From SC on compensation to IT firm’s right, here are the key court orders | Business Standard Column–02.04.2018

Supreme Court upturns decisions on compensation

Contrary to its earlier decisions and those of high courts, the Supreme Court last week ruled if a victim of road accident fails to demand higher compensation, he would not get it even if he deserved it. The courts had a consistent view that there was no restriction the tribunal/court cannot award compensation amount exceeding the claimed amount. The court had stated in the past that the function of the tribunal/court is to award “just compensation which is reasonable on the basis of evidence”. However, in its latest judgment under the Motor Vehicles Act, titled Shivawwa vs National Insurance, the apex court took a different view.

The dependents of the deceased demanded Rs 800,000. The tribunal awarded Rs 320,000. The dependents failed to press for the higher amount in the appeals. The court found it as the reason for not enhancing the amount. It also chided the Karnataka High Court for “casually” allowing the insurer’s appeal and cancelling the compensation altogether on wrong premises.

Financial bid not only criterion

Even if the financial bid of a party in a tender is lower than its competitors, the employer is not bound to accept it as public interest should prevail, the Supreme Court stated last week while setting aside the judgment of the Madhya Pradesh High Court in the case, Municipal Corporation vs BVG India Ltd. It explained: “A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in the court intervening in such a commercial transaction”.

The Ujjain Municipal Corporation had invited online bids for door-to-door collection of solid waste from those who have five years’ experience in the field. There were three bidders. BVG offered the lowest bid. However, the corporation did not choose it because its experience and joint venture claim were doubted. The firm moved the High Court, which set aside the award of the contract to Global Waste Management Cell Ltd. On appeal, the Supreme Court stated that the High Court should not have gone into the bid as if it was an appellate authority.

The High Court had increased the marks for the failed firm by revaluing the offers. The Supreme Court stated that the High Court violated the norms of judicial review laid down in a series of its judgments.

Conflict of interest in buying shares

The Supreme Court last week set aside the judgment of the Calcutta High Court and the former Company Law Board in a case in which a West Bengal-owned company declined to register 100 shares bought by a company which also had major shares in it. The court asked the National Company Law Appellate Tribunal (NCLT) to reconsider the question of registration in its judgment, Mackintosh Burn Ltd vs Sarkar & Chowdhury Enterprises.

The CLB had taken the view that refusal to register transfer of shares was permissible only if the request was illegal. But under the Companies Act 2013, refusal to transfer “without sufficient cause” is another ground. In this case, the allegation of the state company was that the transfer would enable a rival in the business to buy shares and manipulate decisions. According to the Supreme Court, “Refusal can be on the ground of violation of law or any other sufficient cause. Conflict of interest in a given situation can also be a cause.” In the facts of the case, the allegation of the state company that the transfer is deceptive and mala fide should be considered by the NCLT, the court said.

IT firm’s right to software denied

The Supreme Court has dismissed the appeal of a computer firm challenging a Kerala notification declaring its computer system and network as “protected systems” under the Information Technology Act. The firm had also questioned the constitutional validity of Section 70 of the Act alleging that it granted excessive delegation of power to the authorities. The High Court had dismissed its writ petition and the Supreme Court also rejected its appeal in the case, BN Firos vs State of Kerala. The Kerala government and the Centre for Development of Imaging Technology had conceptualised a single window multiple agency bill collection system. The firm, with the application software from Microsoft Corporation of India, developed a suitable system and it was implemented in 13 districts. However, disputes arose between the firm and the Centre for Development over IP rights. This led to the writ petition invoking the provisions of the Copyright Act and the IT Act.

The High Court held that the IP Rights in the software vested in the state government so as to entitle it to declare the same as a “protected system”. This view was upheld by the Supreme Court.

NHAI fined over multiple suits

The Delhi High Court has imposed a heavy fine on the National Highways Authority of India (NHAI) for rendering “yeoman disservice” to the object of the Arbitration and Conciliation Act. The government firm appealed to the division bench against the imposition of Rs 40,000 as costs by the single judge bench. The division found that the single judge “erred on the side of leniency” and burdened the NHAI with Rs 50,000 more for indulging in unnecessary litigation. The judgment, NHAI vs Hindustan Construction Co, said: “We have had repeated occasions to express our discomfort at the multitude of petitions and appeals under the Act. We do not intend to reiterate the same.” In this case, the NHAI challenged three awards delivered by three different arbitration tribunals in its dispute with Hindustan Construction Co over four-laning of the Lucknow-Ayodhya highway.

Gratuity denied after 22 years of daily wage

The Supreme Court assailed the conduct of the Chhattisgarh government which kept an employee for 22 years as a daily wager on a salary of Rs 2,776 per month and denied gratuity after regularising him in the last three years. The High Court had upheld the government stand. In its judgment, Netram Sahu vs State, the apex court said: “It was indeed the state which took 22 years to regularise his service and went on taking work on payment of a meagre salary… the state had no justifiable reason to deny gratuity which was his statutory right under the Payment of Gratuity Act, a welfare legislation. It is the duty of the state to voluntarily pay the gratuity rather than to force the employee to approach the court to get his genuine claim.” The court imposed costs on the government and ordered it to release the gratuity amount due to him. It added: “It is really unfortunate that the genuine claim was being denied at every stage of the proceedings up to this court and dragged him in fruitless litigation for all these years.”

via From SC on compensation to IT firm’s right, here are the key court orders | Business Standard Column

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