Arbitrator will test 'dead' disputes

In an arbitration dispute, the Supreme Court will not normally decide whether the claims are long dead and barred by the law of limitation. It will be determined by the arbitration tribunal, the court stated in the judgment, Schlumberger Asia Services Ltd vs ONGC. In this case, the Hong Kong company which supplied drilling equipment and services to the Indian public sector company complained that it had not received payment for the work it had undertaken. Though it had sent notices several times, ONGC did not respond. It therefore invoked the arbitration clause. ONGC stated that it was a dead claim because of the long delay. It also argued that the notices did not reach its correct department. When the foreign company moved the Supreme Court Chief Justice of India for appointment of an arbitration tribunal, it stated that it would not decide the question of delay. It should be left to the tribunal. It appointed three of its former judges as a tribunal to decide the merits of the case, including the delay. The judgment made it clear that it would decide the issue of delay "only when the claim is evidently and patently a long-barred claim, like if the contractor makes it a decade or so after completion of the work." If the contractor makes a claim "slightly beyond" the period of three years of completing the work, say within five years, the court will not enter into disputed questions of fact, the judgment clarified.

Primacy for workers' dues
The Supreme Court has ruled that the dues of workers of an industrial unit which close down shall have preference over that of a state finance corporation. In this case, Mysore Panel & Board Ltd closed down its operations in 2002 leaving its workers jobless. The trade union claimed their dues under the Industrial Disputes Act and the Payment of Gratuity Act. The authorities allowed their claims but the labour commissioner did not take any action. Meanwhile, the Karnataka state finance sold the assets for an amount lower than the dues of the workers. The trade union moved the high court against the corporation's action. It allowed its writ petition. The finance corporation appealed to the Supreme Court. Dismissing the appeal in the case, Karnataka State Finance Corporation vs Industrial Workers' General Union, the Supreme Court reiterated that the workers' dues shall have precedence over other claims. The State Financial Corporations Act is an additional law and not in derogation of other laws. Therefore the labour laws and the Companies Act which grant primacy for workers' dues shall prevail. The court also blamed the labour commissioner for not implementing the order of the authorities in favour of the workers for a long time, letting the corporation take over the property of the industrial unit.

Telecom towers can't be taxed

The Gujarat high court has quashed the tax bills raised by the various corporations, municipalities and Panchayats of Gujarat and ordered refund of the duty collected on telecom towers to respective mobile phone operators. The telecom companies had challenged the authority of the local bodies to tax the mobile towers treating them as buildings. They argued that those structures are not buildings and therefore the state legislature had no competence under the constitutional provisions to impose tax on lands and buildings. They also contended that proper rules have not been framed to enable the local authorities to collect tax on the mobile towers. Agreeing with the contentions in the judgment Reliance Communications vs Surendranagar Municipality, the high court declared that the laws passed by the local bodies to levy tax on the towers were illegal and unconstitutional.

Views on Designs Act clarified
Settling difference of views among various benches of the Delhi high court, a full bench last week ruled that in a dispute under the Designs Act, an aggrieved party cannot file a composite suit for infringement of a registered design and a "passing off" action. The court, however, has the discretion to try the suits together, if it the issues are common. In its judgment, Mourya Industries vs Sona Paint and Hardware, it further said that a holder of a registered design could institute a suit against another who is also in possession of a registered design.

Disparaging commercial stopped
The Delhi High Court last week passed an order against Hindustan Unilever restraining it from publishing "disparaging" advertisements against kitchen cleaning liquid Dettol Healthy Kitchen of rival Reckitt Benckiser (India) to promote its own product Vim Liquid. The objectionable part of the commercial was the sentence: "An antiseptic is for cleaning wounds and floors. Would you use it to clean utensils your family eats from?" The judge stated that the UK-based Reckitt Benckiser has made out a prima facie case and the balance of convenience lies with it. The judge, in his interim order, stated that the ad "subtly yet certainly targeted" Dettol and its product Dettol Healthy Kitchen.