In house monthly legal journal of TATA MOTORS LTD ISSUE No.

14
HIGHLIGHTSOFTHEISSUE ProductLiability:DefencesavailabletoManufacturers ChangesintheLegalArenaInternational ImportantJudicialPronouncements ABitofFun QuoteoftheMonth

April, 2012

PRODUCTLIABILITYDEFENCESAVAILABLETOMANUFACTURERS Inthelastissuewediscussedtheriskdefencebasedonthepresentstateofknowledgeatthetimeof releaseoftheproductintothemarketanditwasclearthatthecurrentstateofscientificandtechnical knowledgesetsastandardthatneedstobefollowedbymanufacturers. The knowledge that the product is dangerous may only be discovered after carrying out extensive testing and there ought to be a limit on the amount of time and expense that manufacturers are expected to spend on the same. It could well be an issue that is discovered only after a long and arduoustesting/useinwhichcaseunlessthevehicleisputontheroadforalongperiodoftime,the same cannot be discovered at all by the manufacturer. These issues go to the very root of financial viabilityofinnovationswhichisironicinanerawheregovernmentssupportinnovativeindustry.This defenceofdevelopmentalriskisthereforefraughtwiththechancesoffailureastheauthoritiescould welltakeastrictliabilityapproachwherenolibertyisgrantedtothemanufacturer.Insurancepremia forsuchrisksaregenerallyhighasthedefenceisconsideredweak. Whathappensiftheendproductisdefectivebecauseofadefectivecomponentsuppliedbyavendor? The manufacturer could pass the burden to the vendor in case the issue lies entirely with the componentandisnotattributableeithertothefinalproductortotheinstructionsofusegivenbythe manufacturer. Here the component ought not to be manufactured to the specifications of the manufacturer. In some countries, however, the law makes it clear that it is the manufacturer of the vehiclealonewhowillbeheldresponsibleandnotthecomponentmanufacturerinanycase. 1

 CHANGESINTHELEGALARENAINTERNATIONAL Indonesia:IndonesiahasissuedanewManpowerDecreewhichlists19positionsthatcanbeheldonly byIndonesiansandnotbyforeigners. Malaysia: The new Malaysian Competition Act prohibits anticompetitive and unfair trade practices, irrespectiveofwhetherthecommercialactivityisdirectedfromwithinoroutsideMalaysia. Nepal:NepalhasdoneawaywithtoughernormsforcarimportsfromIndiaandhasallowedimportson thebasisofselfcertificationbyauthorizedmanufacturers. Myanmar:MajortaxreformsareintroducedinMyanmar,inbrief,theyare Reductionofallcorporateincometaxby5% Commercialtaxreducedfrom25%to5%onallgoodsandservicesproducedorimported

IMPORTANTJUDICIALPRONOUNCEMENTS Employment: Intheabsenceofemployeremployee relationship,nocompensationcanbeawardedunderthe WorkmensCompensationAct.1 Ifaworkmanmisbehavesandthreatensanyotheremployeethatamountstothreattopeaceand disciplineandthensuchmisbehaviorrendershimliabletodismissal.2 SecurityguardspersonnelprovidedbyGroup4toitsclientsarenotprovidedasacontractorbut onprincipaltoprincipalbasisandGroup4isanindependentlegalentity,thusclientscannotbe termedasprincipalemployerofsuchsecurityguards.3 Taxation: Duty paid by mistake on exempted goods does not make them liable to duty and also non claiming of refund of such excess duty shall not come in the way of claiming the benefit of exemption.4 Thecompanydidnotshowtradediscountsontheinvoices,however,subsequentlyissuedcredit notesextendingdiscounts.TheKeralaVATDepartmentcontendedthatsuchdiscountscannot 1 New India Assurance Company Ltd., Shimoga v. Vijendra Setty & Others , 2012-I-LLJ- 641 (Karnataka) 2 Karnataka State Road Transport Coporation, Kolar v. P. Selvaraj, 2012-I-LLJ-856 (Karnataka)
Group 4 Securitas Guarding Ltd and another V/s Employees Provident Fund Appellate Tribunal and Others(2012 (132) FLR 921 4 Bonanzo Engg. & Chemical P. Ltd. vs. Commissioner of Central Excise; 2012 (277) ELT 145 (SC)
3

 be taken into account for the purpose of calculation of VAT as they were not passed on the invoices. The Supreme Court has allowed the said discounts as VAT law does not specify that discountmustbegivenontheinvoices. CompetitionLaw: The Competition Commission of India has found that 47 LPG cylinder manufacturers indulged in bid riggingbyquotingsimilarratesforLPGcylinderstooilcompaniesandhasimposedapenaltyupto7%of theaverageturnoverofthecompany.

ABITOFFUN Excuseme,ayoungfellowsaidtoanolderlibrarian,IvejustmovedhereandIwonderifthistown hasanycriminallawyers. Well,repliedthelibrarian,IhavelivedhereallmylifeandallIcantellyouisweareprettysurewe do,butnoonehasbeenabletoproveityet.

QUOTEOFTHEMONTH TheLawisnotjustaboutpunishment,butaboutlivinginsociety! Disclaimer This newsletter has been compiled for private circulation among select managers of TML. This is for general information only and its contents should not be used as a basis for specific action withoutfurtherconsultationwiththeLegalDepartmentofTataMotorsLimited. M.JosephMillerII