The coops deposited certain amounts in cash in fixed deposits of Indian Bank. Such deposits were made through some so called commission agents of the bank on payment of huge commission which is ordinarily not allowed by the nationalised banks. Then loans were granted on the deposits with the connivance of officers.
When the deposits matured, the banks refused encashment as they had already been paid by way of loans and, thus, no amount was payable. The matter is under CBI investigation and in the criminal court. Meanwhile, the Supreme Court has asked banks to grant loans to genuine coops to avoid hardships.
United India Insurance appeal dismissed
The Supreme Court has dismissed the appeals of United Insurance Company which had refused to renew mediclaim policies in high claim cases of senior citizens.
The court stated that the company's denial was highly arbitrary. Though the insured were not entitled to automatic renewal, the public sector companies should have been fair. The claimants had been hospitalised repeatedly and the company declined to renew their insurance.
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The court said: "Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason."
The parties are not required to go into all the formalities. Since the policy contemplates terms for renewal, it cannot be placed at par with a case of first contract.
SC reprieve for Reliance Petroleum
The Supreme Court has held that second hand cranes imported by Reliance Petroleum Ltd from Europa BV of Holland in knocked down condition for setting up crude petroleum refinery were exempt from Customs duty.
The Customs authorities had questioned the application of certain exemption notifications dated March 1, 1997 and June 13, 1997 granting exemption to various imported goods, including second hand mobile cranes required for setting up oil refinery.
They had maintained that a crane when placed on a vehicle was a `motor vehicle' and would fulfil the description of a mobile crane or a `material handling equipment,' thus was not eligible for concessional duty. The court rejected these contentions and stated that the crane imported by the company in the knockdown condition would attract the benefit of the exemption under the notifications.
Ponds India vaseline a drug: SC
The Supreme Court held last week that white petroleum jelly sold by Ponds India (now Hindustan Unilever Ltd) under the name Vaseline was a drug and not a cosmetic even if it had no curative value.
Therefore it should be taxed as a drug and not cosmetics under the UP Trade Tax Act. The revenue authorities had argued that since the product was applied for care of the skin, it came within the purview of the definition of "cosmetics" and not within the definition of "medicine".
The court rejected this view and ruled that Vaseline was a pharmaceutical preparation as it was used for cure and treatment of various skin disorders and not for beautification or care of the skin in the normal circumstances. Vaseline does not contain any perfume. A cosmetic ordinarily would contain some perfume, the judgment explained.
SC assails Bank of India
The Supreme Court last week assailed Bank of India for refusing to pay bank guarantee to Nangia Constructions Ltd. It said that if banks dishonour their commitments by adopting "subterfuges", the entire commercial and business transactions will come to a grinding halt.
It dismissed the appeal of the public sector bank which appealed against the order of the Delhi high court directing it to pay the bank guarantee to the construction firm, which invoked it after its client had defaulted in a contractual dispute. The bank had provided bank guarantee to the company on behalf of the other party.
The judgment said: "It is unfortunate that a nationalised bank is finding excuses for refusing to make the payment on totally untenable and frivolous grounds... The entire trust, faith and confidence of people depend on the conduct and credibility of the nationalised bank."