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APEX COURT UPHELD THAT THE SUIT FILED BY NATIONAL HOUSING BANK UNDER SPECIAL ACT ENACTED FOR PURPOSE OF HARSHAD S. MEHTA , IS ONLY AN EYE WASH =The entire scandal and the present litigation revolves around the second defendant (since deceased) – one Harshad S. Mehta (a notified person under Section 3(2) of the Act). The scandal exposes the shortcomings and loopholes in the administration of banking sector of this country, more particularly, the State-owned/controlled banks. 6. The National Housing Bank (hereinafter referred to as the ‘Plaintiff’) a statutory Corporation created by an Act of Parliament (Act No. 53 of 1987) filed two suits, one invoking the original jurisdiction of Bombay High Court (Suit No. 211 of 1995) and another before the Special Court established under the Act No. 27 of 1992 being Suit No. 2 of 1995. The said suits came to be filed against (i) the State Bank of Saurashtra which at that point of time was a subsidiary bank of the State Bank of India but later got amalgamated with the State Bank of India, (ii) Harshad S. Mehta, (iii) two of the employees of the plaintiff bank and (iv) the Custodian appointed under Section 3(1) of the Act 27 of 1992.= No oral evidence from plaintiff side except filing some documents – At the time when these documents were being tendered it was clarified to all parties that mere tendering of documents would only establish that there was in existence such a document and that it stated what is stated. It was clarified that the contents of the documents would not be deemed to have been proved. It was clarified that any party who wanted to prove the truth of the contents had to do so by positive evidence. As stated above, except for 2nd Defendant, no other party has led any oral evidence.”; Janakiraman Committee Report – not admissible = The Special Court Act though declares that the Court is not bound by the Code of Civil Procedure, it does not relieve the Special Court from the obligation to follow the Evidence Act. Further, the learned Judge extensively relied upon the second interim report of the Jankiraman Committee[11] on the ground that the same was tendered[12] by the 1st defendant. 51. Irrespective of the fact whether such a report is admissible in evidence or not, = It is well settled by a long line of judicial authority that the findings of even a statutory Commission appointed under the Commissions of Inquiry Act, 1952 are not enforceable proprio vigore as held in Ram Krishna Dalmia v. Justice S.R. Tendolkar and Others [AIR 1958 SC 538] and the statements made before such Commission are expressly made inadmissible in any subsequent proceedings civil or criminal. In our considered view the report of Janakiraman Committee is not evidence within the meaning of Evidence Act; There is absolutely no evidence on record regarding the payment of the above mentioned amount of Rs.55 crores (approx.) by the plaintiff-Bank to the Standard Chartered Bank except the Janakiraman Committee Report and the correspondence which is neither proved nor the content of the correspondence is explained. On the other hand, the Special Court recorded[17] with respect to the payment of Rs.55 crores (approx.) to the Standard Chartered Bank by the plaintiff – “In the plaintiff’s record there is no clear indication as to for what transaction this cheque had been issued. The plaintiffs were, therefore, not sure for what this cheque had been issued.” 62. In the background of the above discussed pleadings and evidence, we are of the opinion the suit is required to be dismissed on the ground that there is no evidence led by the plaintiff to establish its case. ; suppression of material facts = We must also record our disapproval of the finding recorded by the Special Court that the plaintiff did not suppress the truth. We are of the opinion that the plaintiff approached the Special Court with unclean hands by suppressing the relevant material. We shall first discuss the nature of the suppression and then examine the legal consequences that should follow.= The whole attempt of both the banks is to shield the officers on either side taking refuge under attractive legal pleas – which if examined in the context of the limited facts pleaded give a picture that the suit transaction is an innocuous transaction which unfortunately for the country is not. In our opinion the suit is a sheer abuse of the legal process.= both the plaintiff and respondent Banks simply reiterated their respective stands before the Committee of Secretaries. No attempt appears to have been made by the Government to find out the truth as to (1) how the plaintiff Bank parted with a high denomination cheque and gave custody of the same to Harshad Mehta and (2) as to how the first defendant Bank paid the various amounts to the dictation of Harshad Mehta in the absence of any authorisation by the plaintiff Bank. Be that as it may, if really the Government believed that the judgment of the Special Court does not require any interference, nothing stopped the Government from directing both the Banks to withdraw their appeals before this Court. 74. The whole exercise appears to be an eye wash. A thinly veiled scorn for the orders of this Court.= The professed purpose of the Special Courts Act – the back drop of the scandal that shook the nation – and the manner in which the litigation was conducted coupled with the absolute indifference of the Government to get at the truth only demonstrates the duplicity with which Governments can act. 76. We dismiss the suit and set aside the decree in toto. The consequences follow insofar as the appeals are concerned. But in the circumstances, we do not award any costs.

published in     http://judis.nic.in/supremecourt/imgst.aspx?filename=40614  Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2155 OF 1999 State Bank of India Thr. General Manager …Appellant Versus National Housing Bank & Ors. …Respondents WITH CIVIL APPEAL NO. 2294 OF 1999 CIVIL APPEAL NO. 3647 OF 1999 J U D G M E N … Continue reading

Sec.391 of company Act – seeking approval for compromise scheme – rejected = The Company Petition No. 160 of 2005 was filed by the appellant company herein under Section 391 of the Companies Act, 1956 (hereinafter referred to as “the Companies Act”), seeking approval for the scheme of arrangement/compromise dated 10th August, 2005. The said agreement was entered into between the appellant company herein and its class of creditors, namely its deposit holders and bond holders.= i) “Whether the non-obstante clause in Section 45Q of the RBI Act, 1934 prohibits the High Court from sanctioning any scheme for the deposit holders of an NBFC? ii) Whether the petitioner had failed to disclose the RBI letter dated 18th January, 2005 before the learned Company Judge as per the provisions of Section 391(1) of the Companies Act, 1956?” whether the company should have disclosed the aspects arising out of the order dated 18th January, 2005 to enable the depositors and the bond holders to take an informed decision. The High Court has concluded that the company is guilty of such non-disclosure.= Division Bench has concluded that by virtue of non-obstante clause in Section 45Q of the RBI Act, Chapter IIIB of the RBI Act will prevail over Sections 391-393 of the Companies Act. It is held that the provision contained in Section 45QA which is intended to protect the depositors must have primacy over any other law inconsistent with such provision. It is further held that the scheme of arrangement of compromise even if presented by a NBFC would have to conform to the provisions contained in the Chapter IIIB of the RBI Act. The Division Bench also concluded that not only the scheme is contrary to the specific provisions contained in Chapter IIIB of the RBI Act; it is also against public policy. With these observations the Division Bench had declined to approve the scheme and set aside the order passed by the Company Court.- In our opinion, the High Court has correctly concluded that even if no investigation was pending under Section 235-251 of the Companies Act, it was incumbent on the company to disclose the violations pointed out by the RBI on inspection of its books under Section 47N, which led to the issuance of the notice dated 18th January, 2005. This, in our opinion, would clearly reflect on the lack of bonafide of the company in proposing scheme of arrangement. In our considered opinion, non- disclosure of the action taken and initiated by the RBI as apparent from the letter dated 18th January, 2005, amounted to non-disclosure of material facts which are required to be disclosed under Section 391(1) read with Section 393(1) of the Companies Act. The Company Court whilst examining the fairness and the bonafide of a scheme of arrangement does not act as a rubber stamp. It cannot shut its eyes to blatant non-disclosure of material information, which could have a major influence/impact on the decision as to whether the scheme has to be approved or not. In our opinion, the High Court has not committed any error of jurisdiction in rejecting the submission of the appellant that the non-disclosure of the letter dated 18th January, 2005 was not material. For the aforesaid reasons, we find no justification to interfere with the judgment and order passed by the High Court. The appeals are accordingly dismissed.

published in     http://judis.nic.in/supremecourt/imgst.aspx?filename=40566   REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.5505-5508 OF 2013 [Arising out of SLP (C) NO.12737-12740 OF 2008] M/s. Integrated Finance Co. Ltd. …Appellant VERSUS Reserve Bank of India Etc. Etc. …Respondents J U D G M E N T SURINDER SINGH NIJJAR,J. 1. Leave granted. … Continue reading

legality of an order passed by the Joint Registrar of the Cooperative Societies, Sagar Division, Sagar, M.P., superseding the Board of Directors of District Cooperative Central Bank Ltd., Panna without previous consultation with the Reserve Bank of India, as provided under the second proviso to Section 53(1) of the Madhya Pradesh Cooperative Societies Act, 1960= In such circumstances of the case, we are inclined to dismiss both the appeals with costs directing re-instatement of the first respondent Board of Directors back in office forthwith and be allowed to continue for the period they were put out of office by the impugned order which has been quashed. We also direct the State of Madhya Pradesh to pay an amount of Rs.1,00,000/- to the Madhya Pradesh Legal Services Authority within a period of one month by way of costs and also impose a cost of Rs.10,000/- as against the Joint Registrar, Co-operative Societies, Sagar, the officer who passed the order, which will be deducted from his salary and be deposited in the Panna DCB within a period of two months from today. Ordered accordingly. Further, we are inclined to give the following general directions in view of the mushrooming of cases in various Courts challenging orders of supersession of elected Committees: (1) Supersession of an elected managing Committee/Board is an exception and be resorted to only in exceptional circumstances and normally elected body be allowed to complete the term for which it is elected. (2) Elected Committee in office be not penalised for the shortcomings or illegalities committed by the previous Committee, unless there is any deliberate inaction in rectifying the illegalities committed by the previous committees. (3) Elected Committee in Office be given sufficient time, say at least six months, to rectify the defects, if any, pointed out in the audit report with regard to incidents which originated when the previous committee was in office. (4) Registrar/Joint Registrar are legally obliged to comply with all the statutory formalities, including consultation with thePage 34 34 financing banks/Controlling Banks etc. Only after getting their view, an opinion be formed as to whether an elected Committee be ousted or not. (5) Registrar/ Joint Registrar should always bear in mind the consequences of an order of supersession which has the effect of not only ousting the Board out of office, but also disqualify them for standing for election in the succeeding elections. Registrar/Joint Registrar therefore is duty bound to exercise his powers bona fide and not on the dictation or direction of those who are in power. (6) Registrar/Joint Registrar shall not act under political pressure or influence and, if they do, be subjected to disciplinary proceedings and be also held personally liable for the cost of the legal proceedings. (7) Public money not to be spent by the State Government or the Registrar for unnecessary litigation involving disputes between various factions in a co-operative society. Tax payers money is not expected to be spent for settling those disputes. If found necessary, the same be spent from the funds available with the concerned Bank

Page 1 1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4691 OF 2013 [Arising out of SLP (C) No. 6860 of 2012] State of M.P. and Others .. Appellants Versus Sanjay Nagayach and Others .. Respondents WITH CIVIL APPEAL NO. 4692 OF 2013, (Arising out of SLP (Civil) No. 13125 … Continue reading

Foreign Exchange Regulation Act, 1973 – ss. 50, 51 and 56 – Scope and applicability of – Charges against the appellant for contravening the provisions of s.9(1)(f)(i) and s.8(2) r/w s.64(2) – Enforcement Directorate (ED) sought to prosecute appellant in a proceeding u/s.56 though on the self-same facts and cause of action, respondent-adjudicating authority had dropped charges framed against the appellant u/s.50 – Plea of appellant that standard of proof required to bring home the charge in a criminal case is much higher than the adjudication proceeding and once the appellant was exonerated in the adjudication proceeding, his prosecution was an abuse of the process of Court – Held (per majority): The yardstick would be to judge as to whether allegation in the adjudication proceedings and the proceedings for prosecution was identical and exoneration of the person concerned in the adjudication proceeding was on merits – In case it is found on merit that there was no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the process of the court – In the instant case, in the adjudication proceeding on merit the adjudicating authority had categorically held that the charges against the appellant for contravening the provisions of s.9(1)(f)(i) and s.8(2) r/w s.64(2) were not sustainable – In the face of the finding by the Enforcement Directorate in adjudication proceeding that there was no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution – Resultantly the appellant’s prosecution is quashed – Held (per minority): The scheme of the Act makes it clear that adjudication by the concerned authorities and prosecution are distinct and separate – The two proceedings are independent and irrespective of the outcome of the decision u/s.50, there cannot be any bar in initiating prosecution u/s.56 – In the light of the mandate of s.56, it is the duty of the Criminal Court to discharge the functions vested with it and give effect to the legislative intention, particularly, in the context of the scope and object of FERA which was enacted for economic development of the country and augmentation of revenue. The Enforcement Directorate alleged that the appellant had contravened the provisions of Section 8(2) and 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973 and accordingly rendered himself liable to imposition of penalty under Section 50 of the Act. Accordingly, adjudication proceeding as contemplated under Section 51 of the Act were instituted against him for the aforesaid contraventions. The adjudication officer (the Special Director) came to the conclusion that the allegation made against the appellant of contravention of the provisions of Section 8, 9(1)(f)(i) and Section 8(2) read with Section 64(2) of the Act were not sustainable. The Enforcement Directorate did not challenge this order and it attained finality. The Enforcement Directorate on the same allegation which was the subject matter of adjudication proceeding laid complaint against the appellant for prosecution under Section 56 of the Act before the Metropolitan Magistrate. After the issuance of process and exoneration in the adjudication proceeding, the appellant filed application for dropping the proceedings, inter alia, contending that on the same allegation the adjudication proceedings having been dropped and the appellant exonerated, his continued prosecution is an abuse of the process of the Court. The Metropolitan Magistrate rejected his prayer. Aggrieved, the appellant preferred criminal revision application which was dismissed by the High Court by the impugned order. In the instant appeal, dispute arose as to whether the Enforcement Directorate (ED) could prosecute the appellant in a proceeding under Section 56 of the FERA when on the self-same facts and cause of action, the respondent-adjudicating authority had dropped the charges framed against the appellant under Section 50 of the FERA. It was contended on behalf of the appellant that standard of proof required to bring home the charge in a criminal case is much higher than the adjudication proceeding and once the appellant was exonerated in the adjudication proceeding, his prosecution was an abuse of the process of Court. =Allowing the appeal (per majority), Per Chandramauli Kr. Prasad, J. (for Harjit Singh Bedi, J. and himself): HELD: 1. Section 50 of the Foreign Exchange Regulation Act, 1973 (FERA) provides for mandatory penalty and fixes the outer limit of such penalty on any person contravening the provisions of the Act which is to be adjudged by the Director of Enforcement or any other officer of the Enforcement not below the rank of an Assistant Director empowered by the Central Government. The procedure and the power to adjudicate penalty has been provided under Section 51 of the Act. From a plain reading of Section 51 of the Act it is evident that for adjudging the penalty under Section 51 of the Act for contravention of the provisions of the Act or any rule, direction or order made thereunder the adjudicating officer is to be satisfied that the person has committed the contravention after holding an inquiry in the prescribed manner and after giving the person concerned a reasonable opportunity of making representation. Thus besides the procedural requirement the sine qua non for imposition of penalty under Section 51 of the Act is that the adjudicating officer has to record its satisfaction that the person concerned has committed the contravention of any of the provisions of the Act or of any rule, direction or order made thereunder. [Paras 8, 9] [903-E-H; 904-A-G] 2. As would be evident from the preamble of the FERA, it was enacted for the conservation of foreign exchange resources of the Country and the proper utilization thereof in the economic development of the Country. The proceedings under Section 51 and 56 of the Act are independent of each other and the finding in an adjudication proceeding under Section 51 of the Act is not binding in the proceeding for prosecution under Section 56 of the Act and both can go hand in hand. Further, the prosecution can be launched even before conclusion of adjudication proceeding under Section 51 of the Act. [Paras 10, 11] [904-H; 905-H; 906-A-C] 3. The standard of proof in a criminal case is much higher than that of the adjudication proceeding. The Enforcement Directorate has not been able to prove its case in the adjudication proceeding and the appellant has been exonerated on the same allegation. The appellant is facing trial in the criminal case. Therefore, the determination of facts in the adjudication proceeding cannot be said to be irrelevant in the criminal case. However, the finding in an adjudication proceeding is not binding in the proceeding for criminal prosecution. A person held liable to pay penalty in adjudication proceeding cannot necessarily be held guilty in criminal trial. Adjudication proceedings are decided on the basis of preponderance of evidence of a little higher degree whereas in a criminal case entire burden to prove beyond all reasonable doubt lies on the prosecution. [Paras 15, 16] [909-H; 910-A-B; 911-F-G] 4. The yardstick would be to judge as to whether allegation in the adjudication proceeding as well as proceeding for prosecution is identical and the exoneration of the person concerned in the adjudication proceeding is on merits. In case it is found on merit that there is no contravention of the provisions of the Act in the adjudication proceeding, the trial of the person concerned shall be in abuse of the process of the court. [Para 19] [916-A-B] 5. In the instant case, in the adjudication proceeding on merit the adjudicating authority has categorically held that “the charges against Shri Radheshyam Kejriwal for contravening the provisions of Section 9(1)(f) (i) and Section 8(2) read with Section 64(2) of the Foreign Exchange Regulation Act, 1973 cannot be sustained”. In the face of the aforesaid finding by the Enforcement Directorate in adjudication proceeding that there is no contravention of any of the provisions of the Act, it would be unjust and an abuse of the process of the court to permit the Enforcement Directorate to continue with the criminal prosecution. [Para 23] [919-F-H; 910-A] 6. In the result the impugned judgment of the Metropolitan Magistrate and the order affirming the same by the High Court are set aside and appellant’s prosecution is quashed. [Para 24] [920-B] Standard Chartered Bank and others vs. Directorate of Enforcement and others (2006) 4 SCC 278; Assistant Collector of Customs, Bombay and another vs. L.R. Melwani and another AIR 1970 SC 962 and Iqbal Singh Marwah v. Meenakshi Marwah (2005) 4 SCC 370 – distinguished. Uttam Chand and others vs. Income Tax Officer, Central Circle, Amritsar (1982) 2 SCC 543; G.L. Didwania and Another vs. Income Tax Officer and Another 1995 Supp (2) SCC 724 and K.C. Builders and Another vs. Assistant Commissioner of Income Tax (2004) 2 SCC 731 – relied on. Hemendra M. Kothari v. Shri W.S. Vaigankar, Asstt. Director, Enforcement Directorate (FERA), Govt. of India and State of Maharashtra [decided by Bombay High Court on 25-04-2007] and Sunil Gulati & Anr. V. R.K. Vohra 145 (2007) DLT 612 – approved. B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23 Full Bench; K.G. Premshanker v. Inspector of Police (2002) 8 SCC 87 – referred to. Case Law Reference: (2006) 4 SCC 278 distinguished Para 11, 20 AIR 1970 SC 962 distinguished Para 12, 13 AIR (32) 1945 Lahore 23 referred to Para 15 (2002) 8 SCC 87 referred to Para 15 (2005) 4 SCC 370 distinguished Para 16 (1982) 2 SCC 543 relied on Para 17 1995 Supp (2) SCC 724 relied on Para 17 (2004) 2 SCC 731 relied on Para 17 145 (2007) DLT 612 approved Para 22 Per Sathasivam, J. (dissenting): HELD: 1. The Foreign Exchange Regulation Act, 1973 (FERA) being a statute relating to economic offences, there is no reason to restrict the scope of any provisions of the Act. These provisions ensure that no economic loss is caused by the alleged contravention by the imposition of an appropriate penalty after adjudication under Section 51 of the Act and to ensure that the tendency to violate is guarded by imposing appropriate punishment after due transaction in terms of Section 56 of the Act. In fact, Section 23D of the Foreign Exchange Regulation Act, 1947 had a proviso, which indicates that the adjudication for the imposition of penalty should precede making of complaint in writing to the court concerned for prosecuting the offender. The absence of a similar proviso to Section 51 or to Section 56 of the 1973 Act is a clear indication that the Legislature intended to treat the two proceedings as independent of each other. There is nothing in the present Act to indicate that a finding in adjudication is binding on the Court in a prosecution under Section 56 of the Act or that the prosecution under Section 56 depends upon the result of adjudication under Section 51 of the Act. The two proceedings are independent and irrespective of the outcome of the decision under Section 50, there cannot be any bar in initiating prosecution under Section 56. The scheme of the Act makes it clear that the adjudication by the concerned authorities and the prosecution are distinct and separate. No doubt, the conclusion of the adjudication, in the case on hand, the decision of the Special Director, may be a point for the appellant and it is for him to put forth the same before the Magistrate. Inasmuch as FERA contains certain provisions and features which cannot be equated with the provisions of Income Tax Act or the Customs Act and in the light of the mandate of Section 56 of the FERA, it is the duty of the Criminal Court to discharge its functions vest with it and give effect to the legislative intention, particularly, in the context of the scope and object of FERA which was enacted for the economic development of the country and augmentation of revenue. Though the Act has since been repealed and not available at present, those provisions cannot be lightly interpreted taking note of the object of the Act. [Para 23] [942-D-H; 943-A-D] 2. In view of the above, the conclusion arrived at by the Metropolitan Magistrate, Calcutta as well as the decision of the High Court are upheld. [Para 24] [943-E] G.L. Didwania and Another v. Income Tax officer and Another 1995 Supp (2) SCC 724; K.C. Builders and Another v. Assistant Commissioner of Income-Tax (2004) 2 SCC 731; P.S. Rajya vs. State of Bihar (1996) 9 SCC 1; Uttam Chand and Others v. Income Tax Officer, Central Circle, Amritsar (1982) 2 SCC 543 – distinguished. Standard Chartered Bank and Others vs. Directorate of Enforcement and Others (2006) 4 SCC 278; K.G. Premshanker vs. Inspector of Police and Another (2002) 8 SCC 87; Assistant Collector of Customs vs. L.R. Malwani, 1969 (2) SCR 438; Iqbal Singh Marwah and Another vs. Meenakshi Marwah and Another (2005) 4 SCC 370 – relied on. Asstt. Commr. vs. Velliappa Textiles Ltd. (2003) 11 SCC 405; ANZ Grindlays Bank Ltd. vs. Directorate of Enforcement (2004) 6 SCC 531; Standard Chartered Bank vs. Directorate of Enforcement (2005) 4 SCC 530 – referred to. B.N. Kashyap vs. Emperor AIR (32) 1945 Lahore 23 Full Bench – referred to. Case Law Reference: 1995 Supp (2) SCC 724 distinguished Para 9, 10, 11, 16, 19, 22 (2004) 2 SCC 731 distinguished Para 9 , 11 (1996) 9 SCC 1 distinguished Para 9 , 12 (1982) 2 SCC 543 distinguished Para 9 , 13 (2006) 4 SCC 278 relied on Para 15, 22 (2002) 8 SCC 87 relied on Para 15, 17 1969 (2) SCR 438 relied on Para 15, 18, 19, 22 (2005) 4 SCC 370 relied on Para 15, 20 AIR (32) 1945 Lahore 23 Full Bench referred to Para 15, 21 (2003) 11 SCC 405 referred to Para 16 (2004) 6 SCC 531 referred to Para 16 (2005) 4 SCC 530 referred to Para 16 CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1097 of 2003. From the Judgment & Order dated 10.08.2001 of the High Court of Calcutta in C.R.R. No. 3593 of 1997. A. Sharan, Punet Jain, Sushil Kr. Jain, Pramod Sharma, Anil K. Verma, Pratibha Jain for the Appellant. P.P. Malhotra, ASG, P.K. Dey, Ranjana Narayan, B. Krishna Prasad. Tara Chandra Sharma, Neelam Sharma for the Respondents.

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1097 OF 2003 RADHESHYAM KEJRIWAL ….. APPELLANT VERSUS STATE OF WEST BENGAL & ANR. ….. RESPONDENTS J U D G M E N T CHANDRAMAULI KR. PRASAD, J. 1. We have gone through the draft judgment prepared by our noble and learned Brother … Continue reading

Gift Tax Act, 1958: Sections 2(xii), 4(1) (c) and (d)-Gift of immovable property by unregistered document-Held, for a valid gift under Section 2 (xii) and (4) compliance with the provisions of Transfer of property Act and Registration Act necessarv- transfer of Properly Act, 1882-Sections 122 and 123-Registration Act, 1908- Sections 17. Words & Phrases . “Gift”-Meaning of in the context of Section 2(xii) of Gift Tax Act, 1958 and Section 122 of the Transfer of Property Act, 1882. Respondent, by an unregistered declaration sought to make a gift of certain immovable property to his wife. The Gift Tax Officer held that no valid gift had been made by respondent since the provisions of Section 123 of the Transfer of Property Act, 1882 had not been complied with. The said Findings were affirmed by the Assistant Commissioner and the Tribunal. However, on reference, the High Court observed that the definition of the word ‘gift’ under the Gift Tux Act, 1958 was wider than the definition of ‘gift’ in the Transfer of Property Act, and held that registration of document was not necessary for a valid gilt under Section 4 of the Act. Hence the present appeal by Revenue. -Allowing the appeal, the Court HELD : 1.1. High court erred in coming to the conclusion that the case fell within the provisions of Section 4 of the Gift Tax Act, 1958 and, therefore, as it was a deemed gift it was not necessary that the document had to be registered. [619-H; 620-A] 1.2. There can be no doubt that certain transactions may not be regarded as a gift for the purposes of the Transfer of Property Act but would fall within the ambit of the expression ‘gift’ by virtue of Section 4 of the Gift Tax Act, but in each one of the cases which in certain circumstances is to be regarded as a gift under Section 4 there has to be a transfer of immovable property and a transfer by reason of Section 17 of the Registration Act can only be by way of a registered document. Surrender or forfeiture of an interest in immovable property as contemplated by Section 4(1) (c) or vesting of any property in another person as contemplated by Section 4(1) (d) in the case of an immovable property would also attract the provisions of Section 17 of the Registration Act. [618-G-H; 619-A, B, C] 1.3. In order that there could be a transfer of property by way of gift as contemplated by the Transfer of Property Act, there has to be a registered document if the property sought to be transferred is immovable. The general law did not stand abrogated and the requirement of complying with the provisions of the Transfer of Property Act and the Registration Act had to be fulfilled. [617-F, 619-G-H] Commissioner of Gift Tax, Kerala v. R. Valsala Amma, 82 ITR 828 (SC), relied on. Smt. Padma Lalchand Mirchandani v. Commissioner of Income Tax, New Delhi, 128 ITR 174 (Delhi); Commissioner of Gift-tax, Bombay III v. Matilda Ferreira, 112 ITR 934 (Bombay); K. Madhavakrishnan v. Commissioner of Gift- tax, Tamil Nadu, 124 ITR 233 (Madras) and Darbar Shivrajkumar v. Commissioner of Gift-tax, Gujarat-IV, 131 ITR 647 (Gujarat), approved. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6725 of 1994. From the Judgment and Order dated 12.2.1985 of the Rajasthan High Court in Income Tax Ref. No. 27/75. B.B. Ahuja, K.C, Kaushik, Rajiv Tyagi, R.R. Dwivedi and B.V. Balram Das for Ms. Sushma Suri for the Appellant. N.M. Ranka, Sushil Kumar Jain and Raj Kumar Yadav for the Respondent.

CASE NO.: Appeal (civil) 6725 of 1994 PETITIONER: COMMISSIONS OF INCOME TAX, JAIPUR RESPONDENT: SIKBHMAL NAWALAKHA DATE OF JUDGMENT: 16/08/2001 BENCH: B.N. KIRPAL & SHIVRAJ V. PATIL JUDGMENT: JUDGMENT 2001 Supp(1) SCR 615 The Judgment of the Court was delivered by KIRPAL, J. The respondent was the owner of immovable property and by declaration dated … Continue reading

Swiss Bank accounts of Indians =Writ Petition (Civil) No.176 of 2009 was filed by Shri Ram Jethmalani and five others against the Union of India, the Reserve Bank of India, the Securities Exchange Board of India, the Director, Directorate of Enforcement and the Chairman, Central Board of Direct Taxes, Department of

1 REPORTABLE IN THE SUPREME COURT OF INDIA ORIGINAL CIVIL JURISDICTION I.A. NO.8 OF 2011 IN WRIT PETITION (CIVIL) NO.176 OF 2009 Ram Jethmalani & Ors. … Petitioners Vs. Union of India & Ors. … Respondents O R D E R 1. Writ Petition (Civil) No.176 of 2009 was filed by Shri Ram Jethmalani and … Continue reading

Customs Act, 1962-Section 2(22) (c) and (e) 12, 24 & 28(1)-Customs valuation (Determination of Price of Imported Goods) Rules, 1988-Rules 3&4- Customs duty-Levy of-On import of drawings, designs etc.-In the course of transfer of technology with foreign collaborators-Held, customs duty can be levied, since they are goods-Customs Tariff Act, 1995-Chapter 49. Sections 12 & 14-Rules 3,4, &9-Customs duty-On the imported drawings and designs, etc.-Valuation of-Plea that duty can be levied only on the media- Held, intellectual property when put on a media would be regarded as an article and hence duty is payable on its total value. Section 28(1) proviso-Rule 10-Customs duty-Non-payment of- Issuance of notice-After limitation period-Plea that notice barred by limitation, in the absence of intention to evade duty-Willful suppression or miss- statement of value of the imported goods, proved-Held, notice not barred by limitation. Sections 2 (14) , 2(22) & 12-Customs duty-Levy of-Import of drawings and designs etc.-Without payment of duty-Duty levied on entire contract value- Tariff provided that import on the goods was free of duty- Held, drawings and designs were not dutiable articles–Central Excise Act, 1944-Section 2(d)-Customs Tariff Act, 1995-Heading No. 49.06 Section 28(1)-Customs duty-Levy of–On the import of drawings and designs etc.-Drawings originally sent from India, later imported after approval of the same from the foreign collaborator-Held, duty not leviable. Customs Tariff Act, 1995-Heading No. 98.03-Customs duty-Levy of-Import of technical material by courier-Clearance of–A part of passenger baggage- Held, duty has to be paid on such goods by virtue of the Heading. Appellants, public corporations engaged in the manufacture of excisable goods, entered into technical collaboration with foreign companies. As part of the fulfilment of the contract, the contracting parties abroad, sent drawings designs etc. to India through professional couriers or by post parcels. In Civil Appeal No. 3632 of 2000 these were imported by hand through a passenger. In Civil Appeal No. 1493 of 2000, the drawings sent from India were approved by the foreign company and then sent to India. At the time of importation only the nominal value of the drawings etc., were declared. It came to the notice of the respondent that the appellants had imported drawings, designs, etc., on remitting the consideration for the same, and they had been cleared without proper declaration and without payment of correct amount of duty The respondents issued show cause notices under Section 28(1) r/w Section 24 of the Customs Act, 1962, for levying customs duty on the drawings, designs, etc. Appellants replied that since the imported materials were not `goods’, there could not be any excise duty on service since the remittance were in form A-2 and tax at source under the Income Tax Act was paid in respect of the contracts; and that the demand was barred by limitation. The Commissioner demanded duty and imposed penalty on the appellants. Appeal of the appellants before the Tribunal was dismissed. In appeal to this Court it was contended that the transaction between the appellants and their respective foreign collaborators was one of transfer of technology and hence excise duty cannot be levied on the value of ideas which are not goods; and that the contracts in these cases were for services on the basis of which permission for release of foreign exchange was obtained from Reserve Bank of India; and that even if what was imported were goods, valuation of the same had to be nominal only on the media; and that the show cause notices which were issued were barred by time inasmuch as the extended period of limitation could not be availed as the appellants had never intended to evade duty; and that the imports through the courier could not be governed by heading No. 98.03 of the Customs Tariff Act In Civil Appeal No. 3632 of 2000 appellant contended that at the time when the drawings were imported, the import of the same was free of duty and duty could not be levied even as part of the passenger baggage. Allowing Civil Appeal Nos. 3632 of 2000 and 1493 of 2000 and dismissing the other appeals, the Court. HELD : 1.1. Drawings, plans, manuals etc., specified in Chapter 49 of the Custom Tariff Act, 1995 are statutorily regarded as goods, attracting a specified rate of customs duty on their import into India. There is no challenge to any of the statutory provisions and reading the two Acts i.e., Customs Act, 1962 and Customs Tariff Act together, there is no doubt that what has been imported into India by the appellant collaborators were goods even though the tangible articles so imported contained information or knowledge for use by the appellants. [627-D] 1.2. In view of the clear provisions of the Customs Act and the Customs Tariff Act. whenever any goods of movables of tangible articles are imported into this country, customs duty is payable. For the purpose of attracting levy it would be immaterial as to what are the types of goods imported or what is contained in them or recorded thereon . The contents will be relevant for the purpose of valuation. [627-F] 1.3. The moment the information or advice is put on a media, whether papers of diskettes or any other thing, that what is supplied becomes chattel. It is in respect of the drawings, designs etc., which are received that payment is made to the foreign collaborators. It is these papers or diskettes etc., containing the technological advice, which are paid for and used. The foreign collaborators part with them in lieu of money. It is, therefore, sold by them as chattel for use by the Indian importer. The drawings, designs, manuals etc., so received are goods on which customs duty could be levied. [628-C] 1.4. The belief of the appellants that what was imported were not `goods’, as the Reserve Bank had also regarded the payment was being made for services and not goods, was clearly erroneous and misplaced. The appellants had represented to the Reserve Bank that the collaborators were rendering service and no this representation remittances were allowed. The Reserve Bank must have examined the applications from the point of view of release of foreign exchange. It was not an adjudicating authority under the Customs Act. Had there been any doubt about the question whether what was imported were goods or not then, perhaps the grant of permission to remit money for services rendered and payment of taxes in respect thereof may have been relevant. But here, on the examination of the law applicable to the levy of customs duty the position is free from any ambiguity. As the drawings, designs, manuals etc., imported through couriers were `goods’ on which customs duty was payable. The action of the Reserve Bank cannot result in negating the statutory provisions of the Customs Act and the Tariff Act applicable in the instant cases. |628-G-H; 629-A| The Assistant Sales Tax Officer and Others v. B.C. Kame, Proprietor Kame, Proprietor Kame Photo Studio, [1977] I SCC 634 and Everest Copiers v. State of Tamil Nadu, [1996] 5 SCC 390, distinguished. State of Himachal Pradesh v. Associated Hotels of India Ltd., (1972) 29 STC 474; State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd., (1958) 9 STC 353; Slate of Tamil Nadu v. Anandam Viswanathan, |1989] 1 SCC 613; Hindustan Shipyard Ltd. v. State of U.P., [2000] 6 SCC 579; Rainbow Colour Lab & Anr v. State of M.P. and Others, [2000] 2 SCC 385; Hindustan Aeronautics Ltd v. State of Karnataka, [1984] 1 SCC 706 and Builder’s Association of India and Others v. Union of India & Others, [1989] 2 SCC 645, referred to Deta Nominees Pty. Lit. v. Viscount Plastic Products Ply. Ltd., (1979) VR 167; Wilhelm Winter; Cynthia Zheng v. G.P. Putnam’s Sons, 938 F. 2nd 1033 9th Cir. (1991); Robinson v. Graves (1935) KB 579 and Lee v. Griffin, (1861) 1 B & S 272, referred to. `Contract of Sale of Goods’, by Benjamin, Third Edition, referred to. 2.1. Intellectual property, when put on a media, would be regarded as an article on the total value of which customs duty is payable. The legislative intent can easily be gathered by reference to the Customs Valuation Rules and the specific entries in the Customs Tariff Act. The value of an encyclopaedia or a dictionary or a magazine is not only the value of the paper. The value of the paper is in fact negligible as compared to the value or price of an encyclopaedia. Therefore, the intellectual input in such items greatly enhance the value of the papers and ink. The charge of a duty is on the final product whether it be the encyclopaedia or the engineering or architectural drawing or any manual. [634-B-C] 2.2. It is misconception to contend that what is being taxed is intellectual input. What is being taxed under the Customs Act read with Customs Tariff Act and the Customs Valuation Rules is not the input alone but goods whose value has been enhanced by the said inputs. The final product at the time of import is cither the magasine or the encyclopaedia or the engineering drawings as the case may be. There is no scope for splitting the engineering drawing or the encyclopaedia into intellectual input on the one hand and the paper, on which it is scribed on the other. For example, paintings are also to be taxed. Valuable paintings are worth millions. A painting or a portrait may be specially commissioned or an article may be tailor-made. This aspect is irrelevant since what is taxed is the final product as defined. [635-A-C] 2.3. The shift from the concept of price of goods, as was classically understood, is clearly discernible in the new principles. Transaction value may be entirely different from the classic concept of price of goods. Full meaning has to be given to the rules and the transaction value may include many items which may not classically have been understood to be part of the sale price. It would not be correct, to take the entire contract value as being the value of the imported goods. [635-E] M/s Gannon Dunkerley and Co. and Others v. State of Rajasthan and Others, [1993] 1 SCC 364; Collector of Customs (Prev.) Ahmedabad v. Essar Gujarat Ltd., (1996) 88 ELT 609 S.C. and State Bank of India v. Collector of Customs, Bombay, [2000] 1 SCALE 72, referred to. St. Albans City and District Council v. International Computers Ltd., (1996) 4 all ER 481 and Advent Systems Ltd. v. UNISYS Corporation, (925) F 2nd 670 3rd Cir (1991), referred to. 3.1. There was a wilful suppression or mis-statement of the value of the goods imported and, therefore, the respondents were entitled to invoke the provisions of the proviso to Section 28 (1) of the Customs Act and issue show-cause notice even it period of six months importation had expired but before the expiry of five years thereof. [643-B] 3.2. The proviso to Section 28 can inter alia be invoked when any duty has not been levied or has been short-levied by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions `mis- statement’ and `suppression of facts’ are to be qualified by the word `wilful’, the making of such a wilful mis-statement or suppression of facts would attract the provisions of Section 28 of the Customs Act [641-B-C] Collector of Central Excise, Hyderabad v. M/s Chemphar Drugs and Liniments, Hyderabad, [1989] 2 SCC 127; Cosmic Dye Chemical v. Collector of Central Excise, Bombay, [1995] 6 SCC 117; M/s Padmini Products v. Collector of Central Excise. Bangalore, [1989] 4 SCC 275; Tamil Nadu Housing Board v. Collector of Central Excise. Madras and Another, [1995] suppl. 1 SCC 50 and Collector Central Excise v. H.M.M. Ltd., (1995) 76 ELT 497, referred to. 4. In the present cases, the technical material which was received was cleared as part of passenger baggage. Whether the courier or the person bringing the technical material was a person nominated by the collaborator or by the appellants is of no consequence because the levy under Section 12 of the Customs Act is on the goods imported into India. In other words, the subject matter of the tax is not the person importing or exporting but the subject matter of the tax is the goods imported. If such goods are imported as a part of the baggage then by virtue of heading No. 98.03 rate of duty prescribed therein has to be paid. The underlying principle prior to May, 1995 in relation to taxing the passengers’ baggage was that the said baggage which contained dutiable articles was not to be taxed separately as articles but the baggage as a composite unit was to be taxed in its entirety, after giving credit for the free allowance which was available to the passenger. [644-D-F] 5.1. In Civil Appeal No. 3632 of 2000, the drawings and designs which were imported by the appellant were correctly classifiable under heading No. 49.06 and the tariff itself providing that the import of the same is free, the said drawings and designs were not dutiable articles and, therefore, no customs duty was leviable thereon even as a part of the passenger. [648-E] 5.2. Under the Central Excise Act, 1944 in definition of words “excisable goods” under Section 2(d), the very specification or inclusion of goods in the First and Second Schedule of the Central Excise Tariff Act would make them excisable goods subject to duty. Under the Customs Act, the provisions seem to be somewhat different While by virtue of Section 2(22) all kinds of movable property would be `goods’ but it is only those goods which would be regarded as `dutiable goods’ under Section 2(14) which are chargeable to duty and on which duty has not been paid. The expression “chargeable to duty on which duty has not been paid’ indicates that goods on which duty has been paid or on which on duty is leviable, and therefore no duty is payable, will not be regarded as `dutiable goods’. It is only if payment of duty is outstanding or leviable that goods will be regarded as dutiable goods. [647-H; 648-A-B] Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Co. Ltd., (1996) 83 ELT 3 SC and Wallace Flour Mills Company v. Collector Central Excise, (1989) 44 ELT 598, referred to. 6. The value of drawings in Civil Appeal No. 1493 of 2000, which belong to the Indian company were merely approved by the German company could only be nominal and under no circumstances the said value could be regarded as DM 60,000. The nominal value disclosed by the courier, on the facts and circumstances of the case, could not, therefore, be said to be incorrect. [649-F] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 821 of 2000.

CASE NO.: Appeal (civil) 821 of 2000 Appeal (civil) 1021 of 2000 Appeal (civil) 1023 of 2000 Appeal (civil) 1027 of 2000 Appeal (civil) 1028 of 2000 Appeal (civil) 1029 of 2000 Appeal (civil) 1030 of 2000 Appeal (civil) 1031 of 2000 Appeal (civil) 1032 of 2000 Appeal (civil) 1033 of 2000 Appeal (civil) 1423 … Continue reading

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