Page 21 - Banking Finance October 017

LEGAL UPDATE

"Free Samples" is a com- LIC not an "insurance company"
The Allahabad Municipal Corporation had argued that LIC is not had to pay li-
mercial activity
cence fees as insurance was a trade in its jurisdic-
The samples sent to potential foreign tion. LIC expressed the view that "trade" in Sec-
clients are a tion 438 of the UP Municipal Corporation Act did
commercial ac- not include the business of insurance since the pro-
tivity. The Con- vision deals with keeping for sale or otherwise goods
sumer Protection or animals or the manufacture of goods.
Act debars indi-
viduals who are This argument was accepted by the Supreme Court. The Apex Court upheld the
engaged in com- judgment of the Allahabad High Court, which had held that the Life Insurance
mercial activities from moving con- Corporation of India was not covered by the expression "insurance company"
sumer forums. In the case of TNT under a 1999 notification issued by the Allahabad municipal corporation.
India Ltd vs. Lochan Tea Ltd., the
National Consumer Commission Filling LPG Cylinder whether relates to "manufacture"
stated that individuals engaged in or not
commercial activities are barred from The revenue authorities had disallowed the deduction claimed by the assessee
moving to consumer forums.
firms, contending that they did not engage in pro-
In this case, the tea company en- duction or manufacture activity because the gas
gaged the other firm to carry was produced and manufactured in refineries and
samples of it tea bags to the US,
thereafter there was no change in the chemical
China and other countries. Some of
composition or other properties of the gas while
them were not delivered on time, filling the cylinder.
leading to the tea company moving
the consumer forum in Siliguri and The dispute went up to the Tribunal, where it was ruled that LPG produced in
the agent was directed to pay the the refineries cannot be directly supplied to households without bottling of the
compensation. On appeal, the na- LPG into the cylinders and it was a complex activity which can only be carried
tional commission stated that the out by experts. The Supreme Court upheld the view of the ITAT ruling that filling
forums below had not discussed the LPG cylinders amounts to "manufacturing" activity and the assessee was entitled
aspect of commercial activity ad- to benefits u/s 80HH and others
equately. It said that though the tea
bags were "free trade samples of no Seller liable to clear old power bills
commercial value", they were being The Supreme stated in the judgment of Sothern Power Distribution Co vs Gopal
sent to expand and promote their sale. Agarwal, that an auction purchaser of prop-
erty is not liable to clear arrears of electric-
Arbitral Tribunal powers ity charges of the past ownerIn this case,
enhanced the assets of a company, which failed to
repay the loan given by City Union Bank,
The Arbitral Tribunal have been em-
was purchased by Mr.Agarwal, being the
powered with power to punish a
party for flouting its orders, without highest bidder and was also given the cer-
taking the trouble of referring the tificate of sale by the bank.
issue to the high court (HC). The Apex On application for power connection, the distribution company claimed old dues
Court has made it even applicable to of Rs. 2 crores. The aggrieved moved to the AP High Court which asked the
to interim orders of the tribunal also company to give power connection. The Power Company appealed to the Su-
as for the case of Alka vs Shamshul preme Court only to get the appeal dismissed stating that the buyer went by
Khan where there was a dispute over the "as is where is" condition and he had not undertaken to clear the dues of
sale of flats. the previous owner.

20 | 2017 | OCTOBER | BANKING FINANCE

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