From shoe design case to law on securities, here are key court orders

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E-tender data cannot be retrieved

 

A bid in e-tender cannot be retrieved to examine the documents submitted, when there is a dispute over the bidding process, according to the National Informatics Centre (NIC) that sets up portals for tenders. The NIC's stand was cited in the judgment of the Supreme Court last week in the case, Maharashtra Housing Development Authority (MHADA) vs Shapoorji Pallonji & Co.

 

In this case, the authority invited tenders for a redevelopment project. The company bid on the website 44 minutes before the closure. It claimed that it pressed the ‘freeze button’ but did not get an acknowledgment. When it complained to the NIC, it said that there was no technical glitch and the company might not have pressed the button. This led to a writ petition in the Bombay High Court, which ordered the NIC to access files containing the bid documents, decrypt them and review the bidding process. The MHADA moved the Supreme Court, which asked the NIC whether the data are retrievable. It said no and explained that in the present e-tendering system, with the government guidelines, it was not possible to access the data. It has neither the keys nor the approved process to download the documents. Moreover, 427 bids were received in the last hour without any hitch and therefore, the fault lay with the company, it emphasised. The Supreme Court, relying on the statement, set aside the High Court order giving the company a second chance for bidding.

 

Trade discount can be deducted

 

The Supreme Court has set aside a judgment of the Karnataka High Court and ruled that while computing taxable turnover, a company would be entitled to a deduction of trade discount under the state VAT law.  In this case, Maya Appliances vs Asst Commissioner, the company that manufactures home appliances allowed discounts to its distributors as a matter of trade practice. These discounts may take the form of a scheme discount or quantity discount. The company claimed the discount as a deduction from the total turnover. It argued that it offered a quantity discount to its distributors, depending on their performance during the previous quarter as part of a marketing strategy. The Commissioner of Commercial Taxes disallowed the quantity discount observing it was not relatable to the sales effected by the tax invoices.  The company appealed to the High Court without success. However, the Supreme Court agreed with its contention.

 

SC calls for tighter law on securities 

 

The Supreme Court has called for a more comprehensive legal framework governing the securities market. “As the market grows, ingenious means of manipulation are also employed.  In such a scenario, it is essential that the Securities and Exchange Board of India (Sebi) keeps up with the changing times and develop principles of good governance in the stock market,” the court stated, while partly allowing the appeals of the Sebi in the case of three traders and three brokers. The Securities Appellate Tribunal had quashed charges of manipulation against them.

 

The Supreme Court, in its judgment in Sebi vs Rakhi Trading Ltd, ruled that the three traders had indulged in fraudulent and unfair trade practices violating the guidelines. But the court stated that there was no evidence to hold the three brokers guilty of violating regulations covering them. Showcause notices had been issued to them alleging that the parties were buying and selling securities in the derivatives segment at a price that did not reflect the value of the underlying in synchronised and reverse transactions. The adjudication officer ruled against the traders and the brokers, but the SAT quashed the order, leading to the appeal. The Supreme Court stated that if the SAT order was sustained it would have “serious repercussions undermining the integrity of the market”.

 

Goa companies face corruption trial

 

The Supreme Court has dismissed the appeal of a former power minister of Goa, who is facing charges of favouring two companies by changing the electricity tariff without his Cabinet’s approval. The trial under the Prevention of Corruption Act has been allowed to proceed. In this case, Mauvin Godinho vs State of Goa, the Cabinet in 1991 had taken a decision to grant 25 per cent rebate for five years to firms using high-tension and low-tension supply. In 1996, the accused issued a notification without the Cabinet’s approval to add an ‘extra high tension’ category. This benefited two companies.

 

A legislator filed criminal complaints against Godindo and the companies, alleging that the former minister had caused a loss of ~45,277,856 to the exchequer. Conspiracy and cheating under the Indian Penal Code and charges under the Prevention of Corruption Act were filed. The accused persons moved the Bombay High Court, which found prima facie a case under the Prevention of Corruption Act. They appealed to the Supreme Court for quashing the charges, without success. The ex-minister along with the two companies, Marmagoa Steel Ltd and Goa Glass Fibre Ltd, a division of Binani Zinc Ltd, are named in the case.

 

Halving compensation amount criticised

 

The judgment of the Punjab & Haryana High Court in a road accident compensation case was “casual, if not cryptic and perverse”, the Supreme Court observed while restoring the order of the Motor Accident Claims Tribunal. In this case, Archit Saini vs Oriental Insurance Co, the tribunal had ordered the insurer to pay ~300,000. But the High Court reduced the amount by half, observing that the victim, riding a car, also contributed to the accident when his vehicle hit a stationary gas tanker parked in the middle of the road. The Supreme Court stated that the High Court casually overturned the tribunal’s finding that the tanker alone was negligent and reduced the compensation by half without giving any reason whatsoever.

US firm loses shoe design case

 

The Delhi High Court has directed Crocs Inc of the US to pay cost of litigation and compensation to half a dozen shoe companies, including Bata, Liberty, Action and Relaxo. The US corporation had sought permanent injunction against these companies alleging that they had pirated its registered design of sandals with holes. It was contested by the other firms which argued that there was nothing new or original in the Crocs’ design and it had existed before its registration under the Designs Act. The registration was liable to be cancelled as it was not valid due to lack of newness. The High Court accepted the contention and dismissed the application. It invoked the Commercial Courts Act to impose costs on the US firm.