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Legal Aspects of Business Assignment

Utkarsh Upadhyaya
Section: E

M.C. Mehta v/s Union of India-Oleum Gas

Leak Case
Case Facts
On December fourth and sixth of 1985, a serious outflow of oleum gas from
one of the units of Shriram Food and Fertilizers in the heart of the capital
Delhi that resulted in the death of many people
The leakage was caused by a combination of mechanical and human errors
This leakage happened due to bursting of the tank containing oleum gas as a
result of the collapse of the structure on which it was mounted and it created a
scare amongst the people residing in that area.
Within two days, another leakage, though this time a minor one took place as a
result of escape of oleum gas from the joints of a pipe
On 6th December, 1985 directed Shriram that within two days it should cease
carrying on the occupation of manufacturing and processing hazardous and
lethal chemicals and gases including chlorine, oleum, super-chlorine,
phosphate, etc at their establishment in Delhi and within 7 days remove such
chemicals and gases from Delhi. At this juncture M.C.Mehta moved to the
Supreme Court to claim compensation by filing a PIL for the losses caused
and pleaded that the closed establishment should not be allowed to restart
Principle of Law
Writ petition under Article 32 of the Constitution had come before the court on
a reference made by a Bench of three Judges. The reference was made because
certain questions of seminal importance and high constitutional significance
were raised in the course of arguments when the writ petition was originally
The Bench of three Judges permitted Shriram Foods and Fertilizer Industries
to restart its power plant as also plants for manufacture of caustic soda and
chlorine including its by-products and recovery plants like soap, glycerin and
technical hard oil, subject to the conditions set out in the Judgment.
While the writ petition was pending the Delhi Legal Aid and Advice Board
and the Delhi Bar Association asked for awarding compensation to the persons
who had suffered harm on account of escape of oleum gas.
When these applications for compensation came up for hearing it was felt that
since the issues raised involved substantial questions of law relating to the
interpretation of Arts. 21 and 32 of the Constitution
Question was whether the court had jusrisdiction over the matter- the scope
and ambit of Article 32 of the Constitution of India does not merely confer
power on this Court to issue a direction, order or writ for enforcement of the
fundamental rights but it also lays a constitutional obligation on this Court to
protect the fundamental rights of the people and for that purpose this Court has
all incidental and ancillary powers including the power to make and adopt new
remedies and fashion new strategies designed to enforce the fundamental
The case lays down the principle of absolute liability and the concept of deep
The next question which arises for consideration on these applications for
compensation is whether Article 21 is available against Shriram which is

owned by Delhi Cloth Mills Limited, a public company limited by shares and
which is engaged in an industry vital to public interest and with potential to
affect the life and health of the people. The issue of availability of Article 21
against a private corporation engaged in an activity which has potential to
affect the life and health of the people was vehemently argued by counsel for
the applicants and Shriram
Quoting the order of the Supreme Court-Shriram is an authority within the
meaning of Article 12 so as to be subjected to the discipline of the
fundamental right under Article 21, we do not think it would be justified in
setting up a special machinery for investigation of the claims for compensation
made by those who allege that they have been the victims of oleum gas
escape. But we would direct that Delhi Legal Aid and Advice Board to take up
the cases of all those who claim to have suffered on account of oleum gas and
to file actions on their behalf in the appropriate court for claiming
compensation against Shriram. Such actions claiming compensation may be
filed by the Delhi Legal Aid and Advice Board within two months from today
and the Delhi Administration is directed to provide the necessary funds to the
Delhi Legal Aid and Advice Board for the purpose of filing and prosecuting
such actions
Impact on Business
The case had a significant impact of business as it being in the aftermath of
the Bhopal Gas Tragedy made it a landmark one
The court can innovated new methods and strategies for the purpose of
securing enforcement of the fundamental rights, particularly in the case of
the poor and the disadvantaged who are denied their basic human rights
and to whom freedom and liberty have no meaning.
The power of the Court is not only injunctive in ambit, that is, preventing
the infringement of a fundamental right, but it is also remedial in scope
and provides relief against a breach of the fundamental right.
The power of the court to grant such remedial relief may include the power to
award compensation in appropriate cases where infringement of the
fundamental right is gross and patent, such infringement should be on a large
scale affecting the fundamental rights of a large number of persons or it should
appear unjust or unduly harsh or oppressive on account of their poverty or
disability or socially or economically disadvantaged position.
Similar Cases
Dr. Shiva Rao Shantaram Wagle v. Union of India, AIR 1988
M.C. Mehta v. Union of India, AIR 1988
Union Carbide Corporation v. Union of India, AIR 1990
Charan Lal Sahu v. Union of India, AIR 1990
S. Jagannath Vs Union of India (1997) 2 SCC 87: AIR 1997
Vellore Citizens Welfare Forum Vs Union of India (1996)
M.C. Mehta Vs Union of India, (1997)
M.C. Mehta Vs Union of India, (1997)
M.C. Mehta Vs Kamal Nath, (1997)

Lee v/s Lees Air Farming Ltd.

Case Facts

Catherine Lees husband Geoffrey Lee formed the company

through Christchurch accountants, which worked in Canterbury,
New Zealand.
It spread fertilisers on farmland from the air, known as top
dressing. Mr Lee held 2999 of 3000 shares, was the sole director
and employed as the chief pilot.
He was killed in a plane crash.
Mrs Lee wished to claim damages of 2,430 pounds under the
Workers Compensation Act 1922 for the death of her husband,
and he needed to be a worker, or any person who has entered
into or works under a contract of service with an employer
whether remunerated by wages, salary or otherwise. The company
was insured (as required) for worker compensation.
The Court of Appeal of New Zealand said Lee could not be a
worker when he was in effect also the employer. It was stated "the
two offices are clearly incompatible. There would exist no power
of control and therefore the relationship of master-servant was not

Facts of Law

The case dealt with the concept of corporate veil and separate legal
The Judicial Committee of the Privy Council reasserted that a
company is a separate legal entity, so that a director could still be
under a contract of employment with the company he solely

Impact of Case on Business

In the landmark judgment the court ruled that the company was a
separate legal entity
Thus the director could be in a contract of employment with a
company solely owned by him and thus be compensated in this
particular case
Similar Cases

Salomon v Salomon & Co Ltd (1897)

Battle v Irish Art Promotion Centre Ltd (1968)

State Trading Corporation of India Ltd. (1963)

In C.I.T. v. Meenakshi Mills Ltd. (1967)
Macaura v Northern Assurance Co Ltd (1925)


Daimler Benz Aktiegesellschaft V/S Hybo Hindustan

Case Facts

The Plaintiffs being a famous German car company and its subsidiary in
India, filed a suit for permanent injunction restraining infringement of trade
mark against the Defendant towards use of its trade mark Benz along with
the device of a three pointed human being on undergarments.
The symbol was used by the makers of VIP underwear in an advertisement
featuring a man in a pose mimicking the logo of the famous auto brand, on top
of this the range of under garments were named VIP Benz
Principle of Law

Court observed that the mark Benz and the device of device of a three
pointed human being are well known marks
There are names and marks which have become household words. Benz as
name of a Car would be known to every family that has ever used a quality
car. The name Benz as applied to a car, has a unique place in the world.
There is hardly one who is conscious of existence of the cars/automobiles,
who would not recognize the name Benz used in connection with cars
The court observed that- Trade Mark law is not intended to protect a person
who deliberately sets out to take the benefit of somebody elses reputation
with reference to goods, especially so when the reputation extends world wide.
By no stretch of imagination can it be said that use for any length of time of
the name Benz should be not objected to
The court stated that- Benz is a name given to a very high priced and
extremely well engineered product. The defendant cannot dilute, that by user
of the name Benz with respect to a product like under-wears

Impact on Business
The Defendant was restrained from using the mark Benz along with the device of a
three pointed human being for undergarements.
Similar Cases
Cadbury India Limited And Ors. vs Neeraj Food Products on 25 May, 2007

Hyundai Corporation vs Rajmal Ganna on 14 September, 2007

Lupin Limited vs Johnson & Johnson on 6 September, 2012
Carlsberg India Pvt. Ltd. vs Radico Khaitan Ltd. on 20 December, 2011
Glaxo Group Ltd. & Anr. vs Sunlife Sciences Pvt. Ltd. on 6 October, 2010
Brahmos Aerospace Pvt. Ltd. vs Fiit Jee Limited & Anr. on 24 February, 2014
Pfizer Products Inc. vs Rajesh Chopra And Ors. on 31 May, 2007
Marico Limited vs Agro Tech Foods Limited on 1 November, 2010
Itc Limited vs Philip Morris Products Sa And Ors. on 7 January, 2010


Hadley v/s Baxendale

Case Facts

The claimants, Mr Hadley and another, were millers and worked together in a
partnership as proprietors of the City Steam-Mills in Gloucester.
They cleaned grain, ground it into meal and dressed it into flour, sharps, and
A crankshaft of a steam engine at the mill had broken and Hadley arranged to
have a new one made by W. Joyce & Co. in Greenwich.
Before the new crankshaft could be made, W. Joyce & Co. required that the
broken crankshaft be sent to them in order to ensure that the new crankshaft
would fit together properly with the other parts of the steam engine.
Hadley contracted with defendants Baxendale and Ors, who were operating
together as common carriers under the name Pickford & Co., to deliver the
crankshaft to engineers for repair by a certain date at a cost of 2 sterling and
4 shillings.
Baxendale failed to deliver on the date in question, causing Hadley to lose
Hadley sued for the profits he lost due to Baxendale's late delivery, and the
jury awarded Hadley damages of 25.
Baxendale appealed, contending that he did not know that Hadley would
suffer any particular damage by reason of the late delivery.
The question raised by the appeal in this case was whether a defendant in a
breach of contract case could be held liable for damages that the defendant
was not aware would be incurred from a breach of the contract.
Facts of Law

The Court of Exchequer, declined to allow Hadley to recover lost profits in

this case, holding that Baxendale could only be held liable for losses that were
generally foreseeable, or if Hadley had mentioned his special circumstances in
The mere fact that a party is sending something to be repaired does not
indicate that the party would lose profits if it is not delivered on time.
The court suggested various other circumstances under which Hadley could
have entered into this contract that would not have presented such dire
circumstances, and noted that where special circumstances exist, provisions
can be made in the contract voluntarily entered into by the parties to impose
extra damages for a breach

Impact on Business
This case sets the basic rule to determine consequential damages from a breach of
contract: a breaching party is liable for all losses that the contracting parties should
have foreseen, but is not liable for any losses that the breaching party could not have
foreseen on the information available to him.
Similar Cases

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1948]

Koufos v Czarnikow Ltd or The Heron II [1969]
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd [1978]
South Australia Asset Management Co v York Montague [1996]
Jackson v Royal Bank of Scotland [2005]


Baldry v/s Marshall

Case Facts

The plaintiff asked the defendants, who were motor dealers, to supply a car
that would be suitable for touring purposes
The defendants recommended a Bugatti, which the plaintiff bought. The
written contract excluded the defendant's liability for any "guarantee or
warranty, statutory or otherwise"
The car turned out to be unsuitable for the plaintiff's purposes, so he rejected it
and sued to recover what he had paid.
The Court of Appeal held that the requirement that the car be suitable for
touring was a condition
Since the clause did not exclude liability for breach of a condition, the plaintiff
was not bound by it.

Principle of Law

The sale of goods Act, 1930,recognize condition and warranty separately

although both the terms denote the promise made by the seller The difference
lies in the nature of promise. If the promise is such that it affects the very basis
of the contract, it is a condition .If the promise is such that it is collateral to the
main purpose of the contract it is a warranty.

As a general rule when a person buys something it is his duty to see whether
that something suits his purpose or not .He cannot hold any body responsible
for making a bad choice. This is known as the doctrine of caveat emptor when
seller gives express condition or warranty regarding a product; he is bound to
honor that.

In case the goods bought do not comply with such condition or warranty, the
seller is liable to compensate the buyer. Even in the absence of express
stipulations by the seller, law presumes that products should meet certain
conditions and warranties, breach of which has the same effect as the breach
of express stipulations

Impact on Business


When a consumer buys goods from a trader, both parties enter into a contract.
A contract may be defined as an agreement between two or more parties that is
intended to be legally binding

Under the Consumer Rights Act 2015, certain standards apply to every
transaction for the sale and supply of goods (including hire purchase, hire, part
exchange and contracts for work and materials).

Section 3(2) provides that if goods are sold and delivered to minors or those
mentally incapacitate the minor will be liable to pay a reasonable price if the
goods are necessaries. Necessaries are goods suitable to the persons' condition
of life and actual requirements at the time of contracting.

Similar Cases

Curtis v Chemical Cleaning Co [1951]

Parker v South Eastern Railway (1877)
Chappleton v Barry UDC [1940]
Thompson v LMS Railway [1930]



Hellen Wallia v/s Cathay Pacific Airways Ltd.

Case Facts

Helen Wallia was travelling with another person from San Francisco to Hong
Both in all had four bags when they checked in at San Francisco.
Initially tags were given for three bags only but upon insistence of Hellen
Wallia fourth tag was also given.
When the flight arrived at Hong Kong only three bags could be traced. Fourth
of which the tag was given later belonging to Hellen Wallia, could not be
She lodged complaint at Hong Kong with Cathay Pacific Airways Ltd. and
also at Mumbai in India. Correspondence that ensued between the parties,
Cathay Pacific offered in all US$ 640

Principle of Law

As stated in Cathay Pacifics passenger ticket, airlines liability for checked

baggage is limited to 20 USD per kilo unless a higher value is declared in
advance and additional charges are paid prior to the commencement of
For passengers travelling on the transpacific route, Canada and USA, the
maximum weight of each piece of checked baggage is 32 Kilos. This
therefore, allows the airline to settle Hellen Wallias claim for USD 640
Hellen Wallia seeked damages amounting to Rs. 24,63,885/- (US$ 54753)
with interest @ 18% per annum from date of loss
The Court took the view that- It was a transpacific flight where the maximum
weight of 32 Kgs. was allowed.
Thus multiplying this with US$ 20 per Kg., the amount of US$ 640 was
offered which Hellen Wallia declined.
This led to filing of the complaint. According to the provisions of Carriage by
Air Act, 1972, there is a limit placed on the liability of the carrier where
damages can be awarded @ US$ 20 per Kg. of the weight of the lost baggage.
This limit would not apply if it was done with the intent to cause damage or
recklessly and with knowledge that damage would probably result. There was
no such plea in spite of assertion by the counsel for Hellen Wallia that the
baggage of the complainant was lost intentionally by Cathay Pacific

Thus the court not finding any merit in the complaint dismissed it
Impact on Business
Since the complaint of Hellen Wallia was not according to the Air Act it was
dismissed by the Court.
Similar Cases

Durunna v. Air Canada, 2013

Connaught Laboratories Limited v. British Airways, 2005
Green Computer AB v. Federal Express Corp. et al., 2004
MDSI Mobile Data Solutions Inc. v. Federal Express, 2003
Nuvo Electronics Inc. v. London Assurance et al., 2000
Markham Meat Industries Supplies Inc. v. Air France, (July 9, 1998)
Huxley v. Aquila Air Ltd., 1995