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One-time settlement scheme

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The Supreme Court last week upheld the right of the small and medium enterprises (SMEs) to invoke the of the RBI in repayment of loans. In the case of Sardar Associates Ltd vs Punjab and Sind Bank, the firm defaulted in its installments to the bank. So the bank declared the account as non-performing assets and started recovery proceedings. The firm offered a one-time settlement according to RBI guidelines. The bank did not accept it, leading to litigation in the debt recovery tribunal. The tribunal directed the bank to settle the case in terms of the RBI guidelines. However, the bank appealed to the Punjab and Haryana high court which quashed the tribunal’s order. The firm appealed to the SC. 

ESIC cover for petrol pump staf

Staff at a petrol pump is covered by the Employees State Insurance Act, the SC held last week in the judgement, M/s Qazi Noorul Pump vs ESI Corporation. The pump owner challenged the notice from the corporation for contribution. The high court dismissed his petition. He appealed to the SC, arguing he was not manufacturing goods, but only pumping oil. The SC dismissed the appeal rejecting his argument that according to the excise law, manufacturing means producing a new commodity. The SC asserted that under the Factories Act, pumping oil is a “manufacturing process.” It was the Factories Act definition which was applicable to the ESI law, the judgement said. 

Arbitration for speedy resolution of disputes

Arbitration proceedings are aimed at speedy resolution of disputes untrammelled by the rules of a civil court and therefore, there is no need for framing of issues when a party challenges the award of an arbitrator, the Supreme Court said in its judgement last week in Fiza Developers & Inter-Trade Ltd vs AMCI (I) Ltd. The award was for payment of Rs 58 crore by Fiza to the opposite party. It moved against the award in the civil court and later in the Karnataka high court where it failed. In its appeal before the Supreme Court, it argued that the court must frame issues as in a civil court.

The Supreme Court rejected this contention and ruled that “having regard to the object of the Arbitration and Conciliation Act, that is providing an expeditious alternative binding dispute resolution process with minimal court intervention, it is difficult to envisage proceedings under Section 34 of the Act as full-fledged regular civil suits under Code of Civil Procedure.” 

Dependants of carpenter get their due

The Supreme Court last week dismissed the appeal of National Insurance Company against the Madhya Pradesh high court asking it to pay Rs 4.48 lakh to the dependants of a carpenter who died in a road accident when a truck hit a jeep in which he was riding. The tribunal had awarded Rs 2.32 lakh, which was enhanced by the high court. The insurance company argued in appeal that the amount was exorbitant as a carpenter could not have been earning Rs 100 a day as the high court estimated. The Supreme Court rejected the contention and asserted that even in 1997 when the mishap occurred, “he could have comfortably earned Rs 100 a day.” 

Closed saw mills of UP

The Supreme Court has asked the Uttar Pradesh government to decide within three months whether the saw mills which are lying closed following its orders could be allowed to open and start manufacturing if wood is available. It may be recalled that the court had ordered the closure of saw mills in forest areas a decade ago. In this case, T N Godavarman vs Union of India, several saw mills of the state submitted that they were suffering huge losses as the units were not functioning at present though they were in existence for long. They claimed that wood was available for them. The court therefore asked the government to find out whether they can be “accommodated” in future if wood was available.

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