From cheque bounce to medical trademark, here're the key court orders

Warring public entities sent to new forum

Commercial litigation among central public sector enterprises (CPSEs) and various government departments/organisations see no end. This was evident last week when the Supreme Court asked MTNL, Canara Bank and its subsidiary Canfina to take their 25-year-old dispute to the Administrative Mechanism for Resolution of CPSEs Disputes (AMRCD). Two months ago, the court had referred them to arbitration, ordering that Canfina must be impleaded in the process on the principle of “group of companies”. Since the disputes involved government entities, MTNL now moved the court in an attempt to resolve the issues through the newly contrived AMRCD. Canara Bank opposed the move, arguing that it would amount to a review of the court’s earlier order. However, the court wanted to try the new method suggested by MTNL. “If any settlement is brought about through such an attempt, it will not only save public funds but will ensure the true spirit of coordination amongst different public bodies,” the court observed. It added if the disputes are not settled by January 15, they will go back to the arbitration table. Disputes between different arms of the government have been sore points for decades, which even the Supreme Court could not solve despite repeated efforts. The objective of the AMRCD is to bring about a time-bound settlement of disputes between government entities.


Getting ex-director out of company flat


If a director of a company refuses to move out of the residence provided by it after leaving his post, both civil and criminal proceedings may be instituted against him. Section 630 of the Companies Act deals with penalty and imprisonment for withholding the property. The Supreme Court ruled in the judgment in Hoogly Mills vs State of West Bengal that the pendency of a civil suit in respect of a property would not bar a complaint under Section 630 concerning the same property. In this case, a director refused to vacate the flat given to him by the company. The company signed an agreement to buy the flat, but the director claimed that he had a claim to it because an heir to the owners had agreed to sell it to him. On this claim, a civil suit was pending. The sessions court proceeded with the criminal complaint. The Calcutta High Court quashed it. Therefore, the company moved the Supreme Court. It set aside the high court judgment, observing that “given that the primary object of Section 630 is to provide a speedy mechanism for restoration of wrongfully withheld property to companies, we find that the provision should be construed as far as possible to facilitate a remedy in favour of the aggrieved company and to prevent the wrongful retention of the property for an unduly long period by the accused person”.


Presumption of debt in cheque bounce


The Supreme Court has reiterated that once a cheque is issued, it is presumed that it was for consideration and the holder of the cheque received it in the discharge of existing debt. It is a statutory presumption under the Negotiable Instruments Act. The drawer can rebut it to escape prosecution. In this case, Uttam Ram vs Devinder Singh, an apple grower used ropeways to get his produce to the road. However, the cheque given to the ropeway owner bounced. When a criminal case was filed, the drawer alleged that the amount was higher than due, the cheque book was lost and the number of cartons did not tally. The court did not believe it and asked him to pay double the amount written on the cheque, plus Rs 1 lakh as costs.



Prohibition-hit bottlers to get relief


Manufacturers and suppliers of country liquor in Bihar won a partial victory as the Supreme Court ordered the state government to refund the licence fee for the period when their plants were sealed following the declaration of prohibition in 2016. They had moved the high court which ordered the government to refund the licence fees and the differential amount. The government appealed to the Supreme Court in a batch led by State of Bihar vs Riga Sugar Co. It stated that the high court was right in ordering a refund, in some cases without hearing them. “Since orders of cancellation and suspension are punitive, the licensee should be given an opportunity before the licence is cancelled or suspended,” the court stated in the main case. But in the case of some distilleries, the high court order was overruled. 


Family affairs not to affect compensation


When compensation for a road death is computed, the court cannot take into account the arrangement of the shares of property within the family. The court must go by the law in the Motor Vehicles Act, the Supreme Court emphasised in its judgment in Renu Rani vs New India Assurance Co. In this case, a journalist died when his car was hit by a truck coming from the opposite side. The tribunal awarded Rs 13,725,000 to the victim’s wife, daughter and parents. The insurer appealed to the Supreme Court, arguing that the woman had relinquished her share in favour of the other claimants and consequently she was not entitled to compensation. Rejecting the contention, the court asserted that “it is in between the family members to make an arrangement with regard to the family affairs. The grant of compensation in respect of accidental death of a person will not be affected by the family arrangement inasmuch as the compensation as per law has to be awarded by the court in favour of the dependants.”


Strict view in medical trademark violations


Since people are now travelling to different countries, medicine with an internationally reputed trademark could be confused with a local brand with a similar sounding name. In pharmaceutical products, it could be harmful if deceptive names are given, the Delhi High Court stated in its judgment in GSK Consumer Healthcare SA vs EG Pharmaceuticals. In this case, GSK sued EG Pharmaceuticals, Zydus Healthcare and Biochem Pharmaceuticals Industries of passing off their nasal decongestion drops with similar-sounding names. GSK’s product, claiming international recognition, is Otrivin. The opposite parties used the name Biotrivin. The names could confuse consumers as both are used for the same complaint. In medicines, a strict view should be taken by courts as they affect human life. Stating so, the court granted an injunction against the opposite companies as GSK is likely to suffer irreparable financial injury. They were restrained from manufacturing, offering for sale, and advertising in any manner whatsoever any products under the mark Biotrivin or any other mark carrying a similar name.


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