Legal News & Views

The High Court has held that being legal representatives, claimants of deceased, though they are not dependents, are entitled to compensation. The court made it clear that for being entitled to compensation, one need not be a dependent legal representative. It is only when there are dependents and non-dependents, that dependents are to be preferred for grant of compensation over non-dependents. Justice B Siva Sankara Rao made this order in an appeal by the United India Insurance Coompany, Hyderabad, challenging the order of the Motor Accidents Claims Tribunal-cum-XVIII Additional Chief Judge, Hyderabad, awarding compensation of Rs 2.39 lakh (against a claim of Rs 2.5 lakh) with interest at 9 percent per annum to the claimants, who are the husband and two major sons of the deceased, Anjan Bai Metre (55), who died in an accident in 2003. The accident was the result of an autorickshaw dashed against a roadside big tree near Ranjendra Nagar, and the deceased who was travelling in the ...

With the government set to reintroduce the marriage laws amendment bill in the Lok Sabha to amend the Hindu Marriage Act and the Special Marriage Act to make irretrievable breakdown of marriage a ground for divorce, the Supreme Court has urged a rethink if it was an expedient ground for untying the matrimonial knot. "It is highly debatable whether, in the Indian situation, where there is rampant oppression of women, such a ground would at all be expedient," said the bench of Justice Vikramajit Sen and Justice Prafulla C. Pant in a recent judgment. The court hoped that this will be considered by the Lok Sabha. The Marriage Laws (Amendment) Bill, 2013 that was passed by the Rajya Sabha lapsed before it could be considered by the Lok Sabha, as the lower house was dissolved upon completion of its term and general elections were held. The court said this while restricting its examination of a divorce plea by K. Srinivas on the ground of alleged cruelty by his wife K. Suni...

The Supreme Court has stated that a consumer court cannot impose penal compensation when the aggrieved person did not ask for it. In this case, General Motors vs Ashok Ramnik, the National Consumer Commission imposed compensation on the car manufacturer for selling its vehicles as SUV to 260 customers though the model did not qualify for that description. Ashok had a dream to drive in a sports model vehicle to the high hills. The brochure of General Motors promised exactly that. So he bought a Chevrolet Forester model for Rs 14 lakh in 2004. But he was disappointed on several fronts and sued the firm for unfair trade practices like promising facilities which were not available. The district consumer forum asked the firm to return the money with costs of litigation and Rs 5,000 for mental agony. The firm appealed to the State Consumer Commission, which found that it was not a SUV as was described in the brochures. So it asked the manufacturer to correct its claims in future ads. When t...

When facts regarding the dishonour of a cheque are complex and seriously disputed, the high court cannot quash prosecution in a cryptic order, the Supreme Court stated in the case, Sesame Chemicals vs State of Meghalaya.  The payee company alleged that the cheque it received bounced as the drawer firm had stopped payment by the bank. The drawer firm contended that the goods supplied by the other firm was substandard, and the cheque was signed at gun point. Both parties filed criminal complaints against each other, under the Negotiable Instruments Act and criminal laws. The Gauhati High Court quashed the trial regarding the bounced cheque. On appeal, the Supreme Court  stated that the truth or otherwise of the allegations could be established only by evidence at the trial. The high court should not have cancelled the prosecution  at the instance of the drawer of the cheque, who abused the process of the court. Article referred: http://www.business-standard.com/arti...

A person who buys a commercial plot to earn his livelihood  is a 'consumer' within the definition in the Consumer Protection Act, the Supreme Court ruled while setting aside the view of the National Consumer Commission in the case, Sanjay Joshi vs Municipal Board, Laxmangarh.  Sanjay was the lowest bidder in the auction for commercial plots and he paid security amount. Later he came to know that the plot was caught in  civil litigation and the municipal board could not sell it. He wanted to withdraw the security amount, which the board forfeited. He moved the district consumer forum which asked the board to return the money with  interest. The state commission confirmed it. However, the National Commission took the view that since the buyer wanted to start a business in the plot, he was not a consumer. On appeal, the Supreme Court reversed the decision and stated that since he an unemployed person who wanted to make a living, he came within the definition of consume...

There is no distinction between a hotel and an elite club when it comes to contribution to the Employees State Insurance fund, the Supreme Court stated while dismissing the appeal of Delhi Gymkhana Club Ltd last week. The court rejected the argument of the club that it was not “manufacturing” food in its kitchen and therefore the club was not a factory covered by the ESI law. “Kitchen is an integral part of the club which caters to the needs of its members on payment, thereby making the club fall within the definition of factory,” the Supreme Court emphasised, agreeing with ESI Corporation. The high court had already dismissed the club’s petition. The appeal was dismissed with the searing remarks that the welfare law was not followed by the elite club and “it is very unfortunate that it has not paid ESI contribution for more than three decades.” Article referred: http://www.business-standard.com/article/opinion/protection-for-sick-units-from-creditors-114110200712_1.html

Upholding Additional District Forum's verdict, the Nagpur bench of State Consumer Disputes Redressal Commission has asked a private builder to rectify defects as claimed by the residents or pay compensation. The residents of Wathoda-based Indira Town had alleged substandard construction that led to cracks and seepage of water in their new tenements. A bench of presiding member BA Sheikh and Jayashree Yengal, while delivering the order, made it clear that "it's always obligatory on the part of developer/builder to make construction without any defect... The construction firm cannot claim cost of repairing when the leakage or seepage occurred. Even if the possession of homes was taken over by the residents, in current case that didn't absolve the builder from rectifying defects," the judges observed. According to residents, their township was launched in 2004 and builder Sarju Constructions had allegedly taken maintenance amount of some Rs 4.25 lakh towards fac...

The south Mumbai district consumer dispute redressal forum on Wednesday, while directing an insurance firm to pay the accident cover claim of a deceased policy holder to his mother, held that both murder and accident are considered as unfortunate incidents and thus murder of a person also comes under the definition of accident. The forum in its order copy has mentioned that as per the dictionary meaning, accident is an unfortunate incident and so was the murder of the deceased. Thus, it is counted as an accident. How did the policy holder die? As per the order copy, deceased Dilip Prabhu had opted for an accident cover policy in June 1995, and it was active till June 1997. In 1996, Dilip was murdered while he was returning from work. The CID was investigating the case. Dilip and his wife, who were married in 1993, had sought for divorce in 1996. However, before the court could pass the final orders in the case, Dilip was killed. Who sought the accident claim amount? After Dilip...

The apex consumer commission has denied insurance claim to a man for his goods destroyed in a fire as he had changed the place of his business without intimating the firm, which had insured his goods. National Consumer Disputes Redressal Commission (NCDRC), presided by Justice K S Chaudhari, passed the order while allowing the revision petition of State Bank of India, which was asked to pay the man for the loss as per the direction of Shimla state consumer commission. "Complainant was under obligation to intimate insurance company about change of place of business and to get necessary endorsement on policy but he failed to intimate... And in such circumstances petitioner (bank) cannot be held guilty of any deficiency," the NCDRC said. The bank had approached the NCDRC against the state commission's order that had asked it to pay Rs 1.71 lakh to Himachal Pradesh resident Anil Kumar for the loss of his goods by fire. The bank had opposed Kumar's claim, saying t...

A senior citizen was awarded a compensation of Rs 5.13 lakh by the Thane Motor Accident Claims Tribunal on Monday. The 73-year-old woman had lost one of her legs after a speeding car ran over her in her housing complex in 2011. Sessions court judge S Y Kulkarni ordered Sweety Jitendra Shah, who was the owner of the car, and National Insurance Company to jointly pay the compensation to the victim with a 7% interest within a period of one month. If they fail to do so, then they will have to pay an additional 2% interest till realization, the judge said. The case dates to January 24, 2011, when the victim, Gumphabai Patil, was sitting in her building garden, along with her grandchildren, at 4.45pm when Sweety's driver lost control of the car and rammed into Patil. Since the car ran over her legs, Patil sustained severe injuries and her left leg had to be amputated. While Sweety was not present for the proceedings, the insurance company argued that the claim was not tenable as t...

The Madras High Court has issued an order in favour of a petition filed by Orchid Chemicals and Pharmaceuticals Ltd (OCPL) against ING Vysya Bank's move to declare the company as a wilful defaulter. It may be noted that the Bank has earlier approached the Debt Recovery Tribunal against the execution of the business transfer agreement of OCPL with Hospira Healthcare, to transfer some business and assets of OCPL to the latter. The dispute started after the Bank has sanctioned unsecured working capital limits of Rs 40 crore to OCPL in September 2001, which the company defaulted. It has also defaulted in payment to a consortium of Banks as well as to the other banks and submitted a proposal in June 2013 to the CDR cell for restructuring of the debt, which was later passed by the CDR Empowered Group. ING Vysya, which opposed the CDR package, filed a complaint with the Debts Recovery Tribunal and while things were moving before the Tribunal and the Appellate Tribunal, the Bank first...

The Delhi High Court last week set aside the demand of the tax authorities which insisted that in cases where deposits were made in terms of directions issued by the court, the banks were required to deduct tax at source and issue tax deducted at source certificates. The CBDT had also issued a circular to that effect. The high court, in its judgment in the case, UCO Bank vs Union of India, struck down the circular on several grounds. "The circular," said the court, "proceeds on an assumption that the litigant depositing the money is the account holder with the bank and/or is the recipient of the income represented by the interest accruing thereon. This assumption is fundamentally erroneous as the litigant who is asked to deposit the money in court ceases to have any control or proprietary right over those funds. The amount deposited vests with the court and the depositor ceases to exercise any dominion over those funds. It is also not necessary that the litigant who dep...

Delhi state consumer commission has set aside an order directing an insurance firm to pay the claim to man for his stolen vehicle, saying he had intimated the company about the theft after a delay of three months in violation of terms of the policy. The Delhi State Consumer Disputes Redressal Commission, presided by its judicial member S A Siddiqui, passed the order while allowing an appeal filed by Oriental Insurance Company Ltd against an order of a district consumer forum. In its order of January 30, 2012, the forum had asked the insurance firm to pay the claim to Delhi resident Tilak Raj Taneja, whose vehicle was stolen on the intervening night of March 15-16, 2001. The insurance company had denied the claim to Taneja on the ground that he informed them about it on June 11, 2001, after nearly three months. The state commission, however, set aside the forum's order, saying, "The insurance company has direct interest in the matter...It was to indemnify the owner of ...

The Board for Industrial and Financial Reconstruction (BIFR) does not lose control over a sick company even if it has revived on its own and its net worth has become positive. The civil court cannot claim jurisdiction on the ground that the company which was once sick has turned the corner, the Supreme Court ruled last week in the case, Ghanshyam Sarda vs M/s Shiv Shankar Trading Co. In this case, some parties moved the civil court which was resisted by others. Thus the dispute arose over the power of the civil court and BIFR. The court stated that the law gave "complete supervisory control to the BIFR over the affairs of a sick industrial company from the stage of registration of reference and questions concerning status of sickness of such company are in the exclusive domain of the BIFR." The judgment asserted that the aspects of revival of such company being completely within its exclusive domain, it is the BIFR alone, which can determine the issue whether such company no...

The plea of a mentally unstable woman, seeking interim maintenance from her estranged husband in a domestic violence case, has been rejected by a Delhi court which noted that the man had a "meagre salary" and after providing for basic needs, he was left with "almost nothing". Additional Sessions Judge Amit Bansal upheld magisterial court's order denying the interim maintenance to the woman, on the ground of financial status of the husband, who was earning merely Rs 4,500 per month and was already maintaining his widowed mother and mentally unstable child. The judge, while noting that the man had to spend Rs 1,300 monthly for medical care of his mother and mentally unstable son, besides other miscellaneous expenses including power, water, etc., said, "It is evident that the husband is earning a meager salary and all of it is spent upon the above said heads of expenditure. "The payment capacity of the husband and his liabilities have also to be consid...

The South Mumbai district consumer dispute redressal forum on Monday pulled up the New India Assurance company guilty of arbitrarily deducting a claim made by one of its Versova-based consumers who had undergone a cataract operation in October 2009. What did the fine amount to? The forum directed the firm to pay back the total expense occurred to the consumer, which is Rs72,606, along with 6% interest on the amount from November 2009 onwards. The forum also directed the firm to pay an additional Rs15,000 and Rs5000 towards the complainant's mental agony and litigation cost, respectively. What had happened to the consumer? As per the forum's order copy, Prem Padma had, in 1991, purchased a mediclaim policy which had a claim cover of Rs3 lakh, and which was active till the year 2010. In 2009, Padma started realizing a problem in her left eye, and thus sought medical opinion from an ophthalmologist, who asked her to undergo a cataract operation, which was done in October 2...

A consumer forum here has set aside its earlier order rejecting a transporter’s claim for his stolen truck and has now ordered an insurance firm to pay Rs 8.21 lakh to him. The Thane District Consumer Disputes Redressal Forum (TDCRF) had in February rejected the Rs 14 lakh claim of Bhiwandi-based transporter Jaykant Bhagawati Prasad Pandey  for his stolen truck, while observing that just because the branch office of any organisation is located within the forum’s jurisdiction, the claim cannot be lodged with it. Pandey had filed the claim with the Thane office of the New India Assurance company, while he had taken the insurance policy from the firm’s Santa Cruz office. He had informed the forum that in 2009, when his truck was going from Mumbai to Patna, some persons got into the vehicle and after giving tranquiliser to the driver, they threw him out  and escaped with the truck. Pandey had then sought a claim from the insurance firm which rejected it on the ground that...

The Income Tax Appellate Tribunal (ITAT) has clarified that money paid under the consent decree mechanism to settle disputes is permissible as business expenditure and cannot be equated to penalty levied for breaching law. The clarification will set precedence as many companies are currently negotiating with the market regulator to settle disputes under the consent mechanism by paying a fee but without admitting or denying guilt. They can record such costs as normal business expenditure and claim tax exemption. No such tax benefit can be taken on penalties levied for breaching law. The ruling of the ITAT bench of BR Baskaran and Sanjay Garg came on a case related to Reliance Shares & Stock Broker, a unit of Anil Ambani's Reliance Group. For the assessment year 2008-09, the company had declared a loss of Rs 1.55 lakh in its Income Tax return. The assessing officer observed that it had paid Rs 50 lakh to the Securities and Exchange Board of India to settle a dispute, and...

A motor accident claims tribunal (MACT) here has directed the United India Insurance Company to pay Rs 6.25 lakh compensation to the relatives of a 40-year old woman who was killed in a road accident near Vitthal Mandir on Dhanori Road on October 2012. The tribunal, presided over by district judge N P Dhote, relied on cogent material evidence furnished by police while rejecting the insurance firm's claim that the accident did not occur due to rash and negligent driving on the part of the motorcyclist whose vehicle hit the woman, Rekha Sandip Sutar, causing her death. The company had insured the motorcycle. Rekha had alighted from an autorickshaw near Vitthal Mandir on Dhanori Road when she was hit by a motorcycle around 12.30pm on October 31, 2012. She sustained multiple injuries and was admitted to the Sassoon Hospital where she succumbed to her injuries around 3.30pm, the same day. In the ensuing probe by the Vishrantwadi police, an offence of rash and negligent driving was ...

The Supreme Court has said that the revival of a sick company will take precedence over recovery proceedings. The provisions of the Sick Industrial Companies Act (SICA), 1985, will prevail over the Recover/y of Debts Due to Banks and Financial Institutions (RDBB) Act, 1993, said a three-judge bench, headed by chief justice of India HL Dattu. "We hold that the provisions of SICA, in particular Section 22, shall prevail over the provision for the recovery of debts in the RDDB Act," said the bench, which also comprised justices SA Bobde and Abhay Manohar Sapre. KSL & Industries Ltd had challenged a February 2006 ruling by the Delhi High Court which held that in view of the specific bar contained in SICA, no recovery proceedings could be effected against M/s Arihant Threads Ltd. It had set aside the order passed by the Debt Recovery Appellate Tribunal (DRAT), Delhi, on this ground. The issue then went to a two-judge bench, comprising justices CK Thakker and Altamas Kab...

RBI/2014-15/307 A.P. (DIR Series) Circular No. 38 November 20, 2014 To All Category – I Authorised Dealer Banks Madam/ Sir, Acquisition/Transfer of Immovable property – Payment of taxes Attention of Authorised Dealers in Foreign Exchange is invited to Foreign Exchange Management (Acquisition and Transfer of immovable property in India) Regulations, 2000 notified vide Notification No. FEMA 21 /2000-RB dated 3rd May 2000 as amended from time to time. 2. It has been observed that doubts persist in the members of public regarding requirement of payment of taxes while undertaking property transactions under these regulations. 3. In this connection, it is clarified that transactions involving acquisition of immovable property under these regulations shall be subject to the applicable tax laws in India. 4. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Acquisition and Transfer of immovable property in India) (Amendmen...

An insurance company is not liable to pay any claim if the insured transport vehicle, which met an accident, is driven by a person having a licence to drive only light vehicle, the apex consumer body has observed. "A person who does not hold licence to drive transport vehicle cannot drive transport vehicle and if he drives transport vehicle, insurance company cannot be fastened with any liability," the National Consumer Disputes Redressal Commission (NCDRC) said while allowing a revision petition of insurance company New India Assurance Co Ltd. The insurance firm had sought setting aside of the state commission order of dismissing its appeal against the district forum's order granting compensation to vehicle owner Birender Mishra, whose vehicle had met with an accident. Setting aside the order of district consumer forum which had asked the insurance firm to pay compensation of Rs 1,15,975 with 9 per cent per annum interest and litigation cost to Mishra, the NCDRC s...