Delay defeats insurance claim
If the insurance claim is made late, it can be rejected even if the insurance company had appointed a surveyor to assess the damage, according to the Supreme Court.
The survey is no evidence of waiver of the time limit by the insurer. It does not condone the delay made by the claimant, the court asserted in its judgment, Sonell Clocks & Gifts Ltd
vs New India Assurance. In this case, the plant and machinery of the firm were damaged in a flood. It made the claim after about four months. The insurance company appointed a surveyor who reported that due to the delay, the damage could not be assessed accurately. The claim was thus rejected on the ground of delay. This was challenged in the National Consumer Commission, which rejected the claim on the ground of delay. On appeal, it was argued by Sonell that the survey was implied consent to condone the delay.
The insurer submitted that according to the Insurance Surveyors & Loss Assessors Regulations, it was bound to appoint a surveyor when there was a claim. But that did not mean that the claim could be rejected on other grounds like delay. Sonell finally argued that the Consumer Protection Act should be read in a liberal manner, without insisting on technicalities, since it is a socially beneficial legislation. The court rejected it stating that the issue here was not technical but the heart of the matter
and when there is a lapse, the policyholder must suffer the consequence.
Tax benefit scaled down with time
The Supreme Court
has set aside a judgment
of the Himachal Pradesh High Court
and stated that industries in the state, which had set up units, cannot claim total income tax exemption for 10 years on the ground that they had expanded the industry during the period. The court interpreted Section 80-IC of the Income Tax Act introduced in 2004 to attract industries to hilly states like Himachal Pradesh, and Sikkim and other northeastern states. Different provisions apply to different states. In Himachal, the industries could get a total exemption for five years and for the next five years 25 per cent. The industries claimed a total exemption for all 10 years on the ground that they had expanded their units. The tribunals and the high court
granted it. However, on appeal the Supreme Court
ruled in its judgment, CIT vs Classic Binding Industries, that units in the state cannot claim 100 per cent exemption for all 10 years but must be satisfied with 25 per cent for the second half of the 10-year period.
Procedure cut short in arbitration appeal
An appeal to set aside arbitration award is a summary procedure and it shall not be delayed by introducing rules for framing issues and oral evidence, the Supreme Court
stated in its judgment, Emkay Global Finance Ltd
vs Girdhar Sondhi. The Arbitration and Conciliation Act is meant to speed up the resolution of disputes. A proposed amendment to the law will totally dispose of evidence in the application for challenging the award. The application should be decided by the records that were before the arbitrator. If more evidence is required it may be called for by affidavits. Cross-examination is not allowed unless necessary. The judgment, setting aside a Delhi High Court
decision, was passed in a dispute between a registered broker with the National Stock Exchange
and its client regarding a certain transaction in shares and securities.
Forfeiture of gratuity not automatic
The Supreme Court
has ruled that an employer cannot automatically hold back gratuity of a dismissed employee and it should follow the rules set in Section 4 of the Payment of Gratuity Act. Moreover, gratuity can be forfeited only to the extent the employee has caused financial loss to the employer. The court stated so in its judgment, Union Bank of India
vs CG Ajay Babu, while dismissing the appeal of the public sector bank. The employee was dismissed after an enquiry but his gratuity was withheld alleging that his conduct involved ‘moral turpitude’. The court stated that if there was such an offence it was not for the bank to decide it but for a criminal court. Forfeiture is allowed only if a criminal court has convicted the employee for moral turpitude and he was dismissed on that count. In this case, the bank did not file a criminal case against the employee and there was no conviction either. Merely stating that the charges involved moral turpitude would not do. The court further ruled that the Payment of Gratuity Act shall take precedence over any rule set by the bank.
DRI cannot freeze bank account
The Delhi High Court
last week set aside the letter of the Directorate of Revenue Intelligence
asking Union Bank of India
to freeze the current account of a firm and calling upon the bank not to permit any withdrawal till further communication. The bank account of the proprietor of the readymade garment manufacturer was frozen because of fraudulent exports by some other firms. The high court
stated in its judgment, R K Impex vs Union of India, that the authorities were not able to show any power under the Customs Act to take such action on bank accounts. The authorities have the power to search premises and seize goods but they have no power to issue a letter to the bank as they did.
Goshala not covered by ESI Act
The Patna High Court
last week dismissed the appeal of the Employees State Insurance (ESI) authorities which had asserted that a goshala (cow shelter) in the city is covered under the ESI Act. The authorities had issued show cause notice to the goshala claiming that it was covered by the Act. They argued that it had more than 20 employees on its register and sold milk and fodder, making it a profit-making ‘shop’ covered by the Act. However, the facts were not proved and, therefore, the ESI court
struck down the notice. The goshala’s contention was that it was “a charitable institution and its predominant purpose was to provide service to infirm cows as per the Hindu religion". It had not employed more than 20 people to invite the liability under the scheme, and the staff were volunteers. On appeal, the high court
refused to interfere in the dispute because there was no “substantial question of law” warranting its interference. In this case, ESI vs Shri Krishna Goshala, the high court
clarified that the ruling of the ESI court
was based on finding of facts, not law.