Business Standard

LIC to pay only half of wage arrears

M J Antony 

The Life Insurance Corporation of India has persuaded the Supreme Court to reduce by half its financial burden for absorbing temporary workers. About 25 years ago, the Central Government Industrial Tribunal -cum-Labour Courts had directed LIC to regularise temporary workers with full pending wages. Its appeal before the Supreme Court was dismissed last year, and it was ordered to pay the dues. LIC has now moved a review petition. The court refused to change the judgment but was merciful towards LIC, which said implementation of the order would impose a "heavy financial burden", entailing an expense of Rs 7,087 crore and Rs 728 crore annually. LIC's source of funds is public and the government does not contribute to it, it is not sitting on huge surplus, attorney general argued. Moved by the pleas, the court wrote: "Ordinarily, financial hardship would not be a sufficient ground to warrant our interference...but in this case, keeping in view the fact that LIC is a statutory corporation operating in the interest of the public at large, on the limited point of payment of full back wages to the temporary workers who are entitled for regularisation, we may reconsider it." The court had allowed LIC to pay only half the pending wages within two months.

Double taxing in building held illegal
Goods such as iron and steel products cannot be subjected to central sales tax for a second time if used for reinforcement of cement in pillars, beams or roofs. These items do not change their identity, and are merely subjected to some processing or finishing and remain commercially the same, the Supreme Court said in its judgment in B Narasamma vs deputy commissioner. The Karnataka government had argued in its appeals that when goods were used for civil construction, they changed their nature and the processes amounted to "manufacture" of new products. Therefore, higher sales tax could be levied. The court dismissed the appeal.

Burglary without force not insured
The Supreme Court ruled last week that when an insurance policy speaks of burglary, it is theft accompanied by forcible or violent entry. Mere theft is not covered, stated the judgment in the case, Industrial Promotion & Investment Corporation of Orissa vs New India Assurance. The public sector corporation lends money to small and medium enterprises. One such company failed to repay the loan and the corporation took over its assets and insured it. When it was about to be auctioned, it was found that parts of the plant and machinery were missing. The corporation made a claim with the insurer. It repudiated the claim, leading to the dispute. The court said the term in the contract referred to burglary, not theft. "A plain reading of the policy would show that a forcible entry should precede the theft, and unless they are proved, the claim cannot be accepted," the judgment explained. It stressed that in commercial matters, terms of contracts should be read strictly, especially when there is no ambiguity in the language.

Order modified on hair removal ads
The Delhi High Court last week modified an earlier order in the battle between Reckitt Benckiser and Gillette India over hair removal advertisements for women. Gillette, a subsidiary of Proctor & Gamble, complained that the rival disparaged its product, Venus, in its ads. Reckitt said its cream Veet was better. A single judge had passed an interim injunction earlier regarding the Veet ad. On Reckitt's appeal, a division bench relaxed the terms of the injunction. Accordingly, Reckitt can use a blue razor, the colour of which is claimed to be that of Gillette's. Reckitt shall also increase the font size by two points in the disclaimer indicating that the razor in the ad is for men. Further, it shall drop the claim that its product leaves the skin "up to two times" smoother.

Building without sanction must go
The Calcutta High Court dismissed the appeal of Saraf Infra Projects seeking to protect its multi-storeyed hotel project from demolition for not getting sanction from the central government. The building near Fort William has been built at a cost of Rs 180 crore, but when the builder started beautification of an area near army property, objections were raised. Rejecting the builder's arguments, the high court said the sanction granted without adhering to the Kolkata Municipal Act and the Works of Defence Act, a 1903 central law, was void from the start. The judgment said: "the building plan sanctioned by KMC without prior permission of the central government is bad in law… The citizen who is the beneficiary of such illegal permission cannot legitimately contend that since on the basis of the permission he has spent huge sums of money or has otherwise changed his position to his detriment, the permission cannot be cancelled… We are conscious that the view we have taken will cause hardship. However, it cannot be said private interest must give way to public interest."

ST relief for Bajaj Tempo
The Bombay High Court last week ruled that customs duty paid on goods imported cannot be included in the definition of their "purchase price". The court passed the judgment in the appeal case, Commissioner of Sales Tax vs Bajaj Tempo, granting relief to the auto company, which imported goods used in the manufacture of three-wheelers. The court rejected the state government's argument that purchase price as defined in the state law included customs duty and asserted that it referred only to purchase made within the state.

Insurer not liable due to bad packing
The National Consumer Commission has rejected the claim of reimbursement by Jaiprakash Associates against ICICI Lombard Insurance for machinery damaged in transit from Spain to India because the packaging was not suitable or adequate. The ship reportedly faced extreme weather in the Atlantic and had to be diverted to Lisbon. When the machinery was found damaged, the claim was made against the insurer, which argued that packaging was not according to international standards. No other cargo was damaged, it said. The commission agreed, and dismissed the complaint.

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First Published: Sun, August 28 2016. 21:32 IST