From arbitration contract to e-market, here are the key court orders

The SC has held that an arbitration agreement need not be signed, though it must be in writing

Clash of currencies in arbitral award

When an arbitral tribunal passes its award specifying interest rates in different currencies, it should coordinate the choice of currency with the interest rate. This must be kept in mind when the parties do not operate in the same currency. It is necessary to consider the complications caused by differential interest   rates. A uniform rate of interest for Indian rupees and Euros would not be justified, the Supreme Court observed in its judgment, Vedanta vs Shenzen Shandong Nuclear Power Construction Co. In this case, the two companies entered into four inter-related contracts for construction of a power plant. The contracts did not contain a clause on payment of interest. Disputes arose between them resulting in termination of contracts which led to international commercial arbitration within India. The three-member arbitral tribunal granted a dual rate of interest — one part of the claim in rupees and another in Euros. Then the dispute was over the rate of interest. The Supreme Court modified the high court order on interests and stated that the interest rates in rupees and Euros were high and unjustified. In the case of Euro component, the court ordered that the payment of interest would be as per Libor + 3 percentage point on the date of the award.

Arbitration contract needs no signature

The Supreme Court has held that an arbitration agreement need not be signed, though it must be in writing. The court made this statement in its judgment, Caravel Shipping Services vs Premier Sea Foods Exim. In this case, the consignor of goods and its shipping agent had disputes over payment of a sum. The merchant moved a suit, while the agent sought arbitration. The merchant opposed it arguing that the bill of lading, which attached printed terms, was not signed by the parties. The courts below agreed with it. But on appeal, the Supreme Court noted that the bill of lading specified that when accepting it, the merchant agreed to be bound by "all terms, conditions... whether typed, printed or otherwise". The arbitration clause was in printed form attached to the bill of lading and so part of the contract. Therefore there was an arbitration clause, the court said while setting aside the judgments of the courts below.

State housing board must act fairly
 

The Supreme Court has reiterated that government entities cannot discriminate or act arbitrarily while disbursing state largesse. In this case, Powai Panchsheel Co-op Hsg. Society vs Maharashtra Housing Area Development Authority, the state housing board did not consider the offer of one housing society while accepting the offers of three others. The judgment stated that confining the consideration of the offers made by the three societies without valid reasons made the entire decision of the housing board unconstitutional. All the four societies were similarly situated. Therefore the board’s resolution was quashed observing that it was "vitiated as being unreasonable, arbitrary and violative of principles of equality enshrined in Article 14 of the Constitution". The court did not go into allegations against the officials of the board as the resolution was set aside.

Short absence is not ‘break in service’

A clause in the standing orders of an industrial unit which treats absence of a worker even for half a day ‘break in service’ is illegal, the Supreme Court ruled in the judgment, Sri Ramnarayan Mills vs Textile Workers Union. In this case, the company applied to the Joint Commissioner of Labour, seeking to add   one more new ground — ‘break in service’ — in the chapter of punishment. The commissioner allowed it. The union appealed to the Madras High Court, which held the amendment illegal. The mills appealed to the Supreme Court without success. The court stated that such a clause could be misused by the management by arbitrarily imposing punishment. The absence could be for genuine reasons. There are other punishments like admonishment and pay cut. They were enough. The rule would also deprive the employee of his right to get gratuity as the Payment of Gratuity Act is applied when there is continued service. The judgment stressed that the law was a beneficial one, and it could not be allowed to be defeated by an amendment which is not introduced with bona fide intention.

SC succour for wronged widow

A woman whose husband died in 1999 while on duty as a driver in the Karnataka state transport corporation got huge relief from the Supreme Court though she did not file an appeal. She had sought compensation under the Employees’ Compensation Act and the commissioner under the Act granted her Rs 0.38 million. In his order, he stated that if the corporation did not deposit the amount in 45 days, 12 per cent interest would also be accrued. The order stood as the high court also did not correct it. The Supreme Court ruled that the interest should be paid from the date of accident 20 years ago; not if the corporation failed to pay in 45 days.

Curbs on intermediaries in e-market

Intermediaries in e-commerce marketplace must operate with caution and they cannot claim immunity provided in the Information Technology Act if they violate trade mark law, the Delhi High Court emphasised in its judgment, Christian Louboutin SAS vs Nakul Bajaj. “So long as they are mere conduits or passive transmitters of records or information, they continue to be intermediaries, but merely calling themselves as intermediaries does not qualify all e-commerce platforms or online marketplaces as one,” the judgment stated while interpreting Section 79 of the Act dealing with intermediaries. In this case, the foreign firm dealing in luxury goods sought to stop Indian website Darveys.com from selling its products, alleging that they were counterfeits. The website countered that it did not sell those products but only directed potential customers to sellers who are spread over many countries. They are intermediaries protected by the Act, they argued. However, the high court stated that when an e-commerce company claims immunity, it ought to ensure that it does not have active participation in the selling process. The presence of any element which shows active participation could deprive intermediaries of the exemption. The court passed eight directions against Darveys like: If the sellers are abroad, before uploading a Louboutin product bearing its marks, it shall obtain concurrence before offering them on its platform; if the sellers are in India, it shall enter into an agreement ensuring the genuineness of the products.