhani Roller Flour Mills (P) Ltd. v. Mangilal Bagri to support the view that shareholders could inspect company records in proceedings under Sections 397 and 398 of the Companies Act. The court concluded that the inherent powers should be invoked to allow the petitioners to inspect the records of the Respondent Company.
Conclusion:
The court allowed the application for inspection filed by petitioners No. 30 and 31. The Respondent Company was directed to allow the petitioners to inspect the books of accounts, files, documents, and papers during office hours, in the presence of a responsible officer of the company. Additionally, the Respondent Company was instructed to paginate all relevant documents and prepare a list of these documents, a copy of which was to be given to the petitioners. The inspection was scheduled to commence on September 16, 1991.
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1991 (8) TMI 346
Issues:
1. Whether the suit for injunction to restrain defendants from taking steps under Revenue Recovery Act is maintainable.
2. Whether the suit is barred under Order XXIII, Rule 1(4), C.P.C.
Analysis:
Issue 1:
The plaintiff filed a suit for injunction to prevent the defendants from recovering an alleged due amount under an agricultural loan. The plaintiff denied liability, citing discharge and limitation as defenses. The defendants claimed the amount was due and sent a requisition for recovery. The trial court and the Sub Judge dismissed the suit. The High Court noted that the requisition under the Revenue Recovery Act was issued well after the limitation period had expired. The court rejected the argument that the limitation Act does not apply to proceedings under the Revenue Recovery Act. Citing a precedent, the court emphasized that a debt legally due can be enforced through legal process, and if barred by law, it cannot be considered due. However, the suit was dismissed under Order XXIII, Rule 1(4), C.P.C.
Issue 2:
The plaintiff had previously filed a suit for injunction against the same defendant, which was dismissed as not pressed. The court analyzed the applicability of Order XXIII, Rule 1, C.P.C. The court explained the provisions of Rule 1, which allow a plaintiff to abandon a suit or part of a claim with court permission. The court highlighted that if a suit is withdrawn without permission, the plaintiff is precluded from filing a fresh suit on the same subject matter. However, in this case, the second suit was pending when the first suit was dismissed. Citing legal precedents, the court concluded that Order XXIII, Rule 1, C.P.C. does not bar a suit already instituted before another suit is abandoned or dismissed. Therefore, the court held that the plaintiff was wrongly denied relief, set aside the impugned judgment, and decreed in favor of the plaintiff in the Second Appeal, allowing the appeal without costs.
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1991 (8) TMI 345
... ...
... ... ..... jha, JJ. ORDER Appeal dismissed.
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1991 (8) TMI 344
The Supreme Court of India dismissed the appeal in the case with citation 1991 (8) TMI 344 - SC. Justices Ranganath Mishra and P.B. Sawant delivered the order.
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1991 (8) TMI 343
Issues:
Challenge to order under Section 169 of the Delhi Municipal Corporation Act.
Analysis:
The writ petition challenged the order of the Additional District Judge, Delhi, allowing the appeal under Section 169 of the Delhi Municipal Corporation Act. The respondent, as the owner of a house in New Delhi, contested the rateable value fixed by the Assessor and Collector for the years 1984-85. The Assessor considered factors like land cost, construction cost, and rent received, including a security deposit. The Additional District Judge, in the appeal, disagreed with the Assessor's valuation, citing a D.D.A. circular and directed a fresh valuation of land. The Judge also questioned the addition of a monthly sum to the rent. The petitioner contended that the Judge's decision was incorrect.
Case Precedent:
Referring to a Division Bench judgment in a similar case, the High Court directed a fresh valuation of the land as of 1/08/1981, following established guidelines. The Court also instructed a reevaluation of the construction cost, allowing the owner to present evidence of expenses. The Assessor was advised to use C.P.W.D. rates as a guideline, not conclusive evidence.
Rent Valuation:
Regarding the addition of a monthly sum to the rent, the Court found no justification for presuming an increase in rent based on a security deposit. The Court emphasized that income from a security deposit should not automatically be considered part of the rent. The judgment highlighted that the security deposit is refundable and serves as a safeguard against nonpayment of rent. The Court rejected the notion that income from the security deposit should be included in the rent unless specific circumstances indicate otherwise.
Conclusion:
The writ petition was partly allowed, setting aside the Additional District Judge's order on land and building valuation. The original assessment order was also annulled, allowing the Assessor to conduct a fresh assessment following legal procedures. No costs were awarded in this judgment.
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1991 (8) TMI 342
Issues:
1. Whether the legal representatives of a deceased defendant can file an additional written statement without seeking leave of the court?
2. Whether Order 8 Rule 9 controls Order 22 Rule 4 in terms of filing a defense as a legal representative?
3. What is the legal position regarding the filing of additional written statements by legal representatives of a deceased defendant?
Analysis:
The judgment revolves around the issue of whether legal representatives of a deceased defendant can file an additional written statement without seeking leave of the court. The plaintiff's counsel objected to the legal representatives filing a written statement without court permission, citing Order 8 Rule 9 of the Code of Civil Procedure. On the other hand, the defendants' counsel argued that Order 22 Rule 4 allows legal representatives to raise a defense without needing prior court permission.
The court analyzed the provisions of Order 8 Rule 9 and Order 22 Rule 4. Order 8 Rule 9 mandates seeking court permission for filing additional pleadings, while Order 22 Rule 4 allows legal representatives to make any defense appropriate to their character without such permission. The court emphasized that Order 8 Rule 9 pertains to pleading rules, requiring parties to justify the need for additional pleadings. In contrast, Order 22 Rule 4 grants legal representatives the right to raise defenses without prior court approval.
The court highlighted that Order 8 Rule 9 does not control Order 22 Rule 4. While Order 8 Rule 9 involves court discretion in permitting additional pleadings, Order 22 Rule 4 empowers legal representatives to raise defenses as per their character without such discretion. The court referenced a Calcutta High Court judgment, which emphasized granting leave for additional pleadings, but the court differentiated the applicability of Order 8 Rule 9 in the present case.
Ultimately, the court held that the legal representatives' written statement should be considered valid as their defense was appropriate to their character. Even if Order 8 Rule 9 were to apply, the court granted leave considering the nature of the defense raised and the absence of objections from the plaintiff's side. The court concluded by ordering the case accordingly, recognizing the legal representatives' right to raise defenses without hindrance.
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1991 (8) TMI 341
Issues Involved:
1. Scope and ambit of Section 14(1) and Section 14(2) of the Hindu Succession Act, 1956.
2. Whether life interest acquired under a will becomes absolute property under Section 14(1) of the Act.
3. Application of Section 14(1) and Section 14(2) to property acquired by a Hindu female under a will or other instruments.
Detailed Analysis:
Issue 1: Scope and Ambit of Section 14(1) and Section 14(2) of the Hindu Succession Act, 1956
Section 14(1) of the Act states, "Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner." The explanation includes various forms of property acquisition. Section 14(2) specifies that sub-section (1) does not apply to property acquired by way of gift, will, or any other instrument where the terms prescribe a restricted estate.
The Court clarified that Section 14(2) is an exception to Section 14(1) and applies only if the acquisition is made for the first time without any pre-existing right in the female Hindu. The objective of Section 14(1) is to remove disabilities imposed by law on women and to achieve social and economic equality.
Issue 2: Whether Life Interest Acquired Under a Will Becomes Absolute Property Under Section 14(1) of the Act
In the case of Civil Appeal No. 630 of 1981, the plaintiff claimed absolute rights in the suit properties after the lifetime of the defendant, who had acquired life interest under her husband's will. The Trial Court and the First Appellate Court upheld the plaintiff's claim, but the High Court reversed the decision, dismissing the suit. The Supreme Court held that the life interest acquired by the defendant under the will became her absolute property under Section 14(1) of the Act, as she was in possession of the property with a pre-existing right to maintenance.
Issue 3: Application of Section 14(1) and Section 14(2) to Property Acquired by a Hindu Female Under a Will or Other Instruments
The Court examined various precedents, including Badri Prashad v. Smt. Kanso Devi and V. Tulsamma v. V. Sesha Reddy, which established that Section 14(1) applies to properties where the female Hindu had a pre-existing right. The case of Mst. Karmi v. Amru was distinguished as it did not consider the provisions of Sections 14(1) and 14(2) in detail.
In Special Leave Petition (C) No. 438 of 1979, the widow's limited interest under a compromise decree was held to have been enlarged into an absolute right by virtue of Section 14(1).
In S.L.P. (C) No. 2113 of 1980, the widow's limited estate under a will was similarly enlarged into absolute ownership under Section 14(1), as she had a pre-existing right to maintenance.
Conclusion:
The Supreme Court reaffirmed that Section 14(1) of the Hindu Succession Act, 1956, aims to convert the limited estate of a female Hindu into absolute ownership if she had a pre-existing right to the property. Section 14(2) applies only when the property is acquired for the first time under a will or other instrument without any pre-existing right. The appeals and special leave petitions were dismissed, confirming the enlargement of limited estates into absolute ownership under Section 14(1).
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1991 (8) TMI 340
Issues Involved:
1. Whether the Bank of Maharashtra is prohibited under the provisions of the Banking Regulation Act from holding shares in the respondent-Sangli Bank.
2. Whether the facts and circumstances which resulted in the rejection of the transfer of 20,562 shares lodged in February/March, 1982, still hold good in respect of the 50 shares which were lodged in April, 1987, and registration of transfer of which was refused on the ground of the earlier refusal by the board of directors of the respondent-Sangli Bank.
Issue-Wise Detailed Analysis:
1. Prohibition under the Banking Regulation Act:
The relevant provisions of the Banking Regulation Act, 1949, are Sub-section (2) of Section 19 and Sub-section (2) of Section 12. According to Sub-section (2) of Section 19, no banking company shall hold shares in any company exceeding 30% of the paid-up share capital of that company or 30% of its own paid-up share capital and reserves, whichever is less. Sub-section (2) of Section 12 restricts any person holding shares in a banking company from exercising voting rights on poll in excess of 1% of the total voting rights of all the shareholders of the banking company.
In this case, the 50 shares in question constitute less than 0.26% of the paid-up share capital of the respondent-Sangli Bank. Therefore, there is no legal bar on the appellant holding these shares. The respondent-Sangli Bank contended that a specific direction was given by the Reserve Bank of India and the Ministry of Finance to the Government of Maharashtra and the Bank of Maharashtra not to acquire the shares of Sangli Bank. However, the respondent-Sangli Bank did not produce any documentary evidence to support this contention. In the absence of such evidence, the board concluded that there is no prohibition under the Banking Regulation Act for the appellant to hold the shares in question.
2. Validity of Grounds from 1982 for Rejection in 1987:
The board of directors of the respondent-Sangli Bank had earlier rejected the transfer of 20,562 shares in 1982 on the grounds that the acquisition was not legal and valid, as the Central Government had not issued the required notification under Section 19(2) read with Section 53 of the Banking Regulation Act, 1949. They also apprehended that the Bank of Maharashtra intended to acquire control over the Sangli Bank, which was against the spirit of the Banking Regulation Act.
However, the present case involves only 50 shares, which are less than 1% of the paid-up share capital of the respondent-Sangli Bank. Therefore, the board concluded that the grounds for rejection in 1982 do not hold good for the 50 shares lodged in 1987. The board also noted that companies engaged in similar businesses often hold nominal shares in each other, and there is no reason to believe that such holdings would undermine customer confidence or employee initiative.
The board found that the respondent-Sangli Bank had not given just and proper consideration to the proposal, given the changed circumstances. The refusal to register the transfer of shares was deemed unjustified.
Conclusion:
The board concluded that the refusal to register the transfer of shares by the respondent-Sangli Bank was unjustified. Consequently, the appeal was allowed, and the respondent-Sangli Bank was directed to register the transfer of the 50 shares within ten days of receipt of the order. There was no order as to costs.
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1991 (8) TMI 338
Issues involved: Alleged actionable inaction by Union Government in providing facilities to Inquiry Committee, jurisdiction of the Court in parliamentary matters, justiciability, interim direction regarding listing of matters before a specific judge.
The Supreme Court addressed a writ petition alleging inaction by the Union Government in facilitating an Inquiry Committee formed by the Speaker of Lok Sabha under the Judges (Inquiry) Act, 1968. The petitioners sought a writ to compel the Government to support the Committee in carrying out its functions. Various issues, including the Court's jurisdiction in parliamentary affairs and justiciability, were raised during the arguments. Additionally, an application was filed seeking an interim direction to prevent matters from being listed before a judge if the parties did not wish to have their cases heard by that judge. The Court declined to issue the interim order, stating that it could prejudice the main matter's decision. It emphasized that one bench cannot interfere with matters before another bench, as each bench functions as the court itself, and decisions rest solely with the bench hearing the case. The Court dismissed the application, highlighting the importance of judicial propriety and discipline in such matters.
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1991 (8) TMI 337
Issues Involved:
1. Deduction of Rs. 71,395 as a trading loss from fabricated purchase.
2. Deduction of Rs. 19,199 as trading loss from investment in U.P. State Development Loan.
3. Deduction of Rs. 36,745 payable as interest under section 3(3) of the U.P. Sugarcane (Purchase) Tax Act, 1961.
4. Deduction of Rs. 3,572 paid as interest under section 220(2) of the Income-tax Act, 1961.
5. Calculation of extra shift depreciation allowance for double and triple shift working.
Issue-wise Detailed Analysis:
1. Deduction of Rs. 71,395 as a trading loss from fabricated purchase:
The assessee-company claimed a deduction of Rs. 71,395 as a trading loss due to fabricated parchis by the mills staff in collusion with the society's staff and some farmers. The Tribunal concluded that the sum was not an accrued or ascertained liability during the assessment year in dispute. The Tribunal's decision was based on the fact that the liability was disputed by the assessee and was only settled on 30-9-1964, after the close of the accounting period. The court upheld the Tribunal's view, referencing the case of CIT v. Oriental Motor Car Co. (P.) Ltd., where it was held that a liability crystallizes only when the dispute is settled. Thus, the deduction of Rs. 71,395 was not allowed for the assessment year in dispute.
2. Deduction of Rs. 19,199 as trading loss from investment in U.P. State Development Loan:
The assessee incurred a loss of Rs. 19,199 from the resale of U.P. Government securities, which were purchased at the instance of District authorities. The Tribunal initially disallowed this deduction, stating there was no direct nexus between the investment and the business benefits. However, the court referenced the case of CIT v. S.B. Sugar Mills and the Supreme Court decision in Patnaik & Co. Ltd. v. CIT, which allowed such losses as business expenditure due to business expediency. Consequently, the court held that the assessee was entitled to the deduction of Rs. 19,199 as trading loss.
3. Deduction of Rs. 36,745 payable as interest under section 3(3) of the U.P. Sugarcane (Purchase) Tax Act, 1961:
Both parties conceded that this issue was governed by the Supreme Court's decision in Mahalakshmi Sugar Mills Co. v. CIT and the Full Bench decision in Triveni Engg. Works Ltd. v. CIT. These cases established that such interest payments are deductible. Therefore, the court held that the assessee was entitled to the deduction of Rs. 36,745.
4. Deduction of Rs. 3,572 paid as interest under section 220(2) of the Income-tax Act, 1961:
The court referenced the decisions in CIT v. Oriental Carpet Mfrs. (India) (P.) Ltd. and Dhampur Sugar Mills Ltd. v. CIT, which held that interest paid under section 220(2) for delayed payment of income-tax dues is not incidental to the business. Consequently, the court ruled that the Rs. 3,572 paid as interest was not allowable as a deduction under section 37(1) and/or section 28 of the Income-tax Act.
5. Calculation of extra shift depreciation allowance for double and triple shift working:
The court referred to the Full Bench decision in Dhampur Sugar Mills Ltd. v. CIT, which dealt with a similar situation. It was held that extra shift depreciation allowance should be calculated proportionately for the period the factory worked triple shifts, rather than at 100% of the normal depreciation allowance. Therefore, the court upheld the Tribunal's decision that the extra shift depreciation allowance should be calculated proportionately.
Conclusion:
The court answered the questions as follows:
1. Affirmative, against the assessee.
2. Negative, in favor of the assessee.
3. Negative, in favor of the assessee.
4. Negative, against the assessee.
5. Affirmative, against the assessee.
The assessee was entitled to costs of Rs. 300 from the department due to largely succeeding in the reference.
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1991 (8) TMI 336
Issues Involved:
The applicability of section 304-B of the Indian Penal Code to a case where the death alleged to be a dowry death occurred prior to the insertion of section 304-B in the Indian Penal Code.
Summary:
The case involved the death of the petitioner's daughter, suspected to be unnatural due to torture by her husband and relatives. The petitioner filed a criminal complaint under section 498-A read with section 34 I.P.C., seeking trial under section 304-B I.P.C. The Magistrate dismissed the application citing the amendment's prospective nature. The High Court upheld this decision, leading to the special leave petition.
The Supreme Court deliberated on the applicability of section 304-B to the case, emphasizing its role in eradicating the social evil of dowry. The Court highlighted the legislative measures taken, including the Dowry Prohibition Act, 1961, and subsequent amendments like section 498-A and section 304-B.
Section 304-B, introduced in 1986, defines dowry death and prescribes stringent punishment. The Court noted that trying the respondents under section 304-B for an act pre-dating its creation would violate Article 20(1) of the Constitution, protecting against retroactive laws. The Court rejected the argument that section 304-B was merely a rule of evidence, affirming that it created a new substantive offence.
The judgment concluded that the respondents could not be tried under section 304-B for an act committed before its enactment. However, if the accusation disclosed a more stringent pre-existing offence, the appellant could raise it for consideration. As no such argument was presented, the appeal was dismissed.
Judgment:
The Supreme Court dismissed the appeal, upholding the High Court's decision regarding the inapplicability of section 304-B to the case due to its retrospective nature and the protection provided by Article 20(1) of the Constitution.
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1991 (8) TMI 335
Issues:
1. Determination of market value for land acquisition under the Land Acquisition Act 1894.
2. Consideration of sale transactions in determining market value.
3. Deduction of land for development purposes in valuation.
Analysis:
1. Market Value Determination:
The case involved a dispute over the market value of land acquired for a housing scheme under the Land Acquisition Act 1894. The appellant contested the valuation set by the High Court, arguing that the reliance on a previous judgment for valuation was erroneous. The Supreme Court emphasized that the market value should reflect the price prevailing at the time of the notification under section 4(1) of the Act. The Court reiterated that the price a willing vendor could reasonably expect from a willing purchaser forms the basis for determining market value. It was held that the exclusion of genuine sale transactions of the acquired land and reliance on a different judgment for valuation was illegal. Ultimately, the Court determined the market value to be &8377; 6 per square yard, considering the sale transactions and prevailing circumstances.
2. Consideration of Sale Transactions:
The appellant argued that the sale transactions of the acquired land should have been considered in determining the market value. The Court agreed, stating that genuine sale transactions within a reasonable time from the acquisition date provide the best evidence for valuation. The Court criticized the lower courts for disregarding the sale deeds presented by the respondents and relying on a different judgment for valuation. It was emphasized that the prevailing market value should be based on actual sale transactions of the specific land under acquisition, rather than unrelated judgments. The Court concluded that the market value should be &8377; 6 per square yard, considering the genuine sale transactions of the acquired land.
3. Deduction for Development Purposes:
Another issue raised was the deduction of land for development purposes in the valuation. The appellant contended that 1/3 of the land should be deducted for roads, parks, drainage, and other amenities. The High Court's reasoning for valuing the land at &8377; 12 and then deducting to &8377; 10 was challenged. The Supreme Court referred to previous judgments and established that a deduction of 1/3 for development purposes is reasonable. The Court held that the High Court erred in its valuation methodology and determined the market value after deduction to be &8377; 4 per square yard. The respondents were awarded 15% solatium on the market value and 4% interest from the date of dispossession.
In conclusion, the Supreme Court allowed the appeal, setting the market value at &8377; 6 per square yard after deducting 1/3 for development purposes. The judgment highlighted the importance of considering genuine sale transactions and following established principles for valuation under the Land Acquisition Act 1894.
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1991 (8) TMI 334
Issues Involved:
1. Validity of the Order of the Lt. Governor dated 27th October, 1987.
2. Validity of the subsequent Notification dated 29th August, 1990.
3. Seniority of members of the Society for allotment of plots.
Summary:
1. Validity of the Order of the Lt. Governor dated 27th October, 1987:
The appellants challenged the validity of the Order of the Lt. Governor dated 27th October, 1987, which exempted the Rehabilitation Ministry Employees' Cooperative House Building Society Ltd. from the provision of Section 12 of the Delhi Cooperative Societies Act, 1972, and gave retrospective effect to the amended bye-law 5(1)(a)(iii) from 10th January, 1968. The Supreme Court held that the notification was valid under Section 88 of the Act. The Court emphasized that the purpose of the quasi-judicial order dated 19th August, 1985, was to regularize the membership of persons who had become members of the Society many years ago. The notification dated 27th October, 1987, was issued to subserve that purpose, and it was neither unreasonable nor issued in bad faith. The Court stated, "In the normal course, it would not be just and proper to interfere with such an order under Article 136 of the Constitution."
2. Validity of the subsequent Notification dated 29th August, 1990:
The subsequent Notification dated 29th August, 1990, rescinded the earlier notification dated 27th October, 1987. The Supreme Court held that this subsequent notification was ultra vires as it effectively reviewed and nullified the quasi-judicial order dated 19th August, 1985, which had become final. The Court stated, "It is settled law that a quasi-judicial order once passed and having become final cannot be reviewed by the authority passing that order unless power of review has been specifically conferred." The Court further noted that the notification dated 29th August, 1990, was invalid as it took away the vested rights of the members created by the earlier notification.
3. Seniority of members of the Society for allotment of plots:
The appellants contended that the seniority of 15 members, who had filed fresh affidavits after the appellants had been enrolled as members, could not be given priority over them. The High Court found that these 15 persons were admitted as members of the Society prior to 17th November, 1979, and their membership was only regularized in the meeting held on that date. The Supreme Court upheld the High Court's view, stating, "The 26 persons of Category 'C' including the appellants would obviously be junior to the 15 members referred to above." The Court found no error in the High Court's decision regarding the seniority of members.
Conclusion:
The Supreme Court dismissed the appeal, upholding the validity of the notification dated 27th October, 1987, and declaring the subsequent notification dated 29th August, 1990, as ultra vires. The Court also upheld the High Court's decision regarding the seniority of the Society's members. The appeal was dismissed, and the parties were directed to bear their own costs.
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1991 (8) TMI 333
Issues:
Dispute over leasehold properties between two brothers, possession of suit properties, validity of Will and allotment, entitlement to injunction.
Analysis:
The case involved a dispute between two brothers over leasehold properties left by their father. Ramasamy claimed possession of the properties since 1962, while Muthiah asserted ownership based on a Will. The trial court and first appellate court ruled in favor of Ramasamy, finding him in sole possession of the properties. Muthiah failed to prove the validity of the Will or any allotment in his favor. The High Court, on second appeal by Muthiah, introduced new inferences questioning the possession and joint ownership of the leasehold rights. Despite this, the High Court did not provide its own findings on the matter, leaving the question of title unsettled for future proceedings.
The Supreme Court criticized the High Court's decision, stating that the High Court overstepped its jurisdiction by reassessing evidence and interfering with findings of fact made by the lower courts. The High Court's doubts and inferences did not change the established facts of the case, which were in favor of Ramasamy's possession of the properties. The High Court's failure to address the actual issue raised by the parties, the sufficiency of proof, and the absence of any challenge to the possession of Ramasamy on legal grounds led the Supreme Court to conclude that the High Court erred in reversing the lower courts' decisions.
In its final judgment, the Supreme Court allowed the appeal, restoring the trial court's judgment and decree in favor of Ramasamy. The Supreme Court emphasized that the High Court's interference was unwarranted, and there would be no order for costs in the Supreme Court. The case highlights the importance of respecting findings of fact made by lower courts and the limitations of the High Court's power in second appeals, particularly in matters of possession and entitlement to relief like injunctions.
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1991 (8) TMI 332
Issues Involved:
1. Jurisdiction of Courts in Contractual Disputes
2. Interpretation of Section 20 of the Code of Civil Procedure
3. Validity of Jurisdiction Clauses in Contracts
Summary:
Jurisdiction of Courts in Contractual Disputes:
The primary issue in these appeals was whether the courts at Bombay had exclusive jurisdiction to decide disputes arising from the contracts between the parties, as stipulated in the contractual clauses, thereby ousting the jurisdiction of the courts at Madras where the suits were instituted.
Interpretation of Section 20 of the Code of Civil Procedure:
The appellant argued that, apart from the courts within whose territorial jurisdiction the goods were delivered for transport, the courts at Bombay also had jurisdiction due to the principal office being located there, as per the Explanation to Section 20 of the Code of Civil Procedure. The court, however, found this argument flawed. The Explanation to Section 20 is in two parts: the first part applies to corporations with a sole or principal office, and the second part applies to corporations with both a principal and subordinate office. The court clarified that if the cause of action arises at a place where the corporation has a subordinate office, only the courts at that place have jurisdiction, not the courts at the location of the principal office.
Validity of Jurisdiction Clauses in Contracts:
The court referred to precedents such as Hakam Singh v. M/s. Gammon (India) Ltd. and Globe Transport Corporation v. Triveni Engineering Works, which held that parties could agree to confer jurisdiction on one of the courts that already had jurisdiction under the Code. However, in the present cases, since the cause of action did not arise in Bombay and the appellant had subordinate offices at the places where the goods were delivered, the courts at Bombay did not have jurisdiction. Consequently, the jurisdiction clause in the contracts conferring exclusive jurisdiction on the courts at Bombay was invalid.
Conclusion:
The appeals were dismissed, affirming that the courts at Madras had jurisdiction to entertain the suits, and the jurisdiction clause in the contracts was not enforceable. The parties were ordered to bear their own costs.
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1991 (8) TMI 331
Issues Involved:
1. Nationalisation Scheme Validity
2. Delay in Final Notification
3. Applicability of New Act Provisions to Old Act Schemes
4. Period of Limitation for Finalising Schemes
Summary:
Nationalisation Scheme Validity:
The appellant challenged the nationalisation scheme for the Kota-Sangod route proposed by the Rajasthan State Road Transport Corporation under Section 68-C of the Motor Vehicles Act, 1939 (old Act). The High Court dismissed the writ petition, and the appellant appealed to the Supreme Court.
Delay in Final Notification:
The appellant argued that the undue delay of 11 years in issuing the final notification rendered the scheme invalid. The Supreme Court noted that the delay was caused by the appellant and other operators who approached the Minister for Transport, stalling the notification process. The Court held that the appellant could not complain about the delay he was responsible for.
Applicability of New Act Provisions to Old Act Schemes:
The Motor Vehicles Act, 1988 (new Act) came into force on 1.7.1989, repealing the old Act. The appellant contended that the scheme proposed under the old Act lapsed due to the delay in finalisation. The Court referred to Section 217(2)(e) of the new Act, which saves schemes proposed under Section 68-C of the old Act and mandates their finalisation under Section 100 of the new Act. The Court held that the scheme did not lapse automatically and was saved by the new Act.
Period of Limitation for Finalising Schemes:
The appellant argued that under Section 100(4) of the new Act, the scheme lapsed as it was not finalised within one year from the date of publication. The Court clarified that Section 100(4) applies to schemes proposed under the new Act, not to those under the old Act. For schemes under the old Act, the one-year period should be computed from the date of commencement of the new Act (1.7.1989). The final notification issued on 29.8.1990 was within the prescribed period, considering the stay order obtained by the appellant, which excluded the period of the stay from the one-year limitation.
Conclusion:
The Supreme Court upheld the High Court's decision, dismissing the appellant's writ petition and confirming the validity of the final notification issued under Section 100(3) of the new Act. The appeal was dismissed with costs.
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1991 (8) TMI 330
Whether failure on the part of the Detaining Authority as well as the State Government to accede to the request of the appellants to take out copies of the representations and forward the same to the Central Government for consideration has resulted in violation of their constitutional/statutory right to have their representation considered by the Central Government?
Whether the detention orders are liable to be quashed on that ground?
Held that:- the Detaining Authority as well as the State Government were not justified in taking a hyper-technical stand that they were under no obligation to take out copies of the representations and forward them to the Central Government. We think that this approach on the part of the Detaining Authority and the State Government has robbed the appellants of their constitutional right under Article 22(5) read with section 11 of the Act to have their representation considered by the Central Government. The request of the detenus was not unreasonable- On the contrary the action of the Detaining Authority and the State Government was unreasonable and resulted in a denial of the appellants' constitutional right. The impugned detention orders are, therefore, liable to be quashed. Appeal allowed. Set aside the order of the High Court and quash the detention orders on this single ground.
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