Legal News & Views

1.      Commissioner of Income-tax vs. Deepak Agarwal         Where assessee P.A. Jose vs. Assistant Commissioner of Income-tax, Circle-1, Kottayamssee was not engaged in business of investment in shares, interest bearing funds invested in shares of related company to extend financial support, could not be said to be utilization for business purposes, and proportionate interest was liable to be disallowed.         Held : Interest on funds invested in related companies to be disallowed if it doesn't serve any business purpose -IT 2.       Commissioner of Income-tax-IV vs. Sambhav Media Ltd.        Computation for loss suffered by a party to contract is to be allowed, if not claimed twice       Held : Writing off a debt is enough to claim deduction; assessee not required to prove if debt has actually gone bad -IT 3.     P.A. Jose vs. Assistant Commissioner of Income-tax, Circle-1, Kottayam       Expenditure incurred for interior decoration on leased premises

Government of West Bengal Land and Land Reforms Department Requisition Branch Writers’ Buildings, Kolkata-700001. No. 2126(80)-LL/N/1R-49-2012 Date: 29.04.2013 To Additional Chief Secretary/Principal Secretary/Secretary ………. Department Divisional Commissioner …………… Division Director of Land Records & Surveys, 35 Gopalnagore Road, Alipore, Kolkata-27. District Magistrate, ………………… District 1st Land Acquisition Collector, 5, Bankshal Street, Kolkata-700 001. Sub:- Assessment of revision of rent in respect of Private premises hired for public purposes. The principles for certifying reasonableness of rent in respect of private premises hired for public purposes were laid down in this Department Order No. 590(96)-LR. dated 03.08.1993 for simplification of the procedure as well as for removal of certain anomalies in following the procedure laid down in the said circular, it is felt necessary to replace this order. After careful examination it has been decided by the Gover

Birla Sun Life Insurance Company has been directed by UT District consumer disputes redressal forum to refund to a complainant the surrendered value along with the cost of litigation, on the ground of false assurance to provide an insurance cover that he required. The complainant, Yashu Vashishath, a resident of sector 19 and a student at Punjab University subscribed to the policy which assured catering to all the requirements needed for him to get admission in Winconsin, U. S. A. After paying the first premium of Rs 1 lakh, he left for the US. Yashu alleged that the premium receipt that the company issued to the school authorities abroad was rejected as the policy was not recognized there. Yashu then took up the issue with insurance company, asking for the refund of the premium, but to no avail. A complaint was filed with the insurance ombudsman and despite the instructions; the company did not send the duplicate copy of the policy bond and or refund the amount. Meanwhile, the in

When it comes to general insurance claims, a surveyor has long played God. He is the one on whose word insurance companies rely while handing out the money. For the uninitiated, a surveyor is a qualified professional, who assesses the nature and extent of your loss, and the insurer company processes your claim on the basis of the report that is prepared by him. However, in a recent case, the National Consumer Commission held that the surveyor's assessment need not be the final word while settling a claim. Given the extent to which the insurance companies depend on the surveyor's report, this ruling is significant. It clearly establishes that companies must look beyond the assessment report, especially in cases of ambiguity. The case In April 2005, the owner of Uni Ply Industries insured the stock in his factory for Rs 30 lakh with New India Assurance, for a year. The insurance company issued a one-page policy cover note, but without any terms and conditions. The policyho

A Delhi-based builder has been asked by the top consumer court to refund Rs 1.91 lakh charged in excess from an elderly couple, to whom the delivery of two flats in Gurgaon was delayed for 20 months on the ground that an electricity connection was lacking. The delay by Today Homes Infrastructures amounted to deficiency in service, the National Consumer Disputes Redressal Commission said. The national commission upheld the state commission's decision against the interest collected by the builder from the flat applicants, OP Ratra, 72, and his wife Harmeet, 68. Ratra and his wife booked two floors in the project of the builder's units bearing No 86 at the ground floor and the first floor, Blossom-II at Sector-51, Gurgaon. The two complainants totally paid Rs 66.88 lakh. "In our observation, the builder claiming that he has right to charge interest at the rate of 15 percent per annum appears to be unjust and an exploitation of consumers. Hence, the builder charging int

A consumer forum has held that when the terms of an insurance policy are vague, benefits should be given to the insured. The forum brought to book an insurance company that denied the accidental death claim of a South Mumbai resident on the ground that the death of his father, a senior citizen and a doctor, due to a fall at home, was not accidental and was caused by disease-related giddiness. National Insurance Co Ltd will have to pay the victim's son, Dr Sunil Vakil, the insured sum of Rs 5 lakh along with an interest of Rs 1.20 lakh. It will also have to pay Rs 23,000 as compensation for an unfair trade practice and towards the costs of the complaint. The forum cited a national commission order which said it was an accidental death even if an insured person suffered a fit and drowned or fell in front of a train and was killed. The national commission ruling said that "it is settled law that when two reasonable interpretations of the terms of the policy are possible, t

Life Insurance Corporation has been pulled up by a consumer forum here for "knowingly harassing" the widow of a policy holder by denying her claim and directed to pay her Rs. 1.06 lakh. The New Delhi District Consumer Disputes Redressal Forum noted that as per the conditions of the policy issued to the complainant's husband no medical report was required, but LIC had denied the claim on the ground that he had not disclosed that he had been suffering from TB for over four years. "We have gone through the contents of complaint and noticed that non-medical policy for sum assured of Rs. 50,000 was issued to the complainant by opposite party (LIC) over which there is no medical report is required as per norms of LIC policy. "Despite the above facts, opposite party deliberately/arbitrarily denied the claim without supporting evidence which is a clear case of deficiency/unfair trade practice that opposite party knowingly harassed consumers without any reason exc

In a significant order with far-reaching consequences, the Madras High Court has brought aided private educational institutions under the ambit of the RTI (Right To Information Act). In the case pertaining to the Thiagarajar College of Engineering in Madurai, the Court held that it is indeed a “public authority” as defined in the RTI Act and hence could not deny information with regards to its functioning to those who seek it. Given that Tamil Nadu has a number of such aided private institutions, not just in engineering but also in other areas, whose functioning have time and again been questioned by educationists, the order clearly provides an opportunity to usher in greater transparency. Thiagarajar College of Engineering receives aid from the State Government for payment of salary to teaching and non-teaching staff. In 2009, one T K Ravindranath made an application under the RTI Act seeking information on fee structure of the college for certain courses. In reply, the colle

Consumer forum decides bank's inefficiency cost man his policy Chief of Pune District Consumer Disputes Redressal Forum, VP Utpat, and Forum member SM Kumbhar have directed Bank of Maharashtra (BoM) to pay Rs16,000 to Shukrawar Peth resident who did not get mediclaim benefits owing to neglect of the Bank. The forum asked the Bank to pay within within six weeks, Rs10,000 as compensation for the mediclaim benefits he lost, Rs5,000 for the mental agony he suffered, and Rs1,000 as suit charges, totalling Rs16,000. Vinod Takhatmal Kothari, a resident of Shukrawar peth had moved a plaint against BoM regional office at Lokmangal in Shivajinagar on September 13, 2010, for alleged inefficiency of services. According to Kothari’s complaint, he ran a proprietary concern named Sha Takhatmal Foujimalji Kothari and had a current account with BoM for six years. He had availed a mediclaim insurance policy from the Oriental Insurance Company 13 years ago. It was a joint policy with his wife

The Motor Accident Claims Tribunal (MACT) has exonerated an insurance firm from paying compensation to a road accident victim on the grounds that the driver of the offending vehicle did not possess a valid Heavy Transport Vehicle (HTV) driving licence. The Tribunal, holding both the driver and victim equally responsible for the accident, also reduced the compensation amount, to be paid by the owner of the truck that hit the complainant Ramesh Eknath Kamble’s motorcycle at a signal light. The Member of the Tribunal and Additional Sessions Judge, S Y Kulkarni, in his award, stated that non-possession of the licence by the truck driver violated terms and conditions of the insurance policy. 'Therefore, in present facts and circumstances of the case I hold that insurance company deserves to be exonerated from the responsibility to pay the compensation to the applicant. 'In present facts and circumstances of the case I am of the view that only the opponent the owner of the of

Dismissing the defence of an insurance company that there was a delay in lodging the claim for the theft of a dumper, the Thane district consumers forum has directed the company to settle the claim of Rs 14 lakh along with payment of legal expenses. Thane District Consumers Disputes Redressal Forum (TDCDRF) chairman Umesh V Jawalikar and member N D Kadam, in their order on Wednesday, noted that the ICICI Lombard General Insurance company was unnecessarily making an issue out of the delay in lodging of the claim, which was not the case at all. Bhojraj V Tichkule, a resident of Thane city, in his complaint to the forum stated that on May 13, 2009, his driver had parked his dumper in front of a transport company at Vasai. Next day, when the driver returned to take the dumper it was not found in its place. Hence, he immediately informed Tichkule, who initiated the process of search and went to the police station to lodge a complaint. But, the police asked him to carry out the search

In an unprecedented and first-of-its-kind case, the Maharashtra State Commission constituted a special five-member bench to answer a reference whether telecom disputes are maintainable under the CPA. This required to be done since two different smaller benches had given conflicting rulings on the issue. The confusion arose because of a Supreme Court judgment in the case of General Manager Telecom v/s M Krishnan, where it was held that a dispute between a telegraph authority and a consumer is not maintainable under the CPA and requires to be decided through arbitration. The massive 29-page landmark judgment was passed by the Maharashtra State Commission after hearing the advocates for MTNL, BSNL and Bharti Airtel and the representative of Bombay Telephone Users' Association, which had intervened in the matter and argued on behalf of all the consumers. The judgment, which was delivered on November 6, 2012, by Justice S B Mhase along with judicial members S R Khanzode and P N Kasha

In a significant judgement that should help apartment owners, the top consumer court has directed a Ghaziabad-based builder and an official of an apartment block in Uttarakhand to "atone for their deficiencies" by rectifying defects in an apartment bought by two consumers or pay them over Rs.16 lakh in compensation cost for repairs and promised discount. National Consumer Disputes Redressal Commission Presiding Member J. M. Malik slammed Maa Jhande Wali Constructions and Anil Gupta, managing director of Ganga Residency Apartment in Uttarakhand's Tehri Garwal, for an apparently non-serious approach towards the complaint filed by the flat owners and staying away to delay the proceedings in the subordinate consumer fora. Malik, in a recent order, offered a breather to aggrieved flat owners Parth Prathim Saha and Pankaj Roy, both residents of Tripura, and noted: "On merits, the counsel for the (builder and Gupta) admitted that they are ready to rectify the deficienc

Banks cannot invoke powers to create general lien to freeze a savings bank account and recover outstanding dues from an account holder without prior intimation to the customer, the Maharashtra state consumer commission held last week. Invoking the provision for creating lien or freezing a savings bank account has to be with prior intimation to the complainant as opportunity of natural justice, the commission noted, reversing the Mumbai suburban district consumer forum’s ruling. The district forum had rejected Chandivali resident Arti Krishnan’s complaint against HDFC Bank, stating that the bank was empowered to create lien on her savings bank account and was empowered to debit money from the account for settling purported credit card dues. On April 25, 2006, Krishnan, who had lost her credit card, was issued a new card. There was a dispute about outstanding dues on the previous card and the bank agreed to settle it at Rs29,000, which Krishnan was supposed to pay in instalments.

The Madras high court has frowned on mechanical return of registered letters as "unclaimed" by postmen, and said that in case they could not be delivered, proper reasons must be given. Justice S Tamilvanan, underscoring the importance of a registered post in litigations and other matters, said that when people pay a fee and affix sufficient postal stamp, the postal authorities or postmen must discharge their duties in a responsible manner. The postman should make it clear as to whether the registered letter was served on the addressee or refused by the addressee or no addressee was found in the given address, the judge said. Passing orders on a matrimonial litigation, wherein a Chennai-based woman wanted her divorce proceedings to be transferred from a Puducherry court to a Chennai court, the judge said the woman's notice sent by registered post had been returned undelivered with a simple endorsement "unclaimed." Slamming the practice, Justice Tamilvan

Holding that banks cannot deny educational loans on the grounds that a student has examination arrears, the Madras High Court (Madurai Bench) has directed a Canara Bank branch in Karaikudi in Sivaganga district to sanction Rs 3.60 lakh as loan to an engineering college student. The student V P Infant Ranjith is pursuing BE Computer Science Engineering in a private engineering college near Chennai. His father V K Peter Rajan, an advocate, filed a petition stating that the Canara Bank, Sankarapuram Branch in Sivaganga had refused to sanction an education loan during 2011 stating that they had already reached the cumulative loan sanctioning limit for the year. The bank officials advised him to approach the next year. The following year when he applied for a loan of Rs 3.60 lakh, the bank kept his application pending but orally indicated to him that since he is an advocate it would be difficult to recover the loan amount. Besides, Ranjith had failed in a subject in the second year an

A road accident victim’s right to claim compensation is statutory. This right cannot be denied merely because the driver of a light motor vehicle did not get authorisation in his licence to drive a commercial vehicle also, the Supreme Court has held. A Bench of Justices S.S. Nijjar and M.Y. Eqbal said the insurance company “cannot disown its liability on the ground that although the driver was holding a licence to drive a light motor vehicle but before driving a light motor vehicle used as commercial vehicle, no endorsement to drive acommercial vehicle was obtained in his licence. In any case, it is the statutory right of a third party to recover the amount of compensation so awarded from the insurer. It is for the insurer to proceed against the insured for recovery of the amount in the event there has been violation of any condition of the insurance policy.” In the instant case, cyclist Charles was fatally knocked down by a Mahindra van running at high speed on May 23, 1998. Driv

No employee, as a matter of right, can seek the benefits of voluntary retirement scheme (VRS) and the decision-taking power lies only with the employer firm, the Supreme Court has held. "A voluntary retirement scheme introduced by a company, does not entitle an employee as a matter of right to the benefits of the scheme," a bench headed by Chief Justice Altamas Kabir said. The bench, also comprising Anil R Dave and Ranjana P Desai, said it was "well settled" that only the employer can decide VRS pleas of its employees. "Whether an employee should be allowed to retire in terms of the scheme (VRS) is a decision which can only be taken by the employer company, except in cases where the scheme itself provides for retirement to take effect when the notice period comes to an end," it said. The observation came in a verdict by which the apex court rejected the plea of C V Francis, a Kerala resident, that his termination from the post of a manager of Stee

There is no absolute command of law that the testimonies of cops should always be viewed with suspicion if public witnesses to an offence do not come forward to depose, the Supreme Court today said. A bench of justices B S Chauhan and Dipak Misra said the testimony of a cop should not be disbelieved on the ground that that he is a policeman and rather, the deposition be scrutinised on "the principle that quality of the evidence weighs over the quantity of evidence." "...There is no absolute command of law that the police officers cannot be cited as witnesses and their testimony should always be treated with suspicion. "Ordinarily, the public at large show their disinclination to come forward to become witnesses. If the testimony of the police officer is found to be reliable and trustworthy, the court can definitely act upon the same," the bench said while referring to various previous judgements. It said after scrutinising the evidence, the court may d

"Obtaining consent by exercising deceit cannot be legitimate defence to exculpate an accused", the Supreme Court today said while upholding the conviction of a man, who repeatedly had sexual intercourse with a girl on the false promise of marriage. The apex court concurred with the findings of the Madras High Court and the trial court which had convicted the man by holding him guilty of raping the girl who was a major. The court noted that the accused at each time before having sexual intercourse "swore" that he would marry her but he later refused to tie the knot with her. "We confirm the concurrent determination of the courts below, that accused-appellant Karthick committed deceit with the prosecutrix by promising to marry her. On the strength of the said deception, in the first instance persuaded her not to disclose the occurrence to anyone, and thereafter, repeatedly had sexual intercourse with her. Therefore, in the facts and circumstances of this c

The Supreme Court has held that a joint account holder cannot be prosecuted in a cheque bounce case unless the cheque has been signed by each and every person of such account. The apex court said only the person, who issues a cheque from a joint account, can be made accused in proceedings under section 138 of Negotiable Instruments (NI) Act for dishonour of the cheque. "We also hold that under section 138 of the NI Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder," a bench of justices P Sathasivam and J S Kehar said. "This court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act," the bench further said. The verdict gave relief to a woman who had challenged the summons issued to her for the dishonour of cheque issued by her husband from their joi

Bhoruka Engineering Inds. Ltd. vs. DCIT (Karnataka High Court) The assessee held 98.73% shares in Bhoruka Financial Services Limited (BFSL). In AY 2005-06 BFSL purchased a plot of land from a group sick company called Bhoruka Steels Ltd for Rs.3.75 crores which was accepted to be the prevailing market price u/s 50C. BFSL was a shell company with no assets other than the said land. In AY 2006-07 the assessee sold its shareholding in BFSL to DLF Commercial Developers Ltd for a net consideration of Rs. 20 crore. As the sale of shares was executed through the Magadh Stock Exchange and STT was paid, the assessee claimed that the gain on sale of shares was exempt u/s 10 (38). The AO, CIT(A) and Tribunal rejected the assessee’s claim on the basis that the assessee, BFSL and Bhoruka Steels were all controlled by common shareholders and that the scheme to first sell the land to BFSL and then to sell the shares of BFSL was devised with the sole purpose of avoiding tax on the capital gains whic