Monthly Archives: October 2015

Marketability – A decisive test for dutiability

In APSEB v. CCE, (1994) 2 SCC 428, it was held thus:
“marketability is an essential ingredient in order to be dutiable under the Schedule to the Act.”
The marketability is thus essentially a question of fact to be decided on the facts of each case. There can be no generalization.
Marketability is a decisive test for dutiability. It only means ‘saleable’ or ‘suitable for sale’. It need not be in fact ‘marketed’. The article should be capable of being sold or being sold, to the consumers in the market, as it is – without anything more.
In Moti Laminates (P) Ltd. v. CCE, (1995) 3 SCC 23 the court held that an intermediate product, namely, resols, not being marketable would not be exigible to duty. The court held:
“Although the duty of excise is on manufacture or production of the goods, but the entire concept of bringing out new commodity etc, is linked with marketability. An article does not become goods in common parlance unless by production or manufacture something new and different is brought out which can be bought and sold. In Union of India v. Delhi Cloth and General Mills Co. Ltd., (1977) 1 ELT 199, while construing the word ‘goods’, it was held as under:
“These definitions make it clear that to become “goods” an article must be something which can ordinarily come to the market to be bought and sold”. Therefore, any goods to attract excise duty must satisfy the test of marketability. The tariff schedule by placing the goods in specific and general category does not alter the basic structure of leviability. The duty is attracted not because an article is covered in any of the items or it falls in residuary category but it must further have been produced or manufactured and it is capable of being bought and sold.”
In Union of India v. Sonic Electrochem (P) Ltd., (2002) 7 SCC 435, the question whether the plastic body of electro mosquito repellant was excisable goods was decided thus:
“The germane question is whether it has marketability. The plastic body is being manufactured to suit the requirements of EMR of the respondents and is not available in the market for being bought and sold. It is not a standardized item or goods known and generally dealt with in the market. It is being manufactured by the respondents for its captive consumption. It is not a product known in the market with any commercial name.
Marketability of goods has certain attributes. The essence of marketability is neither in the form nor in the shape or condition in which the manufactured articles are to be found, it is the commercial identity of the articles known to the market for being bought and sold. The fact that the product in question is generally not being bought and sold or has no demand in the market would be irrelevant. The plastic body of EMR does not satisfy the aforementioned criteria. There are some competing manufacturers of EMR. Each is having a different plastic body to suit its design and requirement. If one goes to the market to purchase the plastic body of EMR of the respondents either for replacement or otherwise, one cannot get it in the market because at present, it is not a commercially known product. For these reasons, the plastic body, which is a part of EMR of the respondents, is not ‘goods’ so as to be liable to duty as parts of EMR under Para 5 (f) of the said exemption notification. Escorts Ltd. v. CCE, (2015) 9 SCC 109.

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Filed under Excise Act, Marketability

Delay in Filing Appeal under Section 18(1) of SARFAESI Act – Can be condoned

The Andhra Pradesh High Court in Sajida Begum v. State Bank of India, AIR 2013 AP 24 in holding the tribunal to be court has relied on Sections 22 and 24 of the Recovery of Debts Due to Banks and Financial Institutions Act. Section 22 vests power of Civil Court on the Tribunal only for purposes mentioned therein, such as summoning witnesses etc. and deems Tribunals to be courts for specified purposes, such as for Sections 193, 196 and 228 of the Indian Penal Code and Section 195 of the Criminal Procedure Code. These provisions may not be conclusive of the question of the Tribunal being court for section 29(2) of the Limitation Act without further examining the scheme of the statutes in question. In Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking Corporation, (2009) 8 SCC 646, the Court examined the scheme of the two Acts in question and held that the tribunal was a court but not a civil court for purposes of Section 24 of the CPC. Power of condonation of delay was expressly applicable by virtue of Section 18(2) of the SARFAESI Act read with proviso to Section 20(3) of the RDB Act and to that extent, the provisions of Limitation Act having been expressly incorporated under the special statutes in question, Section 29(2) stands impliedly excluded. Even though Section 5 of the Limitation Act may be impliedly inapplicable, principle of Section 14 of the Limitation Act can be held to be applicable even if Section 29(2) of the Limitation Act does not apply as laid down by the court in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department, (2008) 7 SCC 169.
Delay in filing an appeal under Section 18(1) of the SARFAESI Act can be condoned by the Appellate Tribunal under proviso to Section 20 (3) of the RDB Act read with Section 18(2) of the SARFAESI Act. Baleshwar Dayal Jaiswal v. Bank of India, 2015 (112) ALR 645.

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Filed under Delay condonation under Securitisation Act, Recovery Laws

Accessory – Meaning of

The term “accessory” has been defined by lexicographers broadly to mean as something which contributes to or aids in an activity or process.
Oxford Advanced Learner’s Dictionary defines it as – “a thing which can be added to something else in order to make it more useful, versatile or attractive.”
According to Merriam Webster Dictionary it is “something added to something else to make it more useful, attractive or effective.”
Black’s Law Dictionary provides that the term “accessory—Means anything which is joined to another thing as an ornament or to render it more perfect or which accompanies it or is connected with it as an incident or as subordinate to it or which belongs to or with it. Adjunct or accompaniment. A thing of subordinate importance. Aiding or contributing in secondary way or assisting in or contributing to as a subordinate.”
The meaning of the expression “accessory” has been explained by the court in Annapurna Carbon Industries Co. v. State of A.P., (1976) 2 SCC 273, in the light of the question whether “arc carbon” is an “accessory” to cinema projectors or other cinematographic equipment under Item 4 of Schedule I to the Andhra Pradesh General Sales Tax Act, 1957 as follows:
“The term accessories is used in the Schedule to describe goods which may have been manufactured for use as an aid or addition.
Other meanings given there are “‘supplementary or secondary to something of greater or primary importance’, ‘additional’, ‘any of several mechanical devices that assist in operating or controlling the tone resources of an organ’. ‘Accessories’ are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument.” Commissioner of Sales Tax v. AKZO Nobel India Ltd., (2014) 16 SCC 242.

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Filed under Accessory, Commercial Law

Artistic Freedom – Constitutional Provisions

Artistic freedom cannot be curbed by allowing an over sensitive individual to lift a passage, dialogue or clip out of context. Every part of an artistic portrayal must be read in the context of the whole. Otherwise freedom to speak and express will be reduced to husk. That freedom comprehends not merely the freedom of the director, producer, artist and script writer but equally the freedom of the audience to see, watch, observe and assess. A Statutory Authority in the form of the Central Board of Film Certification has been constituted for the certification of films under the Cinematograph Act, 1952. Lifting of an isolated extract from a motion picture would not do justice either to the fundamental right of the producer, director, script writer and artist or, for that matter, to the right of the community at large to view what is offered in pursuance of a certification granted in accordance with law. Anil Pradhan v. Union of India, (2015) 3 UPLBEC 1890.

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Filed under Artistic Freedom, Media Law

Arbitral Tribunal – Award of Interest

Section 31(7) of the Arbitration and Conciliation Act, by using the words “unless otherwise agreed by the parties”, categorically specifies that the arbitrator is bound by the terms of the contract so far as award of interest from the date of cause of action to date of the award is concerned. Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest.
In Union of India v. Saraswat Trading Agency, (2009) 16 SCC 504, the Hon’ble Apex Court has observed in the said case that if there is a bar against payment of interest in the contract, the arbitrator cannot award any interest for such period. Union of India v. Bright Power Projects (I) Pvt. Ltd., 2015 (4) AWC 3862.

The grant of award of interest on arbitrable claims by the Arbitral Tribunal is not inherently illegal or against any public policy or per se bad in law or beyond the powers of the Arbitral Tribunal. In other words, it is permissible to award interest in arbitrable claims by the Arbitral Tribunal.

Indeed, Sections 31(7)(a) and (b) of the Act empower the Arbitral Tribunal to award interest on the awarded sum and secondly, it is always subject to the agreement between the parties.

It is a well settled principle in Arbitration Law that the award of an Arbitral Tribunal once passed is binding on the parties. The reason being that the parties having chosen their own arbitrator and given him authority to decide the specific disputes arising between them must respect his decision as far as possible and should not make any attempt to find fault in each issue decided by him only because it is decided against one party. It is only when the issue decided is found to be bad in law in the light of any of the specified grounds set out in Section 34 of the Act, the Court may consider it appropriate to interfere in the award else not. Union of India v. Susaka Pvt. Ltd., (2018) 2 SCC 182.


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Filed under Arbitration, Award of Interest

Service Related Claim – Based on a Continuing Wrong

In the case of Union of India v. Tarsem Singh, (2008) 8 SCC 648, it was held as under:
“To summarise, normally, a belated service related claim will be rejected on the ground of delay and laches (where remedy is sought by filing a writ petition) or limitation (where remedy is sought by an application to the Administrative Tribunal). One of the exceptions to the said rule is cases relating to a continuing wrong. Where a service related claim is based on a continuing wrong, relief can be granted even if there is a long delay in seeking remedy, with reference to the date on which the continuing wrong commenced, if such continuing wrong creates a continuing source of injury. But there is an exception to the exception. If the grievance is in respect of any order or administrative decision which related to or affected several others also, and if the reopening of the issue would affect the settled rights of third parties, then the claim will not be entertained. For example, if the issue related to payment or refixation of pay or pension, relief may be granted in spite of delay as it does not affect the rights of third parties. But if the claim involved issues relating to seniority or promotion etc. affecting others, delay would render the claim stale and doctrine of laches/limitation will be applied. Insofar as the consequential relief of recovery of arrears for a past period is concerned, the principle relating to recurring/successive wrong will apply. Habib Ali v. State of U.P., 2015 (4) AWC 4174.

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Filed under Continuing Wrong, Employment Law

Doctrine of Merger

The “doctrine of merger” is not a “doctrine of universal or unlimited application”. It is not that in every case where there are two orders, one by the inferior authority and the other by a superior authority, it is to be deemed that former had merged in the latter thereby losing its identity completely. The applicability of the doctrine of merger will depend on the nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge laid. It will depend upon the subject matter of the appeal or revision or the scope of proceedings in which final orders are passed.
The same legal position has been laid down in the case of Kunhay Ahmed v. State of Kerala, (2000) 6 SCC 359. The court referred to another decision of the Hon’ble Supreme Court in State of Madras v. Madurai Mills Co. Ltd., AIR 1967 SC 681, wherein it had held that the doctrine of merger is not a doctrine of rigid and universal application and the applicability of the same are dependent upon the scope of the appeal or revision contemplated by the particular statute, the nature of the appeal or revisional order and the scope of the statutory provisions conferring the appellate or revisional jurisdiction. State of U.P. v. Vivekanand Singh, 2015 (4) AWC 4130.

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Infringement Proceedings – Place for Institution of

On a due and anxious consideration of the provisions contained in Section 20 of the CPC, Section 62 of the Copyright Act and Section 134 of the Trade Marks Act and the object with which the latter provisions have been enacted, it is clear that if a cause of action has arisen wholly or in part, where the plaintiff is residing or having its principal office/carries on business or personally works for gain, the suit can be filed at such place/places. Plaintiff(s) can also institute a suit at a place where he is residing, carrying on business or personally works for gain de hors the fact that the cause of action has not arisen at a place where he/they are residing or anyone of them is residing, carries on business or personally works for gain. However, this right to institute suit at such a place has to read subject to certain restrictions, such as in case plaintiff is residing or carrying on business at a particular place/having its head office and at such place cause of action has also arisen wholly or in part, plaintiff cannot ignore such a place under the guise that he is carrying on business at other far flung places also. The very intendment of the insertion of provision in the Copyright Act and Trade Marks Act is the convenience of the plaintiff. The rule of convenience of the parties has been given a statutory expression in Section 20 of the CPC as well. The interpretation of provisions has to be such which prevents the mischief of causing inconevience to parties.
The intendment of the aforesaid provisions inserted in the Copyright Act and the Trade Marks Act is to provide a forum to the plaintiff where he is residing, carrying on business or personally works for gain. The object is to ensure that the plaintiff is not deterred from instituting infringement proceedings “because the court in which proceedings are to be instituted is at a considerable distance from the place of their ordinary residence. The impediment created to the plaintiff by Section 20 CPC of going to a place where it was not having ordinary residence or principal place of business was sought to be removed by virtue of the aforesaid provisions of the Copyright Act and the Trade Marks Act. Where the Corporation is having ordinary residence/principal place of business and cause of action has also arisen at that place, it has to institute a suit at the said place and not at other places. The provisions of Section 62 of the Copyright Act and Section 134 of the Trade Marks Act never intended to operate in the field where the plaintiff is having its principal place of business at a particular place and the cause of action has also arisen at that place so as to enable it to file a suit at a distant place where its subordinate office is situated though at such place no cause of action has arisen. Such interpretation would cause great harm and would be juxtaposed to the very legislative intendment of the provisions so enacted.
Section 62 of the Copyright Act and Section 134 of the Trade Marks Act have to be interpreted in the purposive manner. No doubt about it that a suit can be filed by the plaintiff at a place where he is residing or carrying on business or personally works for gain. He need not travel to file a suit to a place where defendant is residing or cause of action wholly or in part arises. However if the plaintiff is residing or carrying on business etc. at a place where cause of action, wholly or in part, has also arisen, he has to file a suit at that place. Indian Performing Rights Society Ltd. v. Sanjay Dalia, 2015 (4) AWC 4035.

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Filed under Infringement Suit, Intellectual Property Law

Disciplinary Proceedings – Against a Retired Employee

In Anant R. Kulkarni v. Y.P. Education Society, 2013 (138) FLR 168 (SC), the Hon’ble Apex Court considered the question as to whether continuation of departmental enquiry is permissible against a retired employee, wherein it was held that enquiry against a retired employee is subject to the statutory rules, which governs the terms and conditions of his service. If the inquiry was initiated while the delinquent employee was in service, it would continue even after his retirement but, nature of punishment would be limited to certain extent and accordingly, punishment of dismissal or removal of the employee from service cannot be imposed on the retired employee. The Hon’ble Supreme Court has categorically ruled that in the absence of any statutory power conferred on the management, to hold a fresh enquiry after the retirement, no such enquiry against the employee could be conducted. In the aforesaid decision, the Apex Court has decided the issue thus:
“Thus, it is evident from the above, that the relevant rules governing the service conditions of an employee are the determining factors as to whether and in what manner the domestic enquiry can be held against an employee who stood retired after reaching the age of superannuation. Generally, if the enquiry has been initiated while the delinquent employee was in service, it would continue even after his retirement, but nature of punishment would change. The punishment of dismissal/removal from service would not be imposed. S. Andiyannan v. Joint Registrar, Co-operative Societies, 2015 (146) FLR 1079 (FB).

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Filed under Departmental Enquiry, Retired Employee

Possession, Occupation and Control – Distinction Between

The distinction between “possession” and “occupation” was considered in Seth Narainbhai Iccharam Kurmi v. Narbada Prasad Sheosahai Pande, AIR 1941 Nag 357 and the court held:
“Bare Occupation and possession are two different things. The concept of possession, at any rate as it is understood in legal terminology, is a complex one which need not include occupation. It comprises rather the right to possess, and the right and ability to exclude others from possession and control coupled with a mental element, namely, the animus possidendi, that is to say, knowledge of these rights and the desire and intention of exercising them if need be. The adverse possession of which the law speaks does not necessarily denote actual physical ouster from occupation but an ouster from all those rights which constitute possession in law. It is true that physical occupation is ordinarily the best and the most conclusive proof of possession in this sense but the two are not the same. It is also true that there must always be physical ouster from these rights but that does not necessarily import physical ouster from occupation especially when this is of just a small room or two in a house and when this occupation is shared with others. The nature of the ouster and the quantum necessarily varies in each case. State of U.P. v. Daiya Charitable Society, 2015 (112) ALR 138.

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Filed under Civil Law, Possession