Sunday, April 27, 2014

Wrong Debiting To Bank account Is Bad

Wrong debiting of bank account-Business Standard-28.04.2014

 selection of key court orders
The Supreme Court ruled last week that State Bank of India (SBI), Overseas Branch, Mumbai, was wrong in debiting the account of an exporting firm after a long delay of two and a half years on the ground that it was wrongly deposited in the account. When the firm moved the Bombay High Court with the complaint, it dismissed it on the ground that it would not interfere in contractual matters in a writ petition. The firm,Metro Exporters Ltd, therefore appealed to the Supreme Court. SBI argued that the amount credited to the firm did not belong to it but it exclusively belonged to the bank. The amount was deposited in the firm's account by mistake and hence it could be recovered debiting its account. It is a 'normal' practice and was done in good faith, it was argued. Rejecting the contention, the judgment emphasised that the exporter should not suffer for the mistake committed by the bank.

Fresh tender for tea estate sale
The Supreme Court last week set aside the sale of a tea estate in Assam and asked the authorities to call for a fresh tender. The official liquidator of a tea coop floated tenders without the prior sanction of the government as required under law and the price was far below the market price. The low price was justified on the ground that 70 per cent of the land was encroached upon. The Gauhati High Court had given the green signal for the tender process. But the state appealed to the Supreme Court and in its judgment, State of Assam vs Susrita Holding Ltd, the High Court order was set aside.

Bajaj Allianz to pay damages to engineer 
A 24-year-old metallurgical engineer who lost his leg in a road accident was awarded Rs 33.10 lakh as compensation, to be paid by Bajaj Allianz General Insurance Ltd with interest. The motor accident tribunal awarded Rs 30 lakh, which was reduced by the Karnataka High Court to Rs 6.32 lakh. The Supreme Court raised it, setting aside the computation formula adopted by the High Court. Dinesh Singh had suffered 60 per cent permanent injury. He lost his job in the steel company and had to work in a bank on a temporary basis. He suffered loss of future earnings, prospects of marriage and other amenities and has to continue medical treatment. All these factors were considered by the Supreme Court while enhancing the damages.

Borrower must take Sarfaesi remedies 
A borrower must avail of the remedies provided in the Securitisation ("Safaesi") Act, in the first instance, and it should not rush to the High Court with a writ petition, the Supreme Court has stated in its judgment in the case, Devi Ispat Ltd vs State Bank of India. In this case, the bank classified the account of the steel company as non-performing asset (NPA) since its outstandings crossed the permissible limit. When the bank issued notice under the Act the firm moved the Calcutta High Court against the declaration as NPA. The High Court dismissed it on the ground that the firm has an alternative remedy under Section 13 (3A) of the Act. According to this provision, the borrower can raise objections to the creditor against the latter's action. On appeal, the Supreme Court upheld that view.

Sterlite appeal on power dismissed
The Supreme Court last week dismissed the appeal of Sesa Sterlite Ltd against the ruling of the appellate tribunal of electricity in Odisha. The tribunal had affirmed the orders of the Odisha Electricity Regulatory Commission that said that even if the firm was a 'deemed distribution licencee', it was still liable to pay cross subsidy charge to WESCO which is a distribution licencee for the area in question. Sesa Sterlite, manufacturer and exporter of aluminium, argued that it has its unit in Special Economic Zone (SEZ) and it is a developer in the area. It is not drawing electricity from WESCO for its unit, VALE-SEZ. It has a Power Purchase Agreement (PPA) with Sterlite Energy Ltd. Moreover, it had applied for approval of the PPA, but the state commission rejected it and directed it to pay charges to WESCO holding it to be a 'consumer'. The court rejected these contentions.

Delegation of power a necessity
The Supreme Court has stated that in view of the complexity of modern day administration and expansion of state functions to economic and social spheres, delegation of powers has become a compelling necessity. It cannot be expected that the head of the administrative body performs each and every task himself. The court stated so in its judgment, Sidhartha Sarawgi vs Port Trust of Kolkata, while upholding the eviction of two lessees of land belonging to the port trust. The land manager ordered demolition of the illegal constructions and ejectment of sub-tenants. The lessees protested, but the land manager terminated their 30-year licence leading to writ petitions in the Calcutta High Court. They were dismissed. In the appeal before the Supreme Court, it was argued that the land manager had no power to terminate leases; only the chairman of the port trust could do it. The Supreme Court rejected the contention and stated that the chairman had authorised the land manager to take action against the lessees and he had the jurisdiction to do so.

Deadline to complete national highway
Setting aside the judgment of the Punjab and Haryana High Court, the Supreme Court last week asked the contractor of the Panipat-Jullundhar national highway to complete the widening work by March 31 next year. The High Court had cancelled the Rs 4,500 crore contract altogether due to slow work since 2008. Soma Isolux, the contracting firm, appealed to the Supreme Court. It directed the firm to submit quarterly progress reports to the national highway Authority (NHAI). The court further clarified that neither NHAI nor the contractor shall raise any further litigation over the project in any court as the work had already been enmeshed in litigation at the fag end of the project. If it is further delayed, NHAI shall decide the quantum of penalty.

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