IF auction of property to recover public dues fetches more than the amount payable, the balance should be paid to the owner. Failure to do so will make the entire auction sale illegal. All consequential proceedings are liable to be quashed, the Supreme Court stated last week in its judgment in Ram Kishun vs State of UP. A person had taken an agricultural loan from Union Bank of India which he could not refund. The bank initiated recovery proceedings against one of the guarantors. Since he also did not pay, his land was auctioned. The sale consideration was three times the outstanding dues. The balance was not returned to the owner. The court held that the auction was illegal. However, in this case, the buyer had been in possession of the property for nearly two decades while the litigation was going on and he had developed the land. Therefore, the court did not want to disturb his possession but allowed the original owner to apply to the collector for the excess amount.
No mercy for corrupt officials
The Supreme Court has stated that even if the bribe amount may be small, it cannot be condoned after 18 years because, “corruption corrodes the spine of a nation and in the ultimate eventuality makes the economy sterile.” Two officers of Bhavnagar city survey office had demanded Rs 50 from a person who wanted property records. They were arrested under the Prevention of Corruption Act and sentenced to rigorous imprisonment for six months. Their appeals were rejected both by the Gujarat High Court and the Supreme Court. The judgment, Narendra Trivedi vs State of Gujarat, observed that “corruption at any level does not deserve either sympathy of leniency.”
Tax deduction for oil companies
The Delhi High Court last week dismissed the writ petition of Joshi Technologies International Inc, a company incorporated in the US claiming benefit under Section 42 of the Income Tax Act, 1961in respect of the two Production Sharing Contracts (PSCs) both oil fields in Dholka and Wavell, Gujarat. Section 42 deals with a special provision for deductions in the case of business for prospecting, etc., for mineral oil under a contract with the government. The contract should be tabled in Parliament. It was not done in this case. The company’s claim for deduction was accepted in 2002, but in 2005 the revenue authorities stated that the benefit was given wrongly and demanded tax with several additions. The company argued that it was not its fault that the contract was not tabled in the House. It also contended that the benefit was given to 216 PSCs of various oil fields before initiation of New Exploration Licence Policy from January 1, 1999. The High Court rejected the contentions and stated that under the terms and conditions, as well as in the notes of the Ministry of Petroleum, no benefit under Section 42 was envisaged or promised.
Hindalco’s appeal dismissed
The Delhi High Court last week dismissed the challenge of Hindalco Industries, a part of Indo-Gulf Fertilizers and Chemicals Corporation Ltd (IGCL), to the arbitral award in its dispute with Indian Farmers Fertiliser Cooperative Ltd (IFFCO). The dispute was over the memorandum of understanding for long-term supply of phosphoric acid. The specifications and right to reject were contained in the memorandum. IGCL undertook to supply the goods to IFFCO. However, disputes arose when IFFCO allegedly stopped receiving the supplies. Each party alleged violation of the contract by the other, leading to arbitration by a three-member tribunal. The majority of them gave an award in favour of IFFCO, stating that it was IGCL which was in breach of the MoU. Its counter-claims were rejected. Therefore it moved the high court under the Arbitration and Conciliation Act. It affirmed the majority view of the tribunal which maintained that it was IGCL which was in breach of the contract, causing losses to IFFCO.
Prosecuting polluting authorities
The state pollution control board cannot prosecute officials of a municipal council without the sanction of competent higher authorities, the high court has ruled in the case, N S Brar vs Punjab Pollution Control Board. The board had filed criminal complaints under the Water (Prevention and Control of Pollution) Act against the president and executive officials of Abohar city for not installing any plant to treat the sewage discharge. By constructing a disposal work for collection and pumping of the sewage/sullage of the city for further discharging into the lined channel, it has violated the provisions of the Act. The officials were stated to be directly responsible, and therefore, liable to be prosecuted. The high court stated that they were “public servants” and therefore sanction under Section 197 of the Criminal Procedure Code is required to prosecute them. The complaints and summoning orders were thus quashed.