Nod to recovery

LEGAL DIGEST

The Supreme Court has allowed recovery proceedings initiated by State Bank of India against Nalanda Ceramics & Industries and three of its directors, who stood guarantee for a loan of Rs 6 crore.

The company was ordered to be wound up. The bank's mortgage suit was stalled by winding-up proceedings and BIFR action.

The directors told the court that since there was inordinate delay, the suit must be dismissed under the Limitation Act. The Supreme Court ruled that the delay was caused by the directors' legal action.

Banks' cheque dispute

The Supreme Court has set aside the order of the Calcutta High Court and remitted to it for reconsideration a dispute between Punjab & Sind Bank and Allahabad Bank over a cheque of Rs 5.6 crore.

Allahabad Bank moved the high court, which said since the dispute was between two public sector undertakings, it should be resolved by the machinery set up for such purpose, as directed by the Supreme Court in an earlier case.

When Punjab & Sind Bank appealed to the Supreme Court, it observed that the high court had wrongly understood its decision and after explaining the correct position, asked the high court to decide the matter afresh.

Trust appeal allowed

The Supreme Court has set aside the Delhi High Court order disallowing the Modipon Ltd Senior Executive Trust from bringing in more facts in a suit seeking removal of KK Modi from the trust.

According to the officers, the trust bought 19,314 equity shares of Godfrey Philips in the name of Modi, in his capacity as a trustee.

The share certificates and bonus shares issued to the trust were allegedly put in a new account in Oriental Bank of Commerce by Modi. This case was going on when the trust wanted to file fresh applications. The high court did not allow this.

House allottees to pay

The Supreme Court has overruled an order of the National Consumer Commission and ruled that that allottees of housing board houses should abide by the terms of the cost agreement.

In the case, Chief Administrator vs Shabnam Virk, the allottees complained that the cost of houses had gone up by Rs 1 lakh and they were not bound to pay it.

The consumer commission approved this argument and ruled that they were liable to pay only the amount initially advertised.

On appeal, the Supreme Court held that the allottees should pay the escalated cost as they had accepted the houses after agreeing to the terms, which clarified that the original tentative cost could go up.

TN's mining order

The Supreme Court has modified the judgment of the Madras High Court, which had upheld the exclusive right of the state government to quarry sand.

The right was conferred under Rule 38A of the Minor Mineral Concession Rules, following complaints of indiscriminate quarrying, which became a threat to ecology. Several licencees moved the high court against the rule.

The high court upheld the rule, but said that those who had licences could continue till the term of the licence. The state government appealed to the Supreme Court, which allowed the miners six months or the unexpired period of the lease, whichever was less.