The Economic Times, New Delhi 25 Feb 2008 P 20
THE Supreme Court has ruled that mere unfairness does not constitute oppression, to claim relief under the provision of Companies Act. When the shareholders of a company are given right to subscribe to the rights issue along with others in the same proportion, no prejudice is caused warranting relief under the provision of the Act, said the apex court. It termed grant of relief in such case, by the Company Law Board, as illegal. A bench comprising Justice Tarun Chatterjee and Justice P Sathasivam said: “The CLB missed a most basic principle of Section 397 (of the Companies Act), namely, that mere unfairness does not constitute oppression.”
Chapter VI of the Companies Act deals with prevention of oppression and mismanagement. Section 397 deals with relief in cases of oppression.
The court said that when shareholders were given the right to subscribe to the rights issue along with all others in the same proportion, no prejudice, whatsoever, could have been caused to them.
The court decided a bunch of appeals with similar issues. In one such case, Mr V S Krishnan and five others were collectively holding in excess of one-tenth of the issued share capital of Westfort Hi-Tech Hospital. Alleging oppression and mismanagement in the affairs of the company, they had approached the CLB’s additional principal bench at Chennai for redressal of their grievances under the provisions of the Act. They alleged that the issue of further shares on right basis, transfer of shares and other instances like manipulation of minutes of meetings were illegal. The Board had held further issue of shares of the company as illegal and void. Aggrieved by it, the company and its chairman K Mohandas moved Kerala High Court. On November 14, 2006, the high court partially set aside the order of the Board. The high court had said that the issuance of right shares needs no interference and CLB went wrong. We order that petitioners (before CLB) and other NRI shareholders shall be given one month’s time to accept the rights shares offered and it is for them to accept the offer or not, the high court had said. It was challenged by Mr Krishnan and others in the apex court. Royalty part of import price
The Supreme Court in a ruling has said that pricing arrangement between a foreign collaborator and an importer is a clue to decide the contentious issue of technical know-how fees and royalty. For such levy, examination of technical assistance and trademark agreement (TAA) between the licensor and licensee is not enough, said the apex court. A bench comprising Justice SH Kapadia and Justice BS Reddy said: “In addition to the price for the imported goods, the buyer incurs royalty and licence fee costs. These are paid to the foreign supplier for using information, patent, trademark and know-how in the manufacture of the licensed product in India.” “Rule 9(1)(c)of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 stipulates that payments made towards technical know-how must be a pre-requisite condition for the supply of imported goods by the foreign supplier and if such condition exists, then such royalties and fees have to be included in the price of the imported goods,” the court said. M/s Ferodo India, the buyer which was the manufacturer of brake liners and brake pads in India had entered into TAA with UK-based M/s T & N International. Customs officials held that the technical knowhow fees and royalty were related to the imported goods and were a condition of sale for the import. Therefore, the knowhow fees and royalty was added to the CIF value of the imported goods.
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