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2009 (9) TMI 1095
1. ISSUES PRESENTED and CONSIDERED The core legal issues considered in this case include: - Whether the findings in Suit No. 5 of 1978 are barred by the principle of res judicata, given that no appeal was filed against its judgment.
- Whether the property in question is a public or private temple, and if the sale of the property required statutory permission.
- Whether the findings from one suit can be altered in an appeal from a different suit, especially when no appeal was filed against the original suit.
- The applicability and scope of the doctrine of res judicata in the context of the concurrent suits.
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Res Judicata and Suit No. 5 of 1978 The appellants argued that the findings in Suit No. 5 of 1978 should be considered res judicata since no appeal was filed against it. The Court examined Section 11 of the Civil Procedure Code (CPC), which outlines the doctrine of res judicata, emphasizing that a matter is directly and substantially in issue if it is necessary for the decision of the case. The Court referenced precedents, including Sajjadanashin Sayed and Tamil Nadu Wakf Board, to interpret what constitutes "directly and substantially in issue." It concluded that since the defendants had conceded not to evict the plaintiff forcibly, the trial court should have dismissed the suit without delving into the title issue, thus the principle of res judicata did not apply to the title issue. Issue 2: Nature of the Temple Property and Statutory Permission The trial court had determined the temple to be a private entity, not requiring statutory permission for property sale. However, the High Court reversed this, declaring it a public temple, thus requiring permission for alienation. The Court explored the implications of this reversal, considering whether the trial court's findings were necessary for the suit's resolution. Issue 3: Alteration of Findings Across Suits The Court addressed whether findings in Suit No. 5 of 1978 could be altered in an appeal from Suit No. 6 of 1978. The appellants argued that the High Court erred in modifying findings from a suit not under appeal. The Court considered the principle that a finding becomes final if no appeal is filed, as established in Premier Tyres Limited and Badri Narayan Singh. Issue 4: Doctrine of Res Judicata The doctrine's applicability was debated, focusing on whether the findings on the temple's nature and title were directly and substantially in issue. The Court emphasized the doctrine's importance in ensuring finality in litigation, referencing historical and international jurisprudence to underscore its significance. 3. SIGNIFICANT HOLDINGS The Court was divided, with Justice Katju dismissing the appeal, emphasizing that the trial court's decision on the title was unnecessary and thus not subject to res judicata. Justice Ganguly dissented, arguing for the appeal's allowance, asserting that the findings on title were directly in issue and should be binding without an appeal. Justice Katju's Reasoning: "Once the defendants had conceded that they were not going to forcibly evict the plaintiff-respondents, then the suit should have been straightway dismissed on this ground alone, and it was not necessary for the trial court to have gone into any other issue, including the issue of title." Justice Ganguly's Reasoning: "The question of title of the trustees was prominently raised... unless a decision on this aspect and the title of the trustees is rendered, the further decision, namely, the dismissal of the suit cannot be reached." Core Principles Established: - The necessity of a matter being directly and substantially in issue for res judicata to apply.
- The importance of finality in litigation and the sanctity of judicial findings when no appeal is filed.
- The procedural impropriety of altering findings from a suit not under appeal.
Final Determinations: In light of the divergent opinions, the matter was directed to be placed before another bench for resolution, highlighting the complexity and significance of the issues involved.
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2009 (9) TMI 1094
Issues Involved:
1. Compliance with Section 512 of the Companies Act, 1956.
2. Fairness and transparency in the disposal of public property by the Official Liquidator.
3. Validity of the tender process and the treatment of the appellant's tender.
4. Judicial review of the decision-making process in the award of contracts or sale of public property.
Issue-wise Detailed Analysis:
1. Compliance with Section 512 of the Companies Act, 1956:
Initially, the appellant raised an objection regarding non-compliance with Section 512 of the Companies Act, 1956. However, during the hearing of the Writ Appeal, the appellant's counsel did not press this issue, recognizing that in a case of voluntary winding up, the permission of the Company Court is not mandatory as per Section 457 of the Act. Thus, this issue was not pursued further in the appeal.
2. Fairness and Transparency in the Disposal of Public Property:
The core issue revolved around whether the Official Liquidator, respondent No. 1, acted in a fair and transparent manner while disposing of the property held by the State undertaking, APSSIDC. The chronology of events indicated that the appellant, an IOC dealer, was interested in purchasing the land adjacent to its retail outlet. The appellant initially offered Rs. 3,230 per square meter, which was treated as the base price. Respondent No. 1 stipulated conditions for considering the appellant's offer, including participation in a tender-cum-auction process. Despite the appellant's initial reluctance to engage in counter offers, it submitted a tender along with the EMD, indicating its continued interest. The court found that respondent No. 1 failed to maintain transparency and fairness by ignoring the appellant's tender and not conducting an open auction, thereby causing potential loss to the public exchequer.
3. Validity of the Tender Process and Treatment of the Appellant's Tender:
The appellant's tender submission on 15-1-2003, prior to the publication of the tender notice, was a focal point. The Official Liquidator's failure to acknowledge or consider this tender, despite having received it along with the EMD, was deemed arbitrary and lacking transparency. The court noted that respondent No. 1 did not provide any explanation for ignoring the appellant's tender, which was a valid submission. The learned Single Judge's interpretation of the appellant's letter dated 5-11-2002 was found to be erroneous, as the appellant had reserved its right to participate in an open tender. The court concluded that the Official Liquidator's actions were not in accordance with a fair and transparent procedure.
4. Judicial Review of the Decision-Making Process:
The court emphasized the limited scope of judicial review under Article 226 of the Constitution of India, which focuses on examining the decision-making process rather than the merits of the decision itself. Citing precedents, the court reiterated that the disposal of public property must adhere to principles of fairness and transparency. The Official Liquidator's failure to conduct an open auction and consider the appellant's tender was found to contravene these principles, warranting judicial intervention. The court referenced the Supreme Court's doctrine of trust, underscoring the necessity for fair and transparent methods in disposing of public property.
Conclusion:
The court set aside the order of the learned Single Judge, allowed the Writ Petition, and quashed the proceedings impugned in the Writ Petition. It directed the Official Liquidator to issue a fresh tender notification with a base price of Rs. 7,500 per square meter, ensuring wide publicity and transparency in the process. The court also ordered the return of the amounts received from the appellant and respondent No. 4 towards the EMD and deposit, respectively. The judgment underscored the imperative for public authorities to act as trustees of public property, ensuring the highest possible returns in the public interest.
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2009 (9) TMI 1093
Issues Involved:
1. Auction of immovable assets of the company in liquidation.
2. Claim for possession of the property by alleged owners.
3. Status and rights of the company as a statutory tenant.
4. Salable interest of the company in liquidation in the property.
5. Directions for handling the property and resolving claims.
Issue-wise Detailed Analysis:
1. Auction of Immovable Assets:
- The applicant, Ed-India Public Trust, filed Company Application No. 318 of 2006 seeking directions for the Official Liquidator and the sale committee to auction the immovable assets of the company in liquidation. The applicant expressed a desire to purchase the property and had submitted an offer. However, due to pending claims regarding ownership, no immediate action could be taken for the sale of the property.
2. Claim for Possession by Alleged Owners:
- Company Application No. 370 of 2006 was filed by certain individuals claiming to be the successor owners of the property, seeking its possession. The Official Liquidator's report indicated that the property was not owned by the company in liquidation, and the claim of ownership by the applicants needed adjudication. The court observed that the relief sought in the present application was not granted in the earlier application (No. 249 of 2006) due to its scope being outside a review application, allowing for a separate application for such relief.
3. Status and Rights as a Statutory Tenant:
- The company in liquidation was found to be in possession of the property as a statutory tenant under the Bombay Rents Hotel and Lodging House Rates Control Act, 1947, after the expiry of the lease agreement. The court noted that the company could continue occupying the property as long as it complied with statutory conditions, such as payment of rent and adherence to other terms. The rights of a statutory tenant are protected under the Rent Act, and the landlord's ability to recover possession is restricted unless specific conditions are met.
4. Salable Interest in the Property:
- The court examined whether the company in liquidation had any salable interest in the property. It was concluded that while the rights of a statutory tenant are heritable, they are not transferable or salable unless permitted by government notification. The existing notifications did not cover the sale of the property by the company in liquidation, as it was not an ongoing concern. Consequently, the company did not have a salable interest in the property.
5. Directions for Handling the Property:
- The court directed the Official Liquidator to sell the superstructure over the land, considering it as belonging to the company in liquidation, and to hand over possession to the applicant after the sale. The applicant agreed to forgo arrears of rent and taxes, which would benefit the company's corpus. The court also instructed the Official Liquidator to issue a public notice inviting objections to the ownership claim and to report any objections to the court. The directions ensured that no genuine owner's claim would be defeated, and the company's rights as a statutory tenant would end upon surrendering the land.
In conclusion, the court allowed Company Application No. 370 of 2006 in terms of the directions provided, while Company Application No. 318 of 2006 was disposed of without further orders, as the question of accepting the offer did not arise. The Official Liquidator's report, OLR No. 84 of 2006, was also disposed of in alignment with the order passed in Company Application No. 370 of 2006.
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2009 (9) TMI 1092
Issues Involved:
1. Delay in criminal trials and appeals.
2. Right to a speedy trial under Article 21 of the Constitution.
3. Entitlement to bail for under-trials and suspension of sentence for convicts.
4. Guidelines for granting bail and suspension of sentence.
5. Establishment of a "Criminal Justice Monitoring Board."
Detailed Analysis:
1. Delay in Criminal Trials and Appeals:
The judgment highlights the significant delays in the criminal justice system, particularly in the states of Punjab and Haryana and the Union Territory, Chandigarh. The case of Dalip Singh is used as an example where the trial took more than 6-1/2 years to record 28 pages of prosecution evidence. The judgment criticizes the lack of accountability and coordination among the police, prosecution, and judiciary, leading to prolonged trials and appeals. The court emphasizes the need for a systematic approach to address these delays, suggesting the establishment of a "Criminal Justice Monitoring Board" to oversee and expedite the process.
2. Right to a Speedy Trial Under Article 21 of the Constitution:
The court reiterates that the right to a speedy trial is an integral part of Article 21 of the Constitution, as recognized by the Supreme Court in several landmark judgments. This right extends to all stages of criminal proceedings, including investigation, trial, and appeal. The judgment cites cases like Abdul Rehman Antulay v. R.S. Nayak and others to emphasize that while no fixed time frame can be prescribed for trials, the burden lies on the prosecution to justify any delay. The court stresses that delays should not prejudice the accused and that the right to a speedy trial serves both individual and societal interests.
3. Entitlement to Bail for Under-trials and Suspension of Sentence for Convicts:
The judgment discusses the entitlement of under-trials to bail when trials are unduly prolonged and the conditions under which convicts can have their sentences suspended pending appeal. It refers to the principles laid down in Dharam Pal v. State of Haryana, which provided time frames for the release of convicts pending appeals. The court acknowledges the need for flexibility, stating that each case should be considered on its own facts and circumstances. It suggests that under-trials should be considered for bail if the trial is not nearing conclusion after 180 days, provided they do not pose a risk of tampering with evidence or absconding.
4. Guidelines for Granting Bail and Suspension of Sentence:
The judgment outlines several guidelines for granting bail to under-trials and suspending sentences for convicts. It suggests that the nature of the offense, the manner of its execution, the accused's conduct, and the potential for misuse of bail should be considered. The court also addresses the issue of repeated bail applications, directing that under-trials and convicts should have only one hearing for bail on merits and another based on long custody. The judgment emphasizes that the guidelines are illustrative and not exhaustive, allowing for judicial discretion based on the specific circumstances of each case.
5. Establishment of a "Criminal Justice Monitoring Board":
The court supports the suggestion to establish a "Criminal Justice Monitoring Board" comprising the heads of police, prosecution, and prisons. This board would regularly monitor trial progress and address delays due to infrastructure or manpower issues. The court believes that such a board would ensure better coordination among the various limbs of the criminal justice system and uphold the right to a speedy trial as enshrined in Article 21 of the Constitution.
In conclusion, the judgment addresses the systemic issues causing delays in the criminal justice process and emphasizes the need for reforms to ensure the timely administration of justice while safeguarding the rights of the accused.
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2009 (9) TMI 1091
Issues Involved:
1. Whether a decree can be passed on a petition for mutual divorce under Section 13B of the Hindu Marriage Act, 1955, when one of the petitioners withdraws consent prior to the passing of the decree.
2. The applicability of the doctrine of irretrievable breakdown of marriage in granting divorce under Section 13B of the Hindu Marriage Act.
3. The scope of the Supreme Court's powers under Article 142 of the Constitution in granting divorce by mutual consent.
Issue-wise Detailed Analysis:
1. Withdrawal of Consent under Section 13B of the Hindu Marriage Act:
The primary issue addressed in the judgment was whether a decree for mutual divorce can be granted when one party withdraws consent before the decree is passed. According to Section 13B(2) of the Hindu Marriage Act, both parties must maintain their consent from the filing of the petition until the decree is issued. The Court referenced the case of Smt. Sureshta Devi v. Om Prakash, where it was held that the consent must subsist until the decree is passed. In this case, the respondent wife withdrew her consent after initially agreeing to the mutual divorce, leading to the dismissal of the petition by the lower courts.
2. Doctrine of Irretrievable Breakdown of Marriage:
The Court explored the applicability of the doctrine of irretrievable breakdown of marriage, which is not explicitly a ground for divorce under Sections 13 or 13B of the Hindu Marriage Act. The Court reviewed previous judgments, such as Ashok Hurra v. Rupa Bipin Zaveri, where the Supreme Court invoked its extraordinary powers under Article 142 to grant divorce despite the withdrawal of consent, based on the irretrievable breakdown of the marriage. The Court noted that while the doctrine is not a statutory ground for divorce, it has been applied by the Supreme Court in special circumstances to prevent prolonging the agony of the parties involved.
3. Supreme Court's Powers under Article 142:
The judgment highlighted the Supreme Court's unique authority under Article 142 of the Constitution to do complete justice in cases where the marriage has broken down irretrievably. This power allows the Supreme Court to grant a decree of divorce by mutual consent even if one party withdraws consent, as seen in several cases like Ashok Hurra and others. The Court emphasized that such powers are exclusive to the Supreme Court and not available to lower courts or High Courts, which must adhere to the statutory requirements of the Hindu Marriage Act.
Conclusion and Judgment:
In the present case, the Supreme Court exercised its powers under Article 142, considering the parties had been living separately for more than seven years, and the respondent wife had already benefited from property rights transferred by the appellant. The Court found the respondent's stance of wanting to live separately but refusing mutual divorce unacceptable. Therefore, the appeal was allowed, and the impugned judgment of the High Court was set aside. The petition for mutual divorce under Section 13B was accepted, and a decree of divorce was granted, dissolving the marriage from the date of the judgment. No order as to costs was made.
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2009 (9) TMI 1090
Issues Involved:
1. Contravention of Section 9(1)(a) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973.
2. Validity and voluntariness of confessional statements.
3. Right to cross-examine witnesses.
4. Genuineness of gift transactions.
Issue-wise Detailed Analysis:
1. Contravention of Section 9(1)(a) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973:
The appellant, S.K. Mittal, was penalized for abetting the co-noticees in making payments to or for the credit of NRIs from NRE accounts without the general or special exemption of the Reserve Bank of India, thus violating Section 9(1)(a) of the FERA, 1973. The adjudicating orders imposed penalties for payments made against receipts from NRE accounts of NRIs Subhas Sethi, Narendra Nath Gupta, and Sudesh Kumar. The Tribunal found that the NRE accounts were fraudulently maintained and largely funded by foreign exchange locally, with crores of rupees distributed from these accounts under the guise of gifts.
2. Validity and Voluntariness of Confessional Statements:
The appellant argued that his confessional statements were not voluntary and were obtained under coercion and threat. However, the burden of proving coercion was on the appellant, which he failed to discharge. The Tribunal referred to the Supreme Court's observation in KTMS Mohd. v. UOI, stating that the maker of the statement must establish inducement, threat, or promise. The Tribunal found the statements of the appellant and his employee, Umesh Mendiratta, to be corroborated by other evidence and circumstantial details, thus rejecting the appellant's claim of coercion.
3. Right to Cross-examine Witnesses:
The appellant contended that he was not allowed to cross-examine third-party recipients of the NRE accounts. The Tribunal noted that cross-examination cannot be claimed as a matter of right, citing the Supreme Court's ruling in Surjit Singh Chhabra v. UOI. The Tribunal found no justifiable ground for the appellant's request for cross-examination and upheld the rejection of this request.
4. Genuineness of Gift Transactions:
The appellant claimed that the transactions were genuine gifts made out of love and affection by the NRIs to various recipients. However, the Tribunal found this contention unconvincing, noting that the transactions involved payments at a premium, indicating commercial transactions rather than genuine gifts. The Tribunal emphasized that a gift cannot involve consideration from the donee to the donor, as it would then be a commercial transaction. The statements of the appellant, Mendiratta, and other recipients raised significant questions that the appellant failed to answer, leading to the conclusion that the transactions were not genuine gifts.
Conclusion:
The Tribunal concluded that the appellant, S.K. Mittal, was guilty of abetting the recipients of the amounts from the NRE accounts in contravention of Section 9(1)(a) of the FERA, 1973. However, considering the appellant's role as an intermediary and the actual beneficiaries being the co-noticees, the Tribunal found the penalty amount excessive. The penalty was reduced to the amount already pre-deposited by the appellant in the three appeals. The appeals were partly allowed, and the pre-deposited amount was appropriated towards the penalty.
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2009 (9) TMI 1089
Issues Involved:
1. Penalty for contravention of sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973.
2. Unauthorized acquisition and transfer of foreign currency under section 8(1) of the Foreign Exchange Regulation Act, 1973.
Issue-wise Detailed Analysis:
1. Penalty for Contravention of Sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973:
The appellants were penalized for failing to take reasonable steps for the repatriation of export proceeds after exporting goods worth US dollars 510,463.28. The appellants argued that the exports were actually made by Mines & Minerals Trading Corporation Ltd. (MMTC), who had an agreement with the appellants to manufacture goods. The appellants did not have an export code number, and the export proceeds were to be realized in MMTC's account. The appellants were only responsible for manufacturing the goods and were to receive 30% of the return as their wages.
The Tribunal noted that MMTC Ltd. was responsible for signing the GRIs, obtaining the export code number, and receiving the export proceeds. MMTC Ltd. also took all export benefits, such as duty drawback and income-tax exemption. The Tribunal concluded that MMTC Ltd. was the exporter and bore the responsibility for repatriation of export proceeds under section 18 of the FER Act, 1973. The legal obligation under sections 18(2) and 18(3) is cast on the exporter, and since the appellants did not file an undertaking under section 18(1), no adverse presumption under section 18(3) could arise against them.
The Tribunal emphasized that "reasonable steps" depend on the circumstances of each case and that MMTC Ltd., as the exporter, had the obligation to take such steps. The Tribunal found that the appellants could not be held responsible for the contravention of sections 18(2) and 18(3) of the FER Act, 1973, and quashed the penalties imposed on them.
2. Unauthorized Acquisition and Transfer of Foreign Currency under Section 8(1) of the Foreign Exchange Regulation Act, 1973:
Appellant J.B.S. Bakshi was penalized for unauthorizedly acquiring US dollars 1 lakh from M/s. Omran Italian Jewellery, Sharjah, UAE, and transferring the same to M/s. Al Abdulla Jewellery Trades, UAE, as well as acquiring and transferring Dhiram 168,000 to M/s. Omran Italian Jewellery, Sharjah. The Tribunal examined section 8(1) of the FER Act, 1973, which restricts dealing in foreign exchange without the previous permission of the Reserve Bank.
The Tribunal found that the appellant did not acquire the foreign currency for personal use but acted as a carrier for M/s. Omran Italian Jewellery, who paid the money to M/s. Al Abdulla Jewellery Trades for the release of shipment. The Tribunal concluded that mere possession of foreign currency as a carrier does not amount to acquisition or transfer under section 8(1). The Tribunal stated that the burden of proof beyond reasonable doubt lies with the Enforcement Directorate, which failed to provide viable proof of guilt against the appellant.
The Tribunal quashed the penalty imposed on appellant J.B.S. Bakshi, finding that the allegations of contravention of section 8(1) were not substantiated.
Conclusion:
The Tribunal allowed the appeals, quashing the penalties imposed on the appellants for contravention of sections 18(2) and 18(3) and section 8(1) of the Foreign Exchange Regulation Act, 1973. The Tribunal found that MMTC Ltd. was the exporter responsible for repatriation of export proceeds and that the appellant J.B.S. Bakshi did not unauthorizedly acquire or transfer foreign currency. The impugned order was based on wrong assumptions and was set aside.
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2009 (9) TMI 1088
Issues:
Violation of FERA provisions - contravention of Sections 9(1)(b) & 9(1)(d)
Non-compliance with pre-deposit of penalty amount for filing appeal
Analysis:
The appeal before the Appellate Tribunal for Foreign Exchange was filed against an Adjudication Order imposing a penalty for contravention of FERA provisions. The appellant, Shaikh Mohd. Ismail Adam, received and made payments without permission from RBI, leading to the penalty. The appellant failed to comply with the pre-deposit order despite being directed to pay 20% of the penalty amount. The respondent argued for dismissal of the appeal due to non-compliance with the High Court order as per Section 52(2) of the FER Act.
The FERA provisions require appellants to file an appeal along with the penalty amount unless dispensation is granted. The Tribunal cited a Supreme Court case, Navin Chandra Chhotelal v. Central Board of Excise & Customs, where non-compliance with deposit requirements led to rejection of the appeal. Although Section 52 does not explicitly mention rejection for non-compliance, the Tribunal asserted its authority to dismiss appeals for such reasons. Despite being given over 3 years and leniency in the deposit order, the appellant failed to comply, leading to the dismissal of the appeal based on statutory provisions and equity considerations.
In conclusion, the Tribunal upheld the dismissal of the appeal due to the appellant's persistent non-compliance with the pre-deposit order, citing statutory provisions and the Supreme Court's stance on such matters. The records of the appeal were to be archived as per the order issued.
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2009 (9) TMI 1087
The appellant challenged an adjudication order imposing penalties for contravention of FER Act. The order was based solely on the appellant's admissional statement without corroboration. The appellant pleaded mistake of fact, which is a valid defense. The impugned order was quashed due to lack of corroboration, following the judgment in Vinod Solanki v. Union of India 2009 (233) ELT 1571. The appeal was allowed in favor of the appellant.
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2009 (9) TMI 1086
Issues:
1. Reduction of penalty imposed under FEM Act, 1999.
2. Interpretation of Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000.
3. Claim of ownership and possession of seized foreign currency.
4. Residency status of the appellant under FEM Act, 1999.
5. Contravention of section 4 of FEM Act, 1999.
6. Quantum of penalty imposed and its justification.
Analysis:
1. The appeal was against the reduction of penalty from Rs. 15,000 to Rs. 5,000 under the FEM Act, 1999. The tribunal directed the appellant to deposit 40% of the reduced penalty amount within 45 days, which was complied with. The appeal was taken up for final disposal on merit.
2. The appellant argued that the seized foreign currency was within the permissible limit as per the Foreign Exchange Management Regulations, 2000, allowing residents of India to retain foreign currency worth not exceeding USD 2000. The appellant claimed joint ownership with his wife, citing his work history abroad and the absence of a currency declaration form during entry to India.
3. The respondent contended that the appellant's statements indicated sole ownership of the seized foreign currency, acquired abroad and declared as his hard-earned money, despite initial claims of joint ownership with family members. This established contravention of the FEM Act, 1999, leading to justified confiscation.
4. The appellant's residency status was confirmed under the FEM Act, 1999, as a resident of India based on the duration of stay prior to the search date. The regulations allowed possession of foreign currency not exceeding USD 2000, with no evidence presented to prove ownership by family members.
5. The possession of foreign currency beyond the statutory limit of USD 2000 was deemed a contravention of the FEM Act, 1999, as confirmed by the appellant's admission of ownership of the seized currency. The confiscation of the foreign currency was upheld by both adjudicating authorities.
6. The quantum of penalty imposed was reduced to Rs. 5000 by the first appellate authority, considered reasonable compared to the contravention involved. The tribunal dismissed the appeal, directing the appellant to deposit the balance penalty amount within 7 days, failing which the Enforcement Directorate would realize it in accordance with the law.
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2009 (9) TMI 1085
Issues Involved: Contravention of Section 10(4), 10(5) read with Section 42 of the Foreign Exchange Management Act (FEM Act) 1999; Validity of the adjudication orders; Requirement of due care and caution by authorized money changers; Applicability of the standard of care and caution; Legality of penalties imposed.
Issue-wise Detailed Analysis:
1. Contravention of Section 10(4), 10(5) read with Section 42 of the FEM Act 1999:
The appellants, licensed full-fledged money changers (FLM), were found guilty of contravening Section 10(4) and 10(5) read with Section 42 of the FEM Act 1999. The adjudicating authority held that the appellants released foreign currency to individuals sponsored by a non-existent firm, M/s. Leather Crafts and Goods Exports. The applications were signed by Manas Kumar Moitra, and the same individuals were sponsored multiple times within a short period, indicating a lack of due diligence by the appellants.
2. Validity of the Adjudication Orders:
The Tribunal initially affirmed the adjudication orders dated 15-12-2005, which were remanded back for reconsideration. However, the Madras High Court quashed the Tribunal's order and directed it to dispose of the appeals on merits. Upon review, the Tribunal found no merit in the appeals and upheld the adjudication orders, emphasizing the appellants' failure to act with due care and caution.
3. Requirement of Due Care and Caution by Authorized Money Changers:
The appellants argued that their possession of a valid RBI license negated any contravention of the FEM Act. However, the Tribunal emphasized that the license implicitly required the appellants to act with due care and caution. The Tribunal highlighted that the appellants failed to notice glaring discrepancies, such as the same person being sponsored twice within a short period and multiple sponsorships by the same firm within overlapping dates.
4. Applicability of the Standard of Care and Caution:
The Tribunal referred to various legal precedents to underline the expectation of a higher standard of care and caution from authorized dealers. The appellants, being experienced money changers, were expected to scrutinize transactions diligently to prevent fraud. The Tribunal cited the Bombay High Court's observation that the standard of care must be judged according to the capacity and intelligence of the person, and the Orissa High Court's ruling that higher standards are expected from authorized dealers.
5. Legality of Penalties Imposed:
The Tribunal found that the penalties imposed were not harsh or excessive. The appellants were held responsible for their conduct and the conduct of their company. The penalties were deemed appropriate given the appellants' failure to adhere to their legal duties. The Tribunal dismissed the appeals, affirming the adjudication orders and sustaining the penalties.
Conclusion:
The appeals were dismissed, and the adjudication orders were upheld. The appellants were found guilty of contravening Sections 10(4) and 10(5) read with Section 42 of the FEM Act 1999. The Tribunal emphasized the need for authorized dealers to act with due care and caution and upheld the penalties imposed, finding them neither harsh nor excessive. The pre-deposit amounts were ordered to be appropriated towards the penalties, with the remaining amounts to be deposited within one week.
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2009 (9) TMI 1084
Issues:
Violation of Section 9(1)(e) of FER Act, 1973 - Placing amount to the credit of a non-resident without RBI permission.
Analysis:
The judgment by Km. Vijay Laxmi, Member of the Appellate Tribunal for Foreign Exchange, pertains to appeals against a penalty imposed on a company and its directors for contravening Section 9(1)(e) of the FER Act, 1973. The penalty was for placing Rs. 95,000 to the credit of a non-resident without RBI permission. The appellants argued that the transaction was a local financial one, denying any foreign exchange involvement. They claimed ignorance of the non-resident status of the individual involved. However, it was established that the amount was indeed credited to a non-resident without seeking RBI permission, a clear violation of the law.
The tribunal noted that the appellants failed to seek RBI permission before crediting the amount to a non-resident individual. It was emphasized that no one would deposit a significant sum without some acquaintance with the company, placing the burden on the appellants to verify the individual's residential status. The association between the company and the non-resident individual indicated the appellants' knowledge of the individual's status, reinforcing the charge against them.
The judgment highlighted the importance of regulatory mechanisms under the FER Act to prevent economic offenses. It cited a case emphasizing the need to administer justice impartially to protect the national economy and interests. Despite the appellants' arguments, the tribunal found the impugned order to be correctly passed. The penalty amount was deemed appropriate considering the contravention's seriousness and the quantum involved. The tribunal upheld the penalty and directed the appellants to pay within 15 days, warning of legal action if the amount was not deposited promptly. Overall, the appeal was dismissed for lacking merit, affirming the penalty imposed for violating Section 9(1)(e) of the FER Act, 1973.
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2009 (9) TMI 1083
Issues:
Non-compliance with pre-deposit order under Section 19(1) of FEM Act, 1999.
The judgment delivered by the Appellate Tribunal for Foreign Exchange pertains to appeals filed against an Adjudication Order imposing penalties for contravention of the Foreign Exchange Management Act, 1999. The penalties were imposed on an appellant company and three other individuals for failure to take reasonable steps for repatriation of export proceeds, as per the Foreign Exchange Management Regulations. Despite being served notice, the appellants did not comply with the pre-deposit order issued on 29.1.2009, leading to the appeal being taken up ex parte for further decision.
The Respondent argued that the appeals should be dismissed due to the non-compliance with the pre-deposit order dated 29.1.2009, as mandated by Section 19(1) of the FEM Act, 1999. This section requires the deposit of the penalty amount while filing an appeal against an order imposing a penalty. The Tribunal is empowered to dispense with such deposit only in cases of undue hardship, subject to conditions it deems fit to impose to ensure penalty realization.
The Tribunal highlighted the statutory obligation under Section 19(1) of the FEM Act, 1999, which necessitates the pre-deposit of penalty while filing an appeal unless the Tribunal permits otherwise based on undue hardship. The Tribunal emphasized that it cannot interpret the law differently to avoid harsh consequences, citing a Supreme Court judgment. The Tribunal reiterated that statutory laws must be applied as prescribed by the legislature without introducing sympathy or leniency.
The judgment concluded that the appellants failed to make the pre-deposit of the penalty within the stipulated period, despite clear consequences outlined in the pre-deposit order. The Tribunal, based on the non-compliance with the pre-deposit order, dismissed the appeals. The decision was made in adherence to the provisions of Section 19(1) of the FEM Act, 1999, emphasizing the importance of complying with legal obligations and orders in such matters.
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2009 (9) TMI 1082
Issues:
1. Whether the appellants can be held guilty for contravention of section 9(1)(c) FER Act 1973 or the appeals are required to be allowed?
2. Whether certain background facts not part of the Show Cause Notice can be considered for holding the appellants guilty?
3. Whether anything outside the Show Cause Notice can be brought into the impugned order to hold the appellants guilty?
Analysis:
1. The case involves a dispute where an amount of Rs. 10570000/- was accepted by the appellant firm as deposits from 7 NRIs, leading to the issuance of a Show Cause Notice alleging contravention of section 9(1)(c) FER Act. The RBI had allowed the appellants to accept deposits with certain conditions. The impugned order discussed the manner in which the deposits were generated in the name of 7 NRIs.
2. The Senior counsel for the appellant argued that the RBI permission and Exchange Control Manual provisions allowed deposits from NRIs for a limited period, contending that no contravention of section 9(1)(e) occurred. It was emphasized that the allegations in the SCN must be specific and not vague, citing legal precedents to support the argument.
3. The Enforcement Directorate argued that the deposited amount did not originate from NRIs, supporting the impugned order. The legal principle was discussed that adjudication proceedings require a proper Show Cause Notice to be served, and the adjudicating officer cannot go beyond the allegations in the SCN without violating principles of natural justice.
4. The judgment highlighted the importance of adhering to the contents of the Show Cause Notice during adjudication proceedings. It was noted that the RBI permission exempted the appellants from contravention of section 9(1)(e) FER Act, as permitted transactions are not subject to the restrictions outlined in the Act.
5. The conclusion favored the appellants on the first issue, stating that the contravention of section 9(1)(e) did not occur due to RBI permission. It was emphasized that anything not alleged in the SCN cannot be considered in the adjudication order, ensuring adherence to procedural fairness and the principles of natural justice.
This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the reasoning behind the decision rendered by the Appellate Tribunal for Foreign Exchange in New Delhi.
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2009 (9) TMI 1081
Issues: Violation of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973; Validity of confessional statement; Burden of proof for coercion in statement; Corroboration of evidence in retracted confessional statement.
Analysis:
1. The appeal was filed against an adjudication order imposing a penalty for contravention of section 9(1)(b) of the FER Act and confiscating a seized amount. The appellant did not appear, and the case proceeded for final disposal.
2. The appellant was accused of receiving funds from a person resident outside India without RBI permission. Investigations revealed the appellant's receipt of funds and his admission of receiving the amount for business from his brother in Jeddah.
3. The appellant contested the confessional statement's voluntariness, claiming the seized amount belonged to another individual. However, the evidence, including recovered slips, corroborated the initial statement, and the appellant failed to explain the delay in retraction.
4. The statutory provision of section 9(1)(b) prohibits receiving payments from non-resident individuals without RBI authorization. The appellant's retraction lacked substantiation, and the burden of proving coercion was not met, as per legal precedents.
5. The retracted confessional statement was found voluntary and supported by circumstantial evidence, including the substantial amount received and the relationship between the appellant and the sender. The appellant failed to justify the source of the seized funds.
6. The judgment concluded that the appellant was rightly held guilty of contravening section 9(1)(b) of the FER Act. The penalty imposed was deemed appropriate and in line with the severity of the offense. The appeal was dismissed, and the pre-deposited amount was to be appropriated towards the penalty.
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2009 (9) TMI 1080
Issues:
Violation of provisions of section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973 leading to penalty imposition.
Detailed Analysis:
Issue 1: Violation of FERA Provisions
The appeal was filed against an Adjudication Order imposing a penalty for contravention of section 9(1)(b) and 9(1)(d) of FERA. The appellant, along with a co-noticee, was found involved in a transaction where Indian currency was recovered, indicating a violation of FERA. The appellant was located and admitted to making payments as per the transaction details provided by the co-noticee. The appellant contested the confessional statements, claiming they were obtained under coercion and were not voluntary.
Issue 2: Legal Position of FERA Sections
Sections 9(1)(b) and 9(1)(d) of FERA prohibit receiving or making payments without authorization from RBI in cases involving persons resident outside India. The burden of proving coercion in the confessional statement rested on the appellant, as per legal precedents. The Supreme Court rulings highlighted the importance of voluntary and corroborated confessions in such cases.
Issue 3: Evaluation of Confessional Statement
The confessional statement of the appellant, recorded in 1992, detailed the transactions and payments made, implicating the appellant in the violation of FERA provisions. The appellant's claim of coercion lacked substantial evidence or timely retraction, leading to the conclusion that the statement was voluntary and truthful. The circumstantial evidence, including the involvement of a person residing outside India, supported the confessional statement.
Issue 4: Penalty and Judicial Scrutiny
After considering the evidence and circumstances, the Tribunal concluded that the appellant was rightly held guilty of contravening FERA sections. The quantum of penalty imposed was deemed appropriate and in line with the seriousness of the offense. The Tribunal upheld the impugned order, dismissing the appeal for lack of merit. The predeposited amount was to be appropriated towards the penalty, confirming the validity of the penalty imposition.
In conclusion, the Tribunal found the appellant guilty of violating FERA provisions, emphasizing the importance of voluntary confessions and the burden of proof in coercion claims. The penalty imposed was considered justified, and the appeal was dismissed, affirming the initial order.
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2009 (9) TMI 1079
Issues Involved:
1. Non-compliance with court orders.
2. Jurisdiction of the High Court in contempt proceedings.
3. Financial incapacity as a defense in contempt proceedings.
4. Execution of decrees versus contempt proceedings.
Summary:
1. Non-compliance with Court Orders:
This petition u/s Contempt of Courts Act, 1971, seeks to hold Respondents Nos. 1 to 7 guilty for not obeying the orders passed on 17.11.2000 by the Division Bench of this High Court in Writ Petition No.767 of 2000, as confirmed by the Supreme Court in Civil Appeal Nos. 1049 and 1050 of 2002 on 31.8.2005. The petitioners, teachers at a non-aided English Medium School, were entitled to benefits of the 5th Pay Commission Recommendations from 1st May 1999, as per the High Court's order.
2. Jurisdiction of the High Court in Contempt Proceedings:
Respondents argued that the High Court lacks jurisdiction to entertain the contempt petition since the orders of the Supreme Court are said to have been disobeyed. They cited Bahujan Samaj Prabodhan Shikshan Sanstha vs. The State of Maharashtra, which held that the High Court cannot punish for contempt of the Supreme Court.
3. Financial Incapacity as a Defense in Contempt Proceedings:
Respondents contended that their non-compliance was not willful but due to financial difficulties. They presented affidavits and balance sheets showing significant financial losses and debts, arguing that the trust and the associated sugar factory were financially incapable of complying with the court orders. They cited several cases, including Dr. Prakash Watkar vs. Dr. Smt. Sadhna w/o Shashikant Waikar, to support that non-willful disobedience due to compelling circumstances should not be punished as contempt.
4. Execution of Decrees versus Contempt Proceedings:
Respondents argued that the appropriate remedy for the petitioners is to execute the decree as per Rule 21 of Chapter 17 of the Bombay High Court, Appellate Side, Service Rule 1960, rather than filing a contempt petition. They cited Food Corporation of India vs. Sukha Deo Prasad, which states that contempt jurisdiction is not intended for enforcement of money decrees.
Conclusion:
The High Court dismissed the contempt petition, concluding that the non-compliance was due to financial difficulties rather than willful disobedience. The petitioners were granted liberty to pursue other appropriate remedies available under the law.
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2009 (9) TMI 1078
The High Court of Bombay corrected a typographical error in an order. The Commissioner had confiscated goods, and the Tribunal imposed a fine in lieu of confiscation for jewelry and currency without apportioning the amount. The court directed the original authority to consider imposing fines independently for currency and jewelry.
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2009 (9) TMI 1077
Issues Involved:
1. Authorization to file the suit.
2. Territorial jurisdiction of the court.
3. Validity of the assignment of the trademark 'CINNI'.
Issue-wise Detailed Analysis:
1. Authorization to File the Suit:
The defendants contended that the suit was not filed by a duly authorized person, asserting that Chandra Kumar Sah, the Managing Trustee who filed the suit, had been removed from his position by a resolution of the Board of Trustees. The plaintiff countered this by referencing the trust deed, which appointed Chandra Kumar Sah as the Managing Trustee for life, authorizing him to institute legal proceedings. The court noted that the trademark 'CINNI' had been assigned to the plaintiff under a Deed of Assignment, and the Managing Trustee was authorized to file the suit. The court emphasized that for the purposes of an application under Order VII Rule 11 CPC, the averments made in the plaint must be taken as correct. The court found that the issue of the Managing Trustee's removal and authorization to file the suit were matters to be decided after evidence was presented.
2. Territorial Jurisdiction of the Court:
The defendants argued that the court lacked territorial jurisdiction as no part of the cause of action arose within its jurisdiction. They asserted that both parties were located in Varanasi, and all relevant activities occurred there. The plaintiff argued that the court had jurisdiction as the plaintiff conducted business in Delhi through its distributor, M/s. Sah Agencies Pvt. Ltd., which received a cease and desist notice from the defendants in Delhi. The court found that the plaintiff had established a prima facie case of conducting business within its jurisdiction. The court also noted that the defendants' actions, such as issuing caution notices in a widely circulated newspaper, supported the plaintiff's claim of jurisdiction. The court concluded that jurisdictional issues could only be definitively resolved post-trial.
3. Validity of the Assignment of the Trademark 'CINNI':
The defendants contended that the assignment of the trademark 'CINNI' was invalid due to non-registration with the Registrar, as required under Section 45 of the Trade Marks Act, 1999. The plaintiff argued that the assignment deed executed on 05.11.2000 vested the trademark rights in the plaintiff, and the registration of the assignment was a procedural formality. The court agreed with the plaintiff, stating that the title to the trademark is created by the assignment deed and not by its registration. The court cited various precedents to support this view, emphasizing that registration serves as evidence of title but does not confer title itself. The court noted that the plaintiff had applied for registration, and the matter was pending before the Registrar. The court found that the assignment deed was valid and that the plaintiff had acquired rights in the trademark 'CINNI' from the date of its execution.
Conclusion:
The court dismissed the defendants' applications for rejection of the plaint and for vacation of the interim injunction. It found that the plaintiff had made out a prima facie case, with the balance of convenience and the potential for irreparable injury favoring the plaintiff. The interim orders restraining the defendants from interfering with the plaintiff's business and from transferring the trademark 'CINNI' were made absolute.
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2009 (9) TMI 1076
Issues Involved
1. Conflict between decisions in Ahammed Kutty v. State of Kerala and Shoukathali v. Tahsildar.
2. Legal procedure for seizure and release of vehicles under the Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001.
3. Authority of the District Collector versus Judicial Magistrate in matters of vehicle seizure and confiscation.
4. Adherence to judicial discipline and precedent.
Detailed Analysis
1. Conflict between decisions in Ahammed Kutty v. State of Kerala and Shoukathali v. Tahsildar
The Division Bench was tasked with resolving the apparent conflict between the decisions in Ahammed Kutty v. State of Kerala, 2008 (1) KLT 1068 and Shoukathali v. Tahsildar, 2009 (1) KLT 640. The petitioner in W.P. (Civil) No. 26073 of 2009 relied on the decision in Ahammed Kutty, which argued that a vehicle could only be confiscated or a fine imposed after a successful prosecution in a competent criminal court. Conversely, the respondents cited Shoukathali, which supported the immediate imposition of penalties by the District Collector without waiting for criminal prosecution.
2. Legal procedure for seizure and release of vehicles under the Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001
The court examined Section 24 and Section 25 of the Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001. Section 24 makes all offences under the Act cognizable, while Section 25 stipulates that no court can take cognizance of offences except upon a written complaint by an authorized officer. The Division Bench in Moosakoya v. State of Kerala, 2008 (1) KLT 538 had provided detailed directions on the procedure for vehicle seizure, including the preparation of a mahazar, consideration of objections by the District Collector, and the potential auction of the vehicle if fines are not paid.
3. Authority of the District Collector versus Judicial Magistrate in matters of vehicle seizure and confiscation
The court clarified that the District Collector has the authority to confiscate and sell vehicles used for illegal sand transportation, as per the Act and Rules. The decision in Moosakoya emphasized that the seizure process is governed by the Sand Act and Rules, not by Section 102 of the Code of Criminal Procedure. The court held that the learned Single Judge in Ahammed Kutty erred by not following the Division Bench decisions in Abdul Samad v. State of Kerala, 2007 (4) KLT 473 and Moosakoya, which upheld the District Collector's authority.
4. Adherence to judicial discipline and precedent
The court stressed the importance of judicial discipline and the need for lower courts to follow precedents set by higher courts. The learned Single Judge in Ahammed Kutty was criticized for ignoring Division Bench decisions on the grounds of a stay by the Supreme Court. The court reiterated that even if a decision is stayed, it remains binding unless overturned by a larger bench or legislative intervention. The court cited several Supreme Court judgments emphasizing the necessity of adhering to judicial precedents to maintain consistency and predictability in the law.
Conclusion
The Division Bench concluded that the decisions in Abdul Samad and Moosakoya correctly interpreted the legal position regarding the seizure and confiscation of vehicles under the Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001. The court directed that the Writ Petitions be dealt with in accordance with the directions in Shoukathali, which aligned with the aforementioned Division Bench decisions. The court also noted that individual cases with factual disputes concerning natural justice should be handled separately on their merits. The Registry was instructed to place the Writ Petitions before the appropriate Bench as per the roster, and petitioners were allowed to seek interim relief from the learned Single Judge if advised.
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