SC asks Bombay HC to arbitrate

The Supreme Court (SC) has asked the Bombay high court to decide the arbitration case between the Liberian shipping company, Petine Shipping Inc, and the Minerals and Metals Trading Corporation (MMTC). The Bombay high court had held that it was for the Delhi high court to hear the case as it was earlier moved there.

Though the arbitration suit was in the Delhi high court, the ex-judge nominated by MMTC as its nominee for arbitration had died and the proceedings stopped there. The consignment of rock phosphate from Togo, which was in dispute, was unloaded in Mumbai and therefore it was for the Bombay high court to deal with the arbitration, the Supreme Court said.

Judgment set aside
The SC has set aside the judgement of the Punjab and Haryana high court appointing its ex-chief justice as arbitrator in a dispute between the central government and a contractor in the case, Union of India vs M/s Onkar Nath. After receiving the final payment without protest, the contractor raised 20 claims after a lapse of two years. When the government rejected it, the contractor invoked the arbitration clause and moved the high court. It allowed its application and appointed the arbitrator. On appeal, the SC quashed the high court’s appointment of the arbitrator stating that there was no dispute for settlement two years after receiving the final payment without protest. 

Tax benefit on sale of bulk items
The SC has set aside the judgment of the Madras high court and ruled that manufacturers can claim the benefit of deduction of tax on bulk items sold with warranty under Section 37 of the Income Tax Act. The court stated in its judgment in Rotork Controls India vs Commissioner of Income Tax that while producing sophisticated goods like valve actuators in this case, there might be complaints. Such goods are not bought without warranty. Therefore, warranty became integral part of the sale price of the product. In other words, warranty stood attached to the sale price of the product.

Drawer of cheque will not be liable
The SC has set aside the Delhi high court judgment and ruled that the drawer of a cheque would not be liable under Section 138 of the Negotiable Instruments Act if he had reported to the police that his cheques have been lost. Under the law, a person who issues a cheque which is dishonoured by the bank for want of sufficient funds would be criminally prosecuted. In this case, Raj Kumar Khurana vs State of Delhi, Khurana filed a first information report before the police that two cheque leaves have been stolen from his office. However, the cheques were filled up and presented at the bank. It rejected them stating that the cheques were reported stolen by the drawer.

The payee then filed a complaint under the Negotiable Instruments Act. Khurana moved the high court to quash it. It was dismissed. On appeal, the Supreme Court quashed the high court order stating that the rejection of the bank in this case would not attract the provisions of the Act.