'Infancy protection' for Sangam Spinners

LEGAL DIGEST

The Supreme Court has set aside the judgment of the Rajasthan High Court and granted 'infancy protection' to Sangam Spinners under the Employee Provident Fund Act. The company had started production in 1995.

According to the Act, such new factories are given exemption from the law for three years. This period was to expire in 1998.

However, before that, the provision for such exemption was deleted from the law. Therefore, the Regional Provident Fund Commissioner asked the factory to comply with Provident Fund rules from the date of repeal of the law.

The factory argued that it had three years' grace period. The Supreme Court stated that it was entitled to the protection for three years from the date of establishment of the unit, irrespective of the repeal of the provision.

Gujarat Maritime Board can be registered as charitable institution: SC

The Supreme Court has held that the Gujarat Maritime Board, constituted to develop and maintain minor ports, can be registered as a charitable institution for claiming income tax exemption.

The judgment said: "It is clear that the Board is under a legal obligation to apply the income, which arises directly and substantially from the business held under the trust, for the development of minor ports in Gujarat. Therefore, they are entitled to be registered as a 'charitable trust' under Section 12 of the Income Tax Act, 1961."

Insurance company not liable for cancelled policy

The Supreme Court has held that National Insurance Company is not liable to compensate for the death of a girl as the cheque issued for renewal of the policy was dishonoured for insufficient funds and the policy had been cancelled by the insurance company before her death.

The motor accident claims tribunal had directed the insurer to pay Rs 1.58 lakh with 12 per cent interest despite the dishonour of the cheque.

The father of the girl argued that the policy subsisted despite the dishonour of the cheque as the money has been tendered. The Supreme Court asked the insurer to pay compensation to him, in view of his poor financial situation, and then recover the amount from the owner of the vehicle which killed the girl.

Executive's plea quashed

The Supreme Court has dismissed an appeal moved by a marketing executive of a Hong Kong electronic company who was accused of breach of confidentiality and misuse of goodwill.

He was employed by Prodigy Electronics Ltd in Hong Kong with an agreement that he would work exclusively for it. Later, he was posted in Delhi where he worked for rival foreign companies without informing his employer. The Hong Kong firm moved the Delhi High Court for compensation.

He challenged the jurisdiction, insisting that according to his employment contract, the suit should be filed in Hong Kong. The High Court as well as the Supreme Court rejected his contention and said that since the alleged breach of contract took place in Delhi, Indian courts could decide the suit.

SC sets aside HC judgment in I-T Lucas TVS case

The Supreme Court has set aside the ruling of the Madras High Court in the income tax case against Lucas TVS Ltd raising the issue of allowability of 25 per cent investment allowance under Sections 32A and 43a(1) of the Income Tax Act.

The High Court had relied upon its earlier judgment in Southern Asbestos Cement Ltd case but the Court found that it had not discussed the questions raised in the present case.

Therefore, the Supreme Court asked the High Court to consider the matter afresh after formulating the correct question of law.