From flat sale contract to ruling on cheque, here are the key court orders

Stay on arbitration centre vacated 

The proposed New Delhi International Arbitration Centre has been caught in litigation for some months and the Delhi High Court last week vacated a stay on the government’s ordinance establishing it. The International Centre for Alternative Dispute Resolution (ICADR) had challenged the New Delhi International Arbitration Centre Ordinance issued in March. The centre was established for creating an autonomous regime for institutionalised arbitration and for the acquisition of the undertakings of ICADR which stood vested in the New Delhi Arbitration Centre. ICADR alleged that the ordinance was issued though there was no urgency. The government countered and asserted that a Bill for setting up the centre was passed by the Lok Sabha but the Rajya Sabha could not take it up as it was adjourned sine die in February this year. The government has international obligations to set up a proper centre for alternative dispute resolution. The B N Srikrishna Commission and the 84th parliamentary committee had recommended the establishment of such a centre. Since ICADR was set up in 1995, its performance was unsatisfactory and it was not able to attract arbitration cases to it. Therefore, the ordinance was issued, the government argued. It also noted that an appeal against the high court stay could not be heard by the Supreme Court because judges in three Benches recused themselves each time it was listed. The high court vacated the stay on the ordinance and clarified that its order was only interim in nature and the main writ petition will be heard in July. “All pending arbitration cases with ICADR shall be permitted to be carried out in the same manner as they were being done prior to the issuance of the ordinance and further seminars, conferences and other training activities already fixed shall be permitted to be carried out according to the schedule already fixed,” the judgment explained.

Written contract before flat sale

The developer of a residential project has a duty to enter into a written agreement for sale with the buyer on receiving an advance payment, the Supreme Court ruled while setting aside the judgment of the National Consumer Commission which had dismissed the appeal of a flat buyer. The agreement is necessary to get a loan from a financial institution, the court stated in its judgment in Suman Jindal vs Adarsh Developers. In this case, the developer cancelled the allotment due to alleged delay in payment. The buyer moved the consumer commission which dismissed its petition. On appeal, the Supreme Court stated that the commission was wrong and asserted that even under the Karnataka Ownership Flats Act, the developer was obliged to enter into a written agreement. The developer had meanwhile sold the concerned flat to a third party. The court held that it was a later sale and the original allottee had a greater claim and he should be handed over the flat.

Accept value in bill of entry

The Supreme Court declared last week that the transaction value mentioned in the bill of entry should not be discarded unless there are contrary details of contemporaneous imports or other material justifying the rejection. The court stated so in its judgment in Century Metal Recycling Ltd vs Union of India. The company is engaged in the manufacture of aluminium alloys, for which it regularly imports aluminium waste as a raw material for self-consumption. Its grievance is that the principal commissioner of customs, Noida, always refused to clear consignments according to the declared transaction value in the bill of entry. The officers insist that the firm write a letter agreeing to pay customs duty as per their valuation. Thus the firm is compelled to forego its right to provisional assessment under the Customs Act. The court allowed the appeal stating that the order of the customs authorities was flawed and contrary to law for it did not give a good reason for rejection of the transaction value as declared in the bill of entry.

Conflict of views on excise resolved

A conflict of views about three judgments of the Supreme Court in interpreting a rule in the Central Excise Act was resolved by a larger bench of the court in its judgment in SAIL vs Commissioner of Central Excise. The question was whether interest is payable on the differential excise duty with retrospective effect payable on the basis of escalation clause under Section 11AB. This provision deals with interest on delayed payment of duty. SAIL had objected to the demand for interest on duty already paid before the rates were revised. It relied on one set of judgments. Several other companies also had objected to such demands and moved the Supreme Court. The present Bench dismissed the objections of SAIL and others after elaborately going through case law and similar provisions in the Income Tax Act and other commercial laws.

Compensation for death due to work stress

A healthy person who went to Saudi Arabia and died due to the stress and strain of long hours of work in hot conditions could be eligible for compensation and the insurance company is bound to pay it to the heirs, the Delhi High Court ruled in its judgment in Star Health & Allied Insurance Co vs Ambedkar Singh. Before leaving India, he was medically examined in Delhi and cleared by the insurance company and the employer and again in Saudi Arabia before starting work. When he died, his heirs argued that the death occurred during the course of employment and therefore, they were eligible for damages under the Employees Compensation Act. The company countered that Singh had died of natural causes or had concealed his ailments. It was liable only if the death was caused directly by some external violence. The trial court did not accept the insurer’s contention and awarded Rs 10 lakh to the heirs. The high court dismissed the appeal.  

Place of trial in cheque cases

The Delhi High Court last week ruled that the amended Section 142(2) of the Negotiable Instruments Act made it clear that in cheque bounce cases, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where he maintains an account, would be the place of trial for the offence. It further clarified that the provisions of the Code of Criminal Procedure on territorial jurisdiction have to give way to the provisions of the Act. The court stated so in its judgment in Somani Worsted vs Aez Infratech. Three petitions in this case were ordered to be transferred from Delhi to Meerut as the cheques were presented there.