Legal News & Views

A lawyer who gives a legal opinion cannot be charged in a criminal case in the absence of evidence that she actively perpetrated the fraud, the Bombay High Court has ruled. Two years after city-based advocate Mohana Nair (60) was charged by the CBI with forgery and fraud over an opinion she gave in a housing loan case, a division bench of Justice S C Dharmadhikari and Justice Gautam Patel quashed the case against her, calling it "entirely frivolous, thoroughly vexatious and undeniably oppressive". The court also slammed the investigating agency for targeting the advocate. "Unless we find that there is at least a prima facie case against an advocate who gave an opinion-a 'best judgment assessment', as it were, based on her knowledge of the law, her appreciation of the facts and her reading of the documents-that she played an active role in the fraud alleged, we cannot but conclude that there is no case to be made out against that advocate," said the ju...

Apex court verdict upholding Bombay high court ruling is a jolt to developers in the state. This is good news for those who have bought property between June 2006 and March 2010. The Supreme Court on Thursday said Value Added Tax (VAT) cannot be imposed on buyers. This has come as a jolt to builders in the state who wanted 1% tax instead of 5% imposed by the state government in 2006. They were recovering the VAT amount from buyers. Justice RM Lodha upheld the Bombay high court order that VAT cannot be imposed on buyers. “The value of goods which can constitute the amount to be taxed has to be the value of the goods at the time of incorporation of goods in the works even though property in goods pass later. Taxing the sale of goods element in a works contract is permissible even after incorporation of goods provided tax is directed to the value of goods at the time of incorporation and does not purport to tax the transfer of immovable property,” the court observed. The court also direc...

Reliance Communications Ltd has been directed by a consumer forum here to pay Rs 10,000 to one of its subscribers as compensation for its "malpractice" of changing his tariff plan without his consent. The East District Consumer Disputes Redressal Forum also held that Reliance Communications, being a private service provider, is not a telegraph authority and hence, it cannot avail the immunity available under a Supreme Court verdict exempting telegraph authorities from the purview of Consumer Protection Act in telecom matters. A bench headed by N A Zaidi said the matter was "a clear cut case of malpractice thriving in the telecom industry at the hands of the service providers like the respondent (RCL)" as the telecom major could not show the TRAI circular on the basis of which it had arbitrarily changed its subscriber's tariff plan. As Reliance had "erred to file" the TRAI circular to defend its action, the forum observed that "it is farcical t...

IDBI Bank will have to pay compensation of Rs 3.22 lakh to a Pune man after it lost the original sale deed of his property, which he had submitted while procuring a home loan in 2003. The complainant, Captain Vikrant Apandkar, had sought the document after foreclosing the loan in 2007. "He has been continuously making efforts to obtain the original documents. The bank disowned its stand in locating and dispatching the original document to the complainant for quite a long time. The complainant was subjected to unnecessary correspondence and follow-up since he had availed the loan in 2003," said the Maharashtra State Consumer Disputes Redressal Commission. Apandkar had earlier filed a complaint against the bank in the district forum. But on May 31, 2012, when the forum dismissed the complaint on the grounds that it was filed late, he filed an appeal in the state commission. In the appeal, Apandkar said that on June 30, 2007, the bank issued him a no-dues certificate, b...

At a time when land is at a premium in Mumbai and land-grabbing a common occurrence, the Bombay HC, in an order, has ruled that the state government can take over land if a property does not have any legal heirs or beneficiaries. Forty-four years after a man died without any heirs, leaving behind a 5,143-sq m plot in Ghatkopar, the HC directed that the state be included as a party in the land dispute. In 1944, Kashinath Sawant bought the Ghatkopar land. He died in 1969 without any heirs. Neelkanth housing society said it was the owner as the developer who constructed the building had purchased the plot. Bhuwaneshwar Tripathi has staked claim saying he was a tenant in the chawl on the land. "If the trial court finds that the property's last known lawful owner has not left any legal heir, descendant, rightful nominee or beneficiary, it would vest in the state government," said Justice A P Bhangale. "In the case in hand, if the trial court finds it necessary to app...

Non-listing of a disease in the ‘recommended diseases’ list cannot be a ground for rejection of insurance claim, the Madras High Court has ruled. “Once a person is validly covered by a health insurance scheme and he has taken treatment at an accredited hospital, he cannot be denied reimbursement of the cost of treatment on the ground that the ailment has not been included in the ‘recommended diseases’ list for reimbursement,’’ Justice T Raja observed while allowing a writ plea from G Simon Christudoss. Accepting the arguments of advocate D Prasanna that a school employee had been unfairly denied reimbursement of costs involved in his eye surgery conducted at a city hospital, the judge said it was not open to the DEO, the competent authority, to say that the employee was not entitled for reimbursement of medical expenses as the disease he suffered from was not shown as one of the diseases on the list. The approach of the officer was unreasonable, the judge said. Christudoss, an ass...

A power company cannot unilaterally change a consumer's electricity meter because it suspects the instrument is defective, the Bombay high court has ruledin an important order. Putting the reins on power companies, Justice Ashok Bhangale, while hearing a two-decade-old case, said that if there was a dispute about the working of a meter, in the absence of allegations of fraud against the consumer, the matter has to be referred to the electricity inspector. Moreover, the inspector can decide on additional charges only for a period up to six months prior to when the dispute was raised. "Provisions of the Indian Electricity Act manifest that the original correct meter once installed acquires a sacrosanct status. After installation, both parties cannot remove or replace the meter," said the judge. The court said that if the power company or consumer suspects that a meter is defective, then the matter should be brought before the electricity inspector. The company will n...

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 ...

The Bombay high court recently slammed United India Insurance Company Ltd for refusing to renew a cancer patient's policy and held that renewal of health insurance policies cannot be declined on an arbitrary ground that a person holds multiple policies. The court said there is no bar on the number of insurance policies a person can have.'' The court said the firm's denial was on "preposterous grounds" of suppression of illness when there was a clear disclosure by the policy holder. The HC held that if a complainant does not accept the Ombudsman's award, the insurance company doesn't have any discretion to implement it. Rejecting renewal on such recommendation is "flawed", the HC held. "The renewal of a mediclaim policy cannot lie at the whim and caprice of the insurer," said a bench of Justices D Y Chandrachud and S C Gupte last month. Kalyani, a bank employee, and her husband Avinash Gokhale had filed a petition in the HC last ...

The Supreme Court has scoffed at Haryana's land acquisition policy under which authorities had acquired a fully operational industrial unit and its land for setting up an industrial estate. A bench of Chief Justice P Sathasivam and Justice Ranjana P Desai quashed acquisition of the land on which the industrial unit was functioning and said, "We are of the view that there is no justification in acquiring a running industrial unit for industrialization of the area." This happened at Kundli, a stone's throw from Delhi, where the authorities in 2005 acquired the land on which an industrial unit of VKM Katha Industries Ltd had been functioning since 1994. The unit was registered as a small-scale industrial unit with the director, industries department, Haryana, and was manufacturing kattha for various tobacco and non-tobacco products. On December 21, 2005, Haryana government's industries department issued a notification under Section 4 of the Land Acquisition Ac...

The right to occupy a flat is a species of right to property and the flat can be mortgaged to avail of a loan for the flat owner's benefit, the Supreme Court stated last week while dismissing the appeal of Hill Properties Ltd against the attachment of a Malabar Hill flat at the instance of a petition by Union Bank of India before the Debt Recovery Tribunal. A shareholder of the building company mortgaged the flat, which was attached under the Securitisation Act. The company challenged it. Dismissing its appeal, the court stated: "We find that neither the Companies Act nor any other statute make any provision prohibiting the transfer of species of interest to third parties or to avail of loan for the flat owners' benefit. A legal bar on the saleability or transferability of such a species of interest, in our view, will create chaos and confusion. The right or interest to occupy any such flat is a species of property and hence has a stamp of transferability," the cou...

Resolving doubts over two differing interpretations of the Supreme Court in the matter of Negotiable Instruments Act, a larger Bench last week stated that for the purpose of calculating the period of limitation of one month, which is prescribed under Section 142(b) of the Act, the period has to be calculated by excluding the date on which the cheque was dishonoured. A division Bench had referred the question to the larger Bench as the principle laid down in the case, in Saketh India Ltd vs India Securities Ltd, and in the case, SIL Import, USA vs Exim Aides Silk Exporters, differed with each other. The new judgment, Econ Antri Ltd vs Rom Industries Ltd, settled the question by holding that the first case laid down the correct principle and should be followed by all courts below. http://www.business-standard.com/article/opinion/hc-cannot-cancel-auction-sale-113090200004_1.html

The Supreme Court has ruled that the insurance company is liable to pay compensation to a road accident victim when it informed the insured that his cheque was dishonoured after the mishap. In this appeal, National Insurance Company vs Balkar Ram, the motor accident tribunal had ordered compensation to the victim. The company appealed against it, arguing that the cover note for the policy was issued against a cheque which was dishonoured even before the accident. On the other hand, the victim argued that the intimation regarding the dishonour of the cheque and cancellation of the policy was communicated to him after the date of the accident. The cheque bounced on April 17, the accident took place two days later and the intimation of the dishonour was conveyed on April 26. The court ruled that till then the insured was holding a valid policy and therefore the insurer must pay compensation. Article referred:http://www.business-standard.com/article/opinion/hc-cannot-cancel-auction-sa...

The Supreme Court has stated that high courts should not set aside auction sale conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act) exercising its writ powers. In this case, GM, Sri Siddeshwara Co-operative Bank Ltd vs Sri Ikbal, the borrower of a housing loan was a "chronic defaulter" and therefore, the property was auctioned and it was sold in the presence of the borrower. After four years, the borrower challenged the sale certificate of the auction purchase in the Karnataka High Court in a writ petition. The high court quashed the auction sale and ordered a fresh auction. It further made certain observations against the bank officer and directed its registrar to refer the matter to the Superintendent of Lokayukta police at Bijapur for further action in accordance with law. The high court's view was that the mandatory rules were not followed. The bank and the auction purchaser moved ...

In a judgment that will impact lakhs of people registered under the Employees State Insurance Scheme (ESIS), the Bombay high court has ruled that a dependent of an employee who dies a natural death at the workplace is eligible for compensation. Terming death due to a heart attack at work as "an employment injury'', the high court has directed the Employees State Insurance Corporation (ESIC) to pay a widow monetary benefits that she is eligible to under the scheme within four weeks. On September 5, 2013, a division bench of Justice V M Kanade and Justice K R Sriram allowed a petition by the widow, Bhagyashree Mahadik, challenging rejection of her claim. Her husband, Bharguram (50), died of a heart attack while at work on March 27, 2012. He was employed with Dhanwantari Engineers as a fitter on a salary and enrolled under ESIS by his employer. ESIC rejected Bhagyashree's claim saying her husband had died of a heart attack, which cannot be termed as employment inju...

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...

Emphasising that a flat buyer cannot be charged extra for a car parking space, a consumer forum has fined a developer that committed this "unfair trade practice". The Central Mumbai District Consumer Disputes Redressal Forum last week directed Tata Housing Development Company to refund Rs 50,000 to Ghatkopar-based Suresh Mehta and pay him compensation of around Rs 20,000. "Car parking area is the common area of the society. Therefore, the opponent (the developer) had no right to charge any amount for the sale or use of the parking space," observed the forum. It took into consideration a Supreme Court judgment which held that a developer can only sell a flat and has no right to sell a parking space. In his complaint, filed with the consumer forum last year, Mehta had said that he purchased on June 30, 2010, an apartment and car parking space at Betegaon, Palghar, for Rs 17.4 lakh. He maintained that Rs 50,000 was taken from him for car parking and another Rs 5...