The Supreme Court ruled last week that a small scale industry can demand higher rate of interest from a buyer if there is delay in payment after acceptance of goods. This right derives from the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act. This law was brought into force in 1993 to ensure prompt payment by buyers to small units with inadequate working capital. The court made this declaration in two judgments, M/s Purbanchal Cables & Conductors Ltd vs Assam State Electricit Board, and Assam SEB vs M/s Shanti Conductors Ltd. The judgments, however, clarified that the claim cannot be made retrospectively for contracts made before the passage of the Act.
Occupier cannot stop mortgage sale
The Supreme Court last week allowed Indian Bank to sell a prime property in Mumbai after evicting a person who claims to be tenant under a ‘leave and licence’ agreement of 1989. The owners of the property had defaulted in payment to the bank and had left for the USA. The bank invoked the Debts Due to Banks and Financial Institutions Act to sell the property mortgaged to it. The occupier resisted it. The debt recovery tribunal, however, issued a recovery certificate in favour of the bank. The occupier objected to the sale of the property. But the Supreme Court dismissed his appeal in the case, Nitin Gunwant vs Indian Bank. The bank, said the court, is a nationalised bank dealing with money of the general public and the sale could not be stopped merely on account of the objection of the occupier, who is “abusing the process of the legal system”. He should establish his claim in a civil suit, the court said.
Higher compensation after 42 years
The Supreme Court has set aside the judgment of the Bombay High Court in a 42-year-old land acquisition case involving the development of Panvel, Navi Mumbai. The agricultural land owners were offered Rs1.75 per square meter when the new city was planned. When the land owners sought re-determination of the rate of compensation arguing that the nearby area was industrialised, the land acquisition officer in fact reduced the rate to Rs1.20 on the ground that the land was underdeveloped and agriculture depended upon uncertain monsoon. The farmers moved the high court, which upheld the reduction of the compensation and allowed further deduction of ‘development charge’ at the rate of 15 per cent. The Supreme Court allowed the land owners’ appeal, titled Sabhia Mohammed Yusuf vs Special Land Acquisition Officer, and restored the land acquisition court’s award of Rs25 per square metre. The court also passed detailed directions to ensure that even this money reached the land owners and their successors, as some of them have died during the four decades of litigation.
Computer units covered by ESI Act
The Bombay High Court last week ruled that creation of software or development of software is a manufacturing process and the premises where computers are involved in manufacturing process is a factory under the Employees’ State Insurance Act. Two companies had argued before the ESI court in Mumbai that they were not involved in any ‘manufacturing process’ and therefore labour laws were not applicable to them. One firm, Reliable Software Systems Ltd, argued that it was engaged in providing online information to share market traders regarding the position of shares in the market. So the function of the company was only related to receiving, storing and transmitting the information to the clients in the stock market. There was no question of development of any software. ESI Corporation submitted that computer units are covered under the definition of “shop” according to a government circular and a Supreme Court judgment. It further submitted that it was not necessary that the process should end in a substance being manufactured. What is required is that it should carry on manufacturing process. The ESI argument was accepted by the high court.
Injunction against use of Red Hat mark
The Delhi High Court has passed an interim injunction in favour of Red Hat Inc prohibiting another firm from using the trade mark Red Hat with an illustration showing a red hat. Red Hat Inc argued that both firms were operating in the field of computer ware and related services. It formed a joint venture with Clover Technologies and has world-wide reputation. It was alleged that a rival firm used ‘redhat’ in some of its domain names. The logos were also similar, tending to mislead clients. Red Hat also claimed that it has registered the name in several other countries and it was the first to register it as a trade mark. The rival was accused of ‘passing off’ its services. The high court stated that its preliminary opinion was that there was infringement of trade mark and therefore till a final decision is taken, the red hat mark should remain with Red Hat Inc.