From minimum wage order to whisky brand row, here're the key court orders

A weekly selection of key court orders

Minimum wage order can’t change job terms

While implementing the Minimum Wages Act, a government cannot alter the terms of employment. It can only fix the wages of employees. Other components of employment remain the same. For example, the government cannot define skilled and unskilled workers and put them in separate categories. Similarly, the government cannot fix the period of training of apprentices. Such contracts cannot be interfered with by the government while exercising its powers under the Act. “Categorisation or classification by deeming workmen in one category to belong to another category is in direct contravention of the contract between the employer and the employee and is beyond the jurisdiction of the government,” the Supreme Court stated in its judgment in Faridabad Industries Association vs State of Haryana. The state government had issued a notification revising the minimum wages. However, it went on to define skilled and unskilled workers and other matters. The industries challenged the notification in the high court, which dismissed their petition. On appeal, that part of the notification which went beyond fixing the wages was quashed by the Supreme Court as the government lacked jurisdiction to do so. The judgment asserted that any person who is employed for hire or reward will benefit from the notification. There is no distinction between a person employed by the principal employer and a person employed through a contractor. Further, the court clarified that wages included “all remuneration, capable of being expressed in terms of money”, expressed or implied in the contract which may include house rent allowance.

Retrenchment benefit for illegal appointees

The Supreme Court has observed that termination of an employee on the ground that his initial appointment was illegal would amount to retrenchment. The consequence is that Section 25F of the Industrial Disputes Act dealing with retrenchment will be applicable to him and he will be eligible for certain labour welfare benefits. The Act does not cover “invalid appointment”, the court stated in its order in the case, Bihar State SC/ST Cooperative Development Ltd vs State of Bihar. The employees, in this case, argued that they had worked continuously for 240 days in a particular year and therefore, their termination was illegal. They demanded reinstatement with back wages. The labour court allowed their claim, but the Patna High Court reversed the judgment. It, however, did not permit recovery of dues already paid. The government appealed to the Supreme Court. It ruled that the retrenchment was illegal.

Plea to stop bank guarantee rejected

The Bombay High Court has rejected the plea of a foreign consortium for stopping the invocation of a bank guarantee provided to ONGC. The consortium formed between Mercator Offshore Ltd of Singapore and Gulf Piping Co of the UAE was given a project to re-purpose the “Sagar Samrat Conversion Project” for use as a mobile off-shore production unit. Mercator Oil & Gas Ltd, the lead member of the consortium, submitted a performance guarantee to ONGC. When the project was in the final stages, disputes arose between them and payments were withheld. Mercator alleged there was a collusion between the UAE firm and ONGC to oust it from the project. Mercator wrote to Axis Bank not to allow ONGC to invoke the bank guarantee. It moved the high court alleging fraud by ONGC. The latter contended that it was entitled to invoke the unconditional guarantee as the contractor had failed to complete the project in seven years and it had not proved any fraud in the deal. The high court agreed and disbelieved any collusion between ONGC and the UAE firm which was given the contract to complete the project. The court observed: “ONGC is a public sector company. It is difficult to believe that it can take any decision secretly.”

Liberal view of compensation rules

In motor vehicle accident claims, a recurring problem is lack of evidence of the income of the deceased to calculate compensation. Some tribunals and high courts take a strict view and demand documentary evidence. But it should not be insisted upon, according to the Supreme Court. This beneficial view was reiterated by the Meghalaya High Court in the case, Oriental Insurance Co. vs Santana Paul.  The insurer argued that the award of Rs 10.38 lakh by the Shillong tribunal for the road death of a 25-year-old man was too high and not based on any evidence of his income. Dismissing its appeal, the high court ruled that the standard of proof in such cases is one of “preponderance of probability, rather than one of proof beyond a reasonable doubt”. Strict proof is required in criminal cases but the Motor Vehicles Act proposes “just compensation” as it is a welfare law. Therefore, the principle of equitable compensation should guide courts, the judgment asserted. It stated that the tribunal had correctly assessed the income of the youth, though there was no documentary evidence. The insurer was asked to pay compensation to his mother.

Second round of whisky brand row

Allied Blenders & Distillers Ltd, manufacturers of renowned whisky Officer’s Choice, moved the Delhi High Court again over infringement of the trademark and design of its bottle. Some time ago, the court had passed an injunction against Rangar Breweries, directing it not to imitate the brand of the Allied. However, Allied now pleaded that the rival was still selling country liquor under the brand name ‘Rangar da Santra’, embossing the trademark Officer’s Choice on them. The bottles look like recycled bottles of Allied. Rangar submitted that some third party is doing the mischief and it has filed a complaint with police who are searching for the culprit. The high court, while ordering an injunction against Rangar, asked it to pay Rs 3 lakh as a cost to Allied, half of which will be refunded if the third party was found out and a charge sheet is filed.

Customs to refund duty to fruit juice importer

The Madras High Court has ordered customs authorities to refund the duty paid by a fruit juice importer with a 24 per cent interest from 2006 to 2014. In this case, Adluri Foods vs the Assistant Commissioner of Customs, the importer had paid Rs 8.34 lakh towards various customs levies. Later, the firm found that the goods were exempt from countervailing duty. It sought a refund of the duty but the authorities rejected the claims of the importer. They had also lost the records and had miscalculated the payment. The high court invoked Section 27A of the Customs Act which mandates the department to refund within three months to avoid interest on delayed refunds.