TaxTMI 
TaxTMI 
2013 (2) TMI 86
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....vocate for K.C. Palanisamy, Cheran Holdings Pvt. Ltd. & K.C. Palanisamy Associate Holdings Pvt. Ltd. Petitioner Through: Mr. Anish Dayal & Mr. Siddharth Vaid, Advocates Respondents Through: Mr. V. Lakshmi Narayanan, Advocate for SPIL Mr. Dhruv Wahi, Ms. Shalini Rawat, Mr. Ashish Singh, Mr. Brijesh Choudhary, Advocates for Cheran Ent. (P) Ltd. Petitioner Through: Mr. H. Karthik Seshadiri, Advocate for K.C. Palanisamy, Cheran Holdings Pvt. Ltd. & K.C. Palanisamy Associate Holdings Pvt. Ltd. CORAM: JUSTICE S. MURALIDHAR O R D E R 1. Although there are a large number of applications pending consideration, this order covers a specific issue concerning the implementation of previous judgments and orders of the Court vis-a-vis the liability of Sporting Pastime India Ltd. ('SPIL'). 2. The facts relevant to the issue are that CP No.292 of 2004 was filed by Pacific Convergence Corporation Ltd. ('PCCL') under Sections 433(e) and 434 of the Companies Act, 1956 ('Act') seeking the winding up of Data Access (India) Ltd. ('DAIL') on the ground that DAIL was unable to pay its debts. DAIL admitted to the liability arising from the availing of a loan of $ 10 million in its draft....
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....The case of Canara Bank was that DAIL owed it about Rs. 92 crores. Rs. 17 crores was owed to one of the consortium banks, i.e., Syndicate Bank. DAIL had, with the permission of Canara Bank opened an account with ABN Amro Bank ('ABN Amro') for the limited purpose of receiving the aforementioned money from DAA. A sum of $ 17 million (which approximately was Rs. 78.45 crores) was received by DAIL from DAA on 19th August 2004. On that day itself from the said account in ABN Amro Rs.78.45 crore was transferred by DAIL to CHPL. Immediately thereafter CHPL transferred Rs. 18.05 crores to KCPH, approximately Rs.35.30 crores to Cheran Enterprises Pvt. Ltd. ('CEPL') and Rs. 25 crores to SPIL. On 20th August 2004, KCPH transferred Rs. 18.03 crores to the Syndicate Bank. 5. Canara Bank filed CA No.1582 of 2004 in which this Court passed an order on 17th December 2004 directing that the balances to the above extent be maintained in the respective accounts of CEPL, SPIL and KCPH. 6. DAIL filed CA No.35 of 2005, seeking vacation of the order dated 17th December 2004. DAIL contended that $ 17 million was not received from DAA but as a loan from Odyssey Re subject to two conditions, i.e., ....
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....ld 100% shares of CHPL. It may also be noted at this stage that the allotment by SPIL of shares to CHPL has since been cancelled by the Company Law Board ('CLB') by an order dated 9th October 2006. The CLB took note of the judgment dated 18th November 2005 passed by this Court in CP No.292 of 2004. 9. Reverting to the judgment dated 18th November 2005, the case of SPIL that the sum of Rs. 25 crore was transferred to it by CHPL on 19th August 2004 by way of investment was not believed by this Court. The Court noted that Canara Bank had received copies of the letters addressed by Mr. Siddhartha Ray as Chairman of DAIL to the Enforcement Directorate and the Revenue authorities stating that the new management, i.e., Mr. K.C. Palanisamy and others had fraudulently transferred funds of DAIL to their own companies. The declaration filed with the Reserve Bank of India ('RBI') on 19th August 2004 by ABN Amro stated that the inward remittance of $17 million was received on the account of DAIL against "outstanding bills of services rendered." The Court also noted the contention of Canara Bank that the sum of Rs. 78.45 crores (i.e. $17 million) was held by DAIL "in trust and such a trust....
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....s a loan advanced by Odyssey Re. 12. Meanwhile CEPL filed writ petitions [WP (C) 32444-32450 of 2006] in the Madras High Court praying inter alia for a writ of certiorari to quash an order dated 23rd September 2005 issued by the Additional Commissioner of Income Tax ('Addl. CIT') and certain other orders of the Assistant CIT, confirming the demand against CEPL and praying for the release of the sums attached together with interest. SPIL filed WP(C) 13820 of 2007 against the Asst. CIT and CIT, Coimbatore [Respondent Nos.1 and 2] and the State Bank of India ('SBI'), Adyar Branch, Chennai [Respondent No.3] seeking stay of the order dated 19th February 2007 passed by CIT, Coimbatore and praying that the attached money should be released only to SPIL and no one else. A prayer was also made that the sum of Rs. 17,40,29,511 already recovered by IT Department should be asked to be refunded together with interest. 13. In SPIL's writ petition, a learned Single Judge of the Madras High Court passed an interim order on 9th May 2007 in terms of which the IT Department and the SBI were restrained from releasing the aforementioned amounts, i.e., Rs. 17,40,29,511 and Rs. 7,59,70,489 along wi....
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....ated 18th November 2005 passed by the Company Court which had been upheld by the DB. The Court also noted that differences had cropped up between Mr. Nandakumar Athappan, who held 45%, 45% and 10% shares respectively in CEPL, O.R.E. Holdings and CG Holdings Pvt. Ltd. ('CGHPL'), and Mr. K.C. Palanisamy. After noticing the complex pattern of holding of shares of one company in the other, the Court concluded that "prima facie, it does appear that all the companies were fully aware and conscious of the transfer of the money in ABN Amro Bank and the claim of Canara Bank." Notice was also taken of the proceedings pending in the Madras High Court at the instance of CEPL. 17. The Court in its detailed order dated 21st January 2011 issued the following directions: "36.... (1) All bank accounts and deposits of CEPL, CHPL, SPIL and KCPAHPL are hereby attached. No payments will be made from the said bank accounts except with the permission of the Company Court. The aforemtioned companies are also restrained from selling, disposing of or creating third party interest in respect of movable and immovable assets. (2) Managing Director/principal officer of CEPL, CHPL, SPIL and KCPAHPL w....
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.... to the Court. 19. The other development that requires to be noticed is that, on 3rd January 2013, a learned Single Judge of the Madras High Court allowed the writ petitions filed by CEPL in which Canara Bank was impleaded as a party Respondent by an order dated 16th September 2010. Some of CEPL's writ petitions were disposed of as having become infructuous on account of subsequent developments, including allowing of appeals filed by CGHPL, the 6th Respondent in those writ petitions against the assessment order. It was held by the learned Single Judge in the judgment dated 3rd January 2013 that the attachment order issued by the IT Department was on the mistaken assumption that CGHPL was the holding company of CEPL and that a certain sum was issued from CEPL to CGHPL. Since it was specifically stated on affidavit that CGHPL was not the holding company of CEPL and CEPL did not owe any money to either the Directors or the shareholders, the attachment by the IT Department was held to be invalid. However, in para 32 of the judgment, the Madras High Court made it clear that the said order was "subject to the order dated 21.01.2011 passed by the Delhi High Court in Company Petition No....
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....he later amount which was not appropriated towards demand stood discharged as provisional attachment under section 281 B was not extended after statutory period of 2 years. 3. That before any amount could be refunded order dated 09/05/2007 of Hon'ble Madras High Court was received stating and injuncting the Department not to release the same to any party but only to M/s. Sporting Pastime India Ltd. The same was followed by another order sent to the Department by the Hon'ble Supreme Court vide SLP No.10960/2008 dated 7.04.2008 injuncting Income Tax Department for releasing that amount to 'any party.' The order of stay of the Hon'ble Supreme Court reads as under:- "Meanwhile respondent no.2 and 3 will not release the amount to any party." 4. That admittedly Department does not have any lien on the said amounts and in any case no demand is subsisting payable or due from M/s. Sporting Pastime India Ltd. 5. That Department is ready and willing to comply with the order of this Hon'ble Court dated 22.09.2006 but for the injunction issued by the Hon'ble Court of Madras. 6. That on further independent verification from Hon'ble Supreme Court it transpires that the said petitio....
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....oth of which have become final as far as SPIL is concerned. The submissions made on behalf of learned counsel for the parties on the other issues will be dealt with in the subsequent orders. CP 292 of 2004, CCP(Co) 31 of 2005, CCP(Co) 16 of 2007 & CCP(Co) 22 of 2007 Page 17 of 20 27. The above narration of facts reveals the following factual position: (i) The judgment dated 18th November 2005 passed by the Company Judge in CP 292 of 2004 has become final with the dismissal by the DB of Co. Appeal Nos.3-5 of 2006 filed by CHPL, KCPH and SPIL respectively on 20th November 2009. (ii) Writ Petition Nos.13820-21 of 2007 filed by SPIL in the Madras High Court are pending. With the dismissal on 14th December 2009 of SLP (C) No. 10960 of 2008 filed by Canara Bank, the interim order dated 9th May 2007 passed in those writ petitions to the effect that with the release by the IT Department of Rs. 7,59,70,489 [forming subject matter of WP(C) No. 13820 of 2007] and Rs. 17,40,29,511 [forming subject matter of WP(C) No.13821 of 2007] along with interest accrued thereon will not be made to any person other than SPIL continues. (iii) There is no restraint on SPIL by any Court in comp....