SC reverses HC order on power dispute

LEGAL DIGEST

The Supreme Court last week set aside the judgment of the Allahabad High Court, which had held that the UP State Electricity Board and the co-operative units buying power from it were public sector undertakings and therefore they should settle the dispute over electricity bills among themselves through a committee set up by the chief secretary of the state.

In this case, UPSEB vs Sant Kabir Sahakari Katail Mills Ltd and others, the Board had entered into agreements with these units promising continuous electricity supply at different rates according to the nature of the operations of the co-operative units.

Later, the co-operatives challenged the power bills in the High Court. It ruled that the dispute was between public sector units. Therefore, following the Supreme Court judgment in the 1992 ONGC case, it said, where the government and its undertakings were disputing parties, the differences should be settled by a committee.

The board appealed to Supreme Court, which remitted the dispute to the High Court to examine whether the board and the co-operatives were government undertakings.

Standing order of IOC upheld

The Supreme Court last week upheld the standing order of the Indian Oil Corporation, which allowed a general manager to dismiss an employee without following the regular disciplinary procedure in special circumstances.

In the case of Ajit Kumar Nag vs Indian Oil, an employee was instantly dismissed for creating unruly scenes at the corporation's hospital. This was challenged by the employee, who also challenged Standing Order 20 (vi) of the corporation.

The case was referred to a larger Bench since two earlier judgments of the Supreme Court held conflicting views. A three-judge Bench has now upheld the rule. In this case, the general manager took action in the interest of the security of the refinery (Haldia) and the staff there. The rule providing for such action was not arbitrary or unreasonable, the Supreme Court said.

Gauhati High Court judgment reversed

The Supreme Court last week allowed the appeal of M/s George Williamson (Assam) Ltd against the judgment of the Gauhati High Court after interpreting the implications of Explanation 1 to Rule 2 of the Second Schedule to the Companies (Profits) Surtax Act.

The company was formed mainly to take over 12 sterling tea companies, registered in England and operating in India. The acquisition was done in accordance with a scheme under Sections 391 and 394 of the Companies Act.

The RBI permitted it to pay Rs 4.90 crore as consideration. Against this, the net assets shown in the balance sheet were Rs 1.43 crore more, which were shown as "other reserve".

The question was whether it was included in the explanation which says: "A paid up share capital or reserve brought into existence by creating or increasing any book asset is not capital of a company."

The revenue department and the High Court interpreted it against the company. However, the Supreme Court held they were wrong.

Government asked to pay subsidy

The Supreme Court has directed the central government to deposit the subsidy amount with a company, with 9 per cent interest, within three months, in the case of Union of India vs Krimpex Sythetics Ltd.

The company claimed investment subsidy under a central scheme, but the government rejected it. The company, along with several others, represented to the Union industry ministry, which held that it was entitled to the subsidy.

The government then alleged that the premises of the company was found closed and it had gone into liquidation. This was proved wrong. Therefore, the Supreme Court asked the government to pay the subsidy.