From cheque bounce to intellectual property cases, here're key court orders

A weekly selection of key court orders

Bank an ‘industrial undertaking’?

Is a bank an ‘industrial undertaking’ eligible to claim deduction according to Section 35-D of the Income Tax Act? YES Bank has raised the question and the Supreme Court has asked the Bombay High Court to answer it. The bank has cited an earlier judgment of the Bombay High Court, in which it had presumably held that banks are "industrial undertakings". It also relied on a ruling of the Income Tax Appellate Tribunal (ITAT), which held that even a share broking entity is an "industrial undertaking" for the purpose of Section 35-D. The revenue authorities had rejected the claim of the bank that it was an industrial undertaking and disallowed deduction under Section 35-D in respect of amortization of expenditure incurred on initial public offering of equity shares. The tribunal decided in favour of the bank. The tax authorities moved the high court, which dismissed the appeal. In a further appeal, the Supreme Court found that the high court had not framed the question of law nor decided the issue of Section 35-D, stating merely that it was “not necessary”. Therefore, it was asked to follow the procedure and decide the questions raised by the bank.

Double whammy for antique smugglers

When an article of antiquity is tried to be exported, both the Customs Act and the Antiquities and Art Treasures Act could be applied to prevent it. The collector of customs has the power to confiscate the article as well as initiate prosecution, the Supreme Court stated in its judgment, Dept of Customs vs Sharad Gandhi. Setting aside the Delhi High Court order which dismissed the complaint of the customs department, the Supreme Court stated that there is no inconsistency between the two laws. If there is any doubt over the antiquity of the article, the Director General of Antiquities will decide the issue. In this case, the exporter declared that his wooden box contained ‘stone figure handicraft’. The customs officials called experts from the Archaeological Survey of India who decided that it was a sandstone head of Buddha, an antiquity. The courts below dismissed the complaint on the ground that the customs authorities could not invoke antiquities law. The Supreme Court allowed the prosecution to continue. 
 

Another chance to drawer in cheque bounce case

The Supreme Court set aside the punishment of imprisonment in a bounced cheque case and gave the guilty drawer “another chance to mend himself”. Rohitbhai became friends with another businessman at a shopping complex in Vadodara. Later Rohitbhai requested his new friend to lend him Rs 22.5 lakh. It was given, but the seven cheques in repayment bounced, leading to a complaint under the Negotiable Instruments Act. The trial court acquitted Rohitbhai on several grounds like rainwater had washed away the original cheques and the lender could not show the source of his income for the amount loaned. But the Gujarat High Court convicted him and sentenced him to one year’s imprisonment plus repayment of double the amount of cheques totalling Rs 42 lakh. On his appeal, the Supreme Court set aside the imprisonment but asked him to pay the penalty failing which he would undergo the jail sentence.

Consumer complaint junked at threshold

The National Consumer Commission has the power to dismiss a petition without issuing a notice to the opposite party under the amended Consumer Protection Act. But that power should be exercised with caution depending on the facts of the case, the Supreme Court stated in its judgment, Anjaneya Jewellery vs New India Assurance. In this case, the commission rejected the complaint at the threshold itself, leading to the appeal. The insurer supported the commission’s stand that Section 13 of the Act was amended to remove “procedure on receipt of complaint” and replacing it with “on admission of a complaint”. Therefore, there was no procedure to issue notice. The Supreme Court did not agree with the argument in this case and asked the commission to reconsider the case.

Injunction in intellectual property cases

The Delhi High Court last week passed a permanent injunction in two intellectual property cases. In one case, MakeMyTrip India Ltd vs Pravasi Guide Ltd, the former company alleged that the opposite party had infringed upon its trademark by imitating its name and logo. MakeMyTrip is registered under the Trade Marks Act as well as the name “MakeMy”. Pravasi adopted a domain name, “makemypravaas.com”. These are bound to cause confusion among travellers who are clients of both companies. The court accepted the arguments and passed an injunction against Pravasi. In the second case, Mallcom (India) Ltd vs Rakesh Kumar, the court restrained the latter and four others from infringing upon the trademark in a pictorial label. Mallcom is a market leader in safety gears like industrial shoes and it used the label “Tiger” with distinctive design. However, the opposite parties imitated it violating the trademark, Mallcom alleged. The high court found that both parties were in the same business and the accused persons merely changed the spelling by replacing one letter. This small change was bound to confuse the clients. The court, therefore, imposed costs of Rs 6 lakh on the accused, apart from ordering the return of the infringed goods to Mallcom.

Rage against boss: Dismissal quashed

A suspended employee who took a colleague to the house of their boss and threatened him with dire consequences committed an act subversive of discipline but since it was a solitary act committed under rage, it did not deserve dismissal, according to the Allahabad High Court. It agreed with the labour court that dismissal was a punishment disproportionate to the offence. The high court also ruled in the judgment in Hindalco Industries Ltd vs State of UP that after the amendment to the Industrial Disputes Act, the labour court and the industrial tribunal have wide discretion on the imposition of punishment. The labour court, while upholding the disciplinary enquiry conducted against the workman in this case, had found that the punishment was excessive. It, therefore, modified the order of dismissal to direct reinstatement of the worker with 25 per cent of back wages and continuity of service. In the appeal, the company argued that a single incident of misconduct was punishable according to its standing orders. Dismissing the management’s appeal, the Supreme Court explained that under Section 11-A of the Act, the jurisdiction of the labour court or the industrial tribunal is wide and there is no rigid formula that in all cases where the disciplinary authority awarded a punishment, the labour court would uphold it without applying its own independent mind.