Brief case: Subsidy not a matter of right, says SC

A weekly selection of key court orders

Subsidy not a matter of right: SC

Subsidy is a matter of fiscal policy and a privilege granted by the state; it cannot be claimed as a right by any beneficiary, the Supreme Court stated while dismissing a large number of appeals against several high court orders. Several state corporations had challenged the dual pricing policy of the Ministry of Petroleum with regard to diesel. The ministry had denied subsidy to bulk consumers such as transporters with the result that they had to buy diesel from oil marketing companies at the retail price, which was high. In the main case, Indian Oil Corporation vs Kerala State Transport Corporation, the high court had agreed with the state corporation which argued that it was fulfilling a social obligation by providing service with no profit. The dual pricing was discriminatory and unfair. The government countered that the policy was introduced after due deliberation by expert bodies and was part of fiscal consolidation. It wanted to reduce the subsidy burden and ensure long-term energy security. The court agreed with the argument of the government that the oil marketing companies had suffered heavy losses and borrowed excessively. The government wanted to direct funds for social welfare schemes for the common people. Such a policy is not amenable to judicial review.  

Land acquisition issue for larger Bench 

Yet another issue regarding the new land acquisition Act of 2013 has been referred to a larger Bench of the Supreme Court in the judgment, Indore Development Authority vs Shailendra. This also deals with the question of the lapse of land acquisition due to the long delay in taking possession of land. In this case, the authority wanted to build a link road to connect it to the ring road in 1995. But it was not done due to encroachments. Therefore, the authority deposited the compensation with the land acquisition collector. The landowners did not take it under protest and moved the high court. It held that the acquisition proceedings had lapsed due to passage of time. This was because of Section 24 of the new Act, which set a time limit for taking possession and paying compensation. In this case, the payment was lying in the treasury with no landowner claiming it. Such a situation had not arisen before the Supreme Court so far, though several other issues related to Section 24 have been referred to larger Benches. Therefore, the court tagged this case with the other pending cases.

Railway rapped for prolonging case 

The Supreme Court has severely criticised the central government for raising new and technical legal points before it to defeat the claim of a private contractor who had won an arbitral award in 2002. The arbitral tribunal, consisting of three railway officials, had unanimously awarded interest on the claimed amount. The Railways was trying its best to resist the payment of interest in the case, Union of India vs Susaka Ltd.  While dismissing the appeal of the government against the judgment of the Bombay High Court, the apex court recalled its earlier observations that “the government, while dealing with a citizen, must act like an honest person”. If the claim is a just one, even if legal defences can be raised against it, the government should not resort to technicalities. The court stated that the award was, in fact, just.

Liberal view of insurance policy term 

An insurance company can repudiate the claim of an insured person only if there is serious violation of the conditions in the policy. “Violation of the condition must be such a fundamental breach so that the claimant cannot claim any amount whatsoever,” the Supreme Court stated in the case, Manjeet Singh vs National Insurance Co.  In this case, the driver-owner of a truck gave a lift to a few persons on a cold wintery night near Yamuna Nagar. But they later overpowered him, gagged him and threw him into a field and fled with the vehicle. He filed a claim which was repudiated by the company, which argued that giving a lift to strangers violated the policy condition. The consumer forums up to the National Commission agreed with the company. On appeal, the Supreme Court stated that in this case, there was no serious violation of the terms and the driver’s act was a “humanitarian gesture”.  He could not foresee the theft. The insurance company had argued that there was arbitration pending between it and the financier and the award should be awaited. The court rejected this contention asserting that the arbitration should not defeat the right of the insured against the insurance company.

Row over domain trademark

The Delhi High Court last week stated that no party could claim trademark in domain names starting with “bookmy” as it describes the service rendered. It is used by several facilitating companies and not an inventive name exclusive to one user. The high court thus dismissed the petition of Bigtree Entertainment Ltd against a rival, Brain Seed Sportainment, seeking an injunction against the use of the word “bookmy”. Bigtree provides a range of ticketing solutions through call centres, internet ticketing, kiosk and a mobile ticketing platform through its website bookmyshow.com. Brain Seeds has its website bookmysports.com, which provides online booking facilities for sports events.  The dispute was over the prefix “bookmy” which was common. Bigtree claimed copyright on it while Brain Seed argued there was nothing inventive about the common word and it was only descriptive of the service. It presented several websites which started with “bookmy”. The high court accepted it. 

Case against directors quashed 

The Patna High Court has quashed a case of food adulteration against Reckitt Benckiser (India). The food inspector in Patna found that the barley powder cans of the company did not carry the “best before” date which amounted to misbranding under the food adulteration rules. The official filed a petition before the Civil Surgeon-cum-Chief Medical Officer, Patna, seeking written consent to prosecute the managing director, directors, chairman, all administrative officers and production in-charge of the company for the offence. After the approval, a complaint was filed before the magistrate who took cognizance of it and issued bailable warrants. The company, therefore, approached the high court. It argued that there was no adulteration and only misbranding and the sanction to prosecute was given mechanically against a group of persons. The company was not named and the directors were not specified and there was no mention of persons in charge of the conduct of the company. Moreover, some of them were not directors at the time. When the company is the alleged offender, the directors cannot be fastened with vicarious liability, the judgment underlined.