Case BriefsHigh Courts

Allahabad High Court: Disgruntled with the respondent for non-compliance with the Court’s earlier orders, Vivek Kumar Birla, J. allowed the present contempt application and issued a show-cause notice to the concerned delinquent officers.

The present contempt application has been filed by the applicant pleading for an action against the respondent for wilful disobedience of the judgment and order dated 18-09-2018 passed by this Court in Special Appeal Defective No. 656 of 2018 and the order dated 17-09-2019 passed in Contempt Application (Civil) No. 5773 of 2019

Counsel for the applicant, Kushmondeya Shahi has submitted that the copy of the order had been served to the respondent and yet nothing was done in that regard. Left with no other option, the applicant filed the present application seeking relief. The respondent had been granted more time for compliance vide order dated 17-09-2019 but even after the expiry of the period, any decision is yet to be taken by the respondents.

Upon careful perusal of the facts and circumstances, the Court has found it fit to initiate contempt proceedings against the respondent.

Lamenting over the sorry state of affairs with respect to the compliance of its orders, the Court has passed strict remarks taking the concerned administrative officers to the task. The remarks have been reproduced below for reference:

“This Court is noticing every day that apparently the officers concerned, who were directed to act as per the order of the Court, are not complying with the orders at the first instance and the aggrieved party is forced to file contempt application and even after granting further time to comply with the order of the writ Court passed in contempt application, the orders not being complied with. Apparently, the Officers are becoming habitual and not complying with the orders of this Court at the first instance.

This is a sorry state of affairs and it is expected that the opposite party shall make every effort and shall also issue necessary orders in this regard to the subordinate authorities to strictly comply with the orders at the first instance itself, otherwise the Court will take a serious view of the matter.”

 In view of the above, the Court has allowed the present contempt application issuing notice to the respondent to appear in person and show cause as to why charges be not framed against him under Section 12 of the Contempt of Courts Act for wilful disobedience of the aforementioned orders. [Arun Kumar v. Renuka Kumar, Contempt Application (Civil) No. 3033 of 2020, decided on 08-09-2020]


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Case BriefsHigh Courts

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Division Bench of Anil Choudhary (Judicial Member) and P. Venkata Subba Rao (Technical Member), allowed an appeal which was filed on being aggrieved by the dismissal of the appeal by the Commissioner (Appeals).

The appellant is registered with the Service Tax Department and was engaged in the business of civil construction classifiable under ‘Works Contract Services’. During verification of the records and accounts maintained by the appellant and on reconciliation with the ST-3 returns filed by the appellant, it appeared that the appellant had not paid service tax on some part of their turnover during the period 2011-12 to 2014-15 particularly in respect of service provided to organizations like Andhra Pradesh Power Generation Corporation (AP GENCO), Andhra Pradesh Tourism Development Corporation (APTDC), etc. It further appeared that in respect of service rendered the recipient(s) did not fall under the category of Government/ local authority/ Government authority. The show-cause notice was adjudicated on the contest and the aforementioned demands were confirmed along with penalty of Rs 1,03,83,141/- under Section 78 of the Act and a further penalty of Rs 10,000/ under Section 77(2) of the Finance Act, 1994. Aggrieved by which the appellant had filed an appeal with the Commissioner (Appeals) who had dismissed the appeal but had reduced the penalty. Thus, the instant appeal was filed.

The Tribunal while allowing the appeal explained that admittedly all the companies / Corporations have been established by the Government of Andhra Pradesh under the various Acts and /or ‘Government order’, as aforementioned and thus held that the appellant had provided service to Governmental authority. Thus, the service recipients were covered under sub-clause (i) of clause (5), of the definition of the term ‘Govt. Authority’, in Notification No. 25/2012-ST, as amended by Notification No. 2/2014-ST (by way of substitution). Accordingly, the appellant is entitled to exemption and the demand of Rs 97,63,710 is set aside. Further, in the second issue, it was found that the construction of flats under the ‘development agreement’ with the landowner by the appellant is on principal to principal basis. In such a transaction, there is neither any element of service provided to the landowner, nor any element of sale, thus, the Tribunal held that the service tax was not imposable setting aside the demand of Rs 5,55,458/-. Lastly, in the third issue, the Tribunal held that the appellant had already provided the service as well as raised the invoice before the due date. Further, admittedly appellant had not given the option for payment of tax as per the date of receipt of consideration. Thus, the Tribunal held that demand of tax, relying on Rule 11 of Point of Taxation Rules was bad, setting aside the penalty of Rs 63,973. [Krishi Constructions (P) Ltd. v. Commr. of Central Tax, 2020 SCC OnLine CESTAT 199, decided on 22-09-2020]


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Case BriefsHigh Courts

Karnataka High Court: M.I. Arun, J. allowed the writ petition and declared the show cause notice or any subsequent proceeding as null and void.

According to the brief facts of the case, the petitioners were granted the impugned land in 1975 for non-agricultural purposes and had since been in peaceful possession.

The petitioners contended that the respondents had been issuing show-cause notices and had been pursuing proceedings against them since 2016 alleging that the said land was allotted to them, not in accordance with law. The petitioners had been defending themselves since the very inception of the dispute in 2016, and finally filing the present writ petition against the latest notice issued in August 2020. Further, the petitioners also sought the order passed by the respondent Commissioner cancelling their land grant to be quashed as it had been passed while the present appeal was still being adjudicated upon.

The Court held that since the land was granted to the petitioner in the year 1975 and the show cause notice has been issued in 2020, thus a lapse or delay of 45 years is not reasonable or just. The Court further pointed out that Article 112 of the Limitation Act prescribes 30 years limitation period for suits by or on behalf of the central or state government.

Furthermore, fraud may vitiate everything, but the respondents failed in indicating fraudulent acts by the petitioners in the notice. Thus the incessant delay in issuing the notice was held to be bad in law.[G. Chitra Poornima v. State of Karnataka, 2020 SCC OnLine Kar 1393, decided on 10-09-2020]

Case BriefsHigh Courts

Bombay High Court: Anil S. Kilor, J., held that to declare land as private forest under Maharashtra Private Forest (Acquisition) Act, 1975, it is necessary for the land to fall under the ambit of ‘private forest’ under Section 2 (f) and notice has to be issued to the owner and to all other persons having an interest in such land, calling on them to show cause why such declaration should not be made.

Present petition is arising out of the order dated 08-03-2016 passed by Maharashtra Revenue Tribunal, Nagpur upholding the Collector’s Order declaring thereby the notices issued by the Range Forest Officer to the petitioner intimating that the Government has taken possession of the land owned by the petitioner as the land falls under the definition of Section 2(c–i)(f) of the Maharashtra Private Forest (Acquisition) Act, 1975.

Sunil Manohar, Senior Advocate assisted by Vidya Umale, Advocate for the petitioner and Barabde, Assistant Government Pleader for the respondents.

What does Section 3 of the Maharashtra Private Forest (Acquisition) Act, 1975 talk about?

Section 3 of the Act, 1975, speaks about the vesting of private forest in State Government.

It says that all private forests in the State shall stand acquired and vest, free from all encumbrances, in, and shall be deemed to be, with all rights in or over the same or appertaining thereto, the property of the State Government.

Further, it has been stipulated all rights, title and interest of the owner or any person other than Government subsisting in any such forest on the appointed day shall be deemed to have been extinguished.

Private Forest

Section 2 (f) of the Act, 1975, defines the ‘private forest’ means in case whether the State Government and any other persons are jointly interested in the forest, the interest of such person in such forest or sites of dwelling houses constructed in such forest which are considered to be necessary for the convenient enjoyment or use of the forest land appurtenant thereto.

Section 21 of the Act, 1975 mandates the Collector or any officer authorised in this behalf by State Government, to issue a notice to the owner and to all other persons having an interest in such land, calling on them to show cause why such declaration should not be made.

Section 21 makes it clear that a private land not covered by Clause-(f) of Section 2 can be declared as a ‘private forest’ and only those lands which are covered by Clause (f) of Section 2 will vest in the State Government in accordance of Section 3 of the Act, 1975.

Present Matter

On perusal of the notices issued by the Range Forest Officer, it is apparent that the said notices do not refer to any declaration under Section 21 or disclose how the land in question falls in the purview of the definition of ‘private forest’ under Section 2 (f).

Further, neither the Collector nor the Tribunal has noted any declaration under Section 21 of the Act 1975 or discussed any material wherefrom it can safely be said that the land owned by the petitioner falls within the purview of Section 2 (f) of the Act, 1975.

Illegal

Hence, the Bench declared that without disclosing how the land owned by the petitioner falls within the ambit of definition of ‘private forest’ under the Act 1975 or without following the procedure laid down in the Act, to declare the land in question as ‘private forest’ is illegal.

Adding to the above, Court stated that the Collector and the Tribunal did not go into the issue of applicability of the Act, 1975 to the land owned by the petitioner.

In light of the above, matters need to be remanded to the Collector for fresh consideration by keeping all the contentions of the parties open.

It is further directed that the Collector shall consider the observations made hereinabove relating to provisions of Sections 2 (f) and 21 of the Act, 1975 while deciding the matter afresh.[Gaurakshan Sanstha, Arvi, v. Collector Wardha, 2020 SCC OnLine Bom 908, decided on 08-09-2020]

Case BriefsHigh Courts

Gauhati High Court: Achintya Malla Bujor Barua, J. allowed the writ petition and granted the respondents the liberty to continue proceedings against the petition at their behest by affording him the opportunity to be heard first.

The facts in a nutshell bring out that the petitioner, who is a registered contractor under the PWRD, was allotted work as per the letter of acceptance. Although the original period for completion of the work was 3 months, due to certain intervening factors, the time was extended. The petitioner submitted that the work was completed prior to the end of the extended period. Later on, there was a complaint from the Commissioner & Secretary to the Governor of Assam that the approach road to the Raj Bhawan was damaged. There was an enquiry on the said complaint and it is stated that the PWD had submitted a report that some loose materials were present in the bituminous mixture which was due to inadvertence. The petitioner proposed before the department that necessary rectification would be done at the cost of the petitioner. The rectification work although allowed, could not be completed by the petitioner because of some difficulties due to the COVID-19 pandemic situation. Accordingly, the petitioner prayed for some more time for completion of the repair work.

Counsel for the petitioner, I. Choudhary submitted that due to incessant rains a landslide further damaged the approach road to the Raj Bhawan. In the aforesaid circumstance, PWRD, Assam had issued the order by which the petitioner was debarred for a period of 3 months with immediate effect from performing any work.

Thus, the petitioner filed the said petition challenging the order on the grounds that it was passed without following the due procedure of law.

Nath, counsel for respondents, upon instruction made a statement that neither any show-cause notice nor any opportunity was given to the petitioner before the impugned order was issued by the PWRD.

The law as regards the blacklisting of a contractor had been settled by the Supreme Court in Erusian Equipment & Chemicals Ltd. v. State of W.B., (1975) 1 SCC 70 wherein it has been provided that blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purpose of gains and therefore the person concerned should be given an opportunity to represent his case before he is put on the blacklist.

An excerpt from the Erusian Equipment verdict is pertinent to refer here:

“The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are “instruments of coercion”

The Court while relying on the above-mentioned Supreme Court verdict allowed the writ petition and held that, since the order of debarring the petitioner was set aside on a technical reason, the Court granted liberty to the respondent authorities to still proceed against the petitioner by following due procedure of law i.e. by issuing a show-cause notice or giving him an opportunity to present his case first.[Oriental Engineers v. State of Assam, 2020 SCC OnLine Gau 3443, decided on 19-08-2020]

Case BriefsHigh Courts

Jammu and Kashmir High Court: Vinod Chatterji Koul, J. dismissed the writ petition as a show-cause notice not reflective of any pre-disposition of mind of the authorities who have issued it.

In the present case, the petitioners who belong to the Nomadic Bakarwal community have contended that some 65 years ago they inhabited a certain piece of land by building a colony on the assurance of the then Revenue Minister. They further contended that the Divisional Commissioner was accordingly directed to take appropriate steps in the regularisation of the said colony. The petitioners have further averred that no steps were actually taken to pass regularisation orders and further, their houses were demolished by the respondents. Despite the fact that houses of petitioners are outside Forest land, the Forest Department had issued show cause notice against them. Aggrieved by this the petitioners filed the said Writ Petition.

The Court propounded the fact that both the Acts, viz. the Indian Forest Act, and the Public Premises (Eviction of Unauthorised Occupants) Act 971, provide issuance of show cause notice before proceeding ahead in the matter for removal of unauthorized occupation. A full-fledged mechanism is ingeminated in both the Acts. Taking into account the provisions of the Indian Forest Act and the Public Premises (Eviction of Unauthorised Occupants) Act 1971, respondents have rightly issued Show-Cause Notice upon petitioners.

Relying on Union of India v. Kunisetty Satyanarayana, (2006 12) SCC 28 according to which, writ petition is not maintainable against a show-cause notice, the Court held that the same will apply to the case at hand.[Jameel v. UT of J&K, 2020 SCC OnLine J&K 396, decided on 11-08-2020]

Case BriefsHigh Courts

Jharkhand High Court: Sanjay Kumar Dwivedi, J. dismissed the petition and no relief given to the petitioners.

The facts of the case are that the petitioners herein were appointed by Jharkhand Staff Selection Commission on the post of constable after clearing the preliminary exam, mains exam, interview and medical examination pursuant to which all were declared successful. The appointment letters were issued and the training was given and completed. However, they were dismissed from service vide order dated 03.07.2018, 27.07.2018 and 01.08.2018. Pursuant to the order of the High Court dated 11.08.2017 medical board was reconstituted and the petitioners appeared for the examination and were declared to be unfit. Hence the instant writ petitions were filed seeking quashing of the dismissal orders as aforementioned.

Counsel Anil Kumar Sinha, Abhishek Sinha, Ranjan Pd. Ram, A.K. Sahani and Piyush Chitresh represented the petitioners. It was submitted that the petitioners have been dismissed from service without any departmental proceeding or any show-cause notice in spite of the petitioners having completed their training post-appointment order. Hence in absence of show cause and without following the principles of natural justice the impugned orders are not tenable and are fit to be quashed by this Court.

Counsel for the respondent, Sanjoy Piprawal, Manoj Kumar, P.A.S. Pati, and Rohan Kashyap submitted that if the petitioners in the present case were aggrieved by the decision to hold a fresh process, they did not espouse their remedy. Instead, they participated in the fresh process of selection and it was only upon being unsuccessful that they challenged the result in the writ petition. This was clearly not open to the appellants. The principle of estoppel would operate.

Court relied on a judgment titled Ashok Kumar v. State of Bihar, (2017) 4 SCC 357 and held that it is a well-settled proposition of law that once a person participated in the proceeding, they are not allowed to challenge the same.  He further observed that if the petitioners were aggrieved by the decision to hold a fresh medical examination they were bound to explore the remedy in the law instead they participated in the fresh process of selection and upon being unsuccessful and dismissal they challenged in these writ petitions. This was clearly not open to the petitioners.  The principles of estoppel would operate.

In view of the above, the petition stands dismissed and disposed of.[Santosh Kumar v. State of Jharkhand, 2020 SCC OnLine Jhar 737, decided on 05-08-2020]


*Arunima Bose, Editorial Assistant has put this story together

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Division Bench of Anil Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member), allowed an appeal which involved the question that whether the appellant company was liable to pay service tax under the category of Business Auxiliary Service (BAS) for the period April 2007 to September 2011 or whether the activity of the appellant was not taxable under the principle of mutuality, being services provided to group/promoter companies.

The appellant company was a limited company by guarantee and not by having a share capital. The main objects of the appellant company, as per its Memorandum of Association, are to enable the members of the company to mutually avail and share common facilities and resources afforded by the company. The counsel for the appellant Ashok S. Hasija, contended that a Company limited by guarantee is an extensive mode used for organizing professionals traders, etc into an association for a general and non-business purpose; the appellant company had been incorporated to organize and share various common facilities and resources on the principle of mutuality; the transactions of the appellant were on the basis of no profit no loss basis; the appellant was an extended arm of the member companies. It was accepted principle that Service provided to one’s own self was not taxable; appellant company and the member companies being one unit, the nature of service so provided by the appellant to its members would that be a service to themselves; therefore, service tax could not be levied.

The Bench while allowing the appeal found that the companies have come together to share the resources and there was mutuality of interest of the promoters/member companies and that the show cause notice was not maintainable both on the principle of mutuality and on the fact of lack of consideration for such services alleged to have been rendered. [GMR Corporate Centre (P) Ltd. v. C.C.E. & C.S.T., 2020 SCC OnLine CESTAT 147 , decided on 29-07-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Division Bench of Sulekha Beevi (Judicial Member) and Anil G. Shakkarwar (Technical Member) allowed an appeal filed aggrieved by the order of the Commissioner.

The appellants, who were engaged in execution of construction services, were issued Show Cause Notice dated 07-10-2010 proposing to demand Service Tax under the category of ‘Construction of Commercial or Industrial Complex Service’ and ‘Construction of Residential Complex Service’.

The Original Authority confirmed the demand, interest and passed an order in respect of penalty, against the reduced penalty imposed by the Additional Commissioner, the Department had filed an appeal before the Commissioner result of which the Commissioner had modified the penalty thus the appellants had filed the instant appeal. The counsel for the appellant, M. Vigneshwari submitted that appellant had paid up the Service Tax liability to the tune of Rs 36,39,526 much before the issuance of Show Cause Notice. However, the demand raised in the Show Cause Notice was Rs 46,36,419. The appellant had pleaded to grant them the benefit of cum-tax value. After extending such cum-tax value benefit, Service Tax liability was re-determined as Rs 39,80,678. The appellant had paid the remaining Rs 3,41,152 along with interest. They had also paid penalty of Rs 10,000 and also 25% of the reduced penalty.

The Court while allowing the appeal stated that the appellant had paid up major portion of the Service Tax liability before issuance of the Show Cause Notice and later paid up the balance amount. Thus the order needs to be set aside. [MSR Constructions v. Commr. Of CE & ST, Service Tax Appeal No. 40460 of 2013, decided on 06-03-2020]

Case BriefsHigh Courts

Rajasthan High Court: A Division Bench of Sangeet Lodha and Mahendar Kumar Goyal JJ., ordered for seizure of building and issued show-cause notices to respondents for deliberate disobedience of the order of the Court.

The present Civil Contempt petition has been filled by the petitioners alleging disobedience of the previous interim of the present High Court. Previously the Court had directed that no building shall be allowed to be constructed/raised in the vicinity of the area in question except on issuance of a No Objection Certification in accordance with the guidelines issued by the Government of India.

The Learned Additional Solicitor General representing the petitioner, R.D. Rastogi submitted photographs of the construction of the building demonstrating that the respondent had defied the orders of the Court and continued construction of the building. It was also submitted that in pursuance of the Court’s directions the respondents were under obligation to ensure that no further construction is raised. However, the respondents deliberately allowed the constructions due to extent undue favour to the fourth respondents.

The Court upon perusal of the facts and records placed before the bench directed to seize the building constructed and it shall not be released from the seizure without permission from the Court. The Court also ordered to issue show-cause notices to the respondents asking them to provide reasons for wilful disobedience of Court orders. [Union of India v. State of Rajasthan, 2020 SCC OnLine Raj 241, decided on 11-02-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Exchange Board of India (SEBI): G. Mahalingam (Whole Time Member), issued an impounding order and issued show-cause notices against the ‘Insiders’ and suspected entities who had traded in the scrip of PC Jeweller and found to be in violation of the provisions of Sections 12A(d) and (e) of the SEBI Act and Regulations 4(1) read with 4(2) of the Insider Trading Regulations, 2015.

In the present case, SEBI conducted an investigation in the scrip of PC JewellerLimited to ascertain whether or not suspected entities had traded in the said scrip during the investigation period on the basis of unpublished price sensitive information in contravention of the provisions of SEBI Act 1992 read with SEBI (Prohibition of Insider Trading) Regulations, 2015.

During the investigation, it was observed that corporate announcements by PC Jeweller had been made with respect to buyback equity shares of the Company. Price data for the scrip prior to and after the aforementioned announcements along with date and time of dissemination of the same by BSE/NSE on their websites indicated that the information pertaining to the approval &subsequent withdrawal of the buyback is considered to be price-sensitive information.

Further adding to the above, information pertaining to the buyback of equity shares of the Company, which was related to a change in the capital structure of the Company, qualified as UPSI in terms of Regulation 2(1)(n)(iii) of the Insider Trading Regulations 2015.

SEBI sought information from PC Jeweller and certain other entities regarding details of persons including Promoters/Directors/Employees and/or any other persons who were having access to and/or in possession of the information pertaining to the buyback of equity shares.

After considering the information and investigation conducted by SEBI, the Board in light of provisions of Insider Trading Regulations, 2015, the investigation identified Padam Chand and Balram Garg, Shivani Gupta, Sachin Gupta, Amit Garg and Quick Developers Pvt. Limited as ‘Insiders’.

  • Padam Chand Gupta is the Chairman of the Company and as such, is connected to the Company and was reasonably expected to have access to the aforesaid UPSI–I and UPSI–II. Therefore, Padam Chand Gupta is a ‘Connected Person’ in terms of Regulation 2(1)(d)(i) of the Insider Trading Regulations, 2015 and is considered to be an ‘Insider’.
  • Balram Garg was the Managing Director of the Company and was privy to the discussions/information regarding the approval for and withdrawal of the buyback of equity shares of the Company i.e. UPSI–I and UPSI–II. Therefore, Balram Garg is a ‘Connected Person’ in terms of Regulation 2(1)(d)(i) of the Insider Trading Regulations, 2015 and is considered to be an ‘Insider’.
  • Shivani Gupta had traded in the scrip. Sachin Gupta (Shivani Gupta’s husband and son of Padam Chand Gupta) had traded in the scrip through the trading account of Shivani Gupta. Further, Shivani Gupta’s brother–in–law i.e. Amit Garg [nephew of Padam Chand Gupta and Balram Garg and son of Amar Chand (Ex-Vice Chairman of PC Jeweller)] had traded in the scrip through the trading account of Shivani Gupta with Karvy Stock Broking Limited.
  • QDPL – The entity had traded in the scrip through Karvy.
    In view of the facts, charges alleged in the instant proceedings against the above-mentioned, are brought out as under-

“Padam Chand Gupta (Chairman of PC Jeweller) and Balram Garg (Managing Director of PC Jeweller) (‘Insiders’ in terms of Regulations 2(1)(d)(i) read with 2(1)(g) of the Insider Trading Regulations, 2015) had communicated UPSI–I and UPSI–II to Shivani Gupta, Sachin Gupta, Amit Garg and QDPL (who qualify as ‘Insiders’ in accordance with Regulations 2(1)(g)(i) read with 2(1)(d)(i) of the Insider Trading Regulations, 2015 and also Regulation 2(1)(g)(ii) of the aforesaid Regulations). Accordingly, Padam Chand Gupta and Balram Garg have prima facie violated Section 12A(e) of the SEBI Act and Regulation 3(1) of the Insider Trading Regulations, 2015, by communicating UPSI–I and UPSI–II to Shivani Gupta, Sachin Gupta, Amit Garg and QDPL.”

SEBI noted the copy of a death certificate obtained from KARVY that Padam Chand Gupta passed away on 28-01-2019.

Need of the impounding order?

Non–interference by SEBI at this stage would, therefore, result in irreparable injury to the interests of the securities market and the investors. It, therefore, becomes necessary for SEBI to take urgent steps of impounding and retaining the proceeds (notional loss/gains) made by Shivani Gupta, Sachin Gupta, Amit Garg and QDPL, by way of an interim measure.

Order

A. A sum of Rs 6,17,60,184.13 shall be impounded jointly and severally, from Shivani Gupta, Sachin Gupta and Amit Garg, being the notional loss avoided on account of trades carried out in the trading accounts of Shivani Gupta, and

B. A sum of Rs 2,13,23,161.64 shall be impounded jointly and severally, from Quick Developers Pvt. Limited and Amit Garg, being the notional loss avoided/gains made on account of trades carried out in the trading account of Quick Developers Pvt. Limited.

The above-said amount has to be credited to an Escrow Account in a Nationalised Banks, by marking a lien over it.

Banks shall not allow debits from the bank accounts of Shivani Gupta, Sachin Gupta, Amit Garg and Quick Developers Pvt. Limited, to the extent of the amounts impounded, until the Escrow Account(s) as stated above are opened by them and the amounts as stated are transferred.

In light of the alleged violations of the provisions of Sections 12A(d) and (e) of the SEBI Act and Regulations, 4(1) read with 4(2) of the Insider Trading Regulations, 2015, by Shivani Gupta, Sachin Gupta, Amit Garg and Quick Developers Pvt. Limited, this Order shall be treated as a Notice under Sections 11(1), 11(4) and 11B(1) of the SEBI Act calling upon the above mentioned to show cause as to why certain directions shall not be passed against them.

This Order shall come into force with immediate effect and shall be in force till further orders.[PC Jeweller Ltd., In Re., 2019 SCC OnLine SEBI 304, decided on 17-12-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): The Division Bench of Suresh Chandra and Bimal Julka, Information Commissioners, directed for a show-cause notice to be issued to the CPIO with respect to misleading the Commission in regard to the information sought by the Complainant.

Facts of the Case

Complainant sought information regarding Mr Srinivas – Inspector of Customs, detailed list of Postings/Departments served from the date of joining duty till the date of RTI application, address and ownership details of present residential premises, etc.

With respect to the above-sought information, CPIO and Dy. Commissioner (ACC) stated that there was no person by the name of Mr Srinivas – Inspector of Customs working at their office hence the information sought could be treated as ‘Nil’.

Complainant being dissatisfied by the response of CPIO, approached the Commission. Commission had given out the following order in the said respect,

“Keeping in view the facts of the case and the submissions made by both the parties and in the light of the aforesaid judgments, no further intervention of the Commission is warranted in the matter. For redressal of grievance, the Complainant is required to approach an appropriate forum.”

Complainant aggrieved by the decision of the Commission approached the Karnataka High Court. Further, Legal Cell, CIC in compliance with the order of Karnataka High Court placed the matter before the IC- Bimal Julka, who vide its order proposed to schedule the hearing with another IC for the sake of objectivity/transparency.

Complainant’s stand

According to the complainant documents and evidences including criminal cases which revealed that there was one person Mr M.V. Srinivas who was working in the customs Department had been furnished and hence not adverting to that, the CPIO had perhaps evaded the disclosure of information.

CPIO had not taken the plea that the RTI application was indefinite or unspecific while giving nil information and that Mr Sujith Kumar P. Sompur, CPIO who was also the reporting officer of Mr M.V. Srinivas deliberately misled the Commission despite being aware of the facts and the antecedents of the individual.

Respondent’s stand

Respondent while defending the reply given by the then CPIO argued that the information sought was not about the specific person (Mr M.V. Srinivas) and subsequently the Complainant had revealed the specific person.

Thus, the CPIO in the absence of specific name could not have inferred or created information which was not in the custody of the CPIO and that there had been a plethora of judicial pronouncement and other precedents of the Central Information Commission supporting his viewpoint that as CPIO he was not to invent or create information/provide opinion/advice or draw inference.

Further, the Commission had received complainant’s written submission wherein it was stated that RTI application was filed seeking information on  Mr M.V. Srinivas who was directly reporting to the CPIO. Sujith Kumar P.  Sompur being the CIU head had only two inspectors allocated to him namely Mr Srinivas and Mr Niranjana Murthy. He thereafter alleged that Mr  Sujith Kumar P. Sompur and Mr Srinivas had jointly and severally committed several corrupt criminal acts and numerous FIRs and Charge Sheets had been filed.

When the RTI application was filed seeking information on Mr Srinivas, CPIO with a sinister view to exonerate and extricate themselves had intentionally filed a false and malicious statement that there exists “No person by the name Srinivas, Inspector of Customs, Air Cargo Complex, Bengaluru working at their office.”

Hence, CPIO indulged in such misleading mischief thereby misinterpreting the facts to exonerate and extricate themselves from the pending as well as impending cases.

Tribunal giving the interim decision, in order to ascertain clarity and reasons, issued a show-cause notice to the then CPIO and the present CPIO as to why penal action should not be initiated against them in accordance with the provisions of RTI Act, 2005 for misleading the Commission with the correct identity of the Customs Official where information as sought by the Complainant. [Kriplani M. v. CPIO, 2019 SCC OnLine CIC 1266, decided on 01-11-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Custom, Excise and Service Tax Appellant Tribunal (CESTAT): A Division Bench of Rachna Gupta (Judicial Member) and C.L. Mahar (Technical Member) dismissed a rectification appeal filed by the applicant.

The applicant had submitted that the Tribunal in the impugned order had committed an error by not dealing with the following contentions of the appellant as were made against impugned order-in-original dated 31-03-2014:

  • No specific categorization of demand was made in the impugned show-cause notice which should render the entire proceedings as vague and bad in law.
  • In Skylarks Cazers International v. CST 2018 (5) TMI 877, a similar demand was set aside for want of bifurcation of demand under various services.
  • The order omitted to consider the other grounds mentioned in the appeal and therefore must be an error apparent on the face of the record.

On the other hand, the department contended that the impugned appeal has been allowed by way of remand. The demand for Service Tax was confirmed on principle, however, quantification of the same was given to the adjudicating authority for de novo adjudication. Thus, all the grounds as raised by the appellant were not the subject matter of rectification of mistake.

The Tribunal explained that the show-cause notice proposing the impugned demand of Rs 64,04,301 was served upon the appellant observing that the appellant had a number of companies under its aegis and was availing payment of Service Tax by suppressing the full taxable amount collected from various clients who were receiving the services as that the security agency and manpower supply services from the appellant. The contention about show-cause notice being barred was also considered. Finally, the contention that the demand for gross turnover of all the services provided by the appellant without bifurcation had also been dealt with as the matter had been remanded back for the quantification of the demand on the basis of financial year-wise receipt service tax value.

The Tribunal finally dismissed the appeal stating that the decision cannot be re-opened under the guise of rectification of mistake. As far as the arbitrary/vagueness of a show-cause notice was concerned, the same was held to be correct in principle by the Tribunal. A decision on a debatable point of law or fact cannot be corrected by way of rectification. Otherwise also the impugned final order was remanded to the adjudicating authority for quantification of the demand. [Skylark Hi-Tech Solution (P) Ltd. v. Commissioner, 2019 SCC OnLine CESTAT 303, decided on 11-11-2019]

Case BriefsHigh Courts

Gujarat High Court: Dr A.P. Thaker, J. declined the prayer for the grant of interim relief after considering the averments and documentary evidence on record.

The petitioner had challenged an order passed by the respondent which blacklisted the petitioner due to which it was unable for him to take part in a new tender which was floated by the respondent. Dixa Pandya, advocate for the petitioner also stated that the blacklisting is hampering the petitioner’s reputation.

Per Contra Dr Venugopal Patel submitted that the petitioner was unable to fulfill the earlier responsibilities and the petitioner was not able to give any reasonable explanation for the same in addition to which a show-cause notice was also served to the petitioner which does not give him a chance to put up his case.

The Court while dismissing the application for the grant of interim relief clarified that the respondent had floated the necessary guidelines with certain conditions to the petitioners which were accepted by the petitioner and the petitioner was given proper opportunity in every case to be heard the petitioner, however, can move to respondent for reconsideration for the decision of blacklisting. [Bindiya Enterprise v. State of Gujarat, 2019 SCC OnLine Guj 1, Order dated 01-01-2019]

Case BriefsHigh Courts

Madhya Pradesh High Court: G. S. Ahluwalia, J., allowed a petition and directed the respondents to not take any coercive step against the petitioner unless and until an enquiry is conducted under Section 89 of M.P. Panchayat Raj Awam Gram Swaraj, Adhiniyam, 1993.

 The petitioner has filed the instant petition under Article 226 of the Constitution of India has against the order passed under Section 92 of the M.P. Panchayat Raj Awam Gram Swaraj, Adhiniyam, 1993. The facts of the case are that a show-cause notice was issued to the petitioners under Section 92 of the Adhiniyam for recovery of Rs 2,70,000. The show-cause notice was duly replied by the petitioners, however, without conducting any enquiry, the impugned order was passed.

Counsel for the petitioner submitted that the respondents have already taken a final decision, which is bad because the provision of Section 92 of Adhiniyam, is merely an execution provision, and unless and until an enquiry is conducted under Section 89 of Adhiniyam, no action can be taken against the petitioners.

Counsel for the State stated that the impugned order is not a final order, but it is merely a show-cause notice and no action under Section 92 of Adhiniyam would be taken unless and until an enquiry is conducted under Section 89 of Adhiniyam.

In view of the above, the court relying upon the decision in Kadam Singh v. CEO, 2019(1) MPLJ 420, directed that the respondents shall not affect any recovery or shall not take any coercive step against the petitioners, unless and until an enquiry is conducted under Section 89 of Adhiniyam. Further, the Court has also directed the respondents to initiate an enquiry under Section 89 of Adhiniyam and decide the same within a period of six months in accordance with the law. [Kamla Yadav v. State of M.P., 2019 SCC OnLine MP 3090, decided on 22-10-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: Tarlok Singh Chauhan, J. partly allowed the appeal of filed by an employer challenging the compensation granted to a deceased employee’s wife under the Employees Compensation Act, 1923 on the ground that before passing a penalty order against the employer, a reasonable opportunity must have been given to him to justify himself.

Appellant herein was the employer of the respondent’s husband (deceased employee) who was employed as a driver by the appellant and died in an accident. Respondent’s wife filed a petition against the appellant seeking payment of compensation along with interest and penalty against the appellant and other respondents towards their joint and severe liability under the Employees Compensation Act, 1923. The appellant in his reply denied the salary as claimed and requested the recovery of the insurance amount. However, the Employee’s Compensation Commissioner-II awarded the respondent with compensation and interest along with a penalty. Aggrieved by this award, the appellant filed the present appeal.

Navlesh Verma learned counsel for the appellant, contended that there was no employer-employee relationship between the appellant and the deceased employee; and secondly that no show-cause notice was issued on the appellant-employer before passing an adverse award against him.

The Court held that the records proved that there was a relationship of employer and employee between the appellant and the deceased.

With respect to the second contention, it was held that as per the judgment in Ved Prakash Garg v. Premi Devi, (1997) 8 SCC 1 penalty under Section 4-A(3)(b) of the Act can only be imposed when the employer is given a prior notice and an opportunity to defend himself against the same which was certainly not given to the appellant herein.

Hence, the court allowed the appeal and set aside the penalty imposed on the appellant. [Amandeep Singh v. Shaheena Parveen, 2019 SCC OnLine HP 1416, decided on 30-08-2019]

Case BriefsHigh Courts

Allahabad High Court: Siddhartha Varma, J., set aside the impugned order as the charge enumerated in the show cause notice was rightly replied to by the petitioner and there was no illegality to that effect.

In the pertinent case, the petitioner moved to this Court against the impugned order which cancellation the license of the petitioner to run the Fair Price Shop. The factual matrix of the case was that upon a complaint being made by one Sunil Kumar Maurya on the telephone that the petitioner, who was a Fair Price Shop dealer, had in the month of May 2018 not distributed the essential commodities but had sold them out in the open market, an inspection was made by the Supply Inspector on 26-5-2018. Thereafter on 29-5-2018, the petitioner was served with a show-cause notice and a suspension order. The petitioner replied to the show-cause notice on 11-6-2018. However, when the Sub-Divisional Officer, on 18-8-2018 cancelled the licence of the petitioner to run the Fair Price Shop which was affirmed by the Appellate Authority by its order dated 12-12-2018.

The counsel for the petitioner contended that the show-cause notice which was served on the petitioner along with the suspension order did not contain any specific charge. The only charge appeared in the show cause notice was just with regard to the 81 missing bags of wheat, therefore, no further charge should have been dealt with while passing the impugned order.

High Court was of the view that the charges should be very clear and if the charges are vague then the inquiry itself becomes vitiated. The Court further allowed the writ petition as the charge in the show cause notice was just one in number and that had been replied to by the petitioner and the other charges should not have been taken into account for terminating the licence of the petitioner.

Further, the Court gave directions to the State Government that “they should advise their officers that when they issue show-cause notices then they should enumerate the charges properly. They should not be merged with the details of the complaints and the inspection report”. [Manoj Kumar Yadav v. State of U.P., 2019 SCC OnLine All 3476, decided on 19-09-2019]

Case BriefsHigh Courts

Bombay High Court: A Full Court Bench of Pradeep Nandrajog, CJ and Revati Mohite Were and Bharati H. Dangre, JJ. returned a reference unanswered in light for the reason that the law is well settled and there was no contradiction in the judgments delivered by different Benches.

The questions were referred to be answered by a Full Bench relating to the procedure to be followed by the Magistrate while issuing a Show Cause Notice under Section 107 CrPC (security for keeping the peace in other cases, i.e. other than the case of security for keeping the peace on conviction under Section 106). The Division Bench, in the present case, noted that as many as eight judgments passed by different Benches had held that before proceeding to issue a Show Cause Notice envisaged under Section 107, the opinion contemplated by Section 111 CrPC (order to be made) had to be separately authored. It was also noted that another Division Bench in Suleman Adam v. Emperor, 1909 SCC Online Bom 102, had taken a contra view. Therefore, the instant reference was made to the Full Bench.

The High Court perused all the decisions mentioned in the reference order and noted that the procedure followed in Suleman Adam’s case was in the peculiar facts of that particular case. It was observed: “To put simply, the requirement of law is that the Magistrate has to form an opinion in writing contemplated by Section 111 CrPC and thereafter proceed to issue a show cause notice as contemplated by Section 107 and along with the show cause notice annex the opinion. But, in a given case, it may happen that the language in which the order/opinion contemplated under Section 111 is not comprehensible to the noticee, then the may integrate the order/opinion and convey to the noticee in the language which the noticee comprehends.”

It was further stated: “The purpose of the law is that the noticee is to be made known the factual matrix comprising either the complaint or the information received by the Magistrate and the reasons for the opinion formed by the Magistrate.”

The High Court did not find any contra opinion in Suleman Adam’s case vis-a-vis the opinion given in the other eight judgments mentioned in the reference order. Resultantly, the Full Bench returned the reference unanswered for the reason that the law is well settled as captured in the said eight judgments.[Farhan Nasir Khan v. State of Maharashtra, 2019 SCC OnLine Bom 1777, decided on 03-09-2019]

Case BriefsHigh Courts

Bombay High Court: A Division Bench of Akil Kureshi and S.J. Kathawalla, JJ. addressed the petition filed by NDTV challenging orders passed by Securities Exchange Board of India (SEBI). Orders passed by SEBI pertained to the rejection of applications filed by NDTV for condonation of delay in filing settlement applications.

Facts pertaining to the present case

SEBI had initiated adjudication proceedings against the petitioner. The ‘first show-cause notice’ dated 12-02-2015 alleged violation of Clause 36 of Listing Agreement on the ground that there was non-disclosure of a tax demand of Rs 450 Crores which was raised under an assessment order against the Company for the assessment year 2009-2010.

04-03-2015 – Petitioner filed reply contending that he was under legal advice and bonafide belief that the tax demand was not required to be reported under Clause 36 of the Listing Agreement.

04-06-2015 – SEBI passed order holding the petitioner liable for the violation of Clause 36 of Listing Agreement and imposed a penalty of Rs 25 lakhs under Section 23-A of the Securities Contracts (Regulation) Act, 1956.

23-07-2015 – Petitioner filed an appeal against the above-stated order of SEBI before SAT, Mumbai.

28-08-2015 – SEBI issued ‘second show-cause notice’ against the company and its directors and key managerial personnel in which the allegations included non-disclosure of tax demand of Rs 450 Crores, delayed disclosure of certain sale of shares by KVL Narayan Rao, Group CEO and Executive Vice-Chairman and delayed disclosure by the petitioner under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

08-06-2016 – SEBI issued the ‘third show cause notice’ alleging the petitioner for violation of certain provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Contentions

Petitioner stated that there was no contravention of non-disclosure of tax demand which was the main subject matter of the first and second show-cause notices. In regard to the allegations in the third show cause notice, the petitioner stated that it could trace the proof of some of the disclosures but could not trace the proof of the rest. Under the circumstances, without conceding to the correctness of the allegations made, the petitioner took a decision to seek settlement of all three cases.

21-03-2017 – Petitioner filed settlement application with respect to the first and second show-cause notices.

24-07-2017 – In respect to the third show-cause notice, the settlement application was filed.

15-05-2017 – Petitioner filed an application for condonation of delay in filing settlement application dated 21-03-2017. Further, it was stated that the settlement application was re-presented on 26-09-2017 confined to the second show-cause notice.

Additionally to the above contentions, counsel for the petitioner stated that:

  • No personal hearing was granted.
  • Impugned orders are non-reasoned orders, due to no reasons being cited for rejection of delay of condonation
  • Petitioner made out sufficient grounds for condoning the delay.
  • Delay in view of the statutory provisions should be construed liberally. SEBI committed a serious error in not entertaining settlement applications on merits simply rejecting on the ground of delay.

Counsel for SEBI opposed the petition contending that the delay in both the cases was substantial which was not satisfactorily explained. SEBI considered the applications on merits and recorded that for want of satisfactory reasons, delay cannot be condoned. Orders, therefore cannot be termed as unreasoned orders.

Conclusion

The High Court perused relevant statutory provisions, i.e. Securities and Exchange Board of India Act, 1992 and SEBI (Settlement of Administrative and Civil Proceedings) Regulations 2014.

With the stated statutory framework in mind, Court perused the relevant documents on record. Further perusal of both the impugned orders suggested that the Board had not cited any reasons for rejecting the respective obligations of the petitioner for condonation of the delay. “Mere statement that the panel of whole-time members did not find the reason given as sufficient would not constitute proper reasons for dealing with the applications.”

“Facts and grounds stated in both the delay condonation applications were different. However, both the applications met with the same response from the Board. Citing identical one line consideration both applications were rejected. It ought to have been appreciated that the result of the rejection of delay condonation applications would be to terminate respective settlement applications without consideration on merits.”

Court stated that the Board committed a serious error in rejecting both the applications for condonation of delay.

Court further added that, “In the present case, we are not inclined to express any conclusive opinion with respect to the right of an applicant of settlement application to be heard in person at the stage where application for condonation is being decided by the Board.”

Thus, the Court set aside both the impugned orders and the applications for condonation of delay stood allowed. [NDTV v. SEBI, 2019 SCC OnLine Bom 1772, decided on 04-09-2019]