Contract labour issue splits SC bench

The status of contract labour in commercial establishments continues to divide the judges. Last week, two judges in a division bench of the Supreme Court hearing the appeals of workers in the Hotel Corporation of India, which runs the canteen facilities for Air India, differed on their entitlements. The grievance of the workers was that they were employed by Air India, but they were not regularised by keeping them temporary for long periods by devious means. They argued that they were working with Chef Air, a unit of the government-owned Hotel Corporation, which in turn was a subsidiary of Air India. They raised an industrial dispute and the tribunal held that they were deemed employees of Air India and their real status was "camouflaged" by corporate veils. Air India moved the Delhi High Court against the tribunal's verdict. Both the single judge bench and the division bench of the high court gave findings in favour of the national carrier. The employees carried the dispute to the Supreme Court in the appeal, Balwant Rai vs Air India. The judges again differed on the status of the workers. One judge held that the workers of Chef Air cannot claim to be employed by Air India and dismissed the appeal. On the other hand, another judge restored the order of the tribunal and ordered Air India to reinstate them with consequential benefits like back wages. Since the judges have given contrary orders in their separate 150-page judgment, the issue will have to be decided by a larger bench, or it may even go to a constitution bench.

Sarfaesi disputes must go to DRT
The Supreme Court has ruled that a secured creditor aggrieved by measures taken by the borrower under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi) may approach the Debt Recovery Tribunal, or its appellate tribunal, but not the civil court. Jurisdiction of the civil courts is entirely barred under Sections 13(4) and 34 of the Act, the court stated in the case, Jagdish Singh vs Heeralal, which involved a loan extended by Bank of India and property disputed by members of a joint Hindu family. The court reiterated this position while setting aside the judgment to the contrary delivered by Madhya Pradesh High Court.

Larger bench to decide insurer's liability

A two-judge bench of the Supreme Court has referred a question involving insurer's liability in road accidents to a larger bench, as it felt that some earlier judgments were wrongly decided. The present judgment in the appeal, United India Insurance Co Ltd vs Sunil Kumar, asserted that a person claiming compensation under Section 163-A of the Motor Vehicles Act need not prove who is at fault for the accident causing death or permanent disability. Some judgments had insisted that the fault should be fixed before awarding compensation. In the new judgment, that view was held to be wrong and therefore it should be reviewed. The court asserted that this provision of 'no-fault liability' was intended to provide immediate relief to the victim instead of waiting to prove who was at fault. This was a beneficial legislation. "If the owner of the vehicle or the insurance company is permitted to prove contributory negligence or default or wrongful act on the part of the victim, naturally it would defeat the object of Section 163-A," the judgment said. Compensation after proving the fault, which is a long process, is dealt with in another section. But Section 163-A provides immediate relief to the victim.

BHEL dismissal of DGM 'too harsh'
The Supreme Court has quashed the dismissal of a deputy general manager of BHEL, who was dismissed six days before his retirement after 30 years of service. He was given all retiral and pensionary benefits, setting aside the judgment of the Uttarakhand High Court in the appeal, Girish Goyal vs BHEL. He was in charge of the canteen where it was found that there were discrepancies in the stocks of tea leaves and milk powder. He pleaded negligence and alleged that there was a chain system involving his superiors and subordinates. They were not punished, but he was dismissed. The Supreme Court stated that the punishment was disproportionate to the negligence, apart from the bad name it brought to him. The company was asked to pay him all the benefits with interest.

Judges must give reasons for order
A judgment must give reasons for its conclusions, the Supreme Court reiterated in the case, Shree Mahavir Carbon Ltd vs Om Prakash. In this case, the company alleged serious fraud by a financier who took it over by gaining majority shares by offering it funds for expanding its coke oven plant. The company filed a criminal case and the magistrate took cognisance of the various offences. The accused persons moved the Orissa High Court which quashed the magistrate's order, stating that it was a civil dispute and not a criminal case. The high court did so in a cryptic order, "with no discussion worth the name as to how the high court accepted the pleas of the accused persons." The high court was asked to hear the case afresh.

SAIL challenge to arbitration dismissed
The Delhi High Court last week dismissed two writ petitions opposing the decision of arbitral tribunals, which rejected preliminary objections and went on with the proceedings. In the first case, the Steel Authority of India challenged the decision in its dispute with Seaspray Shipping Co arguing that there was no arbitration clause in the contract. A similar plea was made in the second petition, moved by United Spirits Ltd in its dispute with Stitch Craft India. The high court decided that if the arbitral tribunal decides to go ahead with its proceedings, without ruling on preliminary objections, the parties cannot always move the high court in a writ petition. The Arbitration and Conciliation Act was meant to speed up decisions and "interference with the arbitral proceedings, in exercise of writ jurisdiction is bound to delay the conclusion of such proceedings, thereby defeating one of the main objectives behind preferring arbitration over litigation," the judgment said.