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| 'Stays not advisable on dues of banks, creditors' |
| BS Reporter / Aug 09, 2010, 00:41 IST |
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The Supreme Court (SC) ruled last week that the courts should not normally pass stay orders in cases relating to recovery of dues of banks, financial institutions and secured creditors as they would have serious adverse impact on the financial health of such institutions which ultimately prove detrimental to the economy of the nation. “The high courts should be extremely careful and circumspect in exercising its discretion to grant stay in such matters,” the court stated in the judgment, United Bank of India vs Satyawati. In this case, the bank initiated against the guarantor of a debt when the borrower, Pawan Colour Lab, defaulted in repayment of the loan. This action of the bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act was challenged by the guarantor in the Allahabad high court. It stayed the recovery proceedings. On appeal by the bank, the SC set aside the high court order.
Trustees cannot use trust’s money to fight each other in court
When two groups in a trust sue each other, the legal expenses cannot be met from the trust fund, the SC stated in the case, Rekhaben Sheth vs Charu Mehta. The Bombay high court had stopped all financial transaction of the Lilavati Kirtilal Mehta Medical
Trust as there were allegations of misappropriation of funds against some trustees. The charity commissioner was also asked to see that no policy decisions were taken by the trust without his prior approval. However, it was alleged by one trustee that about Rs 3.5 crore was paid to lawyers to fight the case and it amounted to contempt of court. The high court issued contempt of court notice against some trustees. They appealed to the SC against the high court order. The SC dismissed their petition.
Centre’s appeal against glass products’ maker dismissed
The SC dismissed the appeal of the central government against Alembic Glass Industries Ltd and ruled that the company was not liable to pay higher excise duty on products which had undergone the process of printing and decoration. The revenue authorities in Gujarat had issued show cause notice to the company stating that the price list did not reflect the correct value. They argued that by printing and decorating the glass ware, a new product had come into existence. The company denied it. Agreeing with the company, the SC stated, by printing names/logos on the bottles the basic character of the commodity did not change. They continued to be bottles and had commercial value on their own.
Converting tarpaulin to made-ups is not manufacture
In another case of excise duty, the Supreme Court last week stated that conversion of tarpaulin into tarpaulin made-ups would not amount to manufacture and did not attract levy. In this appeal case, moved by the Commissioner of Central Excise, Chennai, against Tarpaulin International, Rohini Mills Ltd and several other manufacturers of tarpaulin made-ups the revenue authorities contended that the commodity prepared by means of cutting, stitching and fixing eye-lets amounted to manufacture under the Central Excise Act. Rejecting the argument, the Supreme Court stated that the process did not change the basic characteristic of the raw material and end product with total transformation in the original commodity. Therefore there can be no levy of central excise duty on tarpaulin made-ups.
Ex-SC judge appointed arbitrator
The Supreme Court last week appointed its former judge, Justice S B Sinha, as arbitrator under the Arbitration and Conciliation Act to decide the dispute between the Indian promoter of a Singapore firm and Paramount Investments Ltd incorporated in Mauritius. The latter firm procured farm-out transactions of oil and gas blocks in Gabon for the Singapore firm with a proposal for production sharing contract in Brunei as well as in Tajikistan. Disputes arose between the two contracting parties, with one denying the existence of an arbitration clause in the agreement. After analysing the facts, the court ruled that there was an arbitrable dispute and appointed the arbitrator.
Injunction against use of ‘All Fleet’ trade mark
The Delhi high court has allowed the application for injunction moved by Ashland Licensing & Intellectual Property LLC against Savita Chemicals Ltd in a row over the use of the mark “All Fleet”. Ashland argued that the disputed mark was first registered in the US in respect of motor oil and in India since September 1994. Products under “All Fleet” are manufactured and distributed by “Valvoline Cummins Ltd”, a joint venture concern between Ashland Inc and Cummins Sales and Services (India). Savita Chemicals, which was accused of passing off the goods, resisted the prayer of the US corporation stating that its plea for rectification of the trade mark register was pending before the authorities. The high court rejected the argument of the Indian company that the trade mark was descriptive and therefore no claim could be made for it.
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