Govt must pay for officers' negligence

The government must pay for the negligence of its officers and it cannot claim "sovereign immunity" like in the old days, the Supreme Court has stated while imposing compensation on the authorities who failed to register three fishing vessels, causing loss to owners. The vessels were bought by Sancheta Food Products in an auction. They had to be registered under the Merchant Shipping Act for taking them to the high seas for fishing. However, the officers were taking contrary stands regarding the rules applicable to the vessels, causing heavy loss to the firm. It sued the government in the Calcutta high court. It imposed compensation on the government for its "contradictory and dilatory" stands. The government appealed to the Supreme Court, which upheld the high court judgment. It elaborated on the "vicarious liability" of the state for the actions of its officers and diluted the immunity of the government in negligence cases. Citing earlier decisions rejecting the claim of immunity of the government, the present judgment reiterated that "no legal or political system today can place the state above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of officers without any remedy…The modern social thinking of progressive societies and the judicial approach is to do away with archaic state protection and place the government on a par with any other juristic legal entity." The court also rejected the government's plea that it has taken action against the officer concerned. The liability of the government did not end with action against its officers, the judgment emphasised.

Taxmen cannot lay down policy
The Supreme Court last week stated that a government department must implement the industrial policy laid down by the government and should not devise its own policy, that too contrary to the Cabinet decision. The government must speak with one voice, the court stated in its judgment Llyod Electric & Engg Ltd vs State of Himachal Pradesh. "What is given by the right hand cannot be taken by the left hand," it remarked while allowing the appeal of the company holding that it was eligible for concessional rate in central sales tax. While the Cabinet had extended tax benefits up to 2013 for industrial units to attract investments, the department maintained that the company was not eligible for them as the notification was issued later and did not cover it. The high court upheld the interpretation of the department. Setting aside the judgment of the high court, the Supreme Court stated that the department cannot issue a notification contrary to the Cabinet decision on policy matters. Moreover, the department cannot deny the benefit because it delayed the notification consequent on the Cabinet decision. The company was eligible for the concessional rate at the rate of one per cent, and not two per cent on inter-state sales, the Supreme Court said.

Refund not end of bank fraud trial

In a case of fraud against a bank, the accused person cannot get away by 'settling' the criminal complaint by repaying the amount involved, the Supreme Court stated in the judgment, Central Bureau of Investigation vs Maninder. The complaint was that the accused person opened a current account in the name of a firm with Punjab National Bank in Ludhiana and got an advance. Later, the vigilance officer of the bank found that the bill of lading produced by him was forged. Therefore, Maninder was arrested and criminal prosecution was launc-hed against him under the penal code provisions and the Prevention of Corruption Act. He moved the Delhi high court claiming that he had settled the affair with the bank after paying the amount and, therefore, the complaint should be quashed. The court did so. Therefore, the CBI filed an appeal. Allowing the appeal, the Supreme Court stated the high court should not have exercised its discretion to quash the complaint without adequate reason. "In such economic offences, Court must not only keep in view that money has been paid to the bank which has been defrauded but also society at large. It is not a case of simple assault or a theft of a trivial amount; but the offence with which we are concerned is a well planned and was committed with a deliberate design with an eye of personal profit regardless of consequence to the society at large. To quash the proceeding merely on the ground that the accused has settled the amount with the bank would be a misplaced sympathy. If the prosecution against the economic offenders are not allowed to continue, the entire community is aggrieved," it said.

Milk allowance part of wages for ESI
The Calcutta High Court ruled last week that allowance for milk paid to workers in a factory is part of the wages for purposes of the Employees State Insurance Act. However, if such allowance is given due to the special nature of the work like those working around a furnace who need glucose and salt, it would be included in the wages. The court also held that remuneration paid for work done during paid holidays is also not wages. These two issues had been debated by Kesoram Industries and the ESI Corporation since 1995, and the company's writ petitions were allowed by the court. The corporation maintained that milk allowance and payment for working on paid holidays were not part of the wages. The company disputed it and submitted that it was a plain and simple allowance, styled as 'milk allowance'. It argued that the extra paid on paid holidays was not overtime. It was component of the wages. The court accepted these arguments.

Row over choosing arbitrator
The Supreme Court last week stated that disputing parties must first try to mutually agree on arbitrators and should not approach the court straightaway. In this case, Huawei Technoloties vs Sterlite Technologies, the contract provided for choosing a sole arbitrator by mutual consent. One arbitrator was named by Huawei, but Sterlite opposed him and he quit. Huawei , therefore, moved the court for naming another. It said that the possibility of naming an arbitrator by mutual consent must be tried again and only then the court should be approached.

Ice cream not counted among sweets
The Bombay High Court stated last week that ice cream could not be classified along with 'sweets and sweetmeats' and, therefore, the sales tax will be 8 per cent, double that of other common Indian sweets. Vadilal Dairy International Ltd challenged the demand of 8 per cent arguing that ice cream is understood in common parlance as a sweet. The list of items in the Bombay Sales Tax Act indicated that it was so along with other items like shrikand, basund and doodhpak, pastries, kulfi and non-alcoholic drinks containing ice creams of kulfi. The court rejected the argument.