Third parties cannot be dragged into arbitration

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A home financing company (HFC) cannot be made a party to arbitration of disputes between the developer and the buyer of the house unless the HFC was a party to the arbitration agreement, the Supreme Court stated in the case, Deutsche Post Bank Home Finance Ltd vs Taduri Sridhar. In this case, the buyer of the house and the developer had an arbitration agreement. The HFC was not party to it. When disputes arose between the buyer and the developer, the buyer moved the Andhra Pradesh high court for appointment of an arbitrator under the Arbitration and Conciliation Act. The high court appointed an arbitrator and made the HFC as a party as the buyer alleged collusion between the HFC and the developer. The HFC appealed to the Supreme Court arguing that it was not a party to the bipartite agreement between the buyer and the developer. The Supreme Court accepted this contention and dropped the HFC from the arbitration.

SC allows Dedicated Freight Corridor Corporation of India appeal
The Supreme Court allowed the appeal of Dedicated Freight Corridor Corporation of India and upheld the acquisition of land in Etawa, Uttar Pradesh for a project. The complaint of the land losers was that the award of compensation for the acquisition was not given within the prescribed one year from the declaration. The Supreme Court ruled that though there was delay in the award, the acquisition itself did not lapse according to the provisions of the Railways Act. However, the court further said that the delay will entitle the land losers to get additional compensation at a rate not less than 5 per cent of the value of the award for each month of delay.

Appellate applied wrong principles in rejecting claim for customs duty: SC
The Supreme Court has stated that the Customs, Excise & Service Tax Appellate Tribunal had applied wrong principles while rejecting the claim for customs duty drawback in the case, Siddachalam Exports Ltd vs Commissioner of Central Excise. The exporter was accused of inflating shipping bills for export of ladies’ tops and denim shirts consigned to a Russian firm. The charge was that the clothes were export rejects and the total value was Rs 56 lakh instead of Rs 4 crore as claimed. The court stated that instead of first determining the value of the goods on the basis of contemporaneous exports of identical goods, the revenue department erroneously resorted to a market enquiry. “If for any reason data of contemporaneous exports of identical goods was not available, the procedure laid down under the 1988 Rules should be followed and market enquiry could be conducted only as a last resort,” the court clarified. In this case no such exercise was undertaken by the commissioner and therefore, the court remitted the matter to the tribunal for fresh consideration.

Rs 3 lakh award to victim in Rudra vs National Insurance case
When medical evidence shows that a motor vehicle accident victim suffered 58 per cent disability from the mishap, the high court could not have it reduced on its own to 15 per cent and award a lower compensation, the Supreme Court stated in the case, Rudra vs National Insurance Company. The motor vehicle tribunal granted Rs 40,000 which was raised by the Karnataka high court to Rs 1.5 lakh. The Supreme Court awarded Rs 3 lakh and asked the insurer to pay it to the 25-year-old victim, who was a coolie but incapacitated from doing any physical work due to the accident throughout his life.

Industrial Finance Corporation of India a public financial institution
The Supreme Court last week ruled that Industrial Finance Corporation of India is a ‘public financial institution’ under Section 4A of the Companies Act and it was entitled to invoke the Securitisation Act to enforce a “security interest”. Upholding the view of the Delhi high court in the appeal case, Bharat Steel Tubles Ltd vs IFCI, the apex court stated that the conversion of the IFCI into a company did not alter its position and status as a financial institution in view of Section 5 of the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act. All matters, including all benefits, relating to the corporation, stood wholly transferred in favour of the new company.

Glodyne Technoserve appeal dimissed
The Supreme Court has dismissed the appeal of Glodyne Technoserve Ltd, which had bid for a project for issuing identity cards for the public distribution system in Madhya Pradesh. The government rejected it offer as it did not produce the latest ‘quality certificate’ with the bid document. The firm argued that it did have the latest certificate and therefore it was eligible to be considered. It also contended that the requirement for producing the latest certificate was added later by the government in a corrigendum to the bidder check list. Rejecting these arguments, the Supreme Court stated that in such circumstances, the authority inviting bids has the discretionary power to accept the bid or not. The decision can be quashed only if it was proved to be arbitrary or perverse. In this case, it was neither, the court declared.