A person standing near a shop died when a heavy stone fell on his head. The stone flew from a place where digging of a well by blasting was taking place. The power came from a battery of a tractor insured under the ‘farmer package policy’. The insurer denied liability arguing that the vehicle was used for commercial purpose and not agricultural purpose as claimed by the owner of the vehicle. The motor accident claims tribunal held that there was a breach of policy terms and therefore, the owner was liable. On appeal, the Bombay High Court reversed order and stated that the tribunal had no jurisdiction to hear the claim as the vehicle was ‘not in use’. In the appeal case, Kalim Khan vs Fimidabee, the Supreme Court interpreted the words “use of motor vehicle” in Section 165 of the Motor Vehicles Act. It ruled that the vehicle need not be in motion, but if there is a “causal connection” between the vehicle and the accident, the insurance company will be liable. The connection need not be “intimate” or have “direct nexus” with the accident. Therefore, the High Court was wrong to say that the vehicle was not in use. On the question of liability, the Supreme Court directed United India Assurance Co to deposit the compensation first and then sue the owner if he was found liable on the facts of the case. The case was remitted to the High Court to re-examine the facts and terms of the policy.
Bad cheque causes bad blood
Two friends fell out over a bad cheque and the one who issued it was sentenced to pay fine and undergo six months imprisonment by the Supreme Court last week. In this case, Kishan Rao lent Rs 200,000 to Shankargouda to start a business and took a post-dated cheque in return. But it bounced twice for want of sufficient funds. On the complaint of Kishan under Section 138 of the Negotiable Instruments Act, the magistrate sentenced Shankargouda to fine and imprisonment. The magistrate did not accept his version that the cheque was stolen and the signature on it was not his. However, the Karnataka High Court acquitted him on the ground that Shankargouda was successful in casting a doubt in the mind of the court that there was no debt or liability to pay the amount. The Supreme Court set aside that ruling which went against the trial court finding on facts. It said that the High Court had no jurisdiction to go against the conviction on the ground of presumptions without explanations.
Arbitration award must give reasons
The Delhi High Court last week set aside part of the award of a three-member arbitral tribunal because it did not provide reasons for the conclusion. In this case, National Highway Authority of India vs Hindustan Construction Co, there were disputes over payment in the contract to build Lucknow-Muzzaffarpur highway. The tribunal rejected the NHAI claim of interest on recovery mobilisation and equipment advance and allowed the counterclaim of Hindustan Construction. But the award did not contain reasons, which was contrary to Section 31(3) of the Arbitration and Conciliation Act. The court emphasised that “it is the fundamental policy of Indian law that all decisions must be informed by reasons, however brief".
Who is the fairest of them all?
The Calcutta High Court last week rejected the plea of Hindustan Unilever Ltd (HUL) to lift an injunction against it in its advertisement campaign allegedly hurting Emami Ltd. The cosmetic giants are fighting over the names of their products claiming to make men fairer, sometimes in 10 seconds of applying its cream. Emami named its product ‘Fair and Handsome’. The HUL product is ‘Men's Fair & Lovely’. The legal battle started when HUL launched a TV campaign allegedly claiming that its product was the original and the other one was “doosra”, and true brightness could be achieved by virtue of the original. The rival took HUL and all TV companies which showed the commercial to court. The trial court passed an injunction against HUL and the district court refused to stay it. On appeal, the High Court declined to change the order. In its judgment, the court explained that the commercials on the electronic media at peak time, especially during sports events, tended to have a great impact on the viewer leading to a huge loss to Emami. The order of the trial court did not suffer from any grave error, calling for the interference of the High Court, the judgment said.
Higher VAT on non-fruit syrup
The Allahabad High Court last week ruled that the famous sharbat, Rooh Afza, is neither a fruit juice nor a fruit drink nor processed fruit and therefore, liable to pay 12.5 per cent under the Uttar Pradesh VAT Act. The court observed that it is a “non-fruit syrup”, being a concentrated sugar syrup which is not specified in the Act. In common parlance, it is known as sharbat. Since Rooh Afza does not fall under any of the entries in the Act, it shall fall under the residuary entry and liable to pay the higher tax. Hamdard (Wakf) Laboratories had unsuccessfully challenged the order of the commercial tribunal which had upheld the claim of the Commissioner of Commercial Taxes. It cited a Supreme Court judgment which had held that the product was a fruit drink and pointed out various communications under the Food Safety Act to prove that it was a fruit product. But the court rejected the argument.