Brief case: SC judges divided on Satyam arbitration

A weekly selection of key court orders

SC judges divided on Satyam arbitration

Disputes arising from the Satyam Computer affair is all set for the fourth round in the Supreme Court (SC) with a split verdict by the two-judge bench on the validity of the award given by the London Court of International Arbitration against Venture Global Engineering LLC, and in favour of Tech Mahindra Ltd, formerly known as Satyam Computer Services Private Ltd. Justice A M Sapre set aside all arbrital proceedings including the award passed by the sole arbitrator as being against the public policy of India. On the other hand, the other judge in the Bench, Justice J Chelameswar, had different views on public policy and fraud. The dispute has travelled from the district courts of Michigan and Illinois in the US to courts in Hyderabad and the Andhra Pradesh High Court and had earlier reached the apex court at different stages. Since the two-judge bench differed on the question of public policy, they referred the question to the Chief Justice of India to set up a larger bench to give a final answer. Venture is a company incorporated in the US. The dispute originated over an agreement between Venture and Satyam in 1999 to set up a joint venture. Satyam moved arbitration in London and got a favourable award. This was challenged in Indian courts and on appeal, the Supreme Court judges have now differed on important questions leading to the reference to a larger bench.

Landlord to pay service tax

The Supreme Court ruled last week that service tax should be paid by the lessor of an immovable property who let it out to the lessee and not the latter. The Calcutta High Court had taken the opposite view in the case, Union of India vs Bengal Shrachi Housing Development Ltd. The government was paying the firm Rs 16 lakh a month for an accommodation for the Indian Coast Guard. When it came to the payment of service tax, there was a dispute on who would pay it. The Calcutta High Court held that the liability to bear service tax being that of the recipient of the service, the government would be liable to pay the said tax. The government appealed to the Supreme Court. It noted the provisions of the Finance Act 1994 which introduced service tax and agreed with the government that the lessor has the liability. But the government’s victory was hollow because, meanwhile, it had written to the chief of the Coast Guard that it would pay service tax and other duties. Thus the government won on law but lost on the basis of the letter.

Damages for road mishap recalculated

The Supreme Court last week directed Oriental Insurance Company to pay Rs 22 lakh as compensation to a youth who suffered 50 per cent disability in a road accident. The 22-year-old merchant navy trainee, Ankur Kapoor, was awarded Rs 6.60 lakh by the motor accident claims tribunal without quantifying the loss under separate heads. On appeal by the youth, the Punjab and Haryana High Court enhanced the compensation to Rs 8.80 lakh, again not following the norms for computing losses under different heads like loss of job, future earnings, medical expenses, loss of amenities like marriage, and loss of expectation of life. Therefore, the Supreme Court recalculated the loss under these heads and reached the figure of Rs 22 lakh. The insurance company will also pay eight per cent interest from the date of the compensation claim for the accident which occurred in 2000.

Cheque-bounce cases clog courts

The Bombay High Court has echoed the Supreme Court’s lament about cheque bounce cases constituting 20 per cent dockets in criminal courts all over the country and asked the magistrate in a nine-year-old case to conduct day-to-day hearings and dispose it of expeditiously. The high court noted that in the Aurangabad region alone there were 72,096 cheque-bounce cases pending. The SC last month had asked the high courts to allow the use of online facilities to dispose of such cases. The high court judgment in the case, Ramgopal Automobiles vs State of Maharashtra, directed its registrar general to place the problem before the Chief Justice so that urgent action could be taken to dispose of the cases clogging criminal courts. In this case, a writ petition was moved in the high court by a firm which complained about a bounced cheque because the magistrate’s court was not concluding the proceedings even after nine years. 

Port trust to pay tax on goods sale

The Bombay High Court last week rejected the challenge of the port trust to the demand of tax by the Maharashtra authorities on the sale of goods which are kept in their custody after landing and not removed within the prescribed time. The port trust argued that it was selling goods by way of administering the port and they are not carrying on any business of buying or selling goods. It was not a dealer in goods, which is liable to pay tax under the state law. The high court rejected the contention and interpreting the Major Port Trusts Act and the Constitution, concluded that the port trust could be deemed to be a dealer under law.

Film ‘Mr Nookayya’ violates trade mark

The Delhi High Court dealt with two trademark cases in recent days involving big brands. On a petition by Nokia Corporation of Finland it passed a permanent injunction against Movie Express of Hyderabad which wanted to release a Telugu movie called Mr. Nookayya and release music CDs with similar sounding names like Nookaiah. Nokia argued that it was registered also in the entertainment services. The court stated that the similar sounding names would confuse consumers. It imposed a fine on Movie Express whose conduct was described as “deplorable”.

Another foreign firm, KYK Corporation of Japan, also won its right to intellectual property when the high court dismissed the petition of Indian firm KYK International. The Japanese firm had moved the Intellectual Property Appellate Board for “rectification” of the record with regard to ‘KYK’ as the rival was dealing in similar products and it would confuse customers, resulting in loss of business. The board allowed the application for rectification of the register. The Indian firm approached the high court against it. Dismissing the appeal, the Delhi High Court stated that the Japanese firm had a trans-border reputation, exporting its products to various countries, and the Indian firm could not establish the prior use of the name for automobile products.