The Telegraph
Since 1st March, 1999
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Corporate heartburn in court
ITC freezes on victory lap

Sept. 9: After fighting a legal battle for years against the highest tax demand raised by the government on any company ever, ITC Ltd today emerged the winner only to invite the judge's wrath for 'smuggling' the order out of the courtroom before it had been signed.

The Supreme Court quashed the Rs 803-crore excise tab the government had slapped on the cigarette-to-hotels conglomerate based in Calcutta 17 years ago.

But, in a bizarre turn, Justice Ruma Pal recalled the order, which she and fellow judge P. Venkatarama Reddi had still not signed when she learnt that an overexcited legal counsel for the company had spirited it out of the court without permission.

'Taking the judgment out of the court will be a costly affair,' Pal said while rejecting the profuse apologies made by the ITC counsel. 'We know under whose instigation it has been done.'

All the ITC counsel tendered an 'unconditional apology' and filed an affidavit. The company's lawyers claimed the copy of the judgment had become 'entangled' with the bunch of other case papers carried by an ITC counsel, who left the court to attend to other business.

In Calcutta, ITC officials were tightlipped. A company spokesperson said: 'Since the matter is sub judice, we cannot talk.'

Although Justices Pal and Reddi had heard the petition, the judgment was pronounced by Pal. Reddi was due to sign the order later in the day.

Pal had allowed the counsel for ITC to peruse the judgment, but made it clear that it had not been signed by the other judge and that 'certain corrections' had to be made on the last page of the order.

News that ITC had been reprieved reached the stock market soon after she read out the operative parts of the order. The scrip hit an intra-day high of Rs 1,098 around 11.20 pm.

Once Pal learnt the order had been leaked, she said it would be 'reserved' and added that further directives would be passed in consultation with Reddi.

The ITC share lost some of the gains it had made but still closed Rs 37.05 up at Rs 1079.85 on the National Stock Exchange.

Although the order stands 'reserved', legal experts do not believe the verdict will be reversed, though the court could slap stiff penalties.

If the order is not modified, the government will have to refund the Rs 350 crore the company had deposited between April 1996 and January 1997 pending the outcome of the case.

The excise claim arose from the charge that ITC had short-paid excise duties between 1983 and 1987.

Some 45 minutes to an hour after reading out the order, Pal realised that it was missing from her table. 'When the judge realised that the judgment was missing from her table, she called for it,' said a court official.

When the judgment was brought back, an angry Pal wanted to know how it had gone out of her court.

Several photocopies of the 40-page judgment were allegedly made within the Supreme Court and allegedly faxed to Mumbai.

'It is the judge-counsel confidence that has been broken with this incident,' a senior counsel said. He said 'normally' once the judgment is pronounced, the counsel 'just see the portions' within the courtroom.

'If this trust is broken, in future every judge may suspect the counsel,' he said.

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