Supreme Court

Agarwal Tracom Pvt. Ltd. vs. Punjab National Bank and Ors.

MANU/SC/1494/2017

27.11.2017

Banking

Auction purchaser can challenge the action of forfeiting it’s deposit by secured creditor before DRT

The present appeal is filed against the final judgment passed by the Delhi High Court whereby the Division Bench of the High Court had dismissed the appeal filed by the Appellant herein for quashing the order passed by the Single Judge, which dismissed the Appellant's writ petition.

Respondents-Punjab National Bank (PNB) had given loan facility to a Company called "M/s. India Iron & Steel Corporation Limited" (Borrower) for their business. To secure the loan amount, the Borrower had secured their assets, which consisted of the land, factory building, plant and machinery. The Borrower, however, failed to clear their loan amount and became a defaulter in its repayment. The PNB, therefore, invoked their powers under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and issued a public sale notice sale of the mortgaged assets. The Appellant herein was one of the bidders, whose bid was declared the highest and accordingly, accepted by PNB. The Appellant, however, failed to pay the regular installments towards sale money in terms of memorandum of understanding to PNB and sought extension of time to pay and remove the scrap material from the site which gave rise to the disputes between the parties, namely, PNB, Appellant and the Borrower before the Debt Recovery Tribunal (DRT) wherein an order was passed directing the Appellant not to remove any material from the factory premises.

The Appellant then wrote a letter to PNB requesting them to refund their money with interest which led to another dispute between the parties wherein Allahabad High Court had observed that since the Appellant had failed to comply with the term of memorandum of understanding inasmuch as the Appellant having failed to deposit the requisite installment of sale money, the PNB cannot proceed with the auction sale and nor can the Appellant be permitted to remove the scrap material lying in the factory premises.

This led the PNB to forfeit the Appellant's deposit which was challenged by the Appellant by filing the writ petition in the High Court of Delhi. The Petition was dismissed by the Single Judge of the High Court on the ground of availability of alternative statutory remedy to the Appellant of filing the application under Section 17 of the SARFAESI Act before the DRT to challenge the action. The appeal filed for challenging the decision of Single Judge was dismissed by the Division Bench of Deli high Court. Felt aggrieved, the Appellant has filed the present appeal by way of special leave in Supreme Court.

The learned senior Counsel appearing for the Appellant while questioning the legality and correctness of the view taken by the two Courts below contended that action impugned by the Appellant in their writ petition, namely, "forfeiture of the deposit of money by PNB" is not one of the measures specified under Section 13(4) of the SARFAESI Act and, therefore, provisions of Section 17 of SARFAESI Act are not attracted so far as the Appellant's right to challenge such action under Section 17 before the DRT is concerned.

Thus, the short question that arise for consideration in this appeal is whether the High Court was justified in holding that the remedy of the Appellant lies in challenging the action of the secured creditor in forfeiting the deposit by filing an application under Section 17 of the SARFEASI Act before the DRT or the remedy of auction purchaser is in filing the writ petition under Articles 226 and 227 of the Constitution of India to examine the legality of such action.

The Supreme Court has dismissed the Appeal and observed that an action of PNB in forfeiting the deposit made by the Appellant is a part of the measures taken by it under Section 13(4) of SARFAESI Act. The Appellant being fall within the expression "any person" as specified under Section 17(1) of SARFAESI Act is entitled to challenge the action of the PNB before the DRT by filing an application under Section 17(1) of the SARFAESI Act.

Thus, the Writ Court as also the Appellate Court were justified in dismissing the Appellant's writ petition on the ground of availability of alternative statutory remedy of filing an application under Section 17(1) of SARFAESI Act before the concerned Tribunal to challenge the action of the PNB in forfeiting the Appellant's deposit under Rule 9(5). In view of the above, present court do not find any ground to interfere with the impugned judgment of the High Court.

The Appellant is, accordingly, granted liberty to file an application before the concerned Tribunal (DRT) under Section 17(1) of the SARFAESI Act, which has jurisdiction to entertain such application within 45 days from the date of this order. In case, if the Appellant files any such application, the Tribunal shall decide the same on its merits in accordance with law uninfluenced by any of the observations made by this Court and the High Court in the impugned judgment. With these observations and liberty granted to the Appellant, the appeal fails and is accordingly dismissed.

Relevant

under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Tags : Alternative Remedy SARFAESI Act DRT

Share :

Top

Income Tax Appellate Tribunal

Income-tax Officer Vs. Somavamsha Sahasrajuna Kshatriya Credit Co-operative Society.

MANU/IL/0147/2017

27.11.2017

Direct Taxation

Credit co-operative society providing credit etc. to its members cannot be treated as a ‘co-operative bank’ carrying on banking activities

The Assessee, in the present case, is a credit co-operative society who provided credit/loan facilities to its members and accepted deposits from them. The Assessee had filed its return of income and declared its total income after claiming deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961 (Act). The return was processed under Section 143(1) of the Act and the case was subsequently taken up for scrutiny. The Assessing Officer (‘AO’), on examination of the Assessee’s claim for deduction under Section 80P(2)(a)(i) of the Act, was of the view that the Assessee is in fact a bank as per Section 5 (ccv) of the Banking Regulation Act,1949 and therefore, as per the provisions of Section 80P(4) of the Act, it was not entitled to the deduction claimed under Section 80P(2)(a)(i) of the Act. The assessment was accordingly concluded under Section 143(3) of the Act.

Being aggrieved, the Assessee preferred an appeal before the CIT(A) and in support of its claim for Section 80P(2)(a)(i) deduction, relied on the decision of the Karnataka High Court wherein the Hon’ble High Court had dismissed the Revenue’s appeal on the very same issue. The CIT(A) after relying on the said judgment of Karnataka High Court has allowed the Assessee’s claim for deduction under Section 80P(2)(a)(i) of the Act.

Aggrieved by the order of the CIT(A), Revenue has filed the present appeal before this Tribunal. The question for consideration and adjudication before this Tribunal is that whether the Assessee, admittedly a credit cooperative society engaged in providing credit facilities, etc., to its members, is entitled to be allowed deduction claimed under Section 80P(2)(a)(i) of the Act or whether the said claim is hit by the provisions of sec.80P(4) of the Act.

The Tribunal observed that the issue stands squarely covered in favour of the Assessee and against Revenue, by the decision of the coordinate bench of this Tribunal in its order in ITA No.1574/Bang/2012 dated 19/12/2014 in the Assessee’s own case for Assessment Year 2009-2010, wherein following the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sanagha Niyamitha in ITA No.5006/2013 dated 5/2/2014, it was held that a co-operative society providing credit etc., to its members cannot be treated as a ‘co-operative bank’ carrying on banking activities. Similar view was upheld by a co-ordinate bench in the Assessee’s own case for Assessment Year 2010-2011 also.

Subsequently, the Hon’ble Karnataka High Court in the Assessee’s own case for another assessment year, while considering the very same issue of the Assessee’s claim has dismissed Revenue’s appeal and thereby affirmed the Tribunal’s order in the Assessee’s own case for Assessment year 2009-2010. In the result, Revenue’s present appeal for Assessment Year 2011-2012 also dismissed.

Relevant

Section 80P(2)(a)(i) of the Income-tax Act, 1961

Tags : Credit Cooperative Society; Cooperative Bank Deduction

Share :

Top

Income Tax Appellate Tribunal

ITO vs. Ms. Vanaja Sunder Iyer

MANU/IU/0733/2017

27.11.2017

Direct Taxation

Profits on sale of shares were liable to taxed under the head capital gains

This appeal has been filed by the Revenue for challenging the order of CIT(A) for treating the profit earned by the Assessee from the sale of shares under the head of capital gains.

As per the facts, the Assessing Officer, after analyzing the transactions made by the Assessee of purchase and sale of shares, observed that the period of holding of shares indicate that the motive of the transaction is to earn profit and not capital appreciation. Thus, the profit earned from the transaction is liable to be treated as business income. However, on appeal, CIT(A) decided the matter in the favour of the Assessee and allowed the amount of profit to be treated as capital gain. Being aggrieved, Revenue approached the present Tribunal.

The present bench found that the CIT(A) after applying proposition of law laid down by Bombay High Court in the case of Gopal Purohit and applying CBDT Circular No.4/2007 dated 15/06/2007 held that profits on sale of shares were liable to taxed under the head capital gains and dismissed the appeal after ruling that profit declared by the Assessee was correctly treated by CIT (A) as capital gain liable to be taxed under the head Capital Gains.

Tags : Capital Gains Sale of shares

Share :

Top

High Court of Chhattisgarh

Chhattisgarh State Electricity Board Vs. Chhattisgarh Human Rights Commission and Ors.

MANU/CG/0651/2017

07.11.2017

Human Rights

State Human Rights Commission is only a recommendatory body and has no power and jurisdiction to direct payment of compensation.

The present petition is filed by the Chhattisgarh State Electricity Board (Petitioner) for challenging the order passed by the Chhattisgarh Human Rights Commission (Commission), whereby the Commission has directed the petitioner to pay the compensation towards illegal and forceful installation of six electricity polls and electricity line in the agricultural field owned by Respondent No.4.

The learned counsel appearing for the petitioner has submitted that the Commission has no jurisdiction and authority to grant compensation and it can only make a recommendation under Section 19(a) of the Protection of Human Rights Act, 1993 (Act of 1993) to the concerned authority or Government to make payment of compensation and damages to the complainant or to the victim or the members of his family as the Commission may consider necessary.

The Court after careful perusal of various provisions and precedents decided by the Supreme Court as well as the High Courts has observed that after completion of an inquiry if the Commission finds that inquiry discloses the violation of human rights it may recommend to the concerned Government or authority to make payment of compensation or damages to the complainant, but the Commission has no authority and jurisdiction to pass an order directing payment of compensation. The Human Rights Commission is a recommendatory body and it only makes a recommendation to the concerned authority or Government for enforcement of its recommendation. It has no adjudicatory jurisdiction to pass an order directing payment of compensation. Therefore, the impugned order is vulnerable to the extent of directing payment of compensation and hereby set aside. The said order will be treated only as a recommendation of the Chhattisgarh Human Rights Commission. However, it will open to the petitioner to consider the said recommendation in accordance with law. The writ petition is allowed to the extent sketched hereinabove.

Relevant

Section 19(a) of the Protection of Human Rights Act, 1993

Tags : Human Rights Commission Compensation Recommendatory Authority

Share :