[No.195]

Supreme Court

• S.T. Krishnappa V. Shivakumar and Ors.

Plaintiff-appellant was given in adoption by his genetive parents-original defendants in a ceremony. Deed of adoption admittedly did not contain any stipulation that the said adoption was in “dvyamushyayana” or in other form. Plaintiff-appellant thereafter claimed that he continued to be a coparcener in his genetive-parents property and claimed that he was entitled to share in suit properties along with his sister. Trial court and lower appellate court negatived claim of appellant. Hence, present appeal. Whether plaintiff is entitled to a share in his natural father’s property? Held, in in Rajgopal (Dead) by LRs. v. Kishan Gopal and Anr.(2003) 10 SCC 653, a Division Bench of SC held that in every case of absolute dwyamushyayana form of adoption, there must be an agreement to the effect that the person given in adoption shall be the son of both, i.e., the natural father as well as the adoptive father and such an agreement must be proved like any other fact by the party alleging the same. As per Sub-section (3) of Section 483 of Principles of Hindu Law by Mulla where a person gives his only son in adoption to his brother, adoption must be presumed to be in the dvyamushyayana form, unless a stipulation is proved that the adoption was to be in the ordinary form. In Bombay, however, it has been held, that there is no such presumption, and that a person alleging that an adoption was in the dvyamushyayana form, must prove that there was an agreement to that effect, even if the person adopted was the only son of a brother. But it is not necessary that the adoptive father and the natural father should be brothers. No such presumption can be attached in the instant case as a brother had not given his only son in adoption to another brother. It is also not a where case such a custom was prevalent. If there existed a custom, the matter might have been different. The twist sought to be given that the purported adoption was made only for the purpose of nominating a heir, was not accepted stating that when a ceremony was performed, the parties intended to comply with the requirements of law that for a valid adoption, there must be a giving and taking. In view of the finding of fact arrived at by the Courts below there is no merit in the appeal. Appeal is dismissed.

• D. Dwarakanantha Reddy V. Chaitnya Bharathi Educational Society and Ors.

Appellants were appointed as promoter-members of first respondent society without payment of rupees one lac fee as per society stipulations and their appointment was subsequently ratified by General Body of first respondent society. Thereafter, at a meeting of Board of Governors of respondent society it was resolved that appellants could not be said to be legally inducted members and their induction was totally illegal and unlawful and that the earlier resolution was merely a “proposal” with a condition that nine persons would be admitted as members at an appropriate time. Appellants challenged said decision of society on ground that no show cause notice was issued or no opportunity of being heard was given to appellants before Board of society took above said decision and filed an Original Petition. The learned trial court judge dismissed application holding that no prima facie case had been made out by the Petitioners-Appellants and they could not be granted interim relief as sought. The appellants preferred Revision Petitions but High Court dismissed same and affirmed decision of trial court. Hence, present appeal. Whether decision of respondent society holding appointment of appellants was not legal valid without issuance of show cause notice and giving reasonable opportunity of being heard is valid? Held, as to issuance of show cause notice calling for explanation and giving an opportunity of hearing as also observance of natural justice, this Court in T.P. Daver v. Lodge Victoria No. 363, S.C. Belgaum made the following observations. A member of a masonic lodge is bound to abide by the rules of the lodge; and if the rules provide for expulsion, he shall be expelled only in the manner provided by the rules. The lodge is bound to act strictly according to the rules, whether a particular rule is mandatory or directory falls to be decided in each case, having regard to the well settled rules of construction in that regard. The jurisdiction of a civil court is rather limited; it cannot obviously sit as a court of appeal from decisions of such a body. It can set aside the Order of such a body, if the said body acts without jurisdiction or does not act in good faith or acts in violation of the principles of natural justice. Ratio laid down in Daver does not apply to the facts of the case. In the instant case, the controversy does not relate to expulsion of a member. The question is whether the Appellants can be said to have been legally admitted as Promoter-Members. Once it is held that the Appellants were properly inducted and had become Promoter-Members of the Society, principles of natural justice required issuance of notice, calling for explanation and affording reasonable opportunity of being heard. The case of the Society, however, is that Appellants were never legally inducted as Promoter-Members and their so called induction was not in consonance with law. The said issue is yet to be decided. Therefore, Daver is of no assistance to the appellants at this stage. Appeal is dismissed.

High Courts

Delhi

• M/S Kamdhenu Ispat Limited V. M/S Kamdhenu Industrial Service

Plaintiff filed present suit alleging violation of its proprietary rights in trademark and tradename “Kamdhenu” by defendant with dishonest intention and infringement of said registered mark. Allegedly, goods of defendant are same or are cognate goods as those of plaintiff and its trade mark and trade name was identical or deceptively similar to that of plaintiff’s. Hence, present suit. Whether plaintiff is entitled to protection of its trademark? Held, the lettering style and colour combination adopted by plaintiff in respect of its trade mark Kamdhenu is registered under Copyright Act, 1957 and as such, plaintiff is owner and has exclusive proprietary rights therein under provisions of Copyright Act, 1957. Defendant has adopted the trade name Kamdhenu Industrial Service which is identical to trademark and trade name of plaintiff which would certainly result in creating confusion and deception in minds of public who would carry a belief that business of defendant is associated with that of plaintiff. Plaintiff has also established that adoption of such trade mark and trade name by defendant is subsequent and without knowledge, permission or consent of plaintiff and that same is dishonest, mala fide and fraudulent. Certainly, by these acts which plaintiff has complained of, Defendant is infringing legal, exclusive and proprietary rights of plaintiff in trade mark and tradename. These actions of defendant are also causing dilution of plaintiff's established goodwill and reputation in market. Therefore, plaintiff has certainly established entitlement to protection of its trade mark and trade name from such dishonest adoption and use by defendant and a judgment in its favour. Therefore, permanent injunction is granted in favour of plaintiff.

• ITC Limited V. Sunil and Ors.

Plaintiff is engaged in the business of contemporary mens wear and is the registered proprietor of trademarks JOHN PLAYERS. Defendants allegedly sold counterfeit goods of plaintiffs from their premises bearing identical mark “John Players” and therefore, plaintiff filed suit for trademark and copyright infringement. Defendants failed to enter appearance despite service and were proceeded against ex parte. Plaintiff prayed for relief of damages apart from relief of injunction against defendants. Hence, present suit. Whether plaintiff is entitled to relief of damages in addition to relief of injunction? In such a case a party like said defendants who fail to enter appearance cannot be put on a better footing than a party who has appeared before Court. Principle expounded is that apart from compensatory damages even punitive damages ought to be awarded to discourage and dishearten law breakers who indulge in violation with impunity and that such damages ought to be awarded against defendants who choose to stay away from proceedings of the Court and they should not be permitted to enjoy benefits of evasion of Court proceedings. The rationale set out for same is that while defendants who appeared in Court may be burdened with damages while defendants who chose to stay away from Court would escape such damages. Once action of defendants results in affecting reputation of plaintiff, every endeavour should be made for a larger public purpose to discourage such parties from indulging in acts of deception. Therefore, decree passed in favour of plaintiffs.

Madras

• Commissioner of Income Tax, Chennai V. S.R. Associates, Chennai

Assessee filed return for relevant assessment year and claimed carry forward of loss of unabsorbed depreciation. Assessing Officer reduced carry forward of loss of unabsorbed depreciation to a certain extent and then initiated penalty proceedings and levied penalty under Section 271(1)(c) of Income Tax Act. Aggrieved by same, assessee filed an appeal before Commissioner of Income Tax (Appeals) who in turn annulled levy of penalty and decided issue in favour of Assessee. Upon appeal at instance of Revenue, Tribunal also decided issue in favour of Assessee. Hence, present appeal. Whether Order of Tribunal deleting penalty imposed by Assessing officer is valid in view of fact that income of assessee is net loss? Held, words “in addition to tax, if any, payable him” employed in Clauses (ii) and (iii) and words “amount of tax sought to be evaded by reason of such concealment of particulars of his income” employed in Clause (iii) of Section 271(1)(c) of Act are deciding factors for invoking penalty proceedings under Section 271(1)(c) of Act. A plain reading of Clauses (ii) and (iii) in Section 271(1)(c) of Act, particularly in context of words “in addition to tax, if any, payable him” employed in Clauses (ii) and (iii) would make it clear that penalty contemplated in all above Clauses is a measure of tax payable by Assessee. In other words, if no tax is payable by Assessee, there would be no penalty which could be levied on Assessee. Word “income” occurring in Clause (c) and (iii) of Section 271(1) of Act refers to positive income only and not a loss. Penalty could be imposed only in addition to tax payable. When there is no tax payable, question of any penalty does not arise. In fact, evasion of tax is sine qua non for imposition of penalty. If there is no taxable income or tax assessed for payment during a particular year, question of evasion and consequently, penalty do not arise. Penal provisions of Section 271(1)(c), therefore, are attracted only in case of an Assessee having positive income and not loss, as question of concealment of income to avoid payment of tax would arise only in former case. Penalty is a deterrent measure to prevent evasion of tax and when there was no tax payable, there could be any such evasion so as to provide a scope for levying any penalty, vide CIT v. Prithipal Singh and Co. (183 ITR 69). Therefore, no error or illegality in the Order of Tribunal in deleting penalty taking into account income of Assessee is a net loss.

Press Information Bureau

• Government notify changes in Provisions on Levy of Service Tax

PIB dated 22.05.2007: The government has issued some Service Tax notifications giving effect to some of the provisions of the Finance Act, 2007 relating to service tax. Accordingly, seven services which are added in the category of taxable services shall come into force from 1st June, 2007. Renting of immovable properties for use in commerce or business shall be leviable to service tax with effect from 1st June, 2007. However, property tax paid on immovable property is specifically excluded from the levy of service tax by way of an exemption notification. Works Contract Service shall also be leviable to service tax with effect from 1st June, 2007. However, an optional Composition Scheme for payment of service tax on Works Contract Service has been notified. Under this Scheme, provider of Works Contract Service has given the option to pay service tax at a flat rate of 2% of the total value of the contract instead of paying service tax at the standard rate.

RBI

DBOD

• Section 23 of the Banking Regulation Act, 1949-Doorstep Banking

Circular No. DBOD.No.BL.BC. 99/22.01.010/2006-2007 dated 24.05.2007: The RBI vide the present circular notifies that banks have been permitted to (i) deliver cash/draft at the doorstep of the individual customers also (in addition to corporate customers/Government Departments/PSUs etc.) either against cheques received at the counter or requests received through any secure convenient channel such as phone banking/internet banking and (ii) deliver cash/draft at the doorstep of Corporate customers/Government Departments/PSUs etc., against cheques received at the counter or requests received through any secure convenient channel such as phone banking/internet banking. The same shall be subject to banks adopting technology and security standards and procedures as envisaged in RBI circular DBOD.Comp.BC.130/07.03.23/2000-2001 dated June 14, 2001, including those specifically relating to authenticating users as indicated and taking adequate safeguards/precautions in undertaking the above transactions.

Press Release

• Customers can now appeal against the Banking Ombudsman's Decision

Press Release No. 2006-2007/1608 dated 24.05.2007: RBI vide the present press release notifies that Bank customers can now appeal against the decision of the Banking Ombudsman where he has rejected the customer's complaint relating to matters falling within the grounds of complaints specified under the scheme. The Reserve Bank of India has amended the Banking Ombudsman Scheme, 2006 to enable the customers to appeal against the Banking Ombudsman's decision. Before such amendment, the bank customers could appeal only against the awards given by the Banking Ombudsman. The appellate authority for the Banking Ombudsman Scheme is the Deputy Governor of Reserve Bank of India. Originally introduced in 1995, the Banking Ombudsman Scheme enables speedy and cost effective resolution of complaints of bank customers relating to deficiency in bank services. The Scheme now covers all Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks. The customers can also now complain to the Banking Ombudsman against deficiency in almost any banking services, including credit cards, after exhausting the channel available with the bank concerned for resolving their complaints. The Reserve Bank has appointed 15 Banking Ombudsmen who are located mostly in State Capitals under the Scheme. The Banking Ombudsman tries to resolve the complaint through conciliation or mediation and even passes an award if it is not resolved through such settlement.

Telecom Regulatory Authority of India (TRAI)

• TRAI asks telecom service providers to ensure transparency in charging for SMS on Festival/customary days

Press Release No. 49/2007 dated 25.05.2007: Several telecom operators are offering free/discounted SMS Schemes. Such offers are made either as part of regular tariff plans with or without an additional monthly payment or are offered as packs valid for specified period or as promotional schemes. Accordingly, some operators have reported to TRAI that such free/discounted SMS under various plans/packs shall not be available to customers on certain specified days which happen to be social, cultural/ festival days. The Authority has asked the service providers to follow certain principles to ensure transparency in the charging of SMS on such days which is generally termed as ‘SMS blackout’ days. Under these Guidelines any operator implementing separate tariffs on blackout days has to ensure that the ‘black out’ days i.e. the days on which free/concessional SMS are not available shall be clearly indicated in the package itself; the SMS charges applicable on these special days shall be explicitly conveyed to the subscribers; the dates corresponding to the black out day shall not be altered after the pack is subscribed by the customer and that there shall be no addition to the list of black out days after the pack is subscribed by the customer.

• Constitution of Committee on Health Insurance for Senior Citizens

Notice dated 22.05.2007: Vide the present circular IRDA notifies that the IRDA has decided to constitute a Committee on Health Insurance for Senior Citizens. Accordingly, the Committee shall suggest commercially viable health insurance schemes for the senior citizens taking care to see that they do not spiral into a high cost healthcare system; identify the problems in extending health insurance to senior citizens without age limit and at affordable cost and suggest possible solutions; examine the pros and cons of separate health insurance schemes for the senior citizens considering the profitability and claim ratios of different segments of health insurance; examine the issues connected with “portability” of health insurance by the senior citizens from one scheme to another and from one insurer to another and suggest the manner and conditions in which such portability is achieved; examine the feasibility of offering a menu of options to the senior citizens in terms of the type of diseases (including “pre-existing diseases”) to be covered, the proportion of expenses to be paid, and the quantum of “deductible”; suggest streamlining of procedures such that medical treatment is on “cashless” basis and is rendered promptly; suggest ways to incorporating alternative systems of medicine into the health insurance system; suggest possible incentives to the senior citizens for adopting healthier life styles; examine the feasibility of incorporating the concept of “family doctor” into the health insurance schemes for the senior citizens; examine the feasibility of integrating travel insurance such as “Overseas Mediclaim” policy into the health insurance schemes of senior citizens and any other relevant issue.

Cases

• United States of America V. Marvin Daniel Hudson

Defendant and his co-conspirators advertised via facsimile a "Microsoft Closeout Sale" offering steep discounts on various Microsoft products. A Maryland based company “BFS” responded to the advertisement and placed order for some products. Upon receiving the software, however, the company's operations manager became suspicious of the software's authenticity and contacted Microsoft, which confirmed that the software was counterfeit. BFS then refused to pay for the software and turned all copies over to the government. Defendant was then charged with the offense of conspiring to infringe copyright. Trial court imposed restitution order on defendants. Same was challenged by defendant on ground that district court erred in imposing the restitution order because Microsoft suffered no actual losses from his conduct. Hence, present appeal. Held, a restitution order must be based on actual loss," which the government bears the burden of proving. The purpose of restitution is not to punish defendants or to provide a windfall for crime victims but rather to ensure that victims, to the greatest extent possible, are made whole for their losses. Consequently, a district court that orders restitution in an amount greater than the total loss caused by the offense thereby exceeds its statutory jurisdiction and imposes an illegal sentence. The government contends that Microsoft suffered the actual loss of the sale that Microsoft would have made to BFS had Defendant not sold BFS counterfeit Microsoft products. The government provides no support for its contention that Defendant's actions thwarted this theoretical future sale. The government's assertion that Defendant's actions deprived Microsoft of potential sales is not supported by the record, and the government does not contend that Microsoft suffered loss in any other way. Thus it is not possible to see how the order of restitution can be viewed as anything but a windfall for Microsoft. Because the government failed to prove that Microsoft suffered any actual loss, no restitution should have been ordered. Therefore, district court’s order reversed and vacated.

• KSR International V. Teleflex Inc. et al

Petitioner-company developed an adjustable pedal system for cars with cable-actuated throttles and obtained '976 patent for the design, General Motors Corporation (GMC) chose petitioner-company to supply adjustable pedal systems for trucks using computer-controlled throttles. To make the '976 pedal compatible with the trucks, petitioner-company added a modular sensor to its design. Respondents however hold the exclusive license for the Engelgau patent claim 4 which discloses a position-adjustable pedal assembly with an electronic pedal position sensor attached a fixed pivot point. After learning of petitioner’s design for GMC, respondent sued for patent infringement, asserting that petitioner’s pedal system infringed respondent’s Engelgau patent's claim 4. Petitioner countered that respondent’s claim 4 was invalid under §103 of the Patent Act as it forbids issuance of a patent when the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art. Petitioner contended that respondent’s patent was just a modification of an already known pedal or prior art called Asano pedal. Trial court granted summary judgement in favour of petitioner however, same was reversed on appeal by first appellate court. Hence, present petition. Held, petitioner provided convincing evidence that mounting a modular sensor on a fixed pivot point of the Asano pedal was a design step well within the grasp of a person of ordinary skill in the relevant art. Its arguments, and the record, demonstrate that respondent’s claim 4 of Engelgau patent is obvious. In rejecting the District Court's rulings, the Court of Appeals analyzed the issue in a narrow, rigid manner inconsistent with §103 and precedents. The judgment of the Court of Appeals is therefore reversed and case remanded for further proceedings.

News

• European, Asian states agree to deadline on greenhouse gases pact but US balks

Asian and European countries agreed to set new international emissions standards by 2009, after a two-day conference in Hamburg, Germany that included representatives from over 40 nations. Supporters of the new deadline said it was necessary in light of the impending 2012 expiration of the Kyoto Protocol, which currently governs international greenhouse gases. Attendees also discussed the need for global promotion of alternative energy sources, agreeing to a tentative outline for the different responsibilities of richer and poorer nations in emissions reduction. The European Union has begun exerting pressure on major polluters in Asia, but many Asian countries have indicated they will only reduce emissions in exchange for European green technology. The EU has so far been reluctant to accept the trade, but the first round of negotiations is scheduled to begin in December in Bali, Indonesia. The US has rejected the conference's deadline to reduce emissions globally as too broad. According to chairman of the White House Council on Environmental Quality, the Bush administration favors a policy which sets goals in the context of national circumstances, rather than a global mandate. The US also rejected the 1997 Kyoto Protocol because it excluded developing countries from the restrictions and many feared it would disproportionately harm the US economy.

• Bangladesh government arrests ex-ministers in ongoing corruption probe

The Bangladeshi interim government arrested seven prominent citizens in the latest chapter of its anti-corruption campaign. The military-backed regime detained four former government ministers, two mayors, and an ex-president of the Federation of Bangladesh Chamber of Commerce and Industry. Those arrested include former Commerce Minister, former Health Minister, ex-junior Minister for Energy, and former junior Sports Minister. 

The men were arrested under emergency laws which allow detention without warrants or specific charges. According to the Bangladeshi government, some of the men were detained for suspected corruption while others were only detained for questioning. Since President Iajuddin Ahmed became leader of the emergency government in January with a vow to end the country's infamous political corruption, more than 170 prominent citizens have been detained. 

• Supreme Court grants certiorari in four cases to be heard next term

The US Supreme Court granted certiorari in four cases to be heard next term. In Hall Street v. Mattel the court will resolve a circuit split on whether parties may contractually agree to vacate an arbitration award under the Federal Arbitration Act. In Ali v. Federal Board of Prisons the court will decide if sovereign immunity under the Federal Tort Claims Act [28 USC 2680(c)] extends to prison workers who lost the personal property of a prisoner while he was being transferred from one prison to another. In John R. Sand Gravel Co. v. US the court granted certiorari solely to decide whether the six year statute of limitations on Tucker Act [28 USC 2501] claims limits the jurisdiction of the US Court of Federal Claims. Finally, in CSX v. Georgia State Bd. of Equalization the court will determine if railroad companies can challenge a state's method of valuing railroad property in federal court, using federal laws preventing state tax discrimination against railroads [49 USC 11501(b)(1)]. 

• Russia court accords amnesty to police officers in Beslan school hostage crisis

Three Russian deputy police chiefs charged with criminal negligence in connection with their conduct during the 2004 Beslan school hostage crisis in which over 300 civilians were killed received amnesty from a Russian court. Relatives of the victims, most of whom were children, began vandalizing the courtroom by breaking windows and overturning furniture, forcing the judge reading the order to retreat to another room before finishing. Prosecutors had alleged that the police officers failed to raise security levels despite warnings about the possibility of attacks in the region. The officers pleaded not guilty to charges of negligence in March, and could have faced up to 7 years in jail if convicted. Victims rights groups such as Mothers of Beslan have argued that the government has ignored and covered up failures by the law enforcement agencies involved in the siege and the rescue operation.