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• 2003 (9) TMI 831
  
  ISSUES PRESENTED and CONSIDERED

  The core legal issues considered in this judgment include:

  • Whether the Securities and Exchange Board of India (SEBI) had the jurisdiction to issue directions under Section 11B of the SEBI Act against the appellant company for alleged violations of the Companies Act.
  • Whether the appellant company violated the provisions of Sections 69, 73(3A), and 77 of the Companies Act, 1956, in relation to its public issue of shares.
  • Whether SEBI's order directing the promoters of the appellant company to provide an exit option to shareholders was valid under the Companies Act.
  • Whether the proceedings initiated by SEBI were in violation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
  • Whether the appellant company, being under the inquiry of the Board for Industrial and Financial Reconstruction (BIFR), was immune from SEBI's jurisdiction.

  ISSUE-WISE DETAILED ANALYSIS

  Jurisdiction under Section 11B of the SEBI Act:

  • Legal Framework: Section 11B of the SEBI Act empowers SEBI to issue directions in the interest of investors or the orderly development of the securities market. The section applies to persons associated with the securities market.
  • Court's Interpretation: The Tribunal found that while SEBI had the power to issue directions under Section 11B, it could not use this section to enforce provisions of the Companies Act, such as Sections 69, 73(3A), and 77, as these sections have their own enforcement mechanisms.
  • Application of Law to Facts: The Tribunal concluded that SEBI's order was beyond its jurisdiction as it attempted to enforce provisions of the Companies Act through Section 11B of the SEBI Act.

  Alleged Violations of the Companies Act:

  • Legal Framework: Sections 69, 73(3A), and 77 of the Companies Act, 1956, regulate the allotment of shares, maintenance of subscription money, and prohibition on a company buying its own shares, respectively.
  • Court's Interpretation: The Tribunal noted that the consequences for non-compliance with these sections are provided within the Companies Act itself, and SEBI cannot enforce these provisions using the SEBI Act.
  • Conclusions: SEBI's order based on alleged violations of these sections was found to be without jurisdiction.

  Exit Option for Shareholders:

  • Legal Framework: The Companies Act provides specific remedies and procedures for dealing with issues related to share allotment and shareholder rights.
  • Court's Interpretation: The Tribunal held that SEBI's direction to offer an exit option to shareholders was not in alignment with the Companies Act, which already provides remedies for such situations.

  Proceedings under SICA:

  • Legal Framework: Section 22 of SICA provides that no proceedings for winding up or recovery against a company under inquiry by BIFR shall proceed without the consent of the Board.
  • Court's Interpretation: The Tribunal found that SEBI's proceedings did not fall within the scope of Section 22 of SICA, as they were not related to winding up or recovery against the company's assets.

  Immunity under BIFR Inquiry:

  • Legal Framework: BIFR inquiries provide certain protections to companies under its purview.
  • Court's Interpretation: The Tribunal determined that the appellant's status as a sick company under BIFR did not preclude SEBI's jurisdiction to investigate and take action for violations of securities laws.

  SIGNIFICANT HOLDINGS

  • Jurisdictional Limitation: "Section 11B cannot be invoked to take action against those who contravene the provisions of sections 69, 73 and 77 of the Companies Act."
  • Core Principles Established: SEBI's powers under the SEBI Act are distinct and cannot be used to enforce the provisions of the Companies Act unless specifically authorized.
  • Final Determination: The appeal was allowed, and SEBI's order was set aside for lack of jurisdiction. However, SEBI was not precluded from taking appropriate action under the SEBI Act for violations of securities laws.

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• 2003 (9) TMI 830
  
  The Appellate Tribunal for Foreign Exchange in New Delhi set aside an Adjudication Order imposing a penalty of Rs. 15 lakhs on the Appellant firm for contravening sections 8(3) and 8(4) of the Foreign Exchange Regulation Act, 1973. The matter was remanded back to the Adjudicating Officer for fresh adjudication after notice to the Appellants, who must furnish necessary evidence within six months.

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• 2003 (9) TMI 829
  
  Issues:
  1. Contravention of provisions of the Foreign Exchange Regulation Act, 1973.
  2. Failure to submit evidence of import.
  3. Ex parte proceedings and penalty imposition.
  4. Request for dispensation of pre-deposit of penalty.
  5. Misplacement of necessary import documents.
  6. Health issues of the company director affecting response to show-cause notice.
  7. Request for remand of the case back to the Adjudicating Officer.
  8. Consideration of fresh opportunity for the appellant to be heard.
  
  Analysis:
  The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi dealt with an appeal against an Adjudication Order finding the appellant company guilty of contravening provisions of the Foreign Exchange Regulation Act, 1973, regarding failure to submit evidence of import. The firm had acquired foreign exchange but failed to provide import evidence, leading to a penalty imposition of Rs. 20,40,000. The appellant did not respond to the show-cause notice or attend adjudication proceedings, resulting in an ex parte decision by the Adjudicating Officer.
  
  The appellant's representative argued that the necessary import had been made in time and submitted documents supporting the import claim, explaining the delay in producing them due to office relocation and health issues faced by the company director. The respondent highlighted the absence of a confirmation letter from the appellant's bankers and requested a remand of the case for verification of documents not considered during the initial proceedings.
  
  After considering both parties' submissions, the Tribunal found the import claim crucial and granted the appellant a fresh opportunity to be heard. The impugned order was set aside, and the case was remanded for fresh adjudication from the stage of the show-cause notice. The appellant was directed to appear before the Adjudicating Officer for expedited proceedings, preferably within six months from the order receipt.

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• 2003 (9) TMI 828
  
  Issues:
  Disciplinary inquiry for misplacement of a file leading to dismissal, challenge to the dismissal order on grounds of disproportionate punishment.
  
  Analysis:
  The appellant, a Senior Assistant in the respondent-Corporation, faced a disciplinary inquiry for misplacing a file, deemed misconduct under By-Law 18. The Inquiry Officer found the appellant guilty, leading to dismissal by the disciplinary authority. The appellant challenged this order in the Punjab and Haryana High Court, which upheld the dismissal, prompting the appeal to the Supreme Court.
  
  The appellant contested the Inquiry Officer's findings, arguing the punishment was disproportionate. The appellant's unblemished record and lack of prior misconduct were highlighted. The appellant's counsel cited precedents allowing courts to interfere if the punishment shocks the conscience, referencing cases like Bhagat Ram v. State of H.P and U.P. State Road Transport Corporation v. Mahesh Kumar Mishra.
  
  The Supreme Court noted that while appellate courts typically do not substitute penalties, they can intervene if the punishment is shockingly disproportionate. In this case, the appellant's 20-year unblemished service and the nature of the misconduct (file misplacement without malice) were considered. The disciplinary authority's decision to dismiss was deemed too severe for a mere act of negligence, lacking ulterior motives or record sensitivity.
  
  The Court found the punishment excessive and modified it to withholding one increment and stoppage at the efficiency bar, rejecting back wages but allowing subsistence allowance. The dismissal was substituted with the revised penalty, emphasizing the need to prevent prolonged litigation and ensure a fair outcome. The appeal was partly allowed, modifying the dismissal order to the revised penalty, thus concluding the judgment.

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• 2003 (9) TMI 827
  
  Issues:
  1. Challenge of penalty imposition under section 15(1) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.
  2. Interpretation of the definition of "motor vehicles" under the Motor Vehicles Act, 1988.
  3. Requirement of registration for excavators under relevant laws.
  4. Validity of penalty imposition without proper notice and hearing under Section 15(1).
  
  Issue 1: Challenge of Penalty Imposition
  The petitioner sought to quash the penalty imposed by the respondent under section 15(1) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990. The petitioner argued that when the excavator was purchased in 1995, it was not considered a motor vehicle under the Motor Vehicles Act. The petitioner claimed that they were informed by the Regional Transport Office (RTO) that registration was not required for such vehicles at that time. The petitioner contended that only after a Supreme Court decision clarified the status of excavators as motor vehicles did the liability to pay tax arise, and hence, the penalty should not have been imposed without proper notice under Section 15(2).
  
  Issue 2: Interpretation of "Motor Vehicles"
  The petitioner's case revolved around the interpretation of the term "motor vehicles" as defined in Section 2(28) of the Motor Vehicles Act, 1988. The petitioner argued that excavators were not considered motor vehicles until the Supreme Court decision clarified their status. This argument was crucial in determining the liability for tax under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.
  
  Issue 3: Registration Requirement for Excavators
  The petitioner highlighted that before the Supreme Court's decision, there was no requirement for registration of excavators as motor vehicles. The contention was that since there was no obligation to register the excavator at the time of purchase, the liability to file a return and pay tax had not arisen. The petitioner emphasized that the lack of clarity regarding registration exempted them from the tax payment obligation until the legal position was clarified.
  
  Issue 4: Validity of Penalty Imposition
  The Court acknowledged that the penalty imposition without proper notice and hearing as required under Section 15(1) was illegal. The Court held that the petitioner must be heard before any penalty is levied, and since the notice did not indicate a proposal for a penalty, the imposition was unjustified. The Court ruled in favor of the petitioner, quashing the penalty while affirming the liability to pay the tax. The judgment emphasized that the petitioner did not intentionally evade tax and should not be subjected to further inquiry.
  
  In conclusion, the High Court allowed the writ petition, setting aside the penalty imposition under Section 15(1) of the Act, while affirming the liability to pay tax. The judgment clarified the legal position regarding the registration and tax obligations for excavators, emphasizing the importance of proper notice and hearing before imposing penalties.

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• 2003 (9) TMI 826
  
  Issues: Tender selection process, Appointment of event manager, Interpretation of tender clause, Contempt proceedings, Period of tender notice.
  
  Tender Selection Process: The Ministry of Tourism invited tenders for organizing a travel expo, where M/s. Tafcon offered the highest upfront payment. Despite a lower offer from another party, the Selection Committee recommended M/s. Tafcon as the highest bidder based on upfront payment, leading to an agreement with the Union of India. However, a writ petition was filed challenging this decision, resulting in a legal battle.
  
  Appointment of Event Manager: The High Court allowed the appeal by the writ petitioner, setting aside M/s. Tafcon's appointment as the event manager and directing fresh tenders for future years. The Supreme Court reviewed the High Court's decision and found factual errors in the judgment, concluding that the Minister had indeed approved the appointment of M/s. Tafcon, overturning the High Court's decision.
  
  Interpretation of Tender Clause: The respondent claimed a misunderstanding of the tender clause regarding profit sharing, offering a lower upfront payment based on this interpretation. The Supreme Court noted this argument but ultimately upheld M/s. Tafcon's selection due to their superior offer, regardless of the clause's interpretation.
  
  Contempt Proceedings: The respondent initiated contempt proceedings against M/s. Tafcon for continuing to advertise the event despite the High Court's order. These proceedings were dismissed as the matter was pending in the Supreme Court.
  
  Period of Tender Notice: The Supreme Court clarified that the tender notice was for a three-year event, and the respondent's legal actions should not deprive M/s. Tafcon of the benefit they would have received had the writ petition not been filed. Consequently, the appeals were allowed, setting aside the High Court's decision.

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• 2003 (9) TMI 825
  
  Issues involved:
  Application under Order 23 Rule 1 (3) CPC seeking permission to withdraw suit with liberty to file a fresh suit on the same cause of action.
  
  Detailed Analysis:
  
  1. Background: The petitioners, who were plaintiffs in a suit for declaration and injunction, sought to withdraw the suit with liberty to file a fresh suit on the same cause of action after the trial court dismissed their suit. The first Appellate Court also dismissed their application under Order 23 Rule 1 (3) CPC, leading to the revision before the High Court.
  
  2. Legal Submissions: The counsel for the petitioners argued that the first Appellate Court erred in dismissing the application without considering the technical omission regarding the identity of the predecessors in title of both parties. They relied on a previous decision to support their contention that permission to withdraw a suit can be granted even without a formal defect if there are sufficient grounds.
  
  3. Legal Provisions: Order 23 Rule 1 (3) CPC allows a suit to be withdrawn with liberty to sue afresh on sufficient grounds. The term "sufficient grounds" must be interpreted in conjunction with formal defects, and the permission to withdraw a suit should be granted cautiously, especially if it would deprive the defendant of the lower court's favorable decision.
  
  4. Criteria for Withdrawal: The Court must be satisfied that the suit must fail due to a formal defect or there are sufficient grounds for allowing the plaintiff to file a fresh suit. Formal defects refer to prescribed procedural errors, while other sufficient grounds should not be due to the plaintiff's fault.
  
  5. Court's Discretion: Granting permission to withdraw a suit with liberty to file a fresh one is at the Court's discretion. The Court must provide reasons for granting such permission, but no obligation exists for explaining a refusal.
  
  6. Decision: The High Court found that the technical omission regarding the identity of the predecessors in title did not constitute a formal defect. The appellate Court's decision to dismiss the application was upheld, considering that allowing the withdrawal would affect the respondent's vested rights under the lower court's decision.
  
  7. Precedent: The respondent cited a Supreme Court decision emphasizing that withdrawal of a suit at the appellate stage should not nullify vested rights under a decree unless a strong case is presented. The High Court agreed with this principle and affirmed the dismissal of the application.
  
  8. Final Ruling: The High Court dismissed the revision, upholding the lower appellate Court's decision. The counsel's argument for interference was deemed unwarranted, and no costs were awarded. The Court also clarified that the observations made need not influence the appellate Court's decision on the appeal's merits.
  
  9. Additional Evidence: The petitioner's counsel requested the Court to acknowledge the right to approach the appellate Court for presenting additional evidence. However, the Court stated that such a request would be decided by the appellate Court independently and in accordance with the law.
  
  10. Conclusion: The High Court's judgment emphasized the careful consideration required when seeking to withdraw a suit with liberty to file a fresh one, especially when it may impact the rights of the opposing party. The decision highlighted the importance of adhering to legal procedures and the limitations on withdrawing suits to prevent prejudice to the other party.

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• 2003 (9) TMI 824
  
  Issues Involved:
  1. Quashing of the proceeding under Section 138 of the N.I. Act due to limitation.
  2. Sufficiency of allegations against the directors of the company under Section 141 of the N.I. Act.
  
  Detailed Analysis:
  
  Issue 1: Quashing of the proceeding under Section 138 of the N.I. Act due to limitation
  The petitioners sought to quash the proceeding on the grounds that the case was barred by limitation. They argued that the complainant issued the first notice on 22-06-2001 upon receiving information from the bank about the cheque bounce. However, the complainant issued a second notice on 18-08-2001 to circumvent the limitation period, which is not permissible under the law. The complainant denied issuing the first notice, which became a matter of fact to be decided during the trial.
  
  The court considered the supplementary affidavit filed by the petitioners, which included the two notices. The opposite party's affidavit-in-reply provided an evasive denial of the first notice. The court, relying on the decision in Badat and Co., Bombay v. East India Trading Co., held that the first notice was indeed issued and the complainant suppressed this fact to save the limitation period. The court applied the principle from the decision in Sadanandan Bhadran v. Madhavan Sunil Kumar, which states that once a notice under Clause (b) of Section 138 is given, the right to issue another notice is forfeited. The period of one month for filing the complaint starts from the day immediately following the expiration of 15 days from the receipt of the first notice.
  
  The court concluded that the complaint filed on 07-09-2001 was beyond the limitation period, as it should have been filed within one month from the expiration of 15 days after the first notice dated 22-06-2001. Therefore, the complaint was hopelessly barred by limitation.
  
  Issue 2: Sufficiency of allegations against the directors of the company under Section 141 of the N.I. Act
  The petitioners argued that the complaint did not contain specific averments that the directors were responsible for the day-to-day management and affairs of the company, as required under Section 141 of the N.I. Act. They cited several decisions, including K.D.G. Nair v. Jindal Menthol India Ltd. and Smt. Katta Sujata v. Fertilizers & Chemicals Travancore Ltd., to support their contention that the complaint must clearly state that the directors were in charge of and responsible for the conduct of the business of the company.
  
  The opposite party contended that the complaint's paragraphs 2 and 5 indicated that the directors were responsible for the company's day-to-day affairs. They relied on decisions like Mohan Kumar Mukherjee v. Ledo Tea Company Limited and Natesha Singh v. Klen and Marshalls of Manufactures and Exporters Pvt. Ltd., arguing that the complaint sufficiently indicated the directors' involvement in the management.
  
  The court, after considering the submissions and the cited decisions, concluded that the allegations in the complaint were not sufficient to proceed against the directors under Section 138/141 of the N.I. Act. The authoritative pronouncements in the decisions cited by the petitioners were found to be applicable, and the court held that the complaint did not make out a case against the directors.
  
  Conclusion:
  The court allowed the quashing of the proceeding under Section 138 of the N.I. Act, holding that the complaint was barred by limitation and the allegations against the directors were insufficient. Consequently, the proceeding being case No. 1070-C/2001 under Section 138 of the N.I. Act pending before the Judicial Magistrate, 1st Class, Tamluk, Dist. Midnapore, was quashed.

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• 2003 (9) TMI 823
  
  Issues Involved:
  1. Validity of termination of workmen under Section 6N of the Uttar Pradesh Industrial Disputes Act, 1947.
  2. Interpretation of "continuous service" under Section 2(g) of the UP Act.
  3. Entitlement to back wages upon reinstatement.
  
  Detailed Analysis:
  
  1. Validity of Termination:
  The appellant terminated the services of the respondents and other workmen on 31st March 1987, claiming they were casual workers with insufficient work. The workmen contested this termination, leading the State Government to refer the matter to the Labour Court under Section 4(k) of the Uttar Pradesh Industrial Disputes Act, 1947 (UP Act). The Labour Court found that none of the workmen had worked for 240 days in the year preceding their termination, thus denying them protection under Section 6N of the UP Act. However, it was also found that the workmen had worked for more than 240 days in each year from 1983 to 1986. The Labour Court concluded that the workmen were not entitled to continuous service benefits under the UP Act due to their failure to meet the 240-day requirement in the year immediately preceding their termination.
  
  2. Interpretation of "Continuous Service":
  The High Court overturned the Labour Court's decision, ruling that under Section 6N read with Section 2(g) of the UP Act, it was unnecessary for the workmen to complete 240 days in the year immediately preceding their termination. The High Court held that since the workmen had completed 240 days in earlier calendar years, they were deemed to be in continuous service, making their termination illegal under Section 6N. The appellant argued that the workmen needed to complete 240 days in the 12 months preceding their termination to claim continuous service. However, the Supreme Court noted that Section 2(g) of the UP Act does not specify the requirement of working 240 days in the "preceding" 12 months, unlike the Industrial Disputes Act, 1947 (ID Act). The Court emphasized that welfare legislation should be interpreted broadly to benefit the working class, rejecting the appellant's narrow interpretation.
  
  3. Entitlement to Back Wages:
  The High Court directed the reinstatement of the workmen with consequential service benefits but denied back wages. The respondents challenged this denial, but the Supreme Court upheld the High Court's decision. Given the financial position of the appellant and ongoing proceedings before the Board for Industrial and Financial Reconstruction, the Court found no reason to interfere with the denial of back wages.
  
  Conclusion:
  The Supreme Court dismissed the appeal, affirming the High Court's judgment that the termination of the workmen violated Section 6N read with Section 2(g) of the UP Act. The respondents were ordered to be reinstated from November 2003 and to be paid wages from that month onward. The Court emphasized a broad interpretation of welfare legislation to protect workers' rights, rejecting the appellant's restrictive interpretation of continuous service requirements. No costs were awarded.

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• 2003 (9) TMI 822
  
  Issues Involved:
  1. Whether the initiation of proceedings under Section 138 of the Negotiable Instruments Act against all partners of the firm is proper.
  2. Applicability of Section 141 of the Negotiable Instruments Act and Section 25 of the Indian Partnership Act.
  3. Whether the proceedings should be quashed under Section 482 of the Cr.P.C.
  
  Detailed Analysis:
  
  1. Initiation of Proceedings Under Section 138 of the Negotiable Instruments Act
  
  The petitioners challenged the initiation of proceedings under Section 138 of the Negotiable Instruments Act, arguing that there was no specific averment in the complaint as required under Section 141 of the Act. The respondent-complainant had issued a legal notice to all partners of the firm, demanding payment for dishonored cheques. The third petitioner replied but did not specify who was responsible for the firm's business. The court noted that the complainant, being a stranger to the firm's internal affairs, was justified in impleading all partners as accused, especially when the notice did not clarify the responsible individuals.
  
  2. Applicability of Section 141 of the Negotiable Instruments Act and Section 25 of the Indian Partnership Act
  
  Section 25 of the Partnership Act states that every partner is liable jointly and severally for all acts of the firm. Section 141 of the Negotiable Instruments Act extends liability to every person in charge of and responsible for the conduct of the company's business. The court emphasized that the complainant would not know the internal management of the firm and relied on the lack of clarity in the reply notice from the accused. Therefore, the court held that all partners could be proceeded against, as the complainant was not at fault in impleading them.
  
  3. Quashing of Proceedings Under Section 482 of the Cr.P.C.
  
  The court referred to various precedents, including the Supreme Court's decision in U.P. Pollution Control Board v. Modi Distillery, which held that a company could not take advantage of its own lapse in not providing details of responsible persons. The court also noted that inherent power under Section 482 of the Cr.P.C. should be exercised to prevent abuse of process or to secure the ends of justice. Given the inconsistencies in the petitioners' statements about who issued the cheques and their responsibilities, the court found no grounds to quash the proceedings at this stage.
  
  Conclusion:
  
  The petition was dismissed, but the court allowed the petitioners to file a memo or application before the Trial Court to clarify that only the managing partner was responsible for the cheques. The Trial Court was directed to consider such a memo or application on its merits.

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• 2003 (9) TMI 821
  
  Issues:
  1. Conviction under Section 201 IPC for causing disappearance of evidence and giving false information to screen offender.
  2. Application of legal principles in determining guilt under Section 201 IPC.
  3. Analysis of evidence to establish essential ingredients of the offence under Section 201 IPC.
  4. Consideration of acquittal under Section 302 IPC in relation to conviction under Section 201 IPC.
  5. Impact of defective charge on the trial process and the necessity of attributing knowledge of the offence to the accused.
  
  Issue 1: Conviction under Section 201 IPC for causing disappearance of evidence and giving false information to screen offender
  
  The appellant and her brother were tried for various offences under the Indian Penal Code, including Section 201 IPC. The trial court acquitted the appellant of most charges but found her guilty under Section 201 IPC for causing disappearance of evidence related to the murder of the deceased. The High Court upheld this conviction, emphasizing the active participation of both accused in misleading authorities and family members about the incident to protect themselves from legal consequences.
  
  Issue 2: Application of legal principles in determining guilt under Section 201 IPC
  
  The defense argued that the appellant's acquittal under Section 302 IPC, coupled with her lack of involvement in the murder, rendered her conviction under Section 201 IPC unsustainable. The State contended that the intention to screen the offender is crucial for a conviction under Section 201 IPC, citing relevant legal precedents to support their position.
  
  Issue 3: Analysis of evidence to establish essential ingredients of the offence under Section 201 IPC
  
  The court examined the evidence presented during the trial to ascertain whether the appellant met the requirements of Section 201 IPC. It was noted that the accused must have knowledge or belief in the commission of the offence, caused evidence to disappear, and intended to shield the offender from legal punishment. The court scrutinized the actions of the accused post-incident to determine their culpability under this section.
  
  Issue 4: Consideration of acquittal under Section 302 IPC in relation to conviction under Section 201 IPC
  
  The court clarified that while an acquittal under Section 302 IPC does not preclude a conviction under Section 201 IPC in certain cases, such a conviction necessitates establishing the accused's knowledge or belief in the commission of the offence. In this instance, the court found insufficient evidence to attribute such knowledge to the appellant, leading to the setting aside of her conviction under Section 201 IPC.
  
  Issue 5: Impact of defective charge on the trial process and the necessity of attributing knowledge of the offence to the accused
  
  The defense highlighted the absence of essential ingredients in the charge framed against the appellant, emphasizing the importance of attributing knowledge of the offence to sustain a conviction under Section 201 IPC. The court acknowledged the legal principle that defective charges may not always invalidate a trial but stressed the significance of proving the accused's awareness of the crime to uphold a conviction. Ultimately, the court overturned the appellant's conviction under Section 201 IPC due to insufficient evidence linking her to the offence.

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• 2003 (9) TMI 820
  

  Challenged the acquittal Order - Delay in lodging the FIR and sending the special report to the Magistrate - homicidal death - Offence punishable u/s 302 read with Section 34 of the Indian Penal Code, 1860 ('IPC') - Benefit of doubt - HELD THAT:- There is no evidence to show that the tractor was in usable condition. Even if it was in usable condition the frame of mind of one who had lost his son and other close relative using a tractor to cover a distance of 9 K.M. at a point of time, has been lost sight of by the High Court. It is not unusual for a person to avail public transport facility to go to a police station. Much has been made of not lodging the case at the police post. An explanation has been offered as to why it has not been done. The High Court very lightly brushed it aside. Unfortunately, the High Court came to conclude on surmises and conjectures that the FIR was lodged after deliberation.

  It is not unusual for a person to avail public transport facility to go to a police station. Much has been made of not lodging the case at the police post. An explanation has been offered as to why it has not been done. The High Court very lightly brushed it aside. Unfortunately, the High Court came to conclude on surmises and conjectures that the FIR was lodged after deliberation. There was no material to support such a conclusion. The distance between the police post and the Ilaqa Magistrate is about 20 K.M. The special report reached the Magistrate within a few hours. That by itself is not of suspicious circumstance. The High Court has not considered that the distance is 20 K.M. Additionally, no question was put to the investigating officer as to why it took 3 hours for the report to reach the Magistrate. Had such a question been put, the investigating officer would have been in a position to explain the delay, if any.

  Without seeking for a response from the investigating officer, it is not open to say that there was delay in sending the report. Otherwise, an adverse inference would be drawn in respect of a matter for which no explanation is sought for from the relevant witnesses. It is not the time, but unexplained delay in a case, which is of relevance. The inevitable conclusion therefore is that the High Court was wrong in holding that there was delay in lodging the FIR and in sending the special report.

  The vulnerability of the High Court's judgment is amplified by the fact that it has put great emphasis on the acquittal of two co-accused to discard PW's 5 evidence. That per se was not a ground to find the evidence as tainted. The eye-witnesses have described the incident with graphic detail and except minor discrepancies which do not in any way corrode the prosecution version, their testimony has remained unshaken in spite of incisive cross examination. The trial Court had carefully scrutinized their evidence and acted on it. On the contrary, the High Court without even indicating any plausible reason as to why the evidence was not acceptable, has chosen to ignore it and characterize it as unreliable. By a cryptic judgment more based on surmises and conjectures than appraisal of evidence, the High Court has discarded it. That being the position, inevitable conclusion is that the High Court's judgment is indefensible and deserves to be set aside which we direct. Judgment of the Trial Court is restored.

  The appeal is allowed. The respondents who are on bail are directed to surrender to custody to serve remainder of the sentence.

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• 2003 (9) TMI 819
  
  Issues Involved:
  1. Custodial violence and torture.
  2. Delay in filing the complaint.
  3. Credibility of witnesses and evidence.
  4. Procedural lapses by police and judiciary.
  5. Awarding of compensation.
  
  Issue-wise Detailed Analysis:
  
  1. Custodial Violence and Torture:
  The judgment begins by highlighting the widespread issue of custodial violence, torture, and abuse of police power. It references Article 5 of the Universal Declaration of Human Rights, which prohibits torture and cruel treatment. The judgment stresses the importance of Article 21 of the Indian Constitution, which guarantees the right to life and personal liberty, and underscores the inbuilt guarantee against torture or assault by the State or its functionaries. The judgment notes that despite legal provisions like Sections 330 and 331 of the IPC, which punish those causing hurt to extort confessions, convictions are rare due to lack of evidence.
  
  2. Delay in Filing the Complaint:
  The judgment critically examines the delay in filing the complaint, noting that the private complaint was lodged more than a year after the alleged incident without a plausible explanation. The High Court found this delay to be a significant factor undermining the credibility of the complainant's version. The complainant's plea that she was unaware of legal remedies and was writing to high dignitaries was deemed unacceptable, especially since legal advice was sought immediately after the occurrence.
  
  3. Credibility of Witnesses and Evidence:
  The judgment scrutinizes the evidence provided by the complainant and witnesses (PWs 1, 2, and 5). It highlights several inconsistencies and improbabilities in their testimonies. The High Court found the evidence of merciless assaults by the accused incredible, as the medical report only showed 16 simple injuries. The judgment also points out that the complainant's version was not supported by the initial medical reports or the statements recorded soon after the incident. The Court emphasizes the need to separate grain from chaff, acknowledging that while some exaggerations are common, the evidence in this case was too inconsistent to be credible.
  
  4. Procedural Lapses by Police and Judiciary:
  The judgment identifies several procedural lapses, including the failure to register an FIR despite clear allegations of assault. The Court criticizes the police for treating the statements under Section 174 of the Code of Criminal Procedure as sufficient, instead of registering an FIR. The judgment also notes that the trial court did not grant the accused the opportunity to cross-examine court witnesses, which was contrary to established legal principles. Additionally, the Court highlights the lack of action on the part of higher authorities despite requests for a Crime Branch inquiry.
  
  5. Awarding of Compensation:
  Despite upholding the acquittal of the accused, the Court acknowledges the procedural failures and the injuries sustained by the deceased. It directs the State Government to pay compensation of Rs. 1,00,000/- to the mother and children of the deceased, while excluding the widow who had remarried. The compensation is to be kept in fixed deposit, with only the interest allowed to be drawn. The judgment also orders an inquiry by the Head of the Police force under the Chief Secretary's direct control to identify those responsible for the injuries and to take action against officials who failed to register the FIR or conduct a proper inquiry.
  
  Conclusion:
  The Supreme Court dismissed the appeal, affirming the High Court's acquittal of the accused due to lack of credible evidence and procedural lapses. However, it emphasized the need for accountability and directed compensation to the deceased's family, along with an inquiry into the procedural failures.

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• 2003 (9) TMI 818
  
  The Supreme Court of India dismissed the appeals in favor of the assessee, following a previous decision in the matter of Sanat Products Ltd. v. Commissioner of Central Excise, Meerut. The appeals were dismissed without any order as to costs.

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• 2003 (9) TMI 817
  
  Issues Involved:
  1. Validity of the compulsory retirement orders of judicial officers in the State of U.P.
  2. Applicability of the Uttar Pradesh Judicial Officers (Retirement on Superannuation) Rules, 1992, vis-`a-vis Rule 56 of the U.P. Fundamental Rules.
  3. Requirement of Full Court resolution for compulsory retirement under Allahabad High Court Rules.
  4. Impact of the Supreme Court's directions in All India Judges Association case on the retirement age of judicial officers.
  5. Justifiability of the compulsory retirement orders based on the service records and integrity of the officers.
  
  Issue-wise Detailed Analysis:
  
  I. Validity of the Compulsory Retirement Orders:
  The appeals challenge the compulsory retirement orders of judicial officers in U.P. The court reiterates that judicial service is not merely employment but involves exercising the sovereign judicial power of the State. Judges' integrity must be beyond doubt, and the service cannot afford the continuance of persons of doubtful integrity. The evaluation by the High Court Judges' Committee, if affirmed in a writ petition, is generally not interfered with by the Supreme Court unless in exceptional circumstances.
  
  II. Applicability of the 1992 Rules vis-`a-vis Rule 56 of the U.P. Fundamental Rules:
  The appellants argued that the 1992 Rules, which increase the retirement age from 58 to 60 years, override Rule 56 of the U.P. Fundamental Rules. The court clarified that Rule 2 of the 1992 Rules provides an overriding effect only to the extent of increasing the retirement age to 60 years, substituting Rule 56(a). However, Rule 56(b) to (e) and the associated explanations remain unaltered. The court cited the decision in A.G. Varadarajulu v. State of T.N. to support that the non obstante clause should be interpreted to the extent intended by the legislature.
  
  III. Requirement of Full Court Resolution:
  The appellants contended that the Full Court's resolution was necessary for compulsory retirement orders. The court referred to the decision in State of U.P. v. Batuk Deo Pati Tripathi, which held that control over the subordinate judiciary under Article 235 could be exercised by a smaller committee of judges. The court upheld that the Administrative Committee's recommendation for compulsory retirement was valid and within the framework of Article 235.
  
  IV. Impact of Supreme Court's Directions in All India Judges Association Case:
  The appellants argued that the directions in the All India Judges Association case for scrutinizing service records before allowing judges to continue beyond 58 years were no longer applicable due to the 1992 Rules. The court distinguished the present case from the Sarnam Singh case, stating that the High Court exercised its power under Rule 56(c) of the Fundamental Rules for compulsory retirement, which remains valid despite the increased retirement age.
  
  V. Justifiability of Compulsory Retirement Orders:
  The appellants argued that the compulsory retirement orders were unjustified. The court reiterated principles from Baikuntha Nath Das v. Chief District Medical Officer, stating that compulsory retirement is not a punishment and does not imply stigma or misbehavior. It is based on the subjective satisfaction of the government, considering the entire service record, with more importance on recent performance. Judicial scrutiny is limited to checking for mala fides, lack of evidence, or arbitrariness. The court found that the High Court's orders were based on relevant material, including service records and reports of doubtful integrity, and were not arbitrary or mala fide.
  
  Case-specific Observations:
  - Civil Appeal No. 2398 of 2001: The appellant had a history of average to poor performance, complaints about integrity, and various inquiries. The Screening Committee found him unsuitable for service beyond 58 years.
  - Civil Appeal No. 2920 of 2001: The appellant faced multiple allegations and inquiries, including misuse of authority and breach of guidelines. The Screening Committee's decision was based on his service record.
  - Civil Appeal No. 7342 of 2001: The appellant had poor performance records, allegations of misconduct, and failure to comply with transfer orders. The Screening Committee found him unsuitable for continuing in service.
  
  Conclusion:
  The Supreme Court dismissed the appeals, upholding the High Court's orders of compulsory retirement based on the subjective satisfaction derived from the service records and overall reputation of the judicial officers. The court emphasized the need for regular scrutiny to maintain the integrity and efficiency of the judicial service. The appeals were dismissed with costs quantified at Rs. 5000/- each.

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• 2003 (9) TMI 816
  
  Issues Involved:
  1. Effect of prior judgment on the current case.
  2. Determination if the institution is a Sikh Gurdwara.
  3. Relief sought.
  
  Detailed Analysis:
  
  1. Effect of Prior Judgment on the Current Case:
  The Tribunal addressed whether the prior judgment in Mahant Harnam Singh v. Gurdial Singh and Anr [1967]2SCR739 barred the current proceedings. The Tribunal held that the previous judgment did not preclude its jurisdiction to decide the petition under Section 7 of the Sikh Gurdwaras Act, 1925. The High Court and Supreme Court upheld this view, indicating that the prior judgment did not operate as res judicata in this context.
  
  2. Determination if the Institution is a Sikh Gurdwara:
  The Tribunal initially found that the institution was a Sikh Gurdwara, noting that it was established by Sikhs and used for worship of Guru Granth Sahib. However, the High Court reversed this decision, emphasizing that the Tribunal did not specify under which clause of Sub-section (2) of Section 16 the institution fell. The High Court noted that the Committee failed to prove the essential ingredients required under Section 16(2) of the Act. The Supreme Court upheld the High Court's view, stating that the onus was on the Committee to prove that the institution was a Sikh Gurdwara. The Court reiterated that Nirmalas are not Sikhs and that the mere presence of Guru Granth Sahib does not make an institution a Sikh Gurdwara.
  
  3. Relief Sought:
  The High Court and Supreme Court both concluded that the institution in question was not a Sikh Gurdwara. The Supreme Court dismissed the appeals, affirming the High Court's judgment and emphasizing the importance of the representative suit under Section 92 of CPC, which binds all interested parties. The Court noted that the findings in the representative suit are conclusive and prevent re-litigation of the same issues.
  
  Conclusion:
  The Supreme Court upheld the High Court's judgment, confirming that the institution was not a Sikh Gurdwara and that the prior judgment did not bar the current proceedings. The onus of proof was correctly placed on the Committee, and the appeals were dismissed.

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• 2003 (9) TMI 815
  
  Issues Involved:
  1. Whether document EX.P5 dated 19.11.1974 is an acknowledgment of liability on the basis of which a decree for recovery of the amount can be passed against the defendant.
  2. Whether the suit of the plaintiff is liable to be decreed on the basis of the statement of accounts even though the evidence of the plaintiff has not been rebutted by the defendant.
  
  Issue-wise Detailed Analysis:
  
  1. Acknowledgment of Liability (EX.P5):
  The plaintiff argued that the defendant acknowledged their liability on 15.11.1974, as indicated by the handwritten note on EX.P5 stating "present outstanding Rs. 9551.91." However, the court found that this handwritten note was not proven to be written by the defendant. Evidence from both plaintiff witnesses (PW1 and PW2) indicated uncertainty about who wrote the note, and the defendant denied it was in their handwriting. The court concluded that the writing on EX.P5 was added later and was not part of the original letter. Therefore, EX.P5 could not be considered an acknowledgment of liability by the defendant.
  
  2. Decree Based on Statement of Accounts (EX.PX):
  The plaintiff's suit was also based on the statement of accounts (EX.PX). The defendant had received a copy of this statement before filing their written statement but did not dispute any specific entries in it. The court examined whether the statement of accounts was admissible evidence under the Bankers Books Evidence Act, despite lacking a date on the certification. It was determined that the omission of the date was a directory provision, not mandatory, and thus did not render the statement inadmissible.
  
  The court referenced the case of Chandradhar Goswami and Ors. v. Gauhati Bank Ltd., which required corroborative evidence for entries in bank statements when disputed. However, in this case, the defendant did not dispute specific entries, only the overall liability and the manner of the sale of pledged goods and machinery. The court found that the plaintiff's witnesses (PW1 and PW2) sufficiently proved the entries in the statement of accounts, and the defendant failed to provide evidence to rebut this.
  
  Conclusion:
  The court held that the statement of accounts (EX.PX) was admissible and sufficient to establish the defendant's liability. The plaintiff was entitled to recover Rs. 6240.59 with interest at 12% per annum from the date of filing the suit until realization. The appeal was accepted, and the judgments of the lower courts were set aside, decreeing the suit in favor of the plaintiff.

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• 2003 (9) TMI 814
  
  Issues:
  Alleged commission of offence under Section 409 read with Section 34 of the Indian Penal Code, 1860 (IPC)
  Interpretation of criminal breach of trust under Section 409 IPC
  Requirement to prove entrustment and dishonest intention under Section 405 IPC
  
  Analysis:
  The case involved an appeal by the informant against respondent No. 2 and others for an alleged offence under Section 409 read with Section 34 IPC. The prosecution's case revolved around the disappearance of money from a bank, which was entrusted to an individual for counting. The Trial Court convicted respondent No. 2 and another accused, but the appellate court acquitted them due to doubts regarding the manner of entrustment. The High Court also found the evidence lacking in establishing the entrustment beyond a reasonable doubt, hinting at the possibility of theft. The informant appealed this decision before the Supreme Court.
  
  The Supreme Court delved into the legal provisions governing criminal breach of trust by public servants, bankers, merchants, or agents under Section 409 IPC. To establish an offence under this section, two key elements must be proven: entrustment of property and the commission of criminal breach of trust. The Court highlighted the necessity to prove entrustment and the accused's dishonest intention to misappropriate or convert the entrusted property. The mens rea, or the intention, plays a crucial role in determining criminal liability in such cases.
  
  In this specific case, the Court noted that while the money was entrusted and subsequently went missing from the bank's cash counter, the crucial question was whether the accused dishonestly misappropriated or converted the money for personal use. The prosecution failed to establish that the accused directly misappropriated the money, as it disappeared due to theft by an unknown person. The Court emphasized that the mere loss of entrusted property does not automatically constitute criminal breach of trust unless misappropriation or conversion is proven. The lower courts were criticized for not considering these essential aspects, leading to the acquittal of the accused under Section 409 IPC.
  
  Ultimately, the Supreme Court dismissed the appeal, affirming that the accused could not be convicted under Section 409 IPC due to the lack of evidence establishing misappropriation or conversion. However, the Court clarified that this decision did not prevent the informant from seeking legal recourse through other available remedies.

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• 2003 (9) TMI 813
  
  Issues:
  1. Interpretation of depreciation rates for trucks used in business.
  2. Determination of depreciation rate based on truck usage for hire or personal business.
  3. Consideration of income source for determining depreciation rate.
  
  Analysis:
  1. The Revenue filed an application under Section 256(2) of the IT Act, 1961, questioning the Tribunal's decision to allow higher depreciation on a truck used for business purposes. The dispute centered around whether the assessee was entitled to depreciation at 40% rather than 30% on the truck used for its business operations.
  
  2. The assessee, a firm engaged in manufacturing, claimed 40% depreciation on a truck in its tax return. The Assessing Officer (AO) disallowed this claim, allowing only 30% depreciation. The Commissioner of Income-tax(Appeals) upheld the AO's decision, stating that the truck was not used for hire but for the assessee's business. However, the Tribunal allowed 40% depreciation, considering the income derived from truck operations.
  
  3. The Revenue argued that the Tribunal erred in not referring the question of depreciation rates to the High Court. They contended that the truck's usage for hire should determine the depreciation rate, citing a previous court ruling. On the other hand, the assessee's counsel argued that the Act does not restrict 40% depreciation to transporters only. They emphasized that the truck was registered as a public carrier and partly used for business purposes, justifying the higher depreciation rate.
  
  4. The High Court analyzed the facts and previous rulings, noting that the Tribunal found substantial income from hiring the truck. They distinguished the current case from a previous case involving stone transportation. The Court emphasized that the key issue was whether the truck generated income from hiring, irrespective of the primary business activity. They concluded that no legal question arose, upholding the Tribunal's decision to allow 40% depreciation.
  
  5. In summary, the High Court dismissed the Revenue's application, affirming the Tribunal's decision to allow 40% depreciation on the truck used for business operations. The judgment clarified that income from hiring the truck, even if a portion of total receipts, justified the higher depreciation rate, irrespective of the primary business activity.

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• 2003 (9) TMI 812
  

  Suit for damages for non delivery - breach of the original agreement - supplemental agreement - enforcement of bank guarantees - HELD THAT:- Undoubtedly, if the promisor abstains from doing something that could be consideration for the contract. However, in the supplemental agreement there is no mention that the consideration is non-enforcement of bank guarantees. Further the Respondents had delivered the dal. The Appellants has accepted the dal. Thus the Respondents could not be said to be in breach of the original agreement. If the Respondents were not in breach of the original agreement, then the bank guarantees could not have been enforced by the Appellant. Lastly and most importantly in the suit it is not claimed that the consideration for the supplemental agreement was not the enforcement of the bank guarantees.

  For all these reasons, we are in agreement with the reasoning given in the impugned judgment that the supplemental agreement was without consideration.

  We therefore see no reason to interfere. Accordingly the Appeal stands dismissed. There shall be no order as to costs.

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