From Chilli farmers to ONGC contract, here are the key court orders

According to the order, the insurer will pay the loan amount to the bank, and the chilli farmers will get a waiver of the interest

Builder told to pay for project delay
 

In one of the earliest decisions involving the Real Estate Regulation Act (RERA), the Bombay High Court has directed the promoter to pay 10 per cent interest for the period when the possession was not given to the aspirants of flats. While most of the allottees had paid 95 per cent of the due amount, the promoter of the project had completed only zero per cent to 95 per cent of the construction, and started work on few of the amenities promised like a clubhouse. The home applicants moved the Maharashtra real estate regulatory chairman, who believed the completion certificate issued to the promoter and asked the allottees to move in. But they went to the appellate tribunal, alleging that the project had not been completed. The architect of the project gave a completion certificate but a joint inspection by the promoters and the allottees revealed that the architect’s claim was wrong. The appellate tribunal was, therefore, convinced that the project had not taken off and it ordered an inquiry into the conduct of the architect. The promoter appealed to the High Court. In its judgment, Sea Princess Realty vs Rajesh Mehta, the High Court declined to interfere in the finding of facts by the appellate tribunal. It stated that there was no substantial question of law involved in the appeal calling for its intervention.

Computers get income tax relief

Are computers installed in an industrial unit eligible for investment allowance? The answer "Yes" came from the Calcutta High Court last week. It took around 35 years of arguments by Brooke Bond India Ltd to settle the issue that arose in the 1983-84 assessment year. The IT tribunal had answered "No", and the revenue authorities continued to insist that computers are not directly involved in the production of tea. Section 32A of the Income Tax Act talks only about ships, aircraft and plant as eligible for the tax benefit. The court said since computers play a pivotal role in our daily lives, it could be included in the term ‘plant’. The appeal was pending with the High Court since 2000, and unless the tax authorities move the Supreme Court, the issue is settled.

Civil dispute in criminal garb

Describing a case as a “classic example of turning a pure civil dispute into a criminal litigation", the Madhya Pradesh High Court last week allowed the appeal of US-based Cott Beverages Inc against its bottler, Tristar Beverage Ltd. “The complaint, if any, is arising out of business dealings and the complainant is certainly at a liberty to approach the commercial courts… The present case is an effort to settle the dispute and claims which do not involve any criminal offence by applying pressure through prosecution and deserves to be deprecated,” the High Court asserted.  The case arose in a dispute over commission to the bottler and the period of the contract. But the Indore bottler filed criminal cases, alleging cheating by the US cola corporation. The magistrate took cognizance of the complaint. Therefore, the corporation moved the High Court. Quashing the complaint, the court remarked: “The complainant has gone to the extent of impleading the company, its head and all senior officers as accused persons, without ascribing any specific role to any of them.”

New arbitration law takes precedence

Arbitration proceedings that had started after the passing of the Arbitration and Conciliation Act in 1996 will be governed by that law and not under the old Arbitration Act of 1940. The Madras High Court stated this in the case, Tata Finance Ltd vs Poongodi. The award was in favour of the finance company and against borrowers. But, the executing court ruled that since the award was passed according to the old law, it was not valid. On appeal, the High Court stated that the arbitration proceedings started in this case only after the new Act came into force. Therefore, the new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act come into force.

Chilli farmers get interest waiver

The National Consumer Commission has waived off the bank interest on a large number of farmers in Bellary in Karnataka whose chilli crops kept in a cold storage were destroyed when a fire broke out in the building. There was a tripartite agreement between the farmers, Canara Bank and Sridevi Cold Storage. The crops stored were insured by United India Insurance Co. The farmers used to pay back the loan from the bank, which included part of the premium the cold storage paid to the insurance company for indemnifying the crops. When the fire destroyed the crops, the insurer denied any liability because the farmers had not taken out insurance. They were not consumers according to the definition in the Consumer Protection Act and the tripartite agreement did not include the insurer. The state commission rejected the insurer’s contention and directed it to pay the compensation with 14 per cent interest. United India and the farmers moved the national commission. It rejected the contention of the firm of collusion of the bank, farmers and others. However, the interest was reduced to 12 per cent following the principle laid down by the Supreme Court. The national commission also rejected the claim of the farmers who sought compensation at the price of the crops at the time of the fire. They were given only the price at the time of warehousing. According to the order, the insurer will pay the loan amount to the bank, and the farmers will get a waiver of the interest.

CCI to probe ONGC contract

The Competition Commission of India has ordered an investigation into the allegation by Indian National Shipowners' Association that Oil and Natural Gas Corporation had indulged in anti-competitive and abusive conduct in the relevant market. The order stated the comparative size and resources, possession of economic power as an undertaking of the government and dependence of member companies of the association made ONGC a dominant force in the market. It was also of prima facie view that there was substance in the allegation that abusing the dominant position ONGC imposed one-sided and onerous terms in the Charter Hire Agreements entered with the suppliers of Offshore Support Vessels. Regarding the unfettered right of ONGC to terminate the contract without giving reasons, the commission said: “The very stipulation of such one-sided clause, which gives an unfettered right to a dominant party to use it in its favour without giving any reciprocal right to the other party to the agreement, is prima facie abusive.”