TaxTMI Updates e-Newsletter
Nov 16,2021

Release of statutory forms - Issuance of Form C / F-Forms - Rectification and revision of VAT/DVAT returns - Requirement of surety/indemnity bond as condition for release - Directions subject to pending proceedings before higher court

Release of statutory forms - Issuance of Form C / F-Forms - Rectification and revision of VAT/DVAT returns - Respondents were directed to release Form C to enable the petitioner to carry out corrections and revisions of returns for the relevant quarter(s). - HELD THAT: - The Court, having regard to earlier coordinate-bench decisions that authorise the release of statutory forms to permit correction of mistakes in DVAT returns, directed the respondents to release Form C to the petitioner within two weeks so that appropriate corrections for the stated quarter(s) may be carried out. The order follows the reasoning in prior writs where release of F Forms was permitted subject to interim and higher court orders; accordingly the direction is framed while noting that its operation is subject to the final outcome of the pending Special Leave Petition before the Supreme Court. [Paras 5, 6]

Form C shall be released to the petitioner within two weeks to enable corrections/revision of DVAT returns for the relevant quarter(s), subject to the final outcome in SLP No. 7636/2019.

Requirement of surety/indemnity bond as condition for release - The petitioner was required to furnish a surety bond to secure the amounts in issue as a condition for release of the statutory form. - HELD THAT: - Recognising the revenue interest and following the practice adopted in earlier orders, the Court stipulated that the petitioner shall furnish a surety bond to secure the amounts in issue before the forms are released. The direction leaves the respondents free to seek such indemnity/security and conditions the release upon its provision. [Paras 5]

Petitioner to furnish a surety bond to secure the amounts in issue as a condition for release of Form C.

Final Conclusion: Writ petition disposed directing release of Form C within two weeks to permit rectification/revision of DVAT returns for the fourth quarter of 2016 17, subject to the petitioner furnishing a surety bond and the final outcome in SLP No. 7636/2019.

Cancellation of registration under Section 12AA(3) - genuineness of charitable activities - scope of re-examination of trust deed at time of initial registration - treatment of overseas donations under Section 11(1)(a) and (c) - role of Assessing Officer in scrutinising application of income for charitable purposes - finality of Tribunal's factual findings under Section 260A - substantial question of law under Section 260A

Cancellation of registration under Section 12AA(3) - scope of re-examination of trust deed at time of initial registration - genuineness of charitable activities - Validity of the Commissioner's retrospective cancellation of the assessee's registration under Section 12AA(3) on grounds that activities were not genuine and not in accordance with the trust deed. - HELD THAT: - The Court held that when registration under Section 12A was granted in 1995 the clauses and covenants of the Trust Deed were examined and satisfaction recorded; those matters therefore could not furnish a fresh cause of action for cancelling that registration years later. The Commissioner's reliance on the manner in which funds were employed and the question whether activities were in accordance with the deed was a matter which, on the facts, had been considered at the time of original registration and, in any event, fell within the remit of assessment proceedings rather than constituting a ground for cancellation. The Tribunal, as the final fact-finding authority, examined the deed and the relevant facts and recorded findings in favour of the assessee; the High Court found no error in the Tribunal's approach or conclusion.

The cancellation of registration under Section 12AA(3) was not maintainable and the Tribunal's setting aside of the Commissioner's order is upheld.

Treatment of overseas donations under Section 11(1)(a) and (c) - role of Assessing Officer in scrutinising application of income for charitable purposes - Whether alleged donations made abroad without prior CBDT approval justified cancellation of registration. - HELD THAT: - The Court observed that questions regarding application of Section 11 to the trust's donations abroad and any requirement of prior approval are factual and legal matters that can be examined in assessment proceedings. The Commissioner's invocation of those facts as a basis for cancellation was not a proper exercise of jurisdiction in the circumstances of this case where the Tribunal had considered the documentary material and recorded findings favourable to the assessee.

Alleged overseas donations did not furnish a valid ground for cancellation; such issues are for assessment and do not sustain the Commissioner's order of cancellation.

Finality of Tribunal's factual findings under Section 260A - substantial question of law under Section 260A - Whether any substantial question of law arises under Section 260A meriting interference with the Tribunal's order. - HELD THAT: - On exercise of appellate jurisdiction under Section 260A, the High Court's function is to decide whether a substantial question of law arises; it must not re-appreciate facts. Having regard to the Tribunal's examination of the trust deed and relevant materials and its findings in favour of the assessee, the Court found no error in the Tribunal's approach or conclusion and no substantial question of law deserving interference.

No substantial question of law arises; the appeal is dismissed.

Final Conclusion: The High Court dismissed the revenue's appeal under Section 260A, upholding the Tribunal's setting aside of the Commissioner's order cancelling the trust's registration; the grounds relied on by the Commissioner (including overseas donations and alleged non-genuine activities) did not justify cancellation and are matters for assessment rather than retrospective removal of registration.

Reopening of assessment under Section 147/148 - change of opinion - failure to disclose fully and truly all material facts - tangible material to form reasonable belief that income has escaped assessment - treatment of actuarial surplus/negative reserve in life insurance business

Reopening of assessment under Section 147/148 - change of opinion - tangible material to form reasonable belief that income has escaped assessment - Validity of reopening the assessment under Section 147/148 in respect of AY 2003-2004. - HELD THAT: - The Court upheld the conclusion of the Tribunal that the reassessment initiation was not valid because the Assessing Officer did not place any new tangible material before him to justify a reasonable belief that income had escaped assessment. The Court relied on the principle that a mere change of opinion by the revenue on the manner of computation does not confer jurisdiction to reopen assessments. The record showed that the actuarial report, including the negative reserve, had been furnished during the original assessment and the Assessing Officer had referred to that report while completing the assessment; consequently there was no non-disclosure of material facts which would sustain reopening under Section 147/148. [Paras 6, 8, 9]

Reopening of assessment under Section 147/148 was not valid; the reassessment was vitiated as it rested on a mere change of opinion and absence of tangible material to show omission or failure to disclose.

Failure to disclose fully and truly all material facts - treatment of actuarial surplus/negative reserve in life insurance business - Whether the Assessing Officer demonstrated an omission or failure by the assessee to disclose material facts by not including the negative reserve in actuarial surplus. - HELD THAT: - The Court endorsed the Tribunal's finding that the Assessing Officer had not produced any evidence to show that the assessee omitted to disclose relevant material facts; the actuarial documents reflecting the negative reserve were in the possession of the Assessing Officer during the original assessment and the Assessing Officer had applied his mind when passing the assessment order. In these circumstances the adjustment sought by the revenue was characterised as a reassessment based on a changed view rather than on discovered omission, and therefore could not be sustained. [Paras 6, 8, 9]

There was no omission or failure to disclose fully and truly all material facts; the addition disallowing the negative reserve could not be upheld for want of jurisdiction to reopen.

Final Conclusion: The impugned order of the Tribunal upholding the invalidity of the reassessment is affirmed; Questions 1 and 2 are answered against the Revenue, and the third question on merits does not arise as the assessment has been set aside.

Determination whether payment is salary or professional fees (contract of service vs contract for service) - Application of multi-factor test: control test, independence test and intention of the parties - Tax deduction at source: applicability of Section 192 vis-a -vis Section 194J - Assessee in default and vicarious liability under Sections 201 and 201(1A) - Relevance of recipient's return and prior assessment showing income as professional income

Determination whether payment is salary or professional fees (contract of service vs contract for service) - Application of multi-factor test: control test, independence test and intention of the parties - Tax deduction at source: applicability of Section 192 vis-a -vis Section 194J - Characterisation of payments to 'in-house consultant doctors' as salary or professional fees was not finally adjudicated and the matter was remitted to the Assessing Officer for fresh consideration. - HELD THAT: - The Court examined the authorities emphasising multi-factor tests (control, independence and intention), and noted that the contract terms, incentive scheme and the fact that consultants had filed returns declaring professional income are material to classification. In view of the incentive policy and the documentary material placed before the Court, the Court concluded that the existing orders treating payments as salary could not be sustained without re examination. Consequently, the Tribunal's and lower authorities' conclusions insofar as they treated the payments to in house consultants as salary were set aside and the matter restored to the Assessing Officer to re consider the characterisation in the light of the incentive policy, relevant agreements and the jurisprudence on contracts for service versus contracts of service. [Paras 13, 14]

Orders treating the appellant as 'assessee in default' in respect of in house consultant doctors are set aside and the Assessing Officer is directed to re consider the nature of payments (salary v. professional fees) after providing an opportunity of hearing.

Assessee in default and vicarious liability under Sections 201 and 201(1A) - Relevance of recipient's return and prior assessment showing income as professional income - The question of whether the appellant is an assessee in default and liable to tax and interest under Sections 201 and 201(1A) in respect of payments to in house consultants was not finally determined on merits and was remitted for fresh decision; the orders holding the appellant to be in default are set aside pending such reconsideration. - HELD THAT: - Relying on appellate precedents and the principles governing Sections 201 and 201(1A), the Court observed that liability as an assessee in default depends on correct characterisation of the underlying payments. Given the material indicating that recipients declared and were assessed on professional income, and the special incentive structure, the Court found it appropriate to set aside the declarations of default made by the Assessing Officer, CIT(A) and the Tribunal in respect of in house consultants and to restore the matter for fresh adjudication. The Assessing Officer is to take an expedited decision in accordance with law after affording hearing and may permit the assessee to produce additional evidence. [Paras 13, 14, 15]

Orders declaring the appellant an assessee in default for payments to in house consultant doctors are set aside and the matter is remitted to the Assessing Officer for fresh adjudication including determination of any tax and interest liability, after hearing the assessee.

Final Conclusion: Appeal allowed in part: the High Court set aside the orders of the Assessing Officer, CIT(A) and the Tribunal insofar as they treat payments to in house consultant doctors as salary and declare the appellant an assessee in default, and restored the matter to the Assessing Officer to re consider classification, tax and interest issues in light of the incentive policy, agreements and the recipients' returns; other benefits granted to the assessee remain undisturbed and the assessee may produce additional evidence.

Validity of notice under Section 143(2) - Period of limitation for issuance of notice - Jurisdiction to frame assessment - Section 292BB - notice deemed valid where assessee has appeared or co operated - Service of notice versus issuance of notice

Validity of notice under Section 143(2) - Period of limitation for issuance of notice - Jurisdiction to frame assessment - Notice under Section 143(2) issued beyond the prescribed period is invalid and, being so, the assessing officer lacks jurisdiction to frame the assessment. - HELD THAT: - The Court examined the timing of the notice under Section 143(2) vis a vis the proviso which prescribes three months from the end of the financial year in which the return was furnished. On the facts, the financial year ended 31.03.2013 and six months (sic - three months) lapsed on 30.09.2013; the impugned notice dated 21.10.2013 was therefore issued after expiry of the limitation period. The Court held that issuance of notice beyond the prescribed period amounts in law to absence of notice and goes to jurisdiction; such absence cannot be treated as a mere procedural irregularity and will vitiate the assessment. The Tribunal's quashing of the assessment on this ground was held to be correct. [Paras 7, 8, 16, 20, 21]

Assessment quashed for want of jurisdiction because the notice under Section 143(2) was issued beyond the period of limitation.

Section 292BB - notice deemed valid where assessee has appeared or co operated - Service of notice versus issuance of notice - Section 292BB does not cure the complete absence of a validly issued notice beyond the limitation period; it only cures infirmities in service of a notice that has emanated from the Department within time. - HELD THAT: - The Court analysed Section 292BB and relevant authorities, including the Apex Court's reasoning in Lakshman Das Khandelwal, to conclude that Section 292BB operates by deeming a notice to have been duly served where the assessee has participated or co operated, but presupposes that a notice has been validly issued by the Department within the limitation period. The provision therefore addresses defects in service or manner of service, not non issuance or issuance outside the statutory time bar. Consequently, the contention that the assessee's appearance or cooperation cured the late issuance was rejected. [Paras 9, 17, 18, 21]

Section 292BB cannot validate a notice that was not issued within the statutory limitation; it does not save an assessment founded on a time barred notice.

Final Conclusion: The substantial question is answered in favour of the assessee: the notice under Section 143(2) was issued beyond the period of limitation and therefore the assessing officer lacked jurisdiction to frame the assessment; Section 292BB does not cure such defect. The Revenue's appeal is dismissed.

Computation of undisclosed income under Section 158BB - distinction between computation and estimation of undisclosed income - reliance on seized material and computation on actuals - use of extrapolated data for block assessment - evaluation of evidentiary material and opportunity to cross-examine - tribunal's findings on facts and finality in appellate review

Computation of undisclosed income under Section 158BB - distinction between computation and estimation of undisclosed income - reliance on seized material and computation on actuals - use of extrapolated data for block assessment - Deletion of addition for unexplained investments in land at Buttahanahalli based on Tribunal's finding that the Assessing Officer impermissibly relied on extrapolation and failed to base the computation on seized material on actuals. - HELD THAT: - The Court applied the principle that under the scheme of Section 158BB the assessing authority is required to compute undisclosed income on the basis of calculable data seized during search and not by making estimates. The Tribunal correctly relied on the distinction between 'computation' and 'estimation' and the requirement that undisclosed income for the block period must be based on evidence seized and relatable to the assessee's unaccounted receipts. The Assessing Officer's extrapolation from certain agreements and reliance on statements of farmers, without conforming to the mandated methodical computation from seized material, was held to be impermissible. The Tribunal's deletion of the addition was upheld as consistent with the settled principle that computation must be on actuals derived from seized material rather than by arbitrary estimation [Andaman Timber Industries V/s. CCE invoked by Tribunal and the coordinate bench decision in Commissioner of Income-Tax, Bangalore V/s. Gowri Gopal Textile Processing [P.] Ltd. relied on by this Court]. [Paras 12]

Substantial question answered in favour of the assessee; addition based on extrapolation deleted.

Reliance on seized material and computation on actuals - evaluation of evidentiary material and opportunity to cross-examine - tribunal's findings on facts and finality in appellate review - Deletion of addition for alleged bogus expenditure claimed as development charges paid to sister concern (JAIC) amounting to Rs. 92,00,200/- where records showed payments by other persons and not by the assessee. - HELD THAT: - The Court examined the material placed before the authorities and the Tribunal, including the profit and loss accounts and the break-up of receipts recorded in JAIC's books which showed that substantial sums were received from other persons (Mrs. Pyari Jan and Iffath Maab) and only a lesser amount was attributable to the assessee. The Assessing Officer's conclusion treating the payments as bogus in the hands of the assessee was found to be a factual finding which the Tribunal, as the final fact-finding forum, had considered and negatived after reviewing accounts and submissions. As these were pure questions of fact and the Tribunal's conclusion was supported by the record, the Court declined to interfere under Section 260A. [Paras 19]

Substantial question answered in favour of the assessee; Tribunal's deletion of the addition on bogus expenditure upheld.

Final Conclusion: Both substantial questions of law are answered in favour of the assessee and against the Revenue; the Tribunal's deletions are sustained and the Revenue's appeal is dismissed.

Defect under Explanation (a) to section 139(9) of the Act - processing of return under section 143(1)(a)(vi) and its provisos - computation of receipts in INR under Rule 115 of the Income Tax Rules - reimbursements and credit notes not constituting taxable income - appealability under section 246A(1)(a) and section 246A(1)(i) - remedy for excess tax/refund under section 237 - special provision overrides general principle (general ia specialibus non derogant)

Defect under Explanation (a) to section 139(9) of the Act - processing of return under section 143(1)(a)(vi) and its provisos - computation of receipts in INR under Rule 115 of the Income Tax Rules - reimbursements and credit notes not constituting taxable income - Mismatch between income shown in the return and income as per Form 26AS does not, per se, constitute a defect under Explanation (a) to section 139(9) for A.Y. 2016-17 where explanations (conversion rates, reimbursements, reversals) are furnished. - HELD THAT: - The assessee explained the mismatch on three grounds: conversion of foreign-currency invoices into INR using SBI TT Buying rate as per Rule 115, receipt items being reimbursements not chargeable to tax, and subsequent credit notes/reversals reducing includible income. Clause (a) of Explanation to section 139(9) concerns non-filling of annexures/columns and not mere non-tallying of figures arising from bona fide differences of computation or classification. Section 143(1)(a)(vi), as inserted w.e.f. 01.04.2017, specifically dealt with adjustment for income appearing in Form 26AS not included in the return but subject to provisos requiring prior intimation and consideration of the assessee's response; this special regime is the appropriate mechanism to address such mismatches. Applying the principle that special provisions displace general ones, the AO could not treat the mismatch as a clause (a) defect so as to invalidate the return for A.Y. 2016-17; the statutory scheme contemplates processing/adjustment or, where applicable, assessment proceedings rather than summary nullification of the return when the assessee furnishes legitimate explanations. [Paras 7, 8, 9, 10, 11]

The mismatch, explained by conversion methodology, reimbursements and reversals, does not render the return defective under Explanation (a) to section 139(9) for A.Y. 2016-17; AO erred in declaring the return invalid on that ground.

Appealability under section 246A(1)(a) and section 246A(1)(i) - remedy for excess tax/refund under section 237 - An order under section 139(9) which, by wrongly declaring the return invalid, effectively denies or jeopardizes a taxpayer's claim to refund or creates liability the assessee contests is appealable to the CIT(A) under section 246A(1)(a); in the unusual circumstances here it is also analogous to an order refusing refund and thus appealable under section 246A(1)(i) read with section 237. - HELD THAT: - Section 246A(1) lists orders appealable to the CIT(A). While an order under section 139(9) is not expressly listed, clause (a) contemplates appeals against 'an order against the assessee where the assessee denies his liability to be assessed', and is not confined to formal assessment orders. Where an order under section 139(9) operates to deny a legitimately due refund or to treat a return as never filed, thereby creating or jeopardizing liability which the assessee disputes, such an order falls within the ambit of section 246A(1)(a). Further, having regard to the purpose of section 237 (refund of excess tax paid), and the factual matrix where the AO's act resulted in denial of refund, the order has the character of a refusal of refund and is therefore analogous to an order appealable under section 246A(1)(i). Given these circumstances, the CIT(A) erred in treating the departmental order under section 139(9) as not appealable. [Paras 12, 13, 14, 15]

The CIT(A) should have entertained the appeal; the order under section 139(9) in these circumstances is appealable to the CIT(A) under section 246A(1)(a) and is akin to an order refusing refund under section 237, making it appealable under section 246A(1)(i).

Appealability under section 246A(1)(a) and section 246A(1)(i) - Disposition of the appeal and further direction to the CIT(A). - HELD THAT: - Because the AO wrongly declared the return invalid and the CIT(A) dismissed the appeal as not maintainable, the Tribunal set aside the impugned order and directed that the appeal be decided on merits. The assessee must be given a reasonable opportunity of hearing before the CIT(A), who will decide the matter in accordance with law including consideration of the explanations furnished and, if necessary, following assessment proceedings under section 143(3). [Paras 15, 16]

Impugned order set aside; matter remitted to the CIT(A) for adjudication on merits after affording the assessee a reasonable opportunity of hearing.

Final Conclusion: The Tribunal held that a bona fide mismatch between income in the return and Form 26AS-explained by exchange-rate conversion, reimbursements and reversals-does not amount to a defect under Explanation (a) to section 139(9) for A.Y. 2016-17; an order under section 139(9) which effectively denies refund or creates disputed liability is appealable to the CIT(A) under section 246A(1)(a) and, in the circumstances, analogous to refusal under section 237 making it appealable under section 246A(1)(i). The impugned order was set aside and the appeal remitted to the CIT(A) for disposal on merits after hearing the assessee.

Deductibility of employees' contribution to PF/ESI where paid before due date for filing return - clarificatory (declaratory) amendment versus substantive amendment - prospectivity of fiscal amendments altering accrued rights - principle against retrospectivity in taxation

Deductibility of employees' contribution to PF/ESI where paid before due date for filing return - interpretation of contribution in Section 43B/36(1)(va) - Assessee entitled to deduction of employees' contribution to PF/ESI for the relevant assessment year, where the contribution was remitted before the due date for filing the return under section 139(1). - HELD THAT: - Having regard to the decision of the jurisdictional High Court in Essae Teraoka (P.) Ltd. v. DCIT, the Tribunal accepted that the word 'contribution' in the statute contemplates both employer's and employee's share and that payment made on or before the due date for filing the return under section 139(1) entitles the employer to deduction. On the facts the assessee remitted the employees' contribution prior to the due date for filing the return; accordingly the disallowance made in the section 143(1) intimation was unsustainable and the Assessing Officer was directed to grant the deduction. [Paras 6, 7]

Disallowance in respect of employees' contribution to PF/ESI reversed and deduction to be granted.

Clarificatory (declaratory) amendment versus substantive amendment - prospectivity of fiscal amendments altering accrued rights - principle against retrospectivity in taxation - Amendments effected by the Finance Act, 2021 to section 36(1)(va) and section 43B are not clarificatory/declaratory so as to operate retrospectively; they are prospective and do not apply to the relevant assessment year. - HELD THAT: - The Tribunal examined precedents including the larger Bench decisions on retrospectivity and the Supreme Court's tests for identifying clarificatory amendments. It held that where an amendment alters the existing legal position and adversely affects accrued rights, it cannot be treated as merely clarificatory. The Finance Act, 2021 expressly stated the amendments' effective date as 01.04.2021 and the legislative material showed intent for prospective operation. The Tribunal found intrinsic evidence that the 2021 Explanations change the position of law in relation to the 'due date' concept and therefore are not retrospective; reliance on Gold Coin was distinguished on its facts and legislative context. [Paras 6, 7, 8, 9, 10]

Amendments by Finance Act, 2021 are prospective and do not apply to the relevant assessment year; they cannot be invoked to sustain the disallowance.

Final Conclusion: Appeal allowed: the Tribunal directed grant of deduction for employees' contribution remitted before the due date for filing the return and held that the Finance Act, 2021 amendments to section 36(1)(va) and section 43B are prospective and do not apply to the assessment in question.

Treatment of capital expenditure as application of income and its impact on depreciation claim - allowability of depreciation where cost of asset has been allowed as application of income - treatment of repayment of loan vis-a -vis prior allowance of asset cost as application of income (avoidance of double deduction) - revision under Section 263 for assessment found to be erroneous and prejudicial to the revenue - precedential effect of Supreme Court decision in CIT v. Rajasthan & Gujarat Charitable Foundation on depreciation treated as application of income

Allowability of depreciation where cost of asset has been allowed as application of income - precedential effect of Supreme Court decision in CIT v. Rajasthan & Gujarat Charitable Foundation on depreciation treated as application of income - Depreciation is allowable for the assessment year under consideration notwithstanding that the cost of the assets had been treated as application of income. - HELD THAT: - The Tribunal applied the binding decision of the Supreme Court in CIT v. Rajasthan & Gujarat Charitable Foundation, which held that depreciation can be treated as application of income even where the expenditure on acquisition of the capital asset was treated as application of income. The Income-tax Act was amended from AY 2015-16 to disallow such depreciation, but that amendment is prospective and does not affect AY 2010-11. The view taken by the CIT(Exemptions) in the revision order, being contrary to the Supreme Court precedent, could not be sustained. The revision order on this issue was therefore set aside. [Paras 4]

Set aside the CIT(Exemptions) order to the extent it disallowed depreciation; depreciation claim sustained for AY 2010-11 in conformity with the Supreme Court decision.

Treatment of repayment of loan vis-a -vis prior allowance of asset cost as application of income (avoidance of double deduction) - revision under Section 263 for assessment found to be erroneous and prejudicial to the revenue - Whether repayment of loan can be treated as application of income depends on whether the cost of the asset acquired from the loan proceeds was already allowed as application of income; the matter was not examined by the assessing officer and requires fresh consideration. - HELD THAT: - The CIT(Exemptions) initiated revision under Section 263 contending that allowing repayment of loan as application of income would result in double deduction where the asset cost had already been allowed as application. The Tribunal observed that the assessing officer did not examine this factual and consequential question during assessment. The Tribunal found merit in revisional scrutiny on this point but noted that the CIT(Exemptions) had directed disallowance without determining whether the asset cost had indeed been allowed as application of income. Accordingly, the Tribunal modified the CIT(Exemptions) direction and directed the assessing officer to examine the claim afresh: if the cost of assets acquired out of loan funds was allowed as application of income, repayment should not be allowed as application; if the asset cost was not allowed as application, repayment may be allowed as application of income. [Paras 5, 6]

Direction to the assessing officer to examine and decide the repayment-of-loan claim afresh in the light of whether the asset cost was previously allowed as application of income; CIT(Exemptions) direction modified accordingly.

Final Conclusion: The appeal is partly allowed: the revision under Section 263 is quashed insofar as it disallowed depreciation (depreciation claim upheld for AY 2010-11 following the Supreme Court precedent); with regard to repayment of loan the matter is remitted to the assessing officer for fresh examination to determine whether repayment can be treated as application of income depending on whether the asset cost was already allowed as application.

Opportunity of being heard - admission of additional evidence - remand for fresh assessment - Rule 46A of the Income Tax Rules, 1962 - addition under section 68 as unexplained cash - computation under section 115BBE

Opportunity of being heard - admission of additional evidence - Rule 46A of the Income Tax Rules, 1962 - remand for fresh assessment - Whether the assessment order should be set aside and remitted to the Assessing Officer because the assessee was not given a proper opportunity to produce documents and the CIT(A) declined to admit additional evidence without adjudicating admissibility under Rule 46A. - HELD THAT: - The Tribunal found that the Assessing Officer framed an adverse addition treating cash as unexplained and proceeded without affording the assessee proper opportunity to furnish documents or explanations. On appeal the CIT(A) refused to admit additional material solely on a procedural ground, without considering whether the assessee had reasonable cause for non-production before the AO and without applying Rule 46A to decide admissibility or seeking a remand report. The assessee's stated reason for non-production (misplacement of the notice under section 142(1)) amounted to a reasonable cause meriting consideration. In these circumstances the Tribunal relied on the principle that an assessment order made without giving the assessee a fair opportunity must be set aside and remitted for fresh consideration (Tin Box Company vs. CIT relied upon) and directed that the matter be restored to the file of the AO for de novo assessment after affording the assessee opportunity to file documents and submissions. [Paras 4, 5]

Impugned order of CIT(A) set aside; issues remitted to the Assessing Officer for de novo assessment after permitting the assessee to file the documents and explanations and after the AO proceeds in accordance with law.

Final Conclusion: The appeal is allowed for statistical purposes; the CIT(A)'s order is set aside and the matter is remitted to the Assessing Officer for fresh assessment of Assessment Year 2016-17 after providing the assessee an opportunity to produce evidence and explanations and after compliance with Rule 46A where applicable.

Notice under section 148: validity and conditions precedent - Use of Investigation Wing information as tangible material to reopen assessment - Bogus purchases disallowance - Estimation of disallowance by applying a percentage

Notice under section 148: validity and conditions precedent - Use of Investigation Wing information as tangible material to reopen assessment - Validity of reopening the assessment by issuance of notice under section 148 - HELD THAT: - The Tribunal upheld the reopening, finding that the Assessing Officer and the CIT(A) had recorded and relied upon information received from the department's Investigation Wing, Mumbai, including admissions by authorised persons of the searched group that bogus accommodation entries were provided. Those inputs furnished tangible material and a live link to the belief that income had escaped assessment, justifying initiation of proceedings under section 148. The Tribunal rejected the assessee's contention that reasons were not based on tangible material and that the notice was vitiated.

Reopening under section 148 sustained; notice held valid.

Bogus purchases disallowance - Estimation of disallowance by applying a percentage - Sustainability and quantification of addition on account of alleged bogus purchases from M/s. Kangan Jewellers Pvt. Ltd. - HELD THAT: - While the Tribunal found that the assessee had obtained bogus purchase invoices from the group identified in the investigation and thus some disallowance was warranted, it declined to uphold the full addition. Applying consistent reasoning adopted in closely related appeals concerning adjacent assessment years (where similar facts led the Tribunal to disallow only a percentage), the Tribunal determined that in the facts and circumstances a restricted disallowance of 8% of the impugned purchases was appropriate. The Tribunal noted that such estimation depends on case-specific facts and recorded that the 8% restriction was directed in the larger interest of justice and not to be treated as a precedent.

Addition sustained in part; bogus purchases disallowance restricted to 8% with computation by Assessing Officer.

Final Conclusion: The appeal is partly allowed: the reopening under section 148 is sustained, but the addition for alleged bogus purchases is restricted to 8% and the Assessing Officer is directed to compute accordingly; the Tribunal's delay in filing is condoned.

Section 263 powers of revision - Explanation 2 to Section 263 - failure to make enquiries - Explanation 1 to Section 263 - expanded meaning of 'record' and fresh material - doctrine of natural justice in revisionary proceedings - Section 68 - unexplained credits - Section 69C - repayment/verification of loans - doctrine of substance over form - Section 43CA - deeming fiction and safe harbour limits - Section 40(a)(ia) - disallowance for failure to deduct TDS

Section 68 - unexplained credits - Section 69C - repayment/verification of loans - doctrine of substance over form - Validity of revisional directions (points 1-4) to verify transactions with M/s. Gangotritracon P. Ltd. including invocation of Section 68, verification of stamp papers, application of substance over form, and verification under Section 69C. - HELD THAT: - The Tribunal found that the sums referred to by the revisional authority related to receipts in earlier years and constituted opening balances or transactions assessed in those earlier years, and therefore Section 68 could not be legitimately invoked for the assessment year under consideration. Consequential directions tied to such past receipts (including genuineness of stamp papers and application of the doctrine of substance over form) were held to be extraneous to AY 2016-17. Likewise, repayments and interest recorded in the books could not be regarded as falling within Section 69C for the purpose of impugning the impugned assessment. The Tribunal concluded that the four directions were vague, lacked legal basis in relation to the assessment year in question, and were beyond the scope of Section 263; consequently those directions were quashed. [Paras 9, 10, 11, 13]

Directions 1-4 relating to GTPL transactions are quashed as being beyond the scope of revisional powers and not prejudicial to revenue in respect of AY 2016-17.

Explanation 1 to Section 263 - expanded meaning of 'record' and fresh material - Explanation 2 to Section 263 - failure to make enquiries - doctrine of natural justice in revisionary proceedings - Section 263 powers of revision - Obligations of the revisional authority when new incriminating material comes to its notice after completion of assessment and the required scope of enquiries and opportunities before exercising Section 263 powers. - HELD THAT: - The Tribunal interpreted the interplay between Explanation 1 and Explanation 2 to Section 263 and held that where fresh material (outside the assessment record) surfaces to the revisional authority, an independent quasi-judicial proceeding effectively arises. In such circumstances the revisional authority must undertake preliminary enquiries, confront the fresh material with the assessee, afford effective opportunity to meet the material (including enabling confrontation/cross-examination where relevant), and record a speaking satisfaction before setting aside an assessment. A mere summary remand based on untested adverse material without performing these quasi-judicial functions and without affording the assessee a real opportunity would be impermissible and amount to perfunctory exercise of power. [Paras 13, 14]

Revisional action based on fresh material without adequate preliminary enquiries and without confronting the assessee with that material is illegal; revisional authority must perform quasi judicial functions and observe principles of natural justice before invoking Section 263.

Section 43CA - deeming fiction and safe harbour limits - Validity of the revisional direction to verify applicability of Section 43CA where sale deeds were executed below stamp duty value. - HELD THAT: - The Tribunal observed that the Assessing Officer had examined the transactions, and noted the legislative relaxations (first to a 5% buffer, later to 10%) which provide a safe harbour such that where stamp duty value does not exceed the consideration by more than the applicable buffer, the actual consideration may be adopted. The Tribunal held that the AO's acceptance of transactions where variation did not exceed 10% was supportable; accordingly the revisional directions were quashed to the extent they sought re-examination within the safe harbour. However, insofar as the difference between stamp duty value and actual consideration exceeds 10%, the revisional direction to enquire was sustained and the AO may examine applicability of Section 43CA for such transactions. [Paras 15]

Directions under Section 43CA are quashed insofar as variations are within 10% (safe harbour); directions to enquire are upheld only for transactions where the difference exceeds 10%.

Section 40(a)(ia) - disallowance for failure to deduct TDS - Validity of revisional direction relating to alleged non-deduction of TDS on commission payments (misstated as Section 40A(3)). - HELD THAT: - On the record, the assessee produced ledgers, tax audit report entries, and TDS challans demonstrating that tax was duly deducted and compliance verified by the Assessing Officer. The Tribunal found no basis to hold the AO's order erroneous on this point and observed that the PCIT's perception of default was unjustified. [Paras 16]

Revisional direction concerning alleged failure to deduct TDS is set aside; no error found in the assessment on this score.

Final Conclusion: The assessee's appeal is allowed in part: directions 1-4 and the direction concerning alleged TDS default are quashed; directions under Section 43CA are quashed to the extent variations are within the 10% safe harbour but sustained for transactions exceeding 10% difference, for which the AO may make enquiries in accordance with law and after affording opportunity.

Levy of penalty under Section 271(1)(c) - concealment and furnishing inaccurate particulars of income - analysis of penalty vis-a -vis each addition/disallowance - bona fide difference of opinion in accounting treatment - writing off of miscellaneous balances as a commercial decision - requirement of falsity or dishonest conduct to attract penalty - disallowance in respect of belated payment of employees' contributions where payment made before due date of filing

Levy of penalty under Section 271(1)(c) - analysis of penalty vis-a -vis each addition/disallowance - bona fide difference of opinion in accounting treatment - requirement of falsity or dishonest conduct to attract penalty - Whether penalty under Section 271(1)(c) could be sustained in respect of disallowance of provision for interest, miscellaneous balances written off and disallowance relating to employees' contributions and interest on inter-group advances - HELD THAT: - The Tribunal examined the additions individually and applied the principle that penalty cannot be automatically levied merely because an assessment disallows a claim; each disallowance must be viewed to ascertain whether concealment or furnishing of inaccurate particulars, or dishonest conduct, is established. The assessing officer's disallowance of the provision for interest arose from a difference in accounting treatment and the AO rejected the assessee's manner of debiting the provision; such a bona fide difference of opinion does not, without more, establish culpable concealment. The disallowance relating to employees' contributions was rendered debatable because payment was made before the due date for filing the return under section 139(1), and thus on the facts the matter was not one of obvious falsity. The disallowance of miscellaneous balances written off was founded on absence of explanation, but the Tribunal noted judicial precedent that writing off is a commercial/business decision which cannot be impugned unless the claim is shown to be false or bogus; no such finding of falsity was recorded by the AO. For the interest charged on advances to related parties the AO recorded lack of elaboration to substantiate the rate, but that deficiency did not establish deliberate concealment. Applying the governing principle that penalty must be analysed in relation to each addition, the conditions necessary to sustain penalty under Section 271(1)(c) were not satisfied in respect of these items and the penalty was therefore not justified. [Paras 7]

Penalty under Section 271(1)(c) as sustained by the CIT(A) in respect of the specified disallowances is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2011-12 and deleted the penalty under Section 271(1)(c) insofar as it related to the disallowance of the provision for interest, miscellaneous balances written off, the disallowance relating to employees' contributions and the disallowance concerning interest on inter-group advances.

Reason to believe - reopening of assessment - reassessment jurisdiction - application of mind - escaped assessment - quash reopening

Reason to believe - reopening of assessment - application of mind - quash reopening - Validity of reopening assessment under section 147/148 when the Assessing Officer formed belief on information later shown to be wrong and failed to re apply his mind or record fresh reasons after the assessee's objections. - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer for issuing notice under section 148 and the objections filed by the assessee which demonstrated that a return had been filed and that the receipts shown in Form 26AS were not necessarily taxable income. The Assessing Officer had originally formed belief of escapement based on survey information and entries in Form 26AS, but after the assessee informed the AO that the information was incorrect (return filed and receipts contractual), the AO did not re apply his mind nor record fresh reasons addressing the new material. The Court emphasised that 'reason to believe' requires tangible material, a nexus between material and belief, and an application of mind; where the basis for belief is shown to be wrong and no fresh reasons are recorded, the jurisdictional foundation for reopening collapses. Consequently, reassessment framed on the known to be wrong information could not be sustained and had to be quashed. [Paras 8, 9]

Reopening was invalid as the Assessing Officer proceeded on information shown to be wrong without fresh application of mind; reassessment quashed.

Final Conclusion: The appeal is allowed: the reassessment proceedings initiated under section 147/148 for AY 2008-09 are quashed because the Assessing Officer persisted with reopening based on information which the assessee showed to be incorrect and failed to record fresh reasons or re apply his mind.

Deductibility of interest expense - applicability of section 14A to expenditure relating to exempt income - Rule 8D(2)(i) - treatment of interest income and remuneration from partnership - application of section 40(b) limitation on partner's interest

Deductibility of interest expense - applicability of section 14A to expenditure relating to exempt income - Rule 8D(2)(i) - treatment of interest income and remuneration from partnership - application of section 40(b) limitation on partner's interest - Validity of disallowance of interest of Rs.13,12,037 under section 14A read with Rule 8D(2)(i). - HELD THAT: - The Tribunal examined the Assessing Officer's disallowance under section 14A r.w. Rule 8D(2)(i) of interest claimed by the assessee who was a partner in a firm. The Tribunal found on the material that the assessee had incurred interest expenditure and had also earned interest and remuneration from the firm; the Assessing Officer's conclusion that the interest should be disallowed because borrowed funds were used by the firm was not decisive of deductibility. The balance sheet showed the assessee had significant own capital and borrowed funds, and it was not possible to identify exclusively which funds financed which assets; the assessee had legitimately earned interest income from the firm which was not rendered automatically exempt for the purpose of denying deduction. The Tribunal further observed that the restriction under section 40(b) on interest payable by the firm does not convert the interest received by the partner into exempt income for the partner such that the partner's bona fide interest expenditure must be disallowed; the AO cannot penalize the assessee merely because the firm's payment is restricted by section 40(b). For these reasons the Tribunal held that the interest expense was claimable by the assessee against his income and that the disallowance under Rule 8D(2)(i) was not warranted. [Paras 8]

Disallowance of interest of Rs.13,12,037 under section 14A r.w. Rule 8D(2)(i) is not sustained; ground allowed.

Clubbing of minor's income - application of Special Bench decision - Whether disallowance should be sustained in respect of interest paid to minor children and the applicability of the Special Bench's approach. - HELD THAT: - The Tribunal recorded that grounds relating to interest paid to minor children and reliance on the Special Bench decision in Vishnu Mahajan were consequential to the primary finding and were not adjudicated on merits. No independent determination was made on these contentions; they were not decided by the Tribunal. [Paras 8]

Grounds raised on interest paid to minor children and on the Special Bench decision were not adjudicated; treated as consequential.

Final Conclusion: The appeal is partly allowed: the disallowance of interest under section 14A r.w. Rule 8D(2)(i) (Rs.13,12,037) is set aside; the other grounds were consequential and not adjudicated.

Revisionary jurisdiction under section 263: erroneous and prejudicial order - non-application of mind by Assessing Officer - adequacy of enquiries and evidentiary material in assessment - First Loss Deficiency Guarantee and loss on assigned portfolio - disallowance under section 14A read with Rule 8D - allocation of interest to exempt income

Revisionary jurisdiction under section 263: erroneous and prejudicial order - non-application of mind by Assessing Officer - adequacy of enquiries and evidentiary material in assessment - First Loss Deficiency Guarantee and loss on assigned portfolio - Validity of the Pr. CIT's exercise of powers under section 263 in setting aside the assessment and directing the AO to reexamine the claim of loss on assigned portfolio including the excess cash collateral component. - HELD THAT: - The Tribunal examined the assessment record, AO's questionnaire and the replies filed by the assessee and found that the AO's inquiry into the claimed 'loss on assigned portfolio' was inadequate. The assessee's replies and explanatory notes did not furnish working papers, agreements, repayment schedules or confirmations sufficient to verify the claimed loss and the component identified as 'excess cash collateral invoked' for which the AO had not made relevant enquiries. The Tribunal agreed with the Pr. CIT's conclusion that the AO had not applied his mind, had not conducted requisite investigations and, therefore, the assessment order was erroneous and prejudicial to the interests of revenue. Reliance was placed on settled principles that section 263 can be invoked where an assessment order is based on incorrect application of law, wrong assumption of facts, or non-application of mind and where prejudice to revenue results. Having found the twin conditions satisfied the Pr. CIT was held justified in setting aside the assessment and directing the AO to revisit the matter after proper enquiries and affording the assessee an opportunity of being heard. [Paras 8, 9]

Pr. CIT's exercise of revisionary jurisdiction under section 263 was upheld; the assessment order for AY 2011-12 was set aside and the AO was directed to reexamine the loss on assigned portfolio (including the excess cash collateral component) after making proper enquiries and affording the assessee a hearing.

Disallowance under section 14A read with Rule 8D - allocation of interest to exempt income - Validity of the Assessing Officer's disallowance under section 14A read with Rule 8D in respect of interest attributable to exempt dividend income. - HELD THAT: - The AO calculated interest directly attributable to exempt dividend income by applying the average borrowing cost to the period and quantum of investments yielding exempt income and arrived at a disallowance under Rule 8D(i). The Tribunal examined the assessee's balance sheet, cash flow and the AO's reasoning that the assessee's own funds were largely deployed in fixed assets and loans and that fresh borrowings were used for making investments yielding exempt income. The assessee failed to substantiate that investments were financed from own funds. The Tribunal found the AO's computation under Rule 8D(i) to be within the permissible limits (not exceeding the exempt income) and that reliance on an earlier ITAT decision for a different assessment year was not binding. Consequently, the AO's disallowance under Rule 8D(i) was sustained while a minor component under Rule 8D(iii) was deleted. [Paras 14]

Disallowance under section 14A read with Rule 8D(i) as computed by the AO was upheld; a small disallowance under Rule 8D(iii) was deleted. Revenue's appeal was partly allowed.

Final Conclusion: For AY 2011-12 the Tribunal dismissed the assessee's appeal against the Pr. CIT's revision under section 263, holding that the AO's assessment was erroneous and prejudicial to revenue for lack of requisite enquiries and non-application of mind, and upheld the Pr. CIT's direction to reexamine the loss on assigned portfolio; in the revenue's appeal the Tribunal partly allowed the appeal by sustaining the AO's disallowance under section 14A read with Rule 8D(i) while deleting a minor component under Rule 8D(iii).

Admissibility of documents received from abroad under Section 139(ii) of the Customs Act, 1962 - Requirement of contemporaneous imports/evidence of identical or similar goods for rejecting invoice price under Section 14 and Customs Valuation Rules - Rejection of transaction value and application of the residual method of valuation under Rule 9 of the Customs Valuation Rules, 2007 - Related person test and its applicability for valuation under Rule 2(2) of the Customs Valuation Rules, 2007 - Recording and admissibility of statements/confessional entries under provisions for recording statements (Section 138B procedure) and retraction - Confiscation and redemption fine under Section 125 of the Customs Act and its linkage to correctness of declared transaction value

Admissibility of documents received from abroad under Section 139(ii) of the Customs Act, 1962 - Procured invoices and export declarations obtained via Belgium Customs are not admissible and cannot form the basis for enhancing assessable value. - HELD THAT: - The Tribunal examined the procured invoices and export declarations and found multiple discrepancies: absence of signatures or authentication by Belgium Customs or Indian Embassy, lack of supplier signature or standard supplier invoice format, differing invoice numbers and dates, plain paper copies without supplier certification, and internal inconsistencies. Applying the statutory test in Section 139(ii) and precedent of the Supreme Court, the Tribunal concluded that these documents do not satisfy the requirements for raising the presumption of authenticity or truthfulness and therefore lack evidentiary value. Consequently, no presumption under Section 139(ii) was available to the adjudicating authority and the procured documents could not be relied upon to establish higher import values or misdeclaration of quantity. [Paras 6]

Procured documents from Belgium Customs are inadmissible and cannot be relied upon to enhance value or sustain misdeclaration charges.

Requirement of contemporaneous imports/evidence of identical or similar goods for rejecting invoice price under Section 14 and Customs Valuation Rules - Rejection of transaction value and application of the residual method of valuation under Rule 9 of the Customs Valuation Rules, 2007 - Transaction value declared by the importers must be accepted; rejection and redetermination under Rule 9 were unsustainable in absence of cogent evidence of contemporaneous higher-priced imports. - HELD THAT: - The Tribunal applied Section 14 and the Customs Valuation Rules and reaffirmed that the invoice price is the starting point but may be rejected only on cogent reasons supported by evidence of contemporaneous imports of identical or similar goods at higher prices. The adjudicating authority had redetermined value under Rule 9 relying on the procured documents; however those documents were found inadmissible. The importers had placed on record contemporaneous export declarations and evidence of identical/similar imports showing prices in the same range as declared to Indian Customs. The Tribunal held that Rule 3(1) (transaction value) applied and Rule 12 was not triggered because there was no credible basis to doubt the declared values. In these circumstances the residual method (Rule 9) could not be validly invoked to enhance value. [Paras 6]

Declared transaction value accepted; determination under Rule 9 set aside for lack of admissible evidence and absence of contemporaneous higher-priced imports.

Recording and admissibility of statements/confessional entries under provisions for recording statements (Section 138B procedure) and retraction - The statement of Shri Prakash Chand Garg dated 8.8.2018 cannot be treated as a conclusive confessional admission for valuation purposes. - HELD THAT: - The Tribunal analysed the contents and context of the statement recorded on 8.8.2018, noting that responses were limited to documents shown to the deponent and included an undertaking to verify facts within ten days. The deponent retracted the statement by affidavit the next day and the supplier had communicated that the procured documents were not issued by it. The Tribunal held that the statement was not self-sufficient to prove undervaluation, that statutory procedural safeguards for admitting such statements (including proper examination as required by the recording provisions) were not complied with, and that a retraction filed before the authority required examination and could not be ignored. Given the inadmissibility of the underlying procured documents, any statement based on them had no evidentiary value. [Paras 6]

Statement dated 8.8.2018 is not admissible as conclusive evidence of undervaluation and cannot support enhancement.

Related person test and its applicability for valuation under Rule 2(2) of the Customs Valuation Rules, 2007 - The three importers cannot be treated as related persons for the purpose of rejecting transaction value on the evidence available. - HELD THAT: - The Tribunal considered the basis for treating M/s NPT, M/s SPPL and M/s SIPPL as related: familial directorships, common residential address, inter-company fund transfers in financial statements, and alleged links to foreign suppliers. It held that internal fund transfers in India and familial relationships alone do not establish relatedness for valuation under Rule 2(2), which concerns relationships relevant to imported goods. The transfers relied upon related largely to the 2017-18 period and were explained as sales or loan repayments; they did not establish a common interest affecting import pricing across the disputed period. Further, where foreign suppliers sold identical goods at similar prices to unrelated Indian buyers, relatedness could not justify rejection of transaction value. Thus the findings of relatedness were unsustainable on the record. [Paras 6]

Importers are not shown to be related persons for purposes of valuation; relatedness cannot sustain rejection of transaction value.

Confiscation and redemption fine under Section 125 of the Customs Act and its linkage to correctness of declared transaction value - Confiscation and the redemption fine imposed on M/s NPT are set aside because the declared transaction value was accepted. - HELD THAT: - Confiscation and the consequent redemption fine were predicated on findings of undervaluation and non-genuine documentation. Having found the transaction value correctly declared and the procured documents inadmissible, the Tribunal concluded there was no justification for confiscation of the seized goods or the Redemption Fine imposed under Section 125. The Tribunal therefore set aside both the confiscation-related penalty and enforcement of associated bonds/guarantees. [Paras 6]

Confiscation and redemption fine set aside; enforcement of bonds/guarantees in respect of that fine quashed.

Penalties under Sections 112A, 114A and 114AA of the Customs Act and their dependence on proved undervaluation - Penalties imposed on the importers and their directors are set aside as there is no valid basis for concluding undervaluation. - HELD THAT: - Penalties were imposed on the companies and directors predicated on findings of undervaluation and related-party malpractice. The Tribunal's conclusions that the transaction value was correctly declared, that the procured foreign documents were inadmissible, that relatedness was not established, and that no evidence of extra remittances was produced, remove the factual and legal foundation for penal liability. Accordingly, the Tribunal set aside all penalties imposed in the impugned order. [Paras 6]

All penalties imposed on the six appellants and their directors are set aside.

Final Conclusion: All six appeals are allowed. The adjudicating authority's reliance on procured foreign documents is held inadmissible, the declared transaction values of the importers are accepted, the enhanced duty demands (based on Rule 9) are set aside, confiscation/redemption fine is quashed, and all penalties imposed on the companies and their directors are revoked; consequential relief to follow in accordance with law.

Invocation of the extended period of limitation under section 28(4) of the Customs Act - suppression of facts - wilful mis-statement - liability of importer to make truthful declaration in Bills of Entry - burden on Revenue to prove deliberate suppression or wilful mis-statement - precedents under pari materia provisions of Central Excise (section 11A) constraining invocation of extended limitation

Invocation of the extended period of limitation under section 28(4) of the Customs Act - suppression of facts - liability of importer to make truthful declaration in Bills of Entry - burden on Revenue to prove deliberate suppression or wilful mis-statement - Whether the extended five year limitation under section 28(4) of the Customs Act could be invoked against the appellant for alleged non declaration of RSP/MRP in courier imports. - HELD THAT: - The Tribunal examined the factual matrix and the settled law. The Bills of Entry for the courier consignments were filed by courier agents on the basis of declarations and invoices furnished by the foreign consignor, assessed by the proper officer, with duty paid by the courier and later recovered from the appellant. The show cause notice invoked section 28(4) on the premise that the appellant wilfully suppressed the RSP/RSP related facts. The Tribunal applied the strict judicial test developed in Supreme Court precedents under the pari materia provision (section 11A of the Central Excise Act) that suppression of facts must be deliberate and amount to a positive act - mere omission or failure to declare, without evidence of deliberate concealment to evade duty, is insufficient. Relying on Pushpam Pharmaceuticals and subsequent authorities, the Tribunal held that nothing in the material established deliberate suppression or wilful mis statement by the appellant: the assessing process involved the proper officer and the courier agent, and the show cause notice proceeded on an incorrect assumption that the appellant itself had made the declarations to Customs. Because the essential ingredients for invoking the proviso to section 28(4) (collusion, wilful mis statement or deliberate suppression) were not satisfied, the extended period could not be invoked and the demand could not be sustained. [Paras 25, 27]

Extended limitation under section 28(4) could not be invoked as suppression or wilful mis statement by the appellant was not established; the demand and impugned order were set aside.

Final Conclusion: The appeal is allowed; the Commissioner (Appeals) order dated 12.03.2020 is set aside and the demand premised on invocation of the extended five year period under section 28(4) is rejected for want of any proved deliberate suppression or wilful mis statement by the appellant.

Reversal of burden of proof under Section 123 - burden of proof on Revenue to establish smuggling - smuggling as rendering goods liable to confiscation under Section 111/113 - imported goods ceasing to be imported once cleared for home consumption - confiscation of goods under the Customs Act

Reversal of burden of proof under Section 123 - imported goods ceasing to be imported once cleared for home consumption - Whether the burden under Section 123 shifted to the appellants to prove that the seized betel nuts were not smuggled goods. - HELD THAT: - Section 123 shifts the burden of proof only where (i) seizure is made in the reasonable belief that the goods are smuggled and (ii) the goods belong to categories specified (gold, watches or other classes notified by the Central Government). There is no record that betel nuts were notified under Section 123. Consequently the statutory reversal of burden did not apply. Further, even if goods are of foreign origin, once imported goods have been cleared for home consumption they cease to be "imported goods" and there is no legal obligation on subsequent holders or buyers to produce import documents. Therefore the appellants had no legal responsibility to prove that the betel nuts were not smuggled; the statutory burden remained on the Department to prove smuggling. [Paras 4, 5, 6]

The burden under Section 123 did not shift to the appellants as betel nuts were not shown to be a notified class; appellants were not required to prove the goods were not smuggled.

Burden of proof on Revenue to establish smuggling - smuggling as rendering goods liable to confiscation under Section 111/113 - confiscation of goods under the Customs Act - Whether the Revenue proved that the seized betel nuts were smuggled goods so as to justify confiscation and ancillary penalties including confiscation of vehicles. - HELD THAT: - Confiscation under the Customs Act requires proof that the goods were smuggled (acts or omissions making goods liable to confiscation). The goods in this case were seized within India and the Department relied on suspicion, expert opinion and unsatisfactory commercial documents produced by the appellants. However, because the statutory reversal of burden under Section 123 did not apply, the onus remained on the Revenue to establish illegal importation/smuggling. The Revenue did not discharge that onus in the adjudication and first appellate order relied upon the appellants' inability to demonstrate non-smuggling despite there being no legal duty on them to do so. Accordingly confiscation could not be sustained on the basis that the appellants failed to prove lawful importation. [Paras 6, 7]

Revenue failed to establish that the betel nuts were smuggled; the confiscation upheld by the authorities cannot be sustained.

Final Conclusion: Appeals allowed; impugned order of confiscation set aside and consequential relief granted to the appellants.

Confiscation for contravention of an exemption notification - Country of Origin Certificate as substantive and conclusive evidence - penalty under Section 114A for duty short-paid due to collusion or willful misstatement or suppression of facts - value loading and verification by the Proper Officer

Confiscation for contravention of an exemption notification - Country of Origin Certificate as substantive and conclusive evidence - Confiscation and redemption fine imposed in respect of the live consignment under Bill of Entry No.2321708 dated 05.07.2017 - HELD THAT: - The Tribunal found on the material on record that the Country of Origin Certificate for the live consignment had been sent back to Bangladesh for rectification by the importer before DRI's intervention and therefore the importer was not availing the exemption at the time of detention. In these circumstances confiscation under the provision dealing with contravention of an exemption notification was unwarranted. The Court further held that the SAFTA Certificate issued by the designated Bangladeshi authority is substantive and conclusive evidence and, in absence of any material to show forgery or that its genuineness was questioned by Indian authorities or that any overseas follow up was made to cancel or recall the certificate, the certificate could not be unilaterally rejected to sustain confiscation. [Paras 11, 12]

Confiscation and the consequent redemption fine in respect of the live consignment (BE dated 05.07.2017) cannot be sustained and are set aside.

Penalty under Section 114A for duty short-paid due to collusion or willful misstatement or suppression of facts - Country of Origin Certificate as substantive and conclusive evidence - Imposition of penalty under Section 114A of the Act on the importer in respect of the live consignment and past consignments - HELD THAT: - The Tribunal recorded that there was no material to establish collusion, willful misstatement or suppression of facts by the importer. All relevant documents, including the SAFTA Certificates and invoices, were available with the Proper Officer and no fresh documents were unearthed during investigation. Given the conclusive nature of the Country of Origin Certificates issued by the competent Bangladeshi authority and absence of any evidence of forgery or overseas confirmation to negate those certificates, the ingredients required for imposing penalty under Section 114A were not made out. [Paras 11, 12]

Penalties imposed under Section 114A in respect of the live consignment and the past consignments are not sustainable and are set aside.

Country of Origin Certificate as substantive and conclusive evidence - SAFTA benefit cannot be denied in absence of overseas enquiry or evidence impeaching the certificate - Whether the SAFTA Country of Origin Certificates issued by the Bangladeshi authority could be unilaterally rejected by Indian authorities - HELD THAT: - The Tribunal held that Country of Origin Certificates issued by the designated Bangladeshi authority (Export Promotion Bureau) are substantive and conclusive evidence. In the absence of any record showing forgery, questioning of genuineness by DRI/Customs, or any overseas enquiry/confirmation to displace the certificate, Indian authorities cannot unilaterally reject such certificates to deny the benefit of the exemption notification. Reliance was placed on earlier Tribunal decisions reaching a similar conclusion. [Paras 12]

SAFTA Country of Origin Certificates issued by the Bangladeshi authority cannot be unilaterally rejected by Indian authorities in absence of material impeaching them.

Value loading and verification by the Proper Officer - penalty under Section 114A for duty short-paid due to collusion or willful misstatement or suppression of facts - Validity of clearance and denial of exemption in respect of the three past Bills of Entry (2016 consignments) and related penalty - HELD THAT: - The Tribunal observed that for the three earlier consignments the Proper Officer at Petrapole LCS had carried out value loading after examination and verification of documents such as the SAFTA Certificates and invoices and had allowed the benefit of the exemption notification. There was no evidence of collusion or suppression of facts; therefore the requirements for imposing penalty under Section 114A were absent. Consequently, the penalty relating to those past consignments could not be sustained. [Paras 12]

The adjudication and value loading by the Proper Officer stood and the penalty under Section 114A in respect of the past three Bills of Entry is set aside.

Final Conclusion: The appeals are allowed; confiscation and redemption fine in respect of the live consignment are set aside, penalties under Section 114A in respect of the live and past consignments are not sustainable and are set aside, and the SAFTA Country of Origin Certificates issued by the Bangladeshi authority are to be treated as substantive evidence absent material impeaching them; consequential relief to follow as per law.

Imposition of anti-dumping duty despite designated authority recommendation - setting aside Office Memorandum declining anti-dumping duty - remand to Central Government for fresh decision - non-application of statutory time-limit on remand for fresh decision

Imposition of anti-dumping duty despite designated authority recommendation - setting aside Office Memorandum declining anti-dumping duty - Validity of the Office Memorandum of the Central Government declining to impose anti-dumping duty despite the designated authority's recommendation. - HELD THAT: - The Tribunal applied its earlier reasoning in Jubilant Ingrevia Limited and concluded that the decision of the Central Government not to impose anti-dumping duty, despite a recommendation by the designated authority for imposition, could not be sustained. On that basis the Office Memorandum dated 07.04.2021 was set aside. The Tribunal directed that the matter be remitted to the Central Government to reconsider the designated authority's recommendation in the light of the observations made in the cited decision, thereby treating the Government's refusal as liable to judicial interference and requiring fresh administrative consideration.

The Office Memorandum declining imposition of anti-dumping duty is set aside and the matter is remitted to the Central Government for reconsideration of the designated authority's recommendation.

Remand to Central Government for fresh decision - non-application of statutory time-limit on remand for fresh decision - Whether the statutory time-limit for the Central Government to take a decision applies where the matter is remitted for fresh consideration. - HELD THAT: - Relying on the Tribunal's earlier view in Jubilant Ingrevia Limited and its prior decision in M/s S. I. Group India Private Limited, the Tribunal held that where a matter is remitted to the Central Government for fresh decision, the three-month limitation for taking a decision (as provided in the relevant rules) would not apply to the fresh decision-making exercise occasioned by the remand. The Tribunal therefore remitted the matter without holding the Government to the original statutory time-limit.

On remand for fresh consideration, the statutory time-limit for the Central Government's decision does not apply; the Central Government is to take a fresh decision on the designated authority's recommendation.

Final Conclusion: The appeal is allowed to the extent that the Office Memorandum dated 07.04.2021 is set aside and the matter is remitted to the Central Government to reconsider the designated authority's recommendation; the statutory time-limit for decision does not bind the fresh decision on remand.

Reactivation of Director Identification Number (DIN) - management dispute marking by Registrar of Companies (ROC) - power of ROC to withhold approval, registration and recording of documents pending settlement of management dispute - Master Circular dated February 10, 2012 - Clause 2 and Clause 3 distinction - recall of order

Reactivation of Director Identification Number (DIN) - The deactivation of the writ petitioner's DIN was set aside and the DIN re-activated allowing him to discharge duties as director. - HELD THAT: - The Court found that the writ petitioner had complied with the statutory requirements applicable to directors (filing of annual reports and financial statements) and that the deactivation of his DIN was de hors the law. While the writ petition did not challenge the marking of the company as having a management dispute, the petitioner's personal liability to have his DIN deactivated was not established. Consequently, the portion of the earlier order re-activating the petitioner's DIN was upheld and given effect; the ROC was directed to take consequential steps to permit the petitioner to discharge his duties as director subject to other legal constraints continuing to operate. [Paras 12, 14, 16, 17, 19]

DIN of Krishna Kumar Rungta re-activated; ROC to take consequential steps to permit him to discharge duties as director.

Management dispute marking by Registrar of Companies (ROC) - power of ROC to withhold approval, registration and recording of documents pending settlement of management dispute - Master Circular dated February 10, 2012 - Clause 2 and Clause 3 distinction - The portion of the earlier order setting aside the ROC's June 24, 2016 direction (withholding approval/registration/recording and public availability of documents while management dispute subsists) was recalled and the ROC's power to maintain that bar under Clause 3 of the Master Circular remains in force. - HELD THAT: - The Court examined the Master Circular dated February 10, 2012 and held that Clause 3 operates independently of Clause 2. Clause 3 expressly empowers the ROC, on receipt of a complaint, to mark a company as having a management dispute and to withhold approval/registration/recording of documents filed by the company and contesting groups of directors, thereby preventing their availability in the public registry until the dispute is settled. As the company in question remains marked as having a management dispute, the ROC's June 24, 2016 direction continues to be valid. The earlier order of this Court that had set aside that ROC direction exceeded the scope of the writ petition and was therefore unsustainable; that part of the order was accordingly recalled and set aside. [Paras 11, 13, 16, 18, 19]

Order of 24 June 2016 of ROC Kolkata withholding approval/registration/recording and public availability of documents pending settlement of management dispute remains in force; the earlier setting aside of that order is recalled.

Final Conclusion: The recall application is allowed: the March 8, 2021 order is modified so that the writ petitioner's DIN is re-activated and he may discharge directorial duties, but the ROC's direction of June 24, 2016 withholding approval/registration/recording and public availability of documents while the company is marked as having a management dispute continues in force.

Stay of interim order - status quo order - possession under SARFAESI Act - vacation of status quo - jurisdiction of the National Company Law Tribunal - interlocutory application for vacation

Stay of interim order - status quo order - possession under SARFAESI Act - Validity of the learned Single Judge's refusal to stay the NCLT order dated 30.09.2021 directing status quo in respect of the corporate debtor's assets. - HELD THAT: - The Single Judge declined to grant interim relief because the appellant had already taken physical possession of the subject property and had filed an interlocutory application before the NCLT seeking vacation of the status quo order, which was pending and listed on a short date. The Court found no infirmity in the Single Judge's conclusion that, in view of the appellant's possession and the pending adjudication before the Tribunal, no grave or irreparable loss was shown that would justify interfering with the Tribunal's interim order. The Single Judge also recorded that the Tribunal would be required to consider the appellant's plea as to the Tribunal's jurisdiction when the interlocutory application is taken up. [Paras 5, 6, 7, 8]

The refusal to grant a stay of the NCLT's status quo order was upheld and the appeal on this ground dismissed.

Jurisdiction of the National Company Law Tribunal - interlocutory application for vacation - vacation of status quo - Objection to the jurisdiction of the NCLT and the direction for adjudication of the pending interlocutory application. - HELD THAT: - The High Court did not decide the jurisdictional objection on the merits but recorded that the appellant's objection to the Tribunal's jurisdiction must be raised and decided by the NCLT. The Court made it clear that it expressed no opinion on the merits and directed that the NCLT deal with the appellant's application for vacation of the status quo order and the jurisdictional plea in accordance with law, urging expedition and avoidance of unnecessary adjournments. [Paras 5, 9]

The question of the NCLT's jurisdiction and the interlocutory application for vacation of the status quo order is to be considered and decided by the NCLT; the High Court refrained from expressing any view on the merits.

Final Conclusion: The appeal is dismissed; the order of the learned Single Judge refusing to stay the NCLT's status quo order is upheld. The NCLT is directed to adjudicate the pending interlocutory application, including the appellant's jurisdictional objection, on its merits and expeditiously; no opinion is expressed on the substantive merits of the dispute.

Sanction of scheme of amalgamation under Sections 230 to 232 of the Companies Act, 2013 - Scheme of Amalgamation by merger by absorption - Appointed Date - dissolution of transferor company without winding up - accounting treatment and reserves on amalgamation - set-off of fees on authorised share capital - protection of creditors' interests - compliance with Regional Director and Official Liquidator reports - filing of order with Registrar of Companies and stamp duty adjudication

Sanction of scheme of amalgamation under Sections 230 to 232 of the Companies Act, 2013 - Scheme of Amalgamation by merger by absorption - compliance with Regional Director and Official Liquidator reports - Tribunal sanctioned the Scheme of Amalgamation between Kladenet Technologies Pvt. Ltd. (transferor) and Unifynd Technologies Pvt. Ltd. (transferee) and declared the Company Scheme Petition absolute. - HELD THAT: - The Tribunal recorded that no objector opposed the Scheme, the petitioner companies had passed board resolutions approving the Scheme, and had complied with directions of the National Company Law Tribunal, Mumbai Bench. The Regional Director's observations were addressed by the petitioners and the Regional Director's representative declared the explanations satisfactory with no objection to the Scheme. The Official Liquidator's report stated that affairs of the transferor company were conducted properly and recommended dissolution. On the record, the Tribunal found the Scheme to be fair and reasonable, not in violation of law or public policy, and that all requisite statutory compliances had been fulfilled, accordingly making the Company Scheme Petition absolute and sanctioning the Scheme. [Paras 10, 11, 12, 13, 19]

Scheme sanctioned and Company Scheme Petition made absolute.

Appointed Date - Appointed Date for the Scheme was fixed as 1st April, 2020. - HELD THAT: - The Scheme defined the Appointed Date as 1st April, 2020 and the petitioners confirmed that date and undertook to comply with the requirements relating to the Appointed Date as clarified by the Ministry. The Tribunal recorded the Appointed Date accordingly. [Paras 9, 18]

Appointed Date is 1st April, 2020.

Dissolution of transferor company without winding up - Official Liquidator report - The transferor company (Kladenet Technologies Pvt. Ltd.) was ordered to be dissolved without winding up. - HELD THAT: - The Official Liquidator reported that the affairs of the transferor company had been conducted properly and were not prejudicial to shareholders' interests and recommended dissolution. On that basis and as part of sanctioning the Scheme, the Tribunal directed dissolution of the first petitioner company without winding up. [Paras 11, 14]

First petitioner company to be dissolved without winding up.

Accounting treatment and reserves on amalgamation - set-off of fees on authorised share capital - protection of creditors' interests - compliance with Regional Director and Official Liquidator reports - Petitioners' undertakings regarding accounting treatment, set-off of fees, and protection of creditors' interests were accepted and to be complied with. - HELD THAT: - The Regional Director's report raised matters including compliance with applicable accounting standards (AS-14/IND AS-103 and other standards), quantification and treatment of differences in accounting policies (crediting surplus to Capital Reserve and debiting deficits to Goodwill, and restriction on distribution of such reserves), service of notices to concerned authorities, and set-off of fees paid by the transferor against any fees payable by the transferee. The petitioners furnished undertakings and rejoinders addressing these points. The Regional Director's representative found the explanations satisfactory and had no objection; the Tribunal recorded these undertakings and proceeded to sanction the Scheme. [Paras 9, 10, 12, 13]

Undertakings accepted; petitioners to comply with accounting, fee set-off and creditor-protection obligations as recorded.

Filing of order with Registrar of Companies and stamp duty adjudication - Petitioners were directed to file the certified copy of the Order and the Scheme with the Registrar of Companies and to lodge authenticated copies for stamp duty adjudication. - HELD THAT: - The Tribunal directed the petitioners to file a copy of the Order along with the Scheme electronically (E-Form INC-28) and physically with the concerned Registrar of Companies within 30 days of receipt of the Order. The petitioners were also directed to lodge a copy of the Order and Scheme, duly authenticated by the NCLT Registry, with the concerned Superintendent of Stamps for adjudication of stamp duty within 60 days. Authorities were directed to act on authenticated copies of the Order and Scheme. [Paras 15, 16, 17]

Directions issued for filing with ROC, lodging for stamp duty adjudication, and for authorities to act on authenticated copies.

Final Conclusion: The Tribunal, having received satisfactory explanations to the Regional Director's observations and the Official Liquidator's report, sanctioned the Scheme of Amalgamation between the parties, fixed the Appointed Date as 1st April, 2020, directed dissolution of the transferor company without winding up, recorded petitioner undertakings on accounting treatment, fee set-off and creditor protection, and issued directions for filing the Order and Scheme with the Registrar of Companies and for stamp duty adjudication.

Sanction of scheme of amalgamation - Appointed Date under a scheme and effectivity from such date - scheme under Sections 230-232 - requirement of shareholder/creditor meetings and approvals - pooling of interests method under Ind AS 103 for common-control business combinations - acceptance of Regional Director reports and undertakings as condition of sanction - intra-group exemption from Competition Commission of India approval - obligations arising from stock-exchange/SEBI no-objection letters and related listing compliances

Sanction of scheme of amalgamation - Appointed Date under a scheme and effectivity from such date - Sanction of the Composite Scheme of Amalgamation of Bamnipal Steel Limited and Tata Steel BSL Limited into Tata Steel Limited and fixation of the Appointed Date. - HELD THAT: - After considering the material on record, the petitions, reports and the responses filed by the Petitioner Companies, the Tribunal found the Scheme to be fair and reasonable, not violative of law and not contrary to public policy. The Tribunal accepted the Petitioner Companies' submissions that statutory compliances required for convening or dispensing with meetings were complied with in accordance with earlier CSA Orders and that the Scheme specifies the Appointed Date as April 1, 2019. In view of the foregoing, and having regard to the clarifications and undertakings on record, the Company Scheme Petition was made absolute and the Scheme sanctioned with the Appointed Date fixed as April 1, 2019. [Paras 31, 42, 43]

The Composite Scheme is sanctioned and the Appointed Date is fixed as April 1, 2019.

Acceptance of Regional Director reports and undertakings as condition of sanction - obligations arising from stock-exchange/SEBI no-objection letters and related listing compliances - pooling of interests method under Ind AS 103 for common-control business combinations - Responses and undertakings given by the Petitioner Companies to the observations of the Regional Directors (Western Region, Mumbai and Northern Region, New Delhi) were considered and accepted, and the Petitioner Companies were directed to comply with those undertakings. - HELD THAT: - The Tribunal examined the RD, Mumbai and RD, New Delhi reports and the affidavits/annexures filed in response. It recorded that replies to several observational paragraphs were satisfactory and that the Petitioner Companies undertook to: comply with applicable accounting standards including Ind AS 103 (pooling of interests accounting for common control combinations) and other relevant accounting standards; ensure that capital reserves arising out of amalgamation are not used for dividend distribution if so required by accounting treatment; comply with SEBI/listing requirements in relation to convening of meetings and vote validations; and adhere to other statutory and regulatory requirements. Those clarifications and undertakings were accepted and the Petitioner Companies were directed to comply with them. [Paras 21, 23, 24, 31, 37]

The Tribunal accepted the Petitioner Companies' clarifications and undertakings in response to the RD reports and directed compliance with the same.

Intra-group exemption from Competition Commission of India approval - acceptance of RD's observation on CCI clearance - Whether approval of the Competition Commission of India was required for the amalgamation. - HELD THAT: - The Petitioner Companies contended that the amalgamation falls under the intra-group exemption (Item 9 to Schedule 1 of the CCI Regulations) and therefore CCI approval was not required. Having considered the submissions, the Tribunal accepted this position and recorded that CCI approval had not been obtained because it was not necessary under the applicable laws and rules. [Paras 29, 31]

CCI approval was not required and the Tribunal noted that no CCI approval had been obtained.

Treatment of shareholder and creditor complaints and objections - requirements under proviso to Section 230(4) regarding who may object - Resolution of shareholder/creditor representations and disposal of related company applications challenging the share exchange ratio or scheme. - HELD THAT: - Petitioner Company 3 received representations from certain shareholders and creditors concerning the share exchange ratio and other matters. The Tribunal noted the Petitioners' responses that objections must meet the statutory thresholds under the proviso to Section 230(4) to be maintainable, pointed to the communications and responses sent to complainants and regulators (including SEBI's closure of a complaint), and observed that the Petitioner Company 3 had filed appropriate replies. On that basis, the Tribunal found that the grievances raised in the cited company applications were addressed and there was no surviving objection requiring further relief. [Paras 40, 41]

The applications challenging the scheme (CA 156 of 2021 and CA 261 of 2021) were dismissed as the objections were addressed and no maintainable grievance survived.

Filing of certified copy of order and attendant compliance steps - Post-sanction compliance directions to the Petitioner Companies and concerned authorities. - HELD THAT: - Upon sanctioning the Scheme, the Tribunal directed the Petitioner Companies to file a certified copy of the order and the Scheme with the relevant Registrar(s) of Companies electronically using the prescribed e-form within the stipulated period, to lodge the order and Scheme with the Superintendent of Stamps for stamp duty adjudication, and recorded that all concerned authorities are to act on the certified copy. It also left the liberty for any interested person to apply for further directions or modifications if necessary. [Paras 44, 45, 46, 47]

Petitioner Companies and authorities directed to carry out statutory post-sanction filings and compliance as specified.

Final Conclusion: The National Company Law Tribunal, Mumbai Bench sanctioned the Composite Scheme of Amalgamation, fixed the Appointed Date as April 1, 2019, accepted the Petitioner Companies' clarifications and undertakings in response to Regional Directors' reports, recorded that CCI approval was not required, dismissed the pending challenge applications as resolved, and directed the Petitioner Companies to undertake the statutory post-sanction filings and compliance.

Freeze of bank accounts / debit freeze - interim de-freezing of accounts subject to conditions - principles of natural justice and impleadment - interest of justice - limited withdrawal for payment of wages, salaries and day-to-day operations - monthly submissions of acquittance slips / expenditure statements to the Tribunal

Freeze of bank accounts / debit freeze - interim de-freezing of accounts subject to conditions - limited withdrawal for payment of wages, salaries and day-to-day operations - principles of natural justice and impleadment - Interim relief to de-freeze specified bank accounts of the applicant company on conditions pending disposal of the impleadment application and the main petition. - HELD THAT: - The Tribunal found that although it had not earlier directed de-freezing, the existing freeze on the applicant's bank accounts is preventing the company from meeting payroll and day-to-day expenses. The Tribunal also accepted the proposed respondents' contention that deciding the IA in their absence might violate principles of natural justice and cause them prejudice. Balancing these competing considerations and in the interest of justice, the Tribunal exercised its discretion to grant a limited interim arrangement: the respondent banks are directed to de-freeze the named accounts but the applicant is permitted to draw only amounts actually necessary to pay duly employed workers' wages and salaries and to manage routine operations. The Tribunal required oversight by mandating monthly submission of acquittance slips/statements of payments and expenditure to the Tribunal until further orders. The order is an interim, protective measure while preserving the rights of the proposed respondents and pending resolution of impleadment and the main issues. [Paras 13]

Specified accounts of the applicant are de-frozen for limited withdrawals to meet wages, salaries and day-to-day operations, subject to monthly submission of acquittance slips/statements to the Tribunal.

Principles of natural justice and impleadment - interest of justice - Further reliefs and the question of impleading the ex-directors are to be considered at a subsequent hearing; the application is listed along with IA No. 9/2021. - HELD THAT: - The Tribunal recognised the proposed respondents' application for impleadment and that adjudicating the IA without them might cause grave injustice. Consequently, the Tribunal reserved consideration of the remaining reliefs sought in the IA and directed that the present application be listed along with the impleadment application for further hearing on the specified date. This leaves the substantive claims and the impleadment question to be finally adjudicated after hearing both parties. [Paras 13]

The balance of the reliefs is reserved for consideration after hearing the parties; the IA is listed with IA No. 9/2021 on the next date.

Final Conclusion: The Tribunal granted a conditional interim de-freeze of specified bank accounts to enable limited withdrawals for payment of wages, salaries and routine operations subject to monthly accounting to the Tribunal, and reserved all other reliefs and the impleadment issue for further consideration at the next hearing.

Restoration of struck off company - striking off under Section 248 - restoration under Section 252(3) - conditional restoration subject to filing of pending statutory records and payment of fees/costs - publication of restoration in the Official Gazette - effect of restoration on pending litigation

Restoration of struck off company - restoration under Section 252(3) - conditional restoration subject to filing of pending statutory records and payment of fees/costs - effect of restoration on pending litigation - The appeal for restoration of the name of the company struck off from the Register of Companies is allowed subject to specified conditions. - HELD THAT: - The Tribunal considered that the company had been struck off after compliance with the statutory procedure under Section 248 because it had not filed annual returns and financial statements and had not obtained dormant status. The appellant explained non-filing as resulting from miscommunication between auditor and management and asserted ownership of land and existence of unsecured loan obligations. A caveator disputed the company's ownership of the land and pointed to pending civil litigation. The Tribunal found that restoration would enable the company to pursue the pending Special Civil Application before the High Court and that apprehension of undue advantage to the caveator was unfounded because any rights or disputes pending before a forum would continue to be adjudicated as per law. Balancing these considerations, the Tribunal concluded that restoration was just and reasonable despite prior non-compliance, and therefore directed restoration subject to the company filing all outstanding statutory documents for the years in default, payment of prescribed fees/additional fee/fine, payment of specified costs for each year of default, delivery of a certified copy of the order to the ROC, and publication by the ROC in the Official Gazette. The Tribunal expressly limited its order to violations that led to striking off and left open the ROC's power to take action for any other violations or offences committed prior to or during striking off. [Paras 9, 10]

Allowed; Registrar of Companies directed to restore the company's name and status subject to filing pending statutory documents with prescribed fees/additional fee/fine, payment of costs for each year of default, delivery of certified copy to ROC, and publication in the Official Gazette; restoration without prejudice to ROC's power to take action for other violations.

Final Conclusion: The appeal is allowed and the Registrar of Companies is directed to restore the company's name as if it had not been struck off, subject to compliance by the company with filing outstanding statutory documents, payment of prescribed fees/additional fee/fine and costs, delivery of a certified copy to the ROC and subsequent publication; the order is confined to the violations that led to striking off and does not preclude the ROC from taking action for other offences.

Restoration of company name - restoration under section 252(1) of the Companies Act, 2013 - deemed operation of company upon restoration - reactivation of bank accounts - compliance with statutory filings - payment of costs as condition for restoration - marking DIN as active - facilitation of addition of directors by back-end processing

Restoration of company name - restoration under section 252(1) of the Companies Act, 2013 - compliance with statutory filings - Restoration of the appellant-company's name in the Register of Companies was ordered. - HELD THAT: - The Tribunal examined the appellant's averment and supporting records showing the company was operational despite non-filing of statutory returns, and noted that the Registrar of Companies and the Income-tax Department raised no objection. Applying the statutory power to restore a struck-off company, the Bench held the case fit for restoration while requiring the company to comply with the provisions of the Act by filing all required documents and fulfilling other statutory compliances within 30 days from restoration. Restoration was therefore granted subject to those compliance obligations. [Paras 8, 9, 10]

The appeal is allowed and the company's name is restored in the Register of Companies, subject to statutory compliance.

Deemed operation of company upon restoration - reactivation of bank accounts - Consequences of restoration: the company shall be deemed operational in all respects and its bank accounts shall function without separate direction. - HELD THAT: - The Tribunal directed that upon restoration the company shall be deemed to have been in operation as if its name had not been struck off under section 248, and expressly recorded that functioning of all bank accounts follows from restoration so that no separate order to activate bank accounts is necessary. The RoC was to give effect to the order after ensuring compliance with the conditions imposed. [Paras 10]

On restoration the company is deemed operational and bank accounts shall be functional without any separate direction.

Payment of costs as condition for restoration - Restoration was made conditional upon payment of specified costs to designated recipients within three weeks of receipt of certified copy of the order. - HELD THAT: - As part of the exercise of its restorative power, the Tribunal imposed costs payable to the Prime Minister's National Relief Fund, the Online Miscellaneous fee account of the Ministry of Corporate Affairs, and the NCLT Rajasthan Bar Association, Jaipur, to be tendered within the stipulated period. Effectiveness of the RoC giving effect to restoration was made contingent on verification of such payment. [Paras 9, 10]

Restoration is subject to payment of the directed costs within the prescribed time and compliance verified by the RoC.

Marking DIN as active - facilitation of addition of directors by back-end processing - The RoC was directed either to mark the directors' DINs as 'Active' where defaults are limited to this company, or to facilitate urgent addition of new directors by back-end processing. - HELD THAT: - Relying on the principle and directions in earlier High Court and Ministry communications referenced in the order, the Tribunal permitted the RoC to reactivate directors' DINs if the directors' defaults were confined to the company under consideration, in consonance with the stated ratio decidendi. Alternatively, the RoC was directed to enable addition of new directors under section 167(3) by back-end processing as per the Ministry's directions, to ensure the company can function post-restoration. [Paras 10]

RoC shall mark DINs active where appropriate or facilitate addition of directors through back-end processing as directed.

Final Conclusion: The Tribunal allowed the appeal and restored the company's name in the Register of Companies subject to payment of the directed costs and statutory compliances; upon restoration the company is deemed operational and bank accounts shall function, and the RoC is directed to reactivate directors' DINs or facilitate appointment of directors as prescribed.

Validity of requisitioned EGM resolutions - Doctrine permitting court intervention where proposed resolutions are illegal or incapable of being effectuated ('still born' resolutions) - Interpretation of 'valid requisition' under Section 100 of the Companies Act - Jurisdictional ouster under Section 430 of the Companies Act - Requirement of prior regulatory approvals for changes in board/CEO (MIB/SEBI regulatory constraints) - Statutory regime for appointment and removal of directors and independent directors (NRC, databank, Board satisfaction) - Limits of shareholder requisition rights where exercise would cause statutory non compliance

Interpretation of 'valid requisition' under Section 100 of the Companies Act - Validity of requisitioned EGM resolutions - Whether the Court is precluded from examining the legality or effectiveness of resolutions proposed in a requisitioned EGM and whether 'valid requisition' in Section 100 precludes such examination. - HELD THAT: - The Court held that Section 100's procedural requirements for a requisition (numerical threshold, signature, delivery and setting out matters) do not immunise the substance of proposed resolutions from judicial scrutiny. The word 'valid' in the context of Section 100 cannot be read to mean that any requisition satisfying the procedural criteria is beyond review where the proposed resolutions are plainly illegal or incapable of being lawfully effectuated. Drawing on authorities (including Isle of Wight, Centron, Queensland Press, Rose v McGivern and subsequent English decisions), the Court accepted the distinction between resolutions that are merely irregular or undesirable and those that are illegal or 'still born'. Where the object of a requisition is one that cannot lawfully be implemented, directors and courts are entitled to refuse to give effect to the requisition; the Court is not foreclosed from considering legality prior to the EGM being called or held. The interpretative focus is therefore on whether the matters proposed are legally implementable, not solely on procedural compliance under Section 100. [Paras 43, 45, 46, 53, 70]

Section 100's procedural validity requirement does not bar the Court from examining whether proposed resolutions are illegal or incapable of being effectuated; the Court may intervene where the proposed objects are plainly unlawful or ineffective.

Doctrine permitting court intervention where proposed resolutions are illegal or incapable of being effectuated ('still born' resolutions) - Limits of shareholder requisition rights where exercise would cause statutory non compliance - Whether the Court should exercise its jurisdiction to restrain a requisitioned EGM where the proposed resolutions, if implemented, would cause the company to be in clear statutory or regulatory non compliance. - HELD THAT: - The Court accepted Zee's submission that where proposed resolutions, if passed, would result in breach of statutory or regulatory mandates (for example resulting in the absence of a required Managing Director under Section 203, or contravention of SEBI Listing or Takeover provisions, or MIB prior approval requirements), intervention is appropriate. Indian company law should not be read to compel a company to hold a meeting whose sole or principal objects would produce unlawful outcomes and thereby expose the company to mandatory sanctions. The Court emphasised that shareholder rights to requisition meetings are not unlimited and cannot be used to force unlawful changes; compliance with other statutory and regulatory regimes (Companies Act, SEBI norms, MIB guidelines, NRC processes) is decisive. The Court observed that allowing such a meeting would be to invite the company to run aground on statutory non compliance and that judicial intervention to prevent that is consistent with established common law principles. [Paras 53, 56, 70, 71, 72]

The Court will restrain a requisitioned EGM where the proposed resolutions are shown to be unlawful or incapable of implementation and would cause statutory/regulatory non compliance.

Statutory regime for appointment and removal of directors and independent directors (NRC, databank, Board satisfaction) - Requirement of prior regulatory approvals for changes in board/CEO (MIB/SEBI regulatory constraints) - Whether the Requisition Notice's proposals (notably removal of the Managing Director without lawful replacement and direct appointment of six named independent directors) complied with the statutory and regulatory framework for appointment/removal of directors and prior regulatory approvals. - HELD THAT: - Applying the Companies Act provisions on independent directors, the NRC process, Section 203 (requirement of MD/CEO/manager), and SEBI Listing and Takeover norms together with MIB guidelines, the Court found that the Requisition Notice's structure was inconsistent with the statutory scheme. Shareholders cannot directly nominate and impose named persons as independent directors in a manner that bypasses the NRC, databank/selection process and Board satisfaction requirement. Removal of the Managing Director without a lawful and compliant mechanism for replacement would create a statutory void contrary to Section 203. Further, changes to Board/CEO where prior MIB approval is mandated cannot be treated as merely 'subject to' ex post facto approval; prior regulatory permission is required. On the facts of the present Requisition Notice, these infirmities rendered the proposed resolutions legally vulnerable. [Paras 25, 26, 31, 33, 36]

The Requisition Notice's proposals were inconsistent with the statutory/regulatory regime for directors and with MIB/SEBI requirements and thus were legally vulnerable.

Jurisdictional ouster under Section 430 of the Companies Act - Whether this Court's jurisdiction to entertain Zee's suit and grant injunctive relief was ousted by Section 430 because the NCLT/NCLAT was seized of overlapping petitions. - HELD THAT: - The Court held that Section 430 does not bar civil courts from entertaining matters which the NCLT/NCLAT are empowered to determine only insofar as the subject matter falls within the NCLT's statutory remit. The present suit challenged the legality/effectiveness of the Requisition Notice and sought an injunction against the requisitioning shareholders; the Court was not being asked to injunct the NCLT or interfere with the tribunal itself. The NCLT's rules do not list Sections 100, 149, 150 or 168 as exclusively within its domain in a manner that would oust jurisdiction here. Consequently, Section 430 did not preclude this Court from exercising jurisdiction to determine whether the requisition could be restrained on grounds of illegality. [Paras 8, 12, 75, 76]

Section 430 does not oust this Court's jurisdiction to entertain and decide Zee's challenge to the Requisition Notice; the Court may grant injunctive relief against the requisitionists.

Validity of requisitioned EGM resolutions - Doctrine permitting court intervention where proposed resolutions are illegal or incapable of being effectuated ('still born' resolutions) - Whether, on the facts of this case, an injunction should be granted restraining Invesco from taking steps in furtherance of the Requisition Notice dated 11 September 2021. - HELD THAT: - Having applied the legal principles above to the facts (the Requisition Notice was procedurally valid but proposed removal of the MD without lawful replacement, proposed direct appointment of six named independent directors bypassing NRC/selection and raised MIB/SEBI/Takeover concerns), the Court concluded that the requisitioned resolutions, if put into effect, would produce statutory and regulatory non compliance and be incapable of lawful implementation. Given that conclusion, and because the relief sought was against the requisitionists (not the NCLT), the Court exercised its equitable jurisdiction and granted the injunction sought, restraining Defendants Nos. 1 and 2 (and those acting through them) from taking any step in furtherance of the Requisition Notice including calling or holding an EGM under Section 100(4). [Paras 36, 71, 77]

Injunction granted restraining the requisitionists from implementing or taking steps in furtherance of the Requisition Notice dated 11 September 2021; no costs ordered.

Final Conclusion: The High Court held that it is not precluded from examining the legality or effectiveness of resolutions requisitioned under Section 100 and may intervene to restrain a requisitioned EGM where the proposed resolutions are plainly illegal or incapable of lawful implementation; applying these principles to the present facts, the Court found the Requisition Notice legally vulnerable (including for circumventing NRC/SEBI/MIB/Section 203 requirements) and granted an injunction restraining the requisitionists from taking steps in furtherance of the Requisition Notice dated 11 September 2021.

Corporate creditors' right to invoke the Insolvency and Bankruptcy Code - review of tariff order by the regulatory commission - writ jurisdiction under Article 226 to secure commercial certainty - prerogative extraordinary jurisdiction to do complete justice - RBI Framework for Resolution of Stressed Assets - role of the regulatory commission in adjudicating arithmetical errors on the face of record - commercial restructuring versus independent statutory remedy under the IBC

Corporate creditors' right to invoke the Insolvency and Bankruptcy Code - commercial restructuring versus independent statutory remedy under the IBC - review of tariff order by the regulatory commission - Whether the Corporate Creditors (R3 and R4) were required to await the outcome of the Review petition before invoking the IBC. - HELD THAT: - The Court held that the pronouncement of the Tariff Order by the Commission on 31 May 2021 fulfilled the key pre-condition contemplated in the consortium restructuring discussions and did not, as a matter of law, fetter the Corporate Creditors from initiating IBC proceedings. From a commercial standpoint the IBC is an independent statutory remedy and a claimed non-viable tariff returned by the Commission does not prevent creditors from realising their debts. The Court observed, however, that the issue of whether the parties' consortium consensus contemplated only the pronouncement of any Tariff Order or required a 'viable' tariff is a matter for commercial debate between the parties. The Court also noted factual indicia (failure to infuse agreed working capital) that justified the creditors' unilateral recourse to the NCLT. While recognising that a review application pointing to arithmetical omissions was not manifestly frivolous and that tariff determination is essentially an arithmetical/expert exercise for the Commission, the Court concluded that creditors cannot be put to wait indefinitely for adjudication of the review where restructuring has effectively collapsed. Consequently the invocation of the IBC by R3 and R4 was not impermissibly restrained by the mere pendency of the Review petition.

R3 and R4 were not required to await the outcome of the Review petition before invoking the IBC; their initiation of insolvency proceedings was not barred by the pendency of the Review.

Review of tariff order by the regulatory commission - role of the regulatory commission in adjudicating arithmetical errors on the face of record - Direction to the Commission to adjudicate the Review Petition filed by the Company. - HELD THAT: - Although the Court did not decide the merits of the Review, it recognised that the Review application alleging arithmetical omissions prima facie was not a mere cosmetic exercise and that tariff fixation involves technical/arithmetic issues for expert determination by the Commission. In the exercise of its supervisory jurisdiction aimed at securing commercial certainty between parties whose dealings affect public supply of electricity, the Court directed the Commission to decide the Review Petition on its merits within a fixed timeline to prevent indefinite pendency impeding parties' legal options. The Court thus required the regulatory adjudicatory process to be expeditiously completed, without prejudicing the parties' rights.

The Commission was directed to adjudicate the Review Petition on merits within six weeks from communication of the order.

Writ jurisdiction under Article 226 to secure commercial certainty - prerogative extraordinary jurisdiction to do complete justice - Whether the High Court could entertain writ jurisdiction to intervene in the dispute between the Corporate Debtor and Corporate Creditors. - HELD THAT: - The Court held that Article 226 jurisdiction is not ousted merely because commercial or insolvency remedies exist; High Courts possess extraordinary prerogative powers to do complete justice and to secure certainty in commercial transactions, particularly where public-law elements (state-owned creditors and supply of electricity as a public purpose) are involved. The Court invoked authority for the proposition that High Courts can exercise powers to effectuate complete justice. Exercising that jurisdiction, the Court refrained from deciding the substantive competing claims but issued directions intended to facilitate a final commercial appraisal (including a further consortium meeting) and prompt regulatory adjudication before parties proceed with their chosen remedies.

The High Court was competent to exercise writ jurisdiction to issue directions aimed at securing commercial certainty and to order procedural steps without adjudicating the merits of competing commercial claims.

Final Conclusion: The High Court held that the creditors were not required to postpone invoking the IBC solely because a Review of the Tariff Order was pending; however, in the interest of commercial certainty and fairness it directed the Commission to decide the pending Review within six weeks and directed the parties to revisit fulfillment of consortium pre-conditions in a further meeting, while declining to enter into merits of the disputes.

Locus of proprietorship firm to initiate CIRP - running account and part payment as acknowledgement - effect of acknowledgment under Section 18 of the Limitation Act, 1963 - effect of payment on account under Section 19 of the Limitation Act, 1963 - obligation of corporate debtor to reply to demand notice under Section 8 of the IBC

Locus of proprietorship firm to initiate CIRP - Proprietorship firm has standing to initiate CIRP under the Code. - HELD THAT: - The Tribunal examined Section 2(f) of the Code and held that proprietorship firms are expressly included within the class of persons to whom the Code applies. Consequently, the Appellant, being a proprietorship concern, possessed the statutory capacity to invoke the insolvency process by filing a Section 9 application. [Paras 5]

Appellant, a proprietorship concern, has locus to initiate CIRP and maintain the Section 9 application.

Running account and part payment as acknowledgement - effect of acknowledgment under Section 18 of the Limitation Act, 1963 - Part payment and contemporaneous ledger/email communications constitute acknowledgment sufficient to compute a fresh period of limitation under Section 18. - HELD THAT: - On the material placed (ledger account covering 01.04.2015 to 31.03.2018, entries showing payments on 16/17/23.05.2017, and email of 10.05.2018 attaching statement of account), the Tribunal concluded there were continuing transactions amounting to a running account. The part payment by the corporate debtor coupled with the statement of account/email were held to operate as an acknowledgment of liability within the meaning of Section 18 of the Limitation Act, 1963, thereby triggering a fresh period of limitation computed from the date of acknowledgment/part payment. Applying that principle, the Section 9 application filed in November 2019 fell within the fresh limitation period. [Paras 6, 8, 10, 14]

The part payment and the ledger/email constitute an acknowledgment restarting limitation; the Section 9 application is not time barred.

Effect of payment on account of debt or of interest under Section 19 of the Limitation Act, 1963 - running account and part payment as acknowledgement - Payment on account supports computation of a fresh limitation period and validates the claim that the application was within limitation. - HELD THAT: - The Tribunal applied the doctrine that payment on account by the debtor before the prescribed period gives rise to a fresh limitation period (Section 19), and read Sections 18 and 19 together in the factual matrix of recurring transactions and part payments. The ledger entries and admitted payments were treated as payments on account and/or acknowledgments, reinforcing that the limitation period was revived and that the petitioner filed the Section 9 application within that revived period. [Paras 10, 14]

Part payments recorded in the ledger/email operate to revive limitation so the claim is within time.

Obligation of corporate debtor to reply to demand notice under Section 8 of the IBC - Failure of the corporate debtor to respond to the Section 8 demand notice is material and was not addressed by the Adjudicating Authority. - HELD THAT: - The Tribunal noted that the Section 8 demand notice of 25.02.2019 was delivered and that the corporate debtor did not reply within the statutory ten day period. The corporate debtor neither denied receipt before the Tribunal nor offered reasons for failing to reply in the record; the Adjudicating Authority had not considered this omission. The non reply was treated as relevant factual background supporting the continuity of the claim and the acknowledgement analysis. [Paras 11, 13]

Non reply to the Section 8 notice by the corporate debtor was noted as relevant and the Adjudicating Authority's failure to address it was highlighted.

Final Conclusion: Appeal allowed. The Adjudicating Authority's order dismissing the Section 9 application as barred by limitation is set aside; findings that the proprietor could maintain CIRP proceedings, that part payments and ledger/email constituted acknowledgment reviving limitation, and that the corporate debtor did not reply to the Section 8 notice were upheld; matter remitted to the Adjudicating Authority to proceed in accordance with law.

Existence of dispute - operational debt - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - rejection of Section 9 application - application of the Mobilox principle - adjustment against liquidated damages

Existence of dispute - operational debt - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - application of the Mobilox principle - rejection of Section 9 application - Whether the Adjudicating Authority was justified in rejecting the appellant's Section 9 application on the ground of a pre existing dispute - HELD THAT: - The Tribunal recorded and accepted several admitted facts including issuance and amendment of work orders, completion of work, invoices raised and part payments made, and that additional bills were raised for extra work. The Respondent consistently pleaded that the additional bills related to work not agreed under the contract and that liquidated damages/ set off were claimable under the contract terms. The Adjudicating Authority found, applying the law in Mobilox Innovations (as relied upon by the Respondent), that there was a pre existing dispute reflected in exchanges between the parties and correspondence concerning quantification of additional work and liquidated damages. The Tribunal noted those findings and observed that the Adjudicating Authority had rightly concluded that the existence of a dispute disentitled the appellant to relief under Section 9. The appellant's contention that part of the claimed operational debt was undisputed was considered but not accepted as a ground to sustain the Section 9 petition in view of the admitted set off/liquidated damages and the established pre existing dispute. Having found no illegality in the Adjudicating Authority's application of the Mobilox principle to the admitted facts, the Tribunal declined to interfere with the rejection of the Section 9 application. [Paras 18, 19]

The rejection of the Section 9 application by the Adjudicating Authority on account of a pre existing dispute is affirmed and the appeal is dismissed.

Final Conclusion: The Appellate Tribunal affirmed the National Company Law Tribunal's order rejecting the Section 9 petition, holding that a pre existing dispute (including issues as to additional work and adjustment by liquidated damages) existed and consequently there was no illegality in the Adjudicating Authority's refusal to admit the insolvency petition.

Distribution of liquidation estate cash balances - order of priority under Section 53 - Regulation 42(1) and distribution prerequisites - maximisation of value of assets - prematurity of distribution during liquidation

Distribution of liquidation estate cash balances - order of priority under Section 53 - Regulation 42(1) and distribution prerequisites - prematurity of distribution during liquidation - Whether the Tribunal should direct immediate distribution of the cash balance of the corporate debtor to stakeholders in liquidation. - HELD THAT: - The Tribunal examined the applicants' plea for distribution of the cash balances forming part of the liquidation estate and noted the applicants' willingness to have distribution made in accordance with the order of priority set out in Section 53 and to account for CIRP and estimated liquidation costs. The Liquidator indicated availability of funds and expressed conditional consent subject to an undertaking to replenish any shortfall. Notwithstanding these representations, the Bench concluded that the company remains operational in part and that permitting immediate distribution at this stage would derogate from the value of the company and undermine the objective of maximisation of asset value during the liquidation process. The Tribunal considered the regulatory requirement that distribution follow the filing of the stakeholders list and asset memorandum (Regulation 42(1)) and the scheme of Section 53 governing distribution, but held that distribution prior to completion of liquidation and without the liquidation process being substantially advanced would be premature. Consequently the application for immediate distribution was rejected. The Tribunal further directed administrative steps to progress liquidation, including submission of a progress report and a revised list of stakeholders, and ordered that distribution be commenced only after completion steps are taken so that distribution can occur in one go. [Paras 20]

Application for immediate distribution rejected as premature; liquidator directed to submit progress report and revised stakeholders list and to complete liquidation steps before commencing distribution in one go.

Final Conclusion: The application seeking direction for immediate distribution of the corporate debtor's cash balance is dismissed as premature; the liquidator is directed to file a progress report and revised stakeholders list and to proceed to complete the liquidation in a time bound manner before initiating distribution.

Liquidation under section 33 of the Insolvency and Bankruptcy Code - commercial wisdom of the Committee of Creditors - judicial interference with commercial decision of CoC - natural justice / right to be heard - One Time Settlement (OTS) and absence of application under section 12A - time-bound completion of Corporate Insolvency Resolution Process (CIRP)

Liquidation under section 33 of the Insolvency and Bankruptcy Code - commercial wisdom of the Committee of Creditors - time-bound completion of Corporate Insolvency Resolution Process (CIRP) - Validity of the liquidation order where CoC, having rejected the sole resolution plan and with no acceptable settlement from the promoter, decided to move for liquidation. - HELD THAT: - The Tribunal found that CIRP was initiated on 14.2.2020; only one resolution plan was received and ultimately rejected by the CoC in its 13th meeting dated 16.6.2021, after which the Resolution Professional filed the section 33 application. The Appellant pursued multiple OTS proposals with the bank but none were acceptable to the bank and no application under section 12A was filed. The Adjudicating Authority's order for liquidation followed the CoC's decision taken within the CIRP timeline; the Tribunal emphasised the statutory requirement of timely completion of insolvency proceedings and that section 33 must follow where no viable resolution plan is approved. The Appellant did not point to any legal infirmity in the CoC decision or in the Adjudicating Authority's order. Applying the principle that the commercial wisdom of the CoC is to be respected except where there is a legal defect, the Tribunal declined to interfere with the liquidation order. [Paras 12, 13, 15, 17, 18]

The liquidation order was upheld as legal and proper; the appeal against the liquidation order is dismissed.

Natural justice / right to be heard - One Time Settlement (OTS) and absence of application under section 12A - judicial interference with commercial decision of CoC - Whether the Appellant was denied effective opportunity of hearing or otherwise prejudiced in contravention of principles of natural justice so as to vitiate the liquidation order. - HELD THAT: - The Appellant contended that he was unaware of the filing of the section 33 application and that he was not afforded opportunity to place objections or to have the reserved order recalled; he relied on his series of OTS proposals. The Tribunal recorded that the Appellant's OTS proposals were repeatedly rejected by the bank and no acceptable settlement existed; consequently no section 12A application was filed by the Appellant. The Tribunal observed that the Appellant failed to demonstrate any legal infirmity in the CoC's process or in the Adjudicating Authority's order. Mere assertion of non-awareness, without showing that the procedural shortcoming led to a legal defect in the decision-making, was insufficient to disturb the order. The Tribunal therefore found no breach of natural justice warranting interference. [Paras 7, 8, 11, 17, 18]

The contention of denial of effective opportunity of hearing was rejected and did not vitiate the liquidation order; no interference warranted.

Final Conclusion: The appeal is dismissed at the admission stage; the liquidation order of the Adjudicating Authority is upheld and there is no order as to costs.

Maintainability of an application under Section 7 when filed by an authorised person / power of attorney holder - effect of acknowledgement in writing under Section 18 of the Limitation Act to extend limitation for IBC proceedings - effect of payment on account of debt under Section 19 of the Limitation Act - entries in balance-sheets as acknowledgement of liability - date of default as date of classification as NPA

Maintainability of an application under Section 7 when filed by an authorised person / power of attorney holder - power of attorney as general authorisation - The Section 7 petition was filed by an authorised person of the bank and is maintainable. - HELD THAT: - The Tribunal applied the law laid down by the Supreme Court in Rajendra Narottamdas Sheth regarding competence of a power of attorney holder who has been generally authorised by the financial creditor. The Assistant General Manager who signed the petition was shown to be a principal officer authorised by a General Power of Attorney dated 27 September 2011 and authorised to prosecute proceedings, recover loans and initiate proceedings under the IBC; additionally a permission letter dated 11 June 2018 was on record. The Tribunal held that a general authorisation granted pursuant to a board resolution does not disentitle the officer from acting as the authorised representative for filing a Section 7 application and therefore the objection to maintainability on the ground of want of authorisation was untenable. [Paras 4]

Objection to maintainability for want of proper authorisation is rejected and the application is held to be filed by an authorised person.

Effect of acknowledgement in writing under Section 18 of the Limitation Act to extend limitation for IBC proceedings - effect of payment on account of debt under Section 19 of the Limitation Act - entries in balance-sheets as acknowledgement of liability - date of default as date of classification as NPA - The Section 7 petition was not barred by limitation; acknowledgements/payments and balance-sheet entries extended the limitation period and the Adjudicating Authority rightly admitted the petition. - HELD THAT: - The Tribunal examined whether the petition filed on 22 October 2018 was time barred given the account was declared NPA on 01 July 2015. It considered applicability of Sections 18 and 19 of the Limitation Act as applied to IBC proceedings, and relied on binding Supreme Court authority holding that acknowledgements in writing and certain payments within the prescribed period can restart limitation. The Tribunal found a credit entry of 30 December 2015 on the debtor's account and balance sheets for 2016 17, 2017 18 and 2018 19 showing amounts due and payable to the bank, signed by the appellant, which constituted material extending limitation under Section 18 and, as applicable, Section 19. The appellant's assertion that the December 2015 credit was from an unrelated party and was returned was unsupported by evidence. The Tribunal further noted precedent that a Certificate of Recovery or final adjudication can give rise to a fresh cause of action and observed that the Adjudicating Authority may consider documents placed on record before final decision. On this basis the Tribunal held that the Adjudicating Authority correctly concluded the petition was within the extended limitation period and admitted it. [Paras 5]

Limitation objection is rejected; the petition is within the extended limitation period and its admission by the Adjudicating Authority is upheld.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's admission of the Section 7 petition is upheld: the petition was filed by an authorised person and was not barred by limitation in view of the acknowledged liabilities and relevant account entries considered by the Adjudicating Authority.

Finality of an approved resolution plan - submission and admission of claims in the corporate insolvency resolution process - recall or review of order approving resolution plan - limitation and delay in filing claims and appeals under the IBC - proper remedy against actions of the resolution professional and approval order - role of the resolution professional and Committee of Creditors in deciding claims - application under Section 60(5) of the IBC challenging decisions of the resolution professional

Finality of an approved resolution plan - recall or review of order approving resolution plan - role of the resolution professional and Committee of Creditors in deciding claims - The Adjudicating Authority cannot recall or review its order approving a resolution plan, and once a resolution plan is approved and implemented undecided or belated claims cannot be entertained against the successful resolution applicant. - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that there is no provision in the IBC permitting recall or review of the order approving a resolution plan. Relying on the principle that a successful resolution applicant must not be faced with undecided claims after approval (as expounded by the Supreme Court), all claims are required to be submitted to and decided by the resolution professional so that the prospective resolution applicant takes over on a known slate. Allowing new or belated claims after implementation would undermine the certainty of amounts payable by the resolution applicant and is impermissible. [Paras 12, 13, 15]

No power to recall or review the approval order; new/undecided claims cannot be considered after approval and implementation of the resolution plan.

Submission and admission of claims in the corporate insolvency resolution process - limitation and delay in filing claims and appeals under the IBC - proper remedy against actions of the resolution professional and approval order - application under Section 60(5) of the IBC challenging decisions of the resolution professional - The appellant's claim and applications were barred by inordinate delay and limitation, and the appropriate course was to file timely appeal or specific applications within limitation rather than the belated proceedings instituted. - HELD THAT: - The appellant was aware of the CIRP by 1.11.2019 but filed its claim only on 6.2.2020 and the Section 60(5) application over eleven months after approval of the resolution plan. The Tribunal observed that the appellant should have kept track of CIRP actions, and that the remedy against the approval of the resolution plan was an appeal under the IBC within the prescribed time; similarly grievances against the resolution professional required timely proceedings. The belated filing and failure to pursue the proper remedies within limitation disentitled the appellant to relief. [Paras 10, 11, 12]

The claim and applications were filed with inordinate delay and after lapse of limitation; the appellant's recourse was to file timely appeal or appropriate applications, which it did not do.

Final Conclusion: The appeal is dismissed at the admission stage for being time-barred and on merits insofar as reconsideration of an approved and implemented resolution plan is impermissible; no order as to costs.

"Financial Debt" as defined under section 5(8) - "Default" as defined under section 3(12) - Admission under Section 7 of the I&B Code - Appointment of Interim Resolution Professional - Moratorium under Section 14 of the I&B Code - Public announcement of initiation of Corporate Insolvency Resolution Process - Duties of Interim Resolution Professional under Sections 18 and 15 - Form No.1 under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016

"Financial Debt" as defined under section 5(8) - "Default" as defined under section 3(12) - Admission under Section 7 of the I&B Code - The petitioner established existence of a financial debt and a default, warranting admission of the Section 7 petition. - HELD THAT: - The Tribunal found on the material on record, including the MOUs, payment particulars and the corporate debtor's reply, that the loan was disbursed and the corporate debtor did not dispute the liability but admitted inability to repay. The documents demonstrated payment of interest for limited periods and unpaid principal and interest thereafter. Applying the statutory definitions, the Tribunal held that both elements-existence of a financial debt and default-were established, and the formalities for initiating proceedings under Section 7 were complete. [Paras 21, 23, 24, 25]

Petition under Section 7 admitted as conditions of 'debt' and 'default' are satisfied.

Appointment of Interim Resolution Professional - The Insolvency Professional proposed by the financial creditor is fit to be appointed as Interim Resolution Professional (IRP). - HELD THAT: - The Tribunal examined the written consent (Form 2) and the records for any disciplinary proceedings against the proposed IRP. Finding none and noting the proposal by the financial creditor, the Tribunal appointed the named insolvency professional to conduct the insolvency resolution process. [Paras 26, 27]

Proposed IRP appointed to conduct the Corporate Insolvency Resolution Process.

Moratorium under Section 14 of the I&B Code - Moratorium under Section 14 is operative from the date of the order. - HELD THAT: - Upon admission, the Tribunal directed that the moratorium provisions apply forthwith, prohibiting institution of suits, transfer or encumbrance of the debtor's assets while preserving supply of essential goods and services. The moratorium is to remain effective until completion of the insolvency resolution process or approval of a resolution plan under Section 31. [Paras 28]

Moratorium declared and made effective from the date of the order.

Public announcement of initiation of Corporate Insolvency Resolution Process - Duties of Interim Resolution Professional under Sections 18 and 15 - IRP is directed to make the public announcement and perform statutory duties, and to report progress to the Tribunal within the stipulated time. - HELD THAT: - The Tribunal directed the IRP to immediately carry out the public announcement of initiation of CIRP as mandated, and to perform duties assigned under the Code, including Section 18 and Section 15 responsibilities. The IRP was required to inform the Tribunal of progress and compliance within 30 days, with liberty to report earlier if necessary. [Paras 29, 30]

IRP to make public announcement, undertake statutory duties and report progress to the Tribunal within 30 days.

Final Conclusion: The Section 7 petition was admitted: the Tribunal held that a financial debt and default existed, appointed the proposed Interim Resolution Professional, declared moratorium under Section 14 effective from the date of the order, directed immediate public announcement of the CIRP and entrusted the IRP with statutory duties and reporting obligations.

Admission under Section 9 of the Insolvency and Bankruptcy Code - debt and default - limitation - Corporate Insolvency Resolution Process (CIRP) - appointment of Interim Resolution Professional - moratorium - prohibition on continuation of suits and enforcement actions - supply of essential goods or services during moratorium - management vesting in IRP/RP - public announcement of CIRP - updating Registrar of Companies master data

Admission under Section 9 of the Insolvency and Bankruptcy Code - debt and default - limitation - Company petition under Section 9 of the Code admitted and CIRP ordered against the corporate debtor on proof of debt and default and within limitation. - HELD THAT: - The Tribunal was satisfied on the material on record that the operational creditor had established the existence of debt and default by producing the relevant invoices, the demand notice and the service track report; the corporate debtor remained ex parte and did not challenge the claim. The Tribunal noted that the subject invoices related to 2018 and the petition filed on 17.01.2020 was within the limitation period. On this basis the petition fulfilled the requirements for admission under Section 9 and was admitted. [Paras 3, 4, 5]

Company Petition (IB)-362(MB)/2020 allowed and CIRP ordered against M/s. Cubatics Industries Private Limited.

Appointment of Interim Resolution Professional - moratorium - prohibition on continuation of suits and enforcement actions - supply of essential goods or services during moratorium - management vesting in IRP/RP - public announcement of CIRP - updating Registrar of Companies master data - Interim directions issued on admission including appointment of IRP, moratorium and ancillary procedural directions. - HELD THAT: - Upon admission the Tribunal appointed the named insolvency professional as interim resolution professional to carry out functions under the Code. The Tribunal directed the operational creditor to deposit the initial CIRP cost as specified. A moratorium was imposed prohibiting institution or continuation of suits or enforcement actions against the corporate debtor, and prohibiting transfer, encumbrance or disposal of assets; supply of essential goods or services, if continuing, was directed not to be terminated during the moratorium. The Tribunal recorded that management of the corporate debtor would vest in the IRP/RP, required suspended directors and employees to cooperate with the IRP/RP, directed immediate public announcement of the CIRP, and ordered that a copy of the order be sent to the Registrar of Companies for updating master data. [Paras 6]

Mr. Kailas T. Shah appointed as Interim Resolution Professional; moratorium and other directions (including deposit of initial CIRP cost, continuation of essential supplies, vesting of management in IRP/RP, public announcement, and ROC update) issued.

Final Conclusion: The Tribunal allowed the Section 9 petition, directed initiation of CIRP against the corporate debtor, appointed an Interim Resolution Professional and issued the statutory moratorium and related procedural directions to give effect to the CIRP.

Admission of petition under Section 7 of the Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process (CIRP) - Debt and default - Evidence of debt in audited financial statements - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - Jurisdiction of the Adjudicating Authority - Public announcement and invitation of claims

Jurisdiction of the Adjudicating Authority - This Bench has jurisdiction to adjudicate the Section 7 petition against the Corporate Debtor. - HELD THAT: - The Corporate Debtor is a public company incorporated on 02.05.2005 and its registered office falls within the territorial jurisdiction of this Bench. On that basis the Adjudicating Authority held that the Bench is competent to deal with the petition. [Paras 2]

Bench has jurisdiction to hear and decide the petition.

Debt and default - Evidence of debt in audited financial statements - Admission of petition under Section 7 of the Insolvency and Bankruptcy Code - The Financial Creditor has established existence of debt and occurrence of default and the Section 7 petition is admissible and is to be admitted. - HELD THAT: - The petitioners, as legal heirs of the deceased original creditor, served a demand notice dated 03.10.2017. The Corporate Debtor's own audited financial statements acknowledge the loan. The Corporate Debtor's defence - that repayment was to be effected only from sale proceeds of a specified asset and that the loan terms were oral - was rejected as having no substance. Applying the principle that once 'debt' and 'default' are proved the adjudicating authority is bound to admit a Section 7 petition, the Authority found the application to be complete and the threshold default satisfied. [Paras 12, 13, 15, 16]

Debt and default established; petition under Section 7 is admitted and CIRP is ordered to be initiated.

Appointment of Interim Resolution Professional - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Public announcement and invitation of claims - Interim Resolution Professional is appointed; moratorium and ancillary directions for conduct of CIRP are imposed. - HELD THAT: - The Financial Creditor proposed Mr. Milind Kasodekar and filed his written consent and registration certificate. The Authority appointed him as Interim Resolution Professional to perform functions under the IBC. A moratorium under section 14 was ordered restraining institution or continuation of suits, transfer or disposal of assets, and enforcement of security, with specified exceptions for essential supplies and transactions notified by the Central Government. Directions were given for public announcement of CIRP, submission of documents to the IRP, deposit to meet costs of public notice subject to CoC approval, updating Registrar of Companies, and communication of the order to relevant parties. [Paras 14, 16]

IRP appointed; moratorium declared; directions issued for carrying out the CIRP, public announcement, claims invitation and related compliance.

Final Conclusion: The Adjudicating Authority admitted the Section 7 petition, held that debt and default were established on the basis of acknowledged entries in audited financials and the demand notice, appointed an Interim Resolution Professional, declared a moratorium and directed the steps required to commence and conduct the CIRP.

Initiation of Corporate Insolvency Resolution Process - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and demand notice - default - ex parte admission - forfeiture of right to file counter - appointment of Interim Resolution Professional - moratorium

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and demand notice - default - ex parte admission - forfeiture of right to file counter - Petition under Section 9 was admitted and Corporate Insolvency Resolution Process (CIRP) was ordered to be initiated against the Corporate Debtor. - HELD THAT: - The Tribunal recorded that the Operational Creditor supplied Harbour Mobile Crane services and raised invoices which remained unpaid. A demand notice was issued on 05.06.2020 to the Corporate Debtor, which did not reply. The Corporate Debtor failed to file a counter despite adjournments and, by order dated 15.04.2021, the Tribunal forfeited its right to file a counter. In view of the undisputed default, absence of any defence on record and the Operational Creditor's claim, the Tribunal concluded that the statutory requirements for admission under Section 9 were satisfied and admitted the petition ex parte, directing commencement of CIRP. [Paras 8, 9, 10]

Company Petition admitted ex parte and CIRP against the Corporate Debtor ordered to commence.

Appointment of Interim Resolution Professional - initiation of Corporate Insolvency Resolution Process - An Interim Resolution Professional was appointed to take charge and conduct the CIRP. - HELD THAT: - The Operational Creditor did not propose any candidate for the IRP. The Tribunal therefore appointed Mr. Sunkara Venkateswara Rao as Interim Resolution Professional and directed him to file his written consent in the prescribed form and to take charge of the Corporate Debtor's management and perform duties under the Code and Rules in furtherance of the CIRP. [Paras 10]

Mr. Sunkara Venkateswara Rao appointed as Interim Resolution Professional and directed to assume charge and comply with statutory obligations.

Moratorium - initiation of Corporate Insolvency Resolution Process - Moratorium under the Code was declared in respect of the Corporate Debtor consequent to initiation of CIRP. - HELD THAT: - On admission of the Section 9 petition and commencement of the CIRP, the Tribunal declared the moratorium in terms of the Code and directed cooperation of the Corporate Debtor's management with the IRP for effective discharge of his functions under the Code.

Moratorium declared in terms of the Code and management directed to extend cooperation to the IRP.

Final Conclusion: The Tribunal admitted the Section 9 petition filed by the Operational Creditor, ordered initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor, appointed an Interim Resolution Professional and declared the moratorium; the petition was admitted ex parte following the Corporate Debtor's failure to respond.

Exclusion of time from liquidation period - compromise or arrangement under Section 230 of the Companies Act, 2013 - Regulation 2B(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2020 - calculation of liquidator's fee excluding excluded period

Exclusion of time from liquidation period - Regulation 2B(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2020 - compromise or arrangement under Section 230 of the Companies Act, 2013 - Period from 11th January 2021 to 28th July 2021 excluded from the liquidation period of the corporate debtor. - HELD THAT: - The Tribunal applied Regulation 2B(2) which provides that time taken on compromise or arrangement, not exceeding ninety days, shall not be included in the liquidation period. In the facts before it the promoters sought time to propose a restructuring under Section 230 of the Companies Act, 2013, were granted an initial 90 days and a subsequent extension which expired on 28th July 2021, and were unable to complete the restructuring within those periods. Having regard to these events and the prevailing pandemic-related circumstances, the Tribunal held that the period from 11.01.2021 to 28.07.2021 falls within the exclusion contemplated by Regulation 2B(2) and ordered that this period be excluded from the liquidation period, subject to compliance with the IBBI Regulations. [Paras 5, 6]

Exclude the period from 11th January 2021 to 28th July 2021 from the liquidation period of the corporate debtor.

Calculation of liquidator's fee excluding excluded period - exclusion of time from liquidation period - Liquidator's fee to be calculated excluding the period from 11th January 2021 to 08th July 2021. - HELD THAT: - Following the exclusion of time from the liquidation period under Regulation 2B(2) and the Tribunal's exercise of discretion in the circumstances, the Tribunal directed that the fee payable to the liquidator be computed by excluding the specified excluded period. The order specifies the period for fee computation as 11.01.2021 to 08.07.2021 and mandates that calculation be carried out in accordance with the IBBI Regulations. [Paras 6]

Compute the liquidator's fee excluding the period from 11.01.2021 to 08.07.2021, following the IBBI Regulations.

Final Conclusion: The Tribunal, invoking Regulation 2B(2) of the IBBI (Liquidation Process) Regulations, 2020 and having regard to the attempted compromise under Section 230 and pandemic-related circumstances, excluded 11.01.2021-28.07.2021 from the liquidation period and directed that the liquidator's fee be calculated excluding 11.01.2021-08.07.2021 in accordance with the IBBI Regulations.

Debt and Default under the Insolvency and Bankruptcy Code - Financial debt including interest-free loans - Admissibility of a petition under Section 7 - Scope for raising a dispute in Section 7 proceedings - Appointment of Interim Resolution Professional and moratorium on initiation of suits

Debt and Default under the Insolvency and Bankruptcy Code - Entry of loan in financial statements as evidence of debt - The Corporate Debtor owed a debt which was due and in default within the meaning of the Code. - HELD THAT: - The Tribunal found that the amounts advanced by the Financial Creditors appear as loans under "Current Liabilities - Short Term Borrowings" in the Corporate Debtor's financial statements and that resignation letters were handed to the existing directors with an understanding that the loan would be cleared on acknowledgement of resignation, thereby establishing both existence of debt and occurrence of default. The Tribunal held that auditor's notes expressing uncertainty as to the source of information did not negate the entries in the financial statements, which the auditor otherwise found to be in agreement with books of account. Applying the wide definition of "default" in section 3(12), the non-payment of the loan amounted to default for the purposes of admitting a Section 7 petition. [Paras 16, 17, 31, 32, 34]

Debt and default were established and the Corporate Debtor was held to be in default.

Financial debt including interest-free loans - Definition of Financial Creditor under the Code - The amounts advanced by the applicants qualify as 'financial debt' and the applicants are 'financial creditors' under the Code despite the loans being interest-free. - HELD THAT: - Relying on the statutory definition of "financial debt" and authoritative precedent, the Tribunal held that a loan advanced to finance the business of the corporate debtor falls within the ambit of section 5(8) even if no interest is payable. The absence of an agreed interest rate did not preclude characterization of the advances as financial debt where the commercial effect was that of borrowing. Accordingly, the applicants satisfy the definition of financial creditors under section 5(7). [Paras 18, 19, 20, 32, 34]

The advances are financial debt and the applicants are financial creditors entitled to invoke Section 7.

Admissibility of a petition under Section 7 - Scope for raising a dispute in Section 7 proceedings - The Section 7 petition was complete and liable to be admitted; the alleged pre-existing or parallel disputes did not preclude admission. - HELD THAT: - The Tribunal observed that unlike Section 9, Section 7 admits little scope for raising a "dispute" once debt and default are established. Having found documentary support in bank statements and financial statements for the advances and the default, and having considered the Corporate Debtor's contentions of disputed entries and parallel proceedings (civil suits, arbitration, earlier Section 9 filings), the Tribunal held those contentions did not negate the statutory requirements for admission. The application was therefore complete and satisfied the threshold under the Code and Rules for initiating CIRP. [Paras 31, 32, 33, 34]

The Section 7 petition was admitted and the statutory threshold for initiation of CIRP was satisfied.

Appointment of Interim Resolution Professional and moratorium on initiation of suits - Relief incidental to admission: moratorium, public announcement and vesting of management - On admission, an Interim Resolution Professional was appointed, moratorium was declared and consequential directions were issued to commence CIRP. - HELD THAT: - The Tribunal accepted the proposed IRP after receipt of his written communication in the prescribed form and certificate of registration. Consequent to admission, the Tribunal ordered the statutory moratorium, directed public announcement of CIRP, required cooperation of officers and managers with the IRP, directed deposit by the Financial Creditor to meet initial expenses, and instructed communication of the order to relevant authorities including the Registrar of Companies. These orders flow from the admission and are required by the Code and Rules to facilitate the CIRP. [Paras 33, 34, 35]

Mr. Mandar Wagh was appointed as IRP, moratorium was imposed and directions for commencement of CIRP were issued.

Final Conclusion: The Tribunal admitted the Section 7 petition, held that the advances constituted financial debt and that default was established, initiated the Corporate Insolvency Resolution Process, appointed an Interim Resolution Professional, and directed the statutory moratorium and ancillary steps to carry forward the CIRP.

Liquidation under section 33(2) of the Insolvency & Bankruptcy Code, 2016 - Committee of Creditors decision to liquidate - voting threshold for liquidation (not less than sixty-six percent) - appointment of liquidator under section 34(1) of the Code subject to valid Authorisation for Assignment - initiation of liquidation process under Chapter III of the Code - cessation of powers of the board of directors and key managerial personnel upon liquidation - public notice of liquidation and filing of order with Registrar of Companies - bar on institution of suits and legal proceedings upon initiation of liquidation subject to section 52 and section 33(5)

Liquidation under section 33(2) of the Insolvency & Bankruptcy Code, 2016 - Committee of Creditors decision to liquidate - voting threshold for liquidation (not less than sixty-six percent) - Order for liquidation of the Corporate Debtor on account of the CoC's resolution to liquidate - HELD THAT: - The Adjudicating Authority held that section 33(2) requires it to pass an order for liquidation where the resolution professional intimates a decision of the Committee of Creditors, approved by not less than sixty-six percent of the voting share, to liquidate the corporate debtor. The CoC resolved to liquidate by 85.97% voting share. On that basis the Bench directed liquidation of Mohan Motors Udyog Private Limited in terms of section 33(2) read with sub section (1). This decision follows the statutory mandate that a CoC decision meeting the prescribed voting threshold obliges the Adjudicating Authority to order liquidation when intimated by the resolution professional. [Paras 14, 15]

The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code.

Appointment of liquidator under section 34(1) of the Code subject to valid Authorisation for Assignment - Appointment of the liquidator and condition precedent to assume office - HELD THAT: - The Tribunal appointed Mr. Abhit Kumar Singh as Liquidator under section 34(1) of the Code. The appointment is made subject to the Liquidator possessing a valid Authorisation for Assignment (AFA) issued by the Insolvency Professional Agency of which he is a member, in terms of the relevant regulation. The order thus both identifies the individual to act as liquidator and conditions his entitlement to act on compliance with the applicable professional authorisation requirement. [Paras 15]

Mr. Abhit Kumar Singh is appointed as Liquidator, subject to his possessing a valid AFA from the relevant Insolvency Professional Agency.

Initiation of liquidation process under Chapter III of the Code - public notice of liquidation and filing of order with Registrar of Companies - cessation of powers of the board of directors and key managerial personnel upon liquidation - bar on institution of suits and legal proceedings upon initiation of liquidation subject to section 52 and section 33(5) - Incidental directions governing the conduct of liquidation and transitional steps - HELD THAT: - The Tribunal directed the Liquidator to commence the liquidation process in accordance with Chapter III of the Code and the Liquidation Process Regulations. It ordered issuance of public notice in the same newspapers earlier used, directed the Resolution Professional to hand over all CIRP records to the Liquidator within two weeks, and required filing of the order with the Registrar of Companies. The Bench ruled that all powers of the board and key managerial personnel cease and vest in the Liquidator. Further, it clarified that, subject to section 52 of the Code, no suit or other proceeding shall be instituted by or against the Corporate Debtor on initiation of liquidation except as permitted (and that the Liquidator may institute proceedings on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority). The order also records that this liquidation order shall be deemed notice of discharge to officers, employees and workmen except insofar as business is continued by the Liquidator during liquidation. [Paras 15]

Directions issued for initiation and conduct of the liquidation process, handover of records, publication of notice, cessation of directors' and KMPs' powers, restrictions on suits, and filing with the Registrar of Companies.

Final Conclusion: Application for liquidation is allowed; the Corporate Debtor is ordered to be liquidated, a Liquidator is appointed subject to requisite authorisation, and consequential directions for commencement and conduct of the liquidation process are issued.

Admission and computation of claim including interest based on loan agreements and financial statements - Rule 8(2)(b) of CIRP Regulations, 2016 - amount of claim ascertained on the basis of financial contract supported by the financial statement - financial statement as evidence of debt - related party under Section 5(24A) of IBC, 2016 - role and neutrality of the Resolution Professional - constitution of Committee of Creditors and voting share determination - use and weight of due diligence reports in ascertaining related party status - approbate and reprobate principle - reconstitution of CoC and replacement of Resolution Professional

Admission and computation of claim including interest based on loan agreements and financial statements - Rule 8(2)(b) of CIRP Regulations, 2016 - amount of claim ascertained on the basis of financial contract supported by the financial statement - financial statement as evidence of debt - approbate and reprobate principle - Validity of admission and computation of claims of unsecured financial creditors including interest and the consequent voting share calculation. - HELD THAT: - The Tribunal examined the Notes to Accounts (Clause 9) in the financial statements which disclosed borrowing costs and the non-provisioning of interest, and noted parity in methodology applied by the RP in admitting interest for both secured and unsecured financial creditors. In light of Rule 8(2)(b) of the CIRP Regulations, 2016 and the definition of "financial statement" in the Companies Act, the amount of claim was ascertainable on the basis of loan agreements supported by the financial statements. The Tribunal applied the principle that one cannot approbate and reprobate: if interest is to be excluded for unsecured creditors it must equally be excluded for secured creditors. Given that the RP used loan documents and the financial statements consistently for all creditors, and that the RP produced charts and documents supporting the admitted claims, the admission and computation of interest-inclusive claims and resulting voting shares were held to be correctly ascertained. [Paras 10, 11]

Admission and computation of the claims (including interest) of the unsecured financial creditors and the resulting voting share determination by the RP were correct; no fault found.

Related party under Section 5(24A) of IBC, 2016 - use and weight of due diligence reports in ascertaining related party status - role and neutrality of the Resolution Professional - constitution of Committee of Creditors and voting share determination - reconstitution of CoC and replacement of Resolution Professional - Whether the unsecured financial creditors are related parties of the Corporate Debtor and whether the CoC was wrongly constituted, warranting removal of the RP and reconstitution of the CoC. - HELD THAT: - The Tribunal compared the earlier (2016) unsigned draft report relied on by the applicant with the due diligence report obtained by the RP (SDMA, dated 12.02.2020) which examined MCA data and applied the statutory tests under Section 5(24A). The RP's report contained specific analysis of shareholding, management, and other indicia and concluded that the unsecured creditors were not related parties. The Tribunal held that interchange of managerial personnel or historical group association, without contemporaneous association with the Corporate Debtor at the relevant time, is not a sufficient basis to treat those creditors as related parties. The object of excluding related parties from CoC is to preserve independence, but past relations do not automatically disqualify a creditor absent material showing that related status existed on the date of initiation or was re-established to dominate CIRP. No material was produced to prove that related-party status persisted to the detriment of stakeholders. Having accepted the RP's due diligence and finding, the Tribunal found no bias or misconduct by the RP and no ground to dissolve the CoC, remove the RP, or reconstitute the CoC. [Paras 12, 13, 14, 15]

Unsecured financial creditors are not held to be related parties; the RP's conduct and the constitution of the CoC are upheld; prayer for replacement of RP and reconstitution of CoC is rejected.

Final Conclusion: Both IAs are dismissed: the admission and computation of claims (including interest) and the RP's related-party findings were upheld; there is no occasion to remove the Resolution Professional or to reconstitute the Committee of Creditors.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - adjustment/deduction of pre-deposit under SVLDRS - consolidation/clubbing of disputes for relief under SVLDRS - beneficial construction of amnesty schemes - prohibition on refund of excess pre-deposit

Adjustment/deduction of pre-deposit under SVLDRS - consolidation/clubbing of disputes for relief under SVLDRS - prohibition on refund of excess pre-deposit - beneficial construction of amnesty schemes - Excess disputed pre-deposit made in respect of one show-cause notice can be adjusted against amount payable under a second show-cause notice for the same assessee and same subject matter under the SVLDRS. - HELD THAT: - The Court accepted that the SVLDRS is a beneficial amnesty and dispute-resolution scheme and must be construed liberally to achieve its object of liquidating legacy disputes. Section 124(1)(a) contemplates relief where tax dues are relatable to a show-cause notice or "one or more appeals arising out of such notice", and Section 124(2) requires deduction of any amount paid as pre-deposit when issuing the statement of the amount payable, while the proviso bars refund of excess. Read together, these provisions permit deduction/adjustment of pre-deposits against amounts payable under the Scheme. Where multiple show-cause notices and appeals relate to the same assessee and the same subject matter (here, jaggery powder) for different periods, the Scheme's language and object permit consolidation for the limited purpose of mutual adjustment of disputed pre-deposits. The requirement in Rule 3(2) that a separate declaration be filed for each case does not by itself create a prohibition on making mutual adjustments across cases; absent any express bar in the Scheme or Rules, mutual adjustment is permissible to give effect to the Scheme's amnesty and dispute-resolution purpose. For these reasons the designated committee's refusal to adjust the excess pre-deposit was set aside and the committee was directed to adjust the amounts and issue a discharge certificate. [Paras 8, 9, 10, 11, 12]

Impugned Form SVLDRS-3 dated 13.12.2019 quashed; respondents directed to adjust the excess pre-deposit made in respect of the first show-cause notice against the amount payable in the second case and to issue a discharge certificate for the period 16.09.2015 to 30.06.2015.

Final Conclusion: Petition allowed; the designated committee's order rejecting adjustment was quashed and respondents directed to effect mutual adjustment of disputed pre-deposits under the SVLDRS and to issue a discharge certificate for the second case expeditiously.

Valuation of job-worked goods - Rule 8 of Central Excise (Valuation) Rules, 2000 - cost of manufacture plus job charges - suppression of fact / malafide intention - revenue neutrality - entitlement to Cenvat credit - remand for recomputation of duty and credit

Valuation of job-worked goods - Rule 8 of Central Excise (Valuation) Rules, 2000 - cost of manufacture plus job charges - Valuation method applicable to goods manufactured on job-work and returned to the principal manufacturer - HELD THAT: - The Tribunal held that Rule 8 applies only where the assessee uses the excisable goods himself or they are used on his behalf in manufacture of other articles. Here the job-worker manufactured the intermediate product and returned it to the principal manufacturer, who alone used it in further manufacture. Therefore the ingredients of Rule 8 are not satisfied in the hands of the job-worker. Reliance was placed on earlier Tribunal and Supreme Court decisions recognising that valuation in the hands of a job-worker who does not himself use the goods should be on cost construction (cost of raw material plus job charges). The Larger Bench decision in Eicher Motors was found inapplicable as it addressed a different factual question. [Paras 6]

Valuation in the hands of the job-worker must be determined on cost of manufacture plus job charges; valuation under Rule 8 was not applicable and the adjudicating authority should re-determine value accordingly.

Suppression of fact / malafide intention - revenue neutrality - Whether short-payment/non-revision of declared value by the job-worker amounted to suppression with malafide intention attracting demand and penalty - HELD THAT: - The Tribunal found that the appellant had paid excise duty and, on detection by audit, paid the differential duty with interest prior to the show cause notice. The duty paid was undisputedly available as Cenvat credit to the principal manufacturer, rendering the situation revenue neutral. In such revenue-neutral circumstances and given that the department was aware of the declared price, malafide intention or suppression could not be attributed to the job-worker. Accordingly, the circumstances did not justify imposition of penalty. [Paras 6]

No suppression of fact or malafide intention was found; penalty imposed on the job-worker was set aside; duty and interest to be recomputed in accordance with re-determined valuation.

Entitlement to Cenvat credit - Rule 9(1)(b) of the Cenvat Credit Rules, 2004 - remand for recomputation of duty and credit - Whether the principal manufacturer's claim to Cenvat credit could be disallowed on the ground of suppression by the supplier - HELD THAT: - The disallowance of Cenvat credit was premised solely on an allegation that the supplier (job-worker) had suppressed facts. Having held that no suppression or malafide intention was attributable to the job-worker, the Tribunal concluded that the principal manufacturer is entitled to Cenvat credit. However, as the excise duty payable by the job-worker requires recomputation pursuant to the Tribunal's valuation finding, the consequential amount of Cenvat credit may vary and must be recomputed accordingly. [Paras 7]

Demand of Cenvat credit, penalty and interest confirmed against the principal manufacturer is set aside; entitlement to credit upheld subject to recomputation consistent with re-determined excise liability of the job-worker.

Remand for recomputation of duty and credit - Relief and further proceedings required following the Tribunal's findings - HELD THAT: - Because valuation in the job-worker's hands must be recomputed on the cost-plus-job-charges basis and consequential adjustments to duty, interest and Cenvat credit for the principal manufacturer will follow, the Tribunal directed remand to the adjudicating authority for fresh computation and issuance of a fresh order reflecting the correct valuation and consequential entitlements. The Tribunal set aside penalty and confirmed that interest and duty be recomputed. [Paras 6, 7, 8]

Matters remanded to the adjudicating authority for passing fresh orders computing the correct excise duty, interest and consequential Cenvat credit; penalty and earlier confirmed Cenvat demands set aside.

Final Conclusion: Both appeals allowed in part. Valuation of job-worked intermediate goods in the hands of the job-worker is to be on cost of manufacture plus job charges and not under Rule 8; no suppression or malafide intention was found and penalties and confirmed Cenvat demands are set aside. The matters are remanded to the adjudicating authority for recomputation of duty, interest and consequential Cenvat credit and for passing fresh orders consistent with these findings.

Aluminium dross and skimming arising in the course of manufacture - manufacture and excisable goods - marketability test - twin tests under Section 2(d) and Section 2(f) of the Central Excise Act, 1944 - Explanation to Section 2(d) of the Central Excise Act, 1944 (2008 amendment) - by product versus waste/refuse in manufacture - requirement of creation of a new and distinct article

Aluminium dross and skimming arising in the course of manufacture - manufacture and excisable goods - marketability test - twin tests under Section 2(d) and Section 2(f) of the Central Excise Act, 1944 - Explanation to Section 2(d) of the Central Excise Act, 1944 (2008 amendment) - Generation of aluminium dross and skimming in manufacture of aluminium motor vehicle parts does not amount to manufacture and is not liable to central excise duty - HELD THAT: - The Tribunal examined the Revenue's reliance on the Explanation to Section 2(d) (inserted w.e.f. 01/05/2008) and held that the question is governed by the settled twin tests requiring conjunctive satisfaction of Section 2(d) and Section 2(f). The court followed authoritative precedents, particularly the decision in Hindalco Industries Ltd. (affirmed by the Supreme Court) and other tribunal and High Court decisions, which held that dross and skimming produced unavoidably in the manufacturing process are refuse/waste and do not attain the character of a new and distinct excisable product simply because they may be sold. Mere presence of a tariff entry or the fact that an item can be sold does not establish marketability in the commercial sense required for excisability. The Tribunal also noted the relevance of Chapter Note 3 to Chapter 26 - that Heading 26.20 applies to ash and residue used in industry for metal extraction or as starting material - and observed absence of evidence of such end use. Applying these principles, the Tribunal concluded that aluminium dross and skimming did not satisfy the requirement of being manufactured goods capable of attracting excise duty, and therefore the demand could not be sustained on merits. [Paras 8, 9]

Demand confirmed by the lower authority was set aside on merits; generation of aluminium dross and skimming in the manufacture of aluminium castings/parts does not amount to manufacture and is not excisable.

Final Conclusion: Following binding precedents, the Tribunal allowed the assessee's appeal, set aside the excise demand on merits, dismissed the Revenue's appeal (including on time bar grounds), and disposed of cross objections.

Confiscation without notice - redemption fine - show cause notice - penalty under Rule 15A of the Cenvat Credit Rules, 2004 - penalty under Rule 26(2) of the Central Excise Rules, 2002 - availment of irregular Cenvat credit through bogus invoices

Confiscation without notice - redemption fine - show cause notice - Validity of confiscation of goods and imposition of redemption fine on M/s. Mittal Corp Limited when the show cause notice did not propose confiscation or fine against it. - HELD THAT: - The show cause notice dated 05.04.2016 proposed confiscation of goods and imposition of penalty only against M/s. Nakoda Ferromet. The adjudication order, however, confiscated goods and imposed redemption fine on M/s. Mittal Corp Limited despite the latter not being impleaded in the show cause notice for those reliefs. The Tribunal held that confirming confiscation and redemption fine against a party not so charged in the show cause notice is not legal or proper and therefore such confirmation cannot be sustained. The impugned order was set aside insofar as it upheld confiscation and imposition of redemption fine on M/s. Mittal Corp Limited. [Paras 4]

Confiscation of goods and imposition of redemption fine on M/s. Mittal Corp Limited set aside for lack of proposal in the show cause notice.

Penalty under Rule 15A of the Cenvat Credit Rules, 2004 - availment of irregular Cenvat credit through bogus invoices - Whether penalty under Rule 15A of the Cenvat Credit Rules, 2004 is sustainable against M/s. Mittal Corp Limited. - HELD THAT: - Although confiscation and redemption fine could not be sustained, the Tribunal examined statutory accounting requirements and found that receipt of the impugned goods at the factory premises was not recorded in statutory records as required under Central Excise and Cenvat law. The absence of entries in the requisite records exposed the appellant to penal consequences under Rule 15A. Accordingly, the Tribunal held that imposition of penalty under Rule 15A in respect of the failure to account for receipt of goods is legally tenable. [Paras 4]

Imposition of penalty under Rule 15A on M/s. Mittal Corp Limited upheld.

Penalty under Rule 26(2) of the Central Excise Rules, 2002 - Whether the quantum of penalty imposed on M/s. Nakoda Ferromet and Heeralal Kanungo should be modified. - HELD THAT: - Having considered the facts and circumstances, the Tribunal exercised its discretion in the interest of justice to reduce the quantum of penalty imposed on the other appellants. The adjudicatory exercise resulted in modification of the impugned order by reducing the penalty to 50% for both M/s. Nakoda Ferromet and Heeralal Kanungo. [Paras 5]

Quantum of penalty imposed on M/s. Nakoda Ferromet and Heeralal Kanungo reduced to 50%.

Final Conclusion: The appeal of M/s. Mittal Corp Limited is partly allowed by setting aside confiscation and redemption fine for lack of proposal in the show cause notice, while penalty under Rule 15A is sustained; penalties on M/s. Nakoda Ferromet and Heeralal Kanungo are reduced to 50%, and the appeals are disposed accordingly.

Joint and several liability of directors for company tax dues - liability of directors on winding up under Section 37 of the Tamil Nadu Value Added Tax Act, 2006 - assessment and liability of legal representatives under Section 26 of the Tamil Nadu Value Added Tax Act, 2006 - attachment and auction of director's property for recovery of company tax arrears

Joint and several liability of directors for company tax dues - liability of directors on winding up under Section 37 of the Tamil Nadu Value Added Tax Act, 2006 - attachment and auction of director's property for recovery of company tax arrears - Whether the petitioner, a director and shareholder of the private company, can be held liable and his personal property subjected to auction for recovery of the company's tax arrears, and whether the auction notice could be quashed. - HELD THAT: - The Court accepted the factual position that the petitioner and his wife are the only two directors and shareholders of the company and that returns for the assessment year 2010-2011 admitting tax liability were filed by the dealer (paras. 20-21). The scheme of the Tamil Nadu Value Added Tax Act, 2006 obliges directors and certain other persons to answer for a dealer's tax liabilities: Section 35 deals with firm partners, Section 26 contemplates assessment of legal representatives, and Section 37 makes every person who was a director at the time of winding up jointly and severally liable for taxes unless he proves non-attribution of non-payment to gross neglect, misfeasance or breach of duty (paras. 22-26). The Court reasoned that even if the company is not wound up, the directors remain liable where the company fails to discharge tax obligations, and if wound up, Section 37 similarly imposes liability on directors subject to the limited defence noted in the statute (para. 27). The revision order confirming reversal of incorrect input tax credit and the consequent demand notices of 27.10.2014 remained unchallenged and in force, and recovery proceedings were therefore competent (paras. 11-13, 28). Given these statutory provisions and the facts that the company is effectively a family/quasi private entity with the petitioner and his wife as the only functionaries and that dues remain unpaid, the petitioner failed to establish a legal ground to interfere with the impugned auction notice (paras. 14-16, 29-33). The Court distinguished the out-of-State decisions relied on by the petitioner as governed by different statutory schemes and facts (para. 29). [Paras 28, 30, 31, 32, 33]

Petition dismissed; impugned auction notice not interfered with and respondent directed to issue fresh auction order in accordance with law.

Final Conclusion: The writ petition is dismissed; the Court held that under the Tamil Nadu Value Added Tax Act, 2006 the petitioner, being a director and shareholder of the company which admitted tax liability for 2010-2011 and failed to pay amounts due, cannot be exonerated from liability and the auction of his property for recovery of the company's tax arrears may proceed after issuance of a fresh auction order.

Entry tax on machinery and spare parts valuing ten lakhs or more - classification of electronic equipment as machinery for entry-tax purposes - interpretation of the term 'machinery' in fiscal statutes - value aggregation of components forming an integrated working system

Classification of electronic equipment as machinery for entry-tax purposes - interpretation of the term 'machinery' in fiscal statutes - entry tax on machinery and spare parts valuing ten lakhs or more - value aggregation of components forming an integrated working system - Electronic goods and equipment imported and used in installation of a telephone exchange constitute 'machinery' (including parts and spares) and are liable to entry tax where the aggregated value exceeds the threshold. - HELD THAT: - The Court upheld the view that modern electronic and computerised devices fall within the concept of 'machinery' as understood for fiscal purposes. Reliance was placed on this Court's earlier decisions which explained that 'machinery' is a broader concept than 'machine', embraces devices that act as an organised system to perform a specific function, and includes electronic apparatus and their working parts. The authorities below correctly treated the imported items as machinery or parts thereof because the items operate together as an integrated system for telecommunication; individual components which lack separate utility may nevertheless be parts of 'machinery'. The Tribunal and assessing authorities therefore rightly aggregated the value of the goods forming the working system to determine that the value exceeded the statutory threshold, making them leviable to entry tax. Prior judicial dicta, including principles from Privy Council and appellate decisions, were applied to conclude that electronic communication equipment satisfies the statutory concept of 'machinery'.

The imported electronic equipment used for the telephone exchange was held to be 'machinery' (including parts/spares); entry tax leviable as value exceeded the prescribed threshold.

Final Conclusion: Revision dismissed; no substantial question of law arose as the authorities were justified in levying entry tax on the imported electronic equipment treated as machinery for Assessment Year 2003-04.

Arbitral award - international commercial arbitration - Section 34 setting aside arbitral award - applicability of the 2015 Amendment Act - patent illegality - public policy of India - fundamental policy of Indian law - effect of arbitration clause incorporating future amendments - pre-2015 legal position

International commercial arbitration - arbitral award - Whether the award in question is an award arising out of an international commercial arbitration. - HELD THAT: - The Court held that the appellant is a party based in Singapore and therefore, under the statutory definition, the arbitration qualifies as an "international commercial arbitration" even though the arbitral proceedings were conducted within India. The Court noted that the award is not claimed to be a foreign award under Part II of the Act, and thus Chapter VII remedies for domestic awards were engaged in the proceedings at issue. The characterization of the arbitration as international commercial arbitration was applied in considering the appropriate legal tests for interference under Section 34. [Paras 12, 13]

The arbitration is an international commercial arbitration for the purposes of classifying the nature of the award.

Applicability of the 2015 Amendment Act - effect of arbitration clause incorporating future amendments - pre-2015 legal position - patent illegality - public policy of India - fundamental policy of Indian law - Whether the 2015 Amendment Act (and the narrowed tests it introduced) applied to the Section 34 challenge to the award and, on the applicable pre-2015 legal position, whether the award should be set aside. - HELD THAT: - The Court found that the Section 34 proceedings were initiated before 23.10.2015 and, following this Court's precedents, the amended Section 34 applies only to applications made on or after that date. A broadly worded clause in the Deed of Settlement referring to the Act "or any amendment thereto" did not amount to the parties' agreement to invoke the 2015 Amendment Act so as to alter the statutory scheme set out in Section 26; general contractual language cannot override the legislative intent and the negative covenant in Section 26. Applying the pre-2015 legal position, the Court examined whether the award was in conflict with the public policy of India or the fundamental policy of Indian law. On the facts, the Court agreed with the High Court that the arbitrator's conclusion-effectively depriving the respondent of the substantial benefits obtained under the Deed of Settlement because of indiscreet emails by the respondent's wife (who was not a party to the Deed and was later dropped from proceedings)-was contrary to fundamental policy and justice. The award's consequence, namely to grant liquidated damages to the appellant and deny the respondent his contractual entitlements despite performance of the critical obligations, was found to be inappropriate and unsustainable under the pre-2015 test; clause 6 could not legitimately be invoked to produce the arbitrator's outcome. [Paras 26, 31, 32, 35, 38]

The 2015 Amendment Act does not apply to the Section 34 challenge; applying the pre-2015 legal position the award is set aside as being contrary to the fundamental policy of Indian law/public policy.

Final Conclusion: The Court affirmed the High Court's interference with and setting aside of the award on the pre-2015 legal position, holding that the award was contrary to the fundamental policy of Indian law; the appeal is dismissed with costs.

Presumption under Section 139 - Presumption under Section 118 - Cognizance under Section 142 requires complaint by the payee or holder in due course - Complainant in the name of a company must be represented by a natural person - Board resolution as sufficient authorization to institute proceedings on behalf of a company - Technical defect in the form or cause title not fatal where substance shows corporate representation - Sentence mitigation and suspension upon repayment

Cognizance under Section 142 requires complaint by the payee or holder in due course - Complainant in the name of a company must be represented by a natural person - Competency of the complainant where the payee is a company and the complaint was signed and filed by its Managing Director - HELD THAT: - The Court held that where a body corporate is the payee a natural person must represent that juristic person in court and the court treats the natural person as the de facto complainant while the company remains the de jure complainant. The authorities relied upon establish that initial want of authority can be cured by subsequent authorisation and that a Magistrate cannot insist on a particular individual remaining the representative throughout. Applying these principles, the Court found from the cause title, the annexed Board Resolution and the affidavit that the Managing Director had filed the complaint on behalf of the Company, and that the format chosen (naming the Managing Director first and then the office held) did not render the complaint incompetent to be entertained under Section 142. [Paras 19, 20, 22, 26]

Complaint was competently instituted by the Managing Director on behalf of the Company and cognizance under Section 142 was proper.

Board resolution as sufficient authorization to institute proceedings on behalf of a company - Technical defect in the form or cause title not fatal where substance shows corporate representation - Validity and sufficiency of the Board Resolution and related documents as proof of authorisation to file the complaint - HELD THAT: - The Court held that a certified copy of a Board Resolution need not itself be signed by all directors as that would be part of the minutes; a copy evidencing authorisation to initiate legal proceedings and appoint advocates is sufficient. The certified resolution in this case expressly authorised the Managing Director (and another) to issue notices, file complaints and take necessary legal steps. Coupled with the affidavit filed in the trial court, the material satisfied the requirement of authorisation and the lower courts erred in treating the copy and the cause title as fatally defective. [Paras 23, 24, 25, 26]

The Board Resolution and accompanying affidavit constituted sufficient authorisation; the finding of lack of authorisation was set aside.

Presumption under Section 139 - Presumption under Section 118 - Applicability of statutory presumptions regarding the nature of transaction and burden on the drawer when signatures on cheques are not disputed - HELD THAT: - The Court reiterated that Section 139 raises a presumption that the holder received the cheque for discharge of debt or liability and Section 118 accords presumptions in favour of negotiable instrument holders; where the signatures on the cheques are not disputed and no alternative account or story (fraud, misrepresentation or non-liability) is pleaded by the drawer, the drawer bears the burden to rebut those presumptions. The respondent had not disputed signatures nor provided an alternative explanation for issuance of the cheques, and thus failed to discharge the statutory presumptions. [Paras 17, 27]

Statutory presumptions applied and the respondent failed to rebut them; the substantive defence was not made out.

Sentence mitigation and suspension upon repayment - Appropriate sentence for offence under Section 138 and conditions for suspension in view of delay and passage of time - HELD THAT: - After holding the respondent guilty on merits, the Court considered the lapse of time and sentencing norms under Section 138. It imposed one year's imprisonment and a fine amounting to twice the cheque amount, but provided for suspension of the sentence on payment of a specified sum (one further cheque amount) within two months. The Court also awarded costs to the appellant. The order balances punishment with restitution given the long delay since institution of proceedings. [Paras 28, 29]

Respondent sentenced to one year imprisonment and fine; sentence suspended on specified payment within two months and costs awarded to the appellant.

Final Conclusion: The appeal is allowed: the trial and High Court orders are set aside; the complaint was validly instituted by the Managing Director on behalf of the Company; statutory presumptions in favour of the holder applied and were not rebutted; respondent is sentenced to one year imprisonment and fine, with suspension of sentence upon specified payment within two months, and the appellant is entitled to costs.

Terms of reference - Arbitrator's jurisdiction - Travelling beyond the terms of reference - Stridhana property - Interim award - Final award and appointment of arbitrator - Petition under Section 34 of the Arbitration and Conciliation Act, 1996 - Reliance on earlier partition/award in arbitration

Terms of reference - Arbitrator's jurisdiction - Stridhana property - Travelling beyond the terms of reference - Whether the Arbitrator exceeded his mandate by deciding entitlement to the 99 diamonds and one emerald ring despite having found them to be stridhana, thereby committing a jurisdictional error. - HELD THAT: - The Court accepted the High Court's conclusion that the Arbitrator's mandate under term (iii) was confined to determining whether the jewellery was stridhana property of Respondent No.1 and that term (iv) would become operative only if the jewellery was held not to be stridhana. The Arbitrator had found the jewellery to be stridhana but proceeded to rely on the 1971 award and the alleged handing over of the jewellery in 1971 to deny Respondent No.1's claim for return, effectively adjudicating entitlement contrary to the sequential operation of the terms of reference. By doing so the Arbitrator traversed beyond the scope of his reference and permitted retention of the jewellery by the Appellants despite having concluded it was stridhana. That constituted a jurisdictional error and impermissible travel beyond the terms of reference, justifying the High Court's setting aside of that part of the interim award. The Court therefore upheld the High Court's interference with the interim award insofar as it denied Respondent No.1's rights over the jewellery and confirmed that the Arbitrator should not have decided division under term (iv) after concluding term (iii) in favour of Respondent No.1. [Paras 11, 12, 13, 14]

The Arbitrator exceeded his jurisdiction by deciding entitlement to the jewellery after finding it to be stridhana; that portion of the interim award was rightly set aside.

Interim award - Final award and appointment of arbitrator - Reliance on earlier partition/award in arbitration - Disposition of the remaining arbitration proceedings and appointment of an arbitrator to complete the final award. - HELD THAT: - The Court noted that the interim award decided several points but left further determinations and the physical division for final adjudication. In view of the resignation and unavailability of earlier appointees, the Court appointed a new sole Arbitrator to continue and conclude the arbitration, directing expedition in view of the long pendency. This is a direction for continuation and finalisation of the arbitration rather than a re-adjudication on merits of issues already decided, save for the part set aside relating to the jewellery. [Paras 7, 15]

The Court appointed a sole Arbitrator to resume and complete the arbitration proceedings and pass the final award expeditiously.

Final Conclusion: The appeals are dismissed; the High Court's setting aside of the interim award insofar as it denied Respondent No.1's rights over the 99 diamonds and one emerald ring (found to be stridhana) is upheld, and a sole Arbitrator is appointed to continue and conclude the arbitration proceedings and pass the final award.

Appeal against acquittal in prosecution under Section 138 of the Negotiable Instruments Act - Presumption of liability under Section 118 and Section 139 of the Negotiable Instruments Act - Proof of legally recoverable debt or liability - Admissibility and weight of belated/extraneous documents in appellate review - Standard of reappreciation of evidence in appeals against acquittal - Sentence and default imprisonment in convictions under Section 138

Appeal against acquittal in prosecution under Section 138 of the Negotiable Instruments Act - Standard of reappreciation of evidence in appeals against acquittal - Presumption of liability under Section 118 and Section 139 of the Negotiable Instruments Act - Admissibility and weight of belated/extraneous documents in appellate review - Validity of the Appellate Court's interference with the trial court's conviction under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The High Court held that the learned Additional Sessions Judge erred in setting aside the trial court's conviction by placing decisive reliance on a belated letter (marked as Ext.4) and on a G.D. entry referred to therein which was not produced in original. The appellate court gave undue weight to a fresh plea raised on appeal and treated the accused as having successfully rebutted statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act on the balance of probabilities. The High Court observed that where the trial court has accepted the prosecution evidence, applied the statutory presumptions and reached a possible view, an appellate court should not lightly overturn an acquittal unless there are very substantial and compelling reasons (for example, palpably wrong fact-finding, erroneous view of law, patent illegality, manifest injustice or ignored material evidence). On the record, the trial court had found that the statutory requirements (presentation, dishonour, service of notice and time-limits) were satisfied and had accepted that a debt or liability existed; the Appellate Court's reliance on the belated defence plea and an unproduced G.D. entry did not constitute such very substantial and compelling reasons to disturb that finding. Consequently the Appellate Court's reappreciation was held to be contrary to the established principles applicable to appeals against acquittal in cases under the Negotiable Instruments Act.

The Appellate Court's order of acquittal was set aside; the trial court's conviction under Section 138 N.I. Act was restored.

Proof of legally recoverable debt or liability - Presumption of liability under Section 118 and Section 139 of the Negotiable Instruments Act - Whether the prosecution had proved existence of a legally enforceable debt or liability sufficient to sustain conviction under Section 138 N.I. Act. - HELD THAT: - The High Court endorsed the trial court's conclusion that the prosecution had proved the existence of debt or liability and complied with statutory requirements for prosecution under Section 138. The trial court had considered the object and legislative intent of Chapter XVII (Sections 138-142) to protect the efficacy of negotiable instruments and had applied the statutory presumptions. The Appellate Court's contrary finding-based on a belated denial and an unproduced police G.D. entry-was held to be legally unsound because the accused had not, on the evidence before the trial court, successfully rebutted the presumptions mandated by Sections 118 and 139. The High Court observed that a belated plea taken on appeal cannot be given undue importance where statutory presumptions properly applied by the trial court remain undisplaced.

The trial court's finding that a legally enforceable debt or liability existed was affirmed and the presumption under Sections 118/139 was held not to have been rebutted.

Sentence and default imprisonment in convictions under Section 138 - Whether the trial court's sentence and order for default imprisonment required interference. - HELD THAT: - Although the accused challenged the imposition of fine and the default sentence, the High Court, having restored the conviction, affirmed the sentence as imposed by the trial court. The Court directed the accused to surrender to serve the sentence and authorised the learned Magistrate to proceed to execute the sentence in case of default, thereby treating the sentence as valid and enforceable in the circumstances of the case.

The sentence imposed by the trial court (including the fine and default imprisonment) was affirmed and directed to be executed.

Final Conclusion: The judgment and order of acquittal dated 31.08.2015 passed by the Additional Sessions Judge, Bolpur in Criminal Appeal No. 3 of 2015 is set aside; the conviction and sentence dated 31.01.2015 passed by the A.C.J.M., Bolpur in Complaint Case No. 136 of 2009 are reinstated, and the accused is directed to surrender to undergo the sentence as ordered by the trial court.

Presumption under Section 139 of the Negotiable Instruments Act - Presumption of consideration under Section 118 - Rebuttal of statutory presumption by preponderance of probabilities - Cheque given as security and not in discharge of debt - Shifting of evidential burden

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttal of statutory presumption by preponderance of probabilities - Cheque given as security and not in discharge of debt - Whether the accused successfully rebutted the statutory presumption of liability arising from the dishonour of the cheque, thereby justifying acquittal under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The trial court found that the respondent produced direct evidence and documentary proof that the alleged debt had been discharged by two cheques dated 14.02.2015 and 14.03.2015 which were encashed by the complainant, and that the cheque which was later dishonoured had been given as security or was otherwise misused. The complainant failed to mention or satisfactorily explain the encashment of those two cheques either in the complaint or in examination-in-chief. On the standard of preponderance of probabilities, these circumstances furnished a probable defence that there was no legally enforceable debt at the time of issuance of the dishonoured cheque. Consequently the evidential burden, having shifted by reason of the defence evidence, lay on the complainant to prove the existence of the debt; the complainant's fragile explanation did not discharge that burden. In view of accepted principles that a statutory presumption under Section 139 is rebuttable on the preponderance of probabilities and that a cheque issued as security does not attract Section 138 liability, the High Court found no infirmity in the trial court's conclusion of acquittal. [Paras 5, 6, 16, 18]

The respondent successfully raised a probable defence on the preponderance of probabilities that rebutted the presumption of liability; the order of acquittal is maintained.

Final Conclusion: The appeal is dismissed. The High Court affirms the trial court's acquittal on the finding that the accused rebutted the statutory presumption by establishing a probable defence (payment and/or that the cheque was security) and that the complainant failed to satisfactorily explain the encashment of two cheques; no interference with the acquittal is warranted.

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttable statutory presumption - Standard of proof - preponderance of probability - Quasi-criminal nature of proceedings under Section 138 of the Negotiable Instruments Act - Reverse onus clauses and proportionality

Presumption under Section 139 of the Negotiable Instruments Act - Rebuttable statutory presumption - Standard of proof - preponderance of probability - Quasi-criminal nature of proceedings under Section 138 of the Negotiable Instruments Act - Whether the acquittal of the accused for offence under Section 138 of the Negotiable Instruments Act was justified on the ground that the complainant failed to prove that the cheque was issued against the loan allegedly sanctioned and disbursed to the accused, and whether the accused successfully rebutted the statutory presumption. - HELD THAT: - The trial court found that the complainant failed to produce documentary evidence (such as loan sanction letter, disbursement proof or bank statements) to establish that the disputed cheque was issued against the loan allegedly sanctioned to the accused; the allegation in the complaint alone was held to be insufficient. The Court reiterated that the presumption under Section 139 is statutory but rebuttable; in proceedings under Section 138 (which are quasi criminal) the accused need only raise a probable or plausible defence on the preponderance of probabilities and is not required to disprove the complainant's case beyond reasonable doubt. Citing the principles in Kumar Exports and consistent authorities, the judgment explains that once the accused adduces evidence or circumstances that make non existence of consideration or debt probable, the evidential burden shifts back to the complainant. Applying these principles to the material on record, the lower court cogently concluded that, in the absence of expected documentary material in the complainant's possession and in view of the defence advanced by the accused, the statutory presumption was rebutted and conviction could not be sustained.

The acquittal of the accused by the trial court is upheld as the presumption under Section 139 was rebutted on the preponderance of probabilities for want of documentary proof that the cheque was issued against the loan.

Final Conclusion: The criminal leave to appeal is dismissed; no illegality or perversity is found in the trial court's acquittal where the complainant failed to produce documentary proof to sustain the statutory presumption and the accused made out a probable defence on the preponderance of probabilities.

Quashing of criminal proceedings under Section 482 Cr.P.C. - criminal liability under Section 138 of the Negotiable Instruments Act - appreciation of disputed facts at quashing stage - summoning order and non-application of mind - exercise of inherent jurisdiction

Criminal liability under Section 138 of the Negotiable Instruments Act - appreciation of disputed facts at quashing stage - exercise of inherent jurisdiction - Whether the complaint under Section 138 of the Negotiable Instruments Act could be quashed in exercise of the High Court's inherent jurisdiction when parties dispute payment of statutory dues. - HELD THAT: - The Court found that the parties have taken conflicting stands on whether the statutory/service-tax dues were paid: the complainant asserts compliance and production of challans, while the petitioners admit partial payment but deny full compliance. Where the defence is factual and disputed - not admitted by the complainant nor apparent on the record - such matters require trial and appreciation of evidence by the trial court. Reliance was placed on Supreme Court authorities holding that disputed factual defences should not be decided in petitions under Section 482 Cr.P.C. and that appreciation of evidence is impermissible at the quashing stage. In view of these settled principles and the present factual dispute, the Court declined to exercise its inherent jurisdiction to quash the criminal proceedings. [Paras 11, 12, 13, 14, 15]

Petition to quash the complaint under Section 138 NI Act dismissed on account of disputed factual questions that require trial.

Summoning order and non-application of mind - quashing of criminal proceedings under Section 482 Cr.P.C. - Whether the summoning order was vitiated by non-application of mind warranting interference under Section 482 Cr.P.C. - HELD THAT: - The contention that the learned ACMM passed the summoning order without due application of mind was considered and rejected. The Court observed that a summoning order need not be a detailed, elaborate order and found no basis to hold that the order suffered from non-application of mind. Consequently, this ground did not justify quashing the proceedings. [Paras 8]

The plea of non-application of mind in the summoning order is rejected; it does not warrant quashing of proceedings.

Final Conclusion: The petition under Section 482 Cr.P.C. seeking quashing of the complaint under Section 138/141 NI Act is dismissed: disputed factual issues about payment of statutory dues and the adequacy of the summoning order preclude interference at the quashing stage, and the trial court is directed to proceed with adjudication.

Compounding of offence under Section 147 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Judicial precedent allowing compounding after conviction - Acquittal consequent to compounding - Release of amounts deposited with trial court - Discharge of personal bonds

Compounding of offence under Section 147 of the Negotiable Instruments Act - Judicial precedent allowing compounding after conviction - Power of the court under Section 147 of the Act to compound an offence under Section 138 even after conviction. - HELD THAT: - The High Court accepted the accused's submission that the entire amount awarded by the trial court had been paid to the complainant and observed that, exercising powers under Section 147, the court may compound the offence notwithstanding that conviction has been recorded. The court relied on the principle in judicial decisions permitting compounding post-conviction and found no impediment to accepting the parties' compromise where the complainant, on oath, affirmed voluntary receipt of part of the amount and consented to release of the balance in his favour. On that basis the court proceeded to exercise the compounding power and allowed the petition. [Paras 5, 6, 7]

The court held that the offence under Section 138 could be compounded under Section 147 despite earlier conviction and accepted the compromise between the parties.

Acquittal consequent to compounding - Release of amounts deposited with trial court - Discharge of personal bonds - Consequences of compounding: quashing of convictions and orders for release of deposited amount and discharge of bonds. - HELD THAT: - On acceptance of the compromise and exercise of power under Section 147, the court quashed and set aside the convictions and sentences recorded by the two courts below and acquitted the accused of the charges under Section 138. The court ordered that the Rs. 75,000 lying deposited with the trial court be released to the complainant into his saving account after furnishing account details, and directed discharge of the personal bonds furnished by the accused. The court disposed of the revision petition accordingly along with pending applications. [Paras 8, 9]

Judgments and orders of conviction and sentence were quashed and set aside; accused acquitted; deposited amount to be released to complainant and personal bonds discharged.

Final Conclusion: Revision allowed: on the parties' compromise and exercise of power under Section 147 of the Negotiable Instruments Act the court compounded the offence, quashed convictions and sentences, acquitted the accused, directed release of the amount deposited with the trial court to the complainant and discharged the bonds.

Offence under Section 138 of the Negotiable Instruments Act, 1881 - Compounding of offence under Section 147 of the Negotiable Instruments Act read with Section 320(6) Cr.P.C. - High Court revisional jurisdiction under Section 401 Cr.P.C. to give effect to genuine compromise - Deposit of 15% of cheque amount as condition for quashing conviction (Damodar S. Prabhu principle)

Offence under Section 138 of the Negotiable Instruments Act, 1881 - Compromise in negotiable instruments offence - High Court revisional jurisdiction under Section 401 Cr.P.C. to give effect to genuine compromise - Validity of the compromise between the parties and its sufficiency to permit quashing of the conviction and sentence in proceedings under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The Court found on the materials placed before it (the Panchayati settlement and the complainant's affidavit) that the compromise was genuine, bonafide and arrived at without undue influence, threat or coercion. Applying the revisional jurisdiction under Section 401 Cr.P.C., and following the settled principle in Damodar S. Prabhu (as applied in earlier divisional decisions of this Court), the High Court held that where the offence is compoundable and the compromise is valid, the Court may set aside convictions and sentences to give effect to the compromise and to preserve the compensatory character of the remedy in cheque dishonour matters. In these circumstances the judgments of the trial and appellate courts were set aside and the revision petition allowed in terms of the compromise.

The conviction and sentence dated 08.07.2019 and 10.07.2019 (and the appellate dismissal) were set aside as the compromise was held to be genuine and operative.

Deposit of 15% of cheque amount as condition for quashing conviction (Damodar S. Prabhu principle) - Compounding of offence under Section 147 of the Negotiable Instruments Act read with Section 320(6) Cr.P.C. - Conditional terms imposed by the High Court for allowing the compromise and quashing the conviction, including the requirement to deposit 15% of the cheque amount with the State Legal Services Authority and consequences of non-compliance. - HELD THAT: - Relying on the ratio in Damodar S. Prabhu and this Court's precedents, the High Court framed the grant of relief on the petitioner making a specified deposit to give effect to the compensatory objective of the NI Act. The petitioner undertook to deposit 15% of the cheque amount with the Haryana State Legal Services Authority. The Court directed deposit within three weeks from receipt of certified copy of the judgment and made clear that failure to comply would render the revision petition ineffective (that is, the order allowing the revision would have no consequence), thereby preserving the alternative of the original conviction and sentence if the condition is not satisfied.

The revision petition was allowed subject to the petitioner depositing 15% of the cheque amount with the State Legal Services Authority within three weeks; failure to do so would render the order ineffectual.

Final Conclusion: The High Court, exercising revisional jurisdiction, allowed the criminal revision by setting aside the conviction and sentence in the Section 138 NI Act proceedings on the basis of a genuine compromise, subject to the petitioner depositing 15% of the cheque amount with the Haryana State Legal Services Authority within three weeks, failing which the order shall stand ineffectual.

Offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - cheque issued as security - post-dated cheque - pre-existing legally enforceable debt - escrow account

Cheque issued as security - post-dated cheque - pre-existing legally enforceable debt - offence under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - escrow account - Whether the amount of Rs. 46,00,000/- constituted a loan giving rise to a pre-existing legally enforceable debt so as to attract criminal liability under Section 138, or was an investment for which the cheque was only security and not encashable for repayment. - HELD THAT: - The Court examined the Memorandum of Understanding (Ex. P2), clause (11) of which records issuance of a demand promissory note and post-dated cheques "in order to secure the interest of the party of the first part", together with evidence about the escrow account arrangement and emails referring to the transaction as an "investment". PW1's case was that Rs. 46,00,000/- was loaned and Ex. P3 (dated 22.10.2009) represented the principal plus interest payable after a 90-day cycle; however the cheque was issued before completion of the agreed 90-day period. DW2's evidence established that the funds were intended to be operated from an escrow account jointly controlled, and the cheque was drawn on a separate account. The trial court convicted, but the lower appellate court accepted that the transaction was an investment and the cheque was given as security. Applying the principle that a cheque issued only as security and not representing a legally enforceable debt cannot attract Section 138, and having regard to the contemporaneous documents and emails, the Court found that the cheque was premature and issued as security for an investment maturing after 90 days; consequently it did not represent a legally enforceable debt and the presumption under Section 139 was rebutted on the record. The Court therefore upheld the findings of the Lower Appellate Court and held the conviction unsustainable. [Paras 22, 23, 24, 29, 30]

The transaction was an investment and Ex. P3 was a security/post-dated cheque that did not represent a legally enforceable debt; the conviction under Section 138 is unsustainable and the appellate court's order setting aside the conviction is confirmed.

Final Conclusion: Criminal Appeal dismissed; the VI Additional Sessions Judge's order setting aside the conviction and sentence is confirmed on the basis that the cheque was issued as security in an investment transaction and did not represent a legally enforceable debt under Section 138.

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Burden to rebut statutory presumption - Misuse of cheque and legally recoverable debt - Sentence, fine and compensation in conviction under Section 138

Offence under Section 138 of the Negotiable Instruments Act - Presumption under Sections 118 and 139 of the Negotiable Instruments Act - Burden to rebut statutory presumption - Misuse of cheque and legally recoverable debt - Conviction under Section 138 of the Negotiable Instruments Act was legally sustainable. - HELD THAT: - The issuance of the cheque and the signature thereon were not in dispute. Documentary evidence including a letter from the accused to the complainant (Ex. P2) indicated that the accused acknowledged dues and that Venugopal had business dealings with the complainant, supporting that the cheque related to a legally recoverable debt. The accused alleged misuse of the cheque by the complainant but did not lead evidence to substantiate that contention, did not take the witness stand, and did not initiate any action against the complainant or Venugopal for alleged misuse. In view of the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, the accused bore the burden to rebut those presumptions by evidence; having failed to do so, the trial court's finding of guilt was upheld by the First Appellate Court and is not shown to be perverse, arbitrary or legally infirm. [Paras 12, 13, 14, 15]

Findings of guilt for the offence punishable under Section 138 of the Negotiable Instruments Act are affirmed and do not call for interference.

Sentence, fine and compensation in conviction under Section 138 - The sentence and the order of fine/compensation were not excessive and did not warrant reduction. - HELD THAT: - The cheque amount and the fine/compensation imposed were recorded by the trial court and affirmed by the appellate court. The complainant did not seek enhancement of the fine; the revision petitioner failed to demonstrate any error in the sentencing exercise. In these circumstances, there was no basis to interfere with the quantum of fine or the order directing compensation to the complainant. [Paras 16]

Sentence and the order as to fine/compensation are confirmed; no reduction warranted.

Final Conclusion: Revision petition dismissed; conviction under Section 138 of the Negotiable Instruments Act and the sentence (including fine and compensation) affirmed.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal / probabilisation of statutory presumption - presentation and return of cheque evidenced by bank records - service of legal notice by registered post acknowledgment due (RPAD) - setting aside perverse appellate acquittal and restoration of trial conviction

Presumption under Section 139 of the Negotiable Instruments Act - Whether the de facto complainant was entitled to the statutory presumption under Section 139. - HELD THAT: - The Court found that Exs. P.1 and P.2 (original cheques) belonged to the accused and the signature was admitted. Presentation and return of the cheques were established through bank records, notably Ex. P.7 (Cheque Referred and Returned Register), which specifically recorded the cheque numbers and return reason as insufficient funds. On that basis the trial Court correctly held that the essential ingredients of Section 139 were satisfied and the statutory presumption in favour of the complainant arose. [Paras 11, 15, 19]

The statutory presumption under Section 139 was rightly drawn by the trial Court and is upheld.

Rebuttal / probabilisation of statutory presumption - Whether the accused successfully rebutted or probabilised the statutory presumption. - HELD THAT: - The accused denied liability and sought to probabilise the suggestive case by relying on Ex. D.1 (account statement) and by contending non-presentation of the cheques. The Court examined the evidence, including P.W.2's explanation and Ex. P.7, and concluded that the accused failed to raise a probable defence meeting the required standard. The Court accepted the trial Court's view that the entries (or lack thereof) in Ex. D.1 were explicable by the accused's account being at zero balance and did not displace the presumption. [Paras 16, 17, 18, 19]

The accused did not probabilise the suggestive case; the rebuttal attempt failed.

Presentation and return of cheque evidenced by bank records - Whether the cheques were presented for encashment and returned for insufficiency of funds as evidenced by bank records. - HELD THAT: - Although Xerox copies of return memos (Exs. P.3 and P.4) had been placed on record, the prosecution produced Ex. P.7 (Cheque Referred and Returned Register) and examined the bank manager (P.W.2) to establish presentation and return. Ex. P.7 specifically recorded the cheque numbers and return on account of insufficient funds, and P.W.2's testimony corroborated the presentation and return. The Court found these records sufficient to prove presentation and return. [Paras 11, 15, 16]

Bank records (Ex. P.7) and testimony established presentation and return for insufficient funds.

Service of legal notice by registered post acknowledgment due (RPAD) - Whether the legal notice was validly served on the accused. - HELD THAT: - The trial Court relied on Ex. P.6 (RPAD) and concluded that the refusal to accept the notice amounted to sufficient service. The High Court found no error in that conclusion and negatived the defence contention that no notice was served. [Paras 12]

Service of the legal notice was validly established by Ex. P.6 and the defence objection is negatived.

Setting aside perverse appellate acquittal and restoration of trial conviction - Whether the order of acquittal by the Lower Appellate Court was perverse and liable to be set aside, restoring the trial Court's conviction and sentence. - HELD THAT: - The High Court scrutinised the appellate court's contrary findings and concluded they were perverse because they did not reflect the true state of affairs as shown in Ex. P.7 and the trial evidence. Given that the statutory presumption was rightly drawn, presentation and return established, service proved, and the accused failed to probabilise his defence, the appellate acquittal was set aside and the trial conviction and sentence restored. [Paras 11, 18, 19, 20]

The appellate court's acquittal is set aside as perverse; the trial Court's conviction and sentence are restored.

Final Conclusion: Criminal Revision allowed; the order of acquittal dated 12.09.2015 is set aside and the conviction and sentence recorded by the trial Court in S.T.C. No. 15 of 2012 are restored.

Dismissal of complaint for non-appearance amounts to acquittal - Consequences of non-appearance under Section 247 of J&K Cr.P.C. - Where an appeal lies, revision is barred (sub section (5) of Section 439 of J&K Cr.P.C.) - Remedy against order of acquittal is by appeal (after seeking leave where required)

Dismissal of complaint for non-appearance amounts to acquittal - Consequences of non-appearance under Section 247 of J&K Cr.P.C. - Dismissal of the complaint for non-appearance of the complainant resulted in acquittal of the accused. - HELD THAT: - The trial Magistrate dismissed the complaint for default in appearance of the complainant and did not decide the matter on merits. Section 247 J&K Cr.P.C. prescribes that where a complainant does not appear the Magistrate shall, unless he adjourns, acquit the accused. Thus dismissal of the complaint in default carries with it the necessary consequence of acquittal. This conclusion is consistent with the precedent cited by the Court holding that dismissal for non-appearance amounts to acquittal under the corresponding provision of the Code. [Paras 7, 8, 9, 11]

The order dismissing the complaint amounted to an acquittal of the petitioner.

Where an appeal lies, revision is barred (sub section (5) of Section 439 of J&K Cr.P.C.) - Remedy against order of acquittal is by appeal (after seeking leave where required) - A revision petition against an order of acquittal which is appealable is not maintainable; the appropriate remedy is an appeal as provided by the Code. - HELD THAT: - Once the dismissal was held to amount to acquittal, the Court observed that the procedural code bars entertaining revision where an appeal lies and no appeal has been brought by the aggrieved party. Sub section (5) of Section 439 J&K Cr.P.C. (corresponding to the Central Code provision) precludes revision in such circumstances. Consequently the Revisional Court lacked jurisdiction to entertain and allow the revision petition that set aside the dismissal and ordered revival of the complaint. The Court relied on consistent High Court and Supreme Court authority on this rule. [Paras 12, 15, 16]

The Revisional Court's order was without jurisdiction and is set aside; the complainant's remedy is to proceed by way of the appeal provided by law.

Final Conclusion: The petition is allowed: the revisional order setting aside the trial Magistrate's dismissal is quashed because dismissal for non-appearance amounted to acquittal and, where an appeal lies, revision is barred; the complainant remains free to pursue the remedy of appeal in accordance with law.

Power to receive additional evidence under Section 391 Cr.P.C. - exercise of appellate discretion subject to absence of prejudice, retrial or change in nature of defence - admissibility of documentary bank statements as additional evidence - onus to prove payment and receipt in proceedings under Section 138 of the Negotiable Instruments Act - appellate power to rectify irregularity but not to fill up lacuna in prosecution/defence

Power to receive additional evidence under Section 391 Cr.P.C. - exercise of appellate discretion subject to absence of prejudice, retrial or change in nature of defence - admissibility of documentary bank statements as additional evidence - Whether the Appellate Court rightly allowed the accused to produce additional documentary evidence (bank statements) under Section 391 read with Section 311 Cr.P.C. - HELD THAT: - The Court applied settled principles that an appellate court has wide power under Section 391 Cr.P.C. to admit additional evidence at the appellate stage so long as admission would not cause prejudice to the other party, amount to a re-trial, change the nature of the case of the accused, or be merely to fill lacunae rather than to serve the ends of justice. The impugned order shows the proposed evidence is documentary bank statements that may explain the parties' financial transactions and the alleged repayments; the evidence is not said to introduce a new defence but to elucidate matters already raised during trial and cross-examination. The trial Court's observation that accused failed to produce documentary proof of RTGS was noted, but the appellate court found that the initial burden to prove whether repayments related to cheques or RTGS lay with the complainant and that analysis of bank statements of both parties and the company could illuminate whether the cheques were issued in discharge of legally recoverable debt. The appellate court further recorded that the complainant would have the opportunity to cross-examine and challenge the additional evidence and that admission was principally a matter of putting statements on record for final analysis. Applying the test from precedent, the Court concluded that allowing the documentary evidence would not cause prejudice or amount to retrial and was consistent with doing justice in the appeal.

The Appellate Court rightly allowed production of additional documentary evidence under Section 391 r/w Section 311 Cr.P.C.

Onus to prove payment and receipt in proceedings under Section 138 of the Negotiable Instruments Act - appellate power to rectify irregularity but not to fill up lacuna in prosecution/defence - Whether the trial Court wrongly shifted the burden of proof regarding alleged RTGS repayment and whether that error justified reception of additional evidence on appeal. - HELD THAT: - The judgment records that the trial Court observed the accused did not adduce documents or bank witnesses to prove alleged RTGS repayments and therefore found the accused's defence unproved. The High Court, however, accepted the appellate court's view that the complainant had not led specific evidence to show whether the admitted repayment of a sum was applied against amounts advanced by cheque or by RTGS; accordingly the trial Court had in effect misallocated the onus. Given that lacuna in the complainant's evidence, the appellate court's reception of bank statements to determine the application of repayments and whether cheques were issued in discharge of liability was appropriate to rectify the irregularity in proof rather than to introduce a new defence. The Court noted the complainant's right to cross-examine and to meet the additional evidence at the final disposal of the appeal.

The trial Court's practical placement of onus was incorrect and reception of additional bank statements on appeal was justified to resolve that defect in proof.

Final Conclusion: The revision petition is dismissed; the order of the Lower Appellate Court permitting additional documentary evidence (bank statements) is upheld, with liberty to the complainant to cross-examine and answer the additional evidence at the final hearing of the appeal.

Presumption under Section 138 of the Negotiable Instruments Act - rebuttal of presumption by probabilising suggestive case - pre-existing legally enforceable debt - evidentiary burden to prove debt after rebuttal - maintainability of complaint against proprietary of a firm

Presumption under Section 138 of the Negotiable Instruments Act - rebuttal of presumption by probabilising suggestive case - pre-existing legally enforceable debt - evidentiary burden to prove debt after rebuttal - Whether the accused successfully rebutted the statutory presumption and whether the complainant proved the existence of a pre-existing legally enforceable debt. - HELD THAT: - The Court held that the complainant was entitled to the statutory presumption arising from the dishonour of the cheques, and it was for the accused to rebut that presumption. The accused did not need to examine himself as a witness but could rely on materials on record and make his suggestive case probable to the requisite degree. The accused advanced a plausible defence that the cheques were handed over as security and that the complainant's evidence (PW1) was weak: she disclaimed knowledge of business details, did not produce books of account, and failed to explain computation of the amounts said to represent interest. Those admissions and the absence of documentary account evidence made the defence case probable and, therefore, the complainant required positive evidence to establish a legally enforceable debt. The Sessions Court correctly found that after the rebuttal the complainant had not discharged the evidentiary burden of proving the pre-existing debt, and thus conviction could not be sustained. [Paras 14, 16, 17, 18, 19]

The presumption under the Negotiable Instruments Act stood rebutted to the extent that the complainant failed to prove a pre-existing legally enforceable debt; conviction could not be maintained.

Maintainability of complaint against proprietary of a firm - Whether the complaint was maintainable against the accused in his capacity as proprietor of the firm. - HELD THAT: - The Court recorded that the accused was represented as proprietor of the firm and signed as Letter of Authority; there was no legal ground to hold that a proprietor could not be prosecuted in respect of such business transactions. The signature on the cheques was not disputed. Accordingly, the complaint as framed was maintainable against the accused in his proprietary capacity. [Paras 9, 10]

Complaint was maintainable against the accused as proprietor of the firm.

Final Conclusion: The Sessions Court's order allowing the accused's appeal was upheld: having found that the accused probabilised the defence and that the complainant failed to prove the pre-existing legally enforceable debt, the conviction was not sustainable. The criminal appeal is dismissed and the appellate order is confirmed.