From theft charge to long-standing disputes, here're the key court orders

Topics Supreme Court

Company is employer, not its directors


The Calcutta High Court has ruled that the term ‘employer’ does not include the director of a company.  It is the company which is the employer and not its director, either singly or collectively. The judgment in the case, Supreme Paper Mills vs State of West Bengal, was dealing with the criminal liability of the directors when employees’ contribution was not deposited with the provident fund authority. The enforcement officer under the Provident Fund Act filed first information report against the company, its chairman-cum-managing director, two directors and the general manager for breach of trust because they had not deposited the amount with the statutory authority on time. The charge sheet was before the special judge. Meanwhile, the company moved the high court to quash the prosecution and submitted that the amount had subsequently been deposited. However, the authorities took the stand that once the offence is committed under the Indian Penal Code, they cannot be exonerated. The high court quashed the charge sheet against the executives but asked the company to stand trial. 


Top coal company to stand criminal trial


South Eastern Coal Fields (SECL), the largest coal-producing company in the country, has to stand trial for violating environmental laws as its petition has been dismissed by the Chhattisgarh High Court. According to the judgment in the case, SECL vs Chhattisgarh Environment Protection Board, the subsidiary of Coal India was granted consent under the provisions of the Water (Prevention and Control of Pollution) Act, which was renewed from time to time. It was not renewed after November 2001 but SECL continued to extract coal violating the Environment Protection Act. It even expanded its mining capacity from 10 million tonnes to 15.394 million tonnes from 2001-2002. The board submitted that the company and its chief general manager are responsible for the violation and should be punished. The Chief Judicial Magistrate, Korba, took cognizance of the offence and issued process. They moved the high court to quash the prosecution, raising technical arguments. While rejecting all contentions, the high court cited several Supreme Court judgments on the environment which had asserted that “when it affected public health, courts could not afford to deal lightly with cases involving pollution of air and water.”


IT notice to Infosys quashed


The Karnataka High Court has quashed the notices issued to Infosys by the Commissioner of Income Tax for reopening the assessment of three years from 2004. The judgment asserted that “there is no iota of material available in the reasons recorded by the assessing officer to believe escapement of tax on any agreement where the company received revenue from foreign companies for deputing the technical members independent of software development work.”  The notice for reopening of the assessment was based on the assessment relating to the assessment year 2007-2008. In that assessment, certain claims for deductions under Section 10-A of the Income Tax Act were disallowed. That finding was applied to the earlier assessments alleging that some incomes had escaped then. The company argued that the earlier assessment could not be reopened after six years. It also asserted that there was no escapement of income and all facts were disclosed in the original assessments. The high court observed that “it is presumed that the assessing authority had examined the entitlement of deduction under Section 10-A by the assessee from all angles. Withdrawal of the deduction allowed based on the assessment order relating to the assessment year 2007-08 is without application of mind and nothing but a change of opinion, which tantamounts to review and the same is not permissible.”


Design theft charge against ex-staff junked


The Bombay High Court has dismissed the petition of a medicine packaging company alleging that its former employees started a rival firm and thus violated their terms of contract, and were also guilty of ‘passing off’.  The employees had worked as assistant manager (production) and mechanical draughtsman. Later they started another firm dealing in blister packing of medicines and cold forming machine. They also stated in the brochure of the new firm that they had seven years’ experience in the original company. The latter moved the high court alleging that its ex-employees had used its designs to start their venture. The high court rejected the plea in its judgment, IMA-PG India vs Accupack. It stated that the company had not proved that it had the proprietary right to the exclusive use of any mark or get-up.  Merely because the ex-employees had worked in the company cannot lead to the conclusion that they had passed off goods of the original firm. Moreover, the rights belonged to the Italian parent of the company and if there was any grievance about passing off, that company which is the principal should move the court.


Award in long-standing disputes upheld


With a 320-page judgment, the Bombay High Court last week drew curtains on a batch of disputes, more than a decade old, between Indian shareholders and a German company in the appeal, Wind World India vs Enercon GmbH. The court upheld the award of the arbitration tribunal. Wind World was incorporated under the Companies Act as a joint venture between Enercon GmbH and members of the Mehra family. Enercon is the registered holder of 56 per cent of the issued share capital, and the Mehras are the registered holders of the residual 44 per cent. The German company is in the business of engineering, manufacturing and marketing wind turbine generators. Disputes ranged over shareholding, royalty and intellectual property rights and travelled to different fora in England and courts and tribunals in this country, including the Supreme Court. Ultimately, a three-member tribunal by a majority gave an award in favour of Enercon. Wind World challenged the award in the commercial court of arbitration in the high court and failed. The appeal also was dismissed.


Lone Aadhaar dissenter wins a point


An employee of Mumbai Port Trust who refused to link his Aadhaar card number to his salary account has won his point after a long legal fight. A division bench of the Bombay High Court directed the trust to pay him 7.5 per cent interest on 30 months’ salary which was withheld. The trust submitted that there was no clarity on the matter until the issue was decided by the Supreme Court. After that, the salary was paid. The trust also pleaded that Ramesh Kuhade was the lone exception among 800 employees. The court rejected these arguments and observed that even one dissenter has a right to oppose a government order.

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