Five elements in cheque bounce cases

The offence of issuing a cheque without sufficient amount in the bank has five ingredients and it is not necessary that all of the components should be present for prosecuting the drawer, the Supreme Court reiterated last week in its judgment in the case, Devendra Kishanlal vs Dwarkesh Diamonds Ltd. The five elements are drawing of the cheque, presentation to the bank, bouncing, giving notice to the drawer and his failure to make payment within 15 days. It is not necessary that all the above acts should be carried out in the same locality. It is possible that each of those five acts were done at different places. In this case, the business dealing was held at Mumbai, products were supplied from Mumbai to Delhi, cheques were handed over in Mumbai and were dishonoured by the bankers of Delhi and legal notice was issued from Mumbai. When the complaint was filed in Mumbai, it was rejected by the magistrate stating that he has no jurisdiction and Delhi was the right place. The sessions judge took a contrary view.

The Bombay High Court held that the session judge was wrong. On further appeal, the Supreme Court ruled that the high court was wrong and the sessions judge was right in holding that the Mumbai magistrate has jurisdiction, as some of the transactions occurred there.

Territorial curb on sale impractical

Imposing geographical restrictions on the sale of goods with disputed trade mark would be unjust, the Supreme Court remarked while dismissing the appeal of Satnam Overseas against the Delhi High Court judgment in its dispute with rival Sant Ram & Co. Satnam moved an application before the registrar with regard to the trade mark 'Kohinoor' rice and he allowed the product to be sold in six cities of Uttar Pradesh. The dispute was taken to the Delhi High Court, which allowed Sant Ram to sell its rice in the entire state. Satnam appealed to the Supreme Court, which rejected its argument that the high court was wrong. The judgment said that restricting the trademark to a few cities would create a lot of complications and litigation as to the exact boundary of a particular or district. It would also be impossible for Sant Ram to ensure that its products are not sold to retailers outside the six cities.

Tax on imported software

The Delhi High Court has dismissed the appeal of the director of income tax against the order of the Income Tax Appellate Tribunal, which had held that the consideration received by Infrasoft Ltd on grant of licences for use of software is not royalty within the meaning of Article 12(3) to the Double Taxation Avoidance Agreement between India and the United States of America. The company involved was an international software marketing and development arm of an international group. The holding company is Infrasoft Corporation based in US. Its branch in India imported certain packages in the form of floppy disks or CDs for private consultants in civil engineering and designs. Revenue authorities taxed the receipts on sale of licensing the software as "royalty". The company maintained that it was at best business profit. In a 175-page judgment, the high court held that "what has been transferred is not copyright or the right to use copyright, but a limited right to use the copyrighted material and does not give rise to any royalty income."