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M J Antony: Court not to disturb ongoing project

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The Supreme Court last week dismissed the appeal of Tejas Constructions & Infrastructure Ltd against the judgment of the which had upheld the allotment of the project work involving design, construction and commissioning of a single integrated water supply at Sendhwa (Madhya Pradesh) in favour of M/s P.C. Snehal Construction Company. Only four firms were found eligible under the tender conditions. Tejas argued that Snehal was not eligible for the project as it had no technical qualification. Despite the objections, the project was awarded to Snehal. Tejas moved the high court, without success. The Supreme Court upheld the finding of the high court. Its judgment added that the central government sponsored project, which is to be completed this year, is meant to benefit scarcity-hit population in the town and therefore, interference in the matter at this late stage would put the people to great hardship.

Challenge to tariff hike dismissed
The Supreme Court last week dismissed the appeal of M/s DSR Steel Ltd against the order of the Appellate Tribunal for Electricity allowing revising of tariff for industries and others under an incentive scheme. The Ltd of Jaipur, Jodhpur and Ajmer had applied for revision of tariff from the Rajasthan Electricity Regulatory Commission. Objections of several industries and some hundred individuals were heard before allowing the revision. The industries argued that they had invested huge amounts on the promise of continuation of the incentive scheme prevailing then. The commission rejected the arguments and allowed revision of the tariff. The industries took the issue to the appellate tribunal in New Delhi, which rejected their arguments. Now the Supreme Court has also dismissed the appeal, stating that issues decided by the commission and the tribunal should not be reopened unless there is a substantial question of law involved.

Award struck down for long delay
If the parties to an agreement set a time limit for arbitration and the arbitrator exceeds it, the award is liable to be struck down, the Bombay high court ruled last week in the case, Ltd vs M/s Mantech Consultants. Earlier, the single judge bench of the high court had set aside the award of the arbitrator on the ground that the award passed was not in accordance with the agreement as he had no authority to proceed with the award after the stipulated time provided in the agreement and there was undue delay in declaring the award after the conclusion of arguments. The judge also held that the mandate of the arbitrator would automatically stand terminated in terms of the arbitration agreement when the time limit for making the award expired. Bharat Oman appealed against this decision. On appeal, the division bench of the high court upheld the decision. The judgment said: “Even in a civil suit, the court is required to deliver the judgment within a reasonable period and without undue delay. If the agreed statutory period has expired, without any conclusion and/or decision by the arbitrator, the delayed award in question, in our view, is bad in law, apart from the fact that it is contrary to the agreed binding terms between the parties including the arbitrator.”

Only court can extend arbitration
The Delhi high court, while setting aside an award of an arbitrator, observed last week that the time fixed under the Arbitration Act 1940 can be extended only by the court and not by parties. “The arbitrator has no jurisdiction to make an award after the expiry of the time for making the award unless the parties sought extension by applying to the court,” the court stated in the case, Union of India vs Peeco Hydraulic Ltd. In this case these conditions were not fulfilled and therefore the entire proceedings were illegal, the court asserted.

Insurer to pay for flood losses
The last week dismissed the appeal of Ltd against the order of Maharashtra State Consumer Commission which had accepted the claim of the Prime Health Care Products, as assessed by the surveyor appointed by the insurance company. Prime Health Care Products, manufacturer of cosmetics for Hindustan Unilever Ltd, had filed an insurance claim under an ‘Industry Protective Policy’. There was heavy rain in Daman, where the godown was situated, and stocks kept on the second floor were damaged. The insurance company repudiated the claim stating that the damage was not due to rain or floods, but due to seepage. The state commission rejected the argument. On appeal, the national commission upheld the state commission’s decision and said that acceptance of the stand of the insurance company would destroy the very justification for provision of the insurance cover in such a case. “No person, in a proper frame of mind, would seek insurance cover, paying heavy premium, for goods stored on the second floor, if he knew that flood water level has to rise high enough to reach the second floor from the ground, for the damage to be compensated under the policy,” the judgment said.

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