SC dismisses insurer's appeal

LEGAL DIGEST

The Supreme Court last week dismissed the appeal of National Insurance Co Ltd against the judgment of the Jammu & Kashmir High Court in the claim of a jeweller for theft under the jeweller block policy. The insurance company argued that it was protected by an exclusion clause.

According to the clause, if the insured property is entrusted to a customer, it would be excluded. In this case, the thief entered the business premises and walked away with the jewellery.

The high court held that there was no entrustment in such a case; it was pure theft. The insurance company appealed to the Supreme Court arguing that it was a case of breach of trust, which was excluded.

The court stated that the policy covered the risk of theft. The offences of breach of trust and theft are different, as defined in the Indian Penal Code. It affirmed the ruling of the high court.

'Crushed bone' judgment set aside

The Supreme Court last week set aside the judgment of the Allahabad High Court in a case questioning whether crushed bone could be considered as fertiliser. Under the state sales tax law, bones invite a rate higher than chemical fertiliser.

The issue in this appeal, Commissioner of Sales Tax vs Bharat Bone Mill, was how crushed bone should be classified. The high court had considered a report of the Directorate of Marketing and Inspection, Union Ministry of Food and Agriculture and other encyclopaedic works.

It ultimately decided that it was bone meal and not crushed bones that could be treated as fertiliser. There was a difference between the two.

The Supreme Court, however, observed that the high court did not have the advantage of expert opinion on whether crushed bones could be used only for the purpose of fertiliser or whether crushed bones were sold to the farmers for use only as fertiliser.

The court therefore set aside the orders of the assessing authorities as well as the high court but left the question open for subsequent cases, if any.

Apex court raps assessing officers

The Supreme Court observed last week that assessing officers should not behave as if they are bloodhounds and should act as watchdogs of revenue.

"It is unfortunate that in a large number of cases, orders totally bereft of rationality are being passed. They do not, in any manner, serve public interest, much less the interest of revenue," the judgment said in the case of assistant commissioner of anti-evasion, commercial taxes vs Amtek India Ltd.

In this case, the commercial tax officer of Bharatpur, Rajasthan, imposed penalty on the company suspecting the genuineness of certain documents. It was later found to be baseless. The Rajasthan High Court imposed penalty on the officer to be paid by him personally.

On appeal, it was argued that an error of judgment should not be treated as mala fide action. The Supreme Court said the officer should have been more careful. Though his action was unjustified, the court deleted the imposition of penalty on him.

Relief granted for lost consignment

The Supreme Court last week upheld the judgment of the National Consumer Disputes Redressal Commission in the case of loss of consignment by a carrier.

In this case, Transport Corporation of India Ltd vs Veljan Hydrair Ltd, machinery was sent from Andhra Pradesh to Gujarat, but the consignee did not take delivery. Therefore the consignor asked the carrier to send the goods back. But it did not return.

Therefore, the consignor moved the consumer commission. The carrier argued that the consignor had not paid the freight charges for re-booking and therefore there was no consideration and contract for service. The state and national consumer commissions rejected this argument.

The Supreme Court explained the law thus: "When the goods are not delivered, there is a deficiency in service. It is no doubt true that service does not include rendering service free of charge. Where the contract for transportation is for a consideration (freight charge), the mere fact that such consideration is not paid would not make the service free of charge. There is a difference between contract without consideration and contract for consideration which is not paid."

Paradigm Logistics wins land sale case

The Supreme Court last week confirmed the sale of 26 acres of prime land in the Industrial Park in Hyderabad to Paradigm Logistics and Distribution Pvt Ltd, settling long-standing disputes over it. Earlier, 51 acres were given to United Auto Tractors Pvt Ltd to set up an industry but the project was caught in financial problems and litigation.

The Supreme Court in 2004 set up a committee, with representatives of Syndicate Bank and Andhra Pradesh Industrial Infrastructure Corporation Ltd, to sell the land. In its auction, Celebrity Infrastructure Pvt Ltd was the highest bidder with an offer of Rs 42 crore.

However, it could not pay the full amount on time and so its offer was cancelled. Meanwhile, Paradigm matched Celebrity Infrastructure's offer and paid the full amount of the bid. No other party could match its bid. In view of these factors, the Supreme Court confirmed the sale in favour of Paradigm.