Legal and Compliance Watch
‘Drivers must eat’: HC upholds Rs. 16L payout
Providing relief to the family of a 40-year-old truck driver under the Employees’ Compensation Act, the Uttarakhand high court (HC) has upheld a labour court order awarding around Rs 16 lakh, including interest, after holding that his death from cardiac arrest after having a meal while driving from Uttar Pradesh to Jharkhand was “sufficiently connected with his employment” and that “having food was necessary for maintaining health during his long driving duties”.
Kamal Singh died on March 3, 2021. He was survived by his wife Mithilesh, four children and parents. The case before the HC centred on whether his death could be classified as “incidental to his employment”.
United India Insurance Company had challenged the compensation awarded by the labour court in Kashipur in 2025. The insurance company argued that Singh’s death was a “natural occurrence unrelated to his professional duties”. It also contended that the claimants had not provided sufficient evidence to establish that his death was directly linked to his employment activities.
The lawyer representing Singh’s wife cited a Supreme Court (SC) ruling concerning a truck driver who died after falling into a canal while he had stopped to bathe during a journey from Ambala to Meerut.
The apex court noted that the truck’s cabin was not air-conditioned and would have been a “baking oven” during the afternoon in the sultry monsoon heat of June 2003, when the temperature in Yamunanagar had touched 42.6°C.
HC: Banks can’t freeze a/cs on ‘mule’ allegation
Calcutta High Court said that a bank cannot freeze accounts merely on allegations that they are being used to receive, move and launder illegally acquired money — known as “mule accounts” in banking parlance — without filing a ‘Suspicious Transaction Report’ (STR). Banks file STRs with Financial Intelligence Unit (FIU).
HC also directed State Bank of India (SBI) to immediately de-freeze the bank account of a Kolkata businessman marked as ‘Money Mule’. Justice Krishna Rao held that clause 59 of the Master Direction of Feb 25, 2016, states that the bank needs to “meticulously monitor” to identify accounts that are operated as ‘Money Mules’ and take appropriate steps, including “reporting of suspicious transactions to FIU-IND…if it is established that an account opened and operated is that of Money Mule, but no Suspicious Transaction Report was filed by the bank, it shall then be deemed that the bank has not complied with these directions.”
The bench held that though the bank is enabled to take action, “it does not specifically authorize freezing of accounts”.
Sanjiv Kumar Dalmia, the owner of ‘Sanjeev Vyapaar’, had his SBI account with Chetla branch. On March 19, the bank suddenly partially froze his account. While Sanjiv’s argument was that despite repeated representations before the bank, he was not informed of the reason, the bank’s counsel submitted that his account was marked as ‘suspected mule account’.
SC settles 30yr shareholding dispute in favour of Peerless
Supreme Court settled a three-decade-old dispute involving Peerless General Finance and Investment Company Limited (PGFI) and Parasmal Lodha-owned Bhagwati Developers Private Limited (BDPL) over change in shareholding pattern by ruling in favour of PGFI.
PGFI is the holding company of Peerless group, one of the largest home-grown conglomerates in Bengal. Currently, the Roy family holds 76% in Peerless and the Lodhas 20%.
A bench of Justices P S Narasimha and Alok Aradhe declined to interfere with the ruling of National Company Law Appellate Tribunal (NCLAT) and dismissed the appeal filed by BDPL.
The dispute involves the issuance of 30,000 equity shares by Peerless board in 1987 through private placement, approved by its shareholders and Board of Directors, and the transfer of 15,626 shares by existing shareholders. The transactions were challenged by some minority shareholders with support from BDPL alleging that they were intended to alter the control of Peerless to the advantage of the Roy family and involved improper routing of funds. The minority shareholders later withdrew and BDPL took over as the main petitioner.
The legal dispute travelled through Calcutta High Court and Supreme Court before reaching National Company Law Tribunal (NCLT), which in an order on July 18, 2022, allowed BDPL petition almost three decades after the date of the transactions.
Company can be convicted & punished, jail may be substituted by fire: SC
A company having no physical body cannot be imprisoned and having no mind cannot possess mens rea (guilty mind), which is essential for conviction in a criminal case. So can a firm be convicted and punished?
SC answered the tricky questions by holding that a company can be convicted even when it cannot have a guilty mind of its own and can also be punished, though the punishment of a jail term can be substituted by a fine.
A bench of Justices J B Pardiwala and Manoj Misra said there is a need to bring a law for corporate criminal liability but said the issue comes within the legislature’s prerogative and it cannot be done by a court. It held that a company is not rendered immune to prosecution merely because the offence carries a mandatory sentence of imprisonment. Referring to a constitution bench ruling, the bench said a judicial discretion to impose a fine alone must be read into such provisions when dealing with juristic persons.
“The position under Indian law is thus clear that a corporation can be prosecuted for an offence notwithstanding that it carries a mandatory sentence of imprisonment or requires proof of mens rea. It appears that a corporation cannot be prosecuted only where the offence is punishable with imprisonment alone, or where the offence, by its nature, requires personal malicious intent, such that it is incapable of commission by a corporation at all,” the bench said.
