From arbitration agreement to cheque bounce case, here are key court orders

A weekly selection of key court orders

Evidence of arbitration agreement

“An arbitral clause need not necessarily be found in a contract or an arbitral agreement. It can be included in the correspondence between the parties also,” the Supreme Court stated in its judgment, PEC Ltd vs Austbulk Shipping Sdn. Dismissing the challenge to the judgment of the Delhi High Court and the arbitrator’s award, the apex court stated that the arbitration agreement could be found in the Charter Party governed by English law in this case. The court explained that the term “agreement in writing” in the Arbitration and Conciliation Act was very wide. The court also ruled that an application for the enforcement of a foreign award was not liable to be dismissed if it was not accompanied initially by the original award or its authenticated copy among other documents. Section 47 of the Act postulates that the party applying for the enforcement of a foreign award “shall” produce before the court at the time of application certain documents.  The court diluted “shall” to “may”, but only at the initial stage of filing application and not thereafter. 

All-India excise probe against NBCC

The Delhi High Court has ruled that central excise officers of the Directorate of Central Excise Intelligence (GCEI)  have all-India jurisdiction and can issue notices and enquire into matters relating to service tax against any assessee, even if that person is registered with one or multiple commissionerates. The court stated so in its judgment in the case, National Building Construction Co vs Union Of India, in which the public sector undertaking engaged in civil works for governments challenged the notices issued by the DGCEI to investigate service tax evasion cases of all the branches of the NBCC. The NBCC has 88 service tax registrations in different commissionerates and states; consequently, it files separate service tax returns as per the registrations. It was served notices by different commissionerates.  According to the NBCC, the Finance Acts did not permit centralised investigation, except in rare circumstances. On the other hand, the GCEI contended that centralised enquiry is necessary as multiple investigations all over the country on the same issue would result in inconvenience, harassment and wastage of time and resources. The court dismissed the NBCC petition and ordered it to comply with the notices issued or to be issued by central excise officers to furnish evidence and documents pertaining to the project management consultancy charge.

Cheque bounce case against firm

Prosecution under the Negotiable Instruments Act for issuing a cheque that bounced will not be stopped because the notice was issued by the payee only to the managing director and not to the company. It is an irregularity but it is not fatal to the prosecution, according to the Delhi High Court judgment in DSC Ltd vs DJ Buildcon Ltd. In this case, the cheque was signed by the MD of DSC. The payee company issued a notice to him, and not to DSC. When the latter company was summoned by the criminal court, it moved the high court for quashing the prosecution, arguing that the statutory notice was addressed only to the MD and not to the company which held the bank account. The payee company countered, stating that DSC is a legal entity and the cheque having been signed by its MD, the notice was to the company and the complaint in the name of the company through its MD was maintainable. The court agreed and stated that notice to a company is actually to bring it to the notice of its directors. 

Heady litigation over beer bottles 

The Madhya Pradesh High Court has rejected the petition of Skol Breweries Ltd, manufacturers of Hayward 5000 beer, seeking an injunction against a rival, Som Distilleries & Breweries, invoking the Designs Act and the Trade Marks Act. According to Skol, it has registration for its design of bottles. Its competitor was buying such bottles from the junk market and filling them up with its product. Som Distilleries is, thus, violating its design and trademark, Skol argued, and the consumer is misled by the shape of the bottle. However, the court stated that the trial court is seized of the suit and there was no immediate reason for a temporary injunction. The high court asked the trial court to dispose of the suit within two months without granting adjournments “if the parties are found to be avoiding the hearing.”

High court error prolongs labour case

The Supreme Court has found fault with the Bombay High Court for making “errors apparent on the face of the record” in a labour case and asked it to rehear the dispute, which is more than a decade old.  In this case, Godrej & Boyce Manufacturing Co vs Engineering Workers’ Association, the high court had upheld the award of the industrial tribunal, Maharashtra, in a reference made under the Industrial Disputes Act.  The reference was about regularisation of contract workers and paying them in the scale of the regular workers. The tribunal had at first rejected the workers’ pleas, but later reversed it and ruled against the management. Therefore, it appealed to the Supreme Court. It found that the high court had confused facts. Instead of quoting the reference, by mistake, it quoted “the operative portion of the award passed by the industrial tribunal and treated the operative portion of the award as reference and proceeded to examine the submissions and rejected the same.”  Therefore, the court allowed the appeal of Godrej. The reference was made in 2006 and the award came only last year. Because of the high court’s mistake, the case has returned to it.

Tenacious widow wins compensation

A widow of a 25-year-old man and her two minor children won compensation in a road accident case after being denied the relief by the tribunal and the Rajasthan High Court. Though there was a criminal case against the truck driver who killed the man 16 years ago, the insurer challenged the claim arguing that there was no evidence of the accident or identity of the driver. The Supreme Court judgment in the appeal, Vimla vs  National Insurance Co, stated that “the approach and conclusion of the  tribunal and the high court for dismissing the widow’s claim was [were] not in accordance with law and did not deal with the issues raised.”  The high court did not even give reasons for dismissal. The insurer was directed to pay Rs 1.127 million with interest @6 per cent.