[No.192]

Supreme Court

• Supreme Court Bar Association Vs. Union of India (UOI) and Ors

Petitioners filed writ petition under Article 32 against appointment of a retired Judge as Chairman of concerned State Legal Service Authority in different States on ground that appointment of retired Judges has the effect of stalling the effectiveness in functioning of the State Legal Service Authorities. Whether appointment of a retired Judge as Chairman of State Legal Service Authority over that of a sitting Judge falls foul of legislative intent under concerned Act? Held, though in terms of Section 6(2) retired Judge can be appointed, but that shall have to be in exceptional circumstances. The advantage of having a sitting Judge as the Chairman far outweigh the disadvantages where retired Judges are appointed. Therefore, normal rule is that a sitting Judge should be appointed as the Chairman and only when unusual difficulties exist, a retired Judge may be appointed. That has to be the exception and not the rule. Therefore, writ petition is allowed.

• Union of India (UOI) Vs. Yumnam Anand M. @ Bocha @ Kora @ Suraj and Anr.

Respondent-detenu filed writ petition against order of detention claiming that there was inordinate delay on part of authorities in disposing off representations made against order of his detention. Appellant-authorities submitted that some time was taken to obtain the view of the sponsoring authority with regard to detention which resulted in delay of disposing representations made against order of detention. High Court however, allowed writ petition and held that views of the sponsoring authority were not necessary to be taken and, therefore, the delay had not been properly explained. Hence, present appeal. Whether there was delay in disposal of representation and whether same has to be considered in background of Article 22(5) of Constitution? Held, a constitutional protection is given to every detenu which mandates grant of liberty to detenu to make a representation against detention, as imperated in Article 22(5) of Constitution. It also imperates authority to whom representation is addressed to deal with same with utmost expedition. The representation is to be considered in its right perspective keeping in view fact that detention of detenu is based on subjective satisfaction of authority concerned, and infringement of constitutional right conferred under Article 22(5) invalidates detention order. Personal liberty protected under Article 21 is so sacrosanct and so high in scale of constitutional values that it is the obligation of Detaining Authority to show that impugned detention meticulously accords with procedure established by law. In case of preventive detention no offence is proved, nor any charge is formulated and justification of such detention is suspicion or reasonability and there is no criminal conviction which can only be warranted by legal evidence. Preventive justice requires an action to be taken to prevent apprehended objectionable activities. But at the same time, a person’s greatest of human freedoms, i.e., personal liberty is deprived, and, therefore, laws of preventive detention are strictly construed, and a meticulous compliance with procedural safeguard, however, technical is mandatory. Compulsions of primordial need to maintain order in society, without which enjoyment of all rights, including right of personal liberty would lose all their meanings, are true justifications for laws of preventive detention. This jurisdiction has been described as a “jurisdiction of suspicion”, and compulsions to preserve values of freedom of a democratic society and social order sometimes merit curtailment of individual liberty. No law is an end itself and the curtailment of liberty for reasons of State’s security and national economic discipline as a necessary evil has to be administered under strict constitutional restrictions. No carte blanche is given to any organ of State to be sole arbiter in such matters. Appeal is allowed.

High Courts

Karnataka

• Ex GNR J.J. Xavier Vs. CDA (Pensions), Allahabad, UP and Anr.

Petitioner had filed a writ petition challenging the validity and legality of an order passed by respondent-competent authority denying petitioner 20 per cent disability pension. High Court in that writ petition set aside the impugned order passed by competent authority and remitted matter to competent authority for fresh consideration. However, respondent-competent authority again passed an order denying disability pension to petitioner. Hence, present petition. Whether impugned order of respondent authority denying petitioner disability pension is sustainable? Held, it is manifest on the face of relevant material available on file that second Respondent has committed an error and material irregularity in proceeding to pass impugned Order contrary to relevant original records that are made available. When confidential report consisting of recommendation as well as sanction by competent authority was very much available on file, by merely placing reliance on Medical Board Report, second Respondent proceeded to pass impugned speaking Order contrary to relevant material available on file. On this ground alone, impugned speaking Order cannot be sustained. Further, in spite of specific direction issued by Court in earlier round of litigation, second Respondent proceeded to pass impugned speaking Order, without conducting proper enquiry, without assigning valid and cogent reasons and without recording a specific finding as to how Petitioner is not entitled to 20 per cent disability pension under Pension Regulations for the Army 1961(Part-I). Therefore, impugned Order passed by second Respondent cannot be sustained and the same is liable to be set aside.

• Commissioner of Income-tax, Karnataka III, Bangalore Vs. M/s MICO Ltd., Bangalore

Assessee-company entered into an agreement with Engineering Company “GEC” to pay a consideration of Rs. 5,50,000 per year in return for some services rendered by the company. The said amount was to be paid by assessee company in two installments. After the first installment was made, assessee claimed deduction in respect of second installment from total income to be computed as it fell within the accounting period. Deduction was however disallowed on ground that there was no supporting evidence proving performance of contract by GEC. Thereafter, tribunal in light of a reference application referred matter to High Court. Hence, present reference. Whether tribunal ought to have rejected deduction claimed by assessee with respect to expenditure incurred in respect of services rendered by GEC? Held, in case on hand, despite an adverse finding, tribunal would never say that the agreement is not a bona fide agreement. The agreement is accepted. Once the agreement is accepted, the authorities must be slow in rejecting contention of assessee unless a very strong case is made out against assessee. In the case on hand, longstanding relationship between parties, earlier acceptance of Rs. 2.75 lacs as allowance expenditure in terms of Order of tribunal and the oral advise, it cannot be said that said expenditure is not allowable as held by tribunal. Further, on facts, in case on hand, assessee has placed acceptable material before tribunal. Rejection of case of assessee only on ground of no evidence particularly in light of the material produced before tribunal, is not acceptable.

• Smt. Shoba Lakshmi, W/o Shankara Rao Vs. The Divisional Commissioner, Bangalore Division, Bangalore and Ors.

Petitioner-employee’s caste certificate was cancelled by second respondent after verification by Caste Verification Committee on ground that petitioner has wrongly stated her caste as “Maleru” instead of “Brahmin Maaleru” in the caste certificate and got appointment. Petitioner challenged jurisdiction of respondents and stated that caste certificate has been issued to her after verification by Tahsildar and that she is entitled to the benefit of government order dated dated 11th March, 2002, stating that the persons belonging to Maleru caste who have the benefit of the certificate should not be in any way harassed or subjected to any enquiry or dismissal. Petitioner then appealed against order of second respondent. However, appeal was dismissed by first respondent. Hence, present petition. Whether Caste Verification Committee could verify caste of petitioner? Held, when there is suppression of truth and real facts are based on documentary evidence then such finding cannot be easily ignored on ground that CVC has no jurisdiction. In case of State of Maharashtra v. Ravi Prakash Babulalsing Parmar, Supreme Court has held that scrutiny committee had the power to go into question as to whether the caste certificate had rightly been issued or not. Further, no material is placed by petitioner to say that CVC cell constituted is without any authority of law. Petitioner was shown to have deliberately suppressed true facts and obtained employment based on certificate issued by Tahsildar. Caste Verification Committee based on report and after due enquiry has declared caste of petitioner as Maaleru Brahmin and not Maleru which is a scheduled tribe and has directed to cancel certificate issued by Tahsildar. Therefore, no illegality either in the Order passed by Caste Verification Committee or in the Order passed by Divisional Commissioner in appeal. Appeal is dismissed.

Press Information Bureau

• Revision of Ceilings provided under Payment of Bonus Act

PIB Dated 19.04.2007: The Payment of Bonus Act, 1965 provides for payment of bonus to persons employed in an establishments or industry employing 20 or more persons, to do any skilled, unskilled, manual, supervisory, managerial, administrative, technical or clerical work. The bonus is paid on the basis of profits or production or productivity and provides for payment of a minimum bonus of 8.33%. The Act provides for two types of ceilings known as eligibility ceiling and calculation ceiling for payment of bonus. The eligibility ceiling was last revised through an amendment in Payment of Bonus (Amendment) Ordinance, 1995 and was made effective from April 1, 1993. As such, an 'employee' employed in any industry on a salary or wage not exceeding Rs. 3500/- per month is eligible to receive bonus calculated at Rs.2500 per month limit. However, according to Section 12 of the Act, the bonus payable to an employee whose salary or wage exceeds Rs. 3500/- per month, the bonus payable to such employee shall be calculated as if his salary or wages were Rs. 2500/- per month. The Second National Commission on Labour has recommended that the eligibility limit should be increased to Rs. 7500/- per month from the existing Rs. 3500/- per month and the calculation ceiling should be hiked to Rs. 3500/- per month from the existing Rs 2500/- per month. The trade unions have been demanding for abolishing/hiking of the ceilings. The revision of ceilings as recommended by the Second National Commission on Labour has been agreed to at the 40th Indian Labour Conference (ILC) held in December 2005. The issue will be discussed again at the 41st ILC being held on 27th & 28th April 2007. The Labour Ministry is, however, of the view that any demand to further enhance the eligibility and calculation ceilings as already agreed to at the last ILC will further delay its implementation by at least by two years.

• Revised Guidelines regarding regularization of Unauthorised Colonies in Delhi

PIB Dated 26.04.2007: The process of finalizing the revised guidelines is on following the Union Government's approval for revision in the guidelines for regularization of unauthorized colonies in Delhi. Unauthorized colonies fulfilling the prescribed conditions will be eligible for regularization. Once regularized, as per the provisions of Master Plan, unauthorized regularized colonies would be covered by the Special Area Building Regulations to be framed for special area, unauthorized regularized colonies and village abadis. Owners in special area, unauthorized regularized colonies and village abadis shall register themselves with the local body within a period of four months indicating the existing extent of construction. Thereafter, a certificate of structural safety by qualified engineers shall be submitted within the next six months. Subject to height restriction of 15 meters, all buildings covered by such registration shall be exempted from punitive action till Special Area Building Regulations for these areas are notified or for a maximum three years, whichever is earlier. The concerned local bodies/agencies responsible for civic services will provide civic facilities as per their service plans and over a period of time, those colonies will be integrated into the planned development. In view of the legal and administrative issues involved, no time frame has been fixed at this stage.

RBI

Press Release

• RBI introduces Protected Disclosures Scheme for Private and Foreign Banks operating in India

RBI Press Release No. : 2006-2007/1423 Dated 18.04.2007: The Reserve Bank of India introduced Protected Disclosures Scheme for private and foreign banks operating in India. The scheme applicable to private sector and foreign banks operating in India has been formulated broadly on the lines of Government of India Resolution dated April 21, 2004 authorising the Central Vigilance Commission (CVC) as the designated agency to receive written complaints or disclosure on any allegation of corruption or misuse of office by any employee of the Central Government or of any corporation established by it or under any Central Act, government companies, societies or local authorities owned or controlled by the Central Government and recommend appropriate action. It is as a proactive measure to strengthen financial stability and with a view to enhancing public confidence in the financial sector that the Reserve Bank of India had proposed to introduce a scheme called 'Protected Disclosures Scheme for Private Sector and Foreign Banks'.

• RBI Calls for Applications from Companies Desirous of Doing Credit Information Business

RBI Press Release No. : 2006-2007/1419 Dated 18.04.2007: The Reserve Bank of India has called for applications for registration from companies desirous of commencing the business of credit information under the Credit Information Companies (Regulation) Act, 2005/Rules/ Regulations. Companies may send in their applications by on July 31, 2007 in the prescribed format along with supporting documents. The credit information companies already in existence before enactment of the Credit Information Companies (Regulation) Act may also make an application to the Reserve Bank in accordance with sub-section (2) of Section 4 of the Act. The Reserve Bank may call for additional information after preliminary scrutiny of the applications. It may be noted that the Government of India had, on June 23, 2005, notified the Credit Information Companies (Regulation) Act, 2005 and same came into force from December 14, 2006.

SEBI

Secondary Market Division

• Amendments to Clause 32 of Equity Listing Agreement

Circular No. SEBI/CFD/DIL/LA/2/2007/ 26/4 Dated 26.04.2007: The extant Clause 32 of the Equity Listing Agreement requires listed companies to supply a copy of the complete and full Balance Sheet, Profit and Loss Account and Directors' report to each shareholder and upon application to any member of the Exchange. This requirement was stipulated at a time when information dissemination was at the barest minimum and the Annual Report of the company containing the Balance Sheet and the Profit and Loss Account was the only means through which the shareholders of the company could keep themselves informed about the affairs of the company. In the context of changes brought about in the market scenario, SEBI has decided to amend Clause 32 of the Equity Listing Agreement to align it with the provisions of Section 219(iv) of the Companies Act i.e. to permit listed companies to send a statement containing the salient features of the (i) Balance Sheet, (ii) the Profit and Loss Account and (iii) the Auditors' Report instead of sending full Balance Sheet and Annual Report. Accordingly, the first and second paragraphs of Clause 32 of the Equity Listing Agreement relating to sending of annual reports by listed companies to their shareholders shall stand amended. The other provisions of Clause 32 of the Equity Listing Agreement pertaining to turnover and income etc. from new activities, cash flow statement to be given along with the Profit and Loss Account shall remain unchanged. The revised Clause 32 of Equity Listing Agreement shall come into force with immediate effect.

Cases

• Maureen Marder Vs. Jennifer Lopez; Sony Music Entertainment, Inc.; Paramount Opinion Pictures Corporation

The popular movie “Flashdance” which was a box office hit tells the story of a woman construction worker who performs at night as an exotic dancer and whose goal is to obtain formal dance training at a university. According to plaintiff, the Flashdance story was modeled after her life story and career as a nightclub dancer. She claims that she contributed to the creation of Flashdance by providing defendant-Paramount Pictures with details of her life story with the understanding that defendant- Paramount would use this information to create an original screenplay. Plaintiff then signed a “General Release” purporting to discharge defendant-Paramount from claims arising out of the creation of the film in return for a consideration of $2300. Thereafter, 2nd defendant-Sony released a music video for the song, “I’m Glad” which featured Jennifer Lopez as a dancer and singer. According to plaintiff, the Video contains re-creations of many well-known scenes from “Flashdance”. Plaintiff filed a complaint with the district court asserting a claim against defendant-Paramount for a declaration of her rights as a co-author of Flashdance and a co-owner of the copyright. She also claimed she was entitled to share in the revenues defendant-Paramount allegedly received from defendant-Sony for the licensing and exploitation of Flashdance in the Video. The district court granted Defendants’ motions to dismiss complaint under Federal Rule of Civil Procedure 12(b)(6) without opinion. Hence, present appeal. Whether the General Release precludes plaintiff from asserting a copyright interest in Flashdance? Held, Both plaintiff and defendant agree that California law applies to the interpretation of the Release, as provided by the Release terms. According to the California Supreme Court, a release is the “abandonment, relinquishment or giving up of a right or claim to the person against whom it might have been demanded or enforced and its effect is to extinguish the cause of action. In general, a written release extinguishes any obligation covered by the release’s terms, provided it has not been obtained by fraud, deception, misrepresentation, duress, or undue influence. The interpretation of a release is governed by the same principles applicable to any other contractual agreement. The court must interpret the Release so as to give effect to the parties’ mutual intent as it existed when they contracted. The Release executed by plaintiff provides that plaintiff “releases and discharges Paramount Pictures Corporation of and from each and every claim, demand, debt, liability, cost and expense of any kind or character which have arisen or are based in whole or in part on any matters occurring at any time prior to the date of Release.” Such a release of “each and every claim” covers all claims within the scope of the language in absence of extrinsic evidence to the contrary. Plaintiff has offered no such extrinsic evidence. Accordingly, “the law imputes to plaintiff an intention corresponding to the reasonable meaning of her words and acts. Furthermore, though in hindsight the agreement appears to be unfair to plaintiff as she only received $2300 in exchange for a release of all claims relating to a movie that grossed over $150 million, there is simply no evidence that her consent was obtained by fraud, deception, misrepresentation, duress, or undue influence. Accordingly, we hold that enforcing the Release by dismissing the claims against Paramount would not “defeat the reasonable expectations of the parties to the contract.” The General Release plaintiff signed constituted a waiver of all claims against Paramount arising out of her contributions to the film Flashdance. Her current claims against defendant are barred by the Release. Further, plaintiff’s suit against defendant Sony and Lopez was properly dismissed because she cannot bring an infringement action if she cannot assert a valid copyright interest in Flashdance and she has no existing evidence of copyright ownership. Accordingly, district court’s grant of Defendants’ motions to dismiss under Rule 12(b)(6) is affirmed.

• Central Admixture Pharmacy Services, Inc. And Dr. Gerald D. Buckberg Vs. Advanced Cardiac Solutions, P.C. and Charles Wall

The patent at issue involves a chemical solution used during heart surgery which was patented as “515 patent”. The owner of the said patent licensed it exclusively to plaintiff-company. Plaintiff-company, CAPS, thereafter applied pursuant to 35 U.S.C. § 255, for a certificate of correction to replace all instances of the word “osmolarity” in the ’515 patent with the word “osmolality.” Thereafter, plaintiff-company filed suit claiming infringement of patented product by defendant-company. District court granted conditional summary judgment in favour of plaintiffs for infringement and willfulness for actions occurring after the issuance of the certificate of correction, contingent upon the certificate of correction being found valid. The district court later determined that the certificate was valid as a matter of law. Hence, present appeal. Held, a patentee who has made “a mistake of a clerical or typographical nature, or of minor character” may apply to the PTO for a “certificate of correction, if the correction does not involve such changes in the patent as would constitute new matter or would require re-examination as per 35 U.S.C. § 255. § 255 is interpreted to require that a broadening correction of a clerical or typographical error be allowed only where it is clearly evident from the specification, drawings, and prosecution history how the error should appropriately be corrected. Since the result is to invalidate a certificate of correction which is part of a duly issued patent, the party seeking invalidation must meet “the clear and convincing standard of persuasion.” Invalidating a certificate of correction for impermissible broadening therefore requires proof of two elements: (1) the corrected claims are broader than the original claims; and (2) the presence of the clerical or typographical error, or how to correct that error, is not clearly evident to one of skill in the art. The undisputed facts demonstrate that the error here is one of the second category. The word ‘osmolarity’ is indeed “spelled correctly and reads logically in the context of the sentence.” Since the error corrected here was not clearly evident to one of skill in the art and the result of its correction was to broaden the claims, defendant should be granted summary judgment that the certificate of correction is not valid. The patent therefore continues to read as it did prior to the issuance of the certificate. Because the district court’s summary judgments of infringement and willfulness were both explicitly contingent on the validity of the certificate of correction, those judgments are vacated.

News

• Lawyers taking Rumsfeld war crimes case to Spain after German rejection

A German lawyer appearing for war crime cases said that he will refile a war crimes complaint against former US Secretary of Defense, Donald Rumsfeld, in Spain with the help of Spanish counterparts after the German Federal Prosecutor's office rejected a bid to prosecute the suit in Germany under the country's universal jurisdiction law. The German Federal Prosecutor stated that the case did not have a sufficient connection to Germany to warrant exercise of her legal discretion, noting that the alleged crimes were committed outside of Germany, the defendants do not reside in Germany, they are not currently located in Germany, and it is not anticipated they will soon enter German territory. Spain passed a universal jurisdiction law of its own in 1985, invoking it most famously in the case of former Chilean dictator Augusto Pincohet.

• ABA condemns proposed DOJ restrictions on Guantanamo lawyers

The American Bar Association (ABA) condemned a US Department of Justice proposal that lawyers for Guantanamo Bay detainees should be subjected to tightened restrictions including limited access to their client and evidence. The case in which the proposal was advanced involves an Afghan detainee, Haji Bismullah and oral arguments in said case are scheduled for May 15 before the US Court of Appeals for the District of Columbia Circuit.

• Turkey presidential vote challenged in constitutional court

A parliamentary vote on the only candidate running to be the next president of Turkey ran into a legal challenge after the current Turkish Foreign Minister fell 10 votes short of a requisite majority in the first round of balloting. Turkey's constitution authorizes three rounds of presidential voting: a first round where a two-thirds majority of 367 out of 550 seats is needed; a second round, where the same two-thirds majority is needed; and a third round, where a simple majority of 276 seats is needed. The opposition party boycotted said vote, as they felt that Turkey's president should be entirely secular, and challenged the results in Turkey's Constitutional Court arguing that the constitutional provision required a quorum for vote to be official and lead to a second round.

• Cambodia Bar Association slashes fees for genocide trial lawyers

A spokesman for the Cambodian Bar Association (BAKC) said that the group would dramatically reduce the fees it proposed to levy on foreign lawyers taking part in the upcoming Khmer Rouge genocide trials before the Extraordinary Chambers in the Courts of Cambodia. Foreign lawyers will now to be required to pay a one-time flat fee of $500, down from an earlier combined rate of over $2700 comprised of a membership fee, a fee of $2000 payable on case assignment, and a monthly fee of $200. The initial fee structure had prompted concerns from rights NGOs and foreign judges on the court that it would discourage volunteer lawyers from offering their services and would prompt complaints that defendants had not been given a free choice of counsel. Cambodia's 1975-79 Khmer Rouge regime was responsible for the deaths of over 1.7 million people from genocide, disease and malnutrition.