Legal News & Views

In order to reduce the cost of insurance inflicted by fraud, IRDA is planning to build advanced detection and prevention systems at industry level to identify fraudulent claims before payment occurs Worried over fraud in the health insurance sector, Insurance Regulatory and Development Authority (IRDA) plans to build an advanced detection and prevention system to check fraudulent claims. In order to reduce the cost of insurance inflicted by fraud, IRDA said it is proposing to build advanced detection and prevention systems at industry level to identify fraudulent claims before payment occurs and to improve the accuracy of fraud detection. "Firms/ organisations are advised to submit proposal to establish a comprehensive and complete solution for insurance fraud management within health insurance segment...," IRDA said, while inviting bids from eligible agencies for fraud prediction and detection analysis for underwriting and claims. The regulator said it is looking to...

Public now appears to be accessing the consumer forum quite regularly and for almost any instance of grevience. Raigad district resident Prahlad Padalikar did. When he was charged Rs 25 for a one litre-bottle of Oxyrich mineral water at Kamat Hotel, he filed a complaint with the Maharashtra Consumer Disputes Redressal Commission. The bottle, usually available for Rs 15 elsewhere, was labelled ‘Specially packed for Kamat Hotel’. The Commission took up Padalikar’s complaint as a case of exploitation of consumer and ruled that, “Rs 25 is a much higher, exorbitant and unconscionable price at which the Oxyrich bottle, is sold to the complainant. The stamping ‘Specially packed for Kamat Hotel’ is equally misleading and misrepresenting, since it has no nexus with either quality, quantity, purity or service other than the one which are available with Oxyrich packed drinking water bottle available at Rs 15, elsewhere.” The purchase cost for Kamat Hotels, the Commission said, was Rs 1...

Insurance companies and public sector units (PSUs) had to face some tough time in 2012 from the consumer fora which pulled up these entities for causing a rise in frivolous litigation, reports PTI. The apex consumer commission pulled up PSUs for behaving 'penny-wise, pound-foolish' and spending more money in fighting cases than they might have to pay to the claimants. The National Consumer Disputes Redressal Commission (NCDRC) made the observation while pulling up Haryana Urban Development Authority (HUDA) for "gross negligence, deliberate inaction and lack of bonafides" in delaying by 204 days filing of a plea against a state consumer commission's order. The NCDRC also imposed a fine of Rs50,000 on HUDA while blaming the legal staff of the PSUs for not examining cases properly and forcing litigants to approach courts, resulting in a rise in frivolous litigation. Apart from PSUs, the consumer fora made clear its displeasure with insurance compani...

Ruling that lunch break will be included in business hours unless specifically stated otherwise in the policy, the National Consumer Disputes Redressal Commission (NCDRC) has directed an insurance company to pay Rs 10.5 lakh to a Bhayander-based jeweller. Panchsheel Jewellers had bought an insurance policy from the New India Assurance Company for Rs 21.51 lakh. The policy covered all the jewellery and cash in the shop including those at the display window. The theft took place in the shop premises on 8.5.2003 during the lunch hours.  Gold ornaments allegedly worth over Rs.21 lakhs and some cash were stolen. The jeweller deposed before the commission that the business hours are from 10.00 to 10.00 p.m. so also according to normal business practice lunch hours are the part of working hours of business.  About the gold ornaments kept in the showcase it is not possible every time, when the shop is closed for lunch time during business hours, to keep the ornaments again in...

Now that the Banking Laws (Amendment) Bill has been passed by the Lok Sabha, it will easily go through the Rajya Sabha also as it has the approval of the main opposition party, the BJP after finance minister P Chidambaram dropped the controversial clause relating to allowing banks to trade in commodity futures and keeping the sector outside the purview of Competition Commission of India. Some of the salient amendments that were demanded by the RBI (as a prerequisite to issuing new bank licenses) and have been approved are as follows: (a) RBI to have the power to supersede bank boards for a period not exceeding 12 months. Under the existing Banking Regulations Act, 1949, the RBI has the power to remove a director or any other officers of the banking company. The amendment enhances the power of the RBI to supersede the board of directors of a banking company for a period not exceeding 12 months and appoint an administrator for managing the company during that period; (b) Ra...

This seems to be the year of retrospection for the Supreme Court. From changing its stance in foreign arbitration matters to insurance and now cheque bouncing under Sec 138. In 1998, the court had held that you could not file a case on second dishonour of a cheque, if you had not acted on the first default. A new SC order changes this. Approaching the courts to seek justice is a game of chance, to say the least. The end result is totally uncertain. Apart from cumbersome procedures, litigants are subject to the vagaries of law. While the law is enacted by the legislature, it is interpreted by the judiciary; therefore, any judicial pronouncement, particularly by the Supreme Court, becomes the law of the land. It is not uncommon to find contradictory views taken by different judges on the same issue. But, what can one do when the highest court itself finds that its judgement 14 years earlier was wrong? This is what is called ‘the vagaries of law’. Cheques are the normal mode...

The numbers of search warrants executed under the Income Tax Act, 1961 during the years 2010-11, 2011-12 and the current year are as under: Period Number of warrants executed 2010-11 4852 2011-12 5260 2012-13 * 1540 (upto Sept. 2012)                                    * figures are provisional Income Tax Department conducts search and seizure actions based on credible information relating to ‘persons’, which include individuals, Hindu undivided families (HUFs), firms, companies, association of persons (AoPs), body of individuals (BoIs), local authorities and any artificial juridical person, who satisfy any of the conditions specified in Section 132 (1) of the Income Tax Act, 1961. As these persons are engaged in diversified businesses/professions across different sectors spread all over the country, Person-wise/sect...

After 7 long years of deliberation at the government level and another 5 years at the parliamentary stage, the Lok Shabha has finally approved the Companies Bill 2011, in a bid to amend the 5 decade old Companies Act 1956. It still needs to be approved by Rajya Shabha. The government has tried plug loop holes and streamline the act to some extent. Structural difference:-  Companies Act 1956  Companies Bill 2011  13 parts 750 + sections 15 schedules  29 chapters 470 clauses or sections 7 schedules Among the significant changes brought in are:- Clause 2) Changes in definitions:- 'Abridged Prospectus' - Now stands as specified by SEBI New concept of  'Associate Company' Concept of  'Interested Director' clarified New concept of  'Key managerial personnel' - which includes the CEO, CFO, Company Secretory, Who...

Amid raucous protests, the Republican-led Michigan House approved a contentious right-to-work bill on  Dec 11 limiting unions' strength in the state where the (Union for American Auto Workers)  UAW was born. The chamber passed a measure dealing with public-sector workers 58-51 as protesters shouted "shame on you" from the gallery and huge crowds of union backers massed in the state Capitol halls and on the grounds. Backers said a right-to-work law would bring more jobs to Michigan and give workers freedom. Critics said it would drive down wages and benefits. The right-to-work movement has been growing in the country since Wisconsin fought a similar battle with unions over two years ago. Michigan would become the 24th state to enact right-to-work provisions, and passage of the legislation would deal a stunning blow to the power of organized labor in the United States. Wisconsin Republicans in 2011 passed laws severely restricting the power of public s...

On Friday morning, 27 people were killed in a shooting at an elementary school in Newtown, Connecticut. Among the fatalities are 20 children, six adults, and the shooter. We're following this story closely with regular updates here. This guide and map have been updated with data from the Newtown massacre. It's perhaps too easy to forget how many times this has happened. The horrific mass murder at a movie theater in Colorado on July 20, another at a Sikh temple in Wisconsin on August 5, another at a manufacturer in Minneapolis on September 27—and now the unthinkable nightmare at a Connecticut elementary school on December 14—are the latest in an epidemic of such gun violence over the last three decades. Since 1982, there have been at least 62 mass murders carried out with firearms across the country. There are approximately 90 guns for every 100 people in the US. More than 85 people a day are killed with guns and more than twice that number are injured with them. Gu...

A Supreme Court ruling on 11th Dec, to the effect that non-payment of dues against a foreign exchange derivatives contract by a company will qualify as wilful default, will arm banks with greater powers to deal with such cases. In 2008, several companies posted losses on derivatives contracts and dragged banks to court claiming these had been mis-sold to them. Companies had argued that since a derivatives contract was not a loan, they could not be categorised as ‘wilful defaulters’ even if there were outstandings against such contracts. However, a bench headed by Justice AK Patnaik upheld a similar ruling by the Bombay High Court in August 2011, setting aside the Calcutta HC’s order of September 2009 which said a Reserve Bank of India (RBI) circular, issued in 2010, was not applicable to forex derivatives. “Bankers are relieved that they can now take steps to recover their dues,” said Dipak Gupta, joint MD, Kotak Mahindra Bank. “The ruling clarifies that a wilful default is no...

A mobile purchaser, who did not take a receipt to avoid value added tax, lost his case related to a defect in goods against the dealer before Goa state consumer disputes redressal commission. Dismissing the petition, the commission observed that the "Consumer Protection Act, 1986, was intended to protect the consumers, but consumers can be protected only in accordance with law and not by overstepping the law." The case relates to Devdatta S Naik, who purchased a Nokia 1600 from Sai cellular services, Margao, at a cost of 3800 in December 2005. He paid the dealer 1000 by cheque and the balance of 2800 in cash. He did not obtain a receipt, in order to save 12.5% tax. The phone failed after two days and had to be sent to Pune for repairs. The replacement phone that the dealer gave him also failed. Naik then insisted on getting a new phone and refused to accept the repaired phone. When the phone stopped functioning and the citizen demanded a replacement from the ma...

Five years after losing her husband in an accident, Manisha Devi, the widow of a CRPF jawan, will finally get insurance after a district consumer forum in Delhi ruled in her favour. Noting that the insurance company's action was "unjustified", District Consumer Disputes Redressal Forum (East) has asked Oriental Insurance Company to pay Rs 4.5 lakh as insurance to the widow and an additional Rs 1 lakh as compensation for "harassment, mental pain and agony". The forum also directed the company to deduct the compensation from the salary of the branch manager who rejected Manisha's claim. "We direct that this amount of Rs 1 lakh shall be recovered by the insurance company from the salary of the branch manager who rejected the claim of the complainant... The amount of compensation is the result of an unjustified action of the insurance company authorities who rejected the bona fide claim of the complainant," the order passed by N A Zaidi, pres...