Labourers not covered by insurance

The Supreme Court ruled last week that an insurance policy of a motor vehicle did not cover employees of a person who hired the vehicle to carry goods. Someone who travels, not being an authorised agent in place of the owner of goods, and claims to be an employee of the owner of goods, cannot be covered by the statutory policy, the court stated in the judgment, Sanjeev Kumar vs National Insurance Company. The dispute arose when a person hired a vehicle to carry his goods and took along with him two employees. All of them died in a road accident. The Himachal Pradesh High Court, modifying the order of the accident claims tribunal, asked the insurance company to pay compensation and allowed it to recover from the owner of the vehicle. Therefore, the owner appealed to the Supreme Court. The appeal was dismissed.

Oman bank’s complaint of fraud

In a case in which National Bank of Oman filed a criminal case of cheating to the tune of Rs 5 crore against a resident of Karnataka, the Supreme Court has held that the magistrate in Ahmednagar had not followed the procedure of jurisdiction. The bank had no office in the country and the complaint was filed by his power of attorney in Ahmednagar, because he was residing there. The Supreme Court said the magistrate there had no jurisdiction as the accused person, Barakara Aziz, was not staying there. The magistrate also did not follow the special procedure of investigation under Section 202 of the Criminal Procedure Code in such cases. This procedure was meant to protect persons residing in far-off places against false complaints to harass him. The court asked the magistrate to reconsider the case.

Larger bench to decide on Cenvat

A two-judge bench of the Supreme Court last week referred to a larger bench a question involving cenvat credit, as there was difference in the views of two benches. In this case, Commissioner of Central Excise vs Gujarat Narmada Valley Fertilisers Co Ltd, the company used cenvat duty paid fuel as input for generating steam. It is then used to used to generate power for manufacture of fertiliser which is exempt from excise duty. The company argued that it was entitled to claim cenvat credit on the input, though fertiliser is exempt from excise duty. The revenue department did not allow it and issued showcause notice for recovery of wrongly availed credit. The tribunal ruled that the company was eligible for it. On appeal, the Supreme Court found that two of its judgments gave conflicting answers to the issue arising from the interpretation of Cenvat Credit Rules 2002. The question will be answered by a larger bench.

Bayer to compensate cotton farmers

The Bombay High Court dismissed the appeal of Bayer Bio Sciences Ltd against the order of the Commissioner for Agriculture, Maharashtra, and asked the company to pay compensation to 164 farmers with 24 per cent interest. The company deals in the business of seed manufacturing and sale. The Controller and Director of Agriculture found that the farmers were entitled to compensation under the Cotton Seeds Regulation Rules. The company raised several technical objections and challenged the finding of the inspectors that cotton seeds sold by the firm were sub-standard. The high court rejected its contentions.

Rap for govt rail firm

The Delhi High Court last week stated that public sector Rail Vikas Nigam Ltd had caused “enormous loss to the exchequer due to its illegal conduct in awarding contract for laying a rail line in Karnataka. In this case, Supreme Infrastructure India Ltd challenged the award given to Larsen & Toubro. In the tender document, Supreme made a typographical error; otherwise it was the lowest bidder, it argued. The Nigam maintained that Supreme was not entitled to modify the document and proceeded to invoke the bank guarantee. Supreme, therefore, moved the writ petition. The court stated that the error was merely typographical. It was mischievous on the part of the Nigam not to seek clarification. Being a public authority dealing with public funds, the Nigam owes a public duty to not outrightly reject a bid and that too the lowest bid, on such flimsy and superficial ground, the court said and passed several directions to protect the interest of the parties and the public.

Challenge to Vat scheme dismissed The Delhi High Court has dismissed the writ petition moved by the Sales Tax Bar Association against the state Value Added Tax Act, alleging that it enabled imposition of tax, interest or penalty without adequate opportunity to the dealers. It was alleged that thousands of dealers were served demanding crores of rupees on a single day. The revenue department said that its software could do assessment on a large scale and demonstrated it to the dealers. They were not satisfied. The court stated that the scheme of the Act did not cause any prejudice to the assessees. It first allowed a unilateral assessment by the dealer himself, thereafter by the assessing officer and thereafter provided for a bilateral assessment after opportunity of hearing, the court said.