From bounced cheques to liquor licence rule, here are key court orders

Award of interest in arbitration conditional

If the General Conditions of Contract in Construction Works prohibits demand of interest, arbitrators do not get jurisdiction to award interest, the Supreme Court held in its judgment in Jaiprakash Associates vs Tehri Hydro Development Corporation. The contracting company was given a project, but disputes arose over certain claims. They were referred to arbitration by a three-member panel. It gave an award largely in favour of Jaiprakash and also granted interest on the dues. Then the jurisdiction of the arbitral panel to grant interest when the General Conditions barred it became another point of conflict. The matter was taken to the Delhi High Court, which held that relevant clauses categorically provided that no interest would be payable to the contractor on the money due to him. No interest was payable as Clauses 50 and 51 of the General Conditions barred arbitrators from granting interest, though they claimed the power. The appeal of the company was rejected by the Supreme Court. The precedents cited by the firm were under the Arbitration Act of 1940, the judgment explained, and the new Arbitration and Conciliation Act as interpreted by the Supreme Court has changed the law.

Haryana liquor licence rule set aside

The Supreme Court last week ruled that the financial commissioner of Haryana had no power to amend rules providing for a single liquor licence for the entire state to deal in imported foreign liquor, bottled outside the country. The International Spirits & Wines Association of India, a representative body of liquor companies doing business in India, had challenged the relevant provisions in the Haryana Liquor License Rules as amended in 2017. They argued that the creation of a monopoly by the state in favour of a private entity to trade in liquor was contrary to the freedom of trade guaranteed by the Constitution.  The amendment also violated the Punjab Excise Act applicable to Haryana. The court, allowing the appeal,  held that the commissioner was not competent to amend the rules with regard to the grant of the number of licences for the entire state. That power was exclusive to the state government. The judgment was passed by a majority of two judges. The dissenting judge, while dismissing the petition of the dealers, remarked that the state had apparently gained by way of an enhanced collection of revenue by the new regime. The minority judgment stated: “State’s power to experiment in economic matters shall not suffer invalidation at the hands of the court. Such power must be premised solely on state action falling foul of the Constitution and the laws. The state would, however, do well to provide for a suitable mechanism by which it can provide appropriate safeguards so that there is fair dealing by the exclusive licencee.”

Director absolved in cheque case

The director of a company who signs a cheque which bounces would not be liable if the company is not arraigned as an accused, the Supreme Court reiterated in its judgment in Himanshu vs B Shivamurthy. In this case, the payee filed a complaint against the signatory of the bounced cheque under Section 138 of the Negotiable Instruments Act. The magistrate issued summons to the signatory, who was a director of Lakshmi Cement and Ceramics Industries Ltd. He moved the Karnataka High Court for quashing the summons. The high court refused to do so. So he appealed to the Supreme Court. He argued that the cheque was not issued in his personal capacity and the complaint was not maintainable as it was not instituted against the company and its directors. The notice, according to the Act, was also not served on the company. The court agreed and allowed the appeal.

CEO’s plea against firm dismissed

The Supreme Court has dismissed the writ petition of a former chief executive officer of a company seeking a CBI probe into the affairs of the firm. He had alleged several financial irregularities indulged in by the firm domestically and internationally. He had complained about them to various authorities without result. Therefore, he approached the Supreme Court seeking an investigation. The court dismissed the petition, Ramesh Sanka vs Union of India, stating that disputes between employers and employees cannot be decided in a writ petition. They should be tried by civil courts. The judgment added that since investigations by some agencies are going on, those found guilty in the management of the company would face the consequence.

Housing society bye-law quashed 

The Supreme Court has quashed the bye-law of a Delhi housing society, which barred a member from selling a house to a non-member without permission of the society. Dismissing the appeal, Delhi Dayalbagh Cooperative vs Registrar, the court stated that such a restriction is not authorised by the Delhi Cooperative Society Act. Therefore, the bye-law violated the Act. The judgment said: “It appears to be the duty of the Registrar and the registered housing  society to scrutinise the bye­laws of the society and, to the extent they are inconsistent with the provisions of the Act or Rules, to ask them to amend them to make it in conformity with the Act.” Even if this duty has not been performed by the authority, no provision in the bye­-laws inconsistent with the provisions of the Act can have the force of law.

Half justice after three decades

Two judgments of the Supreme Court last week indicated the time taken by the judiciary in labour and environment cases.  A labour case moved up from an industrial court to the Supreme Court at snail’s pace for nearly three decades and had to return to the starting point after the last week’s judgment. In this case, Bundi Zila Petrol Pump Dealers Association vs Zila Petrol Mazdoor Sangh, the Supreme Court set aside orders of the Rajasthan High Court and the industrial tribunal because the association was not given a chance to present its case. The dispute was over the entitlement of casual leave, dearness allowance, annual increments and the like which was referred by the state government for adjudication by the tribunal. The labourers had won all the way but had to return to the tribunal as evidence had to be reappraised.  In another judgment, the Supreme Court dismissed a two-decade-old case over sewerage cess demanded by civic authorities from a chemical factory for treating effluents. The dispute between Vasant Chemicals Ltd and the Hyderabad Water and Sewerage Board started in 2000 and the company’s appeals against sewerage charges were dismissed by the court.