From battle over whisky brand to Rera rule, here're the key court orders

Contractor must be heard before debarring him

An agreement cannot be terminated mid-way during the promised period, that too without hearing the affected party, the Supreme Court of India stated in a case between the UP Warehousing Corporation and a contractor. The corporation had issued an e-tender in 2018 for transportation of food grains but cancelled it 10 days later due to “administrative reasons”. Another tender was issued but that was also cancelled by the managing director as he found it “impractical” to go ahead with it. He issued yet another tender with much higher rate. One contractor, Sudhir Kumar, was successful and an agreement was signed for a two-year period. But then the whole tender was caught in a corruption scandal related to the tender process. The truck owners’ association alleged in its complaint to the principal secretary that there was huge loss to the corporation due to financial irregularities in the tenders. Several employees of the corporation faced disciplinary proceedings. Kumar, who had completed half his contractual period, was debarred without a hearing. He moved the Allahabad High Court, which ruled that it was wrong to terminate his contract. Moreover, the action will result in unfairly debarring him for a further three years. The corporation appealed to the Supreme Court, which dismissed the appeal stating that the debarring without hearing him was illegal. The corporation had argued that a contractor cannot directly move the high court and he should go to a civil court to decide a contractual matter. The Supreme Court rejected the contention and asserted that when the issue is in the “public law domain” and not private law field, a contractor of a state corporation can move a high court. 

Four-tier litigation over wrong letterhead

Using a wrong letterhead for a loan recovery notice could cost a lender long and expensive litigation, L&T Housing Finance Ltd learned the hard way. Trishul Developers, a real estate partnership, had taken a loan that it did not repay. So L&T moved the debt recovery tribunal. It dismissed the application on the ground that the letter was issued by L&T Finance Ltd. The company appealed to the appellate tribunal, which set aside the DRT ruling. On further appeal, the Karnataka High Court quashed the appellate tribunal order and upheld the tribunal order. So L&T moved the Supreme Court. The company argued that it used a common letterhead and the authorised signatory committed an inadvertent mistake by sending the notice in the letterhead of L&T Finance Ltd. The borrower contended that L&T Finance was not the secured creditor. The Supreme Court quashed the high court order stating that the issue was “trivial and of a technical nature” and the lender has substantially complied with the rules of the Securitisation (Sarfaesi) Act.

Heady battle over whisky brand

In a trademark dispute over the shape and design of whisky bottles, the Delhi High Court has temporarily barred Agribiotech Industries Ltd from using the trademark or trade name of Chetak or any mark deceptively similar to “Officer’s Choice” and “Officer’s Choice Blue” trademarks registered by Allied Blenders And Distillers Ltd. Allied Blenders claimed that it is a leading manufacturer of whisky with high reputation. It alleged that the opposite company marketed a rival whisky brand named Chetak Whisky. The design and colour scheme imitated those of Officer’s Choice in bottles and website pictures and, therefore, consumers were likely to be deceived by the trade dress. Agribiotech challenged the jurisdiction of the high court. It also submitted that the shape and size of its product were different and there was a picture of a chetak on the bottle. However, the high court stated that the overall effect would mislead the consumer.

Rera rule on pre-deposit upheld

The Punjab and Haryana High Court has rejected the challenge to the requirement of a pre-deposit as set out in Section 43 (5) of the Real Estate (Regulation and Development) Act. The judgment stated that it was neither unreasonable nor arbitrary. Some 20 builders of Haryana had sought waiver of the pre-deposit rule for entertaining appeals against an order of the Real Estate Regulatory Authority. The builders had pleaded that they were facing financial crisis. According to the rule, a promoter has to first deposit 30 per cent of the penalty imposed by the appellate tribunal. The high court also rejected the prayer that it should exercise its discretionary power to waive the requirement of pre-deposit. The court further dismissed the builders’ plea that the rule should not be applied to projects that were going on before the central legislation was passed in 2016. The judgment said: “In a country like ours, when millions are in search of homes and had to put entire life earnings to purchase a residential house for them, it was compelling obligation on the government to look into the issues in the larger public interest and if required, make stringent laws regulating such sectors. We cannot foresee a situation where helpless allottees had to approach various forums in search of some reliefs here and there and wait for the outcome of the same for indefinite period. The public interest at large is one of the relevant considerations in determining the constitutional validity of retrospective legislation.”

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