Time frame for completing arbitration

Though the law sets a time limit for the arbitrator to pass an award, the period could be extended in one exceptional case, - when both parties consent to do so, the Supreme Court stated in its judgment in Electrical Manufacturing Co vs Power Grid Corporation. If there is no consensus, the arbitrator must complete the proceedings within the time frame. In this case, the time was not kept after disputes arose between Electrical Manufacturing and NTPC over payment for a contract to execute the Rihand-Kanpur transmission line. The company approached NTPC and other authorities, but to no avail. So, it invoked the arbitration clause and appointed its nominee. However, NTPC failed to name its arbitrator. The company got the Institution of Engineers (India) to appoint the other two arbitrators. The arbitration went ahead, despite protests by NTPC (now Power Grid Corporation), and the award was passed in the company's favour. When Electrical Manufacturing approached the Delhi High Court for execution, NTPC objected. While accepting the objection, the high court said the tribunal "had acted in utter haste in rushing through the arbitration proceedings without affording proper and adequate to opposite parties." Setting this aside, the Supreme Court said the tribunal was right in completing the proceedings as NTPC did not either participate or give consent for further time to complete proceedings.

Arbitrator named in tiff with BHEL

The Supreme Court has said the question of whether the quality of service provided by a company is adequate and satisfactory is for an arbitrator to decide. Objections regarding limitation should also be settled by the arbitrator, it said. Keeping this in mind, the court nominated a retired Delhi High Court judge as the sole arbitrator in the case of Wexford Financial Inc Panama vs Bharat Heavy Electricals Ltd. The Panama company, with a liaison office in Delhi, procured contracts from government agencies for 1.1 per cent commission. It introduced the public sector company to Mass Global Investment Co, incorporated under Iraqi law and engaged in power generation for the Kurdistan regional government. The project did not materialise, but the Panamanian company procured another. Disputes arose over the payment of commission. The foreign company approached the Chief Justice of India and he ruled that the disputes fell within the terms of the arbitration agreement.

Auction of debtor's assets confirmed

The Supreme Court has dismissed an appeal of the Karnataka State Financial Corporation and confirmed the sale by auction of the property of a borrower as no "viable" offer had come forth in a decade. In the case of Chem Solar Energy System Ltd vs KSFC, there were four attempts at auction, but offers were only around Rs 50 lakh. One party offered Rs 50 lakh and paid part of it. But, the auction was cancelled without him being given notice. Some persons later offered Rs 1.6 crore but did not pay anything. Since the person who offered and paid part of it in 2005 was still waiting, the Supreme Court said the sale to him was fair and legal.

Tiles firm to pay for being 'callous'

The Supreme Court last week described the attitude of H & R Johnson (India) as "callous", when a consumer complaint was made about the poor quality of its glazed floor tiles. Lourdes Society Girls Hostel complained to the firm several times, but it did not respond. The charitable society, which runs the hostel, moved the Surat district consumer forum, which awarded compensation. This was upheld by the Gujarat state consumer commission. But on appeal, the National Commission held that the hostel was a "commercial enterprise" and not a consumer under the Consumer Protection Act. Reversing that view, the Supreme Court ruled that the hostel was run for the benefit of tribal girls and did not make any profit. The national commission exceeded its jurisdiction by overturning decisions rendered by forums below, the court said.

Public hearing must for unit expansion

While insisting on a public hearing before sanctioning the expansion of an industrial unit, as mandated in an environment notification of 2006, the Supreme Court made an exception in the case of a steel plant, Electrotherm (India) Ltd vs Patel Ramjibhai. In a public interest petition, the Gujarat High Court had stopped the expansion of a steel plant in Kutch, but the Supreme Court allowed it to operate as the environmental sanction was granted in 2010. The court said a pre-decisional public consultation is essential, but in view of the fait accompli, it allowed a post-decisional public hearing within three months. If public opinion is against the unit, which had expanded three-fold, the authorities shall scale down manufacturing to bring them within environmental parameters, the judgment said

Dissecting principal and interest

If a court or an arbitration tribunal directs a party to pay a sum with interest to the opposite party, the person who has to pay cannot insist that she would pay the principal first and then the interest. In the case of Jaayaswals Neco Ltd vs Union of India, the arbitrator asked the railways to pay a sum to the firm, whose contract was abruptly cancelled. The railways made part payment and claimed it included both principal and interest. The firm approached the Delhi High Court arguing that it had not agreed to apportionment of payment. The high court ruled last week that the railways' calculation was "fundamentally flawed" and it could not dissect the payment.

Entry tax on imported fuel

Even as a nine-judge Constitution Bench of the Supreme Court headed by the Chief Justice of India is currently hearing about 2,000 petitions moved by companies on the validity of entry tax, the Bombay High Court last week dismissed a set of petitions by Tata Power seeking to declare entry tax on fuel oils imported by it as illegal. Rejecting its contention that the Maharashtra law could not be applied on imported goods, the high court said "it is immaterial whether the goods originally arrived from outside the country or from another state within the country." The high court also reiterated that writ courts would not interfere in the decisions of tax implementing authorities, unless they are arbitrary or patently wrong.