Memorial Submission-Companies Act,1956 Section 25

8/12/2019 Memorial Submission-Companies Act,1956 Section 25

http://slidepdf.com/reader/full/memorial-submission-companies-act1956-section-25 1/21

GUJARAT NATIONAL LAW U NIVERSITY

I NTRA-MOOT COURT COMPETITION

In the Hon’ble Supreme Court of India

STATE OF MAHARASHTRA (APPELLANT)

V.

TEXTILES TRADE PROMOTION COUNCIL

(R ESPONDENT)

WRITTEN SUBMISSION O N BEHALF OF R ESPONDENT (R-24)

Case no....... of 2014



2 | P a g e

TABLE OF CONTENTS

1. Index of Authorities………………………………………………………………….……..3

2. Table of Cases……………………………………………………………………………...4

3. List of Abbreviations and Statutes Referred……………………………………………….5

4. Statement of Jurisdiction………………………………………………………………...…6

5. Statement of Facts………………………………………………………………………….7

6. Issues Raised………………………………………………………………………………..8

7. Summary of Arguments……………………………………………………………….........9

8. Arguments Advanced…………………………………………………………….……….11

9. Prayer………….……………………………………………………………………….….



3 | P a g e

INDEX OF AUTHORITIES

BOOKS REFERRED

Basu DD, „Commentary on the Constitution of India Volume 5‟ (2008), 8 th Edition,

Lexis Nexis, Butterworths Wadhwa, Nagpur





Shukla VN, „ Constitution of India‟ (2103), 12 th Edition, Eastern Books Company,

Lucknow



4 | P a g e

TABLE OF CASES

Pritam Singh vs. State- AIR 1950 SC 169

Kapildeo Singh vs. State Emperor- AIR 1950 FC 80

Bihar Legal Support Society vs. Chief Justice of India- AIR 1987 SC38

Dhakeswari Cotton Mills vs. CIT-(1954) 26 ITR 775 (SC)

Dunlop India Ltd. vs. Union of India-1977 AIR 597

Shaw Wallace vs. Workmen- AIR 1978 SC 977

State of Orissa vs. Bina Pani Devi-[1967] 2 S.C.R. 625.

A.K. Kraipak vs. Union of India-[1970] 1 S.C.R. 457

Koshy George v. The University of Kerala-[1969] 1 S.C.R. 317,

Sumer Chand Jain v. Union of India

Indian National Congress v. Institute of Social Welfare- AIR 2002 SC 2158

Cooper vs. Wilson-(1937) 2 KB 309

Queen vs. Dublin Corporation-(1878) 2 Ir. R. 371

Rex vs. Electricity Commissioners-(1924) 1 KB 17

Schmidt v. Secretary of State for Home Affairs-[1968] 112 AC 690

Maneka Gandhi v. Union of India-(1978)1 SCC 248

Bar Council of India vs. High Court Kerala-(2004) 6 SCC 311

Calico Mills Ltd. v. State of Madhya Pradesh- AIR 1961 MP 257

Geeta enterprises v. State of Uttar Pradesh and Ors- AIR1983SC1098

BSNL v. Union of India- AIR 2006 SC 1383

Federation of Hotel & Restaurant Association of India Vs. Union of India -1989 178 ITR

97(SC)

Larsen & Toubro Vs. Union of India- (1993) 1 SCC 365

Godfrey Phillips (I) Ltd.& Anr. vs. State of U.P.& Ors.- 2005 AIR 1103, 2005 (1)

SCR 732



5 | P a g e

STATUTES REFFERED

Bombay Entertainment Duty Act, 1923

LIST OF ABBREVIATIONS

1. &…………………………….....................................................................................and

2. AIR………………………………......................................................All India Reporter

3. Art. ……………………………….......................................................................Article

4. Corp………………………………...............................................................Corporation5. Hon‟ble ……………………….........................................................………..honorable

6. J……………………………….............................................................................Justice

7. Ltd. …………………….............................................................………….........Limited

8. Para. ………………….........................................................……………........paragraph

9. Pvt.........................................................................................................................Private

10. Pg. ………………………………............................................................................Page

11. Rs………………………………..........................................................................Rupees

12. s ……………………………..............................................................…..............section

13. SC………………………................................................……….............Supreme Court

14. SCC…………………......................................……………..........Supreme Court Cases

15. Supp……………………………...............................................…..........Supplementary

16. v. ………………………………...........................................................................Versus



6 | P a g e

STATEMENT OF JURISDICTION

The State of Maharashtra has approached The Hon‟ble Supreme Court of India under Article

136 1 of the Constitution of India by filing a Special Leave Petition. The Respondent submit

the Jurisdiction of the Hon‟ble Court.

1 Article 136 in The Constitution Of India 1949,Special leave to appeal by the Supreme Court

(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to

appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by

any court or tribunal in the territory of India

(2) Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or made by any

court or tribunal constituted by or under any law relating to the Armed Forces.



7 | P a g e

STATEMENT OF FACTS

Textiles Trade Promotion Council (Respondent) is a company incorporated under

Section 25 of the Companies Act, 1956 i.e Companies established with no profit

motive.

Company organizes annual exhibitions titled the International Apparel show which

provides a platform for interaction between all traders. The organizers charge high

entry fee in order to encourage only serious business visitors to attend the shows. The

exhibition generates lot of revenue to the state and nomial income is earned by the

organizers. The Company paid lot of entertainment duty to the Appellant under protest since an

No objection certificate was not issued until the duty was paid to the Collector.

IAS 2014 was approaching, the respondent wanted to ensure no last minute problem

and applied for the NOC and made it clear to the State that no Duty was payable, but

the Police authorities instituted on the NOC from the Collector. Since the exhibition

was fast approaching the respondent paid the duty again on protest.

Through a letter, the Respondent made an application to the Additional collector to

refund the earlier deposits since it was paid under protest as the said act was not

applicable on the exhibition.

The Additional Collector without hearing the Company passed an order which

directed the Company to pay the due of the exhibition which happened in 2013 and

was given 7 days to comply with the orders otherwise necessary step would be taken

to ensure the payment.

The Respondent approached the High Court against the said order where the High

Court gave an order in the favour of the respondent

Hence the State has approached this Hon‟ble Court



8 | P a g e

ISSUES RAISED

1. Special Leave Petition under article 136 is not maintainble in the Supreme Court of

Indi this case

2. Was the Assistant Collector under an obligation to give a hearing to the Company. If,

yes, whether such denial of such opportunity goes to the root of the matter and vitiates

the proceedings?

3. Does the Trade exhibition organised by the Respondent falls under the definition of

the Entertainment as defined under the Act and is the Company liable to payable to

duty of such exhibition?



9 | P a g e

SUMMARY OF ARGUMENTS

Issue No 1: Special Leave Petition under article 136 is not maintainable in the Supreme

Court of India this case

It is the humble submission of the Respondents before this Hon‟ble Court that the present

petition seeking Special Leave under Article 136 is not maintainable. The Supreme Court

made it abundantly clear that it can only exercise this wide discretionary power sparingly and

in exceptional cases. If any mistake of law is brought to the notice of the Court or it finds that

there has been a grave miscarriage of justice, the Court can exercise this wide discretionary

power that has been granted to adjudicate and decide upon the matter. The Respondents

contend that the dispute was satisfactorily decided upon by the High Court and that there are

no grounds on which the petition of the Petitioners can be maintained

Issue No 2: Was the Assistant Collector under an obligation to give a hearing to the

Company. If, yes, whether such denial of such opportunity goes to the root of the matter and

vitiates the proceedings?

The Respondent submits to the Hon‟ble Court that the Assessing office under the Bombay

Entertainment Duty Act, 1923, has not followed the due process of the law. The Assessing

officer has failed to give notice to the respondent and proceed on the merits of the case. It is

rudimentary principle of law that the every person should be heard before being condemned

or punished , which has not followed in this particular case. The Respondent are denied an

opportunity of being heard by the statutory authority which is the mandatory obligation of the

Collector under Section 4B of the 1923 act. The act of the collector in this particular case

goes against various precedents of the this Hon‟ble Court. The respondent submits that

Collector being mandated under the act for collection of entertainment duty has failed in the

primary obligation of issuing notice to the Respondent, which goes to the root of this matter.



10 | P a g e

Issue No 3: Does the Trade exhibition organised by the Respondent falls under the definition

of the Entertainment as defined under the Act and is the Company liable to payable to duty of

such exhibition.



11 | P a g e

ARGUMENTS ADVANCED

Issue No1. Special Leave Petition under article 136 is not admissible in the Supreme

Court of Indi this case.

It is the humble submission of the respondents before the Hon‟ble Supreme Court is that the

present SLP under Art. 136 of the Constitution is not admissible. The jurisdiction of this

Hon‟ble Court can be invoked only if the matter involves a “substantial legal question”, i.e.,

if there is a constitutional or legal issue upon which this Hon‟ble Court deems it necessary to

re-adjudicate. The scope of appeal under Art. 136 is restricted to the aforementioned, and the

Court is vested with the discretionary power to grant Special Leave or refuse it.

The present case pertains to alleged non-payment of entertainment tax and it is the contention

of the Respondents that it does not involve a substantial legal or constitutional question.

Entertaining the present case would go against the stand of this Hon‟ble Court in which it

stated as follows: “The court will not grant special leave, unless it is shown that exceptional

and special circumstances exist, that substantial and grave injustice has been done and that

the case in question presents features of sufficient gravity to warrant a review of the decision

appealed against”.

1. The Respondent humbly submits before this Hon‟ble Court that it may not grant

special leave to appeal under the plea to adjudicate and decide upon the dispute at

hand as the Respondents were not afforded with an opportunity to be heard by the

Additional Collector at the time of passing order and as a result, did not meet the ends

of justice.

2. In the case of Pritam Singh v. State2, it was observed that the wide discretionary

power conferred upon this Hon‟ble Court can be exercised sparingly and in

exceptional cases. It is the contention of the Respondents that the present case does

not involve such an exceptional question of law for the Hon‟ble Supreme Court to

delve interfere and grant special leave.

3. The first instance of the principles being laid down for the grant of Special Leave can

be seen in the case of Kapildeo Singh v. King Emperor 3 adjudicated upon by the

2 AIR 1950 SC 169

3 AIR 1950 FC 80



12 | P a g e

Federal Court. Though this Hon‟ble Court is not bound by the judgments of the

Federal Court, the principles provide us with an understanding as to the circumstances

under which Special Leave to Appeal can be granted. It was stated in the

af orementioned case that “exercise of prerogative takes place only where it is shown

that injustice of a serious and substantial character has occurred” or in a situation

where there issue pertaining to admission of improper evidence by a lower court. It is

abundantly clear from the facts of the present case that no grave injustice has been

meted out to the Appellants and neither has there been admission of improper

evidence against the Appellants. Thus, the Respondent contends present petition is not

maintainable.

4. The purpose and scope of Article 136 was clarified by the Hon‟ble Supreme Court in

the case of Bihar Legal Support Society v. Chief Justice of India4. It was held that the

extraordinary jurisdiction of the Supreme Court under Article 136 could only be

invoked for the purpose of correcting a grave miscarriage of justice, and if the

Supreme Court found that such injustice had been meted out, it would grant special

leave to adjudicated and decide the case. In the present case, there has been no such

injustice meted out by the Hon‟ble High Court in its order. In fact it has only

corrected the injustice meted out by the Additional Collector. Thus, it provides no

scope for appeal.

5. In several cases, including Dhakeswari Cotton Mills v. CIT5 and Dunlop India Ltd. v.

Union of India6, it has been made abundantly clear that the Hon‟ble Supreme Court

that under Art. 136, the Supreme Court does not interfere with the current finding

unless these findings are vitiated by errors of law or if the conclusion reached by the

lower courts regarding the jurisdiction concerning the supervising of functioning of

these bodies. However, in the present case there has been no error of law and neither

has there been a mistake in assuming jurisdiction and thus, this Petition is not

maintainable.

6. The Hon‟ble Supreme Court has also stated in the case of Shaw Wallace v. Workmen 7

that its jurisdiction can only be invoked when there has been manifest injustice meted

out, a fundamental legal error or perverse finding of facts. In the present case neither

of the above requirements are met. Thus, the present case is not maintainable.

4 AIR 1987 SC38

5

(1954) 26 ITR 775 (SC)6 1977 AIR 597

7 AIR 1978 SC 977



13 | P a g e

7. The Hon‟ble Supreme Court, in general, does not interfere with the concurrent

findings of a Tribunal or a High Court unless there is a mistake of law or omission of

some important piece of evidence from consideration. In the present case, neither of

the above criteria have been fulfilled and thus, in light of it, there is no ground for

maintainability.

In the light of the above contentions, the Respondents respectfully submit that the present

petition is not maintainable.



14 | P a g e

Issue No 2: Was the Assistant Collector under an obligation to give a hearing to the

Company. If, yes, whether such denial of such opportunity goes to the root of the matter and

vitiates the proceedings?

The Respondent submits to the Hon‟ble Court that the Assessing office under the Bombay

Entertainment Duty Act, 1923, has not followed the due process of the law. The Assessing

officer has failed to give notice to the respondent and proceed on the merits of the case. It is

rudimentary principle of law that the every person should be heard before being condemned

or punished , which has not followed in this particular case. The Respondent are denied an

opportunity of being heard by the statutory authority which is the mandatory obligation of the

Collector under Section 4B of the 1923 act. The act of the collector in this particular case

goes against various precedents of the Hon‟ble Court. The respondent submits that Collector

being mandated under the act for collection of entertainment duty has failed in the primary

obligation of issuing notice to the Respondent, which goes to the root of this matter.

Respondent rely on the State of Orissa v. Bina Pani devi8 where the court held that .

“It is true that the order is administrative in character, but even an admini strative order

whi ch involves civi l consequences as already stated must be made consistently with the rules

of natural justice after informing the first respondent of the case of the State, the evidence in

support thereof and after giving an opportunity to the first respondent of being heard and

meeting or explaining the evidence.”

The respondent submits that the Court gave effect the principle of natural justice wherever

the matter had “civil consequences”. Respondent has not been given an hearing be fore the

statutory authority which has lot of civil consequences, since the respondent have been forced

to pay the entertainment duty .

The respondent also relies on A.K Kripak v. Union of India9 where this Hon‟ble Court held

that

“The aim of the rules of natural justice is to secure justice or to put it negatively to prevent

miscarriage of justice. These rules can operate only in areas not covered by any law validly

made. In other words they do not supplant the law of the land but supplement it. The concept

of natural justice has undergone a great deal of change in recent years. In the past it was

8 [1967] 2 S.C.R. 625.

9 [1970] 1 S.C.R. 457



15 | P a g e

thought that it included just two rules namely (1) no one shall be a judge in his own case

(Nemo debet esse judex propria causa) and (2) no decision shall be given against a party

without affording him a reasonable hearing (audi alteram partem). Very soon there- after a

third rule was envisaged and that is that quasi- j udicial enquir ies must be held in good

fai th, without bias and not arbitrarily or unreasonably.

But in the course of years many more subsidiary rules came to be added to the rules of natural

justice. Till very recently it was the opinion of the courts that unless the authority concerned

was required by the law under which it functioned to act judicially there was no room for the

application of the rules of natural justice. The validity of that limitation is now questioned. If

the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see

why those rules should be made inapplicable to administrative enquiries. Often times it is not

easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries.

Enquiries which were considered administrative at one time are now being considered as

quasi judicial in character. Arriving at a just decision is the aim of both quasi- judicial

enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry

may have more far reaching effect than a decision in a quasi-judicial enquiry”.

As observed by this Court in Suresh Koshy George v. The University of Kerala10

“the rules of natural justice are not embodied rules. What particular rule of natural justice

should apply to a given case must depend to a great extent on the facts and circumstances of

that case, the framework of the law under which the enquiry is held and the constitution of

the Tribunal or body of persons appointed for that purpose. Whenever a complaint is made

before a court that some principle of natural justice had been contravened the court has to

decide whether the observance of that was necessary for a just decision on the facts of that

case.”

In Sumer Chand Jain v. Union of India11 the Hon‟ble court held that when there is denial of

natural justice the entire matter is vitiated since the denial of basic principle goes the root of

the matter.

10 [1969] 1 S.C.R. 317,

11 Decision of the Supreme Court on 4

th May 1967



16 | P a g e

The Collector being an quasi- judicial authority under the statue has an obligation for giving

an opportunity of hearing to the respondent. The respondent relies on the Indian National

Congress v. Institute of Social Welfare12 where the court held that “the dictionary meaning of

“:the word quasi is 'not exactly' and it is just in between a judicial and administrative

function. It is true, in many cases, the statutory authorities were held to be quasi-judicial

authorities and decisions rendered by them were regarded as quasi judicial, where there were

contest between the two contending parties and the statutory authority was required to

adjudicate upon the rights of the parties. In Cooper vs. Wilson 13, it is stated that "the

definition of a quasi-judicial decision clearly suggests that there must be two or more

contending parties and an outside authority to decide those disputes…….. Thus, where there

is a lis or two contesting parties making rival claims and the statutory authority under the

statutory provision is required to decide such a dispute, in the absence of any other attributes

of a quasi-judicial authority, such a statutory authority is quasi- judicial authority.”

In Queen vs. Dublin Corporation14, it was held thus :

" In this connection the term judicial does not necessarily mean acts of a Judge or legal

tribunal sitting for the determination of matters of law, but for purpose of this question, a

judicial act seems to be an act done by competent authority upon consideration of facts and

circumstances and imposing liability or affecting the rights. And if there be a body

empowered by law to enquire into facts, makes estimates to impose a rate on a district, it

would seem to me that the acts of such a body involving such consequence would be judicial

acts."

In Rex vs. Electricity Commissioners15 Atkin L.J., stated that “when anybody of persons

having legal authority to determine questions affecting the rights of subjects and having the

duty to act judicially, such body of persons is a quasi-judicial body and decision given by

them is a quasi-judicial decision. The Commissioner, after making an enquiry and hearing the

objections was required to pass order.”

12 AIR 2002 SC 2158

13

(1937) 2 KB 30914 (1878) 2 Ir. R. 371

15 (1924) 1 KB 17



17 | P a g e

In summary, it can be said that from aforesaid decisions, where a statutory authority is

empowered to take a decision which affects the rights of persons and such an authority under

the relevant law required to make an enquiry and hear the parties, such authority is quasi-

judicial and decision rendered by it is a quasi-judicial act.

In Schmidt v. Secretary of State for Home Affairs16 approved.

“There can be no distinction between a quasi-judicial function and an administrative function

for the purpose of principles of natural justice. The aim of both administrative inquiry as well

as the quasi-judicial enquiry is to arrive at a just decision and if a rule of natural justice is

calculated to secure justice or to put it 'negatively, to prevent miscarriage of justice, it is

difficult to see why it should be applicable to quasi- judicial enquiry and not to administrative

enquiry. It must logically apply to both. It cannot be said that the requirements of fairplay in

action is any the less in an administrative enquiry than in a quasi-judicial one. Sometimes an

unjust decision in an administrative enquiry may have far more serious consequences than a

decision in a quasi-judicial enquiry and hence rules of natural justice must apply, equally in

an administrative enquiry which entails civil consequences.”

Finally, the respondent relies on the Maneka Gandhi v. Union of India17, the facts of the case

can be summarized in a nutshell, the appellant passport was impounded and was not given an

hearing by the statutory authority, who was under no obligation to give the appellant an

hearing but the 7 judge bench this Hon‟ble Court followed the “due process of law” which

was until not recognized by the Hon‟ble Court till then.

The respondent would like the take this court through the paragraphs of the land mark

Judgment

“Sections 5, 6 and 10 of the impugned legislation (Passpor t Act) must be tested even under

Art. 21 on canons of processual justice to the people outlined above. Hearing is obligatory-

meaningful hearing, flexible and realistic, according to circumstances' but not ritualistic and

wooden. In exceptional cases and emergency situations, interim measures may be taken, to

avoid the mischief of the passportee becoming an. escapee before the hearing begins. "Bolt

the stables after the horse has been stolen" is not a command of natural justice. But soon after

the provisional seizure, a reasonable hearing must follow, to minimise procedural prejudice.

And when a prompt final order is made against the applicant or passport holder the reasons

must be disclosed to him almost invariably save in those dangerous cases, where irreparable

injury will ensue to the State. A government which revels in secrecy in the field of people's

16 [1968] 112 AC 690

17 (1978)1SCC 248



18 | P a g e

liberty not only acts against democratic decency but busies itself with its own burial. That is

the writing on the wall if history were teacher, memory our mentor and decline of liberty not

our unwitting endeavor. Public power must rarely hide its heart in an open society and

system. Article 14 has a pervasive procession potency and versatile quality, equalitarian in its

soul and allergic to discriminatory diktats. Equality is the antithesis of arbitrariness.

The Legislature by making an express provision may deny a person the right to be heard.

Rules of natural justice cannot be equated with the fundamental rights. Their aim is to secure

justice and to prevent miscarriage of justice. They do not supplant the law but supplement it.

If a statutory provision can be read consistently with the principles of natural justice the court

should do so but if a statutory provision that specifically or by necessary implication excludes

the application of any rules of natural justice this Court cannot ignore the mandate of the

legislature or the statutory authority and read into the concerned provision the principles of

natural justice. To a limited extent it may be necessary to revoke or to impound a passport

without notice if there is real apprehension that the holder of the passport may leave the

country if he becomes aware of any intention on the part of the Passport Authority or the

Government to revoke or impound the passport but that itself would not justify denial of an

opportunity to the holder of the passport to, state his case before the final order is passed. The

legislature has not by express provision excluded the right to be heard.

We may commence the discussion of this question with a few general observations to

emphasise the increasing importance of natural justice in the field of administrative law.

Natural justice is a great humanising principle intended to invest law with' fairness and to

secure justice and over the years it has grown into a widely pervasive rule affecting large

areas of administrative action.”

Thus, the soul of natural justice is fair play in action' and that is why it has received the

widest recognition throughout the democratic world. In the United States, the right to an

administrative hearing is regarded as essential requirement of fundamental fairness. And in

England too it has been held that 'fair play in action' demands that before any prejudicial or

adverse action is taken against a person, he must be given an opportunity to be heard18.

18 Bar Council of India vs. High Court Kerala, (2004) 6 SCC 311



19 | P a g e

Considering various precedents as mentioned above and relying heavily on the Maneka

Gandhi Judgment, where the 7 Judge Bench of this Hon‟ble Court recognized the importance

of the Principles of Natural Justice, the Respondent humbly submits to this Court to held that

Order of the Collector void on the grounds of the statutory authority denied an opportunity of

hearing to the respondent which was an obligation under Section 4B (2) of the Bombay

Entertainment Duty Act,1923. The acts of theCollector has caused lot of “civil consequences”

to the Respondent which puts the Respondent into lot of hardships. Respondent being a

company who are incorporated under Section 25 of the Companies, which speaks about the

companies incorporated not for profit has been ordered to pay extra duty on the exhibition

conducted by us without giving an opportunity of hearing or notice, since the issue goes to

the root of the matter, the Respondent urge the Hon‟ble Court to dismiss the case and to

affirm the High Court decision.

.



20 | P a g e

Issue No 3.: Does the Trade exhibition organized by the Respondent falls under the

definition of the Entertainment as defined under the Act and is the Company liable to payable

to duty of such exhibition?



21 | P a g e

PRAYER

Wherefore in the lights of the statement of issues, arguments advanced and authorities cited

before the Honourable bench of the Hon‟ble Supreme Court of Indi,the Counsel for

Respondents most humbly prays to this Honourable this Court to adjudge and declare the

following:

1. The Stay order be vactated

2. Special Leave Petiton be dismissed

3. And Refund of the extra duty paid by the Respondent with interest as applicable.

. OR

May pass any order, decree or judgement in the light of Justice, Equity and Good Conscience.

For which the counsel for the Appellant shall pray duty bound as ever most humbly to this

Honourable Court.

All of which is most respectfully, humbly and equitably submitted and affirmed before this

Honourable Court.

Sd/-

Respondents

Date post:	03-Jun-2018
Category:	Documents
Upload:	srinjoy-bhattacharya
View:	216 times
Download:	0 times

Memorial Submission-Companies Act,1956 Section 25

Documents