Power tariff concessions

LEGAL DIGEST

The Supreme Court has dismissed appeals of AP Steel Re-Rolling Mills Ltd and Victory Papers and Boards India Ltd against a Kerala High Court judgment rejecting their claim for concessional power tariff.

The two contended that they made huge investments to install imported machinery in their new units on the basis of the promises made in the state's industrial policy.

They did not get the promised concessional power rates and moved the high court, which rejected their claim, stating that they had taken considerable time to complete the work and were not ready when the concessional scheme was in operation.

By the time the units were energised, the period for concession was already over. Therefore they could not claim the benefit. The Supreme Court upheld the high court view.

Apprenticeship benefits

The Supreme Court has allowed an appeal of the National Small Industries Corporation Ltd in a labour case relating to interpreting the status of an apprentice under Section 18 of the Apprentices Act. A worker at the corporation claimed that he was an employee under the Industrial Disputes Act.

He said he had worked for a long time at the establishment and was selected as an apprenticeship trainee. He was removed from service without retrenchment benefits and moved a labour court, which held that his dismissal was unjustified.

The labour court asked the establishment to reinstate him with back wages and other benefits. The Madras High Court substantially upheld the view of the labour court. The Supreme Court, however, ruled that he was only an apprentice and not a workman.

Accident claim in case of minor

The Supreme Court has ruled in New India Assurance Co versus Satender that "in the case of young children of tender age, in view of the uncertainties, neither their income at the time of accidental death nor the prospects of future increase in their income nor chances of advancement of their career are capable of proper determination on an estimated basis."

The court thus reduced the compensation awarded by the motor vehicle accident claims tribunal for a nine-year-old from Rs 3.40 lakh to Rs 1.80 lakh.

The tribunal had rejected the notional income in the second schedule to the Motor Vehicles Act at Rs 15,000 per annum as unrealistic and fixed it at Rs 30,000. It deducted one-third for personal expenses and Rs 20,00 as the dependency of its parents and adopted a a multiplier of 17. The insurance company appealed to the Supreme Court. which modified the figure.

Modi Rubber debt case

The Supreme Court has severely criticised the Delhi High Court for passing an order allowing Modi Rubber Ltd to dispose of its assets, while the Allahabad High Court, the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and various debt recovery tribunals had restrained the company from doing so.

The court passed the order in an appeal by Morgan Securities & Credit Pvt Ltd. Modi Rubber had taken a loan of Rs 5 crore and did not repay. The arbitrator asked Modi Rubber to pay a certain amount. When Morgan Securities moved the Allahabad High Court, it restrained Modi Rubber from selling its assets.

Modi Rubber then approached the AAIFR for disposing of its shares in Ambuja Cement Eastern Ltd. The board rejected its application. The Supreme Court observed that the Delhi High Court had chosen to brush aside all those orders without considering whether it would be appropriate to sell the assets of a company which was before the BIFR.

"Occasions are not infrequent when not so scrupulous debtors approach BIFR to stall the proceedings and to keep their creditors at bay. The delay before the BIFR is sought to be taken advantage of," the judgment said.

It stated that Parliament had taken note of this trend and had repealed the Sick Industrial Companies Act in 2003. But it regretted that the subsequent changes in the Companies Act to cure the situation had not been brought into force. The court called for the notification of the new provisions as early as possible.

Brand and levy of excise duty

An assessee under the central excise law cannot claim duty benefits while it uses the brand name of another firm, the Supreme Court has held Commissioner of Central Excise versus Khanna Industries. The latter manufactured brass sanitary bathroom fittings.

The goods were packed in cardboard boxes and used a brand name, "ARK," in a stylish manner. The brand name belonged to another firm. The authorities denied benefit of exemption to the assessee company and imposed a penalty.

The Supreme Court pointed out that they were separate legal entities. Therefore the assessee company could not claim the benefits under the notification.

Account fudging: 'Best' judgment upheld

In a "best judgment assessment" under the income tax law, there is always a certain degree of guess work and it should be accepted unless it is totally arbitrary, the Supreme Court has said in Kachwala Gems versus Joint Commissioner of I-T. In this case, the assessee dealt with precious stones. The assessing officer found several serious defects in the books of accounts.

He held that the firm had shown bogus purchases to reduce the gross profits. The books of accounts were rejected and the officer resorted to the best judgment assessment under Section 144 of the Income Tax Act.

Upholding the arguments of the revenue authorities, the Supreme Court added that it would not interfere in the finding of fact of the income tax tribunal.

Accident at workplace

The Supreme Court has stressed that in order to make a valid claim under the Workmen's Compensation Act, the injury or death of the worker should be shown to be the result of the employment.

In a case, Shakuntala versus Prabhakar, a transport worker died while he was travelling in a truck. His mother claimed compensation under the Act arguing that he died due to the strain of the work. The commissioner under the Act ruled that a death during the work would be deemed to "arise out of and in the course of employment," and compensation was payable.

On appeal, the Bombay High Court rejected this view and stated that there was no evidence to show that the person died of heart attack because of the strain of work.

The Supreme Court explained that every death during the work would not attract liability to pay compensation. The death must be caused by the nature of the work, it said.