Bombay HC recalls arbitration order

If one of the companies in an arbitration case is incorporated outside India, the chief justice of a high court has no power to appoint an arbitrator even if the parties agree to arbitration and name arbitrators. This power belongs only to the Chief Justice of India or his designate as it is an "international commercial arbitration" under the Arbitration and Conciliation Act. The high court can initiate arbitration only in disputes between domestic parties. Moreover, before naming an arbitrator, the high court chief justice or his designate is bound to verify whether he has jurisdiction in the matter. This clarification to the Arbitration Act came last week in the case, Roptonal Ltd vs Aneez Bazmee. The Bombay High Court, after pointing out the error in law made by it earlier, recalled its 2014 judgment and allowed the petition of the company which is incorporated in Cyprus. None of the parties brought this principle to the notice of the chief justice's designate, nor did they object to the appointment of arbitrators. The designated judge appointed arbitrators without examining whether he has jurisdiction to do so. Nevertheless, the 2014 order was illegal, the judgment said. The Cyprus company moved the high court only now and the present judgment set aside the arbitration launched two years ago. Though the foreign company had reportedly vested all its rights in its Indian arm, Viacom 18 Media, the situation did not change as both parties had jointly moved the court for arbitration.

Singapore firm wins DTAA case

The Delhi High Court has allowed the petition of Technip Singapore, a company providing offshore construction, engineering and support services to oil and gas industry, against the ruling of the Authority for Advance Ruling (AAR). The Singapore company is entitled to the benefit of India-Singapore double tax avoidance agreement (DTAA). In 2008, it signed a $18-million contract with Indian Oil Corporation for offshore construction work at Paradip involving installation of Indian Oil-supplied equipment. The Singapore firm maintained that it did not have any project office or any other premises in India for executing the work. Its obligations were fulfilled by deputing men and materials at the offshore site where the activity was performed. However, the ITO (international taxation) filed a report before the AAR stating that its income was taxable in India as fees for technical services both under the Income Tax Act and the DTAA. The high court ruled that the Singapore company had no permanent establishment in India, nor a fixed pace of business or project officer and it was present only for 41 days. Therefore, the income earned by it from the contract with Indian Oil could not be brought to tax in India in terms of DTAA.

Mining royalty hike struck down

The Punjab and Haryana High Court has struck down a 2005 notification of the Mines Department of the Haryana government increasing the rate of royalty 50 per cent, from Rs 24 per tonne to Rs 36 per tonne and also enhancing the rate of dead rent to Rs 2,000 per hectare. The higher rate was notified amending the schedule to the central law, the Mines and Minerals (Regulation and Development) Act. The minor mineral companies, which have existing leases, argued that the rates have been fixed in their seven-year contracts with the Haryana government and they cannot be changed midway. There was no empirical data to justify the hike and therefore it was arbitrary, it was contended. Accepting the arguments, the high court stated, in its judgment in the case Faridabad Gurgaon Minerals vs State of Haryana, "The contract was a statutory contract. It was obligatory on the state to incorporate the statutory terms CWP No. 17958 of 2005 which it intended to bind the contracting party, but having forsaken such a course it cannot jump the statutory gun on the contracting party to enforce terms which were not visualised in the contract. Indeed, it is a case where the state fettered its own powers either through neglect or convenience."

Excise tribunal decision on yarn quashed

The Supreme Court has set aside the judgment of the Excise Appellate Tribunal and granted relief to Sarla Performance Fibers Ltd by directing excise authorities to recalculate duty on polyester yarn of the 100 per cent export-oriented unit. The commissioner in Surat had confiscated stocks in 2002, appropriated a sum given as bank guarantee, demanded differential duty on the confiscated goods and imposed a penalty on the Silvassa company. It was challenged by the company claiming benefits under a 1984 notification which was denied by the revenue authorities. The dispute travelled to various forums and to the Bombay High Court, ultimately landing in the Supreme Court after more than a decade. The judgment stated that the tribunal and the revenue authorities relied on a 2004 notification which was not applicable in this case.

Gillette objects to hair cream ad

The Delhi High Court has passed a partial injunction against Reckitt Benckiser's advertisements, barring it from using blue colour on a razor sold for removing female hair. Gillette India moved the court alleging that the blue colour was exclusively used for its razor and Reckitt aired disparaging ads in the electronic media falsely showing it as leaving stubbles. Moreover, Gillette alleged that the blue razor was shown on a dark skin whereas use of the Reckitt hair removing cream was shown on a fairer skin. It indicated that use of razors led to darkening and uneven skin, which is falsehood and disparagement of Gillette razors. The court reserved its decision on these finer issues for a later day awaiting exhaustive reports from neutral labs. "There are many ifs and buts and variations whether use of a razor or a hair removing cream, inasmuch as, one method may be suited to one set of individuals/ladies whereas another method may be suited to another set of individuals/ladies," the judgment observed.

Bank held liable for forgery

The National Consumer Commission has indicted Dena Bank for negligence and deficiency in service in two cases of large sums deposited in fixed accounts by Mumbai Metropolitan Region Development Authority (MMRDA) the Maharashtra Tourism Development Corporation. The receipts were forged by the go-betweens, and large amounts were siphoned off through overdrafts, leading to CBI (Central Bureau of Investigation) stepping in. The Commission held both the public authorities and the bank were negligent in their own ways. It asked the bank to return Rs 351 crore to MMRDA and Rs 125 crore to the Tourism Corporation, with interest. It also suggested administrative action against guilty officials of the government entities.