TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the court had jurisdiction under section 391(6) of the Companies Act, 1956 to stay proceedings under the Delhi Sales Tax Act, including penalty and interest proceedings. (ii) Whether, on the facts, stay ought to be granted against the levy of penalty and recovery of interest.
Issue (i): Whether the court had jurisdiction under section 391(6) of the Companies Act, 1956 to stay proceedings under the Delhi Sales Tax Act, including penalty and interest proceedings.
Analysis: The expression "any suit or proceeding" in section 391(6) was construed broadly. The limitation noticed in section 446 of the Companies Act, 1956, which is linked to proceedings capable of being transferred to the winding-up court, did not govern section 391(6). Assessment and penalty proceedings under the taxation law could be stayed even though they were to be conducted only by the taxing authorities and not by the winding-up court. The court therefore rejected the objection that the sales tax enactment was a self-contained code beyond the reach of section 391(6).
Conclusion: The court held that it had jurisdiction under section 391(6) to stay taxation proceedings.
Issue (ii): Whether, on the facts, stay ought to be granted against the levy of penalty and recovery of interest.
Analysis: No stay was sought or warranted against the assessment itself. As to penalty, the court found that the penalty proceedings were independent of assessment proceedings under sections 55, 56 and 57 of the Delhi Sales Tax Act and that permitting penalty at that stage could frustrate the proposed scheme of arrangement. As to interest, the court noted that interest under section 27(3) was statutorily payable and arose automatically, though recovery could be stayed. Relief was therefore made conditional on monthly payments and payment of current liability.
Conclusion: The court stayed the levy and recovery of penalty for assessment years ending before 1 April 1980 and stayed recovery of interest, subject to conditions.
Final Conclusion: The application was allowed in part by recognizing jurisdiction to intervene under the company law provisions and by granting conditional protection against penalty and interest, while leaving assessment proceedings untouched.
Ratio Decidendi: The words "any suit or proceeding" in section 391(6) of the Companies Act, 1956 are wide enough to include proceedings under special taxing statutes, and the court may grant a conditional stay where such proceedings may jeopardize a proposed scheme of arrangement.
TaxTMI 
TaxTMI 
