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1998 (9) TMI 697
The Bombay High Court upheld the lower courts' decision in favor of the plaintiff in a loan dispute, ruling that the suit was not barred by limitation and the plaintiff did not need a money lending license. The appeal was dismissed with no costs.
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1998 (9) TMI 696
Issues Involved:
1. Whether the Sessions Court can add a new person to the array of accused in a case pending before it at a stage prior to collecting any evidence.
Issue-wise Detailed Analysis:
1. Authority of Sessions Court to Add a New Accused Prior to Evidence Collection:
The primary issue in the appeal was whether a Sessions Court has the authority to add a new person to the array of accused before any evidence is collected. The Sessions Judge initially held that he could do so based on the decision in *Kishun Singh Vs. State of Bihar* (1993 2 SCC 16). This decision was reaffirmed by the High Court of Punjab and Haryana, referencing *Nissar Vs. State of U.P.* (1995 2 SCC 23).
2. Legal Reservations and Larger Bench Consideration:
The legal position in *Kishun Singh* was questioned in *Raj Kishore Prasad vs. State of Bihar* (1996 4 SCC 495), leading to the matter being considered by a larger Bench. The appellant contended that Section 319 of the Code of Criminal Procedure (CrPC) is the only provision allowing a Sessions Court to add a new accused, and this can only be invoked based on evidence presented during the trial.
3. Interpretation of Section 319 CrPC:
Section 319 of the CrPC allows a court to proceed against any person appearing to be guilty of an offense based on evidence presented during an inquiry or trial. The Supreme Court emphasized that this power is contingent on evidence tendered during the trial, not on materials presented before the committal court, as highlighted in *Rajkishore Prasad Vs. State of Bihar* (1996 4 SCC 495).
4. Jurisdiction of Sessions Court Post-Committal:
The Court examined whether the Sessions Court's jurisdiction under Section 193 CrPC includes summoning persons not covered by the committal order. It was noted that the committal process involves specific formalities, including dealing with the accused as per Section 209 CrPC. The Court concluded that the Sessions Court could only add new accused under Section 319 CrPC after the evidence collection stage has commenced.
5. Addressing Exceptional Circumstances:
The Court acknowledged situations where the Sessions Judge might realize the necessity of adding an accused before evidence collection to prevent miscarriage of justice. It suggested that in such rare cases, the Sessions Court could report to the High Court, which could then direct the committing Magistrate to rectify the committal order.
Conclusion and Order:
The Supreme Court found it difficult to support the observations in *Kishun Singh* regarding the Sessions Court's powers under Section 193 CrPC to summon new accused based on pre-trial materials. Consequently, the impugned order of the Sessions Court adding the appellant as an accused was set aside. However, the decision was made without prejudice to the Sessions Court's powers under Section 319 CrPC to add any person to the array of accused based on evidence collected during the trial. The appeal was thus allowed.
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1998 (9) TMI 695
Issues:
1. Department's appeal regarding trading addition for asst. yrs. 1984-85 and 1985-86.
2. Assessee's appeal for asst. yr. 1986-87: a) Rejection of claim for carry forward of loss. b) Disallowance of telephone expenses.
Department's Appeals - Trading Addition:
The Department's appeals focused on the deletion of trading additions due to excessive wastage claimed by the assessee. The CIT(A) consolidated the issue for both years, where the AO had made additions for asst. yrs. 1984-85 and 1985-86. The dispute arose from the assessee's claimed process loss of raw cotton and production variations compared to the previous year. The AO concluded that the assessee showed excessive wastage and made corresponding additions. However, the CIT(A) considered the assessee's submissions, highlighting the maintenance of regular books of accounts and strict oversight by the excise department. The CIT(A) found no defects in the books of account and deleted the additions for both years.
Assessee's Appeal - Carry Forward of Loss:
In the appeal for asst. yr. 1986-87, the first ground concerned the rejection of the claim for carry forward of loss. The AO disallowed the claim due to the late filing of the return. The CIT(A) upheld the disallowance, emphasizing the belated filing of the return beyond the prescribed deadline. The assessee argued that the delayed filing was due to extraneous circumstances related to the unit being taken over by the Government. The authorized representative contended that the return was filed within the extended period, making the claim allowable. The Tribunal agreed with the assessee, citing previous decisions and the Supreme Court's ruling in a similar context. The Tribunal allowed the appeal, directing the AO to permit the carry forward of the loss to the succeeding year.
Assessee's Appeal - Disallowance of Telephone Expenses:
The second ground in the assessee's appeal related to the disallowance of Rs. 2,050 from telephone expenses. During the hearing, the authorized representative did not press this ground, leading to its rejection. Consequently, this aspect of the appeal was dismissed.
In conclusion, the Appellate Tribunal at Jaipur ITAT dismissed the Department's appeals regarding trading additions for asst. yrs. 1984-85 and 1985-86, while allowing the assessee's appeal for asst. yr. 1986-87 in part, specifically permitting the carry forward of loss to the succeeding year. The Tribunal's decision was based on detailed considerations of the factual and legal aspects presented during the proceedings, ensuring a thorough analysis of the issues involved in each appeal.
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1998 (9) TMI 694
Issues:
1. Conviction under Arms Act and TADA Act based on possession of sten-gun and live cartridges.
2. Double jeopardy claim due to previous trial on different charges.
3. Trial of multiple offences together under Criminal Procedure Code.
4. Evidence requirement for proving possession and identity of seized weapon.
5. Acceptance of defense witnesses' testimony.
Analysis:
1. The appellant was convicted under Section 25 of the Arms Act and Section 5 of the TADA Act for possessing a sten-gun and 12 live cartridges. The Designated Court relied on the evidence of witnesses to establish the possession of the weapon and live ammunition. The court found the sten-gun in working condition and the cartridges live based on expert testimony.
2. The appellant argued against being tried again for possession of the sten-gun and cartridges, citing a previous trial where the prosecution evidence was not believed. However, the Supreme Court dismissed this claim, emphasizing that the previous trial was for different offenses, and hence, the appellant could be tried again for the current charges.
3. The appellant contended that the offenses under the Arms Act and TADA Act could have been tried together with other charges. The court clarified that Section 220 of the Criminal Procedure Code allows trying multiple offenses together but does not mandate it. The Designated Court's decision to try the offenses separately was deemed legal.
4. The appellant raised concerns about the lack of evidence regarding the custody and handling of the seized weapon. However, both the Investigating Officer and the Armourer identified the weapon and cartridges in court, confirming their authenticity. The court found no doubt about the identity of the weapon, especially since it was in working condition and the cartridges were live.
5. The appellant's defense witnesses claimed that he was in police custody before the incident, supported by a Panchayat resolution. However, the Designated Court rejected this defense, noting the absence of a formal complaint about the alleged unlawful detention. The court deemed the police's involvement of the appellant justified and rejected the defense raised.
In conclusion, the Supreme Court dismissed the appeal, finding no merit in the appellant's contentions. The court upheld the Designated Court's decision based on the evidence presented and the legal considerations discussed in the judgment.
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1998 (9) TMI 693
Issues Involved:
1. Whether the letter of intent dated 30.5.1997 constitutes a concluded contract.
2. Whether the negative covenants in the letter of intent can be enforced.
3. Whether the balance of convenience, irreparable loss, or comparative hardship justifies the grant of an interim injunction.
Issue-wise Detailed Analysis:
1. Whether the letter of intent dated 30.5.1997 constitutes a concluded contract:
The appellant contended that the joint venture agreement dated 30.5.1997 was a complete and self-operative contract, binding the parties for five years. However, the respondents argued that the letter of intent lacked consensus ad idem regarding commercial terms and was not acted upon, making it a mere proposal rather than a concluded contract. The court noted that the letter of intent required further procedural, functional, and operational details to be settled by 7.6.1997, which never occurred. Subsequent correspondences indicated that the joint venture arrangement was abandoned and replaced with a new underwriting arrangement. The court concluded that the letter of intent was not a concluded contract as essential terms and mutual obligations were not finalized.
2. Whether the negative covenants in the letter of intent can be enforced:
The appellant argued that the negative covenants in the joint venture agreement should be enforced irrespective of balance of convenience or irreparable injury. The respondents countered that the negative covenants could not be invoked as the joint venture was not acted upon and was effectively abandoned. The court examined several precedents, including Gujarat Bottling Co. Ltd. v. Coca Cola Co. and others, and concluded that negative covenants could only be enforced if the contract was concluded and binding. Since the joint venture agreement was not a concluded contract and was replaced by a new arrangement, the negative covenants could not be enforced.
3. Whether the balance of convenience, irreparable loss, or comparative hardship justifies the grant of an interim injunction:
The court emphasized that the grant of an interim injunction is an equitable and discretionary remedy, requiring a strong prima facie case, the necessity to prevent irreparable injury, and a balance of convenience favoring the plaintiff. The court found that the appellant failed to establish a strong prima facie case as the joint venture agreement was not a concluded contract. Furthermore, the court held that the comparative mischief or inconvenience from granting the injunction would be greater than withholding it, as it would disrupt the telecast of the serials and cause irreparable loss to the respondents. The court also noted that the appellant could be compensated with damages if they succeeded in the trial.
Conclusion:
The court dismissed the appeal, upholding the learned single judge's decision to refuse the interim injunction. The court determined that the letter of intent dated 30.5.1997 was not a concluded contract, and the negative covenants could not be enforced. The balance of convenience, irreparable loss, and comparative hardship did not justify the grant of an interim injunction. The court emphasized that any opinions expressed in the order were tentative and should not influence the trial court's final decision on the merits of the case.
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1998 (9) TMI 692
The Appellate Tribunal CEGAT NEW DELHI ruled that Trichloro Ethylene and Carbon Tetra Chloride are entitled to Modvat credit even if used for cleaning goods. The distinction of essentiality for inputs is immaterial in the Modvat scheme. The appeal of the Revenue was dismissed.
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1998 (9) TMI 691
Issues:
1. Whether the clearance of components to the site amounts to the manufacture and clearance of a complete Diesel Generating Set.
2. Whether all the purchased components being cleared from the factory would amount to the clearance of Diesel Generating Sets in a knocked down condition.
3. Whether the Diesel Generating Set was manufactured at the appellants' premises.
4. Whether the appellants are entitled to MODVAT Credit even if they have not followed the requisite procedure under the MODVAT Rules.
Issue 1:
The dispute revolves around whether clearing components to the site constitutes manufacturing and clearing a complete Diesel Generating Set. The appellants argue that the set only comes into existence after detailed assembly on-site, making it immovable property unsuitable for sale. However, the adjudicating authority maintains that clearing all components amounts to manufacturing the sets. The authority's decision is based on the fact that inspections were conducted at the appellants' premises, not necessarily requiring assembled sets. Consequently, a duty demand and penalty were imposed on the appellants, leading to the appeal.
Issue 2:
The adjudicating authority's reasoning suggests that clearing all purchased components from the factory could be seen as the clearance of Diesel Generating Sets in a knocked-down state. This view is supported by the argument that even if fully assembled sets weren't transported to the site due to logistical reasons, the transported components should still be considered 'goods' subject to levy under relevant laws. The authority's stance is reinforced by legal precedents and interpretations, indicating that goods brought into existence outside the factory can still be classified as such.
Issue 3:
The question of whether the Diesel Generating Set was manufactured at the appellants' premises is central to the case. The authority's adverse finding against the appellants is based on the premise that manufacturers need not produce all components to constitute manufacturing. The Tribunal aligns with this view, emphasizing that the assembly of components at the site still qualifies as manufacturing. The judgment draws parallels with legal interpretations and previous decisions to support the conclusion that the Diesel Generating Set was indeed manufactured at the appellants' premises.
Issue 4:
Regarding MODVAT Credit entitlement despite non-compliance with procedural requirements, the Tribunal rules in favor of the appellants. Even though the appellants did not strictly follow MODVAT Rules, they are deemed eligible for the credit if entitled by law. The Department is instructed to recalculate the duty quantum after extending the MODVAT Credit benefit to the appellants, thereby modifying the initial order while upholding it in essence.
This detailed analysis of the judgment highlights the key issues, arguments, and legal interpretations involved in the case, providing a comprehensive overview of the decision rendered by the Tribunal.
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1998 (9) TMI 690
The Gujarat High Court upheld a decision based on a Supreme Court ruling in the case of M/s.Isha Marbles v. Bihar State Electricity Board. The appeal was dismissed as the High Court is bound by the Supreme Court's decision.
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1998 (9) TMI 689
Issues:
- Professional misconduct by an advocate engaging in taxi business without permission from the Bar Council.
Analysis:
The case involves an appeal challenging the order of the Disciplinary Committee of the Bar Council of India, which suspended an advocate from practice for one year due to allegations of professional misconduct. The complainant accused the advocate of engaging in a taxi business without the necessary permission from the Bar Council, which was considered a violation of the rules governing advocates' conduct. The evidence presented before the Disciplinary Committee focused on whether the advocate had indeed committed the alleged misconduct.
Upon review, it was revealed that the advocate had enrolled with the Punjab and Haryana Bar Council in 1990 while his family was involved in a taxi business, and he owned four taxis at that time. However, the advocate claimed to have transferred ownership of the taxis to other individuals after becoming an advocate, ceasing his involvement in the taxi business. The Disciplinary Committee found the advocate guilty of professional misconduct based on the evidence presented.
The Supreme Court analyzed the relevant Bar Council rules, particularly Rule 47, which prohibits advocates from personally engaging in any business but allows for being a sleeping partner in a business not conflicting with the dignity of the legal profession. Rule 48 permits advocates to hold certain positions in companies without executive duties. The Court emphasized that charges of professional misconduct require proof beyond a reasonable doubt, akin to a quasi-criminal charge.
The Court found that the evidence against the advocate was insufficient to establish misconduct. Despite owning the taxis, there was no concrete proof that the advocate continued the taxi business after enrolling as an advocate. The advocate's statement that he had stopped the taxi business post-enrollment remained unchallenged and unrebutted. The Court concluded that the evidence was vague and did not conclusively prove the misconduct charge. Consequently, the Court allowed the appeal, overturning the Disciplinary Committee's decision and setting aside the suspension order, as the charge against the advocate was not proven beyond a reasonable doubt.
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1998 (9) TMI 688
Issues:
1. Permission to use a stadium for non-sports activities.
2. Challenge to the interim order permitting such use.
3. Ensuring protection of stadium infrastructure during non-sports events.
Analysis:
1. The judgment deals with the issue of permitting the use of a stadium for non-sports activities. The case involved a request to use Nehru Stadium in Chennai for a Platinum Jubilee celebration, which was challenged by a public interest litigant. The Court acknowledged the ban on using sports stadia for purposes other than sports events, emphasizing the need to maintain the stadium's integrity and prevent damage. The Court allowed a one-time exception for the celebration but restricted the use to specific areas, isolating the natural and synthetic turfs to prevent damage.
2. The challenge in the appeal focused on the interim order granted by the High Court, allowing the state to proceed with the event under assurances for the stadium's safety and upkeep. The appellant questioned the legality of permitting the event despite the ban on non-sports activities. The Supreme Court modified the terms of the permission, emphasizing that the one-time use should not set a precedent for future non-sports events at the stadium. The Court highlighted the importance of upholding the ban to protect the taxpayers' investment in building and maintaining the stadium.
3. The judgment also addressed the need to protect the stadium infrastructure during non-sports events. The Court suggested confining the event to specific areas, such as the lower and upper galleries, to minimize potential damage to the turfs. By isolating the areas within the stadium and restricting activities near the turfs, the Court aimed to prevent harm to the stadium's facilities. The decision underscored the significance of maintaining sports stadia for their intended purpose and ensuring the proper upkeep of public infrastructure.
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1998 (9) TMI 687
Issues Involved:
1. Legislative Competence and Jurisdiction
2. Authority of the Director vs. Officer on Special Duty
3. Validity of the Memorandum Issued by the Officer on Special Duty
4. Time Limit for Disposal of Quarry Lease Applications
Issue-wise Detailed Analysis:
1. Legislative Competence and Jurisdiction:
The regulation of mines and minerals falls under Entry 54 of List-I of the Constitution, leading to the enactment of the Mines and Minerals (Regulation and Development) Act, 1957. Section 2 of the Act declares Union control over the regulation of mines and development of minerals. The Supreme Court's decision in Baijnath v. State of Bihar (1970) affirmed that once Parliament declares control over a subject, any state legislation in that field becomes unconstitutional. This principle is supported by earlier decisions in Hingir-Rampur Coal Co. Ltd. v. State of Orissa (1961) and State of Orissa v. M.A. Tulloch & Co. (1964).
2. Authority of the Director vs. Officer on Special Duty:
Section 15 of the Act allows State Governments to make rules for regulating minor minerals. The Andhra Pradesh Minor Mineral Concession Rules, 1966, specifically empower the Director to grant quarry leases for granite. Rule 12(5) details the Director's authority and procedures for granting leases, emphasizing that the Director alone is competent to grant leases. No provision exists for any Special Officer to override the Director's authority, as affirmed by Rule 11(2).
3. Validity of the Memorandum Issued by the Officer on Special Duty:
The appellant challenged the Memorandum issued by the Officer on Special Duty, which directed the Director not to grant quarry leases until a policy decision was made. The court found that the Officer on Special Duty lacked statutory authority to issue such a directive, as the legislative framework and rules only recognize the Director's authority in this matter. The Memorandum was thus declared invalid and not in accordance with the law.
4. Time Limit for Disposal of Quarry Lease Applications:
The court disagreed with the single Judge's interpretation that Rule 12(5) does not impose a time limit for the Director to consider applications. The court emphasized that public authorities must act within a reasonable time frame, even if the statute is silent on specific time limits. The reference to a sixty-day period for executing lease deeds in Rule 12(5)(c) indicates legislative intent for timely action. The court rejected the notion that applications could be indefinitely pending awaiting new policies, which had not yet been finalized.
Conclusion:
The court set aside the single Judge's order and quashed the Memorandum issued by the Officer on Special Duty. The appeal was allowed, and the respondents were directed to dispose of all pending applications within eight weeks. The court underscored the necessity for public authorities to act expeditiously and within the bounds of their statutory authority.
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1998 (9) TMI 686
Issues Involved:
1. Prospective and retrospective application of amended rules regarding qualifications for promotion.
2. Determination of eligibility based on the date of vacancy occurrence.
3. Validity of qualifications acquired during the period they were recognized.
Detailed Analysis:
1. Prospective and Retrospective Application of Amended Rules:
The petitioners, Class IV servants in Government Departments, sought promotion to Lower Division Clerks (LDC) based on qualifications equivalent to the Secondary School Examination. The Rajasthan Subordinate Offices Ministerial Staff Rules, 1957, initially recognized these equivalent qualifications. However, amendments effective from June 28, 1985, deleted these equivalences, restricting eligibility to those with a Secondary School Examination certificate from recognized boards. The petitioners argued that the amended rules should not apply retrospectively to disqualify them, as they had acquired the qualifications before the amendment.
The judgment referenced several precedents, including the Supreme Court's stance in K.C. Arora v. State of Haryana, which held that retrospective amendments affecting vested rights are invalid. It was concluded that while rules can be amended retrospectively, such amendments cannot take away vested rights. The amended qualifications would apply to vacancies arising after the notification date, but not to those who had already acquired equivalent qualifications before the amendment.
2. Eligibility Based on Date of Vacancy Occurrence:
The court addressed whether eligibility should be determined based on the date the vacancy occurred or any anterior date. It was concluded that the qualifications required for promotion should be based on the date of the vacancy. Vacancies occurring before the amendment would be governed by the old rules, as established in Y. V. Rangaiah v. I. Sreenivasa Rao and State of Rajasthan v. R. Dayal.
3. Validity of Qualifications Acquired During Recognition Period:
The court examined whether qualifications acquired during their recognition period remained valid after derecognition. The petitioners had acquired qualifications like Rashtra Bhasha Parichay and Prathama before the amendment. The court distinguished between derecognition of specific institutions and general amendments in eligibility criteria. It was stated that removing a qualification from eligibility does not derecognize the degree itself but merely changes the eligibility criteria for a particular post.
The judgment cited several cases, including Suresh Pal v. State of Haryana, where the Supreme Court upheld the validity of qualifications acquired during their recognition period. However, it was clarified that this principle applies to specific derecognition cases and not general amendments in eligibility criteria.
Conclusion:
The court concluded that the amended qualifications would apply to candidates who acquired equivalent qualifications before the amendment. However, the amended rules would not apply to vacancies occurring before the amendment date. The petitions were to be listed before an appropriate bench for decisions in accordance with this interpretation.
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1998 (9) TMI 685
Issues Involved:
1. Whether prisoners required to do labor as part of their punishment should be paid wages at rates prescribed under Minimum Wages law.
2. Whether the deduction of the cost of food and clothes from prisoners' wages is permissible.
3. Consideration of the constitutional prohibition against forced labor under Article 23.
4. Determination of equitable wages for prisoners.
5. Recommendation for legislation to compensate victims from prisoners' wages.
Detailed Analysis:
1. Payment of Minimum Wages to Prisoners:
The primary issue addressed is whether prisoners who perform labor as part of their punishment should be paid wages at the rates prescribed under the Minimum Wages law. The Supreme Court considered appeals from various State Governments challenging High Court judgments that upheld the contention that denial of such wages infringes on constitutional protections against forced labor. The Court noted that the National Human Rights Commission (NHRC) and senior counsels supported the principle that prisoners should be paid at the rates prescribed under the Minimum Wages law. The Court acknowledged that the State Governments generally agreed that prisoners should be paid wages, but contested the extent and the deductions permissible.
2. Deduction of Cost of Food and Clothes:
The Court examined the judgments of various High Courts, including Kerala, Gujarat, Rajasthan, and Himachal Pradesh, which directed that prisoners be paid wages without deductions for food and clothes. The Supreme Court considered the State Governments' argument that deducting the cost of food and clothes is permissible. The Court noted that the obligation to provide food and clothes is an inherent responsibility of the State due to the prisoners' confinement. However, the Court also recognized that deductions for certain amenities and services are allowed under the Minimum Wages Act and concluded that the request to deduct expenses for food and clothes from prisoners' wages is reasonable.
3. Constitutional Prohibition Against Forced Labor:
Article 23 of the Constitution prohibits forced labor and mandates that any contravention of this provision shall be an offense. The Court discussed whether hard labor imposed on convicted prisoners constitutes "forced labor" under Article 23. The Court referred to the decision in People's Union for Democratic Rights vs. Union of India, which held that labor provided for remuneration less than the minimum wage falls within the scope of "forced labor." The Court concluded that compulsory labor for convicted prisoners serves a public purpose, such as deterrence and reformation, and thus falls within the exception provided in Article 23(2).
4. Determination of Equitable Wages:
The Court emphasized that prisoners, like any other workmen, are entitled to equitable wages for their labor. The Court referred to the Mulla Committee Report, which recommended fair and equitable wages for prisoners. The Court noted that paying a pittance is virtually paying nothing and highlighted the need to consider contemporary legislative standards on wages, such as the Minimum Wages Act. The Court directed each State to constitute a wage fixation body to recommend equitable wages for prisoners and to fix interim wages within six weeks.
5. Legislation for Victim Compensation:
The Court recognized the importance of considering the plight of victims and suggested that the State should make appropriate laws to divert a portion of prisoners' wages to compensate deserving victims. The Court noted that restorative and reparative theories emphasize restitution and reparation to victims. However, the Court acknowledged that it could not issue a direction for such compensation in the absence of specific legislation due to the prohibition in Article 300A of the Constitution.
Conclusion:
The Supreme Court concluded that:
1. It is lawful to employ prisoners sentenced to rigorous imprisonment to do hard labor.
2. Jail officials may permit other prisoners to work if they request it.
3. Prisoners must be paid equitable wages for their labor, and States must constitute wage fixation bodies to recommend such wages.
4. States must fix interim wages within six weeks and report compliance.
5. States are recommended to legislate for setting apart a portion of prisoners' wages to compensate victims.
The appeals and writ petitions were disposed of accordingly, and the registry was directed to send a copy of the judgment to the Chief Secretary of every State Government.
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1998 (9) TMI 684
Issues Involved:
1. Maintainability of an appeal from an order granting conditional leave to defend under Order 37 of the Code of Civil Procedure.
2. Merits of the order under appeal, contingent on the decision of the first issue.
Issue-Wise Detailed Analysis:
1. Maintainability of an Appeal from an Order Granting Conditional Leave to Defend under Order 37 of the Code of Civil Procedure:
- Earlier Division Bench Judgment: A Division Bench in M/s Merchants of Traders (P) Ltd. v. M/s Sarmon Put. Ltd. held that such an order was not maintainable as a judgment under Clause 15 of the Letters Patent. This decision followed earlier judgments in Hiralal Deb Gupta v. Salil Kumar Paul and Bonwarilal Roy v. Sohanlal Daga, which stated that the order was not appealable because it did not necessarily mean that the plaintiff would succeed in the suit.
- Post-1976 Amendment: The court noted that the 1976 amendment to Order 37 changed the procedural context significantly. The amended Order 37 now envisages a decree being passed immediately upon the defendant's failure to obtain leave to defend or comply with the conditions of the leave granted. This change aligns with Chapter XIIIA of the Original Side Rules of the court, which consistently held that an order granting conditional leave to defend is appealable as a 'Judgment' under Clause 15 of the Letters Patent.
- Bombay High Court Amendment: The Bombay High Court had previously amended Order 37, and the 1976 Amendment of the Code largely incorporated this amendment. The Bombay High Court held that an order granting conditional leave to defend was a judgment under Clause 15 and thus appealable. This stance was also recognized by the Supreme Court in Milkiram (India) Pvt. Ltd. v. Chamanlal.
- Supreme Court's View: In Shah Babulal Khimji v. Jayaben D. Kama, the Supreme Court emphasized that an order refusing the defendant leave to defend the suit directly affects the defendant's valuable right to defend and should be treated as a judgment within the meaning of the Letters Patent, making it appealable.
- Conclusion: Given the changes post-1976 and the alignment with the Bombay High Court's interpretation, the court concluded that an order refusing leave to defend or granting such leave conditionally is appealable under Clause 15 of the Letters Patent. However, due to a contrary view by a co-ordinate jurisdiction, the issue should be referred to a larger Bench.
2. Merits of the Order Under Appeal:
- Conditional Leave to Defend: The appellant was granted conditional leave to defend the suit, subject to furnishing security for five lakhs, failing which a decree for that sum would be directed.
- Appellant's Defense: The appellant claimed that payments made to the plaintiff and Unique Traders (a concern of the plaintiff's brother) exceeded the amounts claimed in the plaint. However, Unique Traders was not a party to the suit, and separate accounts were maintained for payments to Unique Traders and the plaintiff.
- Admissions by Appellant: The appellant admitted in several letters to its banker that a sum of Rs. 65,580 was payable to the plaintiff after adjusting an amount of Rs. 4,60,576 on account of monies paid in excess to Unique Traders. Without this adjustment, the admitted dues to the plaintiff would be over Rs. 5 lakhs.
- Court's View: The court found that the learned Judge did not exercise discretion arbitrarily in granting conditional leave to defend. The reference to Unique Traders was deemed irrelevant as no proceedings were filed against Unique Traders by the appellant, and separate accounts were maintained.
Separate Judgment by B. Panigrahi, J.:
- Order Under Appeal: The order directed the appellant to furnish a Bank Guarantee for Rs. 5,00,000 or security by way of immovable property for the same amount, failing which a decree for Rs. 5,00,000 would be passed.
- Appellant's Argument: The appellant argued that the cheques were handed over as collateral security and payments were made in cash. The appellant also claimed payments were made to Unique Traders, a sister concern of the plaintiff.
- Court's Decision: The court found that the trial Judge had appropriately imposed a conditional direction to the defendant to furnish security. The appellant's defense was considered not bona fide, and the trial court's discretion was upheld.
- Appealability: The court acknowledged divergent opinions on the appealability of such orders and suggested that the matter be resolved by a larger Bench.
Conclusion:
The appeal was allowed, and the Hon'ble Chief Justice was requested to constitute a larger Bench to decide the issue of appealability of orders granting conditional leave to defend under Order 37 of the Code of Civil Procedure.
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1998 (9) TMI 683
Issues:
Petition filed under sections 397 and 398 of the Companies Act, 1956 alleging oppression and mismanagement in Vindhya Tea and Industries Private Limited.
Analysis:
The petitioners sought various reliefs, including declaring the allotment of equity shares illegal, removing certain members from the company's register, superseding the board of directors, appointing an administrator, convening an annual general meeting, surcharging a respondent for misappropriation, and declaring another respondent not a director of the company. However, due to the financial institution auctioning the company's entire undertaking and utilizing the proceeds to clear liabilities, the substratum of the company was lost. As a result, the petitioners did not pursue most reliefs except those related to financial irregularities. The petitioners were directed to provide details of financial irregularities, which included diversion of funds, misappropriation of bank account funds, inflating costs, misappropriating funds for personal use, falsifying accounts, and discrepancies in payments and audits.
The petitioners submitted affidavits detailing financial irregularities, such as fund diversions, misappropriations, inflated expenses, false financial positions, unpaid taxes, discrepancies in accounts, and fraudulent audits. The financial transactions with the financial institutions were also scrutinized. Despite arguments and written submissions, the Company Law Board found the material insufficient to form a prima facie opinion due to the police seizing documents for a criminal investigation. The Board noted that invoking Schedule XI for penalties and restoration requires specific findings for each allegation, which cannot be based solely on prima facie opinions. Without primary documents and with the respondents defending the allegations, the Board refrained from making definitive conclusions on the financial irregularities. Since a criminal complaint was already lodged and primary documents seized, the Board decided not to delve into the alleged irregularities and dismissed the petition without costs.
In conclusion, the petition alleging oppression and mismanagement in Vindhya Tea and Industries Private Limited under sections 397 and 398 of the Companies Act, 1956 was dismissed by the Company Law Board due to the loss of the company's substratum and the ongoing criminal investigation seizing crucial documents. The Board refrained from making definitive conclusions on the financial irregularities without primary documents and specific findings for each allegation, emphasizing the need for thorough evidence before invoking penalties under Schedule XI.
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1998 (9) TMI 682
Issues Involved:
1. Whether the expressions "suit or other legal proceedings" in Section 446(1) and "suit or proceedings" in Section 442 of the Companies Act include criminal complaints filed under Section 138 of the Negotiable Instruments Act.
2. Whether the Company Court has jurisdiction to stay criminal proceedings against a company in winding up.
3. Whether the Company Court can grant permission to prosecute or stay proceedings under Section 138 read with Section 141 of the Negotiable Instruments Act.
Issue-wise Detailed Analysis:
1. Interpretation of "suit or other legal proceedings" and "suit or proceedings":
The primary issue was whether the terms "suit or other legal proceedings" in Section 446(1) and "suit or proceedings" in Section 442 of the Companies Act encompass criminal complaints under Section 138 of the Negotiable Instruments Act. The court analyzed various sections of the Companies Act, including Sections 442, 446, 454, 457, 542, 621, 632, and 633. It noted that wherever Parliament intended to confer power on the Company Court to try criminal offences, it did so explicitly. The court emphasized that the terms "suit" and "legal proceedings" should be interpreted ejusdem generis, meaning they should be read in the context of civil proceedings related to the winding up of the company, not criminal proceedings.
2. Jurisdiction of the Company Court to Stay Criminal Proceedings:
The court examined the object of Sections 442 and 446, which is to protect the assets of a company in winding up from wasteful or expensive litigation. It referred to judgments like Sudarsan Chits (I) Ltd v. G. Sukumaran Pillai and Central Bank of India v. M/s. Elmot Engineering Company, which highlighted the purpose of these sections as ensuring the efficient and economical disposal of winding-up proceedings. The court concluded that the Company Court does not have the jurisdiction to stay criminal proceedings, as these do not fall within the ambit of "legal proceedings" that the Company Court can control.
3. Permission to Prosecute or Stay Proceedings under Section 138 of the Negotiable Instruments Act:
The court considered whether criminal complaints under Section 138 of the Negotiable Instruments Act could be stayed due to the winding-up process. It referred to the case of Orkay Industries Limited v. State of Maharashtra, where it was held that the filing of a winding-up petition does not affect the prosecution of offences under Section 138. The court reiterated that criminal law proceedings do not halt due to winding-up proceedings and that the Company Court cannot intervene merely because a fine might be imposed, which would be paid from the company's assets. The court emphasized that the expressions "legal proceedings" and "other legal proceedings" in Sections 442 and 446 should be read to mean civil proceedings with a bearing on the winding-up process, not criminal complaints.
Conclusion:
The court dismissed Company Application No. 446 of 1998 in Company Petition No. 457 of 1997, rejecting the request to stay criminal proceedings under Section 138 of the Negotiable Instruments Act. In Company Application (Lodging) No. 621 of 1998 in Company Petition No. 220 of 1997, the court granted an extension of two months to deposit the amount as ordered but rejected the prayer to stay the proceedings. The court concluded that criminal proceedings under Section 138 of the Negotiable Instruments Act are not covered by the expressions "suit or other legal proceedings" or "suit or proceedings" in Sections 442 and 446 of the Companies Act.
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1998 (9) TMI 681
Issues Involved:
1. Maintainability of the appeal.
2. Deduction of life insurance money from compensation under the Motor Vehicles Act, 1939.
3. Interpretation of "pecuniary advantage" and its applicability under the Motor Vehicles Act, 1939.
Summary:
1. Maintainability of the Appeal:
The respondents raised a preliminary objection regarding the maintainability of the appeal, arguing that it was dismissed as not pressed in the High Court. The Supreme Court found no merit in this objection, clarifying that the High Court dismissed the appeal because the issue was already covered by a previous decision, allowing the appellants to challenge the point before the Supreme Court.
2. Deduction of Life Insurance Money:
The core issue was whether the life insurance money received by the claimants should be deducted from the compensation payable under the Motor Vehicles Act, 1939. The trial court had deducted the life insurance amount based on the Bombay High Court's decision in Jaikumar Chhaganlal Patni and Others vs. Many Jerome D'souza and others (AIR 1978 Bombay 239). The Supreme Court examined divergent views from various High Courts and English courts on this matter.
3. Interpretation of "Pecuniary Advantage":
The Supreme Court scrutinized the interpretation of "pecuniary advantage" under the Motor Vehicles Act, 1939, contrasting it with the Fatal Accidents Act, 1855. The Court noted that the language of Section 110-B of the Motor Vehicles Act, 1939, which uses the term "just" compensation, provides a wider discretion to the Tribunal compared to the Fatal Accidents Act, 1855.
The Court referred to English case law, including Bradurn vs. Great Western Rail Co. and Parry vs. Cleaver, which held that insurance money should not benefit the tortfeasor. The Court emphasized that the compensation under the Motor Vehicles Act is for accidental death or injury, not any other form of death. Therefore, any pecuniary advantage not directly related to the accidental death should not be deducted from the compensation.
The Court concluded that the life insurance money, being a result of a contract between the deceased and the insurance company, is not a pecuniary advantage received by reason of the accidental death and should not be deducted from the compensation payable under the Motor Vehicles Act.
Conclusion:
The Supreme Court set aside the impugned judgment of the High Court and restored the Tribunal's judgment, holding that the amount received by the claimants from the life insurance policy of the deceased is not deductible from the compensation computed under the Motor Vehicles Act, 1939. The appeal was allowed with costs on parties.
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1998 (9) TMI 680
Issues Involved:
1. Initiation of a criminal proceeding.
2. Interlocutory order issuing certain directions.
3. Main petition under Sections 155/397/398/399/402/403 and 406 of the Companies Act.
4. Allegations of oppression and mismanagement.
5. Validity of Board Meetings and Annual General Meetings.
6. Shareholding pattern and corporate veil.
7. Relief and remedies under Sections 397/398 of the Companies Act.
Summary:
1. Initiation of a Criminal Proceeding:
The order dated 6-2-97 under appeal is in two parts, viz. initiation of a criminal proceeding and interlocutory order issuing certain directions. The court intends to pronounce a separate judgment in respect of the criminal aspect of the matter.
2. Interlocutory Order Issuing Certain Directions:
The interlocutory order was subject to appeal, and the court decided to dispose of the main Company Petition itself. By a separate judgment, the court disposed of the appeal regarding the criminal proceedings under Schedule XI of the Companies Act.
3. Main Petition under Sections 155/397/398/399/402/403 and 406 of the Companies Act:
B.P. Jalan filed an application against 32 persons, including Akshay Nidhi Ltd. and its subsidiaries, claiming various reliefs under the Companies Act. The court heard the parties and disposed of the main application.
4. Allegations of Oppression and Mismanagement:
Allegations of oppression and mismanagement were made against the respondents, particularly against respondent Nos. 6 and 7. The charges included fabrication of minutes of meetings, non-transmission of shares, and holding illegal meetings to acquire control over various companies.
5. Validity of Board Meetings and Annual General Meetings:
The court examined the validity of several board meetings and annual general meetings, noting serious allegations of fabrication and manipulation of minutes, lack of quorum, and non-compliance with legal requirements. The court found substantial evidence of oppressive conduct by the majority shareholders.
6. Shareholding Pattern and Corporate Veil:
The court noted that the companies were inter-linked and interwoven, with individuals maneuvering the affairs to oust others. The court emphasized the equitable jurisdiction under Sections 397 and 398 of the Companies Act, allowing the lifting of the corporate veil to address mismanagement and oppression.
7. Relief and Remedies under Sections 397/398 of the Companies Act:
The court held that the petitions must succeed, recognizing acts of oppression by the majority shareholders. The court directed the appellants to sell their shares to the respondents, with the value of such shares to be fixed as on the date of passing the judgment by a Chartered Engineer nominated by the Registrar, Original Side of the Court.
Conclusion:
The application was allowed to the extent mentioned, with no order as to costs. The judgment addressed the complex issues of corporate governance, shareholding disputes, and the equitable remedies available under the Companies Act.
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1998 (9) TMI 679
Issues Involved:
1. Whether the Court can order detention without ordering attachment of property u/r 2A of Order 39 of the Code of Civil Procedure.
2. Interpretation of the conjunction "and may also" in Rule 2A(1) of Order 39.
3. Distinction between civil contempt and criminal contempt.
Summary:
Issue 1: Detention Without Attachment of Property
The defendant defied an ad-interim injunction order by constructing a brick wall, leading the plaintiff to seek punitive action u/r 2A of Order 39 of the Code of Civil Procedure. The trial court ordered the defendant's detention in civil prison for one month, which was upheld by the appellate court but quashed by the High Court. The High Court held that detention without prior attachment of property is contrary to law, a view contested by the plaintiff in the Supreme Court.
Issue 2: Interpretation of "and may also" in Rule 2A(1)
The High Court interpreted the conjunction "and may also" in Rule 2A(1) to mean that detention in civil prison is an additional remedy to attachment of property, not an alternative. The Supreme Court disagreed, stating that such an interpretation could lead to anomalous situations where a disobedient party with no property would be immune from consequences. The Court clarified that both attachment and detention are permissible, either separately or together, based on the facts of each case.
Issue 3: Distinction Between Civil and Criminal Contempt
The High Court distinguished between civil contempt, which benefits one party against another, and criminal contempt, which upholds the "majesty of law and the dignity of the Court." The Supreme Court noted that even if an injunction order is subsequently set aside, the disobedience does not get erased, although its rigour may be toned down.
Conclusion:
The Supreme Court disagreed with the High Court's interpretation that detention requires prior attachment of property. The Court held that both remedies could be applied independently or together. However, considering the defendant's subsequent actions of removing the obstruction and tendering an unconditional apology, the Supreme Court found it unnecessary to detain the defendant in prison and dismissed the special leave petition.
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1998 (9) TMI 678
Issues:
Challenge to property tax assessments for specific years. Availability of statutory appeal as a remedy. Maintainability of writ petition under Article 226 despite statutory remedy.
Analysis:
The case involved a challenge to property tax assessments for certain years by the sons of a property owner. The appellants contested the rateable values determined by the New Delhi Municipal Committee (NDMC) for specific years, arguing that the assessments were based on incorrect rental values. The appellants had let out the property to Indian Oil Corporation and M/s Chowgule & Company Limited, and they claimed that the house tax had been levied on actual rent amounts for certain years. However, discrepancies in rental amounts were noted in the assessment orders for subsequent years, which were not the subject of the appeal.
The main legal issue revolved around the availability of the statutory remedy of appeal to the appellants. The counsel for NDMC contended that the writ petition was not maintainable due to the existence of the appeal process, which required the appellants to deposit the house tax as a pre-condition for the appeal to be heard. On the other hand, the appellants argued that the statutory remedy was burdensome and should not preclude them from seeking relief under Article 226 of the Constitution of India.
In analyzing the maintainability of the writ petition, references were made to relevant legal precedents. The court distinguished the decision in Mafat Lal Industries Limited case, emphasizing that the availability of statutory remedies does not bar the constitutional powers of the court under Article 226. The court also highlighted the importance of judicial review provided by Article 226, which cannot be undermined by onerous statutory provisions requiring deposit of taxes as a pre-condition for appeal.
The judgment discussed the principles established in previous cases, such as Himmat Lal Hari Lal Mehta and Srikant Kashinnath Jituri, which emphasized that a constitutional remedy cannot be barred by provisions in a statute regarding finality. The court reiterated that the constitutional remedy under Article 226 provides a distinct jurisdiction for judicial review, separate from the jurisdiction of civil courts under the Code of Civil Procedure.
Ultimately, the court set aside the impugned judgment and remanded the writ petition for fresh consideration, emphasizing the constitutional importance of Article 226 and the need to balance statutory remedies with constitutional rights. The parties were directed to appear before the learned Single Judge for further proceedings, with costs to be borne by each party individually.
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