Oral permission has no legal sanctity: SC

LEGAL DIGEST

An oral permission given by the chairman of a company to the widow of the deceased managing director that she could continue to occupy the company house till another accommodation was available has no legal value, the Supreme Court said in the Shubh Shanti Services vs Manjula Agarwalla case.

The company appealed to the Supreme Court against the Bombay High Court judgment acquitting the widow for wrongfully withholding the property of the company under Section 630 of the Companies Act.

She claimed that the chairman had allowed her to stay on in the company flat when he came to console her after the funeral. The Supreme Court observed that the chairman's promise at that time had no value.

In the matter of company affairs, directors act as a body collectively as a board. Any director acting individually has no power to act on behalf of the company, unless the power is delegated.

The position of the chairman is not substantially different from an individual director. Moreover, the action of the board should be in conformity with the memorandum or articles of association, the Supreme Court pointed out while allowing the appeal of the company.

Termination of service

If an employee does not report for duty even after his extended leave period and after repeated correspondence, the employer may terminate his service without departmental proceedings.

This was held by the Supreme Court in the Viveka Sethi vs Chairman J & K Bank case in two appeals against the judgment of the J & K High Court.

In this case, the employee did not join duty despite several letters to him. When he was terminated he appeared and demanded reinstatement.

The labour court and the high court granted it. The high court held that a full-fledged departmental proceedings should have been conducted before taking action.

The bank appealed to the Supreme Court. It said: "A limited enquiry as to whether the employee had sufficient explanation for not reporting to duties after the period of leave had expired or failure on his part on being asked so to do, in our considered view, amounts to sufficient compliance of the requirements of the principles of natural justice."

Accident victims' compensation cut

The Supreme Court has reduced the compensation and the interest upon the award amounts in two cases, observing that the high courts had erred in assessing the loss and giving higher interest.

The court allowed the appeal of the insurance company in the New India Assurance vs Charlie case. The Kerala High Court had granted Rs 4.68 as compensation for injuries suffered in a road accident by a pillion rider. The Supreme Court reduced it to Rs 3.5 lakh.

In the Tamil Nadu State Transport Corporation vs Rangapriya case, the damages for death was reduced from Rs 6.09 to Rs 4.5 lakh.

The Supreme Court observed that in both cases, the high courts had applied the wrong "multiplier", which is arrived at by taking into account the income of the victim multiplied by the number of years the person would have earned and maintained his family.

In these two judgements, the Supreme Court also linked the interest rate for the amount to the current bank rates and fixed it at 7.5 per cent. In the past years, the tribunals and courts had granted up to 18 per cent as interest on the amounts.