SC sidesteps a BIFR question

Last Updated: Sun, Oct 06, 2013 22:40 hrs

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 public works. The acquisition compensation has wiped out all losses and liabilities, leaving a surplus of Rs 50 crore. It was no longer a BIFR case, the Supreme Court said. In view of this finding, the court did not go into the applicability of SICA to foreign companies. The company is yet to recover from several proceedings related to earlier winding up petitions, shareholder disputes and management issues. The company has only one factory in India, and all shareholders and workers are Indians. The Supreme Court directed that all the issues be decided by the high court and other competent forums. The apex court further clarified that for the present, "the management of the company as on date will continue until orders, if any, varying the current position are passed by any forum competent in law".

Wine producers lose appeal
The Supreme Court has dismissed the appeals of a group of wine manufacturers from Maharashtra who had challenged the levy of excise duty on them despite certain exemptions. The state government had introduced a policy to protect grape wine farmers from sudden financial losses and to encourage the production of grapes, especially in Sangli and Nashik districts. The government also exempted the manufacturers from the levy in certain years. However, one retailer of country liquor moved the Bombay High Court, contending that though the state government had exempted the manufacturers from payment of excise duty, the manufacturers in the garb of collecting the maximum retail price included the excise duty in the MRP of such country/foreign liquor. He, therefore, requested the high court to direct the manufacturers to remit/deposit the excise duty so collected by the manufacturers to the retailers who are by the notification of the government exempted from the payment of excise duty. The high court allowed the petition and stated that if for any reason the manufacturers have collected excise duty , they would be liable to deposit the amount with the state government since it had exempted the manufacturers from the payment of excise duty. Otherwise, it would amount to "unjust enrichment". Dissatisfied with the judgment, the wine manufacturers approached the Supreme Court, but it upheld the high court judgment. However, those who had not collected the levy can approach the authorities and show from their account books that they have not done so and the authorities may pass appropriate orders in such individual cases.

FERA angle to fodder scam
The Supreme Court has dismissed an appeal challenging the transfer of cases under the Foreign Exchange Regulation Act (FERA) from an ordinary criminal court to a special judge in Ranchi dealing with the fodder scam. Dr. K.M. Prasad, former director of the animal husbandry department in the government of Bihar and his three children are being prosecuted by CBI for violation of FERA for allegedly receiving huge sums in dollars and pounds by defrauding the government. According to CBI, these remittances were not genuine gifts as claimed by them but were amounts arranged by certain persons involved in the animal husbandry scam in violation of the provisions of FERA. The accused father and sons argued that the state government had no power to transfer the FERA case to the special court. Rejecting the contention, the Supreme Court stated in the case, Kamlesh Kumar vs State of Jharkhand, that the high court has administrative power bestowed by the Constitution to transfer any criminal case pending before one competent court to another court within its jurisdiction.

Family dispute over trade mark
The Delhi High Court has granted both parties in the trade mark dispute between Ajanta Ltd and Ajanta Transistor Clock Manufacturing Co "one final opportunity" to file an undertaking that they shall strictly comply with all the clauses of memorandum of understanding (MoU) until an award is passed by the arbitral tribunal after trial. The complex dispute is over the division of brand names and products between two brothers and it has reached the Supreme Court once. The companies manufacture clocks, calculators and other consumer electronic goods with brand names, Ajanta and Orpat. The family arrangement did not settle the differences and the dispute is before the arbitral tribunal. The high court asked the parties to abide by the MoU till the award of the tribunal "in order to maintain the peace and harmony of families by avoiding litigation, including
contempt cases".

Bank insures loan without borrower's consent
The National Consumer Commission has dismissed the appeal of Indian Overseas Bank against the award of compensation by the Karnataka consumer commission to a woman whose loan was insured by the bank without her consent or request. She had taken loans to set up a cold storage to make a living. She later found some debits in her account. When she made enquiries with the bank, she was informed that to cover the risk of lending, it had insured the loan amounts and debited the premiums paid to National Insurance Co. She had never signed any proposal form, nor taken any policy personally nor received the policies with the terms and conditions. The claim arose when there was an electrical supply failure causing damage to the freezer damaging Rs 3 lakh worth of ice cream. When she claimed compensation, the insurer paid only for the damage to the equipment and not for the ice cream. When she sued the bank, it argued that she should sue the insurer instead. The insurance company contended that the fire policy did not cover ice cream and it paid according to the policy, which might have underinsured her, so it was not responsible. The consumer commission held the bank guilty of deficiency in service and compensated her for the loss.

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