Provident fund receivable by claimants cannot be deducted as 'pecuniary advantage'

Written by Indu Bhan | Indu Bhan | Updated: Jun 26 2013, 21:41pm hrs
Success in a case not enough to enjoy results: Citing the Privy Councils observation in a 1872 case that the difficulties of a litigant in India begin when he has obtained a decree, the Supreme Court said that the situation still continues unchanged as the successful litigants face the same problem during the execution of a decree. Stating that success in a suit means nothing to a party unless he gets the relief, the apex court in the case of Satyawati vs Rajinder Singh said that even if a litigant gets a decree in his favour, he is not able to enjoy the result due to long and unnecessary execution proceedings.

In this case, Satyawati had won a case in January 1996, entitling him to possession of land in Faridabad, near Delhi. Decree was drawn but till today he was unable to enjoy the property despite several efforts to get the decree executed. Both the executing court and the Punjab and Haryana High Court had rejected his execution petition by observing that the decree was not executable because of certain contradictory reports.

However, the Supreme Court set aside all the orders passed by the courts below it. While directing the executing court to pass its orders for execution of the decree without unreasonable delay, the Supreme Court observed that if the decree-holder is unable to enjoy the fruits of his success his entire effort would be in vain. The delay benefits unscrupulous parties and the person in wrongful possession delights in the delay in procedural complications.

Compounding of offence

Prior permission of a criminal court is not necessary when power of compounding an offence under the Companies Act is exercised by the Company Law Board (CLB), the Supreme Court has held in the case of VLS Finance Ltd vs Union of India. Dismissing the appeal of VLS Finance, the apex court said that any offence punishable under the Companies Act, not being an offence punishable with imprisonment only or with imprisonment and also with fine, may be compounded either before or after the institution of the prosecution by the CLB.

In this case, the Registrars of Companies, Delhi and Haryana, had filed a complaint in civil court alleging that M/s Sunair Hotels Ltd had shown fixed assets including land worth R21 crore in its balance sheet of 1995-96 and had arrayed the company and its chairman-cum-managing director SP Gupta as accused. However, before the court could proceed with the complaint, the CMD approached the Board which compounded the offence in August 2000 on payment of R1,000 for each offence each year.

Even the Delhi high court upheld the the Boards order holding that CLB can compound an offence as both are parallel powers to be exercised by the prescribed authorities who have been empowered under the statute and one power is not dependent on the other.

The Supreme Court also upheld the CLBs powers by stating that Section 211 of the Act and related provisions were brought in view of the need of leniency in the administration of the Act because a large number of defaults are of technical nature and many defaults occurred because of the complex nature of the provision.

No income tax deduction in compensation

Holding that the Rajasthan High Court was wrong in deducting 20% from the salary of the deceased towards income-tax for calculating the compensation, the Supreme Court enhanced the compensation for the death of a 28-year-old engineer from R14.94 lakh to R29.73 lakh with 12% interest. In the case of Vimal Kanwar & Ors vs Kishore Dan & Ors, the apex court said that as per law, the presumption will be that employer (in this case the state government) at the time of payment of salary deducted income tax on the estimated income of the deceased employee from the salary. Therefore, the salary as shown in the last pay certificate should be accepted for computing the income of the deceased person.

In this case, the wife of the deceased, the two-year-old daughter and the mother had jointly claimed compensation of R80.40 lakh from to the Motor Accidents Tribunal. The tribunal after deducting certain amounts towards provident fund (PF), pension and insurance had asked the United Insurance Company to pay R14.78 lakh towards compensation. Though the HC had slightly increased the compensation to R14.93 lakh, it had made a notional deduction of income tax from the salary of the deceased apart from the deduction of annual pension.

On appeal, the apex court said that PF, pension and insurance receivable by claimants cannot be deducted as pecuniary advantage accrued to the claimants. Similarly, bank balance, shares, fixed deposits also are receivable by the nominees, but they are pecuniary advantages not related to the Motor Vehicles Act provisions, it said, adding that the employee or his heirs are entitled to receive these amounts irrespective of the accidental death. Similarly, compassionate appointment of a dependent should also not be considered for deduction, the top court said.