Brief case: SC sets norms in cheque bounce trial

Brief case is a weekly selection of key court orders

SC sets norms in cheque bounce trial

The Supreme Court (SC) has eased the procedure of trial in dishonoured cheques in view of such cases clogging criminal courts. It noted that 20 per cent of the cases in the subordinate courts deal with bounced cheques. Therefore, it has laid down norms to speed up decisions and encourage compounding of offences under Section 138 of the Negotiable Instruments Act. These directions were made in last week’s judgment in the case, Meters and Instruments vs Kanchan Mehta, which was an appeal from the Punjab and Haryana High Court. The high court had refused to compound the offence alleged against the firm and insisted on personal appearance of the director of the firm. The issue was whether the proceedings could be closed when the accused was willing to deposit the cheque amount. In this case, though the firm offered the amount, the payee did not allow the offence to be compounded and wanted penal action. The court appointed a team of lawyers to assist it in this matter. The court passed a five-point order covering all cheque bounce cases. Among them: If the magistrate is satisfied that the drawer is willing to pay the amount, with interest and costs, the case may be closed. If appropriate compensation is paid, compounding must be encouraged and penal aspects can be waived. Even if the payee is not willing to give consent to compounding, the court may close the case and discharge the accused in the interest of justice.

 
Appeals on depreciation claims dismissed
 

The Supreme Court last week dismissed appeals of a large number of companies against the Bombay High Court ruling which had held that even assuming that the assessees had an option to disclaim current depreciation in computing the business income, depreciation had to be reduced for computing the profits eligible for deduction under Section 80-IA of the Income Tax Act. The high court judgment was upheld in the case, Plastiblends India Ltd vs Commissioner of Income Tax, rejecting the argument of the company that depreciation cannot be thrust on them and it was optional. The apex court stated that the full bench of the high court was right in declaring that while computing deduction under Chapter VI-A, it was mandatory to grant deduction by way of depreciation. Section 80-IA of the Act contains a special provision for assessment of industrial undertakings engaged in infrastructure development etc. This provision allows certain specific kind of deductions in respect of depreciation. The issue in this batch of appeals was whether claim for deduction on account of depreciation under Section 80-IA is the choice of the assessees or it has to be necessarily taken into consideration while computing the income under this provision.

 
Foreign, domestic arbitration split up 
 
In a case which involved five inter-connected contracts between a foreign firm, its Indian subsidiary and a ports company, the Supreme Court last week split them and appointed arbitral tribunals for the domestic and foreign issues separately. In this case, Duro Felguera SA vs Gangavaram Port Ltd, the Spanish company and its subsidiary, Felguera Gruas India Ltd, undertook expansion projects of the port near Visakhapatnam but the agreement fell through and the contracts were cancelled by the port company leading to arbitration. Gangavaram wanted to constitute a single arbitral tribunal consisting of three members by a composite reference for adjudication of all the disputes between the parties. It argued that the appointment of a single arbitral tribunal will avoid conflicting awards, huge wastage of time and expense. On the other hand, the Spanish company contended that there were several contract packages with special conditions and arbitration clauses and its Indian arm was not a party in all of them. Therefore the question arose whether there should be one tribunal or separate ones, separating international commercial arbitration and domestic arbitration. The Supreme Court  appointed president of the tribunal which will act as international commercial arbitration tribunal in some contracts and domestic tribunal in the rest, depending upon the contracts.

 
Interim relief a part of wages
 
Interim relief granted to employees under a wage board award is part of their wages and the establishment is bound to contribute the statutory share on it to the Employees’ State Insurance Fund, the Supreme Court stated while overruling the Kerala High Court. In this case, ESI Corporation vs Mangalam Publications, the high court had ruled that the interim relief at the rate of 20 per cent on the basic wages awarded to press workers was ex-gratia and not part of the wages. Therefore, the establishment was not obliged to contribute to the fund from that amount. The corporation appealed to the Supreme Court against that view and succeeded. The judgment asserted that according to the definition of wages in the ESI Act, the interim relief was part of the wages. It was not a gift or inam. The Act is welfare legislation and it should be interpreted liberally. “In cases where there may be two or more ways to interpret a statutory provision, the spirit of this legislation warrants a construction that benefits the working class,” the court said.

 
Cable operator to pay compensation
 
The Delhi High Court last week passed a permanent injunction order in the copyright dispute in the case, Super Cassettes Industries Ltd vs HRCN Cable Network. The latter, which is a ground cable operator based in Haryana, was directed to pay ~16 lakh as compensation to Super Cassettes for violation of its copyright in films and music. The court also barred the cable operator from distributing, broadcasting, public performance or in any other way exploiting the films, sound recordings and literary and musical works of Super Cassettes throughout the country.
 
Back to labour court after two decades

 
The Bombay High Court last week asked the labour court to decide within six months whether some employees who were found drinking inside the factory in 1993 should be reinstated and whether their dismissal was disproportionate to the misconduct. The labour court and the industrial court had directed the mills to reinstate them with back wages in 1995 but the litigation on several fronts continued till now. The establishment had also closed down in 2000. The management appealed to the high court to set aside the orders citing the probe report which confirmed the misconduct. It also argued that the employees had only been ‘discharged’ but not ‘dismissed’. The high court rejected the argument stating that in such cases, the courts should lift the veil to find out the correct nature of the punishment. In this case, it was dismissal, with all legal consequences. Therefore, the high court remanded the case, Empire Dyeing vs Vasudev Kusam, to the labour court which will now decide whether the punishment of dismissal was “excessive and disproportionate” to the misconduct.