The Supreme Court last week set aside the judgement of the Punjab and Haryana high court and declared that the court could not stop the state financial institutions from taking steps to recover loans given to industries. The court cannot act as an appellate authority and nullify the recovery steps unless they are against the law, unreasonable and unfair. The financial corporations are “not expected to flounder public money for promoting private interests”. In this case, Punjab Financial Corporation vs Surya Auto Industries, the court observed that the borrower was recalcitrant and did not accept the liberal terms offered by the corporation. The high court altered the terms of the agreement to suit the borrower, which was illegal.
Interest earned on bonds by Sahara exempted from tax
The Supreme Court has ruled that the interest earned on bonds and debentures by the Sahara India Savings and Investment Corporation was not chargeable to tax, thus dismissing the appeal of the Commissioner of Income Tax, Kanpur. The decision turned on the definition of "interest" in Section 2(7) of the Interest Tax Act. The court stated that when the company bought bonds and debentures of approved nature, they constituted investments and they could not be treated as loans and advances. Therefore, interest on such investment cannot be taxed under the Interest Tax Act.
Bouncing of cheques
The Supreme Court held last week that the offence of issuing cheques which is dishonoured for want of funds can be compromised between the parties. In this case, K M Ibrahim vs K P Mohammed, the drawer was convicted. The courts below held that the offence was not ‘compoundable’. The Supreme Court stated that under Section 147 of the Negotiable Instruments Act, the parties can compromise as the offence is listed as ‘compoundable’.
Workers demand permanency
The Supreme Court last week set aside the judgement of the Bombay high court in the dispute between Mahindra & Mahindra Ltd and a group of workers who demanded permanency. The court also recorded that a “fair and reasonable” offer given by the management to the employees for an amicable settlement of the dispute during the proceedings was rejected. Therefore, the Supreme Court asked the high court to review the case and deal with some vital points which were left out by the high court earlier.
Carrying huge amounts of cash
Travellers who carry huge amounts of cash cannot complain of harassment and delay at airports if investigating officers detain them to inquire about the source and legitimacy of the money, the Supreme Court ruled in Rajendran vs Additional Commissioner of Income Tax. In this case, this passenger, who was also an NRI, boarded from Hyderabad to Chennai, with Rs 65 lakh in cash drawn from a bank with its certificate. He was planning to buy property in Chennai. But when he landed in Chennai, he was detained for 15 hours by tax officials. Ultimately he was freed, but he had to suffer the harassment and the media also reported a distorted version due to a ‘leak’ from the authorities. The court dismissed the petition of the traveller stating that as the country was facing terrorist threat and black money, such probe was inevitable. In view of this problem, the CBDT has issued guidelines last month to air intelligence units to avoid inconvenience to passengers.
HC judgement set aside
The Supreme Court has set aside the judgement of the Uttarkhand high court in an arbitration appeal, Ravindera Kumar Gupta vs Union of India, as the high court had travelled beyond its jurisdiction and went into the details of the matters already decided by an arbitrator. The arbitrator’s decision on disputed facts is considered final and the court cannot normally go over them again. In this case, there was a dispute between the civil contractor and the government over the work and payment. The contractor invoked arbitration, which went in his favour. On appeal, the high court committed a “serious error in re-appreciating the evidence”. The evidence was duly scrutinised and evaluated by the arbitrator. Therefore, the high court should not have done the exercise again, the Supreme Court pointed out.
