The Supreme Court last week set aside the judgment of the Calcutta high court and held that in a case of default of provident fund contribution by an “exempted establishment”, it would be liable for legal action. The question involved in the case, Regional PF Fund Commissioner vs Hooghly Mills, was under the Employees’ Provident Funds and Miscellaneous Provisions Act whether exempted companies can be subjected to proceedings for recovery of damages if they default in the contributions. The high court ruled that such exempted employers could not be proceeded against. According to the Act, establishments which have better schemes for provident fund than the statutory one, may be exempted. The high court, by interpreting Section 17, concluded that the company was exempted. Overruling the high court, the Supreme Court stated that since it is a social welfare law, courts should interpret provisions, if there is any doubt, in favour of the beneficiaries. “The interpretation of the Act must not only be liberal but it must be informed by the values of Directive Principles of State Policy in the Constitution.”
Excise law to be followed
A provision for exemption, concession or exception in a tax law should be strictly followed and the conditions should be precisely met, the Supreme Court stated last week while dismissing two excise appeals moved by Indian Oil Corporation Ltd. One involved supply of crude oil to Ahmedabad Electricity Company and the other referred to supply of naphtha to Indo Gulf Corporation. IOL invoked a 1984 notification seeking exemption from excise duty. The revenue authorities denied it. The court found that the procedures laid down for claiming exemption was not strictly followed and therefore IOL was not entitled to the benefit.
Seeds Corp to pay for damages
The Supreme Court last week dismissed a batch of appeals by government-owned National Seeds Corporation which had been asked to pay compensation to farmers in Andhra Pradesh for losses suffered by them while growing defective seeds provided by the company. The farmers moved the consumer commission which found substance in the complaints and ordered compensation. The corporation, in its appeal, argued that the remedy for the farmers was according to the Seeds Act and not under consumer law. It also argued that the farmers were using the seeds for commercial purpose. Further, the corporation challenged the procedure followed by the forums below. The Supreme Court rejected all these arguments. It pointed out that a commissioner appointed by the consumer forum had found that the sunflower seeds were not up to the standard. The farmers generally are not aware of the Seeds Act. “Majority of the farmers in the country remain illiterate throughout their life,” the court said. Even if they are aware of the laws, it did not benefit them by prosecuting the company. The Consumer Protection Act can be invoked in such cases for compensation, the judgment said.
Jurisdiction to follow contract terms
When contractual disputes arise in different places, the parties involved must go to the court which is named in the contract, though courts in both places may have jurisdiction to decide the disputes. The Supreme Court stated so last week in a dispute between AVM Sales Corporation and Anuradha Chemicals Ltd. They had entered into an agreement at Kolkata for supply of chemicals manufactured by the latter to the former. In the contract, it was agreed that “any dispute arising out of the agreement will be subject to Kolkata jurisdiction only.” When disputes arose between the two, AVM moved the Kolkata court while the other company filed a counter suit in Vijayawada, Andhra Pradesh. Thus one of the crucial disputes in this case was about the jurisdiction of the court. The Andhra court passed order in part of the disputes which arose there. It was upheld by the Calcutta high court. On appeal, the Supreme Court set aside both and sent the disputes to the Kolkata court. It clarified that such agreements were not against public policy and not against the provisions of the Contract Act and therefore should be honoured.
Rap for Punjab & Sind Bank officers
The Supreme Court expressed its “extreme displeasure” against public sector Punjab & Sind Bank for negligence in dealing with public money. In its loan recovery suit against a partnership firm, M/s CS Company, the bank could not produce original documents and lost its case in the Kerala high court. On appeal, the Supreme Court saved the bank from the objections raised by partners who had taken a “dishonest stand to evade liability to make payment to the bank.” After setting aside the high court judgment and allowing the bank to sell the firm’s properties to recover its loan, the Supreme Court criticized the conduct of the bank officials for not producing even the original of the bank guarantee to assert its rights, leading to defeat in the high court. “They have dealt with this matter with extreme casualness,” the court remarked.
