The Supreme Court (SC) last week dismissed the writ petitions of MRF Ltd and Goa Glass Fibre Ltd and upheld the Goa law which prohibited further payments to industrial units which consumed electricity at a rebate of 25 per cent. The law also allowed recovery of the benefits already availed by them. The two electricity consumers had challenged the validity of the law on several grounds. They argued that the Goa (Prohibition of Further Payment and Recovery of Rebate Benefits) Act 2002 was meant to nullify an earlier judgment of the SC and therefore it was unconstitutional. The state countered it by submitting that the rebate had imposed a heavy burden on the state exchequer and therefore it was imperative that the amounts paid were recovered and further loss of public funds avoided. The court rejected the arguments of the electricity consuming industries and declared that the law was constitutional.
‘Officers must protect PSBs interests’
Officers of public sector banks have a special duty to protect the interest of their institutions, the SC stated last week while directing the chairman of Allahabad Bank to take action against the officers who had sanctioned loans to certain firms and allowed the securities to be transferred without repaying the debt. Public sector banks are "instrumentalities of the state" and therefore their officers are fully accountable if they jeopardise the interests of the bank and public funds, the court stated in the appeal of Eureka Forbes Ltd against the judgment of the Calcutta high court against it. The court ordered a probe as “it needs to be seen why and how the interest of the bank has been jeopardised, in what circumstances the loan was sanctioned and disbursed despite some glaring defects having been exposed in the appraisal report. Significant element of discretion is vested in the officers of the bank while sanctioning and disbursing loans but this discretion is circumscribed by the inbuilt commercial principles/restrictions as well as that such decisions should be free from arbitrariness, unreasonableness and should protect the interests of the bank in all events. The greater the power to decide, the higher is the responsibility to be just and fair.”
Private power firms told to meet their responsibilities
The SC last week dismissed the appeals of North Delhi Power Ltd and BSES Rajdhani Power Ltd against the order of the Delhi high court which had asked them to meet the liabilities of the employees who were working in public undertakings before they were taken over by the private two companies. The employees were working for erstwhile Delhi Electric Supply Undertaking. Many of them retired, removed or dismissed in accordance with the provisions of the Delhi Electric Reforms Act 2000. According to a tripartite agreement, the services of the employees were protected by the government. The private companies were not willing to take the responsibility of the former staff. However, the court stated, according to regulations, the transferee companies have taken over liabilities of the former staff also.
Apex court deprecates practice of allegations against judges
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The SC last week deprecated the practice of alleging bias against judges by the losing party. While dismissing the appeal against the order of the special court dealing with securities scam, rejecting the claim of a stock broker, Naresh Aggarwala, against Canbank Financial Services Ltd in the securities scam, the court observed: “It seems to have become a common practice these days for the losing party after receiving an unfavourable verdict, to make allegations of bias against the presiding officer. We decline to give credence to such wild and bald submissions without any factual basis.”
7 guidelines on writing judgments
The SC last week set down seven guidelines for writing judgments in tax cases and criticised the Gujarat high court for dismissing an appeal of the revenue authorities in “a most casual manner”. The high court order is “not only cryptic but does not even remotely deal with the arguments which were sought to be projected by the revenue department,” the SC stated in the case, Joint Commissioner of Income Tax vs Saheli Leasing and Industries Ltd.
The company had claimed depreciation on plant and machinery to the extent of 100 per cent. However, the assessing officers rejected it and imposed a penalty. The tribunal quashed the penalty, and it was upheld by the high court. Allowing the appeal of the revenue authorities, the Supreme Court permitted them to proceed against the company and affirmed that “even if an assessee disclosed NIL income and on verification of the record, it is found that certain income has been concealed or has wrongly been shown, penalty can still be levied.”
No waiver of pre-deposit condition for sick units
The Delhi high court has dismissed the appeal of Swadeshi Cement Ltd against the order of the Debt Recovery Appellate Tribunal asking it to deposit 25 per cent of the dues before moving the court. The creditor, Asset Care Enterprises, had invoked the power under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act against the cement firm. The latter moved the tribunal, which asked it to deposit 25 per cent of the dues before hearing it. It pleaded that it was a ‘BIFR company’ and therefore the pre-deposit condition should be relaxed. The high court rejected this request and declared that sick companies are not entitled to such benefit under the Act.