Brief case: Mining companies' petitions dismissed

A weekly selection of key court orders

The Rajasthan High Court last week dismissed a batch of writ petitions moved by about 20 mining companies challenging the amendment to the mineral concession rules under which they had to pay more to the state. The mining companies, led by Khaitan Chemicals and Bhilai Engineering Corporation, argued that the amendment permitted notional determination of the sale price by adding 20 per cent of the benchmark value, and it was beyond the powers of the central government. They contended that the authority of the central government under the Mines and Minerals Act was limited to the extent of fixing and collection of fees for reconnaissance permits, prospecting licences or mining leases, surface rent, security deposit, fines, other fees or charges and the time within which and the manner in which the dead rent or royalty shall be payable. The earlier rate was 11 per cent of the sale price on ad valorem basis. The determination of sale price is an issue relating to the conditions of contract between the seller and purchaser; as such the central government had no authority to fix a notional sale price for determining the value of royalty, it was argued. The government contended that the change was introduced following the report of a study group which suggested the hike to avoid loss to the state. Accepting the government argument, the judgment stated that the government has not hiked the royalty, but only changed the basis for calculation of ad valorem royalty, based on the benchmark price as declared by the Indian Bureau of Mines from time to time. 

Compensation imposed on Canara Bank 

The Delhi High Court indicted Canara Bank for “utmost negligence on the part of its officials” and directed it to inquire into and fix responsibility of its officials for letting go debtors scot-free while attaching the property of the wrong person without due-diligence. In this case, V K Bhatnagar vs Canara Bank, four persons took loans from the Lucknow branch of the bank. They failed to return it. The bank moved the debt recovery tribunal in Lucknow. It ordered attachment of property of V K Bhatnagar, living in Sainik Farms, Delhi. He did not know that another person of the same name in Lucknow had taken the joint loan. He came to know about the mistaken identity only when loudspeakers announced the attachment order around his house. Though a senior citizen suffering several serious ailments, he was made to run to the Lucknow DRT and then the Delhi High Court. Canara Bank did not relent despite the mistake pointed out by him. It delayed the hearing for two years and showed reports from two detective agencies asserting that this Bhatnagar was the same one in Lucknow. The high court narrated in detail the utter callousness of the bank and asked it to pay Rs 2.60 lakh as compensation for aggravating his medical condition and humiliating his family. 

New rule on executing award 

The Calcutta High Court last week stated that an application to execute an arbitration award could be filed in the court even if the award has been challenged by the party which is aggrieved by the decision. However, this rule was introduced only in October 2015 by an amendment to the Arbitration and Conciliation Act. Therefore, it would not apply to awards delivered before that. The court clarified that the amended rule was prospective in the case, Braithwaite Burn & Jessop vs Indo Wagon Engineering Ltd. The latter had moved the court against the award against it. Braithwaite moved the high court for execution of the award. It was opposed by Indo Wagon arguing that no application for enforcement of the award could be filed until the application for setting aside of the award was disposed of. The court dismissed the application of Braithwaite stating that the award was made before the amendment and therefore it could not be executed. 

Taxmen to refund TDS to Dutch firm 

The Andhra Pradesh High Court has directed the revenue department to refund the amount withheld from Vanenberg Facilities BV as the Dutch firm was not liable to pay tax in India under the Double Taxation Avoidance Agreement (DTAA) between India and the Kingdom of Netherlands. In this case, Director of Income-Tax (International Taxation) vs Vanenberg Facilities, the foreign firm constructed an industrial park in Hyderabad through its wholly owned subsidiary in India. Later, the shares of that company were sold to another Indian firm. The revenue department demanded capital gains tax on that sale and insisted on tax deduction at source. The Dutch firm objected to it, invoking the DTAA and asked for refund of the TDS to the tune of Rs 49 crore with interest. The revenue department took the dispute before the Income Tax Appellate Tribunal which rejected its stand. On its appeal, the high court confirmed the order of the tribunal and stated that the revenue authorities had no right to withhold the money and it shall be returned within three months. 

Pre-deposit rule upheld

The Bombay High Court has dismissed the petitions of two export firms and upheld the rule of pre-deposit for appealing against orders of Customs authorities. Section 129E introduced in the Customs Act in 2014 mandated that if a person wanted to appeal to the commissioner or the tribunal, 7.5-10 per cent of the duty demanded or penalty imposed should be deposited, not exceeding Rs 10 crore. The high court, in its judgment, Harish Nagindas vs Commissioner of Customs, repelled the challenge to the rule, stating that it was reasonable and not arbitrary and the percentage was not high. Earlier, considerable official and judicial time was wasted on applications for waivers of deposit. Therefore the rule was introduced to speed up adjudication. 

Insurer to pay first, then sue owner 

The Karnataka High Court directed United India Insurance to pay compensation for a road accident death, though it was proved that the driver who caused the mishap did not carry a valid driving licence. His licence had expired at the time of the mishap, though it was renewed after three months. The tribunal had imposed the liability to pay on the insurance company. It appealed to the high court. It ruled that though the insurer was not liable to pay compensation due to lack of a valid licence, since the Motor Vehicles Act provided for welfare steps, the company must pay the widow and children first and then may recover the amount from the owner of the vehicle who appointed the driver without due-diligence.