Brief case: Court cannot revive arbitration

A weekly selection of key court orders

Court cannot revive arbitration 

If an arbitral tribunal gives an award without giving reasons for its conclusions, a court cannot remand the matter back to the tribunal. The Arbitration and Conciliation Act does not confer power on the court to remit the dispute to the arbitrator for giving a reasoned award. This is especially so when the award has been set aside as in this case, Kinnari Mullick vs Ghanshyam Das. The dispute was between two joint owners of a prime property in Kolkata who agreed to develop the plot and sell them to prospective buyers.  One party appointed an arbitrator against the objections of the other. The arbitrator went ahead and passed an award, but without giving reasons for his decision. The party which lost moved the Calcutta High Court. It set aside the award and sent it back for arbitration and a reasoned award after a fresh hearing if necessary.  On appeal, the Supreme Court set aside the high court order stating that high court could not have remanded the matter suo motu, as Section 34(4) did not permit it to do so.

Tax deduction on dividend income 

The Supreme Court last week set aside the Bombay High Court judgment and ruled that Godrej & Boyce was entitled to the full benefit of the claim of dividend income without any deductions during the assessment year 2002-03. The basic question in this case, along with some hundred other appeals from various high courts, was the admissibility of deduction of expenditure incurred in earning dividend income which is not includible in the total income of the company by virtue of Section 14A and related provisions of the Income Tax Act, as in force during the relevant assessment years. In the Godrej case, the company manufactures steel furniture, security and electrical equipment and a host of other related products. It is also a promoter of various other companies and invests its funds in such companies to control such sister concerns. The high court had held that the dividend income was not includible in the total income of the shareholder. Several other companies had also claimed the tax benefit and the Supreme Court settled the issue in this batch of cases.

Land buyers can oppose acquisition  

Under the new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, subsequent purchasers, power of attorney holders and others like them have a right to file petitions for declaring that the acquisition proceedings have lapsed due to a long delay. In this case, Govt of Delhi vs Manav Dharam Trust, the acquisition had lapsed because the possession was not taken within five years or no compensation was paid. The state government argued that the acquisition itself was found to be violative of the Delhi land transfer Act and, therefore, the transferees could not claim any right in the matter. The Delhi High Court had rejected all such arguments. The Supreme Court upheld the high court judgment and stated that all persons who bought the land and “even a family residing in the lands sought to be acquired, be it an owner or not,” have a right to approach the court to protect their interests. The judgment said: “The subsequent purchaser, the assignee, the successor in interest, the power of attorney, etc., are all persons who are interested in compensation in terms of the Act and such persons are entitled to file a case for a declaration that the land acquisition proceedings have lapsed.”

RTI used to get police diary  

The Supreme Court has ruled that an accused person cannot produce copies of the police diary obtained by him under the Right to Information Act to cross-examine the investigating officer.  In this case, Balakram vs State of Uttarakhand, the accused person acquired some pages of the police diary of investigation against him by moving an application under the RTI Act.  

He wanted to produce them during the trial. The session judge did not allow it, but the high court stated that the documents could be produced to contradict the investigating officer. Setting aside the high court view, the Supreme Court stated that the investigation diary is a confidential record, and an accused person has no right to obtain it. Only the court can call for it and see it. 

The court did not rule on the question whether the RTI Act could be used to obtain investigating history, but asserted that its confidentiality must be protected lest it should endanger the safety of those who gave statements to the police. 

Court can’t modify NSE tribunal award

The Delhi High Court last week stated that a court cannot modify the award of the arbitrator and its power was only to set it aside if it was erroneous.  In this case, Angel Broking Ltd vs Sharda Kapur, the 76-year-old widow complained that the brokers had made unauthorised transactions causing her a loss of Rs 21 lakh. She sought return of shares, compensation and interest on the principal amount. The firm denied her allegations, and the dispute went to the NSE arbitration tribunal. It asked the firm to give her credit for Rs 21 lakh. She moved the court for interest and compensation. It ruled that as the award did not accord her complete justice, the firm must pay interest and compensation. The division bench of the high court set aside that order, stating that the court had no power to modify the award or grant additional relief.

Plea to arrest bunkers rejected 

The Bombay High Court has rejected the petition of a Bermuda chartering company seeking to arrest the bunkers of an Italian ship harboured in Paradip port in Odisha, arguing that the owner of the bunkers, a Mauritius firm, owed around $1,555,300 to it. The amount was demanded as security while arbitration was pending. The judgment in the case, Mansel Ltd vs Bunkers, stated that the court has no power under its Admiralty jurisdiction to arrest and order sale of bunkers on board the ship. Bunkers consist of the fuel compartment of the ship. If arrest of bunkers is ordered, it virtually amounts to arrest of the vessel as it cannot sail away. The Bermuda firm argued that the power to arrest ship included property in the vessel. The court rejected this argument.  The Italian shipping company has also claimed damages for the loss suffered by it by detaining it in the dispute between the Bermuda and Mauritius firms. The judgment noted that the Bermuda firm had no maritime claim against the Italian ship.