M J Antony: Debt recovery only by tribunal

High courts should not exercise its writ powers to interfere in debt recovery matters, the Supreme Court has stated in the case, T P Vishnu Kumar vs Canara Bank. The bank moved the tribunal for recovering open cash credit, packing credit and foreign bills of exchange. The firm countered the move by demanding several documents from the bank. The latter opposed the demand stating that they were not germane to the case and it was made only to protract proceedings. This was accepted by the tribunal. The firm moved the Madras high court against it and succeeded before the single bench. The division bench, however, ruled that the firm should have moved the appellate tribunal and not the high court. The Supreme Court upheld this view. Chastising the single judge bench, the Supreme Court stated that “if the correctness or otherwise of each and every interim order passed by the tribunal is going to be tested in a high court, it will only defeat the object and purpose of establishing such tribunal.”

Sebi appeal dismissed
The Supreme Court last week dismissed the appeal of Securities and Exchange Board of India (Sebi) against the order of the appellate tribunal in the matter of M/s Informetics Valuation & Rating Ltd which had applied for registration as a credit rating agency. Sebi was not granting recognition as it felt there was discrepancy regarding the creditworthiness of one of the promoters, Coment (Mauritius) Ltd, and audited accounts of previous years. The firm moved the tribunal which set aside the Sebi order and asked it to reconsider the application without requiring the firm to produce accounts of the two previous years. Sebi therefore appealed to the the Supreme Court. Its judgment observed that the board continued to give time to the firm to remove objections beyond the prescribed limit, which was “wholly unwarranted” and allowed the firm to take advantage of the latitude.

‘Hire and fire’ policy illegal

The Supreme Court last week stated that it could not approve of the ‘hire and fire’ policy of Balmer Lawrie & Co and the terms and conditions incorporated in the Manual of Officers. They are arbitrary and cannot be enforced, the court stated while dismissing the appeal case, Balmer Lawrie & Co vs Partha Sarathi. In this case, several officers were terminated invoking a clause in the appointment letter that the company shall have “the right, at its sole discretion, to terminate service and without assigning any reason”. This clause was called “unconscionable” and arbitrary which violated the equality provision in the Constitution (Article 14). Though the company argued that it was not part of the government and therefore, Article 14 was not applicable to it, the Calcutta high court, and now the Supreme Court, rejected this contention and affirmed that it was “state” according to constitutional provisions.

FERA penalty on travel agency
The Supreme Court has dismissed the appeal of Telestar Travels Ltd, a travel agency, against the judgment of the Bombay high court in a case of violation of the Foreign Exchange Regulation Act. The company specialises in booking tickets for crew members in ships. Most shipping companies are based abroad with their representatives based in Mumbai. They would issue instructions to the company to arrange air passages for the crew from different places. Since travel agents in England offered cheap tickets, the company approached a Glasgow firm. The payment for tickets was credited into the Swiss bank account of Bountiful Ltd, registered in British Virgin Islands, which routed it to the Indian company. It argued that it was a commercial arrangement and there was no violation of the law. The Directorate of Enforcement disagreed and maintained that Bountiful was a paper company and its account was operated from India by members of a Desai family. The Appellate Authority on Foreign Exchange imposed Rs 20 lakh as penalty on the firm and the Desais. The high court reduced the amount.

‘Indian MNCs have canine genes'
The Delhi high court last week tried to coin a new phrase, ‘Pomerainan gene’, for the attitude of certain Indian multinationals. In the second round of an arbitration case following the cancellation of 2G spectrum licences by the Supreme Court, the high court remarked: “Not only the earlier litigation fought between Viom Networks Ltd on one side and Unitech Wireless (Tamil Nadu) Ltd and Telewings Communication Services Ltd on the other side but also the instant litigation as also a large number of other commercial litigations witnessed by us in the recent past would evidence, if we may with apology say a ‘Pomeranian’ gene in the Indian multinationals.” When the master picks up the leash, the dog jumps with joy to go out and play, but when it finds darkness, it returns to the master to be chained. The MNCs want to scamper free without government control, but when they encounter an unknown territory, they want the safety of government leash. The judges remarked: “We wonder when the Indian multinational would cease to be a Pomeranian!”