From arbitration to deceptive trademark, here are the key court orders

Port trust can sell goods of third parties

If a lessee of public premises is evicted and is in unauthorised occupation of land, properties there can be sold by the estate officer, even if they belonged to third parties. The officer can sell the goods and deduct the sale proceeds from the dues of the lessee. This is authorised by the Public Premises (Eviction of Unauthorised Occupants) Act, said the Supreme Court in its judgment in the case, Board of Kolkata Port vs APL (India) Ltd. In this case, the land near the port was leased to a firm in 1963, and after 10 years the firm stopped paying rent. After proceedings under the Act, the lessee was ordered to be evicted in 2007. It was done, but one party had a huge number of containers lying in the premises. The port trust refused to allow it to take away the goods, leading to a petition in the Calcutta High Court. The judgment went against the port trust. It appealed to the Supreme Court. It ruled that “the port trust was entitled to sell the goods and deduct from the sale proceeds any amount due to the Port Trust on account of arrears of rent or damages, etc and the balance of the sale proceeds shall be paid to such person or persons, as may appear to the estate officer, to be entitled for the same.” It further explained that the rules applied to all persons who kept their goods on the public premises whether they are tenants, licensees, sub­tenants or any other parties.

Tax exemptions after change of law

The Supreme Court has emphasised the principle of restitution in its judgment last week in the case Uttar Haryana Bijli vs Adani Power Ltd, while dismissing the appeals of Haryana discoms and granting relief to Adani, which has a power plant in Kutch. As a developer under the Special Economic Zones Act, 2005, it was entitled to various exemptions, such as duty leviable under the Customs Act, the Customs Tariff Act, the Central Excise Act, and service tax. It had entered into power purchase agreements (PPAs) with Haryana discoms. Later the Ministry of Commerce and Industry withdrew the exemptions, which gave rise to disputes over the costs to be paid according to the PPA. Adani moved the Central Electricity Regulatory Commission seeking compensation due to change in law invoking PPA provisions. The petition was partly allowed. The matter was taken to the Appellate Tribunal, especially on the question of carrying cost. Its ruling was against the discoms. Their appeals were dismissed by the Supreme Court, which observed that the PPA recognised the principle of restitution by which an affected party must be put in the same economic position as if a change in law has not occurred.

Award of interest in arbitration

The Delhi High Court last week asserted that if there is no provision in a work contract for paying interest for delay, the arbitrators cannot award it. The court was dealing with the recurring theme of demand of interest for delay in projects in the case, Tehri Hydroelectric Development Corporation vs Jaiprakash Associates. The latter was given a contract related to spillways on Tehri dam. Disputes arose and those were referred to a three-member arbitration tribunal. The award was mainly in favour of Jaiprakash Associates. The corporation appealed to the high court under the Arbitration and Conciliation Act. The court upheld the award on most issues but not on the question of interest. For this, the judgment relied on last month’s Supreme Court judgment in another arbitration case between the same parties. 

Deceptive trademark in cigarette brand

The Calcutta High Court has granted an injunction in favour of ITC Ltd against a rival which allegedly imitated the Gold Flake brand of cigarettes. The dispute was over the use of ‘Flane’ by Whole Leaf Tobacco Venture Ltd. Flake, said the judgment, meant a small, flat, very thin piece of something. The rival, which is in the same business, used Flane, an archaic English word meaning an 'arrow'. ITC accused the rival of passing off its products as that of ITC.  The judgment agreed and observed that it appeared from the record that the two sets of packaging were deceptively similar. Even if the rival had adopted the mark innocently, an injunction will be granted against such use if there is a probability of confusion.  The judgment observed that an unexplained similarity is a relevant and important consideration while testing the question of honesty of adoption of the mark. “An action for passing off lies whenever the use of mark so familiar and associated with that of ITC, is calculated to deceive, so as to divert its business or to occasion a confusion between the two products,” the court stated.

Cattle used in shady financial scheme

The promoter of a firm that collected money from poor investors in rural areas and then failed to pay it back to them was denied bail by the Orissa High Court last week in the case, Leena Mahesh vs Republic Of India. According to the CBI charge sheet, the private company, which had changed its name and turned into a public limited company, allured people across the country with its 300-plus branches by promising high returns by providing them domestic animals like goat, sheep and pig. The company was not registered with the RBI or the Sebi and violated criminal laws and the Prize Chits and Money Circulation Schemes (Banning) Act. It had more than 600 accounts in leading banks. There were high-value transactions between sister concerns and to the husband of the accused person. She was denied bail because of the fear of tampering with evidence in the face of the enormity of the allegations and in the interest of the public and the state.

Corporates cannot suffer ‘mental agony’

Though corporate entities often cause mental agony to other companies through deficiency in goods and service, they themselves cannot suffer pain because they are not humans. Therefore, a company cannot ask for compensation for suffering mental agony.  This proposition was reiterated by the National Consumer Commission in its judgment, New India Assurance vs Oswal Plastic Industries. The Punjab state consumer commission had ordered the insurer to pay Rs 1 lakh to Oswal for causing mental agony, apart from other sums for deficiency in service in a claim. While upholding the order, the National Commission set aside the part which referred to compensation for mental agony suffered by Oswal due to fire its factory.

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