The Supreme Court last week appointed former chief justice of the Madras high court, Justice Ashok Agarwal, as the sole arbitrator in the dispute between Denel Ltd and the Ministry of Defence. The company had an agreement with the ministry for the supply of technical goods. Some lots were rejected leading to a dispute. The director general of ordinance factory (DGoF) appointed the manager of the Nagpur ordinance factory as arbitrator. The company objected to it as he was a government employee who was likely to favour his employer. The district court asked the DGoF to conduct the arbitration. The company objected to this also and appealed to the Supreme Court. The judgment stated that it would be “necessary and advisable” to appoint an independent arbitrator. It further noted that “the attitude of the DGOF was not indicative of an impartial approach.” The court added that the material before it showed that the arbitrator was biased in favour of the government.
Earning capacity after disability
The loss of limbs in a road accident affects different persons differently in their earning capacity and the compensation should be determined accordingly, the Supreme Court ruled last week in the judgment, Mohan Soni vs Ram Avtar. It criticised the motor accident claims tribunal and the Madhya Pradesh high court for not taking into account the actual loss of earning capacity of a cart puller who lost his left leg in a motor accident. The tribunal awarded Rs 2 lakh, lowering his physical incapacity from 60 per cent to 50 per cent, reducing his monthly income estimate and raising his age by five years. On the victim’s appeal, the high court hiked the compensation to Rs 2.58 lakh. The Supreme Court raised the amount to Rs 4 lakh. It stated that the loss of a leg of a cart puller is the “end of the road” for him. A desk worker may not suffer much by the loss of a leg. The court also rejected the argument of the owner of the vehicle that the car puller could sell vegetables. Such “conjecture” could not be the basis for scaling down the compensation due as the courts below did in this case, the Supreme Court emphasised.
No excise duty on bitumen mixing
Granting relief to road building firms, the Supreme Court held last week that the mechanical mixing of polymer with heated bitumen used for road construction did not amount to manufacture of a new commercially identifiable product and therefore, did not attract excise duty. The processed bitumen in its hot agitated condition was mixed with stone aggregates which was then used for construction. The resultant product was considered to be a superior quality binder with enhanced qualities. The authorities maintained that the process involved manufacture, and issued notice to the road builders, in a batch of cases titled Commissioner of Central Excise vs Osnar Chemicals Ltd. The firms moved the tribunal which ruled against the authorities. The commissioner appealed to the Supreme Court but it dismissed the appeal.
Port’s policy on stevedores upheld
A division bench of the Bombay high court has dismissed the writ petitions of the Bombay Stevedores' Association Ltd and Zulash Clearing and Shipping Agency challenging the decision of the Bombay Port Trust to take over the stevedoring work by itself. They argued that by virtue of the licence granted by the port trust they were performing stevedoring work and providing services to ship owners/agents and there was no grievance of any nature against them. But the port trust took over the activities in a resolution in 2002. The stevedores objected to the resolution on several grounds like unemployment, lack of power on the part of the trust and infringement of fundamental rights. The authorities defended its decision and cited the reasons for it, namely (i) competition from nearby ports, (ii) non-existence of stevedores at newer ports, (iii) high cost of handling (iv) non-transparency of stevedoring rates and (v) internal constraints in the effective implementation of stevedoring work. The high court accepted the contentions of the port trust.
Insurance co’s appeal dismissed
The National Consumer Commission last week rejected the appeal of United India Insurance Co Ltd and asked it to pay compensation to Akash Steel & Alloys Ltd, whose insured machinery broke down causing financial losses. When the incident was reported to the insurance company it sent a surveyor and assessed the damage but it failed to produce the survey report. When the dispute was taken to the consumer forum, it noted that the survey report and the basis of the alleged settlement of the claim was not produced. The district forum asked the insurer to pay compensation. The appeal of the insurer was dismissed by the Uttar Pradesh State Consumer Commission. On approaching the national commission, a division bench rejected the objections of the insurance company and affirmed the decision of the forums below.
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