The Supreme Court last week dismissed a large number of appeals, moved by Oil and Natural Gas Commission (ONGC) on behalf of its foreign partners, seeking exemption from surtax in respect of agreements for prospecting, extraction and production of mineral oils. The government corporation invoked in vain a 1983 notification granting power to the central government to grant tax exemption to foreign companies in certain cases. The Supreme Court stated that agreements to provide services are not covered by the exemption notification. It is only agreements for association and participation that get exemption, the Supreme Court stated while upholding the judgment of the Uttarkhand high court. The Supreme Court explained that there was nothing to prevent the government to grant exemption to both kinds of contracts. But it chose to grant the benefit only to those which had direct association or participation with the government or ONGC. The objective of the law was to encourage foreign participation. But since the government decided to bestow the surcharge exemption to one category only, the court cannot expand the scope to other categories by judicial pronouncements, the judgment said.
Ceiling on insurance of bank deposit
Courts cannot ask the official liquidator of a failed bank to disburse all deposits to the account holders ignoring the limits set by the Banking Regulation Act and the priority given to the Deposit Insurance and Credit Guarantee Corporation of India, the Supreme Court stated last week while quashing an order of the Madras High Court. A cooperative bank in Tamil Nadu was wound up and an official liquidator was appointed. The depositors were paid Rs 1 lakh each, which was the maximum they were entitled to according to law. Though some of them settled their disputes with the liquidator, others moved the high court for refund of their full deposits. The high court asked the liquidator to pay them within a time limit. The corporation moved the Supreme Court claiming that it was entitled to the balance of the amount with the liquidator after paying up to Rs 1 lakh to the account holders. Allowing the appeal of the corporation, the Supreme Court stated that Section 21 of the Act "not only makes it obligatory on the part of the liquidator to repay the amount to the corporation, but it also clarifies that there shall not be any other preferential creditor."
FM's speech no aid to interpret rule
Nominee is mere custodian of deposit
The Delhi High Court last week ruled that the bequest in a will shall supersede the nomination in a bank account. The petitioner in this case was a former Supreme Court judge, U N Bachawat, whose wife had bequeathed to him two deposits in a Delhi post office bank. When he claimed the amount in accordance with the will, the postal authorities rejected his request maintaining that it was the nominee who was entitled to the money. In this case, the nominee was his grandson. He had relinquished the claim and asked the postal authorities to pay his grandfather according to the will of his grandmother. But the postal authorities insisted on paying the nominee only. They quoted the Government Savings Bank Act 1873, under which the payment must be paid only to the nominee without any exception. The ex-judge argued that the nominee was only a custodian of the funds and they should be paid to the legatee. Accepting his contention and following judgments of the Supreme Court in LIC and other cases, the high court affirmed the principle that a nomination did not oust the testamentary and non-testamentary rights.
Cheque as security should not bounce
The Delhi High Court last week reversed the acquittal of two persons who deposited a cheque as security with a firm which conducted trading in shares on credit basis. When the cheque bounced, the firm filed complaint against the two persons. The Delhi magistrate acquitted them on the ground that the cheque was issued as security and not in discharge of any debt or liability as mentioned in the Negotiable Instruments Act. Moreover, when the cheque was handed over, there was no transaction between the parties. The firm appealed to the high court, and in the judgment, Credential Leasing & Credits Ltd vs Shruti Investments, the court held that the magistrate applied wrong principles to acquit the accused persons. It ruled that the debt or other liability need not be in existence on the date of issuance of the cheque, i.e. on the date of its delivery to the drawee on the date that the cheque bears. The only reference to time in Section 138 is the point of time when the cheque is returned unpaid by the drawer's bank. The court also rejected the argument of the accused persons that as the cheque was issued as security in respect of a contingent liability, the complaint would not be maintainable.
Similar brand names, different use
Even if two products have brand names which sound similar, if they belong to two different classes, there would be no trade mark infringement. The Bombay High Court stated so while rejecting the plea of Indchemie Health Specialties Ltd to pass an injunction against Intas Pharmaceuticals. Indchemie markets 'Cheri', recommended by physicians for iron deficiency. It objected to Intas selling a multivitamin dietary supplement with the name 'Multi Cherry', recommended by dieticians. Indchemie alleged that since the names are similar it will confuse the consumers. Intas countered that cherry is a generic name and its varied spellings would not make it otherwise. The high court rejected the contention of Indchemie stating its product was for therapeutic purposes, on doctor's recommendation, while that of Intas was covered by the Food Safety Act and not under the Drugs Act. Though both products may be available at the chemists, they are dispensed by qualified personnel. Therefore there was no likelihood of confusion.
Ceiling on insurance of bank deposit
Courts cannot ask the official liquidator of a failed bank to disburse all deposits to the account holders ignoring the limits set by the Banking Regulation Act and the priority given to the Deposit Insurance and Credit Guarantee Corporation of India, the Supreme Court stated last week while quashing an order of the Madras High Court. A cooperative bank in Tamil Nadu was wound up and an official liquidator was appointed. The depositors were paid Rs 1 lakh each, which was the maximum they were entitled to according to law. Though some of them settled their disputes with the liquidator, others moved the high court for refund of their full deposits. The high court asked the liquidator to pay them within a time limit. The corporation moved the Supreme Court claiming that it was entitled to the balance of the amount with the liquidator after paying up to Rs 1 lakh to the account holders. Allowing the appeal of the corporation, the Supreme Court stated that Section 21 of the Act "not only makes it obligatory on the part of the liquidator to repay the amount to the corporation, but it also clarifies that there shall not be any other preferential creditor."
FM's speech no aid to interpret rule
More From This Section
The speech of the finance minister in Parliament is no guide to the interpretation of the terms of a notification. Its terms must be interpreted on the basis of the plain meaning of the words used, the Supreme Court stated while dismissing four appeals of the Commissioner of Central Excise against Indian Petrochemicals Corporation Ltd and Indian Oil Corporation. The oil companies had claimed that some of its products like propylene and raffinate were eligible for 8 per cent duty instead of 16 per cent according to a 1983 notification. The revenue authorities rejected their claims and classified the products in the higher duty category. The excise appellate tribunal accepted the classification claimed by the oil companies and allowed them the concessional rate. The authorities appealed to the Supreme Court without success.
Nominee is mere custodian of deposit
The Delhi High Court last week ruled that the bequest in a will shall supersede the nomination in a bank account. The petitioner in this case was a former Supreme Court judge, U N Bachawat, whose wife had bequeathed to him two deposits in a Delhi post office bank. When he claimed the amount in accordance with the will, the postal authorities rejected his request maintaining that it was the nominee who was entitled to the money. In this case, the nominee was his grandson. He had relinquished the claim and asked the postal authorities to pay his grandfather according to the will of his grandmother. But the postal authorities insisted on paying the nominee only. They quoted the Government Savings Bank Act 1873, under which the payment must be paid only to the nominee without any exception. The ex-judge argued that the nominee was only a custodian of the funds and they should be paid to the legatee. Accepting his contention and following judgments of the Supreme Court in LIC and other cases, the high court affirmed the principle that a nomination did not oust the testamentary and non-testamentary rights.
Cheque as security should not bounce
The Delhi High Court last week reversed the acquittal of two persons who deposited a cheque as security with a firm which conducted trading in shares on credit basis. When the cheque bounced, the firm filed complaint against the two persons. The Delhi magistrate acquitted them on the ground that the cheque was issued as security and not in discharge of any debt or liability as mentioned in the Negotiable Instruments Act. Moreover, when the cheque was handed over, there was no transaction between the parties. The firm appealed to the high court, and in the judgment, Credential Leasing & Credits Ltd vs Shruti Investments, the court held that the magistrate applied wrong principles to acquit the accused persons. It ruled that the debt or other liability need not be in existence on the date of issuance of the cheque, i.e. on the date of its delivery to the drawee on the date that the cheque bears. The only reference to time in Section 138 is the point of time when the cheque is returned unpaid by the drawer's bank. The court also rejected the argument of the accused persons that as the cheque was issued as security in respect of a contingent liability, the complaint would not be maintainable.
Similar brand names, different use
Even if two products have brand names which sound similar, if they belong to two different classes, there would be no trade mark infringement. The Bombay High Court stated so while rejecting the plea of Indchemie Health Specialties Ltd to pass an injunction against Intas Pharmaceuticals. Indchemie markets 'Cheri', recommended by physicians for iron deficiency. It objected to Intas selling a multivitamin dietary supplement with the name 'Multi Cherry', recommended by dieticians. Indchemie alleged that since the names are similar it will confuse the consumers. Intas countered that cherry is a generic name and its varied spellings would not make it otherwise. The high court rejected the contention of Indchemie stating its product was for therapeutic purposes, on doctor's recommendation, while that of Intas was covered by the Food Safety Act and not under the Drugs Act. Though both products may be available at the chemists, they are dispensed by qualified personnel. Therefore there was no likelihood of confusion.