The Supreme Court has ruled that prior permission of the criminal court is not necessary for compounding an offence under the Companies Act when power of compounding is exercised by the Company Law Board (CLB). It was argued that the board has to seek the permission of the criminal court and it cannot compound an offence without such permission. Rejecting the argument in the case, VLS Finance Ltd vs Union of India, the court stated that Section 211 of the Companies Act and related provisions were brought "in view of the need of leniency in the administration of the Act because a large number of defaults are of technical nature and many defaults occurred because of the complex nature of the provision." According to the complaint in this case, a hotel company and its chairman-cum-managing director were arrayed as accused for showing assets wrongly in the balance sheet. They moved the CLB and it compounded the offence. The appeal was dismissed stating that "any offence punishable under the Companies Act, not being an offence punishable with imprisonment only or with imprisonment and also with fine, may be compounded either before or after the institution of the prosecution by the CLB."
No I-T deduction in compensation
The Supreme Court raised the compensation for the death of a youth from Rs 14.94 lakh to Rs 29.73 lakh and stated that the Rajasthan High Court was wrong in deducting 20 per cent from the salary of the deceased towards income-tax for calculating the compensation. As per law, the presumption will be that employer at the time of payment of salary deducted income-tax on the estimated income of the deceased employee from the salary. Therefore, the salary as shown in the last pay certificate should be accepted for computing the income of the deceased person. The court stated that provident fund, pension and insurance receivable by claimants cannot be deducted as 'pecuniary advantage' accrued to the claimants. Similarly, bank balance, shares, fixed deposits also are receivable by the nominees, but they are pecuniary advantages not related to the Motor Vehicles Act provisions. The employee or his heirs are entitled to receive these amounts irrespective of the accidental death. They are secured, are certain to be received, while the amount under the Act is uncertain and receivable only on the happening of the event, viz., accident, which may not take place at all. Similarly, compassionate appointment of a dependent should also not be considered for deduction, the judgment emphasised.
Move to check litigation cost
The Delhi High Court has directed Timken Services Ltd not to use the trade name of multinational US firm Timken Co and pass off the products with 'Timken' name, logo or artworks. The court rejected the argument of Timken Services that it had no knowledge of the US company's presence in India since 1922 and it adopted the name of a director, 'Cat Timkey', without dishonest intention since 1989. The US company has submitted that it has incurred Rs 43,60,250 in this matter. In an innovative order, the court asked both parties to submit their estimate of future cost before starting the trial "so that the parties shall have notice of actual cost that the other side estimate would be incurring in the course of litigation. Greater transparency about cost will promote access to justice. This process shall also keep the cost in check."
Challenge to award rejected
The Bombay High Court has dismissed the petition of Maharashtra Small Scale Industries Development Corporation against the arbitration award in its dispute with Snehadeep Structures involving the question of interest on delayed payment. The private firm was employed to clear slurry from the Chandrapur thermal power plant. It claimed that it was entitled to receive full payment of the bills within 10 days of the submission and the corporation failed to pay the bills within the prescribed time and delayed the payment without any justifiable cause. The dispute was decided by an arbitrator in favour of the firm. The high court declined to interfere in the award.
Otis told to install lifts
The National Consumer Commission has directed Otis Elevators Co Ltd to install all the 22 lifts in a cooperative housing society in Delhi within three months or pay Rs 10,000 per day as penal charges. The Talaganj society ordered the lifts but the elevator company did not install half of them despite extending the schedule for completion of work, putting the residents in difficulty. The company had promised to complete the job in 52 weeks. It argued that the cost of material and installation had gone up since the signing of the contract in 1996. The commission rejected this contention stating that the money had already been paid by the society and the company was "enjoying the amount for more than a decade." The complaint of deficiency in service was fully proved, the judgment said.
