2010-11 CORPORATE LAWS CASE LAWS

2010-11 CORPORATE LAWS CASE LAWS  Very Useful for CS Professional/CA Final & CS Executive Students. Compiled by BBLAWCLASS. Also published in CSoC 1.     OIL AND NATURAL GAS CORPORATION LTD. v. COMMISSIONER OF INCOME-TAX[2010] 322 ITR 180 (SC)] Jain D. K. & Thakur T. S. JJ [Decided on 15.3.2010] Income-tax Act, 1961 – Section 37(1) – Business expenditure–  Revenue expenses incurred with foreign exchange borrowings – Loss on account of fluctuation in rate of foreign exchange as on last date of balance-sheet –  Whether allowable as deduction  Held, Yes. 2.     DEPUTY COMMISSIONER OF INCOME-TAX v. M. SUNDARAM [2010] 322 ITR 196(MAD)] Mala R. J [Decided on 26.2.2010] Income-tax Act, 1961 – Section 276CC – Offences and prosecution – Failure to file return in time – Mere payment of interest/penalty – Whether criminal liability is absolved – Held, No. 3.     ISPAT ALLOYS LTD. v. UNION OF INDIA [2010] 2 GSTR 35 (BOM)] Ferdino I. Rebello & Karnik D. G. JJ [Decided on 12.8.2009] Customs Act, 1962 Section 25 – Customs duty – Exemption notification – Promissory estoppel – Withdrawal of exemption notifications during period of exemption in interest of public – Whether tenable – Held, Yes. 4.     UNION OF INDIA v. R. GANDHI, PRESIDENT, MADRAS BAR ASSOCIATION [CIVIL APPEAL NO.3067 OF 2004] & MADRAS BAR ASSOCIATION  v. UNION OF INDIA [CIVIL APPEAL NO.3717 OF 2005] K G Balakrishnan, CJI, R V Raveendran, D K Jain, P Sathasivam & J M Panchal, JJ [Decided on 11-05- 2010] Companies Act, 1956 – 2002 Amendment Act – Parts 1B and 1C of the Act – Whether constitution of NCLT and NCLAT constitutionally valid – Held, Yes. 5.     HMT LTD. v. N. T. RAHAMATULLA KHAN AND ASSOCIATES [2010] 155 COMP CAS 169(KAR) Shylendra Kumar D. V. & Ananda N. JJ [Decidedon 1-2-2010] Companies Act, 1956 – Section  433(e) – Winding up order – Public sector company – Petition for winding up admitted and advertisement ordered without considering defence of company – Whether correct-Held, No. 6.     NU-LINE INDIA P. LTD.,  In re., SWATI STORWEL P. LTD. , IN RE &  STURDY INDUSTRIES LTD., In re.[2010] 155 COMP CAS 186 (HP)] Deepak Gupta J [Decided on 10-9-2009] Companies Act, 1956 – Sections 391 & 394 – Scheme of amalgamation – Documents filed by company contrary to each other – Petition presented in order to overcome any order of Company Law Board – Companies withholding material facts and misleading court – Whether scheme to be approved – Held, No. 7.     SHREE KARTHIK PAPERS LTD. v. SEBI [2010] 155 COMP CAS 201(MAD)] Sivagnanam T. S. J [Decided on 25-2-2010] Sick Industrial Companies (Special Provisions) Act, 1985 – Section 18  – Scheme of rehabilitation-BIFR issuing direction under rehabilitation scheme to stock exchanges and exempting company from various statutory provisions and SEBI guidelines for reducing equity capital and listing of reduced shares – Whether such directions are valid- Held, No. 8.     U. P. CEMENT VETANBHOGI SAHKARI RIN SAMITI LTD. v. OFFICIAL LIQUIDATOR [2010] 155 COMP CAS 211(ALL) Ashok Bhushan & Pandey K. N. JJ [Decided on 18-12-2009] Section 483 of the Companies Act, 1956  read with Section 100A of the Code of Civil Procedure, 1908 – Second appeal from order passed by Single Judge in exercise of appellate jurisdiction – Whether further appeal from such order lie under section 483 - Held, No. 9.     KIMSUK KRISHNA SINHA v. SEBI [2010] 155 COMP CAS 295(DEL)]  Dr. S. Muralidhar J [Decided on 9-4-2010] Securities and Exchange Board of India Act, 1992 read with Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 – Powers of SEBI to investigate  – Draft red herring prospectus – Misstatement in prospectus – Complaint received after the closure of issue – Whether SEBI can entertain the complaint - Held, Yes. 10.                       IBA HEALTH (INDIA) P. LTD. v. INFO-DRIVE SYSTEMS SDN. BHD [2010] 155 COMP CAS 323 (KAR)  Shylendra Kumar D. V. & Narayanaswamy L. JJ [Decided on 21-10-2009] Companies Act, 1956 – Section  433(e) and  (f) – Winding up – Grounds for winding up – Inability to pay debts – Bona fide debt – Merger of companies – Failure of legitimate payments undertaken after deed of settlement – Whether Order of winding up justified – Held, Yes. 11.                       TECHNOVA TAPES (INDIA) P. LTD. v. REGIONAL DIRECTOR [2010] 155 COMP CAS 395 (KAR) Anand B Yarareddy J [Decided on 9-9- 2009] Companies Act, 1956 – Section  22 – Name of company – Rectification – Limitation – Change of law – Amendment giving right to proprietor of registered trade mark to apply within five years of knowledge of infringement – Whether revive right to apply for rectification after expiry of limitation under old law – Held, No. 12.                       SASKEN COMMUNICATION TECHNOLOGIES LTD.,  In re. [2010] 155 COMP CAS 463(KAR) Nagamohan Das H. N. J [Decided on 31-3-2010] Companies Act, 1956 – Sections 211, 391 and 394 – Scheme with shareholders – Creation of business restructuring reserve from securities premium account – Objections on the ground of violation of AS  – Whether ground for rejection – Held, No. 13.                       SHREE VIJAYALAKSHMI CHARITABLE TRUST v. SUB-REGISTRAR [2010] 155 COMP CAS 549 (MAD) Kirubakaran N. J [Decided on 7- 9-2009] Indian Stamp Act, 1899 read with Registration Act, 1908 – Stamp duty – Winding up – Sale of assets by public auction – Sale certificate sent to Registrar for filing in book No. 1 – Whether attracts stamp duty – Held, No. 14.                       CHENNAI YETRUMATHI VALAGA UZHIYARGAL MATRUM POTHU THOZHILALAR SANGAM v. DEVELOPMENT COMMISSIONER, MEPZ SPECIAL ECONOMIC ZONE & ORS [2010] 156 COMP CAS 1(MAD) Murugesan D & Sathyanarayanan M. JJ [Decided on 29-3-2010] Section 529A of the Companies Act, 1956 read with section 73 of the Code of Civil Procedure, 1908 – Company under winding up – Sale of assets by banks under Securitisation Act – Workmen’s dues not quantified – Whether invocation of section 529A possible – Held, No. 15.                       BROTHERS GAS AGENCY v.  HEMKUNT GASES P. LTD [2010] 156 COMP CAS 17 (P&H) Kannan K. J [Decided on 28-5-2009] Companies Act, 1956 – Section 443(e) – Dealer in distribution of liquefied petroleum gas – Breach of contract by principal company – Termination of contract – Petition by dealer against principal company for recovery of security deposit paid by customers and damages for breach of contract – Whether petition maintainable - Held, No. 16.                       VARINDER SAHNI v. MGRM NET LTD [2010] 156 COMP CAS 36 (DEL) Gita Mittal, J [Decided on 30-4-2009] Companies Act, 1956 – Section 433(e) – Winding up – Inability to pay debts – Claim based on rent agreement – Failure by company to pay arrears of rent – Land lord files winding up petition – Company making huge counter claim in suit and seeking permission to contest as an indigent person – Whether petition to be admitted – Held, yes. 17.                       SITARAM SINGH CONSTRUCTION P. LTD. v. UNION OF INDIA [2010] 156 COMP CAS 127 (PAT) Ramesh Kumar Datta J [Decided on 11-12- 2009] Companies Act, 1956 – Section 560 – Register of Companies – Name struck off on failure to file annual returns – Notice not published in Official Gazette or sent by registered post to company before its name struck off from Register – Company a going concern – Whether name of the company to be restored- Held, Yes. 18.                       KANORIA JUTE AND INDUSTRIES LTD. SANGRAMI SHRAMIK UNION v. AAIFR [2010] 156 COMP CAS 131(CAL) Sanjib Banerjee J [Decided on 2-7-2009] BIFR directed by High Court to reconsider revival of company and to give all parties reasonable opportunities – Whether invitation to outsiders to submit scheme for revival of company is irregular – Held, No. Powers of BIFR – BIFR requiring company and operating agency to assess locus standi of union to represent workers – Whether correct – Held, No. 19.                       DAMODAR VALLEY CORPORATION v. AAIFR [2010] 156 COMP CAS 137 (DEL) Madan B. Lokur & Pathak A. K. JJ [Decided on 7-7-2009] Sick Industrial Companies (Special Provisions) Act, 1985 – Section 19(2) – Draft rehabilitation scheme – Consent not given within period of sixty days from date of circulation of scheme – Written request for extension of time also not given – Whether deemed consent to be inferred – Held, Yes. 20.                       O. L. OF GUJARAT RUBBER WORKS LTD. v. MANAGER, CENTRAL BANK OF INDIA [2010] 156 COMP CAS 142 (GUJ) Jayant Patel J [Decided on 15-7-2009] Section 529A of the Companies Act, 1956 read with section 19 (19) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Winding up – Preferential payments – Worker’s dues – Jurisdiction – Suit filed by secured creditor before Debt Recovery Tribunal after commencement of winding up – Sale of assets under order of Debts Recovery Tribunal – Recovery certificate yet to be issued – Amount lying with bank under orders of Tribunal – Whether company court can order deposit of workers’ share on pro rata basis for distribution on ad hoc basis – Held, Yes. 21.                       CHETTINADU CONSTRUCTIONS v. MUTHUKUMARASAMY TEXTILES LTD [2010] 156 COMP CAS 203 (MAD) Paul Vasanthakumar N. J [Decided on 8-10-2009] Companies Act, 1956 Sections 433(e), (f), 434(1) and 439(1) – Winding up – Inability to pay debts – Bona fide dispute as to debt – Application by creditor for appointment of arbitrator before filing winding up petition – Whether petition is maintainable- Held, No. 22.                       PROVAKAR DAS GUPTA v. VETERAN CO. P. LTD [2010] 156 COMP CAS 241(CLB)  Balasubramanian S. (Chairman) [Decided on 5-6-2009] Companies Act, 1956 – Sections 397 and 398 – Oppression and mismanagement – Petition for relief – Articles of association stipulating transfer of shares only to ex-military/ retired military personnel – Amendment of articles to induct heirs of existing directors as members and directors – Whether constitutes oppression and mismanagement – Held, Yes. 23.                       CEMENT CORPORATION OF INDIA LTD. v. REGIONAL LABOUR COMMISSIONER (CENTRAL) [2010] 156 COMP CAS 266 (KAR) Subhash B. Adi J [Decided on 21-3-2007] Section 7(7) of the Payment of Gratuity Act, 1972 read with section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 – Sick industrial company – Suspension of legal proceedings – Payment of gratuity – Appeal from order of Controlling Authority – Pre-requisite condition of deposit of gratuity amount – Whether appeal can be accepted without depositing the payment of gratuity amount – Held, No. 24.                       COMMISSIONER OF CENTRAL EXCISE v. VAHOO COLOUR LAB [2010] 2 GSTR 502(P&H) Ashutosh Mohunta & Mehinder Singh Sullar, JJ. [Decided on 3-2-2010] Finance Act, 1994 – Service tax – Photography – Works contract – Sale – Whether assessee is liable to pay service tax on value of goods/material consumed during processing of photography – Held , No. 25.                       ABAQUS ENGINEERING (I) LTD. v. ADDT.  COMMISSIONER [2010] 2 GSTR 387 (MAD) Jyothimani P, J [Decided on 18-1-2010] Finance Act, 1994 – Section 66A – Service tax – Services received from outside India – Whether taxable in the hands of Indian recipients before introduction of section 66A – Held, No. 26.                       FORCE MOTORS LTD. v. COMMISSIONER OF CENTRAL EXCISE [2010] 2 GSTR 316 (CESTATMUM) Ashok Jindal (Judicial Member) [Decided on 5-8-2009] Cenvat Credit Rules, 2004 – Rule 2(1) – Cenvat credit – Input services – Services rendered such as landing, parking and Xray and service tax charged by Airports Authority of India covered under definition of input services – Aircraft used by assessee for business activities-Whether credit to be allowed for service tax paid to Airports Authority – Held, Yes. 27.                       COMMISSIONER OF SERVICE TAX v. ATRIA CONVERGENCE TECHNOLOGIES P. LTD [2010] 2 GSTR 340 (KAR) Shylendra Kumar D. V. & Ananda N. JJ [Decided on 29-1-2010] Section 78 of the Finance Act, 1994 read with section 35G of the Central Excise Act, 1944 – Service tax – Penalty – Failure to pay tax – Finding that no suppression or misrepresentation of material facts by assessee – Finding of fact – Whether to be examined in appeal-Held, No. 28.                       BHARAT MINES AND MINERALS v. ASSISTANT COMMISSIONER OF CUSTOMS [2010] 2 GSTR 292 (AP) Goda Raghuram & Ramesh Ranganathan, JJ [Decided on 2-2-2010] Appeal – Condonation of delay – Tribunal dismissing appeal without condoning delay of 146 days in preferring appeal – Assessee having arguable case on merits but not setting out substantial reasons for condoning delay – Delay not inordinate – Whether Tribunal ought to have exercised discretion for condonation of delay on reasonable terms – Held, Yes. 29.                       SANJAY SURI V. STATE [2010] 157 COMP CAS 10 (DEL) V.K.Jain, J [Decided on 29-1-2010] Sections 209(6) and 217(1) of the Companies Act, 1956 read with sections 468, 469(1)(b) and 482 of the Cr.P.C – Failure by company to give proper disclosure in balance-sheet regarding collateral security and activities relating to export Prosecution initiated by ROC – Trial Court took cognizance of the offence-summons issued against the directors – Whether criminal proceedings can be quashed- Held, No. 30.                       INCABLE NET (ANDHRA) LTD. V. AP AKSH BROADBAND LTD [2010] 157 COMP CAS 30 (SC)] Altamas Kabir & Cyriac Joseph JJ [Decided on 7-5-2010] Companies Act, 1956 – Sections 397, 398, 402 and 403 – The JV company awarded the EPC contract to its major shareholder who failed to execute the project – Allegations that majority shareholder mismanaged operations of company under contract awarded to it by company – CLB and High court dismissed the petitions – Petitioner appealed to Supreme Court – Whether allegations constitute oppression and mismanagement – Held, No 31.                       DEEPAK LOHIA V. KAMRUP DEVELOPERS P. LTD [2010] 157 COMP CAS 82 (GAU) B.P. Katakey, J [Decided on 3-5-2010] Companies Act, 1956 – Sections 402 and 634A – Enforcement of order passed by CLB – Whether can be enforced as decree passed by civil court – Held, Yes. 32.                       OMAN INTERNATIONAL BANK S. A. O. G. v. AAIFR [2010] 157 COMP CAS 149(DEL) Sanjay Kishan Kaul & Valmiki J. Mehta JJ [Decided on 5- 5-2010] Sick Industrial Companies (Special Provisions) Act, 1985 – Sections 18, 19, and 22 – Scheme for rehabilitation – Financial concession by secured creditors – Objection by minority creditor to scheme – Whether minority creditors can frustrate revival and rehabilitation of sick industrial company - Held, No. 33.                       J. K. AGRI GENETICS LTD. v. FLORENCE ALUMINA LTD [2010] 157 COMP CAS 200 (CAL)] Patherya, J [Decided on 20-5-2010] Companies Act, 1956 – Sections 81(1A) and 391 – Demerger – Scheme proposing demerger and also conversion of preference shares and bonds issued under earlier scheme – Conversion resulting in issuance of further shares to promoters and benefiting such class of shareholders alone Whether procedure prescribed under section 81(1A) ought to be followed – Held, Yes. 34.                       CHIEF COMMISSIONER, LARGE TAX PAYERS UNIT, BANGALORE v. T. N. T. INDIA P. LTD [2010] 3 GSTR 23 (KAR)] Manjunath K. L. & B.V. Nagarathna, JJ [Decided on 16-4-2010] Finance Act, 1994 – Sections 73, 84 and 86- Service tax – Appealable orders – Letter of Additional Commissioner stating door-to-door international courier services not taxable – Subsequent letter informing previous clarification contrary to legal provision and directing assessee to discharge liability immediately – Whether an order appealable before Appellate Tribunal – Held, Yes. 35.                       QAMAR STEEL TUBES P. LTD. v. CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL [2010] 3 GSTR 59 (ALL) Rajes Kumar & Subhash Chandra Nigam, JJ [Decided on 7-1- 2010] Central Excise Rules, 1944 – Rules 52A and 57G – Modvat credit – Claim of credit on basis of original copies of invoices – Disallowance on ground Modvat credit to be claimed on basis of duplicate copy of invoice – Whether correct – Held, Yes. 36.                       SELVEL MEDIA SERVICES P. LTD. v. MUNICIPAL CORPORATION OF CITY OF AHMEDABAD [2010] 3 GSTR 134 (GUJ)] D.A. Mehta & H.N. Devani, JJ [Decided on 19-3-2010] Section 65(105)(zzzm) of the Finance Act, 1994 read with Sections 244, 245 and 386 of the Bombay Provincial Municipal Corporation Act, 1949 – Service tax – Sale of space for advertisement – Municipal Corporation granting permission to advertising agent for putting up advertising boards on private properties and collecting fees therefore – Whether taxable service – Held, No. 37.                       COMMISSIONER OF CENTRAL EXCISE  v. RAJEEV ELECTRICAL WORKS [2010] 3 GSTR 190 (P&H)] Ashutosh Mohunta& Mehinder Singh Sullar, JJ [Decided on 11-5-2010] Finance Act, 1994 – Section 65(39a) – Service tax-vice – Erection, commissioning or installation – Electrical contractor – Service of laying pipes in walls, roof or floor for crossing wires, fixing junction boxes, MS boxes, woodenboxes, fixing cable trays to lay cables, digging earth to lay cables and digging earth pits for earthing equipment – Whether taxable service – Held, No. 38.                       QUALIMAX ELECTRONICS P. LTD. v. UNION OF INDIA [2010] 003 GSTR 194 (DEL)] Badar Durrez Ahmed & V.K. Jain, JJ [Decided on 2-6- 2010] Central Excise Act, 1944 – Section 32E – Settlement of cases – Settlement Commission – Jurisdiction – Pendency of proceedings – Order despatched from office of adjudicating authority prior to date of settlement application – Whether the proceeding was pending at the time of approaching the settlement commission – Held, No. 39.                       KAMAL TRADERS v.  COLLECTOR OF CUSTOMS [2010] 3 GSTR 237 (BOM)] V.C.Daga & K.K. Tated, JJ [Decided on 23-2-2010] Customs Act, 1962 – Customs duty – Import – Definition of capital goods  – Import of compressors against licence – Compressors used as input in manufacture of air conditioners – Whether compressors purchased by importer are capital goods for actual users – Held, No. 40.                       COMMISSIONER OF CENTRAL EXCISE v. DRIES SHOES LTD [2010] 3 GSTR 259 (HP)] Surjit Singh & V.K.Sharma, JJ [Decided on 5-5- 2010] Rule 6(5)(vi) of the Cenvat Credit Rules, 2002 read with Rule 6(1), (6) of the Cenvat Credit Rules, 2004 – Cenvat credit – Exempted goods cleared for export under bond – Whether eligible to Cenvat credit – Held, Yes.