Settlement must be free from duress

Settlement of disputes can be challenged in court if a dominant corporation uses coercion, duress or undue influence of various types against a weak party. But the duress must be proved by showing evidence and documents that show undue influence around the time when the settlement was thrust upon the other party. The protest must be made without loss of time, not after undue delay. A bald allegation of duress would not be sufficient, the Supreme Court has stated in the appeal case, New India Assurance Co vs Genus Power Infrastructure Ltd. In this case, the firm purchased a “standard fire and special perils policy” from the insurance company. There was a fire explosion in the nearby Indian Oil Corporation (IOC) terminal causing extensive damage to the firm’s unit. Though it claimed Rs 29 crore as its loss, the insurer’s surveyor assessed it at Rs 6 crore. However, the firm signed a letter of subrogation in favour of the insurers for Rs 6 crore in full and final settlement. It assigned all its claims to the insurance company for recovery of amounts from IOC, RIICO, the Rajasthan government and others who are liable. Later Genus declared that the document was signed under duress and moved the Delhi High Court for appointment of an arbitrator in the disputes. The high court appointed an arbitrator. The insurance company appealed to the Supreme Court, pointing out the settlement document, objecting to arbitration. The Supreme Court set aside the high court order of arbitration. It said that the allegation of duress and undue influence was not supported by evidence and the objection was raised late.

FCI told to regularise casual labour

The Supreme Court directed Food Corporation of India (FCI) last week to regularise 49 workers who were kept as casual employees for a long time, holding the practice to be an “unfair labour practice”. They were earlier working in a rice mill of FCI at Durgapur under various contractors. The mill was closed in 1990 and the contract system abolished. Thereafter, the workers were directly employed by FCI as casual employees on daily wage basis. The workers, then, demanded regularisation and the dispute was referred to the labour tribunal. It held that the continued casualisation of the service was unfair labour practice according to the fifth schedule of the Industrial Disputes Act and against social justice principles. FCI was asked to regularise them. The management moved the Calcutta High Court ,which set aside the tribunal’s award. Durgapur Casual Workers Union appealed to the Supreme Court. It set aside the high court decision and upheld the tribunal’s order.

Financier not liable to pay damages

If a motor vehicle is hypothecated to a finance company and the borrower does not insure it, the claim for compensation must be paid by the latter, and not the financier, the Supreme Court has held in the judgment, HDFC Bank Ltd vs Kumari Reshma. It set aside the Madhya Pradesh High Court view that it was the lender who was liable to pay compensation if the borrower does not insure the vehicle and meets with a road accident, raising claims by the victim. The high court relied on the term in the loan agreement that the bank was required to get the vehicle insured if the borrower failed, to or neglected to, get the vehicle insured. Overruling that view, the Supreme Court asserted that “the person in possession of the vehicle under the hypothecation agreement is the owner”, according to the provisions of the Motor Vehicles Act. Though the bank was the registered owner of the vehicle along with the borrower, the latter was “in control and possession of the vehicle”. If he neglects to take insurance and causes injury to a road user as in this case, the borrower is liable to pay compensation.

Arbitration can’t be opposed midway

A party to the arbitration proceedings cannot raise objections regarding jurisdiction of the tribunal midway, the Supreme Court stated in the judgment, M/s MSP Infrastructure Ltd vs M P Road Development Corporation Ltd. The disputes in this case were referred to arbitration and the tribunal partly allowed the claim of the contractor. The corporation appealed against it under the Arbitration and Conciliation Act before the district judge. He dismissed it as the appeal was filed two years late, calling the action absolutely unjust and unfair. However, the Madhya Pradesh high court allowed the corporation’s appeal. The firm appealed to the Supreme Court, which quashed the high court order.

Mining federation petition dismissed

The Delhi High Court dismissed the writ petition of the Federation of Indian Mineral Industries last week seeking a declaration that the notification of the Union Ministry of Mines issued on July 18 amending Rule 24A(6) of the Mineral Concession Rules is prospective in nature. The federation had raised several technical objections and cited Supreme Court cases to get the declaration. The rules regarding extension of leases were unreasonable and arbitrary, it was argued. However, the high court rejected all challenges and stated that a court would not give a declaration on hypothetical or speculative facts, unless there is a real cause of action or injury. “It is not the exercise of judicial power to write legal essays or to give advisory legal opinions. A judge never gives a decision until the facts necessary for that decision have arisen because the imagination of judges, like that of other persons, is limited,” the judgment said.

Dispute over condom name resolved

The Delhi High Court stated last week that in a suit for violation of trade mark, if the alleged offender was not aware of the existence of a registered trade mark and admits the mistake at the threshold, it could not be compelled to pay damages and rendition of accounts. It would save the time of the court and the award of damages would be harsh and unjustified. In this case, DKT India vs HLL Lifecare Ltd, the former claimed that HLL, a government of India undertaking that is the largest seller of condoms in the world, had violated its trade mark MoodsXXX. It demanded Rs 45 lakh in damages. The government firm admitted its mistake and undertook not to use the name. It offered Rs 1 lakh to DKT. But the latter was not satisfied. The high court stated that the government company was willing to settle the dispute amicably throughout and had stopped the sale of the brand. Therefore, the demand of a huge compensation was unjustifiable. Moreover, the Trade Marks Act and the Copyright Act take a liberal view in such cases.