When arbitration moves at a snail's pace

Though arbitration is considered to be a speedy remedy, some cases might take decades to conclude. In the latest arbitration judgment delivered by the Supreme Court, the tender for a hydel scheme was floated in 1979 and the project was to be completed in 1982. Disputes arose between the contracting firm, Harish Chandra & Co and the Uttar Pradesh government over payment. Two sets of claims were referred to arbitration under the 1940 arbitration law, which has now been repealed. The award was passed in 1995 in favour of the contractor, which was challenged by the government before the civil judge. He confirmed the award in 1996. The government appealed to the high court in 2001. The judgment came in 2007. The contractor appealed to the Supreme Court the same year. It took nine years for the court to deliver its judgment, which upheld the contractor's claims. However, an appeal in another part of the arbitration proceedings is still pending. The present judgment was critical of the high court for going over facts and evidence decided by the arbitrator. The high court cannot act as an appeal court in arbitration matters and the award must be accepted unless it is totally arbitrary. New arguments cannot be raised in the high court. In this case, the high court violated these norms, the Supreme Court said.

Land compensation unpaid for decades
The strict conditions brought in by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 have exposed irregularities in several proceedings. One of the grossest cases came to light in the Supreme Court, when the Delhi Development Authority (DDA) lost appeals against land owners. The judgment remarked: "The original owners' lands were notified for acquisition on October 24, 1961, of which possession was taken four decades later, in 2000; after which the land owners have yet to see the colour of the paltry amount of compensation offered, which has neither been tendered nor paid to them. In the facts disclosed by this case, there could not be stronger facts to hold such acquisition non-existent in accordance with the object sought to be achieved by Section 24 (2) of the 2013 Act." Explaining the new law, the court continued: "The state has no business to expropriate from a citizen his property if an award has been made and the necessary steps to complete acquisition have not been taken for a period of five years or more. These steps include taking physical possession of land and payment of compensation. The legislature is, in effect, telling the executive to put its house in order and complete acquisition proceedings within a reasonable time. Not having done so, even after a leeway of five years, would cross the limits of legislative tolerance, after which the whole proceeding would be deemed to have lapsed."

Appeals must raise question of law

The Supreme Court has emphasised that an appeal against the decision of the electricity regulatory commission would lie only if there is a "substantial question of law". In this case, Wardha Power Co vs Maharashtra State Electricity Distribution Co, the parties entered into an agreement under which the former would generate and supply power to the distribution firm. However, it could not keep up the schedule. So, it made an ad-hoc arrangement for purchase of power from other sources. Whether such ad-hoc supply should be at the actual cost incurred by the Wardha firm or the agreed rate was the dispute. The state commission and the appellate tribunal rejected the arguments of the Wardha firm. In the appeal, the Supreme Court said under Section 125 of the Electricity Act, an appeal would lie only if there is a substantial question of law. In this case, though the supplier raised 34 questions, none of them involved a question of law, the judgment stated while dismissed the appeal.

Tax same on bitumen in any form
Bitumen in its solid form and bitumen emulsion in the liquid form are scientifically the same commodity and cannot be taxed differently, the Supreme Court ruled in its judgment, Commissioner of Commercial Taxes vs A R Thermosets Ltd. VAT authorities maintained that emulsion was in the unclassified category, attracting a levy of 12.5 per cent. The firm that supplies bitumen for road building and other civil works brought scientific data to contend that they were the same thing and the end use was also the same. Therefore, emulsion should be taxed only at four per cent like bitumen. Mixing of certain material in the emulsified form would not 'manufacture' a new product. The composition is the same and the product in commercial parlance is understood as the same commodity in a different form. This view was accepted by the Supreme Court and it dismissed the appeal of the authorities against the Allahabad High Court verdict.

Packing material not input for goods
The Supreme Court has ruled that packing materials cannot be considered raw materials for manufactured goods, nor are they components or inputs. Only those items that are integral to the manufacture of a product could be considered raw material, the court stated while dismissing the appeal, Hindustan Lever Ltd vs State of Karnataka. The firm produced tea of different varieties in its Dharwad unit, then newly started. It claimed exemption from entry tax for packing materials brought into local areas. Revenue authorities denied the claim, starting a series of litigation over tax liability for the period between 1994 and 1997. HLL lost everywhere, including the Karnataka High Court and now the Supreme Court.

Retired rich with wrong award
The Delhi High Court has upheld the dismissal of an employee of Johnson & Johnson Ltd, who had allegedly stolen confidential documents and threatened to circulate them to rival agencies. The labour court had awarded him Rs 10.44 lakh in 2008 as compensation, with 18 per cent for illegal termination. The high court allowed the appeal of the firm, observing that the "act of the workman was subversive of discipline and good behaviour." He has now retired, gathering all statutory benefits from the company. Though the labour court award has been set aside, in view of his age, the court barred the management from recovering amounts already paid.