HC cannot cancel auction sale

The Supreme Court has stated that high courts should not set aside auction sale conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act) exercising its writ powers. In this case, GM, Sri Siddeshwara Co-operative Bank Ltd vs Sri Ikbal, the borrower of a housing loan was a "chronic defaulter" and therefore, the property was auctioned and it was sold in the presence of the borrower. After four years, the borrower challenged the sale certificate of the auction purchase in the Karnataka High Court in a writ petition.

The high court quashed the auction sale and ordered a fresh auction. It further made certain observations against the bank officer and directed its registrar to refer the matter to the Superintendent of Lokayukta police at Bijapur for further action in accordance with law. The high court's view was that the mandatory rules were not followed. The bank and the auction purchaser moved the Supreme Court. While quashing the high court order, it stated that the Act provided a remedy for the borrower and there was no reason to bypass it and move the high court with a writ petition.

Insurance co held liable

The Supreme Court has ruled that the insurance company is liable to pay compensation to a road accident victim when it informed the insured that his cheque was dishonoured after the mishap. In this appeal, National Insurance Company vs Balkar Ram, the motor accident tribunal had ordered compensation to the victim. The company appealed against it, arguing that the cover note for the policy was issued against a cheque which was dishonoured even before the accident.

On the other hand, the victim argued that the intimation regarding the dishonour of the cheque and cancellation of the policy was communicated to him after the date of the accident. The cheque bounced on April 17, the accident took place two days later and the intimation of the dishonour was conveyed on April 26. The court ruled that till then the insured was holding a valid policy and therefore the insurer must pay compensation.

Doubt on bounced cheque settled

Resolving doubts over two differing interpretations of the Supreme Court in the matter of Negotiable Instruments Act, a larger Bench last week stated that for the purpose of calculating the period of limitation of one month, which is prescribed under Section 142(b) of the Act, the period has to be calculated by excluding the date on which the cheque was dishonoured.

A division Bench had referred the question to the larger Bench as the principle laid down in the case, in Saketh India Ltd vs India Securities Ltd, and in the case, SIL Import, USA vs Exim Aides Silk Exporters, differed with each other. The new judgment, Econ Antri Ltd vs Rom Industries Ltd, settled the question by holding that the first case laid down the correct principle and should be followed by all courts below.

Higher sum for displaced persons

The Supreme Court has directed the Vidharbha Irrigation Development Corporation to pay Rs 3.70 lakh each to project affected persons, without discrimination. In this case, Daulat Sitaram vs state of Maharashtra, lands of villagers in Bhandara district were submerged due to Gosikhurd irrigation project in 1997. They were declared project affected persons under the Maharashtra Project Affected Persons Rehabilitation Act. They were allotted plots in another village, but they did not accept it as they lacked basic amenities. They were instead given Rs 50,000 in compensation. In 2006, another set of villagers affected by the same project were given Rs 3.70 lakh in compensation.

Therefore those who got Rs 50,000 moved the high court for equal amount. The corporation argued that the earlier group had a binding agreement with the government while accepting the amount and they cannot ask for modification of it. The Bombay High Court accepted the government's argument and rejected their plea. They moved the Supreme Court. It asked the government to pay the same amount, pointing out that under contract law any agreement which was unconscionable and against public policy was invalid. Such unconscionable terms imposed on the people are "Henry VIII clause", named after the imperious English king.

Land acquisition for coal quashed

The Supreme Court last week dismissed the appeal of Singareni Collieries Co against the Andhra Pradesh High Court judgment which had quashed the land acquisition proceedings in favour of the government company. The coal firm wanted 35 acres in three districts and the collector notified it in 1992. However, proceedings dragged on. When some land owners moved the high court, it held that the collector who acquired the land made the award beyond the period of two years stipulated in section 11-A of the Land Acquisition Act, and therefore the acquisition lapsed. This view was upheld by the Supreme Court.