Speeding up land acquisition payments

The new land acquisition law has given a severe blow to governments which issue notifications of take-over, but do nothing for years and even deny payments to the land owners. If the delay is more than five years, even if caused by stay orders from courts, the acquisition will lapse. This new rule was applied by the Supreme Court in one case last week and in two other decisions a few days earlier, allowing the appeals of the land owners.

In Sita Ram vs state of Haryana, the award was passed in October 2003 and even after five years, compensation was not paid. Applying the rule in Section 24 (2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013, the Supreme Court set aside the Punjab and Haryana High Court which had upheld the acquisition. The land owner was running a firecracker unit, with 70-metre vacant land ring around it.

In two other cases, Indian Discs Corporation and M/Sharma Agro Industries, the same rule was applied against the state government. Quashing the high court orders, the Supreme Court pointed out that physical possession of the land belonging to the two industries has not been taken by the state for more than five years since the award. The new provision in the 2013 Act applies to acquisitions made earlier to the coming into force of the law.

Arbitrator's power to order compound interest

The Supreme Court bench last week gave a split decision on a question regarding interest awarded by arbitral tribunals. Earlier, other judges sitting in two's were divided on the question whether grant of interest by the arbitral tribunals under Section 31(7) of the Arbitration and Conciliation Act, 1996 amounted to granting "interest on interest".

Therefore, the issue was referred to a larger bench. Even this three-judge bench was divided last week. In a 2:1 decision in the case, Hyder Consulting (UK ) Ltd vs state of Orissa, the Chief Justice upheld an earlier judgment in the "S L Arora case" which had held that if the arbitral award was silent on interest from the date of award till the date of payment, the person in whose favour the award was made would be entitled to interest at the rate of 18 per cent per annum on the principal amount awarded from the date of the award till the date of payment.

On the other hand, the majority judges stated that the S L Arora ruling was wrong and Parliament intended that an award for payment of money may be inclusive of interest, and the "sum" of the principal amount plus interest may be directed to be paid for the pre-award period. The tribunal may direct interest to be paid on such "sum" for the post-award period, which would be after merging interest with the principal, "the two components having lost their separate identities."

Wide discretion in 'search and seizures'

Income tax authorities can conduct search and seize goods on reasonable suspicion of suppression of information, and there are sufficient safeguards against the misuse of this power, the Supreme Court has said while quashing the order of the Allahabad High Court in the case, Union of India vs M/s Agarwal Iron Industries. The raid could be on the basis of "opinion which a reasonable and prudent man would form to issue a warrant".

If the action is challenged in a court, the authorities are not bound to disclose the contents of the confidential files, though the judges can ask for them to satisfy themselves that there was sufficient ground for the raid. In this case, the residential as well as business premises of an iron pipe manufacturer were searched and goods along with documents were seized.

The authorities maintained that the productions declared by the firm in its records was not even one-fifth of the actual production revealed in the seized documents. The firm moved the high court against the raid, arguing that there was no information with the revenue department to justify the raid and the warrant of authorisation was issued mechanically and arbitrarily.

The high court appointed an advocate as a commissioner to prepare an inventory of the goods and later quashed the warrant. The revenue authorities appealed to the Supreme Court. It criticised the high court for appointing an advocate commissioner in this case. The judgment emphasised that under Section 132 of the Income Tax Act, the authorities can order search and seizure if they have sufficient grounds.

Dud cheque for faculty friend

The Supreme Court acquitted a person accused of issuing a cheque that bounced because the complainant did not have sufficient source of income to lend Rs 14 lakh to the accused person as claimed by him. In this case, K Subramani vs K Damordara Naidu, both were government college lecturers. Naidu apparently lent Rs 14 lakh to Subramani to start a business on the promise that the amount will be returned with interest.

Naidu later received a cheque from his fellow-lecturer, but it bounced leading to the criminal complaint under the Negotiable Instruments Act. The trial court examined the financial position of Naidu and disbelieved that he could lend such an amount. It acquitted his colleague.

On appeal, the Karnataka High Court believed that Naidu has the capacity to lend such an amount and let the trial proceed. Subramani appealed to the Supreme Court. It restored the acquittal order observing that Naidu did not seem to have sufficient source of income and he had failed to prove that there is a legally recoverable debt payable by his colleague.

Citibank gets injunction in trademark suit

The Delhi High Court last week granted an injunction in favour of the US corporation, Citigroup Inc, against the Indian firm Citicorp Business and Finance Ltd in a trademark dispute. It directed the Indian company to change its name from Citicorp to some other name which may not be either identical or deceptively similar to that of the US corporation's trademarks, Citicorp/Citi.

It granted six months to do so in view of the fact that the Indian company was using the disputed mark for many years. The US corporation contended that its banking and financing arms were popularly referred to as Citi, Citibank or Citigroup and has global presence in consumer and institutional business. The rival firm was in the same business and had a website www.citicorpbiz.com.