Brief Case: A weekly selection of key court orders

Searching for the meaning of ‘industry’

The meaning of the word ‘industry’ does not pose any particular difficulty to ordinary people. But judges of the Supreme Court were struggling to interpret the term found in the Industrial Disputes Act for nearly four decades and the final word has not been spoken yet. Last week, a seven-judge Constitution bench referred the question to a nine-judge bench in the case, State of Uttar Pradesh versus Jaibir Singh. The issue came to the fore in the 1978 judgment in the Bangalore Water Supply case, when the employees’ rights under the Act were denied by the state. The latter maintained that the water supply board was not an industry, as it was not making profit. Voluntary organisations and trusts also raised the same bar against their employees’ demands. A seven-judge bench delivered a split verdict. The later generation of judges has doubted the ruling, and therefore, the new seven-judge bench referred the question to a nine-judge constitution bench. It is a mark of the times that after the issue was referred to the constitution bench in 2005, it took over a decade to pass on the 38-year-old question to the nine-judge bench.  

Two-tier arbitration valid

If a contract contains a clause which allows two-tier arbitration, it would be valid and it is not opposed to public policy, the Supreme Court has ruled in the judgment, Centrotrade Minerals & Metals Inc vs Hindustan Copper. A two-tier clause allows either party not satisfied with the award of the first arbitration to refer the issues to a second arbitration panel and start the process anew. In this case, Centrotrade was dissatisfied with the award by a panel of the Indian Council of Arbitration denying its claims. Therefore it went in for a second-instance arbitration and this time the award made in London in 2001 was in its favour. When it tried to enforce it in India, the dispute arose about the two-tier clause. The dispute travelled from the Bombay High Court to the Supreme Court and in 2006 the two-judge bench differed in its conclusion leading to the present judgment by three judges. They unanimously ruled that the two-tier clause was permissible according to Indian law.

Transmission lines over mining lands

The Supreme Court has set aside the judgment of the Chhattisgarh high court and allowed the Power Grid Corporation of India to lay transmission lines on the mining land of cement manufacturer Century Textiles & Industries Ltd. The high court had directed the government undertaking to pay compensation to the mining firm. Both parties moved the Supreme Court against the decision. Power Grid argued that it has power to raise transmission towers across private land if necessary under the Telegraph Act and the Electricity Act. Century did not want compensation and contended that blasting would not be possible if towers are built. The Supreme Court rejected Century’s arguments. It said that under the Telegraph Act “unobstructed access to lay down telegraph/electricity transmission lines is an imperative in the larger public interest. Electrification of villages all over the country and availability of telegraph lines are the most essential requirements for growth and development of any country. The legislature has not permitted any kind of impediment/ obstruction in achieving this objective.”  

IT Act given precedence over IPC

If a person has been acquitted of the charge of transmitting obscene material in electronic form under the Information Technology Act, he cannot be charged for the same offence under the Indian Penal Code. The IT Act, being a later law, would prevail over the IPC, the Supreme Court ruled in the case, Sharat Babu vs Govt of NCT. In this case, the executive of a firm was accused of transmitting obscene material in electronic form. He moved the Delhi High Court for quashing the charges. It discharged him under the IT Act, but allowed prosecution under IPC, which deals with sale and distribution of books, pictures and other prurient objects.  On appeal, the Supreme Court set aside the high court judgment and said that once the charges under Section 67 of the IT Act was found untenable, the accused person cannot be proceeded against under Section 292 of the IPC. The IT Act has special provisions with regard to criminal acts and they override the provisions of the old IPC. The judgment added: “When the IT Act in various provisions deals with obscenity in electronic form, it covers the offence under Section 292  IPC.”

High court role in disciplinary action

The Supreme Court last week stated that though the finding of facts by a disciplinary authority should be accepted, the high court can intervene if it is not supported by evidence and no reasonable person would arrive at such decision. In those cases, the high court is duty-bound to examine the evidence and grant relief in appropriate cases, the court asserted in the judgment, Allahabad Bank vs Krishna Narayan. Granting partial relief to the bank manager who was dismissed, the judgement commented that the disciplinary authority in this case did not appear to have properly appreciated the evidence nor recorded reasons in support of his conclusion. “All told,” said the judgment,  the Enquiry Officer, the Disciplinary Authority and the Appellate Authority have faltered in the discharge of their duties resulting in miscarriage of justice.”

Settling a pharma trade name dispute

The Delhi High Court last week granted an injunction in favour of pharmaceutical firm FDC Ltd against Docsuggest Healthcare Services Ltd in their dispute over the use of the trade name Ziffi in medicines and medical services. FDC claimed that it had registered the name for its antibiotic and other range of medicines in 2001 and has wide sales in India and abroad. It complained that the opposite party was using the same name for its websites and services. They are in the business of providing online services for appointment of doctors,  diagnostic centres, spas and salons and other healthcare services under the trading style Ziffi and Ziffi.com and confusing the customers. Granting the injunction, the high court stated that there was prima facie case for passing an injunction. Docsuggest and its website Ziffi.com and a mobile application under the disputed mark were generating revenue out of the name which was very similar to that of FDC’s. It is thereby taking unfair advantage of the registered mark of FDC. The judgment remarked that it was commercial exploitation of the trade mark and by passing-off the products and services, it  affected the reputation and growing business of FDC.


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