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• 1990 (9) TMI 368
  
  ISSUES PRESENTED and CONSIDERED

  The core legal questions considered in this judgment include:

  (1) Whether the petition under Section 20 of the Arbitration Act, 1940 is maintainable given the arbitration agreement between the parties and its potential classification as a foreign award under the Foreign Awards (Recognition and Enforcement) Act, 1961.

  (2) Whether the restraint clause (Clause 27) in the agreement, which prevents the respondent from using PVP-I in its preparations during and after the termination of the agreement, is enforceable under Indian law, specifically in light of Section 27 of the Indian Contract Act, 1872.

  (3) Whether the respondent's actions in preparing and intending to sell a product containing PVP-I under the trade name 'WOKADINE' during the subsistence of the license agreement and within three years post-termination violate the agreement.

  (4) Whether the respondent's procurement of PVP-I from a third party constitutes a breach of the agreement.

  (5) Whether the petitioner is entitled to an interim injunction restraining the respondent from dealing with preparations containing PVP-I post-termination of the agreement.

  ISSUE-WISE DETAILED ANALYSIS

  Issue 1: Maintainability of the Petition under Section 20 of the Arbitration Act, 1940

  The Court considered whether the petition was maintainable under the Arbitration Act, 1940. The arbitration agreement stipulated that disputes would be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, with the arbitration held in Zurich, Switzerland. The Court noted that this could classify the award as a foreign award under the Foreign Awards Act, 1961. However, the respondent conceded the maintainability of the petition for the purpose of deciding the interim application, leaving the substantive question open for future determination.

  Issue 2: Enforceability of Restraint Clause under Indian Law

  The Court analyzed Clause 27 of the agreement, which imposed a restraint on the respondent from using PVP-I during and after the agreement's termination. The Court referred to Section 27 of the Indian Contract Act, 1872, which voids agreements that restrain trade. The Court emphasized that the restraint must be reasonable and necessary to protect the interests of the party enforcing it. The Court found that the restraint was unreasonable post-termination, especially since the petitioner did not manufacture PVP-I and the formulations were publicly known. The Court also noted that the restraint applied only to the "Mundidone" brand of PVP-I, not PVP-I generally.

  Issue 3: Breach of Agreement by Respondent

  The petitioner alleged that the respondent breached the agreement by preparing and intending to sell products containing PVP-I under the trade name 'WOKADINE'. The Court noted that the respondent had pledged not to use the petitioner's formulations and found no evidence of breach before the agreement's expiry. The Court found the restraint on using PVP-I unreasonable after the agreement's termination.

  Issue 4: Procurement of PVP-I by Respondent

  The petitioner argued that the respondent's procurement of PVP-I from a third party constituted a breach. The Court found that the respondent's actions did not breach the agreement, as the order for PVP-I was placed before the termination notice, and the shipment was delayed due to the petitioner's actions.

  Issue 5: Entitlement to Interim Injunction

  The petitioner sought an interim injunction to prevent the respondent from dealing with PVP-I preparations post-termination. The Court found no merit in this application, emphasizing that PVP-I is widely available and formulations are public knowledge. The Court dismissed the application and vacated the interim order.

  SIGNIFICANT HOLDINGS

  The Court held that:

  "Clause 27 is in restraint of trade inasmuch as it itself submitted that this clause was nevertheless valid according to Swiss laws... It is certainly hit by Section 27 of the Contract Act."

  The Court established that agreements restraining trade must be reasonable and necessary to protect the enforcing party's interests. The restraint on the respondent was found unreasonable post-termination, particularly as the petitioner did not manufacture PVP-I and formulations were publicly known.

  The Court concluded that the restraint applied only to the "Mundidone" brand of PVP-I, not PVP-I in general, and found no evidence of breach by the respondent before the agreement's expiry.

  The Court dismissed the petitioner's application for an interim injunction, emphasizing that the restraint was unreasonable and unenforceable under Indian law.

  ---

• 1990 (9) TMI 367
  
  Issues:
  Appeal against acquittal under Section 302 IPC and Section 302 read with Section 109 IPC - Validity of High Court's judgment - Conflict between prosecution evidence and medical evidence - Credibility of witnesses - Nature of injuries - Dying declaration - Evidence of eye witnesses - Presence of fired cartridge at the scene - Reasons for acquittal.
  
  Analysis:
  The case involved an appeal by the State of Haryana against the acquittal of the respondents by the High Court in a murder case. The deceased was shot by the first respondent, resulting in his death. The prosecution relied on eyewitness accounts, medical evidence, and a dying declaration by the deceased. The High Court acquitted the respondents based on several reasons, including discrepancies in the timing of the incident, conflicting medical evidence regarding the injuries, and the credibility of witnesses. The High Court also questioned the authenticity of the dying declaration and highlighted the absence of the fired cartridge in the initial report. The Supreme Court, in its judgment, upheld the High Court's decision, emphasizing the logical conclusion drawn based on the medical evidence and witness testimonies. The Supreme Court found the High Court's reasoning valid and weighty, concluding that there was no compelling reason to overturn the acquittal.
  
  In summary, the Supreme Court dismissed the appeal, affirming the High Court's acquittal of the respondents. The judgment highlighted the importance of considering all evidence, including medical opinions and witness credibility, in criminal cases. The decision underscores the need for coherence and consistency in the prosecution's case to establish guilt beyond a reasonable doubt.

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• 1990 (9) TMI 366
  
  Issues Involved:
  1. Error of law by the High Court in exercising its powers under Section 378 read with Section 386(1)(a) of the Cr. P.C.
  2. Determination of the cause and nature of Asha Rani's death.
  3. Examination of the motive behind the murder.
  4. Evaluation of medical evidence and testimonies.
  5. Assessment of the trial judge's approach and findings.
  6. Criticism of investigation and procedural delays.
  7. Validity and authenticity of the dying declaration.
  8. Judicial conduct and criticism of witnesses.
  
  Issue-wise Detailed Analysis:
  
  1. Error of law by the High Court in exercising its powers under Section 378 read with Section 386(1)(a) of the Cr. P.C.:
  The Supreme Court examined whether the High Court committed any error in allowing the appeal against acquittal and convicting the appellant under Section 302 of the Indian Penal Code. It was established that while caution is necessary in appeals against acquittal, interference is justified in cases of perversity or misreading of evidence. The High Court's decision to set aside the acquittal was found to be within its powers as it identified significant errors in the trial judge's findings.
  
  2. Determination of the cause and nature of Asha Rani's death:
  Both the trial court and the High Court agreed that Asha Rani died unnaturally by burning at her in-laws' house. The post-mortem report indicated the presence of kerosene, ruling out accidental death and suicide. The appellant did not seriously challenge these findings, and it was concluded that Asha Rani was murdered.
  
  3. Examination of the motive behind the murder:
  The courts found that the motive for Asha Rani's murder was related to dowry demands. Her in-laws continuously pestered her for cash or an auto-rickshaw, and upon failure to meet these demands, she was subjected to torture. The trial judge's attempt to dilute the motive by suggesting strained relations was dismissed, as dowry-related motives are inherent in such cases.
  
  4. Evaluation of medical evidence and testimonies:
  The medical evidence, particularly the testimonies of Dr. Saxena, Dr. Temani, and Dr. Patrisia, was crucial. Dr. Saxena confirmed that Asha Rani was conscious and could answer questions when admitted to the hospital. Dr. Temani and Dr. Patrisia both testified that Asha Rani identified her brother-in-law, Ashok, as the person who burnt her. The High Court found no material contradictions in their statements and upheld the consistency of their testimonies despite minor discrepancies.
  
  5. Assessment of the trial judge's approach and findings:
  The trial judge's approach was criticized for being faulty and contrary to the rules of evidence appreciation. The judge misread the evidence, indulged in conjectures, and made assumptions unsupported by the record. The High Court corrected these errors, emphasizing that the judge's conclusions were based on imagination rather than material evidence.
  
  6. Criticism of investigation and procedural delays:
  The investigation was criticized for not producing local witnesses or the nurse and compounder who recorded the injury report. However, the High Court, referencing the case Chandra Kanta v. State of Maharashtra, concluded that defective investigation does not necessarily discredit the prosecution's case. The High Court found the prosecution's evidence credible despite investigative lapses.
  
  7. Validity and authenticity of the dying declaration:
  The dying declaration, as recorded in the injury report, was scrutinized. The High Court found the declaration credible, noting that the deceased was conscious when she made the statement. Despite procedural delays in sending the injury report to the police, the High Court upheld its authenticity, corroborated by consistent entries in the bed head ticket and injury report.
  
  8. Judicial conduct and criticism of witnesses:
  The trial judge's uncharitable criticism of Dr. Patrisia, primarily because she was a woman, was condemned. The Supreme Court expressed deep dissatisfaction with the judge's conduct, emphasizing that Dr. Patrisia had no reason to falsify her endorsement on the injury report. The High Court's decision to rely on the testimonies of Dr. Temani and Dr. Patrisia was upheld.
  
  Conclusion:
  The Supreme Court upheld the High Court's decision to convict the appellant under Section 302 of the Indian Penal Code, dismissing the appeal. The appellant, already in jail, was ordered to serve out his sentence.

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• 1990 (9) TMI 365
  
  Issues Involved:
  1. Interpretation of Section 9 of The Negotiable Instruments Act, 1881 - Definition of 'Holder in Due Course'.
  2. The validity of the plaintiff bank's claim as a 'holder in due course'.
  3. The negligence and good faith of the plaintiff bank in handling the cheques.
  4. The contractual relationship between the plaintiff bank and the first defendant firm.
  5. The liability of the defendants under the endorsed cheques.
  
  Issue-Wise Detailed Analysis:
  
  1. Interpretation of Section 9 of The Negotiable Instruments Act, 1881 - Definition of 'Holder in Due Course':
  
  The judgment revolves around the interpretation of Section 9 of The Negotiable Instruments Act, 1881, which defines 'holder in due course'. The section states: "Holder in due course means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
  
  The court emphasized that to be a 'holder in due course', a person must be a holder for consideration, the instrument must have been transferred before it becomes overdue, and the transferee must act in good faith without any reason to believe there was a defect in the title of the transferor.
  
  2. The Validity of the Plaintiff Bank's Claim as a 'Holder in Due Course':
  
  The plaintiff bank credited the proceeds of the cheques to the account of the first defendant firm, who withdrew the amount on various dates. The trial court and the High Court held that the plaintiff bank was a 'holder in due course' as it purchased the cheques for valid consideration after necessary endorsement before they became overdue. The presumption under Section 118(g) of the Act, which states that the holder of a negotiable instrument shall be presumed to be a holder in due course, supported the plaintiff's claim.
  
  3. The Negligence and Good Faith of the Plaintiff Bank in Handling the Cheques:
  
  The appellant (defendant No. 6) contended that the plaintiff bank acted negligently and did not act in good faith by paying the amounts due under the cheques without making inquiries regarding the title of the first defendant. The court examined various authorities and legal texts, including English law and Indian law, to determine the standards of good faith and negligence. The court concluded that under Indian law, the holder must act in good faith and with reasonable caution. Mere failure to prove bona fide or absence of negligence would not negate the claim, but gross negligence indicating lack of due diligence could.
  
  4. The Contractual Relationship Between the Plaintiff Bank and the First Defendant Firm:
  
  The court found sufficient evidence establishing that the defendants were allowed credit facilities up to Rs. 35,00,000 by the bank. The pledging of the title deed by the 5th defendant and the endorsement of a promissory note for Rs. 35,00,000 in favor of the plaintiff bank indicated an express contract for providing credit facilities. Consequently, there was an implied contract to credit the proceeds of the cheques to the account of the first defendant before actually receiving them.
  
  5. The Liability of the Defendants Under the Endorsed Cheques:
  
  The court held that even if the first defendant failed to supply goods for which the cheques were issued by the 6th defendant, the plaintiff bank had no sufficient cause to doubt the title of the first defendant. The plaintiff bank did not act negligently or disregard any 'red flag' raising suspicion. Therefore, the plaintiff bank was considered a holder in due course for valid consideration and could validly maintain an action against all the defendants, including defendant No. 6.
  
  Conclusion:
  
  The appeal was dismissed, and the judgments of the lower courts were affirmed. The plaintiff bank was deemed a holder in due course, and the defendants were held liable under the endorsed cheques. The court directed the parties to bear their own costs throughout.

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• 1990 (9) TMI 364
  
  Issues:
  Unauthorized transfer of funds by a bank, liability of the bank to recredit the amount, failure of the bank to honor its commitment, plea of oral instructions by the bank, dismissal of Writ Petition by High Court on the ground of disputed questions of facts, appellant's entitlement to relief.
  
  Analysis:
  The appellant, a Sub-Distributor of a company, maintained a Current Account with a bank. The bank transferred a substantial amount from the appellant's account to another account without authorization. Despite admitting the unauthorized transfer and promising to recredit the amount, the bank failed to do so, leading to the appellant filing a Writ Petition seeking a direction for the bank to deposit the disputed amount back into the appellant's account. The High Court dismissed the petition citing disputed questions of facts. However, the Supreme Court found that the case did not involve disputed facts, as the bank had admitted to the unauthorized transfer and its liability to repay the amount. The Court criticized the bank's conduct, noting that transferring funds based on oral instructions without written authorization is unacceptable and damages public trust in the banking system.
  
  The Supreme Court held that since the bank had admitted to the unauthorized transfer and its obligation to recredit the amount, there was no justification for the High Court to dismiss the petition on the grounds of disputed facts. The Court emphasized that as a state instrumentality, the bank must act honestly and in the best interest of its customers. Consequently, the Supreme Court allowed the appeal, overturned the High Court's decision, and directed the bank to recredit the disputed amount to the appellant's account within three weeks, along with any accrued interest. The Court refrained from expressing an opinion on the dispute between the appellant and other parties involved in the case, while also ordering the respondent bank to bear the appellant's costs.
  
  In conclusion, the judgment highlighted the bank's obligation to rectify unauthorized transfers promptly, emphasized the importance of maintaining public trust in banking institutions, and underscored the need for banks to act transparently and in accordance with legal obligations to serve their customers effectively.

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• 1990 (9) TMI 363
  
  Issues Involved:
  1. Territorial Jurisdiction of the High Court for Anticipatory Bail
  2. Maintainability of the Writ Petition
  3. Grant of Anticipatory Bail
  
  Territorial Jurisdiction of the High Court for Anticipatory Bail:

  The primary issue was whether the Delhi High Court had the jurisdiction to entertain an application for anticipatory bail when the alleged offence occurred in Uttar Pradesh. The court referred to previous judgments, including Pritam Singh v. State of Punjab, which established that there is nothing in S. 438 Cr.P.C. that restricts the jurisdiction of the High Court or the Court of Session to grant anticipatory bail to the territorial limits of where the offence was committed. The court observed that "an appropriate Court within whose jurisdiction the arrest takes place or is apprehended or is contemplated will also have jurisdiction to grant bail to the person concerned." The court endorsed the consensus view of various High Courts that the High Court or Court of Session within whose territorial jurisdiction the person has a reasonable apprehension of arrest shall have concurrent jurisdiction to grant anticipatory bail.

  Maintainability of the Writ Petition:

  Respondents argued that the writ petition was not maintainable due to the availability of alternate remedies under Cr.P.C. and parallel proceedings initiated in the Lucknow Bench of Allahabad High Court. The court rejected this argument, stating that when there is an imminent threat of deprivation of personal liberty, the petitioner cannot be asked to avail of alternate remedies as they may not be adequate or efficacious. The court also noted that the petitioner's counsel had not pressed for quashing the proceedings and the impugned warrant, focusing only on restraining the respondents from arresting the petitioner and for anticipatory bail.

  Grant of Anticipatory Bail:

  The court considered various factors for granting anticipatory bail, as outlined in Gurbaksh Singh Sibbia v. State of Punjab. The petitioner had reason to believe he was going to be arrested on an accusation of having committed a non-bailable offence. The court noted that the petitioner is an M.P. with deep roots in society, reducing the likelihood of absconding or tampering with witnesses. The court also observed that the investigation was complete, and charge-sheets had been filed without implicating the petitioner. Given the nature of the offence and the circumstances, the court concluded that the petitioner deserved to be enlarged on anticipatory bail.

  The court allowed the petition and enlarged the petitioner on anticipatory bail in criminal case Crime No. 182 A/89 pending in the Court of C.J.M., District Sultanpur, U.P. The court directed that in the event of his arrest, the petitioner shall be released on furnishing a personal bond for a sum of Rs. 10,000/-.

  Petition allowed.

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• 1990 (9) TMI 362
  
  Issues Involved:
  
  1. Land Acquisition and Compensation
  2. Court Fee and Enhanced Compensation
  3. Application of Section 28A of the Land Acquisition Act, 1894
  4. Payment of Solatium and Interest under Amended Provisions
  
  Detailed Analysis:
  
  1. Land Acquisition and Compensation:
  
  The land belonging to the petitioner-society was acquired for establishing a military cantonment at Bhatinda. Notifications under Section 4(1) and Section 6 of the Land Acquisition Act, 1894 were issued and published on October 9 and 10, 1974, respectively. The Land Acquisition Officer awarded compensation at rates between Rs. 4,500/- and Rs. 16,000/- per acre, dividing the land into three belts (A, B, and C). The Additional District Judge, Bhatinda, upheld the belting and increased the compensation, ranging between Rs. 5,625/- and Rs. 20,000/- per acre. The High Court further revised the compensation, dividing the land into two belts and awarding Rs. 15 per square yard (Rs. 72,600/- per acre) for the first belt and a flat rate of Rs. 25,000/- per acre for the remaining area, adding solatium at 15% and interest at 6% per annum.
  
  2. Court Fee and Enhanced Compensation:
  
  The petitioners filed an appeal (R.F.A. No. 274 of 1981) against the decision of the Additional District Judge, claiming an enhancement of Rs. 4,00,000/- over the awarded compensation. They paid a court fee of Rs. 6,248/- and restricted their claim due to their inability to pay a higher court fee. After almost six years, they filed an application to make good the deficiency in court fee and sought additional compensation with enhanced solatium and interest as per the 1984 amendment. The Full Bench of the High Court dismissed the application, emphasizing that allowing such practices would encourage not paying the court fee initially and then invoking jurisdiction under Section 151 of the Code to pay the deficit court fee and receive enhanced compensation.
  
  3. Application of Section 28A of the Land Acquisition Act, 1894:
  
  The petitioners argued based on the newly added Section 28A, inserted by Amending Act 68 of 1984, effective from April 13, 1982. This provision allows persons interested in the acquired land who were not parties to the reference to request the Collector to redetermine the compensation within three months from the court's award. However, the court clarified that Section 28A applies only to claimants who failed to seek a reference under Section 18 of the Act. The petitioners, having sought and secured a reference under Section 18 and filed an appeal in the High Court, could not invoke Section 28A. This interpretation aligns with the judgment in Mewa Ram (deceased) by his Lrs. and Ors. v. State of Haryana.
  
  4. Payment of Solatium and Interest under Amended Provisions:
  
  The petitioners sought solatium and interest at the higher rate allowed by the amended provisions of the Act. However, the court referenced the recent judgment in Union of India and Anr. v. Raghubir Singh (dead) by Lrs. etc., which precluded the submission since the matter had concluded long before April 13, 1982.
  
  Conclusion:
  
  The court dismissed the petition, noting that the petitioners were satisfied with the amount of Rs. 4,00,000/- and did not seek to pay the deficit court fee soon after the judgment in 1981 but waited almost six years. The Full Bench's decision to discourage such practices was upheld. The court also highlighted that although the petitioners belong to the Scheduled Caste and their land was expropriated for a public purpose, entertaining their claim would open floodgates for similar applications. Nonetheless, the court suggested that the government could consider paying the balance amount ex-gratia to the economically deprived petitioners.

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• 1990 (9) TMI 361
  
  The Supreme Court of India dismissed the special leave petition due to delay, as no satisfactory ground for the delay was explained. The application for condonation of delay was rejected. (Citation: 1990 (9) TMI 361 - SC)

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• 1990 (9) TMI 360
  

  Interpretation of Sections 16 and 22 - Whether, under these circumstances, the winding up proceedings against the company must be stayed under the provisions of Section 22(1) of the Act -Principle of beneficial construction - Phrase "enquiry under Section 16 is pending" in Section 22(1) of the Act - HELD THAT:- The use of the words "under Section 16" limits the words "enquiry pending" in Section 22(1). The provisions of Section 22(1) apply only to such enquiries and to no other. It is well-established that, if the language is clear, the court must give effect to it, for "the words of the statute speak the intention of the Legislature".

  As stated, one of the objects of the Act is to protect public investment made through financial institutions. If we accept the construction of Section 22(1) put forward by Mr. Mitra, it would defeat the objectives sought to be achieved by the Act. For example, a company, with the mischievous intent of avoiding its creditors, could file a reference under Section 15 with untruthful but correct documentation. It may be that the circumstances of the case may not warrant the filing of a reference in fact. According to Mr. Mitra, the documentation being in order, the secretary would register the reference under regulation 19 and the enquiry under Section 16 would be pending from that date. The result would be that recovery proceedings by a financial institution would be stalled for a crucial period allowing the dishonest company time to siphon off its assets. This cannot have been the intention of the Legislature.

  Section 16(3) of the Act also indicates that the enquiry is to be commenced by the Board. The Board is required to complete- the enquiry within 60 (sixty) days from the commencement of the enquiry. This cannot mean that the Board must complete the enquiry within 60- (sixty) days from the registration of the reference but must be construed as meaning from when the Board first applies its mind. We also accept Mr. Sarkar's submissions that mere registration of a reference by the secretary to the Board cannot mean any application of mind by the Board itself.

  Furthermore, it will appear from Section 22(1) that proceedings may be continued against the industrial company with the consent of the Board. This would suggest that the Board would have to apply its mind for the purpose of determining whether the consent should be granted or not. If the Board has not commenced any enquiry at all, it would not be in a position to accord such consent.

  Therefore, the phrase "pending enquiry under Section 16" in Section 22(1) of the Act must include references registered under Section 15 is, in our view, a non sequitur. Merely because Parliament, in its wisdom, has made Section 22(1) applicable to appeals and permitted proceedings against the company to be stayed pending such appeal, that cannot lead to the conclusion that the phrase "on enquiry under Section 16" in Section 22(1) must include a reference under Section 15 of the Act.

  Suffice it to say that, in view of the clear wording of Section 22(1), there is no need to embark upon an enquiry into the intention of Parliament.

  In that view of the matter, we dismiss this application and vacate all interim orders.

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• 1990 (9) TMI 359
  
  Issues:
  1. Inclusion of share income from a partnership firm in the total income of a partner when the partner has not received the share income.
  
  Analysis:
  The judgment pertains to a reference under section 236(1) of the Income-tax Act, 1961, for the assessment years 1980-81 and 1981-82. The main issue was whether the Tribunal was justified in upholding the action of the Income Tax Officer (ITO) in including the share income from a partnership firm in the total income of the assessee when the assessee had not received the share income from the firm. The assessee, a partner in a registered firm, had his share of income added to his total income by the ITO for both assessment years. The assessee contended that the income from the partnership firm and the extent of his share were subject to litigation, and he had not received any share from the firm. The Appellate Authority directed the ITO not to include the income from the partnership firm in the assessee's total income, pending the decision of the High Court. However, the Tribunal overturned the Appellate Authority's decision and upheld the ITO's inclusion of the share income in the assessee's total income.
  
  The Tribunal's decision was challenged on the grounds that it did not consider the facts and circumstances of the case adequately. The counsel for the assessee argued that the suit for dissolution of the partnership firm precluded any assessment of the firm or allocation of income to the assessee. However, the Court held that in the absence of any challenge to the Tribunal's findings, they were bound by those facts. The Court emphasized that as per section 182(1) of the Act, the share of each partner in the income of the firm must be included in the total income of the partner and assessed to tax. Therefore, irrespective of the accounting system followed by the assessee, the income from the partnership firm was deemed includible in the assessee's total income.
  
  In conclusion, the Court answered the reference question affirmatively in favor of the revenue and against the assessee. The judgment highlighted the statutory requirement under section 182(1) for including a partner's share income from a firm in the partner's total income, regardless of the actual receipt of such income. The decision underscored the legal obligation to assess and tax the partner's share of profit from a partnership firm as per the provisions of the Income-tax Act, 1961.

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• 1990 (9) TMI 358
  
  Issues:
  1. Failure of Central Government to dispose of application for consent under Section 86 of CPC within a reasonable time.
  2. Rejection of application for permission to sue the Consulate General of USSR on political grounds.
  3. Interpretation of "political grounds" for refusal of consent under Section 86 of CPC.
  4. Mandamus to command Central Government to reconsider the request for consent.
  
  Analysis:
  
  Issue 1:
  The petitioners leased premises to the Consulate General of USSR, serving notice of non-extension before the lease expiry. Despite filing multiple writ petitions due to Central Government's delay in disposing of the application for consent under Section 86 of CPC, the Central Government rejected the application on political grounds.
  
  Issue 2:
  The rejection of the application for consent was challenged by the petitioners, citing precedents where the Central Government's consent was refused "on political grounds." The Court emphasized the need for clear reasons and objective evaluation by the Central Government when refusing consent, ensuring adherence to principles of natural justice and providing explicit reasons for the decision.
  
  Issue 3:
  The Court found the rejection of the application on "political grounds" in the present case vague and lacking clarity on the political considerations involved. Consequently, the Court quashed the rejection order and directed the Central Government to reconsider the request for consent, emphasizing the necessity of providing clear and intelligible reasons for the decision.
  
  Issue 4:
  While the Court suggested an amicable settlement, no progress was made in that direction. The Court directed the Central Government to reconsider the request for consent under Section 86(2)(c) of the Code promptly, preferably within three months from the judgment date, without imposing any costs on the petitioners.

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• 1990 (9) TMI 357
  
  The Supreme Court upheld the High Court's decision that Directors of a private limited company are not personally liable for contributions under the Employees State Insurance Act, 1948. The liability falls on the company itself if there is an occupier. The appeal was dismissed with no costs due to the absence of the respondents.

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• 1990 (9) TMI 356
  
  Issues involved:
  Estoppel as a defense to right of pre-emption, application of estoppel in pre-emption cases, interpretation of notice requirement under the Rajasthan Pre-emption Act.
  
  Judgment Summary:
  
  The Supreme Court considered the applicability of estoppel as a defense to the right of pre-emption in the context of a pre-emption case. The Court noted that estoppel is a rule of equity designed to prevent unfair behavior and ensure justice. It operates as a check on spurious conduct and is invoked to aid in the administration of justice. The Court emphasized that estoppel can be used as a defense even if not specifically provided for in the law. The Court cited precedents where estoppel was applied to prevent unjust outcomes. The Court highlighted that estoppel can be invoked to curb unwarranted conduct and ensure fairness in transactions.
  
  Regarding the interpretation of the notice requirement under the Rajasthan Pre-emption Act, the Court disagreed with the High Court's view that estoppel could only arise if notice under Section 8 of the Act was given by the seller. The Court emphasized that estoppel can be used as a defense irrespective of statutory provisions. The Court referred to a Privy Council decision where estoppel was applied even in the absence of a statutory notice requirement. The Court clarified that estoppel can be invoked based on broad considerations of equity to prevent injustice.
  
  The Court discussed the nature of the right conferred by Section 9 of the Act, emphasizing that pre-emption is a right of substitution and not favored by courts due to its restrictive nature on property rights. The Court highlighted that the extinction of the right by conduct does not amount to statutory illegality or oppose public policy. The Court distinguished between validity and illegality of transactions, noting that failure to serve notice under the Act does not render the sale void. The Court emphasized that the Act does not debar a pre-emptor from waiving the right, and failure to exercise the right within the specified period results in its extinguishment.
  
  Based on the facts of the case, where the respondent knew of the sale deed, assisted in construction, and delayed invoking the right of pre-emption, the Court found the respondent's conduct inequitable. The Court held that the respondent could not defeat the appellant's right and restored the decision of the First Appellate Court. The Court allowed the appeal and awarded costs to the appellant.
  
  In conclusion, the Supreme Court upheld the application of estoppel in pre-emption cases, clarified the interpretation of notice requirements under the Rajasthan Pre-emption Act, and emphasized the importance of equity and fairness in such matters.

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• 1990 (9) TMI 355
  
  Issues Involved:
  1. Dismissal of the winding-up petition filed by the company.
  2. Financial incapacity and operational suspension of the company.
  3. Conflict between the Companies Act, 1956 and the Industrial Disputes Act, 1947.
  4. Insolvency and inability to pay debts.
  5. Interests of the company's workmen and employees.
  6. Consent terms between the company and its workmen.
  7. Role of the State Government and CIDCO in the company's financial crisis.
  
  Detailed Analysis:
  
  1. Dismissal of the Winding-Up Petition Filed by the Company:
  The appeal challenges the dismissal of the winding-up petition filed by the company under Section 433(a), (e), and (f) of the Companies Act, 1956. The petition was initially dismissed by the learned Single Judge, who held that the provisions of the Industrial Disputes Act prevailed over the Companies Act, as the petition was filed by the company itself, a piece of beneficial legislation regulating employer-employee relationships.
  
  2. Financial Incapacity and Operational Suspension of the Company:
  The company was incorporated on November 15, 1979, as CIDCO Transport Corporation Limited, and later renamed Bombay Metropolitan Transport Corporation Ltd. It faced significant financial losses and labor troubles between 1980-1984. In February 1984, the company's fleet was immobilized, and it had no liquid funds. A meeting with the Chief Minister of Maharashtra led to the decision to close the company's services, which were taken over by the Maharashtra State Road Transport Corporation (MSRTC). Subsequently, the company suspended its operations and declared a lock-out.
  
  3. Conflict Between the Companies Act, 1956 and the Industrial Disputes Act, 1947:
  The most important issue in the appeal was whether there was a conflict between the Companies Act and the Industrial Disputes Act concerning the winding up of a company that is an industrial establishment. The court held that, harmoniously construed, there is no conflict between the provisions of the two statutes, and they operate in distinct and separate fields. The Industrial Disputes Act applies when an employer intends to close down an undertaking, while the Companies Act deals with the winding up of a company, leading to its dissolution.
  
  4. Insolvency and Inability to Pay Debts:
  The company had accumulated significant losses and liabilities, far exceeding its assets. The Comptroller and Auditor General of India noted the company's accumulated loss at the end of March 1985 was Rs. 579.21 lakhs, far exceeding its paid-up capital of Rs. 10.00 lakhs. The company's liabilities as of March 31, 1986, were Rs. 9,26,79,000 due to CIDCO and approximately Rs. 1,00,00,000 due to its employees and workmen, while its assets were significantly lower. The court concluded that the company was in no position to pay its debts or run its business, and no financial institution would reasonably provide it with funds.
  
  5. Interests of the Company's Workmen and Employees:
  The court considered the interests of the company's workmen, noting that the company had not conducted business since 1984, leading to a dwindling value of its assets and increasing liabilities. The consent terms between the company and 1700 workmen, represented by respondents 1 to 4, stated that the proceeds from the sale of the company's assets would first pay the dues of the employees and workmen, with any balance going to CIDCO. The court emphasized that the workmen's interests would be better served by winding up the company and distributing the proceeds accordingly.
  
  6. Consent Terms Between the Company and Its Workmen:
  The consent terms agreed upon by the company and its workmen included the sale of the company's properties and the payment of dues to employees and workmen first. The new corporation proposed by the State Government would consider applications from former workers and employees of the company, giving them preference for employment based on suitability determined by an expert committee.
  
  7. Role of the State Government and CIDCO in the Company's Financial Crisis:
  The State Government, in its affidavit, stated that it had no plans to revive the company or provide financial assistance. The court noted that the company's financial position, not that of CIDCO or the State Government, was relevant to the winding-up petition. The court also dismissed the argument that the State Government was obliged to subsidize the company due to its operational losses incurred while following government orders.
  
  Conclusion:
  The court allowed the appeal, setting aside the judgment and order of the learned Single Judge. The petition for winding up the company was made absolute, with the Official Liquidator remaining as the Provisional Liquidator during a six-week stay of the order's operation. The court emphasized that the winding-up was just and equitable, given the company's inability to pay its debts and the lack of prospects for revival.

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• 1990 (9) TMI 354
  
  Issues Involved:
  1. Justification of High Court in reversing the awards and decrees of the Civil Court.
  2. Determination of market value for the acquired lands.
  3. Entitlement to severance charges and compensation for injurious effects on remaining lands.
  4. Entitlement to payment of interest on solatium.
  
  Summary:
  
  1. Justification of High Court in reversing the awards and decrees of the Civil Court:
  The Supreme Court addressed whether the High Court was justified in reversing the Civil Court's awards and decrees. The High Court reversed the Civil Court's decision, which had enhanced the market value of the lands and awarded compensation including severance and injurious effects. The Supreme Court emphasized that the burden of proof lies on the claimants to show that the Land Acquisition Collector's award was inadequate and that the Civil Court had not subjected the evidence to critical scrutiny. The High Court was found justified in its reversal due to the lack of reliable evidence from the claimants.
  
  2. Determination of market value for the acquired lands:
  The Supreme Court discussed the principles for determining market value in compulsory acquisition cases, referencing several precedents. The Court noted that the High Court, after rejecting the evidence from both the claimants and the State, should have considered the concession made by the Advocate General of Kerala, who suggested a market value of Rs. 18 per cent. The Supreme Court accepted this concession and fixed the market value at Rs. 18 per cent for the lands, while confirming Rs. 30 per cent for wet lands as awarded by the Collector.
  
  3. Entitlement to severance charges and compensation for injurious effects on remaining lands:
  The Supreme Court agreed with the High Court that the appellant did not provide sufficient evidence to support claims for severance charges and compensation for injurious effects. The evidence showed that the appellant did not incur expenses for erecting boundary walls, bridges, or culverts, and there was no significant damage due to the acquisition. Thus, the award for severance charges was deemed unwarranted.
  
  4. Entitlement to payment of interest on solatium:
  The Supreme Court held that the term "compensation" u/s 25(3) of the Kerala Land Acquisition Regulation includes interest on solatium. The Court referenced the case of Union of India v. Shri Ram Mehar & Anr., which distinguished between market value and compensation. It concluded that the appellant is entitled to interest on solatium at 6% per annum from the date of possession until the date of payment.
  
  Conclusion:
  The appeals were allowed to the extent that the market value was fixed at Rs. 18 per cent, with solatium at 15% and interest at 6% on the excess market value, including solatium. The judgment of the High Court was otherwise confirmed, with parties bearing their own costs.

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• 1990 (9) TMI 353
  
  Issues involved: Interpretation of powers of Investigating Agency u/s 102 Cr.P.C. and ownership of funds invested in Banks and financial institutions.
  
  Ownership of funds: The case involved allegations against an individual for committing offenses under sections 467, 468, 471, and 420 of the Indian Penal Code. The Investigating Agency seized incriminating documents indicating that funds invested in financial institutions and Banks belonged to the accused, obtained through forging credit advices. The petitioners claimed that the amounts invested and drafts seized belonged to them, not the accused, and sought withdrawal of prohibitory orders preventing them from accessing their accounts.
  
  Powers of Investigating Agency u/s 102 Cr.P.C.: The petitioners argued that the Investigating Agency had no authority to issue prohibitory orders on Banks and financial institutions, hindering them from operating their accounts. However, the Court held that the Investigating Agency was empowered to issue such orders u/s 102 Cr.P.C. based on legal precedents, including a decision by Padmini Jesudurai, J., which established that money in Bank accounts could be seized by prohibiting the account holder from accessing it. A subsequent Division Bench upheld this view, leading to the dismissal of the petition seeking withdrawal of the prohibitory order and release of the seized demand drafts.
  
  In conclusion, the Court determined that the ownership of the funds and the legality of the prohibitory orders would be decided during the trial based on evidence presented, and upheld the Investigating Agency's power to issue such orders u/s 102 Cr.P.C. based on established legal interpretations.

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• 1990 (9) TMI 352
  
  Issues Involved:
  The judgment involves a challenge to an order passed by the Special Judge Assam and letters issued by the Inspector (CBI) Gauhati in a Crime Case under Sections 120-B and 409 of the Indian Penal Code and Section 5(2) of the PC Act.
  
  Facts:
  The Inspector (CBI) Gauhati directed various bank managers not to allow the petitioner to withdraw money or property from their banks, stating that the assets had been seized under Section 102 of the Criminal Procedure Code during the investigation. The petitioner sought release of the assets, which was rejected by the Special Judge as premature.
  
  Legal Analysis:
  The petitioner argued that a police officer does not have the jurisdiction to prohibit a bank from allowing an accused to operate their account or locker. Section 102 of the Criminal Procedure Code allows for seizure of property suspected to be involved in an offense, with specific procedures for reporting and custody.
  
  Precedent and Interpretation:
  Referring to the case of Textile Traders Syndicate v. State of U.P., it was established that once money passes to a debtor, it becomes unidentifiable and cannot be seized by a police officer. The court agreed with this interpretation, stating that the act of seizure under Section 102 requires actual taking possession of the property.
  
  Judgment:
  The court quashed the orders of the Special Judge and the police officer, ruling that the actions taken were not in accordance with the law. However, in the case of lockers where suspicious articles are present, the police officer was granted permission to take possession within two weeks, during which the petitioner would be restricted from accessing the contents of the lockers.

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• 1990 (9) TMI 351
  
  Issues Involved:
  1. Validity of detention order under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974.
  2. Consideration of material documents by the detaining authority.
  3. Necessity of detention based on a single incident.
  4. Delay in service of the detention order.
  5. Delay in consideration of the representation submitted by the petitioner.
  6. Language of the order rejecting the representation.
  
  Detailed Analysis:
  
  1. Validity of Detention Order:
  The petitioner challenged the validity of his detention under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, based on an order dated December 12, 1989. The petitioner's detention was intended to prevent him from smuggling goods.
  
  2. Consideration of Material Documents:
  The petitioner argued that the detaining authority failed to consider material documents, specifically his bail application and the order relaxing bail conditions. He claimed this resulted in a denial of his right to make a representation under Article 22(5) of the Constitution. The Court found no substance in this contention, stating that these documents were not material and their non-consideration did not vitiate the detention order. The Court referenced the decision in *Haridas Amarchand Shah v. K.L. Verma*, which held that such documents were not vital for the satisfaction of the detaining authority.
  
  3. Necessity of Detention Based on a Single Incident:
  The petitioner contended that the detention order was unnecessary as it was based on a single incident of smuggling. The Court disagreed, stating that preventive detention can be based on a reasonable prognosis of future behavior inferred from past conduct, which may consist of a single act. The Court found that the petitioner's deliberate act of smuggling gold bars concealed in his body, using a passport under a false name, indicated a likelihood of future smuggling activities.
  
  4. Delay in Service of the Detention Order:
  The petitioner claimed that the detention order, passed on December 12, 1989, was served after a month on January 12, 1990, despite his availability. The Court found that efforts were made to execute the order, but the petitioner was not available at his known address. The order was executed promptly after his surrender on January 8, 1990. Therefore, the Court concluded that there was no undue delay in serving the detention order.
  
  5. Delay in Consideration of the Representation:
  The petitioner alleged delay in the consideration of his representation dated January 18, 1990. The Court noted that the representation was received by the Ministry of Finance on January 30, 1990, and was considered on February 20, 1990, with the memo rejecting the representation issued on February 21, 1990. The Court found that the time taken to obtain comments from the sponsoring authority and the actual consideration period was reasonable, and there was no inordinate delay.
  
  6. Language of the Order Rejecting the Representation:
  The petitioner argued that the order rejecting his representation was in English, a language he did not understand. The Court observed that this ground was not raised in the writ petition, and the respondents had no opportunity to address it. However, the Court noted an endorsement by the Jailor, stating that the order was read and explained to the petitioner in a language he understood. Therefore, the Court dismissed this contention.
  
  Conclusion:
  The Court dismissed the writ petition, finding no merit in the grounds urged by the petitioner's counsel. The detention order was upheld as valid and lawful.

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• 1990 (9) TMI 350
  
  Issues:
  Interpretation of Rule 3 of the Maharashtra Ground Water Service, Class I (Recruitment) Rules, 1976 for appointment to the post of Deputy Director; Requirement of practical experience after obtaining a post-graduate degree in Geology for promotion from Senior Geologists under Rule 3(1)(a) of the Rules.
  
  Analysis:
  The judgment dealt with the interpretation of Rule 3 of the Maharashtra Ground Water Service, Class I (Recruitment) Rules, 1976, specifically focusing on the appointment to the post of Deputy Director. The Rule outlined three methods of appointment, including promotion from Senior Geologists, transfer from the Department of Geology and Mining, and nomination from eligible candidates. The case primarily revolved around the requirement of practical experience after obtaining a post-graduate degree in Geology for promotion from Senior Geologists under Rule 3(1)(a) of the Rules.
  
  The appellant, a Senior Geologist, had applied for the post of Deputy Director but was not called for an interview due to not meeting the 10 years practical experience requirement after obtaining his post-graduate degree in Geology. The appellant contended that the insistence on such experience post obtaining the academic qualification was illegal. The High Court dismissed the appellant's writ petition challenging Rule 3(1)(c) requirements. The appellant was reverted to the position of Senior Geologist following a court order.
  
  Subsequently, a new post of Deputy Director was created, and the appellant was selected for promotion under Rule 3(1)(a) of the rules. However, this appointment was challenged in a writ petition on the grounds that the appellant lacked the necessary experience after acquiring his post-graduate degree. The Division Bench of the High Court quashed the selection and promotion of the appellant as Deputy Director under Rule 3(1)(a) of the rules.
  
  During the appeal process, the Government of Maharashtra amended Rule 3(1)(a) by deleting the requirement of 10 years experience after acquiring a post-graduate degree in Geology for promotions. The Supreme Court held that the interpretation of the rule prior to its amendment did not warrant interference. The Court opined that experience should generally be considered post acquiring minimum qualifications, but in the case of promotions, a different interpretation might apply based on the relevant provisions and required experience type.
  
  The Court acknowledged the retroactive application of the amendment, deeming it applicable to the appellant's case. As the appellant was the senior most among Senior Geologists, even under the amended rules, he remained eligible for appointment. Consequently, the Court allowed the appeal against the decision in the writ petition challenging the promotion but dismissed the appeal related to the initial rejection for the post of Deputy Director.

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• 1990 (9) TMI 349
  
  Issues involved: Validity of project financing agreement between local authority and developer, extent of judicial review over governmental projects, interpretation of statutory powers of Municipal Council, compliance with statutory provisions, reasonableness as a test of validity, application of principles of judicial review to contractual decisions, allegations of favoritism in project tendering process, consideration of potential financial misconduct by developer.
  
  1. Financing Agreement Validity: The Supreme Court held that a project, though legal, financed and executed by a developer through an agreement with a local authority, does not become impermissible unless it violates legal limits or constitutes an abuse of power. Judicial review is limited to cases of constitutional violations or clear abuse of power. The court recognized the administrator's right to trial and error within the limits of authority.
  
  2. Policy Options in Urban Planning: In the context of urban planning, a wide range of policy options consistent with statutory objectives should be permissible. The court stated that it is challenging to determine the superiority of one policy option over another in urban planning matters, as long as they align with statutory powers.
  
  3. Interpretation of Statutory Powers: The court found that the power exercised by the Municipal authority in the case aligns with Section 272(1) of the Maharashtra Municipalities Act, and there is no reason to interpret the provision restrictively to exclude such projects.
  
  4. Compliance with Statutory Provisions: It was determined that the transaction did not violate Section 92 of the Act, and it would be unduly restrictive to impose additional restrictions not found in the statute. The court approved the developer's substitution of an occupier with the Municipal Council's consent.
  
  5. Reasonableness as a Test of Validity: The court discussed the different contexts of "reasonableness" in administrative law, tort law, and constitutional law. The administrative law test of reasonableness focuses on distinguishing between proper and improper use of power, rather than the standard of the "reasonable man" in tort law.
  
  6. Application of Judicial Review to Contractual Decisions: The court emphasized that public law elements must be present in contractual decisions to invoke judicial review. In this case, the material presented did not meet the legal requirements for judicial interference.
  
  7. Allegations of Favoritism: The court rejected claims of favoritism in the project tendering process, stating that the tender terms were clear and comparable for all bidders, and no other tenderer raised grievances. The charge of arbitrariness was deemed unsubstantiated.
  
  8. Consideration of Financial Misconduct: The court dismissed concerns about potential financial misconduct by the developer as insufficient grounds to condemn an otherwise valid decision by the Municipal authority. Judicial intervention based on such grounds was deemed inappropriate.

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