TaxTMI Updates e-Newsletter
Oct 07,2020

Duty to pass reasoned and speaking order - Requirement to consider grounds of appeal - Remand for fresh consideration - Opportunity of hearing on remand - Arbitrariness and disclosure of reasons

Requirement to consider grounds of appeal - Duty to pass reasoned and speaking order - Arbitrariness and disclosure of reasons - Appellate Authority's order was non-speaking and did not deal with specific grounds raised in the memo of appeal, warranting setting aside and remand. - HELD THAT: - The Court found that although the Appellate Authority reproduced most of the grounds raised by the petitioner, the impugned order confined itself to factual narration of dates, defaults and demand notices without dealing with the specific objections raised in the memo of appeal. The authority therefore failed to disclose application of mind or record reasons addressing the challenges, rendering the order more akin to an assessing authority's order than an appellate one. Reliance was placed on the principle that public authorities must record reasons to demonstrate proper application of mind and to avoid arbitrariness; absence of reasons suggests legal unsustainability. In view of these deficiencies, the appellate decision could not be allowed to stand and the matter needed to be remitted for a fresh, reasoned disposal addressing the grounds pleaded by the petitioner. [Paras 6, 7, 8, 9]

Impugned order dated 6.9.2019 is set aside and the appeal is remitted to the Appellate Authority for fresh disposal by a reasoned and speaking order dealing with the grounds raised.

Remand for fresh consideration - Opportunity of hearing on remand - On remand the Appellate Authority must afford the petitioner an opportunity of hearing and decide the appeal afresh dealing with the grounds raised. - HELD THAT: - The Court directed that the Appellate Authority shall decide the appeal afresh and specifically deal with the grounds appearing in the memo of appeal. It further directed that the petitioner be given an opportunity of hearing again when the appeal is reconsidered, ensuring that factual contentions and points such as claimed bonafide, technical error in online return filing, deposit of dues subsequently, and computation of interest after taking input tax credit are addressed in a reasoned order. [Paras 9, 10]

Matter remitted to Respondent No.3 for fresh decision after hearing the petitioner and dealing with the grounds raised in the memo of appeal.

Final Conclusion: Impugned order dated 6.9.2019 is quashed; the appeal is remitted to the Appellate Authority for fresh, reasoned disposal, and the petitioner shall be afforded an opportunity of hearing; writ petition allowed in part.

Limited scope of review under Order XLVII Rule 1 CPC - review not ordinarily permissible to re-agitate concluded issues - vested right to carry forward unutilised credit under transitional provisions - procedural or technical mistakes not to defeat substantive vested rights - remedy by appeal to the Supreme Court where implementation is stayed

Limited scope of review under Order XLVII Rule 1 CPC - review not ordinarily permissible to re-agitate concluded issues - vested right to carry forward unutilised credit under transitional provisions - remedy by appeal to the Supreme Court where implementation is stayed - Review application against the Court's earlier judgment directing respondents to permit filing of Form TRAN-1 was not maintainable and is dismissed. - HELD THAT: - The Review Application under Order XLVII Rule 1 CPC was considered in the light of this Court's earlier order in RA CW No. 479 of 2019 (CWP No. 4648 of 2019) dated 29.11.2019, which dismissed a prior review by the Union of India. The Court reiterated the settled limitation on review jurisdiction and rejected any attempt to re agitate matters beyond the narrow grounds permissible in a review. The Court observed (reproducing para 9 of its earlier judgment) that under the transition to the GST regime registered persons have a vested right to carry forward unutilised credit and that procedural or electronic difficulties in filing TRAN 1 cannot, on technical grounds, defeat that right. Although the Gujarat High Court's interim stay on implementation of its order was noted, that circumstance does not provide a ground for review; the appropriate course for the Revenue is to seek appellate remedy before the Supreme Court. Applying these principles, the present review application was dismissed in terms of the earlier RA CW order. [Paras 4]

Review application dismissed and earlier order of RA CW No. 479 of 2019 (CWP No. 4648 of 2019) dated 29.11.2019 applied.

Final Conclusion: The Review Application is dismissed; the Court upheld its earlier reasoning that the matter could not be re agitated in review, affirmed the protection of the vested right to carry forward unutilised transitional credit against procedural/technical infirmities, and indicated the Revenue's remedy by appeal to the Supreme Court.

Review under Order XLVII Rule 1 CPC - vested right to carry forward unutilized input tax credit - permissibility of filing Form TRAN-1 by extended date - effect of a stay in related proceedings on finality of judgment - remedy by appeal to the Supreme Court

Review under Order XLVII Rule 1 CPC - permissibility of filing Form TRAN-1 by extended date - Whether the Review Application seeking review of the judgment directing respondents to permit filing of Form TRAN-1 by the extended date should be allowed. - HELD THAT: - The Court considered the Review Application filed under Order XLVII Rule 1 CPC against its earlier judgment which had allowed writ petitions and directed respondents to permit petitioners to file Form TRAN-1 by an extended date. The Court noted that the gravamen of the challenge was premised on the fact that a judgment relied upon by this Court was itself under review before the Gujarat High Court and that implementation of that judgment had been stayed. The Court examined its earlier reasoning which recognised that unutilised credit available under erstwhile statutes constituted a vested right that could not be lost on mere procedural or technical grounds and observed that reliance had been placed not only on the Gujarat decision but also on a similar view expressed by the Delhi High Court. The Court held that the pendency of review or a stay in a related forum did not constitute a ground for reviewing its own judgment, and that the appropriate remedy for the Revenue, if aggrieved, was by way of appeal to the Supreme Court rather than by re-agitation in review. Applying these principles, the Court found no ground to entertain the present review application. [Paras 3, 4]

Review Application dismissed and the earlier order directing respondents to permit filing of Form TRAN-1 by the extended date is maintained; Revenue's remedy is by appeal to the Supreme Court.

Final Conclusion: The Review Application under Order XLVII Rule 1 CPC is dismissed; the High Court's earlier directions permitting filing of Form TRAN-1 by the extended date remain undisturbed, and the Revenue's appropriate remedy is to seek redressal before the Supreme Court.

Violation of principles of natural justice - statutory appellate remedy - rectification under Section 154 of the Act - order of assessment - coercive recovery proceedings - attachment of bank account - stay application - balance of interests - interim direction restraining further appropriation

Statutory appellate remedy - violation of principles of natural justice - order of assessment - Whether the High Court should interfere with the assessment order when statutory appellate remedies have been availed and are pending - HELD THAT: - The petitioner challenged the assessment order for AY 2017-18 and has lodged a statutory appeal before the Commissioner of Income Tax (Appeals), along with applications for stay and for rectification under Section 154 of the Act, all of which remain pending. The Court emphasised that, in view of the availability and invocation of the statutory appellate remedy, it is not inclined to interfere with the order of assessment at this stage. All substantive grounds and issues raised in the petition are left open for determination in the appellate proceedings rather than being decided by the High Court in the writ petition. [Paras 5]

Petition to interfere with the assessment order is declined; all grounds reserved to be agitated in the statutory appeal.

Attachment of bank account - coercive recovery proceedings - stay application - interim direction restraining further appropriation - balance of interests - Whether coercive recovery by attachment may be continued and whether further appropriation from the attached bank account should be permitted pending appellate proceedings - HELD THAT: - The Assessing Officer had attached the petitioner's bank account and recovered a portion of the disputed demand while the stay application before the Assessing Officer remained pending. To balance the competing interests of the parties pending the statutory appeal and associated applications, the Court permitted the attachment to remain in effect but directed that no further amounts shall be appropriated from the account. This constituted an interim and protective direction tailored to preserve the status quo without prejudicing the appellate remedy. [Paras 6, 7]

Attachment to continue, but no further appropriation from the bank account.

Final Conclusion: Writ petitions disposed by declining to interfere with the assessment order in view of pending statutory appellate remedies; attachment of the bank account is permitted to continue subject to a direction that no further appropriation be made; connected miscellaneous petitions closed, no costs.

Bogus purchases - accommodation entries - verifiability of purchases - acceptance of sales leading to inference of purchases - requirements of independent enquiry before making additions - following binding precedent / application of precedential decisions

Bogus purchases - accommodation entries - verifiability of purchases - requirements of independent enquiry before making additions - Deletion of addition made by the Assessing Officer on account of alleged bogus purchases/payments. - HELD THAT: - The Tribunal held that the Assessing Officer's addition was unsustainable because it rested primarily on a statement of one party (proprietor of the alleged supplier) which was later retracted, and no independent inquiry or opportunity to cross-examine that witness was afforded to the assessee. The first appellate authority and the Tribunal in the precedent examined the assessee's books and bank records and found that purchases and sales were routed through banking channels, the turnover had been accepted by the Trade Tax Department and no defects in the books of account were pointed out by the AO. In those circumstances, and given that the AO did not confront any adverse material to the assessee nor demonstrate that the assessee's declared trading results were unreliable, the conclusion that the purchases were bogus was not established. The Tribunal also followed the earlier decision of the ITAT in the case of Vijay Kumar Goel, which was affirmed by the Hon'ble Allahabad High Court, holding that once sales are accepted it is reasonable to infer that purchases were made and that cancellation of the supplier's registration does not by itself prove that purchases were bogus. Applying that ratio to the present facts, the Tribunal found no material to sustain the addition. [Paras 6]

The additions made by the AO on account of alleged bogus purchases are deleted and the revenue appeals are dismissed.

Final Conclusion: Both Revenue appeals against the deletion of additions for alleged bogus purchases for AY 2009-10 are dismissed, the Tribunal respectfully following the ITAT precedent affirmed by the Hon'ble Allahabad High Court; the assessee's cross objections are dismissed as not pressed.

Bogus purchases - retraction of statement - reliability of survey statement - documentary evidence and burden of proof - Income Tax Settlement Commission finding - acceptance of retraction in group assessment - appellate review of findings of fact

Bogus purchases - retraction of statement - documentary evidence and burden of proof - Income Tax Settlement Commission finding - Deletion of addition of Rs. 3,12,42,835/- on account of alleged bogus purchases was upheld. - HELD THAT: - The Assessing Officer's addition rested principally on statements recorded during a survey under section 133A from Shri Sanjay Chaudhary that he provided accommodation entries. Shri Chaudhary subsequently retracted before the AO and furnished an affidavit; that retraction remained uncontroverted. The CIT(A) relied on the retraction and on corroborative documentary material placed on record by the assessee, including purchase invoices, bank payments through account-payee cheques, stock entries and prior findings of the Income Tax Settlement Commission holding similar purchases to be genuine. The Tribunal noted that Revenue had accepted the retraction in a related group assessment and failed to produce contrary material to rebut the CIT(A)'s findings based on the documentary evidence. In these circumstances, and having regard to the principle that findings based on documentary evidence should be upheld where Revenue does not bring contrary evidence, the deletion of the addition was sustained. The Tribunal also relied on the jurisdictional High Court precedent that where Revenue fails to rebut CIT(A)'s findings supported by documentary evidence, those findings must be upheld. [Paras 5]

Order of the CIT(A) deleting the addition for alleged bogus purchases is upheld and the departmental appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Department's appeal against the CIT(A)'s deletion of the addition for alleged bogus purchases for Assessment Year 2013-14, upholding the deletion on the basis of the uncontroverted retraction, documentary evidence, prior ITSC finding and absence of contrary material from Revenue.

Imputation of interest on inter company receivables - working capital adjustment in transfer pricing - recharacterisation of receivables as loans - arm's length consideration under transfer pricing - deduction under section 10AA as a complete code for computing eligible profits - interest and miscellaneous income forming part of profits of the undertaking

Imputation of interest on inter company receivables - working capital adjustment in transfer pricing - recharacterisation of receivables as loans - arm's length consideration under transfer pricing - Whether the transfer pricing addition by imputing interest on inter company receivables is sustainable. - HELD THAT: - Tribunal found as a factual and legal matter that the taxpayer was a debt free entity and that the working capital impact of outstanding receivables had already been taken into account in benchmarking the international transactions for IT and ITES segments. Following precedent of the Delhi High Court and coordinate benches, the Tribunal held that where working capital adjusted margins of the tested party and comparables have been considered and such margins are comparable, a separate recharacterisation of receivables into an unsecured loan and consequent imputation of interest would distort the overall picture and is not warranted. The Tribunal noted earlier rectification by the TPO and confirmed that the addition on account of interest on receivables is not sustainable and therefore directed deletion of the transfer pricing addition.

Transfer pricing addition on account of imputed interest on inter company receivables deleted.

Deduction under section 10AA as a complete code for computing eligible profits - interest and miscellaneous income forming part of profits of the undertaking - Whether interest income on fixed deposits and miscellaneous income qualify for deduction under section 10AA. - HELD THAT: - Tribunal followed its coordinate bench decisions in the assessee's own case and relevant High Court authority holding that Sections 10A/10AA constitute a complete code for computing profits of the undertaking for deduction and that incomes which form part of the profits of the business of the eligible undertaking (including interest on FDRs and certain miscellaneous receipts) cannot be excluded merely because the assessee is not in the business of finance. The AO/DRP's refusal to follow earlier tribunal orders on the ground that they had not attained finality was held to be legally and factually misconceived, particularly where there was no stay by a higher forum. Applying the earlier reasoning, the Tribunal allowed the deduction under section 10AA in respect of the interest and miscellaneous income claimed by the taxpayer.

Deductions under section 10AA allowed in respect of interest on fixed deposits and miscellaneous income; AO/DRP's disallowance set aside.

Final Conclusion: Appeal allowed: transfer pricing addition on imputed interest on receivables deleted and deduction under section 10AA allowed in respect of interest and miscellaneous income for AY 2013-14.

TDS credit reflected in Form 26AS - pass-through status of a Venture Capital Fund - eligibility for exemption under section 10(23FB) read with section 115U - Rule 37BA - allocation of tax credit to person in whose hands income is assessable - verification of TDS payment from Form 26AS

TDS credit reflected in Form 26AS - Rule 37BA - allocation of tax credit to person in whose hands income is assessable - verification of TDS payment from Form 26AS - Whether the assessee (a SEBI-registered VCF) is entitled to credit for tax deducted at source shown in its Form 26AS in respect of income treated as pass-through under section 115U notwithstanding that no declaration under Rule 37BA was filed with the deductor - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that where the deductor has reported TDS in the name of the assessee and the TDS appears in the assessee's Form 26AS, the assessee is entitled to claim credit for such TDS. The Tribunal noted that Rule 37BA applies where the assessee has intimated the payers about the beneficial owners and the deductor has acted on such declaration to report TDS in the names of those beneficial owners; conversely, where the deductor has deducted and reported TDS in the name of the assessee, the tax credit rightly belongs to the assessee. The assessee had furnished Form 64 to contributors as required under section 115U and the details of contributors were available to the assessing officer; the AO could have verified with contributors but denied credit without checking Form 26AS. The CIT(A) had directed the AO to verify Form 26AS and grant appropriate credit after such verification. The Tribunal found these conclusions to be in accordance with precedent and the record and therefore upheld direction to grant TDS credit upon verification from Form 26AS. [Paras 5, 6, 7]

TDS credit reflected in the assessee's Form 26AS is allowable to the assessee; AO directed to verify Form 26AS and grant appropriate credit.

Pass-through status of a Venture Capital Fund - eligibility for exemption under section 10(23FB) read with section 115U - Whether the assessee, being a SEBI-registered Venture Capital Fund, was entitled to exemption under section 10(23FB) and to have income from investments in Venture Capital Undertakings taxed as pass-through in the hands of unitholders for the impugned assessment years - HELD THAT: - The Tribunal, following a coordinate Bench decision in the assessee's own earlier appeal, accepted the AO's factual and documentary enquiry and findings that the assessee qualified as a Venture Capital Fund under the statutory definition applicable to the relevant assessment year and had filed requisite Form 64 and SEBI registration. The Tribunal reviewed the legislative history of section 10(23FB) and section 115U and held that the sectoral restrictions previously included in the definition of Venture Capital Undertaking had been removed for the applicable period and that real estate sector no longer featured in the negative list. The Tribunal observed there was no material to show SEBI had withdrawn registration or taken action for regulatory violations; absent such material, revenue's contention of ineligibility was unsustainable. On the cumulative record, including submissions, SEBI registration and reports furnished to SEBI and tax authorities, the CIT(A) and the Tribunal concluded that the exemption under section 10(23FB) and pass-through treatment under section 115U were correctly allowed and the AO was directed to give effect to that finding. [Paras 19, 22, 23, 27]

Assessee is entitled to exemption under section 10(23FB) and pass-through taxation under section 115U for the assessment years; AO directed to allow the exemption.

Final Conclusion: Appeals of the revenue for AY 2013-14 and AY 2014-15 dismissed: Tribunal upheld CIT(A)'s directions to allow TDS credit (after verification of Form 26AS) and upheld entitlement of the SEBI-registered Venture Capital Fund to exemption under section 10(23FB) with pass-through taxation under section 115U.

Deduction under section 10A - splitting up or reconstruction of an existing business - arm's length price and transfer pricing adjustment - comparability analysis in transfer pricing - functional dissimilarity as ground for exclusion of comparables - exclusion of comparables for abnormal profits arising from extraordinary events - related party transactions (RPT) threshold for exclusion - remand for fresh examination by AO/TPO

Deduction under section 10A - splitting up or reconstruction of an existing business - Allowability of deduction under section 10A to the assessee for AY 2005-06 - HELD THAT: - The Tribunal noted that a coordinate bench in ITA No.616/Bang/2009 had examined whether the assessee's undertaking was formed by splitting up or reconstruction of an existing business and had held that the mere change in ownership did not amount to splitting up or reconstruction so as to deny the deduction. The CIT(A) followed that coordinate-bench decision; the Bench further observed that the coordinate-bench conclusion has since been upheld by the High Court of Karnataka. In view of the binding coordinate-bench precedent and its subsequent affirmation, the appeal by the revenue against allowance of the deduction was dismissed. [Paras 5]

Deduction under section 10A allowed; appeal of the revenue dismissed.

Arm's length price and transfer pricing adjustment - comparability analysis in transfer pricing - functional dissimilarity as ground for exclusion of comparables - exclusion of comparables for abnormal profits arising from extraordinary events - related party transactions (RPT) threshold for exclusion - remand for fresh examination by AO/TPO - Validity of comparables selected by TPO and exclusion of specific comparable companies for determination of arm's length price - HELD THAT: - The assessee challenged inclusion of seven comparable companies; the Tribunal applied the coordinate-bench rulings in Autodesk India (P) Ltd. v. DCIT which analysed each of the seven contested comparables. Following those precedents the Tribunal directed exclusion of six comparables on the following bases: Bodhtree Consulting Ltd. and Tata Elxsi Ltd. - functionally dissimilar/product companies; Exensys Software Solutions Ltd. - abnormal profit due to amalgamation (extraordinary event); Sankhya Infotech Ltd. - functionally dissimilar (product/ niche activities and lack of segmental break-up); Geometric Software Solutions Co. Ltd. and Four Soft Ltd. - significant related party transactions such that RPT exceeded the threshold (directing AO/TPO to verify RPT percentage and exclude if above 15%). As to Thirdware Solutions Ltd., the coordinate-bench had not directed exclusion and the Tribunal remitted Thirdware to the file of AO/TPO for fresh examination in the light of the assessee's contentions. [Paras 13, 14]

Six comparable companies excluded from the pool; Thirdware Solutions Ltd. remitted to AO/TPO for fresh examination; appeal of the assessee allowed to that extent.

Final Conclusion: The revenue's appeal challenging denial of section 10A deduction is dismissed and the deduction is upheld; on transfer pricing issues six comparable companies are excluded in accordance with coordinate-bench precedents and one comparable (Thirdware) is remanded to the AO/TPO for fresh consideration, resulting in allowance of the assessee's appeal on comparables.

Addition based on loose sheets / digital evidence seized from third party premises - retraction of statement recorded under section 132(4) and admissibility - burden of proof on Revenue to corroborate search disclosures - taxation of firm/company receipts vis-a -vis partners/directors - use of survey/seized materials in assessment under section 153A - requirement of opportunity for cross-examination of declarant - computation of income from unaccounted contract receipts (estimation) - inadmissibility / limited evidentiary value of loose sheets

Taxation of firm/company receipts vis-a -vis partners/directors - addition based on loose sheets / digital evidence seized from third party premises - Addition of undisclosed investment in ULWE plots (total Rs. 52.25 Lacs) assessed in partners' hands for AY 2011-12 - HELD THAT: - Tribunal noted AO's own admission that land purchases were made by the firm and that the investment appears in the firm's books. The AO did not bring cogent material to show that the alleged cash component was paid out of partners' personal funds with a breakup identifying amounts attributable to each partner. In such circumstances the cash allegation, if at all established, could at most be added in the hands of the firm; addition in partners' hands is not maintainable. Time bar for making an addition in the firm's hands prevents such a direction. Deletion of additions in partners' hands follows. [Paras 98]

Addition in the hands of partners for AY 2011-12 deleted; issue decided for the assessee.

Addition based on loose sheets / digital evidence seized from third party premises - inadmissibility / limited evidentiary value of loose sheets - retraction of statement recorded under section 132(4) and admissibility - Alleged investments in Om Sai Riddhi Siddhi Developers (cash investments claimed across AYs 2013-14 to 2015-16) and related protective addition for AY 2014-15 - HELD THAT: - Tribunal applied precedent noting pen drive / loose sheet based material from third party premises is insufficient without corroborative or clinching evidence. Where AO relied on digital records and statements (some retracted) the material fell short of proof of payment of 'on money' by the individuals. Protective addition in firm's hands and substantive additions in partners' hands were examined; tribunal followed earlier ITAT reasoning and deleted additions in the hands of both partners and the firm for lack of corroboration. [Paras 99, 100]

Additions deleted in the hands of the partners and the firm; issue decided for the assessee.

Taxation of firm/company receipts vis-a -vis partners/directors - addition based on loose sheets / digital evidence seized from third party premises - Alleged investment in M/s K.D. Developers assessed in the partner's hands for AYs 2011-12 and 2012-13 - HELD THAT: - AO's material showed the lands were held by the firm K.D. Builders and the assessment proceeded on statements (later retracted) and third party digital material. Tribunal held that absent cogent evidence that payments were made from the partner's personal funds (with identification of share), any addition should lie against the firm; AO produced no such material. As reassessment for the firm would now be time barred, additions in the partner's hands were deleted. [Paras 101]

Additions in partner's hands deleted; issue decided for the assessee.

Taxation of firm/company receipts vis-a -vis partners/directors - addition based on loose sheets / digital evidence seized from third party premises - Alleged investment in M/s Global Star Realtors Pvt. Ltd. (cash payments) assessed in director's personal hands for AYs 2013-14 and 2014-15 - HELD THAT: - Record established that land and projects belonged to the company. AO made additions in the director's hands without producing evidence that the cash component was paid from the director's personal funds. Tribunal found no cogent material to attribute company receipts to the individual and deleted the addition in the director's hands; directing AO to make any firm/company addition was not appropriate given delay and AO's failure to seek at least protective addition earlier. [Paras 102, 103]

Addition in director's hands deleted; issue decided for the assessee.

Addition based on loose sheets / digital evidence seized from third party premises - burden of proof on Revenue to corroborate search disclosures - Alleged undisclosed payment to retiring partner (Jayantilal Jain) assessed for AY 2013-14 - HELD THAT: - AO relied on pen drive material to compute amounts paid to retiring partner and confronted assessee, who denied payments and sought cross examination of the vendor. Tribunal observed AO's demand for evidence of a negative (non payment) is untenable; absent corroborative evidence linking the loose sheets to actual payments, addition could not be sustained and was deleted following the same line of reasoning applied to other pen drive based claims. [Paras 104]

Addition deleted; issue decided for the assessee.

Addition based on loose sheets / digital evidence seized from third party premises - taxation of firm/company receipts vis-a -vis partners/directors - Alleged cash collected in projects developed with Property Infotech India Pvt. Ltd. (PIPL) assessed in individuals' hands for AYs 2014-15 to 2017-18 and related assessment against PIPL / Rohan Monterio (AY 2016-17) - HELD THAT: - AO's own record acknowledged projects were developed jointly by companies (PIPL and GSRL). Tribunal held that if extra receipts exist they are receipts of the companies in their agreed shares and not of the individual; absent evidence tying cash to individual's personal funds, additions in individual's hands were deleted. Concerning revenue appeals against PIPL and Rohan Monterio, CIT(A) deletion was upheld because AO relied on statements (retracted) and loose sheets without providing opportunity for cross examination or independent corroboration. [Paras 105, 108, 109, 110]

Additions in individuals' hands deleted; deletion in company case (PIPL) and individual Rohan Monterio upheld.

Addition based on loose sheets / digital evidence seized from third party premises - taxation of firm/company receipts vis-a -vis partners/directors - Alleged cash receipt on sale of shares in M/s MA Smart Builders & Developers (AY 2017-18) - HELD THAT: - AO relied on impounded documents and third party statements to allege a cash component; however, property was developed by the firm and any on money, if established, would be firm's income. Further, AO failed to produce corroborative material; the alleged receipt was not proved beyond doubt. Tribunal therefore deleted addition in the individual's hands. [Paras 111]

Addition deleted; issue decided for the assessee.

Computation of income from unaccounted contract receipts (estimation) - requirement of opportunity for cross-examination of declarant - addition based on loose sheets / digital evidence seized from third party premises - Cash receipts alleged for construction contracts (Sahakari Sadan, Garden City, Oceanic View and Other projects) for AYs 2014-15 to 2017-18 in the case of Mohammed Ameer and CIT(A)'s direction to estimate income @8% - HELD THAT: - Tribunal accepted CIT(A)'s factual conclusion that extra (unaccounted) receipts existed as per seized entries. AO's practice of multiplying noted figures (by 100/1000) was unsupported and was set aside. CIT(A) treated receipts as unaccounted turnover and directed income estimation; tribunal endorsed that receipts do not equate to income and that the AO must compute unaccounted turnover from entries (without multipliers) and then estimate income. Considering assessee's historical net profit range (average ~3.07%), tribunal directed AO to adopt 3% (rather than 8%) as a reasonable rate to compute net profit on unaccounted turnover and allow credit for income already declared. [Paras 112, 113, 114, 115, 116]

Matters partly allowed for the assessee: AO to compute unaccounted turnover from seized entries (no multiplication) and assess 3% of that turnover as income subject to credit for already declared amounts.

Retraction of statement recorded under section 132(4) and admissibility - burden of proof on Revenue to corroborate search disclosures - Revenue appeal: deletion of addition of Rs.1.83 crores under section 69A in Walter Noronha (AY 2015-16) - HELD THAT: - CIT(A) found AO did not properly decipher loose sheets, did not trace persons named on the papers, and additions rested on statements recorded during search which were retracted. Revenue produced no corroborative material before the Tribunal to rebut CIT(A)'s findings. Tribunal held that additions based solely on such statements/loose papers without corroboration are unsustainable and declined to interfere with CIT(A)'s deletion. [Paras 117, 118, 119]

Revenue appeal dismissed; deletion by CIT(A) upheld.

Retraction of statement recorded under section 132(4) and admissibility - burden of proof on Revenue to corroborate search disclosures - Revenue appeal: deletion of additions totaling Rs.700 Lacs (three components) in M.N. Rajendra Kumar (AY 2016-17) based on retracted statement - HELD THAT: - CIT(A) held the additions (unexplained expenditure/ investments) were founded only on statements recorded during search and lacked corroborative evidence. Tribunal agreed: AO unearthed no independent material to substantiate the cash exchanges alleged; additions founded solely on retracted statements are not sustainable. Revenue produced no additional corroboration before Tribunal; therefore CIT(A)'s deletions were maintained. [Paras 120, 121, 122]

Revenue appeal dismissed; CIT(A) deletions upheld.

Final Conclusion: For assessment years 2011-12 to 2017-18 the Tribunal, after issue wise consideration, has generally held that additions founded on loose sheets and digital material seized from third party premises and on statements recorded during search (many of which were retracted) are not sustainable without independent corroboration or opportunity for cross examination. Additions imposed in the personal hands of partners/directors were deleted where the impugned receipts or investments were shown to belong to firms/companies and AO failed to prove payments from individuals' personal funds. For alleged unaccounted contract receipts, the Tribunal directed computation of unaccounted turnover from seized entries without arbitrary multipliers and accepted an estimated profit rate of 3% to compute taxable income (with credit for amounts already declared). All fifteen assessee appeals were allowed on the terms indicated and all nine revenue appeals were dismissed.

Bogus gifts - Search and incriminating material - Gifts declared in original return prior to search - Deletion of additions where no incriminating material found - Interest under sections 234A and 234B

Bogus gifts - Gifts declared in original return prior to search - Search and incriminating material - Deletion of additions where no incriminating material found - Validity of additions made on account of alleged bogus gifts to the assessee for the assessment years 2003-04 and 2004-05. - HELD THAT: - The Tribunal found that the gifts in question had been disclosed in the assessee's original return filed for AY 2003-04 prior to the date of search and that no incriminating material relating to those gifts was found during the search. Reliance was placed on the legal proposition, including the decision of the Bombay High Court in Continental Warehousing Corporation and the Tribunal's earlier group decision in the assessee's connected matters, that additions on account of gifts which were not pending on the date of search and for which no incriminating material was found during the search are not sustainable. The Revenue did not controvert the factual position nor produce any record of incriminating material before the Tribunal. Applying that principle, the Tribunal concluded that the Assessing Officer's addition could not be sustained and directed deletion of the addition in respect of the gifts.

Addition made on account of alleged bogus gifts is deleted and the grounds raised by the assessee are allowed for AYs 2003-04 and 2004-05.

Interest under sections 234A and 234B - Charging of interest for defaults under assessment proceedings - Charging of interest under sections 234A and 234B as dealt with by the CIT(A) in ITA No.5544/Mum/2012 (consequential on the gifts issue). - HELD THAT: - The Tribunal treated the question of interest as consequential to the decision on additions and declined to decide it on the record before it. The matter was directed to be reconsidered by the Assessing Officer afresh, who is to consider the assessee's arguments on interest and determine the liability in accordance with law after giving the assessee an opportunity to be heard. The identical interest issue in the companion appeals for AYs 2003-04 and 2004-05 was similarly restored to the file of the Assessing Officer for fresh adjudication.

Issue of interest under sections 234A and 234B is remanded to the Assessing Officer for fresh adjudication.

Final Conclusion: The appeals are partly allowed: the additions made on account of alleged bogus gifts for AYs 2003-04 and 2004-05 are deleted; the question of interest under sections 234A and 234B is remitted to the Assessing Officer for fresh adjudication.

Preventive detention under COFEPOSA - delay in passing detention order - delay in execution of detention order - live and proximate link between grounds and detention - subjective satisfaction of the detaining authority - absconding and efforts to apprehend - staleness of grounds due to changed circumstances (COVID-19)

Delay in passing detention order - subjective satisfaction of the detaining authority - preventive detention under COFEPOSA - Whether delay in passing the detention order vitiates preventive detention - HELD THAT: - The court held that delay in passing a detention order does not automatically vitiate preventive detention under COFEPOSA where a tenable and reasonable explanation is offered. Applying precedents, the court accepted the respondents' account of the procedural steps (proposal, CSC scrutiny and independent application of mind by the Detaining Authority) and concluded that the delay in issuance of the order was satisfactorily explained and did not break the necessary nexus between the material relied upon and the subjective satisfaction reached by the Detaining Authority. The court observed that in COFEPOSA matters dealing with organised smuggling, authorities and courts must take a pragmatic view and a delay, if satisfactorily explained, will not invalidate detention. [Paras 16, 17]

Delay in passing the detention order was satisfactorily explained and does not vitiate the preventive detention.

Staleness of grounds due to changed circumstances (COVID-19) - live and proximate link between grounds and detention - preventive detention under COFEPOSA - Whether restrictions on international flights due to the COVID-19 pandemic snapped the live nexus between past smuggling conduct and the need for detention - HELD THAT: - The court rejected the submission that the pandemic-related suspension or restriction of international commercial flights rendered the detention grounds stale. It noted that the detention order was passed before widespread flight restrictions and that DGCA policy allowed selected international scheduled flights on case-by-case routes; the temporary precautionary suspension of flights did not eliminate the risk or future possibility of smuggling. Thus the changed circumstances of the pandemic did not, by themselves, break the live link required for preventive detention under COFEPOSA. [Paras 18]

The COVID-19 related suspension/restriction of international flights did not sever the live nexus between the alleged prejudicial activity and the need for preventive detention.

Delay in execution of detention order - absconding and efforts to apprehend - live and proximate link between grounds and detention - Whether the unexplained delay in executing the detention order vitiates preventive detention - HELD THAT: - The court examined the execution timeline and records of police action. It accepted that the detention order was forwarded for execution and that limited attempts were made on specified early dates, but found no satisfactory material showing meaningful efforts to apprehend the petitioner between March 3, 2020 and May 28, 2020. The court held that mere bald assertions of absconding are insufficient; respondents must demonstrate reasonable and continuous efforts to locate the detenu. In the absence of such explanation for the intervening period, the court found the delay unreasonable, which created serious doubt about the genuineness and immediacy of the Detaining Authority's satisfaction and broke the live and proximate link between the grounds and the purpose of detention. [Paras 20, 27, 28]

The unexplained delay in execution of the detention order vitiates the detention; the order is liable to be set aside.

Final Conclusion: The petition is allowed. The detention order is set aside and quashed on the ground of unreasonable and unexplained delay in execution; the petitioner is directed to be released forthwith unless required in connection with any other case.

Option to pay fine in lieu of confiscation under Section 125 of the Customs Act - Redemption of restricted imports on payment of market value - Classification of used multifunctional devices as 'other wastes' under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - Substantial compliance with Rule 13 and Schedule VIII Entry 4(j) of the H&OW Rules - Compulsory registration under the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012 - Interaction between the Foreign Trade Act and the Customs Act (Section 3(3) / Section 11(8) conceptual interaction)

Redemption of restricted imports on payment of market value - Option to pay fine in lieu of confiscation under Section 125 of the Customs Act - Interaction between the Foreign Trade Act and the Customs Act (Section 3(3) / Section 11(8) conceptual interaction) - Validity of the Tribunal's order setting aside absolute confiscation and remanding for determination of redemption fine and penalty in respect of imported MFDs. - HELD THAT: - The Court examined the scheme of the Foreign Trade Act and the Customs Act and applied the ratio of the Supreme Court in Atul Automations. MFDs are restricted (not prohibited) under the Foreign Trade Policy; consequently Section 125 of the Customs Act permits exercise of discretion to levy a fine in lieu of confiscation. A harmonious reading of the statutory scheme permits redemption of restricted goods on payment of market value at reassessed valuation. The Tribunal's exercise of discretion to set aside confiscation and remand for determination of redemption fine and penalty was thus in accordance with law and supported by the Atul Automations precedent. [Paras 11, 14, 17, 23]

Tribunal rightly set aside absolute confiscation and remanded matter for adjudication of redemption fine and penalty; order upheld.

Classification of used multifunctional devices as 'other wastes' under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - Substantial compliance with Rule 13 and Schedule VIII Entry 4(j) of the H&OW Rules - Whether the imported MFDs fell within the H&OW Rules' category of 'other wastes' and whether there was compliance with Rule 13 and Schedule VIII Entry 4(j). - HELD THAT: - Following the reasoning in Atul Automations, the Court accepted that used MFDs fall within the 'other wastes' category and that the relevant statutory scheme contemplates import subject to conditions. The Tribunal had found substantial compliance with Rule 13 read with Schedule VIII Entry 4(j) (noting some procedural omissions as merely procedural aberrations). The High Court concluded that the Tribunal's assessment of substantial compliance was sustainable on the record and warranted remission for determination of redemption and penalty rather than absolute confiscation. [Paras 14, 18, 23]

MFDs are correctly treated as 'other wastes' and the finding of substantial compliance with Rule 13 / Schedule VIII Entry 4(j) is upheld; confiscation was not mandatory.

Compulsory registration under the Electronics and IT Goods (Compulsory Registration) Order, 2012 - Whether compulsory registration under the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012 (and its amendments) was required for the imported MFDs in these cases. - HELD THAT: - The Court examined the 2012 Order and the 2014 notification schedules and on a combined reading held that the particular MFDs in these cases did not fall within the items listed in either the original schedule or the amended schedule relied upon by the Department. Consequently, compulsory registration under the 2012 Order was not required on the facts of these cases. [Paras 20, 22]

No requirement to register the impugned MFDs under the 2012 compulsory registration Order on the facts of these cases; challenge on this ground fails.

Remand for quantification of redemption fine and penalty - Nature and effect of remand ordered by the Tribunal - whether remand was appropriate and the scope to be followed by the adjudicating authority. - HELD THAT: - The Tribunal remanded the matters for fresh adjudication limited to determination of redemption fine and penalty and for completion within a specified period. The High Court found no error in remanding for re-adjudication limited to quantification and compliance, directing the adjudicating authority to complete the process within two weeks from receipt of certified copy of the judgment. [Paras 3, 18, 24]

Remand for determination of redemption fine and penalty is appropriate; adjudicating authority directed to re-adjudicate within two weeks.

Final Conclusion: The appeals are dismissed. The Tribunal's order setting aside absolute confiscation and remanding the matters for determination of redemption fine and penalty is upheld; compulsory BIS registration was not required on these facts and the adjudicating authority is directed to complete re adjudication within two weeks.

Effect of repeal by enactment - operation of savings and collection provision on repeal - Finance Minister's speech and departmental memorandum not equal to law - statutory enactment governs date from which levy ceases

Effect of repeal by enactment - statutory enactment governs date from which levy ceases - Refund of mica cess for shipping bills filed after 01.04.2016 and before 14.05.2016 - HELD THAT: - The Tribunal determined that the repeal of the levy under the Mica Mines Labour Welfare Fund Act, 1946 took effect on the date of enactment of the Finance Act, 2016 (14.05.2016) because Section 239 repealed the enactments listed in the Fifteenth Schedule without any provision making the repeal operative from 01.04.2016. Section 241 (savings and collection) of the Finance Act, 2016 expressly contemplates recovery and payment of duties levied under the repealed enactments up to the date the Finance Bill received the President's assent, thereby affirming that the levy remained effective until the date of enactment. On that legal basis, shipping bills filed after 01.04.2016 but before 14.05.2016 were not eligible for refund of mica cess. [Paras 6, 8]

Refund claims in respect of shipping bills filed after 01.04.2016 and before 14.05.2016 are not allowable as the levy remained effective until 14.05.2016.

Finance Minister's speech and departmental memorandum not equal to law - operation of savings and collection provision on repeal - Whether the Departmental Office Memorandum dated 27.07.2016 or the Finance Minister's speech can determine the effective date of repeal or override the statutory provisions - HELD THAT: - The Tribunal applied the settled principle that statements in the Finance Minister's speech or subsequent departmental communications do not constitute law unless backed by parliamentary enactment. Relying on the reasoning in B K Industries and the Gujarat High Court decision followed below, the Tribunal held that the Office Memorandum could not override the statutory scheme enacted by Parliament, particularly the savings and collection provision which keeps the levy alive until repeal by the Finance Act took effect on 14.05.2016. [Paras 7, 8]

The Office Memorandum and Ministerial speech cannot determine the operative date of repeal; the statutory enactment (and its savings/collection provision) governs.

Final Conclusion: The appeal is dismissed; the impugned orders rejecting refund claims for shipping bills filed after 01.04.2016 and before 14.05.2016 are sustained because the repeal of the mica cess became effective on 14.05.2016 and ministerial statements or office memoranda cannot alter the statutory effect of repeal.

Condonation of delay in filing appeal under section 128 of the Customs Act, 1962 - Limitation period for filing appeal: 60 days with discretionary further extension of 30 days - Prohibition on condoning delay beyond the additional 30 days

Condonation of delay in filing appeal under section 128 of the Customs Act, 1962 - Prohibition on condoning delay beyond the additional 30 days - Whether the Commissioner (Appeals) erred in dismissing the appeal as barred by limitation where the appeal was filed after the 60-day period and beyond the discretionary additional 30-day extension under section 128 of the Customs Act, 1962. - HELD THAT: - The Tribunal affirmed the Commissioner (Appeals)'s conclusion that an appeal under section 128 must be filed within 60 days from communication of the order and that the Commissioner (Appeals) may, if satisfied of sufficient cause, permit presentation within a further period of 30 days. Citing a Division Bench decision in Diamond Construction vs. Commissioner of Customs, Excise and Service Tax, Jabalpur, the Tribunal accepted the principle that the Commissioner (Appeals) has no power to condone delay where the appeal is presented after the additional 30-day period has expired. Given that the present appeal was lodged beyond the extended 30 days, the Commissioner (Appeals) properly dismissed it as barred by limitation.

Dismissal of the appeal by the Commissioner (Appeals) for being filed beyond the permissible period is upheld.

Final Conclusion: The appeal is dismissed; the Commissioner (Appeals) did not err in rejecting the appeal as barred by the statutory limitation, the appeal having been filed after the additional 30-day extension permitted under section 128 had expired.

Penalty for late presentation of bill of entry - sufficient cause for delay - Bill of Entry (Forms) Regulations, 1976 - Regulation 4 - refund of charges for late presentation of bill of entry

Penalty for late presentation of bill of entry - sufficient cause for delay - refund of charges for late presentation of bill of entry - Whether the penalty/charges for late presentation of the bill of entry imposed on the appellant are sustainable where delay occurred because the appellant could not claim an exemption on EDI due to an error in the exemption notification and pursued the matter with Customs - HELD THAT: - The Tribunal examined Regulation 4 of the Bill of Entry (Forms) Regulations, 1976 (as amended in 2017), which mandates presentation of the bill of entry within the next day following arrival but makes the importer liable to pay charges for late presentation only where the proper officer is satisfied there was no sufficient cause for delay. The admitted factual matrix is that the appellant intended to claim an exemption under the notification, but a clerical error in the new notification and the EDI system prevented filing under the exemption; the appellant pursued the matter with Customs and was told to pay duty and claim refund later. The Tribunal held that, given that the Customs themselves were aware of the claim and the system/notification error prevented timely electronic filing, the delay was attributable to circumstances beyond the appellant's control and constituted a sufficient cause under sub-regulation (2). In these circumstances it was inappropriate to impose or retain charges for late presentation, and the charges paid are refundable. The Tribunal therefore set aside the portion of the impugned order rejecting refund of the late-presentation charges and allowed the appeal with consequential relief. [Paras 4, 5]

Charges for late presentation of the bill of entry were not exigible as there was sufficient cause for delay; the amount paid by the appellant is refundable and the impugned order is set aside to that extent.

Final Conclusion: The appeal is allowed insofar as the refund of charges for late filing of the bill of entry is concerned; the penalty/charges paid for late presentation are refundable and the impugned order rejecting that refund is set aside with consequential relief.

Transaction value and its rejection under Section 14 of the Customs Act - valuation of imported goods and re determination of assessable value - acceptance of re determined value by importer and effect of consent - confiscation, redemption fine and penalty under customs law - refund of differential duty with interest under Section 129EE of the Central Excise Act

Transaction value and its rejection under Section 14 of the Customs Act - valuation of imported goods and re determination of assessable value - Whether the transaction value declared in the Bills of Entry was lawfully rejected and the re determination of import value by Revenue was valid. - HELD THAT: - Section 14 makes the transaction value (price actually paid or payable) the primary basis for valuation, subject to conditions and such rules as may prescribe the manner of acceptance or rejection by the proper officer. The Tribunal found that no reasons were recorded by the authorities for rejecting the declared transaction value prior to undertaking the exercise of revaluation and enhancement. In absence of recorded reasons for doubting the truth or accuracy of the declared value, the statutory requirement for rejection was not complied with and the re determination of value is therefore legally impermissible. The Tribunal concluded that the enhancement of the declared value and the consequent reassessment are bad in law and on facts. [Paras 11, 12]

Rejection of the transaction value and the re determination/enhancement of assessable value set aside; declared transaction value to be accepted.

Confiscation, redemption fine and penalty under customs law - Whether the order of confiscation with option to redeem on payment of fine and the penalty imposed should be sustained in view of the invalid revaluation. - HELD THAT: - The order of confiscation, redemption fine and penalty flowed from the re determined higher assessable value and the finding of undervaluation. Since the Tribunal has held the revaluation to be invalid for want of reasons recorded for rejection of transaction value, the consequential measures of confiscation, redemption fine and penalty cannot stand. The Tribunal therefore annulled those consequential orders as they are premised on the invalid revaluation. [Paras 12]

Order of confiscation, redemption fine and penalty set aside.

Refund of differential duty with interest under Section 129EE of the Central Excise Act - Whether the appellant is entitled to refund of any differential duty deposited with interest. - HELD THAT: - As the reassessment/enhancement of value has been set aside, the Tribunal held that the appellant is entitled to consequential reliefs. This includes refund of any differential duty deposited arising from the impugned revaluation, together with interest as provided under Section 129EE of the Central Excise Act, the refund being a corollary to annulment of the enhanced duty demand. [Paras 12]

Appellant entitled to refund of differential duty deposited with interest under Section 129EE; consequential benefits granted.

Final Conclusion: The appeal is allowed: the rejection of the declared transaction value and the re determination/enhancement of assessable value are set aside for want of recorded reasons; consequent orders of confiscation, redemption fine and penalty are annulled; appellant to receive refund of any differential duty deposited with interest under Section 129EE.

Re-determination of transaction value - principles of natural justice - sequential application of Customs Valuation Rules, 2007 - burden of proof in customs valuation - confiscation and penalty under the Customs Act, 1962

Principles of natural justice - supply of departmental reports and opportunity to reply - Whether the adjudicating authority complied with principles of natural justice by supplying the report/comments relied upon and by affording the appellant an opportunity to meet the re-determination of value. - HELD THAT: - The Tribunal noted that the impugned adjudicating order appears to have relied upon a report/comments obtained from the Additional Commissioner dated 18.11.2011, but it is not clear from the record whether a copy of that report was supplied to the appellant or whether the appellant's submissions in response were obtained and considered. The Tribunal observed that the Appellate Commissioner based his order on those report/comments which are not part of the findings of the original order and that the record does not disclose compliance with the duty to furnish material relied upon when an adverse re-determination is made. Given these defects in procedure and absence of clarity on whether the appellant was given the requisite opportunity to meet the departmental material, the Tribunal held that the matter required fresh consideration by the original adjudicating authority so that principles of natural justice are complied with and a reasoned order is passed after affording appropriate opportunity to the appellant.

Remanded for fresh consideration by the original adjudicating authority to ensure compliance with principles of natural justice and to give the appellant opportunity to meet the report/comments relied upon.

Re-determination of transaction value - sequential application of Customs Valuation Rules, 2007 - burden of proof in customs valuation - Whether the re-determination of value by the adjudicating authority under the Customs Valuation Rules, 2007, was legal and properly reasoned. - HELD THAT: - The Tribunal found that the adjudicating authority's conclusion of mis-declaration rested on the observation that a small percentage of the consignment had markings indicating origins other than declared, without explaining how the importer had knowledge of such difference or how correctly declared 80% of goods justified re-determination of value for the entire consignment. The order also contained internal contradictions: it simultaneously stated there were no imports of identical or similar goods yet re-determined value using prices of identical goods allegedly imported by the appellant. The Tribunal emphasised that it is for the department to prove that declared valuation is incorrect and not for the appellant to justify the difference in value. For these reasons the Tribunal held that the adjudicating authority had not recorded cogent and consistent reasons and remanded the valuation issue for fresh adjudication, directing the original authority to consider the appellant's submissions and apply the CVR 2007 sequentially and with reasoned findings.

Remanded to the original authority for fresh adjudication on value, with directions to apply the Customs Valuation Rules, 2007 sequentially, to address contradictions, and to record cogent reasons while bearing in mind the department's burden of proof.

Final Conclusion: The appeal is allowed in part by way of remand; the matter is restored to the original adjudicating authority for fresh adjudication on both procedural (natural justice) and substantive (re-determination of value) aspects, with a direction to conclude the proceedings within 12 weeks of receipt of this order.

Reasonable opportunity of hearing - restoration of company name under Section 252 - notice to respondent under Rule 37 - setting aside for lack of notice - remand for fresh consideration

Reasonable opportunity of hearing - notice to respondent under Rule 37 - setting aside for lack of notice - Validity of the Tribunal's order restoring the company's name where no notice was served on the company or its directors - HELD THAT: - The Tribunal's power to order restoration under Section 252 is subject to the proviso that a reasonable opportunity of making representations and of being heard be given to the Registrar, the company and all persons concerned. Rule 37 requires issuance of notice to the respondent to show cause, accompanied by the application and supporting documents. The impugned order does not record that any notice was served on the company or its directors before restoration was ordered. In the absence of such notice and opportunity to be heard, the Tribunal's order is legally unsustainable. For this reason the appellate forum set aside the impugned order and remitted the matter for fresh decision after hearing the parties, instructing the Tribunal to decide the appeal under Section 252 in accordance with law and uninfluenced by its earlier order. [Paras 6, 10, 11, 12]

Impugned order set aside for want of notice and remitted to the Tribunal for fresh adjudication after hearing the parties.

Final Conclusion: The NCLAT set aside the NCLT order restoring the company's name because the company and concerned persons were not given the statutory opportunity to be heard; the matter is remitted to the Tribunal to decide afresh in accordance with law after giving notice and hearing the parties.

Restoration of company name - strike off action under Section 248 of the Companies Act - filing of statutory returns and financial statements - declaration regarding deposits during demonetisation - payment of costs as condition for restoration - disqualification of directors and DIN reactivation - publication of restoration order in the Official Gazette - preservation of Registrar's power to take other actions

Restoration of company name - strike off action under Section 248 of the Companies Act - filing of statutory returns and financial statements - Direction to restore the name of the company in the Register of Companies subject to compliance with specified filing requirements. - HELD THAT: - The Tribunal, having considered the ROC's report and the appellant's undertaking, found it just and proper to order restoration of the company's name. Restoration is made conditional on the company filing all outstanding statutory documents and paying prescribed fees/additional fees/fines within 30 days from the date of restoration. The Tribunal accepted the appellant's explanation that non-filing was inadvertent and allowed restoration while preserving the Registrar's prior process under Section 248 leading to strike off. [Paras 7]

Name of the company to be restored on the Register of Companies subject to filing all statutory documents and payment of prescribed fees/additional fees/fines within 30 days of restoration.

Declaration regarding deposits during demonetisation - filing of statutory returns and financial statements - Requirement to submit a declaration from the directors concerning deposits made during the demonetisation period as part of the restoration compliance. - HELD THAT: - As a condition of restoration, the Tribunal directed the appellant to submit a declaration from the directors regarding any deposits made during the demonetisation period. This requirement is to be fulfilled along with filing of statutory documents and payments as directed, forming part of the compliance package necessary for effecting restoration. [Paras 7]

Directors must submit the specified declaration regarding demonetisation-period deposits when filing outstanding statutory documents.

Payment of costs as condition for restoration - Imposition of costs payable to the Central Government as a condition precedent to restoration. - HELD THAT: - The Tribunal imposed a costs condition: the appellant must pay the directed sum to the accounts of the Central Government (Pay & Accounts Officer, Ministry of Corporate Affairs, Southern Region, Chennai) and produce proof to the ROC within three weeks of receipt of the order while submitting documents; failure to do so will cause the restoration order to lapse. This condition is integral to the grant of restoration. [Paras 7]

Appellant to pay the directed costs to the Central Government and produce proof within the stipulated time, failing which the restoration order will lapse.

Disqualification of directors and DIN reactivation - filing of statutory returns and financial statements - Consequences for directors whose DINs are disqualified and Registrar's obligation to permit filing for restoration. - HELD THAT: - The Tribunal clarified that where directors are disqualified, their DINs shall not be reactivated. Notwithstanding such disqualification, the Registrar of Companies is directed to permit the company to file its Annual Returns and Financial Statements to facilitate restoration of the company's name. Thus, restoration of the company's name and enabling statutory filings are ordered without reactivation of disqualified DINs. [Paras 7]

Disqualified directors' DINs shall not be reactivated; nevertheless the ROC must allow the company to file the pending Annual Returns and Financial Statements for restoration.

Publication of restoration order in the Official Gazette - preservation of Registrar's power to take other actions - Requirement for publication of the restoration order and limitation of the order's scope regarding other actions by the Registrar. - HELD THAT: - The Tribunal directed the ROC, after compliance, to publish the order in the Official Gazette under its office name and seal. The Tribunal also made clear that the order is confined to violations that led to the striking off and does not preclude the ROC from initiating or pursuing any other lawful actions or proceedings in respect of other violations or offences committed by the company prior to or during the period of striking off. [Paras 7]

Upon compliance, the ROC shall publish the restoration order in the Official Gazette; the order is confined to the grounds of striking off and does not bar the ROC from taking other lawful actions for any other violations.

Final Conclusion: The Tribunal allowed the appeal and ordered restoration of the company's name subject to conditions: filing all outstanding statutory documents with prescribed fees/additional fees/fines within 30 days, submission of a directors' declaration regarding demonetisation-period deposits, payment of the directed costs to the Central Government within the stipulated time, non-reactivation of disqualified DINs while permitting filings, and publication of the restoration order in the Official Gazette; the order is confined to the violations that led to striking off and does not prevent other actions by the Registrar.

Restoration of name in Register of Companies - strike off under Section 248 - failure to file financial statements and annual returns - filing of statutory documents with prescribed/additional fees - disqualified directors and reactivation of DIN - costs payable to Central Government - scope of restoration order

Restoration of name in Register of Companies - strike off under Section 248 - Restoration of the company's name struck off under Section 248 was ordered. - HELD THAT: - The Tribunal examined the ROC report recording non-filing of balance sheets and annual returns and the procedural steps taken by ROC under Section 248 including notices, newspaper publication and Gazette publication leading to strike off. Having considered the appellant's explanation that defaults in filing were accidental and undertaking to file the pending returns, the Tribunal exercised its discretion to direct restoration of the company's name in the Register of Companies as a just and proper relief. [Paras 6, 7]

The Tribunal directed restoration of the company's name in the Register of Companies.

Filing of statutory documents with prescribed/additional fees - failure to file financial statements and annual returns - Restoration was made conditional on filing all statutory documents and payment of prescribed/additional fees and furnishing a declaration regarding deposits during demonetisation. - HELD THAT: - The Tribunal required the company to file all pending statutory documents within 30 days of restoration together with the prescribed fees/additional fee/fine as decided by the ROC. The appellant was also directed to submit a declaration from the directors regarding deposits made during the demonetisation period. These conditions were imposed to regularise compliance that led to the original strike off. [Paras 7]

Restoration is conditional upon filing pending documents, payment of fees/fines and submission of the specified declaration.

Disqualified directors and reactivation of DIN - filing of annual returns and financial statements - Directors found disqualified will not have their DINs reactivated, but the ROC was directed to permit filing of returns and financial statements by the company for restoration purposes. - HELD THAT: - The Tribunal clarified that where directors are disqualified their DINs shall not be reactivated; notwithstanding that, Registrar of Companies was directed to allow the company to file the annual returns and financial statements necessary to effect restoration of the company's name. This separates the consequence of director disqualification from the procedural act of restoring the company on the register. [Paras 7]

DINs of disqualified directors shall not be reactivated; ROC to permit filing required for restoration.

Costs payable to Central Government - scope of restoration order - The Tribunal imposed costs payable to the Central Government and confined the order to violations that led to the striking off while preserving ROC's power to take further action for other violations. - HELD THAT: - The Tribunal directed payment of costs to the Pay & Accounts Officer, Ministry of Corporate Affairs, Southern Region, Chennai and required proof of payment within a stipulated period when submitting documents, failing which the order would lapse. The Tribunal expressly limited the relief to the violations which resulted in striking off and noted that the ROC remains free to initiate appropriate action in accordance with law for any other violations or offences by the company prior to or during the striking off period. [Paras 7]

Costs were imposed and the restoration order was confined to the violations causing strike off without precluding other lawful action by ROC.

Final Conclusion: The Tribunal allowed the appeal and ordered restoration of the company's name subject to conditions: filing pending statutory documents with prescribed/additional fees and a specified declaration, payment of directed costs, non-reactivation of DINs of disqualified directors while permitting filing for restoration, and preservation of ROC's power to take further action for other violations.

Scheme of Amalgamation - sanction under sections 230 and 232 of the Companies Act, 2013 - compliance with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - protection of interests of creditors and shareholders - appointed date - dissolution without winding up - Regional Director report / no objection - Official Liquidator scrutiny and report - amendment of Memorandum and Articles of Association - payment of further fees on enhanced authorised capital

Sanction under sections 230 and 232 of the Companies Act, 2013 - Scheme of Amalgamation - compliance with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Sanction of the scheme of amalgamation between the Transferor Company and the Transferee Company. - HELD THAT: - The Tribunal examined the petitions filed under sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, the convening and results of meetings of shareholders and creditors, and statutory reports. The Regional Director's report recorded regular filings and raised no objection subject to compliance with clause (i) of sub section (3) of section 232 regarding payment of fees for enhanced authorised capital; the Official Liquidator's appointed auditors certified that the Transferor Company's affairs were not conducted prejudicially to members or creditors. The Tribunal found the scheme fair and reasonable, not contrary to public policy or law, and that statutory compliances were made. The accounting treatment conforms to established accounting standards and no prejudice to creditors was identified. On these bases the scheme was held fit to be sanctioned. [Paras 7, 9, 10, 11, 13]

Company petitions allowed and the scheme of amalgamation annexed to the petitions sanctioned and made binding on all members, creditors and shareholders.

Regional Director report / no objection - payment of further fees on enhanced authorised capital - amendment of Memorandum and Articles of Association - Statutory observations by the Regional Director were noted and compliance directed rather than any objection being sustained. - HELD THAT: - The Regional Director observed that the transferee company must comply with clause (i) of sub section (3) of section 232 concerning payment of further fees for enhanced authorised capital and noted the scheme's protection for employees. The Transferee Company undertook to amend its Memorandum and Articles of Association and to comply with the observation. The Tribunal declined to raise objection and directed the Transferee Company to effect the stated compliances. [Paras 7, 8]

RD's observations recorded; Transferee Company directed to comply with the payment and amendment requirements identified by the RD.

Official Liquidator scrutiny and report - protection of interests of creditors and shareholders - Official Liquidator's audit conclusion that the Transferor Company's affairs were not conducted prejudicially and that no objection is warranted. - HELD THAT: - The Official Liquidator placed on record the auditors' scrutiny of the Transferor Company's books and accounts and their conclusion that statutory books were maintained and affairs were not conducted in a manner prejudicial to members, creditors or public interest. Based on this, the OL submitted that the petitions may be decided on merits without objection. [Paras 9, 10]

Official Liquidator's report accepted and no objection raised to sanctioning the scheme.

Appointed date - Scheme of Amalgamation - Declaration of the appointed date for the scheme. - HELD THAT: - The Tribunal noted the appointed date as recorded in the scheme and observed that the accounting treatment conforms to applicable accounting standards with no adverse impact on creditors or stakeholders. [Paras 11]

Appointed date of the scheme fixed as 01st April, 2018.

Dissolution without winding up - Dissolution of the Transferor Company consequent to sanction of the scheme. - HELD THAT: - On sanction, the Transferor Company is directed to be dissolved without winding up upon filing the certified copy of the Tribunal's order with the Registrar of Companies, in accordance with the scheme and statutory procedure. [Paras 15]

Transferor Company to be dissolved without winding up from the date of filing the certified copy of this order with the Registrar of Companies.

Payment to investigating auditors - Official Liquidator scrutiny and report - Direction for payment to the auditors appointed to investigate the Transferor Company's affairs. - HELD THAT: - The Tribunal directed that the Transferor Company shall pay the specified amount to the Official Liquidator for payment to the auditors who investigated the Transferor Company's affairs, within the time stipulated in the order. [Paras 17]

Transferor Company directed to make the payment to the Official Liquidator for remittance to the auditors within 15 days of the order.

Scheme of Amalgamation - Competition Act, 2002 - Whether the proposed scheme falls within the ambit of sections 5 and 6 of the Competition Act, 2002. - HELD THAT: - The petitioner companies represented that the scheme does not fall within the ambit of sections 5 and 6 of the Competition Act, 2002. The Tribunal recorded that representation and proceeded to sanction the scheme on merits without treating the scheme as attracting those provisions. [Paras 12]

Petitioners' statement that the scheme does not fall within sections 5 and 6 of the Competition Act, 2002 recorded; no further action under the Competition Act taken by the Tribunal.

Final Conclusion: The Tribunal, having recorded the Regional Director's observations and the Official Liquidator's report, and being satisfied that statutory requirements and procedural compliances under sections 230-232 of the Companies Act, 2013 and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 have been met, sanctioned the Scheme of Amalgamation (appointed date 01.04.2018), directed compliance with identified amendments and fee payment obligations, ordered dissolution of the Transferor Company without winding up on filing of the certified order, and directed payment to the auditors; the petitions are disposed of.

Deemed shareholder - rectification of register of members - registration of transfer in register of members - oppression and mismanagement - nominee director rights - maintainability under section 241 - specific performance / enforcement of contractual transfer obligations

Deemed shareholder - registration of transfer in register of members - specific performance / enforcement of contractual transfer obligations - Petitioner No.1's entitlement to be treated as shareholder of Respondent No.1 by virtue of the Facilitation Agreement, Pledge Agreement, letter and Board resolution and the consequent duty to enter its name in the register of members. - HELD THAT: - The Tribunal examined the Facilitation Agreement (06.10.2016), the Pledge Agreement (07.10.2016), the letter dated 07.10.2016 and the Board resolution dated 19.12.2016. Those documents, executed by the authorised signatory of Respondent No.1 (Respondent No.2), recorded an agreement to transfer shares on default and included positive covenants to effect transfers and to mark pledge in the register. The Board resolution of 19.12.2016 records unanimous approval for transfer to Mentor Capital Limited and authorises endorsement and entries in the register. The Tribunal found the respondents' subsequent allegations of forgery and manipulation insufficiently substantiated at this stage and noted that challenges to authenticity are matters for appropriate civil/criminal proceedings. On the combined contractual terms and the company board action, the Tribunal held that conditions for recognition of the transfer (at least in respect of the pledged 51% shares) were met and the company is bound to register the Petitioner No.1. Accordingly the Petitioner No.1 is deemed to be a shareholder holding the shares corresponding to the pledged interest and the Company was directed to enter its name in the register of members. [Paras 13, 15, 19, 21, 22]

Petitioner No.1 is declared to be a deemed shareholder (holding the shares corresponding to the pledged 51%) and Respondent No.1 is directed to register Petitioner No.1 in the Register of Members within three weeks.

Nominee director rights - oppression and mismanagement - maintainability under section 241 - Validity of removal of Petitioner Nos.2 to 4 as directors and whether such removal can stand absent recognition of Petitioner No.1's shareholding. - HELD THAT: - The Tribunal considered the role of Petitioner Nos.2-4 as nominee directors arising from the contractual arrangements between the parties and the effect of recognising Petitioner No.1 as shareholder. It observed that the petitioners rendered services under the agreements and that their removal occurred while the company petition was pending and without provision of records or fair participation. Given the Tribunal's finding that Petitioner No.1 is to be treated as shareholder in respect of the pledged shares, the removal of Petitioner Nos.2-4 was held to be contrary to law and natural justice. The removal was therefore set aside. The Tribunal declined other ancillary reliefs sought by the petitioners as devoid of merit. [Paras 16, 17, 19, 21, 22]

The removal of Petitioner Nos.2 to 4 as directors is set aside and they are restored to their directorship; other reliefs claimed in the petition are rejected.

Maintainability under section 241 - oppression and mismanagement - Whether the company petition under section 241 of the Companies Act, 2013 is maintainable at the instance of Petitioner No.1. - HELD THAT: - Respondents challenged maintainability on the ground that Petitioner No.1 was not a member and that private company requirements preclude a single-member status. The Tribunal examined the contractual matrix, the Pledge Agreement and the Board resolution and concluded that Petitioner No.1 had made out a prima facie case that it is a deemed shareholder in respect of the pledged shares and that there were acts of mismanagement and oppression requiring relief. On that basis the Tribunal held the petition maintainable under section 241 and proceeded to decide substantive reliefs. [Paras 19, 21]

The petition under section 241 is maintainable by Petitioner No.1.

Final Conclusion: The Tribunal declared Mentor Capital Limited to be a deemed shareholder in respect of the pledged 51% shareholding and directed Respondent No.1 to register its name in the register of members within three weeks; the removal of the petitioners who were nominee directors was set aside; all other reliefs sought in the petition were rejected; no order as to costs.

Scheme of Arrangement and Amalgamation - sanction under sections 230 to 232 of the Companies Act, 2013 - appointed date - compliance with accounting standards - interests of shareholders and creditors - dissolution without winding up - lodging certified copy with Registrar and Stamp Authorities

Scheme of Arrangement and Amalgamation - sanction under sections 230 to 232 of the Companies Act, 2013 - interests of shareholders and creditors - Tribunal sanctioned the Composite Scheme of Arrangement and Amalgamation between the petitioner companies. - HELD THAT: - The Tribunal considered the petition, the absence of any objector, the report of the Regional Director and the report of the Official Liquidator and concluded that the Scheme is fair and reasonable, not violative of law and not contrary to public policy. The petitioners had complied with the Tribunal's directions, filed affidavits of compliance and furnished clarifications and undertakings in response to observations made by the Regional Director; those clarifications and undertakings were accepted. On that basis the petition was made absolute and the Scheme was sanctioned. [Paras 2, 3, 19, 21, 22]

Company Petition CP(CAA) No. 925/MB.V/2020 is made absolute and the Scheme is sanctioned.

Appointed date - sanction under sections 230 to 232 of the Companies Act, 2013 - The appointed dates stated in the Scheme were accepted as complying with the requirement that a scheme indicate an appointed date under section 232(6). - HELD THAT: - The petitioner companies clarified that Appointed Date 1 for the demerger is the closing of business hours of 31 March 2019 and Appointed Date 2 for amalgamation is the opening of business hours of 1 April 2019, and represented that the Scheme shall be deemed effective from such appointed dates. The Tribunal accepted this clarification and noted compliance with the Ministry of Corporate Affairs circular to the extent applicable. [Paras 10, 11]

Appointed dates as stated in the Scheme are accepted as compliant with section 232(6) and related MCA clarification.

Compliance with accounting standards - interests of shareholders and creditors - Observations of the Regional Director regarding accounting entries, statutory filings and protection of stakeholders were dealt with by accepted undertakings and explanations. - HELD THAT: - The Regional Director's recommendations - including passage of necessary accounting entries to comply with applicable accounting standards, confirmation that the Scheme in the petition and application are identical, service of notices to regulatory authorities, remedying the non-filing of e-form MGT-14 by the Resulting Company and protection of creditors' interests - were addressed by the petitioners through specific undertakings, explanations and steps (including filing for condonation of delay for MGT-14). The Tribunal accepted these clarifications and undertakings. [Paras 15, 16, 17, 18, 19]

Regional Director's observations are answered by the petitioners' undertakings and explanations which are accepted by the Tribunal.

Dissolution without winding up - The Transferor Company (Third Petitioner) was ordered to be dissolved without winding up. - HELD THAT: - The Official Liquidator reported that the affairs of the Transferor Company have been conducted properly and are not prejudicial to the interests of its shareholders; having sanctioned the Scheme and satisfied itself as to compliances and protections, the Tribunal ordered dissolution of the Transferor Company without the process of winding up. [Paras 20, 23]

Transferor Company to be dissolved without the process of winding up.

Final Conclusion: The Composite Scheme of Arrangement and Amalgamation was sanctioned as fair and lawful; the petition was made absolute, the Transferor Company ordered dissolved without winding up, and the petitioners were directed to lodge certified copies of the Order and Scheme with the Superintendent of Stamps and Registrar of Companies and to comply with the remaining filing directions given by the Tribunal.

Scheme of Arrangement - slump sale - convening meetings of shareholders and creditors - dispensation of meetings - conduct of meetings through video conferencing or other audio visual means - remote e-voting - notice and publication requirements under the Companies (CAA) Rules, 2016 - appointment of chairman and scrutiniser for meetings - quorum and voting entitlement for shareholders and creditors - compliance with Section 230(5) and Rule 8 of the Companies (CAA) Rules, 2016

Dispensation of meetings - convening meetings of shareholders and creditors - Whether meetings of the Transferee Company (TCL Cables Private Limited) are required to be convened and whether the meeting of its equity shareholders may be dispensed with. - HELD THAT: - The Tribunal found that meetings of the Secured and Unsecured creditors of the Transferee Company are not necessary and that the meeting of the Equity Shareholders of the Transferee Company is dispensed with. The conclusion rests on the status of the Transferee Company as a wholly owned subsidiary, the absence of secured or unsecured creditors, and the affidavits filed evidencing shareholder approval. Accordingly, no creditor or shareholder meetings for the Transferee Company need be convened. [Paras 11]

Meetings of the Secured and Unsecured creditors of the Transferee Company are unnecessary and the meeting of its Equity Shareholders is dispensed with.

Convening meetings of shareholders and creditors - Scheme of Arrangement - Whether and when meetings of the Transferor Company (Torrent Power Limited) - equity shareholders, unsecured creditors of the Cable Business Undertaking, and secured creditors - should be convened to consider the proposed Scheme. - HELD THAT: - Having considered the application materials (including board resolutions, valuation and fairness opinions) and submissions, the Tribunal directed that separate meetings for the Transferor Company be convened on specified dates to consider the Scheme. A meeting of Equity Shareholders, a meeting of the Unsecured Creditors limited to those of the Cable Business Undertaking, and a meeting of Secured Creditors are to be held on the dates and times fixed by the Tribunal for the purpose of considering and, if thought fit, approving the Scheme, with or without modifications. The direction reflects the Tribunal's view as to which classes of stakeholders are affected and require to be separately convened. [Paras 11]

Meetings of the Transferor Company's Equity Shareholders, Unsecured Creditors of the Cable Business Undertaking, and Secured Creditors shall be convened on the dates and times fixed by the Tribunal.

Conduct of meetings through video conferencing or other audio visual means - remote e-voting - SEBI listing and disclosure requirements - Whether the meetings of the Transferor Company's shareholders and creditors may be conducted through video conferencing and whether voting should be by remote e-voting. - HELD THAT: - In view of the Ministry of Corporate Affairs circulars cited by the parties, the Tribunal ordered that all meetings of the Transferor Company shall be convened and conducted through video conferencing or other audio visual means (no physical meetings). Recognising the Transferor Company's status as a listed entity and the applicable SEBI and Companies Rules requirements, the Tribunal directed that remote e-voting be provided for all equity shareholders, secured creditors and unsecured creditors. The Tribunal also clarified that proxies are not permitted in accordance with the MCA circular, while authorized representatives are permitted. [Paras 11]

All meetings shall be held through video conferencing/AV means and voting shall be by remote e-voting; voting by proxy is not permitted though authorized representatives are allowed.

Notice and publication requirements under the Companies (CAA) Rules, 2016 - appointment of chairman and scrutiniser for meetings - quorum and voting entitlement for shareholders and creditors - filing of affidavits and reporting results - What procedural directions (notice period, form, advertisement, chairman/scrutiniser appointments, quorum, voting entitlement, and reporting) must be complied with for the convened meetings. - HELD THAT: - The Tribunal prescribed specific procedural directions: notices in Form No. CAA 2 must be sent at least one month before the meetings to persons appearing on record as at 31st March 2020, together with the Scheme and explanatory statement; an advertisement indicating meeting modalities must be published in specified newspapers; Shri Mahesh C. Gupta (failing him Shri Ullas Shah) was appointed Chairman of the meetings and a named practising company secretary was appointed as scrutiniser; quorums were fixed for each class of meeting; voting entitlements are to follow company records and books of account, with the Chairman empowered to determine disputed entries; the Chairman must file an affidavit at least seven days before the meetings confirming compliance with issuance of notices and advertisements; and the Chairman must report the result in Form No. CAA 4 within 30 days of conclusion of the last meeting. These directions implement the Companies (CAA) Rules, 2016 procedural requirements and ensure verifiable compliance. [Paras 11, 12]

The Tribunal directed detailed procedural compliance-notice, advertisement, appointment of chairman and scrutiniser, quorum and voting rules, pre-meeting affidavit, and post-meeting reporting in Form CAA 4-together with service of notices to specified authorities as required by Rule 8 and Section 230(5).

Compliance with Section 230(5) and Rule 8 of the Companies (CAA) Rules, 2016 - Whether notices of the meeting and accompanying documents must be sent to statutory authorities and other specified bodies and the time allowed for representations. - HELD THAT: - The Tribunal ordered that, in compliance with sub-section (5) of Section 230 and Rule 8, notices in Form No. CAA 3 with the Scheme, explanatory statement and Rule 6 disclosures be sent forthwith to the Regional Director (North Western Region), Registrar of Companies (Gujarat), Income Tax Authorities, Reserve Bank of India, BSE, NSE and SEBI. The authorities were afforded 30 days from receipt to make representations, failing which they will be deemed to have no objection. The notices to these authorities are to be sent after the notices to shareholders and creditors and by the methods prescribed in Rule 8(2). [Paras 12]

Notices and documents must be sent to the specified authorities in Form CAA 3 and representations, if any, must be made within 30 days; otherwise no objection is deemed to exist.

Final Conclusion: The Tribunal directed convening of specified meetings of Torrent Power Limited's stakeholders to consider the Scheme of Arrangement (with meetings for the Transferee dispensed with), mandated conduct of the meetings through video conferencing with remote e-voting, prescribed detailed notice, publication, chairman/scrutiniser, quorum and reporting requirements, and required service of statutory notices to relevant authorities in accordance with Section 230 and the Companies (CAA) Rules, 2016; the Company Application is disposed of accordingly.

Sanction of a Composite Scheme of Amalgamation - transfer and vesting of assets and liabilities pursuant to Section 232(3) of the Companies Act, 2013 - continuance of legal proceedings by or against the transferee company - protection and continuity of employees' service on amalgamation - requirement of prior approval from the Ministry of Civil Aviation for change in status/management under CAR - sanction conditional upon regulatory approvals - filing of certified copy with the Registrar of Companies and consequent dissolution of the transferor company - sanction does not bar subsequent action for statutory violations or liability for taxes, stamp duty and other charges - compliance with applicable accounting standards and auditor's certificate under proviso to Section 230/232

Sanction of a Composite Scheme of Amalgamation - sanction conditional upon regulatory approvals - requirement of prior approval from the Ministry of Civil Aviation for change in status/management under CAR - Sanction of the Scheme of Amalgamation by the Tribunal was granted subject to prior approval from the Ministry of Civil Aviation. - HELD THAT: - The Tribunal considered the statutory compliance and the reports filed by the Regional Director and the Official Liquidator and found no objection from them. The Ministry of Civil Aviation, however, informed that prior permission is required under the CAR for change in name, change in management arising from change in equity holdings, or takeover, and that prior approval should be obtained before effecting changes in status of the company. The petitioner companies had not placed on record any approval from the Ministry of Civil Aviation. In view of that omission, the Tribunal sanctioned the Scheme but made such sanction expressly conditional upon obtaining the requisite sanction and approval from the Ministry of Civil Aviation in accordance with the prescribed guidelines. The sanction therefore stands subject to fulfillment of that regulatory requirement. [Paras 7, 12, 15, 16, 17]

Scheme sanctioned, subject to prior approval from the Ministry of Civil Aviation.

Transfer and vesting of assets and liabilities pursuant to Section 232(3) of the Companies Act, 2013 - continuance of legal proceedings by or against the transferee company - protection and continuity of employees' service on amalgamation - appointed date for the Scheme - filing of certified copy with the Registrar of Companies and consequent dissolution of the transferor company - Upon sanction, all specified assets, liabilities, proceedings and employees are to stand transferred to the Transferee Company and the appointed date and ROC filing consequences were fixed. - HELD THAT: - The Tribunal ordered that, pursuant to Section 232(3) of the Companies Act, 2013, all properties, rights and interests of the Transferor Company shall without further act or deed vest in the Transferee Company, and all liabilities, powers and obligations shall transfer to the Transferee Company. Proceedings pending by or against the Transferor Company will continue by or against the Transferee Company. Employees in service immediately prior to the scheme taking effect shall become employees of the Transferee Company without interruption. The Appointed Date was declared as 1st April 2018. The Tribunal further directed that within thirty days of receipt of the certified copy of the order the petitioners shall deliver it to the Registrar of Companies for registration and on such delivery the Transferor Company shall be dissolved and the ROC files consolidated. [Paras 19]

Orders for transfer/vesting, continuance of proceedings, employee continuity, appointed date set as 1st April 2018, and ROC filing/dissolution directions were made operative.

Compliance with applicable accounting standards and auditor's certificate under proviso to Section 230/232 - no bar to action for statutory violations despite sanction - sanction does not exempt payment of stamp duty, taxes or other charges - The Tribunal recorded compliance with accounting and other statutory requirements and clarified that the sanction does not confer immunity from subsequent proceedings, enforcement or statutory dues. - HELD THAT: - The petitioners filed the auditor's certificate certifying compliance with applicable Accounting Standards as required by the proviso to Section 230/Section 232. The Regional Director and Official Liquidator raised no adverse findings that would preclude sanction. Nevertheless, the Tribunal expressly clarified that if any deficiency or violation of any enactment, rule or regulation is found, the sanction will not prevent action being taken in accordance with law against concerned persons. The Tribunal also stated that the order should not be construed as granting exemption from payment of stamp duty, taxes or any other charges or from obtaining permissions required under any law. [Paras 12, 18, 19]

Statutory compliances recorded; sanction without prejudice to actions for violations and without exemption from taxes, stamp duty or other statutory charges.

Final Conclusion: The Company Petition for sanction of the Composite Scheme of Amalgamation is allowed. The Tribunal sanctioned the Scheme subject to obtaining prior approval from the Ministry of Civil Aviation, directed transfer and vesting of assets and liabilities and continuity of proceedings and employees with appointed date fixed as 1st April 2018, and required filing of the certified order with the Registrar of Companies; the sanction is without prejudice to action for any statutory violations and does not exempt payment of applicable taxes or duties.

Summary order. Application for interim restraint (IA-2837/2020) listed for hearing along with Avoidance Application (IA-1313/2020) on 09.10.2020; applicant directed to intimate respondents of the next date of hearing and respondents permitted to file reply, if any, two days before the next date.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code - Appointment of Liquidator under Section 34 of the IBC - Committee of Creditors' resolution to liquidate - Police assistance to Liquidator for custody of records

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code - Committee of Creditors' resolution to liquidate - Liquidation of the Corporate Debtor was ordered pursuant to the Committee of Creditors' approved decision under Section 33(2) of the IBC. - HELD THAT: - The Resolution Professional filed the application under Section 33(2) after the Committee of Creditors, in its fourth meeting held on 03.09.2020, with the requisite voting share (77.92% of voting share and 100% of members present), resolved not to reissue Form G or go for a fresh EOI and recommended liquidation of the company. The Tribunal considered the minutes of the CoC meeting and the surrounding factual matrix concerning the stalled project, lack of approvals, prolonged non construction, minimal bookings and non cooperation of the suspended directors, and observed that the CoC had validly approved liquidation. On that basis the Adjudicating Authority passed a liquidation order pursuant to Section 33(2). [Paras 8, 9]

The Corporate Debtor M/s. Sargam Builders Pvt. Ltd. is put into liquidation with immediate effect under Section 33(2) of the IBC.

Appointment of Liquidator under Section 34 of the IBC - The Resolution Professional was appointed as Liquidator of the Corporate Debtor under Section 34. - HELD THAT: - The Resolution Professional submitted his consent to act as Liquidator and produced the necessary authorisation. Having regard to the CoC resolution recommending the RP to continue as Liquidator and the RP's consent and credentials, the Tribunal appointed the incumbent Resolution Professional as Liquidator under Section 34, directing him to perform duties and exercise powers under the Code and relevant IBBI regulations. [Paras 9]

Mr. Jasin Jose, the Resolution Professional, is appointed as the Liquidator of the Corporate Debtor under Section 34 of the IBC.

Police assistance to Liquidator for custody of records - Police assistance was directed to be provided to the Liquidator to take custody and control of the Corporate Debtor's records. - HELD THAT: - The RP sought police assistance on the ground that the office premises and records are located at premises controlled by the suspended directors and that those directors had not cooperated with the CIRP or CoC. Considering the RP's request and the need to secure records essential for valuation and completion of the liquidation process, the Tribunal directed the concerned police authorities to render necessary assistance to the Liquidator to take custody and control of the Corporate Debtor's records. [Paras 9]

Police authorities are directed to provide necessary assistance to the Liquidator to take custody and control of the Corporate Debtor's records for completion of the liquidation process.

Final Conclusion: The Tribunal allowed the application under Section 33(2) by recording the CoC's decision to liquidate, ordered immediate liquidation of the Corporate Debtor, appointed the incumbent Resolution Professional as Liquidator under Section 34, and directed police assistance to enable the Liquidator to take custody of company records.

Pre-existence dispute - real dispute - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Section 8 demand notice - Mobilox principle

Pre-existence dispute - real dispute - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Section 8 demand notice - Mobilox principle - Whether the application under Section 9 of the IBC is maintainable where the corporate debtor raised a dispute prior to issuance of the Section 8 demand notice - HELD THAT: - The Tribunal found that the corporate debtor had, by its communication dated 19.01.2018 (and reiterated in its reply dated 19.06.2018), raised a substantive dispute regarding the claim before issuance of the Section 8 demand notice. Applying the test in Mobilox Innovative (as applied by the Tribunal), the adjudicating authority's task at this stage is limited to determining whether a plausible, non-spurious dispute exists that requires further investigation. The Tribunal concluded that the dispute disclosed by the corporate debtor is not patently feeble or illusory and appears to have sufficient particulars and substance to warrant investigation rather than summary adjudication under Section 9. Consequently, the existence of a pre-existing dispute disentitles the applicant to initiation of corporate insolvency proceedings under Section 9. [Paras 11, 13]

Application under Section 9 dismissed on account of a pre-existing 'real dispute' raised prior to the Section 8 demand notice.

Final Conclusion: The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 was rejected and the corporate insolvency application dismissed because the corporate debtor had raised a substantive dispute prior to the Section 8 demand notice, engaging the Mobilox principle.

Default and admitted debt - admission of corporate insolvency petition - use of the Insolvency and Bankruptcy Code as a recovery forum - going concern and preservation of substratum - equitable discretion to grant time for repayment - impact of COVID-19 on insolvency proceedings and temporary threshold increase

Default and admitted debt - Existence of debt and default between the parties - HELD THAT: - The Tribunal found on the record that the Corporate Debtor had borrowed funds by way of ICDs and loans and had admitted receipt of the loans and executed demand promissory notes. The parties' course of dealings showed renewals and a running account. The Tribunal recorded that there was no doubt about the existence of an admitted debt and default as per the agreed terms between the parties. [Paras 11]

The debt and default were held to be established on the admitted facts.

Admission of corporate insolvency petition - use of the Insolvency and Bankruptcy Code as a recovery forum - going concern and preservation of substratum - equitable discretion to grant time for repayment - impact of COVID-19 on insolvency proceedings and temporary threshold increase - Whether the petition should be admitted to initiate CIRP or disposed by granting time to repay - HELD THAT: - Applying the principles in Mobilox Innovations (as cited) and subsequent clarifications that the IBC is not to be used as a substitute for debt recovery or to push an otherwise solvent going concern into insolvency, the Tribunal considered that the Corporate Debtor remained a going concern, had substantial revenue and employees, had admitted arrangements and receipts (including funds available via L&T Finance/escrow and payments from DISCOMs), and had already settled substantial creditor dues. The Tribunal also took judicial notice of the altered economic circumstances due to the COVID-19 pandemic and the legislative increase in the default threshold, observing that the Code's object includes preserving value and protecting viable businesses. In light of these factors and the Corporate Debtor's undertaking and arrangements to pay, the Tribunal exercised its discretion to withhold admission of the petition and instead directed the Corporate Debtor to settle the debt within a specified period, granting the Financial Creditor liberty to file afresh if the direction was not complied with. [Paras 13, 14, 15, 16]

The petition was not admitted; the Corporate Debtor was directed to repay the balance debt or the amount as settled within 60 days, failing which the Financial Creditor may file a fresh petition.

Final Conclusion: C.P. (IB) No.359/BB/2019 was disposed of by refusing to admit the petition into CIRP; the Corporate Debtor was directed to repay the balance debt (or the amount as settled with the Financial Creditor) within 60 days, with liberty to the Financial Creditor to file a fresh petition in case of non-compliance.

Corporate insolvency resolution process - financial debt and default - summary adjudication under Section 7 - continuing default doctrine - parallel criminal proceedings under the Negotiable Instruments Act do not preclude initiation under the Code - impleadment of creditors and claims to be adjudicated in CIRP - appointment of Interim Resolution Professional and moratorium

Financial debt and default - summary adjudication under Section 7 - Existence of financial debt and occurrence of default sufficient to admit petition under Section 7. - HELD THAT: - On the materials placed on record - certificate of registration of the Financial Creditor, Loan Agreement dated 20.03.2015, bank statements with banker's book certificate, Demand Promissory Note and Demand Notice dated 07.03.2019 - the Tribunal found that the Financial Creditor disbursed money against consideration for time value of money and that a debt within the meaning of the Code exists. The Tribunal applied the summary scope of Section 7 to ascertain default on the basis of documentary evidence without requiring a full-blown inquiry. The Corporate Debtor did not deny the existence of debt or repayment; its challenge related only to quantum. NeSL report and auditor's report corroborated default. The Tribunal therefore held that the requirements for admission under Section 7 were met and the petition was maintainable. [Paras 17, 18, 21, 23]

The petition is admitted as debt and default are established and the application meets the requirements of Section 7.

Continuing default doctrine - limitation - Limitation objection rejected on the ground of continuing default. - HELD THAT: - The Corporate Debtor argued that the petition was time-barred citing the date of first default. The Tribunal held that the case involves continuous defaults from 30.06.2015 onwards and, in that factual matrix, the plea of limitation fails. The Tribunal relied on the documentary record including the Demand Notice and NeSL report to treat defaults as continuing for purpose of Section 7 adjudication. [Paras 5, 18]

Limitation objection is rejected and does not bar admission of the petition.

Parallel criminal proceedings under the Negotiable Instruments Act do not preclude initiation under the Code - Pending proceedings under Section 138 NI Act do not preclude filing or admission of a Section 7 petition. - HELD THAT: - The Corporate Debtor contended that pending criminal proceedings under Section 138 would preclude the present petition. The Tribunal rejected this contention noting that Section 138 proceedings are criminal in nature and do not operate as a bar to initiation of insolvency proceedings under the self-contained Code. The Tribunal treated the objection as an after-thought immaterial to the threshold satisfaction required under Section 7. [Paras 6, 8, 18]

Section 138 proceedings do not prevent the Financial Creditor from seeking initiation of CIRP under the Code.

Impleadment of creditors and claims to be adjudicated in CIRP - Application for impleadment (I.A. No. 554/2019) dismissed; competing claims to be considered in CIRP by the IRP. - HELD THAT: - Applicants sought impleadment as debenture holders and relied on a No Due Certificate and a discharge deed. The Tribunal held the petition to be an independent proceeding based on the Financial Creditor's debt and default and observed that claims of other parties do not defeat admission. The Tribunal noted that if the applicants have claims, they may submit them to the IRP after the CIRP is ordered; their IA was disposed of accordingly. [Paras 11, 12, 22]

IA No. 554 of 2019 dismissed; impleadment refused and competing claims left to be adjudicated in the CIRP.

Appointment of Interim Resolution Professional and moratorium - Interim Resolution Professional appointed and moratorium declared; IRP found prima facie eligible. - HELD THAT: - The Financial Creditor nominated a qualified Resolution Professional who filed consent and requisite declaration. The Tribunal, satisfied prima facie about his eligibility, appointed him as Interim Resolution Professional. Consequential directions were issued declaring the moratorium and directing the IRP to perform statutory duties and report to the Adjudicating Authority. The Tribunal directed cooperation from the Corporate Debtor's management and fixed a further date for the IRP's report. [Paras 24, 25]

Shri Vijayakumar Subramaniam Varun appointed as IRP and moratorium declared; CIRP initiated.

Final Conclusion: The Company Petition under Section 7 is admitted: documentary evidence established a financial debt and continuing default, limitation and parallel Section 138 proceedings were held not to bar admission, the impleadment application was dismissed and the nominated IRP was appointed with moratorium ordered to commence CIRP.

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Liquidator - Committee of Creditors' approval threshold of 66% for Resolution Plan - Resolution of insolvency should be the norm and liquidation an exception - Moratorium under Section 14 and fresh moratorium under Section 33(5) of the I&B Code - Investigation of financial affairs including preferential, undervalued and fraudulent transactions - Obligations of the Liquidator including public announcement and submission of preliminary report under Regulation 13

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' approval threshold of 66% for Resolution Plan - Resolution of insolvency should be the norm and liquidation an exception - Corporate Debtor to be ordered into liquidation as no Resolution Plan was approved within the permissible CIR process period and the CoC could not reach the required voting threshold. - HELD THAT: - The Tribunal recorded that despite initiation of CIRP, issuance of public invitation for claims and EoIs, and consideration of a Resolution Plan submitted by the promoters, the CoC did not approve any plan with the requisite 66% voting share. Efforts to break the deadlock between the two financial creditors were explored in view of the legislative object that resolution is the norm and liquidation the exception, and relevant judicial precedents were considered. Having found that no Resolution Plan was received/approved under sub section (6) of Section 30 before expiry of the maximum CIRP period and that the deadlock persisted, the Tribunal exercised the power under Clause (a) of sub section (1) of Section 33 to pass a liquidation order. [Paras 16, 18]

Liquidation ordered under Section 33(1) of the I&B Code as no resolution plan obtained/approved within the statutory period and CoC could not secure requisite assent.

Appointment of Liquidator - Obligations of the Liquidator including public announcement and submission of preliminary report under Regulation 13 - The existing Resolution Professional, J. Manivannan, having given consent, is appointed as Liquidator and is directed to perform the statutory duties of the liquidator. - HELD THAT: - On being asked, the Resolution Professional confirmed willingness and furnished written consent to act as Liquidator. The Tribunal appointed him to the liquidator's office and directed him to act strictly in accordance with the I&B Code, the Liquidation Process Regulations and attendant rules. The order prescribes immediate steps including issuance of public announcement, deeming the order a notice of discharge to employees, investigation of financial affairs and filing of a preliminary report within 75 days as mandated by Regulation 13. [Paras 17, 18]

J. Manivannan appointed as Liquidator with directions to carry out statutory liquidation duties, public announcement, investigations and to submit a preliminary report within 75 days.

Moratorium under Section 14 and fresh moratorium under Section 33(5) of the I&B Code - Investigation of financial affairs including preferential, undervalued and fraudulent transactions - Statutory intimation to regulatory and fiscal authorities - Consequential directions ancillary to liquidation were issued, including cessation of prior moratorium, commencement of a fresh moratorium, investigations by the Liquidator and statutory intimations to authorities. - HELD THAT: - The Tribunal directed that the moratorium previously in place under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence. The Liquidator is directed to investigate the corporate debtor's financial affairs with focus on preferential, undervalued and fraudulent transactions and to give necessary intimations to the Registrar of Companies, Insolvency and Bankruptcy Board of India and other fiscal and regulatory authorities (including under Section 178 of the Income Tax Act). The Registry was directed to communicate the order to relevant authorities and financial creditors. [Paras 18]

Prior moratorium ceases; fresh moratorium under Section 33(5) commences; Liquidator to investigate financial affairs and intimate statutory authorities.

Final Conclusion: The Tribunal disposed of MA/1413/2019 by directing liquidation of the Corporate Debtor under Section 33(1) of the I&B Code, appointed the consenting Resolution Professional as Liquidator, and issued ancillary directions governing the liquidation process, investigations and statutory communications.

Effect of acknowledgement under Section 18 of the Limitation Act, 1963 - application of explanation (a) to Section 18 - continuing cause of action and extension of limitation - validity of "without prejudice" communications as acknowledgement - applicability of Section 238A of the Insolvency and Bankruptcy Code, 2016 - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and conduct of CIRP

Effect of acknowledgement under Section 18 of the Limitation Act, 1963 - application of explanation (a) to Section 18 - continuing cause of action and extension of limitation - validity of "without prejudice" communications as acknowledgement - applicability of Section 238A of the Insolvency and Bankruptcy Code, 2016 - Debt claimed by the financial creditor was not barred by limitation as letters and communications from the corporate debtor constituted valid acknowledgements or promises to pay, thereby extending limitation. - HELD THAT: - The Tribunal found that the corporate debtor had repeatedly written to the financial creditor seeking restructuring and, in particular, the letter dated 5th March 2018 referred to an earlier letter dated 11th January 2016 which acknowledged the loan, non-payment and requested restructuring. Applying explanation (a) to Section 18 of the Limitation Act, 1963, the Bench held that acknowledgements need not be in any strict form or addressed only to the creditor and may be construed in a liberal commercial context. The Tribunal relied on its earlier decisions and Supreme Court authority to emphasise that an acknowledgement need only indicate a subsisting jural relationship and may revive limitation if made within the prescribed period. The Bench rejected the contention that communications marked "without prejudice" cannot operate as acknowledgements, noting authority holding that the mere use of "without prejudice" does not negate an acknowledgment of debt. Section 238A of the IBC was held to require the Limitation Act to be applied "as far as may be", and in the insolvency context explanation (a) should be read liberally with the wider definition of "claim" under the IBC. The Tribunal therefore concluded that the sequence of letters constituted either acknowledgements under Section 18 or promises to pay under Section 25(3) of the Indian Contract Act, 1872, and consequently the Section 7 application was not time-barred. [Paras 5]

The debt is not barred by limitation; the corporate debtor's letters constitute acknowledgement/promise to pay and revive the limitation period.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and conduct of CIRP - The Section 7 application by the financial creditor is admitted and CIRP is initiated; moratorium is declared and an Interim Resolution Professional is appointed with consequential directions. - HELD THAT: - Having held that the claim was not time-barred and that the application was complete and free from defect, the Tribunal admitted the application under Section 7 of the IBC. The Bench directed declaration of moratorium and public announcement in accordance with Sections 13-15 and Section 14 of the IBC, specified the effects and scope of the moratorium, appointed the proposed Interim Resolution Professional, directed payment of advance fees and mandated the IRP to conduct the CIRP in a time bound manner, including calling for claims and convening the Committee of Creditors. Administrative directions for public announcement, communication of the order and filing of progress report were also issued. [Paras 6]

Section 7 application is admitted; moratorium declared; IRP appointed and directed to carry out CIRP with specified procedural steps.

Final Conclusion: The Tribunal admitted the financial creditor's Section 7 application against the corporate debtor, holding the claim not barred by limitation because the corporate debtor's communications amounted to acknowledgements or promises to pay under Section 18 (explanation (a)) of the Limitation Act and, read with Section 238A of the IBC, revived the limitation; consequent to admission, moratorium was declared, an Interim Resolution Professional appointed and directions issued for conducting the CIRP.

Corporate Insolvency Resolution Process - default and debt under the Insolvency and Bankruptcy Code - mala fide initiation of CIRP / collusion and abuse of process - non-establishment of default as ground for dismissal - intervention to raise allegations of collusion and to seek dismissal

Default and debt under the Insolvency and Bankruptcy Code - non-establishment of default as ground for dismissal - Whether the Financial Creditor established existence of a financial debt and default sufficient to admit the Section 7 application. - HELD THAT: - The Tribunal found material inconsistencies in the Financial Creditor's case on the occurrence and timing of default. Documents executed on 15.02.2018 (including supplemental consortium agreements and hypothecation instruments) and the enhancement of limits shortly before the alleged date(s) of default made the claimed dates of default and the subsequent classification as NPA (29.05.2018) implausible without proper explanation. The Financial Creditor did not produce requisite data showing reasons for NPA classification or a show cause notice prior to classification. Evidence of prior proceedings (including the dismissed Section 10 petition filed by the Corporate Debtor and related orders of the High Court and Supreme Court) and the ICRA rating action were considered in context; the Tribunal observed that these facts, together with silence and omissions in the Financial Creditor's pleadings, undermined the assertion of an established default. On the record, the Financial Creditor failed to satisfactorily prove that the debt and default relied upon for initiating CIRP had occurred as pleaded.

The Section 7 petition is dismissed for failure to establish the existence of a financial debt/default as required for admission.

Mala fide initiation of CIRP / collusion and abuse of process - intervention to raise allegations of collusion and to seek dismissal - Whether the intervening applicant succeeded in proving that the Section 7 petition was initiated with mala fide intent or in collusion to defeat the intervener's claims, and whether the intervener's application should be allowed. - HELD THAT: - The Tribunal accepted the intervener's contention that the earlier Section 10 proceedings and subsequent conduct (including change of name and address by the Corporate Debtor, the timing and nature of filings, and the pattern of interactions with consortium banks) indicated attempts to frustrate the intervener's rights under foreign awards. The Supreme Court's adverse observations and imposition of costs against the Corporate Debtor in related proceedings were noted. Considering the totality of evidence and the Financial Creditor's conduct (including omissions and unexplained timing of NPA declaration), the Tribunal concluded there was sufficient material to infer collusion/abuse of process and that the Financial Creditor had not come to the Tribunal with clean hands. The intervener was therefore entitled to relief.

The intervening application is allowed; the allegations of mala fide/collusion succeeded and contributed to dismissal of the Section 7 petition.

Final Conclusion: C.A. (IB) No. 881/KB/2019 (intervener's application) is allowed and C.P. (IB) No. 1541/KB/2018 (Section 7 petition by Bank of Baroda) is dismissed; parties to bear their own costs; registry to communicate the order and issue certified copies as directed.

Existence of pre-existing dispute - maintainability of application under Section 9 of IBC, 2016 - effect of respondent's reply to demand notice on disputation - requirement of an undisputed operational debt - dismissal of Section 9 petition

Existence of pre-existing dispute - maintainability of application under Section 9 of IBC, 2016 - effect of respondent's reply to demand notice on disputation - Whether the contentions raised by the corporate debtor constitute a pre-existing dispute and thereby render the Section 9 application not maintainable - HELD THAT: - The Tribunal found that the parties had a contractual arrangement for supply and advance payment of coal but the operational creditor refused to accept the coal alleging inferior quality and non-supply through the vessel named in the contract. The corporate debtor, prior to receipt of the demand notice, had sent an email alleging multiple breaches and the respondent's reply to the demand notice raised contentions of failure to lift coal and delayed payments by the operational creditor. The conduct of the operational creditor (including refusal to accept offered coal during hearing) and absence of a written concluding contract to dispel the disputes supported the conclusion that a pre-existing dispute existed. In these circumstances the Tribunal held that the requirement of an undisputed operational debt for invocation of Section 9 of the IBC was not satisfied and the petition was not maintainable. The Tribunal distinguished the authorities relied upon by the operational creditor on the facts of the case, noting that those decisions did not present the contemporaneous pre-existing contentions shown here. [Paras 5, 8, 9, 10]

Found a pre-existing dispute between the parties; Section 9 petition not maintainable and liable to be dismissed.

Final Conclusion: The Company Petition under Section 9 of the IBC, 2016 is dismissed without cost; the operational creditor remains free to pursue alternate recovery remedies before an appropriate forum.

Service of demand notice - existence of pre existing dispute under Section 9 - admission under Section 9(5)(i) of the Code - completeness of application in Form 5 - application of Mobilox principle on plausible dispute - declaration of moratorium under Section 14 - appointment of Interim Resolution Professional and related duties

Service of demand notice - existence of pre existing dispute under Section 9 - application of Mobilox principle on plausible dispute - Demand notice was duly delivered and no pre existing dispute was shown by the corporate debtor. - HELD THAT: - The Tribunal found that the demand notice in Form No.3 & 4 dated 16.10.2019 was sent to the address as per the corporate debtor's master data and was duly acknowledged. The corporate debtor replied by e mail admitting the debt and requesting time to sell property to discharge liabilities. Applying the principle in Mobilox Innovations, the Tribunal held there was no credible or bona fide dispute raised that would require rejection at the threshold; the reply amounted to admission of liability rather than a notice of dispute. Accordingly, service and the absence of a pre existing dispute were established. [Paras 13, 14, 15, 18]

Demand notice properly served and no notice of dispute established.

Completeness of application in Form 5 - admission under Section 9(5)(i) of the Code - The application under Section 9 was complete and the statutory conditions for admission under Section 9(5)(i) were satisfied. - HELD THAT: - The Tribunal examined the contents of Form 5, accompanying ledger, invoices and computation, and the affidavit verifying the demand notice reply. It found that the application met the requirement of completeness, established existence of an unpaid operational debt in default, that the invoice/notice was delivered, no dispute was recorded, and there were no disciplinary proceedings against the proposed resolution professional. On this basis, and applying the statutory test in Section 9(5)(i), the Tribunal concluded the petition was admissible. [Paras 16, 18, 19, 20]

Petition admitted under Section 9(5)(i); conditions of admission satisfied.

Declaration of moratorium under Section 14 - appointment of Interim Resolution Professional and related duties - Moratorium declared and Interim Resolution Professional appointed with directions. - HELD THAT: - Upon admission of the corporate insolvency petition, the Tribunal declared moratorium in terms of Section 14, specifying the prohibitions on suits, transfers and enforcement and clarifying exceptions relating to essential supplies. The Tribunal vetted the credentials of the proposed interim resolution professional and, finding no adverse material, appointed him under the Code. The order set out the term of appointment, suspension of the board's powers, duties to take control of assets, public announcement, constitution of the committee of creditors and periodic reporting to the Tribunal. [Paras 21, 22, 23, 24]

Moratorium ordered; Mr. Ravinder Kumar Goel appointed as Interim Resolution Professional with the specified directions.

Final Conclusion: The Tribunal admitted the Section 9 petition: demand notice was held properly served and no pre existing dispute was established; the statutory conditions for admission were satisfied; moratorium was declared; an Interim Resolution Professional was appointed and directed to carry out the duties under the Code. CA seeking stay on alienation was disposed of in view of admission.

Resolution plan approval under Section 31(1) of the Insolvency and Bankruptcy Code - compliance with Section 30(2) of the Insolvency and Bankruptcy Code - approval by committee of creditors under Section 30(4) and exercise of commercial wisdom - payment to operational creditors under Section 30(2)(b) as amended - performance security requirement under Regulation 39(4) read with Regulation 36B(4A) - provisions for implementation and supervision of the resolution plan

Resolution plan approval under Section 31(1) of the Insolvency and Bankruptcy Code - compliance with Section 30(2) of the Insolvency and Bankruptcy Code - provisions for implementation and supervision of the resolution plan - Approval of the resolution plan submitted by Haldiram Snacks Private Limited under Section 31(1) of the Code - HELD THAT: - The Tribunal examined whether the resolution plan approved by the CoC met the requirements of Section 30(2) and Section 30(4) and contained provisions for effective implementation as required by the proviso to Section 31(1). The RP's certification in revised Form H and the material in the plan were considered: the plan provided for CIRP costs, management and supervision arrangements (monitoring agency, turnaround experts, reconstitution of board and appointment of KMP), an implementation schedule and sources of funds. The RP certified eligibility under Section 29A and compliance with the Code and Regulations. The CoC approved the plan with 100% voting share after considering feasibility and viability. On this basis the Tribunal concluded that the statutory conditions for approval under Section 31(1) were satisfied and therefore approved the resolution plan as binding on the corporate debtor and stakeholders. [Paras 25, 27, 29, 31, 36]

The resolution plan as approved by the CoC is sanctioned under Section 31(1) of the Code.

Payment to operational creditors under Section 30(2)(b) as amended - liquidation value and distribution in priority under Section 53(1) - Whether the resolution plan complied with the amended Section 30(2)(b) in relation to operational creditors - HELD THAT: - The Tribunal noted the admitted liquidation value and the calculation that the liquidation value available would not cover financial creditors, resulting in nil distribution to operational creditors in liquidation. The plan proposed to settle admitted operational creditor claims at zero because the liquidation-value-based distribution to operational creditors would be NIL; there were no dissenting financial creditors. On this basis the Tribunal held that the plan complied with Section 30(2)(b) (as substituted w.e.f. 06.08.2019) since the plan's treatment of operational creditors equated to the amount payable in liquidation and was certified in Form H. [Paras 21, 22, 26]

The treatment of operational creditors in the approved plan meets the requirements of Section 30(2)(b) as amended.

Approval by committee of creditors under Section 30(4) and exercise of commercial wisdom - judicial review of commercial decisions of the CoC - Whether the Tribunal should interfere with the commercial decision of the CoC to accept a plan below the assessed liquidation value - HELD THAT: - Relying on the legislative scheme and binding authority cited, the Tribunal observed that the commercial decision of the CoC is not amenable to being substituted by the adjudicating authority. The members of the CoC and the RP had contemporaneously recorded awareness that the approved infusion was below average liquidation value and that any contingent refund from pending litigation was uncertain; notwithstanding this, the CoC exercised its commercial wisdom and approved the plan by 100% votes. The Tribunal declined to interfere with that commercial decision. [Paras 30, 31, 32, 33, 34]

The Tribunal will not interfere with the CoC's commercial decision to approve the plan.

Performance security requirement under Regulation 39(4) read with Regulation 36B(4A) - Compliance with Regulation 39(4) (and Regulation 36B(4A)) relating to performance security - HELD THAT: - The Tribunal examined the CoC's decision on the form of performance security and the documents filed by the RP. The CoC had directed 50% of performance security by demand draft and 50% by bank guarantee; the RP placed on record a demand draft and an unconditional bank guarantee in the prescribed manner. On the materials, the Tribunal found that the performance security requirements under the Regulations were complied with. [Paras 35]

Requirements of Regulation 39(4) (read with Regulation 36B(4A)) are satisfied.

Final Conclusion: The Tribunal approved the resolution plan submitted by Haldiram Snacks Private Limited after concluding that the plan met the requirements of Section 30(2) and Section 30(4), contained adequate provisions for implementation, treated operational creditors in accordance with the amended Section 30(2)(b), complied with performance security requirements under the Regulations, and that the Tribunal would not interfere with the CoC's commercial decision; CA No.1033/2019 is disposed of and the moratorium ceases to have effect.

Maintainability of petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 - financial creditor - debt - debt due and payable - repudiation of contract - delivery period with grace period - termination consequences and pre-determined liquidated damages

Maintainability of petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 - debt due and payable - delivery period with grace period - termination consequences and pre-determined liquidated damages - repudiation of contract - Whether the Section 7 petition by the buyer (financial creditor) is maintainable when the agreement provides a delivery period (with grace) expiring in May 2020 and contains termination consequences that would apply if the agreement is terminated prior to issuance of the fit out notice. - HELD THAT: - The Tribunal found it undisputed that the agreement dated 12 November 2015 allotted three flats to the Financial Creditor and that clause 4.3 fixed the delivery period (48 months with a 6-month grace) which thus ran until May 2020. The scheme of the IBC requires that a debt be due and payable for a Section 7 petition to be maintainable. The Financial Creditor's case was that, owing to regulatory action and an alleged impossibility of performance, it repudiated the contract and demanded repayment. The Tribunal observed that if the repudiation/termination route were accepted, clause 9.1(i) - which prescribes forfeiture/ pre-determined liquidated damages and the computation of amounts payable on termination prior to the fit out notice - would apply, and the consequences under the contract would therefore determine what is payable. Because the contractually stipulated delivery period had not yet expired and the contractual termination consequences would govern the amounts payable on termination, the Tribunal held that the debt could not be treated as presently due and payable for the purposes of initiating CIRP. Consequently the petition was premature and not maintainable. The Tribunal expressly declined to adjudicate other contentions between the parties. [Paras 10, 11, 12]

The Section 7 petition is premature and not maintainable and is dismissed.

Final Conclusion: The Tribunal dismissed the Section 7 petition as premature because the contractual delivery period (with grace) had not expired and the contractual termination consequences would govern any amounts payable, hence the debt was not then due and payable.

Finality of adjudication and preclusive effect of appellate orders - binding effect of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - adjustment of earlier deposits / pre-deposits against declared dues under a statutory amnesty scheme - scope of judicial interference under Article 226 where statutory demand has attained finality up to Tribunal - recovery of CENVAT credit disallowed under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 and consequential interest under Section 11AB - imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 and Rule 26 of the Central Excise Rules, 2002

Finality of adjudication and preclusive effect of appellate orders - binding effect of declaration under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - adjustment of earlier deposits / pre-deposits against declared dues under a statutory amnesty scheme - scope of judicial interference under Article 226 where statutory demand has attained finality up to Tribunal - Whether the petitioner could require the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to adjust amounts said to have been deposited earlier against a demand which had attained finality up to the stage of the Tribunal. - HELD THAT: - The Court held that the departmental demand of Rs. 22,99,635/- had attained finality up to the stage of the Tribunal and the petitioner had himself availed the SVLDRS scheme by declaring that amount. Once adjudicatory orders have become final, the scheme must be followed strictly and the authority is not obliged to reopen or rework the final demand by taking into account alleged earlier deposits outside the scheme calculation. Allowing such adjustment would amount to judicially re-opening an adjudication that has attained finality. The petitioner's contention that amounts already deposited ought to have been appropriated against the declared liability was rejected because the scheme determination and the admitted declaration govern the quantification of dues under SVLDRS and preclude further adjustment in exercise of writ jurisdiction.

Petition dismissed; no interference with the determination under the Sabka Vishwas Scheme and the authority's refusal to adjust earlier deposits.

Final Conclusion: Writ petition dismissed: where the departmental demand had attained finality up to the Tribunal and the assessee had declared that demand under the Sabka Vishwas Scheme, the Court will not direct adjustment of alleged earlier deposits or re-open the finalized adjudication; the petitioner must proceed strictly under the scheme.

Reversal of CENVAT credit on clearance of capital goods as scrap - Rule 3(5A) of the CENVAT Credit Rules, 2004 - Belated invocation of a limitation/time-bar defence - Admission of new grounds before appellate forum - Ex-parte adjudication and ex-parte appellate order - Reliance on purchase invoices and burden of proof

Reversal of CENVAT credit on clearance of capital goods as scrap - Belated invocation of a limitation/time-bar defence - Admission of new grounds before appellate forum - Reliance on purchase invoices and burden of proof - Ex-parte adjudication and ex-parte appellate order - Whether the appellant can raise for the first time before the Tribunal the plea that removal of scrap to its other factory gives rise to a revenue-neutral situation and thereby attract time-bar benefit, and whether the demand confirmed by lower authorities is maintainable. - HELD THAT: - The plea that scrap was transferred to the Ghaziabad factory and that any duty paid at Sambalpur would be available as credit at the recipient factory was not raised before the original adjudicating authority or the Commissioner (Appeals) and was advanced for the first time before the Tribunal. The Tribunal held that a new ground not pleaded below cannot be permitted at the appellate stage. The original authority had recorded adverse findings, including that the purchase invoices produced did not correspond to the goods in question and related to a subsequent period, which indicated misleading conduct and an intent to evade duty. The appellant furnished no rebuttal to those findings and failed to appear at hearings leading to ex-parte orders at both stages. Having considered the totality of facts, the Tribunal found the appellant's conduct and the absence of earlier pleading fatal to the belated contention and refused to allow time-bar benefit. Consequently the duty demand, interest and penalty as confirmed below were sustained.

The belated defence based on transfer of scrap and claimed revenue neutrality/time-bar benefit is disallowed; the appeal is rejected and the demand confirmed by the authorities below is upheld for the period 2011-12.

Final Conclusion: The appellant's late-raised contention that transfer of scrap created a revenue-neutral situation and attracted time-bar protection was not permitted; in view of unchallenged adverse findings, ex-parte orders and absence of rebuttal, the Tribunal dismissed the appeal and sustained the duty demand, interest and penalty confirmed by the lower authorities for 2011-12.

CENVAT credit entitlement on inputs used in manufacture of exempted goods - exception under Rule 6(6)(v) of the CENVAT Credit Rules, 2004 for goods cleared for export - export under bond/LUT as procedural requirement distinct from credit entitlement - prohibition on exporting domestic taxes - policy to promote export competitiveness

CENVAT credit entitlement on inputs used in manufacture of exempted goods - exception under Rule 6(6)(v) of the CENVAT Credit Rules, 2004 for goods cleared for export - prohibition on exporting domestic taxes - policy to promote export competitiveness - Appellant entitled to take CENVAT credit of duty paid on inputs used in manufacture of goods which are otherwise exempted but exported outside India. - HELD THAT: - The Tribunal held that although Rule 6(1)-(4) generally disallows credit where inputs are used in manufacture of exempted goods, Sub rule (6) carves out exceptions permitting credit where finished goods are exported to SEZ/EOU/EHTP etc., and Rule 6(6)(v) specifically preserves credit where goods are cleared for export under bond. The Tribunal applied the ratio of earlier authorities (including Drish Shoes Ltd. and Jolly Board Ltd.) and emphasised the legislative and policy position that domestic taxes should not be exported so as to render Indian goods non competitive. On these grounds the denial of credit by the lower authorities was held to be unsustainable and the appellant was held entitled to claim the input credit for the exported exempted goods. [Paras 6, 7, 9, 10]

Credit availed by the appellant is allowable and the duty demand based on denial of such credit is not sustainable.

Export under bond/LUT as procedural requirement distinct from credit entitlement - procedural amendment in Notification No.42/2001 (NT) does not affect substantive credit rights - Amendment removing bond procedure for export of goods chargeable to NIL or wholly exempted does not affect entitlement to CENVAT credit under the Credit Rules. - HELD THAT: - The Tribunal found that the subsequent amendment to Notification No.42/2001 (by Notification No.24/2010) which did away with bond/LUT procedure for goods chargeable to NIL rate or wholly exempted is merely procedural. The change in export clearance procedure does not diminish or alter the substantive right to input credit recognised by Rule 6(6) of the CENVAT Credit Rules. Consequently, non execution of bond/LUT in respect of exempted goods exported was treated as a procedural lapse which cannot be a ground to deny credit. [Paras 8]

Procedural amendment to bond/LUT requirement does not disentitle the appellant from claiming CENVAT credit; non execution of bond/LUT is a procedural lapse and not a substantive bar to credit.

Final Conclusion: The appeal is allowed; the appellant is entitled to the CENVAT credit claimed for inputs used in manufacture of goods exempt from duty but exported during April 2011 to December 2011, and the demand raised by denying such credit is set aside with consequential relief.

Principles of natural justice - failure to consider relevant documents and submissions - penalty under Rule 26(2)(i) and Rule 26(2)(ii) of Central Excise Rules, 2002 - set aside - remand for fresh consideration - allowance of appeal by way of remand

Principles of natural justice - failure to consider relevant documents and submissions - penalty under Rule 26(2)(i) and Rule 26(2)(ii) of Central Excise Rules, 2002 - remand for fresh consideration - Impugned penalty orders were set aside and the matter remanded for fresh adjudication on account of violation of principles of natural justice arising from non-consideration of documents and submissions. - HELD THAT: - The appellants contended that they had produced purchase orders, production sheets, invoices, challans and inward-outward registers showing receipt and supply of goods. The Adjudicating Authority, however, did not properly deal with those documents and submissions. The Tribunal held that neglect to consider material documents and submissions amounted to a violation of the principles of natural justice. The Tribunal further observed that even where the alleged breach is grave, an order will not stand if procedural fairness is denied. In view of this failure, the impugned orders could not be sustained and required fresh consideration. [Paras 4]

Impugned orders set aside; appeals allowed by way of remand to the Adjudicating Authority to pass a fresh order after considering all documents and submissions of the appellants.

Final Conclusion: The Tribunal set aside the penalty orders and remanded the matter to the Adjudicating Authority for fresh adjudication, directing that all documents and submissions produced by the appellants be considered before passing a new order.

Cenvat credit - pre-deposit under Section 35F - deposit of duty/service tax - availment of Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004 - penalty under Section 11AC - requirement of fraud, collusion, willful misstatement or suppression for imposition of mandatory penalty

Cenvat credit - pre-deposit under Section 35F - deposit of duty/service tax - availment of Cenvat credit under Rule 3 of the Cenvat Credit Rules, 2004 - Whether amount paid as pre-deposit under Section 35F pursuant to a stay order qualifies as deposit of duty/service tax for the purpose of availment of Cenvat credit. - HELD THAT: - Rule 3 of the Cenvat Credit Rules, 2004 enumerates the duties and service tax which may be taken as Cenvat credit and does not include pre-deposits made under Section 35F. Payment made under Section 35F is not specifically treated as duty or service tax within Rule 3 and therefore cannot be taken as Cenvat credit. The Tribunal distinguished the appellant's reliance on Hindustan Zinc Ltd. on the ground that in that case the amount had been admitted and treated as duty of excise, whereas here the service provider contested the service tax liability and ultimately succeeded before the Tribunal. In view of the statutory scope of Rule 3 and the factual distinction, taking Cenvat credit of the pre-deposit was not permissible and the demand confirmed by the authorities was in conformity with the Cenvat statute. [Paras 6, 7]

Availing Cenvat credit of the pre-deposit under Section 35F is not permissible under Rule 3 and the demand therefore stands upheld.

Penalty under Section 11AC - requirement of fraud, collusion, willful misstatement or suppression for imposition of mandatory penalty - Whether imposition of penalty under Section 11AC for availment of Cenvat credit of the pre-deposit is sustainable. - HELD THAT: - Section 11AC requires specific allegation and proof of elements such as fraud, collusion, willful misstatement or suppression of facts with intent to evade duty/service tax for mandatory penalty to be imposed. The record and the appellant's pleadings and submissions do not disclose such ingredients; the appellant bona fide believed the credit was admissible and the service provider had deposited the amount and issued documents. There is no case that the documents were invalid or that the deposit was not made. In absence of evidence of fraudulent or mala fide conduct, invocation of Section 11AC is not sustainable. [Paras 8, 9]

Penalty imposed under Section 11AC is set aside for want of necessary ingredients of fraud, collusion, willful misstatement or suppression.

Final Conclusion: Appeal partly allowed: demand for Cenvat credit on the pre-deposit is upheld as not admissible under Rule 3, but the penalty imposed under Section 11AC is set aside for lack of requisite dishonest conduct.

Refund under Section 11B - time limit of one year - Cenvat credit reversal and refund claim - strict compliance with statutory limitation for refunds - interpretation of statutory provisions by authorities created under the statute

Refund under Section 11B - time limit of one year - strict compliance with statutory limitation for refunds - Whether the refund claim filed after almost 13 years from reversal of Cenvat credit is maintainable in view of the one year time limit prescribed by Section 11B. - HELD THAT: - The Tribunal records that Section 11B prescribes a one year period from the relevant date for filing a refund claim. The appellant filed the refund application nearly 13 years after reversing the Cenvat credit. The original authority considered the claim under Section 11B and rejected it as time barred, a view upheld by the Commissioner (Appeals). The Tribunal applied the principle that authorities constituted under the statute must adhere to the clear and unambiguous time limit enacted by the legislature, and cannot adopt a different interpretation to extend the statutory limitation. Reliance on Supreme Court precedent establishing that statutory time limits for refunds must be strictly complied with was noted by the Tribunal in support of this position. [Paras 6, 7]

Refund claim filed after almost 13 years is barred by the one year limitation under Section 11B; appeal dismissed.

Cenvat credit reversal and refund claim - interpretation of statutory provisions by authorities created under the statute - Whether reversal of Cenvat credit pursuant to Board instructions (treated as debit in Cenvat account) takes the claim outside the scope of refund under Section 11B. - HELD THAT: - The appellant contended that reversal of Cenvat credit pursuant to administrative instructions should be treated as a mere book entry (debit) and not as payment attracting Section 11B, and that absence of a prescribed mechanism in 2004 made denial of refund unlawful. The Tribunal observed that the refund application was filed and considered under Section 11B by the authorities. Given the clear statutory prescription of the time limit and the role of statutory authorities to interpret and apply the statute as enacted, the Tribunal did not accept an alternate interpretation that would permit the late claim. The Tribunal therefore did not entertain the appellant's contention as a basis to extend or bypass the statutory limitation. [Paras 3, 6]

Contention that reversal should not attract Section 11B remedy rejected; late claim cannot be allowed on that basis.

Final Conclusion: The Tribunal held that the refund claim filed nearly 13 years after reversal of Cenvat credit is time barred under Section 11B and affirmed the rejection of the refund; the appeal is dismissed.

Input service for Cenvat credit - services used in or in relation to manufacture - industrial township doctrine - essentiality test for input services - entitlement to credit for colony maintenance services

Input service for Cenvat credit - services used in or in relation to manufacture - industrial township doctrine - entitlement to credit for colony maintenance services - Cenvat credit admissibility on service tax paid for services related to maintenance, repair and construction of the residential colony and related civil works used by the appellant. - HELD THAT: - The Tribunal found that the factory was situated at a remote location without an established township or municipal services, and the employer-provided residential colony near the factory was necessary to ensure uninterrupted, round-the-clock availability of staff and officers to run the manufacturing operations. Applying the principle that where a residential colony functions as an industrial township it is the industry's responsibility to maintain municipal/civil services, the Tribunal held that services such as repairs and maintenance of the guest house, construction and annual maintenance of residential quarters, swimming pool, badminton court, landscaping, and repair/maintenance of civil works supplying water to the factory were integrally connected to the running of the factory. On that basis, these services were held to be used in or in relation to manufacture and therefore qualify as input service for the purpose of claiming Cenvat credit. The Tribunal noted and followed the reasoning in the earlier decision in Ultratech Cement Ltd. v. CCE&ST (Tri. Del.) which recognized the concept of an industrial township and entitlement to credit for colony-related services. Having applied this determinative legal test, the Tribunal allowed the appeal and set aside the impugned orders. [Paras 8, 9]

The services relating to the residential colony and related civil works qualify as input services used in or in relation to manufacture and Cenvat credit on the service tax paid is admissible; impugned orders set aside.

Final Conclusion: Appeal allowed: services received for maintenance, repair and construction of the industrial residential colony and related civil works were held to be input services used in or in relation to manufacture, entitling the appellant to Cenvat credit; impugned orders set aside.

Transfers to defraud revenue void - Exception for adequate consideration and without notice of pendency - Presumption of intention to defraud from transfers within short interval and among family members - Enforcement of statutory charge for recovery of tax arrears - Option to redeem property by payment of arrears, penalty and interest

Transfers to defraud revenue void - Presumption of intention to defraud from transfers within short interval and among family members - Validity of the sale of the subject property to the petitioner in view of Section 24-A of the TNGST Act. - HELD THAT: - Section 24-A renders transfers or charges created by a dealer with the intention to defraud the revenue void as against claims for tax. The statutory exceptions apply only where the transfer is for adequate consideration and without notice of the pendency of proceedings or with prior permission of the assessing authority. The assessment order for 1996-97 was served on the dealer on 19.04.1999, and the sale to the petitioner occurred on 27.01.2000 through the dealer's brother acting under a power of attorney. The transfer was between close family members and took place within a short interval after knowledge of the tax demand. On these facts the Court drew a strong presumption of lack of bona fides and of an intention to defraud the revenue, and held that the transfer is void under Section 24-A, permitting the department to enforce the statutory charge against the property for recovery of the dealer's arrears. [Paras 7, 8, 10, 11]

The sale in favour of the petitioner is void as against the revenue under Section 24-A of the TNGST Act and the department is entitled to enforce the charge on the property to recover the arrears of the dealer.

Enforcement of statutory charge for recovery of tax arrears - Option to redeem property by payment of arrears, penalty and interest - Relief available to the petitioner and interim procedural direction regarding enforcement of the charge. - HELD THAT: - Although the transfer is void as against the revenue, the Court noted that the property value exceeds the assessed arrears and, in the exercise of discretion, permitted the petitioner an option to pay the entire liability of the original assessee (arrears, penalty and applicable interest) to obtain release of the property from the charge. The respondents were permitted to keep enforcement proceedings in abeyance for 30 days to enable the petitioner to make a representation enclosing full payment, and the first respondent was directed to consider such request favourably upon receipt within that period. [Paras 12, 13]

Petitioner may approach the assessing authority within 30 days with payment of the entire assessed arrears, penalty and interest; enforcement of the charge is stayed for 30 days and the authority shall consider the request for release of the property instead of proceeding against it.

Final Conclusion: Writ petition dismissed; transfer held void as against the revenue under Section 24-A of the TNGST Act and the department may enforce the statutory charge, subject to the petitioner's option to pay the entire assessed arrears, penalty and interest within 30 days, during which enforcement is kept in abeyance.

Anticipatory bail under Section 438 Cr.P.C. - protection against arrest to persons not concerned with the dispute - commercial dispute not warranting custodial arrest - cheque dishonour/negotiable instruments proceedings as parallel remedy - co-operation with investigation as a condition of bail

Anticipatory bail under Section 438 Cr.P.C. - protection against arrest to persons not concerned with the dispute - commercial dispute not warranting custodial arrest - Grant of anticipatory bail to the applicant apprehending arrest in connection with the FIR registered for alleged civil/commercial dispute involving his son. - HELD THAT: - The Court examined the prosecution story and noted that the core dispute is between the complainant and the applicant's son, who is the sole proprietor of the firm alleged to have defaulted in payment. The applicant was made an accused only because he is the father and looked after his son's business. On the face of the record the applicant is not shown to be directly concerned with the commercial transaction. The Court treated the dispute as essentially commercial in nature and observed that if any amount is due, the complainant has appropriate civil or statutory remedies. Balancing these factors and without adjudicating merits, the Court concluded that protection from arrest was warranted. The Court imposed customary bail conditions including furnishing of a personal bond with a surety and specific condition of cooperation with the investigation, and governed the order by the conditions in sub section (2) of Section 438 Cr.P.C. [Paras 7, 8]

Application allowed; in the event of arrest the applicant to be released on bail on furnishing a personal bond of Rs. 50,000 with one surety of like amount, subject to conditions in sub section (2) of Section 438 Cr.P.C. and cooperation with investigation.

Final Conclusion: The application for anticipatory bail is allowed on the stated conditions because the applicant is not shown to be directly concerned with the commercial dispute between the complainant and the applicant's son; the order is without prejudice to the merits of the case.

Priority of secured creditors over Government dues including revenues, taxes, cesses and rates (notwithstanding clause) - Effect of Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act and Section 26E of the SARFAESI Act - Registration of sale certificate issued by secured creditor under SARFAESI - Erroneous entry and cancellation of encumbrance by Sub-Registrar

Registration of sale certificate issued by secured creditor under SARFAESI - Erroneous entry and cancellation of encumbrance by Sub-Registrar - Disposal of W.P.No.8546 of 2020 by directing the 1st respondent to issue the sale certificate and thereafter register the same where the petitioner repaid the remaining amount. - HELD THAT: - The Court recorded that the petitioner, being the successful auction bidder, had initially failed to pay the remaining amount in W.P.No.8546 of 2020 but subsequently paid it and the 1st respondent received the payment. On that factual basis the writ petition was disposed by directing the 1st respondent to issue the sale certificate and proceed with registration. The direction is grounded on receipt of the balance payment and does not require further adjudication of competing claims. [Paras 2]

W.P.No.8546 of 2020 is disposed by directing the 1st respondent to issue the sale certificate and register it.

Priority of secured creditors over Government dues including revenues, taxes, cesses and rates (notwithstanding clause) - Effect of Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act and Section 26E of the SARFAESI Act - Erroneous entry and cancellation of encumbrance by Sub-Registrar - Whether the Sub-Registrar's refusal to register sale certificates on the ground of encumbrances entered in favour of revenue authorities was maintainable, and whether secured creditor's rights under SARFAESI/RDBI amendments have priority over such government dues. - HELD THAT: - The Court examined the communication from the Sub-Registrar that the encumbrances were entered wrongly by misconstruing letters from the revenue departments and that the District Registrar was asked to cancel the entries. On the legal question, the Court held that the issue is no longer res integra in view of the Full Bench and Division Bench precedents of this Court which interpreted the post 2016 amendments. Those authorities (and the Court's consideration of Section 31B of the Recovery of Debts Act and Section 26E of the SARFAESI Act) establish that, by virtue of the "notwithstanding" clause, rights of secured creditors to realise secured debts by sale of assets over which security interest is created shall have priority over all other debts and Government dues, including taxes, subject to the limited proviso relating to the Insolvency and Bankruptcy Code where applicable. Applying those legal principles to the undisputed factual position (including the mortgage date and absence of contrary material), the Court found no impediment to registration of the sale certificates and allowed the writ petitions. [Paras 7, 8, 9, 14, 15]

The writ petitions challenging refusal to register on the basis of the impugned encumbrances are allowed; the erroneous encumbrance entries are to be treated accordingly and there is no impediment to registering the sale certificates in favour of the petitioner, applying the priority accorded to secured creditors by the cited amendments and authorities.

Final Conclusion: Writ petitions are allowed: W.P.No.8546 of 2020 is disposed directing issuance and registration of the sale certificate on receipt of payment; the remaining writ petitions are allowed by holding that the encumbrances were wrongly entered and by applying the post 2016 statutory regime and precedents which accord priority to secured creditors over Government dues, consequently permitting registration of the sale certificates.