UTI appeal dismissed

LEGAL DIGEST

The Supreme Court last week dismissed the appeal of the Administrator of Unit Trust of India against the judgment of the Andhra Pradesh High Court which had held that a unit holder was entitled to the promised full redemption value of Rs 10 per unit after five years instead of Rs 6.93 at which they were sold by the administrator.

The Income Tax Department had issued notice to the unit-holder for Rs 44 lakh. The administrator paid the amount to the department at the rate of Rs 6.93. The investor did not authorise UTI to sell the units at a lower price.

The high court disapproved of the UTI action. The Supreme Court was even more critical when it said: "The administrator acted hastily and illegally. As a 'state', it was required to exercise restraint and give effect to the provisions of the contract in a reasonable manner."

SC asks NCC to decide 'consumer'

The Supreme Court last week asked the National Consumer Commission to decide whether a person with a complaint against an electricity board could move a consumer forum.

In this case, one Anwar Ali moved the Ranchi consumer forum complaining that his electricity supply was disconnected by the Jharkhand Electricity Board without notice. The forum awarded him Rs 50,000 as compensation with 12 per cent interest. This award was upheld by the state and national consumer commissions.

The board appealed to the Supreme Court arguing that consumer commissions had no jurisdiction to deal with such grievances as the Electricity Act of 2003 has set up its own machinery to deal with the complaints and civil courts could not hear them.

The Supreme Court set aside the judgment of the consumer commission and asked to decide whether a consumer of electricity is covered by the definition of 'consumer' under the Consumer Protection Act so that he can move a consumer forum.

Service of notice to be strictly construed

The Supreme Court held last week that service of notice in the case of a dishonoured cheque should be strictly complied with. Statements of the agents of the payee that they had tried to serve notice but the drawers of the cheques could not be traced was not enough, the court said in the judgment in M/s Sarav Investment & Financial Consultants vs Llyods Register of Shipping Indian Office.

The Magistrate and the Bombay High Court accepted the affidavits of the clerks of the law firm of Lloyds and stated that the service of notice was sufficient.

Therefore, action under Section 138 of the Negotiable Instruments Act for issuing cheques without sufficient funds could be initiated. The Supreme Court set aside the high court ruling and asserted that actual communication of the dishonour of the cheque is imperative. It could be done by sending the notice under registered cover with acknowledgment due within the prescribed period.

MD of Mahalaxmi motors held guilty of contempt of court

The Supreme Court has sentenced the managing director and a director of Mahalaxmi Motors Ltd, a dealer of car maker Maruti Udyog, to six months and three months of imprisonment, respectively.

According to a contempt of court petition moved by Maruti Udyog Ltd, they not only suppressed material facts, but also made a wrong representation to the court. Managing director Mahinder Mehta and director Ratan Mehta had, as dealers of Maruti, accepted various booking advances from customers.

Maruti, on failing to get the money, had filed a recovery suit against the company and its directors. The Supreme Court stated that in the proceedings before it, "not only they went back from the undertaking given before this court, they also sold away the only property which was in their possession."