The Consumer Protection Act has just celebrated its silver jubilee. Though more than 660 consumer forums are functioning in the country at various levels, braving poor infrastructure and rising workload, the law has started a kind of revolution. It has instilled hope in the success of grass roots reforms like the right to information and the right to education.

M J Antony: Shocker for the negligent

Business Standard

The Supreme Court last week ruled that cases of bounced cheque are independent of the revival bid of a sick company. Proceedings in bounced cheque cases under the Negotiable Instruments Act will continue even if there is a scheme to revive the sick company. The revival attempt under the Companies Act will not affect prosecution of charges under Section 138 of the Act. The charges cannot be compounded as in other cases under the Criminal Procedure Code (CrPC), the court stated in a large batch of appeals titled JIK Industries Ltd vs Amarlal. The Supreme Court dismissed appeals of the companies against the Bombay high court judgment which rejected their argument. The charges cannot be compounded as provided under Section 320 of the CrPC without the consent of the secured and unsecured creditors. Though Section 147 of the Negotiable Instruments Act provides for compounding, it does not provide for a special procedure. In its absence, the procedure under the CrPC should be followed.

Dud cheques in revival mode

The tsunami created by the 2G spectrum judgments of the the Supreme Court last week has almost mopped up the ripples they made in the legal sphere. However, they deserve respectful consideration for their discussion on two hot issues that have been agitating public mind in recent years.

M J Antony: Twin gains from 2G verdict

Whether the Sick Industrial Companies Act (SICA) has done more good than harm is an existential question that is difficult to answer. One view is that malingerers invoke it more often than those who need restorative or palliative care. For this reason, there was an attempt to repeal the Act in 2003, but it had a miraculous escape since the law to rescind it was allowed to lapse. Thus, the twice-born Act has continued to provide even more litigation that seems to be one of the main reasons for its existence.

M J Antony: Firms on the rock

IN order to protect sandalwood and its rare varieties found only in south India, the &lsquo;green bench&rsquo; of the Supreme Court last week passed several directions to the central government. According to one of them, the government shall take steps to include Red Sanders, which has medicinal properties and is in high demand abroad, in Schedule VI of the Wild Life Protection Act. This will make it an endangered species. It also asked the government to consult the wild life board and take a decision within six months whether sandalwood could be notified as a protected species. The court heard the Indian Sandalwood Association and the Sandalwood Oil Manufacturers Association raising some objections to the move, but Andhra Pradesh, Karnataka, Kerala and other sandal-producing states wanted restrictions on the felling of the trees.

Sandalwood trade in the dock

An unsung aspect of the recent 2G spectrum judgments is the speed with which the Supreme Court decided the public interest litigation (PIL); it was all over in just over a year. In contrast, there are PILs pending in the court since 1982, like that of Bandhua Mukti Morcha dealing with bonded labour.

M J Antony: Reluctant respondents

The Supreme Court last week transferred to the Gujarat High Court all cases pending in various other high courts, where the validity of Section 80HHC of the Income Tax Act has been challenged by various assessees. The central government wanted this transfer as there might be conflicting judgments if the cases are dealt with by different high courts. This lengthy provision deals with deduction in respect of profits retained for export business. The Supreme Court order in this batch of cases, led by Union of India vs Vijay Silk House (Bangalore) Ltd, noted that the maximum number of cases were pending in the Gujarat High Court and therefore it was proper that the high court there decided the law.

Gujarat HC to decide I-T question

The glare created by recent judgments in public interest cases, like the 2G spectrum scam, illegal money cached abroad and human rights violations have blinded the eyes to the darker side of such litigation. Every now and then, the Supreme Court and high courts come across instances public interest litigation (PIL) abuse.

M J Antony: The public interest camouflage

The Supreme Court ruled, last week, that if a disputing party asks its rival to appoint an arbitrator according to their agreement and if it is not complied with, the former can approach a court for appointment of an arbitrator under the Arbitration and Conciliation Act. After that, the arbitrator appointed by the court will proceed with the arbitration. In this case, Dakshin Shelters Ltd vs Geeta Johari, disputes arose between the two parties who had signed a development agreement. Geeta Johari invoked the arbitration clause in the agreement and nominated a former judge of the Andhra Pradesh high court on behalf of her and called upon the firm to nominate its arbitrator. The firm raised objections to this request. She moved the high court, which appointed an arbitrator. This was opposed by the firm, leading to the appeal in the Supreme Court.

Right to move court for arbitration

The Supreme Court has set aside the judgments of the Chhattisgarh and Madhya Pradesh High Courts and allowed tendu-leaves traders to file their returns before the VAT assessing authority who shall dispose of the matters within two months. The Minor Forest Product (Trading &amp; Development) Co-operative Federation Ltd had initiated the tender process for sale of Tendu leaves. One of the conditions was that the bidder, whose bid is accepted, has to remit the taxes under the VAT Act to the state government. Several firms which were successful bidders were asked to pay the tax. They moved the high courts asking the respective revenue departments to treat the sales as inter-state sale and, therefore, not exigible for the levy. The high courts dismissed their petitions, without going into the nature of the transactions. They appealed to the Supreme Court in a batch, led by M/s Zunaid Enterprises vs State.

VAT on tendu leaves sent for review

The unprecedented stream of review applications filed last week by the government, corporations and gadflies might pose a dilemma for the Supreme Court. The court is supposed to pronounce the last word in disputes, because there must be some finality to the adjudication process. &ldquo;We are not final because we are infallible, but we are infallible only because we are final,&rdquo; said US Supreme Court judge Robert Jackson.

M J Antony: A season for review

THE Supreme Court last week dismissed the challenge of a construction firm to the arbitration award stating that when the parties enter into a contract making the Chief Engineer the arbitrator, knowing his role, authority or power, they stand bound by the choice. If the Chief Engineer is chosen despite knowing &ldquo;his role in the affairs relating to the contract but nevertheless agree for him to be arbitrator and name him in the agreement to adjudicate the dispute/s between the parties, they stand bound by it unless a good or valid legal ground is made out for his exclusion,&rdquo; the court stated in the case, Ladli Constructions Ltd vs Punjab Police Housing Corporation. In this case, a housing project was delayed leading to the cancellation of the contract. The matter was referred to arbitration, which went against the firm. It moved the Punjab and Haryana high court, without success. Before the Supreme Court, it argued that the arbitrator, who was the Chief Engineer, was biased.

Bias of arbitrator not proved

It is a sobering thought that the judiciary is entering the new year with the chronic burden of 30 million pending cases in courts, not counting disputes in tribunals. The high courts have some 4,000,000 cases, and subordinate courts around 25 million.

M J Antony: Law for 'Metro straphangers'

Bharat Petroleum Corp Ltd for terminating in haste the 30-year-old dealership of Allied Motors Ltd &ldquo;even without giving a show cause notice or giving an opportunity of being heard.&rdquo; It clearly indicated that the entire exercise was carried out by the corporation on &ldquo;non-existent, irrelevant and extraneous considerations,&rdquo; the court remarked. There has been total violation of law and the principle of natural justice, the judgment said while directing the company to restore the dealership. The action against the petrol pump in Delhi was taken following a raid and taking samples. The corporation maintained that the petrol samples were adulterated. The dealer challenged the whole procedure as arbitrary and the police officer who took the samples had no authority. The Delhi high court dismissed the petition, leading to the appeal in the Supreme Court where the dealer succeeded.

SC rap for Bharat Petroleum

The Supreme Court last week set aside the judgment of the Calcutta high court and held that in a case of default of provident fund contribution by an &ldquo;exempted establishment&rdquo;, it would be liable for legal action. The question involved in the case, Regional PF Fund Commissioner vs Hooghly Mills, was under the Employees&rsquo; Provident Funds and Miscellaneous Provisions Act whether exempted companies can be subjected to proceedings for recovery of damages if they default in the contributions. The high court ruled that such exempted employers could not be proceeded against. According to the Act, establishments which have better schemes for provident fund than the statutory one, may be exempted. The high court, by interpreting Section 17, concluded that the company was exempted. Overruling the high court, the Supreme Court stated that since it is a social welfare law, courts should interpret provisions, if there is any doubt, in favour of the beneficiaries.

PF rules should be read liberally: SC

It is a measure of the disarray in the judicial system that three different Benches of the Supreme Court &ndash; some say four &ndash; are currently dealing with the multitude of interlocking problems facing the legal edifice in the country. A petition moved by the All India Judicial Association is being heard since 1989. Some criminal cases with heart-rending stories were turned into public interest petitions by the court so that it could deal with larger issues as in the appeal, Imtiaz Ahmad vs State of UP.

M J Antony: Time for intensive care

The Supreme Court last week appointed former chief justice of the Madras high court, Justice Ashok Agarwal, as the sole arbitrator in the dispute between Denel Ltd and the Ministry of Defence. The company had an agreement with the ministry for the supply of technical goods. Some lots were rejected leading to a dispute. The director general of ordinance factory (DGoF) appointed the manager of the Nagpur ordinance factory as arbitrator. The company objected to it as he was a government employee who was likely to favour his employer. The district court asked the DGoF to conduct the arbitration. The company objected to this also and appealed to the Supreme Court. The judgment stated that it would be &ldquo;necessary and advisable&rdquo; to appoint an independent arbitrator. It further noted that &ldquo;the attitude of the DGOF was not indicative of an impartial approach.

SC appoints non-govt arbitrator

One of the dilemmas baffling consumers in shopping malls these days is the &ldquo;tyranny of choice&rdquo;: which brand of soap or potato chips to buy from the overflowing racks? The problem is indeed acute. A US psychologist has even written a book on it and suggested a way to ease this post-modern angst: reduce the choices.

M J Antony: A multiple choice question

THE Supreme Court emphasised last week that private land cannot be acquired without adequate reason, invoking the urgency clause in the Land Acquisition Act. In its judgment in the case, Darshan Lal Nagpal vs Government of Delhi, the acquisition was quashed as it was bad in law. There was no urgency and the owner did not get a hearing. The land was acquired for setting up an electric sub-station by Delhi Transco Limited. The Delhi high court had rejected the challenge to the acquisition.

Land acquisition for Delhi Transco

Two judges of a Supreme Court bench last week differed on the application of the Arbitration and Conciliation Act in a dispute over the termination of a works-contract by the Madhya Pradesh government. Therefore, they have referred the matter to the Chief Justice of India for setting up a larger bench to resolve the issue. The high court had ruled that the dispute should be resolved by the central act and not by the Madhya Pradesh State Arbitration Tribunal set up under a state law. In this appeal, MP Rural Development Board vs LG Chaudhary Engineers, one judge set aside the high court ruling and allowed arbitration to proceed under the MP Act of 1983 and not under the central law. The other judge held that the dispute over works-contract would not fall within the jurisdiction of the State Arbitration Tribunal.

SC judges differ on arbitration law

Arbitration clauses buried in bulky commercial contracts often carry the hidden virus of litigation, as seen in the number of disputes reaching the Supreme Court in recent times. The new arbitration law has not reduced the flow. Questions are frequently raised whether there was a consensual clause on invoking arbitration, whether the arbitrator was impartial or any other nit-picking argument of which the shaky party could think.

M J Antony

M J Antony

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