Pardon delay, but not at high cost

Several litigants approach the court to claim their rights long after the period of limitation set by law. Some do it deliberately as a strategy; some others out of sheer neglect. The chronic defaulters in this aspect are revenue departments and arms of government. Years of delay are common and the courts "condone" the delay of the government entities because if the department's appeal is dismissed, the beneficiary would be assesses who are private companies trying to avoid taxes.

There is even a suspicion, expressed in Supreme Court judgments, that government servants abet the delay. On the other hand, sometimes the courts could be harsh on private parties for coming with application for condoning delay. The Supreme Court found last fortnight that the trial court and the Madras high court imposed "unreasonable and onerous" condition on a litigant who approached them for condoning delay (GMG Engineering Industries vs Issa Green Power Solution).

The courts below directed the party to deposit Rs 1.5 crore and Rs 10 lakh respectively in two suits if the delay had to be condoned. The Supreme Court reduced it to Rs 50,000. The high court, said the apex court, should have kept in view that the parties had not even got a chance to contest the suits on merits. So it was wrong to shut them out with a heavy financial burden, especially since they had given satisfactory explanation for the delay.

Multiplexes get extended time

The Supreme Court has set aside the judgment of the Gujarat high court which had held that the state's policy named "New Package Scheme of Incentives for Tourism Projects, 1995-2000" had come to an end and the fiscal incentives would no longer would be available to multiplex cinemas set up in entertainment complexes.

The construction was delayed due to an earthquake and communal riots. However, the government did not grant extension of the time given for starting operations. The court held the multiplexes were entitled to have full benefit of the scheme and the curtailment of the period was bad in law.

However, since commercial operations have already started, the court asked a committee to examine the eligibility of individual licencees within three months to decide whether they are eligible for the benefit.

Arbitration in dispute with Korean firm

The Supreme Court has appointed its former judge, B Sudershan Reddy, to arbitrate between a Korean firm in the business of biometrics research and development and an Indian company which had ordered 10,500 G10 fingerprint scanner at the instance of Electronic Corporation of India Ltd (Supreme Inc vs 4G Identity Solutions Ltd).

Disputes arose over payment. The Korean firm invoked the arbitration clause in the master agreement and the procedure commenced in Singapore under the Singapore International Arbitration Act. The Indian firm objected to it and pointed out that the arbitration should be according to the Indian Arbitration and Conciliation Act according to the supply agreement. The Supreme Court agreed that according to the relevant clause, the site was India and the law applicable was the Indian law.

Airport Authority, contractor lose appeal

The Delhi High Court last week dismissed the cross appeals of both IDEB Projects Ltd and Airports Authority of India against arbitration award relating to a project for construction of the airport terminal at Khajuraho, the tourist centre in Madhya Pradesh.

The project was to be completed by September 2008, but despite repeated extensions, it was not done. So the contract was cancelled leading to arbitration. The court upheld the award which blamed the contractor for the delay, but rejected the certain counter-claims of the AAI.

Discretion in licensing not unlimited

A government entity cannot arbitrarily cancel a commercial licence granted to a private contractor merely because the agreement uses phrases like "at the discretion", "not obliged to assign any reasons whatsoever" and the like.

Courts have repeatedly interpreted these words to mean that the discretion has to be exercised in a "fair, reasonable, non-arbitrary and non-discriminatory manner", the Delhi High Court stated last week in its judgment, R K Associates & Hoteliers vs Indian Railways Catering and Tourism Corporation. In this case, the corporation granted licence to run a quick service food kiosk at a railway station for five years plus three years. Licence fee for eight years was paid, and huge investments were made before starting the venture.

However, after five years, the corporation floated a new tender presumably to fetch higher profit. This was challenged by the contractor. The corporation contended that courts should not interfere in commercial contractual matters. Rejecting this argument, the judgment said that a writ petition is maintainable against the state and its instrumentalities, which are public sector enterprises completely owned and controlled by the state even in contractual matters.

Even where there exists an alternative remedy in the form of an arbitration clause, the court can interfere if there is violation of principles of natural justice and fundamental rights. The high court allowed the petition and directed the corporation to let the contractor complete eight years.

Compassionate appointments in bank

The Supreme Court has dismissed the appeals of public sector Canara Bank against the Kerala High Court judgment which directed it to grant compassionate appointment to dependents of several deceased employees according to its "dying in harness scheme" introduced in 1993.

The claim was resisted by the bank on the ground that the financial condition of the family members of the deceased employees was good and that the scheme had been replaced with another in 2005 scrapping the provision of compassionate appointment and instead introducing a new scheme of ex-gratia payment.

However, the court pointed out that the 2005 scheme providing only for ex-gratia payment in lieu of compassionate appointment stood superseded by the scheme of 2014 which revived the scheme providing for compassionate appointment. Therefore, the scheme in force is to provide compassionate appointment. The court thus upheld the high court order to consider the applications of the dependents.