Brief case: Insurer's rejection quashed

Illustration: Binay Sinha
Insurer’s rejection quashed

The Supreme Court has dismissed two appeals of the National Insurance Company, which had rejected claims by Hindustan Safety Glass Works Ltd and Kanoria Chemicals & Industries Ltd for damage caused to its works by floodwater and fire. The insurance company repudiated the claims on grounds of delay, but the court found the delay was caused by the insurer itself. In the first case of Hindustan Safety Glass Works, rain caused damages which the first surveyor determined at Rs 24 lakh against a claim of Rs 53 lakh. The insurer felt the surveyor’s report was not bona fide and appointed another, who also reached the same figure. Then the insurer raised new issues such as limitation for a filing suit in the National Consumer Disputes Redressal Commission. The commission rejected it and in the appeal, the Supreme Court described how the government insurer caused the delay. The claim was filed in 1992, the day after the damage, but the surveyors took more than two years to assess the loss. “The entire delay is attributable to National Insurance and cannot prejudice the claim of the insured,” the judgment said, adding:  “To make matters worse, National Insurance actually repudiated the claim of the insured only in 2001, well after the complaint was filed with the National Commission.” The court further underlined that “in a dispute concerning a consumer, it is necessary for the courts to take a pragmatic view of the rights of the consumer principally since it is the consumer who is placed at a disadvantage vis-à-vis the supplier of services or goods”. Similarly, in the Kanoria case, the report of a fire was made in 1993 but the repudiation came in 1999.

Conviction upheld in coal mine mishap

In a coal mine disaster of 1996, the Supreme Court upheld the conviction of a manager and the agent for criminal negligence, but reduced their jail sentence to a fine. The incident was 20 years old, the manager was now an invalid and 75 years old, while the agent was negligent only to a degree, it held. The other accused had already been sentenced to rigorous imprisonment and fined. A mining sirdar had asked 17 loaders to continue work despite warnings by workers from the earlier shift that the roof was about to collapse. The roof did collapse, killing four and severely injuring several others. A probe found the coal mine authorities had violated the system support rules under the mines and minerals Act. A criminal complaint was made before the chief judicial magistrate of Dhanbad who found seven persons guilty, including four public servants who violated the rules and warnings. Their appeals were dismissed by the Jharkhand High Court. Two convicts moved the Supreme Court; but it dismissed their appeals in a long judgment in the case Binoy Kumar vs State of Jharkhand.

CCI probe can’t be stalled

When the Competition Commission of India (CCI) forms a prima facie opinion that certain firms have formed a cartel and asks its director general to probe the allegation, it is an administrative decision. It is a direction to one of its departments and does not involve adjudicatory function. The firms against which the probe is being conducted has no right to inspect documents and evidence against them at that stage, the Delhi High Court ruled last week in the appeals of Premier Rubber Mills and Somi Conveyor Beltings Ltd. In these cases, the commission, on its own, ordered a probe by the director general as it felt the firms had been indulging in a bid-rigging cartel in the market for conveyor belts and exchanged commercial and confidential price sensitive information among themselves prior to submission of bids. The firms told the high court their application for permission to inspect documents and get certified copies was rejected on the ground of confidentiality. Their right to defend themselves had been arbitrarily denied, they argued. They also challenged the regulations related to the investigation. The high court rejected all their contentions and allowed the investigation by the director general to proceed.

High court intervenes in ITC’s trademark suit  

The Calcutta High Court ruled last week that it has jurisdiction to decide a trade mark suit moved by ITC Ltd against a cooperative bank in a “nondescript” Kerala town. The name of the bank is Irinjalakuda Town Co-operative Bank, abbreviated as ITC Bank. The corporation with its registered office in Kolkata alleged infringement of its trade mark and accused the bank of trying to pass off its services as that of the big corporation. It asserted that the website of the bank is accessible everywhere  and that the cheques or drafts carrying the name "ITC Bank" are being issued and can be encashed at all banks situated within the jurisdiction of the Calcutta High Court. Similarly, the debit cards issued can be used at ATMs everywhere. The bank submitted that the high court could not claim jurisdiction in this case as it operated in Kerala. The high court rejected its defence.

Banker’s gratuity can’t be withheld 

The Bombay High Court last week ordered payment of gratuity to a bank employee who was prematurely terminated 20 years ago, alleging financial irregularities. In this case, Nannubhai Desai vs UCO Bank, the court noted that the bank had not issued a show-cause notice to the employee, it had not proved the extent of financial loss and no criminal or civil suit had been filed against him. The court also noted that the Payment of Gratuity Act is a welfare legislation and the employer is not empowered to forfeit gratuity. “Forfeiture of gratuity has serious consequences and any order providing for such forfeiture is a quasi-judicial order. It goes without saying, it must be passed after following principles of  natural justice which call for an impartial and fair inquiry after giving adequate notice and affording sufficient opportunity to show cause to the delinquent employee,” the judgment said.

GAIL’s challenge to rules dismissed 

The Delhi High Court last week dismissed the petition of Gas Authority of India Ltd (GAIL) challenging a set of regulations dealing with tariff, distribution networks and laying of pipelines passed under the Petroleum and Natural Gas Regulatory Board Act.  In this writ petition, GAIL vs Petroleum and Natural Gas Regulatory Board, the public sector undertaking pleaded that 12 tariff orders issued by the board fixing tariff for gas pipelines should be held illegal as the board has no power to do so. The high court rejected the contention.


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