Supreme Court

Shriram Manohar Bande Vs. Uktranti Mandal and Ors. (Neutral Citation: 2024 INSC 337)

MANU/SC/0349/2024

25.04.2024

Service

Mere non-communication of acceptance of resignation to the employee would not render termination invalid

In the facts of present case, Respondent No. 1 is an educational society. The Appellant came to be appointed as an Assistant Teacher and was discharging his duties accordingly. The Appellant tendered his resignation from the said post on 10th October, 2017. However, vide letter dated 25th October, 2017, he withdrew his resignation. Appellant received a letter stating that he was relieved from his service. Against his termination, the Appellant approached the Tribunal constituted under Section 8 of the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977, and Rules framed thereunder (MEPS Act and Rules).

The Tribunal concluded that, the Appellant had indeed withdrawn his resignation lawfully and the Respondents with a mala fide intent had fabricated the documents i.e., the resolutions of the Committee wherein the resignation was accepted. Accordingly, the Tribunal vide judgment set aside the termination of the Appellant. Being aggrieved, the Respondents approached the High Court. The High Court concluded that, there was material on record to show that the resignation tendered by the Appellant was indeed accepted as per the resolution passed by Respondent No. 2 and there was statutory compliance with the requirements under the MEPS Act and Rules. High Court set aside the findings of the Tribunal.

The document in question was placed before the Tribunal at the stage of evidence, which is an admitted fact. Hence, it was wholly erroneous for the Tribunal to conclude that merely because the document and records were in possession of the management, they would have prepared or fabricated such record. The resolution dated 13th October, 2017 is not a 'manufactured' document.

In light of the intent and interpretation of the relevant Section 7 of MEPS and Rule 40 of the Rules, present Court conclude that, the High Court was right in holding that mere non- communication of acceptance of resignation to the employee would not render the termination invalid.

As per service jurisprudence, the employment is terminated from the date on which the letter of resignation is accepted by the appropriate authority. The Appellant, in this case, tendered his resignation letter on 10th October, 2017 and this resignation letter came be accepted on 14th October, 2017, hence the date of termination of the services of the Appellant for the purpose of adjudication would be 14th October, 2017.

Section 7 of the MEPS Act and Rule 40 of the Rules does not impose any guidelines for acceptance of the resignation upon the management. Therefore, the contention raised by the Appellant about withdrawal of resignation before communication of its acceptance does not hold water. There is no infirmity with the impugned judgment and it does not merit any interference. Appeal dismissed.

Tags : Termination Acceptance Legality

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Supreme Court

Global Credit Capital Limited and Ors. Vs. Sach Marketing Pvt. Ltd. and Ors. (Neutral Citation: 2024 INSC 340)

MANU/SC/0348/2024

25.04.2024

Insolvency

Amounts covered by security deposits under the agreements constitute financial debt

Present appeals take exception to judgments and orders passed by the National Company Law Appellate Tribunal (NCLAT). The issue involved is whether the first Respondent is a financial creditor within the meaning of Sub-section (7) of Section 5 of the Insolvency and Bankruptcy Code, 2016 (IBC).

Present Court have no hesitation in concurring with the NCLAT's view that, the amounts covered by security deposits under the agreements constitute financial debt. As it is a financial debt owed by the first Respondent, Sub-section (7) of Section 5 of the IBC makes the first Respondent a financial creditor.

There cannot be a debt within the meaning of Sub-section (11) of Section 5 of the IB Code unless there is a claim within the meaning of Sub-section (6) of Section 5 of thereof. The test to determine whether a debt is a financial debt within the meaning of Sub-section (8) of Section 5 is the existence of a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The cases covered by categories (a) to (i) of Sub-section (8) must satisfy the said test laid down by the earlier part of Sub-section (8) of Section 5.

While deciding the issue of whether a debt is a financial debt or an operational debt arising out of a transaction covered by an agreement or arrangement in writing, it is necessary to ascertain the real nature of the transaction reflected in the writing. Where one party owes a debt to another and when the creditor is claiming under a written agreement/ arrangement providing for rendering 'service', the debt is an operational debt only if the claim subject matter of the debt has some connection or co- relation with the 'service' subject matter of the transaction.

The view taken by the NCLAT under the impugned judgments and orders is correct and will have to be upheld. Therefore, present Court confirms the impugned judgments. The Resolution Professional shall continue with the CIRP process in accordance with the impugned judgments. Appeals dismissed.

Tags : Financial creditor Provision Applicability

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High Court of Delhi

Ester Industries Ltd. Vs. Indus Polyfilms Specialists Pvt. Ltd. (Neutral Citation: 2024 : DHC : 3168)

MANU/DE/3008/2024

24.04.2024

Company

Winding up proceedings pending before High Courts, which are at a nascent stage ought to be transferred to the NCLT

The instant Company Petition has been instituted under Sections 433(e), 434 and 439 of the Companies Act, 1956 seeking winding up of the Respondent company and is predicated on the non-payment of outstanding dues amounting to Rs. 31,78,615 along with interest @ 18% per annum.

It is the case of the Petitioner company that, the Respondent-company failed to discharge its liability despite a notice having been issued under Section 138 of the Negotiable Instruments Act of 1881. Thereafter, in view of the fact that the Respondent company failed/neglected to discharge its liability, the petitioner company was constrained to serve a legal demand notice upon the respondent company under Section 434 of the Companies Act, 1956 calling upon them to repay the outstanding amount of Rs. 31,78,615 along with interest @ 18% per annum. However, despite issuance and service of the legal notice, the respondent company failed to repay the outstanding amount, and hence, the present petition was instituted.

Evidently, the Respondent-company has failed to pay its debt in the normal and ordinary course of its business, hence, the present petition has been filed. However, on a perusal of the record, it is borne out that this winding up petition has been a complete non-starter, and as of yet, no substantial orders have been passed in furtherance of the liquidation of the respondent company.

During the pendency of present proceedings, the Insolvency and Bankruptcy Code, 2016 as well as the Companies Act, 2013, have since been enacted. In view of this, it is the opinion of this Court that the present petition does not deserve to continue before this Court, and it would be appropriate for the same to be transferred to the National Company Law Tribunal.

In Citicorp International Limited v. Shiv-Vani Oil & Gas Exploration Services Limited, it was held that, winding up proceedings pending before High Courts, which are at a nascent stage and have not progressed to an advanced stage, ought to be transferred to the NCLT. Hence, the instant petition is transferred to the NCLT. Parties are directed to appear before the NCLT. Present company petition as well as pending applications are disposed of.

Tags : Outstanding dues Non-payment Winding up

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Customs, Excise and Service Tax Appellate Tribunal

Shri Pravesh Kumar Maurya vs. Commissioner of Central Excise and CGST, Allahabad

MANU/CN/0077/2024

24.04.2024

Service Tax

When the income arising from various activities stand reflected in public documents, there cannot be suppression or misstatement on part of Assessee

In facts of the present case, the demand was raised on the basis of third party information i.e. data revealed from ITR/Form 26-AS from Income Tax Department. On this basis, Show Cause Notice was issued alleging that, the Appellant had shown Income of Rs. 42,29,837 in his ITR but has not paid Service Tax on that amount.

The SCN was adjudicated vide Order-in-Original, by which the demand of Rs. 6,34,476 was confirmed and penalties were imposed under Sections 78, 77(1)(a), 77(2), 77(1)(c) and 70 of the Finance Act,1994.

The service receiver PVVNL deposited the entire service tax amount on the works contract services provided by the Appellant. Present Tribunal in the case of Navyug Alloys Pvt. Ltd., has held that once tax is already paid on the services, it was not open to the Department to confirm the same against the Appellant in respect of the same services, since after accepting the said tax from service recipient, Revenue did not refund the same. The Appellant has submitted that the service tax liability on works contract services provided by him to PVVNL was discharged by the service recipient under reverse charge mechanism. If the same service tax is once again confirmed then it will amount to double taxation.

The demand is barred by limitation having been raised by invoking the longer period. The Revenue picked up the figures from the Income Tax Return maintained by the Assessee. The Income Tax Return has been held to be public documents by various decisions and it stands concluded that when the income arising from various activities stand reflected in the said public documents, it cannot be said that there was any suppression or misstatement on the part of the Assessee so as to invoke the longer period of limitation.

Reference can be made to Tribunal's decision in the case of C.S.T., New Delhi v. Kamal Lalwani, laying down that extended period is not invocable if services rendered are reflected in Balance Sheet and Income Tax returns and no evidence stands produced that non-payment of duty was due to any mala fide intention. Reference can also be made to Hon'ble Allahabad High Court's decision in the case of Commissioner of Central Tax v. Zee Media Corporation Ltd. The Hon'ble High Court observed that the SCN itself shows that every detail was maintained by the assessee in usual course of business, the ingredients of proviso to Section 73(1) of the Finance Act, 1994, establishing any suppression of facts to evade payment of tax cannot be held to be present and invocation of extended period of limitation was not correct on the part of the Revenue. The impugned order is set aside. Appeal allowed.

Tags : Demand Penalty Legality

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High Court of Delhi

Bajaj Plasto Industries and Ors. Vs. Pendo Plast Pvt. Ltd. (Neutral Citation: 2024 : DHC : 3152)

MANU/DE/3007/2024

23.04.2024

Civil

If parties to a dispute agree to choose jurisdiction of a particular Court, that Court alone has jurisdiction to decide the dispute

The limited question that arises in the present petition filed under Article 227 of the Constitution of India, 1950 invoking the supervisory jurisdiction of this Court is whether the Commercial Court at Delhi has jurisdiction to try the commercial suit filed by the Respondent. The Trial Court dismissed the application filed by the Petitioner no.1 under Section 11 of the Commercial Courts Act read with Order VII Rule 10 and 11 and Section 151 of Civil Procedure Code, 1908 ("CPC"), on the ground that the plaint revealed a part of cause of action has arisen in Delhi, that the Petitioner no.1 was working for gain in Delhi and passed the impugned order.

It is settled law that, if parties to a dispute agree to choose jurisdiction of a particular Court, that Court alone has jurisdiction to decide the dispute. Since the agreed jurisdiction is of Courts at Bahadurgarh, therefore, the said Court has jurisdiction to adjudicate the case at hand.

Where two or more Courts have jurisdiction under CPC to try a suit, an agreement between the parties that the dispute between them shall be tried in any one of the Courts is not contrary to public policy. Through a conjoint reading of Section 20 of CPC and Sections 23 and 28 of Contract Act, 1872, there is a scope for partial restriction by limiting the parties to take recourse to one forum. Exclusion of jurisdiction clauses occupy this space between absolute restraint and convenience based forum.

In Hakam Singh v. Gammon (India) Ltd., it is observed that when two Courts have the jurisdiction to entertain a dispute, a choice of one by agreement, would not amount to restraint of legal proceedings or violate public policy under Sections 28 and 23 of the Contract Act. Further, the Supreme Court clarified that the parties cannot by way of an agreement confer jurisdiction on a Court that would otherwise not have jurisdiction in law to adjudicate the dispute.

Admittedly, a part of cause of action, in the present case, arises within the territorial jurisdiction of both the Courts i.e. at Bahadurgarh and Delhi. The intention of the parties can be inferred from use of the exclusion of jurisdiction clause as well as the places where the payments were to be received. From the printed invoices, the Respondent has exhibited its intention that in case of any dispute with respect to the invoices raised, the jurisdiction of Courts at Bahadurgarh, Haryana, is to be invoked. Furthermore, as specifically mentioned on the invoices, the payments of the said invoices were to be received at Bahadurgarh, Haryana.

The intention of the Petitioners is reinforced by the fact that the said invoices have been duly acknowledged by the Petitioners. Also, they have accepted the jurisdiction of Bahadurgarh Courts by filing an application under Order VII Rule 11 of CPC emphasising that the Courts at Bahadurgarh have the jurisdiction. The Respondent, therefore, cannot try and wriggle out of the ouster of jurisdiction clause printed on its own invoices to discard the jurisdiction of Bahadurgarh Courts. The impugned order is set aside. Petition allowed.

Tags : Jurisdiction Parties Intention

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Customs, Excise and Service Tax Appellate Tribunal

Ambika Cotton Mills Ltd vs. Commissioner of GST & Central Excise

MANU/CC/0123/2024

23.04.2024

Excise

When the assessee has not taken the benefit of the CENVAT credit, there is no liability to pay interest

The Appellants are manufacturers of cotton yarn which they are clearing on payment of duty under Notification No. 29/2004-CE and also availing full exemption under Notification No. 30/2004-CE both dated 9th July, 2004. They are availing CENVAT credit facility under Rule 3 of CENVAT Credit Rules, 2004 on inputs, capital goods and service tax paid on input service and utilizing the same in the manufacture of both exempted and dutiable goods.

On verification of CENVAT credit documents, it was noticed that, the Appellant had not reversed the proportionate input credit relating to the exempted goods cleared every month properly during the periods from November 2007 to January 2011 and from November 2008 to December 2010 as required under erstwhile Rule 6(3)(a) and Rule 6(3)(ii) of CENVAT Credit Rules and on being pointed out by the officers of Central Excise, the Appellant accepted the liability and reversed the ineligible CENVAT credit of Rs.58,965 availed on inputs. However, the appellant did not pay the interest on the wrongly availed CENVAT credit.

Hence, Show Cause Notices were issued proposing to recover the interest amount and for imposition of penalty under Section 11AC of the Act. The adjudicating authority confirmed the demands of interest amount of Rs. 25,025 and Rs. 64,668 respectively and imposed penalty of Rs.58,965 and Rs. 4,26,217 under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act. In appeal, Commissioner (Appeals) upheld the orders.

The appellant's claim that sufficient balance was available in CENVAT Credit account to reverse the credit and no pecuniary benefit was derived in any manner has not been contested by Revenue. Under the CENVAT credit scheme, there was no co-relation of the raw material and the final product, and the manufacturer is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. The government has not been deprived of duty on the date, it became due as sufficient credit was available to take care of the debits made even without taking the disputed credit into account.

The Hon'ble High Court of Karnataka in Commissioner of Central Excise & Service Tax, LTU, Bangalore vs. Bill Forge (P.) Ltd. has examined the judgment of the Supreme Court in Union of India vs. Ind-Swift Laboratories Ltd. and distinguished the same. High Court held that, when the assessee has not taken the benefit of the CENVAT credit, there is no liability to pay interest. Once the credit entry was reversed, it is as if the CENVAT credit was not available. In the light of the law as stated in the judgment, no interest is payable in the circumstances and the question of imposition of a penalty does not arise. The impugned orders are hence set aside. Appeals allowed.

Tags : Interest Penalty Legality

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