CONTRACT HITS IMPOSSIBLE HURDLE
The law says that a contract
to do an act, which turns out to be impossible of performance after the
agreement, becomes void and the person who suffers must be compensated. If
environment restrictions not contemplated in the contract frustrate a project
and it becomes impossible or impracticable to implement it, the contractor
deserves compensation, according to the Supreme Court. The contractor who could
not undertake a housing project because of environment curbs not contemplated
by the government at the time of signing the agreement was compensated in the
judgment, Delhi Development Authority vs Kenneth Builders.
Brief
facts
The development authority (“DDA”)
gave to a contractor a housing project in the ridge area of the capital, which
is an ecologically sensitive area. At the time of the contract, this fact was
not taken into consideration by either party. Later, it was found that the
project could not be undertaken because of various regulations to protect the
area. Any development activity at the site required sanction from the Ridge
Management Board and the Supreme Court itself, because of environment
litigation. Though DDA granted the contract on the “as is where is” basis, the
construction could not be undertaken which is prohibited by law and without
permission. Invoking Section 56 of the Contract Act, the court asked DDA
to refund the deposit made by the contractor with interest.
REVIVED UNIT MUST PAY TAX DUES
An industrial unit which was
protected by the Sick Industries Act during revival plans could be asked to pay
its tax dues when it is revived, the Supreme Court ruled in the case, Director
General of Income Tax vs GTC Industries.
Brief
facts
The firm was declared sick in
1997 and referred to BIFR. After a draft rehabilitation scheme was circulated,
the revenue authorities demanded Rs. 366 crore in taxes. However, it was barred
from recovering it due to the SICA provisions. In 2007, the net worth of the
company became positive and it asked the board to deregister it and it was
done. Income tax authorities now demanded Rs.761 crore outstanding. The
company, which allegedly alienated some of its properties, moved the board for
stay of any coercive steps. It was granted. After more appeals, the high court
asked the company to approach the board. The authorities appealed to the
Supreme Court. It allowed the appeal and stated that the high court had gone
wrong as the company has been revived and the scheme had also expired in 2011.
So, the tax authorities can go ahead and recover the arrears.
MINING AFTER EXPIRY OF LICENCE
The Supreme Court last week
indicted the Ministry of Environment and Forests for allowing a mining firm to
continue mining though the local residents complained that its licence had
expired long ago.
In this case, Talaulicar
& Sons vs Union of India, the licence was granted for two years.
The regulations permitted five years, which ended in 2010. When the mining
continued, some residents moved the Bombay High Court and the National Green
Tribunal against the operations.
The high court found that
operations in the Saniem Sacorda iron ore mine was without sanction. The firm
appealed to the Supreme Court. It agreed with the high court and stated that
regulations, including a public hearing, have not been followed. It asked the
ministry to take a fresh look at the issue and take a decision after
scrupulously following the regulations and all factors leading to the
environment impact assessment including effective public hearing preceded by
due publication in the media.
AUCTION OF PROPERTY CANCELLED
In a dispute over the sale of
property of a liquidated company, the order of the company court is binding on
the recovery officer under the Debt Recovery Act, the Supreme Court has held in
its judgment, Anita International vs Tungabadra Sugar Works Mazdoor Sangh.
The winding up proceedings of Deve Sugars Ltd of Karnataka gave rise to complex
litigation in the Madras and Karnataka High Courts.
The Madras High Court
appointed an official liquidator. State Bank of Mysore, which had extended loan
to the firm, moved the debt recovery tribunal in Karnataka and got a recovery
certificate. This was challenged in the Karnataka High Court by the workers.
Ultimately, the recovery officer sold the property to Anita International for Rs.
10.25 crore, which was alleged to be far below the actual price. Ending the
multifarious litigation, the Supreme Court cancelled the sale made by the
recovery officer, holding that his sale was in utter violation of the company
court order.
BANK MUST PROTECT CASH IN TRANSIT AND THE INSURER IS NOT LIABLE
FOR THIS
If proper security is not provided by a bank
for transiting huge cash and it is robbed on the way, the insurer would not be
liable, the National Consumer Commission
ruled last week, setting aside the order the Gujarat state commission ordering
New India Assurance to recoup the loss to a cooperative bank in Ankhleswar.
Brief
Facts
According to the indemnity
policy, the bank was required to employ two guards with firearms when the
amount is more than Rs. 10 lakh. However, the Navsarjan Industrial Bank sent
two clerks and a guard with a wooden stick to State Bank of India to encash a
cheque of Rs. 20 lakh. While returning with the cash, two men on bike fired the
guard injuring him. They carried away the trunk with cash. The coop bank sued
the insurance company. The state commission allowed the claim. New India
appealed to the national commission. It set aside the state commission judgment
and ruled that the coop bank had infringed the conditions in the policy
regarding the number of guards with firearms. The commission rejected the
contention of the coop bank that it was not told about those conditions. It
also did not believe the coop bank which pleaded that Ankhleswar being a small
city, it was difficult to find armed guards.
(Source: Business Standard)
No comments:
Post a Comment