From CERC decision on tariff to patent suit, here are the key court orders

A weekly selection of key court orders

CERC decision on tariff upheld

The Supreme Court last week dismissed a large number of appeals by electricity consuming companies in the eastern part of the country, challenging the ruling of the Appellate Tribunal for Electricity on the question of fixing tariff. The main issue was the applicability of the provisions of the Electricity Act of 2003 in relation to those of the Damodar Valley Corporation Act of 1948. In this batch of judgments, led by Bhaskar Shrachi Alloys Ltd vs DVC, the court gave weight to the new law, as did the Appellate Electricity Tribunal which had earlier dismissed the companies’ challenge to the tariff. They had raised issues regarding the depreciation rate, sinking fund, debt-equity ratio, return of capital investment revenue relating to afforestation and period of transition. The judgment stated that under Section 79 of the Electricity Act, it was the Central Electricity Regulatory Commission (CERC) which would be the “appropriate commission” to determine the tariff as DVC is a corporation under the central government. It upheld the decision of the CERC.

PSUs not to seek special favour

In a dispute between Reliance Cellulose Products Ltd and Oil and Natural Gas Corporation (ONGC), the Supreme Court has upheld the rate of interest of 18 per cent awarded by the arbitrators before, during the arbitration and future interest. ONGC had objected to the rate of interest and moved the civil judge against the award, but it was rejected, though the rate of interest was reduced to 10 per cent. Both parties moved the Supreme Court against the order. Reliance argued the civil judge reduced the rate of interest on the ground that ONGC was a public sector company. It contended that there was no good reason to reduce the interest. ONGC argued that it was not liable to pay interest according to the contact. The court rejected ONGC stand and emphasised that the agreement on the supply of chemicals by Reliance did not reduce the power of the arbitrators to order interest. It also agreed with Reliance stating that ONGC being a public sector undertaking was not sufficient to depart from its liability. It was asked to pay the full interest of 18 per cent prevailing in 1993, the time of the award.

Directors cleared in cheque bounce

The Delhi High Court last week reiterated that in order to prosecute directors of a company for issuing cheques without sufficient fund in the bank, it must be shown that they were in charge and responsible for the day-to-day affairs of the company. Merely naming them is not enough under the provisions of the Negotiable Instruments Act. In this case, Jwala Devi Enterprises vs Fadi El Jaouni and others, 11 criminal complaints were filed under the Act for prosecution of directors of a company. The 

magistrate issued process, but on appeal, the sessions judge quashed the complaints. Thereafter, the payees moved the High Court. It dismissed the appeals stating that the accused were not stated to be signatories to the cheques. 

“They cannot be roped in merely because they have been directors of the accused company. The general averments that they were responsible for all the business dealings and for the circumstances leading to the dishonour of the cheques or that they had given any assurance as to the cheques do not suffice,” the judgement explained. 

Daily wagers paid compensation

When daily wage workers are illegally terminated, they cannot be reinstated with back wages by the industrial court. They can only be sent away with compensation, the Madhya Pradesh High Court ruled last week in the case of workers of State Bank of India. The workers were employed by State Bank of Indore, and later that bank was merged with State Bank of India. The daily wage workers sought regularisation in SBI, which was denied. The workers moved the central government industrial tribunal. It ordered reinstatement of the workers with 50 per cent back wages. The SBI management appealed to the High Court, citing Supreme Court judgments which had held that such workers were entitled only to compensation. This view was accepted

and the High Court set aside the labour court order. It ordered the bank to pay Rs 4 lakh each to the workers who sought reinstatement.

Dutch firm wins patent suit

The Delhi High Court has held that an Indian firm had violated the patent of a Dutch corporation and ordered compensation. Koninklijke Philips Electronics N.V alleged that it was a global corporation with a large number of patents in the field of electronics. It alleged that Mangalam Technology and associated companies infringed upon its patent in DVD and decoding technology and demanded compensation. The Indian firms maintained that major components of the DVD players were procured from authorised licensees like Sony, MediaTek, Sanyo and ST Micro from China after due payment of all the taxes and customs duties. They insisted that they had not violated the patent law. It was argued that the Dutch corporation was indulging in abuse of its dominant position as it was prosecuting them though there are as many as 35 manufacturers of DVD players according to that corporation. Rejecting the contentions of the Indian firms, the High Court held them guilty of the violation of patent law and ruled that the Dutch firm was entitled to royalty and the guilty company must pay punitive damages of Rs 5 lakh. There was no injunction as the patent had already expired.

SBI Cards to pay for unfair practice

SBI Credit Cards was indicted by the West Bengal Consumer Commission for failing to comply with the settlement arrived at before the Banks Ombudsman and sending bills after bills, though the card dues were settled five years earlier. The consumer was ultimately thrust into the Cibil list, blacklisting him for any credit or loan transaction all his life. In this case, Bhaskar Banerjee vs SBI Cards, the consumer owed nothing to the public sector firm but it refused to issue a no due certificate; instead, it continued to send fictitious bills. The Ombudsman told the company to issue the certificate but it did not. The matter was taken to the district consumer forum. It ordered the firm to pay compensation and stop the unfair practice. Still, SBI Cards did not stop sending bills, which now mounted to more than Rs 95,000. Banerjee also found himself in the Cibil blacklist. 

He appealed to the state commission. It raised the compensation amount and severely criticised the firm for its anti-consumer conduct.