Brief case: Speeding up decades-old company case

A weekly selection of key court orders

Speeding up decades-old company case

The Supreme Court has passed a set of orders to speed up a company case which started in the Calcutta High Court in 1987. The apex court, in a recent order, wondered why, despite its several directions, the company judge could not dispose of the case, which has bloated over the three decades with several parties and applications. The Supreme Court asked the company judge to try to dispose of the case, Baranagore Jute Factory plc Mazdoor Sangh vs Barnagore Jute Factory plc, within four months, hearing it on a day-to-day basis. Adjournments will be granted for a short period, only if the party pays Rs 10,000. Disposing of three contempt petitions against top executives for disobeying orders, the court accepted apologies after imposing cost. If the parties do not cooperate with the company judge, he can report to the Supreme Court which will pass appropriate orders including appointment of a receiver for the company. The high court judge shall not accept any more applications, the order said.

VAT on sunflower oil cake upheld 

The Supreme Court has set aside the judgment of the Karnataka High Court and ruled that the by-product obtained after extraction of sunflower cake is subject to value added tax under the state law. In this case, State of Karnataka vs M K Agro Tech Ltd, the manufacturer of sunflower oil contended that de-oiled cake produced by employing solvent extraction process was not subjected to tax. Though the authorities below rejected the contention, the high court accepted it, leading to the appeal by the state. Interpreting the state law, the Supreme Court stated that there was no distinction between by-product, ancillary product, intermediary product or final product. The expressions used are “goods” and “sale” of such goods. Both these ingredients stand satisfied as de-oiled cakes are goods and the firm had sold those goods for valuable consideration. The major outcome of the solvent extraction plant is de-oiled cake which in itself is a marketable good having market value, the judgment said. 

Widow compensated despite limitation  

The Supreme Court exercised its special powers to grant Rs 7 lakh to the widow of a bus driver employed by the Jodhpur electricity distribution company who was electrocuted due to the negligence of the company. The driver was on top of the bus to take out luggage when the electric wire touched and killed him. The widow, Damini, claimed Rs 23 lakh as compensation, but she approached the civil court late while she should have claimed damages within two years. Her petitions were dismissed all along. But the Supreme Court awarded her the compensation, while making it clear that the order was made in the special facts of the case and it should not be treated as a precedent in other cases.

Local tax on SIM recharge coupons 

The Bombay High Court last week ruled that municipal corporations in Maharashtra can impose “local body tax” on SIM cards and recharge coupons for cell phones brought within their territories. But e-recharges made online cannot be taxed. The high court stated so while partly allowing the petition of Bharti Airtel Ltd vs Mira Bhayandar Municipal Corporation. Airtel contended that the SIM card by itself has no intrinsic value unless it is inserted in a phone device for telecom service. However, the court rejected the contention interpreting the state municipal corporations Act. It said that the definition of goods in the Act is wide enough to cover SIM cards and recharge coupons bought within the corporation limits. But, while downloading e-charge, no goods are bought within the territory and therefore the tax cannot be imposed on such transaction.

Fake driving licence no bar

The owner of a vehicle is not expected to conduct an enquiry at the time of employing a driver into the genuineness of his driving licence. All that he has to see is that the driver has showed him a driving licence which on the face of it looks genuine. “It makes no difference that the driving licence however is found to be fake,” the Delhi High Court observed last week in its judgment, HDFC Ergo General Insurance vs Rahul Cargo Ltd. In this case, the vehicle was damaged in an accident. The owner repaired it and then claimed the amount from the insurance company. It rejected the claim maintaining that the driving licence was fake. The trial court nevertheless ordered it to pay the insured amount. The insurance company moved the high court, but dismissing the appeal, the judgment stated that the owner had deposed that the driver had a valid driving licence, “which in law is sufficient”.   

Compensation for road rage victim 

A murder in a road rage could be an “accident” under the Employees Compensation Act, if the victim was killed during the course of duty. The insurer will have to pay compensation, the Delhi High Court stated last week in the case, Tata AIG General Insurance vs Sant Lal Sharma. In this case, Sunny, a young driver, was killed over a parking space dispute by another driver, Lucky, and his aide. The Compensation Commissioner directed Tata to pay Rs 9 lakh to the heirs. The company appealed to the high court arguing that Sunny was not employed by the owner and the incident could not be termed accident while on duty. Rejecting the contentions, the court observed that usually no appointment letter is issued to drivers of commercial vehicles in this country. Therefore, once it is for commercial use, it could be presumed that the driver was an employee. The definition of accident has also been expanded earlier to include murder while on duty. 

Penalty for imitating Ahuja equipment 

The Delhi High Court last week imposed Rs 3 lakh as punitive compensation on a Mumbai firm for violating the trade mark “Ahuja” belonging to Ahuja Radios. Ahuja Radios claimed that it is the leading manufacturer and exporter of public address systems and audio equipment since 1940 with the distinctive mark on their equipment. It alleged that the rival firm, HK Sound Electronics, imitated the trademark and sold inferior equipment in the same field, causing losses to it. The high court granted permanent injunction against the Mumbai firm using the similar-looking trademark and imposed the fine with 12 per cent interest. The judgment stated that the rival firm was guilty of passing off, calculated to take advantage of the reputation and goodwill of the Ahuja trademark. Its act was bound to cause deception and confusion leading to damage to the goodwill of Ahuja Radios.