The Supreme Court has ruled that possession of a plot given to a company for a limited purpose would not create any interest or right in its favour. The Andhra Pradesh High Court view to the contrary was set aside in the appeal, APII Corporation Ltd vs Team-Asia Lakhi Semiconductors Ltd. Government-owned APII Corporation allotted plots for setting up industries to different persons on certain conditions. Team-Asia got a plot for which an amount had to be paid to the corporation. It was given possession for a limited purpose and allowed possession. The company could not pay the amount within the prescribed time and therefore the part amount already paid was forfeited. The company later went into liquidation and the official liquidator wanted to take back possession of the plot and sell it. The government corporation moved the company court against it, but its petition was dismissed. It appealed to the Supreme Court. While quashing the high court order, the Supreme Court stated that the

Liquidator barred from selling plot

Business Standard

Despite the Supreme Court's call to government undertakings to be model employers, they are often as bad as private entities

M J Antony: Division of labour pain

The offence of issuing a cheque without sufficient amount in the bank has five ingredients and it is not necessary that all of the components should be present for prosecuting the drawer, the Supreme Court reiterated last week in its judgment in the case, Devendra Kishanlal vs Dwarkesh Diamonds Ltd.

Five elements in  cheque bounce cases

Once the amount in a dishonoured cheque is paid with interest and compensation, the payee cannot insist on criminal prosecution of the directors of a firm who issued the cheque. The object of Section 138 of the Negotiable Instruments Act, which makes issuing of cheques without sufficient balance in the account an offence, is meant to "inculcate faith in the efficacy of banking operations and credibility of transactions. It is not meant only to punish the guilty," the Supreme Court has stated in the judgment, Lafarge Aggregates & Concrete India Ltd vs Sukarsh Azad.In this case, directors of a construction company issued a cheque to Lafarge, but it was dishonoured by the bank leading to a criminal complaint before the magistrate. The directors moved the high court and offered to pay the amount with interest. The high court, therefore, quashed the complaint. Lafarge was not satisfied with that and appealed to the Supreme Court for prosecution of the directors.The court dismissed the a

SC: No overkill in cheque bounce cases

The Supreme Court today accepted the unconditional apology of former army chief Gen V K Singh and thus put an end to the contempt of court proceedings initiated by it against him

SC accepts apology of former army chief

Constitution benches do not sit often enough to clear decade-old issues

M J Antony: Putting first things last

The status of contract labour in commercial establishments continues to divide the judges. Last week, two judges in a division bench of the Supreme Court hearing the appeals of workers in the Hotel Corporation of India, which runs the canteen facilities for Air India, differed on their entitlements. The grievance of the workers was that they were employed by Air India, but they were not regularised by keeping them temporary for long periods by devious means. They argued that they were working with Chef Air, a unit of the government-owned Hotel Corporation, which in turn was a subsidiary of Air India. They raised an industrial dispute and the tribunal held that they were deemed employees of Air India and their real status was "camouflaged" by corporate veils. Air India moved the Delhi High Court against the tribunal's verdict. Both the single judge bench and the division bench of the high court gave findings in favour of the national carrier. The employees carried the dispute to the Sup

Contract labour issue splits SC bench

The Supreme Court has held that a "rebate of tax" granted by the Uttar Pradesh (UP) government only to cement manufacturing firms functioning within the state was discriminatory and violated the Constitution

UP rebate for cement units illegal: SC

Frivolous suits by the government have cramped the judicial system

M J Antony: Litigating for a lark

Contractors, who undertake government projects, received a setback last week when the Supreme Court barred arbitration if the agreement contains a clause that the chief engineer will decide the issues between the parties. Such a term, which is common in most of the government works contracts, was the focus of 23 appeals. In a typical case from Karnataka, one firm lodged a claim against the government for lack of cooperation on the part of the chief engineer leading to non-completion of a river bridge.It asked the high court to appoint an arbitrator under the Arbitration and Conciliation Act, but its application was rejected. The court stated that if the firm was not satisfied with the decision of the chief engineer, it should go to a civil court and not take the arbitration route. Therefore, the firm appealed to the Supreme Court, along with 22 others that were in the same plight. All these appeals were decided against the contractors in the leading case,  P Dasratharama Reddy vs Govt

Setback for works contractors

The Supreme Court has dismissed a batch of appeals from the Commissioner of Income Tax, expressing the hope that the revenue department will implement its litigation policy with "a little more practically and a little more seriously".The question involved in these appeals was whether the benefit of an entitlement to make duty-free imports of raw materials obtained by an assessee through advanced licences and duty entitlement pass book issued against export obligations, is income in the year in which the exports are made or in the year in which the imports are made.The court ruled the income does not accrue in the year of export but in the year of import.Excel Industries claimed deduction benefit, which was denied by the authorities on the ground that any benefit arising from a business is income. In this batch of cases, the court noted the authorities had accepted deductions in certain years, but in other years they took a contrary stand and moved the Bombay High Court and lost."That b

Litigating with tax payers' money

The draft of a new disability legislation has been handed out; however, the old one is still far from functioning full steam

M J Antony: Crippled by lame excuses

In a precedent-setting judgment affecting government contracts, the Supreme Court has asked BSNL to lay down guidelines for blacklisting firms which respond to tenders and undertake projects. Since blacklisting is a frequent cause of dispute and bitter litigation, this ruling may be followed in the case of other government entities, which enter into supply and works contracts. In this case, M/s Kulja Industries Ltd vs BSNL, the firm which supplies optical fibre and HDPE pipes was debarred "for all times" by the public sector undertaking on the charge of over-invoicing with the connivance of BSNL officers themselves. The Bombay High Court upheld the blacklisting. But the Supreme Court set aside the high court judgment on appeal. The apex court felt that permanently debarring the firm, which survives on supplies to BSNL alone, was too harsh. It felt there should be some "broad guidelines" to provide objectivity and transparency in imposing penalty on delinquent firms. The court asked BSN

SC for guidelines on blacklisting

Two tough laws have not speeded up the recovery of debts due to banks and have disappointed both the lender and the borrower

M J Antony: The trials of tribunals

The Supreme Court today rejected the prayer of Attorney General for interim stay of its order declaring that no one in the country should suffer because one has no Aadhaar number

Apex court turns down AG's plea seeking stay on Aadhaar order

Does the law for revival package under the Sick Industrial Companies (Special Provisions) Act cover foreign companies registered in India? A single judge Bench of the Calcutta High Court said no, but on appeal, a Division Bench said yes, and accordingly decided the suit between Yash Deep Trexim Ltd and Namokar Vinimay  Ltd. However, on further appeal, the Supreme Court did not decide this question and left it open to be decided in an "appropriate case". According to the apex court, it was not necessary to decide whether  the revival scheme framed by the Board for Industrial and Financial Reconstruction (BIFR) in respect of the Baranagore Jute Factory Plc should be implemented. The Supreme Court was freed from answering the issue as the company, which was before the BIFR for a long time and caught in a mesh of litigation and arbitration proceedings, had recovered due to acquisition of its vast land, about 24 acres in Kolkata, by the National Highway Authority of India and for other publ

SC sidesteps a BIFR question

A developer who constructs flats and sells them undertakes a works contract. Therefore, he is liable to pay a turnover tax to the states on the transfer of goods involved in such a contract, the Supreme Court stated last week in a batch of 26 appeals against the judgments of the Bombay and Karnataka high courts. The builders had argued that the flats were to be sold as flats and not an aggregate of its component parts. No work is  carried out for the purchaser who gets title to the property only after all work is complete.Rejecting this view, the Supreme Court ruled in the batch of petitions, led by Larsen & Toubro Ltd vs State of Karnataka, that "a contract may involve both a contract of work and labour and a contract of sale of goods. The distinction between contract for sale of goods and contract for work (or service) has almost diminished in the matters of composite contract involving both a contract of work/labour and a contract for sale."The judgment further stated that taxin

Builder liable to pay turnover tax on flats

The Supreme Court today turned its focus on the role of  seven mineral-rich states in the coal scam case, asking them about their involvement in the allocation of coal blocks.  It put four questions to the governments of Maharashtra, West Bengal, Chhattisgarh, Madhya Pradesh, Andhra Pradesh and Odisha.

SC turns focus to 7 mineral-rich states in coal scam case

After waiting for decades the SC has finally crafted a law on street vendors

M J Antony: Jumping the legislative barrier

The Supreme Court decided on two important questions relating to bounced cheques last week. Resolving the apparent conflict in views between high courts and different benches of the Supreme Court, a larger bench of the apex court laid down that (i) a complaint about a bounced cheque can be filed by a power of attorney holder, and (ii) the power of attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint if he had witnessed the transaction as an agent of the payee/holder in due course or possesses due knowledge regarding the transactions.The court was deciding two appeals against the judgments of the Bombay and Andhra Pradesh high courts. The Mumbai case, A C Narayanan vs State of Maharashtra, started when a firm launched a scheme of investment and collected amounts from various persons in the form of loans. It, then, issued post-dated cheques in the managing director's personal capacity. The cheques were dishonoured leading to crimi

SC addresses issues on bounced cheques

The Supreme Court ruled today that the dispute between public sector Gas Authority of India Ltd (GAIL) and Gujarat State Petroleum Corporation (GSPC) on price of gas imported from Qatar should be decided by arbitration, which is an effective alternative remedy

M J Antony

M J Antony

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