Apex court dismisses BOC's appeal

LEGAL DIGEST

The Supreme Court on Monday dismissed the appeal of BOC India Ltd against the judgment of the Calcutta High Court, which had upheld the decision of the arbitrator in its dispute with Bhagwati Oxygen Ltd.

BOC and Nippon Sansa KK entered into an agreement to facilitate Bhagwati to import components for setting up a 25-tonne a day oxygen plant in Ghatsila, Jharkhand. Bhagwati placed orders with BOC for Rs 4.62 crore worth of supplies.

The payment was made but an arbitration dispute was raised demanding refund, among other things. Out of 12 heads, the arbitrator allowed five. The High Court dismissed BOC's challenge to the award. The Supreme Court has agreed with the High Court.

SC refuses to interfere

The Supreme Court last week dismissed the petition of India Household & Healthcare Ltd, seeking the appointment of an international arbitrator in its dispute with LG Household & Healthcare Ltd. The Indian firm, which claims to have an agreement with the South Korean corporation wanted the court to appoint an arbitrator under the Arbitration and Conciliation Act.

However, the Korean company contended that the memorandum of understanding and licence agreement were products of a gigantic fraud by K P Jayram Pillai and Vijay Singh of the Indian firm and two Korean executives. The Koreans have been convicted and sentenced to imprisonment by a Korean court. The Supreme Court judgment delivered by Justice S B Sinha explained that when there is an arbitration agreement, it would be followed by the court.

However, when the contract itself is void, the court would not appoint an arbitrator. Moreover, in this case, the Madras High Court has passed an injunction in favour of the Korean firm. Therefore, it would not be proper for the Supreme Court to pass an order which would be in conflict with an order passed by another court.

NTPC appeal dismissed by SC

The Supreme Court has dismissed the appeal of the National Thermal Power Corporation Ltd against the judgment of the Delhi High Court where it had challenged the partial award given by the International Chamber of Commerce, Arbitration Tribunal, in Paris.

NTPC had entered into a contract with Siemens Atkeingesellschaft for the setting up of 817 Mw gas-based power project in Uttar Pradesh. There were other contracts with BHEL and Siemens Ltd, Mumbai. Owing to delay in opening of letters of credit and obtaining import licences, the project was delayed.

Therefore claims for damages were raised against NTPC. The issue was taken to the ICC International Court of Arbitration. NTPC also made counter-claims. The tribunal gave a partial award in favour of the foreign firm while the counter claims were dismissed. NTPC then approached the High Court without success. Its appeal has now been dismissed by the Supreme Court.

State rules apply on sales tax assessment

As long as the central government does not make any rules under the Central Sales Tax Act 1956, the determination of the turnover might be carried out by the assessing authority in terms of the state rules, the Supreme Court stated in the judgment, Mahim Patram ( P) Ltd vs Union of India.

The company in this case printed high security question papers for examination boards and sent them to other states. The activity amounted to work contract in the course of inter-state trade. The Act did not contain any provision to levy tax on works contracts despite the insertion of Clause 29A in Article 366 of the Constitution. No rule has till date been framed in regard to the manner in which the sales price is to be calculated.

The firm argued that in the absence of rules, the determination of the sale price should not be left to the whims of the assessing authority. Rejecting the contention, the Supreme Court stated that Section 8 provided for the levy of the tax. Moreover, the rules made by the state government are "incorporated by reference".

SC quashes Madhya Pradesh HC order

The Supreme Court has set aside the judgment of the Madhya Pradesh High Court in Indore Construction (P) Ltd vs Commissioner of Income Tax after interpreting the procedure for "block assessment" under Section 158BC of the Income Tax Act. Block period means the previous years relevant to ten assessment years preceding the previous year in which the search was conducted.

The authorities conducted a search in the premises of one of the directors of the company. During the search under Section 132, several incriminating documents were seized. Proceedings were initiated against the company under Section 158BC. When it was challenged, the tribunal held that the assessing officer had no jurisdiction to proceed against the assessee for making block assessements.

However, the High Court allowed the appeal of the authorities. The Supreme Court quashed the High Court order stating that the conditions precedent for action under Section 158BC have not been fulfilled, like the satisfaction of the assessing officer for taking action.

Dishonoured cheques

The Supreme Court has reiterated in the judgment, N K Wahi vs Shekhar Singh, that in a case of dishonoured cheque issued by a company, only a director who was in charge and responsible to the company would be liable for criminal action. Every person who is a director or employee of the company would not be liable under Sections 138 and 141 of the Negotiable Instruments Act.

In this case, the company issued cheques which were dishonoured. Three persons of the company were made parties to the criminal complaint. They pleaded before the metropolitan magistrate that they were not directors of the company and not responsible for the issuance of the cheque and therefore they should not be proceeded against. The magistrate rejected their prayer.

On appeal, the Delhi High Court accepted the plea that they were not responsible to the acts of the company.

Accident claim: SC overturns view

The Supreme Court has allowed the appeal of New India Assurance Co in a case where a passenger travelling in a tractor was killed by the rash and negligent driving of the driver.

The motor accidents claims tribunal and the Allahabad High Court fixed the liability to pay compensation on the insurance company. The insurer, in its appeal, argued that the tractor could be used only for agricultural work and those travelling in it would not be covered by the insurance contract.

This argument found favour with the Supreme Court. After analysing the provisions of the old and new Acts, the court emphasised that the new law did not enjoin any statutory liability on the owner of the vehicle to get his vehicle insured for any passenger travelling in a goods carriage and the insurance company would not be liable to pay compensation in case of death.

The court further stated that its earlier view expressed in the Satpal Singh case of 2000 was no longer correct.