Brief case: Madhya Pradesh govt told to act as 'honest person'

SC stated that MP govt should act like an honest person while dealing with the case of an individual citizen

The Supreme Court last week chastised the Madhya Pradesh government for forfeiting the earnest money in the auction of a plot and asked it to refund it to the depositor with nine per cent interest and pay costs. 

The court stated that the government should act “like an honest person while dealing with the case of an individual citizen”. In this case, Sunil Kumar vs the State of MP, certain plots in Bhopal were auctioned in 1996 and Sunil Kumar’s bid was the highest. He deposited Rs 3 lakh, but later received a letter imposing four new conditions in the contract, which he rejected. 

The government forfeited his deposit. He moved the civil court and the high court, where he failed. However, after 21 years, he won in the Supreme Court. The judgment stated that the government could not alter or add conditions in the sale and there was no term authorising the government to forfeit the deposit. It was not Sunil Kumar who breached the contract but the state, the court said.

Limitations on power tariff commission

The Supreme Court had last week ruled that a state electricity regulatory commission could not invoke its inherent powers to extend the control period for tariff — the period during which a particular tariff order operates. The commission cannot vary the terms of the power purchase agreement to extend the control period beyond the stipulated time. It is outside the purview of the commission, the court stated while allowing the appeal, Gujarat Urja Vikas Nigam versus Solar Semiconductor Power Co. 

In this case, the solar power project of the company was delayed allegedly due to unforeseen circumstances. The government had changed the law relating to land acquisition and there were hitches in raising transmission lines. Therefore, the commission extended the control period.

The appellate tribunal also approved it asserting that “there is no fetter on the powers of the state commission in the Electricity Act or the Conduct of Business Regulation.” Setting aside the order, the Supreme Court stated that inherent power is available only where the law and rules are silent. It added that courts must be wary when interests of consumers are involved. The tariff once determined after inviting suggestions from public can be changed only after repeating the procedure, the judgment said.

Tenancy disputes not arbitrable 

Disputes over tenancy cannot be determined by arbitration; it should be adjudicated in a civil suit, the Supreme Court ruled in its judgment, Himangni vs Kamaljeet. In this case, the landlord moved the civil court to evict the tenant. The latter moved an application for referring the dispute to arbitration. This was rejected by the civil court as well as the Delhi High Court. 

The Supreme Court upheld the view of the courts. There are some disputes which cannot be referred to arbitration like insolvency, testamentary matters and guardianship. In matters of eviction and tenancy, special laws exist and therefore, the courts specified in those laws have jurisdiction.

Exemption for Maharashtra land law

The Bombay High Court has ruled that the provision of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as regards lapsing of the acquisition does not apply to the acquisition proceedings initiated under the Maharashtra Regional Town Planning Act, 1966.
 
The new central law in Section 24(2) provides for lapsing of acquisition in certain cases. If the award is more than five years old and physical possession has not been taken or compensation not paid, the proceedings shall be deemed to have lapsed. A large number of persons whose land was acquired decades ago and not utilised by the authorities moved the high court invoking the central law. However, the court clarified that the central law would apply only if the acquisition proceedings were “initiated” under that Act, and could not apply if were initiated under state regional town planning law.

Finance company to be wound up

The Delhi High Court last week ordered the winding up of a finance company against which many creditors and investors had complained and was accused of a serious fraud. The central government had referred the affairs of JVG Group of companies to the Serious Fraud Investigation Office. After an investigation, it filed a detailed report which confirmed the allegations against the company. It stated, among other things, that there was siphoning of funds of the group companies by purchasing large tracts of land in Haryana and Uttar Pradesh. 

The ensuing debts to the related companies could not be repaid. Meanwhile, the Reserve Bank of India responded to the complaints and filed winding-up petitions against group companies. The high court appointed liquidators and ordered winding up of some of them. 

While ordering winding up of JVG Financing and Services Ltd, the high court noted that the company was not holding general body meetings for a long time and did not file annual reports with the registrar of companies. No balance sheet or statutory record was available with the registrar. The judgment in the case, JVG Finance Ltd vs JVG Financing & Services Ltd, remarked that the business was carried on “fraudulently, deceptively and with mala fide intentions and is a fit case to lift the corporate veil”. 

Drugs banned to save vultures

In a judgment that would protect critically endangered Indian vulture species, the Madras High Court last week dismissed the writ petitions of two pharma companies that make analgesics both for humans and animals. The Union health ministry found that Diclofenac, which was supplied to hospitals in 30ml bottles, are pilfered and injected in livestock in higher doses. When the animals happen to die, vultures eat their carcases, which kill them. 

This is one reason for the 90 per cent decline in vulture population. To save the vultures the rules under the Drugs & Cosmetics Act was modified in 2015. Laborate Pharmaceutical India Ltd of Panipat and Alpa Laboratories of Indore challenged the new rule in the high court. They argued that there is no study to prove that the decline of vulture population was due to pilfering from hospitals and vultures eating carcases of cattle. 

The court appointed an expert committee, which did not get a satisfactory response from the manufacturers. Rebutting the argument of the firms that no study was available on the subject, the court stated that it was passing its order on “precautionary principle”.