When a person is prosecuted for issuing a cheque that bounced, he might hit back by filing criminal cases against the complainant. His harassment could succeed to some extent as seen in the case decided last week by the Supreme Court, D P Gulati vs state of UP. The Allahabad High Court allowed the criminal cases to proceed. However, on appeal, the Supreme Court quashed the criminal cases of cheating, breach of trust and other offences under the Indian Penal Code, describing them as abuse of process of law. In this case, Jetking Infotain Ltd had a franchisee agreement with SVS Computers Ltd. Disputes arose between them over payments. SVS then issued a cheque to Jetking which was dishonoured by the bank due to stop-payment instruction. Jetking filed a complaint under the Negotiable Instruments Act. SVS retaliated by filed criminal complaints against the rival firm. Jetking moved the high court against it, but was not successful. But on appeal, the complaints were quashed and the Supreme Court stated that the high court had not followed the five steps, narrated in the judgment, for testing such complaints for their truthfulness. In another cheque bounce case last week, Supreme Court set aside the Madras High Court order quashing the complaint of the payee. The apex court found fault with the high court for going into "highly disputed questions of facts" which should have been left to be decided by the trial court. The dispute in this case, S Krishnamoorthy vs Chellammal, involved a mortgage and alleged misuse of cheques. Supreme Court allowed the prosecution.
Interest on debentures deductible
The Supreme Court has ruled that the liability of a company to pay interest upfront to debenture holders is allowable as deduction in income tax in the first year itself though the life of the debenture may spread over several years. The Supreme Court stated so in the judgment, Taparia Tools Ltd vs CIT, Nasik, setting aside the rulings of the Income Tax Appellate Tribunal and the Bombay High Court. The high court had upheld the action of the revenue authorities who had treated the payment as 'deferred revenue expenditure' to be written off over a period of five years, which was the life of the debentures in this case. They allowed only one-fifth of the payment, though the entire payment was made in one year. The company challenged the stand of the authorities in several forums, where it lost all the way. But the Supreme Court accepted its arguments and explained the legal position as follows: "The company did not want to spread-over of the expenditure over five years. In the return filed by it, it had claimed the entire interest paid upfront as deductible expenditure in the same year. This course of action was permissible in law. Therefore it could not be deprived of the option to claim the expenditure as deduction."
Excise notice to Maruti quashed
The Supreme Court has quashed the show cause notice served on Maruti Suzuki India Ltd for evasion of excise duty in 2001. The appellate tribunal had upheld the notice. The excise department had argued that it had gathered intelligence that the car manufacturer had cleared inputs/ spares after processing, but excise duty was not paid. It was alleged that various spare parts were procured in the form of bumpers, grills, etc., on which electro deposition coating, an anti-rust process, was made to increase their shelf life. This process increased the value of the inputs. Supreme Court stated that there was no manufacture by this value addition. It said that the final product that were removed from the factory for home consumption remained the same despite the coating process. Mere value addition without more would not make the process 'manufacture'.
Defaulters' claim for privacy rejected
Can a lender bank publish the name and photograph of a defaulter invoking the power under the Securitisation (Sarfaesi) Act?
High courts have taken different views on this question. Several persons challenged the right claimed by State Bank of India in writ petitions in the Gujarat High Court. They argued that their reputation and dignity would be affected and the fundamental right to privacy guaranteed in Article 21 of the Constitution violated. They also contended that the guidelines provided in the Bank Codes and the Standards Boards of India provided for the privacy and confidentiality of borrowers. However, the high court last week dismissed all the petitions, titled Monal Chokshi vs SBI. The bank had argued that the law provided for a procedure for recovery of the dues, like publication of the non-performing asset and the names of defaulters. Since the lender has that power, the modalities which are not prohibited could be resorted to, it was contended. The court accepted the bank's arguments and stated that the Act as well as the agreement signed by the borrower allowed the lender to choose the mode of publication.
'Bulldozing' anti-dumping probe
The Delhi High Court has quashed the order of the anti-dumping designated authority on the petitions of Mahindra & Mahindra and Volkswagen India Ltd as they were not given a hearing before passing an adverse order last year. Synergies Castings Ltd, a producer of cast aluminium alloy wheels in India, had approached the designated authority alleging material injury on account of dumping of similar goods from China, Korea and Thailand. An inquiry was conducted and the order was passed, which was challenged by the vehicle manufacturers. Allowing the writ petitions, the court stated that the companies were "interested parties" who were entitled to a hearing. It further pointed out that there were several "unanswered questions" in the case and remarked that "anti-dumping investigations are time-bound but that does not mean that such important matters can be bulldozed in the manner it has been done in the present case."
Insurer to pay higher compensation
The Supreme Court has steeply enhanced the compensation to be paid by the insurance company in a road accident death, on an appeal by the widow and children. In the case, Asha Verman vs Maharaj Singh, the motor accident tribunal awarded Rs 3.75 lakh as compensation with 6.5 per cent interest from 2006 when the mishap occurred. This was enhanced by the Madhya Pradesh high court to Rs 5.35 lakh. The widow appealed in the Supreme Court. It found that the courts below had erred in computing the compensation, ignoring established principles, and raised the amount to Rs 16.58 lakh with nine per cent interest from the date of the accident.
