SC rebuke for government arbitrators

When arbitrators delay the proceedings intentionally and behave in a "cavalier manner", the court can override the terms of the contract and appoint a sole arbitrator, the Supreme Court has stated in the judgment, Union of India vs UP Bridge Corporation. The corporation had undertaken to construct substructure for rail bridges. There was a clause in the general conditions of contract that in case of disputes, they will be referred to three members of the railway. Differences did arise and they were to be decided by the rail authorities. Though it was done in 2007, for four years the proceedings were not completed. The corporation moved the Allahabad High Court, which gave three months to complete the process. Still it was not concluded. When the corporation moved the high court again, it observed that the delay was intentional and set aside the mandate of the tribunal and appointed a sole arbitrator. The railways appealed to the Supreme Court, which upheld the high court order observing that if the cherished purpose of speedy resolution of disputes by arbitral proceedings was to be accomplished, the government should be more responsible in choosing arbitrators. Officers who are busy with their routine functions should not be chosen as arbitrators as the additional work will be given the back seat. "This kind of behaviour, showing casual approach in arbitration cases is anathema to the very genesis of arbitration," the judgment said in long discussion on the role of the government and the arbitrators.

Australian mining firm loses appeal

The Supreme Court last week dismissed the appeal of Australian company, Swan Gold Mining Ltd, against the Calcutta High Court judgment in its dispute with Hindustan Copper Ltd. The Indian firm, which has several mines rich in natural resources being metallic ores, invited global tender for operation of its Surda Mine and Mosabani Concentrator Plant. The tender terms provided that it shall be the responsibility of the successful bidder for payment of all statutory duties. The foreign company was selected. When it raised invoices demanding reimbursement of basic excise duty and other levies payable by it to the government, Hindustan Copper refused to make the payment. The dispute was referred to a sole arbitrator. He held that the price bid of the Swan Gold was not exclusive of applicable taxes. The company moved the Calcutta High Court. Both the single judge and later the division bench dismissed its appeal under the Arbitration and Conciliation Act. The Supreme Court declined to interfere with the orders of courts below, reiterating the rule that once the arbitrator decides facts in dispute, courts will not interfere in the award unless there is gross miscarriage.

SC corrects view on guarantor's onus

The Supreme Court last week reversed two of its earlier judgments regarding the liability of the guarantor when the main borrower defaults in payment. The earlier view was that no proceedings for recovery of outstanding loan can be taken against a guarantor so long as the property of the owner which is mortgaged is not sold first. This opinion was doubted by a later Bench, which referred the issue to a larger bench. The question was finally answered in the new judgment, Arun Jain vs Pradeshiya Industrial & Investment Corporation. The three-judge bench ruled that under the Uttar Pradesh Public Moneys (Recovery of Dues) Act, the guarantors do not enjoy any protection against recovery proceedings.

Attorney can file cheque bounce complaint

A criminal complaint about issuance of cheque without sufficient balance in the account can be filed by a power of attorney holder. In this case, Vinita Rao vs Essen Corporate Services, the woman entrusted 10,000 shares to the company for utilising their expertise in the market to earn profit. Later, she requested it to return the shares. The company issued cheques to her, which bounced. She appointed her husband as power of attorney to prosecute the company under the Negotiable Instruments Act. The magistrate took cognisance and the trial court convicted the firm. But the Karnataka High Court acquitted it only on the ground that the power of attorney document was not produced. This argument was raised for the first time in the high court. The Supreme Court stated that the high court should not have accepted that belated argument to absolve the company and ordered it to examine the power of attorney.

Revenue authorities to review refund

The Supreme Court last week set aside the judgment of the Gauhati High Court, which had upheld the revenue authorities' demand for recovery of excise duty refunded to several companies. The firms had availed of tax benefits offered to them under an industrial policy to encourage industries in undeveloped areas. However, an amended notification was issued following the 2003 Finance Act, with retrospective effect. The firms lost the benefits and the revenue authorities wanted to recover the refunds granted earlier. The firms challenged it in the high court, but lost. The companies appealed to the Supreme Court in the case, Hindustan Coca Cola vs Union of India. They argued that they were not given notice or hearing before passing the order or recovery. The apex court agreed with them and observed that the high court should not have gone into the facts of each case. However, it directed the companies to deposit the amounts demanded before filing appeals.

Payment for tying workers in legal knots

In a severe indictment of the management of India Yamaha Motor (P) Ltd of Uttar Pradesh for dragging its employees for years in litigation in several courts on different grounds, the Supreme Court said that they should be compensated for the trouble caused to them. The workers wanted regularisation of their employment as they were working since 1989. But the disputes have not been resolved yet. Narrating the complex facts, the judgment said that the management has "abused the judicial process, and thereby tired out the workmen in their legitimate pursuit of their alleged rights." In view of the inordinate delay in the adjudicatory process, the court asked the management to pay Rs 1 lakh each to the employees concerned and directed the industrial tribunal, Meerut, to try to end the controversy within nine months. The judgment emphasised that the adjudicatory process has been set forth in beneficial laws for expeditious relief to workmen. In this case, long years have been wasted. The court noted that even before it, the appeal was pending for six years.